TMI Tax Updates - e-Newsletter
June 19, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise Wealth tax

Articles

1. SALE VALUE OF CARBON CREDIT IS CAPITAL RECEIPT- a point of view supported by judicial rulings.

   By: DEVKUMAR KOTHARI

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

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Fitch Ratings Rely on Older Data, Ignore Recent Positive Trends in Indian Economy : FM.

2. Change in Tariff Value of Brass Scrap (All Grades), Poppy Seeds, Gold and Silver Notified .

Notifications

Customs

1. Corrigendum - dated 15-6-2012 - ADD

Corrigendum of Notification No. 24/2012-Custom (ADD).

2. Corrigendum - dated 15-6-2012 - ADD

Corrigendum of Notification No. 31/2012-Custom (ADD).

3. 51/2012 - dated 15-6-2012 - Cus (NT)

Amends Notification No. 68/2011-Customs (N.T.) - Determines the rates of drawback in supersession of the notification No. 84/2010-Customs (N.T.), dated the 17th September, 2010.

4. 50/2012 - dated 15-6-2012 - Cus (NT)

Amends Notification No. 36/2001-Customs(N.T) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values.

Income Tax

5. 23/2012 - dated 15-6-2012 - IT

Exemptions - News agency - Notified news agency.

Highlights / Catch Notes

Income Tax

• Income Tax Exemptions Granted to Notified News Agency; Official Notifications Highlight Compliance Requirements and Tax Relief Updates.

  Notifications : Exemptions - News agency - Notified news agency. - Notification
  Visit to Get Source

  ---

• Section 80IB Deduction Valid: Project Approved Before April 1, 2005, Exempt from Revised Provisions. Assessing Officer Consistency.

  Case-Laws - AT : Deduction u/s 80IB - Since the project was approved before 1.4.2005 and as AO allowed deduction in earlier years, there is no need for disallowing the deduction in these years, as revised provisions do not apply to the projects approved earlier to 01-04-05. - AT
  Visit to Get Source

  ---

• No Need for Assessing Officer to Record Satisfaction if Jurisdiction Covers Both Assessees u/ss 158BC and 158BD.

  Case-Laws - HC : When the same Assessing Officer has jurisdiction to assess the searched assessee under Section 158BC and the other assessee under Section 158BD whose undisclosed income is also found in the course of such search, there is no necessity for the AO to record satisfaction as required under Section 158BD - HC
  Visit to Get Source

  ---

• Section 154: Rectification Needs Clear Mistake, Not Debatable Legal Issue. Debatable Points Aren't Apparent Mistakes.

  Case-Laws - HC : Rectification contemplated under section 154 must be a rectifiable mistake. A decision on a debatable point of law could not be taken as a mistake apparent from record, - HC
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

Customs

• New Customs Notification Amends Drawback Rates, Replacing Previous 2010 Notification.

  Notifications : Amends Notification No. 68/2011-Customs (N.T.) - Determines the rates of drawback in supersession of the notification No. 84/2010-Customs (N.T.), dated the 17th September, 2010. - Notification
  Visit to Get Source

  ---

• Corrigendum Issued for Notification No. 24/2012-Custom (ADD) to Correct Details on Anti-Dumping Duties.

  Notifications : Corrigendum of Notification No. 24/2012-Custom (ADD). - Notification
  Visit to Get Source

  ---

• Corrigendum issued for Notification No. 31/2012-Custom (ADD) to ensure compliance and accuracy in customs regulations.

  Notifications : Corrigendum of Notification No. 31/2012-Custom (ADD). - Notification
  Visit to Get Source

  ---

Service Tax

• Discrepancy in Service Tax Due to Different Methods Used in Balance Sheet and ST-3 Returns Leads to Demand.

  Case-Laws - AT : Difference in income shown in the balance sheet and in ST-3 returns – differential service tax demand has arisen because of different methods followed for the purpose of preparation balance sheet and ST-3 return - AT
  Visit to Get Source

  ---

• Refund Claim Denied: Lack of Clarity on Customs House Agent Documentation Charges Under Notification No. 41/2007-ST.

  Case-Laws - AT : Refund claim filed under Notification No. 41/2007-ST rejected - The documentation charges have been charged by the CHA of the appellant and there is no indication as to which service has been provided - in the absence of any specific detail the presumption would be that service provided is relating to CHA which is one of the services notified under Notification No. 41/2007. - AT
  Visit to Get Source

  ---

• Driver Inclusion Doesn't Change Cab Rental Contract Nature; Still Subject to Service Tax Under Rent-a-Cab Rules.

