Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
April 8, 2014
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Provision for gratuity or not - Even though the assessee succeeds on the applicability of Section 40A(9) of the Income Tax Act, the case of the assessee fails in view of Section 40A(7) - HC
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Adjustment of tax liability u/s 132B - request made by the petitioners for the sale of gold bars for adjustment towards the automatic tax liability - tax liability was not crystallized - the application filed by the assessee was throughly misconceived and unsustainable - HC
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TDS u/s 194H - Commission paid to TPL in relation to Mutual Fund Schemes - services which were rendered in relation to a transaction in 'securities' stood excluded from the definition of “brokerage or commission“ u/s 194-H - HC
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Validity of notice u/s 143(2) - scrutiny assessment - issuance of notice after 3 months - When the Department has set down a standard for itself, the Department is bound by that standard and cannot act with discrimination - HC
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Additions on the basis of credit entry in P&L Account – Excise credit - in order to impress the bankers and to please the shareholders the aforesaid entry was passed into the profit and loss account - Since income not accrued, not taxable - HC
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Powers available to assessing officer u/s 133(6) - The Co-operative Bank should not feel shy to furnish the information sought by the Income Tax Department in order to ensure that the transactions of the depositors are wholly transparent - HC
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Genuineness of the Transaction – LTCG on sale of shares – shares of listing company were purchased in cash - The AO had not committed any error in rejecting the claim of the assessee - HC
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Deemed dividend - Whether the receipt of share application money can be treated and recorded as loan, deposits and “any payment“ for invoking the provisions of section 2(22)(e) - Held no - HC
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Disallowance u/s 40(a)(ia) of the Act - Reimbursement of CHA charges paid to C & F agent – No requirement to deduct TDS on reimbursement of transportation charges to the agent - HC
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Deletion made u/s 40(a)(ia) – Amount paid to sub-contractors – the assessee had no profit motive and the activity of the society was more of a welfare activity - no TDS u/s 194C - HC
Customs
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Demand of anti-dumping duty - An importer who has imported goods on which no anti dumping was leviable cannot be saddled with the same by issuing a corrigendum notification and that too in a full-fledged mid-term review done by authority - AT
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Levy of CVD (additional customs duty) – Whether imported material is ‘Manganese ore’ or 'concentrate' - appellants have made out a case for waiver - AT
Service Tax
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Vocational training - computer training - Tribunal cannot be said to have erred by holding out that the respondent assessee was a vocational training institute, but we make it clear that it was so in terms of the Notification dated 10th September, 2004 until 16th June, 2005 - HC
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Merely because a part of the salary of global employee was paid in their home country through the holding/foreign company, it cannot be said that the foreign/holding company rendered supply of manpower or labour to the appellant - AT
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Commercial Training or Coaching Service - applicant had sold prospectus and admission forms for consideration and had not paid service tax on such consideration - Matter remanded back - Stay granted - AT
Central Excise
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Availment of CENVAT CRedit - Service Tax paid by the insurance company on the group insurance taken by the respondent herein for his employees - credit allowed - AT
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Whether the Respondent Assessee is entitled to refund claim of the excess duty paid on the discounts which were given to M/s. L & T, but which were not reflected in the invoice - refund allowed - AT
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Extension of time for filing refund claim under Rule 5 of CENVAT Credit Rules, 2004 - question needs to be factually addressed only by the adjudicating authority - AT
VAT
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Commissioner has no jurisdiction whatsoever to say that consequence flowing after decision of Tribunal are not correct and he still can pass an order making alteration in respect to something, which has already been finalized by Tribunal - HC
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Valuation of Works Countract - In the absence of necessary records, the expenditure incurred for the work contract has to be assessed invoking Rule 3(2)(m) of the KVAT Rules - HC
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Rate of tax - central sales tax - The animal feed which is the goods in question in the instant case is not a declared goods - The rate as provided therein should be either @ 10% or at the rate applicable in the appropriate State - HC
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Jurisdiction of High Court under Article 226 of Constitution of India - It is only a ' notice' and it is very much open for the petitioner to submit detailed objections - It is not a fit case to interfere at this stage - HC
Case Laws:
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Income Tax
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2014 (4) TMI 1049
Disallowance of depreciation claimed on leased plant& machinery - Held that:- When the income was received from leasing out of plant and machinery; on the said rental income the assessee shall be eligible inter-alia to claim deductions u/s 32(1) of the Act. In the light of the express provisions of the Act, the assessee is entitled to claim depreciation on plant and machinery. Since, there is no dispute on the fact that the assessee owns the asset and had rented out the said assets, i.e., plant and machinery and the rental income has been duly brought to tax by the assessee, the assesse is entitled to depreciation. In the light of express provision of law, disallowance made of ₹ 89,52,989/- representing depreciation on plant and machinery has been rightly deleted by the ld CIT(A) and the impugned order is valid in the eyes of law and we confirm the same - Decided against Revenue.
