Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 2, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Wealth tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deduction u/s 80HH & 80I - whether extracting stones and then cutting them into the required size and weight, can be held as 'manufacturing activity' - held no - HC
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Reference to the DVO does not become invalid on the completion of the assessment proceedings before the receipt of the valuation report and that after the receipt of the valuation report after completion of the assessment proceedings, the report would become part of the record which may enable the income tax authorities to take action as permissible under the Act, such as Section 147, Section 263, appellate power under Section 250 or Section 251 etc. - HC
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To “make available” technical knowledge, mere provisions of service was not enough and the payer had to be enabled to perform services himself. The department’s argument that the amendments by the Finance Act, 2012 changes the position is not acceptable, since there is no change in the DTAA between India and USA and the DTAA prevails where it is favourable to the assessee; - AT
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Discounting charges vs Interest - merely discount of the sale consideration on sale of goods, it was not “interest” u/s 2(28A) and there was no obligation to deduct TDS thereon - SC dismissed the SLP
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TDS u/s 194H – Trade discount provided by newspaper publishers to advertising agencies under Rules and regulations of Indian Newspaper Society - HC
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Income from house property - Vacancy allowance - Tenant stopped payment rent and stopped using the premises but did not handover the possession back to assessee owner - AT
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Levy of Sales Tax (VAT) on Fabric - Classification of Hook and Loop Tape Fasteners called as Velcro Fastener - what is a Narrow Fabric and Hook and Loop Tape Fasteners
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Charitable Institution - alleged violation of Section 13(1)(c)(ii) read with Section 13(3) on belief that society was for the private benefit of the members - HC
Customs
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Target Plus Scheme – validity of circular - circular dated 8 May 2007 quashed and set aside - HC
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Demand of Anti-Dumping Duty in respect of imports of CFL – contention of revenue that the parts imported by the appellants constitute 90% of the total requirement of manufacture of CFL and in terms of provisions of Rule 2(a) of Interpretative Rules to be treated as complete lamps - AT
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Rate of CVD in respect of goods where full exemption withdrawn - 1% or 5% - Whether the benefit of Notification No. 1/2011 CE dated 1.3.2011 is available to the impugned goods or not - AT
DGFT
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Exemption for export of pulses to the Republic of Maldives. - Notification
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File applications for 9 SEZ port codes - reg. - Circular
FEMA
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Overseas Direct Investments by Indian Party- Online Reporting of Overseas Direct Investment in Form ODI. - Circular
Corporate Law
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Negotiable Instruments Act – Blank Cheque - dishonor of cheque - A person issuing a blank cheque is supposed to understand the consequences of doing so. He cannot escape his liability only on the ground that blank cheques had been issued. - HC
Service Tax
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Coaching or training to the employees of the buyer concerns - not taxable - AT
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Erection, Commissioning or Installation - laying of cables under or alongside roads did not constitute any taxable service under Section 65(105) of the Finance Act, 1994 - AT
Central Excise
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Seeks to rescind Notfns. 09/2012, 10/2012, 11/2012, 18/2012 and 23/2012 – C.E. - Notification
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Classification of other bathroom accessories of brass, namely soap dishes, toilet paper holder, tumbler holder, towel ring, towel rack, towel rack with single rail, coat hook, robe hook and for glass shelf - AT
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Non fulfillment of export obligation - there is no question of further imposition of duty of Customs on such imported goods subsequently allowed to be re exported. Charge of non fulfillment of export obligation is not established - AT
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Cenvat credit - 100% credit availed in the first year – liability would be only in respect of interest on the amount of wrongly Cenvat credit taken for the period for which it was irregular, - AT
Case Laws:
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Income Tax
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2012 (6) TMI 18
DTAA between India & USA - contract for repair and overhauling services of turbines - whether Fees for Technical Services(FTS) - assessee (USA company) in addition to contract for supply and installation of turbines had entered into yet another contract for repair and overhaul services of the turbines - scope of work included inspection and boroscoping periodically - liability for withholding taxes - Held that:- Portion of the consideration must be assigned to the inspection and the boroscoping activity that takes place in India and part of the amount has to be ascribed to the modifications incorporated by the applicant in respect of which it grants a non-exclusive license to ONGC for its own use directly or through its contractors. Those parts of the receipts attributable to inspection and boroscoping activity carried on at the site in Mumbai though arise in India are not taxable as included services under Article 12 of the DTAC, but if the applicant is found to have a permanent establishment in India, taxable as its business income, but that part of the receipts attributable to the services rendered in modifications and replacement of parts covered by engineering, designs, data and specifications delivered to ONGC in terms of the contract, are taxable as included services in India under Article 12 of the DTAC between India and USA as provided for therein. Therefore, payments are not taxable under the Income-tax Act, but only under the DTAC between India and USA. Also, tax has to be withheld u/s 195 on that part of the apportioned payment.
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2012 (6) TMI 17
Addition u/s 56(2)(v) with regard to the alleged loans taken by the assessee - addition made on the ground that the assessee could not show that the loans had been repaid and since no interest was paid on the purported loans, the said amounts were to be regarded as payments received without consideration - Held that:- Since the material with regard to the repayment of the loan was not before the Tribunal, hence it would be appropriate if the impugned order is set aside and the matter is remitted to the Tribunal to consider the issue afresh.
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2012 (6) TMI 16
Valid service of notice u/s 143(2), sine qua non for making assessment u/s 143(3)/144 - best judgement assessment - notice u/s 143(2) send to assessee at the address(given by assessee while applying for PAN), other than that given in the return of income for the year under consideration and earlier AYs, which was eventually returned by the postal authorities - Held that:- Sending of notice on the address, other than that given in the return of income, which was eventually returned by the postal authorities, does not amount to either service or deemed service of such notice. Further, notwithstanding the fact that change of address was not intimated by the assessee as per the provisions of section 139A(5), the legal consequences for non-service of notice u/s 143(2) on the address provided in the return itself, cannot be brushed aside. It is duty of AO to find out correct address. Effect of Section 292BB - Held that:- Assessment order reveals that the assessee did neither appear before the A.O. nor co-operated in any inquiry relating to assessment. Mere receipt of notice u/s 142 calling for information but not furnishing information in response to the notice, cannot be said to have 'co-operated in any inquiry in relation to an assessment or reassessment'. Hence provisions of Section 292BB are not attracted and it is held that there is no valid service of notice u/s 143(2) rendering assessment order passed void ab initio - Decided in favor of assessee.
