Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
June 27, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Exemption u/s 11 - Violation u/s 13(1)(c) - amount withdrawn from the assessee-Trust and held by one of the trustees for two days - It will not be reasonable to take a view that any benefit could have been derived by trustee in such a short period of two days. - HC
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Payment made for surrender of tenancy rights - deduction allowed u/s 37(1) - AT
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Gains arising on sale of Agricultural land – Assessee might not have paid agricultural income-tax but is paying land revenue and village records clearly showed the land to be agricultural - AT
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Disallowance u/s 40A(3)- trade creditors outstanding - amounts paid otherwise than by a/c. payee cheques or drafts - provisions for different assessment year analyzed - AT
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Income-tax authorities - Instructions to subordinate authorities - Order extending due date for filing Form 49C for F.Y. 2011-12 - Order-Instruction
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Income-tax authorities - Instructions to subordinate authorities - Authorization of AOs in certain cases to rectify/reconcile disputed arrear demand - Circular
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Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of fiscal evasion with foreign countries - Norway - Notification
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Dis-allowance u/s 40(a)(ia) - TDS u/s 194C - Until and unless risk and responsibility of the contract undertaken by the assessee is shifted to the sub-contractors, it cannot be held that these persons are the sub-contractors of the assessee. - AT
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Entitlement under Rule 7A of ITR for deduction of expenditure incurred on replantation of rubber - Expenditure incurred for planting and development of the plantation up to maturity has to be necessarily capitalised and is not allowable as a revenue expenditure. - HC
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Adding back of interest waiver to the book profit u/s. 115JB - CIT invoked the provisions of section 263 - the Assessing Officer having computed the income of the assessee in accordance with the normal provisions of the Act, thus cannot hold that the assessment order passed is erroneous so far as prejudicial to the interest of revenue - AT
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Cash credit - addition u/s 68 - gift - deleting the addition only on the legal grounds without appreciating the facts on record does not bring proper result. - AT
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Revision u/s 263 - Unexplained cash credit under section 68 / 69 of the Act – CIT cannot replace his own opinion and substitute with that of the Assessing Officer. He can revise the assessment order only and only when the twin conditions i.e erroneous and prejudicial to the interests of the Revenue, are fulfilled. - AT
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MAT - creation of the revaluation reserve account being referable to the balance-sheet assets portion and not by way of appropriation to the profit and loss account, the question of the assessee claiming reduction to the book profit did not arise. - HC
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Whether Tribunal was right in holding that earlier year's bonus is to be deducted from the book profit under section 115J - held no - HC
Customs
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Seeks to amend Notifications 100/2009-Cus, 101/2009-Cus, 102/2009-Cus and 103/2009-Cus all dt.11-09-2009 and 104/2009-Cus dt.14-09-2009 - Notification
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CVD demand on the imported goods based on MRP as the goods were imported in 20 kg packing having no MRP declared on the imported package - The appellants affixed the brand name on the imported package - AT
FEMA
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Foreign investment in India by SEBI registered FIIs in Government securities and SEBI registered FIIs and QFIs in infrastructure debt - Circular
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External Commercial Borrowings (ECB) – Repayment of Rupee loans - Circular
Corporate Law
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Imposing fees on certain e-forms filed with ROC, RD or MCA(HQ) under MCA-21 where at present no fee is prescribed. - Circular
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The Limited Liability Partnership (Amendment) Rules, 2012 - Notification
Indian Laws
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ATTENTION: All DIRECTORS of ANY COMPANY Updating of Income Tax PAN details in MCA21 DIN DATA
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STEP CLOSER TO THE GOODS AND SERVICE TAX (GST)
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Adjustment of excess service tax paid for the discharge of service tax liability for the subsequent period
Service Tax
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As the applicant is engaged in the construction of flats for Indian Army and WBPDCL and the residential complex are for the personal use of the army and WBPDCL - in favour of assessee. - AT
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Earthwork and excavation for making civil foundation for windmill towers - works undertaken by the appellant were preparatory to erection, commissioning and installation of windmills – Pre-deposit ordered. - AT
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Electronic refund of service tax paid on taxable services used for exports of goods - Trade Notice
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Whether a co-operative bank can be held to be liable for service tax in respect of providing banking and other financial services as covered by the expression "or any other body corporate, or any other person" used in Section 65 (105)(zm) and sub-section 65 (12) - held yes - AT
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Adjustment of excess service tax paid for the discharge of service tax liability for the subsequent period allowed - AT
Central Excise
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SSI exemption - there is no bar to availing SSI exemption if the unit is using a trade mark belonging to the foreign firm so long as the said unit is exclusive owner of the said trade mark in India - AT
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SSI Exemption - brand name - as there are various decisions of Tribunal and Apex court against revenue, merely because, the Apex Court subsequently in the case of Grasim Industries Ltd(2005 (4) TMI 64 (SC)) ruled to the contrary, it could not be said that the assessee had suppressed material facts - HC
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Recovery of deemed Cenvat Credit availed through fraudulent bills - penalty under Rule 27 imposed - liability of bank - no penalty can be imposed on the banking company - AT
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Recovery of duty from a successor in business - legal heirs of a deceased assessee - the legislature has consciously kept away the legal heirs from answering to liabilities under the Act. - HC
VAT
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Delhi Value Added Tax Act, 2004 -in case multi functional machine is a duplicator or a photocopying machine, which incidentally can be used as a printer or a scanner etc., the said machine would not qualify and cannot be treated and regarded as input or output unit of automatic data processing machine and will be covered by the residuary tax rate - HC
Case Laws:
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Income Tax
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2012 (6) TMI 602
Exemption u/s 11 - denial on ground of entity being not an educational institution - assessee, running a Distance Education Programme for Annamalai University, on Hotel Management and Catering Technology resulting in grant of Diploma and graduation, based on a Memorandum of Understanding (MOU) entered with Annamalai University - Revenue contended assessee to be only technical collaborator for the Distance Education Courses and not doing any charitable activity - alleged contravention of section 11(5) and 13(1) - Held that:- On perusal of Memorandum of Understanding entered by the assessee with Annamalai University and objects of the Trust it is clear that ex-facie the objects are nothing but educational and assessee was imparting a type of oral education and students studying in assessee's institution were being awarded formal Diploma/degree. There is no case for the Revenue that Annamalai University was existing for any commercial purposes. In our opinion, if Annamalai University was an educational institution, then assessee, which was conducting classes for the said University under its authority, was also an educational institution. Whether the substantial surplus generated by the assessee for the relevant previous year would make it a commercial entity - Held that:- Merely because the education activity had resulted in a surplus, would not be a ground to hold that assessee was not carrying on charitable activity. There is no case for the Revenue that surplus generated by the assessee on account of its activities were divided among the trustees or taken by the trustees but, for certain violation allegedly falling under Section 13(1)(c). Therefore, assessee could not have been denied the eligible exemption u/s 11 and 12 for a reason that it was not doing charitable activity as defined u/s 2(15). Violation u/s 13(1)(c) - sum of ₹ 30 lakhs withdrawn from the assessee-Trust and held by one of the trustees for two days - Held that:- It will not be reasonable to take a view that any benefit could have been derived by trustee in such a short period of two days. No violation could be established. Further, A.O. is directed to verify the explanations given by the assessee insofar as alleged violation u/s 13(1)(c) was concerned. If these are explained satisfactorily, assessee shall be given exemption claimed u/s 11 and 12 - Decided in favor of assessee for statistical purposes.
