TMI Tax Updates - e-Newsletter
June 18, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise Wealth tax

Articles

1. THE COMMISSION PAID TO PRIVATE DOCTORS FOR REFERRING PATIENTS FOR DIAGNOSIS COULD NOT BE ALLOWED AS A BUSINESS EXPENDITURE.

   By: DR.MARIAPPAN GOVINDARAJAN

2. Services becoming taxable w.e.f. 01.07.2012- advisable to pay and to receive evidence of payment before 30.06.2012 to avoid extra liability, contingency and disputes.

   By: DEVKUMAR KOTHARI

3. NEWSWEEK, OUTLOOK AND PLACE OF PROVISION OF SERVICE RULES, 2012

   By: Jayaprakash Gopinathan

News

1. India- Brazil to Strengthen Cooperation in Making Drugs and Medicines: Anand Sharma.

Notifications

Customs

1. 41/2012 - dated 14-6-2012 - Cus

Seeks to amend Notification No. 39/96-customs - Exchange rates for export goods - Amendment to Notification No. 30/96-Cus. (N.T.).

2. 40/2012 - dated 14-6-2012 - Cus

Inclusion of Inland Container Depot (ICD) Tondiarpet (TNPM), Chennai in the list of ports permitted for exports and imports under Export Promotion.

Income Tax

3. 22/2012 - dated 14-6-2012 - IT

Exemption under Section 10(48) - Notified Foreign oil Company selling crude oil in India

4. 21/2012 - dated 13-6-2012 - IT

No Deduction of tax at source (TDS) on Software

Service Tax

5. Order No. 1/2012 - dated 15-6-2012 - ST

Service Tax (Removal of Difficulty) Order, 2012 - Amends section 68 of the Finance Act, 1994 – Consequential Amendment

Circulars / Instructions / Orders

DGFT

1. 05 (RE:2012)/2009-2014 - dated 14-6-2012

Amendment of SION E-125 under Food Product Group.

Highlights / Catch Notes

Income Tax

• High Court Clarifies: Cannot Split Assessing Officer's Order for Separate Challenges u/s 264(4)(c.

  Case-Laws - HC : The order of the Assessing Officer cannot be divided into two parts with one part being made subject matter of challenge before the appellate authority and the other part being made subject matter of challenge under the revisional jurisdiction. Section 264(4)(c) does not permit such bifurcation- HC
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• Penalty for Repayment by Journal Entries u/s 271E Deleted; No Contravention of Section 269T Found.

  Case-Laws - HC : Penalty u/s 271E - contravention of Section 269T - repayment by journal entries - penalty imposed u/s 271E deserves to be deleted - HC
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• Section 14A Notional Interest Rule Deemed Inapplicable for Loans Used as Capital in Partnerships.

  Case-Laws - AT : Dis-allowance u/s 14A of notional interest paid on loan taken for capital contribution in partnership firm - partnership firm - provisions of section 14A are not applicable in the present case - AT
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• MLA Salary Income Not Eligible for Expenditure Deductions u/s 57.

  Case-Laws - AT : Allowable deduction from salary received by MLA - section 57 do not provide for any deduction of expenditure from such salary income, etc of an MLA. - AT
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• Court Rules Job Work Activities Qualify for Investment Allowance u/s 32A; Manufacturing Status Confirmed Regardless of Ownership.

  Case-Laws - HC : Investment allowance u/s 32A - job work – activity which the assessee carries on is manufacturing activity irrespective of the fact whether the grey cloth belongs to it or to its customers. - deduction allowed - HC
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• Court Denies 25% Depreciation Claim on Abkari License; Use Written Down Value, Not Purchase Cost.

  Case-Laws - HC : Depreciation on the purchase value of abkari licence - assessee's claim for depreciation at 25% of the actual cost is not allowable because depreciation has to be allowed only on written down value. - HC
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• Foreign Oil Company Exempt from Income Tax on Crude Oil Sales in India u/s 10(48) of Income Tax Act.

  Notifications : Exemption under Section 10(48) - Notified Foreign oil Company selling crude oil in India - Notification
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• New TDS Rules Issued for Software Payments: Key Changes Affecting Software Transactions and Tax Compliance.

  Notifications : Deduction of tax at source (TDS) on Software - Notification
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• Loan Processing Fees Examined as Interest Under Income Tax Act Sections 2(28A) and 194A; TDS Non-Compliance Triggers Section 40(a)(ia) Consequences.

  Case-Laws - AT : Loan Processing fees - whether considered as interest for purpose of Section 2(28A) and 194A - assessee was obliged to deduct tax at source which it had not done so. Rigours of Section 40(a)(ia) is attracted - AT
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• Royalty Income Taxed on Cash Basis Under India-USA DTAA, Regardless of Accounting System Used.

  Case-Laws - AT : DTAA between India and USA - Royalty income - irrespective of the system of accounting, royalties are taxable on cash basis. - AT
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• Denial of Registration u/ss 12A and 80-G Due to Extravagant Expenses, Despite No Ban on Luxury Conferences.

  Case-Laws - AT : Registration u/s 12A and 80-G - denial on ground that there was extravagance of expenses - there is no ban or embargo whether conference can be held in five star hotel or not. - AT
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Customs

• Chennai's ICD Tondiarpet Added to Authorized Ports List for Export-Import Operations to Boost Trade Efficiency.

  Notifications : Inclusion of Inland Container Depot (ICD) Tondiarpet (TNPM), Chennai in the list of ports permitted for exports and imports under Export Promotion. - Notification
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• Proposed Amendments to Notification No. 39/96-Customs Update Exchange Rates for Export Transactions to Reflect Current Market Conditions.

  Notifications : Seeks to amend Notification No. 39/96-customs - Exchange rates for export goods - Amendment to Notification No. 30/96-Cus. (N.T.). - Notification
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DGFT

• DGFT Announces Amendment to SION E-125 for Food Products, Streamlining Export Input-Output Calculations.

  Circulars : Amendment of SION E-125 under Food Product Group. - Public Notice
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Corporate Law

• Limitation Period for Offenses Under Companies Act: Six Months from Offense or Awareness Date Per Section 469(1)(b).

  Case-Laws - HC : Offense under companies act - period of limitation of six months - period of limitation for an offence starts on the date of the offence or where the date is unknown from the date the person aggrieved by the offence acquires knowledge of such offence (section 469(1)(b)). - HC
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Indian Laws

• Service Tax Amendment Corrects Reference Error in Section 68 to Section 66B with 2012 Order.

  Act-Rules : While introducing negative list under Service Tax the reference to Section 66 in Section 68 was not amended in Finance Act, 2012, now this error is corrected section 68 amended vide Service Tax (Removal of Difficulty) Order, 2012 dated 15-6-2012 to make reference to Section 66B.
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Service Tax

• Miscellaneous and transaction charges excluded from gross value for service tax in stock broking services.

  Case-Laws - AT : Stock Broking service - Valuation - inclusion of Misc. charges, turnover charges, Trade Guarantee Fund (TGF), Investor's Protection Fund (IPF), Stamp duty, Stock Exchange charges, Transaction charges, SEBI fees, Custom Protection Fund (CPF) and Demat charges - shall not form part of gross value of taxable service. - AT
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• Service Tax Implications on Flats Allocated to Landowners in Joint Development Agreements Pre-April 2006: Registration Fees & Stamp Duty Query.

  Case-Laws - AT : Construction of residential complexes - joint land development agreement - agreement prior to 19-4-2006 - value of flats given to land owners - inclusion of Registration fees and stamp duty - AT
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• Exemption Notification No. 13/2003-ST: Product May Not Qualify as 'Processed Tobacco'; Partial Stay Granted in Case.

  Case-Laws - AT : Exemption Notification No.13/2003-ST – Product should be considered as 'processed tobacco' for the purpose of interpreting Notification No. 13/2003 and therefore they may not be eligible for the exemption. - stay granted partly. - AT
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• Port Service Tax Refund on Export Services: Criteria Met, Officers Can't Reject Claims Over New Issues.