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2012 (6) TMI 15
Dependent Agent - Permanent Establishment - assessee, a Mauritius company, engaged in telecasting TV channels had an advertisement collection agent in India who collected revenue from time slots given to Indian advertisers - assessee claimed that its profits from India were not chargeable under the DTAA because (i) it did not have a PE and (ii) even if Indian agent is assumed to be PE, the agent had been remunerated at ALP and further profits could not be attributed - Revenue contending that as the assessee was dependent on the Indian agents, the Indian agents constituted a “Dependent Agent PE” - Held that:- A plain reading of clauses of agreement demonstrates that Indian agent is not the decision maker, nor it has the authority to conclude contracts. The agent has no authority to fix the rate or to accept an advertisement. It can merely forward the advertisement and the assessee has the right to reject. The agent is independent contractor and is not servant or employee of the assessee. On facts it cannot be said that the Indian Representative has “habitually exercises” authority to conclude contracts. In the case on hand, there is neither legal existence of such authority, nor is there any evidence to prove that the agent has habitually exercised such authority. In fact, the Principal has raised all the invoices. Thus Article 5.4 of indo- Mauritius DTAA is not attracted in this case. Further, Article 5.5 states that “when the activities of such an agent are devoted exclusively or almost exclusively on behalf of the assessee enterprises”. These wordings refer to the activities of an agent and its devotion to the non-resident and not the other way round. In present case, Indian agent's revenue from Non-resident constituted merely 4.69% of the total income and hence cannot be termed as dependent agent. Neither Article 5.4 nor Article 5.5 of the Indo-Mauritius DTAA are attracted this case. Hence, the assessee has no P.E. in India. Alternatively, even if it is held that there is a PE of the assessee in India, then we hold that as the rate of commission of 15%, was accepted as ALP by the TPO for A.Y. 2003-04 to 2003-04 and 2004-05, no further profit is attributable to the P.E. This is the rate mentioned in Board Circular No. 742 of the order 1996
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2012 (6) TMI 14
Correctness and sustainability of order imposing a condition upon the petitioner to satisfy further 15% of the total alleged liability, inspite of the fact that the petitioner has already satisfied 60% of the demand - petition sought interception of order because of the pendency of the appeal and the nature of challenge involved - Held that:- It is an undisputed fact that, out of the alleged total liability, 60% stands satisfied. That apart, the petitioner being a fully owned Government undertaking, the respondents need not be apprehensive of the possible chance of realisation of the amount if at all due from the hands of the petitioner, as and when the proceedings are finalized. Such condition imposed is waived off and the petitioner is declared as eligible to avail the benefit of absolute stay during the pendency of the appeal - Decided in favor of petitioner.
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2012 (6) TMI 13
Expenditure on Scientific Research - deduction u/s 35(2AB) - Revenue denied weighted deduction in respect of Clinical Trial and Bio-equivalence Study on ground that research were not incurred by the assessee in the approved in-house facility - Held that:- The term "in-house" means, in the present context, that by utilizing the staff of an organization or by utilization of resources of the organization if a research is conducted within the organization; rather than utilization of external resources or staff; then it can be called as in-house research. Language of Section do not suggest that the research is to be conducted within four walls of an undertaking. To conduct the research, data may be collected from several resources, both, within the premises or outside the premises and then researched upon in in-house research facility. Once the scientific research facility is approved, then the expenditure incurred on research and development facility has to be allowed for weighted deduction u/s.35(2AB) - Decided in favor of assessee. Restriction of deduction u/s 80IC on ground that assessee had shown abnormally higher profit of Baddi Unit to claim deduction - AO suggested that, sales of Baddi Unit must be recorded at arm's length price for internal transfer and not the ultimate sale price - Held that:- This is a case where manufacturing products were sold through C&F in the market. Even this is not the case that first sales were made by the Baddi Unit in favour of the head office or the marketing unit and thereupon the sales were executed by the head office to the open market. Once it was not so, then the fixation of market value of such good is out of the ambits of this section. If there is no intercorporate transfer, then the AO has no right to determine the fair market value of such goods or to compute the arm's length price of such goods. Statute do not subscribe such deemed inter-corporate transfer but subscribe actual earning of profit, then the impugned suggestion of the AO do not have legal sanctity in the eyes of law Regarding AO's proposition of segmentation of eligible profit of the manufacturing unit it is held that when the method of accounting as applicable under the Statute do not require segregation or bifurcation of profit of a unit into manufacturing profit and trading/marketing profit, it is no correct on the part of AO to resort to such segregation or bifurcation. There is no such concept of segregation of profit. Rather, the profit of an undertaking for section 80IA deduction purposes should be computed as a whole by taking into account the sale price of the product in the market. Legal and professional expenses incurred for expansion of business - dis-allowance - Revenue contending the same to be pre-operative expenses of a capital nature - Held that:- It has been demonstrated that the expenditure in question was not for setting up a new line of business but for the setting up a new production unit for expansion of the same line of business already in existence hence allowable as revenue expenditure - Decided in favor of assessee. Product Registration Expenses, Trademark Registration Fees, Patent Registration Fees and reimbursement of expenses for Product Registration Support Services - dis-allowance - Revenue contending the same to be intangible assets eligible for depreciation u/s 32 - Held that:- Payments in question are inextricably linked with the working of the assessee's business. By incurring those expenditure the assessee has not acquired any new right of permanent character. The licenses or the registrations are required to be renewed and therefore part of the day to day running expenditure of the business. In the absence of creation of any new asset we hereby held that such an enduring benefit may not tantamount to rendering of capital expenditure - Decided in favor of assessee. Dis-allowance u/s 14A - Held that:- In present case, on one hand the direct nexus of utilization of assessee's own funds towards investment in the impugned equity shares was not established and on the other hand from the side of the Revenue equally it was not placed on record that having regard to the accounts of the assessee the A.O. was not satisfied with the claim by the assessee that no expenditure has been incurred in relation to income which does not form part of the total income. Matter restored back to file of AO. Transfer Pricing - adjustment to ALP - eligibility for availability of benefit of variation between ALP and price determined u/s 92C(2) - Held that:- The matter requires reconsideration at the level of the AO only to examine the correctness of the computation as suggested by the assessee and if any relief is permissible, then the same can be granted but as per law. partial relief provided by DRP by allowing mark-up @ 2% is not disturbed. MAT - provision for doubtful debt not added to the book profit for computing income u/s 115JB - Held that:- Provision for doubtful debt to be added to the book profit for computing income u/s 115JB - Decided against the assessee. Benefit of carry forward of MAT credit u/s 115JAA - Held that:- Since the necessary facts are yet to be examined, therefore, we refer this ground back to the stage of the Assessing Officer to decide accordingly.
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2012 (6) TMI 12
Bad Debts - Revenue contended dis-allowance on the ground that the assessee did not make sufficient efforts to recover the money and that the entire transaction was only a paper transaction - Held that:- Entire matter is one of fact and the question as to whether the amounts were actually written off in the books of accounts by the assessee is a factual finding arrived at by the Tribunal on a perusal of the ledger account of the debtor in the books of the assessee. Once the factual position is admitted/ accepted, the challenge by the Revenue must fail in view of the decision of the Supreme Court in T.R.F. Limited v. CIT[2010 (2) TMI 211 (SC)] - Appeal dismissed.
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2012 (6) TMI 11
Legality of remit order passed by Tribunal - addition of share application money u/s 68 - assessee contended that Tribunal had sufficient material to to decide the question of addition and there was no necessity for remitting the matter before the Assessing Officer - Held that:- Tribunal noticed that identity of the share holders has not been established in order to ascertain the genuineness of transactions and it being satisfied that matter needs further inquiry and decision afresh, has chosen to remand the matter to the Assessing Officer. Issues have not been closed by the Tribunal nor any of the grounds raised by the appellant has been finally determined, petitioner has still opportunity to prove his claim as is sought to be raised in the present appeal. No substantial question of law arises for consideration - Appeal dismissed.