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2012 (6) TMI 601
Income from the activities rendered in connection with prospecting for, or extraction or production of, mineral oils - Non-resident - assessbility u/s 44BB or 44DA - AY 07-08 - revenue contended such receipts as royalty or FTS, assessable u/s 115A, falling out of purview of S 44BB - Held that:- Amendment by Finance Act, 2010, excluding the application of Section 44BB in cases where Section 44DA applies, is prospective and applies from AY 2011-12. Thus, in as much as in the present appeal the AY is 2007-08 is involved and admittedly the income earned by the assessee is effectively connected with the permanent establishment, even if the income is indeed in the nature of 'fee for technical services', still assessment cannot be made under Section 115A. Further, the AY being 2007-08, Section 44DA is also not applicable. For this reason alone, the impugned Assessment Order which has assessed the income u/s 115A is liable to be set aside - Decided in favor of assessee. Further, reimbursements of expenses being customs duties paid by the Assessee on behalf of its clients, equipments lost in hole etc cannot be included within the scope of receipts for purpose of determining income of the Assessee. Interest u/s 234B and 234C - Held that:- Since income of the assessee (a non resident) is subject to TDS u/s 195, hence the interest liability u/s 234B and 234C does not arise.
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2012 (6) TMI 600
Deduction u/s 80IB - dis-allowance on ground that assessee is developer and not the owner of the land - Held that:- Ownership of property is not a condition precedent for granting deduction u/s 80IB(10), hence, appellant as a developer is entitled to claim aforesaid deduction. See CIT vs. Radhe Developers(2011 (12) TMI 248 (HC)), ACIT v. Smt.C Rajini (2010 (12) TMI 248 (Tri)) - Decided in favor of assessee. Dis-allowance of expenditure - Held that:- It has been observed that AO had resorted to make lump sum additions under each head, however, the basis or yardstick for such additions have not been spelt out. At the same time, the assessee had also failed to bring any documentary evidence on record to belie the AO’s stand. Hence, there is no justifiable scope to interfere with the AO’s action on this point.
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2012 (6) TMI 599
Income from sale of shares - Business Income vs Long term Capital gains - assessee- company, purchased shares of MABL(unlisted company) having accumulated losses - shares purchased @ Rs.21.30 per share when the book value was nil - infusion of borrowed funds - Held that:- Obvious intention of the assessee in purchasing the shares was to make profit on resale of the shares as the share price could rise because of strong market reputation and goodwill of the other promoters. This conclusion is further supported by the fact that the assessee within the lock-in period sold shares to the other promoters at high profit despite mounting losses. The assessee was not expected to earn any dividend from the investment because of huge losses. No person will purchase shares from borrowed funds for investment when no dividend is expected. Therefore, merely because the shares were shown as investment in the books, it could not be accepted as investment. Hence, the purpose behind the purchase of shares was to earn quick profit on resale of shares and not for earning dividend income. It is a settled legal position that even a single and isolated transaction can be considered as adventure in the nature of trade. In our view, the purchase and sale of the shares on the facts of the case has to be considered as adventure in the nature of trade and profit has to be assessed as business income - Decided in favor of Revenue.
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2012 (6) TMI 598
Payment made for surrender of tenancy rights - dis-allowance on ground of absence of any tenancy agreement - Held that:- From the registered agreement entered into between Mr.Mehta and the assessee, it stands proved that the assessee got the tenancy of the premises in question surrendered from the hands of Shri Mehta. The fact that the said agreement is a duly registered document, always carries presumption of correctness, cannot be lost sight of. So far as the plea of Revenue that there is no agreement of tenancy as such between the assessee and so-called tenant is concerned, it is well settled law that tenancy could be a contract written as well as oral. It is the inter-se conduct of the parties i.e. landlord and tenant in particular case which is the relevant factor to determine the relationship of tenant and landlord. Therefore, the same is allowed as business expenditure - Decided in favor of assessee. Dis-allowance u/s 37 in respect of payment made against purchase of materials from certain parties - expenditure alleged to be bogus on ground of non-furnishing of PAN number and non-production of parties to prove the genuineness of the transactions - Held that:- In view of PAN being furnished, we find that instead of question no evidence in support, the case in hand is only regarding factual verification of the payments made. Hence, issue remitted back to AO to decide the issue afresh - Decided in favor of assessee for statistical purposes.
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2012 (6) TMI 597
Transfer Pricing - adjustment to ALP - assessee, joint-venture company between Mastek Ltd and Deloitte Consulting, formed for establishment and operation of an offshore development centre for provision of both offshore and on site information technology and other related services - various international transactions entered into by the assessee includes reimbursement made to Deloitte, on account of marketing services rendered by way of assignment of three senior managers by Deloitte to undertake full-time marketing only for assessee - Cost incurred on assignment of said managers consisted of their salary and related expenditure, charged by Deloitte on actual basis - TPO held that marketing costs incurred and allocated by Deloitte to assessee did not result in rendering of any service to assessee and, therefore, determined ALP for same, at Nil – assessee contesting the same - Held that:- It is very imperative on the part of the assessee, to establish before the TPO, that the payments made were commensurate to the volume and quality of services and such costs are comparable. No such efforts was made. No ALP was computed by the assessee. In present case, Deloitte is responsible for generation of sales management, delivery of projects, maintaining customer relationship and billing and collection. The assessee has no market risk. In fact, assessee company has no revenue which has been derived as a result of these marketing expenses. Under similar circumstances a uncontrolled comparable company would not incur such expenditure. Hence, the ALP is rightly determined at "nil". On contention of assessee that TPO is not empowered to disallow the expenditure and that the very reference to the TPO by the AO presumes that the amount in question is allowable u/s 37 it is held that Assessing Officer has no discretion in the matter, in view of the binding nature of CBDT instructions dated 20th May 2003, directing for referral of matters to the TPO for determination of ALP where the aggregate value of international transactions exceeds ₹ 5,00,00,000. Further, TPO has not disallowed any expenditure, only the ALP was determined. It was the Assessing Officer who computed the income by adopting the ALP decided by the TPO at "nil". It is also held that 'ALP' has to be determined irrespective of any contractual/legal obligation undertaken by parties. Deduction u/s 10A - dis-allowance in respect of income arising out of the adjustment - Held that:- Since income arising out of the adjustment is not derived by the undertaking from expert. Hence, requirement of section 10A, have not been compiled with resulting in non-entitlement of deductions u/s 10A - Decided in favor of Revenue
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2012 (6) TMI 596
Gains arising on sale of Agricultural land – Revenue added the sale to LTCG as assessee could not prove that the land was agricultural in nature – Held that:- There is no doubt that the assessee was unable to produce any records regarding purchase of seeds,inputs,fertilizers or insecticides for the casuarina plants stated to have been grown in the said land this by itself would not convert agricultural land in which factually there were cultivated casuarina plants a non-agricultural one - letter of Assistant Commissioner (Urban Land Ceiling, Alandur, Chennai clearly shows that the land had cultivation of casuarina plants therein and as per the Tehsildar, the land was agricultural in nature - Assistant Commissioner (Urban Land Ceiling) had dropped the proceedings for levy of urban land tax - Tehsildar, Chengalpattu,had also certified in his letter that irrigation was done through ground water facilities - Assessee might not have paid agricultural income-tax but is paying land revenue and village records clearly showed the land to be agricultural – other two conditions being satisfied, impugned land is hereby held to be Agriculture land – in favour of assessee.
