TMI Tax Updates - e-Newsletter
July 11, 2013

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Wealth tax

Articles

1. Widening of the scope of power of Transfer Pricing Officer in context of Section 92CA of the Income Tax Act, 1961 – An Analogous study

   By: Ravi kapoor

2. RELEVANT INTERPRETATION PRINCIPLES FOR SERVICE TAX (PART- III)

   By: Dr. Sanjiv Agarwal

3. No Cenvat credit reversal required where service tax is not paid due to non-recovery of consideration in case assessee pays service tax on receipt/ collection basis

   By: Bimal jain

News

1. The Institute of Company Secretaries of India Launching 'Certified Banking Compliance Professional Course’

2. RBI Reference Rate for US $ and Euro

3. Modified Industrial Infrastructure Upgradation Scheme (MIIUS)

4. Disinvestment of 5 percent paid up equity capital of ITDC and 1.02 percent of paid up capital of STC out of Government of India shareholding

5. Finance Minister P. Chidambaram Meets top American Executives and USA Senator Max Baucus, Chairman of the Senate Finance Committee During His Ongoing US Visit; Discussions Focused on the Current Business and Investment Environment in India; Fm Emphasized the Need for U.S Companies to Set-Up Local Manufacturing Bases in India

Notifications

Customs

1. 71/2013 - dated 10-7-2013 - Cus (NT)

Amends Notification No. 92/2012-Customs (N.T.), dated the 4th October, 2012

VAT - Delhi

2. F. 3(4)/Fin.(Rev-I)/2013-14/Dsvi/519 - dated 9-7-2013 - DVAT

Delhi Value Added Tax (Second Amendment)] Rules, 2013

3. F. 3(6)/Fin.(Rev-I)/2013-14/Dsvi/499 - dated 4-7-2013 - DVAT

CST [(Delhi) (Amendment)] Rules, 2013 – Amendment of Rule 3 & Form 1

Circulars / Instructions / Orders

VAT - Delhi

1. 05/2013-14 - dated 10-7-2013

Process of online registration.

FEMA

2. 05/2013-14 - dated 1-7-2013

Master Circular on Risk Management and Inter-Bank Dealings

3. 15/2013-14 - dated 1-7-2013

Master Circular on Foreign Investment in India

4. 06/2013-14 - dated 1-7-2013

Master Circular on Miscellaneous Remittances from India –Facilities for Residents

DGFT

5. 19(RE 2013)/2009-14 - dated 10-7-2013

Amendments in the Reward/Incentive Schemes of Chapter 3 of Foreign Trade Policy 2009-14 - Appendix 37D of Handbook of Procedure (Vol. I).

Highlights / Catch Notes

Income Tax

• Court Rules AO Cannot Reopen Assessment Just for Unprocessed or Legally Unsustainable Claims; Stronger Grounds Needed.

  Case-Laws - HC : Merely because the claim was not processed during the scrutiny assessment or that such claim was perhaps legally not sustainable, would not vest the jurisdiction in AO to reopen the assessment - HC
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• High Court Criticizes Improper Use of Section 127 for Case Transfer Due to Lack of Transparency and Full Disclosure.

  Case-Laws - HC : Power to transfer a case u/s 127 - transferring the case by furnishing to the petitioner imperfect knowledge - The extreme impropriety of such a course could not be made too plain. - HC
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• High Court Denies Tax Exemption to Educational Society u/s 10(23C)(vi) Due to Student Donations Collection.

  Case-Laws - HC : Exemption u/s 10(23C)(vi) - educational society - collection of donations from pupils - exemption not allowed - HC
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• Mark-to-Market Loss Claim: Forward Contract Revaluation and Crystallization of Liabilities on Balance Sheet Date.

  Case-Laws - AT : Mark-to-market loss claim on revaluation of the pending forward contract on the closing day - a liability is said to have crystallized when a pending obligation on the balance sheet date is determinable with reasonable certainty. - AT
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• Court Rules on Income from House Property: No Extra Tax if Rent Exceeds Municipal Valuation; Notional Interest Excluded.

  Case-Laws - AT : Income From House Property - enhancement of annual let out value - notional interest on deposits - municipal valuation is less than the actual rent received - No addition - AT
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• Court Allows Deduction for Payment to M/s. JSMS; Not Considered a Joint Venture in Lokhandawala Branch Management Case.

  Case-Laws - AT : TDS - disallowance of payment on account of share of profit paid to M/s. JSMS for managing the Lokhandawala Branch - the arrangement was not a case of joint venture - deduction allowed - AT
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• TPO Can't Independently Review International Transactions for Price Adjustments Without Explicit Referral.