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2012 (6) TMI 10
Penalty under section 271(1)(b) of the Income-tax Act - fault for non-compliance of hearing - assessee stated that notice dated had been sent to the old address and therefore, not received - non-receipt of notice was the reason for the assessees' non-appearance – Held that:- Penalty will not also be imposed merely because it is lawful to do so. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act, or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute". orders of the authorities below set aside and delete the levy of penalty. appeals filed by the assessees are allowed.
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2012 (6) TMI 9
Disallowance of depreciation - assessee company claimed the depreciation on the re-valued amount of trade mark, but the A.O disallowed the same on the reason that M/s. Balaji Pens Pvt. Ltd. (the assignor) had voluntarily agreed as on the date of assignment to M/s. Veekay Industries ( assignees) along with the actual of the said trade mark ‘Pik’ which was registered for the token consideration of Rs. 100 – matter remanded to CIT(A) for fresh adjudication in the light of the direction given in the preceding years i.e. A.Y. 1999-00 to 2004-05 Disallowance - assessee has debited the donation of Rs. 39,200/- to the Profit & Loss Account . The A.O was of the opinion that the same was not allowable. The assessee contended that the company is labour intensive and manufacturing writing instruments. The assessee’s unit is based in Gujarat and to carry on the business smoothly by maintaining harmonious relations has given donations on various occasions to encourage the workers as well as the local people on the occasion like Navaratri etc., The assessee contended that the same expenditure is allowable u/s. 37(1) – Held that:- expenditure was incurred for maintaining the healthy relations with the worker and peoples in the locality but at the same time, nothing is disputed that the said were the donations. no interference is called for and we accordingly confirm the disallowance Bad debts/balance written off by treating it as a capital loss - assessee has debited to the Profit & Loss A/C. an amount of Rs. 2,96,135/- on account of bad debts/balance written off - assessee explained that the said amount represented the amount advanced to Balaji Pens Pvt. Ltd., for machinery and as the machinery was not supplied, and hence, the un-recovered amount was written of treating the same as an expenditure for the purpose of business u/s. 39(1) of the Act. The A.O rejected the claim of the assessee on the reason that the amount was paid for purchase of the machinery and therefore, any loss incurred on a/c of same is a capital loss – Held that:- In the case of Anjani kumar Co. Ltd. (2002 (7) TMI 44 (HC), the appellant had written off the advances made to the agriculturists for purchase of the agricultural land and the land was to be acquired to set up a factory but ultimately that was not materialized and the agriculturists to whom the advance was given also refused to give the amount. On the above facts, their Lordships held that the same has to be treated as a revenue expenditure. allow the ground taken by the assessee and delete the addition of Rs. 2,96,135/- treating the same as a revenue expenditure u/s. 37(1) of the Act as admittedly, no capital asset came into existence Disallowance of Employees Contribution to PF and ESIC - payment of the Employees Contribution to P.F./E.S.I.C beyond the Grace period - A.O made the disallowance u/s. 36(1)(va) as he was of the opinion that the Employees Contribution to PF/ESIC even if made before filing of the return of income is not covered u/s. 43B of the I.T. Act – Held that:- In the case of Alom Extrusion Ltd.( 2009 (11) TMI 27 (SC)), the issue before their Lordship was whether the omission of second proviso to Section 43B of the I.T. Act 1961 by the Finance Act 2003 operated w.e.f. 1.2.2004 or whether it operated retrospectively w.e.f. 1.4.1988. In the said case also, the issue was concerning the contribution payable by the employer to the P.F/Superannuation Fund or any other Fund of welfare of the employees. decision in favour of the Assessee, assessee’s appeal is partly allowed for the statistical purposes
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2012 (6) TMI 8
Whether service rendered by the non-resident company was technical service - non-resident company, M/s. Rolls Royce Pvt. Ltd., Singapore, represented by ONGC in terms of the contract between the ONGC, inspected the existing control system of three units of RR avon gas generator driven process gas compressor at SHP platform and for utilizing services of engineer for Y2K roll over time at off- shore installation in India – Held that:- company has received fee as con- sideration for the services rendered which were technical in nature and which could not be rendered by anyone else who does not have the tech- nical expertise of that RR avon gas generator driven process gas compres- sor or Y2K roll over time at offshore installation as he could not be able to inspect and give advice. Therefore, the advice given was purely technical in nature and accordingly it is held that the service rendered was a technical service squarely covered under Explanation 2 appended to clause (vii) of sub-section (1) of section 9 which has been adopted by reference under section 44D and section 115A of the Act. Decided in favour of the Revenue
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2012 (5) TMI 507
Dis-allowance u/s 40A(2)(b) on ground that both average manufactured cost and selling rate is less than the purchase rate of the assessee - assessee submitted that under business exigencies, purchases were made to tied over the crisis in the subsequent months when the raw material availability becomes very poor - Held that:- CIT(A) had rightly deleted the addition by comparing the purchase price paid by the assessee with the market price prevalent at the time of purchase, keeping in view the fact that the materials were supplied on FOR and the appellant had saved notional interest on working capital for a period of about 8 months - Decided in favor of assessee. Legal expenses incurred for increase in authorized share capital of the company - capital vs revenue expenditure - Held that:- Expenditure incurred for increase in the share capital of the company after commencement of business is not a capital expenditure but a regular business expenditure of revenue nature - Decided in favor of assessee. Addition made on account of illegal transportation and illegal stock - survey - assessee contended that additions are based upon surmises and assumptions without placing any corroborating material and observations purely on the basis of third party reports the findings which were also stayed by the higher authorities - Held that:- Following the Tribunal order in the case of M/s JP Stone Crushers (P) Ltd. v. DCIT based upon identical facts, issues involved on these points in this appeal are restored back to the file of the Assessing Officer for fresh adjudication after taking into account the final outcome of survey. Dis-allowance u/s 40(a)(ia) - non-deduction of tax at source - Revenue contending hiring of machine and equipments as transportation contract - AY 2005-06 - Held that:- From the facts of the case it is established that agreement was for lease of dumpers/JCB only and there was no agreement for executing any work or contract and hence cannot be classified as works contract or a service contract. See DCIT v. Satish Aggarwal & Co [2008 (11) TMI 322 (Tri)] - Decided in favor of assessee. Deduction u/s 80IB - dis-allowance on ground that it was not claimed in the original return of income - Held that:- If an assessee under a mistake, misconception or not being properly instructed is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes are collected. Matter restored to the file of the Assessing Officer - Decided in favor of assessee for statistical purposes.
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2012 (5) TMI 506
Deduction u/s 80HH & 80I - whether extracting stones and then cutting them into the required size and weight, can be held as 'manufacturing activity' - assessee, engaged in the business of excavating stone boulders of specific size and weight - Held that:- Present is a case where boulders are cut to different sizes and weights. The nature and character of the boulders remain the same and from the facts which are brought on the record as noticed by the Tribunal, it cannot be said that the assessee was engaged in any manufacturing activity so as to enable him to take the benefit of deduction u/s 80-HH and 80-I - Decided in favor of Revenue.
