TMI Tax Updates - e-Newsletter
August 24, 2013

Case Laws in this Newsletter:

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

Articles

1. WINDING UP OF A COMPANY FOR NON PAYMENT OF SERVICE TAX

   By: DR.MARIAPPAN GOVINDARAJAN

2. TRANSPORT CHARGES RECEIVED BY EDUCATION INSTITUTES - TAXABLE OR NOT?

   By: Rishi Chanan

3. PLACE OF PROVISION OF INTERMEDIARY SERVICES

   By: Dr. Sanjiv Agarwal

News

1. Interest Rates and Economic Activity (Speech by Shri Deepak Mohanty, Executive Director, Reserve Bank of India, delivered to the Association of Financial Professionals of India (AFPI), Pune, August 23, 2013)

Highlights / Catch Notes

Income Tax

• Unaccounted Sundry Debtors Must Be Included in Surrendered Sale for Income Tax; Separation by Assessing Officer Unjustified.

  Case-Laws - AT : Surrender of Sale (income) - whether unaccounted sundry debtors are part of surrendered sale - Held yes - Assessing Officer was not justified in splitting this particular asset on the basis of seized material - AT
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• Revenue Doesn't Demand Proof of Fund Source u/s 68; No Income Addition for Cash Advance.

  Case-Laws - AT : Addition u/s 68 - Revnue have not asked the purchaser to prove source of the source. The purchaser also in his statement explained the reasons for giving the advance in cash to the assessee because he was not maintaining bank account for the last ten years - no addition - AT
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• Sections 92C and 92CA of Income Tax Act: Distinct Roles in Transfer Price Adjustments Explained.

  Case-Laws - AT : Reference made to TPO - Transfer Price Adjustments (TPA) – Whether Section 92C and 92CA of the income tax act are independent of each other – the words "the said international transaction under section 92C" do not, lead to the conclusion that the requirement of section 92C(3) can be read into section 92CA(1) of the Act - AT
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• Leave Encashment Deduction Under MAT: Accrued Provisions Allowed Due to No Amendment in Section 115JB.

  Case-Laws - AT : Book profit adjustment - MAT u/s 115JB - provision for retirement benefits – As per this clause (f) of section 43B, the expenses of leave encashment are allowable on an actual payment basis. No corresponding amendment, however, was brought about in Section 115JB of the Act, with the result that the provisions for expenses accrued and ascertained shall be allowed while computing book profits under MAT - AT
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• Tribunal Orders Recalculation of Interest u/ss 234A and 234B, Confirms No Error in Directive.

  Case-Laws - AT : Rectification of mistake - Tribunal directed AO to recalculate interest u/s 234A, 234B and adjustment of seized amount with advance tax - There is no mistake in the said order of the Tribunal - AT
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• Bank Branch Classification: Follow RBI Guidelines, Not Income Tax Provisions, for Rural or Urban Status.

  Case-Laws - AT : Bank branch classification as ‘Rural’ or ‘Urban’ – Classification as per RBI guidelines or Income Tax provisions - Overriding effect - A place includes a ward of a Gram Panchayat whose population is less than ten thousand and which may be a part of a panchayat whose population may be more than ten thousand as per 1990-91 census, provided the ward branch is notified as a rural branch by RBI - AT
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• Bank Branch Classification Affects Bad Debt Write-Offs u/s 36(1)(viia) of Income Tax Act.

  Case-Laws - AT : Bank branch classification as ‘Rural’ or ‘Urban’ – Writing off bad debts under section 36(1)(viia) – A bad debt cannot be refused merely because of assessing officer's perception collateral securities should have been taken - AT
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• Section 263 Revision: AO's Exemption on Dividend Income in Insurance Business Upheld as Non-Erroneous and Fair.

  Case-Laws - AT : Revision u/s 263 - Erroneous or prejudicial of revenue - AO allowed the Exemption u/s. 10(34) - Insurance business - Dividend income - The order passed by the AO allowing exemption u/s. 10(34) of the Act cannot be said to be an order which is erroneous and prejudicial to the interest of the Revenue. - AT
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• Assessee Eligible for Section 10B Deduction as 100% EOU; No Allegations on Machinery Details by AO.

  Case-Laws - AT : Deduction u/s 10B - Benefit to 100% EOU - AO not made an allegation that the assessee has not furnished the details of old and new plant and machinery - existing DTA (domestic tariff area) unit can be converted into 100% EOU as per GOI policy and Circular No. 1/2005 dated 6.1.2005 issued by the CBDT. Being so, an assessee cannot be denied deduction u/s. 10B of the Act - AT
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• Income u/s 68 of the Income Tax Act cannot offset past business losses; disallowed expenses can be set off.

  Case-Laws - AT : Income assessable u/s 68 cannot be assessed under any particular head of income including income from other sources u/s 56 - Therefore, this addition cannot be set off against business losses computed in earlier years. However, as far as expenses disallowed on account of education expenses and on account of establishment expenses are concerned, they are to be set off. - AT
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• Tax Dispute: Is Sponsoring Director's Son's Education a Legitimate Business Expense u/s 37?

  Case-Laws - AT : Disallowance u/s 37 - Expenditure on employee's education (son of Directors) - how assessee can say that decision to sponsor education of Employee was not influenced by parental love and affection of Directors - AT
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• Interest Income and Deductions in MAT Book Profit Computation u/s 115JA: Key Tax Implications.

  Case-Laws - AT : Computation of book profit - MAT u/s 115JA - Treatment of interest income for the purpose of section 80IA and thereafter book adjustment u/s 115JA - there was a nexus with the interest paid to the interest earned - eligible for deduction u/s 80IA - AT
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• Assessee Not Required to Record Custodian Stock as Trade; Charges Fixed Fee for Service.

  Case-Laws - AT : Addition towards incorrect accounting of stock - maintaining stock for others - while accepting that the assessee is maintaining the stock of material on behalf of others and only charging fixed amount for this service, and as such, apparently, there is no need to admit the same in their books as stock in trade - AT
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Customs

• Overvaluation Allegation in Duty Drawback Case: Market Inquiry Criticized for Excluding Manufacturers, Benefit Granted to Appellant.

  Case-Laws - AT : Excess duty drawback – allegation of overvaluation - market enquiry was not done with any manufacturer of trouser, That was done with traders without demonstrating whether they have at any time dealt with the goods of the appellant and whether they had any experience as manufacturer - benefit allowed - AT
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• Entity's Refund Claim for Exempt Duty Challenged Due to Bypassing Initial Assessment Order.

  Case-Laws - AT : Refund claim - duty paid at the time of import - Assesse filed a Refund Claim on the ground that the imported goods were exempt from payment of Additional Customs Duty - if an assessee fails to challenge an order of assessment issued by proper authorities, but resorts to file a refund claim for relief, then such approach would disturb the very scheme of the statute - AT
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• Penalty Imposed on Ship Master for Non-Declaration of Goods; Argues Against Penalties for Honest Mistakes Lacking Malice.

  Case-Laws - AT : Non-declaration of Goods – Penalty on the master of the vessel on account of non-declaration - bona fide and inadvertent mistake should not be met with imposition of penalty which had inherent built of mala fide - AT
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• Export Units: Duty Rate Set at Warehousing End, Not Clearance Date; Capital Goods Depreciation Crucial for Compliance.

  Case-Laws - AT : 100% EOU - Export obligations - Rate of duty on de-bonding - Rate of depreciation of capital goods on debonding - if an exemption was available on complying with certain conditions, the conditions have to be strictly complied with - The rate of duty applicable on the goods would be the rate in force on the date of expiry of the warehousing period, irrespective of the date on which the goods were actually cleared from the bond - AT
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Corporate Law

• Court Directs Official Liquidator to Address Property Transfers in Winding-Up Case; Actions Ordered for Four Properties.

  Case-Laws - HC : Winding up – Appointment of Official Liquidator – Transfer of four properties were either made during the pendency of the reference or immediately before or during pendency of the winding up proceeding - In such event, the learned Judge was justified in directing Official Liquidator to take steps in this regard. - HC
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Service Tax

• Service Tax Implications Arise from Construction Activities on Client-Owned Land for Commercial and Residential Complexes.

  Case-Laws - AT : Construction of Commercial Complex and Residential Complex - It was very clear that the construction activity was undertaken on the land already registered in the name of the client and therefore service was being provided by the applicant to such clients - AT
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• New Entry Alters Service Tax Payment Method for Construction of Complexes Effective June 1, 2007; Continuity in Terminology Maintained.

  Case-Laws - AT : Construction of Commercial Complex and Residential Complex - The new entry introduced on 1.6.2007 only brings in a new method of payment of service tax liability for these services - The new entry used the same expressions as were used in the previous entries - AT
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• Court Rules Substituting Buyer Names as Real Estate Agent Service u/s 65 (88); 50% Deposit Ordered.

  Case-Laws - AT : The service provided by the assesse in substituting names of prospective buyers of real estate, in its records, for which it collects transfer charges, does constitute real estate agent service, as defined in Section 65 (88) of the Act - but it is related to sale of real estate - 50% amount ordered to be deposited. - AT
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• Court Grants Partial Stay, Orders Rs. 2 Crore Re-deposit in Dredging and Site Formation Services Case.

  Case-Laws - AT : Stay - dredging activity - Site formation service - Import of manpower service - it is reasonable to call for re-deposit of Rs.2 crores - stay granted partly. - AT
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• Post Office's Commercial Status Under Indian Post Act to Be Reviewed for Service Tax Implications on Property Rentals.

