TMI Tax Updates - e-Newsletter
June 24, 2013

Case Laws in this Newsletter:

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

Articles

1. Making of provision for bad and doubtful debts cannot tantamount to writing off the same in the books of account.

   By: DEVKUMAR KOTHARI

2. GOODS AND SERVICE TAX - RECENT DEVELOPMENTS

   By: Dr. Sanjiv Agarwal

News

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

2. Auction for Sale (Re-Issue) of 1.44% Inflation Indexed Government Stock 2023

Notifications

Customs

1. 33/2013 - dated 19-6-2013 - Cus

Seeks to amend the notification No. 96/2008-Customs, dated 13th August, 2008 so as to include "Republic of Haiti" in the list of Least Developed Countries

Highlights / Catch Notes

Income Tax

• Section 94(7): All Conditions in Clauses (a), (b), and (c) Must Be Met for Securities Transactions in Tax Rules.

  Case-Laws - AT : Transactions in securities - for application of sub-section 7 of section 94 all the three conditions mentioned in clauses (a), (b) and (c) thereof must be cumulatively satisfied - AT
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• Assessing Officer's Error: Incorrect Double Deduction u/s 43B Unrelated to Unpaid Excise Duty Claim.

  Case-Laws - AT : As the valuation of stock is not part of the claim of excise duty remaining unpaid, it was misapplication of facts and figures in the mind of the AO to have discovered double deduction for the purpose of disallowance u/s 43B. - AT
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• AO Must Investigate Jeweler's Role Before Doubting Taxpayer's LTCG Explanation on Jewelry Sale.

  Case-Laws - AT : LTCG - sale of jewellery - if the AO has disbelieved the explanation of the assessee, then he should have made enquiries with the said jeweller instead of presuming that the sales bills were simply arranged by the assessee.- AT
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• Revenue Department Authorized to Reopen or Reassess Taxpayer's Assessment Based on Sufficient Information.

  Case-Laws - AT : Re opening of assessment - Revenue Department had enough information in its possession, therefore fully empowered to reopen the assessment or otherwise assess this assessee - AT
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• Absence of due care by assessee doesn't justify penalty under Income Tax Act Section 271(1)(c); no automatic guilt.

  Case-Laws - AT : Penalty u/s. 271(1)(c) - absence of due care does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income - no penalty - AT
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• Exemption for Leave Travel Package u/s 10(5) Denied for Overseas Travel to Singapore and Malaysia.

  Case-Laws - AT : Claim of exemption under section 10(5) - leave travel package covered Singapore and Malaysia - The condition in no way provides that the assessee is at liberty to claim exemption out of his total ticket package spent on his overseas travel and part of the journey being within India. - AT
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• Court Finds Expense Claims Bogus; Gross Profit Comparison Deemed Irrelevant to Case Outcome.

  Case-Laws - AT : Claim of expenses - transactions as being not genuine and representing bogus claims of expenditure - reliance on a comparative chart, showing its gross profit for the year to be comparable and, rather, better than for the other years, is of no consequence - AT
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• Fringe Benefit Tax Not Applicable: No Employer/Employee Relationship in Tata Brand Equity Contribution Case.

  Case-Laws - AT : Levy of FBT towards Tata brand equity contribution - employer/employee relationship is a pre-requisite for the levy of fringe benefit tax. Thus no such thing present on the facts of the present case. - AT
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• Income from Share Sales and Mutual Funds Should Be Capital Gains, Not Business Income, per CBDT Instruction No. 1827.

  Case-Laws - AT : Income on sale of shares and units of mutual funds - capital gain v/s business income - CBDT Instruction No.1827 - AO is not justified in treating the assessee as dealer in shares and securities - AT
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Customs

• High Court Invalidates Customs Circular No. 18/2006 on Special Additional Duty for Non-Edible Oil Imports under DEPB Scheme.

  Case-Laws - HC : Validity of Circular No. 18/2006 (Customs), dated 5-6-2006 - on goods other than edible oils when imported under DEPB scheme, SAD is leviable is not legally sustainable. - HC
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• Court Upholds Declared Value of Goods; Extra Discount Available to All Buyers u/r 4(1.

  Case-Laws - AT : Valuation - Extra discount received - nothing to show that the same would not have been offered to anyone else wishing to buy the old stock, there is no reason why the declared value in question was not accepted under Rule 4(1) - AT
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Service Tax

• Court Rules on Tax Liability for DG Set Hiring; Partial Stay Granted, No Full Waiver of Amounts Involved.

  Case-Laws - AT : Hiring of DG Sets - supply of tangible goods - liable to service tax or VAT - no prima facie case for complete waiver of the amounts involved. - stay granted partly. - AT
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• Revenue Appeal Dismissed: Commissioners Failed to Deliberate, Merely Signed Off Without Proper Review.

