TMI Tax Updates - e-Newsletter
June 27, 2013

Case Laws in this Newsletter:

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

Articles

1. Cenvat credit cannot be denied on inputs used in a process not considered as manufacture

   By: Bimal jain

2. BUSINESS RESPONSIBILITY REPORT

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. D.C. Bajaj Appointed as Chief Adviser Cost in the Ministry of Finance

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

3. Credit Agreement Worth US$ 84 Million Signed with World Bank for Bihar

4. Skill Development Needed to Fill the Significant Gap between the Actual Skills of Large Number of Candidates Passing Out from Various Schools, Colleges and Professional Institutions Across the Country and the Skills Needed in the Industry; Business and Corporate Houses Must Work Closely with NSDC to Achieve Theambitious Target of Providing Skills to 500 Million People in Ten Years: FM

5. RBI Reference Rate for US $ and Euro

6. Sources of Variation in Foreign Exchange Reserves in India during 2012-13

Circulars / Instructions / Orders

FEMA

1. 119 - dated 26-6-2013

External Commercial Borrowings (ECB) Policy – Import of Services, Technical know-how and License Fees

2. 120 - dated 26-6-2013

External Commercial Borrowings (ECB) Policy – Structured Obligations

3. 121 - dated 26-6-2013

Risk Management and Inter Bank Dealings

Customs

4. 24/2013 - dated 27-6-2013

Classification of Elements of Filters of Heading 8421 – reg.

Highlights / Catch Notes

Income Tax

• Authorities Accept Explanation for Unexplained Bank Credits: Withdrawn Amounts Re-deposited in Same Account.

  Case-Laws - AT : Unexplained credits in the bank account - the explanation submitted by the assessee that the amounts withdrawn from the bank was again re-deposited in to the bank account has to be accepted - AT
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• Penalties u/s 271(1)(c) of Income Tax Act: Imposed Only for Deliberate, Defiant, or Conscious Non-Compliance.

  Case-Laws - AT : Penalty u/s 271(1)(c) - quasi criminal proceedings - penalty will not ordinarily be imposed unless the party obliged under the Act has either acted deliberately in defiance of law or was guilty of conduct contumacious or acted in conscious disregard of its obligation. - AT
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• Assessee's repayment of unexplained deposits accepted; no issue with CIT (A)'s order due to creditor's creditworthiness.

  Case-Laws - AT : Unexplained deposits - the amount was repaid by the assessee through cheque. - there being no doubt with regard to creditworthiness, the creditor being an Income-tax assessee, there is no infirmity in the order of the CIT (A) - AT
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• Tax Interpretation: Share Premium Funds Treated as Loan Transactions for Arm's Length Price Assessment.

  Case-Laws - AT : Computation of arm's length price - The monies parked with its subsidiaries in the form of share premium have to be treated as loan transactions. - AT
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• TPO's Zero Royalty Arm's Length Price Unsupported Due to Lack of Evidence and Reliance on Assumptions.

  Case-Laws - AT : TP - the conclusion of the TPO that the arms length price of the royalty payment should be NIL without specifying any cogent basis is not sustainable - TPO's determination is on the basis of assumption and surmises. - AT
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Customs

• Claimant Retains Right to Refund for Mistaken Export Cess Payment Despite No Appeal Against Assessment Order Filed.

  Case-Laws - AT : Refund claim - payment of export cess by mistake - non-filing of any appeal against the assessment order cannot act fatal to the assessee’s claim of refund. - AT
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• Tribunal Grants Early Hearing on Appeal for Revocation or Suspension of Customs License, Restoring Business Rights in Mumbai.

  Case-Laws - HC : CHA - revocation / suspension of license - early hearing - As the assessee has been deprived of his right to carry on his business at Mumbai since 23-12-2009, it was just and proper for the Tribunal to allow the application for early hearing of the Appeal. - HC
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Service Tax

• Cenvat Credit Permitted for Service Tax on Property Rental, Security, Office Maintenance, and Communication Services Expenses.

  Case-Laws - AT : Cenvat credit of Service Tax relating to rental of immovable property, security guard appointed at the residence of central office and cycle stand, maintenance of registered office at Kolkata and corporate office at New Delhi and telephone/courier services etc. - credit allowed - AT
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• Cenvat Credit Approved for Housekeeping and Construction Services in Factory Premises.

  Case-Laws - AT : Cenvat Credit - Input Services - housekeeping services keeping he factory premises neat and clean and construction services for construction of certain office rooms in the factory premises - credit allowed - AT
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• Cenvat Credit Approved for Input Services in Manufacturing: Legal, Maintenance, Audit, Packaging, and More Recognized.

  Case-Laws - AT : Cenvat Credit - Input Services - The services are certification of the factory work, payment made to advocates for legal services related to manufacturing activities, repair and maintenance of the factory, audit and accounting of the factory, packaging services for export purposes, advertisement expenses, quality upgradation and so on - credit allowed - AT
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• Cenvat Credit Allowed for Commission Agent Services, Establishing Nexus with Manufacturing under Service Tax Framework.

