TMI Tax Updates - e-Newsletter
August 10, 2013

Case Laws in this Newsletter:

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

Articles

1. Highlights of the Companies Bill 2012.

   By: CSSwati Rawat

2. SPECIAL AUDIT

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. RBI announces 35 days & 34 days Cash Management Bills

2. Overseas Direct Investment for July 2013

Notifications

Indian Laws

1. 10/1/2012-DBA-I(Part) - dated 18-7-2013 - Indian Law

Modified Industrial Infrastructure Upgradation Scheme

Circulars / Instructions / Orders

SEZ

1. Instruction No. 77 - dated 6-8-2013

Amendment to the Instruction No. 9 regarding procedure for Reimbursement of Duty (RoD) in lieu of drawback for supply of goods to SEZ developers against Indian Rupees.

Highlights / Catch Notes

Income Tax

• Credit card payments to banks are bank charges, not commissions, u/s 194H; no TDS deduction needed.

  Case-Laws - AT : TDS - payments made to the banks on account of utilization of credit card facilities would be in the nature of bank charges and not in the nature of commission within the meaning of section 194H of the Act and hence no TDS is required to be deducted u/s 194 H of the Act - AT
  Visit to Get Source

  ---

• Interest Expenses for Capital Asset Advances Post-April 2004 Non-Deductible for Income Tax, Per Case Law Updates.

  Case-Laws - AT : Disallowance of interest on advances given for capital assets - after 1.4.2004 if the interest expenditure has been incurred for the purpose of acquisition of capital asset then the same is not allowable - AT
  Visit to Get Source

  ---

• Tax Dispute: Is the Item a Spare Part or Machine? Revenue Lacks Evidence on Classification for Capital Expenditure.

  Case-Laws - AT : Capital expenditure - Disallowance of Expenditure on machines - Spare part or machine itself - No material has been brought to show by the revenue that the TUP is not a spare part - AT
  Visit to Get Source

  ---

• Interest on Principal Not Undisclosed Income in Block Assessment Under Income Tax Section 158BA; Taxpayer Complied with Filing and Payment.

  Case-Laws - HC : Income u/s 158BA - Block assessment - If the principal amount is not considered as undisclosed income, the interest accrued thereon cannot be construed as undisclosed income and in the returns filed by the assessee, that income is also shown and tax is paid - HC
  Visit to Get Source

  ---

• Income Not Undisclosed if Filing Deadline Unmet: Section 158BA Clarifies Tax Return Timing and Disclosure.

  Case-Laws - HC : Income u/s 158BA - Last date for filing returns was not yet over. - As he had an opportunity to file returns disclosing the said income, it cannot be said that it constitutes undisclosed income. - HC
  Visit to Get Source

  ---

• High Court Stays Tribunal's Decision on Section 40(a)(ia) of Income Tax Act Regarding Payable vs. Paid Expenditures.

  Case-Laws - HC : Disallowance due to non deduction of TDS - Tribunal [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] held that the provisions of section 40(a)(ia) applies only to that expenditure which is payable as of 31st March and not to the expenditure which has already been paid during the year itself - Decision of Tribunal stayed - HC
  Visit to Get Source

  ---

• High Court Invalidates Notice u/s 148, Stresses Assessing Officer's Independent Judgment in Reopening Assessments.

  Case-Laws - HC : Notice u/s 148 - Assessing Officer can form an independent opinion on an issue which may have been brought to his/her notice by the audit party and seek to reopen the assessment, provided it is the Assessing Officer's independent belief that income chargeable to tax has escaped assessment - Notice quashed - HC
  Visit to Get Source

  ---

• Tax Department Can't Reject Returns Filed with Wrong Officer After Accepting Payments.

  Case-Laws - HC : Notice u/s 148 - The Department without ever questioning filing of such returns before a wrong officer, having accepted the tax paid under such returns, now cannot be allowed to contend that such returns were filed before wrong officers who had no jurisdiction to accept the same. - HC
  Visit to Get Source

  ---

• High Court Affirms Validity of Section 148 Notice if Reopening Justified on One Issue, Despite Others Lacking Basis.

  Case-Laws - HC : Notice u/s 148 - If the reopening is sustainable on one issue, even if on the other issue the exercise of power under section 147 of the Act is not justified, it would not make render the assumption of jurisdiction under section 147 of the Act invalid - HC
  Visit to Get Source

  ---

• Court Can Review Belief Justifying Reopening u/s 148, But Not Adequacy of Reasons Behind It.

  Case-Laws - HC : Notice u/s 148 - The court while considering a challenge to the reopening of assessment can always examine the existence of the belief but the sufficiency of the reasons for the belief cannot be investigated by the court. - HC
  Visit to Get Source

  ---

• Electricity Use Not Required for Additional Depreciation in Core Manufacturing Activities, Court Clarifies Statute Interpretation.

  Case-Laws - AT : Deduction of additional deduction - The use of electricity in the manufacturing activity of the core business of the assessee is not a precondition for the grant of additional depreciation under the statue - AT
  Visit to Get Source

  ---

• TPO's Revenue Calculation Error u/s 92CA Due to Inconsistent Sales Returns Adjustment Affects Transfer Pricing.

  Case-Laws - AT : Transfer pricing Adjustment u/s 92CA - The TPO has clearly erred in arriving at the revenues - The TPO has to reduce sales returns against sales in all the steps and cannot arbitrarily include in some steps. - AT
  Visit to Get Source

  ---

• Assessees can claim Section 80IC deductions without manufacturing all components; higher profits alone don't justify denial.

  Case-Laws - AT : Deduction u/s 80IC - It cannot be accepted that the assessee should be manufacturing all the components. Further merely showing that that the profits are on higher side, is not sufficient and no defects are pointed out and therefore deduction cannot be denied - AT
  Visit to Get Source

  ---

• Capital Gains Calculation u/s 50: No Deduction for Notional Depreciation on Unused Assets Required.

  Case-Laws - AT : Computation of Capital gains u/s 50 - deduction of notional depreciation on unused assets - When assets not is use no notional depreciation - Section 50 nowhere provides that certain deemed depreciation needs to be allowed - AT
  Visit to Get Source

  ---

Customs

• Enforcement Committee's jurisdiction questioned; DGFT actions must follow due process and allow affected parties to be heard.

  Case-Laws - HC : Jurisdiction and Power of Enforcement Committee - Whether the recommendations made by the Enforcement Committee to the Director-General of Foreign Trade was valid - In the event that the DGFT decides to take any action on the basis - he would had to follow due process of law before taking action and to hear the affected persons - HC
  Visit to Get Source

  ---

• Teak Wood Logs Retain Identity Post-Cutting, Eligible for SAD Refund Under Notification No. 102/2007.

  Case-Laws - AT : Refund of SAD – Benefit of Notification No. 102/2007 - teak wood logs were cut into small pieces and sold in the market – identity of the article did not undergo any fundamental change so as to conclude that what was imported by the assessee was different from the item which ultimately was sold by them in the local market - Refund allowed - AT
  Visit to Get Source

  ---

• VIVITEK Projectors Stay Under Heading 85286100, Not 8471, Due to Multi-Functionality and Data Processing Limitations.

  Case-Laws - AT : Classification of goods – VIVITEK Projectors - the projectors merely having additional function cannot be a ground for classifying it other than 85286100 - they cannot be said to be meant for use solely or principally in an automatic data processing system of heading 8471 - AT
  Visit to Get Source

  ---

Indian Laws

• Offences Under Amending Act 36 of 1987 Now Cognizable; Police Authorized to Investigate Essential Commodities Violations.

