TMI Tax Updates - e-Newsletter
May 25, 2012

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. TOLL COLLECTED ON BEHALF OF NATIONL HIGHWAYS AUTHORITY OF INDIA IS SUBJECT TO SERVICE TAX.

   By: DR.MARIAPPAN GOVINDARAJAN

2. Construction Activities - A Comprehensive Service Tax Perspective

   By: CA.Ankit Gulgulia

3. SETTLEMENT OF CASES UNDER SERVICE TAX

   By: Dr. Sanjiv Agarwal

4. Penalty for concealment of income under section 271(1) ( c )- not applicable in case tax payable is imposed by way of MAT – says the Supreme Court by dismissing appeal of revenue .

   By: DEVKUMAR KOTHARI

News

1. GST to Make Goods and Services more Competitive both in Domestic and International Markets: FM

2. GPF and SDS Interest Rates Revised for the Financial Year 2012-13.

3. 21 bills passed by the Parliament during Budget Session- 2012 Pawan Kumar Bansal says Government very keen on Passing of the Lokpal Bill

4. Steel Minister Reviews Annual Performance of RINL

5. International Crude Oil Price of Indian Basket increase on 22.05.2012 to US$ 106.95/BBL

6. Financial Sector Legislative Reforms Commission (FSLRC) Seeks Submissions/ Views for its Report; To Circulate an Approach Paper by October, 2012

7. Strong Faith in Resilience of Indian Economy: FM

8. CSR Fund Allocation of Maharatnas and Navratnas

9. Payment of EPF

10. Amended DTAA Between India and Switzerland Comes into Force ; Undisclosed Income Worth Rs.565 Crore Detected and Tax Worth Rs.181 Crore Realized

11. India’s Eligibility for Soft Loan

12. Fluctuations in Growth Rates of GDP

13. Functioning of Private Banks

14. Opening of No Frills Accounts for Rural Customers

15. Various Initiatives Taken by Central Government on Economic Front in Last Three Years

16. Auction for Sale of Government Stocks

17. Approach Paper of 12th Five Year Plan (2012-17) Propose a Faster More Inclusive and Sustainable Growth with a Target of 9 Per Cent Annual Growth Rate of GDP

18. Many Recommendations of Shilbhadra Banerjee Committee Report Implemented

19. Final Guidelines on Basel III Capital Regulations Issued by RBI

20. Education Loans for Engineering Students

21. Varuous Community Development Programmes Undertaken by PSBs in North Eastern States

22. Various Measures Undertaken to Curb the Menace of Terror Funding and Fake Currency

23. Subsidy Worth Rs. 2, 16, 297 Crore Payable in 2011-12

24. Government Reverts to the Path of Fiscal Consolidation; Fiscal Deficit to be Reduced to 5.1% of GDP in 2012-13

25. Redemption of preference shares is "transfer" even if both issuer and subscriber companies are under same management as they are both distinct juridical entities

26. Condition necessary for availing immunity from penalty under section 271AAA - assessee must have paid tax along with interest, with no time limit set for such payments.

27. Interest on deposits for availing bank guarantee is business income includible in 'book profit' for purposes of section 40(b)

Notifications

Companies Law

1. G.S.R. 352(E) - dated 10-5-2012 - Co. Law

Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012

Circulars / Instructions / Orders

Companies Law

1. 10/2012, - dated 21-5-2012

Guidelines for declaring a financial Insitution as Public Financial Institution under section 4A of the Companies Act, 1956

Highlights / Catch Notes

Income Tax

• Tribunal Misinterprets Agreement Clauses, Leading to Incorrect Income Assessment of Closing Stock Value by Assessee.

  Case-Laws - HC : Treatment of an amount as income even though the assessee has disclosed the value of goods as part of closing stock - held that:- Tribunal misconstrued the clauses in the agreement to hold that the value of the closing stock had to be treated as income of the assessee.- HC
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• Court Allows Deduction for Unfulfilled Hank Yarn Obligation; Deadline Extended to March 31, 1995.

  Case-Laws - HC : Accrual of expenses - whether provision for hank yarn obligation is allowable as a deduction in this assessment year when the assessee has not fulfilled its obligation and textile commissioner had extended the time for fulfilment till 31.3.95 - held yes - HC
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• Payments to German firm under Cost Allocation Agreement deemed taxable royalty income in India for R&D expenses.

  Case-Laws - AAR : Whether payments made to the applicant (a company based in Germany), in terms of the Cost Allocation Agreement, can be treated as income in the hands of the applicant and whether it is not merely a reimbursement of the expenses incurred for the Research and Development. - held as royalty and taxable in India - AAR
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• Labeling, Tailoring, and More: Manufacturing Activities Qualify for Deductions u/s 80-I of Income Tax Act.

  Case-Laws - HC : Deduction under Section 80-I - activities of labeling, tailoring, packing, pakki checking, buttons and button holes, linking etc. to be held as manufacturing activity. - HC
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• Assessee's Net Surplus from Investment Sale Taxed as Capital Gains, Not Business Income, per Section 45.

  Case-Laws - AT : Business income vs. capital gain - net surplus shown by the assessee is the capital gain on account of the sale/redemption of the assessee's investment and the same is taxable under the head 'capital gains' and not as business income. - AT
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• Court Deletes Baseless Assessment of Bank Deposits u/ss 69 and 69C of Income Tax Act.

  Case-Laws - AT : Addition of bank deposits u/s 69 - Assessee assessed u/s 44AF - the deposits assessed by the lower authorities u/s. 69 and 69C of the Act is without any basis, hence deleted - AT
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Customs

• Court Rules Against Importer on MRP Compliance and CVD Valuation for Goods Sold to Institutional Consumers.

  Case-Laws - AT : Affixing of MRP on imported goods - sale to institutional consumers - Valuation for the purpose of levy of CVD - Manufacture - decided against the assessee - AT
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• Refund Claim for Coal Cess Rejected Due to Unjust Enrichment Despite Clarification Indicating Non-Payability.

  Case-Laws - AT : Refund of the Coal cess - paid initially at the time of import which subsequently has been clarified to be not payable - refund rejected on the ground of unjust enrichment. - AT
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• Circular on Target Plus Scheme Deemed Ultra Vires to Foreign Trade Policy and Customs Notification.

