TMI Tax Updates - e-Newsletter
June 20, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise Wealth tax Indian Laws

Articles

1. Minor child is separately eligible for incentive for investment of capital gains.

   By: DEVKUMAR KOTHARI

2. No Cenvat credit on Input services after 1st July, 2012 ... ???

   By: JAMES PG

3. Works Contract viz-a-viz Commercial or Industrial Construction Services – Valuation & Abatement Issues -Budget 2012

   By: Bimal jain

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

   By: DEVKUMAR KOTHARI

News

1. New LLP Portal – Guidelines for Stake holder.

2. Auction for Sale of Government Stocks.

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

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

Notifications

Central Excise

1. 27/2012 - dated 18-6-2012 - CE (NT)

Refund of CENVAT Credit under rule 5 of the CENVAT Credit Rules, 2004

Customs

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

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

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

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

4. 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.

5. 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

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

Exemptions - News agency - Notified news agency.

Circulars / Instructions / Orders

Service Tax

1. 159/10/2012 - dated 19-6-2012

Audit fees collected by the Comptroller and Auditor General (CAG) – regarding.

DGFT

2. 01 (RE- 2012) /2009-14 - dated 18-6-2012

Introduction of electronic Bank Realization Certificate (e-BRC) system.

Highlights / Catch Notes

Income Tax

• Bad or doubtful debts deduction on balance sheet exempts from Section 115JA or 115JB applicability of the Income Tax Act.

  Case-Laws - AT : MAT - if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the assets aside of the balance sheet, the Explanation to Section 115JA or JB is not at all attracted. - AT
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• "More than Ordinary Profits" in Section 80IA(10) Differs from "Arm's Length Price" in Section 92C: Key Tax Distinction.

  Case-Laws - AT : Phrase ‘more than ordinary profits’ referred in section 80IA(10) is different from ‘arm’s length price’ as referred u/s 92C. - AT
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• Court Rules Contingency Deposit as Trading Receipt in Disputed Transactions During Appeal.

  Case-Laws - HC : Trading receipt - refundable contingency deposit representing sales tax collected in respect of disputed transactions during pendency of appeal before court - held as Trading receipt - HC
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• Non-existent firm transactions recorded as bogus; Section 145 of Income Tax Act not applicable for fraudulent entries.

  Case-Laws - HC : Purchases from non-existent firms – bogus transactions in the books of accounts – Section 145 have no application to such a situation as the provision deals with cases where AO is not satisfied about 'correctness' and 'completeness' of the accounts of the assessee and not fraudulent or fabricated entry - HC
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• Commissioner of Income Tax (Appeals) Justifies Quashing Reassessment Order u/ss 153C and 147/148.

  Case-Laws - AT : Assessment of income of any other person u/s 153C versus income escaping assessment u/s 147/148 - CIT(A) was fully justified in quashing the reassessment order. - AT
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• 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
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• 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
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• 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
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• 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
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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
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• 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
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• 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
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DGFT

• New e-BRC System Introduced to Digitize and Streamline Export Transaction Verification, Reducing Paperwork and Enhancing Transparency.

  Circulars : Introduction of electronic Bank Realization Certificate (e-BRC) system. - Circular
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Indian Laws

• President's Donations Not Personal Info; Disclosure Doesn't Invade Privacy of President or Recipients.

  Case-Laws - HC : The donations made by the President of India cannot said to relate to personal information of the President. It cannot be said that the disclosure of the information would cause unwarranted invasion of the privacy of, either the President of India, or the recipient of the donation. - HC
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Service Tax

• CAG Audit Fees Now Subject to Service Tax: Key Updates and Compliance Guidelines for Accurate Tax Application.

  Circulars : Audit fees collected by the Comptroller and Auditor General (CAG) – regarding. - Circular
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• Farmers Using Tractors or Lorries for Sugar Cane Transport Not Subject to Service Tax, Not Commercial Entities.

