TMI Tax Updates - e-Newsletter
May 18, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI SMS

• Prepayment charges paid to HDFC Limited for closure of loan - deduction from Income chargeable under house property - whether allowable u/s 24 - Held Yes - Tri

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Articles

1. House Property - Pre Payment Charges Allowed

   By: DEVKUMAR KOTHARI

News

1. Joint Statement By Anand Sharma, Minister of Commerce and Industry, India and Toshimitsu Motegi Minister of Economy, Trade and Industry, Japan

2. Anand Sharma Meets Japan Prime Minister Shinzo Abe Asks for Greater Access for Indian Pharma and Agri Products

Notifications

Central Excise

1. 17/2013 - dated 16-5-2013 - CE

Seeks to amends Notifications No. 34/2006-CE, 29/2012-CE, 30/2012-CE,32/2012-CE and 33/2012-CE.

Customs

2. 29/2013 - dated 16-5-2013 - Cus

Amends Notifications No. 92/2009-Cus,93/2009-Cus, 95/2009-Cus,104/2009-Cus and 23/2013-Cus.

3. 28/2013 - dated 16-5-2013 - Cus

Seeks to amend notification No. 12/2012, dated the 17th March, 2012 so as to allow transfer of goods imported for oil exploration from one eligible project to another

Circulars / Instructions / Orders

DGFT

1. 13/2009-2014 (RE- 2013) - dated 17-5-2013

Format of ANF 3F (for Incremental Export Incentivisation Scheme)

Highlights / Catch Notes

Income Tax

• CIT Dismisses Revision Application u/s 264 Favoring Taxpayer Due to Taxpayer's Absence.

  Case-Laws - HC : Revision u/s 264 in favor of assessee - in absence of the assessee, CIT was left with no option but to dismiss the revision. - HC
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• High Court Affirms Petitioner's Right to Interest on Seized Business Funds Post Search and Seizure Operation.

  Case-Laws - HC : Interest on sum seized from the business premises during the search and seizure - petitioner is entitled to interest - HC
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• Court Rules No Addition on Arm's Length Price Due to FX Fluctuations and Data Charges Lacking Financial Impact.

  Case-Laws - HC : There could not have been an addition on account of Arm’s Length Price as the only two purported reasons regarding claim of loss on account of foreign exchange fluctuations and the claim of expenses on account of “data usage charges” had not resulted in any addition. - HC
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• Court Rules Free Reserves and Surpluses Are Part of Shareholders' Equity in Assessment Reopening Case.

  Case-Laws - HC : Re opening of assessment - it is hard pressed to imagine as to how free reserves and surpluses of a company can be considered anything but as part of shareholders funds. - HC
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• Parent Company Income Assessment Doesn't Guarantee Expenditure Allowance u/s 37(1) of Income Tax Act.

  Case-Laws - HC : The mere fact that the income has been assessed in the hands of the parent company of the assessee would not be demonstrative of the allowability of the expenditure under Section 37(1) - HC
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• Prepayment Charges for Loan Closing Allowed as Deduction u/s 24 of the Income Tax Act.

  Case-Laws - AT : Prepayment charges paid to HDFC Limited for closure of loan taken for the purpose of acquisition of the premises - whether allowable u/s 24 - Held Yes - AT
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• Deduction Allowed for Interest on Second Loan Used to Repay Original Loan Under Income Tax Act Section 24(1)(vi.

  Case-Laws - AT : Income from house property - if the second borrowing has really been used merely to repay the original loan and this fact is proved to the satisfaction of the ITO, the interest paid on the second loan would also be allowed as a deduction under s. 24(1)(vi). - AT
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Customs

• Import Duty Refund Not Time-Barred When Assessment Finalized, Rules Court; Period Limitation Inapplicable for SAD Refunds.

  Case-Laws - AT : Refund of SAD paid at the time of import of goods – period of limitation – finalization of provisional assessment - refund claim cannot be rejected on the point of time bar. - AT
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Corporate Law

• ICAI Removes Member for Bigamous Marriage; High Court Highlights Moral Turpitude in Professional Conduct.

  Case-Laws - HC : Removal of name from membership register by ICAI - Bigamy marriage - the offence of bigamy is coming within the meaning of moral turpitude - HC
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• Filing a separate application for another arbitrator is not allowed once one is appointed and the other party is informed.

  Case-Laws - SC : The law is well settled that where an Arbitrator had already been appointed and intimation thereof had been conveyed to the other party, a separate application for appointment of an Arbitrator is not maintainable. - SC
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Indian Laws

• Supreme Court Allows Property Registration via General Power of Attorney in Certain Situations, Clarifying Legal Flexibility.

  Case-Laws - HC : Registry through GPA - The Supreme Court has not said that in no case a conveyance can be registered by taking recourse to a GPA. - HC
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Service Tax

• CENVAT Credit Allowed on Debit Notes as Valid Duty-Paying Documents u/r 9(1.

  Case-Laws - AT : Duty paying document - CENVAT credit taken on debit notes - documents specified under Rule 9 (1) - credit allowed - AT
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Central Excise

• Cenvat Credit Case: Manufacturer's Demand Confirmed Despite Lack of Evidence for Alleged Non-Receipt of Inputs.

  Case-Laws - AT : Cenvat Credit - allegation of non receipt of inputs - No manufacturer can be expected to keep documentary evidences of its clandestine activities. - demand confirmed - AT
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• Court Questions Rejection of Refund Claim Due to Unjust Enrichment; Department Urged to Verify Appellant's Documents Thoroughly.