  Case-Laws - AT : Jurisdiction of Transfer Pricing Officer - Suo motu, TPO cannot take cognizance of any international transaction for suggesting adjustment in the arm’ s length price, which was not referred to him - AT
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Customs

• Customs can act against importers for discrepancies in declared goods, not the Customs House Agent.

  Case-Laws - AT : If the goods are found to be different from those what has been declared in the bill of entry, the department can proceed against the importer and not against the CHA who acts based on the documentary evidence submitted by the importer - AT
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Service Tax

• Diaphragm Wall Construction from Dudheswar to Gandhi Bridge Not Taxable; Stay Granted on Service Tax Implications.

  Case-Laws - AT : Construction of diaphragm wall and anchor slab with special fill from Dudheswar to Gandhi Bridge (eastern bank of river Sabarmati) - prima facie not taxable - stay granted. - AT
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• Service Tax Ruling: Spare Parts and Handling Costs Excluded from Service Valuation at Authorized Stations.

  Case-Laws - AT : Authorized service station - valuation – the cost of the spare parts and cost of handling of spare parts are not to be included in the value of the services rendered - AT
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Central Excise

• Witness Statements Made Voluntarily Can't Be Used to Deny Cross-Examination Request Without Retraction.

  Case-Laws - HC : Merely because the statements were recorded without threat, duress or coercion or that the witnesses at no stage retracted their statements, cannot be a ground for rejecting the request for cross-examination. - HC
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• High Court Grants Central Excise Exemption to UN Project Using Machines Under Notification No.108/95 C.E.

  Case-Laws - HC : Benefit of Notification No.108/95 C.E. - projected funded by the UN - Machines were utilized by the job worker in respect of the project - exemption allowed - HC
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VAT

• KVAT Act Section 47(16A): Floor rate must stay effective; revenue not obliged to issue transit pass at invoice value.

  Case-Laws - HC : So long as, the 'floor rate' fixed under Section 47(16A) of the KVAT Act remains in force, the revenue cannot be directed to issue transit pass indicating the invoice value as sought for by the petitioner. - HC
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Case Laws:

• Income Tax

• 2013 (7) TMI 271
  Deduction u/s 80HHC - Held that:- where the export turnover of an assessee exceeds Rs.10 crores, he does not get the benefit of addition of ninety per cent of export incentive under clause (iiid) of Section 28 to his export profits, but he gets a higher figure of profits of the business, which ultimately results in computation of a bigger export profit - Following decision of Topman Exports Vs. Commissioner of Income-Tax [2012 (2) TMI 100 - SUPREME COURT OF INDIA] - Decided in favour of Assessee.

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• 2013 (7) TMI 264
  Re-assessement - non processing of a claim during scrutiny proceedings - Held that:- notice for reopening was issued beyond a period of four years from the end of relevant assessment year - Even as per the Assessing Officer there was no failure on part of the assessee to disclose truly and fully all material facts. In that view of the matter, merely because the claim was not previously processed during the scrutiny assessment or that such claim was perhaps legally not sustainable, would not vest the jurisdiction in Assessing Officer to reopen the assessment - Decided against Revenue.

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• 2013 (7) TMI 263
  Power to transfer a case u/s 127 - Violation of principle of natural justice - Relevant material not provided to petitioner before transferring petitioner's case - Held that:- if there is a power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made, the order is a NULLITY. Natural justice is another name for commonsense justice. Rules of natural justice are not codified cannons. But they are principles ingrained into the conscience of man - Respondent, without furnishing relevant material along with the notice Annexure 'G', which might throw light upon the matter in question, sought to obtain objection from the petitioner assessee in the absence of material and information, which a properly informed decision requires, in short, passed the order Annexure 'G' transferring the case of the petitioner for assessment to the State of Andhra Pradesh at Hyderabad by furnishing to the petitioner imperfect knowledge - The extreme impropriety of such a course could not be made too plain. - matter remanded back for fresh decision in accordance with law - Decided in favor of assessee.

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• 2013 (7) TMI 262
  Disallowance on expenses - Tribunal deleted - Held that:- issue involved stood covered in favour of the assessee by the decision of the Tribunal in assessee's own case in I.T.A. No.3232/Ahd/1996 - Same was followed in assessee's own case in I.T.A. No.936/Ahd/1999 for the Assessment Year 1992-93 - [2006 (8) TMI 519 - GUJARAT HIGH COURT] was preferred by the Revenue, but the same was withdrawn for the purpose of filing miscellaneous application for correction of the alleged apparent mistake committed by the Tribunal - Appeal dismissed. Disallowance of expenditure on salary - Held that:- if any staff is deployed at the residence of the Chairman for the purpose of looking after basic requirements such as cleaning of the house, attending to official guests, receiving telephones and such other sundry responsibilities, the same would fall within the description expended wholly for the purpose of business. However, amount involved is not very significant. We would, therefore, like to examine such a question in an appropriate appeal proceedings.

