TMI Tax Updates - e-Newsletter
July 17, 2012

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise Indian Laws

Articles

1. Import of Alloy Steel with lower Customs Duty

   By: JAMES PG

2. LIABILITY TO PAY INCOME TAX

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Change in Tariff Value of Brass Scrap (all Grades), Gold and Silver Notified

2. Index Numbers of Wholesale Prices in India (Base: 2004-05=100) Review for the month of June, 2012

3. Budget 2012 : Changes in Service Tax

4. Constitution of an Expert Committee on GAAR to undertake stakeholder consultations to finalise the guidelines for GAAR

Notifications

Customs

1. 45 /2012 - dated 13-7-2012 - Cus

Amends in the Notification No. 12/2012- Customs, dated the 17th March, 2012

2. 58/2012 - dated 13-7-2012 - Cus (NT)

Amends in notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2001-Customs (N.T.), dated the 3rd August, 2001

3. F.No. 437/59/2010-Cus. IV - dated 28-6-2012 - Cus (NT)

Corrigendum to Office Order F.No.437/59/2010-Cus.IV dated 23rd November, 2010

Income Tax

4. 26/2012 - dated 10-7-2012 - IT

Double taxation Agreement - Agreement between the Government of the Republic of India and the Government of Jersey for the Exchange of Information and Assistance in Collection with Respect to Taxes

Circulars / Instructions / Orders

FEMA

1. 06 - dated 13-7-2012

Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR

Highlights / Catch Notes

Income Tax

• Interpreting "Transfer" u/s 53A of the Transfer of Property Act and Its Tax Implications Under Income Tax Act.

  Case-Laws - AT : Transfer - development agreement - Starting words of s. 53A of the Transfer of Property Act are "where any person contracts" which means just the existence of a contract. The assessee is the "person" who has entered into a contract with the developer vide agreement dated 31.03.2006 - The term "transfer" is to be read along with the s. 45 and s. 2(47)(v) of IT Act - AT
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• Court Quashes Section 147 Proceedings, Citing Lack of Valid Basis for Belief in Escaped Income Assessment.

  Case-Laws - HC : Quashing the initiating proceedings u/s. 147 - no basis for the Assessing Officers to form a belief that income has escaped assessment - HC
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• Section 194C Applies to TDS in Transportation Contract; No Transfer of Vehicle Use Rights Indicated.

  Case-Laws - AT : TDS - applicability of section 194C or 194-I? - when the contract agreement is read clause-by-clause, it becomes abundantly clear that there is no transfer of the right to use the vehicle involved in the contract agreement and that the contract agreement is merely for carriage of the petroleum and petroleum products and nothing more - AT
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• Amendment to Section 2(15) focuses on "advancement of any other object of general public utility" only.

  Case-Laws - AT : Amendment to section 2(15) is applicable only to the fourth limb of the definition i.e. ‘advancement of any other object of general public utility’ and not to other activities in the field of relief to the poor, education or medical relief - AT
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• Section 14A Disallowance via Rule 8D Inapplicable if Sufficient Interest-Free Funds Exist.

  Case-Laws - AT : Disallowance u/s 14A by invoking Rule-8D - disallowance cannot be made in case where the assessee is having sufficient interest free funds - AT
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• Corpus Donations Not Taxable: Donor's Intent Key, Not Just Gift Deed, Ensures Tax Exemption for Recipient.

  Case-Laws - AT : Donations received as a corpus funds - the gift deed alone is not to be looked into - it was a corpus donation at the end of donor and it is not a taxable income in the hands of the assessee - AT
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• Ex-parte assessment u/s 144 challenged; validity of notice sent via speed post questioned.

  Case-Laws - AT : Challenge the assessment ex–parte u/s 144 - Valid notice containing the address of the assessee, was issued by speed post to it on 16.8.2008 and the normal presumption is that this notice would have been received by the assessee - AT
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• India and Jersey Sign Agreement to Exchange Tax Info, Prevent Double Taxation, Enhance Economic Cooperation and Transparency.

  Notifications : Double taxation Agreement - Agreement between the Government of the Republic of India and the Government of Jersey for the Exchange of Information and Assistance in Collection with Respect to Taxes - Notification
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Customs

• Corrigendum Issued for Customs Order F.No.437/59/2010-Cus.IV to Clarify and Amend Original Regulations for Compliance.

