TMI Tax Updates - e-Newsletter
June 18, 2013

Case Laws in this Newsletter:

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

Articles

1. MOST PREFERRED VIEW CAN BE ADOPTEDFOR EXPEDITIOUS JUSTICE- LARGER BENCHES GENERALLY CAUSE DELAY IN JUSTICE

   By: DEVKUMAR KOTHARI

2. Overview of Service Tax Voluntary Compliance Encouragement Scheme, 2013 - Series 1

   By: Bimal jain

News

1. India Signs Loan Agreement with World Bank for US$ 255 Million for National AIDS Control Project-IV

2. Government Approves 16 Proposals of Foreign Direct Investment Amounting to About Rs.1646.875 Crore

3. Impact of Euro Area Crisis on South Asia (Paper presented by Shri Deepak Mohanty, Executive Director, Reserve Bank of India at the SAARC FINANCE Group Meeting on 18th June, 2013 at Islamabad, Pakistan)

4. RBI Reference Rate for US $ and Euro

5. RBI announces Scholarship Scheme for Central Bankers/Finance Ministry Officials of SAARC Countries

6. Finance Minister Launches Maiden infrastructure Debt fund (IDF) Scheme of IIFCL Mutual Fund for Catalysing Investment in Infrastructure Sector; FM for Mobilsation of Resources From Insurance and Pension Sector for IDFs

7. Auction for Sale (Re-Issue) of Government Stock

Notifications

DGFT

1. 23 (RE – 2013)/2009-2014 - dated 18-6-2013 - FTP

Prohibition on import of milk and milk products from China

2. 22 (RE – 2013)/2009-2014 - dated 18-6-2013 - FTP

Amendment in Notification No 39(RE-2012)/2009-14 dated 25th March, 2013 relating to export of edible oils

Circulars / Instructions / Orders

Customs

1. F. No. 450/25/2009 - Cus IV - dated 14-6-2013

CORRIGENDUM - 24x7 Customs Operation at Major Ports and Airports – reg. dated the 31 May, 2013

Highlights / Catch Notes

Income Tax

• Deduction for Swapping Premium Allowed u/s 36(1)(viii) of Income Tax Act, Initially Part of Long-term Finance.

  Case-Laws - AT : Swapping premium - Disallowance u/s 36(1)(viii) - swapping premium is nothing but discounted interest and had originated in the long term finance initially advance - deduction allowed - AT
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• Gift Addition Contested: Rs. 3 Lakhs Removed Due to Lack of Donor Response u/s 131 Despite Provided Details.

  Case-Laws - AT : Addition on account of gift - donors did not appear in response to notices u/s 131 - as all details were furnished and source of source were also explained, there is no reason to uphold the addition of Rs.3 lacs. - AT
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• Section 12AA Registration Granted: Hindu Organization's Membership Clause Deemed Acceptable by Authorities.

  Case-Laws - AT : Registration under S.12AA denied - membership is open to 'a Hindu having full faith in Hindu Dharma, Samskruti and way of life' - nothing wrong in the said clause - registration to be granted - AT
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• Agricultural land wrongly classified as benami asset; capital gains not taxable to assessee, rules court.

  Case-Laws - AT : Agriculture land - AO was not justified in holding that the land in question was a benami asset of the assessee and capital gain., if any, was to be assessed in the hands of the assessee. - AT
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• Appellant qualifies for capital gains exemption on joint property sale under Income Tax Act Section 54E.

  Case-Laws - AT : Capital gain computation - Joint ownership - the sale proceeds belonged to appellant and other partners, hence, the appellant is entitled to exemption u/s 54E. - AT
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• Court Confirms Income Addition; Retraction Must Occur Promptly to Be Valid per Legal Principle.

  Case-Laws - AT : Addition made on the basis of statement - It is well settled proposition of law that the retraction should be made at the earliest possible opportunity. - addition confirmed. - AT
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Customs

• Petitioners to receive cess refund on coal imports, limited to duties paid within three years before petition filing.

  Case-Laws - HC : Refund - Levy of Cess on import of coking and non-coking coal - The petitioners shall be entitled to refund of such duty paid only within three years immediately preceding the date of filing of the petition - HC
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Service Tax

• Assessing Authority's Discretion u/s 80: No Penalty Imposed; Revisionary Authority Can't Impose Penalty First Time.

  Case-Laws - AT : Penalty - When the assessing authority, in its discretion has held that no penalty is leviable, by virtue of Section 80 of the Act, the revisionary authority cannot invoke its jurisdiction and impose penalty for the first time. - AT
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Central Excise

• Sugar Cone in Aluminum Foil Classified Under Chapter 19, Confirms Appellant's Assertion.

  Case-Laws - AT : Classification of the product Sugar Cone placed in Aluminium foil cone - sugar cone placed in the aluminium cone is properly classifiable under Chapter 19, as claimed by the appellant. - AT
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• Court Rules: Allegations in Excise Cases Require Concrete Evidence, Not Just Presumptions or Suspicions. Decision Supports Assessee's Position.

