Income Tax
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Whether serving a fresh notice is necessary for the purpose of making an assessment on the body of individuals where an assessment was reopened in the status of association of persons - HC
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Methodology of computation of the assessee's income from finance charges. - System of accounting - accrual of income - bifurcation of the EMIs into principal and interest components - HC
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Claim of depreciation in respect of assets allegedly leased - financing transactions - assessee purchased assets and leased back to the same company claiming 100% depreciation - HC
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Payment of Remuneration Working partner allowed by Tribunal - Manner of quantification in the partnership deed - Section 40(b) - HC
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Waiver of pre-deposit - if on a cursory glance it appears that the demand raised has no leg to stand, it would be undesirable to require the assessee to pay full or substantive part of the demand - HC
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Penalty levied u/s 272A(2)(k) delayed filing of e-TDS returns- AT
Customs
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Discretionary power of tribunal to release the confiscated goods - inadequate redemption fine - levy of penalty under two sections of Customs Act. - HC
DGFT
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Permission to The Cotton Corporation of India Ltd. for export of cotton (Tariff Codes 5201 and 5203) during the cotton season 2011-12. - Ntf. No. 114 (RE-2010)/2009-14 Dated: May 4, 2012
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Permission for registration of contracts for export of cotton (Tariff Codes 5201 and 5203). - Ntf. No. 113 (RE-2010)/2009-14 Dated: May 4, 2012
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Amendments in Appendix 37A & Appendix 37D of Handbook of Procedure, Vol.I. - Cir. No. 109 (RE2010)/2009-14 Dated: May 3, 2012
FEMA
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Exim Bank's Line of Credit of USD 382.37 million to the Government of the Democratic Socialist Republic of Sri Lanka. - Cir. No. 116 Dated: May 4, 2012
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Exim Bank's Line of Credit of USD 70 million to the Government of the Republic of Congo. - Cir. No. 115 Dated: May 4, 2012
Indian Laws
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Scope of the term "fiduciary capacity" - Benami Transactions (Prohibition) Act, 1988 - SC
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Permission to allow writer to the Differently Abled Candidates by ICAI during exam - HC
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Lump sum sales tax on brick klin owners on the basis of production capacity is unconstitutional - Article
Service Tax
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Real estate agent's service - - a service even if provided for consideration only to make few change about sale or purchase of real estate in the records without being the causative factor for such sale or purchase is not taxable service - AT
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Cenvat credit - insurance of workers retiring under voluntary retirement scheme and insurance of export goods and insurance abroad for the sale in case - AT
Central Excise
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Rebate claims - The Cenvat credit was accumulated on the basis of duty paid documents brought up in collusion with nonexistent or bogus firms. - HC
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Notification no. 64/95-CE dated 16.03.1995 - A person invoking an exception or exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision.- AT
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Excisability - demand of duty - intermediate product - captively consumed marketability polystyrene sheets arising in the course of manufacture of the final products - AT
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Income Tax
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2012 (5) TMI 79
Disallowance of depreciation while computing the income of the assessee-trust assessee filed return admitting NIL income after claiming deduction u/s 11- Held that:- Income for the purpose of Section 11 of the Act is the income as per the accounts of the Trust - income in the commercial sense without reference to the heads of income specified in Section 14 - concept of commercial income necessarily envisages deduction of depreciation on assets of the Trust Decided in CIT v. Rao Bahadur Calawala Cunnan Chetty Charities (1979 -TMI - 35614 - MADRAS High Court) in favour of assessee.
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2012 (5) TMI 77
DEPB credit utilized by the assessee and profit earned on sale of DEPB credit would constitute profits under Section 28 (iiid) Held that:- In M/s Topman Exports Versus Commissioner of Income Tax, Mumbai (2012 -TMI - 210467 - SUPREME COURT OF INDIA) it has been held by the Supreme Court that DEPB credit which is utilized is covered under Section 28 (iiic) and profits of sale of DEPB are covered by Section 28 (iiid) - The Tribunal was wrong in holding that the DEPB credit was covered by Section 28 (iiid) of the Act.- in favour of assessee. Interest income to be excluded while applying Explanation (baa) to Section 80 HHC Held that:- Since the assessee has stated that they had earned interest income on FDRs from bank for availing various facilities availing like margin money, packing credit, etc , the Tribunal has not examined the factual matrix and has merely affirmed the decision of the CIT(Appeals)that interest received is assessable under the head other sources - remit to the Tribunal to factually examine the aforesaid aspect - in favour of assessee. Applied Explanation (1)(iv) to Section 115JB while computing the book profits Held that:- As per Explanation (1)(iv) to Section 115JB, it is clear that the book profit shall be reduced by the amount of profits eligible for deduction under section 80HHC as computed under clause (a) or clause (b) or clause (c) of sub-section (3) or sub-section (3A) - AO had added several expenses like dis-allowances of amounts under Section 14A, feasibility report expenses, the deduction as computed by the assessee is not on record - remit to the Tribunal to re-compute the deduction under Explanation (1)(iv) of Section 115JB in favour of assessee.