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2012 (5) TMI 505
Validity of Valuation proceedings referred to DVO, once the assessment u/s 143(3) was completed – reference made to DVO by AO on the basis of his opinion that the valuation as on 01.04.1981 provided by assessee was on the higher side leading to reduction in capital gains – assessment completed without waiting for the report from the DVO on ground of assessment getting time barred – assessment reopened u/s 147 on getting valuation report from the DVO after the completion of the assessment – Held that:- Reference to the DVO does not become invalid on the completion of the assessment proceedings before the receipt of the valuation report and that after the receipt of the valuation report after completion of the assessment proceedings, the report would become part of the record which may enable the income tax authorities to take action as permissible under the Act, such as Section 147, Section 263, appellate power under Section 250 or Section 251 etc. If any action is taken by the departmental authorities on the basis of the report of the DVO received after the completion of the assessment, such action will be open to challenge by the petitioner and it is at that point of time that the Court may be called upon to examine the validity of the action taken by the revenue authorities. That stage has not yet arisen in the present case. Writ petition dismissed.
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2012 (5) TMI 504
Notional sales tax/ sales tax subsidy received under the schemes by the Government - Capital receipt vs Revenue Receipt - Held that:- Following decision of ITAT in assessee’s own case [2003 (10) TMI 255 (Tri)] it is held that claim for treatment of notional sales tax is capital receipt, thus not liable to tax. Further, CIT(A) has rightly held that it is not necessary to go into the alternative plea of the assessee as claiming the notional sales tax as deductible u/s 43B - Decided in favor of assessee. Interest on borrowed funds - dis-allowance of interest being interest referable to interest free loans and advances given to subsidiary companies - Held that:- High Court in the case of Reliance Utilities & Power Ltd.(2009 (1) TMI 4 (HC)), has held that if interest free funds available to an assessee is sufficient to meet its investment, it can be presumed that the investments were made from the interest free funds available with the assessee. Therefore, considering the fact that the assessee had its own funds more than the loans given to its subsidiaries and also in the absence of any nexus establishing that the interest bearing borrowed funds were given as interest free to its subsidiaries, we hold that the dis-allowance of interest is not justified - Decided in favor of assessee. Dis-allowance u/s 14A of estimated expenses out of administrative expenses being expenditure incurred in relation to earning the exempt income u/s 10(33) and 10(23G) - Held that:- Assessee's own funds are far in excess than the investments made by the assessee giving exempt income, the dis-allowance of the interest is not justified as it has to be presumed that the investments had come from the interest free funds available with the assessee - Decided in favor of assessee. Deduction u/s 80HHC - exclusion of gross interest or net interest - Held that:- 90% of net interest expenses have to be considered while computing deduction u/s 80HHC. See ACG Associated Capsules Pvt. Ltd. vs. DCIT(2012 (2) TMI 101 (SC)) - Decided in favor of assessee. Exclusion of profit allowed as deduction u/s 80IA/ 80IB with reference to all(exporting and non-exporting) units while arriving at deduction u/s 80HHC - assessee contended that exclusion should be restricted to export units with reference to which claim u/s 80 HHC is worked out - Held that:- When the deduction u/s 80 HHC is to be considered, it is to be allowed in proportion to export turnover to the total turnover of an undertaking and accordingly that proportion of the deduction allowed u/s 80 HHC is to be considered and reduced while allowing deduction u/s 80 IA of those three exporting units subject to the condition that total deduction will not exceed the eligible profits of the undertaking. Hence, we hold that the entire deduction allowed u/s 80 IA / 80 IB should not be reduced while computing deduction u/s 80 HHC. On the other hand, the claim of export profits of these three units u/s 80 HHC should be reduced while allowing deduction u/s 80 IA in proportion of export turnover to total turnover - Decided in favor of assessee. Deduction u/s 80HHC - inclusion of excise duty and sales tax in the turnover - Held that:- Excise duty and sales tax has to be excluded from the total turnover for the purpose of computing deduction u/s 80 HHC - Decided in favor of assessee. Computation of deduction u/s 80 HHC under the provisions of section 115JB with reference to the profits as worked out on the basis of adjusted book profits - Held that:- Deduction under chapter VIA of I.T Act has to be worked out not on the basis of regular income tax profits but it has to be worked out on the basis of the adjusted book profits in a case where section 115JA/115JB is applicable. See DCIT vs. Syncome Formulations (India) Ltd. [2007(3) TMI 288 (Tri)] Dis-allowance of expenses on account of traveling of spouse of executives - Held that:- Since assessee has not been able to establish that above expenses pertaining to wives/family members of the executives was necessary for the purpose of the business,hence such expenditure is dis-allowed - Decided against the assessee. Non-compete Agreement - assessee together with its subsidiaries sold substantial number of shares held by it in L&T and entered into agreement containing restrictive covenant for a minimum period of five years - SEBI guide for treating 25% of the sale consideration, towards consideration for accepting such restrictive covenant - AY 02-03 - Held that:- Part of the sale consideration received by the assessee on sale of shares has rightly been considered towards receipt on account of restrictive covenant and same is in the nature of capital receipt not taxable under the Act prior to AY 2003-04. Same has become taxable under clause (va) to section 28 w.e.f. 1/4/2003. Transfer pricing - dis-allowance u/s. 92C of ₹ 1.85 crores out of the charter hire charges paid to its associate enterprise - Held that:- Neither the assessee, nor the TPO, nor the AO, or the Commissioner (Appeals) has followed any of the method prescribed in the Act and Rules, for arriving at the ALP. However, both the parties agree that the “CUP” method should be followed. In absence of comparable transactions, we set aside the issue to the file of the AO for the limited purpose of re—computing the arm’s length price by taking the date available in the public domain. Transfer pricing - dispute regarding working of 'Cost plus' method followed by TPO - Held that:- A perusal of the workings clearly demonstrates that the TPO has taken 50% of total cost and whereas the assessee has taken the actual cost relating to charter hire activity. This has made a difference to the calculation of cost. Actuals have to be taken to arrive at the correct cost and only then cost plus method can be applied. Cost plus method does not contemplate estimation of cost. When actual figures are replaced in the calculation made by the TPO, then, no adjustment is called for as the payment is at arm’s length price - Decided in favor of assessee. Depreciation - restriction of depreciation claimed - assessee didn't claimed depreciation in earlier years thus claimed depreciation on WDV whereas Revenue after considering depreciation for earlier years reduced WDV, thereon restricted depreciation - Held that:- Claim of depreciation prior to insertion of clause 5 to section 32(1), inserted w.e.f. 1/4/2002 as applicable from A.Y 2002-03, was optional and depreciation could not be thrust upon the assessee. Therefore, the WDV of the assets as on 31/3/2001 has to be taken for considering the depreciation to be allowed to the assessee. We hold that AO while giving effect to this order will consider the WDV as on 31/3/2001 and allow the depreciation claim accordingly - Decided in favor of assessee. Pre-operative expenses - Held that:- Pre-operative expenses in question have been incurred for the purpose of business of the assessee and the expenditure was incurred for expansion of its existing activities. Hence, these preoperative expenses represent revenue expenditure incurred for the purpose of business and be allowed as deduction u/s 37 MAT - Revenue contending adding back of provision for doubtful debts while computing profits u/s 115JB - Held that:- Considering amendment made by the finance (No.2) Act 2009 with retrospective effect from 1/4/2001 by inserting clause “ i ” in Explanation -1 to section 115JB the issue is to be decided against the assessee and thus addition made by AO is restored.