  Case-Laws - AT : Revenue appeal - committee of commissioners has not applied their minds - they merely put their signatures - appeal dismissed - AT
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Central Excise

• Court Supports Assessee's Right to Cenvat Credit Use under Additional Duty of Excise Act, 1957.

  Case-Laws - AT : Utilization of Cenvat Credit of AED(GSI) - Additional Duty of Excise (Goods of Special Importance) Act, 1957 - prima facie case in favor of assessee - AT
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• Rule 4(2)(b) CENVAT Credit: No Need for Manufacturers to Possess Components in Next Financial Year.

  Case-Laws - AT : As per the Rule 4(2)(b) of the CENVAT Credit Rules the condition that the same should be in the possession of the manufacturer in the subsequent financial year is not applicable to the components. - AT
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• Eligibility of Cenvat Credit Confirmed for Inputs in Temperature-Controlled Storage Tanks, Chapter 73.09 or 84.19.

  Case-Laws - AT : Cenvat Credit - inputs used in construction of storage tank [temperature controlling facility] (Chapter 73.09 or 84.19) - prima facie, they are eligible for cenvat credit - AT
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• Clubbing Turnover for SSI Exemption: Section 4 Criteria Not for Manufacturer Eligibility in Excise Regulations.

  Case-Laws - AT : SSI Exemption - clubbing of turnover - interconnected undertakings - the criteria adopted in Section 4 of the Act for determining interconnected undertaking cannot be applied for determination of the fact as who is the manufacturer - AT
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VAT

• High Court Rules: Seizure Order Validity Under VAT and Sales Tax Beyond Commissioner and Tribunal's Jurisdiction.

  Case-Laws - HC : Power - validity of Seizure - neither the Commissioner or the Officer Authorized not below the rank of DC nor the Tribunal has the power to decide about the validity of the seizure order - HC
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Case Laws:

• Income Tax

• 2013 (6) TMI 534
  Disallowance u/s 14A - CIT(A) restricted it to 1% only - Held that:- As on the issue of disallowance u/s. 14A, this Bench of the Tribunal has been taking a consistent view that this disallowance should be restricted to 1% of dividend income. Following the same, in this appeal also we hold that the disallowance u/s 14A for earning exempt dividend income should be restricted to 1% of dividend income. Disallowance u/s. 94(7) - assessee has only challenged disallowance of loss in respect of transfer of units of Pru. ICICI Power Fund on the ground that all the three conditions as laid down in section 94(7) are not satisfied in this transaction - Held that:- In respect of Pru. ICICI Power Fund the units were purchased on 11.7.2003 and date of dividend was 24.10.2003 and 26.12.2003, therefore, the first condition as laid down in clause (a) of Sec. 94(7) that the units be purchased or acquired within a period of three months prior to the record date is not satisfied. Therefore, following the ratio of Income Tax Officer Vs. Shambhu Mercantile Ltd. (2008 (2) TMI 467 - ITAT DELHI-I) for application of sub-section 7 of section 94 all the three conditions mentioned in clauses (a), (b) and (c) thereof must be cumulatively satisfied., thus the provisions of section 94(7) are not attracted in respect of this transaction and, therefore, the authorities below are not justified to disallow the claim of the assessee in respect of loss suffered by him on sale of units of Pru. ICICI Power fund as no contrary decision was cited by the DR. In favour of assessee.

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• 2013 (6) TMI 533
  Disallowance u/s 43B - Held that:- Facts and circumstances of the case leading to disallowance u/s 43B by hypothetically holding a view that the claim of the assessee becomes double deduction has not been interpreted correctly by the AO for the impugned assessment year even when the matter has been adjudicated upon and deliberated by the Tribunal in assessee’s own case for the immediately preceding assessment years beginning from 1996-97. As the valuation of stock is not part of the claim of excise duty remaining unpaid. Therefore, it was misapplication of facts and figures in the mind of the AO to have discovered double deduction for the purpose of disallowance u/s 43B. In favour of assessee. Disallowance u/s 14A - CIT(A) restricted it to 1% only - Held that:- As relying on DCIT vs EIH Associated Hotels Ltd (2008 (1) TMI 426 - ITAT CALCUTTA-D) & Sagrika Goods & Services Pvt. Ltd. [2013 (6) TMI 534 - ITAT KOLKATA] has restricted the disallowance u/s 14A at 1% of the exempt income for years prior to the A.Yr.2008-09. Therefore, respectfully following the same AO directed to recomput the disallowance of expenditure relating to the exempt income at 1% of the exempt income being Long Term capital gain and dividend income - In favour of assessee.