  Case-Laws - AT : Clandestine removal - allegation cannot be merely on the basis of presumptions and assumptions. Suspicion however grave cannot replace the proof - decided in favor of assessee by majority decision - AT
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VAT

• High Court Rules on VAT Exemption for Milk Powder, Infant Foods; Promissory Estoppel Doctrine Not Applicable.

  Case-Laws - HC : Exemption from VAT on milk powder and the vitaminised infant milk foods - Public interest - Doctrine of promissory estoppel - this is not a case where such principle can be applied - HC
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Case Laws:

• Income Tax

• 2013 (6) TMI 408
  Swapping premium - Disallowance u/s 36(1)(viii) - Held that:- As decided in assessee's own case [2008 (12) TMI 27 - AUTHORITY FOR ADVANCE RULINGS] swapping premium is nothing but discounted interest and had originated in the long term finance initially advance. The premium is actually traced to the original source and is not kept remedy of business of providing long term finance Provision for bad and doubtful debts - Disallowance u/s 36(1)(viii) - Held that:- As decided in Power Finance Corporation Ltd. v. JCIT [2006 (8) TMI 332 - ITAT DELHI] the presentation of the concerned amount under schedule of Reserve and Surplus was based on the mandate of CAG but its nature and character remains tile same as (envisaged under clause (viia)(c) of section 36(1) of IT Act as contextually interpreted and explained in the Board Circular No 258 dated 14-6-1979), the assessee should be taken to have complied With the requirement of making the said provision for c1aiming deduction under clause (viia)(c) of section 36(1). Prior period expenses disallowed - Held that:- Assessee did not produce any evidence to demonstrate that these expenses crystallized during the year under consideration. The assessee is following mercantile system of accounting and in mercantile system of accounting the expenses relate to that year though not incurred has to be provided on estimate basis provided the incurring of such expenses is not contingent. The Ld AR did not submit any argument or evidence to prove that these expenses were contingent.

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• 2013 (6) TMI 407
  Additions on account of cash deposited in bank by the assessee - income shown in the return of income consisted of salary only - case was selected for scrutiny under CASS - Held that:- Assessee has filed additional evidence for admission in the form of two affidavits from the uncles of wife of assessee certifying therein, that they had gifted an amount of Rs.3,00,000/- each in cash to the wife of assessee on the 10th marriage anniversary. From the order of AO and CIT (A), assessee had not taken this plea before them as per assessee neither AO nor CIT (A) asked about it during proceedings before them and assessee being under stress of selling house at a loss and due to loss of job may not have explained these sources. Due to circumstances the assessee can be said to be really under stress and in view of the special circumstances, the additional evidence admitted and in view of additional evidence, remit the file to the office of AO for readjudication - appeal filed by assessee allowed for statistical purposes.

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• 2013 (6) TMI 406
  Disallowances of Rs. 3,18,000/- on account of gift - assessee could not produce the donors and donors did not appear in response to notices u/s 131 - Held that:- There were two entries of Rs.3 lacs and Rs.59,940/- respectively which were received by the assessee. The assessee had furnished copy of bank statement of donor of Rs.3 lacs and also had explained the source of source by furnishing the details of credit side of entry in the pass book of donor. As notices u/s 131 were dated 15.12.2008 and AO without waiting passed the assessment order on 20.12.2008. Thus as all details were furnished and source of source were also explained, there is no reason to uphold the addition of Rs.3 lacs. As regards amount of Rs.18,000/- the amount is too small and was claimed to have been received on marriage anniversary of the assessee which should have been accepted by AO.In favour of assessee. Addition of Rs.59,440/- on account of share trading profit - Held that:- The same was declared as income in the financial year 2002- 03 and the same was received in the year under consideration as apparent from copy of bank account. Therefore this amount cannot be considered as unexplained. In favour of assessee.