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2014 (4) TMI 249
Nature of Expenses – Fees for technical services or not – Article 12 of DTAA between India and Netherlands - Whether the payments made by the applicant to Endemol Holding for availing routing administrative services under the terms of the Consultancy Agreement would be in the nature of Fees for Technical Services (FTS) – Held that:- Nature of the services listed in Schedule 1 to the Management Consultancy Agreement require technical knowledge, experience, skill, know-how or processes - They cannot be termed as merely administrative and support services as tried to be made out by the applicant - several attempts were made in the past to interpret the meaning of “technical services” and also the ‘make available’ clause in Tax Treaties – thus, the services rendered are technical services both under the provision of the Income-tax Act and under the India-Netherlands Tax Treaty subject to fulfillment of requirements of the “make available” clause in the treaty. The broad consensus of the interpretation of the clause seems to be that requirements of “make available” in the tax treaty is met if the technology, knowledge or expertise can be applied independently by the person who obtained the services - the applicant merely took assistance of the Holding company in its business activities outside India and there is no material to suggest that the technical know-how, skill, knowledge and expertise are transferred to the applicant so as to enable the applicant to apply this technical know-how etc. independently – thus, the requirement of the ‘make available’ clause in the Article 12(5) of the India-Netherlands Tax Treaty is not satisfied and hence the payment for the services rendered by Endemol BV will not come under ‘fees for technical services’ under the ‘Tax Treaty’. The payments made by the applicant to Endemol Holding for availing the services under the terms of the Consultancy Agreement is not in the nature of Fees for Technical Services (FTS) under Article 12 of the India-Netherlands Tax Treaty because the services rendered by the non-resident company do not meet the requirements of ‘make available’ under the treaty – thus, the payment will not be treated as business income taxable in India in terms of the India-Netherlands Tax Treaty because Endemol Holding does not have a Permanent Establishment in India. - Decided in favour of Assessee. Nature of Payments made - Whether the payments made by the applicant to Endemol Holding BV can be treated as business income and taxable in India – Held that:- The applicant is an Indian enterprise and for its business activities outside India, the services on Endemol Holding were utilized - There is no material to show that Endemol Holding has any presence in India - Payments for the services were received by Endemol Holding outside India - profits arising out of the transaction for the services rendered by Endemol Holding BV are not taxable in India as Endemol Holding BV does not have PE in India. - Decided in favour of Assessee. Whether the transaction is an arrangement for the purpose of avoidance of tax – Held that:- Relying upon Transmission Corporation of AP Ltd. and others vs. CIT [1999 (8) TMI 2 - SUPREME Court] - The transaction is for genuine business purpose for the benefit of both the parties – there was no sufficient materials on facts and circumstances made available which suggest that the transaction is an arrangement solely for the purpose of avoidance of tax – the payment will not be subjected to withholding of tax u/s 195 of the Act - Decided in favour of Assessee.
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2014 (4) TMI 248
Allowability of deduction u/s 40A(9) r.w.s 40A(7) - Provision for gratuity or not - Provision for service weightage of employees at the time of retirement - Revenue contended that it was neither a gratuity nor a payment made to any welfare fund and would constitute only a provision - setting up or formation of, or as a contribution to, any fund, trust etc. - Held that:- The expression 'fund' denotes the particular category/head and the expression 'payment' is explained on cash payment or debiting to the head of account, which is in contradistinction to actual method of payment - In either case, be it cash or debiting for the account, the crediting has to be to the particular head - in order to be a fund, apart from systematic accumulation of cash, there must be an identified earmarked head, which would represent the liability that the company has to meet and that a mere provision made in the accounts for an ascertained liability, per se without any identifiable setting apart for the particular purpose, cannot constitute a fund. Even if there be an actuarial valuation, the charging of the profit as by way of a provision made, no doubt, satisfies the requirement on the declaration of a dividend, but then, the actuarial valuation charged on the profits must find its place in the form of a creation of a separate fund identified for such purpose with systematic accumulation - The sum of money set apart to meet the scheme has to be there visibly without any probability further, either into the balance sheet entries/or the Profit and Loss account, to call it as a fund. The scheme is not a recognised one, but one reached as per the agreement between the parties - It is not denied by the assessee that a provision was made in the accounts as regards the gratuity payable based on the service weightage - Being a provision made for payment of gratuity to the employees on the retirement or termination of their employment, the claim stands clearly hit by Section 40A(7)(a) of the Income Tax Act. What was created was only a provision in the books of accounts, hence, not a fund or a contribution to a fund to be considered u/s 40A(9) of the Act - the only other provision, which would hit the claim of the assessee herein would be Section 40A(7) of the Income Tax Act - the assessee's claim for deduction is hit by Section 40A(7) of the Act - The provision had been in the statute book with effect from 01.04.1973, inserted by Finance Act 1975, subsequently substituted by Finance Act, 1999, with effect from 1.4.2000 - The provision as is relevant to the assessment year is one what prevailed prior to the substitution by Finance Act, 1999, effective from 1.4.2000. Even though the assessee succeeds on the applicability of Section 40A(9) of the Income Tax Act, the case of the assessee fails in view of Section 40A(7) of the Income Tax Act – thus, the order of the Tribunal is set aside – Decided in favour of Revenue. Power of High Court to decide an issue which was not formulated - Held that:- provisions of section 260A would not take take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. - the grounds taken by itself automatically cannot stand in the way of this Court considering the legal issue on the claim of deduction on the provision made by the assessee as to whether it would be covered by Section 40A(9) or under any other provisions of the Act, which includes Section 40A(7) too. - Decision in the case of Commissioner of Income -Tax V. Mastex Ltd. [2013 (3) TMI 309 - SUPREME COURT] relied upon - Decided in favor of revenue.