  Case-Laws - AT : As individual farmers who owned tractors or lorries either in their name or the names of their family members and who transported sugar cane from collection centre to their factory were not commercial concerns engaged in transportation of the goods no point of levying service tax - AT
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• Builders Not Service Providers Before July 1, 2010: Prima Facie Case Supports Assessee on Service Tax Obligations.

  Case-Laws - AT : Prior to 1-7-2010 a builder cannot be deemed to be service provider - prima facie case in favor of assessee - AT
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• Assistant Commissioner Rules on Cenvat Credit Eligibility; Orders Reversal, Establishes Communication as Appealable Order.

  Case-Laws - AT : Appealable order - As there is a clear finding by the Assistant Commissioner on the question of eligibility to Cenvat credit and also a direction to reverse the credit availed in view of this factual position, the communication satisfies the requirements of an appealable order - AT
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• 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
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• 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
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• 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
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Central Excise

• Refund Process for CENVAT Credit u/r 5: Conditions and Procedures for Exporters Explained.

  Notifications : Refund of CENVAT Credit under rule 5 of the CENVAT Credit Rules, 2004 - Notification
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• Guide to Claiming Cenvat Credit Refunds: Key Steps, Requirements, and Updates u/r 5 of Cenvat Credit Rules 2004.

  Notifications : Refund of Cenvat Credit - Safeguards, conditions and limitations prescribed for the purpose of Rule 5 of Cenvat Credit Rules, 2004 - Procedure for filing the refund claim
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• Cenvat Credit Reversal for Capital Goods Must Reflect Transaction Value, Even Pre-Amendment, Under Central Excise Rules.

  Case-Laws - AT : Reversal of the cenvat credit - removal of capital goods - when a transaction value is available, cenvat credit reversal has to be on the basis of transactional value even prior to the amendment - AT
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• Reassessing MODVAT credit documents lets appellants claim previously unclaimed credits, impacting overall assessment.

  Case-Laws - AT : Cenvat Credit - By verifying the entire documents for the purpose of MODVAT credit, it amounts to opening of the entire assessment, in which case, the appellants would be entitled to take short availed credit by them. - AT
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• 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
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Case Laws:

• Income Tax

• 2012 (6) TMI 415
  MAT - re-computation of book profit on ground that provision for doubtful debts and provision for contingencies were not added to arrive at the book profits u/s 115JB - Held that:- It can be seen that the provision of bad and doubtful debts has been reduced from the gross debtors and the net sundry debtors are shown as asset in the balance sheet. Thus the provision for bad and doubtful debts cannot be termed as a provision for liability but is in the nature of diminution in the value of asset. Facts in the present case are identical to that of the case of Yokogwa India Ltd wherein it is held that if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the assets aside of the balance sheet, the Explanation to Section 115JA or JB is not at all attracted. Hence, CIT(A) has rightly deleted the addition made on aforesaid ground - Decided in favor of assessee

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• 2012 (6) TMI 414
  Deduction u/s 10A - exclusion of expenditure on account of communication charges, insurance charges and professional fee from export turnover for computing deduction u/s 10A - assessee contending that if same are reduced from export turnover, the same should also to be reduced from the total turnover - Held that:- Professional fee, communication charges and insurance expenditure once are excluded from the export turnover, for maintaining principle of parity, the same also has to be excluded from total turnover - Decided against the Revenue.

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• 2012 (6) TMI 413
  Deduction u/s 10A - exclusion of expenditure incurred on account of freight, telecommunication charges, insurance attributable to delivery of articles or computer software, from export turnover while the same is included in total turnover - Held that:- In absence of definition of total turnover, the meaning of the said term for purposes of sections 80HHC and 80HHE and 80HHF are to be applied. Parity is to be maintained with export turnover. Expenses on freight, telecommunication charges or insurance attributable to delivery of articles or things or computer software, required to be excluded from export turnover, are also to be excluded from total turnover for computing exemption u/s 10B/10A. See ITO Vs. Sak Soft Ltd (2009 (3) TMI 243 (Tri)) Similarly, reimbursement of onsite expenses are to be excluded from both export and total turnover for the purpose of computation of benefit under S.10A. Adjustment of profits u/s 10A(7) r.w.s. 80IA(10) - assessee contended that only the profit making companies from the Transfer Pricing Report of the assessee are to be considered in order to determine the ordinary profits - Held that:- Phrase ‘more than ordinary profits’ referred in section 80IA(10) is different from ‘arm’s length price’ as referred u/s 92C. Issue set aside to the file of the AO with a direction to verify the comparable in the light of the decisions of the in the case of Tweezerman (India) P. Ltd. and Digital Equipment India Ltd. Decided in favor of assessee for statistical purposes.

