TMI Tax Updates - e-Newsletter
August 13, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise

Articles

1. Directors remuneration – applicability of section 192 and / or S.194J – need to recheck and decide again proper section of TDS in view of amendment w.e.f. 01.07.12.

   By: DEVKUMAR KOTHARI

2. Whether Cenvat Credit is admissible to the principal manufacturer, when the goods cleared without payment of duty on job work basis?

   By: Bimal jain

3. ADVANCE TAX

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Initiatives Taken by the Government for Unearthing and Curbing Black Money: A Fact Sheet.

2. Anand Sharma to Assess Industrial Scenario with the Industry Calls Meeting of Government–Industry Task Force.

Circulars / Instructions / Orders

DGFT

1. 14 /(RE-2012)/2009-2014 - dated 9-8-2012

Amendment of Standard Input – Output Norms (SION) at S. No. H -97.

Highlights / Catch Notes

Income Tax

• Court Affirms Director Bonuses as Legitimate Commissions u/s 36(1)(ii) of Income Tax Act, No Substantial Law Question Found.

  Case-Laws - HC : Commission & bonus paid to Directors - as no reason to doubt that what was paid to these working directors was indeed commission falling within the first part of Section 36 (1)(ii) - no substantial question of law. - HC
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• No Tax Deduction Required for Reimbursement of Expenses Without Income Element.

  Case-Laws - AT : Non deduction of tax at source - in respect of reimbursement of expenses there is no obligation to deduct tax at source and there was no element of income involved in such payments - AT
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• Supreme Court's Gujarat Maritime Board Ruling: Public-Benefit Activities Deemed Charitable, Not Individual-Gain.

  Case-Laws - AT : Charitable purpose - Principles laid down in the case of Gujarat Maritime Board (2007 (12) TMI 7 - SUPREME COURT OF INDIA) are squarely applicable to assessee’s case wherein it was held that advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose - AT
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• Goodwill Recognized as Depreciable Asset Under Income Tax Rules; Treated as Valuable Intangible Asset.

  Case-Laws - AT : Depreciation on goodwill - as the function of goodwill acquired by the assessee also is to maximizes the profits of the company & as the assessee's goodwill being a valuable commercial asset similar to other intangibles specified in the definition of block assets, is eligible to depreciation - AT
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• Penalty for Violating Stock Exchange Bye-Laws Not an Offence; Section 37 Explanation Misapplied in Disallowing Payments.

  Case-Laws - AT : Disallowance of penalty for violation of the bye-laws of the Stock exchange - payment made for violation of their regulation are not on account of an offence or which is prohibited by law and the invocation of explanation to Sec. 37 of the I.T. Act 1961 is not justified - AT
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• Hotel's Tax Deduction Denied for Missing Audit Report and Failing Eco-Friendly Conditions u/s 80IC.

  Case-Laws - AT : Deduction u/s 80IC - Hotel - eco-tourism project - Non-filing of Audit report alongwith return of income - Denial on ground of non-fulfillment of condition of eco-friendly - AT
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• Court Upholds Assessee's Claim of NRI Gift Under Income Tax Act Section 68.

  Case-Laws - AT : Addition u/s 68 - gifts received from NRI - the assessee’s plea of having received gift deserves acceptance. - AT
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• Unexplained Bungalow Renovation Costs Lead to Section 69 Addition; Taxpayer's Property Valuation Rejection Unjustified by AO.

  Case-Laws - AT : Unexplained investment on renovation of bungalow - addition u/s 69 - AO referred the matter to the DVO - in the absence of any discrepancy noted by the Revenue Department it was not justifiable to reject the valuation of the property as submitted by the assessee - AT
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• Cash Payments for Milk by Agents Exempt from Section 40A(3) Restrictions u/r 6DD Clause (l.

  Case-Laws - AT : Invoking provisions of section 40A(3) - cash payment - As it is the requirement of these agents to make the payment in cash for goods, i.e. milk, to the cattle owners, who belong to economically weaker section, on behalf of the assessee the impugned payments are squarely covered by the exceptions provided in clause (l) of Rule 6DD - AT
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• India-UAE DTAA: Consideration Classified as Fees for Technical Services, Not Royalty u/s 9(1)(vi) of Income Tax Act.

  Case-Laws - AAR : India UAE DTAA - Whether the consideration received by the applicant has to be deemed to be “royalty‟ under section 9(1)(vi) - as the Revenue itself in its objection suggested that the consideration received would be fees for technical services to be dealt with as such in this state it no ruling on this question required. - AAR
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• High Court Rules: Income Tax Appeals Cannot Be Withdrawn Once Initiated, Must Proceed to Conclusion.

  Case-Laws - HC : Withdrawal of appeal before CIT(A) - once the machinery is set in motion, the assessee cannot withdraw the appeal - HC
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• Tribunal Corrects Self-Evident Error u/s 254(2); No Detailed Evidence or Argument Needed.

  Case-Laws - HC : Tribunal was justified in correcting its mistake in exercise of its jurisdiction u/s 254(2) as a patent, manifest and self-evident error which does not require elaborate discussion of evidence or arguments to establish it - HC
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• Court Upholds Disallowance of Depreciation on Goodwill in Amalgamation Case; Assessee Fails to Prove Goodwill Purchase.

  Case-Laws - AT : Disallowance of depreciation on goodwill - scheme of amalgamation - the very purchase of goodwill is not proved by the assessee - Disallowance of depreciation is thus warranted - AT
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• High Court Rules Against Reopening Assessment u/s 148; No Justification for Reassessment Found.

  Case-Laws - HC : Reopening of assessment u/s 148 - no exercise by appellate jurisdiction under Section 260-A is warranted to hold that the very reopening cannot be sustained - HC
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• Tribunal Orders Stand: No Rectification Allowed for Subsequent Contradictory Decisions u/s 254(2.

  Case-Laws - AT : Rectification of the orders passed by the Tribunal on ground that subsequent decision of the Tribunal arrived at a contrary view - there is no mistake apparent on record to invoke the provisions of section 254(2) - AT
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• Section 69C Addition Upheld: Assessee Fails to Justify Household Expenses Claim, Withdrawal Evidence Inadequate.

  Case-Laws - AT : Addition u/s 69C - household withdrawals - contention of the assessee towards household expenses is not capable of acceptance. Addition confirmed - AT
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• Assessee's Provision for Warranty Claims Allowed as Deduction Under Mercantile Accounting System.

  Case-Laws - AT : Provision for Warranty claim - assessee was following the mercantile system of accounting - adjustment is made in future fore excessive provision - claim of deduction allowed. - AT
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• Section 54F Exemption Valid: Wife's Name Added for Convenience; Payment Made by Assessee's Account.

  Case-Laws - AT : Deduction u/s 54F -Since, name of the wife has been added only for the sake of convenience and total consideration has been met from the account of the assessee. - the exemption cannot be denied. - AT
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• Section 10A Excludes Profits from Income, Prevents Setting Off Business Losses Against Them.

  Case-Laws - AT : STPI Unit - set off of losses - As the profits and gains under section 10A were not to be included in the income of the assessee at all, the question of setting off the loss of the assessee from any business against such profits and gains of the undertaking would not arise - AT
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• Assessee Rightly Excludes Postage, Email, Lease Line, and Courier Costs from Fringe Benefit Tax Calculations.

  Case-Laws - AT : FBT – assessee has rightly excluded the amount of expenditure debited under the head postage, email, lease line and courier from the FBT - AT
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Customs

• Rail Cargo Transports Goods from Pakistan to Amritsar, Bypassing Traditional Sea and Air Ports and Custom Stations.

  Case-Laws - AT : Goods reached from Pakistan to Amritsar by rail cargo - import and export through a route other than sea port/ airport or Inland Container Depot or through a Land Custom Station - AT
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DGFT

• DGFT Amends SION H-97 to Update Input-Output Ratios for Accurate Trade Reporting and Industry Alignment.

  Circulars : Amendment of Standard Input – Output Norms (SION) at S. No. H -97. - Public Notice
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Service Tax

• Debate on Service Tax Liability for Commission: Was Extended Tax Period Justified if Appellant Knew Maruti Paid Taxes?

  Case-Laws - AT : Service Tax liability on the commission received - if the appellant was aware that service tax was being paid by Maruti Udyog Limited, invocation of extended period also may not be fair since there cannot be any suppression of facts or mis-declaration in such a situation - AT
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• Section 76 Penalty on Service Tax for Security Services Removed Due to Novelty; Section 80 Invoked.

  Case-Laws - AT : Penalty under Section 76 - call for invoking Section 80 - as the Service Tax liability on Security Agency services being new, the entire penalty need to be deleted - AT
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• Court Rules Incentives to Advertising Agency Not Taxable Services Due to Lack of Clear Justification.

  Case-Laws - AT : Taxability of incentives received by an advertising agency services - Incentive is a receipt for appreciation of performance of services provided. - How such forms part of taxable service remained unexplained. - Decided in favor of assessee. - AT
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• Refund Available for Exports Post "Let Export" Order Per Notification No.42/2001; Conditions Met for Assessee's Claim.

  Case-Laws - AT : Refund - Notification No.42/2001 - export made after obtaining the necessary “let export” order from the proper officer of customs,thus, the relevant condition of the Notification was complied with and hence the assessee could claim the refund - AT
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Central Excise

• Cenvat Credit Reversal Not Applicable for DTA-EOU Merger u/r 10 of Cenvat Credit Rules, 2004.

  Case-Laws - AT : Reversal of cenvat credit during the period when assessee were DTA - two units - Merger with EOU unit - the provisions of Rule 10 of Cenvat Credit Rules, 2004 would not be applicable. - AT
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• Central Excise Warehousing Registration Rejection Overruled; Decision Favors Assessee, Found to Be Without Jurisdiction.

