Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 17, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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Search and seizure – suppression of sale and variation in G.P. rate - Addition made in respect of alleged Hawala transactions - HC
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Weighted deduction u/s 35(B) - The interest on packing credit is not paid in respect of any services rendered outside India and consequently would not stand covered within the ambit of Section 35B(1) (b)(viii). - HC
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Sale of shares - share broker - Revenue condemned the share transaction of the assessee and held them to sham merely because some share brokers were found to be indulged in some wrong - HC
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Capital gain vs Business income - The income from share transactions has been rightly assessed as business income, however, Security Transaction tax (STT) has to be allowed as a deduction - AT
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Addition u/s 50C - reference to DVO - Word “assessable” has been incorporated only w.e.f. 1.10.2009 (Finance Act 2009 w.e.f. 1.10.2009). The same cannot be made operative for earlier Assessment Years i.e. AY 2007-08 in hand. - AT
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TDS on VSAT charges - Since the VSAT charges paid do not have any element of income, deducting tax while making such payments do not arise - AT
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Validity of revisionary order passed u/s 263 on the issue of LTCG held to be STCG by CIT and excess allowance of deduction u/s 80C - AT
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Agricultural income – infraction of the statutory provisions may expose the assessee to the risks of being penalized or punished under the relevant statutes, but the same do not change nature of the agricultural income - AT
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Reopening of assessment – Even if the materials/evidence was not enclosed with the return, full and true details/material was disclosed during the course of the original proceedings - re-assessment order quashed - HC
Customs
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Rate of exchange of conversion of each of the foreign currency with effect from 17th August, 2012. - Notification
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Import of goods - when the quality of the goods itself has been misdeclared, the declared value requires to be rejected. - AT
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Whether the goods, namely, automobile parts exported by the appellant is eligible for all industry rate of drawback - held no - AT
DGFT
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Amendments Schedule-I (Imports) of the ITC(HS) Classifications of Export and Import Items, 2009-14. - Notification
Corporate Law
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Fraud on investors - Directors - Direction given to the Central government to revoke DIN in order to prevent them creation of new company. - Directions given to all banks to stop operation of their accounts. - HC
Service Tax
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Power of the Commissioner (Appeals) to remand – 100% EOU - export of IT software - refund claim under Notification No. 5/2006 dated 14.3.2006 in respect of the unutilised credit accumulated due to export of services - AT
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Double taxation of service tax - subcontractor - the appellant stated that when the appellant provided courier service to the main courier namely professional couriers and service tax having been paid by the latter, there shall not be levy on the appellant. - AT
Central Excise
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Cenvat credit on input services - invoices issued in favour of the Head Office - denial under Rule 9(1)(g) of Cenvat Credit Rules, 2004 on ground that Head Office of the assessee was not registered during relevant time as Input Service Distributor in terms of Rule 3(1) of Service Tax Rules, 2005 - AT
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Cenvat credit – common input used - rule 6 - demand of 10% / 5% on press mud and sludge, which are in the nature of by-product and waste and also non-excisable cannot be sustained - AT
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Central excise retrun - Duty payment has been made under Rule 3A of the Act and not under Section 3 - Under compounded levy scheme, this is the statutory return which is required to be filed and not the return under Rule 12 of the Central Excise Rules, 2002 - AT
VAT
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VAT / CST - Contract for performance of work of laying HDPE pipe for transportation of natural gas – determination of nature of the contract namely whether the said contract was an indivisible interstate works contract or a contract to supply pipes and a contract to lay down the pipes - HC
Case Laws:
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Income Tax
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2012 (8) TMI 402
Search and seizure – suppression of sale and variation in G.P. rate - Tribunal upheld deletion made by CIT(A) on ground that no incriminating material was found during the search on the assessee so as to suggest under-invoicing of sales - documents upon which the AO placed reliance were seized from a different person and not from the assessee - Held that:- Factual findings recorded by CIT(A) and Tribunal have not been sought to be disturbed or impeached by reference to any material or evidence to the contrary. AO has not referred to any material to show that the quality of the hing sold by the assessee was the same as that sold by the members of the group from whom the sale bills were seized during the search carried out simultaneously. In such circumstances, we are unable to hold that the Tribunal was not right in deleting the additions made to the gross profit declared by the assessee – Decided in favour of the assessee. Addition made in respect of alleged Hawala transactions – opinion formed on the basis of some papers found in the course of the search in one of the family members premises – Tribunal while upholding deletion also noted that such a course adopted by the CIT(Appeals) in another case, namely, ACIT vs. Om Prakash Bhatia has been upheld by the Tribunal - Held that:- CIT(Appeals) in the impugned proceedings has no doubt deleted the addition made in respect of Hawala business, but that is only because the Appellate Tribunal for Foreign Exchange had set aside the order passed by the Adjudicating Officer, Enforcement Directorate. These directions of the CIT(Appeals) have been confirmed by the Tribunal in the impugned order and in our opinion rightly so – Decided in favor of assessee.