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• 2013 (6) TMI 405
  Transfer pricing adjustment - selection of comparables - Accentia Technologies Limited - contention of the assessee that in case of the aforesaid company, there is amalgamation in December, 2006, which has impacted the financial result - Held that:- As can be seen from the order of Capital IQ Information Systems India Pvt. Ltd [2014 (3) TMI 626 - ITAT HYDERABAD] the aforesaid company was excluded since ex-ordinary events like merger and demerger had taken during the relevant financial year which must have impacted the financial results of the company. That besides the high volume of on-site operation of Accentia Technologies Limited also makes it functionally dissimilar to the assessee. These facts are not all considered either by the TPO or by the DRP. Therefore remit the matter to the file of the AO who shall verify the fact whether actually merger has taken place during the year and if it found so, then the aforesaid company has to be excluded from the list of comparables. Accurate Data Convertors Private Ltd. - Held that:- Since the TPO has not given any opportunity to the assessee to raise his objections with regard to the aforesaid company, remit this issue to the file of the AO who shall decide the acceptability or otherwise of the company as comparable after considering the assessee 's objections. Vishal Information Technologies Ltd. - Held that:- As can be seen from the order of Capital IQ Information Systems India Pvt. Ltd [2014 (3) TMI 626 - ITAT HYDERABAD] the aforesaid company unlike the assessee has outsourced considerable portion of its business to third party vendor. Hence, it cannot be considered as a comparable. Asit C Mehta Financial Services Ltd. - Held that:- The company has a employee cost of 24.78% compared to assessee's 44%. That besides also the DRP in assessee's own case for asst. year 2008-09 has excluded this company which has not been controverted by the DR. Exclusion directed. Bodhtree Consulting Limited - Held that:- From the annual report of the aforesaid company it is seen that the said company earns its revenue from software development. Therefore it is functionally different from the assessee. This fact has not properly considered by either by the TPO or DRP. Therefore remit the matter back to the file of the AO to reconsider. Eclerx Services Limited - Held that:- As can be seen from the order of Capital IQ Information Systems India Pvt. Ltd [2014 (3) TMI 626 - ITAT HYDERABAD] aforesaid company cannot be treated as not only the said company is functionally different being engaged in providing KPO services but it has also shown extraordinary high profits. Exclusion directed. Informed Technologies India Limited and Iservices India Private Ltd - Held that:- As can be seen from materials on record, the assessee has not raised any objection either before the TPO or before the DRP in respect of aforesaid companies. The assessee has also not made out a very convincing case before us to justify excluding the aforesaid two companies. Hence, we are of the view that these two companies have been correctly selected as comparables. Mold-Tek Technologies Limited - Held that:- As can be seen from the order of Capital IQ Information Systems India Pvt. Ltd [2014 (3) TMI 626 - ITAT HYDERABAD] the said company is to be excluded as it has shown extraoridinarily high profit & that besides also the DRP in assessee's own case for asst. year 2008-09 has excluded this company which has not been controverted by the DR. HCL Comnet Systems & Services Limited, Infosys BPO Limited and Wipro Limited - Held that:- As can be seen from the order of Capital IQ Information Systems India Pvt. Ltd [2014 (3) TMI 626 - ITAT HYDERABAD] the aforesaid three companies cannot be treated as comparable, considering their substantially high turnover as compared to that of the assessee. Also agree that the turnover filter of Rs. 1 crore to Rs. 200 crore as applied in Genisys Integrating Systems (India) (P.) Ltd. [2011 (8) TMI 952 - ITAT BANGALORE] should also apply to the facts of the present case, considering the assessee's turnover of mere Rs. 60 crores. Thus companies having turnover of Rs. 1 crore to Rs. 200 crore alone can be considered as comparable, in the case of the assessee. Exclusion directed. Reduction of communication charges from the export turnover without reducing it from the total turnover while computing deduction u/s 10A - Held that:- his issue is squarely covered in favour of the assessee by the judgment of CIT vs. Gem Plus Jewellery Ltd [2010 (6) TMI 65 - BOMBAY HIGH COURT] & ITO vs. Sak Soft Limited [2009 (3) TMI 243 - ITAT MADRAS-D] thus direct AO to reduce communication charges both from the export turnover as well as the total turnover for computing exemption u/s 10A. This ground of the assessee is allowed.

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• 2013 (6) TMI 404
  Jurisdiction power u/s 263 by CIT(A) - sale consideration in respect of land both at Gurramguda and Badangipet should be taken at Rs.250/- per sq. yard and the difference should have been added which was not done by the AO - Held that:- Considering plea of the assessee that in a confused state of mind, he had accepted the sale of plot at Gurramguda at Rs.250/- per sq. feet and the sale of plot at Badangapet would not be at such higher rate as that of Gurramguda has to be considered. Further, AO shall enquire with the purchasers of the plots and has to determine the correct value after ascertaining the rate which is prevalent in that area at that period of time. Hence remit the issue to the file of AO to re-work the sale consideration of the plots and thereafter, decide the issue in accordance with law. Under-valuation of closing stock - Held that:- Merit in the argument of the assessee that the entire cost of development is not to be taken into consideration but the land development costs as on 31.3.2003 has to be taken and therefore, the amount of Rs.13,18,478/- arrived by CIT is the difference in closing stock, has to be deleted. Inclusion of amount received as advance found in the balance sheet to income of the assessee - Held that:- As during the A.Y. 2004-2005, the assessee sold parts of land at Rs.17,85,600/- and income of Rs.4,01,760/- was offered. The assessee has admitted the advances received during the year at Rs.7,59,943/- has revenue receipts for the immediately succeeding year. Therefore, AO and CIT were not justified in treating the amount of Rs.7,59,943/- as the income of the assessee.

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• 2013 (6) TMI 403
  Write off the bad debts disallowed - CIT(A) held assessee eligible for deduction under section 36(1)(vii) - Held that:- The write off has been effected after following well laid down procedure for recovery at various levels in the organisation. Borrowers had also been given facility of re-schedulement which was objected by some of them and the write off was effected only when the borrowers failed in terms of re- schedulement of loans. However, where any amount was recovered subsequently against bad debts written off, the same has been offered as income by the assessee and tax has also been paid. Taking into account the number of borrowers who are about 28034 and also the fact that the borrowers are poor women with low level of literacy, assessee tried his best for recovery by issuing a public notice and other methods appropriate in the circumstances of the case. Thus remit the issue to the file of AO to verify whether write off of bad debts has been with respect to the individual accounts of the assessee's borrowers and after verification the AO shall decide the issue in accordance with law, after giving a reasonable opportunity of being heard to the assessee - appeal of the Revenue is allowed for statistical purposes.