  Notifications : Corrigendum to Office Order F.No.437/59/2010-Cus.IV dated 23rd November, 2010 - Notification
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FEMA

• India-USSR Deferred Payment Agreements Impact Financial and Tax Rules Under FEMA Circulars.

  Circulars : Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSR - Circular
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Service Tax

• Authorities Must Strictly Follow Central Excise Act Provisions; No Relief Based on Justice or Equality Principles.

  Case-Laws - AT : Refund claim - wrong deposit of service tax - It is well settled law that the authorities working under Central Excise Act are bound by the provisions of the Act and cannot grant relief on the basis of justice, equality and good conscious - AT
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• Eligibility of Cenvat Credit for Air Compressors Purchased in 2005 Under Service Tax Laws Examined.

  Case-Laws - AT : Eligibility of the respondent for availment of cenvat credit of the duty paid on the Air Compressors purchased by them and received in the factory premises on 05.05.2005 - AT
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• Appellant Claims Refund for Service Tax on Courier and Transportation Services Used in Goods Export.

  Case-Laws - AT : Refund claim - service tax paid on the input services - Courier Services and Transportation services utilised by the appellant for export of the goods - AT
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• Businesses Can't Claim CENVAT Credit for Services Used Before Tax Registration, Court Rules; Timely Registration Crucial for Benefits.

  Case-Laws - AT : Non eligibility for cenvat credit on the input services for the period prior to the registration - AT
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Case Laws:

• Income Tax

• 2012 (7) TMI 376
  Treating the transaction as liable for capital gain - assessee contested that no 'transfer' within the meaning of section 2(47)(v)has occurred in respect of the Development Agreement executed by the assessee - Held that:- Starting words of s. 53A of the Transfer of Property Act are "where any person contracts" which means just the existence of a contract. The assessee is the "person" who has entered into a contract with the developer vide agreement dated 31.03.2006 - The term "transfer" is to be read along with the s. 45 and s. 2(47)(v) of IT Act If transferee has taken any steps to construct the flats, undisputedly then, under the provision of Income Tax Act a "transfer" has definitely taken place. Terms necessary to constitute the transfer can be ascertained with reasonable certainty - with two certainties one is passing of substantial consideration and second is passing over of possession - In this case the amount of consideration has to be paid to the assessee in the form of cash as well as in kind i.e., the flats to be constructed by the developers to be handed over to the owners - Even if some part of consideration remains to be paid, the transaction shall not affect the liability of capital gains tax so as to postpone the same indefinitely. What is meant in clause (v) is the "transfer" which involves allowing the possession so as to allow developer to undertake development work on the site - since the possession of the property already handed over to the developer and right and interest in the property has been transferred in favour of the developers.Being so the condition laid down in section 2(47)(v) has been complied with and the lower authorities justified in treating the transaction is liable for capital gain - against assessee.

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• 2012 (7) TMI 375
  Disallowance of freight charges on account of TDS not being deducted - invoking Section 40(a) (ia)- Held that:- Assessee had not produced any material to establish the contention of the assessee, but from making a bald assertion. It was also found from the records that the assessee had made the payment subsequently after the due date and wrongly said that the department had entered the finding of liability to freight charges merely on the fact of the subsequent deposit made - against assessee. Addition of liability in hands of assessee - invoking Section 41(1) - Held that:- Assessee had not produced anything to show the subsisting liability towards the alleged creditors and no evidence placed with respect to the payments made and no consequent acknowledgment of such credits were proved by the assessee - against assessee. cash credits added on to the income returned - invoking Section 68 - Held that:- Assesse's contended the cash credits to be advances from customers who had made orders for specified goods but was unable to provided details of the persons who made such advances - said advances were cash infused by the assessee into the business to make up the short fall in cash - no substantial question of law raised in appeal - against assessee.

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• 2012 (7) TMI 374
  Quashing the initiating proceedings u/s. 147 - Revenue appeal - Held that:- The reasons recorded for initiating reassessment proceeding u/s 147 clearly indicates that there was no new material which had come to the notice of the AO so as to lead to a reasonable belief that income assessable to tax has escaped assessment - order passed originally u/s 143(3) was passed after the respondent had made adhoc claim for expenditure at 30% of the professional receipts in the revised return of income which was later withdrawn. In fact the reasons for reopening the assessment for the year 2002-03 itself records that the the claim of 30% adhoc expenses was withdrawn when the respondent assessee was asked to substantiate the claim - no basis for the Assessing Officers to form a belief that income has escaped assessment - against revenue.