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2012 (8) TMI 401
Capital grant - taxability - assessee charged with duty of implementing a scheme of industries in Delhi which had been formulated by the Delhi Government and as a developing agency and not as the owner of this scheme and had been given the grant only for implementing the scheme - Held that:- It is amply clear that the amount in this regard is a capital grant received in order to carry out the policies of the Government in the manner it is sought to be utilized by the assessee and no administrative expenditure has been incurred out of it. CIT(A) rightly deleted the addition - Decided in favor of assessee Depreciation - non-entitlement of depreciation of the building constructed with the aid of the grant in view of the provisions of Section 43(1) - Held that:- It is clarified that it would be dealt with in the appropriate manner at the relevant stage. Maintenance receipts credited to Maintenance Fund - addition - Held that:- There is no trust under which the assessee can be said to hold the receipts. The assessee is collecting the maintenance charges for maintaining the properties of the housing scheme, and obviously for defraying the expenses. The receipts are its own and merely because some expenditure is required to be incurred on maintenance, the funds collected do not become funds kept or held in trust. Addition confirmed - Decided in favor of Revenue.
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2012 (8) TMI 400
Interest on packing credit paid to bank for export orders secured - allowability of weighted deduction u/s 35(B) - Held that:- This interest on packing credit is not paid in respect of any services rendered outside India and consequently would not stand covered within the ambit of Section 35B(1) (b)(viii). See KEC International Ltd. Vs. CIT (2009 (1) TMI 5 - BOMBAY HIGH COURT) - Decided in favor of Revenue.
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2012 (8) TMI 399
Validity of reopening of assessment of the order framed u/s 143(3) - alleged diversion of interest bearing fund for non-business purpose - assessee contending change of opinion - Held that:- From the submissions made by the petitioner during the course of the assessment proceedings as well as the findings recorded by the AO, it is apparent that the petitioner had furnished necessary evidence in support of its case that in exchange of the loan at a lower rate to M/s. Nachmo Textiles, it had given trade discounts so as to meet with the deficiency caused by giving loan at a lower rate. Thus, AO on the basis of the material produced and having been satisfied that the utilisation of funds advanced was for the purpose of regular business of the petitioner, the reopening of assessment on the very same ground without there being any additional material, is clearly based upon a mere change of opinion. Assumption of jurisdiction u/s 147 is invalid - Decided in favor of assessee
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2012 (8) TMI 398
Long term Capital Gain - sale of shares - share broker - Revenue condemned the share transaction of the assessee and held them to sham merely because some share brokers were found to be indulged in some wrong as per report of inquiry held to detect violation of SEBI ( Prohibition of Fraudulent and Unfair Trade Practices Relating to Security Market) Regulation, 2003 - Held that:- It is clear that after getting that enquiry report, the SEBI prima facie found involvement of some of the share brokers in unfair trade practices. Fact of tinted broker may be relevant for suspicion but it alone necessarily does lead to conclusion of all transaction of that broker as tinted. In such circumstances, further enquiry is needed and that is for individual case. Such further enquiry was not conducted in that case. Just on the mere ground of share transaction with such broker does not lead to the belief that bonafide transactions are sham even if their genuineness and bonafides are established. it is also undisputed that purchase of the shares were shown by the assessees in their Balance Sheet of the last five years and genuineness of the Books of Accounts was never questioned - Decided in favor of assessee.