  Case-Laws - AT : Cenvat Credit - Input Services - commission agent service - nexus with manufacturing - credit allowed - AT
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• High Court Upholds Dismissal of Appeal by Commissioner of Central Excise Due to Late Filing Beyond Time Limit.

  Case-Laws - HC : Filing of appeal before Commissioner (Appeals) - time limit - Commissioner of Central Excise (Appeals) was justified in dismissing the appeal as barred by time. - HC
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• Court Rules Tenant Must Pay Service Tax on Renting Property, Upholds Landlord's Contractual Terms.

  Case-Laws - HC : Renting of immovable property - levy of service tax - dispute between landlord and tenant - tenant refused to pay as per the terms of contract - tenant liable to pay the service tax - HC
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• "Rent-a-Cab" Services: No Vehicle Ownership Required for Classification Under Service Tax Rules.

  Case-Laws - AT : Classification - Supply of cabs - Rent-a-Cab service - There is no stipulation either in the Act or in the Rules that the person renting the cabs should also own the vehicles. - AT
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• Cenvat Credit Approved for Export Services Including CHA and Rent-a-Cab, Eligible Under Tax Regulations.

  Case-Laws - AT : Cenvat Credit - Input services - export of goods - CHA service - rent-a-cab service - credit allowed - AT
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• Cenvat Credit Permitted for Telephone Services Installed at Officials' Residences Under "Input Service" Rule.

  Case-Laws - AT : Cenvat Credit - “input service“ credit on telephone services which are installed at the residence of the officials - Credit allowed. - AT
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Central Excise

• Cenvat Credit Approved for Welding Electrodes in Plant Maintenance Under Central Excise Regulations.

  Case-Laws - AT : Cenvat Credit - welding electrodes used for repair and maintenance of the plant and machinery - Credit allowed. - AT
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• Court Dismisses Delay Condonation Request, Cites Unsatisfactory Bureaucratic Red-Tape Justification by Applicant.

  Case-Laws - AT : Condonation of delay - The argument advanced for the delay is purely bureaucratic red-tape which is not satisfactory to this Bench. - application for condonation of delay dismissed. - AT
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• Court to Decide If Sensur Rubefacient, Herbyl Ointment Are Ayurvedic or Proprietary Medicines Under Excise Tariff Act.

  Case-Laws - AT : Classification - sensur Rubefacient & Herbyl Skin Ointment - under 3003.39 as Ayurvedic Medicine or under 3003.10 of the CETA 1985 as P. or P Medicines (other than Ayrvedic Medicines) - Appellants directed to deposit an amount of Rs. 25 lakh - AT
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• Cenvat Credit on Non-Manufacturing Activity Accepted, No Demand Issued as Duty Paid Exceeds Credit Claimed.

  Case-Laws - AT : Cenvat credit - CR Coils - activity not amount to manufacture - The duty paid has been accepted by the department which is admittedly more than the CENVAT credit availed by the appellants. - no demand - AT
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VAT

• Court Rules Unmeasured Gas Supply Is Not Theft Without Absence of Supplier Consent in Reassessment Proceedings.

  Case-Laws - HC : Reassessment proceedings - entry tax assessment - the dishonest extraction of the gas by tampering the meter, of the unmeasured supply would not prima facie fall within the definition of theft as the consent of GAIL, in supply of gas was not absent. - HC
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Case Laws:

• Income Tax

• 2013 (6) TMI 601
  Payment of PF dues beyond the stipulated date in the PF Act disallowed - CIT(A) deleted the addition - Held that:- As outstanding PF dues in this case has been paid before the due date of filing of the income tax returns no justification of making the disallowance in this regard. In favour of assessee. Depreciation on printers and UPS - 15% or 60% - Held that:- As decided in C.I.T. vs. BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] the depreciation @ 60% on the printers and UPS is to be allowed to the assessee. In favour of assessee.

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• 2013 (6) TMI 600
  Disallowance of 10% of unverifiable construction expenses - CIT(A) deleted the addition - Held that:- AO made the addition on an estimate and adhoc basis, there is no finding, observation or material to justify such estimate which is purely an adhoc guess work. CIT(A) has rightly deleted the same. Against revenue. Addition of unexplained investment in the hands of assessee - Held that:- The documents in question have been owned and explained by assessee's son already assessed at an undisclosed income of Rs. 2,16,42,960/-. The statement of shri Pawar has not been controverted. Besides the accounts of the son have been accepted by the AO except an adhoc addition of 10% expenses which has already been deleted. Once these evidences are not in question the explanation offered by the assessee and has son cannot be outrightly rejected. Mr. Pawar has confirmed the renegotiation of prices of plot thus buyer and seller both agree to the same price, comparable sale instances which are registered documents also support the price. Assessee's son Mr. Ashish Aggarwal being a building contractor, fact of construction of the house for Mr. Pawar is not in doubt, thus presumption u/s 292 C has been discharged by the assessee. Besides the deference if any emerges from the books of the assessees son and not the assessee himself. Further, the plot is not purchased by assessee alone but his wife also, a fact which has not been disputed. Thus, the incriminating document belongs to son and not assessee, discrepancy, if any, cannot be attributed to assessee. Further, the part of the plot ownership belongs to his wife for which also addition cannot be made in the hands of assessee. It is pertinent to appreciate that father and son have already paid taxes on undisclosed income of Rs. 2,16,42,960/-, there is no indication of existence of corresponding assets thus the possibility of telescoping also cannot be ruled out. Thus the impugned addition cannot be made in the hands of the assessee. Against revenue.

