Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 31, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Customs
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Seeks to levy definitive safeguard duty on import of Phthalic Anhydride. - Notification
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Seeks to rescind Notification No.1/2012-Customs (SG). - Notification
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Seeks to amend Notification No.85/2004-Customs - Exemption Notification for items covered under Inia-Thailand Free Trade Agreement. - Notification
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Seeks to levy definitive anti-dumping duty on import of Aniline when originating in or exported from European union. - Notification
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Seeks to withdraw anti-dumping duty on import of Acetone when originating in or exported from Chinese Taipei. - Notification
Corporate Law
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Companies (Director Identification Number) Amendment Rules,2012. - Notification
Indian Laws
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Finance Bill, 2012 got presidential assent as on 28-5-2012 as Finance Act, 2012
Service Tax
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Service Tax (Compounding of Offences) Rules, 2012 - Notification
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Service Tax (Settlement of Cases) Rules, 2012 - Notification
Case Laws:
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Income Tax
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2012 (5) TMI 488
Assessee in default – Trade discount provided by newspaper publishers to advertising agencies under Rules and regulations of Indian Newspaper Society - Revenue contended that said discount are deemed commission and that the assessee ought to have deducted TDS u/s 194H and was liable as assessee-in-default u/s 201 – demand of taxes and interest - Held that:- Two conditions, which are required to be fulfilled before holding a person liable for deduction at source u/s 194H, are the payment is received by a person as agent of principal and secondly payment is for services rendered (not being professional services). In present case, it is clear that advertising agency has never been appointed as agent of the petitioner. The relationship between the assessee and the advertising agency in accordance with the INS Rules is that of a principal to principal because (a) the assessee has no control over the advertising agency, (b) the advertising agency is responsible for payment even if the advertiser has not paid the advertising agency, (c) the advertising agencies are rendering service to the advertisers/ customers & other terms. Therefore, trade discount provided cannot be termed as Commission. Deductor who fails to deduct income tax at source shall be deemed to be an assessee in default only when the assessee has also failed to pay such tax directly. Thus, it flows that there is no occasion to treat the deductor as an assessee in default unless the assessee has not paid the tax directly. Even in case of short deduction, tax cannot be realised from the deductor and he is at best liable for interest and penalty only; Assessing authority has not considered the relevant materials i.e. rules & Regulations of INS, Circular No. 715 dated 8-8-1995 issued by CBDT to determine nature of relationship and applicability of TDS provisions while passing the assessment order, rather placed reliance on the article published in a newspaper, which was an irrelevant material. Hence, said reliance on irrelevant material clearly vitiates the assessment order. Maintainability of writ petition - Since huge liability running in several crores have been fastened on the petitioner and multiplicity of proceedings will increase the assessee’s sufferings even though s. 194H is clearly not applicable; therefore we are of the view that the petitioner has rightly invoked the jurisdiction of this Court under Article 226 and the petition cannot be thrown out on the ground of alternative remedy. Principle of natural Justice - It is the duty of the Department to make a correct assessment and not to make an excessive assessment merely on the ground of shortage of time, since it puts citizens to great harassment as exorbitant demands are raised and it breaches the principles of natural justice - Decided in favor of petitioner.
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2012 (5) TMI 487
Deduction u/s 80HHC - denial of benefit of netting of interest - Held that:- Apex court held in case of ACG Associated Capsules Private Limited v. Commissioner of Income Tax, Central-IV, Mumbai[2012 (2) TMI 101 (SC)] that 90% of not the gross interest/rent but only the net interest/rent, which has been included in the profits of the business of the assessee as computed under the heads ‘PGBP’ is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business. Matter remanded back to A.O. to work out the deductions – Decided in favor of assessee.