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2014 (4) TMI 247
Adjustment of tax liability u/s 132B post search to save interest liability - undisclosed income - request made by the petitioners for the sale of gold bars weighing 6 kilograms seized on 10 December 2013 for adjustment "towards the automatic tax liability" of the first petitioner has been rejected. – Assessee contended that once they have disclosed an undisclosed income of ₹ 12.01 crores, the tax liability would work out to ₹ 3.60 crores being 30% of the surrender amount and after adjusting the value of the gold bars a balance of ₹ 1.78 crores would be the balance and payable to the revenue towards tax and undisclosed income - Held that:- The conditions specified in the first proviso, are clearly not attracted - The AO was justified in his conclusion that it is only when the liability is determined on the completion of the assessment that it would stand crystallized and in pursuance of which a demand would be raised and recovery can be initiated - the application filed by the assessee was throughly misconceived and unsustainable with reference to the provisions of Section 132B(1) of the Act - Any action which the Court may direct in respect of an asset, which has been seized, has to be strictly in compliance of Section 132B of the Income Tax Act - Where a case has not been made out within the four corners of Section 132B, the Court would not be justified in passing a general order of a nature that is sought, beyond the scope and purview of the statutory provision – thus, there is no need for interference in the order of the Tribunal – Decided against Assessee.
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2014 (4) TMI 246
Ambit of section 194H of the Act - Commission paid to TPL in relation to Mutual Fund Schemes - Whether the ITAT was justified in law in allowing expenses paid by the assessee firm without deducting tax at source, ignoring the provisions of section 40(a)(ia) – Held that:- The JCIT fell in error in holding that while TPL had motivated investors to subscribe to Mutual Fund Schemes, it had no connection whatsoever with 'securities' as defined in Explanation (i) and (iii) of Section 194-H - Explanation (iii) to Section 194-H specifically states that the expression 'securities' will have the meaning assigned to it in Clause (h) of Section 2 of the Securities Contracts (Regulation) Act, 1956. TPL had motivated potential investors to invest through the assessee in Mutual Fund Schemes, it has to be held that the services which were rendered in relation to a transaction in 'securities' stood excluded from the definition of "brokerage or commission" u/s 194-H - The CIT(A) was justified in coming to the conclusion that the services which were rendered by TPL were in relation to 'securities' - No other services had been rendered - the dis-allowance u/s 40(a)(ia) was not warranted. A restrictive interpretation should be adopted because unless this were done, the expression 'securities' having been defined in an inclusive sense in Section 2(h) of the Securities Contracts (Regulation) Act, 1956, would exclude a large number of transactions from the ambit of Section 194-H where 'commission or brokerage' is paid to a person acting on behalf of another person for service rendered in relation to any transaction relating to securities - This is a matter of legislative policy - The duty of the Court is to adopt the plain & natural meaning of the words used, particularly in a taxing statute - Once Parliament has legislated by specifically incorporating that the expression 'securities' would have the same meaning as in Section 2(h) of the Securities Contracts (Regulation) Act, 1956, the plain effect cannot be diluted by the Court by reading down the statutory provision - The duty of the Court is to interpret a taxing statute on its plain and literal meaning - the expression 'in relation to' and 'relating to any asset, valuable article or thing, not being securities', are expressions of width and amplitude – thus, there is no reason to interfere in the findings of the Tribunal – Decided against Revenue.
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2014 (4) TMI 245
Validity of additions – Held that:- The CIT(A) and Tribunal was of the same view that the AO without sufficient reason arrived at the finding that there was cessation of liability to the extent of Rs. 13,28,282 because he was of the opinion that the liability for the sum was not carried over in the following accounting year, whereas the fact, according to the CIT(A), was that the credit entry for the sum was the first entry in the ledger of the concerned party – CIT(A) has given some particulars with which the Tribunal concurred in holding that the AO ignored those figures - the addition made by the AO was deleted by the CIT(A) and was approved by the Tribunal - The decision entirely is on facts – the matter is related to the question of fact, thus, need no adjudication – Decided against Revenue.
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2014 (4) TMI 244
Validity of notice u/s 143(2) of the Act - scrutiny assessment - whether circular providing issuance of notice within 3 months is binding upon revenue - Notice for scrutiny even after the expiry of the period of three months from the date of filing of the return but withing the period prescribed u/s 143(2) – revenue submitted that the circulars are not meant for the purpose of permitting the unscrupulous assessees from evading tax. - Held that:- Even assuming that the intention of the CBDT was to restrict the time for selection of the cases for scrutiny within a period of three months, it cannot be said that the selection in the case was made within the period - the return was filed on October 29, 2004, and the case was selected for scrutiny on July 6, 2005 - By any process of reasoning, it was not open for the Tribunal to come to a finding that the Department acted within the four corners of Circulars Nos. 9 and 10 issued by the Central Board of Direct Taxes - The circulars were evidently violated - The circulars are binding upon the Department u/s 119 of the Income-tax Act. It cannot be said that the Department, which is the State, can be permitted to selectively apply the standards set by themselves for their own conduct. If this type of deviation is permitted, the consequences will be that floodgate of corruption will be opened which it is not desirable to encourage. When the Department has set down a standard for itself, the Department is bound by that standard and cannot act with discrimination - In case, it does that, the act of the Department is bound to be struck down under article 14 of the Constitution - it is not necessary to decide whether the intention of the CBDT was to restrict the period of issuance of notice from the date of filing the return laid down u/s 143(2) of the Act – Decided in favour of Assessee.
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2014 (4) TMI 243
Scope of the income to be assessed – Accrual of income - Excise credit - Whether the Tribunal is right in holding that 'excise credit' received by the assessee-company and credited in the profit and loss account does not form part of the income to be assessed – Held that:- The Tribunal was of the view that the right to receive the credit rebate accrued only when there is liability under the Excise Act - Unless the liability under the Excise Act accrues on the production of specified goods in which inputs are used and other relevant conditions are fulfilled by the assessee the benefit by way of credit does not accrue to the assessee - the credit of pro forma rebate taken into account is illusory and no real income had accrued - This was a finding of fact which has not been challenged by the Revenue in the sense that the finding is perverse nor is the finding of the Tribunal was demonstrated by Mr. Dutta, learned advocate for the appellant to be erroneous either in fact or in law. If the assessee had in fact received the money, it would have been a receipt in the nature of revenue but the fact is that the assessee did not receive any money - That is the finding of the Tribunal - The receipt shown in the profit and loss account is an illusory receipt - The assessee had communicated its reasons as to why it resorted to make to such an illusory entry which include that the company had sustained losses and in order to impress the bankers and to please the shareholders the aforesaid entry was passed into the profit and loss account - The Tribunal on facts was satisfied with the explanation - The question raised is a pure question of fact - When the Tribunal was satisfied that the entry did not represent any real income or any real receipt of money, there is no question of the same being taxable – Decided against Revenue.
