TMI Tax Updates - e-Newsletter
July 20, 2012

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise Wealth tax

Articles

1. IF ANY APPEAL IS DISMISSED ON LIMITATION AND NOT ON MERITS, THAT ORDER WOULD NOT MERGE WITH THE ORDERS PASSED BY THE FIRST APPELLATE AUTHORITY.

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. MCA Invites Views/Suggestions on the Proposed ‘Multistate Societies Registration Bill, 2012’.

2. Chairman, CBEC Awards AEO Certificates and Launches CBEC’S Interactive Customs Tariff Website.

3. Anand Sharma Condoles Demise of Rajesh Khanna.

4. MCA’s Fresh Mandate on Filing of Balance Sheet and Profit and Loss Account in Extensible Businessreporting Language (XBRL) Mode.

5. Anand Sharma to Discuss Industrial Projects, FDI with Chief Ministers of Punjab and Haryana tomorrow.

Notifications

Customs

1. 60/2012 - dated 17-7-2012 - Cus (NT)

Appoints the Joint Commissioner or Additional Commissioner of Customs (Imports), Jawaharlal Nehru Custom House, Nhava Sheva, Raigad, Maharashtra, to act as a common adjudicating authority to exercise the powers and discharge the duties conferred.

2. 59/2012 - dated 17-7-2012 - Cus (NT)

Appoints the Joint Commissioner or Additional Commissioner of Customs (Port), Custom House, 15/1, Strand Road, Kolkata, to act as a common adjudicating authority.

3. 57/2012 - dated 11-7-2012 - Cus (NT)

Amends in notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 62/1994-Customs (N. T.) dated the 21st November, 1994.

Circulars / Instructions / Orders

FEMA

1. 08 - dated 18-7-2012

Exchange Earner's Foreign Currency (EEFC) Account .

Highlights / Catch Notes

Income Tax

• Section 69C of Income Tax Act: Focus Shift to Source of Expenditure in Unexplained Purchases.

  Case-Laws - AT : Addition on account of unexplained purchases u/s 69C of the Income Tax Act – section 69C refers to the ‘source of the expenditure’ and not to the expenditure itself. - AT
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• Taxpayer Challenges Section 54 for Capital Gains Exemption on Multiple Property Investments; Tax Authority Evaluates Eligibility.

  Case-Laws - AT : Long term capital gain - exemption / deduction u/s 54 - Alternate claim out of two investment in residential properties - AT
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• Court Clarifies TDS Deduction Criteria: Is it Commission u/s 194H or Rent u/s 194I?

  Case-Laws - AT : Commission versus Rent - Whether TDS was required to be deducted in terms of provisions of sec. 194H or 194 I of the Act - AT
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• Tax Officer Must Recalculate Liability Post-Search, Adjusting for Seized Cash from Request Date Submission.

  Case-Laws - AT : Adjustment of cash seized during the search - AO to re-compute the tax liability - after adjusting the seized cash from the date of request made by the assessee - AT
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• Under-recovery of sale proceeds addressed; no revenue loss as income taxed by sister concern.

  Case-Laws - AT : Addition is made on the ground that there is under-recovery of sale proceeds on an inference that there is a sale – . There is no loss to the Revenue as one of the sister concerns has offered the income in question to tax - AT
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• Taxpayer challenges rejection of books u/s 145(3) of Income Tax Act, disputes profit estimation method.

  Case-Laws - AT : Rejection of books of accounts u/s 145(3) of the I T Act - Applicability of AS-1 / AS-7 (revised) - authorities below are not justified in estimating the profits on percentage basis as per the work in progress shown by the assessee - AT
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• Write-Back as Capital Liability: Tax Implications u/s 2(24) and Section 41(1) for Asset Recalculation.

  Case-Laws - AT : Trading liability or capital liability - income u/s 2(24) read with section 41(1) - The write back under reference a receipt of capital nature. - however the cost of the relevant assets would be required to be recomputed - AT
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• Income Addition Confirmed Due to Undelivered Letters u/s 41(1) for 2007-08 and 2008-09 Tax Years.

  Case-Laws - AT : Addition on account of sundry creditors - deemed income u/s 41(1) - no change in the outstanding balance in AY 2007-08 and 2008-09 - letters issued u/s 133(6) were returned undelivered - Addition confirmed - AT
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• Debate on Depreciation Rate: Should Roads Be Classified as Buildings (10%) or Plant and Machinery (25%)?

  Case-Laws - AT : Depreciation on roads - at 10% as building or 25% as plant and machinery - building includes road - AT
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• Surrendered Income Can Be Offset Against Business Losses u/ss 71 and 72 of the Income Tax Act.

  Case-Laws - AT : Addition on account of surrender of income - set off the surrendered income against business losses – allowed as per provisions of section 71 & 72 - AT
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• Exploring Discounts vs. Commissions in Marketing Expenses: TDS Implications u/s 194H of the Income Tax Act.

  Case-Laws - AT : Discount versus commission - ‘Marketing Expenses’ including ‘Incentive and Discount’ - TDS u/s 194H - AT
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• Interest on Tax Refunds: Distinguishing Sections 244 and 244A of the Income Tax Act for Consistent Application.

  Case-Laws - AT : Interest on 'amount of refund' u/s 244 versus Interest on 'any tax' u/s 244A - AT
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• Court Rules 50% of Coconut Sales as Agricultural Income for Small-Time Farmer.

  Case-Laws - AT : Agricultural income - Addition on account of income from sale of coconuts - assessee is a small time farmer. - 50% income from sale of coconut is directed to be considered as Agricultural Income. - AT
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• Taxpayer Wins Exemption for Merging Flats into One Home u/s 54F, Qualifies for Tax Benefits.

  Case-Laws - AT : Exemption u/s 54F - merging of 4 flats originally planed into one unit - exemption allowed - AT
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• Exemption u/s 54 EC Available for Partial Investment in Specified Long-Term Assets Despite Denied Claim.

  Case-Laws - AT : Denial of the benefit claimed u/s 54 EC - exemption under section 54 EC is available even when the part of capital gain is invested in specified long-term asset - AT
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Customs

• Exporters Liable for Demurrage and Incidental Charges on Illegally Detained Goods in Customs Area.

  Case-Laws - AT : Demurrage charges and other incidental charges for goods detained in the customs area are required to be paid by the exporter consignor even if such goods were illegally detained - AT
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• Jawaharlal Nehru Custom House appoints Joint Commissioner as common adjudicating authority for customs matters in Maharashtra.

  Notifications : Appoints the Joint Commissioner or Additional Commissioner of Customs (Imports), Jawaharlal Nehru Custom House, Nhava Sheva, Raigad, Maharashtra, to act as a common adjudicating authority to exercise the powers and discharge the duties conferred. - Notification
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• Joint Commissioner of Customs, Kolkata, Appointed as Common Adjudicating Authority for Custom House Matters.

  Notifications : Appoints the Joint Commissioner or Additional Commissioner of Customs (Port), Custom House, 15/1, Strand Road, Kolkata, to act as a common adjudicating authority. - Notification
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• India Amends 1994 Customs Notification to Update Regulations and Procedures.

  Notifications : Amends in notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 62/1994-Customs (N. T.) dated the 21st November, 1994. - Notification
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FEMA

• New Guidelines for EEFC Accounts Under FEMA: Manage Foreign Exchange Risks and Compliance.

  Circulars : Exchange Earner's Foreign Currency (EEFC) Account . - Circular
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Service Tax

• Director Not Personally Liable for Service Tax Delay Penalty u/s 77(c); No Legal Basis for Personal Penalty.