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2012 (6) TMI 595
Exemption under section 10B - Expenses attributable to delivery of goods outside India – exclusion of the expenses both from the export turnover and the total turnover – Held that :- As decided in Commissioner of Income-tax Versus Tata Elxsi Ltd.[2011 (8) TMI 782 (HC)] that while computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded from the total turnover (denominator) - since the export turnover forms part of the total turnover, if an item is excluded from the export turnover, the same should also be reduced from the total turnover - in favour of assessee.
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2012 (6) TMI 594
Disallowance u/s 40A(3)- trade creditors outstanding - revenue appeal amended provisions of section 40(A)(3) w.e.f. 01.4.2008 are to be considered for disallowance - assessee contested the purchases were made in year 2004, and as the transactions related to that year, only 20% of disallowance should be made of the amounts paid otherwise than by a/c. payee cheques or drafts, as per provisions of section 40A(3) - Held that:- Considering the provisions applicable in assessment year 2004-05 and year 2008-09, there are three major differences:- (i)as per the provisions of assessment year 2004-05, the assessee is required to make payment by way of crossed cheque/crossed bank draft whereas as per the provisions of assessment year 2008-09, the assessee is required to make payment by way of a/c payee cheque / a/c payee bank draft. (ii)as per the provisions applicable in assessment year 2004-05, the disallowance was to be made to the extent of 20% of payments made in contravention to the prescribed mode whereas, as per the provisions applicable in assessment year 2008-09, such disallowance is to the extent of 100% of such payment in contravention to the prescribed mode - disallowance made by the A.O. cannot be sustained (iii) As per the provisions applicable in assessment year 2004-05, the disallowance was to be made in the relevant year in which the expenditure was incurred whereas as per the provisions of assessment year 2008-09, addition is to be made in the year in which payment in contravention to prescribed mode was made by the assessee irrespective of the fact as to whether the expenditure was incurred in an earlier year. if we apply the provisions of Section 40A(3) as applicable in assessment year 2004-05, we find that no addition in the present year is justified and no disallowance can be made in assessment year 2004-05 also because as per the provision of Section 40A(3) as applicable in assessment year 2004-05, the payments are required to be made by a crossed cheque/crossed bank draft and the assessee has made the payment by way of crossed cheque and, therefore, no disallowance is called for in the present case as per the provisions of Section 40A(3) as applicable in the assessment year 2004-05 - in favour of assessee.
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2012 (6) TMI 593
Whether Appellate Tribunal is right in law and on facts in setting aside the order passed by the CIT u/s. 263 of the Act - Assessing Officer finalized assessment of the respondent-assessee - Commissioner was of the opinion that the Assessing Officer did not carry out proper inquiries. There was nothing on the record to show that the books of account, bills, vouchers, cash book, etc., were produced by the assessee before the Assessing Officer at the time of assessment proceedings – Held that:- during the course of framing of the assessment, the Assessing Officer had access to all the records of the assessee, after pursuing such record the Assessing Officer framed the assessment, such assessment could not have been re-opened in exercise of revision power under Section 263 of the Act for making further inquiries. Tax Appeal dismissed.
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2012 (6) TMI 592
Applicability of section 80-I(9) - section 80-I(8) could apply only where the goods had been transferred from one unit to other unit at less than the market price – Held that:- since there was no difference between the transfers from the combing unit to the spinning unit, there was no justification for making any adjustments as made by the Assessing Officer - Tribunal on appreciation of evidence concluded that there was no difference in the rate adopted by the assessee in respect of transfers from the combing unit to the spinning unit and that the provisions of section 80-I(8) and (9) were not attracted in the present case - In favour of the assessee.
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2012 (6) TMI 591
Condonation of delay - assessee had not been keeping well and hence, he could not pursue and attend the assessment proceedings and file the appeal within time before the Commissioner of Income-tax (Appeals) – Held that:- assessee had not been able to fortify the above cause. The plea of the assessee has not been accepted to be bona fide - Assessing Officer also clearly shows that the assessee had not been co-operative in getting the assessment finalized and had not even filed the return - assessee had not been appearing and answering to the questionnaire issued by the Assessing Officer - prayer of the assessee for condonation of delay rejected
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2012 (6) TMI 590
Whether Tribunal was right in upholding the disallowance of 50 per cent. of the sales promotion expenses for free distribution of gift articles along with the appellant's product are based on any material or evidence and/or have been arrived at by ignoring and not considering the relevant material – Held that:- Gift articles were purchased and the same were sent to depots of the appellant at various places and the depot registers are maintained. Payments to the supplier were made by account payee cheque or otherwise. If this evidence is considered then it is established beyond doubt that the gift articles were purchased, and there has been no evidence that the same could not be utilized - order of Tribunal is not sustainable
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2012 (6) TMI 577
Dis-allowance u/s 40(a)(ia) - TDS u/s 194C - assessee engaged in business of forklift hiring, gives on hire forklift vehicles either owned by him or taken on hire from outside parties - dis-allowance made of hire charges paid to outside parties on hire of forklift vehicles on account of non-deduction of taxes - Held that:- For application of provisions of Section 194C in this case it has to been seen, whether the assessee has entered into any kind of sub-contract with the outside parties from whom he has hired the forklift vehicles on random basis to fulfil his own commitment towards his principals. There is no material on record to remotely suggest that there was any kind of oral or a written contract or sub-contract with the outside parties from whom he has taken the forklift vehicles. Until and unless risk and responsibility of the contract undertaken by the assessee is shifted to the sub-contractors, it cannot be held that these persons are the sub-contractors of the assessee. Hence, assessee was not liable to deduct TDS u/s 194C(2) in relation to payment made to the outside parties and accordingly there is no violation of Section 40(a)(ia) - Decided in favor of assessee.
