TMI Tax Updates - e-Newsletter
June 4, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise Indian Laws

Articles

1. SERVICE TAX (SETTLEMENT OF CASES) RULES, 2012 – AN OVERVIEW.

   By: DR.MARIAPPAN GOVINDARAJAN

2. SERVICE TAX (COMPOUNDING OF OFFENCES) RULES, 2012 – AN OVERVIEW.

   By: DR.MARIAPPAN GOVINDARAJAN

3. A FOOTNOTE CANNOT GUIDE OR CONTROL A RETURN FILED BY AN ASSESSEE.

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Difficult Times Should Not Lead to Inactivity: Anand Sharma.

2. India Signs Agreement with Bahrain for Exchange of Information with Respect to Taxes.

3. Change in Tariff Value of Brass Scrap, Poppy Seeds, Gold and Silver Notified .

4. India’s Foreign Trade: April, 2012.

Notifications

Customs

1. 47/2012 - dated 31-5-2012 - Cus (NT)

Amends Notification No. 36/2001-Customs(N.T) - Palm oil, Palmolein, Soyabean Oil (Crude) and Brass Scrap (all grades) - Traiff Values.

DGFT

2. 118 (RE-2010)/2009-2014 - dated 30-5-2012 - FTP

Exemption for export of pulses to the Republic of Maldives.

Circulars / Instructions / Orders

FEMA

1. 131 - dated 31-5-2012

Overseas Direct Investments by Indian Party- Online Reporting of Overseas Direct Investment in Form ODI.

DGFT

2. 66 (RE-2010) /2009-14 - dated 31-5-2012

File applications for 9 SEZ port codes - reg.

Highlights / Catch Notes

Income Tax

• Antique and Collectible Items Classified as Capital Assets for Tax Purposes, Not Personal Effects.

  Case-Laws - AT : Capital assets vs personal effects - antique or decorative items and collectors items, cannot be classified as personal effects - AT
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• Tax Deduction Denial Overturned: Section 80IC Deduction Allowed Despite Filing Delay, Prioritizing Substantial Justice Over Technicalities.

  Case-Laws - AT : Deduction u/s 80IC - denial u/s 80AC on ground of delay in filing return - When the substantial question of justice involved technicalities should be ignored. Claim of the assessee cannot be denied on technicalities when the assessee is legally otherwise entitled for deduction - AT
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• Revising Tribunal Orders: Supreme Court's Overruling u/s 254 Applies Retrospectively as New Legal Interpretation.

  Case-Laws - HC : Legality of revision of order of Tribunal u/s 254 on ground of retrospective overruling - Judicial decision acts retrospectively. Judges do not make law they only discover or find the law. Thus, where a decision of the Supreme Court overrules an earlier decision, the views expressed in the later decision would have to be regarded as having always been the law. The overruling is, therefore, retrospective. - HC
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• Section 73: "Carried On" Means Actual Conduct of Activities, Not Just Objectives in Memorandum of Association for Tax Purposes.

  Case-Laws - HC : Speculation business - The words "carried on" stated in Section 73 mean actual carrying of the activity and it has to be read in context of what actually was done by the company in the relevant year, rather than what was main object in the Memorandum of Association of the company. - HC
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• Section 43B Disallows Unpaid Entry Tax, Welfare Cess, Provident Fund, and Interest Before Tax Return Filing.

  Case-Laws - HC : Dis-allowance u/s 43B - entry tax, welfare cess, Provident fund, Interest to public institutions - expenditure dis-allowed for want of proof that taxes have been paid before filing the return - HC
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• Expenditure on Satellite Space for Qualifying Services: No Disallowance or Notional Income Deduction Allowed.

  Case-Laws - HC : Deduction - no income or receipt was shown - In case the assessee incurs expenditure to buy and utilize space segment on a satellite for providing the qualifying services, the expenditure incurred cannot be disallowed and no notional income can be computed or reduced from the income earned from the qualifying service. - HC
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• Vacancy Allowance Not Applicable for Non-Let Properties u/s 23(1)(c) of the Income Tax Act.

  Case-Laws - AT : Income from House Property - In case the property is not let out at all during the previous year, no vacancy allowance can be given u/s 23(1)(c). - AT
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• High Court examines unexplained cash credits u/s 68; stresses accurate determination of relevant "previous year" for assessment.

  Case-Laws - HC : Unexplained cash credits - addition made u/s 68 of cash credits, related to the earlier previous year - The phrase "previous year" is very relevant. - HC
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• Section 142 Notice Alone Doesn't Equal Cooperation if Information Isn't Provided; Section 292BB Presumption Not Applicable.

  Case-Laws - AT : Mere receipt of notice u/s 142 calling for information but not furnishing information in response to the notice, cannot be said to have 'co-operated in any inquiry - provisions of Section 292BB are not attracted - AT
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• Notice Sent to PAN Address Invalid u/s 143(2) as Returned by Postal Authorities; Not Sent to Return Address.

  Case-Laws - AT : Valid service of notice u/s 143(2) - notice u/s 143(2) send to assessee at the address(given by assessee while applying for PAN), other than that given in the return of income for the year under consideration and earlier AYs, which was eventually returned by the postal authorities - notice is invalid - AT
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• Indian Agent Not a Permanent Establishment Under Mauritius DTAA; No Habitual Contract Authority Found.

  Case-Laws - AT : Dependent Agent - Permanent Establishment - On facts it cannot be said that the Indian Representative has “habitually exercises” authority to conclude contracts. - Mauritius DTAA is not attracted in this case. - AT
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• Deduction for Scientific Research u/s 35(2AB) Requires Research to Be Conducted In-House Using Own Resources.

  Case-Laws - AT : Expenditure on Scientific Research - deduction u/s 35(2AB) - The term "in-house" means, in the present context, that by utilizing the staff of an organization or by utilization of resources of the organization if a research is conducted within the organization; rather than utilization of external resources or staff; then it can be called as in-house research. - AT
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DGFT

• DGFT Grants Exemption for Export of Pulses to Maldives, Boosting Bilateral Trade Relations and Supply Chain Stability.

  Notifications : Exemption for export of pulses to the Republic of Maldives. - Notification
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• DGFT Circular on Filing Applications for Nine SEZ Port Codes: Procedures and Requirements for Stakeholders.

  Circulars : File applications for 9 SEZ port codes - reg. - Circular
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FEMA

• Indian Entities Must Report Overseas Investments Online via Form ODI Under FEMA Guidelines for Compliance and Monitoring.

  Circulars : Overseas Direct Investments by Indian Party- Online Reporting of Overseas Direct Investment in Form ODI. - Circular
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Corporate Law

• Registrar's Website Error: 0.5% Stamp Duty on Increased Share Capital Not Legally Supported Without Act Amendment.

  Case-Laws - HC : Mere fact that the website of the ROC indicates that stamp duty shall be 0.5 per cent of amount on increase in the authorized share capital does not lend a legal basis for such levy, in the absence of any amendment to the Act to that effect. - HC
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• BIFR empowered under SICA Sections 22 and 22A to rehabilitate financially distressed companies through strategic recovery schemes.