  Case-Laws - HC : Target Plus Scheme - Foreign trade policy - the conditions which were stipulated by the circular dated 8 May 2007 were ultra vires paragraph 3.7.6 of the Foreign Trade Policy and Customs notification dated 8 April 2005 - HC
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Corporate Law

• Company Cheque Dishonored Due to Single Signatory; No Guilt u/s 138, Possible Cheating u/s 420 IPC.

  Case-Laws - HC : Dishonor of cheque - joint signatory - cheque was signed by only one signatory - The respondents may have committed an offence of cheating punishable under section 420 IPC but by no means it can be said that they are guilty of offence under section 138 N.I. Act. - HC
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• Section 4A of Companies Act, 1956: Criteria for Declaring a Financial Institution as Public Financial Institution.

  Circulars : Guidelines for declaring a financial Insitution as Public Financial Institution under section 4A of the Companies Act, 1956 - Circular
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• Companies Must Disclose Unpaid and Unclaimed Funds Under Investor Education and Protection Fund Rules, 2012.

  Notifications : Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012 - Notification
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Indian Laws

• Interest Rates Revised for GPF and SDS for 2012-13, Impacting Financial Planning and Savings Strategies.

  News : GPF and SDS Interest Rates Revised for the Financial Year 2012-13.
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• Supreme Court rules no penalty for income concealment u/s 271(1)(c) if taxed under Minimum Alternate Tax.

  Articles : Penalty for concealment of income under section 271(1) ( c )- not applicable in case tax payable is imposed by way of MAT – says the Supreme Court by dismissing appeal of revenue . - Article
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Service Tax

• CENVAT Credit Approved for Security Services Provided to Farmers Under Agreement.

  Case-Laws - AT : CENVAT credit - input services of security services provided to group of farmers under an agreement - appellant entitled for credit as input service - AT
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• Cenvat Credit Valid on Debit Note Cum Bills and Duplicate Invoices if Essential Verification Details Present.

  Case-Laws - AT : Cenvat credit - duty paying documents - debit note cum bills - duplicate copies of invoice - credit allowed - AT
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• Tour Services in Package Tours Must Be Included in Gross Value for Service Tax, Not Classified as Reimbursements.

  Case-Laws - AT : Package tour services - TTD darshan, sightseeing in RFC etc. are supplementary services rendered by the appellant in relation to package tour, the collections for the same from the tourists cannot be typified as 'reimbursements'. - to be included in gross value - AT
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Central Excise

• Manufacturer Settles Duty and Penalty; No Additional Penalty for Director After Show Cause Notice.

  Case-Laws - AT : Personal penalty on Director - held that:- Admittedly the manufacturer having paid the entire duty, interest along with 25% of penalty within a period of 30 days from SCN - separate imposition of penalty on the Director is not called for. - AT
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• Cenvat Credit Valid Even Without Clearances Under Notification No. 29/04; Final Product Not Fully Exempted.

  Case-Laws - AT : Cenvat Credit - Merely because during the relevant period, when the capital goods were received in their factory, there were no clearance by availing the benefit of Notification No. 29/04, will not make their final product as fully exempted. - AT
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• Tax Demands on Informal Records Deemed Unsustainable in Clandestine Removal Cases Under Central Excise Laws.

  Case-Laws - AT : Clandestine removal - confirmation of demand on the basis of katcha parchis cannot be held to be sustainable. - AT
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• Cenvat Credit Approved for Tool Kits and First Aid Kits Sold with Final Product; Costs Included in Product Price.

  Case-Laws - AT : Cenvat credit allowed on tool kit and first aid kit are sold by the appellant along with final product and their cost is included in the same. - AT
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VAT

• High Court Rules in Favor of Assessee: DVAT Act Section 74A Revision Powers Apply Prospectively, Not Retrospectively.

  Case-Laws - HC : Rejection of refund claim under DVAT by invoking revision powers - period of limitations - Power of revision of cases under DVAT Act after repeal of Delhi Sales Tax Act - section 74A - prospective or retrospective - Decided in favor of assessee. - HC
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Case Laws:

• Income Tax

• 2012 (5) TMI 370
  Reassessment - notice u/s 148 - held that:- The assessee had filed and furnished all details and particulars relating to the royalty payment including agreements, calculation and the approval. There was no failure on the part of the assessee to furnish true and correct all material facts. - Writ of certiorari issued and the notice issued under Section 148 of the Act and order dated 24.3.2011 dismissing the objections to the reassessment proceeding passed by the Assessing Officer quashed. - The re-assessment order also quashed.

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• 2012 (5) TMI 369
  Treatment of an amount as income even though the assessee has disclosed the value of goods as part of closing stock - held that:- Tribunal misconstrued the clauses in the agreement to hold that the value of the closing stock had to be treated as income of the assessee. - Decided in favor of assessee.

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• 2012 (5) TMI 368
  Accrual of expenses - whether provision for hank yarn obligation is allowable as a deduction in this assessment year when the assessee has not fulfilled its obligation and textile commissioner had extended the time for fulfilment till 31.3.95 - held that:- when the liability admitted is of reasonable certainty, the mere fact that the actual quantification might take place in the next year, per se, would not stand in the way of the assessee being granted the deduction. The assessee, admittedly, is maintaining the account on mercantile basis. In that event, the decision of the Apex Court in Bharat Earth Movers Vs. C.I.T.) (2000 (8) TMI 4 (SC)), directly applies to the facts of the case. - Decided in favor of assessee.

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• 2012 (5) TMI 367
  Revision u/s 263 - on the issues regarding assessment of capital gain on mutual funds as business income and the capital contribution received from partner companies as deemed dividend U/S 2(22)(e) of the Act though both the issues are highly debatable and two opinions are possible - The only activity carried on by the assessee during the year under consideration was purchase and sale of mutual funds and securities - It is the claim of the assessee that by modifying clause (2) of the partnership deed the transactions entered into by the assessee become investments made by the assessee and recouping of the same investment - On the issue of applicability of section 2(22)(e) of the Act, it was contended by the Ld DR that the Assessing Officer did not examine this issue at all. It was submitted by him that if the Assessing Officer failed to make enquiry which was required to be made, the Ld CIT can assume jurisdiction u/s 263 - Held that: the Ld CIT was justified in coming to the conclusion that the impugned assessment order passed by the Assessing Officer was erroneous and prejudicial to the interest of revenue as the Assessing Officer has failed to take into consideration Circular No.4/2007 dated 15.6.209097 and Instruction No.1527 dated 31st August, 1989 of the CBDT while computing the total income of the assessee - Appeal is rejected Regarding applicability of section 2(22)(e) - Ld CIT in his order u/s 263 of the Act has directed the Assessing Officer to enquire as to whether the partnership deed by which the assessee came into being was a device or not and if it was a device whether section 2(22)(e) of the Act was attracted in assessee's case - Held that: Ld. CIT has given specific finding on certain issues even though he has directed the AO to reframe the assessment as per the correct provisions of law and after giving the assessee adequate opportunity of being heard. We are of the considered opinion that he was not justified in giving such specific findings - Decided in favor of the assessee by way of remand to AO