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• 2013 (6) TMI 599
  Deduction u/s.80IA disallowed - AO denied the claim of the assessee on the ground that assessee was not developer rather a work contractor - Held that:- As relying on assessee's own case [2012 (8) TMI 633 - ITAT HYDERABAD] there is no requirement that the assessee should have been the owner of the infrastructure facility - the contractor and the developer cannot be viewed differently. Every contractor may not be a developer but every developer developing infrastructure facility on behalf of the Government is a contractor. The assessee has developed infrastructure facility as per the agreement with Maharashtra Government/APSEB, therefore, merely because in the agreement for development of infrastructure facility the assessee is referred to as a contractor or because some basic specifications are laid down, it does not detract the assessee from the position of being a ‘developer’ nor will it debar the assessee from claiming deduction u/s 80IA(4). In favour of assessee. Disallowance of interest - whether investments were made out of its own funds or loan funds? - Held that:- There is no dispute that monies have been given to the other parties for business purposes. It is a common trade practice to give advances to the parties to carry on the work on behalf of the assessee. When the assessee has not charged interest on such loans given, the CIT(A) is not entitled to work out any notional interest and make any disallowance/addition to that extent.See S.A. Builders V/s. CIT(2006 (12) TMI 82 - SUPREME COURT). Thus additions deleted. In favour of assessee.

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• 2013 (6) TMI 598
  Interest receipt - whether it is a business receipt or income from other sources - Held that:- As decided in CIT V/s. Sponge Iron India Ltd. [1992 (10) TMI 67 - ANDHRA PRADESH High Court] that since the business had not commenced, the interest income could not be treated as business income & CIT V/s. Rassi Cement Ltd.(1998 (4) TMI 132 - ANDHRA PRADESH High Court) the interest earned on surplus funds deposited in banks during the installation of a company prior to the commencement of the business is assessable as income from other sources. Thus in the light of the foregoing discussion interest income is assessable as income under the head 'other sources' as during the year under consideration was the pre-commencement period of the assessee. Against assessee.

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• 2013 (6) TMI 597
  Non deduction of TDS - leaseline charges and Transaction charges - CIT(A) deleted the disallowance - Held that:- It is now well settled that no TDS liability is attracted so far as VSAT charges, Leaseline charges and other charges paid to BSE or NSE. So far as transaction charges are concerned, this issue is also covered in favour of the assessee by the decision of Kotak Securities Ltd [2011 (10) TMI 24 - Bombay High Court] . Against revenue.

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• 2013 (6) TMI 596
  Unexplained credits in the bank account - Held that:- Before coming to the conclusion that the assessee has utilised the withdrawn amount of Rs.44,44,412/- for some specific purpose, it was incumbent on the part of the revenue authorities to establish on record with supporting evidence what are the specific purposes for which the amount was utilised by the assessee. Without bringing any material on record, assessee's explanation regarding availability of cash cannot be rejected on presumption and surmises when there is no material on record to prove that the assessee had acquired any asset or utilised such funds for any purpose. Presumption and suspicion however strong may be cannot take the place of evidence. Therefore the explanation submitted by the assessee that the amounts withdrawn from the bank was again re-deposited in to the bank account has to be accepted when there is no other material brought on record to show that the assessee has utilised it for some other purpose. Accordingly, the addition made cannot be sustained - appeal filed by the assessee allowed.

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• 2013 (6) TMI 595
  Penalty u/s 271(1)(c) - unexplained investment in stock - Held that:- AO has not considered the issue independently in the proceedings u/s 271(1)(c). Finding recorded by the AO while imposing penalty u/s 271(1)(c) would reveal that there is no conclusive finding at all by the AO that the assessee has either concealed his income or has furnished inaccurate particulars of his income As can be gathered from the discussions made by the CIT (A) in his order while deleting the penalty, the assessee did prove the fact that he had entered into the transactions with M/s Kalpataru Jewellers and in course of assessment proceedings, the AO also had examined the books of accounts, bills and vouchers of M/s Kalpataru Jewellers wherein the transaction under those right bills were found to be duly recorded. It is another fact that the purchases made under Bill Nos. 74 to 77 were not accepted on the ground of human probabilities but that itself would not lead to the conclusion that the assessee has concealed his income when it is not disputed that when assessee's business transaction with M/s Kalpataru Jewellers is not disputed and it is also fact that all the transactions in the said bills were recorded in the books of accounts of M/s Kalpataru Jewellers. As held in case of Hindustan Steels (1969 (8) TMI 31 - SUPREME Court) an order imposing penalty for failure to carry out statutory obligation is the result of quasi criminal proceedings and penalty will not ordinarily be imposed unless the party obliged under the Act has either acted deliberately in defiance of law or was guilty of conduct contumacious or acted in conscious disregard of its obligation. Penalty deleted. In favour of assessee.