  Case-Laws - HC : In view of the provisions of Amending Act 36 of 1987 offence under the Act having been made cognizable police officers though not notified as Inspector under the different control orders issued under the Act have the jurisdiction to investigate the offence committed under the Act with respect to the essential commodity - HC
  Visit to Get Source

  ---

Service Tax

• Tax Classification Debate: Forwarding Agents and Services u/s 65(a) for Proper Tax Category Determination.

  Case-Laws - HC : Forwarding Agents u/s 65(a) - Clearing and Forwarding Services u/s 65(a) - Department itself was not certain about the head under which the transaction character would fall, the criteria which was of great significance in the matter of taxation - The attempt of the Revenue appears to be to hit at some clause to bring the assesse somehow with the net of taxation - HC
  Visit to Get Source

  ---

• Service Tax Liability in Residential Construction Depends on Service Relationship, Not Designation as Builder or Developer.

  Case-Laws - AT : Construction of Residential Complexes – Service tax liability cannot be determined based on what the assesse calls itself, whether as a builder, a developer, a promoter etc. - The liability was to be determined with reference to the criterion whether there was a service provider and service recipient - AT
  Visit to Get Source

  ---

• Goods Transport Agency Must Issue Consignment Note for Recognition u/s 65(105)(zzp); Stay Granted.

  Case-Laws - AT : Goods Transport Agency u/s 65 (105) (zzp) – A person becomes Goods Transport Agency only if he issued the consignment note - The rule says that if the person was a Goods Transport Agency, such agency had to issue consignment note - stay granted - AT
  Visit to Get Source

  ---

• Stay Granted on Police Housing Corporation's Role in State Housing u/s 65 (91a.

  Case-Laws - AT : Construction of Residential Complexes u/s 65 (91a) – The Police Housing Corporation appears to have worked as an extended arm of the Government – the houses that were constructed should be considered to be in the personal use of the State Government - stay granted - AT
  Visit to Get Source

  ---

• Commissioner's Order on Clearing and Forwarding Agents Found Non-Compliant with Sections 84 and 65(23) Provisions.

  Case-Laws - AT : Revision of order by the commissioner Section 84 – clearing and forwarding agent services section 65(23) – one of the conditions mentioned in section 84 (ii) is not fulfilled - the order-in-review passed by the commissioner was not as per the provisions - AT
  Visit to Get Source

  ---

• Activities of Unloading, Loading, and Dispatching Not Classified as Clearing and Forwarding Agent for Service Tax.

  Case-Laws - AT : C&F Agent - the only activity done by him is (a) providing labour for unloading of the goods at the rail heads, loading into the trucks for transport from rail-head to godown and unloading and stacking of the cement at the godown (b) arranging the dispatch of the goods as per the instructions and maintaining record of receipt and dispatch - Not a clearing and forwarding agent - AT
  Visit to Get Source

  ---

Central Excise

• Court Dismisses Writ Petition for MRP Exemption u/r 26 Due to Lack of Supporting Evidence.

  Case-Laws - HC : Exemption of not printing MRP as per provisions of Rule 26 of LMPC Rules - Writ petition in the absence of the petitioner's cooperation in leading evidence on which he was claiming exemption, is not maintainable. - HC
  Visit to Get Source

  ---

• Court Rules Recovery Notice u/s 11D Time-Barred; Section 11A Governs Excise Duty Issues Instead.

  Case-Laws - HC : Limitation period for issue of recovery notice under section 11D - The show-cause notice was issued and served beyond the extended period of five years, the action of the appellant is clearly barred by time. Section 11A covers the field of any duty of excise not levied or not paid or has been short levied or short paid etc - It is section 11A which is attracted and not section 11D of the Act - HC
  Visit to Get Source

  ---

• High Court Orders Interest on Refunds for Delayed Payments u/s 11BB of Central Excise Act.

  Case-Laws - HC : Interest on refund under section 11BB of the Central Excise Act - There has been a delay of considerable period in returning the amount after the Appellate Tribunal held in favour of the appellants assessee. - The interest on the pre-deposit is, therefore, required to be given - HC
  Visit to Get Source

  ---

• Central Excise Exemption Denial Requires Concrete Evidence of Goods Removed Outside Project, Not Speculation per Notification No.108/95-CE.

  Case-Laws - AT : Benefit of Notification No.108/95-CE dt. 28.8.1995 - Demand can be confirmed only based on a specific finding that the goods were removed outside the project and not based on a probability that goods can be removed out of the project because the exemption is not with reference to the nature of goods - AT
  Visit to Get Source

  ---

VAT

• Sales Tax Applied to Forest Entry Fees for Lichen Collection; Payment Considered Transfer of Property Rights.

  Case-Laws - HC : LEVY of sales tax on right to enter the earmarked forest for the purpose of collection of lichen - Though the word “royalty” was used in the instant case, but, in fact, the same was nothing but consideration for transfer of proprietary right in the movable property of lichen upon payment of consideration fixed by the Forest Department - HC
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2013 (8) TMI 300
  Disallowance of depreciation - Assets leased to Western Railways - transactions of lease were questioned by the Assessing Officer - Held that:- it is not a case, as is appearing from different clauses of the lease deed that the equipments leased will be returned back to the lessor after the expiry of the lease. Nothing has been brought to disapprove the said clauses of the lease deed by any of the authorities below - It is not proved that assessee is only a financer and is not interested in the assets and therefore, it cannot be said as full payout lease - such claim did not arise for consideration for the first time, but, is spread over to the entire period between A.Y. 1996-97 to 1999-2000. Such claim was made by the Assessee and duly granted by the Assessing Officer - Decided against Revenue. Premium on redemption of debentures - Tribunal allowed deduction - Held that:- where the company undertakes to pay more amount than what it has borrowed, and liability to pay the excess amount undertaken to be paid by the company to fulfill its needs for borrowed money is an allowable expenditure under section 37 of the Income Tax Act - Following decision of Madras Industrial Investment Corporation Limited v. Commissioner of Income Tax [1997 (4) TMI 5 - SUPREME Court] - Decided against Revenue. Deduction on restructuring of the term loan - Tribunal allowed deduction - Held that:- act of borrowing money was incidental to carrying on of the business, the loan obtained was not an asset or an advantage of enduring nature, the expenditure so made for securing the use of money for a certain period and it was irrelevant to consider the object with which the loan was obtained. Thus, when obtaining of a loan is not considered as an asset or an advantage of enduring nature, any expenditure incurred for reducing such loan burden or securing the borrowings, on more advantageous condition, can not be seen as resulting into a benefit of enduring nature so as to be categorized as a capital expenditure - Following decision of India Cements Limited v. Commissioner of Income Tax, Madras [1965 (12) TMI 22 - SUPREME Court] - Decided against Revenue. Deduction u/s 36[1](iii) - Held that:- Department had allowed such deduction in the earlier years - when it was found that the machinery being purchased through borrowed funds was not for the purpose of new business but expansion of the existing business claim of interest was rightly held allowable - Decided against Revenue.