  Case-Laws - AT : Rent-a-cab service - Merely because the appellant has also provided a driver in terms of the contract, who drives the vehicle, it does not mean that the contract is not for renting of cabs - AT
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

Central Excise

• CENVAT Credit Approved for Duty on Ceramic Mugs Sold in Combo Schemes; Valid Under Central Excise Rules.

  Case-Laws - AT : CENVAT Credit of duty paid on products sold under combo scheme of goods manufactured - CENVAT Credit of duty paid on ceramic mugs is allowable as input credit - AT
  Visit to Get Source

  ---

• 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
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2012 (6) TMI 388
  Transfer Pricing - adjustment to ALP - dispute regarding selection of comparables - assessee engaged in the business of marketing products and technical support services and software development related services in India - Held that:- Analysis of comparable show that TPO has rightly included this comparable on reasons enumerated as follows: R Systems International Ltd (Segment) - TPO rightly excluded provision for doubtful debts and provision for doubtful advances to work out the operating profit of the comparable party since the same cannot be considered as normal expenses - Celestial Labs Ltd - rightly selected by TPO since 95% of the revenue is from services even though it is also engaged in development of products in the field of bio-technology, pharmaceutical - Flextronics Software Systems Ltd - though company is also involved in the development of the software product and is also involved in BPO services, however revenue sales from services constitutes almost 90% and the product sales is only 10%. Following company cannot be taken as comparable on grounds - Lucid Software Limited - this company cannot be treated as having same function and profitability ratio, since company has employed heavy capital in product development expenditure - Infosys Technologies Ltd & Wipro Ltd.-IT Services Segment - cannot be taken as comparable due to size of the company in terms of the sales revenue, stage of business cycle and company's growth cycle - Tata Elxsi Limited - since it is engaged in development of niche product and development services, which is entirely different from the assessee company - Avani CincomTechnologies Ltd.('Avani Cincom') - segmental details of operating income of IT services and sale of software products have not been provided so as to see whether the profit ratio of this company can be taken into consideration for comparison. Assessing Officer is directed to determine the profit ratio after taking the arithmetic mean of all the final tested parties (i.e. after excluding five entities as discussed above) and determine the ALP of the assessee company for international transactions. Depreciation on UPS - 15% or 60% - Held that:- Since computer system can function independently without the UPS and even the UPS generally can be used to ensure uninterrupted power supply to other equipments besides computer. It is, thus, not the integral part of the computer system, hence depreciation to be provided @15% - Decided against the assessee. Interest u/s 234C - Held that:- It is amply clear that there is no shortfall in any of the quarters and, therefore, no interest liability under Section 234C can be fastened upon the assessee.

  ---

• 2012 (6) TMI 387
  Deemed dividend - advance received from M/s A - addition made on ground that M/s P is a common share holder, having 18.99% shareholding in M/s A and 19.72% in assessee company - Held that:- AO has made refernce to Section 2(22)(e), however has not examined provisions of section 2(32) with reference to company which has a substantial interest in company, wherein it was specifically mentioned of carrying not less than 20% of voting power. Admittedly M/s P has less than 20% share holding in both companies. Also, assessee is not owning any share in M/s A. For both the reasons, order of CIT (A) is upheld and issue is decided in favor of assessee. Rejection of books of account on alleged failure of assessee to reconcile turnover disclosed in P/L A/c and reconcile the turnover with STT - estimation of income 21% of turnover - dis-allowance of expenditure - Held that:- Reconciling the turnover on the basis of STT is if not impossible, virtually cumbersome considering the nature of the business, turnover involved and different rates of STT paid for different transactions. Therefore, books of account cannot be rejected simply because the assessee failed to reconcile the turnover to the satisfaction of AO. There is no allegation that the assessee was indulging in any transactions outside the books outside the stock exchange. The books of account were also audited. Hence, CIT (A) was correct in accepting the assessee’s books of account and rejection of estimation at 1% therein, and allowing the expenditure - Decided in favor of assessee. Business Income vs Income from Other Sources - other Income viz IPO referral fee, auction charges and Interest received - Held that:- There is no dispute with reference to the IPO referral fee, auction charges and Interest received being part of business operations and business income except the Income tax Refund. We uphold the order of the CIT (A) as it does not have any tax impact on the small amount of Rs.3,300/-.