  Case-Laws - AT : Refund of Port service tax paid on taxable services utilised for export of goods - Once three aspects are satisfied, the officer sanctioning the refund cannot go into other issues to reject refund claimed. - AT
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• Rebate Denied for Non-Filing of Declaration Under Notification No. 12/2005 ST Despite Being Procedural.

  Case-Laws - AT : Rebate claim - notification No. 12/2005 ST - was not filed - even though non filing of declaration is only procedural, rebate will not be admissible. - AT
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• Appellant's Belief in Non-Taxability of Petrol Bunk Construction Rejected; Deemed 'Commercial Construction Service' Under Tax Rules.

  Case-Laws - AT : Demand of service tax - construction of petrol bunks - claim of the appellant is that they were under bona fide belief that their activities did not fall under 'Commercial or Industrial Construction Service' appears not acceptable. - AT
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Central Excise

• Used Capital Goods Sale Not "As Such," Exempt from Duty Liability, Rule 3(5) Inapplicable.

  Case-Laws - HC : Duty liability - Sale of used capital goods - . They cannot therefore be stated to be sold “as such” capital goods. They were sold as used capital goods. Hence, Rule 3(5) has no applicability. - HC
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• Refining and Minting Precious Metals Like Gold and Silver Classified as Manufacturing for Excise and Tax Purposes.

  Case-Laws - AAR : 'Manufacture' - process for refining and minting of products of precious metals namely gold, silver and platinum as per the specifications of customers - process amounts to manufacture - AAR
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• PVC Crates Used for Transporting Aerated Water Bottles Qualify for CENVAT Credit as Inputs or Capital Goods.

  Case-Laws - AT : CENVAT Credit on PVC crates used for transporting aerated water in bottles - circumstances the PVC crates being used as inputs/capital goods in the manufacture of aerated waters accordingly CENVAT Credit is admissible on the same - AT
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• CENVAT Credit Eligibility Unaffected by Freight Bifurcation for Domestic and Export Clearances; Applies Up to Place of Removal.

  Case-Laws - AT : Bifurcation of Freight paid in respect of domestic clearances and export clearances for CENVAT credit - it makes no difference for allowing Cenvat credit whether the goods are cleared for export purpose or for domestic purpose up to the place of removal - AT
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• Order Copy Must Be Served to Assessee via Registered Post, Not Speed Post, Per Section 37C(1)(a) Requirements.

  Case-Laws - HC : As per Section 37C(1)(a), it was mandatory to serve a copy of the order of Commissioner (Appeals) by registered post with acknowledgment due to the assessee. - delivery by speed post is not enough - HC
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Case Laws:

• Income Tax

• 2012 (6) TMI 359
  Maintainability of Revision petition u/s 264 for waiver of interest u/s 234B when the same has not been raised in the appeal before first appellate authority - Held that:- Bar u/s 264(4)(c), which imposes an absolute prohibition against access of revisional jurisdiction, comes into operation and applies when the assessment order is made subject matter of challenge before the appellate authority. It does not matter whether a particular aspect or issue is challenged or whether a particular relief has not been prayed for. The order of the Assessing Officer cannot be divided into two parts with one part being made subject matter of challenge before the appellate authority and the other part being made subject matter of challenge under the revisional jurisdiction. Section 264(4)(c) does not permit such bifurcation - Petition dismissed.

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• 2012 (6) TMI 358
  Penalty u/s 271E - contravention of Section 269T - repayment of loan by making journal entries in the books of account - Held that:- Reading Section 269T, 271E and 273B together it becomes clear that Section 269T puts an embargo on repayment of loan/deposit except by the modes specified therein, non-compliance of which renders the person liable for penalty u/s 271E. However, Section 273B provides that no penalty u/s 271E shall be imposed if reasonable cause is shown by the concerned person for failure to comply with the provisions of Section 269T In present case, repayment by journal entries was on account of the fact that the assessee was liable to receive amount towards the sale price of the shares sold by the assessee to the person from whom loan/deposit was received by the assessee. Neither the genuineness of the receipt of loan/deposit nor the transaction of repayment of loan by way of adjustment through book entries carried out in the ordinary course of business has been doubted in the regular assessment. In the absence of any finding that the repayment of loan/deposit was not a bonafide transaction and was made with a view to evade tax, it is held that though the assessee has violated the provisions of Section 269T, the assessee has shown reasonable cause u/s 273B and, therefore, penalty imposed u/s 271E deserves to be deleted - Decided in favor of assessee.

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• 2012 (6) TMI 357
  Determination of unexplained money - search - order of I.T.A.T that search was conducted and cash was found in possession of the assessees – statement of assessee that the amount has been kept with him in safe custody by his father – Held that:- The Tribunal concludes with the presumption that the amount stated in the books of account has not been handed over by the father, but belongs to the assessee, has been withdrawn - the assessee was found in possession of cash, therefore, this is the case where the presumption stands rebutted on the basis of documents, which were produced by the assessee - the presumption cannot be on the basis of the assessee's records only is not correct because the documents that are produced include the books of the father - no question arises for determination and consideration of this appeal.

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• 2012 (6) TMI 356
  Dis-allowance u/s 14A of notional interest paid on loan taken for capital contribution in partnership firm - Revenue contended that interest incurred has resulted into taxable as well as tax free income u/s 10(2A) and hence that portion of the interest expenditure which relates to the share of profit is Liable to be disallowed - Held that:- Partnership Act does not contemplate or stipulate capital contribution by the partner as one of the conditions for a partnership firm. Nowhere in the clauses of partnership Agreement it has been stated that contribution of money towards capital or loan were the conditions of admittance of the new partners for sharing of profits by the partners Alt the partners, including the appellant, are entitled to the profit sharing as per the partnership deed and the same was not dependent on contribution of funds made by the partners. Hence, CIT(A) rightly held that the provisions of section 14A are not applicable in the present case - Decided in favor of assessee.

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• 2012 (6) TMI 355
  Validity and essentially, of the order of remand made by the ITAT for finding out the nature of activities undertaken by the appellant and whether it amounts to manufacturing - assessee carrying on the activity of converting heavy marble blocks into slabs and tiles - Held that:- Subsequent events placed on record reveal that core issue on merits have been recorded in favour of the assessee after remand. hence, questions of law as formulated in this case on the validity of the order of remand, now could only be considered rather redundant. Appeal is treated as infructuous and is dismissed as such.

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• 2012 (6) TMI 354
  Allowable deduction from salary received by MLA - AO allowed daily allowance and constituency allowance, fully exempt u/s 10(17)(i) and 10(17)(iii) and dis-allowed balance amount claimed by assessee - assessee contending deduction u/s 57 - Held that:- ‘Salary’ and other allowances received by an MLA, arising out of such position, are to be assessed to tax under the head ‘Income from other sources’, however CIT(A) has rightly affirmed act of AO that provisions of section 57 do not provide for any deduction of expenditure from such salary income, etc of an MLA. Only those exemptions as laid out as per the provisions of section 10(14) read with Rule 2BB(1) and section 10(17) are only allowable from an MLA’s salary. Unexplained credit u/s 68 - alleged gift to son - assessee contended source of gift was out of loan obtained from Canara Bank, withdrawals from partnership firm and agricultural income of HUF - Held that:- Assessee merely furnished an explanation in letter without any corroborative evidence or documentary proof to substantiate the claim. No copy of sanction letter for loan, name and capital account of the firm from which the withdrawals were allegedly made, proof of withdrawals from HUF out of sources from agricultural income were provided. Hence addition rightly made - Decided against assessee.

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• 2012 (6) TMI 353
  Investment allowance u/s 32A - job work – Held that:- In the case of J. B. Kharwar and Sons (1986 (3) TMI 34 (HC)) held that an assessee doing the job work of process of dyeing and printing grey cloth would also be entitled for the relief thereunder as it would amount to manufacture. It is immaterial whether the grey cloth which is subjected to process of dyeing and printing belongs to the assessee or anyone else. The activity which the assessee carries on is manufacturing activity irrespective of the fact whether the grey cloth belongs to it or to its customers. - Decided in favor of assessee.