  Case-Laws - HC : Whether scheme of section 22 and section 22A empowers BIFR to take all such measures which, in opinion of Board, are necessary to bring company out of its sickness and make it viable on implementation of scheme framed by operating agency - powers of the Board under Section 22(3) of SICA - HC
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Service Tax

• No Show-Cause Notice Needed for Delayed Service Tax Payment u/s 73(3); Penalties Considered Unnecessary.

  Case-Laws - AT : Delayed payment of service tax - provisions of sub-section (3) of Section 73 is clearly attracted in the facts of the case and issuance of a show-cause notice for demand of service tax and imposition of penalties was not at all warranted. - AT
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• Service tax credit is allowed for payments to both foreign and domestic commission agents for sales promotion.

  Case-Laws - AT : Service tax credit taken on commission agent services - If the credit paid to foreign commission agents for sales promotion is admissible, naturally, service tax paid to commission agents for sales promotion within the country also would be admissible. - AT
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• Assessee Not Required to Reverse 8% or 10% Credit if Input Credit on Exempted Products is Reversed.

  Case-Laws - AT : If the assessee reverse the credit taken on inputs which has gone into the manufacture of the exempted final products, in that case the assessee is not required to reverse 8% or 10% of the amount of the exempted products. - AT
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Central Excise

• Examining SSI Exemption Eligibility for Manufacturers Under Notification Nos. 8/99-CE & 10/99-CE in Central Excise Regulations.

  Case-Laws - AT : SSI Exemption - Simultaneous availment of benefit of Notification No.8/99-CE, dt.28.2.99 and Notification No.10/99-CE, dt.28.2.99, on the clearances of excisable goods i.e. air conditioning and Hi-Fi systems - AT
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• Central Excise Case: Extended Limitation Period Not Applicable Due to Revenue Neutrality Principle.

  Case-Laws - AT : Extended period of limitation – Revenue neutrality - Demand set aside - AT
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Case Laws:

• Income Tax

• 2012 (6) TMI 41
  Capital assets vs personal effects - Whether articles like carpets, paintings, antique watches, antique furniture and other household items sold by the assessee are capital assets or personal effects - Held that:- There is no direct evidence available before us in support of the claim of the assessee that these inherited and gifted articles were in personal use by the assessee or his dependent family members, or in which premises these were located or in use. The frequency of use of the property depends on the nature of the property. In the absence of nature and full description of each of the household articles or furniture and collector items in the confirmation of sales placed, nor any evidence of intimate connection between the effects and the person of the assessee having been placed before us, we hold that same cannot be classified as personal effects u/s 2(14). Further, we are of the opinion that antique or decorative items and collectors items, cannot be classified as personal effects - Decided against the assessee.

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• 2012 (6) TMI 40
  Deduction u/s 80IC - denial u/s 80AC on ground of delay in filing return - assessee contended that delay was for the reason beyond the control of the assessee - Held that:- In this case admittedly, assessee filed belated return of income on 23.12.2008. Assessee submitted that its computer got corrupted due to viruses and in spite of continuous efforts by the computer technical personnel to retrieve the data in time for filing the return of income, problem persisted in the system. The entire data for the two months period, February and March, 2008, had to be re-entered into the computer system again. On preparation of the final accounts and finalising of statutory audit it took a little extra time that resulted in belated filing of return of income. Thus there was a delay of 74 days in filing the return of income which is beyond the control of assessee. This was also confirmed by the statutory auditor vide his letter dated 20.3.2011. Being so, in our opinion there is a reasonable cause for filing the return of income belatedly and this is beyond the control of the assessee. When the substantial question of justice involved technicalities should be ignored. Claim of the assessee cannot be denied on technicalities when the assessee is legally otherwise entitled for deduction - Decided in favor of assessee.

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• 2012 (6) TMI 39
  Legality of revision of order of Tribunal u/s 254 on ground of retrospective overruling - Penalty imposed u/s 271(1) if returned income is a loss - Revenue contended that order of Tribunal had been based entirely on the decision of the Supreme Court in Virtual Soft Systems Ltd ( 2007 (2) TMI 147 - SUPREME COURT] and the latter decision had been subsequently overruled by a larger Bench of the Supreme Court in Gold Coin ( 2008 (8) TMI 5 - SUPREME COURT] there was a mistake apparent on the face of the record - Held that:- Judicial decision acts retrospectively. Judges do not make law they only discover or find the law. Thus, where a decision of the Supreme Court overrules an earlier decision, the views expressed in the later decision would have to be regarded as having always been the law. The overruling is, therefore, retrospective. In present case, Supreme Court decision in Gold Coin has to be regarded as the law as it existed when the order was passed by Tribunal, there is a clear mistake apparent from the record. Only limitation for correcting the mistake is that imposed by the provisions of Section 254(2) itself and that is only with respect to time. Since, application for rectification having been made in time, the order of the Tribunal recalling its earlier order cannot be faulted.

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• 2012 (6) TMI 38
  Deeming provision of carrying speculation business under Explanation to Section 73 - set off of loss incurred by assessee on purchase and sale of shares denied from other income on ground that said loss is speculation loss and assessee is not covered under exclusionary clause of Explanation to Section 73 - Revenue contended that principal business of the company is not granting loans and advances as the same is not specified in Memorandum of association - Held that:- The words "carried on" stated in Section 73 mean actual carrying of the activity and it has to be read in context of what actually was done by the company in the relevant year, rather than what was main object in the Memorandum of Association of the company. Further, Assessment order refers to only interest income and does not refer to any other income, hence assessee mainly earned income from interest from granting loans and advances. Therefore, assessee was clearly covered by the exclusionary clause of Explanation to Section 73 and the Tribunal rightly set off the losses from sale and purchase from the income of the assessee from loans and advances - Decided in favor of assessee.

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• 2012 (6) TMI 37
  Law of Limitation - validity of notice issued u/s 147 purporting re-opening of assessment after the expiry of nine years from the end of relevant AY - assessment for AY 1998-99 purported to be reopened - applicability of Finance Act 2001 substituting time limit u/s 149 - Revenue contended that Section 149 before its substitution would apply prescribing time limit of 10 years - Held that:- Law of limitation, being procedural law has to be applied to the proceedings on the date of institution/filing. It is a settled position that liability to tax as a levy is normally determined as per statute as it exists on the first day of the AY. In present case, issue is of procedure i.e. the time period in which the assessment or re-assessment proceedings can be initiated, on which it is held that time period/limitation period prescribed on the date of issue of notice will apply. Therefore, where Finance Act, 2001 reduced limitation period u/s 149 from 10 years to 6 years w.e.f. 1-6-2001, all notices issued on or after 1-6-2001 should conform to the revised reduced time limit of 6 years - Decided in favor of assessee.