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• 2013 (6) TMI 532
  Claim under section 10A rejected - Held that:- Respectfully following the principles laid down in CIT v. EHPT India P. Ltd. [2011 (12) TMI 49 - DELHI HIGH COURT] no need to disturb the method of apportionment of expenditure and turnover which were accepted by the AO in the earlier years. The assessee is eligible for deduction u/s 10A and the reason for disallowing entire claim cannot be accepted. Even the DRP was not correct in rejecting the assessee objection stating that the issue is pending before ITAT, the fact of which is not correct. However, in the anxiety of disallowing the entire claim, AO has not examined the apportionment of export turnover and expenses of units therefore matter is restored to the file of the AO to examine the issue of deriving at the profits of eligible unit. In favour of assessee. Reduction of technical fees and satellite link charges from export turnover - Held that:- CIT(Appeals) in the assessment year 2005-06 has followed the order of the ITAT while giving relief on "satellite charges" in the assessment year 2004-05,thus the satellite charges cannot be considered as "telecommunication charges" so as to exclude from the export turnover - alternate ground that the technical fees and satellite link charges should also be excluded from the total turnover in case they were to be excluded from the export turnover covered in favour of the assessee by various judicial pronouncements. in favour of assessee. Disallowance under section 40(a)(ia)- Held that:- Since this issue was crystallised by the order of the ITAT in the same assessment year, the disallowance u/s 40(a)(ia) does not arise, as there is no need to deduct tax on the amount paid to Equant Network Services Ltd. Accordingly the disallowance made by the AO stands deleted. In favour of assessee. Transfer pricing adjustment in respect of ITES services rendered by the assessee - Held that:- Since, the assessee was not been given proper opportunity to examine the comparables selected by the Transfer Pricing Officer and as the objections raised by the assessee are not examined or rebutted either by the Transfer Pricing Officer or by the Dispute Resolution Panel and considering the fact that the information obtained by the Transfer Pricing Officer with reference to certain comparables and segmental data was not even made available to the assessee, we are of the opinion that the issue has to be set aside to the file of the Transfer Pricing Officer for determining the arm's length price afresh after providing the information to the assessee which was collected by the Transfer Pricing Officer. In favour of assessee by way of remand.

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• 2013 (6) TMI 531
  Jurisdiction power u/s 263 by CIT(A) - directing AO to disallow the pre-operative capitalisation of interest, enquire into the genuineness of transaction relating to 22% non-convertible debentures subscribed by the holding company,enquire into the genuineness of transaction relating to advances made for the purpose of land development charges and disallow @ 22% p.a. as interest from preoperative capitalisation, enquire into the genuineness of claim of interest included in preoperative capitalisation and directing AO to compute interest on the deposit at 15% from the date of deposit till the closing date relevant accounting period - Held that:- AO after duly considering the explanation and information filed in response to the notice issued u/s. 143(2) on being satisfied with such explanation chose not to make any further enquiry. Endless enquiry is not possible and it is for the AO to decide when to end the enquiry. The CIT cannot transgress the jurisdiction under Section 263 by mentioning that no proper enquiry was made. As decided in Rishi Kumar Gupta v. CIT [2004 (2) TMI 270 - ITAT AGRA] AO having made the assessment after enquiry, as admitted by the CIT in his notice as well as in his order u/s. 263, he was not justified in setting aside the assessment on the ground that the AO had failed to make "proper enquiry". Thus the order passed u/s. 263 quashed. In favour of assessee.

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• 2013 (6) TMI 530
  Jurisdiction power u/s 263 by CIT(A) - non compliance of section 11 (4A) as Appellant had not maintained separate account books - TDS certificate issued by ONGC showed that its payment was a payment to assessee as a contractor and was not a grant - not entitlement to exemption u/s 10(23C)(iii)(ab) aspect not examined by the AO - Held that:- From the assessment order it no where emerges that the assessment was carried out in hurry. AO has given findings on all the relevant aspects with further findings about application of mind. There is no error in respect of non-consideration of sec. 10(23C)(iiiab) as the AO has only applied section 11 & 12 and held the assessee’s case covered thereunder. This course of action is accepted by assessee. Thus no error in the order of AO. Merely because the donors have deducted some TDS will not convert the real nature of the receipt i.e. being donation, grant or advertisement into one of being sobcontractor. Thus no error in the order of AO and no justification for DIT(A) assuming jurisdiction u/s 263. Similarly, in respect of ONGC the funds were provided for setting up of math’s lab and TDS was deducted by the donor as a matter of abundant caution, which cannot be held against assessee so as to hold as subcontractor. As regards other receipts from Mrs. Ramneeka Lobo which represented expenses in order to meet its expenses towards electricity, water, housekeeping, security etc. for the dance classes & receipts from Tata Consultancy Services Ltd. represented maintenance charges for conducting computer classes for students for which the appellant was charging above mentioned maintenance cost assessee has demonstrated that there was no infirmity therein. Merely because the assessment order is short cannot led to an assumption that proper inquiries were not carried out. Thus order passed by DIT(E) u/s 263 quashed. In favour of assessee.