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• 2013 (7) TMI 261
  Exemption u/s 10(23C)(vi) - educational society - CIT rejected the application on the ground that collection of donations from pupils would amount to an act for the purpose of profit and therefore does not fulfill the objectives mentioned in Section 10(23C)(vi) of the Act. - Held that:- Petitioner having not explained the rules and regulations more appropriately, relating to the collection of donations from pupils contrary to provisions of Karnataka Educational Institutions (Prohibition of Capitation Fee) Act, 1984, coupled with the failure to explain, with material particulars, over the discretion to be exercised by the Executive Committee over such donations, no exception can be taken to the reasons findings and conclusions arrived at by the CCIT’s in the order Annexure-A. In the absence of explanation, it cannot be said that it is not the actual user but the likelihood and the capacity of the trustees to do so which is important, the exercise of discretion by the Executive Committee to put to use the donation is of primary concern - Following the decision of Reliance Motor Company Private Limited -vs- Commissioner of Income Tax [1994 (8) TMI 22 - MADRAS High Court] - Decided against the assessee.

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• 2013 (7) TMI 260
  Computation of expenditure - Held that:- The assessee did not show any expenditure incurred by him for the purpose of earning the money which is exempted under the income tax. The Tribunal has computed expenditure at 1 per cent of such dividend income which, according to them, is the thumb rule applied consistently - No reason to interfere - Decided in favour of Assessee.

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• 2013 (7) TMI 259
  Non deduction of tax at source u/s.194J on VSAT charges, transaction charges and lease line charges, paid to the National Stock Exchange (NSE) - Held that:- It is inconceivable that the stock exchanges are not filing their returns of income or not disclosing the impugned sums in their accounts, which are in fact for most part transmitted by them to the entities providing the corresponding services, i.e., the service providers. The payment thereto is thus by the respective stock exchange, and which in turn stands reimbursed in its respect by its individual members, as it is for their ultimate benefit that the services stand availed of or secured by the Exchanges. This also forms the reason for approving non-deduction of tax at source on the payment of lease line and VSAT charges by them to the stock exchanges. The Revenue has not been able to rebut the assessee's claim that the current year is the first year for which such action has been taken by the Revenue in its case so that the assessee was only acting as it had been in the past, over which s. 194J has been on the statute. Grounds for the invocation of the doctrine of 'legitimate expectation' thus exist. Surely, going by the said decision, s. 194J does not get any more legitimacy on the co-option of sec. 40(a)(ia) on the statute. At the same time, without doubt, a continued stand by the assessee for a subsequent year/s would however imply that it has chosen to contest the Revenue's stand, and which can therefore only be at its own peril, so that it could not be allowed any benefit of doubt in view of non-action by the Revenue despite the provision of s.194J being on the statute for over a decade, the scope of which and, consequently, that of s.40(a)(ia), gets resolved per the said decision, and which is though applicable from an anterior date, i.e., AY 2005-06. As such following the ratio of the decision in the case of Kotak Securities Ltd. (2011 (10) TMI 24 - Bombay High Court) disallowance u/s.40(a)(ia) for the current year would not obtain in the assessee's case. In favour of assessee.

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• 2013 (7) TMI 258
  Non deduction of TDS on freight charges - CIT(A) deleted the addition - Held that:- As the present assessee had, in fact, paid the TDS amounts into the accounts of the Government well before the due dates of filing of her returns of income for the assessment years under consideration, thus in conformity with the judicial views referred in ACIT v. M.G. Vishwanath Reddy [2012 (4) TMI 317 - ITAT BANGALORE] & Tube Investments of India Limited v. ACIT [2009 (9) TMI 37 - MADRAS HIGH COURT] CIT (A) was justified in deleting the additions made by the AOs u/s 40(a)(ia). In favour of assessee.

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• 2013 (7) TMI 257
  Deduction u/s 8OHHC on sale of DEPB license disallowed - whether as per Section 28(iiid) only profit realized from sale of DEPB license will not be eligible for deduction u/s 80 HHC or the full sale consideration received on DEPB license - Held that:- As decided in M/s Topman Exports Versus CIT Mumbai [2012 (2) TMI 100 - SUPREME COURT OF INDIA] DEPB has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessees over and above the DEPB on transfer of the DEPB would represent profit on the transfer of DEPB and while the face value of the DEPB will fall under clause (iiib) of Section 28, difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 – restore the matter back to the file of AO with a direction to allow deduction u/s. 80HHC in terms of the decision of Hon'ble apex Court (supra). In favour of assessee for statistical purposes.

