TMI Tax Updates - e-Newsletter
August 13, 2013

Case Laws in this Newsletter:

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

Articles

1. FILING TAX RETURNS IN AUGUST 2013

   By: Dr. Sanjiv Agarwal

News

1. Customs Duty on Gold, Platinum & Silver Raised

2. RBI Reference Rate for US $ and Euro

3. Commerce Ministry Plans Outreach Progammes to Improve Trade Ties With CIS Countries

4. Banking Structure in India Looking Ahead by Looking Back (Speaking notes of Dr. Duvvuri Subbarao, Governor, Reserve Bank of India, at the FICCI-IBA Annual Banking Conference in Mumbai on August 13, 2013)

5. Statement by Shri P Chidambaram, Union Finance Minister in Parliament

Notifications

Customs

1. 41/2013 - dated 13-8-2013 - Cus

Regarding amendment of notification No. 12/2012-Customs dated 17 march 2012

2. 40/2013 - dated 2-8-2013 - Cus

Regarding amendment of notification No. 12/2012-Cus, dated 17th March, 2012

Income Tax

3. 61/2013 - dated 8-8-2013 - IT

During The Financial Year 2013-14 - Tax-Free, Secured, Redeemable, Non-Convertible Bonds

Circulars / Instructions / Orders

FEMA

1. 20 - dated 12-8-2013

Compounding of Contraventions under FEMA, 1999

2. 21 - dated 12-8-2013

Exim Bank's Line of Credit to the Republic of Zimbabwe

3. 22 - dated 12-8-2013

Exim Bank's Line of Credit of USD 300 million to the Government of the Federal Democratic Republic of Ethiopia

Highlights / Catch Notes

Income Tax

• TDS Not Required on Reimbursements to Consignment Agents; Differentiated from Commission Payments Under Tax Law.

  Case-Laws - AT : Payment to consignment agents - Non deduction of TDS - Commission versus reimbursement of expenses - Since this condition is not satisfied in the case under consideration therefore it is a case of reimbursement of the expenses incurred by the concerned party on behalf of the assessee - AT
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• Income Assessment u/s 147: Substantial Reasons Confirm Income Escaped, Beyond Mere Suspicion.

  Case-Laws - HC : Reason to believe for income escaping assessment under section 147 - The reasons were such which would impel an ordinary person of reasonable prudence to hold that the income escaped assessment. Those reasons do not fall merely within the realm of 'mere suspicion' so to say. - HC
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• Court Orders Revenue to Credit Full TDS from Form 26AS and Issue Refund; Petitioner Can Claim Additional Refund.

  Case-Laws - HC : TDS Credit - Revenue missed out giving credit of the TDS - Revenue directed to take into account the total sum of TDS as is reflected in Form 26AS and after computing such TDS amount, issue refund in the name of the petitioner – Assessee Petitioner is also being permitted to make additional claim of refund - HC
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• Processing Charges from Agro Chemical Manufacturing Not Eligible for Section 80IB Tax Deduction.

  Case-Laws - AT : Deduction under section 80IB - Nature of processing charges received by assessee - Assessee is engaged in the business of manufacturing of agro chemical products and seeds - cannot be said to be profit derived from the eligible undertaking of the assessee eligible for deduction u/s 80IB - AT
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• Section 80IA Deduction: Independent of Depreciation Claims, Calculated After Allowable Deductions (Sections 30-43D.

  Case-Laws - AT : Quantum of deduction under Section 80IA is not dependent upon the assessee claiming or not claiming depreciation, because, under Section 80IA the quantum of deduction has to be determined by computing total income from business after deducting all deductions allowable under Section 30 to 43D of the Act - AT
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• Court Interprets Long-Term Capital Gains and Transfer Definition in Joint Development Agreements Under Income Tax Act Sections 45 & 2(47.

  Case-Laws - AT : Long Term Capital Gain u/s 45 - transfer u/s 2(47) - vacant land - Possession given by the society to the developer under joint development agreement - irrevocable general power of attorney which leads to over all control of the property in the hands of the Developer, even if that means no exclusive possession by the Developer would constitute transfer - AT
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• Company's Demutualization Expenses Classified as Capital Expenditures, Expanding Capital Base to Meet SEBI Requirements.

  Case-Laws - AT : Capital expenditure or Revenue expenditure - Demutualization expenses - It is true that such expansion of the capital base of the company was required to fulfill the requirements of SEBI but still the fact remains that the expenditure has resulted into expansion of the capital base of the assessee company - Held as capital expenditure - AT
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Customs

• Court Upholds Duty-Free Gas Oil Supply for Foreign-Going Vessels, Affirms Sections 69 and 88 Interpretation as Correct.

  Case-Laws - AT : Stay application – supply of duty free gas oil to the vessel which is on a foreign run - combined reading of Section 69 and 88 would indicate that once the goods were loaded or taken on board of any foreign going vessel - they had to be considered as exported out of India was a correct proposition - AT
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• Court Examines Duty on Non-Alloy Steel: Are Imported Sheets Prime or Defective? Key Decision on Customs Duties.

  Case-Laws - AT : Goods whether seconds/ defective or not - Import of Non-alloy Hot-rolled Cut Steel Sheets - ‘nil' basic customs duty - It does not appeal to common sense or logic that any prudent man would pay the price of prime metal for procuring seconds/defective material - AT
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• Rule 8(2) Clarifies Value Addition for Duty Drawback; Bill of Entry and Shipping Bill Values Are Binding.

  Case-Laws - CGOVT : Duty Drawback - Rule 8(2) provides the formula to ascertain value addition as provided under Board Circular No. 14/2003-Cus - the value as per Bill of Entry and Shipping Bill were to be necessarily taken into consideration - Any subsequent negotiations or re-settlement of prices to be paid specifically when the assesse had paid the duties at the time of imports through DFCE licence cannot override the statutory provisions - CGOVT
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FEMA

• Court Upholds Property Detention u/s 3(1) to Forfeit Assets of Convicts, Including Those Held by Relatives.

  Case-Laws - HC : Detention of property u/s 3(1) - the idea was to forfeit the illegally acquired properties of the convict/detenue irrespective of the fact that such properties were held by or kept in the name of or screened in the name of any relative or associate as defined in the said Explanations of Section2 of the Act - The Authority had rightly appreciated the provisions of the SAFEMA and the definition of `relative’ - HC
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Corporate Law

• Court Rules No Confusion in Trademark Case for "FENA" Outside Class 3; Plaintiff Wins Only Within Class 3.

  Case-Laws - HC : Proprietor of Trademark – FENA - There can be no concern of confusion with regard to goods and services of the plaintiff outside of Class 3 - Decided in favour of the plaintiff only to the extent of Class 3 goods and services, and against the plaintiff with regards to goods and services outside Class 3. - HC
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Service Tax

• CENVAT Credit Reversal: Trading Activities Not Exempted Services, Credit Disallowed Due to Lack of Serious Adjudication Errors.

  Case-Laws - AT : CENVAT credit - reversal of credit related to trading activity - exempted service or not - no serious infirmity in the process adopted by the adjudicating authority for arriving at the quantum of cenvat credit irregularly availed by the petitioner which requires to be disallowed - AT
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• Assessee's activities should align with specific taxable services u/s 65(105), not the broader Section 65(19) description.