  ---

• 2013 (8) TMI 299
  TDS u/s 194H - TDS on amount retained by banks/credit card agencies - online transactions / credit card transactions - Held that:- banks make payments to the assessee after deducting certain fees as per the terms and conditions in the credit card and it is not a commission but a fee deducted by the banks - assessee only receives the payment form the bank/credit card companies concerned, after deduction of commission thereon, and thus, this is only in the nature of a post facto accounting and does not involve any payment or crediting of the account of the banks or any other account before such payment by the assessee. Liability to make TDS under the said section arises only when a person acts on behalf of another person. In the case of commission retained by the credit card companies however, it cannot be said that the bank acts on behalf of the merchant establishment or that even the merchant establishment conducts the transaction for the bank. The sale made on the basis of a credit card is clearly a transaction of the merchants establishment only and the credit card company only facilitates the electronic payment, for a certain charge. The commission retained by the credit card company is therefore in the nature of normal bank charges and not in the nature of commission/brokerage for acting on behalf of the merchant establishment - payments made to the banks on account of utilization of credit card facilities would be in the nature of bank charges and not in the nature of commission within the meaning of section 194H of the Act and hence no TDS is required to be deducted u/s 194 H of the Act - Decided against Revenue.

  ---

• 2013 (8) TMI 298
  Deduction u/s 80IB - Small scale industry - Held that:- There is no condition that new definition of small scale industry is applicable to the new units only - Amount of investment has to be seen as on the last date of previous year - last date of the preceding year is 31.3.2007 and the new limit of Rs. 5.00 crore was applicable from 2.10.2006. Therefore, as on 31.3.2007 the assessee was clearly covered by the new definition - Decided against Revenue. Capital expenditure - Disallowance of Expenditure on machines - Spare part or machine itself - Held that:- Certificate from professional state that TUP is a wearable and Breakable part and it require replacement is case of excess wear and breakage. It has got no link in the increase of capacity of Drop Hammer - Assessing Officer’s conclusion is not based upon any specialized knowledge of the production process or any thing to suggest that he spare parts were actually a machine by itself - No other material has been brought to show by the revenue that the TUP is not a spare part - Decided against Revenue. Disallowance of interest - Interest paid at higher rate to person u/s 40A(2)(b) - CIT deleted addition - Held that:- funds borrowed from bank and financial institutions are subject to number of restrictions and are more than secure whereas money borrowed from the relatives was unsecured and generally interest rate is more in case of unsecured loans - Decided against Revenue. Disallowance of expenses u/s 14A - Held that:- the disallowance u/s 14A is based on Rule 8D which has been noted was applicable during the year under consideration and which is in consonance with the decision of Hon'ble Bombay High Court. - Decided in favor of revenue. Disallowance of interest on advances given for capital assets - Held that:- after 1.4.2004 if the interest expenditure has been incurred for the purpose of acquisition of capital asset then the same is not allowable. Since the advances have been made admittedly for the purpose of acquisition of capital asset i.e. land, building etc. interest incurred for acquisition of such asset is not allowable. - Decided in favor of revenue.

  ---

• 2013 (8) TMI 290
  Computation of G.P. rate - Rejection of books of accounts - Tribunal reduced G.P. rate by 2% without giving cogent reasons - Held that:- there was order of affirmance no detailed reasons were otherwise required to be assigned and it was observed by the learned Tribunal that as regards assessment years 1992-93 to 1994-95 the departmental appeals were dismissed and application of 8% profit rate was held to be reasonable and the present appeal is in respect of assessment year-1997-98 and the question decided by the learned Tribunal is one and the same - Decided against Revenue.

  ---

• 2013 (8) TMI 289
  Income u/s 158BA - Block assessment - Addition on account of undisclosed income by way of FDs, Kisan Vikas Pathras - Tribunal deleted addition - Held that:- assessee had filed returns disclosing the said income along with the audit report. The Assessing Authority had passed the assessment order under section 143(3) of the Act for the assessment year 1999-2000 and in the said order he has not pointed them as receipts. Therefore, the last date for filing returns was not yet over. As he had an opportunity to file returns disclosing the said income, it cannot be said that it constitutes undisclosed income. In fact, in the assessment order, the Department has passed a protective assessment order including the said income - Tribunal was justified in granting relief to the assessee - Decided against Revenue. Income u/s 158BA - Block assessment - Deduction u/s 80L - Held that:- interest accrued on the said FDs cannot be held to be undisclosed income. If the principal amount is not considered as undisclosed income, the interest accrued thereon cannot be construed as undisclosed income and in the returns filed by the assessee, that income is also shown and tax is paid - benefit given to the assessee under section 80L of the Act was not challenged by the revenue before the Tribunal - Decided against Revenue. In the absence of any evidence to show that the brothers divided the income equally, as the assessee was in the complete financial management of all the assets, it was of the view that it is probable that entire agricultural income was kept in FD in his name as the ultimate beneficiaries of the same would be his brother and his son. In the light of evidence on record, it cannot be said that the said reasoning of the Tribunal is perverse and calls for interference.

  ---

• 2013 (8) TMI 288
  Expenditure u/s 40(a)(ia) - Disallowance due to non deduction of TDS - Tribunal [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] held that the provisions of section 40(a)(ia) applies only to that expenditure which is payable as of 31st March and not to the expenditure which has already been paid during the year itself - Held that:- Decision of Tribunal stayed - Decided in favour of Revenue.

  ---

• 2013 (8) TMI 287
  Notice u/s 148 - Held that:- Letter of approval from CIT does not bear any reference to the reasons recorded by the Assessing Officer - Assessing Officer did not agree with the audit objection and stuck to her position that she was right in law as well as in the facts while framing the original assessment and that, therefore, the audit objection should be dropped, has not been denied by the Assessing Officer though she herself filed an affidavit before this court in response to such averments made in the petition. All that she had to state was that she was surprised that the petitioner could claim access to inter-departmental correspondence which was strictly confidential in nature - Assessing Officer can form an independent opinion on an issue which may have been brought to his/her notice by the audit party and seek to reopen the assessment, provided it is the Assessing Officer's independent belief that income chargeable to tax has escaped assessment - Therefore, notice of reassessment unsustainable - Decided in favour of assessee.

  ---

• 2013 (8) TMI 286
  Notice u/s 148 - Notice issued after search u/s 132 - Return file before the wrong officer - Held that:- On the basis of the returns filed by the petitioner, and the intimation sent by the Department under section 143(1) of the Act, the assessee discharged his tax liabilities. The Department without ever questioning filing of such returns before a wrong officer, having accepted the tax paid under such returns, now cannot be allowed to contend that such returns were filed before wrong officers who had no jurisdiction to accept the same. When the assessee filed his returns before his ordinary Assessing Officer, primarily the Assessing Officer concerned could have either refused to accept such returns or could have transferred them before the competent authority. He not having done so, after a long period of time, it would not be open for the Department to ignore such returns contending that the same were filed before the officer who had no jurisdiction and therefore, such returns were non est. Any such attempt on the part of the Department would lead to abnormal and incongruent situation. The returns accepted by the Assessing Officer, with or without scrutiny and the assessment framed thereon would stand in eye of law. The reasons recorded for reopening assessment are not valid. The sole ground on which the assessment is sought to be reopened under section 147 of the Act, is not sustainable. - Decided in favour of assessee.