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• 2013 (6) TMI 402
  Registration under S.12AA denied - Held that:- It is an undisputed fact that the objects of the assessee society are to run an Annadana Satram, including poor feeding, to run a library, to work for charities for the benefit and upliftment of economically backward and down trodden people and to do social service for improving the living conditions and work for general welfare of the poor irrespective of caste, creed and colour. For carrying on its activities in pursuance of these objects, it is not necessary or imperative for the applicant society to be owner of the land or the building which is constructed on it. Therefore, the first objection of the DIT(Exemption) that the assessee society has merely been permitted to make construction on the land allotted and had no property of its own, is not valid, since ownership over the property does not in any way disturb the otherwise charitable nature of the assessee society. Notwithstanding such a condition stipulated by the devasthanam authorities, when the assessee is carrying on its activities in pursuance of its objects, which undisputedly are charitable in nature, assessee cannot be denied registration. Since the land was allotted by an authority for a specific purpose, certain conditions have been stipulated by the said authority to monitor and regulate the activity of the Society, to ensure that the objects for which land has been allotted are being pursued. Thus the objection of the DIT(E) with regard to control of the Devasthanam over the management and activities of the assessee-society, is also not sustainable. Even with regard to the last objection for rejection that the membership of the assessee-society is limited to Hindus considering relevant clause from the Rules and Regulations of the assessee society, prescribing the qualification to be a member, as extracted by DIT(Exemption) indicates that membership is open to 'a Hindu having full faith in Hindu Dharma, Samskruti and way of life'. Thus nothing wrong in the said clause, which disqualifies the assessee from being eligible to registration under S.12AA Thus no justification in denying registration to the assessee society. In favour of assessee.

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• 2013 (6) TMI 401
  Profit from sale of agriculture land - benami property - notice u/s 153A - whether the finding of the AO treating the assessee as benamidar of Sh. Rama Gameti can be justified and whether the transactions of sale and purchase of land should be treated as of capital gain nature or of business nature - It may be noted that the above mentioned agriculture land were shown to be purchased by Sh. Rama Gameti who is a domestic employee of the appellant - Held that:- It is noticed that that Shri Rama Gameti, an employee of the assessee raised the loans amounting to Rs. 22.85 lacs from various parties utilized for purchase of agriculture land admeasuring 3,30,872.8 sq ft. The genuineness of the loan was not doubted by the AO. The said land purchased by Shri Rama Gameti was sold to M/s. S.S. Education Trust for a consideration of Rs. 23.87 lacs and after that the loans raised for purchase of the land were repaid by Shri Rama Gameti. AO's view that the assessee used the name of his domestic servant namely Shri Rama Gameti and Smt. Laxmi Bai to purchase the land belonging to Schedule Tribe and converted the same to the residential nature from agriculture nature is not acceptable as the land in question was purchased by Shri Rama Gameti and the purchased deed was not doubted. The conversion of land for non-agriculture purpose was got done by Shri Rama Gameti who sold this land to M/s. S.S. Education Trust which is a separate entity registered with Assistant Commisioner, Devasansthan Vibhag, Udaipur. The said trust also enjoy the benefit of registration u/s 12AA and 80G and is a separate entity from the assessee. So it cannot be said that the assessee got any benefit by purchasing the land in the name of M/s. S.S. Education Trust, a public charitable organisation. Although AO mentioned that Shri Rama Gameti was a benamidar of the assessee and had it been so then the transaction of the land which should have been purchased by a Schedule Tribe only, could easily be cancelled by the administrative authorities but no such action has been taken. Therefore, AO only presumed that Shri Rama Gameti was a benamidar of the assessee and the land purchased was actually benami property of the assessee. Shri Rama Gameti deposited the amounts received by raising the loan in his bank account and by withdrawing the amounts from the bank account, he purchased the land which was sold on profit to M/s. S.S. Education Trust after converting it into non-agriculture land and the assessee did not get any benefit from the land sold to M/s. S.S. Education Trust, a public charitable organisation. Therefore, AO was not justified in holding that the land in question was a benami asset of the assessee and capital gain., if any, was to be assessed in the hands of the assessee. No reason to discuss as to whether the profit on sale of land should be treated as business profit in the hands of the assessee or provisions of Section 50C were applicable because the said facts are to be considered in the hands of the original owner of the land i.e. Shri Rama Gameti who purchased the land by raising the loans and sold the land to M/s. S.S. Education Trust and earned profit - appeal filed by the assessee allowed.