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• 2013 (6) TMI 594
  Addition towards difference in the gross profit - additional income disclosed during survey - addition made towards excess stock - survey conducted in the case of the assessee u/s 133A - CIT(A) deleted the addition - Held that:- Undisputedly, the assessee maintains books of accounts which were produced before AO during the course of assessment proceedings who did not find any defect or discrepancy in the books of accounts. Therefore, without rejecting the books results, AO cannot make addition on account of gross profit discrepancy. Further, the conclusion of AO to the effect that the gross profit declared by the assessee is very low is without any substance as it is evident from the comparable chart given the gross profit shown in the impugned assessment year is comparable to the gross profit shown for the preceding two assessment years. It is also a fact that the assessee has incorporated the excess stock found at the time of survey in the books of accounts and has declared profit thereon. Therefore, consideration of the excess stock found separately again would amount to taxing the same amount twice. No infirmity in the order of the CIT (A) in deleting to the addition made on account of gross profit discrepancy or on account of excess stock. In favour of assessee. Unexplained deposits in the bank account - CIT(A) deleted the addition - Held that:- As it is seen from the confirmation letter forming part of the order of the CIT (A) that the creditor is an income-tax assessee and all the details with regard to the advancement of amount of Rs.20 lakhs has been mentioned in the confirmation letter. The said confirmation letter not only establishes the identity of the creditor but also proves the genuineness of the transaction by giving the details of cheque Number, bank accounts etc., through which the transaction was made. It is also a fact that the amount of Rs.20 lakhs was also repaid by the assessee through cheque. Therefore there being no doubt with regard to creditworthiness, the creditor being an Income-tax assessee, there is no infirmity in the order of the CIT (A) in deleting the addition. In favour of assessee.

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• 2013 (6) TMI 593
  Calculation of eligible exemption u/s 10A - whether communication and internet charges attributable to the delivery of computer software and expenses incurred in foreign exchange in providing the technical services outside India be included - Held that:- As decided in ITO Vs. Sak Soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] for the purpose of applying the formula under sub-section (4), the freight, telecom charges or insurance attributable to the delivery of articles or things or computer software outside India or the expenses, if any, incurred in foreign exchange in providing the technical services outside India are to the excluded both from the export turnover and from the total turnover, which are the numerator and denominator respectively in the formula. In favour of assessee. Computation of arm's length price - contention of the department that the fund transferred to the subsidiaries on account of share premium without any interest and the assessee could not furnish any such analysis to show that the premium paid was at arm's length - Held that:- The monies parked with its subsidiaries in the form of share premium have to be treated as loan transactions. Vide order sheet noting dated 28/06/2010 and 14/10/2010, the tax payer was asked to justify the funds given to its AEs in the form of share premium on the above lines. There is no compliance from the taxpayer. Being so, the TPO computed notional interest on that and disallowed the same. CIT(A) considered certain datas furnished by the assessee and allowed the claim of the assessee. Thus it is appropriate to remit the issue back to the file of the AO for deciding the issue afresh & assessee directed to place all the necessary evidences before AO what was placed before the CIT(A) for re consideration. Appeal of revenue allowed for statistical purposes.

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• 2013 (6) TMI 592
  Low gross profit disclosed - un-explained income - CIT(A) deleted the addition - Held that:- During the course of hearing assessee was required to explain the discrepancy pointed by AO on the basis of month-wise analysis of sales and purchases furnished before AO. The details of both the charts are in terms of pieces. It was pointed out that whereas in the first chart purchases were shown in the month of January 2007, February 2007 and sales in January 2007 but no such details were shown in the second chart contained. As assessee submitted that there may be typographical mistake however CIT(A) has observed that the difference had duly been reconciled in terms of pieces. Thus, it is not clear as to how the discrepancy pointed out by AO got reconciled. Thus matter be restored back to the file of AO for due verification of reconciliation statement - In favour of revenue for statistical purposes. Un-explained credit - CIT(A) deleted the addition - Held that:- Before CIT(A), the assessee furnished various details after considering which CIT(A) deleted the addition but CIT(A) accepted the evidence in contravention to the requirements of Rule 46A particularly the details, inter alia, regarding repayment of loan through account payee cheque. Therefore, restore this matter to the file of AO for deciding the issue afresh, after taking consideration the evidence as were furnished before CIT(A). In favour of revenue for statistical purposes. Commission paid disallowed - CIT(A) deleted the addition - Held that:- As far as commission paid to Shri Pramod Kumar is concerned the main reason for disallowance was that no reply was filed by the party in pursuance to the notice issued under section 133(6). Mere filing of details does not absolve the assessee of the onus cast on it to substantiate the claim for payment of commission. Thus restore the matter back to the file of AO and direct the assessee to produce Shri Pramod Kumar for proper verification of facts. In favour of revenue for statistical purposes. Addition made to the assessable income being 20% of commission paid to other eight persons - CIT(A) deleted the addition - Held that:- Once the persons responded to notice under section 133(6), it cannot be accepted that they did not accept the contents of information sought under section 133(6) unless something is brought on record to contradict the same. As AO himself had allowed 80% of the commission payment AO could not question the adequacy of commission. It is the sole prerogative of business man as to how much commission is to be paid keeping in view the nature of services rendered by persons. Thus ad hoc disallowance was wholly uncalled for with no basis for making 20% of disallowance out of the commission paid. In favour of assessee.