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• 2012 (7) TMI 373
  Rejection of the claim for waiver of interest u/s 234A, 234B & 234C - income generated from the deal to an extent of 3/10 was attributed to the petitioner while the remaining 7/10 was fixed against Mr.K.P.Ahamed Kutty - Held that:- The benefit conferred to Mr.K.P.Ahamed Kutty, is on the basis of the earlier Circular, i.e., Circular dated 23.05.1996, which came to be super ceded by the time since no substantial difference is brought to the notice between these two Circulars - the claim for waiver was submitted by the petitioner much before the claim petition preferred by Mr.K.P.Ahamed Kutty, whose case came to be considered first, passing favourable orders, while the case of the petitioner came to be kept in the cold storage for nearly six years - matter is remitted to the second respondent for fresh consideration

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• 2012 (7) TMI 372
  Genuineness of Assessee firm - held to be Association of Persons u/s 2(31)- the revenue generated by the respondent was passed on to the partners such that no profit accrued to the respondents - Held that:- Assessee had not contrived a devise to evade or even avoid tax. The original intention itself was for the consortium members to bid for and perform the contract and to divide the profits arising therefrom among themselves in accordance with the Consortium Agreement. The members of the consortium constituted the firm, not as a devise to evade or even avoid tax, but upon the insistence of the MIDC - the respondent satisfies the requisite tests of a partnership firm constituted in accordance with law - against revenue.

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• 2012 (7) TMI 371
  Unexplained cash credit of 12 persons - CIT(A)deleted the additions - Held that:- The assessee has failed to prove the creditworthiness of all the creditors and no source of their income has been filed. At the best the assessee is able to prove identity of the creditors, but the assessee failed to prove the genuine credit in the matter and they were having sufficient funds or savings in order to give loans to the assessee. On verification of the bank account of the depositors, it was specifically found that there were no sufficient funds available in their bank account and they were having only small bank balance, which was even not sufficient to meet out their household expenses. Therefore, it is unbelievable to accept the contention of the assessee that said persons were having creditworthiness to advance any loan to the assessee - parties have deposited the cash in their bank account before issuing cheques to the assessee, which apparently show that these were accommodation entries, not genuine and all the three creditors were not having creditworthiness CIT(A) has wrongly deleted the addition shifting the burden on the Assessing Officer to establish the creditworthiness of the depositors - only genuineness of few parties have been proved furnishing relevant bank statement of the creditors explaining that the source of loan - partly in favour of assessee.

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• 2012 (7) TMI 370
  Challenge reopening of completed assessment u/s 147 - ad hoc dis allowances of expenses - Held that:- A.O. himself admitted in his order that the details of expenses has been filed but the log book was not filed by the assessee. Therefore, he disallowed 20% of the generator expenses. As the assessee has furnished details of general expense and repair and maintenance no such adhoc disallowance is warranted whereas in respect of generator expenses the assessee has failed to furnish relevant documents, log book and others, therefore, the A.O. has rightly disallowed 20% of the expenses. Addition on account of estimated business income - as per recognized accounting practice on actuaries – 6.5% of deposits mobilized by assessee forfeited - Held that:- Without bringing any material on record or without any discussion in the body of the order the AO has observed that there may be income of Rs.84,00,000/- on account of forfeiture of deposits - there is no question of forfeiture of any deposit and from the material available on record, it is seen that the company is repaying the depositors year after year - The AO has not discussed in his order that in what type of business and how there will be a business yield @ 6.5 times - against revenue. Addition i.e. making imaginary disallowances out of expenses of non existent business - Held that:- whatsoever has been given by the AO while disallowing admissible expenses on adhoc basis. The income has been estimated on imaginary basis which we have already deleted - in favour of assessee. Addition on account of rent received - Held that:- Addition of Rs.1,54,000/- by mentioning Rent as other income is not acceptable as no discussion has been made in the body of the order that how this rent income is other income. In fact, the assessee in its Profit & Loss account of the Hotel business had shown rental income of Rs.1,68,650/- and it seems that AO had treated the rental income of hotel as income from other sources. However, no finding has been given by the AO that how the rental income of hotel can be treated as income from other sources - in favour of assessee.