  ---

• 2013 (8) TMI 285
  Notice u/s 148 - Depreciation claimed on coal fired boiler building - Held that:- In the detailed questionnaire called for, vide notice issued under section 142(1) of the Act, the Assessing Officer had called for details of investment in fixed assets and not calculation as regards depreciation claimed by the petitioner - Thus, there is nothing on record to indicate that the Assessing Officer had called for details as regards depreciation claimed by the petitioner in respect of the fixed assets in general and the coal fire boiler building in particular or having raised any query in that regard - The only issue discussed therein pertains to disallowance under section 14A of the Act - So far as the assessment order is concerned, it does not reflect any application of mind by the Assessing Officer to the claim of depreciation on coal fire boiler building while framing the assessment - Since the reopening is within a period of four years from the end of the relevant assessment year, the requirement of the proviso to section 147 of the Act, viz., failure on the part of the assessee to disclose fully and truly all material facts for its assessment is not required to be fulfilled - Omission of the assessee to bring to the assessing authority's attention those particular items in the account books, or to particular portions of the documents which are relevant, will amount to "omission to disclose fully and truly all material facts necessary for his assessment - Assessing Officer, while framing the assessment under section 143(3) of the Act does not appear to have formed any opinion in regard to depreciation on coal fire boiler building - It was for the petitioner to bring to the notice of the Assessing Officer that it was claiming depreciation in respect thereof as under the heading "plant and machinery" and not as building. The petitioner having failed to do so cannot now contend that the assessment is sought to be reopened on a mere change of opinion - Following decisions of Malegaon Electricity Co. P. Ltd. v. CIT [1970 (8) TMI 8 - SUPREME Court] and Calcutta Discount Co. Ltd. v. ITO [1960 (11) TMI 8 - SUPREME Court] - Decided against assessee. The court while considering a challenge to the reopening of assessment can always examine the existence of the belief but the sufficiency of the reasons for the belief cannot be investigated by the court. On the facts emerging from the record, the court is of the view that there is sufficient material on record for the Assessing Officer to form a belief as regards escapement of income from assessment in the year under consideration in relation to the claim of depreciation in respect of building of coal fire boiler. - Decided against assessee. Notice u/s 148 - Carry forward of depreciation - Held that:- If the reopening is sustainable on one issue, even if on the other issue the exercise of power under section 147 of the Act is not justified, it would not make render the assumption of jurisdiction under section 147 of the Act invalid - Decided against assessee.

  ---

• 2013 (8) TMI 284
  Addition of bogus claim of consultancy charges payments - unsubstantiated payments of software development charges - repair & maintenance expenses incurred on the residence of Director - CIT(A) has restricted the additions - Held that:- The assessee has produced all proof that was necessary to support its contentions. It is rather the AO who has no proof or support in respect of his contentions in terms of the authorities as explained and stated hereinabove. The survey statement was inadmissible as evidence in the light of the decision of the supreme authorities on the point - during the subsistence of the consultancy agreement, the appellant company did not receive any complaint from M/s. LMZ Energy (India) Ltd. regarding the services provided by M/s. T & G Quality Management Consultants Pvt. Ltd. It may not be out of place to mention here that the appellant company received part consultancy fee from M/s. LMZ Energy (India) Ltd during the year under consideration. The documentary evidence were filed during the course of assessment proceedings to prove the genuineness of the transaction between the appellant company and M/s. T & G Quality Management Consultants Pvt. Ltd - CIT(A) has passed a well reasoned and elaborate order for both the years considering each and every aspect of the matters in detail and the basis and reasoning as given by Ld. CIT(A) are found to be just and appropriate. In the absence of any contrary material having been placed on record, there is no reason to interfere with order's of CIT - Decided against Revenue.

  ---

• 2013 (8) TMI 283
  Deduction of additional deduction - windmill power generation - Held that:- electricity falls within the definition of sale of Goods Act, 1930 and process of generation of electricity is akin to manufacture or production of an "article" or "thing". The power generated need not necessarily be used in the production of assessee's own products namely mining and extraction of gold. The use of electricity in the manufacturing activity of the core business of the assessee is not a precondition for the grant of additional depreciation under the statue - Generation of electricity is a manufacturing activity - The assessee is involved in the manufacturing activity and fulfills the conditions as laid down under section 32(1)(iia). The Government vide Finance Act, 2012 has amended the provisions of section 32(1)(iia) to include the business of generation or generation and distribution of power - Decided against Revenue.

  ---

• 2013 (8) TMI 282
  Disallowance of office expenditure - Held that:- there is no agreement about indemnity of expenses as far as Simplex Sport Complex at Ranchi is concerned, which constitutes the major receipt of consultancy fee - assessee, as a businessman, has the liberty to carry on its business in the manner it thinks feasible. The expenditure having been incurred for business purposes cannot be disallowed on ipsi dixit, beyond which the revenue has not been able to make out any further case - expenditure incurred by the assessee being in the course of business has to be allowed. Besides, assessee undertakes that if any recovery of expenditure is made from Reliance or Simplex, the same would be offered to tax, whenever it is received - Following decision of CIT Vs. Walchand & Co. (P) Ltd. [1967 (3) TMI 2 - SUPREME Court] and Sasoon J. David & Co. (P) Ltd. Vs. CIT [1979 (5) TMI 3 - SUPREME Court] - Decided in favour of assessee.

  ---

• 2013 (8) TMI 281
  Transfer pricing Adjustment u/s 92CA - TPO made adjustment as per Tribunal s order - Held that:- on a careful perusal of the order of the TPO giving effect to the directions contained in the earlier order of this Bench, it is observed that there were variations and total inconsistencies while implementing the directions of the earlier Bench - TPO was in presumption that the earlier Bench had directed to reduce sale return only while calculating CAGR and debtors without appreciating the fact that the earlier Bench had categorically held that those sales did not materialize and, thus, should be reduced from sales - TPO has arrived at the operating costs for the previous years following a new method, a clear deviation from the original order passed on 30.10.2009 and has adopted a totally a different method of calculation of cost by deducting the marketing expenses from the total cost as the marketing division was transferred to TIPL and it does not exist on the date of valuation - TPO adopted corrected method in estimation of future cash flows except that the revenues for the AY 2006-07 has to be considered and is to be taken as the base year for future projection of revenue - Suitable directions have been issued in respect of revenues only and not for the costs. The TPO had, thus, erred in mentioning that there were no specific directions given with respect to the costs of the previous years - The TPO has also erred in mentioning that current year data has to be considered for the projection of future earnings. In fact, specific direction was given, as can be seen from the earlier order that revenues for the current year i.e., 2006-07 has to be considered and is to be taken as the base year for future projections - Decided in favour of assessee. TPO has erred in mentioning that the Marketing Division was non-existence on the date of valuation. The TPO has failed, perhaps, to properly understand that TSPL transferred intangible properties TSFL, Dubai and its marketing division to Tally India Pvt. Ltd and whole subject matter of this valuation is this transfer and the marketing division was in existence before the date of transfer. The transfer of assets and the marketing division is done simultaneously and together. Therefore at the time of transfer of asset, the marketing division was not transferred and it is wrong to assume that the transfer of marketing division has happened prior to the sale of assets - TPO cannot change the method of calculation of cost which was accepted by the earlier Bench as mentioned in the original order and also as discussed above, the assumption of TPO now as different from the original order of the TPO that Marketing division was transferred prior to transfer of assets as the fact remains that both the transfers have taken place simultaneously on 31-01- 2006. TPO has also erred in taking the costs for only 10 months whereas the revenues have been for 12 months. When the revenues are taken for 12 months, the costs have also to be taken for 12 months and not for 10 months. Therefore, the TPO is directed to adopt the costs for 12 months for arriving at CAGR of the cost for the year 2005-06. The TPO has clearly erred in arriving at the revenues for the FY 2004-05 relates to AY 2005-06. As per Step 1, the turnover for the FY 2004-05 relating to FY 2005-06 is Rs. 72,20,84,213/- whereas the TPO has arrived at the turnover at Rs. 198,15,17,988/- which is totally wrong. In the original order passed by TPO, the turnover arrived at Step 1 has been taken in Step 4 also and no specific directions were given by the earlier Bench for arriving at these revenues in this step. The TPO has to reduce sales returns against sales in all the steps and cannot arbitrarily include in some steps. In the earlier order, we had not given specific directions as we found that in the original TP order the revenue are same in Step I and Step 4. - AO directed to adopt the revised/modified transfer pricing adjustment which will be worked out by the TPO - Decided partly in favor of assessee.