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• 2013 (6) TMI 524
  Depreciation disallowed - as per AO assessee had shown the rental income therefore the asset being not used for the purposes of assessee's own business - Held that:- The assessee has given on hire JCB machines, cranes, pipe layers as instead of keeping the machinery idle, the assessee has hired-out those machinery and shown hiring income. By showing this income, the assessee has not given any loss to the Revenue, rather Revenue got benefited. This is not the case of the Revenue that the machineries in question have not at all been used by the assessee for the single day during accounting period under consideration. In a situation when a machinery has been used, for any period in a financial year for the purposes of the business of the assessee, then the assessee is entitled for the depreciation u/s.32(1). Thus whether the machinery is rented out or not had no consequence on the allowance of depreciation which had fallen within the block of assets for the year under consideration and for a part period used towards the business purposes. As per the provisions of section 57 an assessee is entitled for deduction in respect of "income from other sources" which includes deduction u/s.32 of the Act. Since in the present case, the hiring of the machinery was considered as "income from other sources" within the ambits of section 56 of the Act, therefore in consequence thereupon the assessee is entitled for claim of deduction as prescribed u/s.57(ii) which provides deduction u/s.32(i). In favour of assessee.

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• 2013 (6) TMI 523
  Reopening of assessment - show cause as to why the short-term capital gain should not be treated as a business income - assessee informed that earlier an assessment u/s.143 according to which the short-term capital gain was assessed as such - Held that:- Records of the assessee have demonstrated that a return of income along with the computation of total income was filed by the assessee wherein disclosed the profit under the head "short-term capital gain" and paid the tax accordingly. Also noted that the assessee has furnished the P&L account drawn as on 31.3.2005 and therein also there was clear mention of the gain earned on share transaction. When the assessment proceedings were going on, then a questionnaire has been issued dated 11.5.2007, as well as a notice u/s.143(2)/142(1) & as per query No.13 of the questionnaire, the assessee was required to furnish and justify the short-term capital gain along with complete documentary evidences which the assessee furnished before the AO at the time of assessment proceedings. On due verification of all those details, the AO had made an observation in the said original assessment order passed u/s.143(3) dated 24.12.2007, which says that books of accounts, bills, vouchers, etc. were produced during the course of hearing which were verified and test-checked. An another observation made by the AO that the assessee was investing his own funds in the shares markets and earning out of it. Due to these reasons, the facts of the case have amply demonstrated that on the basis of the information available on record the AO had taken a conscious decision to assess the profit as short-term capital gain in the hands of the assessee. Therefore where an AO undertakes scrutiny assessment & on those very facts and details already on record the reopening can be held as change of opinion. See Gujarat Power Corporation Ltd. [2012 (9) TMI 69 - Gujarat High Court] - In favour of assessee.

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• 2013 (6) TMI 522
  Unexplained investment - cash deposited in bank - Held that:- As from the bank statements & cash flow statements prepared by the assessee, there was a pattern of regular withdrawals in round figures on several occasions. There were huge withdrawals such as, a sum of Rs.1,80,000/- on 29/05/2007, Rs.1 lac on 6/09/2007, Rs.2 lacs on 25/10/2007, then Rs.70,000/- and Rs.1 lac in the month of December-2007. If those withdrawals have not been found utilized by the assessee towards investments, then naturally those were available with the assessee to be used or redeposited in the bank as per his desire/sweet will. The AO conclusion that it was not humanly possible and against the human tendency was merely a supposition and such a presumption has no cogent legal basis. If the Revenue Department has not established that the cash available with the assessee was not utilized elsewhere, then on the basis of the preponderance of probabilities, it can be assumed that that very cash was redeposited in the bank - in favour of the assessee that the cash to the extent of Rs.17,17,794/- available as on 31/03/2008 was redeposited. But still, there was a slight gap in the cash deposit made during the financial year 2008-09 to the extent of Rs.18,85,945/- That gap of Rs.1,68,151/- remained unexplained. Addition as income from undisclosed sources - Long term capital gain on sale of jewellery - Held that:- Statement of wealth relevant for AY 1988-89 wherein there was a disclosure of jewellery and ornaments as per Valuer's Report of Rs.1,01,275/-. Further, there was a disclosure of ornament of 298 grams and the value of the same at that assessment year was disclosed at Rs.88,893/-. The mention of the gold ornaments was also made in the balance-sheets furnished before the Revenue Authorities as evidenced by few letters placed on record. Thus if the AO has disbelieved the explanation of the assessee, then he should have made enquiries with the said jeweller instead of presuming that the sales bills were simply arranged by the assessee. The AO has also not denied the fact that in the past the jewellery was actually disclosed in the wealth tax return, thus hereby direct to compute the capital gain on sale of gold ornaments and tax in the hands of the assessee - in favour of assessee.