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• 2012 (7) TMI 369
  Addition made on account of unexplained credit - seized papers belonged to the assessee, therefore, the addition is required to be made in the hands of the assessee - CIT(A) deleted the additions - Held that:- CIT(A) deleted the said addition on the basis ignoring that protective addition in the hands of the assessee on the ground that the case of Shri Hari Shankar Goyal is still pending with the A.O. on the basis of High Court order but the CIT(A) noted that there is no dispute about the disclosure of undisclosed income of Rs.23,71,076/-, which includes Rs.23,50,000/-, before the Settlement Commission in the hands of Late Shri Hari Shankar Goyal, Legal Heir but the fact that what was the final outcome from the case of Shri Hari Shankar Goyal which was pending with the A.O. on the basis of High Court Order - The deletion made by the CIT(A) is little premature as the CIT(A) has deleted the addition without recording the fact of final outcome of assessment in the case of Sahri Hari Shankar Goyal - send back this issue to the file of CIT(A) - in favour of revenue.

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• 2012 (7) TMI 368
  Challenging the re-opening of the closed assessment u/s 147 - disallowing of the assessee’s claim of exemption u/s 54F - Held that:- Originally the A.O. had opted proceeding u/s 154 and when that proceeding became final, he has taken proceeding under section 147 - The assessment must be one single assessment and not piecemeal assessment. If the I.T.O. has assessed only the part of the income of sale income making the assessment and deferred the other part of income for consideration at later stage under section 147 could not be invoked for the purpose of completing the deferred assessment. Claim of exemption u/s 54F- Held that:- Reinvestment of sale consideration for availing benefit u/s 54F should be in the name of the assessee is a debatable issue as there are decisions available on the both the sides, on applying rule as laid down in the case of Mysore Minerals Limited vs. CIT, [1999 (9) TMI 1 (SC)] that in case there are two possible views, a view favorable to the assessee should be adopted - decided in favour of assessee.

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• 2012 (7) TMI 367
  Deduction of tax at source on hiring of buses - applicability of section 194C or 194-I? - Held that:- Considering the Bulk Petroleum Products Road Transport agreement the arrangement for transportation of petroleum products was essentially a contract for transportation of goods and not an arrangement of hiring of vehicles. Thus tax is required to be deducted at source from the payments to the carrier in terms of provisions of sec. 194C and not u/s 194-I - there is nothing to indicate that the assessee has taken trailers/cranes on rent so as to attract the provisions of section 194-I and assessee had given sub-contracts for transportation of goods, thus the said transactions would fall within the purview of section 194C as the assessee was responsible for paying the amount in question for carrying out work in pursuance of contracts between the assessee and the transporters and as such was required to deduct tax at source at the rate prescribed @ 2% - when the contract agreement is read clause-by-clause, it becomes abundantly clear that there is no transfer of the right to use the vehicle involved in the contract agreement and that the contract agreement is merely for carriage of the petroleum and petroleum products and nothing more - in favour of assessee.

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• 2012 (7) TMI 366
  Refusal to grant exemption u/s 80G(5) - withdrawal of the registration granted to the assessee society under section 12AA - Held that:- Assessee Samiti is carrying on the activities in respect of medical relief whose object is ‘education’ or ‘medical relief’ would continue to be eligible for exemption as charitable institutions even if they incidentally carry on a commercial activity - the newly inserted proviso to section 2(15) will apply only to entities whose purpose is ‘advancement of any other object of general public utility’ i.e. the fourth limb of the definition of ‘charitable purpose’ contained in section 2(15). Thus, there is no basis for satisfying the CIT that the activities of the trust are not genuine and they are not being carried out in accordance with the object of the trust/society - C.B.D.T. Circular No.11/2008 dated 19.12.2008 clearly pointed out that the amendment to section 2(15) is applicable only to the fourth limb of the definition i.e. ‘advancement of any other object of general public utility’ and not to other activities in the field of relief to the poor, education or medical relief - cancellation of registration under section 12AA (3) and refusal to renew exemption u/s 80G is not warranted - in favour of assessee.