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• 2012 (6) TMI 412
  Trading receipt - refundable contingency deposit representing sales tax collected in respect of disputed transactions during pendency of appeal before court - Ay 91-92 - Held that:- Irrespective of the labelling, the deposit either as contingency deposit or security deposit, the fact remains that the assessee had collected sales tax towards disputed items and retained part of the amount with it. There are no materials forthcoming from the asseesee to show that the said contingency deposit was never dealt with by the assessee as part of the trading receipt. We confirm the order of the Tribunal in treating the same as Trading receipt - Decided in favor of Revenue Deduction of same for computing total income - assessee contended that amount is refunded to parties - Held that:- On perusal of materials placed it is seen that those amounts relate to the AY 1995-96, hence while treating the receipt as a trading receipt in respect of the AYs under consideration, we hold that on the assessee producing the proof before the AO as regards the refund of the said amount to the parties, it is open to the assessee to make such a claim for deduction of the amount so refunded. Prior period expenses - Held that:- It was not the case that the assessee received the bills after the end of the PY but the assessee omitted to claim the expenditure in the relevant AY which means the liability towards the expenses crystalised in the earlier previous years only. Hence it cannot be allowed in this year, as each AY is an independent and separate assessable unit - Decided in favor of Revenue

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• 2012 (6) TMI 411
  Purchases from non-existent firms – bogus transactions in the books of accounts – contention that Section 145(2) were attracted - Held that:- Evidence against the applicant-assessee would show that the whole purchases shown by the applicant-assessee from M/s Raj Kumar Raghbir Kumar were bogus - the copies of the sales tax bills issued to assessee did not inspire any evidence as the bills did not carry any sales tax/Central Sales Tax number nor the telephone number - the said firm was not found to be in existence when inquiry was made by the AO in the year 1989 nor the address of the party was known to the postal authorities - the said firm was not an existing assessee and the applicant-assessee had failed to produce the said party as also their books of account as the truck numbers given by the applicant-assessee were not truck at all but either scooters, motorcycle and mopeds and many other found to be non-existence because no such number had been allotted by the transport authorities - Section 145 have no application to such a situation as the provision deals with cases where AO is not satisfied about 'correctness' and 'completeness' of the accounts of the assessee and not fraudulent or fabricated entry – against assessee.

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• 2012 (6) TMI 410
  Review petitions by the Revenue – reopening concluded assessments – dis allowance under Section14A – Held that:- If the Revenue's claim is allowed, then the prohibition under the proviso against the AO to revise concluded assessments for making disallowance under Section 14A can be neutralized and defeated by referring concluded assessments to the Commissioner for initiating suo moto revision power under Section 263 - as in the case of concluded assessments the proviso makes it clear that the assessee should not be subjected to disallowance either by reopening assessment under Section 147 or under Section 154 for raising demand of tax after disallowance or for withdrawing refund granted – review petition dismissed – against revenue.

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• 2012 (6) TMI 409
  Review petitions by the Revenue – reopening concluded assessments – dis allowance under Section14A – Held that:- If the Revenue's claim is allowed, then the prohibition under the proviso against the AO to revise concluded assessments for making disallowance under Section 14A can be neutralized and defeated by referring concluded assessments to the Commissioner for initiating suomoto revision power under Section 263 - as in the case of concluded assessments the proviso makes it clear that the assessee should not be subjected to disallowance either by reopening assessment under Section 147 or under Section 154 for raising demand of tax after disallowance or for withdrawing refund granted – review petition dismissed – against revenue.