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• 2012 (6) TMI 36
  Addition made on account of dis-allowance u/s 40(A)(3), charity & donation, dis-allowance towards entertainment and dis-allowance on depreciation - addition made on account for want of proof - AY 89-90 - Held that:- Said adjustments are impermissible and not mandated u/s 143(1)(a)(iii). Aforesaid additions relate to debatable issues or aspects which required examination of explanation or production of documents which were not required to be filed with the return - petition allowed. Dis-allowance u/s 43B - entry tax, welfare cess, Provident fund, Interest to public institutions - expenditure dis-allowed for want of proof that taxes have been paid before filing the return - Held that:- In the present case, there was lapse and failure on the part of the assessee to file the requisite document as per Section 43B to show evidence for payment of tax etc. on or before the due date of filing of the return. Thus, the AO had rightly made and was justified in making prima facie adjustment for want of mandatory documents. Even in the writ petition filed before this Court, it is not pleaded or averred that the amounts in question were paid on or before the due date of filing of the return. Petition dismissed

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• 2012 (6) TMI 35
  Registration u/s 12AA - denial of registration by CIT(A) on ground that assessee trust has surplus more than 15% of total receipts, application of income and that in spite of various objects, the society is only carrying out educational activities and no expenses regarding other activities has been reflected in the Income and Expenditure account - Held that:- To consider whether the said society would be entitled to the benefits u/s 11 and 12 would be pre-judging the issue before the grant of certificate. At the stage of grant of certificate u/s 12A/12AA, the only enquiry which is to make by the Commissioner would be about the objects of the trust or institution and the genuineness of its activities. Undoubtedly the objects of the Samiti are for education and charitable purposes. The CIT has not doubted about the genuineness of activities, therefore, CIT has wrongly rejected the application for registration on the basis of incorrect facts, regarding application of income which is not the part of examination by him at the stage of granting registration u/s 12A/12AA - CIT directed to grant registration.

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• 2012 (6) TMI 34
  Deduction u/s 80IA - assessee engaged in providing satellite based telecommunication solutions - AO on observing that payment was made to British Telecom (Worldwide) and no income or receipts was shown as earned from any third party made addition holding that the income included income from satellite services not in the nature of domestic satellite service - Held that:- As long as assessee was providing broadband/internet services and had received payments for the specified services, the income earned would qualify for deduction u/s 80IA(4)(ii). In case the assessee incurs expenditure to buy and utilize space segment on a satellite for providing the qualifying services, the expenditure incurred cannot be disallowed and no notional income can be computed or reduced from the income earned from the qualifying service. In view of absence of details, we remit the matter to the tribunal to examine the said aspect afresh. Tribunal has to examine and clearly decide nature and character of service rendered by the assessee to third parties and whether the same qualifies and is a prescribed/stipulated service u/s 80IA. Exclusion of sales of equipments from the deduction claimed u/s 80IA on ground that income is not derived from specified services - Held that:- Nature of each contract has to be examined. It has to be ascertained whether it was a case of supply of goods or was it composite contract of providing equipments with telecommunication services. In case, the sale of goods was inextricably linked, had nexus and was connected with the primary purpose of providing or starting telecommunication services, the assessee will be entitled to benefit u/s 80IA - Remitted back to Tribunal. Income earned from development and sale of software upgrades for smooth and trouble free working of VSAT service provided by the appellant - whether qualify for deduction u/s 80IA - Held that:- Nature, character and type of the software and whether or not it could be treated and regarded as income earned from the business referred to in sub-section (4) clause (ii) to Section 80IA has not been examined and considered, therefore, this issue is accordingly remitted to the tribunal for a fresh decision. Exclusion of Interest income on FDR and other income - Held that:- In Liberty India v. CIT [2009 (8) TMI 63 (SC)] it is held that highlighted Section 80IA is a profit linked incentive and only profits “derived from” eligible business are entitled to deduction. The expression “derived from” covers sources not beyond the first degree. Devices to inflate or reduce profits from eligible business should be rejected. Therefore, in absence of details, matter remitted back to tribunal to examine quantum of expenditure incurred/attributed to earning of exempt income u/s 80IA.

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• 2012 (6) TMI 33
  Income from House Property - assessee, owner of a house property having ground plus 4 storey building did not declared any income from the said property - assessee contending Municipal Rateable Value (MRV) to be annual value whereas Revenue determining the same to be on the basis of 8.5% returned on the investment made of the property - claim of vacancy allowance in respect of floors vacant during the year - assessee also contended that floors occupied by partnership firm and companies for carrying out business should be excluded - Held that:- In case the property is not let out at all during the previous year, no vacancy allowance can be given u/s 23(1)(c). Vacancy allowance can be given only when the property is let and vacant for part of the year. See Vivek Jain vs ACIT [2011 (1) TMI 897(HC)] - Decided against the assessee. Portion used for business purpose - Held that:- Portion of the property used by the partnership firm in which assessee is a partner has to be excluded from the total income. However, portion used by the company in which the assessee was share holder and director, cannot be considered for exclusion as company has separate and distinct identity and business being carried on by the company can not be considered as business done by share holder or director - Decided partly in favor of assessee. Fair rental value has to be determined on the basis of comparative cases in the locality and other relevant factors. The return on investment may not always be a reliable indicator of fair rent of the property which depends upon market conditions such as demand and supply position in an area. A comparative case in the locality will be the best guide for determination of fair rent. Issue regarding determination of fair ALV, restored to the file of AO.

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• 2012 (6) TMI 32
  Unexplained cash credits - addition made u/s 68 of cash credits, related to the earlier previous year - Held that:- The phrase "previous year" is very relevant. This indicates that the cash credits which has not been found satisfactorily explained can be added in the income of the assessee of that previous year in which those cash credits were recorded in the account books. The cash credits made in the earlier financial years could not be added in the income of the assessee. Also, in view of non-rejection of books of accounts by Assessing officer, it is held that Tribunal has committed no illegality in confirming the order passed by the CIT(A) deleting the additions - Decided in favor of assessee.

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• 2012 (6) TMI 18
  DTAA between India & USA - contract for repair and overhauling services of turbines - whether Fees for Technical Services(FTS) - assessee (USA company) in addition to contract for supply and installation of turbines had entered into yet another contract for repair and overhaul services of the turbines - scope of work included inspection and boroscoping periodically - liability for withholding taxes - Held that:- Portion of the consideration must be assigned to the inspection and the boroscoping activity that takes place in India and part of the amount has to be ascribed to the modifications incorporated by the applicant in respect of which it grants a non-exclusive license to ONGC for its own use directly or through its contractors. Those parts of the receipts attributable to inspection and boroscoping activity carried on at the site in Mumbai though arise in India are not taxable as included services under Article 12 of the DTAC, but if the applicant is found to have a permanent establishment in India, taxable as its business income, but that part of the receipts attributable to the services rendered in modifications and replacement of parts covered by engineering, designs, data and specifications delivered to ONGC in terms of the contract, are taxable as included services in India under Article 12 of the DTAC between India and USA as provided for therein. Therefore, payments are not taxable under the Income-tax Act, but only under the DTAC between India and USA. Also, tax has to be withheld u/s 195 on that part of the apportioned payment.