  Case-Laws - AT : Rejection of Refund claim - unjust enrichment - In case, department still persists that the element of excise duty has been recovered by the appellant from the Railways then it should have further conducted investigated the verifications to refute the documents submitted by the appellants. - AT
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• CENVAT Credit Applies to Steel Plates and M.S. Channels for Chimney Fabrication as Capital Goods.

  Case-Laws - AT : CENVAT credit on capital goods - steel plates and M.S.Channels used in the fabrication of chimney would fall within the ambit of “capital goods“ - AT
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Case Laws:

• Income Tax

• 2013 (5) TMI 420
  Revision u/s 264 in favor of assessee - Whether there is a provision under the Income Tax Act for recalling the order passed u/s 264 - earlier CIT had dismissed the application - as per the petitioner power to pass exparte order includes the power to recall the same notwithstanding absence of any express provision in respect thereof - Held that:- Persuing the memo of revision/application filed under section 264 wherein it has been stated that no proper notice of hearing has ever been made on the assessee and the AO was totally incorrect in making the addition. No supporting material that the petitioner was not given opportunity of hearing or how the notice was not served has been pointed out therein. On the contrary, in the last paragraph of the assessment order it is mentioned by the Assessing Authority that the petitioner avoided the assessment proceedings. No material was filed by the assessee before the CIT to substantiate it. It is not the case in the writ petition that any supporting material in support of the grounds raised in the petition under section 264 was before the Commissioner of Income Tax who failed to consider it. In absence of any material to show that the assessment order was not correctly framed, the Commissioner of Income Tax, in absence of the assessee, was left with no option but to dismiss the revision. Even the writ petition does not disclose that any material was filed before the Commissioner on the basis of which one could arrive at the conclusion that the assessment order is bad either in law or fact. No merit in any of the submissions of the the petitioner.

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• 2013 (5) TMI 419
  Interest on sum seized from the business premises during the search and seizure - application was rejected stating that the petitioner was not eligible to interest for the AY 1986-87 u/s 240, 244A or 132B(4) - appeal filed by the petitioner against the assessment order dated 30.3.1989 was also dismissed as having become infructuous in view of the petitioner invoking the Kar Vivad Samadhan Scheme, 1998 - Held that:- The question of payment of interest retained u/s 132 is covered by the provisions of sub-section (4) of Section 132B, which has two parts (a) and (b). If sub-section (1) of sub-section 132B and clause (ii) are read it is apparent that where the assets consists solely of money and or partly of other assets the assessing officer may apply such money in the discharge of liabilities referred to in clause (i) and the assessee would be discharged of the said liability to the extent of money so applied. Thus noticing above that the assets available for such application were not in excess of the liabilities which were sought to be discharged. Therefore, there was no question of any interest running under Section 132B(4)(a) - the question of determining the rate of interest under Section 132B(4) or the date from which the interest was to run, does not arise. Because all issues stood closed in February, 1999 as the petitioner made the payment of Rs. 3,29,670/- under the Kar Vivad Samadhan Scheme, 1998 the entire amount of Rs. 5,35,000/- became immediately returnable to the petitioner. However, that amount was returned a little later on 17.2.2000. Therefore, the said amount of Rs. 5,35,000/- was retained by the department to the detriment of the petitioner from February, 1999 to February, 2000 which is approximately one year. Therefore, petitioner is entitled to interest on the said amount. The rate of interest that should be applied would be 10% simple interest which was close to the rate of interest which was being provided by banks on fixed deposits. Thus amount of interest payable by the department will be Rs. 53,500/- to be paid within four weeks. The writ petition is partly allowed.

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• 2013 (5) TMI 418
  Unexplained investment for purchase of land - ITAT deleted the addition - Held that:- Tribunal has found that a sum of Rs.52 lacs was received from M/s SAR Stitchers Pvt. Ltd. Delhi on 05.01.2007 & also noticed that Rs.60 lacs was paid in cash to Radha Swami Satsang Beas, Karan Ban, Jammu, which deposit finds mention in the accounts of seller. The Tribunal has taken into consideration the record produced by the assessee in respect of transaction entered with copy of confirmations, PAN number, Income tax particulars and audited accounts of the lendor. Thus finding that the investment of Rs.52 lacs was duly explained by the assessee, is a finding of fact and such finding of fact does not give rise to any substantial question of law. Revenue appeal dismissed.

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• 2013 (5) TMI 417
  Re opening of assessment - Transfer Pricing Officer had determined the Arm’s Length Price on the basis of which the addition to the extent of Rs 1,20,20,160/- had been made by the AO - Held that:- From a look at Form No.3CEB which was filed alongwith the return by the assessee would indicate that the transactional net margin method had been followed as the most appropriate method. Form No.3CEB is nothing but the report from the accountant to be furnished under Section 92E relating to international transactions filed alongwith the return and, therefore, there was compliance on the part of the assessee with the provisions of Section 92E. There was no material whatsoever before the Assessing Officer when the purported reasons were recorded to indicate that the Arm’s Length Price determined by the assessee was not correct. In fact, there is not even an allegation that the Arm’s Length Price determined by the assessee was not correct. Therefore assessee's conclusion are acceptable that the purported reason of determination of the Arm’s Length Price, as given in the reasons for reopening the assessment, was not a reason at all. AO could proceed to determine the Arm’s Length Price only if there was a fault found with the determination of the Arm’s Length Price by the assessee. If the Assessing Officer were to form such an opinion, then he could either determine the Arm’s Length Price himself or he could refer the matter for computation of the Arm’s Length Price to the Transfer Pricing Officer under Section 92CA. Thus in agreement with the contention of assessee that, following the decisions in Jet Airways (2010 (4) TMI 431 - HIGH COURT OF BOMBAY) and Ranbaxy Laboratories Limited (2011 (6) TMI 4 - DELHI HIGH COURT ) there could not have been an addition on account of Arm’s Length Price as the only two purported reasons regarding claim of loss on account of foreign exchange fluctuations and the claim of expenses on account of “data usage charges” had not resulted in any addition. In favour of assessee.