  Case-Laws - AT : Rejecting of application for registration of Central Excise for warehousing - rejection is without jurisdiction - in favor of assessee - AT
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Case Laws:

• Income Tax

• 2012 (8) TMI 312
  Reopen the assessment u/s 147 - Held that:- Examining the contention of the Petitioner that the impugned notice is without jurisdiction as the self same facts were not only before the Assessing Officer but he had also viewed the very issues on which the assessment is sought to be reopened. Issue in respect of provisions claimed as deduction for arriving at taxable profit was not only dislcosed in the notes to account filed with the return of Income but also in response to specific queries raised during the assessment proceeding. It was reiterated at the hearing that on the aforesaid account of provision, the tax had already been paid in the earlier years and the amounts were merely written back in this year to the extent they were in excess of the provisions required. Issue of failure to deduct TDS on advertisement and sales promotion was also subject to scrutiny by the AO during the assessment proceedings and also the clause 17(f) of the tax audit report brings out the fact that where tax has not been deducted, then the entire amount of payment has been offered for disallowance u/s 40(a)(ia. Issue on declared short term capital gains in respect of income earned out of investments had to be taxed as business Income is not disputed as that the treatment given was consistent with the earlier year practice and accepted by the Respondent - no reason to believe that income has escaped assessment - notice issued for reassessment is quashed - in favour of assessee.

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• 2012 (8) TMI 311
  In a matter which is remanded for a re examination, no question of law arises for examination by the High Court in an appeal under Section 260-A of the Act, unless any part of the remand order suffers from a patent illegality or is an order perverse in nature, and is left to the Lower Appellate Authority to redetermine.

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• 2012 (8) TMI 310
  Petition for writ of mandamus - Held that:- As Single Judge has allowed W.P.of assessee partly by order and remanded the matter back to the second respondent Settlement Commission for the limited purpose of reconsidering the question of penalty, prosecution and the order of assessing officer levying penalty in that view of the matter prayer sought for in the present writ petition of mandamus is premature and petitioner would be at liberty to seek appropriate reliefs before the Settlement Commission after orders are passed on such order of remand - thus writ petitions stands disposed of accordingly.

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• 2012 (8) TMI 309
  Inordinate delay in inflation of action u/s.158BD - There is no justification for initiation of block assessment proceedings u/s 158BD of the IT. Act against the assessee after long gap of completion of the assessment in the case of persons searched.

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• 2012 (8) TMI 308
  Disallowance of Commission & bonus paid to Directors - Held that:- Being a closely-held family company which had by resolution authorized payment of commission to working directors - as no commission was paid to some directors which indicated that such category of amounts was not distributed to directors according to the company’s shareholding pattern & receivers of commission had a very small shareholding in the company - as no reason to doubt that what was paid to these working directors was indeed commission falling within the first part of Section 36 (1)(ii) - no substantial question of law.

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• 2012 (8) TMI 307
  Non deduction of tax at source - assessee providing data processing and other IT enabled services to M/s Hewlett Packard entities(Hong Kong ) - Held that:- Considering the evidence in support the payments were purely reimbursement of expenses incurred by entities of the HP group worldwide on behalf of the Assessee which have been collated by HP,AP(HK). The details of sample employees like invoices for reimbursement made to sample employees have been given reveals the nature of reimbursement. The sample invoices filed depicts that the payments made by the assessee to HP, AP(HK) were reimbursement of actual expenses incurred by the entities of the HP Group on behalf of the assessee. No doubt, the agreement between the assessee and the HP,AP(HK) contemplates 10% mark up on the actual cost, but as far as the payments made during the previous year are concerned, no such mark up has been made and the disputed payments are purely reimbursement of actual expenses incurred with no income embedded in such payments - as decided in the case of Mahindra & Mahindra Ltd. v. Dy. CIT [2009 (4) TMI 207 - ITAT BOMBAY-H ] that in respect of reimbursement of expenses there is no obligation to deduct tax at source and there was no element of income involved in such payments - in favour of assessee.

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• 2012 (8) TMI 306
  Income earned from trading in shares - under the head 'LTCG/STCG' OR 'Income From Business & Profession' - Held that:- Where number of transactions of sale and purchase of shares takes place, the most important test is the volume, frequency, continuity and regularity of transactions of purchase and sale of the shares and where there is repetition and continuity, coupled with magnitude of the transaction an inference can be drawn that activity is in the nature of business - as the transaction of sale of shares and volume were substantial in the case of assessee and revenue could not demonstrate that there were large number of transactions which had frequency, volume, continuity the income earned by the assessee from trading in the shares under the head 'LTCG/STCG' was shown correctly - in favour of assessee.

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• 2012 (8) TMI 305
  Charitable purpose - denial of exemption u/s 11 - local authority created by the Government of Maharashtra claiming exemption of its income as per section 10(20A) till A.Y.2002-03 and subsequently on withdrawal of Section 10(20A), registered u/s 12A - assessee contented that AO is not entitled to examine whether such Trust or Institution was created for charitable or religious purpose or not once it was registered u/s 12A - Held that:- Principles laid down in the case of Gujarat Maritime Board (2007 (12) TMI 7 - SUPREME COURT OF INDIA) are squarely applicable to assessee’s case wherein it was held that advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individuals would be a charitable purpose. Since Coordinate Bench in other cases where the appellant were local authority created by the Govt. of Maharashtra have held in favor of appellants on similar issue, therefore, we uphold the orders of the CIT(A) directing AO to allow exemption under section 11 - Decided against Revenue

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• 2012 (8) TMI 304
  Disallowance of depreciation on goodwill - Held that:- As decided in B. Raveendran Pillai Versus CIT [2010 (9) TMI 434 - KERALA HIGH COURT ] goodwill is not specifically mentioned in section 32(1)(ii) of the Income Tax Act. Depreciation is allowable not only on tangible assets covered by clause (i) of section 32(1) but on the intangible assets specifically enumerated in clause (ii) and such of the other business or commercial rights similar to the items specifically covered therein - as the function of goodwill acquired by the assessee also is to maximizes the profits of the company & as the assessee's goodwill being a valuable commercial asset similar to other intangibles specified in the definition of block assets, is eligible to depreciation - in favour of assessee. Disallowance of provision for leave encashment - Held that:- As in Exide Industries Limited And Another Versus UOI And Others [2007 (6) TMI 175 - CALCUTTA HIGH COURT] wherein the Hon'ble Court has struck down sec.43B(f) which stated that leave encashment could be allowed only on actual payment, in these circumstances the assessing authority is directed to give deduction for the provision of Rs. 93,815/- made by the assessee towards leave encashment Apportionment of expenses - Held that:- As decided in favour of the assessee by the co-ordinate Bench of the Tribunal in assessee's own case that the CIT(A)on observing that the proportionate allocation made by the assessee-company is not sound and correct & adopted one of the methods of apportionments usual recognized in the matters of allocation of expenditure, that is, on the basis of unit-wise turnover and directed to apportion concerned common expenditures. In the absence of any evidence brought on record by AO, the method adopted by the CIT(A) is sustainable in law - thus the ground raised by the Revenue on this point of allocation of expenditure is not meritorious - The appeals filed by the Revenue are liable to be dismissed.

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• 2012 (8) TMI 303
  Disallowance of penalty for violation of the bye-laws of the Stock exchange u/s 37 - Business expenditure - assessee is a stock broker - Held that:- As decided in CIT Vs The Stock and Bond Trading Co.[2011 (10) TMI 172 - BOMBAY HIGH COURT ] the payments made by the assessee to the Stock Exchange for violation of their regulation are not on account of an offence or which is prohibited by law and the invocation of explanation to Sec. 37 of the I.T. Act 1961 is not justified - as addition cannot be sustained, therefore provisions of Sec. 194C is clearly not attracted and no disallowance of such amount could be made by invoking of Sec. 194C r.w.sec. 40a(ia) as pleaded by AO - in favour of assessee. Disallowance towards foreign travel expenses - Held that:- As for assessment year 2002-03 , the CIT(A) has allowed entire travelling expenditure for trips to Dubai and 50% of such expenditure for trips to other places considering the submission that assessee is also engaged in the business of financial activities including leasing financial and advisory services and that the Directors had visited Dubai to study real estate market - as the issue in the year under question is same the same order is to be followed - in favour of assessee. Disallowance of expenses u/s. 14A r.w.r. 8D - Held that:- As the available funds with the assessee are far more than the borrowed funds 5,24,19,372/- which has substantially come down to 22,13,822/- which means that the investments have been made out of interest free funds i.e. assessee’s own funds. Therefore no disallowance can be made u/s. 14A - in favour of assessee.

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• 2012 (8) TMI 302
  Royalty payable to T.V. channels - dis-allowance on ground that assessee failed to file confirmations from few parties - assessee engaged in the business of receiving, distributing and transferring local and satellite channel programmes through various cable operators - non-admission of additional evidences - Held that:- CIT(A) was not justified in not admitting additional evidence particularly when the assessee produced evidence to show that it had made efforts to obtain confirmations which were received only after assessment order was passed. Also, no dis-allowance has been made in earlier years and subsequent years of such royalty payment. Moreover, payments had been made by cheque details of which have been given. Additional evidence should be admitted. Order of CIT(A) set aside, matter restored to file of AO Addition on account of discrepancy in the account of Cable Video India - credit balance outstanding was Rs.9,89,640/- but the party had confirmed credit only to the extent of Rs.6,25,980/- - assessee explained that discrepancy is on account of transactions in the earlier years - Held that:- It is clear that discrepancy is on account of transactions in the earlier years and assessee has already offered income in AY 2000-01 on reconciliation of discrepancy and therefore making addition this year would amount to double taxation. therefore addition stands deleted Bad debts - dis-allowance on ground of failure of assessee to disclose nature, date of debt and the year in which the income had been offered - Held that:- Though assessee submitted that bad debt claim was on account of subscription fee receivable from cable operators but it was never shown as to the year in which the corresponding income had been offered. We therefore upheld dis-allowance. However, bad debts in case of advance to employees has to be allowed as business loss. Addition made to fixed assets - dis-allowance of expenditure and consequent depreciation on ground of absence of evidences of addition - Held that:- Since details of addition of fixed assets had been given and only bills could not be produced as the same were not traceable. We, therefore, set aside the order of CIT(A) and delete the said addition. However in absence of evidence to support uses of amounts for business dis-allowance of depreciation is justified - Decided partly in favor of assessee.