  Case-Laws - AT : Penalty under section 77(c) on Director - delay in payment of service tax - No provision for imposing personal penalty on the Director - AT
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• Tax Refund Claim Due to Misclassification of Interior Decorator Services as Construction Services; Amendment in Service Scope Involved.

  Case-Laws - AT : Refund claim – amendment in the scope of existing services - works of drawings and blue print and interior decorator services - assessee claimed wrong deposit under construction services - AT
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• Service Tax on Customs House Agent Services for Export Goods Qualifies as Admissible Credit.

  Case-Laws - AT : Whether service tax paid on CHA services in respect of export of goods can be allowed as credit or not – credit is admissible - AT
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• Reimbursed Ad Costs for Material Procurement and Logistics Included in Service Tax Value, Affecting Tax Liabilities.

  Case-Laws - AT : Inclusion of reimbursed amounts in the value of services - advertisements for procurement of materials required for executing the project, clearing & forwarding of such material from the port to the project sites - AT
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Central Excise

• Appellant's Claim for Suo Motu Cenvat Credit Denied; Must Follow Prescribed Procedures for Credit Availment.

  Case-Laws - AT : Cenvat credit – suo motu credit on the amount paid by assessee erroneously earlier – suo motu credit availed by the appellant is inadmissible to them - AT
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• Company Seeks Excise Duty Refund Due to Rate Discrepancy Between Clearance and Sale from Depot.

  Case-Laws - AT : Entitlement to refund claim - difference in rate at which excise duty was paid at the time of clearance and the rate on which the goods were sold from depot - AT
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• Court Rejects Appeal Due to 1035-Day Delay; Claim of Unawareness of Liability Found Invalid.

  Case-Laws - AT : Condonation of delay of 1035 days - the contention is that they were not aware of the liability and it has prevented them in not filing the appeal is not correct - AT
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• Job Work Goods Value Excludes SAIL Invoice Costs; Only Costs Incurred by Appellant Considered in Landed Cost.

  Case-Laws - AT : Calculation of assessable value of the job work goods - invoice of SAIL cannot be included in the landed cost of the inputs/raw materials for the reason that the said cost is not incurred by the appellant herein - AT
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Case Laws:

• Income Tax

• 2012 (7) TMI 468
  Powers of CIT(A) under sec. 263 - revision - denial of an opportunity of hearing to the assessee - Held that:- Section 263 contemplates that the Ld. Commissioner may call for and examine the record of any proceedings if he considers that any order passed therein by the AO is erroneous in so far as it is prejudicial to the interest of the revenue after giving the assessee an opportunity of being heard and after making necessary inquiries as he deems fit pass such orders thereon as the circumstances of the case justify - to hold dwell charge at the end of Ld. Commissioner and the paucity of time at a particular station cannot be valid reason for denying an opportunity of hearing to the assessee - because the act provides an opportunity of hearing before taking any action u/s 263 and such opportunities cannot be substituted in a subsequent proceedings his order deserves to be set aside - in favour of assessee.

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• 2012 (7) TMI 467
  Addition on account of unexplained purchases u/s 69C of the Income Tax Act – section 69C would apply only when there is some expenditure for which the assessee is not in a position to explain the source of the same – Held that:- section 69C refers to the ‘source of the expenditure’ and not to the expenditure itself. In the instant case before us, indisputably, the purchases and sales are accounted for in the books of accounts. Thus, source of the expenditure incurred in purchases is obviously explained. - Decided in favor of assessee.

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• 2012 (7) TMI 466
  Disallowance under Rule 8D - business of activities of sales purchase in shares and securities - assessee also earned dividend from these shares and securities – Held that:- Disallowance u/s 14A can only be invoked where Assessing Officer is not satisfied with the correctness with the claim of expenditure made by the assessee or no expenditure has been incurred - application of Rule 8D of the Rules is not automatic. When the assessee makes the claim regarding the quantum of expenses to be disallowed in terms of section 14A of the Act, it was incumbent on the part of the Assessing Officer to consider the claim of the assessee - Assessing Officer has proceeded to apply Rule 8D without giving any finding with regard to the correctness of the claim made by the assessee regarding the disallowance to be made u/s 14A of the Act. The CIT(A) has also proceeded on the same basis - matter is remitted to the file of the Assessing Officer - appeal filed by the department allowed for statistical purposes.

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• 2012 (7) TMI 465
  Justification on levy of interest u/s 234B - CIT(A) deleted levy of interest - assessee's return declaring book profits in terms of provisions of section 115JB - Held that:- The CIT(A) without analyzing the facts of the case deleted levy of interest merely on the submissions of the assessee and did not analyse the facts of the case in the light of decision of the Hon’ble Supreme Court in the case of JCIT Vs. Rolta India Ltd.[2011 (1) TMI 5 (SC)] holding that section 115JA/115JB is a self contained code and all the companies were liable for payment of advance tax u/s 115JB and consequently, the provisions of section 234B and 234C were applicable in the event of default in the payment of advance tax. Section 250(6) mandates that the order of the CIT(A) while disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision whereas a mere glance at the impugned order reveals that the order passed by the ld. CIT(A) is cryptic and grossly violative of one of the facets of the rules of natural justice that every judicial /quasi -judicial body/authority must pass a reasoned order, which should reflect application of mind by the concerned authority to the issues/points raised before it which was missing in the order - as the impugned order suffers from lack of reasoning and is not a speaking order the case is restored back to file of CIT(A) with the directions to readjudicate the issue - decided against assessee.

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• 2012 (7) TMI 464
  Denial of exemption claim u/s 80-IAB - the assessee has not completed that minimum built up area by the end of the previous year relevant to the assessment year under question - the developed portion of the SEZ cannot be given on lease before completing the development of entire approved land - Held that:- This presumption is against the law stated in the SEZ Act as Rule 6(2) of the SEZ Rules, 2006 provides that the letter of approval of a Developer granted shall be valid for a period of three years within which time at lease one unit has commenced production and the SEZ become operational from the date of commencement of such production. It is clear from the above Rule that the SEZ Act does not contemplate that a Developer can assign the land to the entrepreneurs only after completing the development of the entire approved land. The condition specified in the Rule to sustain the validity of the approval is that at least one unit should commence production and to that extent, the SEZ should become operational - The objection of not having developed land of one lakh sq. mtrs. thus fails. Income declared by the assessee company has not been derived from the business of developing SEZ - Held that:- The assessee is a company engaged in the business of developing sector specific SEZ for IT and IT Enabled Services been granted approval by Government of India. By virtue of overriding effect of the SEZ Act, 2005, it is an established fact that the company is a Developer who is engaged in the business of developing SEZ - assessee is the developer and it need not do any other business to claim the benefit of deduction under sec.80-IAB - Assessee's SEZ is sector specific and is not required to run operating units - the only income derived in the hands of the assessee developer will be the lease rent and other service charges if any - the profits and gains of business of a developer contemplated in sec.80-IAB for the purpose of deduction thereunder, is nothing but lease/rental income. Therefore, it made it clear that the lease rental income generated in the hands of a Developer engaged in setting up of the SEZ, is the profits and gains derived from the business of developing a SEZ. Land given on a perennial lease of 99 years with further scope of renewal which in effect is nothing but a sale - Held that:- SEZ Act, 2005 overrides the provisions of the Income-tax Act, 1961 for deciding the basic character of transactions entered into by the Developer and the approved entrepreneurs it is clear that the assessee-Developer has proceeded with the allotment of developed area on lease hold basis to the approved entrepreneurs, the period of lease is 99 years which is permissible under the SEZ Act, 2005 and where there is no right of sale, the possible way is only lease. It may be a perennial lease but that does not change the character of the lease - when the SEZ Act, 2005 provides that it is not permissible for a Developer to sell the land in a SEZ, it is not conceivable in law that the assessee can transfer the ownership of the property to the approved entrepreneurs through any other means. Therefore, there cannot be a case of capital gains arising in the hands of the assessee - decided in favour of assessee.