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2012 (6) TMI 576
Validity of revisionary proceedings u/s 263 - denial of deduction u/s 54F on ground that assessee is not eligible to claim exemption as the assessee had offered income from two house properties at Trichy and Bangalore respectively u/s 64(1)(iv) for which the assessee was considered to be the deemed owner of the said properties - Held that:- If the house properties situated at Trichy and Bangalore are owned by the assessee's wife then the same cannot be considered as owned by the assessee for disallowing exemption u/s 54F. We find that the assessee has brought no material before us to show that either the house property situated at Trichy or Bangalore is not owned by him. CIT also has brought no relevant material on record to show that both the house properties were owned by the assessee. The circumstances in which the income from both the house properties were shown in the return of income by the assessee is also not clear from materials available before us. We, therefore, set aside the order of the CIT and restore the issue back to the file of the CIT for proper enquiry and verification.
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2012 (6) TMI 575
Deduction u/s 10A - exclusion of foreign currency expenses from export turnover and not from the total turnover while computing deduction - Held that:- If an item is excluded from the export turnover, the same should also be excluded from the total turnover to maintain parity between the numerator and denominator while calculating the deduction u/s 10A - Order of lower authorities set aside - AO directed to reduce impugned expenses both from export turnover as well as total turnover - Decided in favor of assessee Transfer pricing - Adjustment in ALP of the contract software research and development services transaction entered by the Appellant with its associated enterprise - AO without giving any opportunity of being heard adopted ALP suggested by TPO on ground that submissions of the assessee were already considered by the Transfer Pricing authority while passing the order u/s. 92CA - Held that:- Issue remanded back to the file of the AO/TPO to be decided afresh after providing due and reasonable opportunity of being heard to the assessee. Benefit of +/- 5% adjustment u/s 92C(2) - AY 2006-07 - assessee contended for standard deduction of 5% as provided under erst while proviso to section 92C(2) before making adjustment for the transfer price on ground that amendment brought in by Finance (No: 2) Act of 2009 is prospective in operation and will be applicable from AY 2009-10 and onwards - Held that:- Proviso is not a procedural piece of legislation and therefore, unless it is so clearly intended, the newly amended proviso cannot be understood to be retrospective in nature. In fact, it is a well-settled proposition that the statutory provisions as they stand on the first day of April of the AY must apply to the assessment of the year and the modification of the provisions during the pendency of assessment would not generally prejudice the rights of the assessee. We therefore find no justification to deny the benefit of +/-5% to the assessee in terms of the erstwhile Proviso for the purposes of computing the ALP - Decided in favor of assessee.
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2012 (6) TMI 574
Dis-allowance of foreign exchange loss of Rs 49.12 lacs - Tribunal while allowing appeal of assessee, directed admission of foreign exchange loss to the entire extent of Rs. 99.23 lacs - Held that:- Tribunal directed the admission of foreign exchange loss to the entire extent of Rs. 99.23 lacs on the premise this was the amount which had been disallowed by the Assessing Officer which is a mistake of fact. Hence, we set aside the order of the Tribunal and deem it proper to remand the matter to the Assessing Authority to re-determine the income after taking note of foreign exchange loss of Rs 49.12 lacs. Expenditure incurred over the office premises for renovation and paying compensation to the lessor which was taken on lease by the assessee - revenue or capital expenditure - Held that:- Amount of Rs 6.73 lacs actually spent by the assessee as a revenue expenditure could have been allowed as a deduction, however, other amount of Rs. 22,19,000/- admittedly paid by the assessee to its lessor can never partake the character of a revenue expenditure and not even as a capital expenditure as the assessee has not constructed the building part but the amount is paid to the lessor. Order of the Tribunal is set aside to this extent and on these two aspects, the matter is remanded to the Assessing Authority.
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2012 (6) TMI 573
Addition of Income tax Receivable to the income of assessee - ignoring the submissions of the appellant that the said income tax (MAT) receivable has never been reimbursed to the assessee - changing the head of income and taxing the same under the head ‘income from other sources’- Held that:- It is relevant to first adjudicate if the additional evidences should be entertained and the consequences of the said decision thereof - examining the additional evidences furnished reveals the correspondence that took place between the assessee and the APTRANSCO and that the said documents do not require any investigation into the basic facts of the issue as they are merely the correspondence between both the parties - issue relating to the correct head of income will be decided after deciding the issue of chargeability - papers filed being admitted the impugned order of the CIT(A)is set aside and restore the matter to the file of the AO for deciding the issue, duly considering, among other things, the additional evidence filed - in favour of assessee for statistical purposes. Entertaining an additional ground by CIT(A)which was not raised before the AO - AO contested that no revised return was filed - Held that:- As decided in Goetze (India) Ltd. vs. CIT [2006 (3) TMI 75 (SC)]that when making of a new claim before the Tribunal or for that matter the CIT(A), who is also not the assessing officer, but who is the appellate authority, assessee does not have to initiate a new claim before them by way of filing the revised return of income - can be done by way of letters or by way of filing revised computation - against revenue. Granting of deduction u/s 80IA by CIT(A)- deemed income through insurance premia - Held that:- Every receipt of the industrial undertaking is not an eligible profits derived from the said undertaking. With the categorization done by the Supreme Court based on a logic ie eligible profits and ineligible ancillary profits, the said distinction has to be looked into by the AO while adjudicating the issue - no clear finding of the Revenue authority that it is not derived from the business of the undertaking, there is no clarity as to whether the said income falls as operational income or ineligible ancillary profit - directed to AO TO gather the relevant facts and decide the issue afresh - favour of assessee by way of remand. Netting of the excess premium received - Held that:- As decided in Lalsons Enterprises Versus Deputy Commissioner Of Income-Tax [2004 (2) TMI 294 (Tri)]the benefit of netting of the excess premium received against the insurance premium amount paid during the year, for taking into account only the differential amount for exclusion from the income eligible for relief under S.80IA of the Act - against revenue.