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• 2013 (6) TMI 400
  Disallowance of deduction u/s 80HHC on DEPB license sold - Held that:- No doubt, the assessee's appeal is both factually and legally acceptable on merits in view of the judgement Topman Exports [2012 (2) TMI 100 - SUPREME COURT OF INDIA]. However, in view of the existing direction in the assessee's own case [2010 (10) TMI 928 - BOMBAY HIGH COURT] directing the AO to consider the claim of the assessee in accordance with the decision of Topman Exports & Others [2009 (8) TMI 827 - ITAT MUMBAI]. In the said judgement, the Hon'ble Bombay High Court has directed the AO to dispose off the issue in the light of their judgment in the case of Kalpataru Colours and Chemicals [2010 (6) TMI 63 - BOMBAY HIGH COURT] wherein held that sale of the Duty Entitlement Passbook is taxable under section 28(iiid) - face value is not required to be deducted from the sale proceeds . Thus due to judicial discipline, we are procedurally constrained to provide the requisite relief to the assessee as this Tribunal has no authority to direct the AO to follow the decision of the Supreme Court in contravention of the said existing direction of the jurisdictional High Court. Hence, the assessee is directed to approach the appropriate forum to seek the relief in view of the existing direction of the jurisdictional High Court. Appeal filed by the assessee dismissed.

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• 2013 (6) TMI 399
  Capital gain computation - whether assessee has invested sale consideration in NHAI Bonds as required u/s 54E - whether property owned jointly by the assessee and his partner - Held that:- CIT(A) has given a categorical finding on this issue stating that the initial investment in the property was made by both the partners equally. The sale proceeded received in the name of the appellant were divided equally by the both partners. Since, it was known that firm was to be dissolved by 31-3-08 hence, they have invested sale consideration in NHAI Bonds as required u/s 54E. Thus the sale proceeds belonged to appellant and other partners, hence, the appellant is entitled to exemption u/s 54E. The sac consideration of the appellant is to be considered at 50% out of total i.e. 55 lakhs. The capital gains before exemption come to Rs.33,34,060/- of which 50% would be at Rs. 17,10,939. Accordingly, the capital gains in the case of the appellant is to be considered at Rs.17,10,939 against which the appellant has invested Rs.16 lakhs in NHAI Bonds. Hence, the chargeable long term capital gains in the case of the appellant would be at Rs.1,10,939 [17,10,939- 16,00,000]. AO is directed to consider long term capital gains at Rs.1,10,939 in the case of the appellant as against Rs.17, 43,060 assessed by him. Against revenue. Deduction u/s. 54F in respect of deposits under Capital Gains Accounts Scheme - Held that:- AO has allowed part of the claim of deduction u/s. 54F in respect of the purchase of land and part of the cost of construction. Therefore, the AO cannot say that the assessee has not claimed any deduction in the return of income. It is an undisputed fact that the return of income was filed electronically and as per the new provision relating to the filing of return, the assessee is not required to file any document alongwith return of income. Also as all the necessary details were filed during the course of the scrutiny assessment proceedings andCIT(A) has categorically held that the deposit in capital gains account scheme was well within the period of limitation provided u/s. 54F(4) no reason to tamper with the findings of CIT(A). Against revenue.

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• 2013 (6) TMI 398
  Export receivables on account of agency commission - whether do not form part of export turnover eligible for claiming exemption u/s. 10A? - Held that:- As decided in Gem Plus Jewellery India Ltd [2010 (6) TMI 65 - BOMBAY HIGH COURT] export turnover in numerator must have same meaning as export turnover which is a constituent element of total turnover in denominator. Also see CIT Vs Genpact India [2011 (11) TMI 119 - DELHI HIGH COURT] wherein relying upon the decision of Gem Plus Jewellery India Ltd. (supra) directed the AO to exclude expenses out of total turnover for computing eligible deduction u/s. 10A. Thus accepting the alternative plea of the assessee direct the AO to recompute the allowable deduction u/s. 10A after excluding the expenses from the total turnover. Depreciation relating to fixed assets of Wada unit disallowed - Held that:- The assets are part of the business of the assessee. In order to be entitled to claim depreciation, asset is to be owned by assessee and it is also to be used for purpose of business or profession, but expression "used for the purpose of business", when applied to block of assets, would mean use of block of assets and not any specific item in the block of assets as individual assets lose their identity once they become part of block of assets. Thus Considering the facts of the case in the light of the above observations in CIT Vs Bharat Aluminium Co. Ltd. [2009 (10) TMI 505 - DELHI HIGH COURT] AO directed to allow the claim of depreciation as per law.