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• 2012 (5) TMI 366
  Additions made by the AO due to non-submissions of confirmations by the parties against enquiry letters issued u/s 133(6) – treating the entire transactions to the said 17 parties as bogus entries and made an addition of Rs.3,72,31,524/ - CIT(A) held the findings of the AO in the assessment order and in the remand report to be unsubstantiated – Held that:- AO’s contention that there is no further verification possible due to absence of contact details provided in the affidavits of the concerned parties is not reasonable as he himself had issued inquiry letters u/s 133(6) – verification of the books of accounts and bills and vouchers could be done during the remand - CIT(A) gave a finding that the books of account are found to be audited by the tax auditors, wherein no such infirmities are noted in the maintenance of the books of account and depicting no change in G.P - findings given by the CIT(A) are proper and no infirmity in the order - against revenue .

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• 2012 (5) TMI 365
  Penalty u/s.271(1)(c) - The main thrust of the argument by the Ld. Counsel of the assessee is that penalty is required to be knocked down simply on the basis that AO has failed to apply his mind because notice has been issued without specifying the allegation as AO has simply tick marked the column "for concealing the particulars of income or furnishing inaccurate particulars of income" in the show cause notice - it is clear that what court observed was that "concealment and filing of inaccurate particulars" are two different requirements - A plain reading of the above clearly shows that the combined meaning of sec.271(1)(c) read with Explanation 1 is that if assessee has filed inaccurate particulars and such person offers an explanation which is not bona fide or offers no explanation, then penalty is leviable - Noticing that the assessee had given an explanation, vide its letter dated March 22, 2006, giving reasons for claim-ing the interest as a deduction, the Tribunal was of the view that the onus shifted on the Revenue to prove that the explanation offered by the asses-see was false - if a claim is patently wrong, as in the case before us, then merely because such claim has been made through books of accounts cannot be said that assessee has disclosed full and true particulars of income - Decided against the assessee

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• 2012 (5) TMI 364
  Transfer pricing - arm's length price - Principle of natural justice - Deduction u/s 10A - international transactions in the nature of provision of contract software development - High Court in the case CIT v. Dalmia Promoters Developers (P.) Ltd. [2006 -TMI - 9467 - DELHI High Court] wherein it was held that for rejecting the view taken in earlier assessment years, there must be material change in the fact, situation or in law. In this case, clearly there is neither any change in the fact, situation or in law. Decided in favor of the assessee by way of remand to AO Regarding short recognition of income under BSNL project - Held that-: on this issue it has been urged by the assessee that the addition to income was made on the basis of revenue, as per advance purchase order. In this regard, it has been argued that this was done without considering the actual purchase order, produced before the DRP by way of application u/r 4 of the IT (DRP) Rules, 2009. Regarding marketing expenses - During the year under consideration, the Assessing Officer has considered the cost of mobile handsets issued to employees, AMSCs and Dealers free of cost and stock scrapped as capital assets on the basis that the assessee continues to be the owner of theses handsets and these handsets are not part of the trading activities of the assessee. Held that: High Court had remitted the matter for Assessment Year 2000-01 and 2001-02 to the file of the ITAT and the ITAT vide order dated 22.9.2011 has remanded back the matter to the file of the Assessing Officer to fresh consideration. – Decided in favor of the assessee by way of remand to AO. Regarding disallowance of 25 per cent of the provision for obsolescence – Held that: - dismissal of the ground raised by the assessee in respect of provision for obsolescence would not preclude the assessee from giving the information to sustain the claim in subsequent assessment years and that once such information is provided, the Assessing Officer would give due consideration to the same. - Decided in favor of the assessee by way of remand to AO. Regarding disallowance of excess depreciation - Held that this issue is squarely covered by the decision of the Hon'ble Jurisdictional High Court in [2010 - TMI - 78240 - DELHI HIGH COURT - Income Tax] C.I.T. v. BSES Rajdhani Powers Ltd. wherein it was held that the Court was in agreement with the view of the tribunal that the computer peripherals such as printer, scanner etc. form an integral part of computer system. – Decided in favor of the assessee

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• 2012 (5) TMI 363
  Penalty u/s 271(1)(c) - delay in service of notice - period of limitation for initiating penalty proceedings - CIT(A) observed that delays in service of notices and orders are routine and natural, even if they are sent by speed post or courier, and much cannot be inferred based just on such delay in service. - CIT(A) has extracted order sheet entries from the record and took note of the sequence of events and concluded that it is almost impossible for the Assessing Officer to back date the order, since the Assessing Officer would have to change too many records, which is again impossible to do. - Decided against the assessee. Regarding penalty - Held that: the words 'return of income to be furnished before the expiry of time specified in clauses (a) and (b) of sub section (1) of s. 139', cannot be read without the words 'income which has not been disclosed so far in his return of income' preceding the aforesaid words and if we read the complete sentence which is comprising out of words "has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in clause (a) or (b) of sub section (1) of section 139" - So far as assessee's case is concerned it is an admitted fact that the assessee has disclosed an additional income and, therefore, the assessee is entitled to the immunity available under clause (2) of Explanation 5 of S.271(1)(c) of the Act for all these assessment years - Appeals are partly allowed

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• 2012 (5) TMI 362
  Revision u/s 263 - Disallowance u/s 14A - speculation loss - carry forward of the balance of speculation loss - held that:- since the eligibility period of carry forward of speculation loss incurred in the year 2001-02 has already expired in the assessment year 2005-06, the ld. AO had wrongly allowed the assessee to carry forward of the balance speculation loss of Rs.80.15 crores as claimed by the assessee beyond 2005-06. - it is evident that the AO has not applied his mind on the issues. - The ld. AO has not made a clear finding whether the assessee is entitled to carry forward the speculation losses beyond four years by virtue of the amendments brought in the Act for the relevant assessment year. Further the ld.CIT has also not adjudicated the issue but only remitted the matter back to the file of the AO to re-do the assessment after due consideration and as per law. - matter remanded back.