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2012 (5) TMI 76
Writ of Certiorari to quash the order of attachment of Bank Accounts for non clearance of demand under Section 156 petitioner contested that he has prima facie case against the demand but his Appeal or Application for Stay is not being heard by the respondent No.2 - Held that:- Since the Appeal along with the Stay Application is pending disposal with respondent No.2, the Writ Petitions are disposed of - direction to the respondent No.2, to dispose of the Stay Application filed within a period of seven days on appearance of the parties before him in favour of assessee.
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2012 (5) TMI 75
ITAT allowed payment made to company and C & F Handling Charges Held that:- Supported by details of expenditure that expenditure is neither wholly of exclusively for the business of the assessee company nor it is allowable u/s. 37 - the assessee or CMD has not given any information how many total man-hours were available and at what level and how much Man hours were spent on this company - it has not given the man-hours spent on this particular company - whether the services are rendered and the expenditure incurred is wholly and exclusively for business purpose has not been proved- no evidence placed on record by the assessee to show that its sales were promoted by the appointment of the handling agent - against assessee. Payment made to the Corporate Management Division allowed by ITAT - Held that:- Whatever the evidence the assessee furnished in the nature of correspondence with the CMD it is covered by the Technical Assistance Agreement made for which separately amount has been paid and no other services have been rendered which is over and above this Technical Assistance Agreement - also held that the expenditure is not wholly and exclusively for business purposes the disallowable expenditure which is not allowable under the I.T. Act the particular company cannot be indirectly allowed to CMD like entertainment or perks disallowable u/s. 37, 40A and 40(c) against assessee.
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2012 (5) TMI 74
Canceling the penalty u/s 271(1)(c) holding that there was no positive concealment detected by the AO Held that:- There has to be concealment of particulars of income by the assessee or the assessee must have furnished inaccurate particulars of income - addition sustained was based on ad hoc estimation of income by applying a flat rate of 8% of profit which can neither be held as concealment of income or filing of inaccurate particulars of income - disparity between the assessed income and the returned income it can be said that the addition was purely on ad hoc estimation of net profit ratio, the AO applied a particular flat rate of 11% against the declared profit rate of 3% by the assessee -the assessee's offering of the profit rate was a conditional proposal to buy peace and not to enter into dispute with revenue authorities - the circumstances under which the advances to Directors have been made required for meeting out the contingencies of the business - CIT (A) was justified in deleting the penalty levied in favour of assessee.
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2012 (5) TMI 73
Disallowance of common cost - assessee before us is a company engaged in the business of providing services to the shippers and charterers by operating and maintaining a fleet of dry bulk carriers in various sizes. The income from these ships was computed, under the tonnage scheme under section 115VG - Held that: the provisions of Section 115 VF, when an assessee options for taxation under the tonnage scheme, the tonnage income is computed under section 115 VG and the income so computed shall be deemed to be the profits chargeable under the head 'profits and gains from business and profession' and the "relevant shipping income referred to in sub section (1) of Section 115 V-I shall not be chargeable to tax" As evident from a plain reading of the above statutory provision, where a tonnage tax company also carries on any business or activity other than the tonnage tax business, common costs attributable to tonnage tax business are concerned are to be determined on a reasonable basis. However, with regard to the depreciation, the allocation of costs have to take into account use of such asset for tonnage tax business and the other business.Assessing Officer is said to have accepted the same formulae, as is rejected in this assessment year, for apportionment of expenditure in the immediately succeeding assessment year, in our humble understanding, cannot act as a estoppel against the specific provisions of law. The provisions of law under section 115 VJ have not been taken into account by the authorities below. Appeal is allowed by way of remand to AO
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2012 (5) TMI 72
Block assessment and penalty u/s 158BC Search and seizure Undisclosed income - held that - When block assessment of any item is made based on evidence collected in the course of search, the assessment under Section 158BC read with Section 158BD is supported by statutory provision namely, Section 158BB of the Act. The Tribunal cannot cancel the assessment of undisclosed income if the same is based on tenable and acceptable evidence recovered in the course of search and which is not disproved by the assessee. Regarding addition is of ₹ 1.09 crores, which is the sum total of unaccounted payments made by the assessee to film directors . The reason for the addition is that all the three film directors denied receipt of payments from the assessee - Held that:- Even when unaccounted income is determined from business carried on clandestinely or not, the statute does not authorize assessment of anything other than "undisclosed income" which has to be arrived at after allowing expenditure incurred by the assessee whether it be accounted in the regular books or not. What is clear from the clandestine records seized from the