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• 2012 (6) TMI 17
  Addition u/s 56(2)(v) with regard to the alleged loans taken by the assessee - addition made on the ground that the assessee could not show that the loans had been repaid and since no interest was paid on the purported loans, the said amounts were to be regarded as payments received without consideration - Held that:- Since the material with regard to the repayment of the loan was not before the Tribunal, hence it would be appropriate if the impugned order is set aside and the matter is remitted to the Tribunal to consider the issue afresh.

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• 2012 (6) TMI 16
  Valid service of notice u/s 143(2), sine qua non for making assessment u/s 143(3)/144 - best judgement assessment - notice u/s 143(2) send to assessee at the address(given by assessee while applying for PAN), other than that given in the return of income for the year under consideration and earlier AYs, which was eventually returned by the postal authorities - Held that:- Sending of notice on the address, other than that given in the return of income, which was eventually returned by the postal authorities, does not amount to either service or deemed service of such notice. Further, notwithstanding the fact that change of address was not intimated by the assessee as per the provisions of section 139A(5), the legal consequences for non-service of notice u/s 143(2) on the address provided in the return itself, cannot be brushed aside. It is duty of AO to find out correct address. Effect of Section 292BB - Held that:- Assessment order reveals that the assessee did neither appear before the A.O. nor co-operated in any inquiry relating to assessment. Mere receipt of notice u/s 142 calling for information but not furnishing information in response to the notice, cannot be said to have 'co-operated in any inquiry in relation to an assessment or reassessment'. Hence provisions of Section 292BB are not attracted and it is held that there is no valid service of notice u/s 143(2) rendering assessment order passed void ab initio - Decided in favor of assessee.

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• 2012 (6) TMI 15
  Dependent Agent - Permanent Establishment - assessee, a Mauritius company, engaged in telecasting TV channels had an advertisement collection agent in India who collected revenue from time slots given to Indian advertisers - assessee claimed that its profits from India were not chargeable under the DTAA because (i) it did not have a PE and (ii) even if Indian agent is assumed to be PE, the agent had been remunerated at ALP and further profits could not be attributed - Revenue contending that as the assessee was dependent on the Indian agents, the Indian agents constituted a “Dependent Agent PE” - Held that:- A plain reading of clauses of agreement demonstrates that Indian agent is not the decision maker, nor it has the authority to conclude contracts. The agent has no authority to fix the rate or to accept an advertisement. It can merely forward the advertisement and the assessee has the right to reject. The agent is independent contractor and is not servant or employee of the assessee. On facts it cannot be said that the Indian Representative has “habitually exercises” authority to conclude contracts. In the case on hand, there is neither legal existence of such authority, nor is there any evidence to prove that the agent has habitually exercised such authority. In fact, the Principal has raised all the invoices. Thus Article 5.4 of indo- Mauritius DTAA is not attracted in this case. Further, Article 5.5 states that “when the activities of such an agent are devoted exclusively or almost exclusively on behalf of the assessee enterprises”. These wordings refer to the activities of an agent and its devotion to the non-resident and not the other way round. In present case, Indian agent's revenue from Non-resident constituted merely 4.69% of the total income and hence cannot be termed as dependent agent. Neither Article 5.4 nor Article 5.5 of the Indo-Mauritius DTAA are attracted this case. Hence, the assessee has no P.E. in India. Alternatively, even if it is held that there is a PE of the assessee in India, then we hold that as the rate of commission of 15%, was accepted as ALP by the TPO for A.Y. 2003-04 to 2003-04 and 2004-05, no further profit is attributable to the P.E. This is the rate mentioned in Board Circular No. 742 of the order 1996

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• 2012 (6) TMI 14
  Correctness and sustainability of order imposing a condition upon the petitioner to satisfy further 15% of the total alleged liability, inspite of the fact that the petitioner has already satisfied 60% of the demand - petition sought interception of order because of the pendency of the appeal and the nature of challenge involved - Held that:- It is an undisputed fact that, out of the alleged total liability, 60% stands satisfied. That apart, the petitioner being a fully owned Government undertaking, the respondents need not be apprehensive of the possible chance of realisation of the amount if at all due from the hands of the petitioner, as and when the proceedings are finalized. Such condition imposed is waived off and the petitioner is declared as eligible to avail the benefit of absolute stay during the pendency of the appeal - Decided in favor of petitioner.

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• 2012 (6) TMI 13
  Expenditure on Scientific Research - deduction u/s 35(2AB) - Revenue denied weighted deduction in respect of Clinical Trial and Bio-equivalence Study on ground that research were not incurred by the assessee in the approved in-house facility - Held that:- The term "in-house" means, in the present context, that by utilizing the staff of an organization or by utilization of resources of the organization if a research is conducted within the organization; rather than utilization of external resources or staff; then it can be called as in-house research. Language of Section do not suggest that the research is to be conducted within four walls of an undertaking. To conduct the research, data may be collected from several resources, both, within the premises or outside the premises and then researched upon in in-house research facility. Once the scientific research facility is approved, then the expenditure incurred on research and development facility has to be allowed for weighted deduction u/s.35(2AB) - Decided in favor of assessee. Restriction of deduction u/s 80IC on ground that assessee had shown abnormally higher profit of Baddi Unit to claim deduction - AO suggested that, sales of Baddi Unit must be recorded at arm's length price for internal transfer and not the ultimate sale price - Held that:- This is a case where manufacturing products were sold through C&F in the market. Even this is not the case that first sales were made by the Baddi Unit in favour of the head office or the marketing unit and thereupon the sales were executed by the head office to the open market. Once it was not so, then the fixation of market value of such good is out of the ambits of this section. If there is no intercorporate transfer, then the AO has no right to determine the fair market value of such goods or to compute the arm's length price of such goods. Statute do not subscribe such deemed inter-corporate transfer but subscribe actual earning of profit, then the impugned suggestion of the AO do not have legal sanctity in the eyes of law Regarding AO's proposition of segmentation of eligible profit of the manufacturing unit it is held that when the method of accounting as applicable under the Statute do not require segregation or bifurcation of profit of a unit into manufacturing profit and trading/marketing profit, it is no correct on the part of AO to resort to such segregation or bifurcation. There is no such concept of segregation of profit. Rather, the profit of an undertaking for section 80IA deduction purposes should be computed as a whole by taking into account the sale price of the product in the market. Legal and professional expenses incurred for expansion of business - dis-allowance - Revenue contending the same to be pre-operative expenses of a capital nature - Held that:- It has been demonstrated that the expenditure in question was not for setting up a new line of business but for the setting up a new production unit for expansion of the same line of business already in existence hence allowable as revenue expenditure - Decided in favor of assessee. Product Registration Expenses, Trademark Registration Fees, Patent Registration Fees and reimbursement of expenses for Product Registration Support Services - dis-allowance - Revenue contending the same to be intangible assets eligible for depreciation u/s 32 - Held that:- Payments in question are inextricably linked with the working of the assessee's business. By incurring those expenditure the assessee has not acquired any new right of permanent character. The licenses or the registrations are required to be renewed and therefore part of the day to day running expenditure of the business. In the absence of creation of any new asset we hereby held that such an enduring benefit may not tantamount to rendering of capital expenditure - Decided in favor of assessee. Dis-allowance u/s 14A - Held that:- In present case, on one hand the direct nexus of utilization of assessee's own funds towards investment in the impugned equity shares was not established and on the other hand from the side of the Revenue equally it was not placed on record that having regard to the accounts of the assessee the A.O. was not satisfied with the claim by the assessee that no expenditure has been incurred in relation to income which does not form part of the total income. Matter restored back to file of AO. Transfer Pricing - adjustment to ALP - eligibility for availability of benefit of variation between ALP and price determined u/s 92C(2) - Held that:- The matter requires reconsideration at the level of the AO only to examine the correctness of the computation as suggested by the assessee and if any relief is permissible, then the same can be granted but as per law. partial relief provided by DRP by allowing mark-up @ 2% is not disturbed. MAT - provision for doubtful debt not added to the book profit for computing income u/s 115JB - Held that:- Provision for doubtful debt to be added to the book profit for computing income u/s 115JB - Decided against the assessee. Benefit of carry forward of MAT credit u/s 115JAA - Held that:- Since the necessary facts are yet to be examined, therefore, we refer this ground back to the stage of the Assessing Officer to decide accordingly.