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• 2012 (6) TMI 408
  Deduction u/s 54f – AO contested to withdrawn LTCG claim allowed as exemption in the A/Y 2006 and to reduce the amount of Rs 25 Lakhs being a capital loss on the sale of house property from the exemption claimed on LTCG u/s 54F - Held that:- As the AO was justified in treating Rs. 73,94,157/- as long term capital gains of the year under consideration the assessee has invested in purchase of new residential house at Rs. 70,80,620/- within the period of two years in which the transfer took place, thus the assessee was eligible for deduction u/s 54F(1) in respect of the said investment - as the capital gains of the assessee was Rs. 48,94,157/- only whereas the assessee was eligible for exemption of more than that amount u/s 54F for investment of Rs. 70,80,620/- in purchase of residential house, CIT(A) was justified in deleting the addition of Rs. 48,94,157 – against revenue. Unexplained investment - appeal by revenue that CIT(A) deleted the addition of Rs. 25 lakhs - AO’s treated the source of investment in property at Chetpet to the tune of Rs. 50 lakhs only as per the sale proceeds of Alwarpet property as shown in registered sale deed, treating Rs. 25 lakhs as unexplained investment - Held that:- The assessee has brought no material on record to show that it actually received any amount more than the amounts shown in the registered deed of sale - the assessee has invested Rs. 70,80,620 in the house property at Chennai and out of which source to the extent of Rs. 50 lakhs stands explained from the sale of property at Alwarpet and Rs. 6 lakhs stands explained from the sale of Velacherry land, thus the assessee was not able to explain the source of investment of balance amount of Rs. 14,80,620 only need to be added to the income of the assessee as un explained income – modify the order of the CIT(A) and restore back the addition to the extent of Rs. 14,80,620 - in favour of revenue.

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• 2012 (6) TMI 407
  Denial of claim of exemption u/s. 80P(2)(a)(i) - Cooperative Society - the amendment to section 80P w.e.f. 01-04-2007, excludes benefit u/s. 80P to co-operative banks other than the defined categories – assessee claimed to be a primary co-operative agricultural and rural development bank – Held that:- Nothing in its object clause to suggest that its primary object is providing financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities (including marketing of crops) - the only object which enables it to provide financial accommodation is its object clause 2(a) only specifing the assets on the security of which the assessee-society may provide finance to its members - its area of operation admittedly extends beyond one Taluk - the assessee's claim of being a primary cooperative agricultural and rural development bank, which though would require independent examination and finding/s, is strongly indicative of the nature of its lending activities, which has a direct bearing on the question of it being a PACS (or not) - restore the matter for the purpose of necessary verification and issue of definite findings of fact/s, back to the file of the first appellate authority - no basis to consider the assessee as being a primary cooperative agricultural and rural development bank as defined in section 80P, so as to be entitled for tax benefit thereunder on its income as one such – in favour of assessee for statistical purpose.

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• 2012 (6) TMI 406
  Factual errors in computing Disallowance u/s 14A r.w.r. 8D - Held that:- From the perusal of the assessee's profit & loss account, it is evident that the total expenditure incurred was Rs. 49,04,028/- only and the disallowance cannot exceed the expenditure actually claimed by the assessee - in favour of assessee.

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• 2012 (6) TMI 405
  Capital gain - transfer - Whether the Tribunal was correct in holding that there was no transfer during the current assessment year despite the assessee handing over the possession of the immoveable property to the builder who had in turn handed over the part of the consideration amount which would amount to transfer attracting capital gains tax – Held that:- as per the agreement, actual possession of the property was handed over on 30.5.1996 and affidavit is also filed to that effect by the assessee and despite the same, the Tribunal has held that assessment of capital gain cannot be done in the year 1997-98 and is liable to be taxed in the year 2003-04 when the entire construction was completed. - Therefore, finding of the Tribunal is erroneous and substantial questions of law answered in favour of the revenue. capital gain is to be taxed in the year 1997-98 and not in the year 2003-04 as contended by the assessee.