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• 2012 (7) TMI 463
  Computation of capital gains - self generated assets like trade mark or brand name - Held that:- Where the cost of acquisition of the capital asset is nil then the computation provision fails and the transfer of goodwill not give rise to capital gains tax. Prior to the amendment made to Section 55(2) by the Finance Act, 2001 effective from 1/4/2002 by adding the words “trade mark or brand name associated with the business” self generated assets such as trademark did not have any cost of acquisition - as amendment bringing self generated intangible assets such as trademark to capital gains tax only with effect from AY 2002-03 onwards in this case AY is 1999-2000 and therefore, the amendment would not have any effect - in favour of assessee.

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• 2012 (7) TMI 462
  Dis allowance of Business Promotion expenses - being of non-business views - Held that:- The invoice submitted by assessee reveals the purpose that the business promotion expenses were incurred as commissioning advance for value assessment of commercial plot in Noida and AO disallowed business promotion expenses only on cryptic reason stating that no details and purpose was given or offered by the assessee - the purpose of above payment as business promotion expenses was properly explained by the assessee as the fresh evidence submitted by the assessee and admitted after due procedure as provided in Rule 46A of the ITR - decided against revenue. Addition on account of deemed dividend u/s 2(22)(e) - the assessee company has taken loan from A.P. Projects Ltd. - Held that:- Shri Pankaj Bajaj was director of the assessee company and he was also a director in the lender AP Projects Private Limited during the year under consideration. In view of the exception as per sub-clause (ii) of Section 2(22)(e, the provisions of deemed dividend are not applicable as the appellant assessee company was not a shareholder in lender A.P. Projects Private Limited and Section 2(22)(e) of the Act is not applicable to a non shareholder - against revenue.

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• 2012 (7) TMI 461
  Refusal of registration u/s 12AA and 80-G of the Income-tax Act - Assessee submitted the required documents, audited accounts along with copies - specific non compliance is not mentioned - CIT, for want of information, rejected the applications of the applicant for registration u/s 12AA as well as u/s 80G of the I.T. Act – Held that:- CIT has not indicated the nature of information not furnished and without considering the documents filed by the applicant along with applications for registration u/s 12AA/80G has rejected assessee’s claim solely on the ground that applicant could not file most of the informations call for . We find force in the argument of ld. counsel that CIT failed to consider the claim of the applicant on merit, without considering the record and affording opportunity of being heard to the applicant on alleged non compliance – matter ramanded to CIT - appeal allowed for statistical purposes only

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• 2012 (7) TMI 460
  Long term capital gain - exemption / deduction u/s 54 - Alternate claim out of two investment in residential properties - for construction of a residential property and for an apartment - due to reasons beyond the control of the builder, the construction would not be completed before the time limit to construct a residential house - assessee had taken the possession of the immovabale property at Park View Apartments within three years from the date of sale of the residential property - in the case of ACIT vs. Smt. Sapna Dimri, the exemption u/s 54 of the Act has been allowed under almost similar circumstances in favour of the assessee while following various precedent - decided in favor of assessee.

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• 2012 (7) TMI 459
  Dis allowance of Deduction u/s 80HHC - assessee contested for not allowing appropriate amount of deduction by holding that the entire amount received on the sale of DEPB represents profits chargeable to tax under section 28 (iiid)- Held that:- DEPB is a kind of assistance given by the Government of India to an exporter to pay customs duty on its imports and it is receivable once exports are made and an application is made by the exporter for DEPB, therefore, no doubt that DEPB is “cash assistance” receivable by a person against exports under the scheme of the GOI and falls under clause (iiib) of Section 28 and is chargeable to income tax under the head “Profits and Gains of Business or Profession” even before it is transferred by the assessee - while the face value of the DEPB will fall under clause (iiib) of Section 28 the difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 and it was not right in taking the view that the entire sale proceeds of the DEPB realized on transfer of the DEPB and not just the difference between the sale value and the face value of the DEPB represent profit on transfer of the DEPB - in favour of assessee.

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• 2012 (7) TMI 458
  Commission versus Rent - Whether TDS was required to be deducted in terms of provisions of sec. 194H or 194 I of the Act - AO invoked provisions of sec. 194I of the Act on the ground that agreements were for rent payments and not commission – Held that:- Specific clause in agreements that the exclusive possession will be with the franchisee and not the assessee - when the assessee is not only not in physical possession and there being no fixed rent payable while the francisee have to receive commission on the basis of turnover or on mutually agreed terms, it is evident that the aforesaid two agreements are truly of franchise and can, by no stretch of imagination, be treated as a tenancy in favour of the assessee - assessee rightly deducted TDS in terms of provisions of sec. 194H of the Act in respect of payments. Provisions of sec. 40(a)(ia) of the Act – Held that:- Assessee deducted and paid tax in accordance with the provisions of sec. 194H of the Act in relation to payments - there is no violation of provisions of sec. 40a(ia) of the Act - even in the event of any shortfall in deduction of tax at source, provisions of sec. 40a(ia) are not attracted

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• 2012 (7) TMI 457
  Adjustment of cash seized during the search - while filing return in compliance to the notice issued u/s 153A, the assessee has computed his income tax liability by taking credit of the cash seized in course of search and seizure operation - AO has accepted the income declared in return filed u/s 153A of the Act, but has not adjusted the cash seized towards the tax liability - nothing on record to show that there is any other existing liability excepting the income tax liability - Held that:- Assessee is entitled to adjustment of seized cash against his income-tax liability - AO to re-compute the tax liability - after adjusting the seized cash from the date of request made by the assessee and thereafter consider charging interest u/ss 234A, 234B and 234C in case there is still any default in discharging the tax liability – In favor of assessee

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• 2012 (7) TMI 456
  Addition is made on the ground that there is under-recovery of sale proceeds on an inference that there is a sale – Held that:- Once the agreement is not doubted and the income has been disclosed in the hands of one of the co–developers, it would be not correct for the Revenue to step in and decide what should be the share of each party - When the income on this area has been offered to tax by the sister concern - it is not proper for the Assessing Officer to sit in the judgment as to which firm is entitled to the revenue on this area of 1628.21 sq.ft. There is no loss to the Revenue as one of the sister concerns has offered the income in question to tax - addition would amount to taxing the same amount in the hands of two assessees which would be bad–in–law.

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• 2012 (7) TMI 455
  Whether CIT erred while passing the order under section 263 of the Income Tax Act, 1961 wherein the order under section 263 has been passed based on the change of opinion – Held that:- On change of opinion, the CIT cannot assume his jurisdiction under section 263 of the Act - Assessing Officer erred in calculating the exemption u/s. 10A of the I.T. Act after deducting the telephone charges from the export turnover - Once an appeal is taken and is decided the original order merges in the appellate order and thereafter it is the appellate order which is operative and enforceable - order of the CIT passed under section 263 of the Act cannot be survived - appeal of the assessee is allowed.