  Case-Laws - AT : Renting of property for use in course of furtherance of business or commerce - Bank and BSNL are commercial organizations - as regards the Post Office, the appellant might have a case and the arguments will have to be considered after examining the provisions of the Indian Post Act. - matter remanded back - AT
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• Service Tax Demand Dismissed: "Contingent Liability" Label on Collected Amount for Flat Sales u/s 73A.

  Case-Laws - AT : Service tax demand u/s 73A – sale of flats - collection of amount towards service tax but not as service tax - contingent liability – appellant took the precaution of collecting it as ‘contingent liability' and not as service tax per se – he also made it clear that in case the outcome of the judicial proceedings emerges in their favour, the amount would be refunded along with interest - No demand - AT
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• CENVAT Credit on Insurance, Internet, and Website Services Under Review; Rs. 16 Lakhs Involved; Stay Granted.

  Case-Laws - AT : CENVAT credit - Input Service - total Cenvat credit availed in respect of insurance service, internet access/connection service and website development service was about Rs. 16 lakhs which appeared to had been correctly availed. - stay granted - AT
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Central Excise

• Court Rules Commissioner Cannot Review Order Based on Fake Certificates and Fabricated Invoices.

  Case-Laws - HC : Whether after the Commissioner had determined the annual capacity of production the Commissioner could review his order when he was informed that fake certificates were issued and as such the earlier determination was based on false and fabricated invoice/certificates regarding the annual capacity of production - Held No - HC
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• Fraudulent CENVAT Credit Scheme Uncovered: Bogus Invoices Issued Without Goods, 2 Crore Pre-Deposit Ordered for Involved Party.

  Case-Laws - AT : CENVAT credit - fraudulent activity - They had without manufacturing any goods passed on the bogus Cenvat credit by issuing bogus invoices to other manufacturers on the basis of which those manufacturers would have taken the Cenvat credit - 2 crores were ordered to be submitted as pre-deposit - AT
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• Assessee's 13-Year Focus on Technical Grounds Fails to Prove Substantive Case; Rectification Requests Denied.

  Case-Laws - AT : Rectification of mistake in the order - Assessee over the period of 13 years did not take note of or considered whether there was a case on merit or not and was fighting the case on a technical ground - The assessee seems to be seeking rectification of mistakes committed by Original Authority, First Appellate Authority and by this Tribunal on six occasions - This cannot qualify as a mistake apparent from the records at all - AT
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VAT

• DEPB License Sales Classified as Business Activity, Subject to VAT/Sales Tax per Section 2(d)(1) Definition.

  Case-Laws - HC : Whether sale of DEPB license constitute business and liable to VAT / Sales Tax - Held yes - By use of the expression “any transaction in connection with the business“, one can hold that the Act itself does not contemplate the frequency or regularity or continuity of the transactions, as has been done in the substantive part in sub clause (1) of sub section (d) of Section 2 of the Act. - HC
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Case Laws:

• Income Tax

• 2013 (8) TMI 672
  Surrender of Sale (income) - whether unaccounted sundry debtors are part of surrendered sale - Unaccounted sale and debtors - Search conducted u/s 132 of the Income Tax Act - Assessment u/s 153A of the Act - Held that:- The total amount of surrender was included in the income of assessee in its computation of income - The amount of Rs. 84.20 lacs is on account of outstanding debtors not recorded in the books of accounts - During search proceedings, the assesssee had surrendered a particular amount representing various undisclosed assets including sundry debtors of Rs.84.20 lacs. When all other undisclosed assets has been accepted as income for A.Y 2007-08, the Assessing Officer was not justified in splitting this particular asset on the basis of seized material – Also, Sh. Naveen Jindal had agreed that the amount of Rs.84.20 lacs was debtors out side the books of accounts on 15.01.2007 which was surrendered and was a part of total surrender of five crores – Appeal allowed – Decided in favor of Assessee. Disallowance of telephone, car expenses etc – Held that:- No incriminating material was found in respect of such expenses which could enable the Assessing Officer to disallow a part of it during proceedings u/s 153A – Thus, relying upon the judgment in the case of Jai Steels India vs. CIT in [2013 (6) TMI 161 - RAJASTHAN HIGH COURT], it was held that in case of assessment u/s 153A, the completed assessment can be tinkered only on the basis of incriminating material found during search - Without any incriminating material Assessing Officer was not justified in making disallowance – Decided in favor of Assessee.

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• 2013 (8) TMI 671
  Unexplained income - Father of the assessee Shri Lalta Prasad Garg has executed Will in favour of the assessee and other family members - Deceased father having jewellery with him and given the same to the assessee and other family members through Will - Sold the same jewellery to M/s. Kalicharan Durga Prasad of Gwalior - In the case of one of the family member Shri Rajan Garg, the AO did not make any addition in this case and accepted the claim of receipt of jewellery through the Will and receipt of sale consideration of the said jewellery - The purchase of jewellery by M/s. Kalicharan Durga Prasad is supported by bills and books of account who has also made statement before the AO for purchase of jewellery from the assessee and other family members - All the entries are recorded in their books of account – The above informations obtained from commercial tax officer, Gwalior u/s. 133(6) by the AO to show that the jewellery was purchased by M/s. Kalicharan Durga Prasad, which is also disclosed in the Sales Tax Return. Therefore, the purchase of jewellery from the assessee and their family members are not in dispute - The returned income of the purchaser has been accepted by the AO also – Held that:- Revenue has not produced any material to contradict the findings of facts recorded by the ld. CIT(A) - ld. CIT(A) on proper appreciation of evidences on record correctly deleted the addition of Rs.65,00,000/-. As regards the addition of Rs.20,00,000/-, assessee produced agreement to sale dated 06.06.06 before the AO through which the assessee received advance of Rs.20,00,000/- from Shri Kaushal Kishore Pawaiya - Shri Pawaiya, admitted in his statement of giving of advance of Rs.20,00,000/- in cash to the assessee - Purchaser of the property has admitted giving of advance to the assessee – In case of doubt in the minds of the AO of execution of agreement to sale, no examination of the marginal witnesses who have signed the agreement to sale to find out the truth in the matter, was done – Also, Shri Kaushal Kishore Pawaiya has maintained regular books of account which were produced before the AO in which availability of Rs.20,00,000/- as cash with him have been specifically mentioned - Plot of land was available to the assessee for sale at the time of entering into agreement to sale - Authorities of the Revenue department have not asked the purchaser to prove source of the source. The purchaser also in his statement explained the reasons for giving the advance in cash to the assessee because he was not maintaining bank account for the last ten years - The assessee in view of the above facts and circumstances and evidences on record has been able to prove identity of the purchaser, genuineness of the transaction and the amount actually received from the purchaser as advance – Appeal allowed – Decided in favor of Assessee.