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2014 (4) TMI 242
Payments made to sub-contractors – Genuineness could not prove - there was a report of the inspector stating that the premises had been vacant and some of the persons had never worked from their residential premises nor was it possible to recognise these persons in the vicinity, concluded that these were bogus parties. The Assessing Officer also noted that the address given was identical and they were registered from a single place. - AO deemed it fit to disallow a sum of Rs. 3.40 crores made towards expenses claimed - Tribunal deleted the additions – Held that:- The Tribunal exhaustively noted the details furnished by both the sides and also quoted the CIT(A) to conclude that on due opportunity afforded to both the sides, the CIT(A) had approached the issue properly - the Tribunal noted that it did not find any reason to disbelieve the evidence - the entire issue is based on factual matrix - From the sufficiency of evidence, when the Tribunal has held in favour of the assessee and when no question of law much less substantial question of law has arisen – thus, there is no need for interference. Deletion u/s 40(a)(ia) of the Act - Whether the Tribunal is right in deleting the addition made u/s 40(a)(ia) of the Income-tax Act on account of payment of transportation charges – Held that:- The decision in CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. [2014 (4) TMI 235 - GUJARAT HIGH COURT] followed - the amendment in section 40(a)(ia) of the Income-tax Act by the Finance Act of 2010 has retrospective effect – Decided against Revenue.
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2014 (4) TMI 241
Disallowance u/s 36(1)(viia) of the Act – rural branch of the bank - Provision for bad and doubtful debts – Whether the Tribunal is right in interfering with the disallowance qua the provision for bad and doubtful debts of the advances made by the rural branches of the assessee u/s 36(1)(viia) of the Act – Held that:- The decision in Commissioner of Income-tax v. Lord Krishna Bank Lt. [2010 (10) TMI 860 - Kerala High Court] followed – "place" referred to in the definition clause for the purpose of identifying the branch of a Bank as a rural Branch with reference to its location is the revenue village – Decided in favour of Revenue. Entitlement for depreciation - whether the assessee is entitled to depreciation on investments on securities like "Held to Maturity" "Available for sale" and "Held for Trade" - Held that:- The decision in Commissioner of Income-tax v. Nedungadi Bank Ltd [2002 (11) TMI 29 - KERALA High Court ] followed - the securities held by the assessee-bank in are the stock-in-trade of the business of the assessee-banks and the notional loss suffered on account of the revaluation of the said securities at the close of the year is an allowable deduction in the computation of the profits – Decided against Revenue. Accrual of interest - Interest credited to P/L account – Held that:- The decision in Commissioner of Income-tax vs. Federal Bank Ltd [2008 (1) TMI 195 - KERALA HIGH COURT] followed – Merely because the assessee has declared it as amount receivable in the course of time, it does not mean that interest on income had in fact accrued to the assessee – Decided against Revenue.
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2014 (4) TMI 240
Powers available to assessing officer u/s 133(6) of the Act – Held that:- The decision in Kathiroor Service Co-operative Bank Ltd. and Others vs. Commissioner of Income Tax and Others [2013 (11) TMI 728 - SUPREME COURT] followed - The opinion of the Income Tax Officer is manifest by his conduct in issuing the notices u/s 133(6) of the Act - The Co-operative Bank should not feel shy to furnish the information sought by the Income Tax Department in order to ensure that the transactions of the depositors are wholly transparent – Decided against Assessee.
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2014 (4) TMI 239
Notice for reopening of assessment u/s 147 of the Act – recording of satisfaction before issuing notice u/s 148 - Held that:- the conditions are sine qua non - the conditions must reflect in the notice itself - In the absence of the same, exercise of jurisdiction in issuance of the notice under aforesaid provision is patently illegal -Nothing has been disclosed or shown even in the subsequent stages – thus, there is no option left, but to set aside the first notice dated March 30, 2012, and the consequential steps being order dated January 15, 2013 – Decided in favour of Assessee.