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• 2013 (5) TMI 416
  Re opening of assessment - capital structure of the petitioner company and the inference drawn by AO was that the cost of assets was being met by the general reserve as reflected in the capital structure of the company, a sum equal to the general reserve would be required to be reduced from the cost of the assets in terms of Explanation 10 of Section 43(1) - depreciation had been claimed by the petitioner on the cost of the assets without reducing the proportionate amount of reserves therefrom thus had claimed excessive depreciation - Held that:- As the the earlier AO had not thought it fit to conclude that the cost of the fixed assets were required to be reduced to the extent of the reserves during the first round of assessment, the reasons as recorded disclose that this was sought to be done by reopening the assessment. This represents a clear change in the opinion without there being any further “tangible material” to warrant the same as a mere change of opinion cannot be a reason for reassessing income under Section 147 as decided in CIT vs. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA) AO seems to have proceeded on an assumption that whereas the value of share capital, issued to the Government as part consideration for the transfer of business to the petitioner company, is limited only to the face value of the shares, the reserves represent a subsidy, grant or reimbursement for meeting the cost of assets transferred. No basis for such an assumption as it is hard pressed to imagine as to how free reserves and surpluses of a company can be considered anything but as part of shareholders funds. AO erred in completely ignoring that reserves and surpluses of a company are a part of shareholders funds and the book value of equity share consists of not only the paid up capital but also the reserves and surpluses of the company. The format of the balance sheet as prescribed under Schedule VI of the Companies Act, 1956 also clearly indicates that reserves and surpluses are a part of shareholders fund. The balance sheet of the petitioners company also reflects the reserves and surpluses as a part of shareholders’ funds. No basis, at all, for AO to surmise that reserves represent a subsidy, grant or reimbursement from which the cost of assets of the petitioner company are met and the whole consideration received by the GOI for transfer of business is limited to the value of loans and the face value of the shares issued to the GOI. A reserve represents the shareholders’ fund and may be utilized in various ways including to declare dividends or for issuing bonus shares. There is no plausible reason to assume that the value of shareholders’ holding in a company is limited to the face value of the issued and paid up sharecapital and the reserves represent a subsidy or a grant or a reimbursement by the shareholders from which directly or indirectly the cost of the assets in the hands of a company are met. Thus reasons as furnished by AO for reopening the assessments could not possibly give rise to any belief that income of the petitioner had escaped assessment -In favour of assessee.

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• 2013 (5) TMI 415
  Expenditure incurred on the maintenance of any office for the purposes of advertisement, publicity, sales promotion - whether will fall within the meaning of section 37(3B)(iv)? - Held that:- The assessee company instead of maintaining the office for the purposes of advertisement, publicity and sale promotion itself had agreed to such activity being done on its behalf by the Calcutta Company. It seems that 8% of the sale realization was agreed to be paid to the Calcutta Company at Calcutta in view of it maintaining office and infrastructure for advertising the product of the assessee company. It is a tool employed by the assessee company to have the advantage of using infrastructure maintained by Calcutta Company for advertising its own goods without taking upon itself the burden to bear the entire expenditure in case separate office in this regard is maintained by itself. This according to the assessee has resulted in curbing the actual expenditure which might have been much more in case a separate office, staff etc. is maintained by itself. Thus, dis-allowance of expenditure and thereby compelling the assessee to maintain such infrastructure itself will only result in wasteful expenditure which is sought to be curbed by inserting sub section (3A) and (3B) by the Finance Act, 1978. Sub section (3B) does not mention that the office for purposes of advertisement, publicity and sale promotion should be maintained by the assessee itself. On the contrary the use of the word "any office" in clause (iv) of sub section (3B) of section 37, without it being circumscribed by words like 'itself' or 'of it's own' leads to irresistible conclusion that expenditure can be made by the assessee company itself or by employing some person or agency on its behalf and in both cases, such expenditure qualifies for total exemption without any dis-allowance under clause (iii) of sub section (3A) of section 37 of the Act. In favour of assessee.