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• 2012 (7) TMI 365
  Disallowance u/s 14A by invoking Rule-8D - steep increase in the expenses claimed under the head bank interest as compared from previous year concludes that the borrowing of funds has been resorted to by the assessee mainly for purchase of shares - Held that:- As decided in M/s Lala Ram Finance & Investment Versus DCIT [2012 (7) TMI 127 (Tri)]disallowance cannot be made in case where the assessee is having sufficient interest free funds - as the assessee was having sufficient interest free funds to cover the investment made in shares of which income is exempt under section 10 disallowance cannot be warranted. Disallowance of power and fuel, manufacturing and out of selling expenses after comparing the expenses with earlier years - Held that:- Neither AO nor CIT(A) found that the expenditure incurred and claimed by the assessee was not for the purpose of business. The adhoc disallowance was made merely on the basis that some of the vouchers were self-made as merely that the assessee has accounted for the expenditure by self-made vouchers automatically does not prove that the expenditure incurred was for other than business purposes - decided in favour of assessee.

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• 2012 (7) TMI 364
  Addition of the entire credits in bank account in the income as unexplained deposits - assessee contested that only the peak credit in the bank account could have been added in the income of unexplained deposit - Held that:- Principle of peak credit is not applicable in the cases where the deposits remained unexplained u/s. 68 and would not apply in the case of different depositors where there has been no transaction of deposits and its repayment between the particular depositor and the assessee - as different drafts were deposited in the bank account of the assessee in the name of different persons, therefore, peak theory cannot be applied in the case of assessee. Further, from the bank statement, it is clear that after deposit of bank drafts in the account in the name of different persons, cash was withdrawn in each and every case, but no evidence was furnished whether the amounts were paid to the same depositors of the drafts or to some other parties - in favour of revenue. Levy of penalty u/s. 271(1)(c) - rejection of appeal as to be time barred - Held that:- It is well settled law that penalty cannot be levied on the amounts /additions, which have already been deleted on quantum appeals. No basis would be left for levy of penalty if addition on which penalty was levied has already been deleted by the appellate authorities - Since the order of the Tribunal was delivered after the levy of penalty, therefore, such circumstances and peculiar facts should have been considered by the ld. CIT(A) in the penalty appeal instead of dismissing the appeal of the assessee holding it to be time barred - the assessee was prevented by sufficient cause from not filing the appeal before the CIT(A) within the period of limitation, thus in such circumstances, the delay should have been condoned - the appeal of the assessee is restored to the file of CIT(A) with the direction to redecide the appeal on merits - in favour of assessee by way of remand.

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• 2012 (7) TMI 363
  Computation of Income - CIT(A) restricted the income of assessee to Rs.3 Lakh as against AO's declaration of at Rs.10,51,812/- treating it to be excessive and on higher side - assessee contested that AO erred in clubbing the purchases of both the entities in the hands of the appellant estimating the sales of both the entities in the hands of the appellant - Held that:- The assessee claimed in the profit and loss account, payment of license fees of Rs.6,00,000/- which was paid for both the concerns and report of the Excise Inspector also confirmed it and the assessee also claimed deduction of total license fees of both the concerns in the profit and loss account. Therefore, from the conduct of the assessee, it was clear that the assessee has shown ownership on both the shops in question and when the assessee was confronted of the fact and was called upon to file rejoinder to the remand report, the assessee did not say anything and stated that it is a matter of record of the AO. Assessee's claim that both the entities of AOP is to be assessed separately is found to be afterthought because no return of income for the assessment year under appeal was filed for AOP. The return of AOP was filed for the first time for subsequent assessment year 2005-06 after completion of assessment of assessee. Thus, no reliance can be placed in the assessment year under appeal that any valid AOP exists as claimed by the assessee - as the assessee did not file the allotment letter of D.M. in respect of shop and no documentary evidence has been filed in support of any of the contentions. The CIT(A) was justified in upholding that both the shops were operated and owned by the assessee and estimate of profit of both the concerns in the hands of the assessee was justified - estimation of the figure of net profit at Rs.3,00,000/- which was in proportion to the income declared by the assessee in the return of income on the basis of declared purchases was correct - against assessee.

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• 2012 (7) TMI 362
  Disallowance of deduction u/s 80-IC - an interest income earned by the assessee - deletion of administrative expenses paid for earning gross interest income as net interest income has to be disallowed from the eligible profit - Held that:- Since the assessee has not advanced any arguments with regard to the proposition that on interest income deduction u/s 80-IC no idea to examine the provisions of sec. 80-IC and in what condition the computation for such deduction has to be made - interest income on fixed deposit for the purpose of availing of credit facility from the bank does not have an immediate nexus with the business and, therefore, it has to necessarily be treated as income from other sources and not business income - as the net interest income which has to be excluded from the eligible profit for grant of deduction under sec. 80-IC and Learned first appellate authority on an ad hoc basis allocated 50,000 rupees towards administrative expenses for earning interest income, remit the issue to the file of the Assessing Officer for allocation purposes.