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• 2012 (5) TMI 361
  Application for waiver to an amount which was the balance amount due from the deceased assessee. - Application under section 220(2A) - learned counsel for the Revenue would but contend that with respect to the question of hardship the Commissioner has found the hardship only with respect to further payment of interest and no hardship has been found with respect to the amounts already adjusted towards the interest - In the instant case, what was stated by the Commissioner was that certain amounts were already paid by way of adjustment or otherwise and that certain amounts remained unpaid - Held that: The standing counsel for the Revenue would also contend that the waiver of interest was limited to that remaining unpaid since the amount adjusted cannot be taken to be having been paid - Decided in favor of the assessee

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• 2012 (5) TMI 360
  Business income or capital gain - appellant has purchased and sold shares to realize the profit based on share price movements. Normally, this is done by some one who is the activity of share trading - principally it does not seems to be a case of mistake because if it was really a mistake then the broker would not have given the profit to the assessee because in the reverse situation i.e. if it was a case of loss assessee would not have made payment of loss to the broker. Moreover, there is no evidence to show that the broker has accepted that it was a case of mistake by him - When these few transactions are considered with the transactions regarding sale of shares of Wyeth Ltd., which were held for almost 10 years, it becomes clear that assessee is only an investor and cannot be called a trader - transactions of sale and purchase of shares have to be assessed under the head "capital gains" only - Appeal is allowed

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• 2012 (5) TMI 345
  Whether payments made to the applicant (a company based in Germany), in terms of the Cost Allocation Agreement, can be treated as income in the hands of the applicant and whether it is not merely a reimbursement of the expenses incurred for the Research and Development. - held that:- The theory of reimbursement propounded cannot stand. - The payment occurs only when the process or scientific experience is used by a member. It is not a sharing of costs or reimbursement of a part of the expenses incurred for the research as and when it is completed. Since it is a payment for use and the payment depends solely on use, the payment can be understood only as royalty. Royalty income liable to be taxed in India under Article 12.2 of the DTAC between India and Germany.

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• 2012 (5) TMI 344
  Penalty u/s 271 - all the additions in respect of commission expenses of Rs.10,46,163/-, clearing and forwarding expenses of Rs.2,01,037/- and fees and legal expenses of Rs.1,10,200/- (totalling to Rs.13,57,400/-) have been disallowed holding that the assessee has violated the provisions of section 40(a) (ia) of the IT Act and that the AO has levied penalty on the said amount - held that:- the learned CIT(A) on proper appreciation of the facts of the case, considering the submissions of the assessee and the citations referred to by the assessee before him, has rightly deleted the penalty

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• 2012 (5) TMI 343
  Transfer pricing - Arm's Length Price (ALP) - Most Appropriate Method (MAM) - held that:- , there is no fault in the reasoning of the TPO in adopting the cost plus method (CPM) as the MAM. In this background and in view of the facts of the case we are of the considered view that the CPM is the MAM as adopted by the TPO for arriving at the value of international transactions and the ALP and interference in her action is required by the Panel. - Decided against the assessee. Restriction on deduction u/s 10B - held that:- The DRP has not dealt with each of the objections of the assessee by passing a speaking order there against and by ascribing cogent reasons for not accepting the objections of the assessee. - matter remanded for fresh decision.

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• 2012 (5) TMI 342
  Disallowance of sales consultancy charges - to three persons are HUFs - payments were made through account payee cheques. - held that:- The only grievance of the revenue is that details of nature of services rendered by the HUFs and how those services were utilized for the business of the assessee, were not filed by the asesssee. We are of the view that since the said required details are necessary to decide the issue, we restore the issue to the file of the AO to decide the issue after examining the details. Addition on account of depreciation on fixed assets - held that:- assessee had produced copy of electricity and water bills paid and it is true that these bills are raised in the name of the previous owner but the said payments are effected by the assessee as the bank account show as the payment made by cheque. - Decided in favor of assessee. Payment of relatives - market rate of interest on loans - interest paid by the assessee to the individuals @ 18% per annum on borrowed capital - held that:- AO has not disputed the loan, its usage or quantum of interest paid, therefore, the interest cannot be disallowed. - Decided in favor of assessee.

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• 2012 (5) TMI 341
  Deduction under Section 80-I - manufacturing and trading of hosiery garments such as pullovers, mufflers and blankets etc. - labeling, tailoring, packing, pakki checking, buttons and button holes, linking etc. - AO opined that these processes did not amount to manufacturing activities or production of articles. - held that:- It is worthwhile to notice that in para 23 of the judgment of Hon'ble the Supreme Court rendered in the case of Arihant Tiles & Marbles (P) Ltd. (2009 (12) TMI 1 (SC)), Hon'ble Mr. Justice S.H. Kapadia (now Hon'ble Chief Justice of India) highlighted another aspect observing that if the view of the revenue namely that the activities undertaken by the assessee- respondent was not in the nature of 'manufacture, was to be accepted then it would have had serious revenue consequences. It was noticed by his Lordship that the assessee- respondent were paying excise duty and some of them were job workers and their activities were recognized by various government authorities as 'manufacture' - Decided in favor of assessee.

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• 2012 (5) TMI 340
  Non deduction of TDS u/s 194C - Cash payment in violation of the provisions of Section 40A(3) - held that:- findings of fact recorded by the Tribunal cannot be interfered with particularly when it has made cash payment exceeding Rs. 20,000/- in violation of the provisions of Section 40A(3) of the Act. There is ample evidence on record to support the aforesaid finding and accordingly a sum of Rs. 33,97,674/- were not allowable as expenditure. - Decided against the assessee.

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• 2012 (5) TMI 339
  Penalty u/s 271(1)(c) - held that:- He has been regularly assessed to tax and charge of concealment of income has never been raised against him. The retirement benefits were deposited in a different account on which income accrued from month to month. He forgot to include such income as in past no such account was there. Looking to these facts, we are of the view that such omissions may take place by a retired person due to lapse of memory. In such circumstances, the explanation is held to be bona fide. Therefore, the levy of penalty is cancelled.

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• 2012 (5) TMI 338
  Capital expenditure or revenue expenditure - amount spent on application software - matter remitted back to AO for fresh consideration. Addition on account of excess claim of expenditure - held that:- if the addition has been made for the same amount during the year under consideration which was earlier made on account of excess provision of sales bonus made in the earlier year, then it can safely be said that the same amount for the same incentive has been added for the year under consideration, which is against the provisions of law because the same income cannot be taxed twice. - Matter remitted for proper verification and decision.