assessee is that both the film producer and the film directors were engaged in collections and payments outside the regular books of accounts and that is the only reason why there is no written agreement between them in regard to profit sharing and the payments are consciously not made through cheques or demand drafts. - The mere fact that film directors have not confirmed receipt of payment in cash from the assessee also is not a ground for treating the payments as bogus or not genuine. - Decided in favor of the assessee. Accounting expenditure - section 69C - held that:- unaccounted expenditure in a proper business can be treated as an expenditure prohibited by law to attract explanation to Section 37(1). So far as the proviso to Section 69C is concerned, in the first place the proviso introduced with effect from 01/04/1999 does not apply to the block assessment for the period covered herein and secondly we do not think excess expenditure over accounted expenditure in business is covered by Section 69C itself. - Decided in favor of assessee. Regarding deletion of ₹ 44.62 lakhs by the Tribunal - advances received from theatre owners. - Held that:- The assessee in the sworn statement stated that advances from theatre owners were received for exhibiting just two films, Aniyathipravu and Chandralekha. However, admittedly, these films were produced and released in the year 1996-97, whereas the advances were stated to have been received during the period 1991-92 to 1993-94. the confirmation letters on the face of it are not genuine and no reasonable man can accept it as proof of cash transactions running into lakhs of rupees. Going by the assessee's financial position and investments revealed by seized records, it is difficult to accept the theory of advance from theatre owners put forward by the assessee later. Decided in favor of the revenue. Regarding deduction under Section 80-IA - Held that:- the assessee has not made any claim in the regular returns filed up to the assessment year 1998-99. - The requirement of an audit report in form 10CCB is for the Department to verify the factual position with reference to the data contained therein, which has contemporary relevance. A claim of deduction under Section 80-IA is admissible only in regular assessment that too if it is claimed along with the return accompanied by audit report in form 10CCB. - Dedction can be claimed for the first time in the computation of undisclosed income in the assessment under Section 158BC of the Act. Decided in favor of the revenue. Regarding penalty - Held that:- the additions of undisclosed income are essentially estimate of profits from film industry and the assessment is based on accounts seized during search and statements recorded from the assessee, which are admissible under Section 132(4) of the Act. Going by the strict provisions of law as explained by us above, penalty is leviable on the differential amount assessed and sustained in appeal which is exactly what the Assessing Officer has done. However, we feel for the first time such a strict interpretation on penalty need not be applied to the assessee at this distance of time after the relevant years. - Partly decided in favor of assessee and partly in favor of revenue.
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2012 (5) TMI 71
Reassessment - Whether serving a fresh notice is necessary for the purpose of making an assessment on the body of individuals where an assessment was reopened in the status of association of persons - that initially an assessment was completed on 28.02.1975 in respect of the assessee in the status of AOP comprising 18 persons in the name of 'Gutta Anjaneyulu & Co - The matter was then again reopened by the ITO by issuing a notice under Section 148 of the Act after obtaining the approval of the CBDT - Full Bench of this Court in PANNABAI v. COMMISSIONER OF INCOME-TAX (1985 -TMI - 27526 - ANDHRA PRADESH High Court) - Held that: it is quire clear, after applying the law laid down by the Full Bench that for modifying the status of the AOP consisting of 3 persons to a BOI consisting of 2 persons, that the CIT could not have acted on his own - there is no doubt that the order passed by the CIT which was upheld by the Tribunal whereby the status of the assessee was "merely" modified from AOP to BOI is not sustainable This notice can be issued only after obtaining the approval of the CBDT since more than 35 years have gone by from the date of the original assessment made on 28.02.1975 - Decided in favor of the assessee by way of remand to AO
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2012 (5) TMI 70
Methodology of computation of the assessee's income from finance charges. - System of accounting - accrual of income - Held that:- there is no indication of the assessee's hire purchase agreements reflecting bifurcation of the EMIs into principal and interest components. In the absence thereof, the common and accepted usage of the Indexing system of accounting in the hire purchase trade must be held to be valid as otherwise the rate of interest under the mercantile system in so far as the later EMIs are concerned would be far higher and contrary to the rate prescribed in the assessee's agreements. Further, as the assessee had itself employed this system of accounting in its books of account, applying the law laid down in SANJEEV WOOLEN MILLS (2005 -TMI - 6166 - SUPREME Court), the Department was bound to accept the same for the assessment proceedings. The law laid down by the Special Bench of the Income Tax Appellate Tribunal at Hyderabad in NAGARJUNA INVESTMENT TRUST LIMITED (1997 -TMI - 65897 - ITAT HYDERABAD) was correct. In the event the hire purchase or leasing agreement did not give the apportionment or bifurcation of the EMIs between the principal and interest components, the interest income in relation to such agreements, recognized on the basis of SOD system of accounting by the assessee in its books of account, represents the 'real income' accrued to the assessee. - Decided in favor of revenue.