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• 2013 (8) TMI 670
  Reference made to TPO by Assessing Officer – Whether Section 92C and 92CA of the income tax act are independent of each other – Held that:- Proceedings in both the sections are quite independent of and distinct from each other and the proceedings under section 92CA(1) of the Act are not dependent on the proceedings under section 92C(3) of the Act. This is due to historical reasons as two provisions were introduced at different times as noted above. The expression "necessary" or "expedient" is quite distinct from and independent of the circumstances mentioned in section 92C(3). The Assessing Officer may consider it necessary or expedient to refer the case of the assessee to the TPO even without considering existence of circumstances mentioned in section 92C of the Act. The Assessing Officer has only to be satisfied that it is necessary or expedient to make a reference to the T.P.O. No other condition is prescribed in the provision - Assessing Officer would consider it "necessary" or "expedient" would depend upon facts of each case. No doubt, even in cases covered by section 92C(3) of the Act, the Assessing Officer may in appropriate cases consider it necessary or expedient to refer the case of the assessee to the TPO for determining the ALP but that does not mean that powers of the Assessing Officer to refer the case to the TPO is restricted to those cases which are covered by section 92C(3) of the Act. Had the legislature contemplated to refer the case of the assessee to the TPO only in the circumstances mentioned in section 92C(3) then the legislature would have to provide such conditions in place of words "necessary" or "expedient" in sub-section (1) of section 92CA. The requirements under both the sections are quite distinct as procedure to be followed in the sections is different. In the above sub-section 92CA(1) there is no reference to section 92C(3) - The CIT(A) has emphasized on the words "the said international transaction under section 92C". These words, only refers to the transaction in respect of which reference can be made to the TPO but the same does not, lead to the conclusion that the requirement of section 92C(3) can be read into section 92CA(1) of the Act – The view of this court is relying upon the decision of the Hon'ble Delhi High Court in the case of Sony India (P.) Ltd. v. CBDT [2006 (10) TMI 88 - DELHI HIGH COURT] - Decided against the Assessee. Companies having higher profits included in comparable for computation of Arm’s Length price - To include Gemini Communication as comparable - The objection against the Gemini Communication Ltd. was raised by the assessee on the ground that the said company is having a super normal profit at 28.07% – Held that:- Profit at 28.07% is not a super normal because the decision relied upon by the assessee in support of its contention are based on the fact where the profit of the comparable as noted by the Tribunal was ranging from 50% to 100% and in those circumstances the Tribunal held that the cases where exceptional profit has been earned and termed as super normal profit should be excluded from the comparables. Therefore, when the profit in case of Gemini Communication does not fall in the category of super normal then merely because of high profits margin cannot be a factor for exclusion from proposed comparables until and unless the extreme results of a case are as a result of exceptional conditions exist. Even as per OECD TP guidelines, the extreme results might consist of losses or unusually high profits itself cannot be a factor for potential comparables; but further examination would be needed to understand the reasons for such extreme results. If some reasons are detected which indicate a defect in the comparability or exceptional conditions for such an extreme results, then only the case may be excluded from the proposed comparables. Exclusion of Punjab Communication Ltd. from the list of comparables for computation of Arm’s Length Price – Held that:- The said company is a persistent loss making company - For the last four years this company has been consistently suffering loss - The persistence loss from year after year itself shows existence of exceptional and extreme circumstances and therefore is a good reason for exclusion of the company from comparables. There is a consistence view of this Tribunal on this point that a company showing persistent losses from year after year cannot be considered as a good comparable for the purpose of determination of ALP. Use of multi-year data for selecting comparables – Held that:- Data relating to the financial year in which the international transaction has been entered into to be used for computation of Arm’s Length Price - It is stipulated under Rule 10B(4) r.w.s Rule 10D(4) that contemporaneous information and documents should be considered as far as possible for the purpose of comparing uncontrolled transaction with the international transaction. Therefore, the comparability of an uncontrolled and unrelated transaction with the international transaction has to be tested by using current year data. Only when the current year data does not give a true picture of the affairs and results of the comparables due to existence of some abnormal circumstances, the multi year data can be considered. Use of data by the TPO after the cut off date – Held that:- There is no infirmity in the action of the TPO in using contemporaneous data at the time of transfer pricing audit, though the same may not have been available to the assessee at the time of preparation of statutory transfer pricing study / documentation Benefit of proviso to section 92C(2) of the Income Tax Act – Held that:- The benefit of proviso to section 92C(2) is available only when the price of international transaction of the assessee is within the tolerance range of ±5% of the ALP computed by taking the arithmetic mean of more than one price - Benefit under the proviso to section 92C(2) is available only as a tolerance range and not as a standard deduction. Accordingly, allowed the benefit of the proviso if the prices of the international transaction of the assessee are within the tolerance range of ±5% of the arithmetic mean of more than one comparable prices. Effect of financial results on TPA – Held that:- Under the Transfer Pricing regulation/provisions the testing party is the assessee and the international transaction entered into by the assessee has to be tested by comparing the same with uncontrolled, unrelated comparable transaction - Price of international transaction in the hand of the AE of the assessee is absolutely irrelevant. The concept of Transfer Pricing based on the principle that instead of entering into a transaction with related party if the assessee had entered into a similar transaction with unrelated party what would have been the prices of said transaction between the assessee and unrelated party. The comparison is always in the context of the effect of the related party transaction and unrelated party transaction at the hand of the assessee. Therefore, the financial results of the AE are not at all relevant for the purpose of determination of arm's length price in relation to the international transaction entered into by the assessee. - Decided against the assessee.

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• 2013 (8) TMI 669
  Book profit adjustment - MAT u/s 115JB - Addition made by the A.O. for calculating the book profit being the provision for retirement benefits – Held that:- Clause (f) in Section 43B of the Act. As per this clause (f), the expenses of leave encashment are allowable on an actual payment basis. No corresponding amendment, however, was brought about in Section 115JB of the Act, with the result that the provisions for expenses accrued and ascertained shall be allowed while computing book profits under MAT - Computation of retirement benefits, having been made on the basis of actuarial valuation, is based, undoubtedly, on a scientific basis - Ld. CIT (A) has correctly held that the provision for retirement benefit, as duly certified by the actuarial valuation, cannot be treated as a contingent or unascertained liability and it is a definite liability in present, which is to be discharged at a future date - Decided in favor of Assessee. Computation of Transfer price on comparables - Apropos Phoenix Lamps was situated in an SEZ and it was enjoying certain benefits and was, thus, in more advantageous position as compared to the assessee – Held that:- Phoenix were to be retained as a comparable, certain adjustments were required to be made to its statistics – There are remaining three comparables, i.e., Indo-Japan Lightings, Fiem Industries Ltd. and Jagan Lamps Ltd. - The PLI’s of these comparables were 8.1%, 2.69% and 1.91% respectively, amounting to a total of 12.77%. - Average PLI of these comparables at 4.26%. The assessee’s margin, at 6.5%, it is seen, is higher than the above average PLI of 4.26% and the assessee’s margin, therefore, does not call for any adjustment on account of ALP concerning royalty payment on purchase of raw material - The CIT (A)’s order in this regard is found to be fully justified as against that of the TPO, who initially observed that an FAR convergence was mandatory and then, simply rejected the comparables on the basis of turnover, without checking out the FAR convergence, and thereafter, chose a single comparable which too (according to him) was not comparable to the assessee company, which observation has correctly been subverted by the Ld. CIT (A) - Since Phoenix Lamps, as found by the Ld. CIT (A), was operating in an SEZ, it, in order to be retained as a comparable, would have required adjustments to be made for the purpose, which, undeniably, was not done by the TPO. As such, Phoenix was rightly rejected as a comparable by the CIT (A). Even otherwise, undisputedly, the product manufactured by Phoenix is entirely different from that produced by the assessee. Whereas the assessee manufactures the complete lamp, i.e., the full lighting assembly or headlight/tail-light used in automobiles, Phoenix is making only the bulb contained therein - Phoenix nowhere qualifies as a ‘comparable’ to the assessee. Adjustment in the Arm’s Length Price – There is agreement between the assessee and Stanley - Assessee was into a commercial relationship with Stanley and the expatriate engineers had been sent to ensure that the technology supplied was properly applied – Held that:- Mere obtaining of moulds, designs and drawings could not lead to disallowance of the royalty payment, since the technology for use thereof was what required the payment of royalty; that from the fact that the assessee’s turnover had increased over the years and that the assessee was establishing its own R that in Assessment Year 2006-07, the TPO had himself rejected Phoenix Lamps as a comparable; that so, Phoenix Lamps was being rejected as a comparable; that the remaining three comparables gave a PLI of 6.07% on the current year’s basis; and that the assessee’s PLI was at 6.50% and so, no adjustment was required to the arm’s length results - CIT (A) has correctly deleted the addition made – Decided against the Revenue. Expenditure on account of foreign tour of the Director of the assessee company - Assessee’s Director, Shri D.K. Jain had incurred an expenditure of Rs. 1,11,497/- on his visit to the USA on 15.08.2003 and that of Rs. 1,47,937/- on his visit to Dubai on 01.10.2003 – Contended by Revenue that no import from the two countries, there was no business connection and the expenditure incurred was not commercially expedient- Held that:- As per Section 37(1) of the Act, it is not necessary that the incurrence of the expenditure should always result in earning of profits and it can be for any purpose, even incidental or ancillary to the business, for which the expenditure may have been incurred, in order to be allowable under the provision – Expenditure allowed – Decided against the Revenue.

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• 2013 (8) TMI 668
  Rectification of mistake - Tribunal directed AO to recalculate interest u/s 234A, 234B and adjustment of seized amount with advance tax - A.O. failed to follow direction - Held that:- There is no mistake in the said order of the Tribunal, warranting any rectification, as the Tribunal made it amply clear and gave direction that seized amount has to be adjusted first towards existing liabilities and thereafter it should be adjusted towards the outstanding tax liability of the assessment years under consideration, and accordingly directed the Assessing Officer to recalculate the interest under S.234A and 234B of the Income-tax Act. It clearly means that if there is no exiting tax liability at the time of seizure of the cash, the seized amount should be adjusted towards payment of advance tax in terms of judgments cited by the assessee, noted above. When once the Tribunal decides an issue in one way, the only course available to the Assessing Officer is to follow the order of the Tribunal in true spirits, and it is not permissible for the Assessing Officer to take a different view, or to sit in judgment over the order of the Tribunal by interpreting the same in the manner he wanted - while there is no warrant for rectification of the order of the Tribunal, in the absence of any specific mistake therein, and the grievance if any to the assessee, arises out of the consequential orders passed by the Assessing Officer - Decided against the Assessee.

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• 2013 (8) TMI 667
  Re-opening of Assessment under section 147 of the Income Tax Act - Assessing Officer granted additional depreciation in the regular assessment and also agreed for deduction u/s. 80HHC on DEPB entitlement – Held that:- Thereafter, assessing Officer not came in to possession of any tangible fresh material to come to the conclusion that the deduction granted to the assessee in respect of additional depreciation and 80HHC deduction in respect of sale proceeds of DEPB entitlement is incorrect - There is no dispute that the assessee furnished full details in the original return of income and there is only change of opinion and the Assessing Officer did not demonstrate what material came to his knowledge for reopening the assessment which was not available at the time of completion of regular assessment – Relying upon the Apex Court judgment in the case of CIT vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA ], it has been held that reopening of assessment is not in accordance with law – Decided in favor of Assessee. Availability of Additional depreciation u/s 32(1)(iia) – Held that:- Relying upon the judgment in the case of ACIT vs. SIL Investment Ltd. [2012 (6) TMI 83 - ITAT DELHI], eligibility for additional depreciation stands admitted Profit element of DEPB can be reduced from the export profits for the purpose of working out the deduction u/s. 80HHC – Held that:- It is a well-settled principle of statutory interpretation of a taxing statute that a subject will be liable to tax and will be entitled to exemption from tax according to the strict language of the taxing statute and if as per the words used in Explanation (baa) to section 80HHC read with the words used in clauses (iiid) and (iiie) of section 28; the assessee was entitled to a deduction under section 80HHC on export profits, the benefit of such deduction cannot be denied to the assessee – Appeal allowed – Decided in favor of Assessee.