  Case-Laws - AT : In terms of Section 65A (2)(a) the activities of the assesse generically considered should be attributed to the more specific description of taxable services enumerated in the in sub-clauses of Sec 65(105) than the other sub-clause [Section 65 (19)], providing a more general description - AT
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• Legal Dispute: Are SEZ Services 'Manpower Supply' or 'IT Services' for Tax Purposes? Potential Liabilities Loom.

  Case-Laws - AT : Classification of Service - Demand for short paid duty – Interest and Penalty – Services to SEZ - Whether the services were in the nature of ‘Manpower Supply’ u/s 65(68) or in the nature of ‘Information Technology Services’ u/s 65 (53a) - Prima facie case is against the assessee - AT
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• Erection, commissioning, and installation services within Maharashtra's government are non-taxable, considered self-service.

  Case-Laws - AT : Erection, Commissioning and Installation Service - Both the provider of service and recipient of the service are part and parcel of the Government of Maharashtra – thus service to self cannot be considered s a taxable service. - AT
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Central Excise

• Cheque Presented by Month-End Meets Duty Payment Deadline in Compounded Levy Scheme Under Central Excise.

  Case-Laws - AT : Compounded levy - Determination of date of payment - cheque presented by the appellant to the bank on or before last date of the month is treatable as the date of discharging duty for the second fortnight under the compounded levy scheme. - AT
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• Court Rules Higher Prices to Related Parties Can Reflect Commercial Standards in Excise Valuation Case.

  Case-Laws - AT : Valuation (Central Excise) - Sale to related parties - the price to the related person cannot be called a non-commercial price since the same was higher than the price to unrelated parties - AT
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• Sugar Cess Not Equivalent to Central Excise Duty; Excluded from Education Cess Calculation.

  Case-Laws - AT : Cenvat credit on sugar cess - sugar cess levied and collected cannot be equated with duty of central excise and therefore, cannot be treated to be part and parcel of the amount on which education cess has to be calculated - AT
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Case Laws:

• Income Tax

• 2013 (8) TMI 380
  Disallowance u/s 40(a)(ia) - Payment to consignment agents - Non deduction of TDS - Commission versus reimbursement of expenses - Held that:- The commission is said to be payment of commission if it is evident that it is being paid for service of a person provided in respect of sale of product of the assessee - The concerned parties have also furnished the sale Patti along with claim of the expenses on sale of consignment goods the claim of expenses given detail the expenses pertaining to the monthly selling expenses loading and unloading dealing with expenses. These expenses have been adjusted and accounted for in the account of respective parties - impugned payment is reimbursement of the expenses and are not the commission as the concerned party did not give any services in respect of the payment of expenditures made. Providing services is essentially requirement of the nature of transaction of a commission. Since this condition is not satisfied in the case under consideration therefore it is a case of reimbursement of the expenses incurred by the concerned party on behalf of the assessee - Decided in favour of assessee.

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• 2013 (8) TMI 379
  Disallowance u/s 36(1)(iii) - CIT partly deleted disallowance - Use of interest bearing borrowed funds in the investment of shares - Held that:- The deduction contemplated by the section is in relation to the expenditure which could properly be regarded as necessary for the purpose of the business or profession. Expenditure incurred on account of commercial expediency for the purpose of business would be allowable under this provision. The expenditure to be allowed must have a nexus with the business of the Assessee. If the expenditure incurred is ostensibly incurred for the business, but if in reality is not for the purpose of business then such expenditure is not allowable - assessee has right to replace his own capital with borrowed funds which were already used for the purpose of business in acquiring assets and other - for the purpose of ascertaining profit and gains, the normal principles of commercial accounting should be applied, so long as they do not conflict with any express statutory provisions - The onus is on the assessee to furnish the relevant material regarding replacement of borrowed funds by own capital and interest free funds available with the assessee - Following decision of Commissioner of Income-Tax Versus Prem Heavy Engineering Works P. Limited [2005 (4) TMI 32 - ALLAHABAD High Court] - Decided in favour of assessee.

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• 2013 (8) TMI 371
  Reason to believe for income escaping assessment under section 147 of the Income Tax Act, 1961 – Held that:- It is also not for this court to examine those reasons from the stand point whether the material on which they are found conclusively proved the escapement of income as formation of such belief by the assessing officer is in the realm of the subjective satisfaction. Moreover, in this case, the assessing officer has not proceeded merely on the basis of report of the Valuer but also considered that such valuation was got done by a third party i.e. the ICICI Bank, which has advanced loan of Rs.1.25 crore to the petitioner on the land being valued by their valuer at Rs.3,53,29,230/- as against Rs.1.20 crores - The reasons were such which would impel an ordinary person of reasonable prudence to hold that the income escaped assessment. Those reasons do not fall merely within the realm of 'mere suspicion' so to say. There does exist some material with the assessing officer for issuance of notice under Section 147 read with Section 148 of the Act of 1961 for formation of requisite belief as to the escapement of income – Decided against the Assessee.

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• 2013 (8) TMI 370
  TDS Credit - Revenue missed out giving credit of the TDS - Rectification of mistake u/s 154 of the Income Tax Act, 1961 – When assesse failed in furnishing necessary details which would have entitled the Department to discard the total amount of TDS, while computing the return of the petitioner, when all the details of TDS are available with the Department – Held that:- Respondent no. 2 has failed to perform its duty as provided under section 154 of the Act. When a glaring mistake was pointed out to the authority, it ought to have amended the order of assessment by exercising powers under section 154 of the Act - Respondents are directed to take into account the total sum of TDS as is reflected in Form 26AS and after computing such TDS amount, issue refund in the name of the petitioner – Assessee Petitioner is also being permitted to make additional claim of refund, which shall be considered by the respondents in accordance with law and permit him more refund; if he is entitled to. The exercise of granting refund to the petitioner must be completed within four weeks from the date of receipt of this order – Decided in favor of Assessee.

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• 2013 (8) TMI 369
  Administrative expenses for earning dividend income from mutual fund – Disallowance under Section 14A of the Income tax act – Investment in units of mutual funds made by the assessee stood at Rs. 6.03 crores as on 31-03-2001 which was increased to Rs. 18.32 crores as on 03-03-2002 – Held that:- Although the investment in mutual funds had been made by the assessee out of its own funds and there was no interest expenditure incurred in relation to the earning of dividend income, the portion of administrative expenses incurred by the assessee was certainly attributable to the earning of the said income - Since no working whatsoever was given by the assessee showing the expenses attributable to the earning of dividend income, estimation of such expenses on proportionate basis to quantify the disallowance u/s 14A of the Act was very much called for - 2% of the dividend income has been held to be reasonable consistently by the Tribunal in various cases - Restrict the disallowance u/s 14A of the Act at 2% of the dividend income. Eligibility of expenses for deduction in under section 80IB – Held that:- There has to be a direct or first degree connection of the income and the business of the eligible undertaking in order to be eligible for deduction u/s 80IB of the Act - Three items of other income are such that the immediate source thereof cannot be said to be the business of eligible undertaking and this being so, all these items of income cannot be said to be eligible for deduction u/s 80IB of the Act – Decided against the Assessee. Reducing the amount eligible for deduction u/s 80IB of the Act while computing profits of the business for the purposes of deduction u/s 80HHC of the Act – Relying upon the decision in the case of Hon'ble Bombay High Court in the case of Associated Capsules (P.) Ltd. vs. DCIT [2011 (1) TMI 787 - BOMBAY HIGH COURT], it was held that profits of business for computation of deduction u/s 80HHC of the Act are not to be reduced by the profits of business allowed u/s 80IA of the Act – Decided in favor of Assessee. Deduction under section 80IB - Assessee is engaged in the business of manufacturing of agro chemical products and seeds and processing charges received by the assessee – Held that:- Nature of processing charges received by the assessee is not very clear as neither the A.O. nor the ld. CIT(A) has given any finding in this regard so as to ascertain as to whether the processing charges were received by the assessee for manufacture of agro chemical products and seeds on job work basis with material supplied by the customers - Claimed by the ld. Counsel for the assessee - While arguing a similar issue in earlier years that the recovery of processing charges was nothing but reimbursement of expenses - Contention raised by the ld. Counsel for the assessee relying on the decision of Hon'ble Madras High Court in the case of Taj Fire Works Industries [2006 (6) TMI 60 - MADRAS HIGH COURT] which involved different facts. Accordingly, it is held that all the four items in question of other income are such that they cannot be said to be profit derived from the eligible undertaking of the assessee eligible for deduction u/s 80IB – Decided against the Assessee.