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2012 (5) TMI 503
Dis-allowance 40(a)(i) on payment of hiring charges for transponder by assessee(Mauritius company), to foreign companies on the ground that no tax has been deducted at source by the assessee u/s 195 - Revenue contending such hiring charges to be Royalty - DTAA between India and USA - Held that:- As we have held that there is no PE, the question of a claim being made and disallowing such a claim for expenditure u/s. 40(a)(i) does not arise. However on merits it is held that issue stands covered in favour of the assessee by the decision of High Court in the case of Asia Satellite Communication Co. Ltd. Vs. DIT(2011 (1) TMI 47 (HC)) wherein it is held that payment made by the telecast operators situated abroad to the assessee which was also a non-resident did not represent income by way of royalty as defined in Explanation 2 to section 9(1)(vi). Further, in the case of DIT Vs. Guy Carpenter & Co. Ltd.(2012 (5) TMI 31 (HC)) it was held that to “make available” technical knowledge, mere provisions of service was not enough and the payer had to be enabled to perform services himself. The department’s argument that the amendments by the Finance Act, 2012 changes the position is not acceptable, since there is no change in the DTAA between India and USA and the DTAA prevails where it is favorable to the assessee; Even otherwise as the payment is made from one non-resident to another non-resident outside India on the basis of contract executed outside India, section 195 will not apply to such cases as held by in the case of Vodafone International Holdings B.V.(2012 (1) TMI 52 (SC)). Further, as prior to the insertion of Section 40(a)(i) in AY 2004-05, payments to a resident did not require TDS. Under the non-discrimination clause in the DTAA, the dis-allowance u/s 40(a)(i) in the case of non-residents cannot be made. See Herbalife International (2006 (2) TMI 220 (Tri)). Aforesaid view squarely apply in respect of payments made to Advanced Satellite( UK based company) for equipment and technical fees. As there is no change in the DTAA between India and UK, we have to hold that no dis-allowance can be made u/s 40(a)(i). No dis-allowance can be made in view of the nondiscrimination clause also. Dis-allowance u/s 40(a)(i) in respect of payments made to LMB(Mauritius) Ltd. for purchase of programmes - revenue contending the same to be payment for grant of broadcasting right - Held that:- Following proposition laid down in case of CIT vs B. Suresh (2009 (3) TMI 4 (SC)) and others it is held that that there is a sale of programmes, section 195 cannot be invoked in case of purchases. Further, it is a payment by a non-resident to another non-resident and as nondiscrimination clause also applies.
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2012 (5) TMI 502
Discounting charges vs Interest - assessee paid a sum of Rs. 3.97 crores to its associate concern in Singapore, on account of discounted charges for getting the export sale bills discounted - AO contended the same to be interest within the ambit of section 2(28A) and disallowed the expenditure u/s 40(a)(ia) on ground of non-deduction of tax at source u/s 195 - High Court relying on Circular No.65 dated 2.09.1971, Circular No.674 dated 22.03.1993 & Vijay Ship Breaking (2008 (10) TMI 6 (SC)) held that as the discounting charges were not in respect of any debt incurred or money borrowed and were merely discount of the sale consideration on sale of goods, it was not “interest” u/s 2(28A) and there was no obligation to deduct TDS thereon - Held that:- Special Leave Petition against the order of High Court stand dismissed - Decided in favor of assessee.
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2012 (5) TMI 501
Deduction u/s 80IA(4)(iii) - the assessing officer concluded that the assessee could not fulfil the conditions attached to the approval granted by the Ministry as well as CBDT for the Industrial Park - minor variation in construction cannot alter the fact that assessee made investment in developing the Industrial Park and also we cannot hold that the area so developed is not sufficient to locate the minimum number of three industrial units as specified in the approval by Ministry of Commerce, Government of India - Assessing Officer has opined that even if the assessee had not let out or used all of such 1,50,718 sq. ft. for approved industrial purposes during the year, it cannot be denied that all of such area had been developed as per the approval of the Central Government and was fit to be used for the specified industrial purposes - Held that: while the assessee has received such approval and notification, the same has not been withdrawn till date for contravention of any of the conditions, even though there is a specific provision for withdrawal, in case the Central Government finds that the conditions prescribed therein have not been adhered to - Decided in favor of the assessee
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2012 (5) TMI 500
Reassessment - Validity of notice - Deduction u/s 80HHC - Undisclosed income - the AO in the block assessment has doubted the genuineness of the purchases from the parties mentioned in the 148 notice and also doubled the sales treating the same as bogus - Held that: A.O. in his reasons recorded for re-opening of the assessment for the impugned assessment year has again referred to the block assessment order wherein it has been held that the assessee was not entitled to deduction u/s 80HHC as the entire purchase and sales are bogus in A.Y. 1999-2000 and 2000-01 - it as an attempt on the part of revenue to, somehow or other, re-open the proceedings and more particularly the block assessment proceeding which they could not successfully support and sustain right up the Tribunal - Decided in favor of the assessee Regarding reassessment proceeding - Held that: A.O. re-opened the assessment on the ground that purchase of diamonds/jewellery from the sister concerns namely M/s Galaxy Exports, M/s Kunal Exports and M/s Prime Star Exports were found to be bogus, hence, he has reason to believe that income has escaped assessment - It has been held in a number of decisions that when there is no reason recorded or the reasons recorded are wrong/absurd or irrelevant the re-assessment proceedings based on such no reason or absurd or irrelevant reason is invalid - Appeal is allowed
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2012 (5) TMI 499
TDS u/s 194C - Liability of Individual / HUF - receipt from its cable network subscribers - Disallowance u/s 40(a) (ia) - Circular No.715 dated 8/08/1995 - applicability of provisions of sub-section (2) of section 194C of the Act. - held that:- In the case of the assessee since the assessee paid the amount to M/s. Devshree Network Pvt. Ltd. For giving cable transmission, therefore, the assessee is a "person responsible for paying the sum in question to the contractor". The contractor in this case thus would be M/s. Devshree Network Pvt. Ltd. For applying the provisions of section 194 C (1) of the IT Act the contract should be between the contractor and the parties as per the list given from (a) to (j) of section 194 C (1) of the IT Act as per the provisions applicable to the assessment year under appeal in which sub-clause (k) being the individual do not find mention. Thus, in the assessment year under appeal, the contract between the contractor and individual would not cast any obligation on the individual to deduct TDS on the payment made to the contractor. Since in this case, payment is made by the assessee to M/s. Devshree Network Pvt. Ltd. for providing cable transmission, therefore, no other person is involved in the transaction/oral contract. Thus, the assessee did not act as a sub-contractor in this case. Assessee is not liable to deduct TDS - Decided in favor of assessee.