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• 2013 (6) TMI 521
  Re opening of assessment - survey u/s.133A - Held that:- As during the course of assessment proceeding for A.Y. 2003-04 and 2004- 05 one of the tenant Shri Rashikbhai Chotabhai Patel of the project developed by M/s.Vastu Construction, had confronted with the impounded material and admitted that he has made the payments over and above the documented price totalling to Rs.22 lacs through cheque and cash. This confession leads to confirmation of payment of on money by Shri Rashikbhai Chotabhai Patel. On verification of return of income for A.Y. 2003-04 & 2004-05 the assessee has shown Rs.78713/- and Rs.46719/- as his total income for both the years. Therefore, the source of on money payment made by the assessee is required to be verified and needs further investigation. The document which was found from the brief case of one Shri Bankim D.Patel, C/o.Vastu Construction has indicated that in respect of Building No.7, the total area was 3020.87 sq.ft. for which the cost of plot was Rs.8,71,200/- and the cost of construction was Rs.13,59,000/-, thus totalling to (approximately) Rs.24,16,000/-. Thus Revenue Department had enough information in its possession, therefore fully empowered to reopen the assessment or otherwise assess this assessee specially within four years as it has happened in the present case - Against assessee. Addition u/s.69 on the basis if said statement - Held that:- This is not a case where merely on the basis of a statement the impugned addition was made. This is a case where the statement was recorded on the basis of an incriminating material recovered during the course of survey operation. On merits the AO has examined the sources of investment to the extent of Rs.11,28,000/- out of the total investment in the said property of Rs.22,16,196/-, hence only the difference amount of Rs.10,88,196/- was taxed in the hands of the assessee. The assessee has not made any attempt to explain the balance unexplained investment. Thus there was no fallacy in the findings on facts as also on law by the Revenue Authorities, hence the said addition is hereby confirmed. Against assessee.

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• 2013 (6) TMI 520
  Penalty u/s. 271(1)(c) - Disallowance of Depreciation on factory Building & Technical Fees Written off - Held that:- The undisputed facts in this case are that the assessee has claimed depreciation of the portion of building let out and had claimed write off of expenditure incurred on technical know-how fee. The fact of claiming of deduction was disclosed in the profit and loss account and also in the return of income. This bona fide belief of the assessee has not been controverted by Revenue by bringing any tangible material on record. As seen in the light of the decision of Price Waterhouse Coopers Pvt. Ltd. (2012 (9) TMI 775 - SUPREME COURT) and Zoom Communication P. Ltd. (2010 (5) TMI 34 - DELHI HIGH COURT) wherein held that absence of due care does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income, thus concluded that since all the necessary facts with respect to the claim of disallowance and deductions were furnished in the return income the fact that the disallowance has been made does not call for levy of penalty us/ 271(1)(c). Thus penalty levied by the AO cancelled. In favour of assessee.

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• 2013 (6) TMI 519
  Deduction under section 10(10C) disallowed - assessee under the VRS Scheme of State Bank of India received sum on account of ex-gratia payments - Held that:- The issue is covered by the ratio laid down in Shri Bikram Jit Passi v. DCIT [2012 (11) TMI 214 - ITAT, CHANDIGARH] wherein similar claim in the hands of another ex-employee of State Bank of India was allowed - in favour of assessee. Claim of exemption under section 10(5) - leave travel package covered Singapore and Malaysia - Held that:- Reading of section 10(5) and Rule 2B of the Rules in conjunction lays down the guidelines for claiming exemption in relations to the travel concession received by an employee from his employer or former employer, for proceeding on leave to any place in India. The person is to undertake the journey to any place in India and thereafter return to the place of employment and is entitled to reimbursement of expenditure on such travel between the place of employment and destination in India. Rule 2B of the Rules further lays down the conditions that the amount to be allowed as concession is not to exceed the air economy fair of the National Carrier by the shortest route to the destination in India. The said condition in no way provides that the assessee is at liberty to claim exemption out of his total ticket package spent on his overseas travel and part of the journey being within India. No merit in the claim of the assessee in the present case - Against assessee.

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• 2013 (6) TMI 518
  Re opening of assessment - addition of treatment under the income of other source by the AD as against income from house property as offer by assessee - Held that:- AO reopened the assessment and issued notice u/s 148 on the same material which was placed before him during the original assessment u/s 143(3). AO raised specific queries pertaining to the amounts received from PVR Ltd. and its treatment by assessee as income from house property. The AO concluded the original assessment by considering the same as income form house property. Subsequently, on the same material the AO recorded satisfaction u/s 147 and issued notice u/s 148 which is clearly a change of opinion and hence, CIT(A) rightly held that issuance of notice u/s 148 is bad in law. Against revenue.