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2012 (6) TMI 572
Computation of deduction u/s 10A - assessee submitted that the AO excluded communication charges from the export turnover without reducing from the same from the total turnover Held that:- As decided in Commissioner of Income-tax Versus Tata Elxsi Ltd.[2011 (8) TMI 782 (HC)]that when certain expenses incurred towards telecommunication charges attributable to the delivery of the computer software outside India are reduced from the export turnover, then they are to be reduced from the total turnover also - in favour of assessee. Transfer pricing adjustment - the assessee's case handed to the TPO for the determination of Arm's Length Price (ALP) - assessee contested that TPO has not adopted a uniform and consistent policy for adopting or rejecting the comparable for both the software services and the IT enabled services - Held that:- In the case of some of the comparable, TPO has stated to be in the business activity of software development, but they have not given any details or any bifurcation of their development and trading activities separately - if the activity of product development would be compared with the software development services offered by the assessee which are both functionally different grave injustice would be done - TPO cannot adopt or pick and choose different methodology or different filters for analyzing the transfer pricing adjustment for the same or similar type of activities - remand the issue to the file of the AO/TPO to reconsider the ALP adjustment in the light of these observations. If any information is sought to be used against the assessee, the same has to be furnished to the assessee and thereafter, taking into consideration the assessee's objections, if any, only then can the TPO proceed to take a decision. If the assessee seeks an opportunity to cross examine the party, the assessee shall be provided such an opportunity. standard deduction of plus or minus 5% to be given to the assessee, while making the transfer pricing adjustment - in favour of assessee for statistical purpose.
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2012 (6) TMI 571
Penalty levied u/s 271(1)(c)on account of unexplained investment - assessee contested that transactions which were shown by the assessee as purchase and shares on behalf of the clients - Held that:- The transactions recorded by the assessee were in fact the investment of the assessee and not the purchases on behalf of the clients and the addition has been made by the AO on the basis of the evidence found that the client’s ID did not match, hence established that the true nature of transaction has not been recorded by the assessee in the books of account- presenting the incorrect facts and that too regarding the nature of transactions recorded in the books of account calls for levy of penalty - the contention of the assessee that the assessee’s claim is denied due to non production of confirmation of the parties cannot invite penal provisions, is not acceptable - once the addition has been sustained and the assessee’s explanation was not found correct, then the provisions of Explanation 1 to sec. 271(1)(c) is applicable and penalty levied against the assessee is justified - against assessee.
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2012 (6) TMI 570
Entitlement under Rule 7A of ITR for deduction of expenditure incurred on replantation of rubber - appellant is a Plantation Company jointly set up by the State and Central Governments engaged in rubber cultivation - Held that:- Expenditure covered by Rule 7A(2) does not cover expenditure incurred for replantation of an area and only provides for deduction of expenditure for infilling through replacement of dead trees or other trees that have become useless, which is not the case here - Rule 7A(2) is in the same line as Rule 7B(2) - yielding healthy rubber plantation does not admit replacement of dead plants within such area as new saplings cannot grow under shade and is never done by any planter - If the appellant's claim is allowed the portion of the agricultural income determined by the Central Income Tax Officer will be in direct conflict with the Scheme of assessment of agricultural income under the State AIT Act which prohibits deduction of expenditure on re plantation of an area and only an incentive is provided by way of re plantation allowances under Rule 3 of the State Agricultural Income Tax Rules - the assessee has no case that they have incurred any expenditure for infilling the yielding area and the expenditure incurred is only for replantation after cutting and removing old plantation, there is no question of considering or allowing the claim under Rule 7A(2) - against assessee.
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2012 (6) TMI 569
Adding back of interest waiver to the book profit u/s. 115JB - CIT invoked the provisions of section 263 - assessee contention that the amount withdrawn from a reserve or provision has to be considered for book profit if it is allowed as deduction in earlier years - Held that:- The amount withdrawn from reserve or provision i.e., waiver of interest cannot be considered as part of book profit since it was never allowed in the computation of book profit of the company in any of the earlier years since the company never had any book profit being sick industrial undertaking as decided in Narayanan Chettiar Industries vs. ITO [2005 (7) TMI 71 (HC)]- the provision for interest was made in earlier year as interest payable was added back to the income of the assessee as the liability was not paid while computing the regular income of the assessee - the Assessing Officer having computed the income of the assessee in accordance with the normal provisions of the Act, thus cannot hold that the assessment order passed is erroneous so far as prejudicial to the interest of revenue - in favour of assessee.
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2012 (6) TMI 568
Disallowance of interest u/s 14A in respect of exempt income from dividends - assessee contested that disallowance made by invoking sec. 14A according to which, AO cannot enhance the assessment or reduce the refund for any asst. year beginning on or before 1.04.2001 - Held that:- Considering the Proviso to sec. 14A inserted by the Finance Act, 2002 with retrospective effect from 11.05.2001 and CBDT Circular No.14 of 2001 dated 12th December, 2001 no deduction shall be made in respect of any expenditure incurred by the assessee in relation to income which does not form part of total income under the Income-tax Act and were assessments proceedings have become final before 1.04.2001, the assessment should not be reopened under sec. 147/154 of the Act to disallow expenditure relatable to exempt income by applying the provision of sec. 14A. In the case of the assessee, processing under sec. 143(1) was made and thereafter AO issued notice u/s 143(2) in order to verify the claims made in the return of income. Therefore, the assessee's case has not been reopened under sec. 147 nor the settled issues have been intended to be upset u/s 154 - the AO was justified in disallowing the claim of interest u/s 14A - against assessee.
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2012 (6) TMI 567
Disallowance u/s 14A Act r.w.r. 8D of the Rules - the assessee submitted that no expenditure was incurred in relation to the investments in question – Held that:- Determining the amount disallowable as per provisions of Rule 8D(2) the condition precedent is that the AO must come to a conclusion having regard to the accounts of the assessee that claim of the assessee that no expenditure was incurred in relation to exempt income is not correct – as no such satisfaction has been arrived at, computation of disallowable amount as per Rule 8D(2) cannot be sustained - in CIT Vs. Hero Cycles Ltd. [2009 (11) TMI 33 (HC)]held that disallowance u/s 14A requires a finding of incurring of expenditure where it is found that for earning exempt income, no expenditure has been incurred, disallowance u/s 14A cannot be sustained – in favour of assessee.
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2012 (6) TMI 566
Cash credit - addition u/s 68 - gift - held that:- The addition could very well be justified even under section 69 of the Act. It is for the assessee to prove the sources of the credits in the bank account as the bank itself has acknowledged that the assessee has an asset in the form of credits in the passbook. It is only for this reason that the assessee ventured into furnishing the evidence in support of the claims of gifts stated to have been received by her. The assessee being found to be the owner of a particular asset is definitely under an obligation to disclose all the sources thereof to the satisfaction of the tax authorities. So, the quarrel whether it is section 68 or section 69 should not make a difference having regard to the subsisting obligation of the assessee to explain all the credits and sources of the investments found by the Revenue. In my view, the learned Judicial Member was unnecessarily in haste to get into the case laws without properly appreciating the facts of the case. It always happens whenever a judgment is appreciated without appreciating the facts that led to that particular decision. I am observing this because it was not the case of the assessee either before the AO or before the CIT(A) and the record that is produced by the assessee before the authorities and before the Tribunal is sufficient to indicate the fact relating to the maintenance of the books of account by the assessee, as discussecd by the learned Accountant Member. Therefore, in my view, deleting the addition only on the legal grounds without appreciating the facts on record does not bring proper result. - Decided against the assessee by three member bench.