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• 2012 (5) TMI 337
  Reassessment - notice u/s 148 - ceased liability - deemed income u/s 41(1) - held that:- it can be easily seen that both the issues were within the knowledge of the Assessing Officer while original assessment was being framed. Not only that the assessee had disclosed all facts pertaining to these issue but had made further clarifications in response to the queries raised by the Assessing Officer. Thus, it cannot be said that there was failure on the part of the assessee to truly and fully disclose all material facts. In the present case, therefore, when the assessment is sought to be reopened beyond the period of four years from the end of the relevant assessment year, the same would not be permissible.

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• 2012 (5) TMI 336
  Deduction u/s 80HHC - direct cost - indirect expenses - held that:- Ld. JM is right in holding that only indirect costs attributable to export have to be reduced for computing the deduction u/s 80HHC in respect of export of trading goods and not all costs other than direct costs. In other words, first, attribution of indirect costs to the export of trading goods is to be made and then only scaling down in proportion is to be resorted to. - Decided in favor of assessee. Decision of Kerala High Court in the case of Parry Agro Industries Ltd. (2002 (3) TMI 9 (HC)) distinguished.

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• 2012 (5) TMI 335
  Business income vs. capital gain - sale and purchase of shares - Held that: - net surplus shown by the assessee is the capital gain on account of the sale/redemption of the assessee's investment and the same is taxable under the head 'capital gains' and not as business income. Regarding disallowance u/s. 14A - Rule 8D of the Income Tax Rules, 1962 - Hon'ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd. vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT) has already held that applicability of Rule 8D of the Rules as prospective and not retrospective w.e.f. assessment year 2007-08, wherein Hon'ble High Court has also directed to recompute disallowance in case there is a nexus for expenses with exempt income by laying down the principle - Appeal is allowed by way of direction to AO to restrict the disallowance at 1% of exempted income as expenses related to this income

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• 2012 (5) TMI 334
  Reopening - Exemption u/s 10(23C)(iiiab) - assessee is a University and it did not file its Returns for Assessment Years 2004-05 to 2007-08 voluntarily but filed in response to notice u/s. 148 of the Act on 08.10.2009 after claiming income as exempt u/s. 10(23C)(vi) of the Act as accruing to the assessee from principal activity of education - according to AO the assessee does not satisfy the conditions either of section 10(23C)(vi) or 10(23C)(iiiab) of the Act. and he disallowed the exemption claimed by assessee in all these years on the same premise - assessee is a University, governed by Governing Council consisting of 10 Members including the Chancellor, who is the Governor of the State of Sikkim - The Government also contributed Rs.30 cr. in Assessment Year 1999-2000 and Rs.23.37 cr. by way of annual grant during the Fin. Years 1997-98 to 2009-10 Held that:- it is clear that the University does exist solely for education but not for making profit as well as the assessee is substantially financed by the Government. In our view, since all the conditions prescribed u/s. 10(23C)(iiiab) of the Act have been satisfied, the income of the assessee for all assessment years is exempt.

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• 2012 (5) TMI 333
  Search and seizure - Block assessment - Held that:- the material on record that all that was found during the search of the premises of Gopalakrishna was certain chits and documents which does not conclusively indicate undisclosed income by the assessee, adding of Rs. 1,50,000/- by holding that the said amount has been kept in fixed deposit by Ramachandra is not at all based upon the seized material as what was found was not the fixed deposit receipt and further in view of the settled principles of law that when deduction had been made at source while making the payment, the receipt cannot be said to be undisclosed - Decided in favor of the assessee

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• 2012 (5) TMI 332
  Addition of bank deposits u/s 69 - Assessee assessed u/s 44AF - assessee is engaged in the business of supply of building material on retail basis and submitted its return of income as on 31.03.2004, 16.11.2005 and 31.03.2007 for the relevant assessment years 2003-04, 2005-06 and 2006-07 under section 139(4) of the Act - The assessee prepared profit and loss account, Balance Sheet and Trading Account and also noted turnover calculated on the basis of these katcha books - Assessing Officer denied computation of income under section 44AF of the Act to assessee on the ground that he has maintained books of account in all three years but by going through accounts prepared by assessee and argued by the Counsel that these are maintained by assessee on the basis of rough/katcha books where sales and purchases are recorded and these are strictly followed - Held that: the deposits and withdrawal are matching with the turnover for all the three assessment years and assessee has declared its income u/s. 44AF of the Act and moreover, the assessee's receipts has nexus with deposits, the deposits assessed by the lower authorities u/s. 69 and 69C of the Act is without any basis, hence deleted - Decided in favor of the assessee

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• 2012 (5) TMI 331
  Addition made under section 41(1) on account of value added tax refund receivable by AO – CIT deleted the addition – Held that:- VAT receivable by the assessee is not to be credited as income without waiting for the refund order by the VAT authority - it is not an automatic refund and is depending on the decision of the commercial tax authority who has to adjudicate the claim - it is not a benefit accrued to the assessee during the year as the claim was not adjudicated by the commercial tax authority - against revenue Dis-allow deduction (DEPB credit) in computing the total income by AO – CIT made credit deduction - Held that :- decided in the case of CIT v. Kalpataru Colours and Chemicals (2010 - TMI - 76895 - BOMBAY HIGH COURT) that DEPB credit is liable to be taxed in the year of issue of credit or in the year of sale of credit - In schedule 9 to the balance-sheet ended with March 31, 2007 the export benefit (DEPB) realisation is shown as Rs. 27,83,209.74 under the head "Other income". It is amply clear that the assessee has not sold DEPB credit during the relevant year. Therefore, the assessee is justified in excluding the same – against revenue.

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• Customs

• 2012 (5) TMI 359
  Waiver of pre-deposit and stay of recovery – Held that:- appeals filed with the Commissioner (Appeals), the assessee did not mention the date of speed post, nothing stood in the way of the appellate authority verifying the records of the department relating to the above dispatch to find out the correct date of dispatch of the Orders-in-Original. It appears from the impugned order that no attempt was made in this regard. There is yet another infirmity in the appellate Commissioner's order. After holding the appeals to be time-barred, he embarked on discussion on merits and took a view on the substantive issue. If an appeal filed with the Commissioner (Appeals) is really belated beyond the condonable period of limitation prescribed under Sec.128 of the Customs Act, it has only to be rejected on that ground and there shall be no discussion on merits, appeals are allowed by way of remand

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• 2012 (5) TMI 358
  Affixing of MRP on imported goods - sale to institutional consumers - Valuation for the purpose of levy of CVD - Manufacture - meaning to the definition of 'manufacturer' given under Rule 2(h) – Held that:- appellant has given a distorted meaning to the definition of 'manufacturer' given under Rule 2(h) - There is nothing in the definition of 'manufacturer' to show that mere affixture of trade mark would suffice the requirement of the inclusive definition. - Decided against the assessee.