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• 2013 (7) TMI 256
  Traveling expenses disallowed - deduction was claimed by the assessee relying on clause 9.6 of the agreement whereas it was disallowed by the authorities below relying on clause 9.3 of the said agreement - Held that:- As evident from the clauses of agreement, all the expenses and risks incurred by the licensee namely M/s Connell Bros. Co. (India) Pvt. Ltd. in connection with the manufacture, distribution and sale of the products were to be borne and paid for by M/s Connell Bros. Co. (India) Pvt. Ltd. The expenses in question on traveling however were incurred by the assessee as licensor and not by M/s Connell Bros. Co. (India) Pvt. Ltd. as licensee and the same, therefore were covered by clause 9.6 of the agreement which required the assessee as licensor to send from time to time its own representatives to visit the customers and promote the licensee's business with the said customers in an effort to assist the licensee with development of its business for the products. The said expenses therefore were to be borne and paid for by the assessee as per clause 9.6 of the agreement and the authorities below, were not justified in disallowing 50% of the traveling expenses of the assessee relying on clause 9.3 of the agreement which covered only expenses and risks incurred by the licensee. Traveling expenses claimed by the assessee were inclusive of foreign travel expenses which as stated specifically by the assessee in the written submissions filed before the CIT(A) were incurred for the purpose of visits of its employees to Hercules Inc.'s offices and plants situated in USA, Korea, Singapore, Thailand etc. for obtaining on site training in order to enable them in assisting M/s Connell Bros. Co. (India) Pvt. Ltd. with regard to technology and marketing of its products. CIT(A) presumed that the said expenses were incurred for the purposes of training to the employees of M/s Connell Bros. Co. (India) Pvt. Ltd. and proceeded on this wrong presumption to confirm the disallowance made by the A.O. on account of traveling expenses. Moreover vide letter dtd. 13-12-2010 filed by the assessee before the CIT(A) as additional evidence, M/s Connell Bros. Co. (India) Pvt. Ltd. had clarified that traveling expenses incurred by the assessee were covered by clause 9.6 of the agreement and not by clause 9.3. In favour of assessee.

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• 2013 (7) TMI 255
  Mark-to-market loss claim on revaluation of the pending forward contract on the closing day - assessee is a partnership firm engaged in the business of manufacturing, trading as well as import and export of diamonds - Held that:- As decided in Bank of Bahrain & Kuwait (2010 (8) TMI 578 - ITAT, MUMBAI) concluded that a liability is said to have crystallized when a pending obligation on the balance sheet date is determinable with reasonable certainty. As per AS-II when the transaction is not settled in the same accounting period as that in which it occurred, the exchange difference arises over more than one accounting period. In view of the decision of the Supreme Court in the case of Woodward Governor India (I) P. Ltd. [2009 (4) TMI 4 - SUPREME COURT] the Appellant's claim is allowable. Thus the assessee in the said case was holding foreign currency as stock-in-trade, the distinction so made by the A.O. was irrelevant and immaterial as rightly pointed out by the CIT(A) relying on the decision of ONGC (2010 (3) TMI 81 - SUPREME COURT) wherein a similar issue was decided in favour of the assessee despite the fact that ONGC was not a dealer in foreign exchange. Also see DCIT vs. Banque Indosuez (Known as Credit Agricole Indosuez) reported [2012 (12) TMI 730 - ITAT MUMBAI] & Societe Generale vs. DDIT (International Taxation) (2013 (5) TMI 374 - ITAT MUMBAI). In favour of assessee.

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• 2013 (7) TMI 254
  Expenses incurred on account of sale promotion - whether be charged under Fringe Benefit Tax (FBT)? - Held that:- Expenditure on account of sales promotion cannot be brought under FBT provisions as they are not incurred by the employees of the company having no direct or indirect benefit accrued to the employees of the assessee. See ACIT vs. Tata Motors Ltd. [2013 (5) TMI 372 - ITAT MUMBAI]. - Decided against the revenue.