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• 2012 (6) TMI 404
  Disallowance under Section 40(a)(i) of Income-tax Act for non deduction of tax on consultancy charges paid to nonresidents working in oil exploration projects in India – Held that:- payments made by the assessee to non-resident consultants, were directly related to the Nigerian projects of the assessee. Assessee being engaged in consultancy business, the fees paid to such consultants on its projects abroad has to be considered as fees paid for services utilized in the business of the assessee outside India. - Therefore, clearly Section 9(1)(vii)(b) of the Act applied and the income earned by such non-residents cannot be deemed to accrue or arising in India. Therefore, assessee had every reason to hold a bona fide belief that no part of the payment had any element of income which was chargeable to tax in India. It cannot be fastened with any liability associated with non-deduction of tax at source on such payments. application of Section 40(a)(i) of the Act was not called for. appeal filed by the Revenue is dismissed

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• 2012 (6) TMI 403
  Assessment of income of any other person u/s 153C versus income escaping assessment u/s 147/148 - Whether CIT(A) has erred in not appreciating the fact that proceedings in this case were initiated under s. 148 – Held that:- provisions of s. 153C of the Act were applicable, which supersedes the applicability of provisions of ss. 147 and 148 of the Act. - documents were seized during the search under s. 132 of the Act and the same were sent to the assessee's AO at Amritsar by the officer at Delhi, officer at Delhi has mentioned in his letter that the necessary action may be taken as per law under s. 153C/148 of the Act. - Hence, notice issued under s. 148 of the Act and proceedings under s. 147 of the Act by the AO are illegal and void ab initio. procedure laid down under s. 153C has not been followed by the AO and, therefore, assessment has become invalid. CIT(A) was fully justified in quashing the reassessment order. order of the CIT(A) upheld and dismiss the ground Nos. 1 to 4 of the appeal. appeal of the Department is dismissed.

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• 2012 (6) TMI 402
  Whether Tribunal is right in holding that Gross profit from the assessees' arrack business at 40 per cent. of the purchase value is sustainable in law and if not what would be the estimate of gross profit as per the principles of best judgment assessment – Held that:- The adoption of 40 per cent. as gross profit of purchase price of arrack, in our considered opinion, is arbitrary and irrational. As seen from the purchase price and sales recoveries, there is a wide variation. In some cases, it is more than nine (9) times and in some other cases less than seven (7) times. Given the fact that there is no price fixed by the Government for sale of arrack and it is generally a seller's market, to assume that the gross profit would be at 1 per cent. of the estimated sales, in our considered view, is low. Accepting the total sale price at eight (8) times of the purchase price, we feel it appropriate to hold that 2 per cent. of the estimated sale value, after considering all types of deductions mentioned hereinabove, would be reasonable. Net profit be estimated at 2 per cent. of the estimated sales or 16 per cent. of the purchase value, whichever is higher.

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• 2012 (6) TMI 401
  Addition on account of unaccounted sale – Held that:- sales tax and entry tax liability pertain to other years. Cess, duties and taxes cannot be reduced from the turnover pertaining to other years. The law provides for claiming of deduction u/s.43B as and when paid therefore cannot be subjected to reconciliation to determine the net sales as declared in the P and L account and the gross sales as per the books of account. - addition deleted. Disallowance u/s. 40(a) (ia) of the Income Tax Act – Held that:- assessee was entitled to make the payment of TDS till the due date of filing of the return when the due date of payment of TDS was the first week of the immediately proceeding month for the Assessment Year 2005-06. The books of account are audited and the financial statement and tax deducted at source payable were certified by the auditors having been paid prior to the due date of filing of the return. - CIT(A) therefore, misdirected himself to confuse between "previous year" and the "assessment year" under the mercantile system of accounting which we are inclined to vacate. The assessee had complied with the provisions of Section 40(a)(ia) was therefore entitled to claim deduction of these expenses which are directed to be allowed. Belated serving of order after a gap of two years – Held that:- assessee did not seek to find the delay in serving the order when the demand had already been informed to it. No purpose would be served for the Assessing Officer to create a demand and not inform the assessee when the learned CIT(A) on the basis of the demand notice agreed to hear the appeal u/s.246 of the I.T.Act. assessee had already filed returns for the Assessment Year 2006-07 and 2007-08 during the intervening period as were intimated to him therefore cannot held a grievance against the Assessing Officer for belatedly serving the same.