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• 2012 (7) TMI 454
  Recalling of order - Rectification of mistake – Held that:- Tribunal's power under section 254(2) is not to review its earlier order but only to amend it with a view to rectifying any error apparent from the record. The power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinion - recalling of the orders of the Tribunal for the AYs 1999-00 to 2007-08 for re-adjudicating the issue in question afresh, as prayed in the Misc. applications would tantamount to review/revision of the order of the Tribunal, which is not permissible in law - no any merit in the present Misc. applications and as such, the Misc. applications filed by the assessee are dismissed

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• 2012 (7) TMI 453
  Rejection of books of accounts u/s 145(3) of the I T Act - Applicability of AS-1 / AS-7 (revised) - addition by way of net profit @ 8% on cost incurred on closing balance of WIP - assessee is following this uniform method of accounting since beginning and the revenue has accepted the same for the AY 2004-05 while passing the assessment u/s 143(3) – Held that:- Contract of installation of elevators/lifts, assesseee’s responsibility and liabilities extent even after the execution work is completed - project cannot be treated as completed until and unless the execution of installation work is completed by the assessee - receipts of advance or part payments of the contract amount itself would not necessary means that the project is completed even to the extent of percentage of receipt of the amount - authorities below are not justified in estimating the profits on percentage basis as per the work in progress shown by the assessee - in favour of the assessee

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• 2012 (7) TMI 452
  Trading liability or capital liability - income u/s 2(24) read with section 41(1) - the credit balance/s, written back in terms of the rehabilitation scheme approved by the Board for Industrial and Financial Reconstruction (BIFR) included not only those on account of trading operations, but also on account of import of plant and machinery. - held that:- The write back under reference a receipt of capital nature. - however the credit written back being admittedly on account of import of plant in the clear absence of which, the Revenue’s case is no more than an allegation or a surmise - appeal by the Revenue is dismissed

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• 2012 (7) TMI 451
  Addition on account of sundry creditors - deemed income u/s 41(1) - AO observed that in 21 cases there was no change in the outstanding balance in AY 2007-08 and 2008-09 - Assessee did not furnish the details called for but submitted copies of purchase bills in the case of 9 parties - In case of 3 parties the letters issued u/s 133(6) were returned undelivered by the postal authorities with the remarks “not known”. The remaining 5 parties stated that as per their books of accounts, they had no transactions with the Assessee for Financial years 2005-06 to 2007-08 and as such no amount is due to them from the Assessee - Held that:- Appellant was not able to explain how the appellant could ever repay these parties because he neither knew their correct addresses or any details of the agents through whom the purchases were made from these parties - Liability has ceased to exist and accordingly taxed it u/s 41(1) of the Income Tax Act - With respect to the action of CIT (A) in deleting the addition with respect to 5 parties CIT(A) has given a categorical finding that the enquiry made by the AO was not proper as the bills issued by the parties related to period prior to 31.3.2001 whereas the AO had asked those parties about the transactions carried out in FY 2005-06 to FY 2007-08. The existence of these 5 parties was therefore not in doubt - CIT (A) deleted the addition - no infirmity in the order of CIT(A) and therefore no interference is called for in his order

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• 2012 (7) TMI 450
  Disallowance of expenses under Section.14A - alleged to be relatable to earning the dividend income, by applying Rule 8D – alleged that assessee's income included exempted income and the assessee has not segregated and excluded any expenditure pertaining to the exempted income, invoked the provisions of sec.l4A of the Act - Assessing Officer, before invoking the provisions of Rule 8D r.w.s.14A of the Act, has not given the reasons as to why he was invoking the provisions of Rule 8D r.w.s.14A of the IT Act – Held that:- Provisions of Rule-8D can be invoked only if the Assessing Officer is not satisfied with the claim of the assessee - Assessing Officer is satisfied that there was an element of expenses involved in earning the exempt income and the assessee has not shown the same - matter remanded back to the file of the Assessing Officer for adjudicating the same afresh - appeal of the Assessee is allowed for statistical purposes

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• 2012 (7) TMI 449
  Penalty under section 271(1)(c) of the Income-tax Act - in the course of the search and seizure action, assessee admitted certain additional income in the course of statement recorded under section 132(4) of the Act - appellant has stated that since he has made the declaration u/s 132(4), and paid taxes on it, he is entitled to benefit of immunity under clause (2) of Explanation 5 to sec. 271(1)(c) – Held that:- Income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in s. 139(1) in clause 2 of explanation are intended to cover only such situations where the time-limit specified in s. 139(1) did not expire as on the date of the search - declaration of income was made for the earlier years for which due date for filing the return of income has already expired prior to the date of search - appellant is not entitled to benefit of immunity prided under clause 2 of Explanation 5 for the declaration made for the year under appeal - appeals are dismissed

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• 2012 (7) TMI 438
  Whether CIT erred on facts and in law in upholding the trading addition and upholding the action of the Assessing Officer in rejecting the books of accounts and holding that the appellant failed to furnish item-wise trading results – Held that:- Assessee is in timber trading activity. The activity involves purchase / import of raw timber, which is thereafter sawed and sold in wholesale / retail basis - assessee’s submission that it is not practically feasible to maintain item-wise stock record of each and every type of timber - there is no allegation by the AO that there has been any pilferage or sale outside the books of account - no case of suppression of sales - assessee’s books of accounts were duly audited, which signifies that books of accounts and method of accountancy are in order - mere fall in G.P. and absence of stock register cannot be a reason to reject the books of accounts - there were no cogent reasons for rejection of the assessee’s books, and estimation of GP rate - details sought by the AO were not practically feasible to be maintained - In favour of the assessee.

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• 2012 (7) TMI 437
  Depreciation on roads - at 10% as building or 25% as plant and machinery - assessee is seeking depreciation as applicable to plants, revenue authorities have allowed depreication as applicable to buiding – Held that:- Roads are to be treated as building and accordingly the depreciation is to be allowed - after the assessment year 1988-89, all the appendices prescribing the table or rates of depreciation had the note that building would include road – In favor of Revenue TDS on Audit fee - amount debited for audit fee on which TDS was not deducted - claim was disallowed u/s. 40(a) – necessary deduction of TDS was made at the time of payment of fee to the auditors only in next F.Y. - Held that:- neither the expenditure pertained to the A.Y. under consideration nor any liability for the same was incurred during the F.Y. relevant to the A.Y. under consideration - disallowance confirmed - appeal filed by the assessee is dismissed.

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• 2012 (7) TMI 436
  Addition u/s. 68 - Issue of share capital - AO has specifically asked the assessee to provide the detailed calculation of the method of valuation of the premium per share in respect of the share premium calculated @ Rs. 400/- per equity share. However, the assessee company has not given any cogent reply in this regard - no cogent explanation on the records, as to why assessee should charge premium of Rs. 400/- on shares of Rs. 100/- per share – Matter remanded to AO Estimation of income – rejection of books of accounts - held that:- all the necessary books of accounts were produced by the assessee and the relevant details of expenditure was also provided. - AO can not reject the books of accounts. Cash payment of repair - held that:- instead of disallowance of Rs. 1,00,000/-, disallowance of Rs. 5,00,000/- to be made.

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• 2012 (7) TMI 435
  Calculation of interest on refund claim - application for rectification disposed off by stating that there is no mistake apparent from record - Held that:- AO has not made any speaking order instead has followed Supreme Court verdict in the case of CIT v. Amalgamation (1997 (7) TMI 15 (SC))which is based upon section 214 and has calculated the interest up to completion of original asset which is not correct as w.e.f. 1.4.1989 the refund has to be paid in accordance with section 244A, thus keeping in view these provisions for assessment years 1993-94 & 1994-95, the assessee was entitled for interest on refund amount due to TDS from 1.4.1993 and 1.4.1994 respectively to date of grant of refund and in the case of tax paid after assessment from the date of payment of such tax to the date of grant of refund - remit the case back to the file of the AO with the direction to re - calculate the interest - in fvavour of assessee as directed.