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• 2013 (8) TMI 666
  Valuation of closing stock - The Hon'ble ITAT set aside the order of Ld CIT(A) with the directions to the assessee to submit the required information so as to arrive at the correct valuation of stock. However, the assessee did not file the required information. Therefore, the Assessing Officer made fresh assessment on the basis of earlier addition which was earlier made by the Assessing Officer by adopting GP rate - ITAT has held that at best the valuation could have been made by the Assessing Officer at Rs.1,29,28,299/- and not more than it as the method of valuation adopted by the assessee was cost or market price whichever is lower - CIT(A) has done the same and has taken this valuation to arrive at the disallowance. The Ld CIT(A) while taking this figure has ignored the discount of Rs.15,42,378/- as claimed by assessee in original assessment proceedings – Held that:- Had the assessee furnished break up of age- wise stock, the disallowance would have been less than this figure or at the most equal to Rs.15,42,378/- as Ld CIT(A) has taken full cost price of stock as on 31.3.1996 which was also the observation of ITAT. – No infirmity in the order of CIT(A) – Decided against the Revenue.

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• 2013 (8) TMI 665
  Bank branch classification as ‘Rural’ or ‘Urban’ – Classification as per RBI guidelines or Income Tax provisions - Overriding effect - Writing off bad debts under section 36(1)(viia) – Held that:- The Reserve Bank sanctions branches on different classifications, like rural, urban etc. In respect of the branches disputed in this case, permission of the Reserve Bank have been obtained by the assessee bank of the status that all branches are rural branches. Therefore, it is to be seen that according to banking norms, the disputed branches are rural branches. Now, this position has to be examined in the light of the Income Tax law. Income Tax law provides that a rural branch means a branch in a place where the population is less than 10,000 - Apropos the urban branches, writing off of bad debt, the assessee is eligible to write off of bad debt u/s 36(1)(viia) A place includes a ward of a Gram Panchayat whose population is less than ten thousand and which may be a part of a panchayat whose population may be more than ten thousand as per 1990-91 census, provided the ward branch is notified as a rural branch by RBI. - the RBI Circular produced before us pertained to 3-6-2003. Ld. Counsel contends that similar panchayats have been named in licenses issued in earlier years also. - the issues are decided on principle but restored back to the file of assessing officer for verification. Deduction of Bad-debts - Loan was given to Asia Pacific Investment Trust by consortium headed by SBI and assessee contributed a part of it – Held that:- The banking practice of advancing moneys to NBFC without taking any collateral security which was part of the loan policy and financing of the consortium becomes a business decision. Further, after the said trust went into liquidation and advance became irrecoverable, the RBI directed the assessee to write off the same as bad debt - A bad debt cannot be refused merely because of assessing officer's perception collateral securities should have been taken – Decided in favor of Assessee. Revaluation of securities holding it to be a notional loss – Held that:- Securities held by the assessee bank in all these cases are the stock-in-trade of the business of the assessee banks and the notional loss suffered on account of the revaluation of the said securities at the close of the year is an allowable deduction in the computation of the profits of the appellant Disallowance of expenses on modification in respect of Ahmedabad branch of the Bank, the assessee took premises on rent at Ahmedabad for a period of three years and made certain modifications to suit its requirement – Held that:- Structures were temporary in nature. The lease was only for a short period of three years and the structure was to be demolished thereafter. The temporary structure was created to increase the efficiency of the place and to suit to the assessee's banking needs - Expenditure incurred was qua the income generating apparatus of the assessee. In such eventuality the theory of enduring benefit also does not apply. Therefore, the expenditure is revenue in nature - Ground of the assessee is allowed – Decided in favor of Assessee.

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• 2013 (8) TMI 664
  Revision u/s 263 - Erroneous or prejudicial of revenue - AO allowed the Exemption u/s. 10(34) - Insurance business - Dividend income - whether exemption u/s. 10 can be allowed to an Insurance company when income is computed u/s. 44 of the Act - Held that:- - Issue of deduction u/s. 10 of the Act was considered and allowed following the Hon’ble Bombay High Court Judgment in writ petition No. 2560 of 2011 dt. 01-12-2011 in the case of General Insurance Corporation of India, Mumbai. Versus The Deputy Commissioner of Income Tax, 1(3) Mumbai GIC of India vs. CIT(Supreme Court)[2006 (9) TMI 116 - SUPREME Court], it is held that assessee was entitled to exemption u/s. 10 including the dividend income i.e., exemption available u/s. 10(34) of the Act. The order passed by the AO allowing exemption u/s. 10(34) of the Act cannot be said to be an order which is erroneous and prejudicial to the interest of the Revenue. - Decided in favor of assessee.

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• 2013 (8) TMI 663
  Deduction u/s 10B - Benefit to 100% EOU - Use of old plant and machinery - conversion of existing unit - Whether the assessee is entitled to claim benefit available to 100% EOU u/s. 10B of the Act read with Circular No. 01/2005 dated 6.1.2005 issued by the CBDT - AO's contention that the old machinery transferred to the new unit exceeded 20% limit - Held that:- Revenue cannot have doubt regarding genuineness of the documents as the documents were issued by Government authorities. It was also made clear before the lower authorities that these are available at the time of survey - The assessee has taken the plant and machinery from M/s. Balaji Agro Oil Industries Pvt. Ltd. which was engaged in the business of castor oil extraction and the present assessee is engaged in chemical business. There is nothing on record to show that the assessee used the machinery used for oil extraction by Balaji Agro Oil Industries Ltd., for the purpose of manufacturing fine chemicals. Further though there was a survey action, the lower authorities not brought on record the bifurcation of the machinery which are already put in to use by Balaji Agro Oil Industries. The Assessing Officer not made an allegation that the assessee has not furnished the details of old and new plant and machinery - existing DTA (domestic tariff area) unit can be converted into 100% EOU as per Government of India policy and this is enumerated in Circular No. 1/2005 dated 6.1.2005 issued by the CBDT. Being so, an assessee cannot be denied deduction u/s. 10B of the Act. Further, the assessee in this case applied for approval of Unit-II as 100% EOU to Development Commissioner on 18.12.2002 and the assessee was granted approval as 100% EOU by the Asst. Development Commissioner, Office of Development Commissioner, Visakhapatnam SEZ and issued green card under 100% EOU scheme on 25.4.2003. Deduction u/s. 10B has to be allowed to the assessee from the date it got the approval as 100% EOU i.e., 25.4.2003 and the Assessing Officer is directed to allow deduction u/s. 10B from the date of approval as 100% EOU by the competent authority for the unexpired period of 10 consecutive assessment years commencing from the assessment year 2004-05 being regarded as second year of production in first year of commercial production being A.Y. 2003-04. This is so because, even if the new unit was commenced in the FY 2002-03 relevant to A.Y. 2003-04, the claim of deduction u/s. 10B cannot be denied in the FY 2003-04 relevant to A.Y. 2004-05 as this year would be the second year of claim of deduction u/s. 10B of the IT Act - Decided against Revenue. Jurisdiction of CIT - CIT set aside claim of 100% depreciation of capital equipment - Held that:- Admittedly, the CIT(A) has no power to remit the issue back to the file of the Assessing Officer with effect from 1.6.2001 as the words "or he may set aside" have been removed from section 251(1)(a) of the Act. Considering this amendment, we are inclined to hold that the CIT(A) should not have sent the issue back to the file of the Assessing Officer and he should have decided the issue by himself. Accordingly, we direct the CIT(A) to decide the issue in accordance with law - Decided in favour of Revenue.