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2014 (4) TMI 238
Genuineness of the Transaction – LTCG on sale of shares – shares of listing company were purchased in cash - Allowanbility of claim of exemption u/s 54F of the Act - Held that:- The assessee has not been able to prove that the shares were purchased on November 12, 1999, inasmuch as there is no documentary evidence proving the fact inasmuch as the said purchase was made in cash - the assessee has also not been able to show that the shares were listed in the stock market at Rs. 2.50, on the day of purchase, inasmuch as the assessee has produced the quotation of the shares as on the date of sale issued by the Guwahati Stock Exchange but no such quotation on the date of purchase was produced by the assessee. The assessee although has produced documentary evidence to show that shares were sold at a price prevailing in the stock market on the date of sale but no documentary evidence were produced to show that on the date of purchase, the market price of the shares was the same at which the shares were claimed to have been purchased - it cannot be said that the explanation offered by the assessee as regards long-term capital gain was rejected unreasonably and that the finding that the amount was not on account of long-term capital gain is based on no evidence – thus, the transaction was bogus and it was simply a sort of modus operandi to convert the undisclosed income into a long-term capital gain claiming the same to be exempted. The AO had not committed any error in rejecting the claim of the assessee and, in fact, applying the test of human probabilities, the AO rightly concluded that the assessee's claim about the amount, being the long term capital gain is not genuine and that the finding arrived at by the AO cannot be said to be a finding, which is not based on no evidence – thus, the order of the Tribunal is set aside – Decoded in favour of Revenue. Addition of undisclosed source of income - Whether the Tribunal was justified and correct in directing the AO to delete the addition as income from undisclosed source – Held that:- The Tribunal rightly held that the assessee had established the identity of the creditor, namely, Venus Hospital Ltd. - The assessee has also discharged its burden, which rested on her, under section 68 of the Act by proving that the amount received by her in cash by the said creditor was duly recorded in the books of account of Venus Hospital Ltd. and the same was examined and verified by the Assessing Officer - The identity of the Venus Hospital has also been established inasmuch as it has filed all relevant documents like income-tax return, balance-sheet, etc. - the identity of the creditor and the genuineness of transaction have been proved. The burden shifted to the AO to prove the contrary - The AO has failed to show either directly or with the help of circumstantial evidence that the amount belonged to the assessee - In the absence of any such evidence on record, more particularly, the identity of the creditor and the genuineness of the transaction in question having been proved the Assessing Officer could not have treated the said amount as income derived from undisclosed sources – thus, there was no infirmity in the order of the Tribunal – Decided against Revenue. Addition of undisclosed source of income – Genuineness of the transaction - Whether the Tribunal was justified and correct in directing the AO to delete the addition as income from undisclosed source from the income – Held that:- The identity of creditor, the genuineness of the transaction as well as the creditworthiness of the creditor have been established – the Tribunal was justified in deleting the addition made u/s 68 of the Act – Decided against Revenue.
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2014 (4) TMI 237
Deemed dividend u/s 2(22)(e) of the Act – Payments towards loan or advance – Whether the receipt of share application money can be treated and recorded as loan, deposits and "any payment" for invoking the provisions of section 2(22)(e) of the Act - Held that:- The decision in CIT v. I. P. India Pvt. Ltd. [2011 (11) TMI 252 - DELHI HIGH COURT] followed - the word 'advance' has to be read in conjunction with the word 'loan' - Usually attributes of a loan are that it involves positive act of lending coupled with acceptance by the other side of the money as loan - it generally carries an interest and there is an obligation of repayment - in its widest meaning the term 'advance' may or may not include lending - The word 'advance' if not found in the company of or in conjunction with a word 'loan' may or may not include the obligation of repayment - If it does, then it would be a loan - the word 'advance' which appears in the company of the word 'loan' could only mean such advance which carries with it an obligation of repayment - Trade advance which are in the nature of money transacted to give effect to commercial transactions would not fall within the ambit of the provisions of section 2(22)(e) of the Act – Decided against Revenue.
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2014 (4) TMI 236
Refund u/s 234D of the Act – Interest on amount before the insertion of section 234D of the Act – Held that:- The decision in CIT v. Infrastructure Development Finance Co. Ltd. [2011 (9) TMI 591 - Madras High Court] followed - the regular assessment was completed on March 30, 2004, and section 234D came into operation on and from June 1, 2003, prior to the completion of the regular assessment, the assessee was liable to pay interest on the excess refund amount received as contemplated under section 234D of the Income-tax Act – Decided in favour of Revenue.
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2014 (4) TMI 235
Disallowance u/s 40(a)(ia) of the Act - Reimbursement of CHA charges paid to C & F agent – Held that:- The Tribunal was of the view that the expenses were incurred by the agent on behalf of the assessee for transportation and other charges, which has been spelt out in the bill itself including the commission to the agent - the relation between the assessee and the agent is principal and agent - so far as the obligation to deduct tax at source from the payment of transport charges and other charges is concerned, the same was complied with by the agent, who had made payment on its behalf - the circular relied upon by the Revenue that it is the liability of the assessee as principal agent to deduct the TDS will not be applicable and the circular would be applicable for payment made to principal to principal – thus, the order of the Tribunal in setting aside the order in deleting the disallowance – there is no need for the interference in the decision of the Tribunal – Decided against Revenue.
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2014 (4) TMI 234
Deletion made u/s 40(a)(ia) of the Act – Amount paid to sub-contractors – TDS not deducted u/s 194C(2) of the Act - Whether the Tribunal was right in law in deleting the addition made u/s 40(a)(ia) of the Act being the amount paid to sub-contractors without deducting the tax at source as required u/s 194C(2) of the Act – Held that:- The CIT(A) view was upheld by the Tribunal that the functions performed by the society had no profit motive and were more in the nature of a welfare activity performed by it - there was no element of works contract in terms of the provisions of section 194C in the activities performed by the society - the assessee had no profit motive and the activity of the society was more of a welfare activity - the reasoning adopted by the Tribunal is just and reasonable - it is not possible to state that there is any infirmity in the order of the Tribunal as there was no question of law arises for consideration – Decided against Revenue.
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Customs
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2014 (4) TMI 233
Export of Indian currency outside India – More than ₹ 5000/- IC - Undeclared for export – Seizure, confiscation and penalty – Held That:- On intelligence the appellant was intercepted at the Sahara Airport on 08.12.2004 and during the search, Indian currency of ₹ 24,17,500/- was found with the appellant which was not declared or not permitted by RBI for export - Thus, the proceedings were initiated against the appellant and the Indian currency was absolutely confiscated and penalty of ₹ 2 lakhs was imposed – In presence of two contrary decisions the matter was referred to the Larger Bench to decide the issue.