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• 2012 (7) TMI 434
  Dis allowance of interest as business expenditure - Held that:- CIT(A) had rightly deleted the addition on account of interest paid as interest free loans and advances to sister concern given by the assessee before taking borrowings cannot come in the way of allowing interest paid on borrowings taken by the company as in the present case, there was fresh borrowings of Rs. 6,00,00,000/- whereas loans and advances are continuing from the previous year. Disallowance of administrative & other expenses - assessee is earning income from business, from short term capital gain, long term capital gain and from interest income - Held that:- Long term investments of the assessee constitute a significant portion of total investments, the income from which is exempt either as dividend or long term capital gain. As the portfolio of assessee consists mere of long term, investments than short term investments and therefore 5% disallowance of expenditure upheld by Ld CIT(A) does not seem to be justified - remit the case to the file of the AO to consider to the expenses which could be related to earning of exempt income i.e. long term capital gain and dividend income and recompute the disallowance - partly in favour of revenue.

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• 2012 (7) TMI 433
  Addition on account of surrender of income - set off the surrendered income against business losses – Held that:- Offer of surrender cannot effect the profit or loss declared by the assessee for that year. It will be added if there is profit and it will be reduced if there is a loss - books of accounts were produced before Ld Assessing Officer during the course of assessment proceedings and the Ld Assessing Officer has not pointed out any difference/discrepancy in the audited accounts - Provisions of section 71(1) clearly allows the set off of loss from one head against income from another head - computation of total income of an assessee as per provisions of section 71 & 72 of the Income Tax Act, 1961 and the assessee has computed its total income keeping in view these provisions, therefore, we do not see any reason to interfere in the order of Ld CIT(A) – In favor of assessee

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• 2012 (7) TMI 432
  International transactions with AE - case referred to (TPO) - addition of interest on the advances of the appellant to AE, being wholly-owned subsidiaries of the appellant - Held that:- The authorities below overlooked the fact that these interest free advances were given to its overseas subsidiaries out of commercial expediency from out of surplus funds available with it - TP adjustment is possible only in cases where comparable uncontrolled transactions entered into between two enterprises are established unless such an uncontrolled transaction is identified, no ALP adjustment is possible - in favour of assessee. Disallowance under section 14A r.w.r. 8D - Held that:- As the provisions of rule 8D it would apply with effect from assessment year 2008-09 and prior to when rule 8D was not applicable, AO had to adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record - remitted the matter to the file of the AO with a direction to follow the decision. Dis allowance of Set-off of loss of STP undertakings - Held that:- Deduction allowed u/s 10A in respect of undertaking is to be allowed after setting off of brought forward loss of that undertaking - allow set off of loss from 10A units against the other business income of the assessee or income from other sources. Dis allowance of Expenditure on software imports - Held that:- This issue has been held in favour of the that the software purchased by it is in the nature of goods and the provisions of section 40(a)(ia) were not applicable to Allocation of Corporate Expenses - Held that:- No specific finds that exemption/deduction in an artificial way of allocating the expenses and that too on surmises is not justifiable – in favour of assessee. Rates and taxes - Held that:- That assessee himself has agreed to allocation of 20% of such expenditure no further disallowance warranted Software development centers outside India - Held that:- As assessee company in foreign countries also paying foreign taxes but had not recorded a finding that such goods or services have been transferred at the market value. In absence of such a finding case is remitted back to AO. “Other Income” not considered as part income eligible under Section 10A - Held that:- In respect of Scrap sale amount, it is clear that the sale of scrap reduced the quantum of expenditure debited for that purpose cannot be excluded for deduction u/s 10A and exclusion of exchange rate fluctuation foreign exchange gain due to fluctuation in the rate of rupee is to be included in the profit of the undertaking and is to be considered as eligible for deduction u/s 10A. Deemed Exports not eligible for deduction u/s 10A - Held that:- As deemed exports are obviously not on account of export of software and not should be included as part of ‘'export turnover' of the undertakings eligible for deduction under section 10A / 10AA - against assessee. Exclusion of VAT/ GST from export and total turnover - Held that:- Once this sum is not included in 'export turnover', then the same cannot be included in the 'total turnover' - against assessee. Communication link and other reimbursements - Held that:- Issue is remitted back to the file of the AO as excluding an aggregate sum incurred by the appellant towards telecommunication expenses for delivery of computer software outside India - AO committed an error of excluding something which is not originally included. Collections beyond 30th September 2007 - Held that:- AO erred in excluding the aggregate sum from the export turnover of the undertakings eligible for deduction u/s 10A on the premise that the sale proceeds were not remitted into India within 6 months from the end of the previous year as provided in section 10 A(3). The learned AO overlooked the fact that the application for extension of time was filed with the competent authority. Issue of denial of deduction under Section 10A for undertakings at Bangalore - Held that:- Tribunal has decided this issue in favour of the assessee company holding that the assessee is entitled for deduction under section 10A - AO erred in refusing to recognize that each of the new undertakings were different from one another and exist independently and are eligible for deduction under Section10A. That establishing each new undertaking is an expansion of business could not be held against the appellant. Deduction under Section 80IB - Held that:- The assesse himself has allocated the overheads and such allocation has been made on the basis of sales turnover, then it was the duty of AO to point out that why the allocation is not correct - assessing officer was not justified in disturbing the allocation. Trading Activity of monitors & Printers - Held that:- Monitors have been sold as part of the computer without making any value addition by the industrial undertaking, then the profit derived from sale of such monitors cannot be considered as profit derived from the industrial undertaking - not to be included for the purpose of computing deduction u/s 80IB. Other Income’ not considered as income eligible for deduction u/s.10A- Held that:- Unless rental income represents a recovery of the rent paid by the undertaking, it cannot be regarded as profit derived by the industrial undertaking. Since the rental income in the assessee company’s case does not meet this requirement, we confirm the order of the Assessing Officer that rental income should be excluded in computing the deduction u/s. 80 IB Deduction under Section 80IC/80-IAB – Held that:- An identical issue of allocation of corporate over heads to various business units / undertakings for determining the profits for computing the deduction u/s. 80IB/IAB has already been considered by the Tribunal in an earlier year in the assessee’s own case thereof and has deleted the allocation of corporate overheads made by the Assessing Officer - following the same decision deletion of the allocation of corporate overheads is deleted. Credit for Foreign taxes paid – Held that:- Credit for income-tax paid in other country in relation to income u/s 10A will not be available u/s 90(1)(a) - direct AO to examine and verify the TDS claims of the assessee for the applicability of section 90(1)(b), and to go through the DTAA agreements Interest u/s 234B/234D – Held that:- The charging of interest is consequential and mandatory and is to be charged in accordance with the provisions of the Act. AO having no discretion in the matter, his action in charging the same is held to be in order