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• 2013 (6) TMI 517
  Introductory Commission rather, hardly literate. Their separate statements were also recorded independently on oath, whereat they confirmed what had been stated by Shri Sandeep Sitani, also admitting to knowing nothing about the business activities of the firms in which they were directors/proprietors. Agreeing with the finding of the Revenue of the impugned transactions as being not genuine and representing bogus claims of expenditure. Further, the assessee's reliance on a comparative chart, showing its gross profit for the year to be comparable and, rather, better than for the other years, is of no consequence inasmuch as what is being impugned is the disallowance of expenditure u/s.37(1). The impugned disallowance is not based primarily on the basis of statement of Shri Sandeep Sitani, but on a consideration of the entirety of the facts and circumstances of the case. There has been rather a complete failure on the part of the assessee to prove the transactions. In fact, the assessee has not even led primary materials in the form of agreements, project reports and confirmations from the clients introduced, etc. It has not shown in any manner as to how the statement of Shri Sandeep Sitani, which is corroborated by the surrounding facts and circumstances of the case, is not correct. The said reliance is, therefore, again misplaced - the assessee's appeal is dismissed.

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• 2013 (6) TMI 516
  Levy of FBT towards Tata brand equity contribution - assessee argued that the payment made to Tata Sons Ltd. is towards subscription fees not covered under sales promotion and publicity - Held that:- As per the Tata brand equity and business promotion agreement between Tata Sons Ltd., and the assessee, the assessee is under contractual obligations to make payment towards the subscription fees. In consideration of this subscription fees, Tata Sons Ltd., is, inter alia, responsible for organising corporate identity and brand promotional activities and campaigns, engage professional consultants, make available a pool of sharable resources of the Tata group to the company and provide assistance in accessing the network of domestic and international business contacts and also permit the company to use the business name. Considering the circular No. 8 of 2005 dated August 29, 2005 employer/employee relationship is a pre-requisite for the levy of fringe benefit tax. Thus no such thing present on the facts of the present case. The subscription amount has been paid as per contractual agreement between the assessee and M/s. Tata Sons Ltd. The invoice raised by M/s. Tata Sons Ltd. is for the services provided for it. As no employer-employee relationship exists between the assessee and M/s. Tata Sons Ltd. subscription payment deserves to be kept out side the purview of FBT. In favour of assessee.

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• 2013 (6) TMI 515
  Addition of commission received - Held that:- As there is no dispute that since the commission was already included in the income certified in Form No16 issued by M/s. Rititka Limited and the assessee himself has shown the same under the head “salary”. Therefore no justification on the part of the AO to add the same again under the head “commission’. In favour of assessee. Income on sale of shares and units of mutual funds - capital gain v/s business income - as per AO in view of the CBDT Instruction No.1827 dated 31.08.1989 the profits from transactions and shares and units of the assessee are treated as business profits - Held that:- Keeping in view of the fact that the assessee invested in shares, securities & units in the past years as well investments were made out of own funds. From the Balance Sheet as of 31st March 2002 & 2003 the assessee’s investments from own funds were Rs.93,30,065/- & Rs.1,39,92,543/- and in the assessments for the relevant period assessee was not regarded as dealer in shares. In the assessment years 2002-03 & 2003-04 the assessee earned dividend and capital losses on transfer of shares & units. In the Income Tax assessments for assessment years 2002-03 & 2003-04, the gains received on transfer of shares & units were assessed as capital gains and not as profits & gains of business. Thus AO is not justified in treating the assessee as dealer in shares and securities. In favour of assessee.

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• Customs

• 2013 (6) TMI 536
  Validity of Circular No. 18/2006 (Customs), dated 5-6-2006 - Levy of SAD u/s 3(5) on import of Crude Palm Oil, Vanaspati Ghee and Fatty Acid - The case of the petitioners is that by virtue of notifications issued from time to time by the Central Government, all goods other than edible oils are exempt from payment of customs duty and additional customs duty which are imported under DEPB scheme. Held that:- in view of the decision in GUJARAT AMBUJA EXPORTS LTD [2012 (7) TMI 679 - GUJARAT HIGH COURT] the stand of the respondents that on goods other than edible oils when imported under DEPB scheme, SAD is leviable is not legally sustainable. To that extent, the petition must succeed. The impugned circular to the extent it is in conflict with our above opinion, would stand invalidated. The petitioners have been clearing their goods during the pendency of this petition by paying SAD. Our declaration, therefore, shall apply in future imports. We reiterate that on any goods whenever the customs duty or additional duty is not fully exempt when imported under DEPB scheme, the entire amount of SAD would have to be paid by the importer. - Decided in favor of assessee.