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• 2013 (5) TMI 414
  Reopening of assessment - unexplained credit in the books of accounts - additions u/s 68 - AO issued summons under Section 131 to 25 parties from whom the share application money had been received - Statement of Mr. Deepak Gupta who has admitted that he has not carried out any business activity accept that of providing accommodation entries to the assessee - Held that:- Unable to accept the contention that there has been failure on the part of the assessee to disclose all material facts in his return as, first of all, there is no such allegation in the reasons as furnished to the assessee secondly, it cannot be ignored of the fact that the enquiry into the share application money had been conducted in detail by the AO in the first round of assessment. Having framed his assessment after enquiry into the identity, genuineness and the creditworthiness of the share applicants, it would not be open for the AO to re-examine the same without there being any material allegation of failure, on the part of the assesse, to make a full and true disclosure. It is well-settled that in order to invoke the provisions of Section 147 after a period of four years from the end of the relevant assessment year, in addition to the AO having reason to believe that any income has escaped assessment, it must also be established that the income has escaped assessment on account of the assessee failing to make returns under Section 139 or on account of failure on the part of the assessee to disclose, fully and truly, the necessary material facts. See Wel Intertrade P. Ltd. & Anr. v. ITO (2008 (8) TMI 18 - HIGH COURT DELHI) and Haryana Acrylic Manufacturing Company v. CIT &Anr (2008 (11) TMI 2 - DELHI HIGH COURT) Also see Duli Chand Singhania v. Asstt. CIT (2003 (12) TMI 23 - PUNJAB AND HARYANA High Court) wherein noted that absence of the finding that the escapement in income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts which is the sine qua non for assuming jurisdiction under section 147 in a case falling under the proviso thereto, makes the action taken by the AO wholly without jurisdiction. Further the mere statement that the DRI has seized certain goods of the assessee and levied a penalty also cannot be stated to be a reason for reopening of assessment of the assessee as the said statement made is neither followed by the recording of a belief that the income escaped on that count or that the assessee has failed to disclose all relevant material, fully and truly, at the stage of the first assessment. Against revenue.

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• 2013 (5) TMI 413
  Reopening of assessment - business support charges, guarantee fees paid to the holding company are not for business expediency & these payments are also being a subject matter of TP not verified in the transfer pricing proceedings by the TPO - Held that:- Reopening of the assessment is within a period of four years. In view of the position in law as laid down by the Supreme Court Kalyanji Mavji And Co. Versus Commissioner of Income-Tax, West Bengal II (1975 (12) TMI 2 - SUPREME Court) no hesitation in coming to the conclusion that the Assessing Officer was acting within jurisdiction in reopening the assessment for A.Y. 2006-07 on the basis of the assessment proceedings for A.Y. 2007-08. The mere fact that the income has been assessed in the hands of the parent company of the assessee would not be demonstrative of the allowability of the expenditure under Section 37(1). Similarly, the considerations which weigh in the passing of an order under Section 195(2) would clearly not be dispositive of the jurisdiction of the Assessing Officer to reopen an assessment under Section 148. For these reasons, no reason or justification to interdict the exercise of the jurisdiction of the Assessing Officer to reopen an assessment under Section 148. The reopening within a period of four years in the present case is based on tangible material. against assessee.

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• 2013 (5) TMI 412
  Whether the land was agricultural in nature or not - The Tribunal held that the view taken by the CIT (A) that the lands in question were situated beyond 8 kms from the outer limits of the municipal corporation of Gurgaon, could not be faulted - Held that:- The Tribunal noted that the AO had made the disallowance merely on the ground that there was the possibility of a shorter distance, which would be less than 8 kms from the outer limits of the municipal corporation. The Tribunal noted that the AO had not doubted the nature of the land being for agriculture. It is in these circumstances that the Tribunal rejected the plea of the departmental representative that the matter be restored to the file of the CIT (Appeals) for verification of the fact as to whether the lands were agricultural in nature or not. No interference is called for with the impugned order of the Tribunal

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• 2013 (5) TMI 411
  Loss on sale of shares - whether can be set off against income from sale of shares exempted not forming part of income under Section 10(38) - Held that:- Section 10 falling under Chapter III of the Act contemplates the income which are not included in the expression 'total income'. Sub Clause 38 of Section 10 contemplates that any income arises from the transfer of Long Term Capital Assets is not an income. Therefore, the income from the sale of shares of the relevant year is not an income, which can be set off from the loss from sale of shares earned in the previous year - order of the Tribunal does not warrant any interference

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• 2013 (5) TMI 410
  Disllowance of commission payments in view of Explanation to Section 37(1)- CIT(A) ITAT allowed the claim stating that assessee has made payment for commission and has been rendered services in consideration of the same The fact that services have been rendered by a party other than the agent to whom commission is paid is wholly immaterial so far as deductibility in the hands of the assessee is concerned - Held that:- The department appeal could not satisfy= as to why were the findings as recorded by the CIT(A) and the Tribunal incorrect either on fact or in law. There is, as such, no reason why the appeal should be entertained. Against revenue.

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• 2013 (5) TMI 400
  Prepayment charges paid to HDFC Limited for closure of loan taken for the purpose of acquisition of the premises - whether allowable u/s 24 - Held that:- The assessee obtained loan from HDFC Limited for acquisition of property. Later on it arranged the money from other sources and repaid the loan as accepted by bank on receipt of prepayment charges. By such repayment, the assessee managed to wipe out its interest liability in respect of the loan, which would have otherwise qualified for deduction u/s 24(b) during the continuation of loan. It is obvious that these prepayment charges have live and direct link with the obtaining of loan which was availed for acquisition of property, thus it is beyond of comprehension as to how the amount paid as interest for the loan taken is allowable as deduction but the amount paid as prepayment charges of the very same loan is not deductible. Both the direct interest and prepayment charges are species of the term 'interest’. Therefore, set aside the impugned order on this issue and order for the grant of deduction. In favour of assessee.