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2012 (5) TMI 486
Addition u/s 68 - Addition of a sum of ₹ 27,61,50,000 and a sum of ₹ 6,42,00,000, being amount received on allotment of preference share capital and share application money received (pending allotment) - violation of the principles of natural justice - During the course of assessment proceedings, the AO noticed that the assessee had repaid loan to the tune of ₹ 16.90 crores by allotting preference shares to private corporate bodies - Tribunal in ITA No.3859/Mum/2009 for assessment year 2006-07 in the case of Chat Computers Ltd. vs. DCIT - The statements of the persons who allowed their bank accounts to be used for depositing cash and issuing account payee cheques for a commission,were recorded - Held that: The mode of payment of application money has been through banking channels and these details are available in the application forms. Thus the genuineness of the transaction has been prima facie established by the Assessee. The Assessee has given the Income Tax Permanent Account Number (PAN) in almost all the share applicants. This would be prima facie proof of the creditworthiness of the Assessee - It is settled proposition of law that the statement recorded during the course of investigation without corroborative evidence has no evidentiary value - Decided in favor of the assessee
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2012 (5) TMI 485
Deduction u/s 80-IB - Held that:- in the A.Y. 2003-04 the order of the Ld. CIT (A) was challenged before the Tribunal by filing appeals being ITAs 6033 and 6143/M/2007 and Tribunal allowed the claim of the assessee following the decision of the Special Bench in the case of M/s. Brahma Associates (2009 (4) TMI 215 (Tri)), copy of the Tribunal order is placed on record - Decided in favor of the assessee Eligible deduction under Section 80-IB(10) - the assessee has collected the development charges, electricity charges, worked done to the buyers of the flats etc. and the said receipts are having direct nexus with the project of the assessee - Assessee has collected the different charges from the flat buyers as builder for the specific purposes but as comparative expenditure is lesser hence, the balance credit was taken to the profit and loss account - Held that: that to the extent of Rs. 4,173,230.60 referred to the above, the same should be excluded from the eligible profit and balance has to be treated as part of the profit derived from the housing project - Appeal is partly allowed Deduction u/s.80IB(10) in respect of 'Sai Jyot' project as it relates to that project - Ld. Counsel argued that apart from the common office expenses relating to the 'Sai Jyot' Project of Rs. 23,96,673/- eligible profit of the 'Sai Jyot' has been reduced for working of deduction u/s.80IB(10) - Held that: the assessee should not have any grievance as M/s. Ganga Developers is one of the assessee's sister concern having identical issue for adjudication - Appeal is allowed by way of direction to A.O. to look into the grievance of the assessee in respect of double deduction and if it is so, then also to give consequential relief
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2012 (5) TMI 484
CIT(A) directing AO to exclude telecommunication expenses amounting from the total turnover for the purpose of computation of deduction u/s 10A – Held that:- For the purpose of applying the formula under sub-section (4) of section 10B, the freight, telecom charges or insurance attributable to the delivery of articles or things or computer software outside India or the expenses, if any, incurred in foreign exchange in providing the technical services outside India are to be excluded both from the export turnover and from the total turnover, which are the numerator and the denominator respectively in the formula – as the provisions of sections 10A and 10B are identical on all material aspects the order of the CIT(A) cannot be perverse - against revenue
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2012 (5) TMI 483
Exemption u/s 11 - Disallowance of salary - salary paid to Smt Shanta Kumar, member of the society section 13(3) - Held that: the payment of salary falls under the bar placed by section 13 of the Act, however, having regard to her qualifications and services rendered to the assessee, the case of the assessee falls under section 13(2)(c) of the Act as the salary paid is not unreasonable. In view of this, the assessee goes out of the bar placed by the provisions of section 13 of the Act, as the salary paid is reasonable - Decided in favor of the assessee Regarding disallowance of advertisement expense - Held that: the nature of professional services rendered by Shri Varun Bharati, who possesses requisite professional qualifications and evidence filed to prove the factum of rendering of such services, the impugned payment cannot be disallowed as it goes out of the mischief of the provision of section 13 - Decided in favor of the assessee
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2012 (5) TMI 482
Disallowance of expenses under section 14A - held that:- the claim that expenses such as salary etc. which are not directly relatable to earning of dividend income cannot be disallowed, is not legally tenable. The disallowance of expenses has however to be made on a reasonable basis. - suo-moto disallowance computed by the assessee can be reasonably taken as the expenditure relatable to the exempt income - disallowance under section 14A @ 10% if general expenses in the PD division upheld. Regarding interest u/s 234C - held that:- Once there is shortfall in payment of advance tax installment, the levy of interest is mandatory as we have pointed out earlier. In case, under estimate of income for advance tax payment was due to conditions beyond the control of the assessee, it could always apply to the competent authority, for waiver of interest in terms of the CBDT Circular - Decided against the assessee Regarding validity of opening of assessment under section 147 - reason to believe - held that:- The only requirement is that there should be some relevant material for formation of belief and the sufficiency of material cannot be questioned. There was material available before AO clearly showed that no expenses in relation to exempt income had been disallowed by the assessee under section 14A which in our view was relevant material for formation of reasonable belief that some income had escaped assessment as it was not possible to earn such huge dividend without incurring any expenses. - Decided against the assessee Speculation loss - setting off - section 73 - held that:- profit from purchase and sale of shares are not to be excluded from the deeming provisions of Explanation to section 73. It was accordingly held that the assessee was entitled to set off brought forward speculation loss against profit from sale and purchase of shares in the current year. - Decided in favor of assessee.
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2012 (5) TMI 481
Bad debt - Held that:- The amount has been correctly disallowed as bad debt because the conditions prescribed u/s.36[2] that either such amount should have been considered for computing the income or the amount could have been lent in the ordinary course of business, are not fulfilled. Loan to sister concerns without interest - Held that: The AO has made his case very clear that a specific amount was borrowed for the purpose of Narsonar Bala project and the loan proceeds were deposited in Kotak Mahindra Bank. Admittedly, the money has been given out of such loan to the sister concern. Therefore, there is a direct nexus between the interest bearing loan and the interest free advances granted to the sister concern. The Ld. Counsel for the assessee made a general submission that in Narsonar Bala project funds of more than Rs.10 crores were used but he has not given any source of such funds or any evidence that assessee was having some interest free funds which were used in this project. - Decided against the assessee.