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• 2012 (8) TMI 301
  Deduction u/s 80IC - assessee engaged in the business of running hotel in the name and style of Hotel Combermere in Shimla in the State of Himachal Pradesh - assessee contended to have incurred substantial expansion and is eco friendly - denial of deduction on ground that running a multi-storeyed commercial hotel in the midst of a city cannot be said to be an eco-tourism project - certificate issued by Department of Tourism only mentioned that Hotel could be considered as a eco-hotel but has not confirmed the same - non-filing of audit report in Form No. No.10CCB - exclusion of certain items from list of substantial expansion and word 'hotel' included in Schedule-XIV was necessarily to be read with word 'eco-tourism' Held that:- From facts on record it is observed that there is approx 63.5% addition to the book value of P&M and we are not in conformity with the observation of the AO in excluding the items of AC, Colour TV, Music Systems and Gym equipments out of the list of plant & machinery as each of the abovesaid items are in the nature of P&M and its costs are to be considered for computing the value of substantial expansion. In any case, even if the said items are excluded from the list of substantial expansion in the P&M, there is addition of 52.94% to the value of P&M as on 1.4.2004. Hence, condition of substantial expansion as stipulated in section 80-IC(8)(ix) are fulfilled. Non-filing of Audit report alongwith return of income - Held that:- Various courts have laid down that the provisions of filing the Audit Report alongwith return of income is directory and not mandatory. In present case, assessee had furnished Audit Report in Form No.10CCB during the course of assessment proceedings and had also filed revised computation during the course of assessment proceedings, hence the said claim merits to be allowed to the assessee. Denial on ground of non-fulfillment of condition of eco-friendly - Held that:- Tribunal in another case has held that in the absence of definition of eco-tourism though the hotel is added into Item No.15 of Part-C is to be construed to be hotel situated in the State of Himachal Pradesh or the State of Uttaranchal having valid licence on the basis of No Objection from the Pollution Department which can be treated to be hotel eligible for deduction u/s 80IC. Since assessee has received Certificate from the Ministry of Tourism and has also a No Objection Certificate issued by the Pollution Control Board, which has not been withdrawn. In view thereof, the assessee is entitled to the benefit of deduction under section 80-IC.

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• 2012 (8) TMI 300
  Addition u/s 68 - gifts received from NRI - Held that:- It is observed that assessee discharged onus of providing relationship with donor, his identity, capacity and other necessary conditions through producing donor himself, his confirmation as well as proof of relation, bank statement, passport details, salary certificate. Accordingly, we hold that the assessee’s plea of having received gift deserves acceptance. Addition u/s 68 - unsecured loans - Held that:- Assessee has to prove capacity of the creditor as well as to establish creditworthiness of the transaction with some supporting evidence. In this case, only identity of the creditors has been established and not creditworthiness in lending the money. Therefore, in absence of evidence to prove relationship as well as proof of credit paid to the assessee, addition is confirmed - Decided partly in favor of assessee.

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• 2012 (8) TMI 299
  Rejecting application for rectification of mistake - mistake in sales for 2 months - Held that:- As per the Tribunal order in the first round, it was directed by the Tribunal that the sales of two months i.e. 01.01.2000 to 29.02.2000 should be estimated but there is no such direction by the tribunal that the same has to be estimated on the basis of sale for six months i.e. from 01.07.1999 to 31.12.1999. Therefore such estimation has to be made as close as possible to the actual figure - As the A.O. himself noted the sale figure from 01.12.1999 to 26.02.2000 and the sale figure for Dec 1999 is separately available there is no requirement to estimate the sale from 01.01.2000 to 26.02.2000 because the actual sale figure for this period can be easily worked out by reducing the sale figure of De 1999 form the sale figure of 01.12.1999 to 26.02.2000 - direction to A.O. to adopt the estimated sale figure of two months from 01.01.2000 to 29.02.2000 at Rs.74,81,858/- and thus assessee gets relief of Rs.12,55,994/- over and above the relief allowed by the A.O - partly in favour of assessee. Mistake in amount of expenditure allowed - Held that:- As the tribunal in the first round noted that chart submitted by the assessee as per which it was claimed by the assessee that the A.O. has not allowed in full the deduction being the difference of expenditure claimed in the receipt and payment account and in the P & L account. The tribunal has restored back the matter to the file of the A.O. for examination of this contention of the assessee and to decide the matter afresh. The A.O. has allowed deduction of Rs.47,87,106/- without giving any basis for working out of this amount as against claim of the assessee - as in the interest of justice, this matter should go back to the file of the A.O. for a fresh decision - in favour of assessee for statistical purposes Mistake in not granting deduction of sales tax - Held that:- As per the computation of income filed by the assessee for the AY. 1997-98, and as per the assessment order for this year u/s 43B it is seen that there was unpaid sales tax as on 31.03.1997 as per books of account out of which an amount of Rs.10,11,681/- was for the period up to 31.03.1996 and the sales tax outstanding for the financial year 1996-97 was Rs.7,24,521 - assessee is having collection of sales tax as per books and the same is not credited to the sales account but credited to liability account - the A.O. should examine the records afresh to find out as to how much sales tax was collected during the block period and credited to the liability account without crediting to the sales account as per the books of account. He should also find the deferment of sales tax as permitted by the State Government - in favour of assessee for statistical purposes. Disallowance of claim of debit under the head ‘debtors’ is in the nature of discount and commission - Held that:- As it is evident that the less sales shown by assessee is because of less number of boxes sold and not because of any discount or commission being reduced from the gross sales as assessee has not brought on record any evidence to support the contention that there is general trade practice in this line of business of allowing cash discount to trades and which is separately paid to them - unable to accept the assessee’s contention that debit under the head ‘debtors’ in the receipt and payment account reflects payment of discount and commission by the assessee on the sales - as every outgoing is not an expenditure and burden is upon the assessee to establish that any outgoing is in the nature of an expenditure incurred for the purpose of business. The assessee except making a claim that debit under the head ‘debtors’ is in the nature of discount and commission has not brought on record any evidence to support this claim - that the amount debited in the receipt and payment account is payment to debtors is not an allowable expenditure - against assessee. Penalty u/s. 158BFA(2) - Held that:- As penalty u/s 158BFA(2) is not mandatory - in the facts of the present case, a person of reasonable prudence can have this possible view that no undisclosed income is arising on the basis of seized material and, therefore, even though addition is confirmed by the Tribunal, penalty is not justified because there is a reasonable and bona fide reason due to which assessee was having a possible view that no undisclosed income is arising out of the seized material and, therefore, penalty u/s 158BFA(2) is not justified - in favour of assessee.

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• 2012 (8) TMI 298
  Unexplained investment on renovation of bungalow - addition u/s 69 - AO referred the matter to the DVO - Held that:- Valuation report made by DVO did not mention that how the DVO has adopted the said rate of construction and from where he has picked up the said construction rate - As the assessee has vehemently claimed that all the payments were made to an architect and detailed copy of account in respect of the payments made was very much before the Revenue Authorities and the Revenue Authorities have not found any discrepancy - as in support of the indirect expenditure incurred i.e. loan taken from the bank on the said property has also been furnished - thus in the absence of any discrepancy noted by the Revenue Department it was not justifiable on the part of the Revenue authorities to reject the valuation of the property as submitted by the assessee - Assessing Officer referred matter to the Departmental Valuation Officer without first rejecting the books of account - in favour of assessee.

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• 2012 (8) TMI 297
  Nature of transaction relating to sale of land - AO's treated the profit on sale of land as income from business as against capital gain claimed by assessee - Held that:- The issue as to whether the transaction relating to sale of land and profit from which was declared as capital gain was a business transaction or sale of capital asset has not been decided by the CIT(A), thus the ground raised by the Revenue does not arise out of the order of the CIT(A) because the CIT(A) having deleted the addition, the profit to the extent, as was declared by the assessee, stands assessed as business income - now the Revenue wants to overcome its own mistake through this miscellaneous petition, so that the impugned quantum addition can also be challenged but the law do not permit such an attempt. The jurisdiction as prescribed u/s.254(2) is limited to the extent to rectify a mistake which is apparent in the order of the Tribunal.

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• 2012 (8) TMI 296
  Dis allowance of prior period development expenses - Held that:- Once the survey party has drawn a trading account as on the date of survey mentioning land development expenses inclusive of the expenditure in question pertaining to bricks purchases, cement pipe, architect fees, registration fees, sundry expenses, moram purchases, colour purchases - the AO’s action would tantamount to double jeopardy, that on one hand net profit was arrived at after considering those expenses and on the other hand again those were added on the pretext of disallowance of expenses pertained to Assessment Year 2005-06 - in favour of assessee. Disallowance out of labour expenses - Held that:- When the Appellant has not engaged any contractor and done the development work departmentally, he has to engage labour at his own and cost of the labours cannot be denied and in case of retail labour, one cannot expect a bill but the reasonable record would be a voucher or labour register. Since the AO has not denied that the Appellant has maintained documentary evidence and the AO has not pin-pointed any defect in the same the disallowance made at 10% of the labour expenses on the reasoning that the documentary evidences are self made cannot be sustained - in favour of assessee. Disallowance of excess claim of depreciation on medical equipments - Held that:- CIT(A) has examined the usage of each of the equipment in question and, therefore, rightly held that they were nothing but in the category of “life saving medical equipments” on which depreciation @ 40% was allowable - in favour of assessee.