  ---

• 2013 (8) TMI 280
  Deduction u/s 80IC - higher profit - purchase of some of the components from outside - Held that:- pursuance of remand report shows that all the details were furnished before the Assessing Officer on 28.3.2011 and the books of account along with vouchers were also produced before him. It has been specified at para 6 of the remand report that books of accounts of Nathu Plasi, Nalagarh were verified that separate books of account have been maintained. Only objection which he has raised regarding denial of deduction that some of the components have been purchased from outside and the profit of the eligible unit are on higher side - it was not denied that the assessee was manufacturing the transformers and some components were purchased from the market. It cannot be accepted that the assessee should be manufacturing all the components. Further merely showing that that the profits are on higher side, is not sufficient and no defects are pointed out and therefore deduction cannot be denied - Decided against Revenue.

  ---

• 2013 (8) TMI 279
  Depreciation on Power Evacuation Infrastructure facilities - depreciation on electricity line for transmission of metering. - nature contribution made to GEDA - CIT allowed depreciation @ 80% - Held that:- machineries had no independent functioning as such. Merely because it improves the working system or controlling / monitoring system, it cannot be treated as an independent machinery and not part of the integrated machinery - payment made for overhead service line, which remained the property of Electricity Board, is allowable as revenue expenditure - Following decision of CIT vs. Excel Industries Ltd. [1979 (10) TMI 68 - BOMBAY High Court] - Decided against Revenue. Depreciation on electricity line for transmission of metering - CIT allowed depreciation @ 80% - Held that:- Power Evacuation Infrastructure facilities was used for less than 180 days, depreciation can be granted at only 40% (i.e. 50% of the normal depreciation of 80%) - Decided in favour of Revenue.

  ---

• 2013 (8) TMI 278
  Disallowance u/s 14A - Investments in the mutual fund - Expenses in relation to income not forming part of total income – Held that:- No deduction shall be allowed in respect of expenditure incurred by the assessee in relation to such income which does not form part of the total income under the Act, by virtue of the provisions of Section 14A(1) - The company is chargeable to tax on its profits as a distinct taxable entity and it pays tax in discharge of its own liability and not on behalf of or as an agent for its shareholders. In the hands of the shareholder as the recipient of dividend, income by way of dividend does not form part of the total income by virtue of the provisions of Section 10(33). Income from mutual funds stands on the same basis - The provisions of sub sections (2) and (3) of Section 14A of the Income Tax Act 1961 are constitutionally valid - The provisions of Rule 8D of the Income Tax Rules as inserted by the Income Tax (Fifth Amendment) Rules 2008 are not ultra vires the provisions of Section 14A, more particularly sub section (2) and do not offend Article 14 of the Constitution - the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The Assessing Officer must 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 - Following decision of Commissioner of Income Tax-II Versus M/s Hero Cycles Ltd [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT] and GODREJ AND BOYCE MFG. CO. LTD. Versus DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Decided against assessee. Deduction u/s 80IB - Small scale industry - Held that:- There is no condition that new definition of small scale industry is applicable to the new units only - Amount of investment has to be seen as on the last date of previous year - during assessment proceedings the AO noticed that the assessee had raised certain unsecured loans. The Assessing Officer was of the opinion that interest paid was excessive and therefore, restricted the allowance of interest to 12% - However, On appeal the claim of interest was accepted at15% - Following decision of Sunder Forging, Ludhiana v. Department Of Income Tax [2013 (8) TMI 298 - ITAT CHANDIGARH] - Decided in favour of assessee.

  ---

• 2013 (8) TMI 277
  Computation of Capital gains u/s 50 - deduction of notional depreciation on unused assets - Held that:- assessee was not in possession and control of the assets due to the seizure as aforesaid so as to use them for the conduct of the business. There was neither active nor passive use of the said assets as they remain seized by the Banks. The assets were auctioned by the banks to the best bidder and the assets were directly handed over by the bank to the buyer - The assessee who could not exercise any control of ownership could not be called as the owner and could not be said to have used the said asset so as to claim depreciation in respect thereof - Depreciation is inseparable from the actual user for business and depreciation allowance is permissible only on that account. It is not an allowance for natural wear and tear by reason of the aging process. Every building starts aging from the day it is constructed, but depreciation is claimable only on account of its user for business which can result in profits and gains - In section 32 the emphasis is on the user of the asset in the business of the assessee. There must be actual, effective and real user in the commercial sense and the user in the commercial sense and the user must be so linked with the business that it can be said that there is an immediate nexus between the user and the business, i.e. the real business of the assessee - Section 50 contains special provisions for computation of capital gains in the case of depreciable assets. The said section nowhere provides that certain deemed depreciation needs to be allowed - where the depreciation has been allowed as per the provisions of the Act after the fulfilling conditions prescribed u/s 32 of the Act and then the special provisions of section 50 would follow - Following decision of Commissioner Of Income-Tax, Gujarat Versus Suhrid Geigy Limited [1981 (4) TMI 79 - GUJARAT High Court] - Decided in favour of assessee. Disallowance u/s 43B - Interest liability not paid - CIT upheld disallowance - Held that:- The assessee understood the OTS of Rs. 378.72 lakhs as being first attributed towards interest and balance towards principal leaving a portion of principal unpaid and waived. On this basis, the assessee claimed interest deduction u/s 43B and offered, though, wrongly the waived principal to tax. Even if one would understand the OTS of Rs. 378.72 as being first attributed towards principal and balance towards interest, it means that unpaid interest of Rs. 1,93,96,881 is to be disallowed u/s 43B - As both erroneous offer of waived principal sum to tax and erroneous claim of interest u/s 43B emanated from a single transaction/event i.e. OTS, both should be understood to have cancelled each other. In other words, whichever way the appropriation of OTS is understood, the assessee cannot be put into double jeopardy - Disallowance u/s 43B reduced - Decided partly against assessee.

  ---

• Customs

• 2013 (8) TMI 275
  Relief beyond the term – enhanced value - Whether the Tribunal was correct in law in granting the relief beyond the terms of the prayer of the assesse in as much as the importer had agreed enhancement to 50% and 25% of the value for calculators with cartons and without cartons respectively and by setting aside the order allowing the appeal and directing the proper officer of the revenue to complete assessment of the goods on the basis of the declared value – Held that :- The order of the CESTAT was confirmed and the Officer concerned was directed to complete the assessment - in the absence of any material evidence the statement made by the assessee for valuation in respect of calculators with cartons and without cartons and the enhancement of the value would be of the order of 50% and 25% respectively assumes significance while arriving at the value for the purpose of adjudication. Statement u/s 108 - Whether the Tribunal was correct in holding that the voluntary statement deposed u/s 108 with respect to acceptance of values, cannot be the basis for enhancing the values in the light of the settled law in the case of Surjeet Singh Chhabra Vs. Union of India [1996 (10) TMI 106 - SUPREME COURT OF INDIA] - Whether the CESTAT was justified in directing the Adjudicating Authority to complete the assessment based on the value declared based on the quotation received - The contention of the assesse that the penal action would be harsh and the statement under Section 108 was not of a binding character and that there were no materials to hold that the concession agreed to was only to enable an early clearance cannot be accepted. The assessee accepted the enhancement of the value - the assessee himself gave an undertaking that he would produce the manufacturer's invoice - before the Adjudicating Authority, no corroborative material or evidence was placed to substantiate the stand that the value given was based on the documents filed before the Officer - Adjudicating Authority was directed to complete the assessment taking note of the value agreed for enhancement in respect of calculators with cartons by 50% and the calculators without cartons by 25%, but without penal action – Decided against assesse.