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• 2013 (6) TMI 535
  Valuation - Extra discount received - appellant are related person to their foreign supplier - Held that:- As per the discount policy of their foreign supplier, as the product being new in India, they offered extra 10% discount to the appellants to introduce the product in India and it is an accepted practice that the goods are sold in different places and at different prices and to attract customers, additional discounts may be given in an area where the product is new and in a well-established market there is no need for any discount. In the instant case, the discount of 20% is uniformly offered in those areas of market where the product is new and new technology is to be introduced which is to be accepted by the buyers. To attract the buyers in new market, the additional discount has been given and in the case of Eicher Tractors Ltd (2000 (11) TMI 139 - SUPREME COURT OF INDIA) it is held that a discount is a commercially acceptable measure which may be resorted to by a vendor for a variety of reasons including stock clearance. A price list is really no more than a general quotation. It does not preclude discounts on the listed price. When a discount is permissible commercially, and there is nothing to show that the same would not have been offered to anyone else wishing to buy the old stock, there is no reason why the declared value in question was not accepted under Rule 4(1). As revenue has not produced any extra evidence which can be proved that being a related person the price is influenced and more discount has been given to the appellants as a related person the transaction value produced by the appellants is acceptable. In favour of assessee.

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• Service Tax

• 2013 (6) TMI 541
  Hiring of DG Sets - supply of tangible goods - liable to service tax or VAT - Held that:- the possession or ownership of the Diesel Generator sets remains with the appellant and effective control of such machinery though may be with the service recipients, appellant's manpower controls the functioning of such Diesel Generator sets. We also find, in one of the agreements with ICICI Lombard, it is mentioned that appellant is being reimbursed for the diesel which has been used for running the Diesel Generator sets which also indicates that the appellant has an effective control over the machinery. At this juncture, we find that the appellant has not been able to make out a prima facie case for complete waiver of the amounts involved. - stay granted partly.

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• 2013 (6) TMI 540
  GTA - service tax on the services of GTA on 25% of gross amount of value - declaration/certificate from the provider of the said services - Held that:- It is the contention of the Revenue that declaration with regard to provision (i) and (ii) are to be made on body of each consignment note. Appellants in this case have produced declaration/certificates on annual basis. - Benefit of exemption allowed - Decided in favor of assessee.

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• 2013 (6) TMI 539
  Abatement of 67% - Valuation - Notification No.1/2006/ST dated 1/03/2006 or the benefit of Notification No.12/03-ST dated 20/06/2003 - erection or installation service - works contract service - Held that:- the issue involved in this case is that the appellant is required to discharge service tax on the entire value received by them from their clients. On perusal of records, we find that appellant has issued the work contracts for doing insulation work, either for hot or cold insulation, for completion of such insulation work, appellant is using Aluminum sheets, Cold insulation with Thermocol and insulation of pipeline with black superioan sleeve providing and fixing of black superioan sleeve with cellotape, insulation with black nitrite rubber foam, sheet etc. Though the ld. Counsel tried to convince us, by bringing to our notice various bills as regards materials consumed by appellant, that they have paid VAT, the said accounting pattern of appellant is confusing and is not bringing out details of the materials which have been consumed by appellant. - the issue is highly debatable and needs considerable time to come to a conclusion on merits - stay granted partly.

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• 2013 (6) TMI 538
  Cenvat Credit - Input services - repair and maintenance of the oxygen plant - Held that:- in case the installation and commissioning of the plant was done by a different party, then the assessee who undertakes the operation and maintenance and activity cannot take credit inrespect of service tax in respect of installation and commissioning of the plant. In the present case, different activities are undertaken by the applicants under a different agreements and the dispute is in respect of the credit which was availed in respect of installation and commissioning of the plant under a different contract and the applicants want to utilize that credit towards payment of service tax in respect of operation and maintenance service which is under a different contract. - prima case is against the assessee - credit denied.

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• 2013 (6) TMI 537
  Revenue appeal - condonation of delay in filing an appeal - clearance from committee of commissioners - Held that:- since the Chief Commissioner (DZ) and Chief Commissioner (CZ) merely appended their signatures on 14.07.2012 and 23.07.2012 to the respective note sheets and memorandum of facts and analysis, drawn up by the respective subordinate officers and the record neither records nor discloses due application of mind, the authorisation to prefer the appeal is unsustainable. We note that the Board has issued a memorandum of instructions dated 23.11.2012 pointing out that the notes in the file and other relevant records should disclose meaningful consideration and application of mind by the committee. As a consequence of the unsustainable authorisation, the appeal must fail and is accordingly dismissed. Since the appeal is dismissed on the ground of defective authorisation by the committee of Chief Commissioners, we dismiss the CoD application No. 2955 of 2012 as infructuous, though we are satisfied prima facie that satisfactory cause exists for condonation of the delay of three days in preferring the appeal. - Decided against the revenue.