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2012 (5) TMI 59
Claim of depreciation in respect of assets allegedly leased - assessee purchased assets and leased back to the same company claiming 100% depreciation as a lessor - ITAT deleted addition made by the AO - Held that:- The appellants are carrying on the business of financiers, they are not dealing in motor-vehicles and the motor-vehicle purchased by the customer is registered in the name of the customer - letter taken from the customer agreeing to keep the vehicle insured recited that the vehicle has been given as security for the loan advanced by the appellants - right of the appellants may be extinguished by payment of the amount due to them under the terms of the hire-purchase agreement even before the dates fixed for payment - the intention of the appellants in obtaining the hire-purchase and the allied agreements was to secure the return of loans advanced to their customers and no real sale of the vehicle was intended considered merely financing transactions -The matter has not been examined and considered by the tribunal from the right perspective as the real issue and controversy has not been examined - An order of remand directing the tribunal to examine the controversy afresh - in favour of the Revenue
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2012 (5) TMI 58
Royalty income - assessee-company computed tax on royalty in respect of 'Marketing Royalty Agreement and royalty on sale of software to third parties @ 10.455% as per section 115A as against the rate of 15% as per Article 12 of the DTAA between India and USA royalty towards ESW the tax was computed @ 15% as per Article 12 of the DTAA between India - USA as against the tax rate of 20% as per section 115A - Held that:- It is a settled position that as per section 90(2), the provisions of the Act or the provisions of the Treaty, whichever is beneficial, apply to the assessee - royalty income in respect of the agreement entered into before 1.6.2005 are from one 'source' and royalty income in respect of agreements entered into on or after 1.6.2005 are from a different 'source' , the contracts or agreements being the source of income have been entered into on different dates and the statute recognizes such time differentiation and provides separate tax rates for each such stream - the assessee is justified in comparing the rate of 10% and 20% (as per section 115A) separately and independently with the rate of 15% (as per Article 12 of the India-USA DTAA Treaty - where a provision in the taxing statute is capable of two reasonable interpretations, the view favorable to the assessee is to be preferred in favour of assessee. Charging of interest u/s.234B Revenue submitted that since the rate for advance tax at 15% is more than the TDS rate under section 115A @10%, the assessee is liable to be charged interest under section 234B Held that:- Foreign company is not liable for internet u/s. 234B - the computation of tax by the assessee at the rates specified in the Treaty and section 115A is correct - that the rate of tax for payment of advance tax and TDS being different, their ratio is not applicable - assessee is therefore not liable to be charged interest u/s. 234B in favour of assessee.
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2012 (5) TMI 57
Writ petition - directing the petitioner to remit 50% of the amount in five equated monthly installments - Held that:- AS a strong prima facie case has been made out by the petitioner,petitioner to remit 25% of the demand raised in two equated monthly installments - on such payment recovery of the balance tax due under Ext.P1 will stand stayed and the Appeal will be heard without any delay.
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2012 (5) TMI 56
Remuneration payable to Working partner allowed by Tribunal - Revenue appeal that the amount of remuneration has not been quantified in the partnership deed Held that:- Section 40(b) (v) specifies that remuneration is to be authorized by partnership deed to a working partner, the working partner has been defined in explanation 4 opportunity Section 40(b), Clause 8 of the partnership deed relates to the entitlement of remuneration to the to the partners - It is mentioned in clause 8 of the partnership deed that remuneration will be payable as per norms fixed by the relevant provisions of the Income-tax Act, thus the quantification of the remuneration is apparent from the clause 8 - the requirement in law is that remuneration should have been authorized and the amount of remuneration shall not exceed the amount as mentioned in sub-clause (v) of Section 40 (b)- the remuneration receivable by the partners is taxable in their hands and it is not the case of the Revenue that the assessee has claimed remuneration to the working partners to avoid tax against revenue.