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• 2013 (8) TMI 368
  Disallowance of loss incurred on sale of investment - Bogus purchase - CIT upheld disllowance - Held that:- The assessee has filed each and every detail before the AO. The purchase price of shares of was paid through proper banking channel, which were purchased in the year 1996-97. Investments were shown in the balance sheet of the assessee. The investment made in the financial year 1996-97 was not doubted as the assessment for assessment year 1997-98 was completed under Section 143(3) - CIT(A) merely observing that the assessee could not file any further evidence in respect of claim of loss, has rejected the claim of the assessee. Once all relevant details are on record, then learned CIT(A) should have considered all these details on merit and the decision should have taken as to whether the loss is allowable or not - Decided in favour of assessee. Capital receipt of Revenue receipt - swap income from forward contract in foreign currency - CIT held income as capital receipt - Held that:- the income earned in the account of swapping of forward rate contract of foreign currency booked for the purpose of capital assets for its Jamnagar refinery project, was earned on account of contract for buying the capital asset. The explanation to Section 43A is also applicable on the facts of the present case - if the foreign exchange loss is on account of purchase of capital asset, then it goes to capital account and if the loss is on account of loan for working capital, then it goes to revenue account - Following decision of Commissioner Of Income-Tax Versus Bharat Heavy Electricals Ltd. [1999 (8) TMI 62 - DELHI High Court] and Sutlej Cotton Mills Limited Versus Commissioner of Income-Tax, West Bengal [1978 (9) TMI 1 - SUPREME Court] - Decided in favour of assessee. Disallowance u/s 14A - Held that:- The demat account relates to purchase and sale of shares. The assessee himself has accepted that there is dividend income which is exempt to tax. The demat account was opened for the purpose of holding the shares in a particular account as per guidelines of the appropriate authority. On opening the demat account etc., the amounts were incurred on that directly linked with purchase and sale of shares on which dividend income is earned, which is exempt to tax. Therefore, it cannot be said that these expenses are for any other purpose and not related to exempted income. If the shares are purchased and sold and they are kept in a particular account and any expenditure incurred on account of that account, it has to be taken that they are directly linked with the purchase and sale of shares - expenses incurred on demat account is directly linked with the earning of exempted income. Accordingly, the provisions of Section 14A are applicable - Rule 8D is prospective in nature - Decided against assessee. Computation of gross total income – manner of claiming special deduction under chapter VI-A – deduction of depreciation allowance – Held that:- quantum of deduction under Section 80IA is not dependent upon the assessee claiming or not claiming depreciation, because, under Section 80IA the quantum of deduction has to be determined by computing total income from business after deducting all deductions allowable under Section 30 to 43D of the Act - for the purposes of deduction under Chapter VIA, the gross total income has to be computed inter alia by deducting the deductions allowable under section 30 to 43D of the Act, including depreciation allowable under section 32 of the Act, even though the assessee has computed the total income under Chapter IV by disclaiming the current depreciation - Following decision of Plastiblends India Limited Versus Additional Commissioner of Income-Tax [2009 (10) TMI 39 - BOMBAY HIGH COURT] - Decided against assessee. Penalty under Section 271(1)(c) - Held that:- penalty on the amount of disallowance under Section 14A is not leviable because the assessee has furnished each and every detail. This is assessee's claim that demat charges are for the purpose of holding the shares, which is a source of income but not directly link with the exempted income - at least penalty on this amount is not leviable as there was no case of furnishing inaccurate particulars. This is a claim of assessee whether the same is allowable or not allowable, is the subject matter of dispute - Decided in favour of assessee.

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• 2013 (8) TMI 367
  Adjustment in arm's length price - Adjustment in regard to advertisement, marketing and sales proportion expenditure - A.O. made addition in reference to difference of arm's length price - Held that:- a fresh exercise has to be undertaken, both by the assessee, as well as by the TPO, to arrive at the arm's length price, based on the principle and propositions of law - assessee should be granted liberty to furnish fresh transfer pricing study report, with comparables obtain by undertaking of fresh search. The TPO should also be at liberty to conduct a fresh search and arrive at appropriate comparable/conclusions - Following decision of Asstt. Commissioner of Income Versus M/s LG Electronics India Pvt. Ltd. [2013 (5) TMI 633 - ITAT DELHI] - Decided in favour of assessee. Depreciation on Plant and Machinery - Held that:- assessee has not claimed depreciation on goods which have been sold / scraped in the earlier years. Moreover, it is a fact that the assessee was engaged in the business of selling air- conditioners. This by itself is sufficient to prove that during the year under consideration relevant block assets is used by the assessee in its business - individual usage of the asset is only relevant in the first year when the asset was put to use and not subsequent years after it has formed part of the block of assets - Decided in favour of assessee. Depreciation on computer peripherals - A.O. disallowed depreciation - Held that:- computer accessories and peripherals such as, printers, scanners and server etc. form an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciation at the higher rate of 60% - Following decision of COMMISSIONER OF INCOME TAX Versus BSES YAMUNA POWERS LLD. / BSES RAJDHANI POWERS LTD. [2010 (8) TMI 58 - DELHI HIGH COURT] - Decided in favour of assessee. Devaluation of stock - A.O. disallowed 20% of the amount of devaluation of stock - Held that:- The assessee has been following his method of valuation of stock during all the previous year as well as the subsequent years - When the revenue has been accepting this method of valuation for many years, there is no reason as to how the same can be disturbed during the year, the disallowance in question is made on ad hoc basis - opening stock of succeeding year is increased by the said adjustment to the value of stock and consequently the profits of the subsequent year get effected to that extent. If the closing stock is valued by applying a particular yardstick or method, then, the opening stock of the year would also be required to be adjusted - Following decision of CIT Vs. Triveni Engineering and Industries Ltd. [2010 (11) TMI 90 - DELHI HIGH COURT] - Decided in favour of assessee. Disallowance of installation expenses - A.O. disallowed expenditure on the ground that the sale has not crystallized - Held that:- income attributable to the installation expenses has been recognized during the year and on the principle of matching income with expenditure, this claim has to be allowed - Decided in favour of assessee.