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2012 (5) TMI 480
Deemed dividend u/s 2(22)(e) - Advance against rent or security deposit - During the course of hearing it is submitted that the assessee company received the said amount not as advance rent but a security deposit through journal entry and there was no actual movement of cash from the bank account - According to the assessee, this security deposit does not come under the ambit of sec. 2(22)(e) of the Act, whereas according to the A.O. this security deposit was nothing but deemed dividend inasmuch as two of the beneficial shareholders of lessee-company were also shareholders and substantially interested in the assessee - It is a principle of interpretation of statutes that where once certain words in an Act have received a subsequent statute, the legislature must be taken to have used them according to the meaning which a Court of competent jurisdiction has given them - Deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender company and not in the hands of a person other than a shareholder. The deeming provision as it applies to the case of loans or advances by a company to a concern in which its shareholder has substantial interest is based on the presumption that the loan or advances would ultimately be made available to the shareholders of the company giving the loan or advance - the provisions are not applicable to the present facts of the case the nature of transactions has no effect. - Decided in favor of the assessee
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2012 (5) TMI 479
Income from house property - Vacancy allowance - Tenant stopped payment rent and stopped using the premises but did not handover the possession back to assessee owner - held that:- Since the above flats were not vacant, during the period July 2005 to December 2005 and it is not the case of the assessee that these premises were let out on higher rent, the explanation of the assessee cannot be accepted that these flats were let out for the period 1.1.2006 to 31st March 2006 on decreased rent as suitable tenants were not available. Thus, there is no question of application of the provision of section 23(1)(c) of the Act as pleaded by the Ld. A.R. The A.O thus has rightly applied the provision of section 23(1)(a) of the Act for computing the rent for this period. - Decided against the assessee.
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2012 (5) TMI 478
Registration u/s 12AA - Assessee-Society had earlier been granted registration u/s 12AA by the then CIT, Madurai, vide his order in C.No.464/24/07- 08/CIT-I dated 12.10.2007, for the assessment year 2007-08 and onwards, but the application for recognition u/s 80G was rejected by the same CIT vide his order dated 24.12.2008 - It is clear that the ld. CIT has been empowered to either continue registration, once granted u/s 12A(a) or else, he can cancel the same if the requisite conditions are no longer found to be fulfilled - From the Income and Expenditure Account of these years, it is clearly seen that the Society was receiving income from laces and embroidery articles, income from coconut shell, SHGs contribution, own contribution, grants received, donations received, interest received, etc. The financing activities undertaken by the Society is clearly evidenced from these facts - It is true that certain amount of commercial activity is permitted under the provisions of the Act, but this has to be only a by-product of 'charitable activities' with a certitude that surplus so generated out of commercial activity are utilized for the charitable objects of the Trust/Society and not for personal use of settlers/beneficiaries - commercial activity in such cases is permissible as per the requirement of section 11(4)/11(4A) and not as per the provisions of section 11(1)(a) of the Act. The commercial activity should aim at achieving end of the trust which is furtherance of its objects and it should not be the motive of the Trust to work for profit - Under these circumstances, we are also satisfied that the Society has ceased to be a genuine Society to be eligible for registration u/s 12AA - Decided against the assessee
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2012 (5) TMI 466
Power of Tribunal to admit Additional Ground - assessee contesting jurisdiction assumed by AO u/s 153A - assessee contended that the ground has been taken in the memorandum of appeal, therefore, it is not an additional ground for which leave is required from the Tribunal, whereas Revenue submitted that ground does not arise out of the order of lower authorities as this question was never taken up before any one of them - Held that:- A person can be “aggrieved” only if a ground had been raised and it is decided against him. S. 253(1) bars a ground which was not raised and not decided by the CIT(A) because there can be no grievance in respect of a matter which is not raised at all. Therefore, ground taken in the memorandum of appeal cannot be a ground validly taken as a grievance from the order of lower authorities. However, on question that whether, such a ground can be raised for the first time before the Tribunal, it is held that Tribunal is not confined only to issues arising out of the appeal before the CIT(A) but has the discretion to allow a new ground to be raised. If a pure question of law arises for which facts are on record of the authorities below, the question should be allowed to be raised if it is necessary to assess the correct tax liability. The submission that the ground could not be raised earlier as the assessee did not have the services of an advocate at its command is reasonable and bona-fide - Additional ground admitted.
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2012 (5) TMI 465
Charitable Institution - alleged violation of Section 13(1)(c)(ii) read with Section 13(3) on belief that society was for the private benefit of the members - Tribunal without referring to factual matrix held that assessee is charitable institution - Held that:- Order of the tribunal in the AY 2005-06 is devoid of reasoning and does not refer to factual matrix and details which have to be examined and considered while deciding the question whether or not Section 13(1)(c)(ii) read with Section 13(3) is violated. The facts, figures mentioned in the income expenditure account and the activities undertaken etc. have not been mentioned or specifically examined. What was and whether any benefit or advantage was enjoyed by the person mentioned in Section 13(3) has not been adverted to and considered. General observations have been made. The order of the tribunal is cryptic and cannot be categorized as a reasoned and speaking order which is mandated and required to be passed by the final fact finding authority - Matter remitted back to Tribunal to examine and record finding on facts relevant and which are to be examined - Partly decided in favor of Revenue.