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• 2012 (6) TMI 12
  Bad Debts - Revenue contended dis-allowance on the ground that the assessee did not make sufficient efforts to recover the money and that the entire transaction was only a paper transaction - Held that:- Entire matter is one of fact and the question as to whether the amounts were actually written off in the books of accounts by the assessee is a factual finding arrived at by the Tribunal on a perusal of the ledger account of the debtor in the books of the assessee. Once the factual position is admitted/ accepted, the challenge by the Revenue must fail in view of the decision of the Supreme Court in T.R.F. Limited v. CIT[2010 (2) TMI 211 (SC)] - Appeal dismissed.

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• 2012 (6) TMI 11
  Legality of remit order passed by Tribunal - addition of share application money u/s 68 - assessee contended that Tribunal had sufficient material to to decide the question of addition and there was no necessity for remitting the matter before the Assessing Officer - Held that:- Tribunal noticed that identity of the share holders has not been established in order to ascertain the genuineness of transactions and it being satisfied that matter needs further inquiry and decision afresh, has chosen to remand the matter to the Assessing Officer. Issues have not been closed by the Tribunal nor any of the grounds raised by the appellant has been finally determined, petitioner has still opportunity to prove his claim as is sought to be raised in the present appeal. No substantial question of law arises for consideration - Appeal dismissed.

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• 2012 (6) TMI 10
  Penalty under section 271(1)(b) of the Income-tax Act - fault for non-compliance of hearing - assessee stated that notice dated had been sent to the old address and therefore, not received - non-receipt of notice was the reason for the assessees' non-appearance – Held that:- Penalty will not also be imposed merely because it is lawful to do so. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act, or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute". orders of the authorities below set aside and delete the levy of penalty. appeals filed by the assessees are allowed.

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• 2012 (6) TMI 9
  Disallowance of depreciation - assessee company claimed the depreciation on the re-valued amount of trade mark, but the A.O disallowed the same on the reason that M/s. Balaji Pens Pvt. Ltd. (the assignor) had voluntarily agreed as on the date of assignment to M/s. Veekay Industries ( assignees) along with the actual of the said trade mark ‘Pik’ which was registered for the token consideration of Rs. 100 – matter remanded to CIT(A) for fresh adjudication in the light of the direction given in the preceding years i.e. A.Y. 1999-00 to 2004-05 Disallowance - assessee has debited the donation of Rs. 39,200/- to the Profit & Loss Account . The A.O was of the opinion that the same was not allowable. The assessee contended that the company is labour intensive and manufacturing writing instruments. The assessee’s unit is based in Gujarat and to carry on the business smoothly by maintaining harmonious relations has given donations on various occasions to encourage the workers as well as the local people on the occasion like Navaratri etc., The assessee contended that the same expenditure is allowable u/s. 37(1) – Held that:- expenditure was incurred for maintaining the healthy relations with the worker and peoples in the locality but at the same time, nothing is disputed that the said were the donations. no interference is called for and we accordingly confirm the disallowance Bad debts/balance written off by treating it as a capital loss - assessee has debited to the Profit & Loss A/C. an amount of Rs. 2,96,135/- on account of bad debts/balance written off - assessee explained that the said amount represented the amount advanced to Balaji Pens Pvt. Ltd., for machinery and as the machinery was not supplied, and hence, the un-recovered amount was written of treating the same as an expenditure for the purpose of business u/s. 39(1) of the Act. The A.O rejected the claim of the assessee on the reason that the amount was paid for purchase of the machinery and therefore, any loss incurred on a/c of same is a capital loss – Held that:- In the case of Anjani kumar Co. Ltd. (2002 (7) TMI 44 (HC), the appellant had written off the advances made to the agriculturists for purchase of the agricultural land and the land was to be acquired to set up a factory but ultimately that was not materialized and the agriculturists to whom the advance was given also refused to give the amount. On the above facts, their Lordships held that the same has to be treated as a revenue expenditure. allow the ground taken by the assessee and delete the addition of Rs. 2,96,135/- treating the same as a revenue expenditure u/s. 37(1) of the Act as admittedly, no capital asset came into existence Disallowance of Employees Contribution to PF and ESIC - payment of the Employees Contribution to P.F./E.S.I.C beyond the Grace period - A.O made the disallowance u/s. 36(1)(va) as he was of the opinion that the Employees Contribution to PF/ESIC even if made before filing of the return of income is not covered u/s. 43B of the I.T. Act – Held that:- In the case of Alom Extrusion Ltd.( 2009 (11) TMI 27 (SC)), the issue before their Lordship was whether the omission of second proviso to Section 43B of the I.T. Act 1961 by the Finance Act 2003 operated w.e.f. 1.2.2004 or whether it operated retrospectively w.e.f. 1.4.1988. In the said case also, the issue was concerning the contribution payable by the employer to the P.F/Superannuation Fund or any other Fund of welfare of the employees. decision in favour of the Assessee, assessee’s appeal is partly allowed for the statistical purposes

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• 2012 (6) TMI 8
  Whether service rendered by the non-resident company was technical service - non-resident company, M/s. Rolls Royce Pvt. Ltd., Singapore, represented by ONGC in terms of the contract between the ONGC, inspected the existing control system of three units of RR avon gas generator driven process gas compressor at SHP platform and for utilizing services of engineer for Y2K roll over time at off- shore installation in India – Held that:- company has received fee as con- sideration for the services rendered which were technical in nature and which could not be rendered by anyone else who does not have the tech- nical expertise of that RR avon gas generator driven process gas compres- sor or Y2K roll over time at offshore installation as he could not be able to inspect and give advice. Therefore, the advice given was purely technical in nature and accordingly it is held that the service rendered was a technical service squarely covered under Explanation 2 appended to clause (vii) of sub-section (1) of section 9 which has been adopted by reference under section 44D and section 115A of the Act. Decided in favour of the Revenue

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• Customs

• 2012 (6) TMI 31
  Appeal filed against Establishment Order dated 18.03.10 whereby Commissioner of Customs has suspended licence of the Appellant under Regulation 20(2) of the Customs House Agents Licensing Regulations, 2004 (CHLAR) - Held that:- It is observed that Commissioner has revoked the licence of the Appellant vide his Order dated 13.04.2012. In these circumstances, the Appeal filed by the Appellant against the Establishment Order dated 18.03.10 has become infructuous and is accordingly dismissed.