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• 2012 (8) TMI 284
  India-Singapore tax treaty - Gains arising from early settlement of forward foreign exchange contract - 'capital gain' or 'income from other sources' - Held that:- As decided by Special Bench of the Tribunal in Apollo Tyres Ltd. Versus Assistant Commissioner Of Income-Tax [2004 (3) TMI 345 - ITAT DELHI-E ]gains arising from early settlement of forward foreign exchange contract has to be treated as capital gain - consequently, the gains realized from early settlement should be regarded as capital gains and not income from other sources - Such capital gains are not liable to tax in India as per Article 13(4) of the India -Singapore tax treaty - in favour of assessee.

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• 2012 (8) TMI 283
  Invoking provisions of section 40A(3) - additions made in respect of the payments made for purchase of milk from the milk producers - Held that:- AO made the impugned additions without examining the relevant evidences in detail as noted if the payments at the level of milk producers are considered, each payment never exceeded the specified sum of 20,000. There is, therefore, no violation of S.40A(3) - it is a fact that the representative of milk collection centre functions in a dual capacity, both for the assessee as well as the milk supplier for incentives 23.78 crores, as against only 42,25,796 for assessment year 2005-06 this vast difference in the disallowance between these two years is on account of deviation in the approach of the assessing officer and acceptance of the assessee’s arguments mentioned above. Therefore, on fairer side, the AO should not have considered the payments made in cash to the ‘representative’ for applying the provisions of section 40A(3)and he should have considered the payments made in cash at the stage of the supplier/producer of the milk - in favour of assessee.

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• 2012 (8) TMI 282
  Disallowance of depreciation - iron rolls purchased by the assessee and leased back to the same party - CIT(A) allowed claim of depreciation - Held that:- Tribunal in this case had set aside the issue to the file of AO, to look into the fact as to what happened to the roll after expiry of lease period who has given a clear finding that the rolls remained with the original seller even after expiry of lease period. CIT(A) has however neither considered this aspect nor has given any finding on this issue - The transactions can not be considered as genuine merely on the ground that the same are supported by bills and agreements asfor a transaction to be a colourable device, it is not necessary that there should be pre-existing relationship between parties. As the Original seller had claimed 100% depreciation on the assets which shows that these were highly depreciable asset and the assessee however, has shown the purchase price of Rs. 34,97,500/- when ISIM had purchased the same at Rs. 36,88,540/- i.e. almost at the same price even after use and claim of 100% depreciation - as observations suggest that transaction may not be a genuine lease transaction but only a financial transaction order of CIT(A)for allowing the claim of depreciation is set aside and the issue is restored back for passing a fresh order after necessary examination - in favour of revenue.

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• 2012 (8) TMI 281
  Disallowance u/s 14A - assessee claimed dividend income as exempt u/s 10(33) - Held that:- On considering the magnitude of profit with the company and the investments made in these shares of Kothari group, it can be easily noticed that the profit for the relevant year itself was much more than the amount of investment & coming to the investments in the shares of Dena Bank in financial year 1996-1997 it is observed that the share capital of the company far exceeds the amount of investment in shares as at the end of such financial year - that if there be interest free funds available to the assessee sufficient to meet its investments and at the same time loan has been raised, it can be presumed that the investments were made from interest free funds - no disallowance u/s 14A in respect of the investments made by the assessee in the shares of three domestic companies - in favour of assessee. Disallowance u/s 43B - the assessee defaulted in depositing employees' contribution to provident fund and ESI within the permissible time - Held that:- Any amount referred to in section 43B, being the sum payable by the employer shall be allowed as deduction if it is paid before the due date of filing of the return - as the assessee has paid the sum though belated but before the date of filing of return the grievance of the assessee is accepted and objection of the Revenue is overruled - in favour of assessee. Disallowance foreign travel expenses - CIT(A) deleted the disallowance - Held that:- As immediately preceding assessment year in the Tribunal has held that no disallowance on account of foreign travel expenses can be sustained - in favour of assessee. Deduction u/s 80-IA(9) - whether relief u/s 80-IA/80-IB should be adjusted before allowing deduction u/s 80HHC - Held that:- As decided in Associated Capsules P. Ltd. Versus DCIT [2011 (1) TMI 787 - BOMBAY HIGH COURT ]that restriction u/s 80-IA(9) is not applicable at the stage of computing deduction u/s 80HHC but only at the stage of allowing deduction u/s 80HHC - in favour of assessee. Netting of interest receipts for the purpose of deduction u/s 80HHC - Held that:- As decided in Associated Capsules Pvt. Ltd. v. CIT [2012 (2) TMI 101 - SUPREME COURT OF INDIA ] netting of interest is permissible - in favour of assessee. Exclusion of amount of excise duty from 'total turnover' for computing deduction u/s 80HHC - Held that:- As decided in Commissioner of Income-Tax Versus Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT ]the excise duty is not includible in the 'total turnover' in the formula contained in section 80HHC - in favour of assessee. Treatment of profit on sale of DEPB license - deduction u/s 80HHC - Held that:- As decided in M/s Topman Exports Versus Commissioner of Income Tax, Mumbai [2012 (2) TMI 100 - SUPREME COURT OF INDIA ]that when DEPB is sold by a person, his profit on transfer of DEPB will be sales value of DEPB less its face value. It has further been held that DEPB is chargeable as income u/s 28(iiib) in the year in which such person applies for DEPB against the exports and profit on sale of DEPB is chargeable u/s 28(iiid) in the year in which he transfers DEPB - in favour of assessee. Reduction of 10% export incentives from the gross indirect cost - Held that:- As decided in HERO EXPORTS Versus C. I. T [2007 (11) TMI 13 - SUPREME COURT OF INDIA ]the principle of attribution is applicable to cases falling u/s 80HHC(3)(b) and therefore, part of indirect cost has to be apportioned to expenses incurred for earning export incentives. 10% of total income has been held as fair estimate in this case - in favour of assessee. Computation of 'book profit' liable for MAT u/s 115JB - reduction of book profit by deduction allowable u/s 80HHC (Export Benefit) - difference between eligibility and deductibility of deduction - Held that:- CIT(A) directed to reduce export profits based on book profit in the ratio of export turnover to total turnover and not the quantum of deduction as worked out u/s 80HHC relying on Ajanta Pharma Ltd. Versus Commissioner of Income Tax-9, Mumbai [2010 (9) TMI 8 - SUPREME COURT ]in which it has been held that clause (iv) of the Explanation to section 115JB covers full export profits of 100% as 'eligible profits' and the same cannot be reduced to 80% by relying on section 80HHC(1B) - in favour of assessee. Treatment to sale of scrap - computation of deduction u/s 80HHC - Held that:- As decided in CIT v. Bicycle Wheels (India) [2010 (10) TMI 496 - PUNJAB AND HARYANA HIGH COURT ] the sale of scrap cannot be excluded from 'total turnover' which shall increase the denominator of formula for determining the extent of benefit admissible to an assessee u/s 80HHC - CIT(A) was correct to direct the assessee in treating sale of scrap as part of 'total turnover' - against assessee. Levy of interest u/s 234D - Held that:- As there is no merit in the contention found raised by the assessee as the regular assessment in this case was completed on 16.02.2004 which is well after the cut off date of 1st June, 2003, in our considered opinion, the Assessing Officer was justified in charging interest u/s 234D - against assessee. Entitlement for credit in respect of minimum alternate tax paid by the amalgamating company - Held that:- As no factual details in this regard are available it will be just and fair if the Assessing Officer is directed to look into these aspects as per law and then decide the matter afresh - in favour of assessee by way of remand.

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• 2012 (8) TMI 280
  India UAE DTAA - contract with the UAE Company for seismic data acquisition on Cauvery and Krishna Godavari basin - can the income derived by the applicant be construed in the nature of "Fees for technical services u/s 9(1)(vii) - Held that:- The applicant is engaged in the business of providing services or facilities in connection with the prospecting for oil but clearly the applicant cannot be said to have undertaken a mining or like project or the work of prospecting for extraction or production of mineral oil, therefore, satisfied that the exception contained in Explanation (2) to section 9(1)(vii) of the Act is not attracted in the case of the applicant -Since the consideration received by the applicant is for rendering technical or consultancy services, on question no. 1, it has to be ruled that the income derived by the applicant has to be construed to be in the nature of "fees for technical services in terms of section 9(1)(vii). Whether the consideration received by the applicant has to be deemed to be "royalty under section 9(1)(vi) - as the Revenue itself in its objection suggested that the consideration received would be fees for technical services to be dealt with as such in this state it no ruling on this question required. Whether the income derived by the applicant from the contract from UAE company is liable to be assessed under section 44BB(1) - Held that:- The income derived by the applicant is from a UAE company and not from the Government or an Indian concern - On the wording of section 44D, 44DA, or 115A the income cannot be brought within their purview, because they only speak of income by way of fees for technical services received from Government or an Indian concern, thus contention of the Revenue that the income derived by the applicant is independently assessable under section 115A or 44DA has to be rejected - as income derived by the applicant is from an activity of mineral oils and from a foreign company, the applicant would be entitled to claim to be assessed under section 44BB(1).