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2012 (5) TMI 55
Set off of short term capital loss on transaction Security Transaction Tax had been paid against short term capital gain arising from non STT transactions - Held that:- Under the provisions of section 70(2), short term capital loss arising from any asset can be set off against short term capital gain arising from any other asset under a similar computation made - merely because the two set of transactions are liable for different rate of tax it cannot be said that income from these transactions does not arise from similar computation made as computation in both the cases has to be made in similar manner under the same provisions in favour of assessee
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2012 (5) TMI 54
Levy of penalty under section 271(1)(c) - assessee contested that a similar addition made for A.Y. 2003-04 stands deleted by the Ld. CIT(A) in first appeal Held that:- Such collection towards share deposit account was not in the nature of revenue receipt and hence was not taxable - the claim of the assessee was on bona fide belief of past accounting practice and legal interpretation - the assessee has disclosed the complete facts in the books of accounts and return of income - it is duty of the AO to compute total income in accordance with law on the basis of particulars filed by the assessee - there is no finding that the explanation furnished by the assessee was false - the AO himself did not disallow such amount in earlier years as well as in subsequent years - penalty under section 271(1)(c) is not leviable -The order of CIT(A) is confirmed.- in favour of assessee.
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2012 (5) TMI 53
Business of retail trade in liquor purchases from the Andhra Pradesh Beverages Corporation Ltd - AO computed the turnover by adopting the profit margin as 27% as per the GOMS No. 184 dated 7.2.2005 of the Govt. of AP and added the difference to the income as suppressed turnover - assessee was unable to produce sale bills - Tribunal directed AO to estimate the net profit at 3% of the purchases or stock put for sale during the year Held that:- the entire understatement of sales cannot be treated as undisclosed income for the year under consideration - it is well settled law that the best guide for estimation of income after rejecting the books of accounts is either past history of the assessee or any other comparable cases - since the assessee's net profit in the past is between 0.12% to 0.28% of sales the estimation of the net profit at 3% is reasonable against revenue. Levying interest u/s 234B assessee contested that the entire purchases are subject to TCS and no advance tax is payable Held that:- The rate of tax collectible may or may not be equivalent to tax which is ultimately payable by the purchaser,the purchaser has to pay advance tax to make up for this difference - Hence as per the provisions of Section 209 r.w.s. 234B the CIT(A) rightly directed the AO to give credit to the tax collectible u/s.206C, from the tax on the assessed income and compute the short fall in payment of advance tax - against assessee.
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2012 (5) TMI 52
Confirmation of foreign travel expenses Held that:- As copies of affidavits were not filed before lower authorities and there is no application having been filed before Ld.CIT(A) or before this bench for admission of such material, hence it is ignored - the assessee has failed to establish that foreign travel expenses as claimed have actually been incurred for business purposes or were even incidental to business of the assessee against assessee. Dis - allowing the claim of bad debt - Held that:- Decided in TRF Ltd. vs. CIT( 2010 - TMI - 76626 - SUPREME COURT ) that if the amount has been written off from the books of account, it is allowable - as the amount has actually been written off in this year as admitted by the assessee and not rebutted by Revenue no justification in making the impugned dis allowance of claim - in favour of assessee.
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2012 (5) TMI 50
Penalty levied u/s 272A(2)(k) delayed filing of e-TDS returns - Held that :- There was only a technical and venial breach to the provisions contained in Rules 31A (2) of the Income Tax Rules, 1962 r.w.s. 200(3) requiring the assessee to submit quarterly returns on due date - as regards the delay in submitting TDS returns, it was explained by the assessee that due to non-furnishing of PAN numbers, the TDS certificate could not be filed in time, but the tax was deducted in time and deposited with the government account - it is clear that the assessee was prevented by sufficient case from filing the returns within the statutory period - assessee did not derive any benefit whatsoever by not filing the e-TDS returns in time, as the amount of TDS was duly deposited in the government treasury within prescribed time in favour of assessee.