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• 2012 (6) TMI 30
  Clearance of imported goods - Allegation of Infringement of trade mark - Trade Marks Act, 1999 - valuation - Held that:- respondents must pass an appropriate order indicating the legal basis on which the action is proposed and also the nature of the action proposed for such perceived violation of law on the part of the respondents after giving a reasonable opportunity to the importer to meet the case against him. - Instead of proceeding to determine the duty leviable on the imported goods by following the appropriate procedure or passing an order of confiscation if they believe that they are justified in the facts and circumstances, the respondents, it appears, are indefinitely detaining the goods without any appropriate order being passed thereon. Such a course of action, is absolutely illegal. respondents are required to take a decision expeditiously either to make a regular assessment or a provisional assessment or a decision to confiscated the goods in question if it is permissible under law after following appropriate procedure or provisionally release the goods under Section 110-A of the Customs Act. Writ petition allowed

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• 2012 (6) TMI 7
  Petition for adjudication of matter relating to the imported second hand Digital Multifunction Print, Copying Machines, Photocopier Machines, spares and accessories - goods detained by custom for want of import license - Held that:- In view of the fact that the goods had already been released by way of the interim orders passed by this Court on finding that goods in question would not fall under the `restricted or prohibited category of goods, as they had been imported under the freely importable category. No licence or permission is needed for such imports, hence, it is found to be appropriate to direct the respondents to adjudicate the matter relating to the goods in question and to pass appropriate orders thereon, as expeditiously as possible.

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• 2012 (6) TMI 6
  Exemption Notification - categorization - duty free import of medical diagnostic equipment - Petitioner failed to fulfil the continuous obligation – authority has proceeded to reject the application for re-categorization in category 1 instead of category 2 for the reason that the Petitioner had initially been categorized in category 2 - Deputy Director General has observed that the Petitioner has never been approved as a charitable hospital either by the DGHS or the Union Ministry of Health and Family Welfare – Held that:- Petitioner falls within the description of a hospital run or substantially aided by a charitable organization. Having regard to the fact that the Petitioner has been registered as a Public Charitable Trust under the Bombay Public Trusts Act, 1950 since 1953 and also holds an exemption under Section 80G of the Income Tax Act, 1961, ground on which the Application for change in categorization was rejected by the Deputy Director General, is ex facie contrary to the law as expounded by the Supreme Court. circumstance that the notification dated 1st March 1988 had come to an end cannot be a ground to reject the plea for re-categorization. Petition allowed by setting aside the impugned order. Deputy Director General shall reconsider the Application submitted by the Petitioner for re-categorization under category 1

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• Corporate Laws

• 2012 (6) TMI 29
  Limitation - alleged violation of section 295 of the Act - Criminal Procedure Code the time limit for taking cognizance of the offence is one year from the date of its commission or knowledge by inter alia the person aggrieved by it – Held that:- application was filed on 4-8-2010. On that date no criminal complaint was lodged by the Registrar of Companies. Therefore, if he is fixed with knowledge of the alleged offence by 22-12-2008, cognizance of the offence was barred when this application was filed. If cognizance of the offence is barred the alleged complaint is liable to be dismissed and the accused discharged. cognizance of the alleged offence is barred by the laws of limitation

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• 2012 (6) TMI 28
  Authority and competence to levy and collect stamp duty on the increased authorized share capital under the Indian Stamp (Delhi Amendment) Act, 2007 - public limited company - Petitioner was directed to pay the stamp duty on increase in the authorized share capital by 15-4-2010 failing which the e-Form 5 would be treated as invalid and would not be taken on record in terms of Regulation 17 of the Companies Regulations, 1956. The Petitioner then wrote to the ROC on 4-3-2010 stating that there is no provision in the Delhi Stamp Act to pay the stamp duty on increase in the authorized share capital. However, the ROC insisted by e-mail dated 15-4-2010 that the Petitioner should file Form-67 in all respects and clarified that if the stamp duty is not paid by the Petitioner, the amount of Rs. 58,25,000 deposited with the ROC will stand forfeited - Held that:- Articles of Association and the Memorandum of Association of a company are required to be submitted at the time of registration of the company. At that stage stamp duty is payable in terms of either Article 10 or Article 39 of the Schedule IA to the Act. Neither Article 10 nor Article 39 refers to 'increase' in the authorized share capital as a basis for levy of stamp duty. In the absence of a specific provision that permits the levy of stamp duty on the increase in authorized share capital, it would not be open to the Respondents to insist upon the Petitioner having to pay stamp duty for the increased authorized share capital. The fact that the Petitioner earlier paid stamp duty when the authorized share capital was increased to Rs. 8.5 crores cannot act as an estoppel against the Petitioner. Also, the mere fact that the website of the ROC indicates that stamp duty shall be 0.5 per cent of amount on increase in the authorized share capital does not lend a legal basis for such levy, in the absence of any amendment to the Act to that effect. writ petition and the pending application are disposed of

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• 2012 (6) TMI 19
  Whether scheme of section 22 and section 22A empowers BIFR to take all such measures which, in opinion of Board, are necessary to bring company out of its sickness and make it viable on implementation of scheme framed by operating agency - powers of the Board under Section 22(3) of SICA – Held that:- It is thus clear that the company itself accepted in no uncertain words that the land under the agreements for sale continued to be its property/asset as on the day the reference application under Section 15(1) of SICA was submitted. Just because all the banks had given NOC for release of its charge on the subject land, it cannot be said that the Board was not empowered to bring the land within the ambit of Section 22A of SICA. So long as it continued to be the asset of the company the Board has unfettered powers under Section 22A and all that it has to examine is the public interest, interest of the company, its shareholders and employees etc. The Board is a body of experts as is clear from the preamble of the Act and the scheme of Section 22 and Section 22A empowers the Board to take all such measures which, in the opinion of the Board, are necessary to bring the company out of its sickness and make it viable on implementation of the scheme framed by the operating agency. The Appellate Authority fell in gross errors in holding that the agreements were concluded/finalised by the registered documents and, therefore the Board could not have exercised the powers under Section 22A of SICA. Regarding the powers of the Board under Section 22(3) of SICA, there could be no dispute that the Board has no powers to annul an existing agreement between the parties i.e., the petitioner company and respondent No.13. However, that by itself would not lead to a conclusion that the Board has no further powers in respect of a property which has been agreed to be sold by registration of an agreement for sale.