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• 2012 (5) TMI 330
  Refund of the Coal cess - paid initially at the time of import which subsequently has been clarified to be not payable - unjust enrichment - held that:- the cess amount has been booked under the expenses and therefore, the same forms part of the cost of cement manufactured by the appellants. Hence, this certificate does not support the claim of the appellants that they have not passed on the extra duty to their customers as part of the price of cement manufactured by them. - refund rejected on the ground of unjust enrichment.

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• 2012 (5) TMI 329
  Quantum of fine and penalty imposed - hazardous goods - appellants are themselves willing to re-export the goods at their own cost - redemption fine and penalty reduced.

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• 2012 (5) TMI 328
  Target Plus Scheme - Foreign trade policy - entitlement to credit at the rate of 15% of the incremental growth - requirement to indicate the name of the export product - circular dated on 8 May 2007 - actual user condition - sale of goods (almonds) in the open market. - misuse of the Target Plus Scheme - Held that:- there should exist a “broad nexus” between the goods which are imported and the goods which are exported - ‘broad nexus’ would mean goods imported with reference to any of the product groups of the imported goods within the overall value of the entitlement certificate. - the goods imported against the certificate shall not be transferred or sold. - Paragraph 3.7.6 on its plain construction, does not incorporate a requirement that the goods which are imported as inputs must find physical incorporation in the export products in relation to which the benefit of the Target Plus Scheme is claimed. The Foreign Trade Policy, it is well settled, is referable to the provisions of Sections 4 and 5 of the Foreign Trade Development and Regulation Act, 1992. The policy cannot be amended by an administrative circular. - the circular does not in this case supplement the policy or fill up an interstitial space. - the conditions which were stipulated by the circular dated 8 May 2007 were ultra vires paragraph 3.7.6 of the Foreign Trade Policy and Customs notification dated 8 April 2005 (Customs Notification 32/05).

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• Service Tax

• 2012 (5) TMI 377
  Whether Tribunal has committed substantial error of law in setting aside penalty under section 78 of the Finance Act, 1994 imposed upon the respondent in ignorance of jurisdictional facts indicating intention of respondent to evade payment of service tax under provisions of the Finance Act, 1994 – Held that:- Under Section 78 of the Finance Act, 1994, penalty can be levied where any service tax has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud or collusion or wilful misstatement or suppression of facts or contravention of any of the provisions of the Act or the Rules with an intent to evade payment of service tax. In the present case, the Tribunal came to the definite finding that no such factors exist. that Section 80 provides that such penalty shall not be imposed if the assessee proves that there was reasonable cause for failure to pay such tax. Tax Appeal dismissed

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• 2012 (5) TMI 376
  Application for waiver of pre-deposit - demand of interest is on the ground that the assessees delayed in paying the service tax on transactions between associated enterprises - contention of the assessees is that there has been no delay on their part as the amendment to Section 67 by which service tax liability was to be discharged in the case of transactions with associated enterprises immediately on entry in the books of accounts is only prospective i.e. w.e.f. 10-5-2008, which is that date of amendment to the statutory provision and not retrospectives - prayer for waiver of pre-deposit granted

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• 2012 (5) TMI 375
  Cenvat credit - technical knowhow imported - assessee paid service tax on royalty and took CENVAT credit thereof under the head 'Intellectual Property Service – Held that:- technical knowhow imported by the appellant consisted of product technology and process technology. If that be so, it requires to be examined as to whether these technologies had any nexus with the manufacture of automobile parts as required by the statutory definition of input service. This aspect could be examined only with reference to the terms and conditions of the licence agreement. appeal stands allowed by way of remand

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• 2012 (5) TMI 374
  CENVAT credit - appellant has a scheme of having tobacco of good quality produced by a select group of farmers. Under this scheme, they supply tobacco seeds free of cost to the farmers and also arrange necessary advice to be given to them by experts - agreement between the appellant and M/s. Supreme Detective and Security Services. Under this agreement dated 18.04.2006 between the appellant and M/s. Supreme Detective and Security Services (SDSS for short), the latter was liable to provide certain services mentioned in an annexure to the agreement, to the farmers within the prescribed time – Held that:- appellant is the service-recipient as they paid for the services of M/s. SDSS and did not recover the same from the farmers and (b) that they have established a nexus between the services and the manufacture of their final product (cigarettes) by showing that the services were ultimately utilized for producing good quality tobacco which was required for the manufacture of good quality cigarettes and also by including the cost of services in the cost of production of cigarettes. The services thus fit in the definition of 'input service' under Rule 2(1) of the CENVAT Credit Rules, 2004. Hence the appellant rightly availed CENVAT credit of the service tax paid on the services. appeal is allowed

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• 2012 (5) TMI 373
  CENVAT credit on "Workmen Compensation Insurance Policy services – Held that:- in the case of Stanzen Toyotetsu India Pvt. Ltd [2011 (4) TMI 201 - KARNATAKA HIGH COURT] wherein the credit on the Group Insurance Health Policy was allowed. department has not taken whether Service Tax paid on the Workmen Compensation Insurance Policy was included in the assessable value or not was not part of the show-cause notice or any other subsequent proceedings, the department rake up the same now. Appeal is dismissed.