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• 2013 (6) TMI 591
  Transfer Pricing Adjustment - Advertisement, marketing and sales promotion expenses (AMP expenses) - Held that:- Upon careful consideration the Special Bench decision of LG Electronics [2013 (6) TMI 217 - ITAT DELHI] it has been deduced that the selling expenses do not lead to brand promotion and the selling expenses have to be excluded from the AMP expenses for the purpose of bench marking analysis - remit the issue back to the files of the TPO with directions that expenditure in connection with the sales as mentioned above cannot be brought within the ambit of advertisement, marketing and promotions expense for determining the cost / value of the international transactions & after deducting the selling price from the AMP expenses TPO shall decide the issue of AMP expenses by applying the proper comparables after hearing the assessee. In favour of assessee for statistical purposes. Adjustment on account of royalty expenses - Held that:- Agreeing with the contention of the assessee that assessee is free to conduct business in the manner that assessee deems fit and the commercial and business expediency of incurring any expenditure is to be seen from the assessee's point of view. It is a settled law that the Revenue cannot sit into the shoe of the assessee and decide what is prudent for the business. See CIT, Bombay Vs. Walchand and Co. Private Ltd.[1967 (3) TMI 2 - SUPREME Court] the expenditure has to be adjudged from the point of view of the businessman and not of revenue. It is on the basis of the same agreement the royalty was paid in earlier years wherein the payment has not been held to be non-bonafide expenditure by the TPO. Thus the TPO's conclusion that there is no benefit to the assessee from the payment of royalty is unsustainable. Furthermore, assessee has duly submitted comparable instances to bench mark royalty thus, the observation of the TPO that comparable instances were not given by the assessee does not hold water any more. As assessee has sought to justify the payment of the royalty on the basis that in the case of the assessee the concerned Ministry of Government Of India has scrutinized the payment of royalty and granted the approval, the payment cannot be regarded as non-bonafide so as to hold the arms length price thereof as NIL. The assessee has rightly considered the comparable uncontrolled price method for determining the arms length price. Thus the conclusion of the TPO that the arms length price of the royalty payment should be NIL without specifying any cogent basis is not sustainable TPO's determination is on the basis of assumption and surmises. Hence, the adjustment made by the TPO is liable to be deleted. In favour of assessee. Disallowance u/s. 40(a)(ia) - short deduction of TDS - Held that:- As DRP has duly directed the AO to verify the assessee's submissions as to whether the payment in question was subject to the TDS and the TDS amount was paid to the government treasury or not AO has not properly looked into the matter. Thus remit this issue to the files of the AO to verify whether the assessee has deducted and paid tax at source from such payment to ICC which was claimed to be deposited with the Government treasury on 28.9.2007. In favour of assessee for statistical proses.

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• Customs

• 2013 (6) TMI 603
  Refund claim - appellants paid the export cess by mistake and Revenue accepted the same, without any objection - Held that:- It seems to be a case of payment of export cess under a mistake. Neither the appellant was aware of the exemption of the same or the Revenue adviced him not to pay the cess. The decision of Aman Medical Products Ltd. vs. CC, Delhi (2009 (9) TMI 41 - DELHI HIGH COURT) wherein held that when there is no list between the assessee and the Revenue, non-filing of any appeal against the assessment order cannot act fatal to the assessee’s claim of refund. By applying the ratio of the above decision to the facts of the present case, there was no list between the appellant and the Revenue and it was a simple case of payment of export cess on a mistaken belief, which was also not rectified by the Revenue. Revenue’s appeal is accordingly rejected.

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• 2013 (6) TMI 602
  CHA - revocation / suspension of license - early hearing - whether the CESTAT was justified in declining to hear appeal expeditiously merely because the suspension order passed at Mumbai does not preclude the assessee from carrying on its business at Goa. - held that:- The fact that the assessee could carry on business at Goa cannot be a ground to deny early hearing especially when the assessee has been in fact carrying on business at Mumbai till the suspension was issued on 23-12-2009. As the assessee has been deprived of his right to carry on his business at Mumbai since 23-12-2009, it was just and proper for the Tribunal to allow the application for early hearing of the Appeal.

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• Service Tax

• 2013 (6) TMI 618
  Cenvat Credit - Input Services - housekeeping services keeping he factory premises neat and clean and construction services for construction of certain office rooms in the factory premises. - Held that:- So far as “construction services” is concerned, the same undisputedly has been used for construction of office room in the factory premises. - the definition of input service specifically covers the services used in relation to setting up, modernization, renovation or repairs of a factory, premises. Thus the construction service used for construction of office rooms of the appellant’s factory was specifically covered by the definition of input service during the period in dispute. - Decided in favor of assessee. As regards the housekeeping service, the same undisputedly has been used for keeping the factory premises neat and clean which is a statutory requirement of Section 11 of the Factories Act, 1948. In view of this, the service have to be treated as services used by the manufacturer in or in relation to the manufacture of final product as without compliance with provision of the Factories Act, manufacturing operations are not possible. - Credit allowed. - Decided in favor of assessee.