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• Central Excise

• 2013 (6) TMI 529
  Utilization of Cenvat Credit of AED(GSI) - Additional Duty of Excise (Goods of Special Importance) Act, 1957 - Held that:- The impugned credit had been legitimately earned by the assessee on procurement of inputs on payment of duty and used for payment of duty following the amendment of Cenvat Credit Rules under Budget 2003. Vide Circular No. 71/16/2003-CX dated 6/3/03, the CBEC had also clarified that it was considered appropriate not to put any cap on the use of the AED (GSI) credit accruing prior to 1/3/2003. - Decision in the case of CEAT Ltd. [2010 (254) ELT 349] followed - the appellant could able to make out a prima facie case in their favour for total waiver of dues adjudged. - stay grated.

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• 2013 (6) TMI 528
  Stay - ISD - Cenvat Credit - Input service distributor - distribution of credit to single unit - recovery of excise duty - penalty under Rule 15 of CCR with section 11AC - Held that:- On going through the above Rule (7), we find that input service distributor may distribute the Cenvat credit to its manufacturing units or units providing output service, subject to the condition (a) and (b) of the rule. From the wording of the rule, we find that input service distributor has to be only one and the credit can be given to different manufacturing units because the "manufacturing units" is used in the rule in plural whereas the input service distributor is mentioned as singular. In the present case we find that the input service credit is being taken by M/s Hindalco Industries Ltd. at Renukoot whereas the input service distributor are more than one as separately registered as Lohardaga and Samri etc. - prima facie view that the Cenvat Credit of service tax paid on input services utilised by the mines located at Lohardaga and Samri etc. is not available to the applicant. - However extended period of limitation may not be applicable to the present case. - pre-deposit ordered partly.

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• 2013 (6) TMI 527
  Cenvat Credit - bushing as parts of capital goods - credit of 50% denied during the subsequent year as the bushings are not in the possession and use of the appellant. - Held that:- As per the provisions of Rule 4(2)(b) of the CENVAT Credit Rules the condition that the same should be in the possession of the manufacturer in the subsequent financial year is not applicable to the components. - credit allowed.

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• 2013 (6) TMI 526
  Cenvat Credit - inputs used in construction of storage tank [temperature controlling facility] (Chapter 73.09 or 84.19) - cenvat credit of duty paid on angles and channels used for the construction of Monorail and platform which form part of towers, acid tank etc. forming a part of their plant. - Held that:- tank with temperature controlling facility is classifiable under Heading 84.19. The contention raised by the appellants that the storage tanks had such facility is not disputed by any specific finding by the Commissioner (Appeals). So prima facie, we are in agreement with the contention of the appellant that they are eligible for cenvat credit of duty paid on such tank. In the case of Monorail and platform also, we see merit in the argument that these are parts of towers and storage tanks and hence prima facie, the assessee appears to be eligible for cenvat credit following the ratio of decision in the case of C.C.E. v. Rajasthan Spinning and Weaving Mills Ltd. - [2010 (7) TMI 12 - SUPREME COURT OF INDIA] - Stay granted.

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• 2013 (6) TMI 525
  SSI Exemption - clubbing of turnover - interconnected undertakings as per Rule 2(g) MRTP Act - related companies as per Section 40A(2)(B) of Income Tax Act, 1961 - notification No. 8/2003-C.E., dated 1-3-2003 - Held that:- Tribunal in a number of decisions, namely, Kiran Biscuits & Foods Ltd.[2004 (11) TMI 352 - CESTAT, BANGALORE], Poly Printers [2001 (11) TMI 109 - CEGAT, NEW DELHI], Universal Industries [2005 (7) TMI 388 - CESTAT, MUMBAI], had, time and again, held that private companies and partnership firms are independent entities and merely because they have mutual interest in the business of each other, their turnover cannot be clubbed for determining their eligibility to small scale exemption. In other words, the criteria adopted in Section 4 of the Act for determining interconnected undertaking cannot be applied for determination of the fact as who is the manufacturer. - applicants herein have made out a strong prima facie case in their favour on merits. - stay granted.

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• CST, VAT & Sales Tax

• 2013 (6) TMI 542
  Power to decide validity of Seizure of goods - release of goods on furnishing of security bond - held that:- neither the Commissioner or the Officer Authorized not below the rank of Deputy Commissioner under Section 48(7) of the Act nor the Tribunal in appeal under Section 57(4) of the Act has the power to decide about the validity of the seizure order and consequently this court in revision also lacks jurisdiction in respect thereof. As far as the quantum of security demanded equivalent to twice the tax imposable, no error in such an order has been shown and such a direction being dependent upon the judicial discretion of the authorities/tribunal, no question of law in connection thereto arises leaving any scope for interference in the same in exercise of revisional jurisdiction. - Decided against the assessee.

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