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• 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.

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• 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/-.

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• 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).

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• 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.

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• 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.

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• 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.

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• 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.

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• 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

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• 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.

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• 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.

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• 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.

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• 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

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• 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

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• 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

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• 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

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• Customs

• 2012 (6) TMI 416
  Application to condone the delay of 985 days in filing appeal - Joint appeal - Held that:- As the main appeal was filed well within the limitation period of 3 months, the present two appeals filed by the partners are required to be treated as supplementary appeals and the delay in filing the same is required to be condoned - as the earlier appeal has been allowed on merits the present appeal being impugned in the main appeal stand set aside allow their appeals - stay petition also gets disposed of.

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• 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.

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• Corporate Laws

• 2012 (6) TMI 400
  Winding up petition u/s 433(e) r.w.s. 434 and 439 of the Companies Act, 1956 - alleged inability to pay debts - respondent contended that that in fact petitioner's holding company namely, M/s. Wacker Chemie, Germany is liable to pay monies in excess of Rs. 8 crores to the respondent - Held that:- Though petitioner admits that the respondent has had business transactions with the petitioner's holding company, but he states that the petitioner's holding company is an independent corporate entity and consequently the aforesaid defence should not be looked into by this Court. However, doctrine of single economic entity is not only well established, but also well recognized by the Courts. Accordingly, this Court is of the view that the defence of the respondent would have to be examined. Consequently, the present petition is dismissed with liberty to the petitioner to file a recovery proceeding in accordance with law.

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• 2012 (6) TMI 399
  Winding up – applicant booked plot before the date of appointment of Provisional Liquidator - Applicant made payments of Rs. 31,100 with JVG Finance and Rs. 3,00,910 with JVG Projects - One Man Committee has found that the claimant has deposited only a sum of Rs. 61,290 towards the sale consideration and other charges whereas the applicant claimed that it had additionally deposited a sum of Rs. 1,00,580 in cash – Held that:- Sale Deed dated 14-7-1998 has been executed only after appointment of Provisional Liquidator and injunction order dated 5-6-1998. The sale is void under section 537(1)(b) of the Act. applicant-claimant is not entitled to allotment of Plot. However, the applicant is entitled to simple interest at the rate of 4 per cent per annum on Rs. 61,290 the amount deposited with the respondent company from the date of its deposit. Application is dismissed

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• 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

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• 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

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• Service Tax

• 2012 (6) TMI 423
  Matter was heard by the Bench consisting of learned Member (Judicial) and (Technical) on various dates - the notice for listing the matter afresh was shocking as detailed arguments were advanced by both the sides and the matter was reserved for pronouncement of orders - Sr. Advocate submits that they have not made a prayer for fresh hearing while filing the Misc. application - Held that:- After appreciating the submissions made by the learned Sr. Advocate, expressing difficulty in rehearing of the appeal and making a request for passing of the order by the same Bench who heard the matter originally it is desirable to place the file before the Hon'ble President for passing appropriate orders, as having no powers/jurisdiction to place the matter before any particular Bench - Registrar is directed to place the file before the Hon'ble President.

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• 2012 (6) TMI 421
  Demand - transportation of sugar cane from collection centres to the factory - Held that:- Notification No.18/2003-Service Tax, dated 21-8-2003 has been issued which exempts commission or installation services provided by a commissioning or installation agency other than a commercial concern, thus accordingly, the commissioning or installation services provided by an individual will be exempt from service tax - As individual farmers who owned tractors or lorries either in their name or the names of their family members and who transported sugar cane from collection centre to their factory were not commercial concerns engaged in transportation of the goods no point of levying service tax - in favour of assessee.