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• 2012 (6) TMI 352
  Penalty under section 271(1)(c) of the Income-tax Act - Whether order made by Tribunal is perverse inasmuch as the Tribunal has deleted the penalty - Tribunal have held that the assessee was a victim and duped by third parties – Held that:- there was evidence and material to show that the respondent-assessee was not involved and in fact had been deceived and had suffered because of malevolent acts of others. The directors of the respondent-assessee were not arrested but on complaint made by the respondent-assessee, an FIR was registered and third persons were arrested. It is not possible to say that the findings recorded are perverse. Decided in favour assessee.

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• 2012 (6) TMI 351
  Denial of deduction under section 80-IA - new unit set up after March 31, 2000 - Revenue contested that activities of the assessee do not amount to manufacturing - Held that:- The assessee installed plant and machinery worth Rs. 44.62 lakhs during the course of the assessment year, this was together with and along side the existing plant and machinery in the same unit at the same site and without any change in the administrative or business set up - the assessee had not set up a separate or identifiable new unit satisfying required conditions for the grant of an exemption - in favour of assessee.

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• 2012 (6) TMI 350
  Review petitions - business of development of software and sale of software packages - Tribunal held that the assessee company had only marketing offices outside India – Court set aside the Tribunal Order on the basis of certificate required to be given by the Chartered Accountant under Section 80HHE(4) r.w.r.18BBA(7) – Held that:- All the three authorities have concurrently held that the assessee is not in the business of providing technical services - the material on record clearly shows that except for these three years, rest of the certificates are correctly issued showing the amount involved in the production and export of the software at Clause 3(i) - it is only in these three years certificates as against the Clause 3(i) nothing is typed and it is typed against Clause 3(ii) held to a bona fide typographical error as the Chartered Accountant without carefully looking into those entries has issued the certificates, which has resulted in confusion - there is an error apparent on the face of the order passed by the Court it calls for review.

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• 2012 (6) TMI 349
  Whether assessee is entitled to depreciation on the purchase value of abkari licence under Section 32(1)(ii) of the Income-tax Act – Held that:- abkari licence is a business right given to the party to carry on liquor trade. abkari licence squarely falls under section 32(1)(ii) on which the assessee is entitled to depreciation at 25% of the written down value as provided under Section 32(1) read with Part B of Old Appendix I under rule 5 of the Income-tax Rules. However, assessee's claim for depreciation at 25% of the actual cost is not allowable because depreciation has to be allowed only on written down value. The previous year relevant for the assessment year being the 3rd year of business, the assessee is entitled to depreciation at 25% of the written down value after reckoning depreciation for the preceding years. appeal is accordingly allowed

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• 2012 (6) TMI 348
  Whether CIT (Appeals) has erred in deleting the additions and holding that the report of DVO is unjustified - Capital gains – Held that:- Under section 50C of the Act for the purpose of computation of capital gains the full value of consideration has to be adopted as per circle rates. for the purpose of computation of capital gains under section 45, the full value of consideration has to be taken as per circle rates prescribed by the State Govt. for the purpose of stamp valuation unless the AO has material in his possession to prove that the assessee had received higher amount than the circle rates. there is nothing with the AO to suggest that the assessee had received more than what is stated in the sale deed and, therefore, full value of consideration cannot be adopted as per the DVO's report which represent fair market value of industrial plot sold. Adoption of DVO's report without providing opportunity of being heard is also against the principles of natural justice. no infirmity in the order passed by the ld. CIT (A). appeal filed by the Revenue is dismissed.

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• 2012 (6) TMI 347
  Profit in lieu of salary - perquisite - Whether CIT(A) erred in confirming the order, bring to tax sum of Rs. 7.5 lakhs as the compensation after termination of employment as profits in lieu of salary - 'any compensation' received by an assessee from his employer in connection with the termination of his employment, the modification of restrictions thereto relating to the termination of employment, the same constitutes 'compensation' taxable u/s 17(3)(i) of the Act. - it is also clear that any sum received by the assessee from the employer or former employer in connection with the termination of his employment, such amount falls within profits in lieu of salary as per clause (i) of sec. 17(3) of the Act. - the sum of Rs. 7.5 lakhs received by the assessee-employee is strictly subjected to certain obligations. - Clause (iii) of section 17(3) is inapplicable to the AY (2001-02) under consideration - Decided against the assessee Rent free accommodation - Held that:- there is no dispute on the allotment of the rent free accommodation to the assesse. CIT(A) relied on rule 3(1) of the I T Rules, 1961 and taxed the said perquisite at the rate of 10% of the salary, which is in order. Accordingly, the order of the CIT(A) does not call for any interference and thus, ground is dismissed Free Food of the Club - Perquisite of Rs. 5,600 – Held that:- assessee has undisputedly availed the said perquisite and therefore attracted the provisions of rule 37(iii) relating to free meal provided by the club-employer. order of the CIT(A) does not call for any interference on this issue. Accordingly dismissed Ad hoc disallowance for want of evidences - held that:- disallowances in the claims for want of evidences. The assessee could not demonstrate the genuineness of the claims either during the assessment proceedings or in first appellate proceedings. Assessee could not improve his case in before us too. We have examined the facts and discussed if the claims of the assessee must be allowed when the claim of deduction is made by him but could not evidence the claim. - Decided against the assessee.

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• 2012 (6) TMI 346
  Block assessment - Whether Assessing Officer has erred in law in making addition in respect of marriage expenditure of daughter of the Appellant though no evidence in respect of incurring such expenditure was found during the search – Held that:- expenditure have never been recorded in the books of account of the assessee. - no bills of those expenditure have been obtained by the assessee. - statement recorded u/s.132(4) of the Act was an evidence by itself. - It is also not the case of the assessee that some of the marriage expenses were incurred and rest were an ad hoc estimation. Rather, this is the case where no expenditure at all was found recorded, but the event of marriage was accepted. ground of the assessee dismissed. Whether Assessing Officer has erred in law in making addition by way of investment in the shares – Held that:- some of the investments in shares were entered in the books of account, however, in respect of some of the investment in the name of four family members, there was no entry in the books of account. clauses of retraction do not cover at all the impugned addition of Rs. 2 lakhs. This is also not the case of the assessee that no shares at all in the name of those four persons were ever purchased Revenue Department had no option but to assess the amount which was offered by the assessee himself. We find no fallacy in the said addition of Rs. 2 lakhs. ground dismissed Whether Assessing Officer has erred in law in making addition of Rs. 45,000/- by way of unexplained household expenditure though no evidence of incurring such expenditure was found during the search – Held that:- there was an investment of Rs. 45,000/- in marble. Once an investment was witnessed by the Search Party and the assessee had not furnished any source of the said investment then a deponent must not be excused of his own offer. no supporting evidence either about the source or about the non-existence of the said asset was placed from the side of the assessee, addition is hereby affirmed and this ground of the assessee is dismissed Whether Assessing Officer has erred in law in making addition by way of investment in NSC for the block period 01/04/1995 to 12/12/1995 though no evidence in respect of such investment from undisclosed source was found during the period search – Held that:- the AO was justified in granting the relief in respect of the encashment amount of NSC and the balance amount was rightly taxed in the block assessment, admittedly which remained unexplained. ground is dismissed. Payment of on money towards purchase of flats - held that:- presence of flats was a glaring and apparent evidence of presence of immovable asset which was found unrecorded in the books of account of the assessee. - He (assessee) was very specific about the mode and the manner of payments made i.e. a portion through cheques and rest portion of payment made in cash. This is not the case of the assessee that those flats did not exist at all or did not belong to the assessee. The existence of both the flats were not denied and it was accepted that in addition to the payment through cheques some amount was paid in cash which was admittedly not recorded in the books of account. Under those circumstances, when the declaration was specific and no ambiguity was left while making the said declaration, the AO had no option but to assess the same as undisclosed income. - Decided against the assessee.