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• 2013 (7) TMI 253
  Income From House Property - enhancement of annual let out value - notional interest on deposits - municipal valuation is less than the value of actual rent - Held that:- Clause (c) of the section 23 will not apply here as none of the properties in question remained vacant during whole or any part of the previous year. Even clause (a) will also not apply as it is applicable in those cases where property has not been let out at all during the entire year and in such a case, it has to be ascertained as to what could be the rent which property might reasonably be accepted to be let out from year to year. In the present case, clause (b) would be applicable because the property was let out and rent was received. The Tribunal in Manisha R. Jaisingh (2012 (5) TMI 159 - ITAT MUMBAI) held that if the actual rent received is more than municipal valuation of the property, then the actual rent received or receivable will be taken as annual letting value of the property within the meaning of section 23(1)(b). Also see Moni Kumar Subba (2011 (3) TMI 497 - DELHI HIGH COURT) which came to the conclusion that notional interest cannot form part of the actual rent. In the present case, assessee had submitted that the municipal valuation of both the properties is now available which is less than the value of actual rent received in the interest of justice, this issue needs to be restored back. Disallowance of administrative expenses - Held that:- On perusal of the expenses, as found that it is not clear as to what are the expenses which have been incurred on account of income from house property and what have been incurred for the purpose of maintaining the corporate entity. If the expenses are directly related to earning of income from house property the same will not be allowed as the statute itself provides standard deduction and other deduction under section 24. However, it cannot be denied that certain expenses are required for maintaining a corporate status, which can be allowed from income from other sources under section 57. On a perusal of these expenses, it is seen that it is very difficult to bifurcate such expenses and, therefore, this issue needs to be restored back to the file of the AO. Set-off of carry forward of deprecation against income for the year disallowed - Held that:- While computing the income of the assessee AO has computed the business income at Rs. 82,07,075 and from there has reduced various incomes aggregating to Rs. 82,85,313 which were not forming part of the business income. The unabsorbed carried forward of the depreciation which is coming from earlier years, has not been set-off either in this year or has been allowed to be carried forward in the subsequent year. If the assessee had not earned any business income in this year, unabsorbed depreciation from the earlier years has to be allowed to be carried forward to the subsequent years. Since there is no proper finding of the Assessing Officer as to why unabsorbed depreciation of the earlier year has not been allowed to be carried forward in the subsequent years, therefore, this issue also needs to be restore back to the file of the AO for examination. Assessee's appeals are partly allowed for statistical purposes.

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• 2013 (7) TMI 252
  Re opening of assessment - TDS - disallowance of payment on account of share of profit paid to M/s. JSMS for managing the Lokhandawala Branch following judgment of IT vs. Panipat Woollen and General Mills Co. Ltd. [1976 (1) TMI 1 - SUPREME Court] - Held that:- Unable to agree with the view taken by the authorities below as the case of CIT vs. Panipat Woollen and General Mills Co. Ltd. (supra), is distinguishable as in that case the agent had also made most of the investments and was sharing both profits and losses whereas in this case, the assessee was only sharing profit with M/s. JSMS who was managing only day to day affairs of the branch whereas policy decisions were taken by the assessee and the entire investments had also been made by the assessee. - the arrangement was not a case of joint venture. - Decision in [2012 (9) TMI 124 - ITAT, MUMBAI] followed - Decided in favor of assesseeee. Non deduction of TDS on the payment made to M/s. JSMS as is of the nature of fees for professional services/technical services - Held that:- Considering assessee s reliance on case of Merilyn Shipping and Transports vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) wherein held that the word "payable" used in section 40(a)(ia) has to be given its natural meaning and section 40(a)(ia) would be applicable only to expenditure which is payable as on March 31 of every year and can not be invoked to disallow amount which have already been paid during the previous year. As assessee submitted that no amount remained payable on account of M/s. JSMC at the end of the year provision of section 40(a)(ia) were not applicable. Levy of interest u/s 220(2) - AO has charged interest under section 220(2) from date of the original assessment order - Held that:- Once the original demand notice has been dispensed with and fresh demand notice has been raised in view of the order giving effect to the Commissioner (Appeals) s order wherein instead of demand there was a refund and such an order has attained finality as no second appeal was filed, then interest cannot be levied under section 220(2) from the date of original demand notice - restore this issue back to the file of the AO to verify whether interest has been charged as per the demand notice in pursuance of assessment order dated 24th December 2009, passed under section 143(3) r/w section 147 or original assessment order dated 23rd February 2005, passed under section 143(3) - partly in favour of assessee for statistical purposes.

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• 2013 (7) TMI 251
  Penalty u/s 271(1)(c) - deduction u/s 80IA disallowed as the assessee which was awarded a contract for construction of four lane road was acting merely as a contractor, therefore, the deduction will not be allowable in view of the amended provisions of section 80IA(4) brought in the statute by the Finance Act, 2007 with retrospective effect from the year 2000-2001 - Held that:- As decided in assessee's group case viz. DCIT v/s Unity Chopra (Joint Venture)[2013 (5) TMI 373 - ITAT MUMBAI] after the decision in the case of ABVG Heavy industries Ltd. (2010 (2) TMI 108 - BOMBAY HIGH COURT) has allowed the claim of deduction u/s 80-IA on similar facts claim of appellant, even on merit (in quantum proceedings) is valid and sustainable. The assessee company was under a bonafide belief that it is eligible for deduction u/s 80-IA. Moreover, from the decisions cited above, it is clearly evident that the said issue is a highly debatable one. It is well settled law that no penalty u/s 271(1)(c) can be levied when the issue is a debatable one as decided in CIT vs. Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT] - thus the orders passed by the Commissioner (Appeals) deleting the penalty levied under section 271(1)(c) confirmed - In favour of assessee.