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• 2012 (8) TMI 279
  Levying penalty u/s 271(1)(c) - Held that:- The assessee had himself agreed for the amount to be assessed on the ground that the parties to whom it had offered commission did not respond to the notices - as the assessee countered the penalty proceedings on no concealment by him, the AO should have rendered a finding on the aspect of concealment - In the absence of any material to prove the concealment in the penalty order, the levy of penalty could not be sustained - the explanation must be preceded by a finding as to how and in what manner the assessee had furnished the particulars of his income and to impose penalty, element of mens rea was essential - penalty is thus liable be deleted - in favour of assessee.

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• 2012 (8) TMI 278
  Dismissal of the appeal - relying upon the letter of the AR seeking permission to withdraw on the ground that the matter is pending before the Settlement Commission - Held that:- No dispute on the fact that the assessee had filed an appeal on time, challenging the merits of the assessment and if the Commissioner (Appeals) has to go into the merits of the assessment, certainly, all the enumerated powers would have been available to an appellate authority to consider the merits of the appeal, including those matters which were not specifically raised before the Commissioner. The assessee herein sought for withdrawal of the appeal to go before the Settlement Commission, which dismissed the petition on the ground that there was no appeal pending a mandatory requirement as on the date of taking up a required application. Thus, on the question as to whether there could be withdrawal of the appeal by the assessee, the decision of the Apex Court reported in CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967 (4) TMI 8 - SUPREME COURT ] gives the answer that once the machinery is set in motion, the assessee cannot withdraw the appeal - after filing an appeal, the tax payer could not, at his option or at his discretion, withdraw an appeal to the prejudice of the Revenue - if a contingency of the nature contemplated u/s 245D(6) is to arise, then the power of the Appellate Authority under Section 251 to enhance the assessment thus available, the question of considering the withdrawal with or without objection from the Revenue does not arise - no hesitation in setting aside the order of the Tribunal and restoring the matter back to the file of the Commissioner of Income Tax (Appeals) for considering the assessment on merits and pass orders thereon in accordance with law.

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• 2012 (8) TMI 277
  Exclusion of the Fixed Deposit Receipts in the business profit for granting deduction u/s 80HHC -Miscellaneous Petition - Held that:- Provision of applicability of Explanation (baa) to Section 80HHC(4A)was brought in as effective from 1.4.1992 and applicable to the assessment year under consideration - the nexus between the business activity of the assessee and the receipt of interest was established and that they formed part of the profits of the business. - the assessee would be entitled to treat it as deductible and to be included in the business income for the purpose of Explanation (baa) to Section 80HHC(4A). Apex Court in ACIT vs. Vs. Saurashtra Kutch Stock Exchange Ltd. (2008 (9) TMI 11 - SUPREME COURT) held that the Tribunal was justified in correcting its mistake in exercise of its jurisdiction u/s 254(2) as a patent, manifest and self-evident error which does not require elaborate discussion of evidence or arguments to establish it, can be said to be an error apparent on the face of the record and can be corrected while exercising certiorari jurisdiction.

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• 2012 (8) TMI 276
  Disallowance of depreciation on goodwill - scheme of amalgamation - Held that:- As the assets and liabilities have not been valued in this case the consideration in the form of cancellation of investments cannot be said to have been made for purchase of assets at book value, when the fair value of each asset and liability is much higher - As the primary asset was land and a building thereon thus, the market value of this asset should have been considered. If the assessee had paid more than the fair market value of assets minus the fair market value of liabilities, then the company would have a case to claim that certain amounts were incurred for goodwill. In the absence of such an exercise there is no goodwill in the nature of commercial rights purchase by the assessee. This is only a book entry and it is only another way of disclosing the intrinsic value of the fixed asset of the company - the very purchase of goodwill is not proved by the assessee - Disallowance of depreciation is thus warranted - against assessee. Disallowance of claim of cessation of liability - Held that:- Provisions of sec. 41(1) will apply when the liability provided has ceased and assessee gets benefit whereas in this case in the amounts were provided as a liability to pay rent in respective assessment years as a ‘provision’ and the assessee has not paid the amounts due to disputes with the land owner and it was informed that no deduction was claimed/allowed in the respective years. Therefore, question of addition u/s 41 does not arise - as the amount has to be considered in AY 2008-09 as the relevant date on which the liability will crystallized and the liability does not pertain to the year under consideration - against assessee.

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• 2012 (8) TMI 275
  Reopening of assessment u/s 148 - addition u/s 68 for unexplained cash credit - Held that:- Re-opening of the assessment proceedings of the firm was because of the submission offered by one of its partner Rishabchand Bhansali, who claimed that an amount found in his books of accounts which was in turn advanced to some other person, was drawn by this partner from the account of the firm, is by none other than the partner of the very firm and it is in the wake of such a stand taken by the partner, there was an occasion for investigating the transactions of the firm, who had claimed the amount as its amount and which was the very version of the assessee and its partner. Issue of notice has been proceeded by a follow up action taken by the AO subsequent to the search of the premises of one of the partners and ultimately AO was of the opinion that a firm, which had the capacity to lend an amount of Rs.71,50,000/- that too, to one of its partners or others is reasonably presumed to have the taxable income and if the assessee had never disclosed its expenditure or otherwise earlier & if the officer records that he has reason to believe that assessee had taxable income and a non-filing of the return, is not merely suspicion and therefore in bringing to tax such amount by re-opening - no exercise by appellate jurisdiction under Section 260-A is warranted to hold that the very reopening cannot be sustained - against assessee.

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• 2012 (8) TMI 274
  Petition seeking rectification of the orders passed by the Tribunal on ground that subsequent decision of the Tribunal arrived at a contrary view - denial of deduction u/s 80IA on ground that business activity carried on by the assessee was not manufacturing activity - assessee engaged in business of manufacturing and filling of argon gas - denial - Held that:- The subsequent decision of the Tribunal arriving at a contrary view cannot render the earlier decision of the Tribunal suffer from mistake apparent on record particularly when the earlier decision of the Tribunal was delivered after sensibly considering the materials available before it and relying upon various decisions of the Apex Court and the jurisdictional High Court. Further Tribunal has dissected the activities involved in the processing/manufacturing/ filling of argon gas in cylinders and with the relevant materials on record came to a thoughtful conclusion that the applicant does not deserve the benefit u/s. section 80 IA since it was not carrying on any activity of manufacturing as envisaged under the Act, we are of the considered view that there is no mistake apparent on record to invoke the provisions of section 254(2) even though the decision of the Tribunal is subsequently held to be incorrect - Decided against assessee

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• 2012 (8) TMI 273
  Violation of principle of natural justice - no opportunity of being heard provided by CIT(A) to AO before deleting the addition - non-return of form ITNS 51 by A.O. - held that:- It is not in dispute that ITNS 51 was not returned by the AO, hence CIT(A) is not justified in presuming that the AO or his representative is not interested in appearing before CIT(A). It is also not in dispute that the date of hearing of the appeal is neither mentioned in ITNS 51 nor informed to the AO by a separate notice. Under these circumstances, without going into the merits of the case, we hold that the order passed by CIT(A) is in violation of principles of natural justice and hence we set aside the matter with a direction to him to give the AO a proper opportunity of being heard and to decide the issues before him afresh.

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• 2012 (8) TMI 272
  Addition u/s 69C - addition on account of low household withdrawals - Held that:- It is observed that assessee did not furnish the details of household expenses incurred. Even the study expenses of her son in USA were not properly indicated. When all the relevant facts and circumstances including the total family withdrawals and the income declared by the assessee are concerned, we find that the contention of the assessee towards household expenses is not capable of acceptance. Addition confirmed - Decided against assessee. Undisclosed income reflected in the form of gift - addition u/s 68 - Held that:- In case of gift of 5000 dollars it is found on perusal of the copy of bank statement of donor that there is no withdrawal for 5000 dollars from his account. We, therefore, uphold the addition. However in case of gift of 10,000 dollars, the same was made through foreign remittance to the assessee, hence addition to this extent is deleted - Decided partly in favor of assessee

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• 2012 (8) TMI 271
  Provision for Warranty claim - dis-allowance on ground that assessee was following the mercantile system of accounting - Held that:- As soon as the sale is made, the assessee incurs the liability on account of warranty claim even though the expenditure may be actually incurred in subsequent years. Therefore, the claim of deduction on account of provision for warranty claim is allowable as deduction in mercantile system of accounting and this view is also supported by the judgment of Supreme Court in case of Rotork Controls India (P) Ltd(2009 (5) TMI 16 - SUPREME COURT OF INDIA ). As regards quantum of claim the assessee had been consistently making claim @ 2% of sales and, in case, in the subsequent year, the provision made is found to be excessive, balance amount is offered for income and, in case, expenditure actually incurred is found to be more, further deduction is claimed in subsequent year. Since assessee has consistently followed the system and adjustments have been made in future, no reason is seen to interfere with the system being consistently followed by the assessee - Decided in favor of assessee.