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• 2013 (5) TMI 399
  Payment of maintenance charges - whether allowable u/s 24 - income from house property - deduction was not allowed by the AO stating that deduction of such charges was not permissible because 30 per cent deduction was allowed under s. 24 which will take care of expenses on account of maintenance - Held that:- The claim of the assessee that those charges were not on account of maintenance but for the facilities provided by the society in respect of use of generator, lift, lighting and common area sweeping etc. has not been rebutted at any stage, therefore, it appears that the assessee was paying the charges to the society for the common area amenities which was deductible from the gross rent received by the assessee. It is also noticed that the assessee had not claimed any separate deduction on account of municipal taxes because the same was included in the impugned charges © 4.40 per sq. ft. per month, therefore, the AO was not justified in holding that the impugned charges paid by the assessee, were on account of maintenance, which were included in the statutory deduction a 30 per cent under s. 24 of the Act. See Sharmila Tagore vs. It. CIT (2004 (6) TMI 591 - ITAT MUMBAI) wherein held that maintenance charges paid to the housing society have to be deducted even while computing annual letting value - In favour of assessee. Interest paid on housing loan - CIT(A) deleted the addition - Held that:- The assessee purchased the house property for a sum of Rs. 1,19,55,353 and the payment was made after raising a loan from HDFC Bank. The assessee raised the loans from HDFC against RBI Bonds maturing in November, 2002 and to get those bonds realized from HDFC Bank, the assessee raised loan from the relatives and IDBI Bank, thus, the subsequent loans were raised by the assessee to repay the original loan raised to purchase the house property, as such, those loans partake the character of original loan as there was direct nexus between the loan and the purchase of the house property, therefore, the interest paid on the loan was deductible u/s 24 from the rental income realized from the house property. CBDT through Circular No. 28, dt.20th Aug.,1969 (F.No. 8/8/69-IT(A-I) stated that if the second borrowing has really been used merely to repay the original loan and this fact is proved to the satisfaction of the ITO, the interest paid on the second loan would also be allowed as a deduction under s. 24(1)(vi). In favour of assessee.

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• Customs

• 2013 (5) TMI 409
  Non deposited of pre deposit - applicant was directed to make a predeposit of Rs. 20 lakhs but deposited a sum of Rs. 5 lakhs submitting no means to deposit the entire amount due to business closure - seeking twelve months time to pre deposit - Held that:- No provision for payment of predeposit in installments exists thus in view of that the application filed by the applicant for extension of time for complying with the stay order is dismissed. Accordingly, the appeal is also dismissed for non-compliance with the stay order under Section 129E.

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• 2013 (5) TMI 408
  Refund of SAD paid at the time of import of goods – Rejection of the on the ground of limitation – As Notification No. 93/2008 prescribes the limitation of one year for filing of the SAD refund claim. - appellant’s contention is that their assessment was provisional and the date of finalization of assessment was taken as the relevant date for computing the period of limitation of one year. Held that - Revenue itself was taking a view that wherever the assessments are provisional, refund claims have to be filed within a period of one year of the finalization of the same. It is only with the Board’s Circular that the issue was settled by observing that inasmuch as the refund is not under Section 27 of the Customs Act, 1962, the fact of finalization of bill of entry assessment cannot be taken as the relevant date. As such without going into the validity and correctness of the Circular issued, without deciding the legal issue as to whether it is provision of Section 27 which will apply or not, I hold that in the peculiar facts and circumstances of the present case, refund claim cannot be rejected on the point of time bar. Accordingly, I set aside the impugned order remand the matter to the adjudicating authority for processing the refund claim after verification of the documents etc. Appeal is allowed in above terms.

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• Corporate Laws

• 2013 (5) TMI 422
  Removal of name from membership register by ICAI - Bigamy marriage - Appellant is a qualified Chartered Accountant who filled a divorce case against his wife concluding to a divorce decree confirmed by Madras High Court where complaint given by the appellant's estranged wife wherein bigamy was stated as a reason for preferring the said complaint against the appellant & ld' XIII Metropolitan Magistrate, Chennai convicted the appellant and imposed sentence to undergo rigorous imprisonment for one year which was reduced to six months by High court and Supreme court modified to the sentence already suffered by the appellant in this case - appellant's name was removed from the Register by ICAI on the grounds of conviction for bigamy - whether allegation of bigamy marriage will come within the meaning of moral turpitude? Held that:- As decided in Pawan Kumar v. State of Haryana [1996 (5) TMI 386 - SUPREME COURT ]considered in Allahabad Bank v. Deepak Kumar Bhola [1997 (3) TMI 569 - SUPREME COURT ] and Baleshwar Singh v. District Magistrate and Collector (1958 (5) TMI 41 - ALLAHABAD HIGH COURT) the expression moral turpitude is not defined anywhere. But it means anything done contrary to justice, honesty, modesty or good morals. It implies depravity and wickedness of character or disposition of the person charged with the particular conduct. Every false statement made by a person may not be moral turpitude, but it would be so if it discloses vileness or depravity in the doing of any private and social duty which a person owes to his fellow men or to the society in general. If therefore the individual charged with a certain conduct owes a duty, either to another individual or to the society in general, to act in a specific manner or not to so act and he still acts contrary to it and does so knowingly, his conduct must be held to be due to vileness and depravity. It will be contrary to accepted customary rule and duty between man and man. The appellant and his estranged wife are Hindus, governed under the provisions of the Hindu Marriage Act, 1955. Section 17 of the Act states that marriage between two Hindus is void if two conditions are satisfied, viz., (1) the marriage is solemnized after the commencement of the said Act, and (2) at the date of such marriage, either party had a husband or wife living and the provisions of Sections 494 and 495 shall apply accordingly. Thus, it is evident that if a Hindu marries with a person having a spouse living or he or she have a spouse living, marries any person, shall be liable for bigamy. Thus having regard to the fact that the appellant married another woman, while the first marriage was subsisting, and had acted contrary to the law and to his "estranged wife", the offence of bigamy is coming within the meaning of "moral turpitude". The conviction recorded against the appellant for bigamy stands even today though sentence was reduced to the period already undergone. Hence, the decision taken by the first respondent to remove the name of the appellant from the register maintained by the Chartered Accountants Council in its 284th meeting held on 13.2.2010, which was published in the official gazette dated 19.2.2010 communicated to the appellant on 16.4.2010, which was upheld by the learned single Judge is valid and no interference is required as the appellant has attracted disqualification by operation of law viz., Section 8 of the Chartered Accountants Act, 1949, due to his involvement in an offence involving moral turpitude.