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2014 (4) TMI 232
Demand of anti-dumping duty - Whether stainless steel cold rolled Coils having width of 1256 MM to 1259 MM are covered under Notification 86/2011 for imposing anti-dumping duty or not and whether the corrigendum issued on Feb, 7, 2012 is applicable retrospectively for the goods imported by the appellant having specifications of Ferritic Grade 1.4512 - Held that:- The findings applying the corrigendum dtd Feb. 7, 2012 and the tolerance level fixed by Notification No. 86/2011-customs from the date of the imposition of anti-dumping duty is not in accordance with the law – If the physical examination of the goods having average width of the goods imported is 1278 - 1279 mm, then said products were not covered for imposition of definitive anti dumping duty – The mid-term review No.14/6/2008-DGAD dated 24.11.2009 also supports this - It is also found that the designated authority while recording the findings on definitive anti-dumping duty had specifically excluded the Cold Rolled Flat products of Stainless Steel of grade EN 1.4512 from the purview of the definitive anti-dumping duty. The corrigendum notified on Feb. 2012 can be made applicable only for the goods for which bills of entry are filed on or after Feb. 7, 2012 - The said corrigendum cannot be applied retrospectively for the goods which have already landed into and for which appropriate Bill of Entry were filed for the reason that an importer who has imported goods on which no anti-dumping was leviable cannot be saddled with the same by issuing a corrigendum and that too in a full-fledged mid-term review done by authority – Relied on judgment in Mascot International vs Commissioner of Customs (Exp.) [2013 (11) TMI 600 - CESTAT MUMBAI] and was held in the favour of the assessee. The scope of the examination was not for enhancement of the product scope i.e., width exceeding 1250 MM and product is defined as cold rolled flat products of stainless of weight of 600 MM upto 1250 MM - The intent of the levy of anti-dumping duty by the Authority is very clear that the product upto 1250 MM is liable for anti-dumping duty; that the Notification 86/2011 was issued in the background that in the absence of tolerance in the recommendation of corresponding Notification the products of width 1250 MM or lower are being declared as having width of 1251 MM to 1300 MM and thereby the anti-dumping duty is circumvented. This Notification came to levy for tolerance of (+) 30 MM in the width - Any product having width more than 1250 MM are not leviable for anti-dumping duty - It is not the intent of the Authority to levy duty on 1280 MM - Admittedly, the width of the product on physical examination was found between 1256 MM to 1259 MM - Therefore Notification 14/2010 amended to Notification 86/2-11 is not applicable to the appellant - Thus question of levy of anti-dumping duty of the goods imported by the appellant does not arise - Impugned order is not sustainable - set aside the impugned order and allow the appeal – Decided in favour of Appellants.
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2014 (4) TMI 231
Waiver of pre-deposit and stay against recovery – Levy of CVD (additional customs duty) – Whether imported material is ‘Manganese ore’ or 'concentrate' - Held that:- For 'manganese ore', no CVD (additional customs duty) would be payable and if it is 'concentrate', CVD would be payable - HSN extract, explains "For the purpose of headings 26.01 to 26.17, the term 'concentrate' applies to ores which have had part or all of the foreign matter removed by special treatments, either because such foreign matter might hamper subsequent metallurgical operations or with a view to economical transport" - There is no finding as to what exactly are the processes which the imported product has undergone. Although it may be true that ores are seldom marketed before preparation but this cannot lead to an automatic conclusion that ores which are imported have become concentrates without any supporting evidence or discussion - The evidence available on record is not sufficient to come to the adverse conclusion against the assessee/importer and the stand taken by the Revenue is not supported by solid facts - No expert opinion has been taken and no enquiries have been made abroad and no trade practice has been considered and the processes undertaken by the supplier and its effect on the ore have not been considered - The percentage of manganese in the ore before washing and crushing and after washing and crushing have not been found out and identified –The appellants have made out a case for waiver - stay granted.
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Service Tax
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2014 (4) TMI 253
Exemption in service tax - Scope of the term vocational training - Whether the computer training institute providing vocational training would be entitled to benefit of exemption Not. No. 24/2004-ST dated 10th Sept. 2004 as amended for the period from 10/09/2004 to 15/06/2005 - Held that:- in the matter of interpreting the Notification dated 10th September, 2004, one has to read only the words used in that Notification and cannot borrow any words from any other Notification. - It said that a vocational training institute shall mean a commercial training or coaching centre, which provides vocational training or coaching that imparts skill to enable the trainee to seek employment or undertake self-employment directly after such training or coaching. In absence of statutory definition, we have to proceed on the basis of the ordinary meaning of the word "vocational", which means "relating to an occupation or employment; directed at a particular occupation and its skills". It cannot be questioned that skill pertaining to computer software and hardware is required to be acquired and, at the same time, it cannot be disputed that once such a skill is acquired, it throws open the door of an occupation relating to computer software and hardware, which entails employment or self-employment. Inasmuch as nothing was mentioned in the Notification dated 10th September, 2004 as regards computer training institutes, it cannot be said that the 10th September, 2004 Notification made any distinction in between a vocational training institute and a computer training institute, as was made on 20th June, 2003. In that background, we find that the Tribunal cannot be said to have erred by holding out that the respondent assessee was a vocational training institute, but we make it clear that it was so in terms of the Notification dated 10th September, 2004 until 16th June, 2005, i.e. when the concept of computer training institute was introduced for the first time in the Notification dated 10th September, 2004 - Decided against Revenue.