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• 2012 (8) TMI 270
  Penalty u/s 271(1)(c) - expenditure claimed in relation to IPO issued many years ago dis-allowed on ground that company had been incorporated more than 10 years ago and claim made by the assessee was patently a wrong claim - Held that:- Case of penalty is to be evaluated under the provisions of Explanation -1 to section 271(1)(c) as per which, in case, in respect of any addition, the assessee offers Explanation which he is not able to substantiate and is also not able to prove that the Explanation is bonafide and all necessary details in relation to claim have been given, penalty is leviable. In this case, it has not been shown as to how claim can be made in this year u/s 35D or u/s 37 when the claim relates to issue of share capital which is of the nature of capital. Further, no material has been placed to substantiate the claim that it has been made on the basis of legal advice. Therefore, Explanation of the assessee on the facts of the case, in our view, cannot be considered as bonafide and penalty u/s 271(1)(c) is leviable - Decided against assessee

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• 2012 (8) TMI 269
  Treatment of capital gain earned by the assessee - AO stated Profit on Sale of Shares should not be treated as Business Income - Held that:- The assessee was investing in shares and securities and also applying for initial public offer. After holding the shares for reasonable period, whenever occasion arose, the assessee sold the same and offered short term capital gain on sale of shares - the assessee has earned capital gains only in respect of delivery based shares - existence of profit motive cannot be taken as decisive test for treating any share dealing transaction as business activity as investments are also made with the motive and intention on earning profits - where the assessee has shown income from delivery based transaction as capital gains and non delivery based transaction as business income that intention of the assessee was to make investment in shares and that the assessee can have two portfolios with the one for investment and other for share trading - Investment in shares were made for earning dividend income which was also offered by assessee in his return of income - in favour of assessee.

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• 2012 (8) TMI 268
  Best Judgement assessment - rejection of books of accounts - estimation of income - assessee contesting claim of various expenses not allowed by CIT - Held that:- It is found that direction of the CIT(A) to adopt 7% of the net profit on gross receipts is based on the decision of the ITAT in the case of Atulraj Builders Pvt. Limited. As CIT(A) has given reasons for his findings, no interference is called for. Further, when CIT(A) has directed to adopt the net profit rate of 7% , such estimation of profits covers all the expenses which are allowable u/s. 30 to section 37 of the Act i.e. all the related expenses are deemed to be allowed.

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• 2012 (8) TMI 267
  Validity of reopening of assessment u/s 148 - same set of facts - assessee contended change of opinion - Held that:- It is observed that actually the issue had been gone into by the AO who framed the regular assessment u/s 143(3). Details filed by assessee before AO, the manner in which the replies have been filed, along with supporting documents, simply prove that these could not have been filed suo moto. These details “had” been called for by the AO and in response to which these replies had been filed. Since the AO has initiated the reassessment proceedings on the same facts and on the same figures, as shown by the assessee in its books, we are of the considered opinion that no “tangible material” had been brought on record by the AO, which could have given him some valid reason to initiate the reassessment proceedings. Therefore, notice issued u/s 148 is held to be void, and consequently the proceedings are void ab initio - Decided in favor of assessee.

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• 2012 (8) TMI 266
  Interest on borrowed funds - dis-allowance on ground that same has been used to provide interest free loans and advances - assessee contended that interest free advances were made out of mixed funds consisting of borrowed and own funds - Held that:- When mixed pool of funds is utilised and no specific borrowed funds are used for investment and sufficient non-interest bearing funds are available, presumption is that investment is made out of own non-interest bearing funds. Deletion of dis-allowance upheld. See CIT vs Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - HIGH COURT BOMBAY ) - Decided in favor of assessee. Employees’ contribution to PF and ESIC - dis-allowance - belated payment - Held that:- If the employee’s share of contribution is paid before the due date of filing of the return u/s 139(1), then no dis-allowance can be made. See CIT V/s Alom Extrusions Ltd (2009 (11) TMI 27 - SUPREME COURT) - Decided in favor of assessee. Dis-allowance u/s 40(a)(ia) - belated payment of TDS - Held that:- Amendment made u/s 40(a)(ia) requires to be treated with retrospective operation. Hence, since TDS has been deposited before the due date of filing of the return of income u/s 139(1), therefore, we delete the addition made u/s 40(a)(ia) - Decided in favor of assessee.

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• 2012 (8) TMI 265
  Deduction u/s 80IB - denial on ground that commercial area constructed in the project is more than 2000 sq. ft - reference made to amendment to section w.e.f. 1-4-2005 ceiling built up area of the shops and other commercial establishments included in the project to 5% of the aggregate built up area of the housing project or 2000 sq. ft. whichever is less - project of the appellant started in 1999 - first phase completed on 1-10-2005 including the commercial area - entire scheme approved by the Government of Maharashtra and SRA - Held that:- Since the project was started in 1999 i.e. prior to the amendment by the Finance Act, 2005 and the deduction u/s 80IB(10) is on the profits derived from the housing project approved by the local authority as a whole, the A.O. was not justified in disallowing the claim of the assessee and hence we are inclined to uphold the findings of the ld. CIT(A) in allowing the same - Decided in favor of assessee.

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• 2012 (8) TMI 264
  Deduction u/s 54F - Long term capital gains on sale of shares - assessee invested sale proceeds in purchase of row houses located at the ground floor and at the 1st & 2nd floor in joint name along with his wife - denial of deduction on ground that exemption u/s 54F is available in respect of one residential house and that to in the name of the individual - Held that:- It is found that AO rejected the claim without making any physical verification. Therefore, matter is restored back to the files of the A.O to verify whether the dwelling unit bears a single municipal number. The A.O. is further directed to verify whether the dwelling units have only one access and common entrance. If the answers to both the aforesaid questions are in affirmative, then the ground floor and the first and second floor cannot be regarded as a separate residential house and to be treated as a single dwelling unit entitled for exemption u/s 54F. Since, name of the wife has been added only for the sake of convenience and total consideration has been met from the account of the assessee. Moreover, provisions of section 45 of the Transfer of the Property Act which provides that the share in the property will depend on the amount contributed towards the purchase consideration and as in the present case, the total contribution has come from the assessee, the exemption cannot be denied. Short-term capital loss on redemption of units - date of realization of cheque issued for purchase of units taken for determination of period of holding whereas assessee contending for date of tendering of cheque to be taken - revenue contended period of holding to be less than 3 months and thus hit by provisions of Section 94(7) - Held that:- Date of tendering the cheque should be taken as the date of the purchase of units. Once this date is taken for consideration, then the provisions of section 94(7) would ultimately not apply on the facts of the transaction - Decided in favor of assessee.

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• 2012 (8) TMI 263
  Condonation of delay - firm of assessee was dissolved - order of CIT misplaced because of voluminous paper work involved pertaining to partnership period owning to dissolution of the firm and it could not be handed over to the counsel for filing the appeal – Held that:- Assessee had sufficiently explained the delay in filing the appeal before the Tribunal and had made out a case for condonation of delay in filing the appeal - in favour of the assessee

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• 2012 (8) TMI 262
  Penalty u/s 271(1)(c) of the Act - AO has made addition u/s 68 of I.T Act - AO has called for confirmation letters – CIT held that assessee has explained the reasons by saying that it fell into a debt trap and had no time to look into the affairs which itself is enough to prove that creditors are not genuine and evade tax thereon. It is also a case of filing of inaccurate particulars of income – Held that:- Order passed by the learned CIT(A) is a non-speaking order in the eyes of law – matter remanded back to the file of the learned CIT - assessee is allowed for statistical purposes.

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• 2012 (8) TMI 261
  Deduction under section 10A of the Act – Held that:- When the miscellaneous income was not relating to export and was reduced from the export turnover, it should have also been reduced from the total turnover for the purposes of working out the deduction under section 10A of the Act - if the income is to be reduced from the export turnover, the same should also to be reduced from the total turnover while working out the deduction under section 10A of the Act. In that view of the matter, we direct the Assessing Officer to reduce the miscellaneous income in question from the export turnover as well as the total turnover while computing the deduction under section 10A of the Act. Deduction under section 10A of the IT Act - Setting off of the loss of Mumbai STPI undertaking from the profits of the business of Bangalore STPI - Held that:- As the profits and gains under section 10A were not to be included in the income of the assessee at all, the question of setting off the loss of the assessee from any business against such profits and gains of the undertaking would not arise - as per section 72(2), unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation treated as current year’s depreciation under section 32(2) is to be set off. As the deduction under section 10A has to be excluded from the total income of the assessee, the question of unabsorbed business loss being set off against such profit and gains of the undertaking would not arise - In favor of assessee.

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• 2012 (8) TMI 260
  Whether AO was justified in withdrawing the interest already allowed u/s 244A in proceedings u/s 154 of the Income-tax Act – Held that:- Appellant had been allowed interest u/s 244A of the Act on certain amount which was ultimately recovered from the appellant. The appellant is not disputing that position. Therefore, withdrawing interest allowed u/s 244A on this amount is just recovering from the appellant what had been wrongly given to it earlier. This is no case could be termed as penalizing the appellant - CO of the assessee is dismissed.

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• 2012 (8) TMI 259
  Business of share trading - sale of units other than units under section 54EA - assessee has shown long term capital gains and short term capital gains from numerous sale and purchase transactions of units of mutual funds - assessee contended that there is redemption of units of mutual funds and units redeemed were held by them as investment and not as stock-in-trade – Held that:- Merely because the purpose of redemption, according to the ld. Counsel for the assessee, is different i.e. other than business and the average period of holding is 413 days do not mean that the assessee is not carrying on business in Shares/Units and Mutual Funds of the Companies and others - CIT(A) was fully justified in treating the income from purchase and sale of shares/mutual fund/unit except units of Birla Sun Life Plus as income from business - assessee appeal rejected

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• 2012 (8) TMI 258
  Penalty notice u/s 271(1)(c) - Deduction u/s 80G – since the return was loss return claim was made u/s 37(1)– Held that:- Since there was loss as per returned income, deduction under section 80G was not admissible - assessee did not explain to the Income-tax authorities or to the Tribunal circumstances in which the mistake took place - Assessing Officer was justified in disallowing deduction and also levying penalty under section 271(1)(c) for furnishing wrong particulars of income when it was not proved that claim was made by mistake and there was no mala fide intention - assessee is liable to penalty Penalty u/s 271(1)(c) - disallowance of commission – Held that:- Disallowance has been deleted in the assessment of the assessee for assessment year 2006-07. However, the assessee did not prefer appeal in this year - Failure to file appeal and to obtain legitimate relief cannot lead to inference of penalty - even though the payment of commission has been disallowed in this year, the fact of the matter is that the assessee could have got this relief by following up the matter in the higher appellate forums - no penalty is leviable in respect of the disallowance of commission - appeal is partly allowed.