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• 2012 (5) TMI 372
  Demand of service tax - Clearing and Forwarding services received - Commissioner (Appeals) has taken a view that the demand is not sustainable since the show cause notice was issued under Section 73 of Finance Act, 1994 and on the day on which show cause notice was issued, the Section 73 was not applicable in respect of short levy arising in respect of the ST - 3 returns filed under Section 71A – Held that:- if provisions of section 71A are not incorporated under section 73, no demand can be raised for the violation of the same, the liability does not arise and demands cannot be sustained. provisions of Section 73 of the Finance Act, 1994 were amended from 10.09.2004 by incorporating violation of Section 71A, for issuance of show cause notice. show cause notice has been issued on 19.05.2004, i.e., prior to amendment of Section 73. appeal filed by the revenue rejected

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• 2012 (5) TMI 371
  Whether the group insurance service provided to them under 'medi-claim policy' for the welfare of assessee's employees by the insurer was an input service under Rule 2 (l) of the CENVAT Credit Rules, 2004 for the assesse – Held that:- After considering the nexus of the service to the business of the assessee, the Bench included the service within the ambit of the inclusive part of the definition of 'input service' and granted the consequential benefit of CENVAT credit to the assessee. assessee's appeal allowed CENVAT Credit on GTA Service - whether GTA Service could be considered as an 'input service' as defined under Rule 2 (l) of the CENVAT Credit Rules, 2004 – Held that:- in the case of M/s. ABB Ltd. GTA Service is an ‘input service' within the statutory definition of this expression. appeal is dismissed

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• 2012 (5) TMI 352
  Cenvat credit - duty paying documents - debit note cum bills - duplicate copies of invoice - department was of the view that these documents are not the valid documents for availing Cenvat credit – Held that:- documents called “debit notes cum bills” contain all the information which is required to be mentioned in the invoices and except for the name of the document, there is no difference between the debit note cum bill and invoice. The nature and value of the service provided and the service tax paid has been shown in these documents and it is not disputed that the service tax has been paid to the Government, Revenue’s appeal is dismissed, cross-objection also stands disposed of

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• 2012 (5) TMI 351
  Cenvat credit for payment of Service Tax on the GTA service - appeal of the Revenue before Hon ble Punjab & Haryana High Court stand decided and vide its decision reported in (2011 (5) TMI 779 (HC)) , the same stand rejected. - Earlier order of dismissal recalled - Credit allowed.

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• 2012 (5) TMI 350
  Business of booking on behalf of goods transport agency - Commission income - Business auxiliary service (BAS) - held that:- notification No. 1/2009-ST dated 5.1.09 vide which services falling under Section 65 (105) (zzb) provided by an assessee to GTA were exempted. - Circular No. 334/13/2009 TRU dated 6.7.2009 vide which by appreciating the difficulty of GTA service provider, Government extended the promise to drop all past demands of litigations, by giving retrospective effect to the notification in question. - matter remanded back for de novo consideration.

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• 2012 (5) TMI 349
  Service Tax on the commission received in distribution of pre-paid SIM, Re-charge coupons, Top-up card and other vouchers under various schemes as an authorized distributor - held that:- as soon as it was pointed out to the assessee that the Service Tax is required to be paid, the assessee discharged the same with interest and also filed ST-3 returns with late fees. - the request for treatment of the amount received as cum-tax amount is allowed and the assessee is entitled to consequent relief, if any. - penalty under Section 76, 77 and 78 of Finance Act, 1994 cannot be sustained.

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• 2012 (5) TMI 348
  Construction services - abatement in terms of notification No. 15/04 and 18/05. - held that:- no suppression or malafide can be attributed to the respondents. There were interim orders during the relevant period by the Hon ble High Court of Delhi which stand noted by the Commissioner (Appeals) in his order while extending the benefit of Section 80. - Penalty not to be imposed.

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• 2012 (5) TMI 347
  Exemption Notification No. 12/03 dated 12.6.03 - Commissioner (Appeals) extended the benefit of Section 80 by observing that they were seeking clarification from the Revenue which was not responded. He also recorded that there was no suppression on the part of the respondents. - appeal filed by the Revenue rejected.

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• 2012 (5) TMI 346
  Package tour services - Tour operator - valuation - gross value - inclusion - TTD darshan ticket charges, RFC entry fees, hill transportation charges and waterfleet charges - held that:- TTD darshan, sightseeing in RFC etc. are supplementary services rendered by the appellant in relation to package tour, the collections for the same from the tourists cannot be typified as 'reimbursements'. - Such collections do not answer the test laid down in the above order of the Tribunal and are necessarily to be part of the taxable value. - The decision in Scott Wilson Kirkpatrick's case (2006 (10) TMI 4 (Tri)) was based on a circular of Director-General of Service Tax. Nobody has relied on any DGST circular before us. - Decided against the assessee. Benefit of abatement - held that:- The appellant is entitled to abatement to the extent of 60% on the gross taxable value (including all the said charges) under Notification No. 39/1997-ST up to 28/02/2006 and under Notification No. 1/2006 from 01/03/2006 to 22.8.2007. They can claim 75% abatement under the latter Notification (as amended) from 23.8.2007. Cenvat credit - nexus between output and input service - held that:- the credit In question cannot be allowed to the appellant inasmuch as, in this appeal, they have not brought out any nexus between the so-called input services (architect services and technical services) and the tour operator's service. Their claim that they are eligible for the credit under the CENVAT Credit Rules 2004 remains Ipse dixit as they have not shown that the said services fell within the ambit of the definition of 'input service' under rule 2(1) of the CENVAT Credit Rules 2004. - Decided against the assessee. Extended period of limitation - held that:- The definition of 'tour operator' came to be amended twice during the material period and Notification No. 39/97-ST was superseded by Notification No.1/06-ST and the latter was amended by Notification No.38/07-ST, all these during the material period. It appears, these changes created confusion in the mind of the appellant on the question whether the charges/fees collected by them from tourists for TTD darshan, RFC visit, boat cruise etc. were to be included in the gross taxable value of tour operator's service for the purpose of claiming abatement. In our view, in these circumstances, it was not correct on the part of the Department to allege that the appellant had wilfully suppressed facts with intention to evade payment of service tax. - Decided in favor of assessee. Penalties - benefit of section 80 - "reasonable cause - held that:- the appellant can legitimately claim the benefit of Section 80 of the Act. Both the penalties are liable to be set aside on this ground.

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• Central Excise

• 2012 (5) TMI 357
  Whether the appellants are entitled to take CENVAT credit on the strength of supplementary invoices which has been raised on them by their supplier as per the agreement - there was an agreement between the supplier and the appellants that if the appellants failed to lift the required quantity, the price of the cracked ammonia gas will be changed and extra amount for that shall be charged from the appellants for which these supplementary invoices has been raised on the appellants on which proper duty has been paid by the supplier – Held that:- in the case of MDS Switchgear Ltd. (2008 (8) TMI 37 - SUPREME COURT - Central Excise) as the supplementary invoice has been raised for the minimum agreed quantity by the appellant is nothing but the escalated amount of the goods received by them, appellants are entitled to take the credit on the strength of the supplementary invoices, appeals are allowed

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• 2012 (5) TMI 356
  Personal penalty on Director - held that:- Admittedly the manufacturer having paid the entire duty, interest along with 25% of penalty within a period of 30 days from the date of issue of show cause notice, the proceedings are required to be held as conclusive in respect of the manufacturer as also in respect of the co-noticees. As such, separate imposition of penalty on the Director is not called for. - The Revenue's appeal rejected.