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2012 (8) TMI 397
Interest from Head Office credited to the P&L Account - addition - Non-resident banking company - assessee contended the same to be non-taxable on ground that one cannot earn income from its own self - Held that:- Issue is covered in favor of assessee by decision of Special Bench in the case of Sumitomo Mitsul Banking Corpn. Vs. DDIT(IT)(2012 (4) TMI 80 - ITAT MUMBAI). Addition cannot be sustained - Decided in favor of assessee Bad debt - opening balance of the provision for bad debt was adjusted against the written off amount and remaining amount of bad debts was claimed - revenue was of the view that the assessee is entitled to a provision for bad debt u/s 36(1)(vii)(a) which is equal to 5% of the total income before deduction allowable under Chapter-VI - Held that:- Issue has been decided in favor of assessee in preceding years wherein it was held that if bad debts are written off in the books of account during the course of the previous year, such bad debts be deducted as admissible u/s 36(1)(vii) before quantifying the assessee’s total income for the purpose of clause (viia) - Decided in favor of assessee Head Office expenses viz traveling expenses claimed by assessee as deduction u/s 37 - Revenue contending application of Section 44C - Held that:- As the travelling expenses have been incurred by the head office on travel of its own staff and directly related to the business of the Indian Branch, hence we hold that section 44C is not applicable and these are allowable u/s 37(1) - Decided in favor of assessee Prior-period interest expenses - certain term deposit interest wrongly accrued on simple interest basis rather than on compound interest - additional interest claim during assessment proceedings - Revenue contending that deduction not made in the return cannot be entertained by AO otherwise than by filing a revised return - Held that:- Impugned amount claimed by the assessee is not a deduction but it is an expenditure. It is not the case of the revenue that these expenditures are not allowable in the regular course of business of the assessee. The claim is supported by the audit report. Therefore, we are of the opinion, that CIT(A) has rightly granted relief to the assessee - Decided in favor of assessee
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2012 (8) TMI 396
Capital gain vs Business income - dispute regarding nature of income from sale and purchase of shares - assessee alleged of involved in scam of getting allotment of shares reserved for small investors by making multiple applications in ficticious /benami names - Held that:- It is found that assessee was financing such activities. Shares allotted were transferred by Smt. Roopal N. Panchal and M/s. Sugandh Estate and Investments P. Ltd.(in whose case search was conducted revealing involvement of assessee in scam) to the assessee and other financiers who sold shares in the market on the day of listing or immediately thereafter for making profits. It is therefore clear that the assessee had acquired shares in public issues from borrowed funds through an organized effort almost at allotment price, through irregular and illegal manner and selling them on profit soon after shares were listed on stock exchange. The income from share transactions has, therefore, been rightly assessed as business income, however, Security Transaction tax (STT) has to be allowed as a deduction - Decided against assessee.
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2012 (8) TMI 395
Penalty u/s 158 BFA (2) - application u/s 154 submitting mistake in the computation in the total income - Held that:- It is not in dispute that after giving effect to the order of the CIT(A) passed against the appeal filed by the assessee u/s 154 the final undisclosed income of the assessee has been determined at Rs. 55 lacs as disclosed by the assessee in the return. Even otherwise, the difference between the income returned and assessed by the A.O. is due to difference of opinion, and, hence not a case of concealment - in absence of any contrary material placed on record by the Revenue there is no concealment on the part of the assessee and deleting the penalty is thus warranted - in favour of assessee.