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• 2012 (8) TMI 257
  Transfer Pricing Adjustment - AO/Transfer Pricing Officer made addition to the total income of the Appellant on account of adjustment in the arm's length price of the software development and related services and customer support services transactions entered by the Appellant with its associated enterprise - disregarding the economic analysis undertaken by the Appellant and conducting a fresh economic analysis for the determination of the arm's length price in connection with the impugned international transactions and holding that the Appellant's international transactions are not at arm's length – Held that:- TPO erred in rejecting certain comparables considered by the Appellant in the comparability analysis by applying different quantitative and qualitative filters - most of the issues raised by the assessee have since been dealt with in the assessee's own case in the immediately preceding assessment year wherein the earlier Bench had remitted back the issues to the TPO for fresh consideration - it is a diversified company and, therefore, cannot be considered as comparable functionally with that of the assessee. There has been no attempt made to identify and eliminate and make adjustment of the profit margins so that the difference in functional comparability can be eliminated – matter remanded to TPO - assessee is partly allowed

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• 2012 (8) TMI 256
  Transfer pricing - Arm's length price - assessee used adjusted profit computed in relation to sales affected as appropriate PLI - TPO found that profits of comparable companies was 8.47 per cent as against that of assessee at 12.18 per cent and accordingly, he proposed Transfer Price adjustment - Commissioner held that 30 per cent of travelling and conveyance, legal and professional charges and communication expenses were extraordinary expenses – Held that:- Commissioner of Income Tax (Appeals) thus failed to follow rules of natural justice, as there was apparent violation of Rule 46A in as much as no opportunity was provided to the TPO - order of the Ld. Commissioner of Income Tax (Appeals) is non-speaking order as it does not give reasons for making adjustment to the operating results of tested party i.e. assessee - not clear how she arrived at the conclusion that 30% of expenses were extraordinary and required adjustment - assessee company had not claimed any adjustment on account of specified expense in the Transfer Pricing Study or documentation prepared under Rule 10D read with section 92D of the Act - matter remitted to the file of the Ld. Commissioner of Income Tax - assessee's cross objection stand allowed for statistical purposes.

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• 2012 (8) TMI 255
  Telephone and mobile expenses are treated as deemed FBT – No where from the reading of sub section 1 or sub section 2 of section 115WB, it is found that postage, email and courier have been treated to the part of FBT or deemed FBT - Postage and courier charges cannot be in any manner be treated as benefit of any kind to any employee as it is purely a business expense of the assessee - email expenses are also part of the business expenses as it does not give any fringe benefit to any employee, unless the company is paying for personal email expenses of the employees - assessee has rightly excluded the amount of expenditure debited under the head postage, email, lease line and courier from the FBT – in favor of assessee Travelling expenses - Held that:- assessee has offered sum of Rs 10,92,547/- under Section 115WB(2)(Q) and others under different clauses, which aggregates to Rs. 12,20,72,623/-. If the Assessing Officer would have carefully perused the said statement filed before him, then definitely he would not have come to the conclusion that there is a difference - Rate of 5% should be applied, in view of the provision of section 115WB©(1)(e), wherein 5% of the tax has been prescribed for expenses referred to in clause Q of sub-section 2 of Section 115WB - Assessing Officer is directed to apply the rate of 5% on the fringe benefit value offered by the assessee under the head tour and travel expenses - appeal of the assessee is allowed.

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• 2012 (8) TMI 254
  Trust - Disallowance of depreciation for a reason that cost of acquisition of the capital asset on which the claim of depreciation was made, was earlier allowed to the assessee as a deduction, while computing its income under Section 11 of the Income-tax Act – Held that:- Depreciation on assets of a Trust is to be deducted for the purpose of calculating income of a Trust - depreciation should be allowed even on assets, the cost of which had been allowed as exempt under Section 11 in the preceding years - appeals filed by the assessee stand allowed. Decision of Supreme Court in the case of Escorts Ltd. (1992 (10) TMI 1 - SUPREME COURT) distinguished.

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• Customs

• 2012 (8) TMI 295
  Revocation of CHA licence – licence was suspended on the ground that preventive section of JNPT has found the sample of polyester fabric which were imported vide bill of entry 624245 dated 11.01.07 were replaced by some other sample nor seek the classification under CTH 58109290 - Held that:- Neither the directors of appellant firm were examined nor cross examined - Mr. Hotkar, who was the temporary employee was found to be the main person for replacing the samples who was not holding the custom pass. In fact Mr. Hotkar was not authorised by the appellant firm - appellant firm cannot be held liable for the Act committed by Mr. Hotkar who was not an employee of the appellant firm. Moreover, there is no corroborative evidence is brought on record by the department to prove that the appellant or their directors were in the knowledge of the act committed by Mr. Hotkar - action taken by the Commissioner (Appeals) against the appellant is harsh and without considering the true and correct facts - order of revocation of the appellant s CHA licence set aside – appeal allowed

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• 2012 (8) TMI 294
  Goods reached from Pakistan to Amritsar by rail cargo - Notification No.48/2000-Cus. dated 25.4.2000 - import and export through a route other than sea port/ airport or Inland Container Depot or through a Land Custom Station - special order / permission of the commissioner - held that:- Any goods reaching through different channel not known to customs authorities or that reaches India through different channel not permitted by the notification that calls for imposition of duty. Both sides agreed that the goods are not prohibited goods since that is covered by DFRC scheme. On such analogy levy of penalty is uncalled for. Therefore, confirming duty element, penalty is waived.

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• 2012 (8) TMI 252
  Challenge the Show Cause Notice as issued without jurisdiction and authority - Held that:- The final impugned order has been passed without addressing the question of jurisdiction, is an order which is not sustainable, under the statute. The impugned order is set aside and all the appeals are allowed by way of remand to the adjudicating authority to reconsider the issue afresh.

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• 2012 (8) TMI 251
  Import of goods – related person - goods imported by them were referred to special valuation cell for valuation of the goods – Held that:- Therefore, the extra discount received by the appellant is not justifiable and the Commissioner (Appeals) has gone differently on other grounds and held that value has to be arrived as per Rule 7/8 of the Customs Valuation Rules, 2007 which is not justified as it is neither the issue nor prayed before him. – matter remanded back.

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• Corporate Laws

• 2012 (8) TMI 293
  Appeal u/s 10F of the Companies Act, 1956 against decision of CLB - CLB while disposing of petition made u/s 397 and 398 as also u/s 402, 403, 406 and 237 r/w Schedule XI imposed condition of creating charge on property - Held that:- We find that the CLB in making such a condition had found that there was an understanding between the parties vis-a-vis the land, which was to be developed for the purpose of the business of the company and this factor weighed with the Board in imposing this condition. Even otherwise it is only the interim arrangement till the amount ascertained as payable to the 2nd respondent, is paid. There is no question of law which is required to be framed in an appeal u/s 10F which has been decided wrongly in the order of the CLB, which calls for correction or any gross injustice having occurred to the appellants to warrant interference in an appeal of this nature. Appeal dismissed

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• 2012 (8) TMI 250
  Petition for sanction of a Scheme of Arrangement - Held that:- Transfer of authorised capital and consequent increase in the share capital of the Resultant Company has been undertaken under Section 391 to 394 of the Companies Act, which are a complete code. Thus, having duly complied with the provisions of Section 391 to 394 and obtained due consent from the shareholders and creditors, the Petitioner Companies viz., the Demerged Company and the Resulting Company have duly adhered to the provisions of the Act - the Transferor Company/Demerged Company has increased its authorised share capital after having duly complied with the provisions of the Act and the Bombay Stamp Act, 1958 and payment of registration charges and stamp duty. Reconstruction entails business-wise bifurcation, which is within the purview of the arrangements contemplated under Sections 391 to 394 of the Companies Act and the same is permissible - Once the Scheme of Arrangement falls squarely within the four corners of this section, it can be sanctioned, even if it involves doing acts for which the procedure is specified in other sections of the Companies Act - Having once duly paid the amounts on periodic increases in share capital, further duty and charges cannot be levied when part of the same share capital becomes the share capital of the Resulting Company by effect of law - that none of the objections raised by the Regional Director are sustainable - Scheme of arrangement / demerger is allowed.

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• FEMA

• 2012 (8) TMI 253
  Foreign exchange was acquired by the Company - bank-to-bank transaction under a Letter of Credit - contravention of the provisions of FERA, 1973 - Held that:- The Appellant Parag Dalmia stated that notice to the company is not notice to the Appellant especially when the company had been wound up - though the offence was allegedly committed on 28th April, 1987, Appellant Parag Dalmia was sent summons for the first time to appear on 16th July, 2001 & till that date no summons were ever issued to him. This belated issuance of summons after 14 years has caused serious prejudice to him as then nothing was available with him to show that he had no role to play in the alleged offence. He neither has the bills of entry nor the postal refer of 1987 - Since the Appellants Parag Dalmia was only an ex-employee, he had no access to the documents and thus he could not file any document in reply to the opportunity notice. Merely because a person is a Director, he cannot be held liable and the onus is cast on the prosecution to prove that the Appellant was responsible and in-charge for the day-to-day functioning of the Company. As per Section 68(1) the initial burden is on the prosecution which is not discharged here. That extensive efforts were made to trace out the address of the company and various letters were written to the bank, however, it may be noted that the least that was required from the Respondent was to find out from the record of the Registrar of Companies about the address of the company - As serious prejudice is caused to the Appellant after more than 14 years in leading his defence this is not a case of delay on account of the acts of the Appellants but because of a casual approach adopted by the Respondent - in favour of assessee.