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• 2013 (8) TMI 366
  Disallowance of interest paid on loan - CIT deleted disallowance - Held that:- once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize his profit. The income-tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman - Following decision of CIT v. Dalmia Cement (B.) Ltd. [2001 (9) TMI 48 - DELHI High Court] and Munjal Sales Corporation Vs. CIT [2008 (2) TMI 19 - Supreme Court] - Decided in favour of assessee. Disallowance u/s. 14A - CIT upheld partial diallowance - Held that:- The assessee has sufficient interest free funds and hence no inference could be drawn that these investments were made out of borrowed funds - Commissioner of Income Tax (A) has decided the issue by restricting the addition u/s. 14A to Rs. 20,000/- which is the total value of investment, the income from which is exempt from tax. No contrary decision to the above has been shown - Decided against Assessee.

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• 2013 (8) TMI 365
  Notice u/s 148 - Deduction allowed u/s 80IA and 80HHC - CIT quashed notice holding that no new material found - Held that:- All details were available before the Assessing Officer at the time of original assessment proceedings and assessee has filed these details along with return of income and AO has allowed the claim of the assessee after examining all these documents and passed a speaking order - AO has not pointed out any specific defect or omission on the part of the assessee - AO in original assessment allowed the claim of the assessee for deduction u/s.80HHD and 80-IA of the Act after examining the relevant details and even the computation made by AO in respect of the claim of these deductions are as per the provisions of Chapter-VI referred to now by the AO were very much available at the time of original assessment also - AO could not bring any new material which was not disclosed earlier nor there was an error in the computation of income filed along with the return of income - Following decision of CIT Vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - Decided against Revenue.

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• 2013 (8) TMI 364
  Long Term Capital Gain u/s 45 - transfer u/s 2(47) - vacant land - Possession given by the society to the developer under joint development agreement - Advance Received or Actual Sales – Held that:- As per Section 45 of IT Act, income-tax was to be charged under the head "capital gain" on transfer of a capital asset and shall be deemed to be the income of the previous year in which transfer took place - The year of transfer was the crucial year and not the time of the receipt - 'Accrue' means 'to arise or spring as a natural growth or result', to come by way of increase' - 'Arising' means 'coming into existence or notice or presenting itself' – both the words were used in contradistinction to the word 'receive' and indicate a right to receive - They represent a stage anterior to the point of time when the income becomes receivable and connote a character of the income, which was more or less inchoate and which was something less than a receipt - An unenforceable claim to receive an undetermined or undefined sum does not give rise to accrual - it was not only the money which has been received by the assessee which was required to be taxed but the consideration which had accrued to the assessee was also required to be taxed. Deemed transfer of property u/s 2(47) – section 2(47)(v) r.w. section 45 indicates that capital gains was taxable in the year in which such transactions were entered into even if the transfer of immovable property was not effective or complete under the general law – Held that:- Charging an item of income under the head 'Capital gains" require that there should be some profit, Such profit must be arising on account of transfer and there should be capital asset which has been transferred - There was no dispute that a capital asset was involved and there was some profit also – Capital gain would be computed by considering the full value of consideration whether received or accruing as a result of the transfer - relying upon Mysore Minerals Ltd. v. CIT [1999 (9) TMI 1 - SUPREME Court] it was not only the consideration received which was relevant but the consideration which had accrued was also relevant - irrevocable general power of attorney which leads to over all control of the property in the hands of the Developer, even if that means no exclusive possession by the Developer would constitute transfer - It can be said that it had to be construed as 'possession' u/s 2(47). Receipt of consideration and registration of property relevant or not - Entitlement for Exemption u/s 54EC - Agreement subject to approvals and permissions – Condition for transfer of land – conditions and encumbrances Past consideration recievable towards the proposed transfer - Computation of Capital Gain –Part performance of contract u/s 53A of TPA – registration of the terms of agreement - Held that:- It was not necessary to get the instrument of transfer registered for the purpose of Income-tax Act when a person had got a valid legally conveyed after complying with the requirements of the law - Technically it can be said that the developer had purchased the membership of the Members in the society which would lead to enjoyment of the property and in that technical sense, clause (vi) of Section 2(47) is applicable - reference has been made only to Section 54 and Section 54EC - Section 54 deals with deduction in case the assessee being an individual or HUF, transfers the residential house - the assessee had transferred the plot – thus it cannot be said that deduction u/s 54F and 54 was same - no ground had been raised for deduction u/s 54F. When the plots remain unallotted and obviously legal ownership and beneficial ownership belonged to the society. Had the plots been allotted to some members before entering into the JDA then it could have been said that the plots have already been allotted and therefore, the society was not responsible for the same. Once the plots were owned by the assessee obviously the transfer of the same would lead to arising of profit which has to be taxed u/s 45. We are of the opinion that lower authorities have correctly rejected the arguments that income from such plots, if any, should be charged under the head "business profits" because it is a settled law that if an income falls under specific head of income contained in Section 14 under Chapter IV then the same has to be taxed under that head. Revised Return u/s 139(5) – Whether CIT(A) erred on facts and in law in sustaining the action of the AO in rejecting the revised return filed during the course of assessment proceedings without assigning reasons – Held that:- Revised return can be filed at any time before the expiry of one year from the end of relevant A.Y. or before completion of assessment whichever is earlier - limitation of one year would expire on 31.3.2009 whereas revised return had been filed on 7.10.2009 which was clearly beyond the limitation prescribed u/s 139(5) – In any case no disadvantage had occurred to the assessee because in the revised return the assessee had included a sum on account of capital gain and the whole dispute in the assessment relates to capital gain arising out of sale. Introduction of Additional Grounds - Whether the CIT(A) failed to appreciate that the income could have been assessed in the hands of the Society and not the appellant – Held that:- Two additional grounds in respect of charging of capital gain, have been raised which had been argued the same are admitted – both the parties adopted identical arguments - the issue raised and additional grounds i.e. issue of chargeability of capital gain decided against the assesse.

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• 2013 (8) TMI 363
  TDS u/s 195 - Nature of payment made to parent compnay - PE - Purchases of Online advertisement space - Article 7 of DTAA with USA - Disallowance u/s 40(a)(i)(A) - Held that:- neither of the party is acting or doing the business activity on behalf of other but the transactions are independent business transaction wherein the respective margins are recover from each other. Moreover, the transaction of payment towards purchase of space on foreign website by the assessee for its client in any case does not constitute a transaction carried out by the assessee on behalf of its parent company. The assessee is doing the business transaction on behalf of its client and offering the income earned from the said business transaction which has been accepted by the AO. Therefore nothing has been brought on record by the Assessing Officer to show that the transaction of purchase of space on foreign website by the assessee from its parent company constitutes the assessee as PE - merely because one of the directors is common in both the companies does not constitute the assessee as PE - risk and reward of the business carried out by the assessee is born by the assessee which itself shows that it is the assessee who is answerable to the customers and therefore the activity of purchase of space on website from the parent company is on principle to principle basis - Decided against Revenue. Nature of payment was made towards sharing of cost for a third party server platform and use of licence - Held that:- When the payment is not towards the cost of any services or supply by the parent company to the assessee but the payment is towards the use of server platform and licence belongs to the third party. Therefore, such payment relates to the use of server and licence of third party routed through its parent company. When the Assessing Officer has disallowed this payment for none withholding of tax by invoking the provision of Section 40(a)(i)(A) then we do not agree with the contention of the assessee that this is a new issue raised by the Ld. DR. This issue requires a proper verification of the real nature of payment and withholding of tax u/s 195. - Issue remmitted back - Decided against assessee

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• 2013 (8) TMI 362
  Unexplained credit u/s 68 - Share application Money - CIT deleted addition partially - Held that:- Company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers - Assessee company made available relevant material before the A.O. and the A.O. has failed to unearth any wrong or illegal dealings - Once it is established that the amount has been invested by a particular person, be it a partner or an individual, then the responsibility of the assessee is over. Assessee has failed miserably to prove with any supporting documentary evidence in its support for rest deletion - The assessee has furnished only share application money through cheques - Assessee has failed to discharge the burden in respect of Section 68 - Partial addition made by CIT confirmed - Following decisions of CIT Vs. Divine Leading & Finance Ltd. [2006 (11) TMI 121 - DELHI HIGH COURT], Hindustan Tea Trading Co. Vs. CIT [2003 (3) TMI 53 - CALCUTTA High Court], CIT Vs. Metachem Industries [1999 (9) TMI 21 - MADHYA PRADESH High Court] and CIT Vs. Lovely Exports P. Ltd. [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - Decided partly in favour of assessee.