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2012 (6) TMI 565
Revision u/s 263 - Unexplained cash credit under section 69 of the Act – Held that:- When the creditors have furnished their confirmation regarding the transactions and their source of income and also furnished the facts of their being assessed with the Department, then in our opinion, all the three requirements as laid down by the precedents for proving cash credits stand fulfilled to the satisfaction of the Assessing Officer. But the appellate authority can further look into this aspect but not the CIT as has been done in this case. and the primary onus of the assessee gets discharged. On similar set of facts if he Assessing Officer has taken a decision, but which according to the ld. CIT, is not and should not be that decision, section 263 does not empower him to look on the issue from that aspect. The ld. CIT cannot replace his own opinion and substitute with that of the Assessing Officer. He can revise the assessment order only and only when the twin conditions i.e erroneous and prejudicial to the interests of the Revenue, are fulfilled. In this case, the assessment order is not at all erroneous, hence, it cannot be revised. order of the ld. CIT set aside and restore the assessment order. appeal stands allowed
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2012 (6) TMI 564
MAT - Whether Tribunal was right in holding that the assessee was right in claiming deduction of the amounts withdrawn from the revaluation reserve during the assessment year, from the book profit under section 115JA - contended by the assessee that in view of the proviso, revaluation reserve created much prior to the introduction of section 115JA of the Act should be allowed as reduction in the computation – Held that:- if the reserve had been created at the first instance with reference to the profit and loss account, then, in the computation of profit the assessee would certainly be entitled to reduction. However, if at the first instance of the creation of reserve, the same is not referable to the profit and loss account, but to the balance-sheet, the question of granting relief to the assessee did not arise. assessee is not entitled to reduction in respect of the withdrawal from the reserve account in terms of section 115JA Explanation (i). Consequently, the order of the Tribunal is set aside. The tax case appeal stands allowed
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2012 (6) TMI 563
Valuation - 50% of the share the assessee owns in the property. He acquired the same under a registered sale deed. 'The Appellate Commissioner accepted the valuation, on the basis of the valuation in the case of Sri S.K. Sanjay where the Tribunal has accepted the valuation. Apart from the consideration mentioned in the sale deed and ownerships slums on the property were taken into consideration in coming to the fair market value. valuation accepted by the Tribunal is just and proper and represents the true market value of the property. appeals are dismissed
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2012 (6) TMI 562
MAT - Whether Tribunal was right in holding that earlier year's bonus is to be deducted from the book profit under section 115J - assessee took the contention that the Assessing Officer should have deducted the bonus paid as well as the from the net profit arrived, since the donation and the bonus were actual cash outgoings from the current year's profit should have been deducted from the net profit - in computing the profit and loss account as per Part II of Schedule VI to the Companies Act, these expendi- ture really go in the computation of the profit and loss account - Held that:- when the profit and loss account of the assessee-company disclosed the net profit as Rs. 24,85,760 in accordance with Parts II and III of Schedule VI to the Companies Act, the assessee is not entitled to have the deduction of amounts assessed on the profit and loss appropriation account in the computation of net profit. tax case appeal allowed
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Customs
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2012 (6) TMI 589
Dismissal of Appeal - delay of 2(two) days - Held that:- The bill of entry is dated 13.02.2006 and the date of challan is 13.02.2006 - Commissioner (Appeals) rejected the appeal on the premise that the Cheque is dated 10.02.2006 not giving any finding regarding the date of challan which is 13.02.2006 - it cannot be held that appeal is filed after time limit prescribed - case is remanded o decide the issue on its merit - in favour of assessee.
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2012 (6) TMI 561
CVD demand on the imported goods based on MRP as the goods were imported in 20 kg packing having no MRP declared on the imported package - assessee contested that the goods will not qualify retail packages as defined under PC Rules and since the ultimate consumers of the imported goods are industrial consumers, the imported product is therefore exempt from affixing MRP on the imported packages as per rule 2A of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 - Held that:- As per the definition of 'Manufacturer' defined under Rule 2(h) of the PC Rules manufacturer includes any person who or which puts, or causes to be put, any mark on ay packaged commodity, not produced, made or manufactured by him and the mark claims the commodity in the package to be commodity produced, made or manufactured by such persons. The appellants after import of the goods affixed the brand name of “Henkel CAC Pvt. Ltd.” on the imported package which gives the indication that the product in question may be manufactured by the appellant - as claim of the assessee that the goods in question are being sold by them to the industrial consumers and this fact is verifiable from the records that the burden lies on the appellant to establish before the lower authorities that the provisions of Chapter II of the PC Rules are not applicable to the packaged commodity imported by them - a reasonable opportunity of producing evidence before the original authority to prove claim that they are covered under exemption from MRP based assessment under Rule 2A of PC Rules shold be given - decided in favour of assessee by way of remand.
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Corporate Laws
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2012 (6) TMI 588
Winding up petition filed u/S 433(e) and (f) of the Companies Act - petitioner, Director of the respondent Company, and also employed as CEO in the respondent company seeking to realize the amount due towards annual bonus with 15% interest and towards balance of Consultancy fee - in respect of the other claims the petitioner has initiated Arbitration proceedings as per the terms of the agreement - Held that:- Settled position of law is that the dispute would be substantial and genuine, if it is bona fide and not spurious, speculative, illusory or misconceived, it is also the position that the company Court at that stage is not expected to hold a full trial of the matter and it must decide whether the grounds appear to be substantial. In the background of facts, dispute raised by the respondent company will have to be considered as substantial and not spurious, illusory and misconceived. The petitioner will have to therefore establish his claim in an action. In any event, the petitioner has admittedly raised a claim before the Arbitrator wherein he can secure complete adjudication. At this stage, since it cannot be classified as an admitted debt, no reason is seen to exercise the discretion vested in this Court to entertain the petition - Petition dismissed.