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2012 (8) TMI 394
Addition u/s 50C - reference to DVO - dispute regarding value of the property in hand regarding which unregistered agreement has been executed in September 2006 - Held that:- Word “assessable” has been incorporated only w.e.f. 1.10.2009 (Finance Act 2009 w.e.f. 1.10.2009). The same cannot be made operative for earlier Assessment Years i.e. AY 2007-08 in hand. The assessment proceedings before the said point of time have to governed by the words “adopted or assessed”. Even otherwise also, the Coordinate Bench in cases of Carlton Hotel had rightly held that sec. 50C is not applicable in cases of unregistered agreements. Once sec. 50C itself is not applicable qua the facts of the instant case, there is no other provision in the Act which could govern the peculiar circumstances in hand. Therefore, we hold that the CIT (A) has not committed any irregularity in deleting the addition, made by the AO - Decided against the Revenue
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2012 (8) TMI 393
TDS on VSAT charges - Held that:- It stands settled that ‘VSAT charges’ are not payment for technical services and same being paid by the assessee to Stock Exchange are merely reimbursement of the charges paid/payable by the Stock Exchange to the Department of Telecommunication. Since the VSAT charges paid do not have any element of income, deducting tax while making such payments do not arise - Decided against Revenue TDS on Transaction charges paid by the assessee to the stock exchanges - Held that:- Though section 194J was inserted w.e.f.July 1, 1995, till the AY in question that is the AY 2005-06 both the Revenue and the assessee proceeded on the footing that section 194J was not applicable to the payment of transaction charges. In these circumstances, if both the parties for nearly a decade proceeded on the footing that section 194J is not attracted, then in the AY in question, no fault can be found with the assessee in not deducting the tax at source u/s 194J and consequently, no action could be taken u/s 40(a)(ia). Therefore, to ascertain whether such bona fide was entertained in the earlier assessment, we remit issue back to file of AO with a direction to decide ‘bona fides of contention’ in this regard and to decide the issue afresh in the spirit of law in case of Kotak Securities (2011 (10) TMI 24 - BOMBAY HIGH COURT) - Decided in favor of Revenue for statistical purposes.
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2012 (8) TMI 392
Validity of reassessment proceedings framed u/s 143(3) r.w.s. 147 - assessment reopened to dis-allow interest expenses holding that said interest paid on the borrowed funds, utilized for the purpose of obtaining capital assets must be capitalized - CIT(A) deleted dis-allowance on ground that requirement is that of utilization of fund for the purpose of business - Held that:- Entire reassessment is bad in law being based on mere change of opinion as there was no failure on part of assessee in disclosing all material particulars. The AO has not come in position of any new material so as to form an opinion that any income has escaped assessment attributable to failure on part of the assessee in disclosing material facts. As regards merits, it is found that borrowed amount is for the purpose of business within the meaning of sec. 36(i)(iii). There is no dispute that borrowed funds were used in business. Hence, we see no reason to interfere - Decided in favor of assessee.
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2012 (8) TMI 391
Penalty u/s 271(1)(c) - dis-allowance during reassessment of the claim already allowed u/s 80-IB on ground that project in question was residential cum commercial which did not qualify for deduction u/s 80-IB(10) - dis-allowance in question was however deleted by Coordinate Bench of Mumbai ITAT, upheld by jurisdictional High Court - Held that:- Since dis-allowance has already been deleted by Tribunal and upheld by jurisdictional High Court, hence there exists no basis to levy penalty u/s 271(1)(c). We, therefore, do not find any infirmity in CIT(A)’s order deleting penalty - Decided in favor of assessee.
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2012 (8) TMI 390
Renewal of certificate u/s 80G - refusal on ground that applicant trust had not carried out any charitable activities in the last three years and had not incurred any expenditure - trust came into existence vide Trust Deed dated 17-11-1997 - this was the case of fourth renewal - no change in facts and circumstances of the case and also in the objects of the assessee trust - Held that:- Until and unless, the conditions mentioned in Section 80G(5) are not violated, refusal for grant/recognition u/s 80G cannot be made. Also, there is also no material on record to show that, what are the change in the facts and circumstances from the earlier years when the approval and recognition u/s 80G was granted and certificate has been issued. thus, matter should be restored back to the file of the DIT(E), who will not only consider the submissions of the assessee but also examine the conditions as laid down u/s 80G(5) - Decided in favor of assessee for statistical purposes.