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• 2013 (7) TMI 249
  Jurisdiction of Transfer Pricing Officer - whether the Transfer Pricing Officer can suggest adjustments to the Assessing Officer in respect of international transaction which has not been referred to him by the Assessing Officer under section 92CA(1) - Held that:- assessee has entered into international transactions with its associated enterprise - It has followed transactional net margin method for justifying the arm’ s length price of international transactions - Transfer Pricing Officer computed more than normal marketing expenses by comparing the advertisement, marketing and promotion (AMP expenses) as a percentage to sales of the assessee with the average advertisement, marketing and promotion of other companies - in the next assessment year, i.e., 2007-08, the Transfer Pricing Officer has referred the matter to the Assessing Officer regarding these expenses and sought a fresh reference. We are conscious of the fact that every assessment year is an independent assessment year, for abundant caution, if the parties have adopted a different procedure in the subsequent assessment year then that may not be very relevant factor for pointing out defect in the procedure adopted by the Transfer Pricing Officer or the Assessing Officer in the preceding assess ment year - as per section 92CA(1), the Transfer Pricing Officer can suggest adjustment on the international transaction entered into by an assessee with its associate enterprises which were sent to him for computation of the arm’ s length price by the Assessing Officer. Suo motu, he cannot take cognizance of any international transaction for suggesting adjustment in the arm’ s length price - Following decisions of Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. P. Ltd. [2010 (7) TMI 844 - SUPREME COURT], Shamrao V. Parulekar v. District Magistrate, Thana [1952 (5) TMI 12 - SUPREME COURT] and Molar Mal v. Kay Iron Works P. Ltd. [2000 (3) TMI 1040 - SUPREME COURT] - Decided in favour of assessee.

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• Customs

• 2013 (7) TMI 248
  CHA licence has been suspended - A case of fraudulent import of “Refrigerant gas” dated 07/01/2012 was detected by the Customs (Preventive) staff - The samples of the consignment drawn and got tested and as per the test report dated 27/01/2012. The gas was found to be 100% HCFC R-22 instead of the declared gas of HCFC R-404A. The assessee was the CHA who filed the bill of entry - A statement of the assessee was recorded on 08/02/2012 - After conducting the investigation in the matter, a show-cause notice was issued dated 27/07/2012 - On 13/12/2012 the CHA licence of the assessee was suspended- Held that:- Declaration made in the bill of entry by the CHA is in accordance with the description of the goods given in the commercial invoice issued by the foreign supplier and also in terms of the licence issued by the DGFT, New Delhi. If the goods are found to be different from those what has been declared in the bill of entry, the department can proceed against the importer and not against the CHA who acts based on the documentary evidence submitted by the importer - There is no proximity between the action of suspension and the act of filing the bill of entry - The bill of entry was filed in January 2012 and the test report indicating that the goods imported were different from those given in the import documents was also known to the department as early as January 2012 - A show-cause notice was also issued to the importer and the appellant proposing confiscation of the goods in July 2012 - Cause of action viz., filing the bill of entry took place in January 2012 whereas the suspension has been ordered in December, 2012 - Not any proximity in time between the two events - Set aside the impugned order suspending the CHA licence of the CHA - Customs are at liberty to conduct the inquiry as provided for in the CHALR 2004 and on completion of inquiry, take action against the appellant, if required. In favor of Assessee.

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• Corporate Laws

• 2013 (7) TMI 250
  Much ado about nothing - nature and substance of the restrictive trade practices complained against the Film Makers Combine (FMC), Indian Motion Picture Producers Association (IMPPA) and Film Distributors Council (FDC)- Held that:- In sofar as the specific instances of the abuse of agreement in question are concerned, it is obvious that there has been a settlement between the original complainant and the respondents. Because the complainant does not have any more complaint/grievance of any boycott or the compulsory undertakings which he is to give under the authority of either FMC or FDC so that question will clearly be foreign to the present enquiry. Also on going through the agreement no scope for any abuse in that agreement found. Nothing has been shown in the agreement which would empower the FDC to order the boycott or to make a producer or distributor to sign an undertaking which would be restrictive to any competition. As the parties have lost interest in the matter no need to continue with this enquiry. As respondent No. 3, Ms. Goel, however assured us that there shall be no abuse of the powers of FDC and, in fact, according to Ms. Goel, the amended complaint has got nothing to do with the FDC at all. There is nothing on record, at least, to suggest that FDC is actually an associate or affiliate of FMC.