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• 2012 (6) TMI 328
  DTAA between India and USA - Royalty income - taxability on gross basis or net basis - assessee opted for the provision contained under article 12 of DTAA contemplating taxation @ 15% of the "gross amounts" of royalties - Held that:- Term "Gross amounts" has not been defined in the treaty. In common parlance, these words mean the amount received alongwith tax deducted etc. at source. Also, section 198, provides that all sums deducted in accordance with the provisions of chapter XVII shall be deemed to be income received for computing the income of an assessee. Thus, expression 'gross amount' includes within its ambit the actual payment and tax deducted at source. Therefore, CIT(A) erred in taxing the net amount @ 15% under the DTAA - Decided in favor of Revenue. Whether, the income by way of royalty is taxable on cash basis or mercantile basis - Held that:- Initial point of taxation is the arising of the royalty in India, but it is finally taxed on the basis of amount of royalty paid to the non-resident. Therefore, irrespective of the system of accounting, royalties are taxable on cash basis. Accordingly it is held that the amount provided by the licensee in its books of account but not paid to the assessee is not taxable. Matter restored to the file of AO to decide about chargeability of interest u/s 234B & 234C.

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• 2012 (6) TMI 327
  Registration u/s 12A and 80-G - denial on ground that there was extravagance of expenses by holding conference of Doctors at five star hotel and there is no benefit to the common public, also, donors are pharmaceutical companies and some of them have deducted TDS - assessee, registered charitable trust, created by eminent cardiologists with object of research in the field of medicines in general and cardiac medicines - Held that:- If the objects of the trust are duly incorporated and charitable in nature and conform to the various rules and regulations; the assessee trust maintains its books of account and the genuineness of the account is established by the society, in normal circumstances the registration should be granted to the Trust u/s 12AA and 80-G. In the given facts and circumstances the conference organized by the assessee is authorized by the objects of the Trust; there is no ban or embargo whether conference can be held in five star hotel or not. Therefore, the adverse inference drawn by the DIT(E) is not proper inasmuch as the trustees will have a discretion to organize the conference at a place and in the manner which is befitting into the participants and objects. Donations presumed as Commercial receipt - Held that:- Only because donors are pharmaceutical companies and they deducted TDS, will not convert a donation into a commercial receipt on the basis of presumptive inferences. As long as the assessee has credited the amount as donations and issued donation receipts, in our view, the same cannot be held to be commercial receipt. We hold that the assessee is eligible for registration u/s 12AA and 80-G, which is granted - Decided in favor of assessee.

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• 2012 (6) TMI 325
  Unexplained expenditure - addition - source and veracity of expenditure stands explained by assessee - Held that:- CIT(A) has rightly held that provisions of Sec.69C will not be applicable as the Assessee has explained the source of the expenditure debited in the P/L A/c which was the amount adjusted payable to SG Takshila Enterprise Company Pvt.Ltd. which the latter agreed to be treated as contribution towards monies payable for acquiring shares of the assessee. Further, AO, after verifying the bills produced by assessee has failed to bring on record any material to suggest that any of such expenditure was bogus or not for the purpose of setting up of the business. Also, once the nature of the expenses is found to be in relation to the business then the quantum of such expenses cannot be as a general rule be enquired into by the AO. Dis-allowance u/s 40(a)(ia) - pre-operative expenses - Held that:- Once it is accepted that the payments were reimbursements and were at actual then the question of deduction of tax at source will not arise. Copies of the quarterly TDS returns reveal that requisite TDS has been deducted and paid wherever required. Dis-allowance stand deleted. Dis-allowance u/s 40A(3) - Held that:- Provisions of Sec.40A(3) were also not applicable as the payments were made by the assessee by cheques - Decided in favor of assessee

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• 2012 (6) TMI 324
  Charitable trust - alleged violation of provisions of Section 13(1)(c) r.w.s. 13(2) - assessee, charitable trust registered u/s 12A, one of the group trust managed by Ansal group, having main objects to promote and encourage educational activities - alleged motivation on the part of Ansal Properties and Infrastructure Ltd. to clandestinely divert Trust Funds for its personal use - agreement to sale of plot by APIL to Trust and its consequent cancellation contended to be colorable device by Revenue - Held that:- It is found that there is no change in Trust's objects and agreements to sale of reserved plots of APIL with group educational trust do not carry any element of primary suspicion. On the basis of contemporaneous evidence, it is observed that presumption cannot be drawn that APIL diverted the funds without proper justification for its use. Before the agreements and after the termination of agreements APIL had interest free credit balance with assessee and it has been providing monetary support to trust now and then. Ground of Revenue dismissed. Non collection of rent and interest from APIL - APIL contended that actual payments made were more than rent and interest and proper entries not made in books of trust - Held that:- What is due in books from AIPL was not money lent or advanced to APIL. It was caused by unadjusted balances of interest on debts already discharged prior to 2001. In fact as at 31.3.2006, APIL had a credit balance of more than Rs. 80 lakhs - No merit in the ground of Revenue Advance to Charanjiv Educational Society not registered u/s 12A, meant for establishing an educational institution at Chhattisgarh - Held that:- Assessee in furtherance of its objects formed this charitable society with same objects and trustees and incurred the expenses which are shown as advance to CEC. In our view, even if the same amount was donated to CEC in place of advance, in that eventuality also it would have been allowed as application to objects. Corpus donations received from HCL & Blue bird - benefit u/s 11(1)(d) - Held that:- Since assesse did not violate any provisions of Sec 13, besides it emerges from the record that both the donors confirmed the corpus donations. CIT(A) was right in deleting these additions. Unexplained credit u/s 68 - corpus donation received from S Jagjit Singh, who though first confirmed such donations, later denied some contents - Held that:- Such addition cannot be made u/s 68 as unexplained cash credit as it is held that there is no violation of Sec. 13. Besides, the name of creditor and identity is accepted by AO. The transaction is through DLF pay order which was donated to assessee, on behalf of JS, to resolve a land dispute. Therefore genuineness and creditworthiness is proved. Also, donors may retract statement, but it can not take away the original nature of corpus donation, which has been used accordingly by assessee. Thus legally this addition can not be made u/s 68. In respect of other donations, assessee having discharged the primary onus of leading evidence for identity, donor and his creditworthiness, assessee trust can not be saddled with this addition u/s 68 which is deleted. Apropos development fund charges directly credited to balance sheet - Held that:- Amount has been rightly held by the lower authorities to be the income of the assessee. Depreciation on assets acquired by the application of trust income - dis-allowance - Held that:- In view of decision in case of DIT v Vishwa Jagriti Mission (2012 (4) TMI 289 (HC)), we allow the claim of depreciation on such asset.

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• 2012 (6) TMI 323
  Loan Processing fees - whether considered as interest for purpose of Section 2(28A) and 194A - Held that:- Definition of Section 2(28A) clarifies that it includes all the charges in respect of moneys borrowed or debt incurred or in respect of any credit facility whether it has been utilized or not. Therefore, such loan processing fee fell within the said definition. Also, unless context otherwise requires "interest" mentioned, in Section 194A has to be understood in accordance with the definition of "interest" given u/s 2(28A). Therefore, assessee was obliged to deduct tax at source which it had not done so. Rigours of Section 40(a)(ia) is attracted - Decided in favor of Revenue Dis-allowance u/s 14A - assessee considered pro rata interest on investments made to earn dividend income on ground that borrowed money was invested in various companies and shares were not allotted in some of such companies, hence, interest could not be attributed to earning of any dividend income on such investments - Held that:- Intention of the assessee for earning dividend income could not be attributed to the amounts invested in share application money, unless and until there is a commitment brought on record by the concerned company for allotment of shares, and the share application money can at the best be considered only as a loan given by the assessee to the said company. We remit the issue back to the AO for fresh consideration in accordance with law.