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• 2012 (7) TMI 431
  Denial of the benefit claimed u/s 54 EC - investment made in REC bonds for a sum of Rs. 50 lakh out of total long-term capital gain of Rs. 3.40 crores - the exemption has been claimed under section 54F - Held that:- It is not a case of availing double exemption on the same amount but the assessee has claimed exemption u/s 54F as well as u/s 54 EC for the respective amount of capital gain invested in purchase of new house and REC bonds. Wherever any such restriction is deemed fit, the legislature has provided in the statute a sufficient check but no such restriction in the statute mentioned - The expression 'the whole or any part of capital gains in the long term specified assets' makes it clear that the exemption under section 54 EC is available even when the part of capital gain is invested in specified long-term asset - in favour of assessee. Once the conditions as prescribed under section 54EC are complied with, than the deduction cannot be denied on the ground that the assessee has also availed the exemption under section 54F against the part of the capital gain. Denial of the benefit claimed u/s 54F - Out of the total capital gain of Rs. 3.40 crores arising from sale of ancestral property, the assessee invested Rs. 2.60-crores for the purchase of 4 flats - AO allowed the exemption only in respect of one flat as cannot be said as adjacent flats - Held that:- The agreement by which the assessee has purchased these flats clearly stipulates that the building in question consisting of duplex houses on top two floors of 9th and 10th floors of the building. The flat number 9A, 9B, 10 A and 10 B are so situated that the flat number 9A and 9B at 9th floor are just below the flat number 10A and 10B at 10th floor. The agreement clearly mentions that one duplex flat was converted from 4 units. Thus, if the requirement of the assessee family is met-out only by enlarging the residential unit by merging of 4 flats originally planed into one unit and that too prior to handing over of the possession of the said residential unit, then the said converted residential unit will be treated as a residential house as stipulated u/s 54F - in favour of assessee.

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• 2012 (7) TMI 430
  Penalty u/s 271B - Failure to get its accounts audited - income as “Business income” instead of “capital gain” claimed by the assessee - exceeding the monetary limit of Rs.40.00 lakh prescribed u/s 44AB - Held that:- The requirement to gets the accounts audited and furnish audit report has arisen because of the change in the head under which income from sale of shares was offered by the assessee. As the assessee declared income from sale of shares under the head 'Capital gains’ and the acceptance by the Revenue of income from sale of shares as capital gain in the immediately preceding year constituted a bona fide ground for the assessee to entertain a belief that such income was liable to be taxed under the head capital gain and not as business income. Once this view is accepted, then failure of the assessee to get its account audited and furnish the audit report, constitutes reasonable cause for default - deletion of penalty - in favour of assessee.

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• 2012 (7) TMI 429
  Eligible for claiming additional depreciation u/s 32(1)(iia) - prior to the installation of the wind mill, assessee was doing only the business of transportation of spirit and molassess - Held that:- As decided in C.I.T v. VTM Ltd. [2009 (9) TMI 35 (HC)]what is required to be satisfied in order to claim the additional depreciation is that the setting up of a new machinery or plant should have been acquired and installed after 31st March, 2002 by an assessee, who was already engaged in the business of manufacture or production of any article or thing - here, the assessee was not into any business of manufacture or production but only transportation of molasses and spirit. Thus, the first condition is not satisfied and thus not eligible for claiming additional depreciation - against assessee.

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• 2012 (7) TMI 428
  Penalty levied u/s 271(1)(c) - Discrepancies were noticed in the accounts and that the assessee has not at all maintained stock register - books of account of the assessee were, therefore, rejected u/s.145 of the Act and made addition on the basis of estimating profit – Held that:- When the matter has been restored back to the A.O. and still pending as claimed by the assessee and one of the addition has been deleted by the co-ordinate Bench - penalty u/s 271(1)(C) is not justifiable and accordingly is deleted - revenue’s appeal is dismissed

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• 2012 (7) TMI 427
  Whether loan to “Sister Concern” even out of borrowed funds is not liable to be disallowed - appellant submitted a copy of ledger account in its books of account during the appellate proceedings to claim the opening balance as well as advance of loan during the year – Held that:- Books of account were seized by the Central Excise and Customs Deptt. Of the appellant and not of its sister concern. It is, therefore, the appellant has no explanation or credible evidence to substantiate its claim of interest - assessee has given interest free loan to sister concern at Rs. 1.20 Crore which is more less matching with interest free fund available with the assessee - There is no direct nexus between interest bearing borrowed fund with interest free advances in the assessment order - assessee’s appeal is allowed

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• 2012 (7) TMI 426
  Penalty in respect of fixed deposit written off - additions made was in respect of claim of bad debt - AO made the addition on the premise that the assessee is not engaged in financing business and the amount written off is a fixed deposit kept in the bank and at the best it represents a capital loss and is not admissible as revenue expenditure – Held that:- Assessee had genuinely suffered loss due to deposit kept in bank during the course of its business - every transaction the issue becomes debatable whether such loss is capital loss or revenue loss - “a mere making of claim which is not sustainable in law, by itself, would not amount to furnishing of inaccurate particulars regarding income of the assessee. Such a claim made in a return not amounting to furnishing of inaccurate particulars” - penalty is not leviable especially when the issue is debatable - assessee has not concealed any particulars of income or furnished any inaccurate particulars - penalty levied by the revenue on the issue of unrealizable fixed deposit kept in bank written off due to cessation of the functioning of the bank deleted

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• 2012 (7) TMI 425
  Power of CIT – Remand - addition on account of disallowance of unpaid service tax, disallowance of service tax, disallowance of rent expenses, disallowance out of consultancy and sales incentive expenditure - AO had specifically stated in the assessment order that in spite of repeated opportunities provided to the assessee, the assessee failed to be present before the revenue in the assessment proceedings - assessment order ex-parte u/s 144 of the Act - CIT(A) had remitted back the matter to the file of the learned AO for verification of all the additions raised – Held that:- Provisions of section 251 of the IT Act wherein the powers of the Commissioner of Income Tax (Appeals) to set aside the order of the learned AO has been omitted by the Finance Act, 2001 with effect from 1st June, 2001 - Order of the learned CIT(A) to be erroneous and hereby, set aside the same and remit back the case to the file of the learned CIT(A) to pass appropriate order as per the provisions of the Act

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• 2012 (7) TMI 424
  Discount versus commission - ‘Marketing Expenses’ including ‘Incentive and Discount’ - discount had been given by the appellant to persons who had booked the flat/building through the appellant and the commission which the assessee received from the builder, is passed on as a part of such commission to the original persons who booked the flat – Held that:- Purchasers received discount in the purchase price. - There is nothing to suggest that the purchasers of flats rendered any service to the assessee rather the assessee rendered services to the intending purchasers - provisions of section 194H are not attracted while making payments to the aforesaid intending purchasers of flats - provisions of sec. 40a(ia) of the Act are not applicable - appeal is dismissed.

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• 2012 (7) TMI 423
  Addition in respect of share application - appellant had furnished details in the form of additional evidence which was referred back to the Assessing Officer for remand report - Assessing Officer neither examined them nor offered his comments on the same – Held that:- share applicants’ existence is recognized as the company is in the records of the IT Department, since the appellant has submitted their PAN and also copies of Income tax records - Assessing Officer had not applied his mind while issuing notice u/s 147/148 of the Act - entire re-assessment is bad in law. Reopening of assessment – Held that:- Assessing Officer had made 2-3 mistakes while framing re-assessment order yet, there was sufficient material before Assessing Officer for initiation of proceedings u/s 147/148 - report of DIT (Inv.) is a primary source of evidence for initiating proceedings u/s 147/148 of the Act and the Assessing Officer had rightly initiated re-assessment proceedings – Against assessee Regarding addition on account of fresh un-secured loans - loans were received by appellant through banking channel from directors, their wives and parents only and that all are income tax payees and has been filing returns since last year – creditworthiness of lender is also proved as they had declared source of income and are filing income tax return - appellant had given interest on the amount of loan and had deducted TDS thereon – Held that:- Assessee has filed necessary documents to prove the genuineness of transactions, identity of investors and creditworthiness of investors - CIT(A) has rightly deleted the addition – In favor of assessee

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• 2012 (7) TMI 422
  Penalty u/s 271(1)( c) on the ground of case selected for security the levy is in mandatory – Held that:- Since the retrospective application of proviso (iv) to section 80HHC is still pending with various Courts, the penalty issue arising out of non implementation of this section cannot be imposed till the final decision of Court relating to applicability of proviso (iv) to section 80HHC. In view of the appeal, the appeal of the assessee is allowed for statistical purposes.