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• 2013 (5) TMI 402
  Arbitration application u/s 11(4) read with Section 11(10) of the Arbitration and Conciliation Act, 1996 What is the scope and ambit of the powers of the Chief Justice u/s 11(6) of the said Act? - In the instant case, the Arbitration Agreement provides that the arbitration proceedings would be held in accordance with the rules and procedures of the International Chamber of Commerce or UNCITRAL. Devas (respondent) made a request for arbitration to the ICC International Court of Arbitration on 29th June, 2011, in accordance with the aforesaid Agreement and one Mr. V.V. Veedar was appointed by Devas (respondent) as its nominee Arbitrator. By the letter written by the International Chamber of Commerce on 5th July, 2011, the Petitioner was required to appoint its nominee Arbitrator, but it chose not to do so and instead made an application under Section 11(6) of the 1996 Act and also indicated that it had appointed Mrs. Justice Sujata V. Manohar, as its Arbitrator in terms of Article 20(9) of the Agreement. Held that:- The law is well settled that where an Arbitrator had already been appointed and intimation thereof had been conveyed to the other party, a separate application for appointment of an Arbitrator is not maintainable. Once the power has been exercised under the Arbitration Agreement, there is no power left to, once again, refer the same disputes to arbitration under Section 11 of the 1996 Act, unless the order closing the proceedings is subsequently set aside. In view of the language of Article 20 of the Arbitration Agreement which provided that the arbitration proceedings would be held in accordance with the rules and procedures of the International Chamber of Commerce or UNCITRAL, Devas (respondent) was entitled to invoke the Rules of Arbitration of the ICC for the conduct of the arbitration proceedings. Article 19 of the Agreement provided that the rights and responsibilities of the parties thereunder would be subject to and construed in accordance with the laws of India. There is, therefore, a clear distinction between the law which was to operate as the governing law of the Agreement and the law which was to govern the arbitration proceedings. Parties had agreed that the procedure for the arbitration would be governed by the ICC Rules, the same would necessarily include the appointment of an Arbitral Tribunal in terms of the Arbitration Agreement and the said Rules. Thus, Arbitration Petition u/s 11(6) of the 1996 Act for the appointment of an Arbitrator must, therefore, fail and is rejected.

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• 2013 (5) TMI 401
  Arbitration agreement - whether the petition is liable to be dismissed on the ground of limitation as it raises dead claims? - powers of Chief Justice or the designated Judge to decided the question on limitation - Held that:- A bare perusal of the observations made by this Court in judgment in SBP & Co. (2005 (10) TMI 495 - SUPREME COURT) makes it clear that the Chief Justice or the designated Judge can also decide whether the claim was dead one or a long-barred claim. But it is not imperative for the Chief Justice or his designate to decide the questions at the threshold. It can be left to be decided by the Arbitral Tribunal. The observations made in SBP & Co. (supra) were explained by this Court in Indian Oil Co. Ltd. (2013 (5) TMI 375 - SUPREME COURT) These observations make it clear that it is optional for the Chief Justice or his designate to decide whether the claim is dead (long-barred). The Chief Justice or his designate would do so only when the claim is evidently and patently a long time-barred claim. The claim could be said to be patently long time-barred, if the contractor makes it a decade or so after completion of the work without referring to any acknowledgment of a liability or other factors that kept the claim alive in law. On the other hand, if the contractor makes a claim, which is slightly beyond the period of three years of completing the work say within five years of completion, the Court will not enter into disputed questions of fact as to whether the claim was barred by limitation or not. In the present case, there is a dispute as to whether the repeated notices sent by the petitioner to the respondents were ever received. There are further disputes (even if the notices were received by ONGC) as to whether they were actually received in the correct section of ONGC. These are matters of evidence which are normally best left to be decided by the Arbitral Tribunal. Thus it would be appropriate for this Court to constitute the entire Arbitral Tribunal in exercise of my powers under Section 11(6) of the Arbitration and Conciliation Act, 1996. In exercise of the aforesaid powers, Justice V.N. Khare, Former Chief Justice of India as the Chairman and Justice D.P. Wadhwa and Justice S.N. Variava, former Judges of this Court are nomimated as Arbitrators to adjudicate the disputes that have arisen between the parties. The arbitrators shall fix their own remuneration in consultation with the parties.