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• 2013 (6) TMI 397
  Addition made on the basis of statement - proper books of account - assessee herein is an ENT surgeon - evidentiary value of statement taken during survy - Held that:- The statement taken from the assessee as well as staff member of the assessee, has further been corroborated by the AO by bringing the fact on record that the assessee did not maintain proper books of accounts. Further, AO has pointed out that the assessee could not bifurcate the professional receipts of Rs.12.54 lakhs under various heads of activities. The assessee also could file only the cash flow statements to substantiate his investments and other cash outflow. These facts clearly show that all is not well with the assessee. These facts, clearly support the case of the AO meaning thereby, the addition of Rs.2.00 lakhs could still be made by the AO without drawing any support from the Statements taken during the course of survey. Hence CIT(A) has misdirected himself in assuming that the impugned addition was made on the basis of statements alone. It is well settled proposition of law that the retraction should be made at the earliest possible opportunity. In view of the huge time gap, the affidavit filed by Smt. K. Laseena is liable to be rejected. Thus AO was justified in making the addition. Against assessee. Addition of cash credit received from Smt. Mini, spouse of the assessee - CIT(A) deleted the addition - Held that:- AO has added the amount without examining either the assessee or the spouse of the assessee & CIT(A) has deleted the addition without carrying out any such examination. Thus, both the tax authorities, has proceeded to deal with this issue on surmises by making certain presumptions failing to examine the above said cash credit as mandated by the provisions of sec. 68 - restore the same back to the file of AO for reconsideration. Addition of cash credit received from a concern named M/s. Priya Health Care - CIT(A) deleted the addition Held that:- AO did not accept the genuineness of credit without carrying out any verification & CIT(A) has also deleted the addition without making any examination of the claim of the assessee. Thus, both the tax authorities, has proceeded to deal with this issue on surmises by making certain presumptions failing to examine the above said cash credit as mandated by the provisions of sec. 68 - restore the same back to the file of AO for reconsideration. Addition relating to the sale of furniture and fittings - Held that:- Assessee could not furnish any evidence to substantiate the claim of receipt on sale of furniture and fittings. Before the CIT(A), though the assessee claimed that the furniture and fittings were accumulated over a period by spending a sum of Rs. 20,000/- per year, yet it turned out to be a oral explanation, as the assessee could not furnish any evidence in support of the said claim. Thus, the credit of Rs.1,53,165/- turns out to be a mere cash credit. As assessee could not discharge the initial burden placed upon him u/s 68 AO was right in assessing the amount of as the income of the assessee. Against assessee.

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• Customs

• 2013 (6) TMI 418
  Mis-declaration of value of the import - Revenue’s grievance that the car imported from United Kingdom was not the country of manufacture but was Austria - levying of redemption fine and penalty - Held that:- There is no dispute that the country of manufacture of the car in both cases is different from country of export. The car import policy being the law of the land which was subject matter of scrutiny by Customs and Import having been made under that policy, contravention of that law is prevented by Customs. The Assessee having contravened policy without the import being made from the country of manufacture defeats the spirit and object of the policy. That made the cars confiscable and the cars became smuggled goods liable to penal consequence of law of customs. Perusal of the import condition as per policy clearly throws light that legislature intended import of cars to enjoy notification benefit only if such import is made from the country of manufacture. The landing port should be the port of export and if it is in a land locked country, that may be imported from the adjoining country situated in the land locked of coastal line from which export was permissible. When the cars in question came from United Kingdom, it was exported from country of manufacture to UK and there after the cars were exported from U.K. into India destination. Therefore no inference can be drawn to equate the imports from country of manufacture. In view of observations having seen from the anxiety of Review Committee pointing out loss of Revenue, the matter should go back to Adjudicating Authority to confront the gravity of charge of violation of import policy and undervaluation of the imported car to the assessee along with review observation for leading their defence since there is clear case of under valuation and violation of mandatory conditions of import policy making the goods confiscable.

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• 2013 (6) TMI 417
  Refund - Levy of Cess on import of coking and non-coking coal - levy of additional duty at the rate of Rs. 3.50 per metric tonne or Rs. 10/- per metric tonne - legal validity - held that:- insofar as the collection of so called additional duty is concerned, the same was wholly illegal. With respect to this aspect even the department is unable to raise any contention. This is so because in an identical situation, the Apex Court in the case of Central Excise & Customs, Bhubaneswar-I v. Tata Iron & Steel Co. Ltd. (2003 (4) TMI 104 - SUPREME COURT OF INDIA) held that such additional duty on imported coal could not be levied. The Apex Court noted that Section 6 of the Coal Mines Act pertains to collection of additional duty on excise. Section 7, on the other hand, pertains to collection of additional duty as Customs duty. The Apex Court noted that in absence of any notification under Section 7 of the Coal Mines Act, no such duty could be levied on import of coal made by the importers. The entire collection of additional duty in the name of Customs duty was wholly unauthorized. Refund - period of limitation - held that:- The contention of the petitioners that, therefore, in view of Section 17(1)(c) of the Limitation Act, 1963, such refund claim made within three years from the detection of the mistake should be entertained, must be rejected. It is a case where the duty was collected without any authority of law. Such collection of duty is not illegal or unlawful or irregularly collected Customs duty under the Customs Act, but a duty collected without authority of law and therefore opposed to Article 265 of the Constitution of India and is thus unconstitutional. In that view of the matter, the petitioners cannot be bound by the limitation prescribed in the Customs Act, 1962 for claiming refund of excess duty or duty collected illegally. The period of limitation prescribed under the Limitation Act would apply. Unjust enrichment - held that:- The Apex Court in the case of Mafatlal Industries & Ors. v. Union of India & Ors. (1996 (12) TMI 50 - SUPREME COURT OF INDIA) having taken note of such decisions, has held that in every case of refund of duty even if the same is on the ground of the provisions under which such duty was collected having been declared unconstitutional, the duty would be on the person, claiming refund, to establish that the incidence of such duty was not passed on to any other person. The petitioners shall be entitled to refund of such duty paid only within three years immediately preceding the date of filing of the petition, which happens to be 18-8-2006. Such refund shall be granted to the petitioners with simple interest at the rate of 9% per annum from the date of payment till actual refund, however, only after ascertaining that the burden of such duty was not passed on to consumer or any other person. - partly decided in favor of assessee.