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• 2012 (6) TMI 322
  Interest payable on the picture under production – whether it will be allowable business expenditure u/s 36(1)(iii) and not forming a part of cost of production under Rule 9A – Held that:- The interest attributable to the borrowings utilized in the production of film will be added to the cost of production for being allowed under Rule 9A and the interest on borrowings used for other purposes will be allowed as a deduction for the current year u/s 36(1)(iii) – no point in ignoring the applicability of Rule 9 on interest on borrowings used for the production of the film when other normal expenses otherwise allowable under other sections like 36, 37 etc are capitalized under Rule 9A - determination of the extent of actual amount of borrowing used for the purpose of production of film the matter is remitted back to the file of the AO to determine the same – in favour of revenue for statistical purpose. Capital gains - Transfer of the property on the basis of joint development agreement - purview of section 2(47) r.w.s. 53A of the Transfer of Properties Act – assessee contention that the assessee has received the right to receive consideration on a later date – Held that:- Mere accrual of the consideration received in the subsequent years does not defer the taxability of the capital gains – as property was handed over in part performance under S.53A of the Transfer of Property Act, and it could not be said that the transaction was without consideration - date on which possession was handed over to the developer is relevant for determination of the year in which the capital gains are assessable to tax - the possession of the land having been handed over to the developer in the assessment year under consideration, the transfer takes place in the assessment year under consideration only, and consequently the assessee is liable to be assessed to tax in relation to the capital gains in the year under consideration itself – against assessee.

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• 2012 (6) TMI 321
  Challenging the taxability of mobilization fee received outside India for the voyage carried out outside India u/s 44BB – Held that:- Minority view that the amount liable to be considered for section 44BB(2) would be the one which is received or receivable on account of supply of machinery, including the hire charges as relatable to the territorial waters outside India – As decided in CIT Dehradun & another Versus Sundowner Offshore International (Burmuda) Ltd. [2009 (2) TMI 46 (HC)] that the mobilization charges received by the assessee attributable to transportation of rig from outside India have to be taken into account for the purpose of computing income u/s 44BB – against assessee. Treatment of disputed, unrealized and unpaid service tax u/s 44BB – the assessee agreed to receive US$ 3.14 million towards outstanding service tax dues in full and final settlement of the claim of US$5.28 million – claim of Service tax on US$ 2.27 million Held that:- As acknowledgement of liability by Hardy to the tune of US$ 3.01 million is received for event to took place in the subsequent year no question of adding the remaining amount in the current year by holding that the assessee acquired any right to receive the amount - the assessee had not acquired any right to receive US$ 2.27 million on account of service tax, being the first step therefore need not embark upon the second step, being its inclusion or otherwise in the receipts for the purposes of section 44BB – in favour of assessee. Challenge charging of interest u/s 234B – Held that:- As decided in case of DIT (International Taxation) v. NGC Network Asia LLC [2009 (1) TMI 174 (HC)] that when the duty is cast on the payer to deduct tax at source, on failure of the payer to do so, no interest can be charged from the payee assessee u/s 234B – in favour of assessee.

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• 2012 (6) TMI 320
  CIT(A) deleting the addition made by the AO admitting the additional evidence of the assessee – assessee is covered by exceptions provided in Rule 46A - AO did not provide an opportunity to the assessee to submit relevant evidence and documents regarding clarifications asked by the AO himself before passing the assessment order - Held that:- The pre-conditions prescribed in Rule 46A must be shown to exist before additional evidence is admitted and every procedural requirement mentioned in the Rule has to be strictly complied with so that the rule is meaningfully exercised - nothing in the order of ld. CIT(A) to show that the AO was confronted with the additional evidence and asked for comment as per statutory requirement of Rule 46A(3) - the error committed by the ld. CIT(A) is that he proceeded to mix up his powers under sub-section (4) of Section 250 of the Act with the powers vested in him under Rule 46A - matter is restored to the file of the ld. CIT(A) to comply with the requirements of Rule 46A .

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• 2012 (6) TMI 319
  Disallowance of deduction u/s. 80IB (10) - housing project constructed by the assessee - condition for completion of the project within four years was not met – Held that:- Cluster of 16 buildings as per the sanctioned layout plan satisfied all the conditions of section 80IB(10) as the first building plan of the assessee was passed before the introduction of this condition in section 80IB(10) and hence, the condition for completion of the project within four years was not applicable in this case - assessee had completed 11 buildings construction on a portion of land occupying more than one acre - no definition of the term 'Project' in section 80IB(10) and the same could not be equated with the entire sanctioned layout - the decision taken on an identical issue under similar facts and circumstances of the case in the appeal for the A.Y. 2006-07 had accepted the assessee is very much entitled to the claimed deduction u/s. 80IB (10) of the Act during the current year – in favour of assessee

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• 2012 (6) TMI 318
  Whether Commissioner of Income-tax has erred in directing the Assessing Officer to treat the warehousing charges as part of Container Freight Station income eligible for deduction u/s 80IA of the Act – Held that:- warehousing facilities alone may not get any deduction but when they are part of CFS as a necessary infrastructure and such CFSs can come into existence and operate only if it provides minimum infrastructure facility as only then sanction for the CFS status is granted then such warehousing facility is different from the stand alone warehousing facility operated outside CFS, warehousing income to be a part of CFS income allowed and hold it eligible for deduction under section 80-IA, appeals filed by the Revenue are dismissed

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• 2012 (6) TMI 317
  100% EOU - deduction under section 80HHC - assessee has two units - assessee claimed deduction under section 80HHC in respect of the Bangalore unit - Assessing Officer aggregated the profit in respect of the two units and computed the relief under section 80HHC in respect of the net income - assessee contending that when the profits from the export unit at Bangalore was identifiable, the assessee would be entitled to 100 per cent. deduction for the said profits – Held that:- each of the unit had maintained their accounts independently and there was no inter- dependency or interlacing of funds to treat them as one consolidated unit, income earned from the export goods from the Bangalore unit merited to be considered for 100 per cent. relief, as one falling under section 80HHC(3)(a) of the Act, so long as the export details of the unit engaged in exports are separately maintained, the assessee could not be denied of the benefit in respect of section 80HHC with reference to the export unit, decision in favour of the assessee, tax case appeal is allowed [L. M. Chhabda and Sons (1967 (3) TMI 10 - SUPREME CourtSUPREME Court - Income Tax) ]

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• 2012 (6) TMI 316
  Deduction u/s 80-IA - whether all the three conditions embodied in S.80-IA(4)(i) were required to be simultaneously fulfilled - assesse mentioned that the assessee is a contractor/developer and claimed deduction under section 80-IA(4) of the Income-tax Act Held that:- in the case of an enterprise carrying on business or developing which is the case of the assessee, all the conditions referred to clause (i) of section 80IA (4) should refer to the conditions as applicable to the developer. developer who is only developing the infrastructure facilities since he does not operate and maintain Infrastructural facilities, cannot be expected to fulfill the condition at subclause (c) which is an impossibility and the requirements to fulfill the said condition shall amount to absurdity and therefore uncalled for. appeals of the assessee are allowed

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• 2012 (6) TMI 315
  Reassessment - limitation - wrong application of rate of tax - held that:- According to the Assessing Officer, the assessed income has been wrongly taxed at 15 per cent whereas it should have been taxed at 20 per cent. Application of rate of tax on assessed income cannot in any way be the result of the failure of the assessee to disclose fully and truly all material facts necessary for assessment. The Assessing Officer is an adjudicating authority for the purpose of levy of rate of tax on particular type of income and in case when there is no dispute regarding the assessable amount, then, it is only the Assessing Officer who has to determine that what rate of tax is payable by the assessee on a particular income. It is a case where first proviso to section 147 is clearly applicable. The initiation of reassessment proceeding is bad in law, hence, the impugned assessments are quashed on the legal ground that initiation of reassessment proceedings is bad in law.

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• 2012 (6) TMI 314
  Recall/rectification of order - typographical error - TDS – assessee in default - held that:- In the light of the conclusion in the preceding sentence, the usage of the word 'NOT' in the above sentence appears to be a typographical error. Accordingly the last two sentences of paragraph 103 at page 66 of the Tribunal order are substituted. Mistake relating to issue the 'offshore' - held that:- The Board circular admits the existence of doubts indicating the possibility of duality of opinions. When duality of opinions exists, there cannot be said to arise a mistake apparent from records. Mistake in view of retrospective amendment - held that:- a retrospective amendment to law does not entitle the filing of maintaining of a miscellaneous petition under section 254(2) of the Act.