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• 2012 (7) TMI 421
  TDS - disallowance u/s 40a(ia) on account of unverified maintenance expenses – Held that:- Where an amount paid is not chargeable to tax In India at all, there is no requirement of tax deduction - payments were reimbursement of expenses and was in no way income chargeable to tax in India in the hands of the payee and hence did not require any tax deduction at source and therefore addition made u/s 40a(ia) of the Act was not warranted – In favor of assessee

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• 2012 (7) TMI 420
  Interest on 'amount of refund' u/s 244 versus Interest on 'any tax' u/s 244A - Held that:- There is misconception in the interpretation of the AO that interest can be paid only on the tax portion in the refund and not on the entire amount of refund. - Moreover, section 244A doesn’t distinguish that the assessee shall be entitled to receive interest only on tax portion in the refund and not on the entire amount of refund as projected by the Revenue. If the interpretation of the Revenue were to be taken on its face value, we are afraid; it would lead to miscarriage of justice. Assessee was entitled to further interest u/s 244 on interest u/s 214 which had been withheld by the Revenue - When the refund of tax becomes payable as a result of orders passed in appeal or other proceedings under the Income-tax Act, 1961, this refund is to be given along with interest which is to be calculated as per section 244A of the Act – In favor of assessee

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• 2012 (7) TMI 419
  Expenditure in respect of poultry farming - Assessing Officer has added back the cost of purchase of Emu birds as well as expenses incurred towards feeing of the birds – Held that:- Assessing Officer has failed to appreciate the fact that without purchase of Emu birds, sale would not have been possible, so the cost of acquisition of Emu birds and the maintenance/feeding cost which the assessee has alleged not to have claimed during the assessment year 2007-08 deserves to be allowed as business expenditure – In favor of assessee Agricultural income - Addition on account of income from sale of coconuts – Assessing Officer while treating the income from sale of coconut trees as income from other sources has observed that it is not acceptable that Rs. 2,400/- worth of trees would have yielded an amount of Rs. 66,820 – Assessee has about 275 coconut trees out of which he has planted 200 coconut trees in the year 2004-05. The coconut trees start yielding fruit in three years time and it was during the relevant assessment year that for the first time, the trees planted by the assessee gave fruits and the assessee was able to earn Rs. 66,820/- from the sale of coconuts – Held that:- Assessee has not produced any concrete evidence to show that it has earned income from sale of coconuts - assessee is a small time farmer. He may not have maintained record of sale of coconuts - 50% income from sale of coconut is directed to be considered as Agricultural Income. Regarding income from sale of turmeric - contention of the Assessing Officer that there is no correlation between the date of alleged sale of turmeric and the harvesting season of the produce is not tenable - stand of the assessee throughout has been that the assessee use to sell the produce only during the time when he used to get maximum price for the crop – Held that:- Assessing Officer made the addition only on the basis of presumption that since the harvesting season and sale of crop do not coincide, the income cannot be considered as agricultural income - addition made by the Assessing Officer deleted

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• Customs

• 2012 (7) TMI 448
  Waiver of the demurrage and detention charges - confiscated the goods for the contraventions of misbranding and adulteration under the Prevention of Food Adulteration Act, 1954 - goods are prohibited for importation into India - consignments to be re-exported on payment of redemption fine and penalty – Held that:- Demurrage charges and other incidental charges for goods detained in the customs area are required to be paid by the exporter consignor even if such goods were illegally detained - delay in redemption and re-export till date has been entirely caused on account of the appellants filing appeals first before the lower appellate authority and then before the Tribunal – against assessee

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• 2012 (7) TMI 418
  Undervaluation of import - levy of penalty and confiscation of goods - higher value was declared by other importers for similar goods - goods imported by the appellants were similar to the comparable import made by other importers – Held that:- Once the test report establishes that the goods of the appellant match with the compared goods imported earlier and possess same attributes as is found by the same analytical laboratory, there is no necessity to interfere to the first appellate authority s order. Accordingly, appeal is dismissed.

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• Service Tax

• 2012 (7) TMI 472
  Default in payment of Service Tax - Courier Service - M/s. Professional Courier Services made a claim that they were only providing co-loader service and the appellant was the one who had provided courier service to the service receivers - Held that:- CA of the appellants submitted a certificate issued by Regional Manager of M/s. Professional Couriers certifying that appellant was working as employees in its branch and income of period 1999-2000 and 2000-2001 was of M/s. Professional Couriers - the appellant became a franchisee w.e.f. March 2001 only and prior to that period they were only employees and the liability had to be discharged by the M/s. Professional Courier Services - as the matter is required to be reconsidered the impugned order is set aside and the matter is remanded to the original adjudicating authority.

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• 2012 (7) TMI 471
  Reduction of penalty by Comm(Appeals)- penalties imposed u/s 75A,76,77,78 by original adjudicating authority - Held that:- Since penalty under Section 78 has been imposed, penalty under Section 76 need not be imposed - a small scale unit need not have to be inflicted with penalties under all these sections - as the appellant is a small scale person and in view of the fact that for a period of four years the total demand for service tax comes to Rs.27,568/- it can be said that provisions of Section 80 can be applied in this case for full waiver of penalty - against revenue.

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• 2012 (7) TMI 470
  Penalty under section 77(c) on Director - delay in payment of service tax - Held that:- No provision for imposing personal penalty on the Director therefore, the impugned order is not sustainable - against revenue..

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• 2012 (7) TMI 469
  Refund claim – amendment in the scope of existing services - works of drawings and blue print and interior decorator services - assessee claimed wrong deposit under construction services – Revenue claim that the services undertaken correctly fall under the category of construction services as per Section 65 (30a) for the period in question – Held that:- The definition of construction services was amended along with the new heading clause 'c' of Section 65 (25b) with effect from 16.6.2005 relate to the completion and finishing services - if the Revenue's stand that such services were covered by the earlier definition is accepted, the newly introduced clause 'c' would become redundant as there is no need to introduce the said clause - the activities undertaken by the respondents were the services contained in the definition under newly introduced clause 'c' of Section 65 (25b) of the Act with effect from 16.6.2005 and not clause 'b' of Section 65 (30a) as it existed prior to 16.6.2005 – against revenue.