  ---

• 2012 (6) TMI 386
  Deduction u/s 80IB - incorrect allowance/denial - assessee, a private limited company, engaged in the business of real estate and construction of various housing projects - deduction allowed in AY 04-05 in respect of projects viz Kaveri, Panchavati, Vrindavan, denied for AY 05-06 & 06-07 on ground of the change in law w.e.f. 1.4.2005 - Held that:- Since the project was approved before 1.4.2005 and as AO allowed deduction in earlier years, there is no need for disallowing the deduction in these years, as revised provisions do not apply to the projects approved earlier to 01-04-05. Therefore, assessee is eligible for deduction u/s 80IB(10). In respect of Balaji & Silicon projects - deduction dis-allowed on the reason that commercial area was exceeding the limits and size of individual flat exceeds 1000 sq ft - Held that:- Issue was covered by the ITAT in assessee’s own case for AY 2004-05, therefore, assessee is eligible for deduction on these projects. Deduction on project Tulsi claimed in AY 2006-07 denied on the reason that this is an extension of the project sanctioned earlier and assessee has not satisfied the conditions u/s 80IB(10) - Held that:- Tulsi Project is separately approved project as a residential housing project and amended provisions of section 80IB(10) effective from 01/04/2005 are applicable and those conditions are satisfied by assessee as the project is a residential project and commercial area is less than the prescribed area and other conditions are satisfied, so we hold that Tulsi project is also eligible for deduction u/s 80IB(10).

  ---

• 2012 (6) TMI 385
  Validity of reopening u/s 147 - ITAT delete the entire addition made by lower authority on the basis of the factual error pointed out by the audit party – Held that:- Re – opening on the basis of the audit objection is not acceptable as it had not explained any provisions of law in the said objection but had merely pointed out certain factual mistakes - the assessee had categorically stated the receipt of the award money by Earth Vision, 1992,Tokyo Global Entertainment Film Festival and not from the Government of India " in the balance sheet under the head of "Notes on Account" - in the absence of any reason that the assessee has failed to disclose fully and truly all material facts necessary for assessment , re-opening cannot be warranted - the Assessing Officer must have tangible material and the reasons must have a live link with the formation of the belief - the conceptual difference between power to review and power to reassess as Assessing Officer has no power to review and has the power to reassess – in favour of assessee.

  ---

• 2012 (6) TMI 384
  Disallowing expenditure - 50% of Legal & Professional Expenses – assessee contented that expenses were incurred in settlement of dispute of the property in which the assessee company was the partner - Held that:- The expenditure claimed also includes expenses for development agreement which has been entered into by the partnership firm with third party in respect of the land after the appellant reaching a settlement with its partners - thus any expenditure incurred in this regard cannot be the expenditure of the appellant - in the absence of the exact break up of expenses he reduced the disallowance to 50% - against assessee. Assessment of Income - Rent and service charges from sub-lease under the head “Income form House property” or “Income from Business” – Held that :- Subletting the premises with the consent of LIC by an agreement made in 1990 which was subsequently renewed in stages for 15 years, the assessee’s contention that it is monthly tenant with LIC does not hold good - assessee held to be as deemed owner u/s 27(iiib) and subsequently treated the rental income from State Bank of Indore as income from house property – against assessee. Disallowance u/s 14A and rule 8D - expenditure attributable to the exempted income – Held that:- Making disallowance u/s 14A is no more res integra in view of the judgment in Godrej & Boyce Ltd. Mfg. Co. (2010 (8) TMI 77 (HC)) holding that the provisions of section 14A & Rule 8D are not retrospective, Rule 8D applicable from Assessment Year 2008-09 and disallowance for earlier period to be determined on reasonable basis and not under rule 8D – partly in favour of assessee. Income from sale of scrap – to be treated as income from other sources or from business and profession – Held that:- On being to show cause why the sale of scrap not to be to be treated as income from other sources assessee has not replied, since assessee is not doing any business, income from sale of scrap is taxable under the head income from other sources – against assessee. Cessation of trade liability - CIT (A) deleted the addition made by AO – Held that:- Waiver of loan liability credited by the assessee under capital reserve account in its books of account is a capital receipt and cannot be deemed as remission or cessation of liability and consequently no benefit has arisen to the assessee in terms of section 41(1) - if the loan was taken for acquiring the capital asset, waiver thereof would not amount to any income exigible to tax there is no material on record to show that the loan was taken for trading purpose - against revenue. Disallowance of interest applying the proviso to Sec. 36(1)(iii) - CIT (A) deleted the disallowance made by AO – Held that:- Tribunals statement in assessee’s own case that the claim of deduction of interest made u/s 36(iii) when part of the income has been treated as income from house property, therefore, the claim of interest u/s 36(iii) is required to be re-examined and adjudicated. The rental income to be treated as income from house property as assessee has not carried out any business activity with only income by way of sub letting the premises in question - the claim of interest is required to be re-examined , remanded back to the file of the AO – partly in favour of Revenue for statistical purpose. Write off of fixed assets and miscellaneous assets – computation of book profit u/s 115JB - CIT (A) deleted the addition made by AO – Held that:- No material on record to show as to how the assessee has written off the fixed assets of Rs. 72.06 lakhs in the profit and loss account out of block of assets without considering the relevant provisions of section 32 with no details of miscellaneous expenditures or any basis of the same to write off - the matter should go back to the file of the AO to examine the same afresh issue as it needs further examination - partly allowed in favour of revenue for statistical purpose.