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2014 (4) TMI 252
Levy of Service Tax on reverse charge basis – Employees working in foreign holding Company - Whether Manpower recruitment or supply agency service u/s 65(105)(k) of the Finance Act, 1994 was provided by the appellant - Appellant contended that there is no supply of labour or manpower, and/or recruitment service provided by its holding company of the appellant - Merely because a part of the salary of global employee was paid in their home country through the holding/foreign company, it cannot be said that the foreign/holding company rendered supply of manpower or labour to the appellant – Held that:- The global employees working under the appellant are working as their employees and having employee-employer relationship - There is no supply of manpower service rendered to the appellant by the foreign/holding company - The method of disbursement of salary cannot determine the nature of transaction – Order set aside – Following decision of M/s VOLKSWAGEN INDIA PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE [2013 (11) TMI 298 - CESTAT MUMBAI] - Decided in favour of assessee. Adjustment of amount assessed - Refund already granted to assessee by preceding proceeding - Revenue adjustment assessed amount in refunds - Held that:- As the assessed liability of the petitioner under the adjudication order has thus suffered a plenary eclipse, the petitioner would be entitled to refund. The petitioner is at liberty to apply for refund. When made, such application shall be disposed of by the appropriate authority, in accordance with law and expeditiously - Decided in favour of assessee.
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2014 (4) TMI 251
Denial of refund claim - Bar of limitation - whether the refund claim filed by the appellant is barred by limitation or not - Held that:- date of filing the refund claim is within one year from the date of export. Admittedly, in this case the export took place during the period July 2008 to September 2008. The refund claim has been filed on 30.03.2009, therefore I hold that the refund claim is within time - Following decision of assessee's own p0revious case [2014 (1) TMI 1508 - CESTAT MUMBAI] - Decided in favour of assessee.
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2014 (4) TMI 250
Waiver of pre-deposit of service tax - Commercial Training or Coaching Service - applicant had sold prospectus and admission forms for consideration and had not paid service tax on such consideration - Held that:- sale of prospectus and admission forms cannot be considered as commercial training and coaching services. Prospectus are sold for consideration to many students who desire to take admission. Some of the students may not apply for admission though they have purchased the prospectus and those who applied for admission may not get admission due to limited number of seats. Therefore, consideration amount received by sale of prospectus and form cannot be considered as part of commercial training and coaching services - Matter remanded back - Stay granted.
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Central Excise
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2014 (4) TMI 230
Availment of CENVAT CRedit - Service Tax paid by the insurance company on the group insurance taken by the respondent herein for his employees - Held that:- first appellate authority, in this case, has relied upon the judgment of Division Bench decision of the Tribunal in the case of HEG Limited [2009 (6) TMI 244 - CESTAT, NEW DELHI] and allowed the benefit of CENVAT Credit and also has relied upon the decision of Hon'ble High Court of Mumbai in the case of Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT], to hold that the respondent therein are eligible to avail CENVAT Credit of Service Tax paid on the services rendered by insurance company on the group insurance taken by him for his employees - No reason to interfere with decision - Decided against Revenue.
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2014 (4) TMI 228
Rectification of mistake - valuation - inclusion of freight charges - Held that:- The adjudicating authority in his order has observed that the appellant did not mention the freight charges in the invoices issued and raised debit notes on the buyer of the goods. In appeal, the lower appellate authority, on perusal of the sample invoice, came to the conclusion that the invoice did indicate the freight charges and, therefore, the adjudicating authority was in error - Matter already remanded back - Rectification denied.
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2014 (4) TMI 227
Denial of refund claim - Unjust enrichment - Whether the Respondent Assessee is entitled to refund claim of the excess duty paid on the discounts which were given to M/s. L & T, but which were not reflected in the invoice in favour of M/s.L & T as the same was not updated in their statement for the period from 1/4/2008 to 26/05/2008 and duty was discharged on such discount amount - Held that:- Commissioner (A) has considered all records which were produced before him to justify as to non -passing of the incident of duty by assessee to their purchaser. I have also perused these two certificates which very clearly establish that the appellant was not paid by M/s. L&T for the amount of refund claimed by them. I also find that in the identical situation, the case law cited by ld. Counsel would apply especially and specifically in the cases cited by ld. Counsel in two judgments i.e. Andhra Pradesh Paper Mills Ltd. (2009 (2) TMI 675 - CESTAT, BANGALORE) will cover the issue in favour of the assessee. Accordingly, I am of the considered view that the order of the First Appellate Authority is correct and legal and does not suffer from any infirmity - Decided against Revenue.
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2014 (4) TMI 226
Extension of time for filing refund claim under Rule 5 of CENVAT Credit Rules, 2004 - first appellate authority remanded matter back - It is the case of the Revenue that the first appellate authority should not have remanded the matter back to the adjudicating authority and should have decided the matter himself. - Held that:- question needs to be factually addressed only by the adjudicating authority, the adjudicating authority should be given a chance to consider the issue afresh - Accordingly, the impugned order as well as the order of the adjudicating authority are set aside the matter is remanded back to adjudicating authority to reconsider the issue afresh after following the principles of natural justice - Decided in favour of Revenue.