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• 2012 (7) TMI 361
  Donations received as a corpus funds - DR stated that without any specific directions by the donors it is an income of the assessee - Held that:- As Registration granted u/s 12AA is concerned it is an order passed by competent authority and if any irregularity crept in the order, the same can be rectified by the competent authority itself, DR cannot raise any objection qua the irregularity, if any, crept in the order of the Learned CIT while granting registration. If discussion between the donor and the donee in the shape of correspondence etc. is seen then it would reveal that donation was made by the donor in order to establish an engineering and a management college in the name of his grand-father. The donor has specifically mentioned in this connection. As the trust had put a proposal to the donor for establishing a college in the name of his grand-father which the donor accepted and accordingly gift deed was made. Thus, the gift deed alone is not to be looked into - it was a corpus donation at the end of donor and it is not a taxable income in the hands of the assessee - with regard to the other donations all the donors have filed their affidavit indicating the fact that they have donated the funds towards corpus - decided in favour of assessee.

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• 2012 (7) TMI 360
  Challenge the assessment ex – parte u/s 144 - the notice was served after the due date - Held that:- Valid notice containing the address of the assessee, was issued by speed post to it on 16.8.2008 and the normal presumption is that this notice would have been received by the assessee - company within a period of one or two days. The notice has not been received back. Therefore, it is held that in absence of any valid rebuttal of service, the same deemed to have been made on the assessee - against assessee. Deletion of addition made by the AO u/s 40(a)(ia)for non-deduction of tax at source - Held that:- Only one notice has been issued in this case for making the assessment u/s 144 adequate opportunity of being heard was not granted to the assessee. Therefore, it is justified in admitting additional evidence under Rule 46(A)(3). The evidence showed that tax has been deducted and paid to the Central Government. Consequently there is no reason to disallow the expenditure Disallowance from laundry expenses, house keeping and service expenses have been deleted by mentioning that the AO has not brought any evidence on record that the expenses were not incurred in the course of business - in favour of assessee

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• 2012 (7) TMI 359
  Levy of penalty u/s 271(1)(c) - penalty levied on account of reduction in the claim made by the assessee u/s 80IB - Held that:- Penalty merely because the claim in the revised return has been reduced is not warranted as Section 271(c) contemplates levy of penalty if assessee conceals the particulars of total income as is referred in S. 2 (45) or furnishes inaccurate particulars of such total income - there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false - A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars - decided in favour of assessee.

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• 2012 (7) TMI 358
  Addition in account of undisclosed income - AO included the income of assessee's wife and in his undisclosed income - Held that:- As the assessee is held to be the owner of M/s Transworld International upto assessment year 1996-97 and his to be owner of this proprietary concern from assessment year 1997-98 the income from this concern for assessment year 1997-98 cannot included in the hands of the assessee - that the addition has been deleted in wife's case also on the ground that the transactions of proprietary concern had been taken into account and profit from this concern was declared by her at Rs. 1,04,996/- and this finding has not been challenged by the revenue - following the rule of consistency CIT(A) was right in deleting the addition. House hold expenses cannot be estimated while making assessment of undisclosed income under chapter XIVB. Thus CIT(DR) has not been able to show that any material was found in search in respect of this issue. Therefore, this ground cannot be taken up for computing undisclosed income - in favour of assessee.

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• 2012 (7) TMI 357
  Disallowance of expenses - Held that:- Assessee failed to submit evidence in support of its claim as no material was brought on the record indicating that he has carried out business activities. In this year, it has only shown rental income and against such income, the expenses enumerated in section 24b can be allowed and the expenses like Loan processing fee, Sales-tax, Insurance Expenses and Bank charges as claimed by assessee cannot be allowed - decided against assessee. Disallowance of interest expenses - the borrowed capital was not used for business purposes - Held that:- If an assessee has borrowed funds, purchased a property/land, raised construction it or renovated it and then earned income, then expenses in the shape of interest etc. would be allowed as a deduction out of the rental income - assessee has filed a bank certificate to provide the transaction details and the accounts of the assessee for earlier years i.e. balance sheet, ledger account etc has alleged that it has raised unsecured loan from individual for construction, these loans were repaid by taking a term loan from the bank - remit the case back for verification and re adjudicate - in favour of assessee for statistical purposes.