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• 2013 (8) TMI 662
  Undisclosed income u/s 68 - Share application maoney - Onus of proving transaction - Held that:- Assessee's company is not carrying out any business activity. This company has shown investments with others in Schedule-V but details of investment are not available. Therefore, taking into consideration, facts and circumstances and failure of assessee to comply with requirement of Assessing Officer in producing Principal Officers/Directors of share applicant companies, it failed to prove identity as well as genuineness of transaction. They have shown very nominal income. It gives an inference that such returns were filed for creating evidence to be used in future - Following decision of A. Govindarajulu Mudaliar v CIT [1958 (9) TMI 3 - SUPREME Court], CIT vs. N.R. Portfolio (P.) Ltd. [2012 (12) TMI 762 - DELHI HIGH COURT] and CIT vs. M/s. Neelkanth Ispat Udhyog Pvt. Ltd [2012 (8) TMI 198 - DELHI HIGH COURT] - Decided against assessee. Disallowance u/s 37 - Expenditure on employee's education (son of Directors) - Held that:- there is no policy formulated by assessee company vide which it had invited applications from all employees for sponsoring their higher education - Had Employee was not son of Directors, his education expenses would have not been met by company. assessee claimed that higher education of Employee would give benefit of more than R.50,000/- per month to assessee company but who has checked credentials of Employee and what salary he would claim in open market. Without there being any material on record, how assessee can say that decision to sponsor education of Employee was not influenced by parental love and affection of Directors - Following decision of CIT vs. R.K.K.R. Steels Pvt. Ltd. [2001 (11) TMI 20 - MADRAS High Court], M. Subramanium Brothers vs. CIT [2000 (12) TMI 67 - MADRAS High Court] and CIT vs. Hindustan Hosiery Ind. [1993 (9) TMI 42 - BOMBAY High Court] - Decided against assessee. Disallowance u/s 14- Computation of disallowance on basis of Rule 8D - Held that:- It is only if Assessing Officer is not satisfied with correctness of claim of assessee, in both cases, that Assessing Officer gets jurisdiction to determine amount of expenditure incurred in relation to such income which does not form part of total income under said Act in accordance with prescribed method. prescribed method being method stipulated in Rule 8D of said Rules. While rejecting claim of assessee with regard to expenditure or no expenditure, as case may be, in relation to exempt income, Assessing Officer would have to indicate cogent reasons for same - Matter remitted back - Following decision of Maxopp Investment Ltd. vs. CIT [2011 (11) TMI 267 - Delhi High Court] - Decided in favour of assessee. Speculative transaction - Purchase and sales of shares - Section 73 - Held that:- The Explanation exclude certain companies whose gross total income consist mainly of income which is chargeable under heads ‘Interests on securities’, ‘Income from house property’, ‘Capital gains’ and ‘Income from other sources’ or whose principal business is of banking or granting of loans. activities of assessee do not fall in ambit of nature of business provided in Explanation. main business of assessee includes sales of shares. It has shown losses on such activities. Thus, primfacie, Explanation appended to section 73 is clearly applicable on facts of assessee’s case. Under Act, every year is an independent year. If assessee has shown losses in share trading activities and its case falls within mischief of deeming fiction provided in section 73, then, on basis of principle of consistency, assessee cannot plead that requirement of law should not be followed. Income from other sources u/s 56 - Cash credit u/s 68 - Held that:- unexplained cash credits have to be brought to tax under section 68 and not under section 56. Both aforesaid sections operate in fields reserved for them. It cannot therefore be said that what is assessable as income u/s 68 must be assessed as income from other sources u/s 56. Set off of business loss from income u/s 68 - Held that:- Section 71 permits set off of loss from one head against income from another head of income as enumerated in section 14 - income assessable u/s 68 cannot be assessed under any particular head of income including income from other sources u/s 56 - Therefore, this addition cannot be set off against business losses computed in earlier years. However, as far as expenses disallowed on account of education expenses and on account of establishment expenses are concerned, they are to be set off.

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• 2013 (8) TMI 661
  Disallowance of warranty provision - Contingent nature of warranty provision - Held that:- authorities below are expected to follow the principle of consistency in the light of orders passed by ITAT and first appellate authority in assessee’s own case in earlier assessment years - there was a calculation mistake at the end of Assessing Officer which was later corrected by the Commissioner of Income Tax(A), therefore, it is appropriate to restore this issue to the file of Assessing Officer with a direction that he will decide the issue of assessee’s claim pertaining to provision of warranty in the light of earlier orders of the Tribunal and first appellate authority for the earlier assessment years in assessee’s case - Decided in favour of assessee. Rejection of books of accounts - Rejection of application u/s 46A - Held that:- Assessee company filed only journal of April, July, October, 2006 and March 2007 before the Assessing Officer and Assessing Officer rejected the books of accounts u/s 145(3) of the Act with an observation that the books of accounts are not properly maintained and in absence of complete ledger, cash book and vouchers, it is not possible to verify trading results or expenses claimed by the assessee - the books of accounts are necessary evidence for the assessment proceedings and the assessee is bound to cooperate with the Assessing Officer by submitting relevant evidence as per requirements of the Assessing Officer. In the present case, the Assessing Officer has specifically mentioned in the remand report that despite several opportunities to the assessee, the complete books of accounts, bills and vouchers related to the claim of expenses were not submitted by the assessee. The Assessing Officer made a disallowance of 20% of expenses on estimated basis on account of non-production of books of accounts, bills and vouchers despite affording adequate opportunity to the assessee for submission of the same. The Assessing Officer also made a contention in the remand report that the Assessing Officer has never refused to admit any evidence nor there was a position that the assessee is prevented by any sufficient cause for producing the evidence in spite of the fact that sufficient opportunities were granted to the assessee for submitting the evidence in question i.e. production of books of accounts, bills/vouchers - Assessing Officer rejected the books of accounts by holding that the assessee’s accounts were incomplete and incorrect without substantiating anything to prove that its accounts were incomplete and incorrect. Books of accounts of the assessee were rejected by the Assessing Officer on baseless reasons which prevented the assessee to produce relevant evidence in support of his claim - Commissioner of Income Tax(A) also rejected the application of the assessee u/s 46A of the Rules without going to the root of the cause which prevented the assessee to produce relevant evidence before the Assessing Officer - claim of the assessee pertaining to total expenses claimed in the Profit & loss account have not been duly verified, evaluated and adjudicated by the authorities below - Decided in favour of assessee.

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• 2013 (8) TMI 660
  Computation of book profit - MAT u/s 115JA - Treatment of interest income for the purpose of section 80IA and thereafter book adjustment u/s 115JA - Deletion of business income - Held that:- The Assessing Officer, while working out the deemed income under S.115JA treated an amount of Rs.3,52,98,854 shown as other income as not earned from business of power generation. It is the contention of the assessee that this income is part of the business of the assessee eligible for deduction under S.80IA, so that the same can be excluded from the provisions of S.115JA as well. The Assessing Officer did not agree and before the CIT(A), the same contentions were reiterated. However, it was also submitted that an amount of Rs.17,75,951 was earned on deposits made for procuring spares which has a direct nexus with the amount borrowed - It is already on record that the amount of Rs.17,75,951 was earned from the deposits made from the borrowals on which interest was also paid. Therefore, there was a nexus with the interest paid to the interest earned - Following decision of Lalsons Enterprises V/s. DCIT [2004 (2) TMI 294 - ITAT DELHI-E] - Decided against Revenue. Deletion of addition made by A.O. - Foreign exchange fluctuations - Held that:- The assessee has furnished the return admitting loss at Rs.9,91,61,190 in the re-assessment proceedings. It is also noticed that the assessment was reopened under S.148 issuing notice on 29.01.2003 for the purpose of bringing to tax the income under the MAT provisions of S.115JA. Since this issue of deduction of foreign exchange claim was also crystalised in the original assessment, and since it was not an issue for reopening the assessment, we are of the opinion that the order of the CIT(A) is justified. Further, the assessee has already offered the same amount as income in assessment year 2002-03 - Decided against Revenue. Deduction u/s. 115JA(2)(iv) - Deduction u/s 80IA - Income from business of power - Held that:- It is the assessee’s income which has various components for working out the purchase price of energy from the assessee by the AP Transco and one of the components was capital cost of the power project. Since the amount accounted for as income was component of the enhanced capital cost which is directly related to sale of energy, we do not see any reason to treat it as ‘other income’. The Assessing Officer’s objection that it has not been taken to Profit & Loss Account is not correct, as the assessee has adjusted under the head ‘prior period adjustments’ and has offered as income during the year. This was also accepted in the regular computation of income - Decided against Revenue. Reopening of assessment - Held that:- reopening of the assessment after four years from the end of the assessment year is bad in law - no new information has been brought on record and the entire information having been placed on record before the Assessing Officer in the course of original assessment, the opinion of the Assessing Officer now can only be considered as change of opinion based on the order for assessment year 2003-04. Since there is no failure on the part of the Assessing Officer in disclosing the material facts at the time of completion of assessment, the reopening after four years from the end of the assessment year, is certainly not as per the provisions of S.147, which empowers the Assessing Officer to reopen only if the conditions are satisfied. Since the proviso to S.147 is clearly applicable - Decided against Revenue.

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• 2013 (8) TMI 659
  Deemed sale - Addition of income from dispatches to sub-contractors - percentage completion method - Difference between the concluded sales and estimated sales - Held that:- There seems to be a prima facie mistake committed by the Assessing Officer in treating the difference between the concluded sales and estimated sales on despatches made to sub-contractors as not accounted, whereas both the streams of income were already taken to the Profit & Loss Account. If this aspect is found to be correct, there is no need to make any addition, as the assessee has offered both the streams of income in the respective Profit & Loss Accounts. Since there seems to be a mistake committed in the course of assessment proceedings and also first appellate proceedings, in the interests of justice, we set aside the issue to the file of the Assessing Officer to examine the contentions of the assessee and in case it is found that the assessee has already accounted for the income as stated above, the question of making any further addition does not arise at all. With these directions, we restore the respective additions in the three years to the file of the Assessing Officer for examination of facts and to decide accordingly. Assessee should be given due opportunity for explaining the above contentions - Decided in favour of assessee. Addition towards incorrect accounting of stock - Held that:- The MOU between the assessee and the VSSC, a Government organization, was examined and there is no dispute with reference to the fact that assessee is maintaining a metal bank for procuring strategic raw-material and using them as and when there was order from VSSC for its supply. It is also on record that the VSSC is providing funds and assessee only procures them on behalf of the VSSC and keeps sufficient stock in its godown. Just because the stock was procured by the assessee, it does not mean that it has ownership on the stock, which pertained to VSSC - While accepting that the assessee is maintaining the stock of material on behalf of others and only charging fixed amount for this service, and as such, apparently, there is no need to admit the same in their books as stock in trade, he confirmed the same holding that the assessee did not specify how the balance figures are shown in the books of VSSC and what is the effect of this confirmation. This reasoning given by the CIT(A) cannot be accepted because VSSC has certified the stock under consideration belongs to it and in no way the ownership of the stock pertains to the assessee. Just because the stock is kept with the assessee the same cannot be treated as the stock of the assessee, as it belongs to a third party, viz. VSSC in this case - Decided in favour of assessee.