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2012 (8) TMI 389
Validity of revisionary order passed u/s 263 on the issue of LTCG held to be STCG by CIT and excess allowance of deduction u/s 80C - assessee purchased three flats vide agreement dated 14.03.2001 rectified vide deed dated 09-10-2002 as the flats numbers were wrongly mentioned in the original agreement - Revenue submitted that through the rectification, the assessee had actually taken different flats, thus holding period was within the three years period - Held that:- It is observed that during the regular assessment proceedings the AO had already made the enquiry, as he thought fit. In these circumstances, it can never be held that there was a lack of enquiry by the authority under the Act. It can also not be held that the enquiry was inadequate because complete details were provided to the AO, therefore, we have to hold that this was a clear case of change of opinion, that too, on a proposal sent by the AO, meaning whereby it was not the case of suo moto action of the CIT, which means, that the CIT himself did not apply his mind. Hence, action to invoke revision proceedings u/s 263 is bad in law and cannot be sustained. Second part of revision proceedings with regard to excess allowance of deduction u/s 80C - rectification proceedings already initiated by AO - Held that:- Since, this was an erroneous view taken by the AO, which, in any case is unsustainable in law. We, therefore, uphold the revision proceedings initiated by the CIT on the issue of excess allowance of deduction u/s 80C - Decided partly in favor of assessee.
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2012 (8) TMI 388
Admission of additional evidence - requirements of Rule 46A – Held that:- new evidence filed by the assessee from the government agency and the same are essential for disposal of the appeal - CIThas considered the new evidence and the facts and circumstances of the case in entirety and validly, after recording reasons, admitted the new evidences Addition on account of unexplained addition to capital account – Held that:- copy of the capital account is available wherein amount on account of remittance from LIC of India and amount on account of constituency allowance received by the assessee is mentioned - addition has been deleted on the basis of corroborative evidence – against revenue Unexplained cash credit –Held that:- Assessee establish the identity & creditworthiness of the investor and genuineness of the transaction - Shri Gurdip Singh is assessed to income tax and he has confirmed the loan granted to the assessee and further quoted his PAN number – addition deleted
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2012 (8) TMI 387
Unexplained cash credit – assessee obtained loans from parties by means of cheques - AO had accepted part of the loans - AO not only accepted the identity and genuineness of the creditors but also the creditworthiness of the creditors - he chose to disallow a part of the loan without bringing on record any material to show that the assessee had any other source of income which could have been routed in the from of loan given by a third party – Held that:- Creditors have explained the source of their deposits which in effect means that the sources were explained by the creditors. The AO has not pointed out how the explanation is not convincing and merely proceeded to invoke provisions of section 68 of the Act, that too for a part of the loan - initial onus placed upon the assessee stood discharged - appeal of the assessee is allowed
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2012 (8) TMI 386
Exemption under S.10(1) of the Act in respect of agricultural income – Held that:- Once it is established that such agricultural activities are carried out by the assessee, assessee is entitled for exemption in respect of such agricultural income under S.10(1) of the Act, irrespective of any violation of the statutory provisions - infraction of the statutory provisions may expose the assessee to the risks of being penalized or punished under the relevant statutes, but the same do not change nature of the agricultural income, and as such, cannot be fatal to the assessee's claim for exemption under S.10(1) of the Act. Charitable or religious trust - Non-registration of the assessee under S.43(1) of the A.P. Charitable and Hindu Religious Institutions and Endowments Act, 1987 – Held that:- Mere fact that the assessee-trust is not registered under the provisions of the A.P. Charitable and Hindu Religious Institutions and Endowments Act, 1987, shall not render the assessee trust as a non-charitable one, and registration under S.12A of the Income-tax Act alone is enough for an assessee to claim exemption in respect of its income under S.11 of the Act - Revenue's appeal is dismissed.