  ---

• 2012 (6) TMI 383
  Challenging the validity of assessment u/s 143 (3) r.w.s 147 – Held that:- A survey u/s 133A revealed that a sum on account of sale of TDR was received by the assessee during the year under consideration, since profit arising from the sale of said TDR was not declared by the assessee in its return of income, the AO conclusion to reopen the assessment as such profit representing income of the assessee chargeable to tax under the head “Capital Gains” has escaped the assessment is valid – in favour of revenue. Exemption on account of profit arising from sale of TDR – Held that:- Considering the New Shailaja Cooperative Housing Society Ltd. case there being no cost of acquisition that could be assigned to the TDR no capital gain arising from transfer of the said TDR could be brought to tax – what assessee sold was TDR received as additional FSI as per the Rules of the Development Control Regulations Agreement, 1991 and it was not the case of sale of development rights already embedded in the land acquired and owned by the assessee - in favour of assessee.

  ---

• 2012 (6) TMI 382
  Cancelling a block assessment - notice for assessment under Section 158BD – as issuing notice for assessment did not record reasons – Held that:- Since the business premises and the residence of Sri.Abdul Gafoor and his wife Mrs.Souda Gafoor who is the managing partner of the respondent-assessee were one and the same, the AO who has jurisdiction to assess the searched assessees was the same officer who has jurisdiction to assess the respondent-firm as well - no scope for transfer of file from one AO having jurisdiction over the searched assessee to another AO for assessment u/s 158BD as both the searched assessee and the assessee in respect of whom details of suppressed income were received, were assessable by the same Assessing Officer - when the same Assessing Officer has jurisdiction to assess the searched assessee under Section 158BC and the other assessee under Section 158BD whose undisclosed income is also found in the course of such search, there is no necessity for the AO to record satisfaction as required under Section 158BD because there is no transfer of file from one officer to another - setting aside the order of the Tribunal and uphold the assessment under Section 158BD - in favour of revenue. Assessment is also barred by limitation – Held that:- As it is prudent that there is no time limit prescribed under the Act for issuance of notice under Section 158BD and the AO has to first complete the assessment that gets time barred first and then proceed to make assessment under Section 158BD later – as assessment was initiated under Section 158BD within two months from completion of assessment under Section 158BC against searched assessees which was made within time – thus the assessment under Section 158BD was initiated within a reasonable time and the same was completed within the statutory period of 2 years as contemplated under Section 158BE(2)(b) - set aside the orders of the Tribunal and restore the appeals back to the files of the Tribunal - in favour of revenue.

  ---

• 2012 (6) TMI 381
  Petitioner challenging the communications issued by the 1st respondent permitting the petitioner to pay 30% of the tax assessed - interpretation and understanding of the proviso to Section 2(15) - charitable purpose - the petitioner submits that his Bank Accounts have been frozen – Held that:- It cannot be disputed that the question regarding interpretation and understanding of the proviso to Section 2(15) of the Act has to be dealt with by the Tribunal before whom the proceedings have been already initiated by the petitioner - the respondents do not have any intention to disturb or affect the services provided by the petitioner, but at the same time, the petitioner has to show its bonafides by paying substantial portion of the legitimate tax due as called upon vide the communication addressed addressed by the Additional Director - it is just and appropriate to direct the Corporation on Additional Director direction to deposit a sum of rupees one crore by 31.3.2012 and continue to pay for every month on or before 15th of each month, subject to this the bank accounts of the corporation shall be de-frozen

  ---

• 2012 (6) TMI 380
  Short term capital gain on sale of land - development agreement - deleting the addition by CIT(A) - Held that:- When possession has been allowed of any immovable property in part performance of a contract, then it amounts to transfer of capital asset - as the possession has been given by the assessee to the developer in the present year, contract has been entered into with the developer as per which price had been fixed and almost entire payment was also received by the assessee all the requirements of Section 2(47)(v) of Income tax Act, 1961 as well as Section 53A of Transfer of Property Act are fulfilled - as the property in question had been transferred by the assessee in the present year itself so, the capital gain tax is payable by the assessee in the present year itself for the entire property - order of Ld. CIT(A) is not sustainable - in favour of revenue.