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• Service Tax

• 2012 (8) TMI 316
  Service Tax liability on the commission received - Held that:- A submission was made during the hearing that the fact of payment of service tax was incorporated in the ST3 returns filed by the appellant but it was fairly agreed that this claim was also not made before the original authority - if the appellant was aware that service tax was being paid by Maruti Udyog Limited, invocation of extended period also may not be fair since there cannot be any suppression of facts or mis-declaration in such a situation - remand the matter back.

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• 2012 (8) TMI 315
  Service Tax liability under the category of Construction services - Held that:- Considering submission by the main contractor that they are in receipt of contract from third party out of which they will be sub-contracting some of the work to the appellant herein and is discharging entire Service Tax liability on the entire amount of contracts - thus tax liability cannot be fastened on the appellant - in favour of assessee.

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• 2012 (8) TMI 314
  Penalty under Section 76 - call for invoking Section 80 - Held that:- As Adjudicating authority has already invoked Section 80 curtailing the penalty to Rs 1 Lakh considering the reason that the appellant could be under impression that they have to discharge the Service Tax liability only when they recover the same from their client - as the Service Tax liability on Security Agency services being new, the entire penalty need to be deleted - in favour of assessee.

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• 2012 (8) TMI 313
  Wrong availment of benefit of Notification No.32/2004-ST - appellant had not produced declaration of non-availment of CENVAT Credit on the inputs as well as capital goods - Held that:- Once the declaration has been filed by GTA on their letter-head as regards non-availment of CENVAT Credit, the benefit of Notification No.12/2003-ST should not be denied. In this case which is in our hand, it is undisputed that the appellant had filed the declaration to the adjudicating authority - in favour of assessee.

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• 2012 (8) TMI 288
  Denial of refund of service tax - notification No.41/07 - port services - Held that:- What is required to be seen whether service tax was paid for the service rendered under the admissible services category or not. If the service tax has been paid under business auxiliary service, appellant may not be eligible. Before sanctioning refund in respect of services provided, the category of service and for which service tax has been paid may be verified from the invoice or any other document that may be produced by the appellants before a decision is taken. GTA service - Refund claim cannot be rejected on technical grounds like invoices issued by transport agencies do not contain all the details. If the appellant is able to correlate the export goods with the documents supporting service tax payment, such a refund should be granted. GTA service received for transportation of empty container - it cannot be denied that the transport of empty container to the exporter's premises was necessary and was received in relation to exported goods - The matter is remanded to the original adjudicating authority for fresh consideration

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• 2012 (8) TMI 287
  Refund of unutilized CENVAT credit of service tax paid on certain taxable services which were claimed to be input services availed for export of output services. - whether the necessary nexus existed between the input services and the output service for the purpose of refund of the CENVAT credit taken on the input services. - power of remand by the Commissioner (Appeals) - held that:- The learned Commissioner (Appeals) did not have the power of remand when the order was passed. - At the same time, the reason found by the learned Commissioner (Appeals) for de novo adjudication of the refund claim has to be appreciated. - To enable the original authority to do so, we set aside the impugned order and allow this appeal by way of remand.

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• 2012 (8) TMI 286
  Taxability of incentives received by an advertising agency services - bad debt and cash discount - held that:- Incentive is a receipt for appreciation of performance of services provided. How such forms part of taxable service remained unexplained. - Decided in favor of assessee. So far as the bed debt is concerned, that was not a consideration received and non receipt of consideration when becomes bed debt, by its nature that do not enter into tax ambit. Therefore, that shall not be taxed. In so far as cash discount is concerned, no logic is shown to us as to how there was understatement of consideration when the discount amount was not received towards consideration. - Discounts not being received not taxable.

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• 2012 (8) TMI 285
  Non comply with condition No.1 (ii) of Notification No.42/2001 - claim the refund rejected - Application seeking waiver of pre-deposit and stay of recovery - Held that:- As the assessee was required to export the goods within six months from the date on which the goods were cleared from the factory for export, the appellant cleared the goods for export on 21.11.2008 and exported it on 14.12.2008 after obtaining the necessary “let export” order from the proper officer of customs,thus, the relevant condition of the Notification was complied with and hence the assessee could claim the refund - grant of waiver of pre-deposit and stay of recovery.

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• Central Excise

• 2012 (8) TMI 317
  Denial of Cenvat credit - job-worked goods were cleared without payment of duty, to the principal manufacturer, who processed the goods further and cleared the final product on payment of duty – Held that:- Cenvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilization in the manufacture of final product, which were cleared on payment of duty by the principal manufacturer, would not be hit by provisions of Rule 57C of erstwhile Central Excise Rules, 1944 - order to the extent it denied the CENVAT credit in question to the assessee is not sustainable - appeal is allowed.

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• 2012 (8) TMI 292
  Dismissal of appeal on account of non-deposit of - Held that:- As during the period in question, the petitioner sold scrap involving duty to M/s VAL - the appeal filed by the petitioner cannot be dismissed for want of pre-deposit by M/s VAL Ltd - as once the Tribunal had waived the condition of pre-deposit of penalty in the case of the petitioner the Tribunal was not justified in passing order on miscellaneous application directing the petitioner to deposit the penalty amount imposed on them by reviewing its earlier order.

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• 2012 (8) TMI 291
  Challenge of remand of the matters by the first appellate authority - Held that:- As decided in MIL INDIA LTD. Versus COMMISSIONER OF C. EX., NOIDA [2007 (3) TMI 8 - SUPREME COURT OF INDIA] the first appellate authority should have decided the issue as per the provisions of Central Excise Act, 1944 by looking into the documentary evidences available to him and does not have the powers to remand the matter back to the adjudicating authority - the impugned remand order is unsustainable.

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• 2012 (8) TMI 290
  Challenge the jurisdiction of the appellate authority - Order passed u/s 3A - AO contested against the belated challenge - Held that:- That it is permissible for the petitioners to challenge the validity of the impugned orders on the ground of lack of jurisdiction even at stage, though the same had not been raised before the adjudicating authority - after the omission of rules 96ZQ, 96ZP and 96ZO of the Rules with effect from 1st March, 2001 no proceedings could have been initiated there under and after the omission of section 3A of the Act with effect from 11th May, 2001, without any saving clause, no pending proceeding under the said rules which had not been concluded before the omission came into effect, could be concluded thereafter - in favour of assessee.

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• 2012 (8) TMI 289
  Valuation of the goods manufactured on job work basis - Non production of CAS-4 certificate - Stay for waiver of duty - Held that:- As the assessee submits that they will be able to produce the CAS-4 certificate before the adjudicating authority it is deem fit to remand the matter to adjudicating authority to examine the issue afresh.

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• 2012 (8) TMI 249
  Duty demand on allegation of clandestine removal - Held that:- As the duty liability has been discharged after the issuance of show cause notice the benefits which are available to an assessee prior to issuance of show cause notice should also be extended after the issuance of show cause notice, if liability is discharged before the adjudication order. No merits in the grounds raised by the Revenue that assessee may seek refund of the amount as that the entire order in original is set-aside as the first appellate authority has considered the extension of benefits of Section 11A to the assessee only on the ground that he has paid the amount in full.

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• 2012 (8) TMI 248
  Reversal of cenvat credit during the period when assessee were DTA - two units - Merger with EOU unit - Held that:- It is the claim for reversal of credit and the transferability thereof, particularly after the merger of two Units no dispute to the issue that the credit if it is allowed to DTA unit will be the very same unit i.e. Kiri Dyes and Chemicals Ltd. The identity of the assessee did not change and is merely the clubbing the unit No.1 & 2 together and the assessee remains the same and function from the same premises as a unit - the provisions of Rule 10 of Cenvat Credit Rules, 2004 would not be applicable.

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• 2012 (8) TMI 247
  Rejecting of application for registration of Central Excise for warehousing - premises is already having Central Excise Registration certificate and Warehouse License in the name of other EOU who has defaulted - Held that:- A perusal of Section 6 & rules also states that it is the person who has to get registered. The notification in Clause (2) only sets out that if such registered person has more than one premises, then each of such separate premises would require registration certificate for each of such premises. It is open to a person who has ceased to carry on the business to apply for deregistration. Would that mean in the absence of the person who has closed or sold the business or premises, applying for deregistration, there is no jurisdiction to grant another person registration of the premises as in the case of a bona fide transferee for value or for that to the owner of the premises whose lessee has defaulted in payment of excise dues - Neither Section 6 nor Rule 9 and the Notification is a provision for enforcing the claim for dues of the department - An immovable property by itself cannot be sold unless the owner of the premises is defaulter and that too under a certificate as arrears of land revenue. That sale would be subject to the priority of claims - The Respondent No. 3 has therefore, clearly acted without jurisdiction in refusing to grant registration on the specious plea that EOU whose assets has been sold and purchased by the Petitioners has not applied for reregistration - in favour of assessee.

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• 2012 (8) TMI 246
  Penalty under Rule 25 of the Central Excise Rules, 2002 - short payment of Cenvat & Education Cess - there is an error of computation of cess - Respondent submitted that there was no mistake on the part of the Respondent for the said error – Held that:- Cess is required to be re-considered and re-computed. Therefore, the case is remanded to the ld.Commissioner (Appeals) for the limited purposes for computation of quantum of Cess.

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