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• 2013 (6) TMI 617
  Cenvat Credit - Input Services - The services are certification of the factory work, payment made to advocates for legal services related to manufacturing activities, repair and maintenance of the factory, audit and accounting of the factory, packaging services for export purposes, advertisement expenses, quality upgradation and so on. - Held that:- From the submissions made by the appellant, the services on which credit has been availed relate to audit and accounting services, repair and maintenance services, packaging service, legal services etc. All these services have nexus and are integrally connected with the business of manufacturing and therefore, they are all eligible input service as defined in Rule 2(l) of the CENVAT Credit Rules, 2004. The decision of the Honble High Court of Bombay in the case of Ultratech Cement Ltd. (2010 (10) TMI 13 - BOMBAY HIGH COURT) applies to the facts of this case. - Credit allowed.

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• 2013 (6) TMI 616
  Cenvat Credit - Input Services - commission agent service - nexus with manufacturing - Held that:- Hon’ble Punjab and Haryana High Court in the case of C.C.E, Ludhiana vs. Ambika Overseas [2011 (7) TMI 980 - PUNJAB & HARYANA HIGH COURT] held that the assessee a manufacturer is entitled to the credit of services provided by the Overseas Commission Agent for canvassing and procuring the order as these activities are sale promotion. Revenue relied upon the decision of the Tribunal whereby the Tribunal after relying upon the decision in the case of Maruti Suzuki Ltd. [2009 (8) TMI 14 - SUPREME COURT] held in favour of Revenue. The Hon’ble Supreme Court in the case of Ramala Sahakari Chini Mills Ltd. vs. C.C.E., Meerut I (2010 (11) TMI 34 - SUPREME COURT OF INDIA) referred the matter to Larger Bench for decision on the issue. In these circumstances, and in view of the Hon’ble P & H High Court in the case of Ambika Overseas (2011 (7) TMI 980 - PUNJAB & HARYANA HIGH COURT) which is specific on the issue, therefore, I find that the impugned order is not sustainable and the same is set aside. - Decided in favor of assessee.

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• 2013 (6) TMI 609
  Filing of appeal before Commissioner (Appeals) - time limit - section 85 - Held that:- it is clear, Section 85 provides that any person aggrieved by any decision or order passed by an adjudicating authority can prefer an appeal within three months. Thereafter, if the Commissioner is satisfied that the appellant was prevented by sufficient cause from preferring the appeal, the Commissioner can allow the appeal to be preferred within further period of three months and not beyond that. In the present case, the appeal has been preferred on 05.10.2009. The order has been passed by the adjudicating authority on 27.01.2009. Copy of the order has been received by the appellant’s son who was the Managing Partner on 07.02.2009. Appellant’s son has died on 23.06.2009. There was enough time to prefer the appeal. The appellant’s son has participated in the proceedings as the Managing Partner of the firm. The knowledge can be attributed to the appellant also who is a partner. Therefore, it cannot be said the appellant was not aware of the order. Commissioner of Central Excise (Appeals) was justified in dismissing the appeal as barred by time. The appellate Tribunal has rightly confirmed it. - Decided against the assessee.

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• 2013 (6) TMI 608
  Renting of immovable property - levy of service tax - dispute between landlord and tenant - tenant refused to pay as per the terms of contract - Held that:- it is apparent that the first defence taken in the preliminary objection No.1 that the tenant was not liable to pay service tax is a defence prohibited by law inasmuch as service tax on commercial rented properties is an indirect tax and the jurisprudence on indirect tax tells us that the primary liability of the landlord to pay the tax to the Income Tax Authorities can be passed on to the tenant, for the reason as per the law it is the commercial use by the tenant which enhances the utility to the tenant with respect to the property which attracts service tax on commercial properties. Section 108 of the Transfer of Property Act, 1882 enlists the rights and liabilities of the lessor and the lessee. Suffice would it be to state that clause (l) thereof, casts a legal duty on the lessee to pay or tender the agreed rent at the proper time and proper place. Thus, notwithstanding there being or there not being a term in the lease deed, it certainly would be the duty of every tenant to pay the rent to the landlord as per the agreement. - Decided against the tenant.