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2012 (5) TMI 464
Admissibility of deduction u/s 80HHC when deduction u/s 80IA has been made - Held that:- If deduction u/s 80IA has been made, deduction u/s 80HHC was not admissible in view of Section 80IB (13) r.w.s. 80IA (9) of the Act. See CIT (Central), Ludhiana vs. M/s. Davinder Exports(2011 (4) TMI 96 (HC)) - Decided in favour of the revenue. Whether “Profit” or the whole amount of DEPB is to be excluded for computation of the deduction u/s 80HHC - Section 28(iiid) - Held that:- Apex court held in case of Topman exports (2012 (2) TMI 100 (SC)) that not the entire amount but the sale value less the face value of the DEPB will represent profit on transfer of DEPB. Difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28. Therefore, matter is remanded back to the AO to pass fresh order in accordance with aforesaid judgement.
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2012 (5) TMI 463
Power of Settlement Commission to reopen its concluded proceedings by recourse to Section 154 to withdraw the partial/full waiver of interest u/s 234B and 234C - Held that:- Supreme Court in case Brij Lal and others Vs. CIT (2010 (10) TMI 8 (SC)) held that after the Settlement Commission allows the application for settlement to be proceeded with, there will be no further charge of interest u/s 234B and that invocation of Section 154 of the Act cannot be justified. Therefore, order dated 31.03.2003 and the subsequent proceedings raising demand of interest are quashed - Decided in favor of assessee.
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2012 (5) TMI 462
Confirmation of addition of Rs.2,62,184/- paid in cash out of total disallowance of Rs.5,55,284/- made for purchase of car – assessee purchased car for Rs.5.55 lakhs. Loan of Rs.2.93 lakhs was arranged from Standard Chartered Bank and the remaining amount of Rs.2.62 was claimed to have been contributed out of own funds - Held that:- The explanation given for the cash payment is devoid of any merit as the capital account of the assessee for the year in question does not show the withdrawal for the purchase of car - car is not appearing on the asset side of the balance sheet of the assessee – against assessee. Disallowance of set off of brought forward business loss - AO rejected the set off as it was not claimed in the original return of income and could not be allowed in the return filed in response to notice u/s.153A – Held that:- Once loss is determined in the return file u/s.139(3), the assessee becomes eligible for set off against the income of the subsequent years irrespective of the fact whether the returns of such later years are filed u/s.139(1) or not - Sec. 80 read with sec. 139(3) requires the submission of return for loss before the due date - the return filed in response to notice u/s.153A is treated as the return filed u/s.139 – in favour of assessee. Disallowance of set off of brought forward business loss for assessment year 2001-02 – Held that:- Brought forward business loss has to be mandatorily set off against the income of the subsequent year, whether or not it is below the taxable limit - the necessary details about the income for assessment years 2003-04 to 2006-07 are not available on record the impugned order is set aside and restore the matter to the file of AO for deciding afresh.
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2012 (5) TMI 461
Addition of undisclosed income - assessee-firm is a builder and during this year, a survey action under section 133A of the Act was carried out on March 9, 2005 - Assessing Officer held that there is clear-cut shortage of income declared and finally the returned income and the assessee has not filed any explanation in this regard. The Assessing Officer worked out the regular income should have been 8 per cent - It was submitted by him that there is no dispute regarding the turnover declared by the assessee in the regular books. Regarding this aspect that amount declared in the course of survey was not added in the income to the extent of Rs. 20,76,537, it was submitted that this allegation is not correct and he submitted that audited accounts are available - the voluntarily disclosed income is only Rs. 1,75,00,000 less by Rs. 5 lakhs to the disclosed amount of Rs. 1,80,00,000 - Held that: Profit before interest on partners' capital and partners' salary is shown by the assessee at Rs. 184.06 lakhs and the net income arrived at was Rs. 175.24 lakhs after allowing deduction of Rs. 1,81,369 on account of interest on partners capital and Rs. 7,00,000 on account of partners' salary - Decided in favor of the assessee Addition u/s 154 made by the CIT(A) - In the present case, this is not the case of the Revenue that the partners of the assessee-firm are fictitious because in the statement of the partner, additional income of Rs. 180 lakhs was declared during the course of survey and it was duly shown in the return of income and the addition was made by the Assessing Officer on the basis of that statement only, which although is deleted, the fact remains that it is not a case of the Revenue that the partners of the assesseer-firm are fictitious - apex court in the case of CIT v. Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC) - Held that: this addition made by the Assessing Officer under section 68 is not sustainable in the light of this decision of the hon'ble Supreme Court and in the light of the facts of the case, since confirmations along with addresses and permanent account numbers were made available by the assessee to the Assessing Officer and no effort was made by the Assessing Officer to pursue the loan creditors - Decided in favor of the assessee Regarding validity of assessment proceedings - this is the claim of the assessee that this notice said to have been issued by the Assessing Officer on June 20, 2006 was never served on the assessee but as per copy of the notice brought on record, there is some signature of some person although no name or date is appearing and hence, it is not coming out whether the same was served on the assessee or not - Appeals are allowed
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2012 (5) TMI 460
Disallowance of Rs.62,19,593 on account of non receipt of confirmation of unsecured loans - Addition u/s 68 - During the course of assessment proceedings, the Assessing Officer noticed that unsecured loans as at the end of relevant previous years stood at Rs.2,52,05,395 whereas, as at the beginning of the year, unsecured loans only amounted to Rs.1,89,85,802 - in the present case, no specific show cause notice with respect to enhancement was not given by the CIT(A) - assessee has now filed additional evidences by way of confirmations and other supporting material to demonstrate bonafides of the creditors - Held that: assessee's failure to have produced all these materials should not come in the way of substantive justice, and, now that the matter is going back to CIT(A) anyway, all these evidences should be examined and considered on merits - Appeal is allowed by way of remand to CIT(A)
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2012 (5) TMI 459