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• Service Tax

• 2013 (6) TMI 416
  Stay - business auxiliary service - extended period of limitation - Held that:- As the appellant never took any steps for getting themselves registered with the department or to file service tax returns or to pay service tax, while rendering the taxable service to SWDL without disclosing this fact to the department, the extended period of limitation was rightly invoked against them. - Prima facie case is against the appellants - pre deposit ordered partly.

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• 2013 (6) TMI 415
  Power of revisionary authority to levy penalty - revision u/s 84 - Held that:- question arising for consideration in this appeal is squarely covered against the appellant by a judgement of the Hon’ble High Court of Karnataka viz. Commissioner of Service Tax vs. Motor World [2012 (6) TMI 69 - KARNATAKA HIGH COURT] wherein one of the questions of law considered by the Hon’ble High Court was Whether the revisionary authority has jurisdiction to impose penalty for the first time when it has not been imposed by the adjudicating or assessing authority by invoking Section 80 - When the assessing authority, in its discretion has held that no penalty is leviable, by virtue of Section 80 of the Act, the revisionary authority cannot invoke its jurisdiction and impose penalty for the first time. - the same effect was given in the case of Sneha Minerals vs. Commissioner of Central Excise, Belgaum [2010 (7) TMI 387 - CESTAT, BANGALORE].

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• 2013 (6) TMI 414
  Cenvat Credit - input services - canteen service - used in or in relation to manufacture - Hon'ble High Court of Gujarat in the case of Ferromatic Milacron India Ltd. [2010 (4) TMI 649 - GUJARAT HIGH COURT], has confirmed the view that credit of Service Tax paid on outdoor catering service provided in factory canteen is admissible since it is mandatory for the employer to provide canteen services to staff under Factory Act, 1948. It was held that the provision of catering service is a statutory requirement and is indispensable for the manufacturer to run the factory and such service can be said to have been indirectly used in relation to manufacture of final product and therefore covered under the definition of input service. - Decided in favor of assessee.

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• Central Excise

• 2013 (6) TMI 413
  Penalty u/s 11AC - no allegation with supporting evidence regarding suppression of facts, misdeclaration, fraud or collusion, etc. - Held that:- Tribunal was perfectly justified in observing that even in the show cause notice there were no allegations that the duty was short-levied or short paid on account of suppression of facts, misdeclaration, fraud, collusion, etc. Section 11AC of the Central Excise Act permits the Authorities to collect penalty if any duty of excise has not been levied or paid or short levied or short paid or erroneously refunded by reason of fraud, collusion, or wilful misstatement or suppression of facts or contravention of any of the provisions of the Act or the Rules with intent to evade payment of duty. - No penalty

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• 2013 (6) TMI 412
  MRP Based valuation - section 4A - stay - formulations/ medicines - period of limitation - held that:- as the appellant is required to print the retail sale price on the product under the DPCO. At the same time, we find that the regulation 15 of the DPCO does talk about the printing of the price on the drugs/medicines, which are offered for retail sale. - All these issues need to be gone into detail which can be done only at the time of final disposal of appeal. In our considered view, the appellant needs to be put to some terms and conditions to hear and dispose of their appeal. - stay granted partly.

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• 2013 (6) TMI 396
  Cenvat Credit - Input services - service of C & F agent - post removal activity - Held that:- Whether we consider the services as of C & F Agent or Commission agent, according to the decision of the Tribunal in the case of Lanco Industries Limited [2009 (7) TMI 125 - CESTAT, BANGALORE] and Rotork Control (India) Pvt. Limited [2010 (6) TMI 336 - CESTAT, CHENNAI] the credit of service tax is admissible. Since the issue is squarely covered by the precedent decisions of the Tribunal, the appeal is allowed with consequential relief to the appellant. - Decided in favor of assessee.