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2012 (8) TMI 385
Penalty under section 271(l)(c) of the Act – Held that:- during pendency of penalty proceedings assessee died and, thereupon Assessing Officer without issuing a fresh notice to legal heir of deceased-assessee passed a penalty order, order so passed was not sustainable being violative of principles of natural justice - Action of the Assessing Officer on the ground that assessee has concealed income is contradictory in terms for the simple reason that the Investigation Wing appears to have passed on the information - assessee voluntarily declared return of income of Rs. 1 lakh it is intriguing to note that the revenue could not lay their hands on any evidence, for about two years, to prove that the gift received by the assessee was bogus and presumably because of non-availability of material no action was taken by the Assessing Officer - it is for the Assessing Officer to prove, either by obtaining the statement from the donor or otherwise, that the gift is not genuine. No such effort was made by the Assessing Officer. Assessee having declared a sum of Rs. 1 lakh as his income it is not a case of furnishing inaccurate particulars of income - penalty proceedings are bad in law
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2012 (8) TMI 384
Undisclosed cash credit - Assessee received unsecured loans from three parties through account payee cheques – Held that:- Assessee has discharged the initial burden of proving identity, genuineness of transactions and also creditworthiness of the three creditors by producing their respective bank accounts. Entry in the pass book of a third party can be taken as a primary evidence in proof of the fact that loan was advanced by third party - initial onus shifts onto the Revenue to prove that the creditors lack creditworthiness and to come to such conclusion, the assessee cannot be asked to produce any evidence which is within the personal knowledge of the third party - AO did not examine the parties and proceeded on the assumption that creditors would not have saved any money to advance the loan - it is not a fit case to make addition u/s 68 of the Act
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2012 (8) TMI 383
Reopening of assessment – income escaped assessment - Assessee, a non-resident, was operating in India through its liaison office and project office - it was found that assessee did not include sales to DMRC effected through project office which amount represented milestone payments received abroad in foreign currency and same was not offered to tax in India as income of project office – Held that:- Even if the materials/evidence was not enclosed with the return, full and true details/material was disclosed during the course of the original proceedings - project office was a permanent establishment - conclusion drawn by the Assessing Officer cannot be attributed to the failure of the petitioner to disclose fully and truly all the material facts. No new material fact or particulars have come to the notice/knowledge of the Assessing Officer - re-assessment order quashed
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Customs
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2012 (8) TMI 382
Enhancement of import value of goods on the basis of contemporaneous imports - difference between the description of the goods - assessee contended the same to be of reject quality whereas test report held the impugned goods to be of Grade-I quality - Held that:- The discrepancy has not been explained by the appellants. Further, a claim has been made by the appellants that they only ordered for the reject quality goods. This submission appears to have no substance as they have taken delivery of the impugned goods without returning the same to the suppliers, which was required to be done, if the suppliers were at fault in supplying a different quality of goods. Hence, enhancement confirmed. Further, when the quality of the goods itself has been misdeclared, the declared value requires to be rejected. The appeal is otherwise rejected except for reducing the redemption fine and penalty.