  ---

• 2013 (8) TMI 274
  Jurisdiction and Power of Enforcement Committee - Whether the Enforcement Committee constituted under the notification had the jurisdiction and power to demand compensation and to levy a penalty – Held that:- The imposition of the penalty does not in the circumstances warrant interference in our extra ordinary jurisdiction under Article 226 of the Constitution - The power to impose penalty was conferred upon the Director-General of Foreign Trade and upon such other officer as the Central Government may by notification in the official gazette authorize in that behalf - Both the notifications constituted an authorisation which was relatable to the power conferred by Section 13 - The Enforcement Committee when it deals with cases involving fraudulent activity, misrepresentation of facts and falsification of documents in connection with obtaining, instituting, utilization or proving the utilisation of quotas had been conferred with a wide power of an all-encompassing nature. The Committee noted that the exporter had all along prepared and kept separate documents with the wilful intention of fraudulently getting the EMD released on the basis of forged documents - the Committee noted that none of the Bank realization certificates contained in the CD had been issued by the Bombay Mercantile Co-operative Bank while the entire set of bogus documents submitted for proving the utilization of quotas was shown as having been issued by that Bank - the finding of fabrication and/or fabrication of documents was confirmed and had attained finality. Whether the recommendations made by the Enforcement Committee to the Director-General of Foreign Trade was valid – Held that:- Suspension of the Importer-exporter Code Number of the assesse and the further recommendation that the companies in which certain specified persons were partners, proprietors or directors should not be issued an IE Code Number - This was a recommendation made by the Committee - In the event that the DGFT decides to take any action on the basis - he would had to follow due process of law before taking action and to hear the affected persons – Decided against assesse.

  ---

• 2013 (8) TMI 273
  Customs duty - Interest – Fine - assesse had imported one brand new car at a declared value (CIF) and an assessable value Customs duty was also assessed - Department was of the view that the Type Approval Certificate had not been issued by an accredited agency in the country of manufacture – Held that:- Differential Customs duty in the case was settled - assesse had already paid the said amount and hence no further liability subsists in this regard - assesse had paid towards interest liability - The accuracy of the interest calculation should be verified by the Revenue and any further amount if payable should be paid - Vehicle was seized and released provisionally to the applicant was found liable to confiscation - The same was ordered to be released on payment of redemption fine- Immunity was granted to the applicant from payment of redemption fine in excess of the above amount. Penalty – Prosecution – Bank Guarantee & Bond – Held that:- Penalty was imposed on the applicant and granted immunity from payment of penalty in excess of the amount - assesse was granted immunity from prosecution under the Customs Act - Jurisdictional Commissioner was directed to discharge the bank guarantee and indemnity bond, furnished by the applicant for provisional release of the impugned vehicle, after realizing the above mentioned differential Customs duty, interest, fine and penalty. Immunity u/s 127H –Held that:- Immunities were granted u/s 127H (1) - Attention of the applicant was also invited to the provision of Section 127H (2) & (3) - The order of settlement shall be void u/s127C (8) - if the Settlement Commission subsequently finds that it had been obtained by fraud or misrepresentation - Order of settlement applied only to the applicant in the case - It does not apply to other noticees to the Show Cause Notice – Decided in favor of Assesse.

  ---

• 2013 (8) TMI 272
  Refund of SAD – Benefit of Notification No. 102/2007 - assessee imported teak wood logs – they were cut into small pieces and sold in the market – revenue was of the view that teak wood logs were converted into small pieces - the classification of the goods were changed – thus the assessee were not entitled for the benefit of Notification No.102/07 - department contended that the assessee had used the goods imported - Held that:- The assessee was entitled for refund of SAD at the rate of 4% - identity of the article did not undergo any fundamental change so as to conclude that what was imported by the assessee was different from the item which ultimately was sold by them in the local market – decided in favour of assessee.

  ---

• 2013 (8) TMI 271
  Classification of goods – VIVITEK Projectors - assessee classified the goods under CTH and CETH 85286100 claiming the benefit of exemption under Sr. No. 17 of the Customs Notification NO. 24/2005 – whether the goods were having additional features which make them not classifiable under 85286100 – contention of the revenue is that, The goods are capable of effective use without being attached to a automatic data processing machine as CTH 85286100 claimed by the respondent are available only for those “projectors which are meant for use solely or principally in automatic data processing machine of heading 8471. In these circumstances, these projectors with multiple uses are appropriately classifiable under CTH 85286900. Held that:- The projection system cannot be used in isolation but replaces the functionality of a monitor - the projectors merely having additional function cannot be a ground for classifying it other than 85286100 - they cannot be said to be meant for use solely or principally in an automatic data processing system of heading 8471 – court relied upon COMMR. OF CUS. & C. EX., HYDERABAD-II Versus AVECO VISCOMM PRIVATE LTD. (2010 (9) TMI 436 - CESTAT, BANGALORE) and CELETRONIX INDIA PVT. LTD. Versus COMMISSIONER OF CUSTOMS, CHENNAI (2006 (12) TMI 38 - CESTAT,CHENNAI) – decided against revenue.

  ---

• Service Tax

• 2013 (8) TMI 296
  Forwarding Agents u/s 65(a) - Clearing and Forwarding Services u/s 65(a) - Duty Demand Whether the Tribunal was correct in law in holding that the activities of the assesse would not come within the purview of clearing the forwarding agents and service provided as clearing and forwarding service and the levy and demand of service tax was unsustainable - Held that:- The assessee's business was never that of a clearing and forwarding agency - relying upon MAHAVIR GENERIC V CCE [2004 (4) TMI 2 - CESTAT, NEW DELHI] - assessee was, in no way, connected with clearing and forwarding of the goods, remains undisturbed - the assessee had not claimed that it has no role on dispatch of goods to the purchaser - there was no evidence to show that the assessee had the responsibility of arranging the despatching of goods purchased by the buyer in the auction nor had responsibility undertaken to collect the goods from the Principal's premises to hold that the assessee was a clearing and forwarding agency – Department itself was not certain about the head under which the transaction character would fall, the criteria which was of great significance in the matter of taxation - The attempt of the Revenue appears to be to hit at some clause to bring the assesse somehow with the net of taxation – Decided against revenue.

  ---

• 2013 (8) TMI 295
  Construction of Residential Complexes – Service provider or not - Duty Demand – Interest and Penalty – Assesse was engaged in the business of Construction of Residential Complexes – Revenue was of the view that assesse had not paid appropriate service tax on different projects executed by them - Whether the activity undertaken by the assesse comes within the category of service or not and whether there was the relationship of service provider and service recipient - The land continued to belong to the assesse and therefore there was no service provider and recipient - Service tax liability cannot be determined based on what the assesse calls itself, whether as a builder, a developer, a promoter etc. - The liability was to be determined with reference to the criterion whether there was a service provider and service recipient - This was the essence of the clarifications issued by CBEC - When un Divided Shares was sold the person to whom it was sold becomes the legal owner of un Divided Shares – Decided in favor of assesse. Residential Complex u/s 65(105)(zzzh) – Waiver of pre-deposit - Held that:- Construction of residential complex was taxable u/s 65(105) (zzzh) prior to 01-06-2007 – following the judgement of LCS City Makers Vs. CST Chennai [2012 (6) TMI 363 - CESTAT, CHENNAI ] – considering the financial hardship of the assesse 4.50Crore were ordered to be submitted as pre-deposit – upon such submission rest of the duty to be waived till the disposal – Decided partly in favor of assesse.