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• 2012 (6) TMI 5
  Pray for being exonerated - limitation - inter-corporate deposit – violation - permission of the Central Government was not obtained for making the inter-corporate deposit - reply of the company that in the decision making process for advancing the inter-corporate deposit, this director did not participate Allegation was that on inspection of the minutes of the board of directors it was found by the Central Government that there was no recording in the minutes whether the directors were interested in any matter discussed there - it was said that the interested directors did not participate in them and their presence was not included Travelling expenses of some family members of the directors were shown as expenses of the company - was mis-utilization of the company's fund - company replied to an earlier identical notice on 19 August, 2009, saying that the presence of the spouse was necessary in the business meetings which the directors of the company attended. The presence of the spouse promoted the company's business interests Limitation – Held that:- when a section 633(2) application is pending in the High Court, within the period of limitation, the Central Government should seek an injunction under section 470(2) of the Code of Criminal Procedure, instead of allowing limitation to set in, particularly so, when it follows the practice of not prosecuting an accused during the pendency of a section 633(2) proceeding. As the offences are minor and as no arguments were advanced in this behalf, petitioners ought to be discharged from the accusation on the ground of limitation. Since the petitioners are being discharged on the ground of limitation there is no need for the court to probe into the alleged offences. application is accordingly allowed by discharging the petitioners

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• 2012 (6) TMI 4
  Application for dismissal of the Reference - Company took loan – unable to pay its debts – B.I.F.R. recommended winding up - When an Appeal was filed before the A.I.F.R. there were two schemes accepted by A.A.I.F.R. Those schemes contemplated merger of the respondent No. 1 company with the respondent No. 2 company Wanbury Limited - proceedings were taken up in this court for merger of these two companies - Supreme Court of India set aside the order passed by the B.I.F.R. and A.A.I.F.R. under Sick Companies Act sanctioning the schemes. The Court also set aside the order of this Court approving the merger of the two companies – Held that:- in view of the order of the Supreme Court, the respondent No. 2 was under a duty to take steps under the Companies Act to give effect to the judgment of the Supreme Court of India. scheme has been submitted by the implementing agency in the Application or Reference and that Reference is filed by the respondent No. 1. If that Reference is incompetent on the ground that respondent No. 1 is not in existence then there is no question of the B.I.F.R. having any power to consider the scheme submitted by I.D.B.I. The B.I.F.R. will get the jurisdiction to consider any scheme only if there a Reference validly made before it and pending. If the Reference is itself not validly filed or does not continue to be validly filed, it would not have the jurisdiction to entertain the scheme filed in that Reference. it has not considered the relevant material and has not given reasons for rejecting the Application filed by the Petitioner. order impugned in the Appeal passed by B.I.F.R. is set aside. The proceedings are remitted back to the B.I.F.R. It is directed to re-consider the Application filed by the Petitioner

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• Service Tax

• 2012 (6) TMI 46
  Delayed payment of service tax - jurisdictional Assistant Commissioner issued a show-cause notice alleging non-payment of service tax – Held that:- appellant-assessee had discharged the service tax liability and interest thereon much before the issue of the show-cause notice and had also filed the service tax return for the relevant period before the issuance of the notice. They also informed that they had also deposited late fee of Rs. 2,000/- for the delayed filing of the return – provisions of sub-section (3) of Section 73 is clearly attracted in the facts of the case and issuance of a show-cause notice for demand of service tax and imposition of penalties was not at all warranted. imposition of penalties under Sections 76, 77 and 78 in this case was not at all warranted and therefore set aside. The appeal is allowed

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• 2012 (6) TMI 45
  Whether the recipient of service provided by the foreign service provider is liable to pay service prior to 18.04.06 – Held that:- in the case Indian National Shipowners Association (2008 (12) TMI 41 (HC)) service receipt is not liable for service tax prior to 18/4/2006 in respect of the service received from Foreign Service Provider. Appeal is allowed.

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• 2012 (6) TMI 43
  Demands of service tax - Manpower Recruitment or Supply Agency's Service - Assistant Manager stated that they were not registered with the department under the above head and that they were going to take such registration - appellant received 9,62,98,816/- as gross amount for the taxable service rendered to the sugar factory - burden of service tax paid by the appellants was passed on to the sugar factories through 'Cenvatable' invoices and that credit thereof was taken by the latter. The learned counsel for the appellants has admitted this fact. This factual situation would also go to establish the admitted tax liability of the appellants Extended period of limitation - it was not necessary for the department to invoke the proviso to Section 73(1) ibid for demanding service tax from the assessee for the aforesaid period, which is within the normal period of limitation prescribed under Section 73(1) Penalty under Section 78 of the Finance Act, 1994 – Held that:- suppression of taxable value of the service cannot be sustained. penalty imposed under Section 78 of the Finance Act set aside Penalty under Section 77 of the Finance Act - assessees misrepresented facts in the ST-3 returns filed by them – Held that:- Section 77 as it stood during the material period provided for a penalty for those who failed to file return. The provision did not contemplate any penalty on any person for misrepresentation of facts in the return filed by him. Therefore, the proposal raised in the relevant show-cause notices and the decision taken by the learned Commissioner under Section 77 of the Finance Act, 1994 are both unsustainable. The penalties imposed on the appellants under Section 77 set aside. appeals are disposed of

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• 2012 (6) TMI 25
  Service tax credit taken on commission agent service received - demand was made on the ground that the services received from selling agents did not have any nexus with the manufacture and clearance of final product from the place of removal and service was beyond stage of manufacture and clearance of goods and therefore cannot be considered as input service – Held that:- nexus to manufacturing activity need not be proved as regards input services in view of the inclusive part of the definition. service tax paid on the commission paid to the foreign commission agents for sales promotion is admissible as cenvat credit. If the credit paid to foreign commission agents for sales promotion is admissible, naturally, service tax paid to commission agents for sales promotion within the country also would be admissible. in the case of Coca Cola India (P.) Ltd. (2009 (8) TMI 50 (HC)). appeal is allowed

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• 2012 (6) TMI 23
  Cenvat credit – Held that:- As Section 73 of the Finance Act, 2010, it has been clarified that, if the assessee is manufacturing both dutiable as well as exempted final products and is not maintaining separate account but at the time of clearance of exempted final products, if the assessee reverse the credit taken on inputs which has gone into the manufacture of the exempted final products, in that case the assessee is not required to reverse 8% or 10% of the amount of the exempted products cleared as per Rule 6(3) of CENVAT Credit Rules, 2004. In this case the contention of the appellant is that they have already reversed the input credit along with interest at the time of clearance of their exempted final products, subsequent to the amendment, the adjudicating authority has passed an order dated 13/12/2010 by giving the benefit of Section 73 of the Finance Act, 2010. Therefore, the Commissioner (Appeals) order has become infructuous. Therefore, the appeal is allowed

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• 2012 (6) TMI 22
  Delayed payment of service tax - jurisdictional Assistant Commissioner issued a show-cause notice alleging non-payment of service tax – Held that:- appellant-assessee had discharged the service tax liability and interest thereon much before the issue of the show-cause notice and had also filed the service tax return for the relevant period before the issuance of the notice. They also informed that they had also deposited late fee of Rs. 2,000/- for the delayed filing of the return – provisions of sub-section (3) of Section 73 is clearly attracted in the facts of the case and issuance of a show-cause notice for demand of service tax and imposition of penalties was not at all warranted. imposition of penalties under Sections 76, 77 and 78 in this case was not at all warranted and therefore set aside. The appeal is allowed