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Customs
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2012 (6) TMI 7
Petition for adjudication of matter relating to the imported second hand Digital Multifunction Print, Copying Machines, Photocopier Machines, spares and accessories - goods detained by custom for want of import license - Held that:- In view of the fact that the goods had already been released by way of the interim orders passed by this Court on finding that goods in question would not fall under the `restricted or prohibited category of goods, as they had been imported under the freely importable category. No licence or permission is needed for such imports, hence, it is found to be appropriate to direct the respondents to adjudicate the matter relating to the goods in question and to pass appropriate orders thereon, as expeditiously as possible.
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2012 (6) TMI 6
Exemption Notification - categorization - duty free import of medical diagnostic equipment - Petitioner failed to fulfil the continuous obligation – authority has proceeded to reject the application for re-categorization in category 1 instead of category 2 for the reason that the Petitioner had initially been categorized in category 2 - Deputy Director General has observed that the Petitioner has never been approved as a charitable hospital either by the DGHS or the Union Ministry of Health and Family Welfare – Held that:- Petitioner falls within the description of a hospital run or substantially aided by a charitable organization. Having regard to the fact that the Petitioner has been registered as a Public Charitable Trust under the Bombay Public Trusts Act, 1950 since 1953 and also holds an exemption under Section 80G of the Income Tax Act, 1961, ground on which the Application for change in categorization was rejected by the Deputy Director General, is ex facie contrary to the law as expounded by the Supreme Court. circumstance that the notification dated 1st March 1988 had come to an end cannot be a ground to reject the plea for re-categorization. Petition allowed by setting aside the impugned order. Deputy Director General shall reconsider the Application submitted by the Petitioner for re-categorization under category 1
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2012 (5) TMI 498
Whether Interest u/s 28AA of Customs Act, 1962 for delay in payment of duty can be levied on demand of duty raised on review of earlier order wherein provisional assessments were finalized - whether Tribunal was justified in dropping demand of interest - Held that:- In present case, Apex court on 14.08.1996 imposed demand of duty by reviewing its earlier order dated 09.09.1991. Assessee discharged such liability, however, Revenue levied interest u/s 28AA on account of delayed payment of duty. Tribunal rightly concluded that finalization of provisional assessments are governed by Section 18 and Section 28AA would have no application as no duty has been determined u/s 28(2). Further, no notice u/s 28(1) to recover any short levy or non levy of duty was issued. Consequently no cause to recover any duty under sub section (2) of Section 28 would arise. Therefore Section 28AA of the said Act would have no application to present facts. Tribunal has only held that interest is not recoverable under the provisions of the said Act and has not allowed appeal of assessee on the ground that no show cause notice for demand of interest was issued - Appeal dismissed
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Corporate Laws
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2012 (6) TMI 19
Whether scheme of section 22 and section 22A empowers BIFR to take all such measures which, in opinion of Board, are necessary to bring company out of its sickness and make it viable on implementation of scheme framed by operating agency - powers of the Board under Section 22(3) of SICA – Held that:- It is thus clear that the company itself accepted in no uncertain words that the land under the agreements for sale continued to be its property/asset as on the day the reference application under Section 15(1) of SICA was submitted. Just because all the banks had given NOC for release of its charge on the subject land, it cannot be said that the Board was not empowered to bring the land within the ambit of Section 22A of SICA. So long as it continued to be the asset of the company the Board has unfettered powers under Section 22A and all that it has to examine is the public interest, interest of the company, its shareholders and employees etc. The Board is a body of experts as is clear from the preamble of the Act and the scheme of Section 22 and Section 22A empowers the Board to take all such measures which, in the opinion of the Board, are necessary to bring the company out of its sickness and make it viable on implementation of the scheme framed by the operating agency. The Appellate Authority fell in gross errors in holding that the agreements were concluded/finalised by the registered documents and, therefore the Board could not have exercised the powers under Section 22A of SICA. Regarding the powers of the Board under Section 22(3) of SICA, there could be no dispute that the Board has no powers to annul an existing agreement between the parties i.e., the petitioner company and respondent No.13. However, that by itself would not lead to a conclusion that the Board has no further powers in respect of a property which has been agreed to be sold by registration of an agreement for sale.
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2012 (6) TMI 5
Pray for being exonerated - limitation - inter-corporate deposit – violation - permission of the Central Government was not obtained for making the inter-corporate deposit - reply of the company that in the decision making process for advancing the inter-corporate deposit, this director did not participate Allegation was that on inspection of the minutes of the board of directors it was found by the Central Government that there was no recording in the minutes whether the directors were interested in any matter discussed there - it was said that the interested directors did not participate in them and their presence was not included Travelling expenses of some family members of the directors were shown as expenses of the company - was mis-utilization of the company's fund - company replied to an earlier identical notice on 19 August, 2009, saying that the presence of the spouse was necessary in the business meetings which the directors of the company attended. The presence of the spouse promoted the company's business interests Limitation – Held that:- when a section 633(2) application is pending in the High Court, within the period of limitation, the Central Government should seek an injunction under section 470(2) of the Code of Criminal Procedure, instead of allowing limitation to set in, particularly so, when it follows the practice of not prosecuting an accused during the pendency of a section 633(2) proceeding. As the offences are minor and as no arguments were advanced in this behalf, petitioners ought to be discharged from the accusation on the ground of limitation. Since the petitioners are being discharged on the ground of limitation there is no need for the court to probe into the alleged offences. application is accordingly allowed by discharging the petitioners
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2012 (6) TMI 4
Application for dismissal of the Reference - Company took loan – unable to pay its debts – B.I.F.R. recommended winding up - When an Appeal was filed before the A.I.F.R. there were two schemes accepted by A.A.I.F.R. Those schemes contemplated merger of the respondent No. 1 company with the respondent No. 2 company Wanbury Limited - proceedings were taken up in this court for merger of these two companies - Supreme Court of India set aside the order passed by the B.I.F.R. and A.A.I.F.R. under Sick Companies Act sanctioning the schemes. The Court also set aside the order of this Court approving the merger of the two companies – Held that:- in view of the order of the Supreme Court, the respondent No. 2 was under a duty to take steps under the Companies Act to give effect to the judgment of the Supreme Court of India. scheme has been submitted by the implementing agency in the Application or Reference and that Reference is filed by the respondent No. 1. If that Reference is incompetent on the ground that respondent No. 1 is not in existence then there is no question of the B.I.F.R. having any power to consider the scheme submitted by I.D.B.I. The B.I.F.R. will get the jurisdiction to consider any scheme only if there a Reference validly made before it and pending. If the Reference is itself not validly filed or does not continue to be validly filed, it would not have the jurisdiction to entertain the scheme filed in that Reference. it has not considered the relevant material and has not given reasons for rejecting the Application filed by the Petitioner. order impugned in the Appeal passed by B.I.F.R. is set aside. The proceedings are remitted back to the B.I.F.R. It is directed to re-consider the Application filed by the Petitioner
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2012 (5) TMI 496
Violation of companies act - oppression and mismanagement – company did not convene AGM - petitioners are seeking permission to sell the assets of the company and distribute the sale proceeds to the shareholders in proportion to their shareholding in the company – Held that:- aberrations in the conduct of AGM and non-compliance of statutory filings itself would not amount to an act of oppression. The alleged default from 2001 is raised only as a ground to challenge the sale deed. Even assuming that there is no Board of directors or if the Board of directors is not lawful Board or if the managing director is not a lawful managing director, the petitioners can get the same resolved by calling a general meeting of the company and get the directors appointed in the place of the retiring directors. Instead of doing that the only resolution in the requisition notice dated 19th November, 2006 is to wind up the company, and sell the assets and share the spoils which are not for the interest of the company, but for personal interests which cannot be entertained under sections 397 and 398 of the Act.