  ---

• 2012 (6) TMI 379
  Sale of office - Long Term Capital Gain or Short Term Capital Gain – Held that:- the date of acquisition in the said property can safely be held to be on 10.06.1999 and the sale was made on 17.09.2004, which fell into Assessment Year 2005-06. Thus from the date of 10.06.1999 till 17.09.2004, the period is of more than 36 months, hence the transaction in question is clearly a 'Long Term Capital Gain' - in the favour of the appellant Cost of acquisition of the property - cost incurred for acquiring the property vide agreement or the market value on the basis of value given by approved valuer – Held that:- the appellant had purchased the said property for a sum of Rs. 4,75,000/- which included the proportionate cost of new building, thus the cost of tenancy right cannot be taken into consideration as contested by appellant, firstly, there was no surrender of tenancy rights and secondly, as per the sub section 2 of section 55, the cost of acquisition of tenancy right has to be taken at Nil – against assessee. Deduction u/s. 54EC - value adopted by the Stamp Valuation Authorities u/s.50C or which was the actual sale value for the purpose of the deduction u/s. 54EC – Held that:- Section 54EC speaks of the actual capital gain which arises out of transfer of Long Term Capital Gain and not deeming amount, whereas section 50C provides for deeming fiction where value of consideration is adopted as per the Stamp Valuation Authorities or any Authority of the State Government - the deemed value cannot be considered for the purpose of exemption u/s 54EC, thus the claim of the appellant u/s. 54EC would be only Rs. 16,00,000/- which is the actual investment in the specified bonds - for the working of the Long Term Capital Gain, the sale consideration will be taken up as per the value determined u/s. 50C which here in this case is at Rs. 24,48,128 as per the value adopted by the Stamp Valuation Authorities.

  ---

• 2012 (6) TMI 378
  Block Assessment - Validity of notice - notices u/s 143(2) and 115WE(2) of the I.T. Act – Held that:- According to the report of the Inspector/notice server, the notice was affixed on the main door of Shop No. 33. There was no evidence of any local person having been associated with in identifying the place of business of the assessee-respondent and the report was not witnessed by any person at all. It had been found to be flagrant violation of rule 17 of order V of the code which lays down a procedure to serve notice by affixture. assessment framed u/s 144 was invalid as no notice u/s 143(2) was validly served upon the assessee within the statutory time. appeal filed by the revenue is dismissed.

  ---

• 2012 (6) TMI 377
  Revenue or capital expenditure - repairs and maintenance of building and plant & machinery as capital expenditure - renewal, replacement or modification of an asset or part of an asset - held that:- Repairs were incurred to preserve and maintain an existing asset. The object of the expenditure was not bringing into existence an another new asset. By the incurring of the said expenditure, the assessee has not obtained a new advantage. It is also necessary to find out whether a particular repair was really needed and in the present case we have noticed that it was a decision of the assessee to take appropriate measure to repair the building for its maintenance as also for safety purposes. - Decided in favor of assessee. It was found that new machinery, new furniture, new sanitary fittings, new electrical wirings were installed. Besides that, an extensive repair in the structure of the building was carried out. Therefore, it was held by the Hon’ble Court that due to total renovation the expenditure in question was capital in nature. Facts of the said cited precedent can be distinguished from the facts of the assessee, that the assessee’s case was not a total renovation or the entire new machinery, new furniture, etc. were brought to the existence. - this ground of the Revenue is partly allowed. Delayed payment of employee’s contribution to PF - held that:- whether the provisions of sec.36 and the provisions of 43B are independent of each other, now a decision of Honble S.C of CIT vs Alom Extrusion Ltd. [2009 (11) TMI 27 (SC)] is available. But this decision is dated 25 Nov.2009 , however, the order of the A.O. is dated 27.11.2006, hence it was not available at the assessment stage. - Matter remanded back. Disallowance u/s.36(1)(iii) being interest cost incurred by the assessee on the advances given for non-business purposes – Held that:- Assessing Officer has stated that the assessee was unable to demonstrate that the non-interest bearing funds were utilized towards investment for earning dividend income. On the other hand, the argument of the assessee was that there were sufficient reserves and share capital out of which the said investment was made. However, the findings of the Assessing Officer have not been dealt with by Learned CIT(Appeals) in their right perspective and one of the reasons of the disallowance of the invocation of section 14A of the I.T.Act has also not been dealt with, therefore, ground remanded back to the stage of Learned CIT(Appeals) to decide De novo. ground of the Revenue may be treated as allowed for statistical purposes Notional loss - Exchange Fluctuation Loss – Held that:- increase in liability due to Exchange fluctuation is not notional or contingent liability, hence, allowable. Since the Assessing Officer has not dealt with the issue in the light of the law pronounced and proceeded without recording any specific finding about the nature of the liability, therefore, such an addition based upon a hypothetical reasoning or merely on surmises, thus do not survive in the eyes of law. ground of the Revenue is dismissed