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• 2013 (8) TMI 658
  Business income or capital gain - Income from purchase and sale of shares - Held that:- a perusal of the facts of the present case clearly shows that no borrowed funds had been used by the assessee for the purchase and sale of shares. Further, a perusal of the list of shares as also the details of the short -term capital gains clearly shows that the assessee is not regularly purchasing and selling shares in a systematic manner to be termed as ‘business’. Substantial portion of the gains as disclosed by the assessee is admittedly from the sale of shares, which have been purchased from IPOs and public offers. It cannot be said that the assessee is regularly and systematically doing any business of purchase and sale of shares. Further, the fact that for the earlier and subsequent years, the Revenue has accepted the similar transact ions in the hands of the assessee being taxed as short -term capital gains also goes in favour of the assessee - Following decision of Radhasoami Satsang Versus Commissioner of Income-Tax [1991 (11) TMI 2 - SUPREME Court] - Decided in favour of assessee.

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• Customs

• 2013 (8) TMI 657
  Undervaluation of Imported Goods - Duty Demand -Violation of Principles of Natural Justice - Opportunity Given to the assesses - The assesses raised ground of violation of natural justice - Held that:- The record enables to appreciate the total careless attitude of the appeal which was not vigilant to pursue remedy before the Tribunal even in second round of litigation interest of Revenue compelled to dismiss the stay applications – Assesses were directed to deposit all the amounts demanded by adjudication order within 60 days of the receipt of the order - The assesse did not cooperate with the adjudicating authority and no reply to the show cause notice was filed - Several opportunities were granted but the assesses showered a defined attitude to law - Decided against assesses.

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• 2013 (8) TMI 656
  Valuation of Invoices - invoices were undervalued the shipment with an intent to evade Customs duty – department issued show cause notice for demand of duty and confiscation of the goods with an option to redeem the goods on payment of redemption fine - Held that:- The invoices admitted by the assessee to be undervalued with an intent to evade payment of duty – the orders had not solely referred to the E-mail invoice - during the adjudication proceedings had been rightly held to be an afterthought and rightly rejected by the lower authorities in as much as no correspondence was exchanged between the appellant and supplier or any other evidence stand placed on record to substantiate the plea – order of the Commissioner (Appeals) to be upheld – decided against the assessee.

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• 2013 (8) TMI 655
  Fraudulent intent - non-Basmati rice was exported in the guise of Basmati Rice – department confiscated the basmati rice and also confiscated that non-basmati rice as these were used for concealing the non-basmati rice - Redemption fine and penalty was imposed – Held that:- There was fraudulent intent to defraud Government revenue - Attempt had been made to export non-basmati rice in the guise of basmati rice - This was fit case for confiscation, imposition of redemption fine and imposition of penalty - Commissioner (A) already reduced redemption fine - No further interference required on this aspect as already excessive benefit has been given by commissioner (Appeal). stay application - imposition of penalty - considering attempts of illegal exports appropriate penalty had been imposed - no case for reduction – stay application and appeal decided against the assessee

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• 2013 (8) TMI 654
  Excess duty drawback – allegation of overvaluation - claim of DEPB and Draw back - Confiscation of goods u/s 113 – Redemption fine u/s 125(1) – Held that:- Assesse would be eligible for the duty drawback - The version of accountant as to sale of fabric to the assesse transportation to the destination of assesse and payment by account payee cheque of the sales consideration of fabric remained un-discarded. Valuation of trousers - It was not possible to doubt manufacturing of the Trouser – It was stated by the said deponent that they use superior quality of raw material in manufacture of export material failed to be discredited by Revenue. Even his version that final destination of export as Dubai appearing in ARE-1 return remained in fact without being impeached by Revenue. Further the market enquiry was not done with any manufacturer of trouser, That was done with traders without demonstrating whether they have at any time dealt with the goods of the appellant and whether they had any experience as manufacturer. - Decided in favor of assesse.

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• 2013 (8) TMI 653
  Refund claim - Assesse had imported bales of Scoured New Zealand Wool -The goods were assessed to duty by the Customs Department and the Assesse cleared the goods on payment of Additional Customs Duty – Assesse filed a Refund Claim on the ground that the imported goods were exempt from payment of Additional Customs Duty in terms of exemption Notification No.20/2006-Cus - Held that:- Order passed by the Commissioner (Appeals) to be sustained – relying upon CCE, Kanpur vs. Flock (India) Pvt. Ltd.[ 2000 (8) TMI 88 - SUPREME COURT OF INDIA ] - in absence of an appeal challenging the assessment order, no refund application is maintainable for excess amount of duty, if any, paid. It is also observed that if an assessee fails to challenge an order of assessment issued by proper authorities, but resorts to file a refund claim for relief, then such approach would disturb the very scheme of the statute and would create uncertainty in the process of levy and collection of duty – Decided against assesse.

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• 2013 (8) TMI 652
  Non-declaration of Goods – Penalty on the master of the vessel on account of non-declaration of 700 MT of cement, two Dozer Caterpillar and one motor bike in the IGM - Difference of opinion - majority order - Held that:- Non-declaration was not on account of any mala fide on the part of the captain - To err is human and as such mistake on the part of the captain can be on account mis-understanding of law and be of procedural nature without any intention to evade duty – bona fide and inadvertent mistake should not be met with imposition of penalty which had inherent built of mala fide – relying upon ESSAR OIL LTD. Versus COMMISSIONER OF CUSTOMS, MUMBAI [2002 (2) TMI 542 - CEGAT, MUMBAI]. In the absence of any mala fide imposition of penalty on steamer agent u/s 112 was not called for - It was trite law that for attracting penalty knowledge of the offended had to be brought out - the captain could be under a bona fide belief that the above items being part and parcel of the vessel on account of the Board’s Circular were not required to be declared separately - such items were already a part of MOA and could not had escaped the attention of the AO – Penalty set aside – Decided in favor of assesse. Dissenting Judgement - Member (Technical) was not in consonance with the opinion of the Member (Judicial) – He delivered separate Judgement as to against the assesse – the Third Member was into the favor of assesse.

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• 2013 (8) TMI 651
  100% EOU - Export obligations - Rate of duty on de-bonding - Rate of depreciation of capital goods on debonding - Benefit of Notification No. 13/81 and Notification No. 123/81 - Whether in respect of the imported capital goods, raw materials and consumables which were, admittedly, used for manufacture of the goods for export the assesse were eligible for duty exemption under Notification No. 13/81-Cus. dated 9-2-1981 and similarly in respect of indigenously procured capital goods, raw materials and consumables which were used for manufacture of export goods, the assesse were eligible for Central Excise Duty exemption under Notification No. 123/81-C.E. - Held that:- The assesse had failed to achieve the export target and failed to achieve the required value addition and thereby have failed to fulfil the condition of the exemption notification, they were not eligible for duty exemption under the notification. Imported raw materials and consumables acquired free of customs duty under Notification No. 13/81-Cus. and indigenous raw material and consumables acquired free of excise duty under Notification No. 123/81-C.E. were concerned, the assesse would not be eligible for duty exemption and the duty forgone in respect of these goods has been correctly demanded – following EAGLE FLASK INDUSTRIES LIMITED Versus COMMISSIONER OF C. EX., PUNE [2004 (9) TMI 102 - SUPREME COURT OF INDIA] and State of Jharkhand v. Ambay Cements [2004 (11) TMI 319 - SUPREME COURT OF INDIA ] - if an exemption was available on complying with certain conditions, the conditions have to be strictly complied with – Decided against assesse. Rate of Duty - Whether the duty chargeable in respect of the unused raw materials and consumables and used capital goods would be at the rate in force on the date of payment of duty or at the rate in force on the date of debonding order or the rate in force at the time of import - Held that:- The warehousing period expired on 30th May, 2000 the duty liability on the goods at the time of debonding would have to be discharged on the basis of the rate of duty in force as on 30th May, 2000 - The rate of duty applicable on the goods would be the rate in force on the date of expiry of the warehousing period, irrespective of the date on which the goods were actually cleared from the bond - relying upon Kesoram Rayon v. CC, Calcutta [1996 (8) TMI 109 - SUPREME COURT OF INDIA ] and M/s. SBEC Sugar Limited & Another v. Union of India [2011 (2) TMI 227 - SUPREME COURT OF INDIA ] – Decided against the assesse. Eligibility for Depreciation - Whether in respect of clearance into DTA of capital goods, which admittedly had been used, the duty would be chargeable after permitting depreciation as on the date of debonding order or after giving depreciation as on the date of payment of duty - Held that:- There was no merit in the assesses’s plea for 100% depreciation for which there was no provision - In terms of Board’s Circular No. 43/98-Cus. prescribing the rate of depreciation, the same was to be permitted at the rate of 4% per quarter for first year, 3% per quarter for 2nd and 3rd year and 2.5% per quarter for subsequent years, subject to maximum depreciation of 90% - The Commissioner in had permitted 90% depreciation - The provisions of condition No. 5 of the Notification No. 13/81-Cus. have to be read with the Board’s Circulars issued from time to time fixing the quantum of depreciation – Decided against assesse. Confiscation of Goods u/s 111(o) and under Rule 210 of Central Excise Rules, 1944 – Penalty u/s 112(a) and under Rule 210 of Central Excise Rules, 1944 – Whether the capital goods and consumables imported by availing duty exemption under Notification No. 13/81-Cus. were liable for confiscation u/s 111(o) for violation of post-import conditions and on this count whether the assesse would be liable for penalty u/s 112(a) and also whether the indigenous excisable goods procured free of duty under Notification No. 123/81-C.E. would be liable for confiscation under Rule 210 of the Central Excise Rules, 1944 and whether the appellant would be liable for penalty under this Rule - Held that:- Penalty u/s 112(a) had been rightly imposed on the assesse and for the same reason, penalty in respect of indigenously procured excisable goods in respect of which the conditions of the exemption notification had not been fulfilled, had been rightly imposed under Rule 210 of Central Excise Rules, 1944 - the conditions of the exemption notification subject to which the goods have been imported free of duty have not been fulfilled, the provisions of Section 111(o) would be attracted and the imported goods would be liable for confiscation and hence the assesse who imported the goods, would be liable for penalty u/s 112(a) of Customs Act – Decided against assesse.