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Benami Property
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2012 (5) TMI 78
Benami Transactions - Scope of the term fiduciary capacity - Whether the entire sale consideration required for the purchase of the suit property was provided by the defendant or contributions in that regard were made even by the plaintiffs - Held that :- Defendant failed to establish that the entire sale consideration was paid by him - On the contrary plaintiffs established they contributed towards sale consideration and the balance amount has been contributed by the first plaintiff - Cannot be said that the defendant is the absolute owner of the suit schedule property Against assesse. Whether the plaintiffs and the defendant were co-owners of the suit property Held that :- By reason of their contribution and the contribution made by their father continued to evince interest in the property and its ownership. Whether the sale transaction in favour of the appellant was a benami transaction so as to be hit by the provisions of the Benami Transactions (Prohibition) Act, 1988 - Held that :- HC held that if a part of the consideration paid for the property in dispute had been provided by the appellant in whose name the property was purchased, the transaction could not be said to be a benami transaction under section 4 of Benami Transactions (Prohibition) Act, 1988. Scope of the term fiduciary capacity - Benami Transactions (Prohibition) Act, 1988 - held that:- It is manifest that while the expression fiduciary capacity may not be capable of a precise definition, it implies a relationship that is analogous to the relationship between a trustee and the beneficiaries of the trust. The expression is in fact wider in its import for it extends to all such situations as place the parties in positions that are founded on confidence and trust on the one part and good faith on the other. - In determining whether a relationship is based on trust or confidence, relevant to determining whether they stand in a fiduciary capacity, the Court shall have to take into consideration the factual context in which the question arises for it is only in the factual backdrop that the existence or otherwise of a fiduciary relationship can be deduced in a given case.
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Customs
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2012 (5) TMI 68
Penalty imposed on the petitioner Company and also suspended the Importer Exporter Code petitioner claim to re-export the goods to foreign exporter revoking the suspension of the Importer Exporter Code as the agreement was entered before the levy of peanlty Held that:- Execution of the bond by the petitioner Company in favour of the respondents - statement further secure the respondents by also restraining the petitioner Company from dealing in any manner with the said assets to the prejudice of the respondents, till, as aforesaid the question of penalty exists - direct the respondents to permit the petitioner Company to re-export the goods by treating the Importer Exporter Code valid for the said limited purpose and subject of course to compliance of all rules, regulations & laws in favour of assessee.
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2012 (5) TMI 67
Discretionary power of tribunal to release the confiscated goods - inadequate redemption fine - levy of penalty under two sections - Anti dumping duty on CD-R - Evasion of anti dumping duty - held that:- The essence of the circumstances relevant to inference is the sine qua non and must be demonstrable. Section 125 no doubt gives discretion to release the goods on payment of redemption fine but the discretion must be exercised in a just and fair manner and on the basis of facts and has to be exercised after recording cogent and relevant reasons. There should not be failure of justice or grave injustice. Statutory discretion is not usually absolute. It is qualified by express or implied legal duty to comply with the substantive and procedural requirement before the decision is taken. Scope of Discretion - held that:- Discretion, in general, is the discernment of what is right and proper. It denotes knowledge and prudence, that discernment which enables a person to judge critically of what is correct and proper united with caution; nice discernment, and judgment directed by circumspection; deliberate judgment; soundness of judgment; a science or understanding to discern between falsity and the truth, between wrong and right, between shadow and substance, between equity and colourable glosses and pretences, and not to do according to the will and private affections of persons. When it is said that something is to be done within the discretion of the authorities, that something is to be done according to the rules of reason and justice, not according to private opinion; according to law and not humour. It is to be not arbitrary, vague and fanciful, but legal and regular. And it must be exercised within the limit, to which an honest man, competent to the discharge of his office ought to confine himself. the findings or reasoning given by the tribunal is not in consonance with the provisions of Section 125 of the Act. We have, therefore, two options. One is to remand the matter to the tribunal for fresh consideration or pass appropriate orders in consonance with the statutory language and to do justice. We are inclined to accept the second course in the present case as delay is not in the interest of either party and is likely to cause prejudice and serve no purpose. Counsel for Achiever International had made affirmative submissions to the said effect. A reading of the two provisions show that they refer to different violations. In a given case, it is possible that only one provision may be attracted and in another case both provisions may be violated. When both provisions are violated, penalty under the two Sections can be imposed. There is no provision/section in the Act, which states that should penalty under one Section be imposed, penalty under the second provision should be waived. - Decided in favor of revenue.