Whether CIT(A)'s upholding the action of the AO in treating the sums being long term capital gains arising on exercise of rights under ESOP, as "perquisites" and taxed the same in the computation of income under the head "salaries is correct - During the course of assessment proceedings, the Assessing Officer noticed that the assessee had received rights under Stock Option Grant from the parent company of Pfizer India Ltd., viz; Pfizer Inc, USA being the grantor of rights under Stock Option Grant - Held that: Learned Representatives fairly agree that the issue is covered against the assessee in assessee's own case for the assessment years 1999-2000 to 2002-03, and so far as this Tribunal is concerned, the matter is to be decided against the assessee - Appeals are dismissed Whether CIT(A)'s upholding the action of the AO in calculating Annual Ratable Values (ALV) of three house properties for the purpose of computing "income from house property" on estimated basis is correct - It was also submitted that since these houses were purchased lock back, values are estimated and no such certificates from Municipal authorities are available with the assessee. It was in this backdrop that the Assessing Officer, inter alia, came to the conclusion that the assessee has not been able to give/submit the municipal ratable and substantiate the basis of the computation of ALV and also current capital value - Held that: assessee has furnished the certificates given by the Brihanmumbai Mahanagarpalika showing the rateable value of the flats and these certificates were enclosed to the return of income. The calculation of the assessee was based on these certificates. In the light of these certificates the Assessing Officer was not justified in redetermining the annual letting value of the flats on the basis of the Times of India property chart - Appeal is allowed Whether CIT(A)'s upholding the action of the AO in disallowing expenses of Rs.1,27,786 for A.Y. 2004- 05 and Rs.2,43,375 for A.Y. 2005-06 incurred on management fees on the alleged ground that these fees are for the purpose of holding assets in Fiduciary Trust of International Account is correct - It was also stated that the copy of the mandate of account opening from FTI account shows that the bank at its discretion may change the nature and composition particularly by selling or purchasing securities, currencies and/or precious metal - Appeals are dismissed
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2012 (5) TMI 458
Addition of Rs.47,72,525/- u/s 69C as unexplained stock - During the course of assessment proceedings the assessee was asked to submit item wise and month wise quantitative details of raw materials as well as sale of finished products - On verification of books of accounts of the assessee and the details as produced before the AO, it was observed that the assessee was maintaining detailed record of purchases, sales and issue of these goods for mixing/preparation of other spices but not produced the same before him - According to the AO, the assessee had showed negative stock and the assessee was asked to explain the negative stock and also why the discrepancy should not be treated as unexplained expenditure incurred by the assessee on purchase of hing - learned DR relied upon the orders of the authorities below and submitted that the assessee has failed to explain the discrepancies in hing account and there was negative balance in the stock on certain dates - Held that: instead of making huge addition against the assessee, it could be reasonable and proper for the AO to reject the book results of the assessee and to make reasonable addition considering the history of the assessee The stock during the course of the proceedings was found to be negative, therefore, it could be presumed that the same was sold outside the books of accounts - The assessee deals in several varieties of the items and as such it would be difficult to maintain details of the stock. The assessee produced all the books of accounts and sales and purchases vouchers before the AO for verification - Decided in favor of the assessee by way of addition of Rs.47,72.525/- is restricted to Rs.3,00,000
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2012 (5) TMI 457
Deemed dividend u/s 2(22)(e) - assessee's shareholding in Claris Lifesciences Ltd. was less than 10% - advance on a date prior to 03.03.2006 - held that:- since on the date of receipt of the amount, the assessee was having less than 10% of beneficial interest in that company, by no stretch of imagination the amount of Rs. 25 lacs received by the assessee can qualify as deemed income under the provisions of Section 2(22)(e) - Held that: the provisions of Section 2(22)(e) of the Act are not applicable in the present case under these facts - Decided in favor of the assessee Addition u/s 43B on account of service tax - The assessee enclosed a copy of the service tax payable account and service tax receivable account for the financial year 2005-06. It was further submitted by the assessee before the A.O. that the amount of consultancy fee credited to P and L account does not include service tax and expenditure debited to P and L account also does not include services tax as the company is merely an agent or government and is liable to collect and pay service tax in accordance with the provisions of law - Held that: even if this balance amount of Rs.10.93,542/- was paid by the assessee after 31.03.2006 but before the date of filing of return of income of the present year being 29.12.2006, assessee is eligible for deduction u/s 43B of the act in respect of future payment whether by way of cash or by way of adjustment against service tax receivable account - Decided in favor of the assessee
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Customs
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2012 (5) TMI 477
Demand of Anti-Dumping Duty in respect of imports of CFL – contention of revenue that the parts imported by the appellants constitute 90% of the total requirement of manufacture of CFL and in terms of provisions of Rule 2(a) of Interpretative Rules to be treated as complete lamps - Held that:- It is not appropriate inasmuch as the provisions of Rule 2(a) of the Interpretative Rules are in the form of a legal fiction created for the limited purpose of classification of incomplete or unfinished article in relation to any reference in a heading to an article in schedule and cannot be used to modify physical identity of an article mentioned in notification imposing a duty on that article, which has to be interpreted strictly - The Directorate General of Anti Dumping and Allied Duties have clarified that anti-dumping duties were not recommended on parts/ components of CFL - the notification No. 138/2002-Cus., dated 10-12-2002 stated that the anti-dumping was recommended only in respect of two types of CFLs (i) Complete, ready to use compact fluorescent lamps wherein choke is integrated within the lamp (ii) Complete, ready to use compact fluorescent lamps wherein choke is external - Admittedly in the present case, the appellants have not imported CFLs, in a ready to use condition but have only imported parts of the same – in favour of assessee.