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• Service Tax

• 2013 (5) TMI 426
  Service tax - Suppression/mis-statement - Held that: - Tribunal in the case of same appellants vide its Final Order No. ST/A/634/2012-Cus dated 1.10.2012 has held that where the decision of the Tribunal prior to the Larger Bench declaration of law were in favour of the assessee, the appellant cannot be held guilty of any suppression or mis-statement. In favour of assessee.

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• 2013 (5) TMI 425
  Imposition of penalty - u/s 77 & 78 - Department states that deposit of Rs. 58,656/- said deposit was towards 25% of penalty u/s 78 and Rs. 10,000/- u/s 77 of the Act. Held that:- Subject to verification of deposit particulars stay application is allowed as well as appeal partly directing the penalty u/s 78 to be reduced to Rs. 48,650/- and confirm penalty of Rs. 10,000/- u/s 77 of the said Act. Since the appellant says that deposit to the above extent has been made, concession in penalty shall be admissible, if the deposit particulars are correct. Thus, appeal is allowed to the extent indicated above partly.

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• 2013 (5) TMI 424
  Refund claim in terms of notification no. 17/2009-ST dated 07.07.2009 denied - as per the dept. period of refund pertains to 08/2011 to 10.2011 whereas the Shipping Bill submitted by the appellant was dated 22.07.2011. Therefore the export document did not match with this refund claim - Held that:- In the refund in question the invoice submitted along with the refund claim was RS/GDN/ST/1783/11-12 dated 17.09.2011 which pertains to period 16.08.2011 to 15.09.2011 whereas Shipping Bill No. 4642020 dated 21.07.2011 submitted by them does not cover period of refund. Similarly Shipping Bill dated 02.09.2011 was submitted for invoice RS/GDN/ST/1784/11-12 dated 17.09.2011 pertaining to period 16.09.2011 to 15.10.2011. Thus no infirmity in the findings of commissioner (Appeal) allowing the departmental appeal by holding that the refund claim was recoverable from the assessee - against assessee.

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• Central Excise

• 2013 (5) TMI 423
  Duty paying document - CENVAT credit taken on debit notes - documents specified under Rule 9 (1) - held that -Proviso to Rule 9(2) of the CENVAT Credit Rules gives enough power to the central excise officers to verify certain critical particulars in the documents and thereafter allow credit if the required minimum criteria are satisfied. - Credit allowed - Decided against the revenue.

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• 2013 (5) TMI 407
  Notification No.214/86-CE - Job Work - Benefit denied - clandestine manufacture - Clarence of goods without payment of duty - Held that:- In the instant case, the goods that are manufactured from the raw materials supplied by Aabcee Packaging were not cleared to their premises. Even this clearance was effected under cover of invoices of the raw material supplier and not under those of the so-called job worker. There is also no evidence of the goods having suffered duty at the hands of the buyers. Thus, the appellant cannot claim the benefit of the above notification. After pursuing the statements coupled with the relevant invoices support the Revenue’s case that the appellants were clandestinely manufacturing and clearing excisable goods without payment of duty during the material period. Therefore the demand of duty/interest/penalty are all sustainable. Thus, appeal is dismissed. However, the separate penalty imposed on the proprietor of Srinidhi Packaging cannot be sustained. For the same offence, there cannot be separate penalties on the proprietor and his concern.

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• 2013 (5) TMI 406
  Cenvat Credit - allegation of non receipt of inputs - clandestine clearances – Held that:- In view of the judicial pronouncements of Apex Court in the case of State of Rajasthan vs. Mohan Lal [2009 (4) TMI 559 - SUPREME COURT OF INDIA] and Collector of Customs, Madras vs. D. Bhoormull [1974 (4) TMI 33 - SUPREME COURT OF INDIA], department has reasonably discharged the burden that inputs were not received by the appellants. No manufacturer can be expected to keep documentary evidences of its clandestine activities. The order passed by Commissioner (Appeals) is, thus, correct and legal. So far as the appeal filed by, Director of M/s. Gyscoal Alloys Limited, against the personal penalty imposed upon him is concerned, it is seen from the records that he was aware of the bringing of inputs without actually receipt of the same and therefore, the penalty has been rightly imposed on the Director.

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• 2013 (5) TMI 405
  Rejection of Refund claim - unjust enrichment - As per revenue there is no evidence that excise duty element for which refund was sought was not embedded into the cost in the tendered amount recovered from the Railways - Held that:- In case, department still persists that the element of excise duty has been recovered by the appellant from the Railways then it should have further conducted investigated the verifications to refute the documents submitted by the appellants. In the absence of any such corroboration the appeal filed by the appellant is required to be allowed as the burden of not recovering the duty from the Railways has been discharged by the appellant.