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• 2013 (8) TMI 361
  Capital expenditure or Revenue expenditure - Demutualization expenses - CIT treated expenses as capital in nature - Held that:- If expenditure may help in the business of the assessee company and may also help in profit making but since the expenditure was directly related to the expansion of the capital base of the company, the same is capital expenditure - The dilution of 51% of shares of the assessee company to outsiders was achieved by resorting to further issues of share capital to outsiders and hence, this is correct that the expenditure is directly related to expansion of the capital base of the company. It is true that such expansion of the capital base of the company was required to fulfill the requirements of SEBI but still the fact remains that the expenditure has resulted into expansion of the capital base of the assessee company - Following decisions of Brooke Bond India Limited Versus Commissioner Of Income-Tax, West Bengal III [1981 (8) TMI 27 - CALCUTTA High Court] and Punjab State Industrial Development Corporation Limited Versus Commissioner of Income-Tax [1996 (12) TMI 6 - SUPREME Court] - Decided against assessee. Disallowance u/s 14A - CIT confirmed disallowance - Held that:- AO has stated in the assessment order that he is not satisfied with the correctness of the claim of the assessee in respect of expenditure, in respect of exempt income - Because of movement or otherwise in the investments of the assessee company as per which investment in three mutual funds were sold, one such investment was retained and two such investment were increased, it is clear that sufficient time was devoted by the top management of the assessee company to monitor the investment and therefore, it is not acceptable that no expenditure was incurred by the assessee company for earning dividend income. Once it is found that the claim of the assessee is not correct regarding not incurring of expenditure for earning dividend income or any other exempt income, Rule 8D has to be applied and the AO had done the same - Following decision of DCIT Vs. Ashish Jhunjhunwala [2013 (6) TMI 545 - ITAT KOLKATA] - Decided against assessee.

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• 2013 (8) TMI 360
  Notice u/s 148 - income escaping assessment - AO failed to take note of exempted dividend income for disallowance of expenses u/s 14A - Held that:- From these reasons recorded by the AO, it shows that the reasons given by the AO were vague, and even there is no mention that any expenses was incurred by the assessee for earning the dividend income. This is also a fact that reasons are recorded by the AO on the basis of profit and loss account, which was filed before the AO at the time of original assessment also, and no new material is available before the AO as per the reasons recorded by the AO - Following decision of Commissioner of Income-tax v. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - Decided in favour of assessee. Deduction u/s 36(1)(xii) - deduction given on account of Grant Given to societies - Held that:- the grant is allowable as an expenditure under section 36(1)(xii) of the Act, and the matter was sent back to the AO for verification (i) whether the alleged non-refundable grants are given from grants received or not, and (ii) non-refundable grants sanctioned, are claimed as deduction only when fund are already utilised/ fund utilisation report are received. Rate of Depreciation on rail mil tankers - Held that:- depreciation rate of 30% is allowable in the case of motor taxi and motor bus, but admittedly in the present case, the rail milk tanker cannot move of its own, and hence, the same cannot be classified as motor bus or motor taxi, and therefore, the same is not eligible for depreciation at the rate of 30%, and the AO has rightly allowed the depreciation at the rate of 15%, by treating the same as plant & machinery - Decided against assessee. Claim of deduction of an amount Disallowed earlier on account of non TDS - u/s 40(a)(ia) - Held that:- As per the proviso to section 40(a)(ia) of the Act, if the tax has been deducted in a subsequent year or if already deducted in the earlier year, has been paid after the due date specified in section 139(1), such sum shall be allowed as deduction in computing the income of the previous year in which such tax has been paid - The requirement of proviso is satisfied by the assessee, but the learned CIT(A) has put one more condition that, unit for which this expenditure was incurred, is not being owned by the assessee in the present year, in which the payment of TDS was made - Decided in favour of assessee. Determination of opening WDV - Held that:- It is settled position of law that the closing WDV of the preceding year has to be adopted as opening WDV of the present year to work out the depreciation allowable to the assessee - Decided in favour of assessee. Disallowance u/s 41(1) - provision written back - deemed income - Held that:- when provision was made, the assessee was not liable to tax, hence, if the provision is reversed in the year of making the provision, it is not resulting into any tax liability, because the assessee was not taxable in that year, and therefore, reversal of such a liability cannot give rise to tax in the year of reversal, when it is not giving any benefit to the assessee, in the year of making the provision - even if it is held that income has to be assessed in the year of making the provision, then this deduction on account of provision under section 36(1)(vii) is not allowable deduction in that year, because under this section, actual write off is allowable and not the provision. This is a pre-requirement of section 41(1) that where the allowance or deduction has been made in the assessment for any year, in respect of loss, expenditure or trade liability incurred by the assessee, and the same is subsequently ceased or has been remitted, then there is income under section 41(1) - Decided in favour of assessee.

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• Customs

• 2013 (8) TMI 358
  Condonation of delay – assessee gave the reason that they did not receive order in original at the given address - Held that:- there was no reason to accept that order in original was not received - the order were returned undelivered but the order in original sent to known postal address was not returned undelivered - The address was the same what was mentioned in the COD application – the delay in number of days in filing each appeal had not been specified in the applications. The medical prescriptions relied upon by the appellant in respect of condonation of delay are of no help to the appellant because nowhere in these documents it is coming out that at any time appellant was admitted in hospital for a longer period and was bet ridden – appeal decided against assessee

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• 2013 (8) TMI 357
  Stay application – oil has been supplied to the various merchant vessels - shipping bill was cleared for export by the customs authorities indicating on the shipping bill that "bonded bunker not to be landed". This would indicate that the warehoused gas oil. when they were imported duty free, has been removed from their warehouse for loading on to the vessel which is on a foreign run. - assessee had deposited the amount during the investigation as against the confirmed demand – Held that:- amount deposited by the assessee was enough deposit to hear and dispose the appeals - assessee was able to demonstrate that the goods which were cleared from their bonded warehouse had been loaded on to the foreign going vessel which was their prime responsibility - combined reading of Section 69 and 88 would indicate that once the goods were loaded or taken on board of any foreign going vessel - they had to be considered as exported out of India was a correct proposition - the invoices had been raised by the assessee which were paid by the purchaser of the gas oil and the bank remittance certificate clearly indicates an invoice number which was raised by the assessee – Applications for the waiver of pre-deposit of the balance amounts involved were allowed and recovery stayed - decided in favour of assessee.