  ---

• 2012 (6) TMI 376
  Registration under section 12A of the Act - application for renewal under section 80G(5)(vi) of the Act - competent authority, the Ld. CIT, failed to take appropriate action in the matter within prescribed time limit under Rule 11AA(6) of the Income-tax Rules, 1962 - no specific provision prescribing consequences for non-passing of such order – Held that:- assessee-appellant, cannot be kept at the mercy of the revenue authority, having complied with his part in the matter, assessee is legitimately entitled for approval of renewal, as applied for, appeal of the assessee is allowed

  ---

• 2012 (6) TMI 375
  Eligibility of deduction of the receipt of DEPB/Duty Drawback benefit u/s 80IB of the Act - appellant, a partnership firm engaged in manufacturing of fabrics out of yarns and also various textile items, claimed deduction u/s 80IB of the Act, on the increased profits as profit of the industrial undertaking, on account of DEPB and Duty Drawback, credited to the Profit & Loss account – Held that:- Duty Drawback receipt/DEPB benefits do not form part of the net profits of eligible industrial undertaking for the purposes of Sections 80I/80IA/80IB of the 1961 Act, in the case of M/s. Liberty India Vs. CIT (2009 - TMI - 34471 - SUPREME COURT - Income Tax), eligibility of deduction of the receipt of DEPB/Duty Drawback benefit u/s 80IB of the Act, decision in favour of the Revenue and against the assessee Whether CIT(A), has erred in holding that deduction u/s.80IB is to be  reduced from the profits of business for computing deduction allowed u/s.80HHC - Deduction u/s.80HHC is an independent deduction and is available independent of the deduction allowable u/s.80IB – Held that:- in the case M/s. Hindustan Mint & Agro Products Pvt. Ltd. (2009 - TMI - 64377 - ITAT DELHI-C - Income Tax) , ground raised by the assessee is adjudicated in favour of the Revenue and against the assessee, appeal of the assessee is dismissed

  ---

• 2012 (6) TMI 374
  Whether Tribunal was right in holding that the rectification under section 154 is not allowable on the issue of carry forward of allowances while completing the assessment under section 115J as the issue is debatable - Commissioner of Income-tax (Appeals) dismissed the appeal on the ground that the issue of carry forward allowance in computing the assessment was based on the provisions of section 115J of the Act and could be rectified under section 154 of the Act having regard to the facts that the mistake of fact was an apparent one – Held that:- rectification contemplated under section 154 must be a rectifiable mistake. A decision on a debatable point of law could not be taken as a mistake apparent from record, no ground to interfere with the order of the Tribunal, Tax Case (Appeals) stand dismissed

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• Customs

• 2012 (6) TMI 373
  Refund claim of duty drawback - repayment of refund directed on ground that claim of same was beyond the statutory period and therefore was wrongly made - Held that:- It is admitted position that the petitioner had filed an application dated 25.07.2003 addressed to Commissioner of Customs, seeking condonation of delay. By implication it can be assumed that the Assistant Commissioner or some other authority had wrongly assumed jurisdiction and condoned the delay. In case the Commissioner or any other authority was not competent to condone the delay and the delay could have been condoned by the Board, the petitioner should have informed and asked to approach the Board. The said application was required to be dealt with by the competent authority. It is accepted that the power to condone the delay beyond three months is with the Board. Hence it will be appropriate to allow petitioner to file application for condonation of delay to Board.

  ---

• 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.

  ---

• 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

  ---

• Corporate Laws

• 2012 (6) TMI 372
  Winding up petition - respondent-company is unable to pay its debt allegedly amounting to Rs. 9,10,000/- as well as interest @ 24% per annum - Held that:- Apart from the interpretation to the alleged loan confirmation letter dated 15th April, 2007 the veracity, genuineness and authenticity of the said letter has to be examined - the said issue can only be determined by a civil court after giving both the parties an opportunity to lead evidence - the defence set up by the respondent-company is certainly not false as the respondent-company has relied upon the balance sheet dated 31st March, 2007 - Winding up petition is dismissed with liberty to petitioner to file appropriate recovery proceedings