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• Corporate Laws

• 2013 (8) TMI 650
  Winding up – Appointment of Official Liquidator – Official Liquidator were directed to take steps against the transfer of properties - Held that:- The management was not at all serious for revival - The assets were no more safe in the hands of the erstwhile management - It was fit and proper, Official Liquidator must take immediate step for possessing the assets and proceed with the winding up - Transfer of four properties were either made during the pendency of the reference or immediately before or during pendency of the winding up proceeding - In such event, the learned Judge was justified in directing Official Liquidator to take steps in this regard. The well-reasoned decision of the learned Single Judge would clearly show, the Court tried its best to find out a solution for revival of the company - The management was however, not serious - For 14 months, the matter was kept pending – On a combined reading of the aforesaid two provisions any transfer prior to date of the commencement of winding up proceeding or during the pendency would be void - Similarly, under the Sick Industrial Companies Act 1987 any transfer of immovable assets during pendency of the reference before the BIFR is prohibited. Appeal of ICICI Bank – Held that:- The direction of His Lordship for restoration of the assets was nothing but a direction upon the Official Liquidator to take lawful steps against the wrong - Such step would obviously deserve a regular proceeding upon notice to the transferee and/or the persons claiming title under them - ICICI bank claiming to be the mortgagee would be at liberty to contest such proceeding - Their apprehension is premature – Neither of the observations would suggest forcible repossession of the properties - it would require a lawful proceeding to be brought for the purpose - In case such proceeding was brought ICICI bank would be free to contest - intervention at this stage was not warranted – Decided against appellant.

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• Service Tax

• 2013 (8) TMI 678
  Construction of Commercial Complex and Residential Complex - The assesse was engaged in construction activity both of commercial complex and residential complex - Revenue revealed that the applicant did not pay appropriate service tax on three projects executed by them - Held that:- Construction of industrial or commercial complex and construction of residential complex were made taxable under entries 65(105)(zzq) and 65(105)(zzzh) even prior to 1.6.2007. The new entry introduced on 1.6.2007 only brings in a new method of payment of service tax liability for these services - The new entry used the same expressions as were used in the previous entries - LCS City Makers Pvt. Ltd. Versus Commissioner of Service Tax, Chennai [2012 (6) TMI 363 - CESTAT, CHENNAI] – The previous entries also provided for appropriate abatement for value of goods and material involved in providing such services - The question of valuation of property handed over to the land owner was also dealt with in the said order and it was decided that value of comparable property constructed for independent buyers can be adopted as a basis for service rendered to the land owner. It was very clear that the construction activity was undertaken on the land already registered in the name of the client and therefore service was being provided by the applicant to such clients - the clarification issued by CBEC was applicable only in cases where the constructed flats or shops were being sold and were registered for sale - For services rendered to the land owners also it was not a case of uncertain profit to be shared by the two but a case of an agreement to do the service of construction of complex for definite consideration in the form of UDS transferred by the land owner to the applicant or sold as directed by the applicant – forty lakhs were ordered to be submitted as pre-deposit – upon such submission rest ot the duty to be waived – conditional stay granted.

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• 2013 (8) TMI 677
  Real Estate Agent Service u/s 65 (88) - service tax on transfer charges received from its clients for substituting the names of new prospective purchasers of immovable property/real estate transactions in the place of prospective purchasers who had initially agreed to purchase the properties - Extended period of limitation was invoked for passing the order of assessment. Held that:-The service provided by the assesse in substituting names of prospective buyers of real estate, in its records, for which it collects transfer charges, does constitute real estate agent service, as defined in Section 65 (88) of the Act - ‘real estate agent service’ mean any service provided or to be provided to any person in relation to sale , purchase, leasing or renting of real estate including a real estate consultant - Since substitution of the names of prospective buyers, was an activity which was primarily in relation to sale of real estate - the concurrent conclusions by the authorities below suffer from no infirmity - extended period of limitation was invoked to assess tax liability - 50% of the duty was ordered to be paid as pre-deposit - upon such submission rest of the duty to be stayed till the disposal - Stay Granted.

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• 2013 (8) TMI 676
  Stay - dredging activity - Site formation service - Import of manpower service - Appellant contended that dredging activity done is not in river, port, harbor, backwater or estuary and, therefore, it was not taxable - activity was done beyond the territorial waters of India and at the relevant time service tax levy was limited to activities done in territorial waters only. Held that:- This is a case, where the liability to service tax has to be proved by the Revenue - in clarification including circulars and press notes issued at the time of introducing the entry for levy of tax, Government had made it clear that service tax was payable only on dredging done in any river, port, harbor, backwater or estuary – there is a factual dispute on the issue as to whether any part of the canal can be considered as within the territorial waters or not Site formation service – department contended that this is case of site formation, for which they were expected to recover necessary soil by dredging - Since the contract showed payment for "dredging and land reclamation" – held that:- It is not justifiable to bring them under a different category and demand tax - purpose of the contract is site reclamation and not dredging - the essential character of the contract at this stage is of site formation only - Under the category of Site formation service are specifically mentioned and are also exempted. Maintenance and repair service – Held that:- In the case of maintenance and repair service factual dispute is raised as to whether repair was done in Singapore or in India - fact cannot be conclusively decided as sufficient evidence was not produced – no sufficient material placed before. Import of manpower service – department contended that the assessee was making payments to their parent company abroad and not to the employees - it should be treated as a case of supply of manpower from abroad by the parent company – Held that:- In the matter of supply of manpower by a parent company to a subsidiary company, there are decisions wherein pre-deposit has been waived treating the present appellant on a different footing is not justifiable . Other miscellaneous items, Dhamra Project and Gangavaram Port - the question whether it is a project for supply of goods appears to be a question of facts needs to be examined at the time of final hearing. - it is reasonable to call for re-deposit of Rs.2 crores - stay granted partly.

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• 2013 (8) TMI 675
  Renting of immovable property – appellant contented that renting out of premises to Bank, BSNL and Post Office does not amount to renting of property for use in course of furtherance of business or commerce – Held that:- The Service Tax demand on the rent collected from the Bank and BSNL, is legally sustainable - Bank and BSNL are commercial organizations and the appellant has rented out their premises to them - amounts to furtherance of business or commerce - as regards the Post Office, the appellant might have a case and the arguments will have to be considered after examining the provisions of the Indian Post Act. Amount of turnover - whether the turnover of the appellant has exceeded the thresh hold limit under SSI Exemption Notification No. 8/2005 or not is a question of fact and has to be examined – Held that:- The matter remanded back to the lower appellate authority as the lower appellate authority has not examined any of these facts - for the purpose of examining the thresh hold limit, the gross amount received for renting of immovable property has to be taken into account - appellant being a sugar factory, they must be discharging the Service Tax on GTA services availed by them - such services might also be includable in thresh hold limit and this fact needs to be examined – matter remanded back.

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• 2013 (8) TMI 674
  Service tax demand u/s 73A – sale of flats - collection of amount towards service tax but not as service tax - contingent liability – department contended that service tax liability would arise under ‘Works Contract Service' for prospective customers under the agreement for sale – appellant constructed flats for sale - a circular dated 01/08/2006 CBEC clarified that liability to pay service tax is on the person who undertook actual construction and not on the builder – Held that:- Provisions of Section 73A are not attracted - the appellant cannot be blamed for believing that the amount is required to be collected - It was the Directorate General of Service Tax which issued the circular saying that the amount is required to be collected and - the appellant cannot be blamed for believing that the amount is required to be collected - appellant took the precaution of collecting it as ‘contingent liability' and not as service tax per se – he also made it clear that in case the outcome of the judicial proceedings emerges in their favour, the amount would be refunded along with interest – appeal allowed in the favour of assessee.

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• 2013 (8) TMI 673
  CENVAT credit - Input Service - The assesse were manufacturer of ball and roller bearings chargeable to Central Excise duty in their factory - They avail Cenvat credit of Central Excise duty paid on inputs and capital goods and of Service Tax paid on input services used in or in relation to manufacture of their final products - The department was of the view that the assesse had wrongly taken service tax credit along with interest and imposition of penalty on them under Rule 15 of Cenvat Credit Rules, 2004 - Held that:- All the services had nexus with the manufacturing business of the assesse and hence the same being services related to manufacturing business of the assesse would be covered by the definition of ‘input service’. Internet Connection Service - Website Development Service - Rent-a-car Service – General Insurance Service – Held that:- As Decided in CCE, Nagpur Versus Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] interest connection service was held as input service – the service of website development was covered by the definition of input as decided in UNIVERSAL CABLES LTD. Versus COMMISSIONER OF C. EX., BHOPAL [2007 (3) TMI 99 - CESTAT,NEW DELHI] - The service of rent-a-car was covered by the definition of ‘input service’ as it was held in COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II Versus J. K. CEMENT WORKS [2009 (1) TMI 146 - CESTAT NEW DELHI] - As regards, the service of general insurance for plant and machinery to cover the assesse against losses due to fire, machinery break down etc. - The service was also covered by the definition of input service and would be eligible for Cenvat credit – Following COMMISSIONER OF C. EX., RAIPUR Versus BEEKAY ENGG. & CASTINGS LTD. [2009 (6) TMI 96 - CESTAT, NEW DELHI] - The total Cenvat credit availed in respect of insurance service, internet access/connection service and website development service was about Rs. 16 lakhs which appeared to had been correctly availed. Waiver of Pre-deposit - Assesse had a prima facie case in their favour and requiring them to pre-deposit the amount of Cenvat credit demand, interest and penalty would cause undue hardship - The requirement of pre-deposit of Cenvat credit demand, interest and penalty was waived for hearing of this appeal and recovery was stayed till the disposal of the appeal – Stay Granted – Decided in favor of assesse.