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• 2012 (6) TMI 420
  Service tax liability under the category of commercial or industrial construction services as per the explanation added to sub clause zzzh of clause (105) of Section 65 of the Finance Act, 1994 – Held that:- The present case is not covered by the clause given in parenthesis in the text of the Explanation but covered by the situation envisaged in the main part of the Explanation thereby meaning that the appellant as a builder cannot be deemed to be service provider providing any service in relation to industrial/commercial or residential complex to the ultimate buyers of the property any time before 1-7-2010 - the deeming provision would be applicable only from 1-7-2010 contained in the explanation added to Section 65(105)(zzq) and (zzzh) having only prospective effect - prior to this date, a builder cannot be deemed to be service provider - as the entire dispute in the present case lies prior to 1-7-2010 a prima facie case against the impugned demand of service tax and the connected penalty arises - since appellant paid an amount of over Rs.64 lakhs waiver of pre-deposit of the amounts involved is allowed and recovery thereof stayed till the disposal of appeal – in favour of assessee.

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• 2012 (6) TMI 419
  Appealable order - Reversal of the Cenvat Credit - services of renting of immovable property – appeal rejected as the letters issued by the Assistant Commissioner demanding the reversal is not an order-in-original against which an appeal lies – Held that:- As there is a clear finding by the Assistant Commissioner on the question of eligibility to Cenvat credit and also a direction to reverse the credit availed in view of this factual position, the communication satisfies the requirements of an appealable order as decided by the Jaswant Sugar Mills vs. Laxmi Chand [1963 (10) TMI 9 (HC)] if a communication in substance contains determination of a question by the application of objective standards as per the legal rules declaring a right affecting their civil rights and it is based on an investigation involving ascertainment of facts by means of evidence it should be considered as proper communication acceptable in the eyes of law - remand the matter back to the lower appellate authority for a decision on merits.

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• 2012 (6) TMI 418
  Adjustment of excess payment of service tax made in the previous quarter - Held that:- As the excess amount actually adjusted amounting to Rs.32,545/- with interest has been deposited and penalty also has been deposited and considering the amounts deposited as sufficient, the requirement of pre-deposit of balance dues is waived and stay against recovery of the same is granted during pendency of appeal.

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• 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.

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• 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.

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• 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.

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• 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.

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• 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.

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• Central Excise

• 2012 (6) TMI 398
  Stay petition - applicability of Rule 2A - dispute regarding duty liability in case of products ie., Air Circuit Breakers and Spares to Air Circuit Breakers in terms of Section 4A of the Central Excise Act, 1944 - assessee contending that since goods were sold directly to the manufacturers, the same has to be treated as industrial consumers - Held that:- Since matter stands remanded to the original authority by the Commissioner (Appeals) for re-quantification of duty amount, the appellants are at liberty to raise the above legal points before the original adjudicating authority, we also find that upholding of penalty amount, but having corrected the demand figures before the Commissioner (Appeals) is not fair. As such the issue on penalty is also kept open to be decided by the Assistant Commissioner, to whom the proceedings already stand remanded. All the stay petitions and appeals get disposed of in the above manner.

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• 2012 (6) TMI 397
  Reversal of the cenvat credit - the appellants had removed capital goods on which credit had been taken to another unit of the same company – Held that:- As this is a case where if the unit were to reverse the cenvat credit in its entirety also, the credit would have been taken in the other unit and therefore the situation was entirely revenue-neutral – assessee’s submission that the other unit was not making entire payment from cenvat credit alone thus the revenue neutrality situation would exist - there were no decisions during the relevant time giving the logic for payment of cenvat credit on the basis of depreciated value - when a transaction value is available, cenvat credit reversal has to be on the basis of transactional value even prior to the amendment - it cannot be said that there was suppression of fact or mis-declaration with intention to evade duty, thus confirmation of the demand cannot be sustained - in favour of assessee.

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• 2012 (6) TMI 396
  Unjust enrichment - rejection of refund claim for want of documents showing that there was no unjust enrichment - appellant submitted refund claim on the ground that that they had passed on cash discount and performance based discount by issuing credit notes half yearly to their dealers - Held that:- Since, appellants have not produced any evidence in the form of Chartered Accountant statement or balance sheet, other than making a statement that they have passed on discounts and discounts includes the element of excise duty also, to show that there is no unjust enrichment, hence appellant's plea stands rejected.