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• 2013 (8) TMI 356
  Goods whether seconds/ defective or not - Import of Non-alloy Hot-rolled Cut Steel Sheets - importer claimed the benefit of notification No.21/2002 which prescribes ‘nil' basic customs duty on such goods other than seconds and defectives – Held that:- On visual inspection the goods appeared to be secondary ad not of prime quality - the price declared for the goods under import match with those for prime material - It does not appeal to common sense or logic that any prudent man would pay the price of prime metal for procuring seconds/defective material – order of the department for demand of duty was set aside – appeal decided in favour of assessee.

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• 2013 (8) TMI 355
  Interest on delayed refund – Refund of duty – assessee filed an appeal for refund of duty – supreme court granted the refund in favour of assessee. - Against the refund granted the assessee made claim of interest – department denied the same – assessee contended that refund arose u/s 18 was governed by Section 27 - Revenue denies on the contention that ground that Section 18 (2) entitles to refund if any arises out of finalisation of provisional assessment automatically whereas refund u/s 27 was a claim without a suo motu grant – Held that:- Delay in granting refund having been made even after 18.7.2006 till 13.7.2007 – assessee was entitled to interest on the refund from interest u/s 18(4) – but before 13.7.2006 was time barred - suo motu refund was a grant of section 18(2) whereas claim of refund was envisaged by section 27 – an assessee assumes right to refund u/s18(2) - section 27 determines a right to refund upon claim – court followed Commissioner of Customs Vs. Indian Oil Corporation (2012 (1) TMI 31 - DELHI HIGH COURT) – sub-sections (3), (4) and (5) introduced to section 18 of Customs Act, 1962 have no retrospective effect - Thus right to interest under Section 18(4) of Customs Act, 1962 before 13.7.2006 is accordingly barred. However delay in granting refund having been made even after 18.7.2006 till 13.7.2007, appellant is entitled to interest on the refund from 13.7.2006 to 13.7.2007 only. - decided in favour of assessee.

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• 2013 (8) TMI 354
  Classification of Goods – Held that:- Directorate General of Central Excise Intelligence was given order to conclude the investigation on as to whether the goods in question were classified under Tariff Item No.848221 or under Tariff Item No.732616 - In case, after investigation it was found that the goods in question were classifiable under Tariff Item No.848221 - the adjudication by the CC shall be concluded as far as possible within a period of two months thereafter subject to complying with the procedure as required and after giving adequate opportunity to the assesse - If it was found that the assesse was not cooperating after giving reasonable opportunity it will be open for the CC to proceed further with adjudication ex-parte after recording reasons. Duty Drawback – Held that:- CC shall comply with the order passed by the court by which the Revenue more particularly CC was directed to process the pending drawback claims at the rate of 2% if it found that the petitioner had complied with the requirements under rules and regulations - shall pay drawback to the assesse on appropriate value of the exports – SLP disposed of by giving instruction of proper adjudication by the department - Decided in favor of assesse.

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• 2013 (8) TMI 353
  Condonation of Delay - Held that:- There were sufficient cause for condonation of the delay - their excise consultant had met with a severe accident and there consultant was not well therefore they could not draft revision applications in time - One medical certificate was also submitted. Fixation of Brand rate of drawback - Revenue rejected the application for fixation of brand rate of drawback under Rule 6 on the ground that export value was less than the value of imported materials – Held that:- The requirement of Rules/ Circulars as substantial requirement of law and cannot be considered as minor technical lapse – The entire case matters should be considered and proceeded as per the statutory provisions of relevant rules/circulars and on the basis of all the legal documents which stands finalized as per the prescribed procedure – following M/s. Paper Products Ltd. v. CC [1999 (8) TMI 70 - SUPREME COURT OF INDIA] - The plain reading of statute as clarified and elaborated vide the C.B.E. & C. Manual and circulars were mandatorily binding on the departmental authorities – and INDIAN ALUMINIUM COMPANY LTD. Versus THANE MUNICIPAL [1991 (9) TMI 162 - SUPREME COURT OF INDIA] - when provisions were stipulated for doing a particular act in a specific manner then it would mean that any deviation therefrom was not permitted at all and it should be performed in that manner itself as per Rules. Purpose of Rule 8(2) of Drawback Rules - Rule 8(2) provides the formula to ascertain value addition as provided under Board Circular No. 14/2003-Cus - the value as per Bill of Entry and Shipping Bill were to be necessarily taken into consideration - Any subsequent negotiations or re-settlement of prices to be paid specifically when the assesse had paid the duties at the time of imports through DFCE licence cannot override the statutory provisions - The orders-in-appeal were therefore upheld for being perfectly legal and proper– Revision application Rejected – Decided against assesse.

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• Corporate Laws

• 2013 (8) TMI 352
  Proprietor of Trademark – Passing off of Goods - Whether the plaintiff was the proprietor of the trademark FENA, if so to what effect - Whether the user of trade mark/ trade name FINAby the defendant in relation to toiletries, cosmetic, detergents, cleaning and polishing preparations, lubricants or any other goods under the trade mark FINA was likely to cause confusion or deception amounting to passing off – Held that:- There can be no concern of confusion with regard to goods and services of the plaintiff outside of Class 3 - Decided in favour of the plaintiff only to the extent of Class 3 goods and services, and against the plaintiff with regards to goods and services outside Class 3. There were no factors of confusion existing between the businesses of the rival parties - Mahendra & Mahendra Paper Mills Ltd. v. Mahindra Mahindra Ltd.[2001 (11) TMI 978 - SUPREME COURT] - The market, trade channels, course of trade and most importantly, the class customers of either parties were entirely different - it was the admitted position that the plaintiff was a household name regarding detergent powder and soaps under the name FENA – They also hold valid trade mark with respect to Class 3 goods in India - Meanwhile, the defendant also holds worldwide - reputation in the petrochemical market and enjoys trans-border reputation in the relevant market –, the defendants goods primarily belong to Class 4 of the Classification of Goods and Services under the Trade Mark Act. Territorial Jurisdiction - Whether this Court has jurisdiction to entertain and try the present suit - Held that:- The issue was in favor of the plaintiff - The plaintiff had placed on record the invoice for purchase of the goods bearing the impugned trade mark - By virtue of the admission and in accordance with Sec. 58 of the Indian Evidence Act, 1872, the plaintiff was not required to prove any further - the sale of goods carrying the trade mark within the territorial limits of the Court’s jurisdiction Damages - Permanent Injunction - Whether the plaintiff was entitled to rendition of accounts, profits and/or damages, if so, how much - Held that:- The plaintiff was entitled to a permanent injunction restraining the defendants from using the impugned trade mark FINA’ with respect to goods and services under Class 3 - The plaintiff had been able to establish that it enjoyed strong goodwill and reputation with respect to soaps and detergents within India - the plaintiff had not been able to prove pecuniary loss thus it was not entitled to either damages or rendition of accounts – Decided in favor of Petitioner.