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• Central Excise

• 2013 (8) TMI 649
  Production capacity based duty - Power to Review the Order - Whether after the Commissioner had determined the annual capacity of production the Commissioner could review his order when he was informed that fake certificates were issued and as such the earlier determination was based on false and fabricated invoice/certificates regarding the annual capacity of production - Held that:- The question was answered in negative - Assesse was available and has also filed his reply to the notice issued by the Excise Commissioner in which he had stated that his statement was recorded under duress thus his statement could not have been relied without his cross examination - apart from the statement there was no material before the Excise Commissioner to hold that the respondent has produced fake invoices - Statement was not recorded in the proceeding as such it could not be read as an evidence and there was no material for exercising the powers under Proviso to Section 11-A of the Act. Material to Prove the Fraud - Whether there was any material before the Excise Commissioner to hold that earlier order was obtained by committing fraud - Held that:- Statement had not been recorded as a witness in the proceeding as such there was no admissible evidence on record to hold that fraud has been committed by the respondent - The Excise Commissioner had illegally treated the statement as an admission - According to the Excise Commissioner as Excise Officer was not a police officer as such the voluntary statement made before him was admissible and Section 25 of the Evidence Act will not apply. CCE Versus Versus M/s Bajaj Auto Ltd. [2010 (11) TMI 7 - Supreme Court India] - Initial burden lies upon the Department to prove that fraud had been committed for invoking provision of Section 11-A Proviso, of the Central Excise Act, 1944 - Excise Commissioner had relied upon the statement recorded by Excise Officer during investigation held against his firm and found that as Deepak Gupta had admitted that he had issued invoices giving incorrect Annual Capacity of Production as such the respondent has secured the previous order by producing forged document as he found that statement of Deepak Gupta was admissible under Section 25 of the Evidence Act - Decided against Department.

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• 2013 (8) TMI 648
  CENVAT credit - The assesse had taken Central Excise registration for manufacture of copper ingots, copper wire and insulated copper wire - they had availed huge amount of Cenvat credit - They had neither filed the Cenvat credit returns nor in the ER-1 they have given the invoice details – Held that:- Prima facie the department’s case against the appellant was on their strong footing and the evidence on record clearly indicates that the Cenvat credit had been availed by the assesse in a fraudulent manner without any invoices without actually receiving any goods and this action of the assesse would attract penalty u/s 15 (2) of Cenvat Credit Rules, 2004 readwith Section 11AC. They had without manufacturing any goods passed on the bogus Cenvat credit by issuing bogus invoices to other manufacturers on the basis of which those manufacturers would have taken the Cenvat credit - no TR-6 challans in this regard had been produced and if this payment had been made by debiting the Cenvat credit amount, the same was meaningless, as all the evidence on record, prima facie, shows that the entire Cenvat credit had been availed by them in a fraudulent manner without receiving any goods and without any invoices - the assesse’s claim in their remark in the ER-1 return that amount was debited by them for payment of penalty imposed by CESTAT was false. Waiver of Pre-deposit – Prima-facie the assesse was not able to make out the case in their favor - Penalty equal to the fraudulently taken Cenvat credit would be attracted under Rule 15 (2) of Cenvat Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944 – 2 crores were ordered to be submitted as pre-deposit – upon such submission rest of the duty to be waived till the disposal – Stay granted.

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• 2013 (8) TMI 647
  Condonation of Delay Application – Held that:- the Senior Manager had followed up the proceedings before the lower authority and he was sick from 02.02.2012 to 01.03.2012 and appeal was filed on 07.03.2012 – The Senior Manager signed the documents before the lower authority and the Appellate Tribunal - Justified to condone the delay – Decided in favor of Assessee. Stay Application – Waiver of Pre-deposit - Cenvat Credit on Outdoor Catering Service - Outdoor Catering Service used in canteen for employees – Relying upon the decision of the Hon'ble Bombay High Court in the case of Commissioner of Central Excise, Nagpur Vs Ultratech Cement Ltd. reported in 2010 (10) TMI 13 - BOMBAY HIGH COURT, credit of service tax paid on Outdoor Catering Service allowed as eligible for CENVAT credit – Demand waived – Stay allowed – Decided in favor of Assessee.

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• 2013 (8) TMI 646
  Rectification of mistake in the order - Assessee over the period of 13 years did not take note of or considered whether there was a case on merit or not and was fighting the case on a technical ground that there was no recovery mechanism and there was never a whisper about merits. Even when the impugned order was passed the only submission made by the assessee was that the show-cause notice was time barred – Held that:- The issue on merit was never raised - This ground of merit is being raised only in the application for rectification of mistake. As regards proceedings for recovery for the year 2001, the matter is before us in the first round of litigation. But even in this case merit was never an issue. The issue was only limitation and whether there was a provision for recovery in the law or not - The assessee seems to be seeking rectification of mistakes committed by Original Authority, First Appellate Authority and by this Tribunal on six occasions - This cannot qualify as a mistake apparent from the records at all – Decided against the Assessee.

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• 2013 (8) TMI 645
  Processing of Cotton Fabrics without the aid of power or steam - Benefit of Exemption Notification No. 111/87 - Whether the exemption Notification No. 111/87-CE would be available to assesse whose clearances for home consumption of the cotton fabrics processed without aid of power or steam in a financial year exceed 50 lakh Sq. mtr. - Revenue was of the view that the exemption would not be available to an assesse from day one – Held that:- The interpretation to the notification given by the Commissioner was incorrect and as such even if the clearances of the processed cotton fabric during a financial year exceed the threshold limit prescribed in the notification, it was only the clearances in excess of this limit which would attract duty, and crossing the threshold limit would not result in total denial of the exemption - There was no provision in the notification to the effect that the exemption would not be applicable if the aggregate quantity of clearances of processed fabrics for home consumption for one or more factories of the manufacturer during the financial year exceed the prescribed threshold limit. Unaccounted Processing of Goods - Processing of cotton fabrics without accounted on the records - Held that:- There was no reason to disbelieve the records of the other contractors - the department's allegation that in addition to the quantity of 43,31,361 L. Mtrs. of fabrics as shown in Central Excise records of the appellant firm another quantity of 3,63,213.55 L. Mtrs of fabrics was also been processed and cleared - For determination of duty on the quantity of fabrics processed and cleared in excess, the matter would had to be remanded. Goods Cleared Without Payment of Duty - Held that:- No duty was chargeable on fabrics - There was gain in the quantity due to elongation of the fabrics during stentering - Since the increase in the length of fabrics had taken place during stentering which was fully exempted process. Limitation Period u/s 11A(1) - Held that:- The fabric was processed without aid of power or steam and clearance was not reflected in the Central Excise records and was cleared without payment of duty the same had to be treated as clandestine removal and accordingly the longer limitation period under proviso to section 11A (1) would be available to the department and for the same reason penalty under Rule 173Q(1)(d) of the Central Excise Rules, 1944 would be imposable on the appellant firm - There was nothing wrong in simultaneous imposition of penalty on the Appellant firm and its partner as the two penalties are under different rules and for different contraventions - Order set aside – Matter Remanded back for re-quantification of the duty demand and also for redetermination of the quantum of penalty on the appellant firm and on partners.

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• CST, VAT & Sales Tax

• 2013 (8) TMI 679
  Whether sale of DEPB license constitute business and liable to VAT / Sales Tax - Whether the assesse was carrying out any Business - The assesse effected sale of DEPB license in the course of the trade or commerce and sold them locally during the assessment years 1999-2000 and 2000-2001. The assesse claimed that the sale of DEPB license was not liable to be included in the turnover, there being no business carried on in that line - there was no sale of goods; consequently, the same was not assessable under the provisions of the Act Held that:- For all purposes or for substantive part of the definition business , there must be frequency, continuity and regularity in the transactions and the said activity would qualify to be termed under the definition of business , the incidental or ancillary activity to the main business does not call for such interpretation - By use of the expression any transaction in connection with the business , one can hold that the Act itself does not contemplate the frequency or regularity or continuity of the transactions, as has been done in the substantive part in sub clause (1) of sub section (d) of Section 2 of the Act. As far as the contention of the assessee that it does not purchase DEPB licence was concerned, going by the scheme of DEPB and the purpose and the background in which the same was issued and the value at which it was assigned to the petitioner there was no justifiable ground to accept the case of the assessee that he was not a dealer dealing in DEPB licence - The issue raised that the assessee was carrying business in DEPB licence was raised only before this Court and not before the authorities below where the question was whether DEPB licence would be liable to tax - it being a question of law the same be rejected - Decided against the assessee.

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