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2012 (6) TMI 587
Winding up petition seeking advertisement - before admitting winding up petition and directing publication of company petition, it is necessary to consider question whether any prima facie case is made out by petitioning creditor – Held that:- when the learned judge has held that there was sufficient compliance of section 433(a), before ordering advertisement, the learned judge ought to have afforded opportunity to the appellant to put forth their case so as to be convinced about the prima facie case of the first respondent - statutory provisions regarding the inbuilt safeguard under the Act has not been complied with and the impugned order directing the effecting of advertisement and the appointment of the official liquidator as a provisional liquidator cannot be sustained - advertisement and publication of the winding up petition in the Official Gazette of Tamil Nadu and local dailies is set aside
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2012 (6) TMI 560
Application from unsecured creditors – Winding up – Secured creditors had objected to the passing of the winding up order - Secured creditors be restrained from selling the assets by private negotiation, instead to follow a transparent process - Held that:- The manner of appropriation of the amount realised would be subject to the proviso to Section 13(9) of SARFAESI Act and Section 529A of the Companies Act which operate in the same plane except that secured creditor would have the right to sell the property which would otherwise have been the function of the Official Liquidator. But, the Official Liquidator acting under the orders of the Company Court would have a role to play to an extent so as to protect the interest of the persons who would be entitled to the benefits of liquidation - the secured creditor/second respondent herein shall therefore have the right to sell the secured assets in terms of Section 13 of the SARFAESI Act as per the procedure contemplated under Rules 8 and 9 of the Rules, 2002 - transparent procedure to be adopted since it is alleged that there were irregularities committed when the movable secured assets were sold - The proposal for sale and the details of the valuation obtained for determining the modalities of sale shall be made available to the Official Liquidator – as there are no dues to employees and workmen this aspect to be considered when the secured creditor seeks leave of this Court to appropriate the amount realized by selling the secured assets as necessary directions could be issued at that stage safeguarding claims in future and the pari passu interest should be protected in that regard - justification for sale by private treaty need not be gone into since the secured creditor/second respondent is not averse to selling it by public auction.
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2012 (6) TMI 559
Winding up - order admitted winding up petition against appellant company - Order passed without considering any evidence - order is passed based on the contents of the compromise petition filed by the parties - parties were not permitted to aduce the evidence – Held that:- Points for consideration have to be formulated and answered in the light of the material on record both oral and documentary evidence and the arguments addressed by learned counsel as well as keeping in mind the statutory provisions .order passed do not satisfy the legal requirements - matter is remitted back to the learned company judge to restore the petition to its original file and provide opportunity to the parties to lead evidence
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Service Tax
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2012 (6) TMI 607
Construction of residential complex for Army and West Bengal Power Devp. Corpn.- Service tax demand - Held that:- Board vide Circular No. 332/16/2010-TRU Dated 24/5/2010 and as decided in KHURANA ENGINEERING LTD. Versus COMMR. OF C. EX., AHMEDABAD [2010 (11) TMI 81 (Tri)]that service provided to Govt. of India directly for end use of residential complex by Govt. of India discovered by the definition of personal use and therefore no Service Tax is leviable on them - as the applicant is engaged in the construction of flats for Indian Army and WBPDCL and the residential complex are for the personal use of the army and WBPDCL - in favour of assessee.
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2012 (6) TMI 606
Cenvat credit –Process Outsourcing and Collection of Services - appellant availed input service credit, but as their service was exempt by Notification No. 8/2003 dated 20/06/2003 they could not utilise the CENVAT credit - refund claim under Rule 5 of the CENVAT Credit Rules, 2004 - Held that:- Once the taxable service is exported and various input services have been utilised for providing the output service: the appellants could be entitled for the rebate, which is equal to the service tax paid on the input services. appellants had fulfilled the five conditions of Notification No. 12/2005 already enumerated in the submission of the appellants. appellants are entitled for the rebate in respect of all the rebate claims filed by them during the relevant period. appellant are entitled for input service credit which they have availed for providing the service, which is exempt by way of Notification No. 8/2003 but have been exported. Appeal allowed
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2012 (6) TMI 605
Waiver of pre-deposit - Services to Local Self Government bodies in the field of e-governance - contention of appellant is that they were discharging only a sovereign function of the State and hence their activity was not chargeable to service tax – Held that:- Recovery of service tax from service-recipients is ipso facto in the nature of demolishing the plea of sovereign function. Amount of over Rs.44 lakhs was collected by the appellant from the service recipients (local bodies) but only 50% thereof was paid to the Central Government as service tax. The balance amount required to be deposited.
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2012 (6) TMI 604
Waiver of pre-deposit - demand of Service Tax - Erection, Commissioning or Installation Service - earthwork and excavation for making civil foundation for windmill towers and did not install or erect such towers, which work was done by their clients – Held that:- works undertaken by the appellant were preparatory to erection, commissioning and installation of windmills – Pre-deposit ordered.
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2012 (6) TMI 582
Whether a co-operative bank can be held to be liable for service tax in respect of providing banking and other financial services as covered by the expression "or any other body corporate, or any other person" used in Section 65 (105)(zm) and sub-section 65 (12) - Held that:- Tribunal held in case of Madhav Nagrik Sahkari Bank Ltd Vs. CCE Indore-I (2012 (3) TMI 283 (Tri)) that even the cooperative bank will be covered by the heading "any other body corporate, or any other person" used in Section 65(105)(zm) and sub-section 65(12) of the Finance Act, 1994 and would be liable to pay service tax. Hence directed to make pre-deposit and subject to deposit of the tax amount, pre-deposit of penalty and interest stands waived - Decided against the assessee.
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2012 (6) TMI 581
Adjustment of excess service tax paid for the discharge of service tax liability for the subsequent period – Held that:- Considering submission that the appellants had wrongly mentioned the provisions of Rule 6 (4A) but in fact the provisions of Rule 6(3) will be applicable in this case no point to deny the adjustment to be made – in COMMISSIONER OF C. EX., MYSORE Versus POWERCELL BATTERY INDIA LTD.[ 2010 (3) TMI 357 (Tri)] it was decided that where an assessee has paid to the credit of Central Government service tax in respect of a taxable service the assessee may adjust the excess service tax so paid by him (calculated on a pro rata basis) against his service tax liability for the subsequent period – in favour of assessee.
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2012 (6) TMI 580
Demand of service tax – C&F services - demands stand confirmed by taking the entire consideration figures from the balance sheet of the appellant – Held that:- Service Tax discharged by treating the services as Business Auxiliary services is to the tune of around Rs. 13,87 lakhs approximately. applicant-appellant directed to make further deposit of Rs. 2.5 lakhs
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2012 (6) TMI 579
Waiver of pre-deposit - services of maintenance and repair – Held that:- no maintenance contract between the appellant and their client and services have been provided under the rate contract. As and when their client required the services of the appellants, they entrust the work to them at the rates agreed by them in the contract. Decided in favor of assessee.
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2012 (6) TMI 578
Cenvat Credit – service tax paid on manpower recruitment, maintenance, electrical maintenance, ship fees, mobile phone services, insurance of building involved, service tax in rent a cab and the mobile services – Held that:- services were covered by Order of this Tribunal dated 20.1.2010 wherein the Tribunal has not allowed Cenvat credit in respect of the services given holding that these are not services connected to the manufacture of the goods in respect of the appellants - Credit not available Availment of Cenvat Credit on the canteen services – Held that:- Cenvat credit is not admissible to the appellants if the cost of the food is borne by the workers of the factory.