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• Customs

• 2012 (6) TMI 345
  Revocation of CHA licence - violation of provisions of CHALR, 2004 - sub-letting of licence - undertaking various transactions in violation of the CHALR provisions - Held that:- In the instant case, violation of Regulation 12 of CHALR, 2004 - sub-letting of licence - is clearly established since it is clear from the records that Dyaneshwar Bhoir was working independently and was using the licence of CHA for a consideration of Rs. 700/- per consignment. Further, violation of Regulation 13 (b) is proved as CHA firm had shown Dyaneshwar Bhoir as an employee and obtained a customs pass when, in fact, he was not an employee at all. Also, CHA had been blindly signing the customs documents brought in by Mr Bhoir, accordingly, violation of Regulation 13 (d) and (n) are also proved. Similarly the allegation that CHA did not know the importer at all in violation of Regulation 13 (a) is also proved. Therefore, order of revocation of license is upheld - Decided against the assessee.

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• 2012 (6) TMI 344
  Demand of duty - Purchase of Duty Exemption Pass Book license from third party - DEPB Scrip was obtained by fraud by third party - DGFT cancelled the DEPB scrip - Appellant contended that DEPB scrip purchased in good faith - Commissioner (Appeals) upheld the duty demanded but set aside fine and penalty – Held that:- once penalty does not stand imposed on the ground that there was no malafide on the part of the appellants, it has to be held that there was no intention to evade payment of duty and the same criteria would apply for the purpose of limitation. - Divergent views by two members

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• 2012 (6) TMI 313
  Importation of plastic scrap - Revenue entertained a view that the plastic scrap importation was contrary to the provisions of Foreign Trade Policy relating to plastic scrap - confiscation and order of re-export of goods - redemption fine and penalty imposed - Held that:- What emerges from CIPET's report is that except for quantity with stickers, balance quantity can be considered as a virgin plastic waste or otherwise and they are not in a position to certify the same. In view of the fact that there was no deliberate intention to import hazardous waste into the country as it emerges from the records, substantial reduction in the redemption fine and penalty would meet the ends of justice for both sides. Accordingly, the redemption fine on the goods is reduced to Rs. 40,000/- penalty on the importer is reduced to Rs. 25,000/- and penalty on the CHA is reduced to Rs. 10,000/-.

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• Corporate Laws

• 2012 (6) TMI 343
  Sanction to a Scheme of Arrangement in the nature of Amalgamation - the transferee company and transferor companies are under the same management- Held that:- The transferee company is not going to be dissolved and is retaining its identity and upon merger of other group concerns, the corpus of the transferee company shall be enlarged - the transferee company shall go into liquidation upon sanctioning of the scheme is completely ill founded - sanctioning of the scheme in no way affecting the rights if any of the objector - since construction of property booked at old rate is already completed and revenue is booked in the year 31.03.2010, there would not be any further losses and in fact huge revenue is under process and hence, the picture as depicted as loss in few of the transferor companies – all the companies are under the same management and are family companies which are closely held companies and upon merger there is no interest of either of the members or public at large is going to be adversely affected and all the companies are going concerns and doing the business uninterruptedly - scheme of arrangement allowed.

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• 2012 (6) TMI 342
  Termination of Sale of assets by liquidator and forfeiture of amount – breach of contract - official liquidator seeks that the sale of the property in question which was confirmed by the court at earlier stage, may be allowed to be terminated and the official liquidator also may be permitted to forfeit the amount deposited by respondent No. 1, i.e., the successful bidder during the auction sale – Held that:- breach on account of non-payment of balance amount of sale consideration ; the official liquidator, as per the terms of tender and paragraph 6(4) of the order dated February 22, 2006, is entitled to take action as per and in accordance with clause 17 and paragraph 6(4) of the order dated February 22, 2006 and the permission as contemplated by the said order therefore deserves to be granted and is hereby granted.

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• 2012 (6) TMI 312
  Sanction to a Scheme of Arrangement in the nature of Amalgamation - certain disclosures not in consonance with AS-14 and directions to change the Appointed Date- the petitioner Transferor Company is a wholly owned subsidiary of the Transferee Company - Held that:- The compliance of the AS-14, if not made while passing the accounting entries, the petitioner hereby undertakes to abide by the directions that the Court may issue with regard to the said disclosures to be made in the first financial statements of the Transferee Company after the Scheme being sanctioned - in order to meet the working capital requirements and other financial requirements, both the companies have provided the consolidated financial results since 1st January 2008 to various banks for availing their facilities, it has been specifically asserted by the petitioner Company that since both the companies have been profit making companies, the scheme sanctioned with Appointed Date of 1st April 2008 shall not result in any special tax benefit to the company or any loss of revenue to the Government, thus it is not necessary to issue the directions to change the Appointed Date - Present scheme of arrangement is in the interest of its stakeholders viz. Shareholders, Creditors as well as in the public interest as amalgamation is proposed to achieve synergic benefits, administrative convenience and economies of scale and the same deserves to be sanctioned.

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• 2012 (6) TMI 311
  Violation - period of limitation - More than six months after the notice, the first show-cause notice was issued by the office of the Registrar of Companies – Held that:- period of limitation for an offence starts on the date of the offence or where the date is unknown from the date the person aggrieved by the offence acquires knowledge of such offence (section 469(1)(b)). Computation of period of limitation - held that:- The exact date on which the investigation and inspection by the inspecting officer was carried out under section 209A of the Companies Act, 1956, is not available from the record. The inspection report is also not available in the record. - the date the inspection is ordered can be taken as the date when the Central Government has knowledge of the alleged offence The explanation furnished explaining distribution of dividend is more than acceptable and does not suggest any violation. The principle taken into account for calculating or disregarding depreciation of the above machinery is an acceptable practice or an arguably tenable practice. There is also assertion of existence of the remuneration committee to justify remuneration paid to the directors. In this kind of a proceeding it should always be the endeavour of the court to come to a finding on For the above reason that is the ground of limitation and non-existence of an offence I relieve the petitioners by discharging them. This application is accordingly, allowed.

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• Service Tax

• 2012 (6) TMI 364
  Stock Broking service - Valuation - Revenue contending that various charges like Misc. charges, turnover charges, Trade Guarantee Fund (TGF), Investor's Protection Fund (IPF), Stamp duty, Stock Exchange charges, Transaction charges, SEBI fees, Custom Protection Fund (CPF) and Demat charges received by stock brokers shall constitute value of taxable service - Held that:- The valuation provision incorporated in section 67 of the Act envisaged that aggregate of commission or brokerage only shall be measure of tax. Basis of taxation was provided in express terms and no implied taxation was permitted by law. - Provision of section 67 provides the basis to determine the value of taxable service. No receipt other than commission or brokerage made by a stock broker is intended to be brought to the ambit of assessable value of service provided by stock broker. Charging section in a taxing statute is to be construed strictly. The correct assessable value of taxable service usually is the intrinsic value of the service provided since service commands that value only and that should only be taxed without any hypothetical rule of computation of value of taxable service u/S 67. Further, burden of proof was on Revenue to establish that such receipts were in the nature of commission or brokerage or had the characteristic of such nature which it failed to discharge. Therefore, aforesaid charges realized by appellants were not being of commission or brokerage are not taxable and shall not form part of gross value of taxable service. Time bar - Held that:- Suppression of material facts cannot be said to have been made when the commission or brokerage received were disclosed in their service tax returns and taxes were paid thereon. No rule could be pointed out requiring a manufacturer to disclose the turnover of exempted goods. Hence, no penalty is imposable for no case of section 73 made out against Assessee - Decided in favor of assessee.