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Corporate Laws
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2012 (5) TMI 49
Sanction of a scheme of arrangement - whether the North Mill was transferred to the petitioner, the transferee company? - Held that:- The surrounding circumstances made it obvious that such property had passed to the applicant under the sanctioning order - The order on the request under Section 11 of the 1996 Act may then have been without prejudice to the applicant's contention that the order sanctioning the scheme was mistaken or left unaffected the applicant's right to urge such ground at a subsequent stage, only then would the present application and the plea urged by the applicant have been maintainable despite the rejection of the request under Section - once the applicant had asserted its right to the North Mill on the basis of the order sanctioning the scheme as drawn up, and failed; it was no longer open to it to claim that the order was erroneously drawn up in the North Mill not being included in the schedule thereto - a mistake of court in an order may be corrected at the instance of any person demonstrating to be prejudiced but the right of such person may not be recognized any longer if he has stood by and allowed a previous opportunity to pass when he ought to have asserted the mistake and attempted to have it rectified against applicant.
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FEMA
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2012 (5) TMI 69
Tribunal dismissed the stay Petition for waiver of predeposit of penalty in FEMA appeal unauthorizedly receipt of payments amounting to Rs.5 Crores on the instructions of persons resident outside India. - Held that:- No case was made out by the Appellant for a complete waiver of the requirement of predeposit under the second proviso to sub section (1) of Section 19 - Tribunal had directed the Appellant to deposit the penalty within thirty days failing which it was stated that the Appeal would stand dismissed - the Appellant had filed writ proceedings before the Delhi High Court and in an appeal therefrom to the Supreme Court under Section 35 - an extension of time of four weeks from the date of order should be granted to the Appellant to affect deposit.
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Service Tax
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2012 (5) TMI 81
Reward to informer - Proceedings under Article 226 demanding a release of reward outstanding under a scheme of the Union Government as he has submitted information to the DGCEI pointing out a case of service tax evasion by a company - Held that:- The issue as regards the culpability of the assessee is still pending in appeal before the CESTAT and the matter has not attained finality -the payment of a reward at this stage cannot be directed by the Court in the exercise of its extra ordinary jurisdiction under Article 226 - do not accept the basic request of the Petitioner to the effect that the committee should be directed to consider the case or that the reward should be disbursed at the interim stage - Decided case in Union of India v. C. Krishna Reddy (2003 -TMI - 46829 - SUPREME COURT OF INDIA)- CESTAT be requested to expedite the disposal of the pending appeal to be fair and proper.
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2012 (5) TMI 64
Application for stay - The appellants have submitted a few job orders and invoices relating to the work done to demonstrate the nature of work - Held that: Commissioner (Appeals) has dismissed their appeal for non-compliance with the provisions of Section 35-F of Central Excise Act. The counsel submits that in the first place, the impugned services are not classifiable under Erection and Commissioning - the appellant should be given an opportunity of hearing. - Decided in favor of the assessee by way of remand to Adjudicating authority
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2012 (5) TMI 63
Refund - Notification No.17/09-ST dated 7.7.09 - Revenue felt that the claim was not filed within the time limit prescribed, Revenue issued a show cause notice for rejecting the refund - Held that: the claim was filed within one year from the date of payment of service tax to the service provider has been found to be false as per the finding in order in appeal in para 5.4. At any rate, since the notification contains both the conditions that is proviso (e) of Clause 1 and proviso (f) of clause 2, the actual requirement is that the exporter should have paid service tax to the service provider and thereafter made a claim within one year from the date of export - Appeal is rejected
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2012 (5) TMI 62
Waiver of pre-deposit - Business Auxiliary Services - Franchisee Service - Revenue was of the view that the appellants should have paid service tax on the opportunity cost charged by the Appellants in the first type of sales and on the price differential charged in the second type of sale of goods under the head for "Franchisee Service" under clause 65 (105) ( zze ) of Finance Act, 1994 - Held that: the manufacturers are not acting as representatives of the appellant in such transactions. They submit that the appellants have not given representational rights to the manufacturers for such sales - the relationship between the manufacturers and the appellants as per the contract would give the activities and nature of franchisee services as defined by the above provisions and there is a relationship as franchisor and franchisee between the two - One difference that we see is that the excise duty is being paid on the value at which goods are sold by the appellants to the customers. In fact this factor is in favour of the case made out by the Appellants - pre deposit waived.