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• 2012 (6) TMI 395
  Recovery of cenvat credit availed on shortages in quantity received in the factory of the appellant as the actual quantity received was less than what was indicated in the invoices – appellant’s claim that such shortages have taken place because of evaporation has to be accepted and he has allowed cenvat credit in all cases, where the shortage was less than 2% - Held that:- As Commissioner (Appeals) himself has observed while taking a view that cenvat credit has to be reversed only in cases where short receipt is more than 2% as there does not seem to be any intention to evade duty as shortage happened due to evaporation or different methods of weighing no point of levying duty demand - when there is a clear observation that there is no intention to evade duty, extended period of limitation could not have been invoked and Commissioner has rightly not imposed penalty – as the total amount involved in this case is less than Rs. 50,000/- the Tribunal need not to entertain the appeal -impugned order is set-aside and appeal is allowed – in favour of assessee.

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• 2012 (6) TMI 394
  Demand imposed due to denial of excess/ wrong credit of duty paid on inputs - assessee requested for allowing short credit availed by appellant which stands denied by Commissioner - appellant engaged in manufacture of computers - Held that:- Adjudicating authority has picked up those cases where the appellants have availed wrong/excess credit but he has ignored those instances where appellants have availed short credit. By verifying the entire documents for the purpose of MODVAT credit, it amounts to opening of the entire assessment, in which case, the appellants would be entitled to take short availed credit by them. As such, we set aside the impugned orders and remand the matter to the adjudicating authority for fresh verification of the documents and allow the appellants to avail the short taken credit, if otherwise available to them.

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• 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.

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• 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.

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• 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.

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• 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.

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• 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.

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• Wealth tax

• 2012 (6) TMI 424
  Valuation of property under Schedule III of the W.T. Act – bifurcation of rateable value into two parts viz, legal occupants and illegal occupants – Held that:- action of the CIT(A) in bifurcating the maintainable ratable value and attributing part of it to legal occupation and illegal occupation is not within the frame work of Rule 5(i) of the Act. As we have already seen wealth tax is levied on the net wealth on the corresponding valuation date. Net wealth in turn is defined to mean the aggregate value of assets owned by the assessee after reducing debts owed in relation to those assets by the assessee. Thus ownership of the property and the fact that it is a let out property is relevant criterion and illegal occupation of the property or actual rent received from lawful tenants all becomes irrelevant. Proceedings under the Income Tax Act for determining income from house property are different and that yardstick cannot be applied in proceedings under the W.T. Act. In terms of Rule 4 the assessee will be entitled to deduction on account of taxes levied by Local Authorities and 15% of GMR. The resultant figure will be NMR which is to multiplied by 12.5 to arrive at the value of the property. Basis of determining by the AO of the value of the property at Rs.5,24,61,625/- based on the Income Tax proceedings cannot be sustained as it was based on erroneous claim made by the Assessee while filing its return of wealth. Order of CIT(A) set aside.

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• Indian Laws

• 2012 (6) TMI 417
  Petition to assail order of Central Information Commission (CIC) directing petitioner to provide information under the Right to Information Act in relation to the donations made by the President from time to time and to publish the details regarding the donations made i.e. the names of the recipients of the donations, their addresses and the amount of donation in each case, on the website of the President's Secretariat - petitioner invoked Section 8(1)(j) i.e. by treating the information as personal information - Held that:- The donations made by the President of India cannot said to relate to personal information of the President. It cannot be said that the disclosure of the information would cause unwarranted invasion of the privacy of, either the President of India, or the recipient of the donation. A person who approaches the President, seeking a donation, can have no qualms in the disclosure of same. Such acts of generosity and magnanimity done by the President should be placed in the public domain as they would enhance the stature of the office of the President of India. In that sense, the disclosure of the information would be in the public interest as well - Petition dismissed.

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