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• 2012 (7) TMI 447
  Whether service tax paid on CHA services in respect of export of goods can be allowed as credit or not – Held that:- Government under Notification No. 17/2009-ST dated 7.7.2009 has since granted exemption to various taxable services provided to an exporter. CHA services are also exempted under Sl. No. 11 to the Table annexed to the said Notification. The present cases have arisen apparently in the absence of exemption notification for the previous period. The only way freeing export goods from domestic taxes can be ensured for the period relevant to these appeals is to allow credit of the service tax paid on the CHA and other services in respect of the export consignments so that the exporter would be compensated either by utilization of such credit for payment of other taxes or by taking refund when such utilization is not possible - appeal is allowed holding that the credit is admissible

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• 2012 (7) TMI 442
  Difference in gross receipt of commission received shown in periodical ST-3 returns - demand of differential service tax and imposition of penalty - Held that:- As Commissioner (Appeals) rejected the appellant's plea of the differential amount being profit on sale of mobile phones stands rejected by him on the ground of lack of documentary evidence were as as regard the small scale notification benefit stating that it is not established from records that the total value of the services provided by the appellant during the preceding financial year was less than Rs.4 lakhs - instead of assuming the facts should have been got verified by him (Commissioner (Appeals)) from the original field officer - set aside the impugned order and remand the matter to original adjudicating authority for fresh decision, after verifying the facts

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• 2012 (7) TMI 441
  Inclusion of reimbursed amounts in the value of services - advertisements for procurement of materials required for executing the project, clearing & forwarding of such material from the port to the project sites - Held that:- The reimbursed expenses in question could not have formed part of the value of the services rendered - the activities for which such charges are levied are not prima-facie covered in the definition of consulting engineering services - no ground to allege suppression on the part of the appellants as the Revenue had issued a show cause notice in 2001 itself, in respect of similar contracts which notices were dropped - in favour of assessee.

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• 2012 (7) TMI 440
  Travel Agent Services - service tax liability - Held that:- The assessee claim the gross amount received for the services was less than Rs. Four lakhs and they are eligible for the benefit of Small Scale Service providers, as per the Notification No. 6/2005-ST the appellant has not raised this point before/the lower authorities - remand the matter back as the issue needs to be considered by the adjudicating authority in its correct perspective.

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• 2012 (7) TMI 439
  Rejection of appeal by first appellate authority - invoking question of limitation - Held that:- The appellant had a right to file an appeal within three months from the date of receipt of the order with a further period of three months for seeking condonation of delay from the first appellate authority, whereas in this case the appellant had received the order on 28.8.2010 and had filed an appeal before the first appellate authority on 14.6.2011, thus beyond the period of prescribed six months - against assessee.

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• Central Excise

• 2012 (7) TMI 446
  Applicability of compounded levy scheme - determination of annual production capacity - Commissioner has fixed the annual capacity of production of the appellant under the Hot Re-Rolling Steel Mills Annual Capacity Determination Rules, 1997 on the basis of the report dated 25.09.1997 of the Superintendent of central excise - Superintendent has accepted all other parameters except the d -factor which according to him was 170 MT and not 155 MT – Held that:- Superintendent while discharging his statutory function under the provisions of law ought to have been meticulous and careful as the verification done by him would be crucial for determination of the annual capacity of production, the basis for payment of duty by the appellant/assessee - there cannot be any assumptions and presumptions in justifying an improper verification report by the said Superintendent which got regularized by him consequent to the failure on the part of the senior officers to get the joint verification completed on 17.10.1997 - order set aside and appeal filed by the appellant allowed

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• 2012 (7) TMI 445
  Demand invoking extended period of limitation u/s 11A - wrong claim of Exemption Notification No.7/94-CE - Held that:- The appellants have been procuring the sulphuric acid for the manufacture of magnesium sulphate under Chapter X obtaining a CT2 certificate from the jurisdictional officer having control over their factory and who was well aware of what was being manufactured by the appellants. This position was also borne out from the earlier Board s circular of 1994 and that there was a change in the situation with the issue of the circular in 1998 was obviously not known to both sides - it would not be proper to uphold the demand for the extended period of limitation under Section 11A - the appellants are liable to pay the demanded duty only for the normal period of one year counting the same backwards from the date of issue of SCNs along with interest thereof - partly in favour of assessee.

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• 2012 (7) TMI 444
  Cenvat credit – suo motu credit on the amount paid by assessee erroneously earlier – Held that:- Any excess payment made to the Department ought to be claimed by filing a refund claim as prescribed under Section 11B of the Central Excise Act - suo motu credit of the amount erroneously paid is not authorized under the Central Excise Act and Rules made thereunder - suo motu credit availed by the appellant is inadmissible to them Penalty – Held that:- Commr. has erred in imposing penalty without issuing them any notice as required under Section 35A (3) of the Central Excise Act and also erred in not mentioning the specific provision under which penalty of Rs.10,000/- imposed - penalty imposed on the appellant by the Ld.Commr. (Appeal) is set aside - Appeal partly allowed.

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• 2012 (7) TMI 417
  Entitlement to refund claim - difference in rate at which excise duty was paid at the time of clearance and the rate on which the goods were sold from depot - Held that:- Considering Rule 7 of the Central Excise (Valuation) Rules where the goods are not sold by the assessee at the factory gate but are transferred to depot from where the excisable goods are to be sold the transaction value of such goods cleared from depot for the purpose of excise duty shall be the rate at which goods are sold from such depot on or about the same time and if such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment. the invoices supplied by the respondent regarding sale at the time nearest to the date and time for removal of the goods from factory to the depot normal transaction value of the goods was much more than the rate at which the excise duty was paid at the time of clearance of goods from the factory and the appellants submitted all the relevant documents including depot invoices which are indicative of the price at depot sale. Duty being advalorem is proportionately reduced with the fall of price at the depot. As a result the appellants have to bear the burden of excess duty paid on the ex-factory value of the goods that is higher than the actual transaction value - though Commissioner (Appeals) has correctly noted the provision of Rule 7 of Valuation Rules, he has not followed the same while deciding the appeal.

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• 2012 (7) TMI 416
  Justification to levy Excise Duty - Held that:- Excise duty is chargeable on any excisable goods if it is established that the assessee has manufactured and cleared the excisable goods, whereas no evidence is find to show that the amount of Rs.27,79,146 which the basis of demand, was received by the respondent against the clearance of the goods manufactured as assessee admittedly explained the receipt of aforesaid amount as advance for development/purchasing tools as per specification of the customer - order in original confirming demand is without any basis is set aside - in favour of assessee.

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• 2012 (7) TMI 415
  Condonation of delay of 1035 days - applicant contended that their factory was closed since 2006 and their Sr. General Manager who was looking after the Central Excise matters left the company and there was no one competent to look after the excise matter - Managerial staff of the company had left the company after the closer of the production – Held that:- There is no denial of the fact that they were received by the applicant - salary was paid by the applicant company and the Central Excise duty were being shown as liability - Therefore the contention is that they were not aware of the liability and it has prevented them in not filing the appeal is not correct - applications is not maintainable and is accordingly dismissed

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• 2012 (7) TMI 414
  Calculation of assessable value of the job work goods - Department stated that assessee has not included the amount of sales tax paid on the raw material i.e. steel - Held that:- It is an undisputed fact that invoice of SAIL clearly indicates the purchasers as M/s. IVCRL Infrastructures & Projects Ltd. and the appellant as a consignee, thus the amount of sales tax indicated in the invoice of SAIL cannot be included in the landed cost of the inputs/raw materials for the reason that the said cost is not incurred by the appellant herein - in favour of assessee.

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• Wealth tax

• 2012 (7) TMI 443
  Agricultural land - assessee has claimed the agricultural lands are exempt from Wealth-tax Act – Held that:- Lands in dispute are located within corporation limit not classified as agricultural land by registration authorities, but the assessee is carrying on agricultural activities on these lands - Construction on these lands can be done after obtaining approval of the appropriate authorities. Hence, the properties owned by the assessee attract Wealth-tax provisions, the value of which is fixed by the Government and taxed accordingly - appeals raised by the assessees are dismissed.

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