  ---

• 2012 (6) TMI 371
  Winding up - workmen of the company-in-liquidation - workers filed application seeking direction to Official Liquidator for ad hoc disbursement of amount to the workers - secured creditor i.e. respondent SBI raised an objection to such ad hoc disbursement contending that procedure prescribed in provisions contained in rules 163 to 168 and 178 is required to be followed for the purpose of disbursement and for determining the extent of admissible claim – Held that:- Court has power to direct disbursement of the available amounts in accordance with the provision of sections 529, 529A and 530 then such power to direct final disbursement would include power to direct ad hoc disbursement as well. order passed for ad hoc disbursement keeping alive all rights and objections of all the secured creditors including the respondent SBI as well as all the workers, as regards the quantification of the final claim and/or disbursement ratio, and that, therefore, the request for ad hoc disbursement of the amount available with the Official Liquidator amongst the secured creditors and the workers is to be accepted

  ---

• 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.

  ---

• 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.

  ---

• Service Tax

• 2012 (6) TMI 393
  Difference in income shown in the balance sheet and in ST-3 returns – Held that:- As Chartered Accountant has made all considerable efforts to prepare the statement and details which would show that a proper verification has been carried out this would nowhere show that there was mistake or with an intention to evade duty - differential service tax demand has arisen because of different methods followed for the purpose of preparation balance sheet and ST-3 return - waiver of penalties by invoking Section 80 instead of remanding the matter to original adjudicating authority for verification of records – in favour of assessee.

  ---

• 2012 (6) TMI 392
  Refund claim filed under Notification No. 41/2007-ST rejected - THC refund claim rejected as service provider was not authorized by the Port – Held that:- In the case of Ramdev Food Products Pvt. Limited [2011 (3) TMI 1256 (Tri)] it has been concluded that refund cannot be denied on the ground that service provider has not been authorized by Port - order rejecting the TCH and repo charges cannot be sustained. Refund claim rejected as service provider was registered under the category of BAS/ BSS – Held that: - Going through invoices it is not possible to make out which category the service provider has been registered - no evidence to show that service tax of which refund claim was made was the service tax paid on the BAS/ BSS which are not covered by the notification - in the absence of any specific clarification and merely on the basis of observations rejection of refund cannot be sustained. Refund claim on documentation charges rejected as being BAS/ BSS or Port Service – Held that: - The documentation charges have been charged by the CHA of the appellant and there is no indication as to which service has been provided - in the absence of any specific detail the presumption would be that service provided is relating to CHA which is one of the services notified under Notification No. 41/2007. Refund claim on GTA service rejected - Revenue stand one of conditions of admitting details of export invoice relating to export goods specifically mentioned in the LR and corresponding shipping bill has not been fulfilled – assessee contention that while admitting that export invoice details has not been given in the LR, co-relation is possible since the factory invoice number is mentioned in the export invoice and ARE-1- Held that:- The notification requires the export invoice number to be mentioned in the LR and in the shipping bill – considering the case of Ramdev Food Products Pvt. Limited [2011 (3) TMI 1256 (Tri)] that this is a rectifiable defect and the appellant has to file a reconciliation statement that how export invoice can be linked with LR - matter is remanded back to original adjudicating authority for decide afresh.

  ---

• 2012 (6) TMI 391
  Payment of service tax out of the Cenvat credit on GTA services - department stated that service tax to be paid was an input service and could not be paid through cenvat credit account as the account could be used for payment either duty on finished goods or service tax on output service – Held that:- On perusal of para 2.4.2 of CBEC s Excise Manual of Supplementary Instructions shows that there is no legal bar to the utilization of Cenvat credit for the purpose of payment of service tax on the GTA services - even as per Rule 3(4)(e) of the Cenvat Credit Rules, 2004, the Cenvat credit may be utilized for payment of service tax on any output service - in favour of the assessee.

  ---

• 2012 (6) TMI 390
  Rent-a-cab service - service tax demand along with interest thereon and a penalty of equivalent amount - the appellant had supplied the buses along with driver and was receiving consideration on a kilometer basis from PCMT – Held that:- As per the agreement, the appellant should supply medium buses having 46 sitting capacity of 30 numbers and mini buses having 32 sitting capacity of 20 numbers to ply the buses on PCMT permit granted by RTO registered in the name of PCMT as lessee and will operate as stage carriers within the operational area of PCMT - from the agreement, it is clear that the appellant is renting or hiring buses to PCMT who undertakes the transport to passengers, on stage carriage basis - For the renting/leasing of buses, the appellant receives a consideration on a per km basis for the distance actually run – Considering the definition of "Rent-a-cab scheme operator" u/s 65(91) the assessee is held liable to be fall under it - Merely because the appellant has also provided a driver in terms of the contract, who drives the vehicle, it does not mean that the contract is not for renting of cabs – appellant to make a pre-deposit of 50% of the service tax adjudged in the instant case within a period of eight weeks from the date of order - against assessee.