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• 2013 (6) TMI 395
  Clandestine removal and under-valuation of goods - Demand based on statement - corroborative evidence - Majority Decision - Cleaner of films/sheets in the guise of Lay Flat Tubing (LFT) - Held that:- The impugned order of demand has relied upon the statement of Shri Kamlesh Pandey, Production Supervisor, who was associated with the appellant company only for a period of about 8 months and as such, his deposition as regards clearances of sheets under the guise of LFT for the period prior to his joining the factory, cannot be held to be true reflection of factual position. Further, it also stands recorded in the said statement of Shri Pandey that the production program register was being maintained on the instructions of Shri H.K. Singh. However, the Revenue has not bothered to record the statement of Shri H.K. Singh, which would have classified that position. Inasmuch as no production program register was being maintained by the appellant for over-the-counter clearances on cash and carry basis, the statement of Shri Pandey in respect of program register cannot be held to be a relevant statement. Revenue authorities have recorded the statements of the owners of vehicles who were engaged by the appellant for transportation of the goods. The said statements do not indicate that the owners were self-driving the vehicles and they would be in a position to give correct particulars as regards invoices, where the name and city of the consignee is mentioned. In the absence of any such corroborative evidence as to that the transportation were made by the said vehicles and that the material transported was nothing but plastic films and sheets and reliance placed by the Revenue authorities on the statements of the transporters is incorrect and such statements do not instill the confidence that the appellant had removed the plastic films and sheets in the guise of LFT. The adjudicating authority has not recorded any finding that the appellant was receiving excess payment than the amount indicated on 814 invoices in Annexure II to the Show Cause Notice, even after scrutinizing the documents resumed from the head office of the appellant. The appellant had, in their statement, clearly stated that the head office of the appellant was collecting cash as indicated in all the 814 invoices. If that be so, the Revenue has not carried out their investigation any further to show or bring on record that the appellant had received the excess amount than the amount billed as indicated in 814 invoices to Annexure II of the Show Cause Notice. In the absence of any such evidences, it cannot be said that the appellant had cleared plastic films and sheets in the guise of LFT. The provisions of Section 11A of Central Excise Act, 1944 talks about the issuance of Show Cause Notice to the “person” who is “liable” to pay duty. It is undisputed in this case that till 5-3-2005, the clearances for home consumption were effected by M/s. Mayura Industries, which was a partnership firm registered with Central Excise authorities. The business of M/s. Mayura Industries was taken over by the current appellant M/s. Radha Madhav Corporation Ltd. w.e.f. 6-3-2005. Thus the demand of duty for the period prior to 6-3-2005 can be raised only on Mayura Industries and not on M/s. Radha Madhav Corporation Ltd., Public Limited Company having distinct and identifiable entity. There is no dispute on the fact that in adjudication proceedings, the charge of clandestine removal and undervaluation is definitely to be established on the basis of preponderance of probabilities. However, it cannot be merely on the basis of presumptions and assumptions. Suspicion however grave cannot replace the proof. Decision of Oudh Sugar Mills Ltd. v. Union of India [1962 (3) TMI 75 - SUPREME COURT OF INDIA] is clearly applicable to the instant case inasmuch as the demand cannot be sustained without any tangible evidence, based only on inferences involving unwarranted assumptions. In favour of assessee.

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• CST, VAT & Sales Tax

• 2013 (6) TMI 410
  Conditional stay - interim stay only to the extent of 80% of disputed tax - Held that:- No valid reason has been assigned by the said authorities while granting the conditional stay to the petitioner and also not valid findings has been given by the said authorities that why petitioner is not entitled for interim protection during the pendency of the first appeal before the appellate authority. Accordingly , the Court feels that since the first appeal is to be decided on merit then there is no justification or reason whatsoever to direct the petitioner to deposit the entire tax liability as assessed by the assessing authority - present petition is disposed of with a direction to the FAA to decide the appeal filed by the assessee expeditiously within a period of two months from the date of receiving a certified copy of this order.

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• 2013 (6) TMI 409
  Exemption from VAT on milk powder and the vitaminised infant milk foods - Public interest - Doctrine of promissory estoppel. - period between 01.04.2006 to 01.08.2006. - Since the exemption notification was withdrawn, the petitioner and other co-operatives made a concentrated effort to convince the Government to reintroduce such concession. - On 02.08.2006, the Government of Gujarat issued a fresh notification in exercise of powers in Sub-section (5) of Section 8 of the Central Sales Tax Act,1956 and reintroduced concessional rate of duty at 2% on whole milk powder or skimmed milk powder. Held that:- If the partial exemption enjoyed by the petitioner was withdrawn mechanically and reintroduced shortly thereafter, the question of examining the petitioner’s grievance in the context of the submissions made before us would arise. In the present case, however, we notice that such withdrawal was also based on public interest. We fail to see how the petitioner can bring in the element of promissory estoppel. It is not the case of the petitioner that on the basis of the exemption granted, it altered the position to its disadvantage. It was suggested that the petitioner had not passed on burden of the differential duty for the intervening period. Even if it was so, this can hardly bind the Government into granting the exemption for such period. In any case, the petitioner’s stand that the differential duty was not collected from the purchasers due to ignorance of withdrawal of exemption also appears to be one of doubtful proposition. We may recall, soon after the exemption was withdrawn, the Gujarat Co-operative Milk Market Federation Ltd., an apex body of the milk producing co-operatives had, on 10.06.2006, made a detailed representation before the Government to reintroduce the exemption. The stand of the petitioner that they were not aware about the withdrawal of the exemption, therefore, is not borne out from the record. The decision in case of M/s. Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh and others (1978 (12) TMI 45 - SUPREME Court) is of course well known judgement in the field of promissory estoppel. Since we have held that this is not a case where such principle can be applied, we do not find it necessary to discuss the issue any further. - Decided against the assessee.

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