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• 2012 (5) TMI 355
  Appellant states that the lower appellate authority has not dealt with the appellant s claim for full quantum of SSI exemption. Further, he states that the appellant was of bonafide belief on the basis of a newspaper report that the impugned goods were exempted from duty and therefore, the question of applying the extended period of limitation cannot arise. - matter remanded back to pass a proper and detailed speaking order.

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• 2012 (5) TMI 354
  Credit of service tax paid on different services for the purpose of paying duty in respect of various goods manufactured - held that:- In view of decision in MURUGAPPA MANAGEMENT SERVICES LTD & Others (2011 (10) TMI 501 (Tri)) and Ultratech Cement Ltd. (2010 (10) TMI 13 (HC)) while decided the issue in favor of assesse, matter remanded back for fresh decision.

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• 2012 (5) TMI 353
  Cenvat credit - wrongly taken Cenvat credit - department was of the view the credit on the basis of endorsed invoices/bill of entry is not correct – Held that:- Cenvat credit in respect of capital goods which are alleged to have been used exclusively for manufacture of the goods on job work basis, which were cleared at nil rate of duty, since the appellant during that period were regularly filing the ER-1 returns and the fact of clearance of goods without payment of duty under job work challan under Notification No. 214/86-C.E., was known to the department, it is difficult to accept the department’s contention that the relevant information with regard to availment of the capital goods Cenvat credit was deliberately suppressed by the appellant, show cause notice is time barred and as such the Commissioner (Appeals)’s order upholding the Cenvat credit demand is not sustainable, appeal is allowed

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• 2012 (5) TMI 327
  Refund - cenvat credit reversed at the instance of audit party - Subsequently, they filed a refund claim of the same on the ground that no notice stand issued by the Revenue. - The claim was rejected by the authorities on the ground that the appellant having accepted their duty liability, there was no need of any show cause notice. - held that:- there was no dispute on the said reversal made by the appellant, nor such reversal made by the appellant under protest, the appellant can be said to have accepted their duty liability and discharged the same in response to the objections made by the audit under the provisions of Section 11 A (2b). - Decided against the assessee.

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• 2012 (5) TMI 326
  Manufacturing of textile products - Cenvat Credit - Notification No. 29/04-CE and Notification No. 30/04-CE whereas the notification No. 29/04-CE permitted concessional rate of duty subject to availment of modvat credit, Notification 30/2004-CE allowed unconditional exemption. - held that:- Merely because during the relevant period, when the capital goods were received in their factory, there were no clearance by availing the benefit of Notification No. 29/04, will not make their final product as fully exempted. - benefit of cenvat credit allowed.

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• 2012 (5) TMI 325
  Shortage in manufactured goods - clandestine removal - held that:- apart from the shortages, which are also contested by the assessee, inasmuch as there was no proper stock taking, there is no evidence showing the manufacture of the goods and their clearances without payment of duty. The clandestine removal being a positive act, the burden of proving the same is on the Revenue and cannot be discharged on the basis of conjectures and assumptions. - Decided in favor of assessee.

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• 2012 (5) TMI 324
  Clandestine removal - incriminating documents in the shape of katcha parchis - held that:- there is no positive cogent evidence relating said katcha parchis to the goods manufactured - No buyers stand identified along with identification of transporter etc. - confirmation of demand on the basis of katcha parchis cannot be held to be sustainable. - Decided in favor of assessee.

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• 2012 (5) TMI 323
  Cenvat credit - inputs - the tool kit and first aid kit are sold by the appellant along with final product and their cost is included in the same. - held that:- input means and includes accessories of final product cleared along with final product. - the appellant had supplied the tool kit and first aid kit to the buyers as per statutory requirements under Central Motor Vehicle Rules, 1989 as accessories to be used in relation to the manufacture of vehicle. Thus, both tool kit and first aid kit in our view are squarely covered by the definition of input given under Section 2(k)(i) of Cenvat Credit Rules and that the appellant had rightly availed the cenvat credit in relation to tool kit and first aid kit. - Decided in favor of assessee.

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• 2012 (5) TMI 322
  Clandestine removal - manufacture of non-alloy steel ingots. - held that:- apart from the photocopies of the notices, there is virtually no evidence indicating or evidencing any clandestine removal by the respondents. The buyers of the final product allegedly cleared by them, as reflected in the invoices have not been approached by the Revenue and examined. Neither there is any statement of transporters. - Decided in favor of assessee.

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• 2012 (5) TMI 321
  Credit of service tax paid on different services for the purpose of paying duty in respect of various goods manufactured - held that:- In view of decision in MURUGAPPA MANAGEMENT SERVICES LTD & Others (2011 (10) TMI 501 (Tri)) and Ultratech Cement Ltd. (2010 (10) TMI 13 (HC)) while decided the issue in favor of assesse, matter remanded back for fresh decision.

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• CST, VAT & Sales Tax

• 2012 (5) TMI 378
  Rejection of refund claim under DVAT by invoking revision powers - period of limitations - Power of revision of cases under DVAT Act after repeal of Delhi Sales Tax Act - section 74A - prospective or retrospective - held that:- no revisional proceeding had been initiated under the Delhi Sales Tax Act, 1975 on the date (01.04.2005) on which the DVAT Act was brought into operation. However, since the Full Bench had indicated that proceedings could be initiated under section 74A of the DVAT Act, all that has to be seen is as to whether the said proceedings have been initiated during the period of limitation as stipulated under section 74A of the DVAT Act or not. Section 74A(2)(b) of the DVAT Act and not Section 46 of the Delhi Sales Tax Act, 1975 would apply. In fact, the impugned show cause notice dated 02.02.2010 could not have been issued under Section 46 of the Delhi Sales Tax Act, 1975. However, even if it is assumed that the impugned show cause notice was issued in exercise of the powers of revision under Section 74A of the DVAT Act, the period of limitation would be that which was in vogue when the said notice was issued. The period of limitation that would apply would, therefore, be the one prescribed under Section 74A(2)(b) of the DVAT Act. And, that being the case, as we have mentioned above, the impugned show cause notice dated 02.02.2010 is barred by time. - Decided in favor of assessee.

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