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• 2013 (6) TMI 607
  Classification - Supply of cabs - Rent-a-Cab service - It is the contention of the advocate that they did not own the vehicle; that they had hired the same from other vehicle owners and supplied the vehicles to M/s. Mahindra & Mahindra as per the contract. The activity undertaken by them cannot be considered as ‘Rent-a-Cab Service' inasmuch s they have not undertaken any renting. - Held that:- the agreement was for the purpose of supply of vehicles of required specifications. The taxable service means any service provided to any person by a ‘rent-a-cab scheme operator in relation to renting of a cab and the terms rent a cab scheme operator means any person engaged in the business of renting cabs, and the cabs includes both motor cabs, maxi cabs, as defined in the Motor Vehicles Act, 1988. There is no dispute of the fact that the vehicle supplied by the appellant satisfied this criterion. There is no stipulation either in the Act or in the Rules that the person renting the cabs should also own the vehicles. So long as the person rents a cab either owned by him or cabs procured from elsewhere, the liability to pay service tax would arise and, therefore, the activity underta Regarding extended period of limitation - Held that:- the show cause notice has been issued within the time-limit specified and the demand is not time-barred. Since the appellant did not file any returns they are rightly liable to penalty under Section 77 and we uphold the same. As regards the imposed under Section 76 the said penalty is attracted for failure to pay service tax by the due dates and there is no mens rea required to impose penalty under the said Section. Therefore, imposition of penalty under Section 76 is also sustainable in law. - Decided against the assessee.

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• 2013 (6) TMI 606
  Cenvat Credit - Input services - export of goods - CHA service - rent-a-cab service - Held that:- So far as the CHA services are concerned, to the extent the same have been used for clearance of imported goods used by the appellant for manufacture the same without any doubt, would be covered by the definition of 'input service' and would be eligible for cenvat credit. As regards the rent a cab services, the same would be eligible for cenvat credit if rent a cab services had been used by the employees of appellant company for the company's work. The Tribunal in the case of Commissioner of Central Excise, Raipur Vs. Beekay Engg. & Castings Ltd. [2009 (6) TMI 96 - CESTAT, NEW DELHI], Dr. Reddy's Lab Ltd. Vs. Commissioner of Central Excise, Hyderabad, [2009 (9) TMI 287 - CESTAT, BANGALORE] and Commissioner of Central Excise, Vishakhapatnam Vs. Andhra Pradesh Paper Mills Ltd. [2010 (2) TMI 532 - CESTAT, BANGALORE] has held that when rent a cab services is availed by the officials of company for company's work the same would be eligible for cenvat credit. However the crucial question in this case is as to whether the services, in question, were used for the company's work. Though on this point the appellant from the very beginning, have pleaded that this fact is verifiable from the invoices, the lower authorities have not given any finding on this point. Accordingly on this point the matter requires to be remanded. - Decided in favor of assessee.

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• 2013 (6) TMI 605
  Cenvat Credit - "input service" credit on telephone services which are installed at the residence of the officials - Held that:- the telephones installed at the residences of the officials which are integrally connected with the business of the manufacture of final product of the appellant and the same is covered under Rule 2(l) of the CCR - Credit allowed.

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• Central Excise

• 2013 (6) TMI 615
  Cenvat Credit - welding electrodes - Held that:- . Though the Honble Andhra Pradesh in the case of Sree Rayalaseema Hi-strength Hypo Ltd. (2012 (11) TMI 255 - ANDHRA PRADESH HIGH COURT) has taken a contrary view observing that the repair and maintenance is an activity distinct from manufacture and inputs used for repair and maintenance of plant and machinery would not be eligible for cenvat credit, the other High Courts have, as mentioned above, have held that welding electrodes used for repair and maintenance of the plant and machinery would be eligible for cenvat credit. Honble Rajasthan High Court in the case of Hindustan Zinc Ltd. Vs. Union of India [2006 (5) TMI 44 - HIGH COURT RAJASTHAN] in which it was held that steel items used for repair and maintenance would be eligible for cenvat credit, has been upheld by the Apex Court as civil appeal filed by the Government against this judgement of Honble Rajasthan High Court had been dismissed. Besides this, Honble this Honble Chhattisgarh High Court in the case of Ambuja Cement Eastern Ltd. (2010 (4) TMI 429 - CHHAITISGARH HIGH COURT) has also discussed the judgement of the Tribunal in the case of Steel Authority of India Ltd.Vs. CCE and Apex Courts order dismissing the SLP appeal against the same and has observed that the Tribunals judgement is not correct and that the dismissal of SLP without giving any reasons does not lay down any law. - Credit allowed.

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• 2013 (6) TMI 614
  Recovery - circular dated 1.3.2013 - Held that:- Having regard to the identicalness of the challenge made in the instant writ petition, we deem it expedient to close this matter by giving liberty to the petitioner to lay before the authority concerned a copy of the judgment and order [2013 (4) TMI 102 - RAJASTHAN HIGH COURT] for the needful.

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• 2013 (6) TMI 613
  Condonation of delay - The reason given is that the appellant being a Division of Indian Railways, they had to forward the papers to their Headquarters for review, clearance etc. and hence, the delay. The appellant also pleads that the appellant being a Govt. department, the matter be considered leniently in view - Held that:- The Hon'ble Supreme Court in the case of Chief Post Master General vs. Living Media India Ltd. - [2012 (4) TMI 341 - SUPREME COURT OF INDIA] held that COD application by Govt. dept. cannot be done mechanically merely because the Govt. or its want was party before the Court and in absence of plausible and acceptable explanation, government cannot plead that there was no gross negligence or deliberate inaction or lack of bona fide , and liberal construction has to be adopted to advance substantial justice. The argument advanced for the delay is purely bureaucratic red-tape which is not satisfactory to this Bench. - application for condonation of delay dismissed.