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2012 (5) TMI 476
Whether Commissioner of Customs (Preventive), has jurisdiction to issue the show-cause notice - Counsel submits that he was not 'proper officer' as defined under Section 2(34) of the Customs Act inasmuch as there is no documentary material to show that the learned Commissioner had been assigned the function of issuing show-cause notice and adjudicating the same in relation to imports – Held that:- no evidence has been brought on record by the respondent to show that the Commissioner of Customs (Preventive) was specifically assigned the function of issuing the show-cause notice and adjudicating the same in relation to the subject imports, lack of jurisdiction for the Commissioner of Customs (Preventive) in this case becomes the common ground for allowing all the three appeals, order is set aside, appeals are allowed
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2012 (5) TMI 456
Rate of CVD in respect of goods where full exemption withdrawn - 1% or 5% - Whether the benefit of Notification No. 1/2011 CE dated 1.3.2011 is available to the impugned goods or not - assessee contested that impugned assessment orders on the impugned Bills of Entry No. 3481711 was passed by Assessing Authority rejecting the appellant's claim of CVD without passing a speaking order in terms of Section 17(5) of Customs Act, 1962 - Held that:- The impugned assessment order is set aside and the concerned authority is directed to pass a speaking order within 15 days of the receipt of this order failing which the appellants appeal shall be treated as allowed - in favour of assessee.
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2012 (5) TMI 455
100% EOU - exported goods for display at Fair Singapore 2006 on returnable basis, claiming clearance without payment of duty – Held that:- goods imported by an EOU is exempt from customs duties vide Notification No. 52/2003-Cus., dated 31-3-2003. I further, find force in the submission of appellant that the imported goods will be finished and re-packed which according to para 9.37 of chapter 9 of the policy is a manufacturing process. Therefore, the imported goods are going to be used for the purpose mentioned in the exemption Notification, Revenue’s appeal is accordingly rejected
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Service Tax
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2012 (5) TMI 492
Extended Period of Limitation - Service Tax demand on the ground that the value of material used in providing photographic service was required to be added in the value of services - Held That:- As the demand is admittedly beyond the normal period of limitation and the Tribunal in the case SHOBHA DIGITAL LAB. Versus COMMISSIONER OF CENTRAL EXCISE, BHOPAL [2011 (8) TMI 721 (Tri)] held in favour of the applicant at similarly situation - set aside the impugned demand alongwith setting aside of penalty imposed upon the applicant - in favour of assessee.
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2012 (5) TMI 491
Waiver of pre-deposit of interest and penalty – denial of utilisation Cenvat credit for payment of service tax on the Goods Transport Agency as recipient of the service – Held that:- Commissioner (Appeals) has dismissed the appeal for non-compliance to the provisions of Section 35F of the Central Excise Act without going into the merits of the Appeal. in the case of Nahar Industrial Enterprises Ltd. (2008 (10) TMI 38 (Tri)) whereby the payment of service tax from Cevant amount was upheld. order is set aside and the matter is remanded to the Commissioner (Appeals) to pass afresh order without insisting upon any pre-deposit. Appeal is disposed of by way of remand. Stay petition and appeal is allowed
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2012 (5) TMI 490
Coaching or training to the employees of the buyer concerns - Held that:- Respondent was not providing any coaching or training to outsiders except the employees of the buyer concerns who were to use the machines purchased. The training is not appearing to be a primary commercial activity of the appellant nor also commercial activity of such nature as known to the fiscal laws was carried out by Respondent. stay application and appeal of Revenue are dismissed.
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2012 (5) TMI 489
Mandap Keeping-Service - receipt of the amount on account of renting out land and open ground – Held that:- There is nothing whisper in the show cause notice as to whether the receipt made by the respondent was in relation to or in respect of any of the functions envisaged by law to be performed using the immovable property. Finding no substance in the show cause notice, there is no need to dilate the matter further. both stay application and appeal of Revenue are dismissed.