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2012 (5) TMI 495
Maturity proceeds/redemption amounts under section 205C of the Companies Act - Investment in bonds with an option of premature redemption – petitioner applied for redemption of their bonds - respondent No. 1 refused to make the payment and informed the petitioner that they had exercised the call option for early redemption in 2001 - As the petitioner did not submit the bond certificates respondent No. 1 transferred the maturity proceeds/redemption amounts under section 205C of the Companies Act, 1956 to the Ministry of Corporate Affairs – Held that:- petitioner is aggrieved because she did not stake her claim for refund within seven years. She did not inform change of address and, therefore, could not be communicated and informed about the premature redemption. The petitioner also did not bother to read the terms and conditions of allotment including the early redemption clause. These are serious lapses on the part of the petitioner Applicability of act – Held that:- Act deal with the deposits or promissory notes. There is no such limitation or prohibition in the Act. The Act itself is a principal enactment and not a delegated legislation Retrospective effect – Held that:- contention of the petitioner that section 205C has been given retrospective effect has no merit. The aforesaid section was introduced by Companies (Amendment) Act, 1999 with effect from 31st October, 1998. The call option was exercised by the respondent in January, 2001 and the bonds became due and payable in July 2001. The contention of the petitioner that they were not aware of this provision also does not merit acceptance. writ petition dismissed
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Service Tax
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2012 (6) TMI 23
Cenvat credit – Held that:- As Section 73 of the Finance Act, 2010, it has been clarified that, if the assessee is manufacturing both dutiable as well as exempted final products and is not maintaining separate account but at the time of clearance of exempted final products, if the assessee reverse the credit taken on inputs which has gone into the manufacture of the exempted final products, in that case the assessee is not required to reverse 8% or 10% of the amount of the exempted products cleared as per Rule 6(3) of CENVAT Credit Rules, 2004. In this case the contention of the appellant is that they have already reversed the input credit along with interest at the time of clearance of their exempted final products, subsequent to the amendment, the adjudicating authority has passed an order dated 13/12/2010 by giving the benefit of Section 73 of the Finance Act, 2010. Therefore, the Commissioner (Appeals) order has become infructuous. Therefore, the appeal is allowed
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2012 (6) TMI 22
Delayed payment of service tax - jurisdictional Assistant Commissioner issued a show-cause notice alleging non-payment of service tax – Held that:- appellant-assessee had discharged the service tax liability and interest thereon much before the issue of the show-cause notice and had also filed the service tax return for the relevant period before the issuance of the notice. They also informed that they had also deposited late fee of Rs. 2,000/- for the delayed filing of the return – provisions of sub-section (3) of Section 73 is clearly attracted in the facts of the case and issuance of a show-cause notice for demand of service tax and imposition of penalties was not at all warranted. imposition of penalties under Sections 76, 77 and 78 in this case was not at all warranted and therefore set aside. The appeal is allowed
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2012 (6) TMI 21
BAS - whether the Respondent availing the services of commission agents, are eligible for taking credit of the service tax paid by the commission agents on the commission received by them – Held that:- in the case of Bhillai Auxiliary Industries (2008 (12) TMI 134 - CESTAT NEW DELHI - Service Tax) , service of commission agents received by a manufacturer is an input service eligible for Cenvat credit, Revenue’s appeal is dismissed
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2012 (6) TMI 20
Stay application - waiver of pre-deposit - appellants provided erection, commission and installation services in respect of various turnkey contracts - adjudicating authority had held that the appellants suppressed the facts and not informed the Revenue about services rendered by them – Held that:- appellant taken a plea that the contracts entered by them with various parties would squarely get covered under the definition of “works contract” under section 65(105)(zzzza) which came into effect from 1-6-2007, adjudicating authority has not given any reasoning to hold against the appellant on this point, there is no dispute that the contracts are understood as works contract act by contracting parties, application for waiver of pre-deposit of amounts is allowed
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2012 (5) TMI 512
Satisfaction of Rule 4A of Service Tax Rules, 1994 in respect of disputed invoices and bills - Held that:- The appellate order does not demonstrate the extent to which examination is done - as if the allegation was that there was non-compliance to Rule 4A, it was necessary to examine the manner and extent of departure to the Rule when applied to the concerned invoice/bill - as examination done by the first appellate authority was not complete, the matter is sent back to satisfy him regarding requirement of Rule 4A.
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2012 (5) TMI 511
Waiver of pre-deposit - assessees took credit on the strength of ineligible documents, namely, invoices not containing their registration number – Held that:- other particulars such as name and address of service receiver (customers of the assessees), value of taxable service etc. are available with invoices and therefore prima facie non-mention of the Service tax registration number of the assessees on the documents on the media for advertisement of the assessee’s products is not sufficient to deny credit which is substantive right. waive pre-deposit granted
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2012 (5) TMI 510
Reduction of penalty - appellant provided taxable service of maintenance, repair and expenses. Expenses reimbursed was held to be taxable - taxability of the transaction - assessee has discharged tax liability before adjudication - appeals are disposed of remanding the matter to the original authority
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2012 (5) TMI 509
Availability of CENVAT Credit of Service Tax paid in respect of services relatable to the Effluent Treatment Plant - CENVAT Credit denied on procedural aspect that various items on which the same can be availed was not having registration number of the service provider – Held that:- it is not clear from the impugned order of the Commissioner (Appeals) that as to whether the same is denied on the ground of procedural lapses or on the ground that the duty does not stand deposited by the service provider with the department, issue of non-payment of Service Tax by service provider was raised in the Audit. Whether this was the audit of present appellant or of the service provider is not clear, matter is remanded to Commissioner (Appeals), for fresh consideration, appeal is disposed off
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Central Excise
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2012 (6) TMI 3
Stay Petition for waiver of pre-deposit, interest thereof and penalty – Revenue stated that the appellant had been unable to produce Project Authority Certificate (PAC) and also that the 2 PACs were having same number, hence duplication - Held that:- On perusal of the papers produced by the assesse, indicate that PAC certificates were available with them today for justifying their claim of clearance and as regards duplication of the PAC number, the concerned Project authority has given a certificate giving the reasoning for duplication of same number - this kind of exercise of factual verification of PACs to the clearances made by the appellant needs to be done by the adjudicating authority so the matter needs to be re-considered – in favour of assessee.