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• FEMA

• 2013 (8) TMI 359
  Detention of property u/s 3(1) - Husband of the present petitioner was ordered to be detained by u/s 3(1) of the COFEPOSA following seizure of foreign currency – Department issued Notice u/s 6(1) of the SAFEMA to show cause why the property belonged should not be forfeited and to show the source of income, earnings and assets, out of which or by means of which, the property was acquired – Held that:- The Tribunal had considered all the submissions made by the them and after examining the reasons assigned by the Authority and documentary evidence produced by the petitioner - the Tribunal thought it fit not to interfere with the order passed by the Authority - the reasons for issuance of notice were attached with the Notice - the Authority had not committed any breach of provisions of SAFEMA while issuing the notice. The persons engaged in smuggling and foreign exchange manipulations do not keep regular and proper accounts with respect to such activity or its income or of the assets acquired therefrom - The violation of foreign exchange laws and laws relating to export and import necessarily involves violation of tax laws - the idea of defining the word “relative” in detail was to reach his properties in whosoever’s name they were kept or by whosever they were held - It had been further held that the idea was to forfeit the illegally acquired properties of the convict/detenue irrespective of the fact that such properties were held by or kept in the name of or screened in the name of any relative or associate as defined in the said Explanations of Section2 of the Act - The Authority had rightly appreciated the provisions of the SAFEMA and the definition of `relative’ and, therefore, had rightly held that they had miserably failed in proving that the property in dispute was purchased by legal means - The burden to prove the same lies upon the person affected to prove that the property which was under the process of forfeiture was purchased by legal means either by himself or his relatives - Attorney General of India, etc. etc vs. Amratlal Prajivandas and Ors. [1994 (5) TMI 235 - SUPREME COURT] – Decided against Petitioner.

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• Service Tax

• 2013 (8) TMI 377
  CENVAT credit - reversal of credit related to trading activity - Revenue was of the view that assesse had irregularly availed CENVAT credit given in respect of the exempted service – held that:- prima facie no serious infirmity in the process adopted by the adjudicating authority for arriving at the quantum of cenvat credit irregularly availed by the assesse which requires to be disallowed - Orion Appliances Ltd. vs. CST, Ahmedabad [2010 (5) TMI 85 - CESTAT, AHMEDABAD ] - it was quite clear that since trading activity was nothing but purchase and sales and was covered under state sales tax law, it may not be appropriate to call it a service. Therefore it had to be held that trading activity cannot be called a service and therefore it cannot be considered as an exempted service also – adjudication order sets out the reasons for disregarding the assesse’s assessment of the allocation of the cenvat credit availed between the taxable Business Auxiliary Service. - We prima facie find no serious infirmity in the process adopted by the adjudicating authority for arriving at the quantum of cenvat credit irregularly availed by the petitioner which requires to be disallowed. Extended Period of Limitation – Waiver of Pre-deposit - Whether the extended period of limitation ought to be invoked – Held that:- The matter to be considered at the hearing of the appeal - We therefore consider it appropriate to grant waiver of pre-deposit and stay all further proceedings on condition that the assesse remitted the entirety of the cenvat credit disallowed, including the interest thereon (but excluding the component of penalty under Sections 77 and 78 and Rule 15(3) and 15(1) of the Cenvat credit Rules, 2004) – stay granted.

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• 2013 (8) TMI 376
  Technical Testing Analysis u/s 65(105)(zzh) or Business support Service u/s 65(105)(zzq) – Duty Demand – Interest and Penalty - Held that:- Prima facie the activities/ operations of the assesse under the research agreement were classifiable as technical testing and analysis service and the assesse could be considered as a technical testing and analysis agency, providing the taxable service specified in Section 65 (105)(zzh) as ‘Technical Testing and Analysis’, and not support of business service classifiable u/s 65(105) (zzzq) of the Finance Act, 1994 - Relying on M/s Paul Merchants Limited & Others Versus CCE, Chandigarh[2012 (12) TMI 424 - CESTAT, DELHI] In terms of Section 65A (2)(a) the activities of the assesse generically considered should be attributed to the more specific description of taxable services enumerated in the in sub-clauses of Sec 65(105) than the other sub-clause [Section 65 (19)], providing a more general description -Further, in respect of reimbursements received the assesse would be prima facie entitled to immunity to levy of service tax, under the Export of Service Rules, 2005, since the services were provided to an overseas company having a permanent establishment outside India, utilised /consumed overseas for the pharmaceutical business of that entity and reimbursements were received by the petitioner in convertible foreign exchange. Waiver of pre- deposit - The assesse had made out a strong case in the substantive appeals – full waiver of Pre-deposit allowed and stayed till the pendency of appeal – Decided in favor of assesse.

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• 2013 (8) TMI 375
  Classification of Service - Demand for short paid duty – Interest and Penalty – Services to SEZ - Whether the services were in the nature of ‘Manpower Supply’ u/s 65(68) or in the nature of ‘Information Technology Services’ u/s 65 (53a) –Revenue was of the view that the services were in the nature of manpower supply which had become taxable from 16.6.2005 itself – Held that:- Prima facie, the contracts involved were for supply of manpower rather than contracts for software development. As regards supply of services to SEZ. - Assesse had not placed on record the details of any software that they developed or any deliverables in respect of any contract - there was shortage of even man-hours, billing were deducted proportionately - the companies to whom the persons were deputed were themselves software developers – Services supplied to SEZ had not been supported by enough documentary evidence - it was a clear case of suppression – relying upon Diksha Technologies Pvt. Ltd. Vs. CCE, Bangalore [ 2010 (10) TMI 491 - CESTAT, BANGALORE]. Waiver of pre-deposit – 50 Lakhs were ordered to be submitted as pre-deposit – rest of the duty waived till the disposal – stay granted partly.

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• 2013 (8) TMI 374
  Limitation period – assessee provided the service of ‘Pandal & Shamiyana Service’ and ‘Mandap Keeper Service’ – whether the notice is time barred and demand is not sustainable – Held that:- What is relevant is whether there was suppression of facts/ mis-declaration with an intention to evade duty on the part of the appellant - First Flight Courier Ltd. (2011 (1) TMI 52 - High Court of Punjab and Haryana) - once suppression or mis-declaration has proved - the extended period becomes invokable - irrespective of the date of knowledge of the department, the relevant date would be 5 years as per statute – appeal decided against assessee.

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• 2013 (8) TMI 373
  Erection, Commissioning and Installation Service - appellant contended that they are Government department and they have undertaken the work of erection of sluice gates for the dams constructed by the aforesaid Corporations which are also statutory corporations of the Government of Maharashtra – Held that:- Assessee was not into “commissioning and installation agency” envisaged under Section 65 (29) - they are not rendering service to anybody else except to themselves - both the provider of service and recipient of the service are part and parcel of the Government of Maharashtra – thus service to self cannot be considered s a taxable service. As clarified by CBEC vide circular No. 790/09/2004 dated 17/09/2004 erection of structures referred to therein means civil corks to installation / commissioning of a plant and machinery. Agricultural dam or sluice gates thereto cannot be considered as a plant and machinery or equipment or structures thereof. They are in the nature of infrastructural construction catering to the needs of agriculture. They are excluded from the purview of service tax levy both under the category of commercial and industrial construction service and Works Contract services specifically. Waiver of Pre deposit – court allowed waiver on pre deposit – stay granted.

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• 2013 (8) TMI 372
  Period of limitation - Admissibility of Input Service Credit – department was of the view that construction of residential quarters/hostels for their employees as same does not qualify under Section 2(1) of the CENVAT Credit Rules, 2004 – Held that:- They were under the bonafide belief that they were entitled for input service credit was reversed and they availed input service credit – as decided in CCE, vs Manigarh Cement (2010 (10) TMI 10 - BOMBAY HIGH COURT) - the applicant has made out a case on limitation. Waiver of pre deposit – court allowed waiver of pre-deposit – stay granted - application decided in the favour of the assessee.