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2012 (5) TMI 471
Refund – unjust enrichment - respondent is engaged in the providing Business Auxiliary Service and paying service tax thereon. The respondent claimed refund of service tax amounting to Rs.6,52,080/- paid by them for the period from 1.12.2007 to 31.8.2008 on the ground that the services rendered by them amounts to export of services in terms of Rule 3(2) of the Export of Service Rules,2005. The refund claim was rejected on the doctrine of unjust enrichment – Held that:- in the case of Sparkler Ceramics Pvt. Ltd (2011 - TMI - 203997 - CESTAT, MUMBAI - Central Excise) unjust enrichment will not be applicable to this case as it involves export of goods. Commissioner (Appeals) order is upheld and Revenue's appeal is dismissed.
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2012 (5) TMI 470
Laying of cables under or alongside roads - Erection, Commissioning or Installation - appellant claims prima facie case on the strength of both Board's Circular No. 123/5/2010-TRU dated 24.5.2010 it was clarified inter alia that laying of cables under or alongside roads did not constitute any taxable service under Section 65(105) of the Finance Act, 1994 - Held that:- in the case of Rajeev Electrical Works (2012 (5) TMI 470 - PUNJAB & HARYANA HIGH COURT - Service Tax) had held that laying of pipes in wall/roof/floor for crossing of wires, fixing junction box, MS box, wooden box, fixing cable trays to lay cables, digging earth to lay the cables and digging earth pits for earthing of equipments did not amount to installation of plant, commissioning of machinery/ equipments etc. appellant need not be asked to make any pre-deposit. order is set aside and the appeal is allowed by way of remand
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2012 (5) TMI 469
Power to remand - respondent challenged the order of the ld. Commissioner (Appeals) found that the lower adjudicating authority has not appreciated the facts and circumstances of the case and remitted the case that the lower adjudicating authority to decide as afresh - department filed appeal against the order-in-appeal on the ground that the Commissioner has no power to remit the case to lower adjudicating authority – Held that:- after 11.5.2001 in Central Excise Act, 1944, power of remand is not given to Commissioner (Appeals), Commissioner is not empowered to remand the matter, he has to decide the matter by himself. Therefore the order of ld. Commissioner (Appeals) remanding the case to the lower authority, is not sustainable, Appeal disposed of by way of remand
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2012 (5) TMI 468
Waiver of pre-deposit of Service tax - ‘Banking and other financial services.’ - there is no evidence on record to show that the amounts collected were in connection with the loans granted by the assessees to the individuals, pre-deposit waived
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2012 (5) TMI 467
Penalty - It is not clear whether there was any evasion of service tax. Merely for delay in replying to a letter by the Range Superintendent, penalty may not be imposable, waiver of pre-deposit of penalty allowed and stay of recovery
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Central Excise
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2012 (5) TMI 475
Demand of Duty, Interest and Penalty on the basis of the value determined in terms of the provisions of Rule 10A - the appellant company is engaged in building of bus bodies - the Department was of the view that assessee were building bus bodies on job work basis – Held that:- This matter is covered against the appellants by the judgement of the Tribunal in the case of Audi Automobiles vs.C.C.E., Indore [2009 (5) TMI 426 (Tri)] Wherein it is decided that body fabricating and mounting on the chassis which were supplied to the said firms by the manufacturer of chassis is the activity for the purpose of valuation squarely fall under Rule 10A and not under Rule 6 - penalty imposed on the appellant company is not justified as the matter relates to interpretation of valuation Rules and it cannot be said that there was intention on the part of the appellant to evade duty - the duty demand along with interest is upheld and demand of penalty is set aside.