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• Customs

• 2012 (7) TMI 356
  Valuation - Quantity to be considered for the valuation of imported MS/HSD and whether CVD is liable to be paid on such value or not - the assessee contested that the quantity which has been unloaded into the shore tank is only the quantity on which duty liability needs to be discharged and not the bill of lading - Held that:- As the appellant is paying the price indicated in the invoice even if appellant would have received lesser quantity of the goods in the shore tanks, the invoice value charged and paid by the appellant would be the correct value unless there is a clear evidence that they have paid less amount or they have paid the value/price for the quantity received in shore tanks - in against the assessee.

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• Service Tax

• 2012 (7) TMI 382
  Refund - appellant paid and deposited Service Tax in respect of commission agent services provided from outside India - Service Tax was not required to be paid by the appellant - no protest was lodged at the time of deposit of said Service Tax – Held that:- In terms of provisions of section 11B, the refund claim are required to be filed within a period of one years from the relevant date. The relevant date stand defined as date of payment of Service Tax. The refund application filed on 9.12.09 is beyond the period of one year from the date of payment of Service Tax on 17.2.07. It is well settled law that the authorities working under Central Excise Act are bound by the provisions of the Act and cannot grant relief on the basis of justice, equality and good conscious – Appeal rejected

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• 2012 (7) TMI 381
  Eligibility of the respondent for availment of cenvat credit of the duty paid on the Air Compressors purchased by them and received in the factory premises on 05.05.2005 - Air Compressors which are purchased and received by the appellant was for providing out put service Commercial and Industrial Construction Services (Pipeline Services) and the said services were brought into the tax net from 16.6.2005 – Held that:- Cenvat credit could not be availed on duty paid on such Air Compressors though it is capital good as the said capital goods were received in the premises of the service provider i.e. respondent before the services were taxable under the Finance Act, 1994.

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• 2012 (7) TMI 380
  Refund claim - service tax paid on the input services - Courier Services and Transportation services utilised by the appellant for export of the goods – claim denied on the ground that appellant has not provided the original or self attested copies of shipping bills, courier bills, bills of lading, MRs of invoices indicating actual export of the goods – Held that:- Appellant is also directed to show the linkage of the goods which are being exported by them with documents - order is set-aside and matter is remitted back to the adjudicating authority

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• 2012 (7) TMI 379
  Non eligibility for cenvat credit on the input services for the period prior to the registration - Held that:- As decided in J.R. Herbal Care India Limited v. CCE, Noida [2010 (3) TMI 391 (Tri)]no provision in the rules that credit was not available to unregistered manufacturers. Manufacturers exempted from the registration do not cease to be a manufacturer of excisable goods. Therefore, in respect of the goods manufactured during the period when the appellant was not registered, credit can be taken subsequently also - in the case of clandestine removals, even if the duty is paid subsequently, cenvat credit on inputs used will be available to the assessee/manufacturer subject to the conditions that proper documents showing the payment of duty are available. If the appellant is eligible for cenvat credit, post registration, this availment or showing the account being credited by the service tax paid on input services, but not availing the same for the purpose of discharge of duty, would be more or less the same or an identical situation to indicate that as STP appellant is eligible for refund of underutilized credit - decided in favour of assessee.

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• Central Excise

• 2012 (7) TMI 355
  Denial of CENVAT credit on lead acid battery and UPS System used in their office and the Cenvat Credit on S. Tax was not available prior to 10/9/2004 - appellant reversed the credit alongwith interest on being pointed out - Held that:- As duty amount is paid before issuance of SCN and the appellant have not been given any option in terms of Section 11AC under 1st proviso for payment of 25% of penalty as decided in the case of Commr. of C. Ex. & Customs, Surat-I Vs. Harish Silk Mills [2010 (2) TMI 494 (HC)] that if the duty amount with interest is not paid in time and even reduced penalty of 25% of the duty amount is not paid in time and option is not given to the respondent assessee, we have taken the view that such option should be given to the assessee and period of 30 days would commence from the date of giving such option - partly in favour of assessee.