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• 2012 (6) TMI 363
  Construction of residential complexes - appellant under Joint Development Agreements with land owners assigned portion of the constructed area, in the form of flats / houses, in favor of the land owners and sold remaining constructed area, in the form of flats/houses, to various buyers - dispute in the nature of non-payment of tax in respect of flats handed over to land owners - Held that:- Relationship of service provider and service receiver - In instant case, since UDS is registered in name of land owners and then the Developer constructs flats for the original Land Owner, becoming UDS holder after registering UDS in his name. Hence it is clearly outside the scope of the clarification given by CBEC and there is a service provided to the UDS holders including the original Land Owners. Also, residential complexes in question were not constructed for personal use of the owners of the land. It was predominantly for sale to individual buyers and was thus covered by the definition of the service. On contention that that there was no provision in law prior to 19-04-2006 to tax consideration received other than in the form of money it is held that once it is decided that tax was payable on the activity, the liability cannot be set to naught because the section dealing with valuation specified only amounts received. It is well-settled that the court would construe the statute in such a manner so as to make the machinery workable. Valuation of flats given to land owners - assessee contending different valuation on ground of point of time of transfer of land - Held that:- Since flats handed over to the land owners were not different from what were sold to the individual buyers, hence it does not warrant assessment of a different value for services in respect of flats handed over to land owners as compared to flat sold to individual buyers. Time bar - Since there has been persistent resistance on the part of the appellant in providing the required information, hence appellant cannot claim benefit of bonafide belief and argue that demand for a period of one year from relevant date only will apply. Flats sold to Individual buyers - assessee contended that flats are constructed and sold and hence the construction service is for self - applicability of circular dated 29-01-2009 issued by CBEC - Held that:- Since UDS was first registered and then an agreement to construct was entered into. Therefore the clarification dated 29-01-2009 issued by CBEC does not apply in this case. Registration fees and stamp duty paid by the appellant and recovered from the buyers - held that:- the expenses relating to stamp duty and registration charges cannot be considered as expenses incurred in the course of providing the service. These are not reimbursed expenses incurred on behalf of the clients and in our view the expenses are outside the scope of the expression of reimbursable expenses very commonly used in the context of value of services. - to be excluded subject of verification. Applicability of definition of a residential complex only to cases where one building has more than twelve flats or will extent to cases where different buildings in the same compound totally having more than twelve flats - Held that:- Expression residential complex will apply only in case of buildings which have more than twelve residential units.It is an agreed fact that this was not the case in respect of Kamakotivilasam project. So we are of the view that the demand in respect of Kamakotivilasam project is not sustainable and the same is set aside.

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• 2012 (6) TMI 362
  Demand of Service Tax, interest and penalty - services of Commission Agent based in UK - Business Auxiliary Services - denial of exemption Notification No.13/2003-ST – contention of appellant that processes undertaken like threshing and drying do not make the unmanufactured tobacco as processed tobacco, the applicants are eligible for the benefit of exemption notification – Held that:- after procuring the unmanufactured tobacco from the growers, undertakes processes. Product should be considered as 'processed tobacco' for the purpose of interpreting Notification No. 13/2003 and therefore they may not be eligible for the exemption. - stay granted partly.

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• 2012 (6) TMI 361
  Penalty - manpower recruitment and supply agency, maintenance and repairs of the building and cleaning services - they did not pay any service tax even though they were providing the taxable services – Held that:- penalty under Section 77 would be attracted. As regards penalty under Section 78, appellant had taken service tax registration in 2005, and subsequently they were regularly receiving payment from NMDC for the services provided, neither any service tax paid nor any returned was filed. Provisions of Section 78 are attracted. Appeal dismissed.

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• 2012 (6) TMI 360
  Cenvat Credit of Service Tax paid on outward transportation - transactions were on FOR destination basis - appellant plead that they have record to show that their transactions were on FOR basis in the sense that the excise duty had been paid on the value which included the cost of transportation from the factory to the buyer's premises – Held that:- matter is remanded to the Commissioner (Appeals) for de novo decision after examining the records submitted by the appellant in support of their plea that their transactions were on FOR destination basis. Appeal disposed of.

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• 2012 (6) TMI 333
  GTA service - service tax abatement denied for the period January 2005 to March 2009 on the ground that the consignment notes did not have the declaration that the GTA service provider had not availed the benefit of Notification No. 12/2003 and had not taken cenvat credit - Held that:- There are several decisions wherein a view has been taken that it is not essential such a declaration has to be given in the consignment notes but separate declaration would also serve the purpose. Also after 01.3.2008, notification was amended and the requirement of declaration was taken away. Matter remanded to original adjudicating authority for fresh adjudication.

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• 2012 (6) TMI 332
  Rebate claim - rejection on the ground that declaration, required under notification No. 12/2005 was not filed - rejection of portion of the claim on the ground of rebate claim being filed beyond the time limit prescribed u/s 11B - Held that:- Purpose of filing declaration is to prevent evasion of duty by receipt of rebate. Tribunal in case of Wipro BPO Solutions Limited (2011 (10) TMI 261 (Tri))took a view that even though non filing of declaration is only procedural, rebate will not be admissible. Hence, rejection of the claim on this ground has to be upheld. Applicability of Section 11B of Central Excise Act, 1944 - Held that:- Claims under notification No. 12/2005-ST also are required to be considered as per the provisions of Section 11B, made applicable to service tax matters vide Section 83 of Finance Act, 1994. In this case the claim is for rebate of duty paid on services utilized in export of services and it is similar to rebate claim which are granted under Rule 18 of Central Excise Rules, 2002, in which case, the time limit u/s 11B would be applicable - Decided against the assessee.

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• 2012 (6) TMI 331
  Refund claim of service tax paid on GTA services rejected - export under Notification No.41/2007-ST rejected as the consignment note did not contain the details of export invoice and container number etc. and on the LR these details were written by the staff of the appellant company and not by the issuer of the LR - Held that:- The invoice issued by the transporters contains all the details and from the records it appears that the transporters are following a practice of issuing the LRs which is for the purpose of transportation only and the invoice issued which is in reality, a consignment note and also is a document for the purpose of transaction between the transporter and the appellant - Since LR and the invoice issued together contain all the details the fact that in the LR certain details have been written by the appellant s staff should not be treated as manipulation and consequently the refund claim is to be allowed - in favour of assessee.

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• 2012 (6) TMI 330
  Demand of service tax - construction of petrol bunks - works contract service - applicant was under the bona fide belief that their activities did not fall under "Commercial or Industrial Construction Service" and therefore, did not take registration and pay service tax – Held that:- activities undertaken by them clearly relates to 'Commercial or Industrial Construction Service' - claim of the appellant is that they were under bona fide belief that their activities did not fall under 'Commercial or Industrial Construction Service' appears not acceptable.

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• 2012 (6) TMI 329
  CENVAT credit on Outdoor Catering service used by them to provide food to their employees - 25% of the cost of service was recovered by the respondent from the employees – Held that:- in Ultratech Cement (2010 (10) TMI 13 (HC) ) original authority directed to quantify the amount of CENVAT credit that would be granted to them after taking into account the extent to which the cost of Catering service was recovered from their employees/workers. The quantum of CENVAT credit admissible to the respondent should be worked out in terms of the Hon'ble High Court's ruling. appeal is disposed of

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• Central Excise

• 2012 (6) TMI 341
  Plea for waiver of pre-deposit of duty of Rs 21.87 lacs and penalty of equal amount u/s 11AC - dismissal of appeal by Commissioner(Appeals) for non-compliance with the provisions of section 35F - assessee offered to make pre-deposit of Rs.3.00 lakhs - Held that:- Applicants are directed to deposit Rs 3 lacs within eight weeks and report compliance on stipulated date directly to Commissioner(Appeals). After waiving the requirement of pre-deposit of balance amount, it is held that since Commissioner(Appeals) has not decided the issues on merits. Therefore the case is remanded to Commissioner(Appeals) for deciding the issue on its merits without insisting for any further pre-deposit.

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• 2012 (6) TMI 340
  Duty liability - Sale of used capital goods - applicability of Rule 3(5) of the CENVAT Credit Rules, 2004 - revenue contended duty liability together with interest and penalty on cenvat credit taken on capital goods - Held that:- Appellant has used the capital goods in its factory for a period of 2 to 4 years, before selling it to M/s. HIPL. They cannot therefore be stated to be sold “as such” capital goods. They were sold as used capital goods. Hence, Rule 3(5) has no applicability. Appellant is not liable to the payment of duty, interest or penalty. In view of aforesaid, the goods are not liable to be confiscated. They are, therefore, liable to be released without payment of any redemption fine and any penalty under Rule 25 of the Central Excise Rules, 2002 - Decided in favor of assessee.