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• 2013 (6) TMI 612
  Classification - sensur Rubefacient & Herbyl Skin Ointment - under 3003.39 of CETA 1985 as Ayurvedic Medicine claimed by the appellant or under 3003.10 of the CETA 1985 as P. or P Medicines (other than Ayrvedic Medicines) as claimed by the Revenue. - Held that:- The nature of the product and how it is perceived by the buyers is also required to be gone into for proper appreciation of the issue. As these details are required to be gone into at the time of regular hearing, we are of the opinion that appellant has not made out a prima facia case for complete waiver and are required to be put to certain conditions. Appellants directed to deposit an amount of Rs. 25 lakh - stay granted partly.

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• 2013 (6) TMI 611
  Cenvat credit - CR Coils - revenue authority are holding that this activity of slitting of CR Coils does not amount to manufacture and have denied the Cenvat credit availed by the appellant. - Held that:- the order of this tribunal in the case of Ajinkya Enterprises (2013 (6) TMI 610 - CESTAT MUMBAI) is squarely on the issue, which has been upheld by the Hon'ble High Court of Bombay [2012 (7) TMI 141 - BOMBAY HIGH COURT] as has been correctly pointed out by the learned counsel. - a strong prima facie case for the waiver of the pre-deposit of the amounts involved. - stay granted.

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• 2013 (6) TMI 610
  Cenvat credit - CR Coils - revenue denied the credit on the ground that credit of Cenvat was not admissible since the activity of de-coiling of HR/CR coils and cutting & slitting thereof into specific sizes as per the design of M/s. Twin Metal Products Pvt. Ltd. (SEZ Unit) and carrying out pickling and oiling did not amount to manufacture. - Held that:- in the case in hand before us, the appellants were undertaking composite activity of de-coiling of HR/CR coils thereafter cutting and slitting into specific sizes and after that pickling and oiling taken place, which was clarified by the department only on 24-6-2010 saying that the said activity does not amount to manufacture. Therefore, following instructions issued through Circular No. 911/1/2010-CX., dated 14-1-2010, the appellants approached to the Commissioner for issuance of appropriate rectification for regularization of the CENVAT credit availed as their activity does not amount to manufacture and they have paid duty on clearance of the goods more than the credit availed. The Commissioner has also considered the representation of the appellant and forwarded to the Board for issuance of the required notification. The Board has neither rejected the proposal of the Commissioner, nor issued the notification for regularization of credit availed. In that situation, we are of the view that the benefit of the Circular No. 911/1/2010-CX., dated 14-1-2010 is available to the appellants. As per Rule 3(5) of the Cenvat Credit Rules, 2004, if the activity in question of the appellants does not amount to manufacture, the appellants are required to pay duty equal to credit taken on clearance of such inputs under cover of Central Excise invoices. As in this case, the activity of the appellants does not amount to manufacture, therefore, these inputs are cleared as such. In that event, as per Rule 3(5) of Cenvat Credit Rules, 2004 the appellants are required to pay duty equal to the credit taken thereon and the appellants have paid duty more than the credit availed. The duty paid by the appellants has been accepted by the department which is admittedly more than the CENVAT credit availed by the appellants. Therefore, we hold that the appellants are not required to reverse the credit. - Credit allowed - Decided in favor of assessee.

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• CST, VAT & Sales Tax

• 2013 (6) TMI 604
  Reassessment proceedings - entry tax assessment - under the 'Gas Sale Contract', the GAIL was supplying gas to the buyers. The gas was measured by the equipments installed at the gas measuring station maintained by GAIL at the buyer's premises. The GAIL alleges that the security of the meter installed at the premises of the buyers is exclusive responsibility of the buyer concerned. If the meter was found tampered, the gas drawn beyond the metered quantity can be treated as unauthorised extraction. - The GAIL is aware of the quantities of the gas, which is alleged to be stolen by the buyers, and has raised the invoices. It is not denied that the gas was drawn, and will thus be treated to be supplied, even if the extraction was unauthorised. - The price was not paid as the quantity of the supply was not admitted. Held that:- the dishonest extraction of the gas by tampering the meter, of the unmeasured supply would not prima facie fall within the definition of theft as the consent of GAIL, in supply of gas was not absent. The unauthorised extraction of gas by tampering with the meter would at best amount to criminal breach of trust. The raising of bills for supply of such unmeasured quantity of gas by tampering of meter will amount to the consent for such supply, under the contract. Additional Commissioner has not erred in law in extending the limitation for making re-assessment of the assessment years 2004-05 and 2005-06. He has given sufficient reasons supported with the grounds of his belief, that the turnover had escaped assessment on the material furnished by the assessing authority. The Deputy Commissioner, Commercial Tax has also not committed any error of law in issuing notice for re-assessment, for which he has given sufficient grounds after considering the reply given by the petitioner. - Decided against the assessee.

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