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CST, VAT & Sales Tax
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2014 (4) TMI 257
Exemption Certificate - Power of commissioner to rectify eligibility certificate – Whether it was open to the Commissioner, Trade Tax, to rectify eligibility certificate issued by Divisional Level Committee w.r.t. grant of exemption to assessee w.e.f. 9.8.1993 after having lost the matter before Tribunal in view of its judgment dated 18.6.1999 passed in Appeal No.162/98 - Held that:- The power of Commissioner to make any rectification etc. u/s 4-A(3) of Act, 1948 cannot be doubted but, when a particular issue or order or document as such has been held to be legal by an adjudicatory forum, higher is status than Commissioner, Commissioner cannot sit in appeal over said authority so as to pass an order, which has effect of altering position, as it has arrived at after decision of higher adjudicatory forum. The eligibility certificate granted by Divisional Level Committee was restored by Tribunal after setting aside an order passed by Commissioner under Section 4-A(3) of Act, 1948 - Therefore, it is the order of Tribunal, which has sustained order of Divisional Level Committee and it seized to be an order of Divisional Level Committee but its status is that of an order, correctness whereof has been adjudged by an authority, having superior power of adjudication over Commissioner and Commissioner has no jurisdiction whatsoever to say that consequence flowing after decision of Tribunal are not correct and he still can pass an order making alteration in respect to something, which has already been finalized by Tribunal - If there is any error or mistake etc., it was open to Commissioner to seek rectification/clarification/modification from Tribunal itself or order of Tribunal could have been assailed before this Court in revisional jurisdiction, but, having accepted order of Tribunal and surrendering to it, it is not open to the Commissioner to suo motu find out some error in respect to an order, which has been upheld by Tribunal and again exercise his power making modification in such order, which has effect of varying Eligibility Certificate of Divisional Level Committee though it has been upheld by Tribunal - Such power has neither been bestowed upon Commissioner by Section 4-A(3) nor can be read therein nor a bare perusal thereof I find to exist - The order passed by Commissioner was patently without jurisdiction - The revision is thus allowed - The impugned order of Tribunal is set aside - The assessee is also entitled to cost of ₹ 25,000/- - Decided in favour of the assessee.
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2014 (4) TMI 256
Valuation of Works Countract - Claim of Deductible expenses – Absence of records of expenses – Applicability of KVAT ACT, 2003 Rules – Held that:- The provisions of the Act clearly disclose that if the expenditure incurred for executing the work contract is ascertainable from the books of account maintained by the dealer, then he is eligible for deduction as per the expenditure he has incurred and if it is not ascertainable, then the provision of Rule 3(2)(m) has to be invoked - When the bills and vouchers have not been produced before the Assessing Authority, the question of verifying the said bills and vouchers does not arise. In the absence of necessary records, the expenditure incurred for the work contract has to be assessed invoking Rule 3(2)(m) of the KVAT Rules - Since the work contract carried on by the appellant do not fall under any type of the contracts between Entries 1 to 13, invoking clause Entry 14 of the table which is “any other work contract”, the Revisional Authority allowed the deduction to an extent of 25% as per clause 3 of the said table - No infirmity or irregularity in the said order - Hence, appeals are dismissed – Decided against appellant.
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2014 (4) TMI 255
Rate of tax - declared goods under central sales tax - animal feeds - “Whether the revisional authority is correct in holding that Section 6(2) of the CST Act is inapplicable to the case of assessee – Goods not covered under Form ‘C’ - Held that:- Revisional Authority has arrived at a conclusion that the same is not justified, but on the other hand has held that, the appropriate provision applicable to the case on hand would be Section 8(2)(b) of the Act - The reason assigned by the Revisional Authority would clearly disclose that in the circumstance where the goods are not covered by ‘C’ forms, the provisions contained in Section 8(2)(b) of the Act would be applicable - The animal feed which is the goods in question in the instant case is not a declared goods - The applicable provision would be Section 8(2)(b) - The rate as provided therein should be either @ 10% or at the rate applicable in the appropriate State - Admittedly, in Karnataka, the rate is lesser as provided u/s 6(2) is to be made applicable - If that be the position, the Revisional Authority was justified in arriving at a conclusion that the rate as provided u/s 8(2)(b) at 10% would be applicable to the instant case - Decided against the assessee.
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2014 (4) TMI 254
Jurisdiction of High Court under Article 226 of Constitution of India - Liability of tax & interest – Scope of challenge against notice of proposed tax u/s 25(1) of the KVAT Act & order passed in previous year - Held that:- It is only a ' notice' and it is very much open for the petitioner to submit detailed objections with reference to the actual facts and circumstances and as to the dispute with regard to the taxable event - It is not a fit case to interfere at this stage; more so when acceptability of the contention raised by the petitioner with reference to the actual facts will have to be ascertained with reference to the relevant records by the assessing authority - As such, an order has to be passed on the basis of the facts and evidence, which does not come with the realm of this Court, in exercise of the jurisdiction under Article 226 - Whether the particular commodity is taxable or not, whether the case is fully in respect of such commodity, whether any other taxable sale is involved etc. are points, which are to be established by the assessee/petitioner before the assessing authority – Matter remitted back to CTO for establishing the facts and figures and to have the matter finalized - Since the time stipulated in Ext.P4 notice is already over, the petitioner is granted a further period of ' three weeks' to submit the objection in response to Ext.P4 - Decided against the petitioner.
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Indian Laws
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2014 (4) TMI 229
Modification of order of imprisonment - impact of quotation of wrong provision in the order - appellant was found in possession of 10 litres of arrack - High Court modified the sentence awarded by the trial Court to that of rigorous imprisonment for one year and to pay a fine of Rs.1 lakh - Held that:- It is true that the proper Section, which is attracted in the instant case, is Section 8(1) of the Abkari Act, as amended by Act 10 of 1996, not Section 55(a). But, misquoting of the Section or misapplying the provisions has caused no prejudice to the appellant, since the offence has been clearly made out. Offence under Section 55(a) can always be altered to Section 8(1) of Act 10 of 1996, therefore, we find no error in the conviction recorded by the Courts below - appellant has no previous history of committing such offence, we are inclined to modify the sentence to that of six months’ simple imprisonment and a fine of Rs.50,000 - Decided partly in favour of applicant.
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