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• 2012 (6) TMI 339
  Plea for waiver of pre-deposit of duty of Rs 34.80 lacs, interest and penalty of equal amount u/s 11AC - dismissal of appeal by Commissioner(Appeals) for non-compliance with the provisions of section 35F - assessee contended that once the duty is paid through Cenvat credit, they are not liable to pay any duty through PLA or cash - Held that:- It is found that Commissioner(Appeals) has not decided the issues on merits. Therefore the case is remanded to Commissioner(Appeals) for deciding the issue on its merits without insisting for any further pre-deposit.

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• 2012 (6) TMI 338
  Job-work - receiving machine bodies for Rubber Bonding from their principal - Revenue opinion that the values of the machine bodies to be added to the assessable value of the job-worked goods - waiver of duty, interest and penalty – Held that:- The applicants receiving the machine bodies for rubber bonding and the same after rubber bonding were cleared on payment of appropriate duty, therefore the goods cleared by the applicants are not finished and marketable goods. These are intermediate products, which are further used in the manufacture of dutiable goods by the principal - INTERNATIONAL AUTO LTD. Versus COMMISSIONER OF CENTRAL EXCISE, BIHAR [2005 (3) TMI 132 (SC)] – complete waiver of pre-deposit.

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• 2012 (6) TMI 337
  'Stock transfer' - rate of duty for the clearance of goods was increased from 4% to 8% - Waiver of pre-deposit of duty,interest and penalty - Held that:- As per Rule 5 of the Central Excise Rules, 2002 rate of duty of excisable goods shall be the rate or value in force when such goods are removed from a factory - as the goods were removed prior to 7.7.2009 the applicant has a strong case for waiver - in favour of assessee.

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• 2012 (6) TMI 336
  Denial of the credit in respect of CVD - credit is availed on the strength of challans and not on bills of entry - application for waiver of pre-deposit of duty, interest and penalty - Held that:- As the facts that the customs duty as well as CVD has been paid which was duly accepted by the customs authorities and thereafter goods were cleared, which were further used in the manufacture of final product and cleared on payment of duty are not in dispute,the pre-deposit of duty, interest and penalty is waived - in favour of assessee.

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• 2012 (6) TMI 334
  'Manufacture' - Whether process proposed to be employed by the Applicant for refining and minting of products of precious metals namely gold, silver and platinum as per the specifications of customers amounts to manufacture or job work - Held that:- It is clear that the processes undertaken by the applicant result in the emergence of goods which have their own distinct character, identity and use. The activities of the applicant, therefore, clearly meet the definition of manufacture. However premise of applicant that if an activity is undertaken on job work basis, it would be precluded from being considered as manufacturing appears to us to be unfounded. It is not as though the two are mutually exclusive. If in a given transaction, the raw material is supplied by the customer and the applicant charges only its making charges, it could well be a case of manufacture on job work basis. Hence, process amounts to manufacture for the purpose of Central Excise Act, 1944 and goods in question would be liable to duties of excise at the appropriate rate(s) as specified in the Central Excise Tariff Act, 1985.

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• 2012 (6) TMI 310
  CENVAT Credit on PVC crates used for transporting aerated water in bottles - appellants, engaged in the manufacture of non-alcoholic beverages - Revenue denied credit on ground that appellants are collecting deposits from the customers on the PVC crates - Held that:- CENVAT Credit is admissible once it satisfies the definition of input and such input is used in or in relation to the manufacture of the final product. In the instant case the appellants had explained the use of such crates during the process of manufacture and disastrous consequence of non-use of such crates. In these circumstances the PVC crates being used as inputs/capital goods in the manufacture of aerated waters accordingly CENVAT Credit is admissible on the same - Decided in favor of assessee.

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• 2012 (6) TMI 309
  Plea for waiver of pre-deposit of duty and penalty of equal amount u/s 11AC - dismissal of appeal by Commissioner(Appeals) for non-compliance with the provisions of section 35F - assessee contended that the order for predeposit of 50% of all dues was passed without granting them personal hearing - Held that:- After waiving the requirement of pre-deposit, it is held that since Commissioner(Appeals) has not decided the issues on merits. Therefore the case is remanded to Commissioner(Appeals) for deciding the issue on its merits without insisting for any further pre-deposit.

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• 2012 (6) TMI 308
  Plea for waiver of pre-deposit of 50% of duty and penalty of equal amount u/s 11AC - dismissal of appeal by Commissioner(Appeals) for non-compliance with the provisions of section 35F - assessee offered to make pre-deposit of 25% of duty - Held that:- Applicants are directed to deposit 25% of duty within eight weeks and report compliance on stipulated date directly to Commissioner(Appeals). After waiving the requirement of pre-deposit of balance amount, it is held that since Commissioner(Appeals) has not decided the issues on merits. Therefore the case is remanded to Commissioner(Appeals) for deciding the issue on its merits without insisting for any further pre-deposit.

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• 2012 (6) TMI 307
  Quantification of demand - Simultaneous claim of cenvat credit on the central excise duty on the capital goods and availed depreciation also - Held that:- As Commissioner (Appeals) while passing the order has not quantified the amount as required under Section 11A(2) and at the same time he has not remanded the matter also the submission that the appellant themselves can quantify and pay the amount since they are aware of all the facts cannot be accepted - the matter is required to be remanded to the original adjudicating authority who has to re-quantify the amount of demand as per the orders of the Commissioner (Appeals)

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• 2012 (6) TMI 306
  Claim of Cenvat credit for GTA service availed to delivery the goods at the buyer's end - Held that:- Tax must have been paid against the invoices giving description of the goods and the destination - unless core examination as to receipt of goods at the buyer's end, actual delivery thereof and cost of freight incurred is done, no Cenvat credit is admissible - matter is remanded to the adjudicating authority to examine the evidence on record and pass appropriate order.

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• 2012 (6) TMI 305
  Bifurcation of Freight paid in respect of domestic clearances and export clearances for CENVAT credit - Held that:- Outward transport service used by the manufacturers for transportation of finished goods from the place of removal upto the premises of the purchaser is covered within the definition of input service provided in Rule 2(1) of the CRR - it makes no difference for allowing Cenvat credit whether the goods are cleared for export purpose or for domestic purpose up to the place of removal - against revenue.

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• 2012 (6) TMI 304
  Maintainability of appeal – limitation – whether once a copy of the order was forwarded by speed post, the requirement of Section 37C of the Central Excise Act, 1944 were complied and, therefore, the appeal filed by the assessee is beyond time - Held that:- As per Section 37C(1)(a), it was mandatory on the part of the Revenue to serve a copy of the order of Commissioner of Central Excise (Appeals) by registered post with acknowledgment due to the assessee. Admittedly in the present case, a copy of the order has not been sent by registered post. it could not be said that the requirement of Section 37C has been complied with. appeal filed by the assessee was time¬barred cannot be sustained. Decided in favor of assessee.

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• Wealth tax

• 2012 (6) TMI 365
  Re- assessment - the Karta’s Minor daughter, the sole beneficiary under the Trust, her assessable wealth was not included in the assessment of HUF – Initiation of rectification proceedings immediately after first assessment - Held that:- The grounds on which reassessment proceedings was taken up were the same grounds for initiation of rectification proceedings under Section 35 also - mere change of opinion itself will not confer jurisdiction to reopen the assessment - it is evident that the AO initiated rectification proceedings only on the score that there is a mistake apparent on the face of the record and hence the assessment was to be revised, therefore it is obvious that the AO had all the materials before him when he invoked the jurisdiction for rectification of mistake, thus it stands to reason that the issuance of notice for re assessment that assessee had not disclosed the material facts fully and truly is totally without any jurisdiction - in favour of assessee.

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