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• Service Tax

• 2013 (7) TMI 268
  Construction Activities - site formation and clearance, excavation and earthmoving and demolition services" - Section 65 (97a) – construction of diaphragm wall and anchor slab with special fill from Dudheswar to Gandhi Bridge (eastern bank of river Sabarmati) - Held that:- The activity relates to construction services and the object of the project is to develop water bodies and recharge water sources - the construction services excludes construction relating to road, airport, railways, transport, tunnels, dams – construction relates to the excluded variety – as decided in ITD Cementation India Ltd. vs. CST (2010 (12) TMI 804 - CESTAT, MUMBAI) - Prima facie case is in favor of assessee - stay granted.

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• 2013 (7) TMI 267
  Security services – penalty – suppression - no response from the department against the registration application in ST-1 form - Commissioner (Appeals) though upheld the liability of service tax, but set aside the penalty imposed by the Adjudicating Authority under Section 78 of the Finance Act, 1994. - Held that:- as soon as it the situation made clear on part of the assessee he paid the service tax and also discharged the Interest - there was no suppression of facts or misstatement - the entire amount of taxable value collected were duly accounted for in their books of accounts and also in the Income Tax Returns – No penalty - decided against the revenue.

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• 2013 (7) TMI 266
  Import of service – franchise services – appellant was appointed as non – exclusive independent contractor - Held that:- Services received prior to the commencement of section 66A are not liable under service tax - issue of liability was settled in Indian National Ship Owners Association v/s Union of India (2008 (12) TMI 41 - HIGH COURT OF BOMBAY) - demand is not sustainable – appeal decided in the favour of the assessee.

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• 2013 (7) TMI 265
  Authorized service station - valuation – inclusions under section 67 - value of spare parts supplied – Held that:- For authorized service stations, the cost of the spare parts and cost of handling of spare parts are not to be included in the value of the services rendered – thus they will not form part of the services rendered – appeal decided against the revenue.

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• Central Excise

• 2013 (7) TMI 247
  Rectification of Mistake from the Final Order of the Tribunal – In the definition of ‘Place of Removal’, clause (iii) was inserted only in section 4(3) of the Central Excise Act, 1944 vide Finance Act, 2003 and came into force only on 14.05.2003. Since the period under consideration in the said order was from July, 2000 to December, 2001, the conclusion drawn in the said order is wrong since in respect of clearances from the depot from where the goods are sold, since depot is not a place of removal, the transaction value has to be determined at the factory gate and the same would not include the cost of transportation from the factory to the depot. – Held that:- in paragraph 8 of the said order, the sentence “From the definition of place of removal, in respect of the goods sold from the depot, it is the depot which is the place of removal, and as regards the time of removal, the same shall be deemed to be the time at which the goods were cleared from the factory” needs to be deleted and we order accordingly. - Decided in favor of Assessee.

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• 2013 (7) TMI 246
  Stay Application - Classification of goods – Under heading 84.37 which attracted nil rate of duty or heading 84.19 which attracted duty of excise @ 8% or 10% during different periods – Manufacture of Par-boiling machine - Held that:- The Circular No. 924/14/2010-CX dated 19/5/2010 of the Board very clearly laid down that the Par-boiling machines are classifiable under heading 84.37- The same has been decided in case of SKF Boilers & Driers (P) Ltd. vs. CCE, Mangalore [2010 (10) TMI 230 - CESTAT, BANGALORE]. The Circular has not been withdrawn by the Board till date, even after the Tribunal decision in the case of Jyoti Sales Corporation [2011 (3) TMI 1317 - CESTAT, NEW DELHI] - Further all other manufacturers are adopting the classification under heading 84.37 and wherever demands have been raised against them, the same stands dropped by the Commissionerate - Machines to be falling under Chapter 84.37 - Dispense with the condition of pre-deposit of the entire amount of duty and interest and penalty and allow the stay petition unconditionally. - Decided in favor of Assessee.

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• 2013 (7) TMI 245
  Cross- examination of witnesses – Held that:- In a given situation, the cross-examination may not be permitted to test the veracity of deposition sought to be issued against a party against whom action is proposed to be taken - It was only when a deposition goes through the fire of cross-examination that a Court or a statutory authority may be able to determine and assess its probative value. Merely because the statements, according to the adjudicating officer, were recorded without threat, duress or coercion or that the witnesses at no stage retracted their statements, cannot be a ground for rejecting the request for cross-examination. - Decision in Telestar Travels (P.) Ltd. v. Special Director of Enforcement [2013 (2) TMI 396 - SUPREME COURT] followed - Decided in favor of Assessee.