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• 2012 (6) TMI 21
  BAS - whether the Respondent availing the services of commission agents, are eligible for taking credit of the service tax paid by the commission agents on the commission received by them – Held that:- in the case of Bhillai Auxiliary Industries (2008 (12) TMI 134 - CESTAT NEW DELHI - Service Tax) , service of commission agents received by a manufacturer is an input service eligible for Cenvat credit, Revenue’s appeal is dismissed

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• 2012 (6) TMI 20
  Stay application - waiver of pre-deposit - appellants provided erection, commission and installation services in respect of various turnkey contracts - adjudicating authority had held that the appellants suppressed the facts and not informed the Revenue about services rendered by them – Held that:- appellant taken a plea that the contracts entered by them with various parties would squarely get covered under the definition of “works contract” under section 65(105)(zzzza) which came into effect from 1-6-2007, adjudicating authority has not given any reasoning to hold against the appellant on this point, there is no dispute that the contracts are understood as works contract act by contracting parties, application for waiver of pre-deposit of amounts is allowed

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• Central Excise

• 2012 (6) TMI 44
  Stay applications - allegation against the appellant company is that during the period of dispute i.e. from 01.04.2005 to 31.03.2006, they used common inputs viz. packing materials in or in relation to the manufacture of excisable goods as well as exempted goods without maintaining separate records - no reasons have been given for rejecting the appellant's plea that there was no manufacturing activity in respect of the goods which according to the department are exempted goods and while according to the appellant is only a trading activity – Held that:- original adjudicating authority must give a clear finding as whether the goods which are alleged to be exempted goods are the outcome of a process which amount to manufacture. The appeals are allowed by way of remand, Stay applications also stands disposed of

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• 2012 (6) TMI 27
  SSI Exemption - Simultaneous availment of benefit of Notification No.8/99-CE, dt.28.2.99 and Notification No.10/99-CE, dt.28.2.99, on the clearances of excisable goods i.e. air conditioning and Hi-Fi systems - Held that:- The issue is squarely covered by the various decisions of this Tribunal and more specifically by this very Bench in the case of Dhanraj Industries Vs. CCE Vapi [2011 (4) TMI 397 (Tri)]in favour of the appellants and therefore for calculating the first clearances which are exempt, there is no need to take clearances under another notification into consideration and the restriction in para 3 of Notification No. 10/99 is not applicable and the Notification No. 8/99 also has a similar condition - there is only one decision which is in favour of the Revenue which happens to be the earliest decision whereas there are many decisions on the issue which are in favour of the appellant which have taken the right view so not to consider it a fit case for referring the matter to the Larger Bench - in favour of the assessee

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• 2012 (6) TMI 26
  Cenvat credit claim on the goods like H.R. Sheets, M.S. Angles, M.S. Channel, M.S. Beam and M.S. Plate - Held that:- Following the ratio of decision in Vandana Global Ltd. vs. CCE, Raipur[2010 (4) TMI 133 (Tri)],Saraswati Sugar Mills vs. CCE, Delhi-III[2011 (8) TMI 4 (SC)] wherein it is held that cement and steel items used for laying 'foundation' and for building 'supporting structures' cannot be treated either as inputs for capital goods or as inputs in relation to the final products and therefore, no credit of duty paid on the same can be allowed under the CENVAT Credit Rules for the impugned period - remanded to the adjudicating authority to decide the issue in the light of aforesaid decisions.

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• 2012 (6) TMI 24
  Extended period of limitation – Revenue neutrality - respondents are clearing certain inputs as such to their sister unit raising invoices and charging duty on assessable value – Held that:- extended period is not invokable. show-cause notice has been issued on 6.2.2008 for the period June, 2005 to October, 2006 by invoking extended period of limitation is not correct as the respondents are regularly filing. R I Return showing clearance of inputs as such on assessable value. in the case of Jay Yuhshin Ltd. (2000 (7) TMI 105 (Tri)) if the assessee himself has to bear the tax liability, there is a situation of revenue neutrality. Appeal filed by the Revenue is dismissed.

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• 2012 (6) TMI 3
  Stay Petition for waiver of pre-deposit, interest thereof and penalty – Revenue stated that the appellant had been unable to produce Project Authority Certificate (PAC) and also that the 2 PACs were having same number, hence duplication - Held that:- On perusal of the papers produced by the assesse, indicate that PAC certificates were available with them today for justifying their claim of clearance and as regards duplication of the PAC number, the concerned Project authority has given a certificate giving the reasoning for duplication of same number - this kind of exercise of factual verification of PACs to the clearances made by the appellant needs to be done by the adjudicating authority so the matter needs to be re-considered – in favour of assessee.

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• 2012 (6) TMI 2
  Denial of Cenvat credit – respondent availed CENVAT credit on inputs and capital goods used in the manufacture of dutiable as well as exempted final products - proceedings were initiated against them for recovery of CENVAT Credit availed on services utilized in the manufacture of goods on job work basis which were cleared under the Notification No. 214/86-CE as amended and the lower adjudicating authority – Held that:- in the case of Escorts Limited. The learned Counsel appearing for the appellant is not able to point out any reason not to follow the decision of the Supreme Court. No question of law arises in this appeal. Appeals of revenue dismissed.

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• 2012 (6) TMI 1
  Revision application - rebate claim - On scrutiny of the rebate claim it was observed that they had not submitted the original and duplicate copies of ARE-1 required to be filed as para 8.3 (iii) and 8.4 of Chapter 8 of the C.B.E.C. Central Excise Manual and Supplementary Instructions and also that no documents in respect of final proof of export of goods and also showing the relevant date were submitted. On those grounds the rebate claim was rejected – Held that:- photocopies cannot be received as secondary evidence in terms of Section 63 of the Act and they ought not to have been received since the documents in question were admittedly photocopies, there was no possibility of the documents being compared with the originals. Government, therefore holds that non-preparation of statutory document of ARE-1 and not following the basic procedure of export goods as discussed above, cannot be treated as just a minor/technical procedural lapse for the purpose of granting rebate of duty on the materials used in the manufacture of impugned exported goods, no infirmity in the impugned order-in-appeal, revision application is rejected

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• Indian Laws

• 2012 (6) TMI 42
  Securitisation Act - taking possession of the secured assets - Second Respondent (Collector and District Magistrate, Sangli) orally declined to render administrative assistance as required - No dates are fixed for the attendance of Bank officers and no communication is furnished regarding the status of the applications – Held that:- Second Respondent is duty bound to act in accordance with the letter and spirit of the legislation enacted by Parliament under Section 14 of the Securitisation Act, 2002. It does not lie within the jurisdiction of the Collector under Section 14 to enter upon an adjudication of the merits of the claim of the Bank. Second Respondent shall expeditiously conclude the pending applications. Petition is accordingly disposed of

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