  ---

• 2013 (8) TMI 294
  Goods Transport Agency u/s 65 (105) (zzp) – Duty Demand – Waiver of pre-deposit - Whether the service provided by the assesse comes into the category of Goods Transport Agency – The assesse was a manufacturer of water storage tanks - They had taken services of individual truck owners for transportation for their final product - They had paid the freight but did not pay any service tax - Revenue was of the view that assesse should had paid service tax in terms of Rule 2 (1) (d) (v) of Service Tax Rules, 1994 wherein the service tax is to be paid by person paying freight - Held that:- Service tax levy shall not be applicable to individual truck owners – as such no consignment note was issued in any manner – The person concerned had to be a ‘goods transport agency’ within the usual meaning of the expression independent of Rule 4A – A person becomes Goods Transport Agency only if he issued the consignment note - The rule says that if the person was a Goods Transport Agency, such agency had to issue consignment note – waiver of pre-deposit allowed till the disposal – Decided in favor of assesse.

  ---

• 2013 (8) TMI 293
  Construction of Residential Complexes u/s 65 (91a) – Duty Demand – Waiver of Pre-deposit - Assesse constructed residential complexes for a State Authority for constructing residential quarters for allotment to its police personnel – Held that:- Houses constructed were owned by the State Government and were allotted to police personnel by the Government - The Police Housing Corporation appears to have worked as an extended arm of the Government – the houses that were constructed should be considered to be in the personal use of the State Government – Following the Judgement of S. Kadirvel Vs CST Tiruchirapalli [2013 (8) TMI 262 - CESTAT CHENNAI] - Waiver of Pre-deposit and stay allowed to the assesse –Decided in favor of assesse.

  ---

• 2013 (8) TMI 292
  Revision of order by the commissioner Section 84 – clearing and forwarding agent services section 65(23) – Whether the order in revision passed by the commissioner valid – appellants are engaged in sales and purchase of the goods on behalf of their principals and their commission is based upon the quantum of sale and purchase – in the view of department activity of the appellant would fall under the category of Clearing and Forwarding Agent services under the provisions of Section 65(23) of Finance Act, 1994 and are charged to Service Tax – Held that:- one of the conditions mentioned in section 84 (ii) is not fulfilled - the order-in-review passed by the commissioner was not as per the provisions - the order was set aside – appeal allowed.

  ---

• 2013 (8) TMI 291
  Clearing and forwarding (C&F) services - appellant provided services in relation to clearing and forwarding and payments received as ‘contract receipt’ - Held that:- The activity of the appellant is only of forwarding and not clearing and forwarding as decided in CCE, Panchkula vs. Kulcip Medicines (P) Ltd ( 2009 (2) TMI 89 - Punjab and Haryana High Court) - the only activity done by him is (a) providing labour for unloading of the goods at the rail heads, loading into the trucks for transport from rail-head to godown and unloading and stacking of the cement at the godown (b) arranging the dispatch of the goods as per the instructions and maintaining record of receipt and dispatch - the order is not sustainable - the appeal is allowed.

  ---

• Central Excise

• 2013 (8) TMI 270
  Exemption of not printing MRP as per provisions of Rule 26 of LMPC Rules - Petitioner no.1 is a partnership firm engaged in manufacturing of 'Branded Chewing Tobacco'. The petitioner no.2 is the partner of petitioner no.1 firm - Exemption given under Rule 26 of the LMPC Rules (earlier Rule 34 of SWMPC Rules) to the manufacturers for sale of goods in net weight of less than ten grams or 10 milliliter are exempted from declaring maximum retail price – Held that:- The provisions of Rule required it to print the weight of finished goods on each packing of such goods to be sold or atleast print that the goods content are less than 10 grams in the packets to be sold. In the absence of mentioning the weight of goods contained in every packet, it could not be known at any time that the contents of goods in a particular packet are more or less than exemption limit – Show cause notice has not been given with any bias as the petitioner failed to cooperate in the enquiry and that the investigation/ enquiry is still pending. The petitioner also did not give details for giving effective reply of the facts, which the petitioner treats as jurisdictional facts and on which the exemption is claimed - Writ petition in the absence of the petitioner's cooperation in leading evidence on which he was claiming exemption, is not maintainable. Limitation – Held that:- Party have willingly, suppressed all the facts and mis-interpreted the provisions of exemption in their favour, to pay less duty on the clearance of their products - Party have willfully suppressed the material facts of non-mentioning the weight on every packet which they were required to print as per the provisions of S.W.M.P.C. Rules/L.M.P.C. Rules, in case they want to seek exemption from printing M.R.P. and accordingly they have paid less amount of duty hence the provisions of Section 11A, as amended, for extended period, are clearly invokable in this case and accordingly the provisions of Section 11AC are also invokable – Decided against the Assessee.

  ---

• 2013 (8) TMI 269
  Limitation period for issue of recovery notice under section 11D of the Central Excise Act, 1944 - Respondent mill is engaged in the manufacture and clearance of made up textile articles and processed textile - Respondent has charged and collected the Central Excise Duty in respect of supply of certain 'towels hand white' ,but has failed to deposit the Central Excise Duty - The period for which the duty has not been paid on the goods i.e. hand towels is April, 1996 to June, 1996. The show-cause notice is dated 6th of March, 2003 and was served on 3rd of February, 2004, beyond the maximum prescribed period of limitation under section 11A of the Central Excise Act, 1944 – Held that:- Section-11A is very widely worded and provides for recovery of duties not levied or not paid or short levied or short paid or erroneously refunded. All possible eventuality of loss of revenue to the Central Government is comprehended therein - Taking that it is a case of recovery of duty either not levied or not paid even though the prescribed period of limitation in such cases is five years from the relevant date - The show-cause notice was issued and served beyond the extended period of five years, the action of the appellant is clearly barred by time. Section 11A covers the field of any duty of excise not levied or not paid or has been short levied or short paid etc - It is section 11A which is attracted and not section 11D of the Act – Decided against the Revenue.

  ---

• 2013 (8) TMI 268
  Interest on refund under section 11BB of the Central Excise Act - Application for refund was filed by the petitioner on March 29, 2000 - The amount claimed as refund being the duty paid and continued to lie as pre-deposit - Tribunal decided in favour of the present appellants on September 3, 2001, and also further held that payment of interest would start running from September 3, 2001 – Held that:- Any delay having been occasioned in refunding the amount beyond the period of thee months, would attract interest - The refund of amount considered as predeposit would be at par with the refund of duty and the interest would be payable on such pre-deposit, relying upon the judgment of the Apex Court in the case of Commissioner of Central Excise Vs. I.T.C. Limited [2004(12)TMI 90 – SUPREME COURT OF INDIA] - The refund of amount of Rs.20 Lacs had been made on February 4, 2004. Thus, there has been a delay of considerable period in returning the amount after the Appellate Tribunal held in favour of the appellants assessee. The interest on the pre-deposit is, therefore, required to be given - The claim was not barred by period prescribed under sub-section (1) of Section 11B of the Central Excise Act - Held to be entitled to the interest on the delayed refund of amount of Rs.20 Lacs for the period from September 3, 2001 to February 4, 2004 – Decided in favor of Assessee.