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• 2013 (7) TMI 244
  Benefit of Notification No.108/95 C.E. - projected funded by the UN - Machineries not given directly to the project implementing authority but given to the agency executing the work - Machineries had been put in use by the sub-contractors, who were given the job of execution – Held that:- The fact cannot go against the assessee's claim - The use of the phrase 'supplied to the projects financed by the said United Nations or an International Organisation and approved by the Government of India' clearly shows that the condition for grant of exemption is supply of the goods towards the project and nothing beyond - Notification applies to the case on hand. In the circumstances - No justification to introduce any condition or read the Notificatin No. 108/95 C.E. in a restrictive manner – Decided against the Revenue.

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• 2013 (7) TMI 243
  Benefit of refund in case of export of goods - by way of re-credit under Notification No. 39/2001-C.E., dated 31-7-2001 and also claim of rebate of duty under Section 11B of the Central Excise Act, 1944 on the same duty of exported goods - double benefit. - Held that:- Statute very clearly stipulates that where any goods are exported, the Central Government may by notification grant rebate of duty paid on such excisable goods subject to condition and limitation and fulfilment of procedure as prescribed in the notification. - As per condition 2(h) of the Notification No. 19/2004-C.E. (N.T.) as amended vide Notification No. 37/2007-C.E. (N.T.), the rebate under section 11B, of duty paid on goods exported on 23-9-2007 is not admissible since the said goods are manufactured by a manufacturer availing Notification No. 39/2001-C.E., dated 31-7-2001. Decided against the Assessee.

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• 2013 (7) TMI 242
  Rebate under Rule 18 - Drug Intermediaries - Description is different in ARE-1 - The department’s main and only ground of claimed rebate to be termed as erroneous is that the products shown in relevant shipping bill is “Drug Intermediates” of TSH No. 2942 00 90 and in Central Excise Invoice/ARE-1 the goods stands named as “Lasamide” classification under TSH No. 2916 31 90. Therefore the item exported is not the very same as cleared from the factory on payment of duty. Held that:- Both the above nomenclature are one and the same for the single export item such as one in Central Excise invoice is “Lasamide” as P.P. Medicament & Bulk Drug specific product name and the other is “Product Group” name Lasamide as “Drug Intermediates”. This has stated to be done as per the requirement/use of the buyer of the country of destination - Except from the stated difference in nomenclature and classification as per respective tariffs there is neither any charge nor any evidence to suggest that the goods exported were other than the goods actually cleared from the factory of manufacture. Government also takes note of the fact that there are a number of connected documents - In the case of M/s. Cotfab Exports reported as [2005 (11) TMI 100 - GOVERNMENT OF INDIA] has held that minor difference in description of goods, being a procedural lapse, was liable to be condoned, since the substantial benefit of rebate cannot be denied for minor procedural technical infractions. - Decided in favor of assessee. Period of Limitation - status of review/appeal of the impugned order-in-original by the jurisdictional Commissioner of Central Excise under Section 35E(2) and 35E(3) of the Central Excise Act, 1944 being time-barred. Held that:- The statute of Section 35E(2) & 35E(3) of the Central Excise Act, 1944 stands amended w.e.f. 10-5-2008 and the relevant review order has to be necessarily made within the stipulated period of three months from the date of communication of relevant order-in-original which stands issued on 9-2-2009 in this case and shown dispatched in February 2009 – The order-in-original herein was reviewed on 17-11-2009. Thus, cannot be taken as having been made within three months of communication of impugned order-in-original. Therefore, applicability of “Time-bar” as hitting to the legality of the said orders of review and appeal by the department as correct. It is quite clear that review order and appeal being time-barred were liable to be rejected straight way. - Decision against the revenue.

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• CST, VAT & Sales Tax

• 2013 (7) TMI 269
  Transit pass indicating the price shown in the invoice issued by the dealer - KVAT Act - Held that:- So long as, the 'floor rate' fixed under Section 47(16A) of the KVAT Act remains in force, the respondents cannot be directed to issue transit pass indicating the invoice value as sought for by the petitioner. Therefore, the respondents are directed to issue transit passes to the petitioner subject to the eligibility, only in accordance with law and in the light of the findings herein before.

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• Wealth tax

• 2013 (7) TMI 270
  Validity of proceedings u/s 17 - Reasons for re-assessement not furnished to assessee - Held that:- right course of action for the Assessing Officer is to furnish the reasons of reopening the assessment to the assessee and in case the assessee has any objection to such reopening, the AO will adjudicate on the same in accordance with law and by way of a speaking order before assuming jurisdiction in reopening the assessment proceedings - In the present case, this exercise has not been carried out - Matter remitted back to Assessing Officer - Following decision of G.K. Drive Shafts vs. ITO [2002 (11) TMI 7 - SUPREME Court] - Decided in favour of Assessee.

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