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2012 (8) TMI 381
Whether the goods, namely, automobile parts exported by the appellant is eligible for all industry rate of drawback – Held that:- Item steering knuckle falls under chapter 87 of the Customs Tariff and hence the all industry rate of drawback for the said item can not be claimed against goods for which rate has been prescribed under chapter 73 - if a product falls under chapter 87, benefit of drawback is not available merely because the product description matches with those given for goods falling under chapter 73 - appellant is not eligible for duty drawback at all industry rates on the impugned goods under serial nos. 73.29 and 73.30 of the drawback schedule as it stood at the relevant time Whether the goods already exported are liable to confiscation and if so, whether penalty is imposable - appellant did not furnish the correct description of the goods under export either in the shipping bill or in the export invoice - appellant sought ineligible drawback by mis-declaring the goods - appellant has submitted that in the instant case the goods have not been seized at all the hence they cannot be confiscated – Held that:- Section 113 deals with liability to confiscation and not actual confiscation - section nowhere states the goods should be seized to determine the liability to confiscation - merely because the goods have been examined by the central excise authorities does not absolve the appellants of their responsibility of making the correct declarations in the export documents - This can at best a factor for determination of quantum of penalty and not for imposition of penalty per se – Penalty reduced
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Corporate Laws
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2012 (8) TMI 380
Winding up – alleged that company was unable to pay its debts – respondent company was taken over by another company but no payment was made by either company – Held that:- Petitioner is an admitted creditor and the respondent is unable to pay its debts, present petition is admitted and respondent company is directed to be wound up. Fraud on investors - held that:- Mr. Vijay Kumar Sharma and his family members are targeting small and middle class investors as they know that they are unorganized and do not have resources to defend themselves. Even the statutory authorities like the Official Liquidator's office who are entrusted with the duty to bring the culprits to book are not able to keep pace with the scams perpetrated by Mr. Vijay Kumar Sharma and his family members. In fact, the Official Liquidator's office is ill-equipped, under-staffed, untrained and manned by non-professionals. Had it not been for the SFIO and police inquiry, Official Liquidator would never even have come to know about the real diversion of funds even in JVG Finance Company, despite lapse of more than ten years. Direction given to the Central government to revoke DIN in order to prevent them creation of new company. Directions given to all banks to stop operation of their accounts.
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Service Tax
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2012 (8) TMI 406
Power of the Commissioner (Appeals) to remand – 100% EOU - export of IT software - refund claim under Notification No. 5/2006 dated 14.3.2006 in respect of the unutilised credit accumulated due to export of services – Commissioner (Appeals) allowed the refund of Cleaning activity, Security Agency, Courier charges, Repair & Maintenance, Cargo Handling, Commercial Training or coaching, Courier, Internet Telephone, Manpower Recruitment, Pager, Rent a cab operator, Telephone, Chartered Accountants, Clearing & Forwarding Agents, Outdoor catering except Air Travel Agent service - Held that:- Order of the Commissioner (Appeals) is not a remand order and he has clearly held that the refund was available in respect of all services except Air Travel Agent service . Therefore, I do not find any merit in the submission that the Commissioner s (Appeals) order is a remand order. Appeal rejected.
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2012 (8) TMI 405
Liability of Service tax on the import of service for the period from 1.1.2005 to 18.4.2006 - Held that:- Liability under Finance Act 1994 for availing service of foreign agents arise after 18.04.2006 following Apex Court decision in case of Indian National Shipowners Association v. Union of India (2010 (12) TMI 12 - SUPREME COURT OF INDIA ) - Decided in favor of assessee
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2012 (8) TMI 404
Demand of service tax - under the category of "Business Auxiliary" service provider – benefit of Notification No.l4/2004/ST, and Notification No. 6/2005-Customs – Held that:- According to appellant individuals are totally exempt from the purview of the service tax when they provided services on behalf of their client - Authorities below have not dealt with exemption notification - matter remanded to Adjudicating Authority-
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2012 (8) TMI 403
Double taxation of service tax - subcontractor - the appellant stated that when the appellant provided courier service to the main courier namely professional couriers and service tax having been paid by the latter, there shall not be levy on the appellant. - held that:- No doubt, larger bench decided [in Vijay Sharma & Co. & 2 Others Vs CCE Chandigarh - 2010 (4) TMI 570 - CESTAT, NEW DELHI]the case of stock brokers and sub-brokers where the matter in controversy was about taxability as was the question framed in para-1 of the reported decision cited by ld. Counsel. We do appreciate that larger bench decision emerged subsequent to adjudication. Therefore, ld. Adjudicating authority had no advantage of reading that decision. But entire plea of appellant was without proof and nothing was proved to show that the appellant was a mere agent of the principal courier. It is therefore not possible to hold that the appellant acted as a courier without being a provider of business support service. Stay granted - matter remanded back to pass a reasoned and speaking order dealing with pleadings and evidence..