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Central Excise
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2012 (6) TMI 586
Whether appellant is required to reverse the Cenvat credit availed on the inputs and the capital goods, while clearing the same to its sister unit or is required to pay duty on the higher rate, applicable at the time of clearance of the same - Held that:- Issue is no longer res integra. It is held in various decisions that during the relevant period, reversal of Cenvat credit originally taken is required to be followed, at the time of clearance of inputs/capital goods as such. See Eicher Tractors Vs. CCE, Jaipur (2005 (9) TMI 340 (Tri))
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2012 (6) TMI 585
Denial of SSI exemption - the specified goods manufactured by assessee are affixed with the brand name of a foreign person, or a trader who is not a manufacturer – appellants contention that that the impugned brand names were owned by the 100% holding companies of the appellant-company which should not be considered completely different from its subsidiary - Held that:- Following the judgment of the Single Bench of the Calcutta High Court in the case of ESBI Transmission Pvt. Ltd. v. CCE - 1997 (1994 (9) TMI 99 (HC)) stating that it has been held that there is no bar to availing SSI exemption if the unit is using a trade mark belonging to the foreign firm so long as the said unit is exclusive owner of the said trade mark in India - in favour of assessee. Whether the price at which the respondent sold the product should be treated as cum duty price and therefore the excise duty should be deducted from the price for arriving at the assessable value – Held that:- The case to be remanded back to the Commissioner for re-quantification.
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2012 (6) TMI 584
SSI Exemption - brand name - Invoking extended period of limitation u/s 11AC - technical know-how agreement entered between the assessee and the West German Company were not disclosed to the Department – the goods manufactured by the assessee have been cleared by the assessee with an endorsement “in collaboration with the West German Company” which constitutes user of the brand name - Held that:- Inscribing words “in technical collaboration with West German Company” would not constitute user of the brand name of the West German Company deserves acceptance - The fact that the assessee did not disclose the 1975 agreement does not enhance the case of the revenue, because the said agreement was only a technical know-how agreement and not an agreement for user of the brand name - the technical know-how agreement entered into by and between the assessee and the West German Company has expired in the year 1980 and the same has not been renewed thereafter – as there are various decisions of Tribunal and Apex court against revenue, merely because, the Apex Court subsequently in the case of Grasim Industries Ltd(2005 (4) TMI 64 (SC)) ruled to the contrary, it could not be said that the assessee had suppressed material facts - against revenue.
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2012 (6) TMI 583
Recovery of deemed Cenvat Credit availed through fraudulent bills - penalty under Rule 27 imposed - liability of bank - Held that:- The act of discounting export bills or sending export bills for collection as part of normal banking operations by the appellant bank would not render the export goods liable to confiscation and the bank liable to penalty - a banking transaction would not normally violate the Central Excise law or the Rules, especially when the same is carried out as part of the normal banking operations - no penalty can be imposed on the banking company as the maximum penalty under the said Rule is only Rs.5,000 whereas Commissioner imposed a penalty of Rs.5 lakh u/r 27 which show clear non-application of mind and ignorance - in favour of assessee.
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2012 (6) TMI 558
Classification of the respondent s product Ponds Oil Control Face Wash - Revenue appeal that the same should be classified as Skin Care preparation falling under Chapter Heading 3304.00 of the Central Excise Tariff Act rather than under the Heading 3402.90 as Organic Surface Active Agent (OSA) accepted by Commissioner (Appeals) – Held that:- Since the disputed issue stands decided in favour of the respondents by several decisions of the Tribunal in MUL DENTPRO PVT. LTD. Versus COMMISSIONER OF C. EX., VAPI [2007 (8) TMI 150 (Tri)], ALFA PACKAGING Versus COMMISSIONER OF C. EX., VAPI [2010 (10) TMI 400 (Tri)] find no merits in the Revenue s appeal – against revenue.
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2012 (6) TMI 557
Penalty on the Director for the Assessee Company – Rule 26 or Rule 27 – Held that:- As no excisable goods are confiscated and the offence alleged against these respondents are negligence, therefore, the said offence does not fall under Rule 26 of the Excise Rules - liable to pay Rs. 5,000 - penalty as ordered by the Tribunal – against revenue.
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2012 (6) TMI 556
Recovery of duty from a successor in business - legal heirs of a deceased assessee - Held that:- the proviso is attracted to cases in which the person chargeable to duty transfers or dispose of the business which he is carrying on during his lifetime. If any amount was due from the predecessor in title, the successor in title is liable and it is to be recovered from him. We do not find any provision in the Act which foists any such liability in the case of intestate succession. In other words, there is no provision which empowers the authorities to recover due from a deceased assessee by proceeding against his legal heirs. The way Sec. 11 and 11A are worded, it is amply clear, the legislature has consciously kept away the legal heirs from answering to liabilities under the Act. In all the cases of such commercial activity being carried on, except that of an individual, the death of any person who is involved in the manufacturing activity, has no impact on the business or manufacturing activity. Even after his death, the manufacturing activity goes on, the legal entity which is carrying on the business is not disrupted and the commercial activity is continued without any interruption. In the case of an individual, on his death, the manufacturing activity comes to an end. To hold his legal heirs liable for the dues under the Act from the manufacturer who is the person who is charged with the duty to pay tax would be unreasonable.
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CST, VAT & Sales Tax
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2012 (6) TMI 603
Delhi Value Added Tax Act, 2004 - taxability of multi functional printers/copiers/scanners and their spares and consumables - Entry no. 41A of the third Schedule at 4% or under the residuary head @ 12.5% - Period of dispute 01.04.05 to 31.03.07 - Held that:- In respect of the period prior to 30.11.2005, it is held that multi function machines may or may not be computer peripheral, depending upon the main purpose or function which the machine was designed and manufactured to perform. If the principal and predominant purpose was to act as a computer printer or scanner or as an input or output devise of the computer, the multi functional machine would qualify and fall under entry 41A clause XXIII. However, if the machine was designed and manufactured for some other primary purpose, then it would not be covered by Entry 41A clause XXIII. With regard to the period after 30.11.2005, it is held that the doctrine of dominant purpose of the multi functional machine will determine/decide whether it is an input or output unit of an automatic data processing machine. In case the principal or dominant purpose is to act as input or output unit, then it would qualify and will be covered by Entry 41A at Sr. No.3. However, in case multi functional machine is a duplicator or a photocopying machine, which incidentally can be used as a printer or a scanner etc., the said machine would not qualify and cannot be treated and regarded as input or output unit of automatic data processing machine and will be covered by the residuary tax rate - Decided partly in favor of assessee.
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