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2012 (5) TMI 61
Cenvat credit - insurance of workers retiring under voluntary retirement scheme and insurance of export goods and insurance abroad for the sale in case - Held that: in the case of Toyota Kirloskar Motor P. Ltd. (2011 - TMI - 210974 - KARNATAKA HIGH COURT - Service Tax) the Hon'ble High Court of Karnataka has widened the scope of input service as defined under Rule 2L of the CENVAT Credit Rules, 2004 and the service received by the applicant are covered under input services - Decided in favor of the assessee
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Central Excise
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2012 (5) TMI 66
Whether CESTAT can remand the matter back with direction to the appellant to first pre-deposit a part of the duty even though the Act does not provide for the same Held that :- Appellant assessee engaged in the manufacture of recorded audio cassettes on job work basis Show cause notice was issued to pay duty along with interest and penalty CCE(A) directed the assessee to make the pre deposit as per Circular No.619/2002 Tribunal following it decision in VIJAYATA AUDIO WORLD Versus COMMISSIONER OF C. EX., MUMBAI (2000 - TMI - 94916 - CEGAT, MUMBAI) granted full waiver of pre deposit While disposing of the appeal tribunal neither considered the applicability of the Circular No.619/2002 nor the non-applicability of the order of the Tribunal in the case of Vijayata Audio World (supra) Order passed by Commissioner(Appeals) and CESTAT was set aside CCE(A) directed to dispose of appeal.
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2012 (5) TMI 48
Demand of duty and penalty - Time limitation - appellant are engaged in the manufacture of Lacquered Metalised Polyester Film as well as Imitation Zari. The appellants were clearing Lacquered Metalised Polyester film on payment of appropriate duty - The case of the Revenue is that the appellants were clearing their final product i.e Lacquered Metalised Polyester film without payment of duty to the job worker and therefore it cannot be said that the same is semi-finished processing to the job worker - Held that: as the appellant are registered with the Revenue in the manufacture of two products, one is dutiable and the other is exempted. The appellants were captively consuming part of the Lacquered Metalised Polyester film is used in the manufacture of zari i.e exempted goods. Therefore, it cannot be said that Lacquered Metalised Polyester film is their final product which is liable to duty at the time of clearance to the job worker - Appeal is allowed
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CST, VAT & Sales Tax
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2012 (5) TMI 65
Demand of lump sum tax determined on the basis of the capacity of brick kiln as per proviso of notification dated 30.06.1993 Punjab General Sales Tax Act, 1948 - Held that:- Sub Section (4) of Section 5 of the Act is declared as ultra vires of the Article 246 read with Entry 54, List-II-State List of Seventh Schedule - in the absence of an element of sale or purchase, it is not possible to accept that the State Legislature would be competent to impose tax on the capacity to produce brick kilns by brick kiln owners - The incidence of tax is the sale not the production, therefore, the provisions of sub Section 4 of Section 5 are beyond the competence of the State Legislature - quashing the notification dated 30.06.1993 (P-1) which incorporated Section 5(4) of the Act in favour of assessee.
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Indian Laws
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2012 (5) TMI 80
Permission to allow writer to the Differently Abled Candidates by ICAI during exam - Guidelines prescribing the procedure to be followed regarding granting of 'Writer' to the Differently Abled Candidates - objection raised on the points that the Writer should not be above 20 years of age, Writer should be the same person for all the papers of an examination and should not be a relative of the candidate Held that:- Merit in the contention of the petitioner that in this season of examinations, any under 20 years of age person is likely to be busy in his/her own examination - The purpose of the respondent ICAI of preventing use of unfair means, can be taken care of by allowing only those person, even if related to the examinee and even if over 20 years of age, who are not familiar with the subject of examination, other persons irrespective of relationship and age should be allowed by the respondent to act as 'Writer' - a need to change the Writer for the reasons beyond the control of the examinee or the Writer would be allowed - directions are only for the current examinations - Examination Committee in its meeting will be entitled to take its own decision after considering the difficulties pointed out by the petitioner.
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2012 (5) TMI 60
Delay in Consent to prosecute - offences under Sections 3, 4, 5 and 6 of the Explosive Substances Act, 1908. - consent of central government for prosecution under Section 7 of the Explosive Substances Act, 1908 Counsel for the appellant submitted that the courts below erred in allowing the application filed by the prosecution after a delay of about three years. He submitted that it was not open to the prosecution to make repeated attempts to get sanction from the competent authority. Counsel submitted that by passing order under Section 311 of the Code, the trial court has subjected the appellant to the ordeal of a trial for the offences under the said Act after a period of three years. This has resulted in miscarriage of justice. Counsel submitted that since the prosecution had deliberately delayed obtaining sanction, it cannot be now allowed to fill in the lacuna. Such a course will result in abuse of process of court. - Held that:- in the facts of this case, where innocent persons lost their lives and several persons were severely injured due to the mishandling and ignorance of assessee which took place in the appellants shop, three years period cannot be termed as delay against assessee.
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