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Central Excise
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2012 (8) TMI 379
Cenvat credit on input services - invoices issued in favour of the Head Office - denial under Rule 9(1)(g) of Cenvat Credit Rules, 2004 on ground that Head Office of the assessee was not registered during relevant time as Input Service Distributor in terms of Rule 3(1) of Service Tax Rules, 2005 - Held that:- It is found that neither the adjudicating authority nor the Appellate authority have undertaken the exercise to scrutinize the invoices relating to Input services availed in order to find out as to whether or not the Input service corresponding to the invoices were availed by the appellant unit or the Head Office or any other unit. We remand the matter back to the adjudicating authority for de novo decision
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2012 (8) TMI 378
Plea for condonation of delay of 29 days - delay occurred due to accident of accountant dealing with the matter who got bed-ridden for almost 3 months - Held that:- Explanation given by the appellant for delay in filing of the appeal is satisfactory and Commissioner (Appeals) should have accepted the same, more so because of the fact the medical certificate of Accountant was also produced. It is well settled that while dealing with the application for condonation of delay, the Courts/Tribunal should take liberal view and ordinarily the doors of justice should not be shut to a party on technical ground of limitation. Delay condoned - Decided in favor of assessee.
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2012 (8) TMI 377
Cenvat credit – common input used - appellants are manufacturers of sugar, molasses, rectified spirit and carbon-di-oxide - manufacture, press mud and sludge are produced which have been sold by the appellants for some value – demand of 10% or 5% as applicable during the relevant period from April 2008 to September 2010 in terms of CENVAT Credit Rule 6(3)(i) – Held that:- CENVAT credit is also admissible in respect of amounts of inputs contained in any of the waste, residue or by-product. It further states that the basic idea is that CENVAT credit is admissible so long as the inputs are used in or in relation to the manufacture of final products - demand of 10% / 5% on press mud and sludge, which are in the nature of by-product and waste and also non-excisable cannot be sustained - appeals are allowed.
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2012 (8) TMI 376
Penalty under Rule 27 of the Central Excise Rules, 2002, for contravention of Rule 12 (1) of the Central Excise Rules, 2002 on the ground that the appellant did not file the monthly ER-1 returns – Held that:- discharge of duty liability under compounded levy scheme - Duty payment has been made under Rule 3A of the Act and not under Section 3 - Under compounded levy scheme, this is the statutory return which is required to be filed and not the return under Rule 12 of the Central Excise Rules, 2002 - appellant has complied with the said procedure - appellant has not violated the provisions of Rule 12 of the Central Excise Rule, 2002 and accordingly, the imposition of penalty on the appellant under Rule 27 for violation of Rule 12 is not correct in law - appeal is allowed
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CST, VAT & Sales Tax
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2012 (8) TMI 407
Contract for performance of work of laying HDPE pipe for transportation of natural gas – determination of nature of the contract namely whether the said contract was an indivisible interstate works contract or a contract to supply pipes and a contract to lay down the pipes - Revenue considered the transaction as a divisible transaction – Held that:- The use of HDPE pipes was an integral part of the performance of the contractual obligation by the applicants in as much as the applicants were required to lay down the tranches and lay down the pipes which would be reaching at site. The payment terms also clearly indicates that the applicants were entitled to get money from Assam Gas depending upon the performance of various acts required to be done for the successful fulfillment of terms of the contract. Further, Clause 9 and clause 21 refers to the term 'contract value' and ‘turnkey basis’ respectively which clearly indicates that the consideration payable was to be calculated as a whole and not in parts. If at all the contract was intended to be divided into two parts, the said payment terms would have indicated that the applicants would be entitled to get cost of the pipes on delivery of required quantity of pipes to be used for the purposes of laying the pipes In view of aforesaid it is held transaction to supply and laying down the pipe being inseparable, it would constitute works contract and to such a works contract, the liability to pay Central Sales Tax would arise only after 11.05.2002 and since the transaction in the present case pertains to the period prior to 11.05.2002, the applicant would not be liable for Central Sales Tax.
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