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• Central Excise

• 2013 (8) TMI 351
  Excess stock of finished goods and raw-materials on stock taking – Held that:- Excess in the stock of aluminium ingots is 0.592 M.T. in the total stock of about 87 M.T. would work out to about 0.7%. Similarly, the excess in the stock of aluminium scrap is 11.554 M.T. out of total stock of about 870 M.T. which would work out 1.33% - Excess of this magnitude, looking to the total quantity of aluminium ingots and scrap cannot be treated as a real excess, as the same could be due to genuine mistakes on the part of the assessee or their workers in recording the weight of ingots and scrap and, as such, no malafide intention can be attributed to the excess of this magnitude – Reliance can also be place upon the judgment in the case of Hindustan Steel Ltd. vs. CCE reported in 1969 (8) TMI 31 - SUPREME Court, wherein it is held that for imposition of penalty under Rule 173 (1) (a) and 173Q (1) (b) of Central Excise Rules, 1944 there must be intention to evade the payment of duty – Decided in favor of Assessee.

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• 2013 (8) TMI 350
  Cenvat credit of service tax paid on the services of commission agents abroad received by them for procuring export orders – Held that:- The service received by the respondent is Business Auxiliary Service which as its names suggests the same is in relation to the manufacturing business of the appellant and, hence, the same would be covered by the expression activities relating to business. Moreover during the period of dispute the definition of input service specifically covered the sales promotion and, procuring sales order is nothing but sales promotion – Also, relying upon the judgment in the case of Cadila Healthcare Ltd. vs. CCE, Ahmedabad [2009 (8) TMI 172 - CESTAT, AHMEDABAD] and CCE, Vapi vs. Nikamal Crates & Bins. [ 2010 (2) TMI 232 - CESTAT, AHMEDABAD], Cenvat Credit is allowed.

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• 2013 (8) TMI 349
  Compounded levy - Determination of date of payment - Commissioner held date of payment will be the date when the cheque was presented - Held that:- cheque presented by the appellant to the bank on or before last date of the month is treatable as the date of discharging duty for the second fortnight under the compounded levy scheme. It is observed that the penalty imposed by the adjudicating authority on the appellant is not is not sustainable as the cheque presented to the bank by the appellant was not dishonoured - Following decision of INDIA CEMENTS LTD. Versus COMMISSIONER OF C. EX., HYDERABAD [2002 (1) TMI 242 - CEGAT, BANGALORE] - Decided against Revenue.

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• 2013 (8) TMI 348
  Benefit of the Small Scale Industries exemption Notification - Commissioner granted benefit - Held that:- manufacturer is not entitled for the benefit of SSI exemption who have the goods manufactured and who is not Indian or the brand name who is not a manufacturer in India - Following decision of NAMTECH SYSTEMS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NEW DELHI [1999 (12) TMI 145 - CEGAT, NEW DELHI] and Fristam Pumps (I) Pvt Ltd vs CCE [2003 (3) TMI 481 - CEGAT, MUMBAI] - Decided in favour of Revenue.

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• 2013 (8) TMI 347
  Marketability of carbon dioxide - Commissioner held gas not marketable as that was not being capable of bought and sold - Held that:- appellant itself has testified that the shortage of carbon dioxide was met from purchase of such goods made from the market - gas is normally filled in cylinders and bought and sold - Following decision of ARTOS BREWERIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, GUNTUR [1996 (5) TMI 265 - CEGAT, MADRAS] - Decided in favour of Revenue.

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• 2013 (8) TMI 346
  Denial of Cenvat Credit on steel items such as MS plates, flats, pipes, sheets, rods, etc – Held that:- Adjudicating authority appears to have rightly relied on the apex court’s judgment in Saraswati Sugar Mills case [2011 (8) TMI 4 - SUPREME COURT OF INDIA ] wherein it was clearly held that a structural support to any capital goods could not be considered as a part or component of such capital goods - prima facie view that CENVAT credit cannot be claimed by the appellant on the structural steel items used in the fabrication of structural support to raw mill, silo, packing plant, etc. and, therefore, the Commissioner s decision to deny CENVAT credit cannot be faulted – Decided against the Assessee. Stay application – Waiver of pre-deposit – Held that:- Entire demand being within the normal period of limitation, and there being no plea of financial hardships, the appellant directed to pre-deposit an amount of Rs.33,00,000/- (Rupees thirty three lakhs only) being the CENVAT credit prima facie deniable to them. They shall pre-deposit this amount within six weeks – Decided against the Assessee.

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• 2013 (8) TMI 345
  Cenvat Credit - Common input - Held that:- common input was used for manufacture of dutiable and exempted goods - if proportionate credit is reversed, assessee shall not be directed to deposit a percentage of sale prices - appellant had enjoyed credit for one year at the cost of Exchequer. Therefore, penalty to that extent shall be paid - Decided in favour of Revenue.

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• 2013 (8) TMI 344
  Valuation (Central Excise) - Sale to related parties - Demand of differential duty - Penalty u/s 11AC - Commissioner upheld penalty - Held that:- the provision in the Valuation Rules, with regard to sale to related persons, is an exception to the general rule. That exception is applicable only when the manufacturer so arranges that goods are not sold except to or through related person. In the present case, goods are being sold to unrelated parties also. To such a case, the exception does not apply. In any case, the price to the related person cannot be called a non-commercial price since the same was higher than the price to unrelated parties - Following decision of ULTRA REFRIGERATORS PVT. LTD. Versus COMMISSIONER OF C. EX., DELHI-IV[2004 (4) TMI 167 - CESTAT, NEW DELHI] and Birdi Steels Vs. CCE[2004 (10) TMI 145 - CESTAT, NEW DELHI] - Decided in favour of assessee.

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• 2013 (8) TMI 343
  Service tax credit - CHA services on export of goods and courier - Commissioner (A) held that such a credit is not admissible as the services are availed after the place of removal - Held that:- in case of FoB contracts the place of removal is the port from where exports have been made - Following decision of CCE, Nagpur Versus Ultratech Cement Ltd., [2010 (10) TMI 13 - BOMBAY HIGH COURT] - Decided in favour of assessee.

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• 2013 (8) TMI 342
  Cenvat credit on sugar cess - whether the cenvat credit of sugar cess is admissible to the appellants - Held that:- the Cess Act and the Sugar Development Fund Act both have been brought on the statute book simultaneously on the same day and operate as a consolidated scheme and the provisions of both the Acts have to be read together. On such conjoint reading, it is apparent that a plain reading by itself would indicate that the sugar cess levied and collected cannot be equated with duty of central excise and therefore, cannot be treated to be part and parcel of the amount on which education cess has to be calculated - Following decision of COMMISSIONER Versus SAHAKARI KHAND UDYOG MANDLI LTD.[2010 (3) TMI 718 - GUJARAT HIGH COURT] - Decided against Assessee.

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• CST, VAT & Sales Tax

• 2013 (8) TMI 378
  Value of imported goods - Respondent issued demand notice to assessee for differential extent - Held that:- Actual price of the commodity imported by the petitioner is much less than the 'floor rate' and that the petitioner has produced all the materials before the assessing authority in support of the same. It is also stated that, nothing has been observed by the assessing authority in assessment orders, as to the correctness, acceptability or otherwise of such documents produced by the petitioner - It is fit and proper to intercept assessment order in the said circumstance and to direct the first respondent to effect the assessment afresh, taking note of the actual facts and figures; more so when, absolutely no enabling provision of the Statute or any binding judicial precedent is brought to the notice of this Court from the part of the respondents, to hold that, irrespective of actual price, the department is entitled to reckon the 'floor rate' for the purpose of final assessment - Decided in favour of Assessee.

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