  ---

• 2013 (8) TMI 267
  Waiver of pre-deposit - Clandestine Removal of goods – Held that:- Allegation regarding clandestine removal is based only on the Sales Manager Report (SMR) and not corroborated by evidences showing clandestine manufacture and clearance. The sharing of budget expenditure for advertisement does not provide any better evidence – Relying upon the decision in the case of CCE Meerut Vs Moon Beverages Ltd. - 2002 (150) ELT 976 (Tri.-Del.).- Decided in favor of Assessee. SSI exemption – Using the brand name of others - Wrong availment of SSI exemption for goods using brand name Bisleri Club Soda - Brand name was owned by M/s. Parle (Exports) Ltd. (PEL, for short) and not AMPL – Held that:- Relying upon the decision in the case of CCE Bangalore Vs Brindavan Beverages (P) Ltd [ 2007 (6) TMI 4 - SUPREME COURT OF INDIA] has held that in such circumstances, extended period of time cannot be invoked against the assessee for invoking any demand because the arrangement between PEL and AMPL was not known to the assessee therein SSI exemption – Using the brand name of others - Wrong availment of SSI exemption for goods using brand name CITRA – Held that:- Relying upon the decision in the case of CCE Bangalore Vs Brindavan Beverages (P) Ltd [ 2007 (6) TMI 4 - SUPREME COURT OF INDIA], it is held that applicant was not aware of the arrangement between LFFPL and PEL and suppression cannot be alleged against them - Deposit of Rs.10 lakhs already made by applicant in this matter which is sufficient for admission of the appeal.

  ---

• 2013 (8) TMI 266
  Waiver of pre-deposit – clandestine removal – Held that:- Following the judgment of Hon'ble High Court of Gujarat in the identical case of Belgium Glass and Ceramics………………….., it is directed to assessee to deposit an amount which is equivalent to 8% of the total duty confirmed by the adjudicating authority - Amount is short to the tune of Rs. 8 Lakhs, as the appellant is required to deposit approximately Rs. 26 Lakhs and they have deposited only Rs. 18 Lakhs. Accordingly, appellant is directed to further deposit an amount of Rs. 8,00,000/- (Rupees eight lakhs only) within a period of eight weeks.

  ---

• 2013 (8) TMI 265
  Waiver of pre-deposit – Stay application - Exemption under notification No.108/95-CE dt. 28.8.1995 is not available when goods are supplied to contractors executing approved projects – Held that:- Objection of the Revenue that exemption is not available when goods are supplied to contractors executing approved projects is not sustainable in view of the decision of the Hon. Madras High Court in the case of CCE Vs. Caterpillar India Pvt Ltd-[2013 (7) TMI 244]. Benefit of Notification No.108/95-CE dt. 28.8.1995 - Explanation 2 added to Notification 108/95-CE by Notification No. 13/2008-CE dt. 1.3.2008 – Held that:- Demand can be confirmed only based on a specific finding that the goods were removed outside the project and not based on a probability that goods can be removed out of the project because the exemption is not with reference to the nature of goods - Explanation 2 is only to the effect that exemption is available to goods which are not withdrawn from the project by the supplier or contractor - Appeal is admitted without any pre-deposit.

  ---

• 2013 (8) TMI 264
  Clandestine Removal of goods - During the physical verification of the goods in the factory by the Central Excise officers on 22nd December 2007 shortage of M.S. bars of 131.600 MTs was noticed – Held that:- Shortage was admitted by shri Ashish Sharma in his statement dated 22.12.2007. He admitted that due to holiday on 21.12.2007 no invoice should be made to show clearance made on 22.12.2007. Since the goods were cleared without payment of duty these clearances are to be treated as clandestine removal of the goods – Decided against the Assessee.

  ---

• 2013 (8) TMI 263
  Cenvat credit of excise duty paid on welding electrodes is admissible to the assesse as Cenvat Credit – Relying upon the decision of Chhattisgarh High Court in case of Ambuja Cement Eastern Ltd. Vs. CCE [2010 (4) TMI 429 - CHHAITISGARH HIGH COURT], and the judgement of Hon’ble High Court of Karnataka High Court in case of Alfred Herbert (India) Ltd.[ 2010 (4) TMI 424 - KARNATAKA HIGH COURT], it has been held that the Cenvat credit in the duty paid on the welding electrodes is admissible to the assessee – Decided in favor of Assessee.

  ---

• CST, VAT & Sales Tax

• 2013 (8) TMI 297
  Demand of trade tax on excess amount - LEVY of tax on right to enter the earmarked forest for the purpose of collection of lichen - Held that:- Intention of the parties was not to grant a right or privilege to the revisionist, but to make the revisionist work for the Forest Department to collect lichen for and on behalf and for the use of the Forest Department in order to enable the Forest Department to transfer the proprietary right therein to the revisionist upon obtaining appropriate consideration in respect thereof. Though the word “royalty” was used in the instant case, but, in fact, the same was nothing but consideration for transfer of proprietary right in the movable property of lichen upon payment of consideration fixed by the Forest Department. Knowing that it was a consideration for transfer of proprietary right in the movable property of lichen by the Forest Department to the revisionist, the Forest Department, as duty bound, charged trade tax as it was liable to do under the U.P. Trade Tax Act - Decided in favour of Assessee.

  ---

• Indian Laws

• 2013 (8) TMI 276
  Cognizable offence - Search and Seizure of essential commodity - Validity of Proceedings – Jurisdiction to investigate - Whether after the amendment of the Essential Commodities Act, 1955, making offence cognizable though the Police had not been notified as an Inspector under the different Control Orders, had jurisdiction to make the search and seizure of the premises or the moving vehicles or carts carrying essential commodity in violation of the Act will make the search and seizure illegal in consequence - will lead the whole prosecution illegal or irregular and the prosecution would vitiate depending on prejudice caused to the accused concerned. Whether the seizure of loaded vehicle intercepted by Police at a deserted place in dark night, will make such search illegal, would vitiate the whole prosecution - Held that:- In view of the provisions of Amending Act 36 of 1987 offence under the Act having been made cognizable police officers though not notified as Inspector under the different control orders issued under the Act have the jurisdiction to investigate the offence committed under the Act with respect to the essential commodity - Search and seizure being part of investigation police officers have also jurisdiction to conduct search, seizure of the premises, vehicle in which the essential commodity was stored or was being transported. Ram Chandra Pansari Vs. The State of Bihar [1988 (3) TMI 410 - PATNA HIGH COURT] was distinguished as wrongly been rendered the benefit without noticed the amending Act 36 of 1987 - State of Punjab Vs. Wassan Singh & Ors.[1981 (1) TMI 249 - SUPREME COURT] was held as per in curium and not a binding precedent Petitions were dismissed with direction to the trial court to proceed with the trial and conclude the same at the earliest – matter remanded back - the prosecution launched against the petitioners shall proceed in accordance with law but it was observed that it shall be open for the petitioners to impress upon the trial court that they had suffered prejudice on account of search and seizure made by the police authorities/ team which was the basis of their prosecution - The trial court while disposing of the trial shall consider the aforesaid submission in accordance with law and record its finding with respect to the prejudice suffered by the petitioners on account of search and seizure which was the basis of their prosecution – Decided against accused.

  ---