  ---

• 2012 (6) TMI 389
  Option to pay 25% towards penalty, interest and service tax – revenue appeal that option to be given by the original adjudicating authority and not at the appellate stage – Held that: - As decided in CCE, AHMEDABAD Versus AKASH FASHION PRINTS PVT LTD.[ 2009 (1) TMI 113 (HC)] that the option to pay 25% towards penalty can be extended at the appellate stage also if the same has not been extended in the order-in-original - since the order-in-original has not extended the option to pay penalty, interest and service tax within thirty days from the date of the order no reason to interfere with the impugned order - against revenue.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• Central Excise

• 2012 (6) TMI 370
  Claim of CENVAT Credit of Service Tax paid denied - service received has no nexus with the manufacture at all – Held that:- The services have been obtained for the purpose of conducting audit of the process and change of raw material suitably presented to GTZ to receive the grant so that the company can phase out the process, which cause depletion of ozone in the atmosphere - the activity undertaken by the appellant was to implement the national plan and ensure that the appellant follow the provisions of Ozone Depleting Substances (Regulation & Control) Rules, 2000 - the whole activity has a direct nexus with the manufacture and manufacturing process and is with the objective of reduction of emission of Ozone Depleting Substances – in favour of assessee.

  ---

• 2012 (6) TMI 369
  CENVAT Credit of duty paid on products sold under combo scheme of goods manufactured - appellant, manufacturer of insulated wares, under sales promotion scheme introduced combo scheme of products manufactured by it including ceramic mugs purchased - Revenue denied credit on ground that ceramics mugs is not input and is not required for the manufacture - Held that:- In the definition of Section 2(f) of Central Excise Act, 1944, in respect of items specified for amendment on the basis of value under Section 4A of Central Excise Act, 1944 on the basis of MRP, packing, repacking, labeling etc are specified as amounting to manufacture. Further Tribunal in case of Gupta Soaps (2007 (3) TMI 29 (Tri)) even allowed cenvat credit of duty paid on product which was not notified u/s 4A. Hence, CENVAT Credit of duty paid on ceramic mugs is allowable as input credit - Decided in favor of assessee.

  ---

• 2012 (6) TMI 368
  Eligibility to set off Cenvat credit admissible on one category of goods against duty imposed on another category of goods - dispute regarding classification of Note Books, Accounts Books, Laminated Kraft Paper, Ruled Paper - assessee contending classification under Chapter No.4820.00 attracting NIL rate of duty - Held that:- Commissioner after classifying the product Ruled Paper under heading 4820.00 attracting Nil rate of duty and the product Laminated Kraft Paper under heading 4811.39 has rightly held that CENVAT Credit admissible can be used for further clearances only and cannot be adjusted against the demand of duty. Since, penalty u/s 11AC was also imposed, hence, redemption fine is reduced from Rs.78,250/- to Rs.10,000/- in the interest of justice. On facts and circumstances of case, penalty imposed on director is set aside.

  ---

• 2012 (6) TMI 367
  Whether Commissioner should have condoned the delay of 3 days in filing the appeal without applications for condonation of delay, having been filed by the appellant - Held that:- Matter is remanded to Commissioner (Appeals), who shall consider the appeals on merit in view of the fact that the delay is of 3 days only and the Commissioner should have given opportunity to the appellant before dismissing the appeal. In this case to avoid unnecessary litigation and in view of the fact that the matter was heard for quite some time on the issue of delay, the delay is being condoned and matter is being remanded to Commissioner (Appeals) for decision on merit.

  ---

• 2012 (6) TMI 366
  Penalty u/s 11AC - alleged availment of excess credit under formula specified in Rule 3(7) of Cenvat Credit Rules, 2004 - credit availed on purchases of raw materials from a 100% EOU - SCN speaks of application of wrong formula but does not say what is the correct formula - reversal of credit under protest - Held that:- It is only known that there was availment of excess cenvat credit but we do not know whether it was because of calculation mistake or because of application of wrong formula. Since appellants paid dues under protest as soon as it was pointed and subsequently after going through the relevant provisions, revised the calculations and submitted the calculation sheet to the department would show that appellant have acted in a bonafide manner. Hence, there was no intention to evade duty or avail wrong credit and what was happened appears to be a bonafide mistake. Penalty imposed u/s 11AC is set-aside.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---

• 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.

  ---