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• 2012 (7) TMI 354
  Eligiblity of cenvat credit of service tax paid on outward transportation of the goods from the factory to the customer s premises - sales are on FOR destination basis - denial of credit - department who pleaded that the impugned order has been passed based on the judgement of the Tribunal in the case of ABB Ltd. (2009 (5) TMI 48 (Tri) ) without any reference to the facts of the case - It is pleaded that even if the customer s premises is treated as the place of removal, there is no finding by CCE(Appeals) that the sales were on FOR destination basis – Held that:- Neither the Commissioner (Appeals) nor the adjudicating Joint Commissioner have looked into this aspect of the case by referring to the facts - Matter remanded to the adjudicating authority for denovo adjudication

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• 2012 (7) TMI 353
  Applications for waiver of pre-deposit along with Education Cess and equal amount of penalty - the contention of the applicant that their appeals were dismissed by ld.Commissioner(Appeals) for non-compliance with the provisions of section 35F of Central Excise Act and cases were not decided on merit - Held that:- Undisputedly the ld.Commissioner has not decided the issue on its merits as on similar facts and circumstances the demands for subsequent period have been set aside by ld.Commissioner(Appeals) vide his order - thus after waiving the requirement of pre-deposit the matter is to be remanded back to ld.Commissioner(Appeals) to decide the issue on its merits without insisting for pre-deposit - Appeal allowed by way of remand - in favour of assessee.

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• 2012 (7) TMI 352
  Wrong availment of Cenvat credit - stay application for granting waiver of penalty - Held that:- Since the appellant took wrong Cenvat credit which was reversed on 17.11.2007 it is necessary to ascertain is whether such credit was utilized by the appellant without having any other credit over and above such amount - if credit was utilized without sufficiency thereof on record penalty should be imposed if there was no utilization it is left for the adjudicating authority to re-adjudicate the matter of imposition of penalty since there is already reversal of Cenvat credit not disputed by the assessee - need to be decided afresh.

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• Indian Laws

• 2012 (7) TMI 383
  Petition seeking reference of the disputes to an independent and impartial sole Arbitrator - provisions of arbitration contained in Clause 10 of the general conditions that once the parties have agreed upon a named arbitrator, the parties cannot resile therefrom - the Chairman-cum-Managing Director had duly acted and exercised his powers and had appointed General Manager (Kot) as the arbitrator - Held that:- It would appear that even though the order may have been made on 19th July, 2011, it was served for the first time on the counsel of the petitioner by e-mail on 26th July, 2011. Therefore, prima facie, it would not be possible to accept the submission of respondent that the petition would not be maintainable on the ground that the arbitrator had already been appointed at the time when the present petition was filed. The issue needs to be decided on the basis of the evidence produced by the parties, at the appropriate time. It would not be possible to reject the petition merely on the ground that this Court would have no power to make an appointment of an arbitrator other than the Chairman-cum-Managing Director or his designate. This Court would have the power to appoint a person other than the named arbitrator, upon examination of the relevant facts, which would tend to indicate that the named arbitrator is not likely to be impartial - the petitioner had clearly pleaded that the named arbitrator is a direct subordinate of the CMD and employee of the respondent. CMD is the controlling authority of all the employees, who have been dealing with the subject matter in the present dispute and also controlling authority of the named arbitrator. Apprehending that the CMD, who had been dealing with the entire contract would not act impartially as an arbitrator - the petitioner thus made it explained that it may not get any justice in the hands of the Managing Director, since he cannot go against the directions issued by the Ministry of Defence, Government of India and, therefore, it would be appropriate to appoint independent sole arbitrator - in favour of petitioner

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• 2012 (7) TMI 377
  Challenge of detention order at the pre-execution stage - Held that:- While the detention orders could be challenged at the pre-execution stage, that such challenge could be made only after being prima facie satisfied that the five exceptions i.e. (i) that the impugned order is not passed under the Act under which it is purported to have been passed, (ii) that it is sought to be executed against a wrong person, (iii) that it is passed for a wrong purpose, (iv) that it is passed on vague, extraneous and irrelevant grounds or (v) that the authority which passed it had no authority to do so had been fulfilled - this case did not fall under any of the five exceptions to enable the Court to interfere and rejected the contention that the exceptions were not exhaustive and that it is only in the five types of instances that the Courts may exercise its discretionary jurisdiction under Articles 226 and 32 of the Constitution at the pre-execution stage. Rejecting Mr. Rohatgi's contention regarding the right of a detenu to be provided with the grounds of detention prior to his arrest - Held that:- That the right of a detenu to challenge his detention at the pre-execution stage on grounds other than those five exceptions mentioned therein, requires further examination - various Special Leave Petitions and the Writ Petitions be listed for final hearing.

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