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• 2013 (5) TMI 404
  Notification No. 73/90 CE – Benefit denied – Manufacture of goods by asseesee and clearance at concessional rate as per notification - As per revenue assessee has not eligible for the benefit of notification because:- (i) Assessee contravened the provisions of rule 52A, 173C and 173G of Central Excise Rules 1944. (ii) Certificate issued by the Chief General Managers of concerned circles furnished by the assessee is not a valid certificate as envisaged in the notification 73/90 (iii) Assessee have suppressed the material facts and accordingly proviso to Sec. 11A(1) of the Act has been invoked. Held that:- There is no merit in the contentions of revenue. The prime idea of concessional rate of duty in terms the said notification is that the goods are used for Rural Telecommunication. In the absence of any dispute about the same, the timing of issuance of certificate cannot be made the basis for denial of substantive benefit, otherwise available to the assessee. Revenue has raised a contention that the goods mentioned in the said certificate were not the goods cleared by the respondent. However the certificate issued by GM (Development) Bihar Circle, Patna refers to the Purchase Orders issued by Department of Telecommunication which interalia contains the quantity of goods and its technical specification. Similarly, the certificate issued by Chief General Manager in the issue Gujarat Telecom Circle, Ahmedabad refers to the details of the Purchase Orders. Therefore revenue grievance cannot be up held. It is however seen that the certificates are issued in May 1992 and in September 1992 whereas, the clearances had been effected during the period from January 1993 to March 1994. As such even the said condition of the notification stand fulfilled. Thus, there is no infirmity in the order of Commissioner (Appeals). The appeal is accordingly rejected.

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• 2013 (5) TMI 403
  Irregular CENVAT credit on capital goods - MS Angles, MS Beams, MS Channels and TMT bars classifiable under heading 72, 73 and 74 been alleged to be not covered under the definition of capital goods under Rule 2(a) of the said Rules, 2004 & were not used in the manufacture of finished products - demand of CENVAT along with interest and equivalent amount of penalty - Held that:- As decided in assessee's own case [2013 (1) TMI 5 - Madras High Court] CENVAT credit was allowed as these items were used for fabrication of structurals to support machines like crusher, kiln, hoppers, pre-heaters conveyor system etc. and that without these structurals, the machinery could not be erected and could not function as relying on Commissioner of Central Excise Jaipur V. Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] applying the "user test" following the Jawahar Mills's case [2001 (7) TMI 118 - SUPREME COURT OF INDIA] held that steel plates and M.S.Channels used in the fabrication of chimney would fall within the ambit of "capital goods" - the assessee was entitled to the relief of MODVAT Credit - against revenue.

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• CST, VAT & Sales Tax

• 2013 (5) TMI 428
  Petitioner was asked to pay tax or to furnish a security in the form, prescribed under Rule 35(4) of the Tamil Nadu General Sales Tax Rules, 1959 for not remitting the Entry Tax at 13% under Section 3(1) of the Tamil Nadu Tax on Entry of Motor Vehicles carrying excavator into Local Areas Act, 1990, before 20.09.2005, to the Commercial Tax Officer II, Theni, Petition was filed for the release of the vehicle. Court passed the interim order. Respondent submitted that the respondent has rightly exercised his power under Section 42(3)(b) of the Act for imposition of tax. He has also given an option for compounding the offence. For the abovesaid reason, he prayed for dismissal of the writ petition. Held that - It is well settled that the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990, is not applicable to the excavator and therefore, the Entry Tax for excavator has not been paid. The contention of the petitioner that he had already paid Central Sales Tax at the time of purchase of the excavator from Dharwad, has not been disputed by the respondent by filing any counter affidavit. As levy of Entry Tax is not applicable to the excavator, the impugned notice is liable to be set aside on the ground of jurisdiction and accordingly, set aside. The writ petition is allowed.

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• 2013 (5) TMI 427
  Condition imposed to satisfy 40% of the disputed liability for availing the benefit of interim stay during the pendency of the appeal. – Assessment was finalized by the first respondent as per Ext.P1/P1(a) orders in which tax liability of assesse is enhanced after the finalization of assessment under the presumption of ‘suppression’, which according to the petitioner are per se wrong and illegal in all respects and hence under challenge in Ext.P2/P2(a) appeals preferred before the second respondent After consideration appellate authority passed Exts.P3 and P4 order against which this writ petition is filed. Held that - This Court finds that the 'extent of suppression' in relation to the suppressed turn over as revealed from the documents is '50%'. Considering the said rate of extent of suppression, the extent of addition stated cannot, prima facie, be said as arbitrary or illegal in any manner. Court taking on notes the relevant facts reduced the extent of liability from 40% to "1/3rd". The same is modified and ordered accordingly and all other conditions remain to be the same. Taking note of the submission made by the learned counsel for the petitioner that the time to satisfy the requirement has already run out, the petitioner is granted a further time of 'two weeks' to comply with the requirements in Ext.P3 and P4, as mentioned above.

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• Indian Laws

• 2013 (5) TMI 421
  Validity of General Power of Attorney (GPA) - registry through GPA - challenging the constitutional validity of the circular dated 27.04.2012 stating that a conveyance of an immovable property cannot be executed on the basis of GPA as relying on Suraj Lamp & Industries (P) Ltd. [2011 (10) TMI 8 - SUPREME COURT OF INDIA] - Held that:- The Supreme Court has not said that in no case a conveyance can be registered by taking recourse to a GPA. As long as the transaction is genuine, the same will have to be registered by the Sub-Registrar. There is distinctly a specific reference to the fact that, a person may enter into a development agreement with a land developer or builder for development of a parcel of land or for construction of apartments in a building, and for this purpose a power of attorney empowering the developer to execute sale agreements or conveyances in regard to individual plots of land or undivided shares in the land relating to apartments in favour of prospective purchasers can be executed or to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. Therefore, the directions contained in the impugned circular were quite contrary to the observations made by the Supreme Court. Accordingly, the same was to be set aside.

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