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2012 (6) TMI 2
Denial of Cenvat credit – respondent availed CENVAT credit on inputs and capital goods used in the manufacture of dutiable as well as exempted final products - proceedings were initiated against them for recovery of CENVAT Credit availed on services utilized in the manufacture of goods on job work basis which were cleared under the Notification No. 214/86-CE as amended and the lower adjudicating authority – Held that:- in the case of Escorts Limited. The learned Counsel appearing for the appellant is not able to point out any reason not to follow the decision of the Supreme Court. No question of law arises in this appeal. Appeals of revenue dismissed.
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2012 (6) TMI 1
Revision application - rebate claim - On scrutiny of the rebate claim it was observed that they had not submitted the original and duplicate copies of ARE-1 required to be filed as para 8.3 (iii) and 8.4 of Chapter 8 of the C.B.E.C. Central Excise Manual and Supplementary Instructions and also that no documents in respect of final proof of export of goods and also showing the relevant date were submitted. On those grounds the rebate claim was rejected – Held that:- photocopies cannot be received as secondary evidence in terms of Section 63 of the Act and they ought not to have been received since the documents in question were admittedly photocopies, there was no possibility of the documents being compared with the originals. Government, therefore holds that non-preparation of statutory document of ARE-1 and not following the basic procedure of export goods as discussed above, cannot be treated as just a minor/technical procedural lapse for the purpose of granting rebate of duty on the materials used in the manufacture of impugned exported goods, no infirmity in the impugned order-in-appeal, revision application is rejected
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2012 (5) TMI 514
Revision applications - rebate claims - rebate claims were rejected by the Divisional Assistant Commissioner on the basis of the fact that raw materials were directly sent to the job workers from the suppliers end without bringing it first to the applicants premises – Held that:- rebate of duty paid on materials will be admissible as per verified input output norms. The contention of the applicant that the approved formula of manufacture/input-output ratio is for the purpose of procurement of raw materials and has nothing to do with sanction of rebate claim is not legally sustainable in view of the above said provision of notification. The consumption of raw materials as per approved/declared input-output norms is required to be taken for computing rebate of duty involved in the materials used in the manufacturing of export goods. Government notes here that lower authorities have correctly followed the prescribed/laid down conditions in respect of export goods herein and sanctioned the rebate claims as per laid down guidelines, revision applications are rejected
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2012 (5) TMI 513
Whether Cenvat Credit of service tax paid in respect of GTA services availed by assessee, can be used for payment of service tax - period involved April, 2006 to September, 2006 - Held that:- Tribunal in the case of Shree Rajasthan Syntex (2011 (8) TMI 265 (Tri)) held that recipient of services from the GTA on payment of service tax gets covered by output service definition as appearing in Rule 2(p) of the Rules. As such, we find that deletion of explanation with effect from 18.4.06 from Rule 2(p) of the Cenvat Credit Rules, 2000 would not make much difference. Therefore, Cenvat credit can be utilised towards payment of Service Tax in respect of services received from Goods Transport Agency inasmuch as by a deemed fiction of law service recipient is held to be output service provider - Decided in favour of assessee. – Decided in favor of assessee.
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2012 (5) TMI 494
Demand of duty by classifying the products under Heading 84.38 not under 84.33 – goods are to be classified as excisable and have wrongly availed the benefit of SSI exemption notifications - Revenue contended that Chapter Heading 84.33 does not cover Tea Sorting Machine and Tea Extractor Machine manufactured by assessee – Held that:- The Assistant Commissioner has rightly held that the classification list effective from 1.4.95 was duly approved by the proper officer and similar classification lists/declarations were filed by the respondent for the periods under question - the show-cause notice itself was silent as to whether the machineries were cleared for some purposes other than tea industry – the assessee had been paying the duty under the same Chapter Heading by availing the benefit of Notification and the Department did not raise any objection, so far as the approved Classification List effective from 01.04.95 – rightly held that when classification lists are filed and approved allegation of suppression or willful mis-statement in order to invoke extended period for demand is not sustainable - adjudicating authority cannot alter the classification accepted by the Assistant Commissioner who is the proper officer under Central Excise Law to finalize classification – against revenue.
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2012 (5) TMI 493
Export - acts of commission and omission were imputed against the appellant - penalty - appeal, the challenge to the order of the Tribunal is on the ground that though the Tribunal has specifically taken note of the statements made by the appellant in para 28 of the impugned order but the statements are not dealt with and no conclusions/findings are arrived at by the CESTAT qua the appellant - violation of natural justice – Held that:- appellant herein had issued airway bills; he had acted as an agent of the 5 concerns which were owned by Shri Tejwant Singh; he played his role on specific instructions of Shri Tejwant Singh; and he was dealing with the Customs Officers in respect of export of these very goods. The Tribunal is thus categorical that the appellant was connected with the procurement of the goods by the exporters and there were other statements and sufficient material to implicate the appellant, no merit in these appeals accordingly dismissed
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Wealth tax
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2012 (5) TMI 515
Denial of Claim of exemption u/s. 5(1)(vi) of the W.T. Act - AO denied exemption as claim has not been made in the return – Held that:- As assessee has wrongly shown the plot measuring 336 Sq. Meter in the return of wealth inadvertently as taxable it is not chargeable to wealth tax as per provisions of section 5(1)(vi) as the plot of land is of area comprising of 500 Sq. meter or less – exemption cannot be ignored even if the assessee has not made any claim of exemption in the return of wealth - since the assessee made claim before the first appellate authority who did not decide this issue and agreed with the finding of the AO the matter requires re-consideration for factual verification and decision in accordance with law - restore the issue to file of CWT(A) with the direction to decide the issue in accordance with law as observed – in favour of assessee for statistical purpose. .
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Indian Laws
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2012 (5) TMI 508
Negotiable Instruments Act – Blank Cheque - dishonor of cheque - co-extensive liability of the guarantor and the principle debtor - petitioner contended that guarantor cannot be prosecuted under section 138 of the Act without taking any action against the principal borrower. Blank cheques had been handed over by the petitioner to the respondent No. 1 towards security which have been misused - Held that:- Petitioner has not denied his signatures on the cheques. Once he has admitted his signatures on the cheque he cannot escape his liability on the ground that the same has not been filled in by him. When a blank cheque is signed and handed over, it means that the person signing it has given implied authority to the holder of the cheque, to fill up the blank which he has left. A person issuing a blank cheque is supposed to understand the consequences of doing so. He cannot escape his liability only on the ground that blank cheques had been issued. - petition is dismissed Bare perusal of the provision clearly shows that the section commences with the words "Where any cheque". The use of word "any" assumes significance here. It shows that for whatever reason if a cheque is drawn on an account maintained by the drawer with its bank, in favour of any person for the discharge of "any debt" or other liability, the ingredients of offence under section 138 of the Act gets attracted in case cheque is returned dishonoured for insufficiency of funds and the cheque amount is not paid within the statutory period despite service of notice.
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