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2012 (5) TMI 474
Penalty – petitioners shifted around 70,000 plastic crates to the plot of M/s. Navneet Publications on emergency basis - officers of the Central Excise Department visited the said neighbouring premises and later on, the petitioners’ premises and seized the said 70,000 plastic crates shifted thereto - Tribunal has found that the action of the petitioners in removing the goods from the place of manufacture and storing them in the adjacent premises, was not suggestive of intention to evade duty - Held that:- penalty under Rule 209A, any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or the rules, shall be liable to a penalty, merely because confiscation under Rule 173Q is set aside as the ingredients of Section 11AC of the Act and Rules 57-I(4) and 57U(6) of the Rules are not satisfied does not mean that penalty under Section 209A cannot be levied if upon the evidence on record a case is made out for levy of such penalty, petition partly succeeds and is, accordingly, allowed, penalty of Rs. 2 lakhs on the petitioner No. 2 under Rule 209A of the Rules is sustained
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2012 (5) TMI 473
Duty demand - clearances of cigarettes alleged to have been made without payment of duty - penalty - applications for waiver of the requirement of pre-deposit of duty demand and penalty - allegation against the GTC is that while MPTL, Durg is a dummy company floated by GTC, fully controlled by them and that actual operations right from the stage of procurement of raw materials, manufacture of cigarettes and transportation and marketing were being carried out and arranged by GTC, during the period from 12-10-90 to 31-3-92 clandestine clearances of cigarettes without payment of duty were made from MPTL’s factory and thereby contravening various provisions of Central Excise Rules, 1944 and that the duty involved on these clandestine clearances – Held that:- after 15 years from the date of issue of show cause notice, the appellants claim that all the relied upon documents have not been supplied/allowed to be inspected - Even if there was stay on adjudication proceedings by the order of Hon’ble Madhya Pradesh High Court, but still the relied upon documents could have been supplied as there was no stay on the same, matter is still un-adjudicated and the impugned order bearing 26-5-2010 has been issued but it is signed by the Commissioner who had retired in 2008. The order passed after 15 years is an ex parte and non-speaking order supposed to have been issued by an officer who had retired long time back, matter involving huge revenue being now 15 years old, we consider it appropriate to direct the Chairman of Central Board of Excise & Customs to monitor the de novo adjudication, appeals and the stay applications are disposed of
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2012 (5) TMI 472
Classification - classification of other bathroom accessories of brass, namely soap dishes, toilet paper holder, tumbler holder, towel ring, towel rack, towel rack with single rail, coat hook, robe hook and for glass shelf - respondent were paying Central Excise duty on these items by classifying the same under sub-heading 7419.99 of the Central Excise Tariff on their transaction value determined under Section 4 of the Central Excise Act. The Department was of the view that all these items are sanitary ware and parts thereof made of brass and hence the same are classifiable under sub-heading 7418.90 of the Tariff – Held that:- other than soap dishes and toilet paper holder of brass, whose classification has been upheld by the Commissioner (Appeals) under sub-heading 7418.90, none of the other items namely towel ring/towel racks, robe hook, coat hook, tumbler holder and glass shelf are classifiable under heading 7418.90, the duty has been correctly paid in respect of these items on the value determined under Section 4, no infirmity in the impugned order, Revenue’s appeal dismissed
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2012 (5) TMI 454
Non fulfillment of export obligation - demand imposed for the duty free import of the capital goods along with interest and for imposition of penalty - assessee registered for an 100% EOU, on failure to comply with export obligation, re-exported impugned capital goods imported - Held that:- Since the goods imported after availing of the facility under EOU scheme, were subsequently exported after observing Customs and Central Excise procedure, no duty liability continue to exist on the assessee and they fulfilled all the conditions as laid down in Para 6.18(e) of Foreign Trade Policy 2004 2009 to exit from the EOU scheme, there is no question of further imposition of duty of Customs on such imported goods subsequently allowed to be re exported. Charge of non fulfillment of export obligation is not established - Decided in favor of assessee.
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2012 (5) TMI 453
Whether matter can be kept pending before Tribunal on ground of pendency of an application/petition before High Court when order staying the operation of the Predeposit Order or modifying the Predeposit Order has not been passed by High Court - assessee neither pre-deposited the directed amount nor reported any compliance on stipulated date - Held that:- It is settled position of law pendency of any appeal or for that matter any proceedings which is akin to appeal do not operate as a stay, the stay has to be obtained specifically from the higher forum. Therefore, Tribunal was justified in dismissing the appeal on ground of failure of assessee to make pre-deposit within stipulated time,
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2012 (5) TMI 452
Application for restoration of appeal - the demand and recovery of excise duty against Main party and also penalty on various other parties including applicant (transporter) – Held that:- Hon'ble High Court vide order directed Main party to deposit ₹ 15 crores in eight equal installments and in the event of such deposit pre-deposit of the penalties imposed on other appellants shall stand waived - the main appellant has failed to comply with the order - since the petitioner has failed to comply with the order of deposit, his appeal has been rightly dismissed for contravention of Section 35F of the Central Excise Actand there is no merit in the request of the restoration of the appeal - against assessee.
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2012 (5) TMI 451
Cenvat credit - 100% credit availed in the first year – Held that:- at the time of receipt of the capital goods while the credit should have been confined only to 50% of the duty amount and balance amount of the credit should have been taken in the next financial year, the appellant have taken full credit at the time of receipt of the capital goods, appellant would become eligible for the balance 50% of the credit and as such the appellant liability would be only in respect of interest on the amount of wrongly Cenvat credit taken for the period for which it was irregular, appellant are directed to deposit an amount of Rs. 2,50,000/- (Rupees Two Lakhs Fifty Thousand only) within a period of eight weeks from the date of this order. On deposit of this amount within the stipulated period, the requirement of pre-deposit of balance amount of Cenvat credit demand, interest and penalty would stand waived and recovery thereof stayed till the disposal of the appeal
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2012 (5) TMI 450
Whether the Learned Tribunal not err in dismissing the Appellant’s Appeal even though the issue of pre-deposit was pending before the Hon’ble Court - Tribunal vide order dated 19th July, 2010 dismissed the appeal of the appellant on the ground of non-compliance of the order dated 15th February, 2010 - Held that:- Tribunal erred in dismissing the appeal of the appellant vide order dated 19th July, 2010. Time upto 16th May 2011 is granted to the appellant to make deposit of the entire tax amount and in case the said deposit is made, the appeals filed by the appellant will be heard by the Tribunal. - However stay order not to be interfered.
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