TMI Tax Updates - e-Newsletter
August 3, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise

Articles

1. GENERAL ANTI AVOIDANCE RULE.

   By: DR.MARIAPPAN GOVINDARAJAN

2. Service Portion in Supply of Foods & Drinks

   By: Dr. Sanjiv Agarwal

News

1. Review of the Foreign Direct Investment policy - permitting investments from Pakistan.

2. CBDT's Clarification on extension of due date of filing of returns

3. India’s Foreign Trade: June, 2012

4. Anand Sharma to lead high-level Ministerial Delegation to Sri Lanka CII CEOS Mission to Sri Lanka to Enhance Bilateral trade Relations Over 108 Companies and 205 Participants to showcase Indian Innovations at the India show, Colombo

5. Relaxation from compulsory e-filing of return of income for assessment year 2012-13 for representative assessees of non-residents and in the case of private discretionary trusts

6. India Signs Revised DTAA with Indonesia for the Avoidance of Double Taxation and for the Prevention of Fiscal Evasion with Respect to Taxes on Income

Notifications

Customs

1. F.No. 437/36/2012-Cus. IV - dated 1-8-2012 - Cus (NT)

Appointment of Common Adjudicating Authority

2. F.No. 437/20/2012-Cus. IV - dated 1-8-2012 - Cus (NT)

Appointment of Common Adjudicating Authority

3. 67/2012 - dated 1-8-2012 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from 02nd August, 2012

4. 66/2012 - dated 31-7-2012 - Cus (NT)

Amends Notification No.36/2001-Customs(N.T) dated 3rd August 2001

VAT - Delhi

5. No. F. 5(54)/Policy-II/VAT/2011-12/394-405 - dated 30-7-2012 - DVAT

Amendment in Sixth Schedule - Regarding grant facilities for exemption/refund of VAT

Circulars / Instructions / Orders

VAT - Delhi

1. No.F 4/operation Cell/2006/1622-32 - dated 30-7-2012

ARRANGEMENTS FOR RECEIPT AND MOVEMENT OF QUARTERLY RETURNS FOR QUARTER ENDING 30-06-2012.

FEMA

2. 11 - dated 31-7-2012

Foreign Exchange Management Act, 1999 (FEMA)-Compounding of Contraventions under FEMA, 1999

3. 12 - dated 31-7-2012

Exchange Earner's Foreign Currency (EEFC) Account, Diamond Dollar Account (DDA) & Resident Foreign Currency (RFC) Account - Review of Guidelines

4. 13 - dated 31-7-2012

Risk Management and Inter Bank Dealings

5. Press Note No.2 (2012 Series) - dated 31-7-2012

Downstream investment by a banking company incorporated in India, which is owned and/or controlled by non-residents/ a non-resident entity/non-resident entities - Insertion of a Note below paragraph 3.10.4.1 of 'Circular 1 of 2012-Consolidated FDI Policy'

Customs

6. 21/2012 - dated 1-8-2012

Clarification on the scope of exemption Notification No.146/94-Customs dated 13-07-1994.

Highlights / Catch Notes

Income Tax

• CIT(A) Validly Assumed Jurisdiction u/s 264; Assessing Officer Overlooked Clause (f) of Explanation 1, Section 115JB.

  Case-Laws - AT : Justification of CIT(A) assuming jurisdiction u/s.264 - No infirmity into the order passed by CIT as is evident from the records that AO has not applied his mind whether clause (f) of the Explanation 1 of Section 115JB was applicable or not - AT
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• Assessee disputes accountant's error on Capital Account entries for immovable property gifts.

  Case-Laws - AT : Addition in respect of gifts of immovable properties - assessee submitted that mistake of the accountant as journal entries were wrongly made to the credit side of the Capital Account - AT
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• Allocation of Expenses Between DTA and EOU Essential for Section 10B Benefits and Reassessment u/ss 147 and 143(3.

  Case-Laws - AT : Allocation of expenses between the DTA and EOU unit - expenses are to be charged to the EOU also in order to compute the benefit u/s 10B - Re assessment made u/s 147 r.w.s. 143(3) - AT
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• Mumbai Rent Control Act Limits Annual Property Valuation per Income Tax Act Section 23(1)(a) to Standard Rent Levels.

  Case-Laws - AT : Addition on account of annual letting value of the house property - the Rent Control Act is applicable in Mumbai thus the annual valuation u/s 23(1)(a) cannot exceed the standard rent under the Rent Control act. - AT
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• Income Tax Authority Bound by Commercial Tax's Stock Valuation; Assessing Officer Can't Reassess Accepted Value.

  Case-Laws - AT : Excess stock - difference in value of stock assessed by sales authority and income tax authority - return accepted by the Commercial Tax Department is binding on the I.T. authorities and the A.O. has no jurisdiction to go beyond the value of the closing stock declared by the assessee and accepted by the Commercial Tax Department - AT
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• Deduction Denied: Section 80IB Requires Independent Formation of Industrial Undertaking, Not Reconstructed or Split Business.

  Case-Laws - AT : Denial of claim of deduction u/s 80IB - the “industrial undertaking” should not be formed by “splitting up” or “re-construction” of a business already in existence - AT
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• Taxpayer Shielded from Prolonged Scrutiny Due to Delayed Action by Tax Authorities u/s 158BD.

  Case-Laws - AT : Block assessment - action u/s.158BD - period of limitation - if the Authorities failed to utilize and communicate such information on time, then the Assessee could not be penalized and kept in the loop of the Authorities for such a long period of 7 (seven) years - AT
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• High Court Rules Interest Income Taxable in Year of Accrual, Not Receipt, Per Mercantile System.

  Case-Laws - HC : Taxation on accrual of interest income - the mercantile system of accounting - the accrual theory of interest income was to be assessed in the year in which it had accrued and had become due. - HC
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• Interest on Government Securities Only Due on Specified Date for Holder; Accrual Tied to Holding Period.

  Case-Laws - HC : Accrual of interest - period of holding - The right to receive interest on the Government securities vested in the respondent only on the due date mentioned in the securities. - HC
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• Tax Not Deducted at Source? No Demand if Deductee Pays, Says Section 201(1.

  Case-Laws - AT : Non deduction of tax at source - no demand visualized u/s. 201(1) should be enforced after the tax deductor has satisfied the Officer in charge of TDS that taxes due have been paid by the deductee assessee - AT
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• Section 36(1)(viii) Income Tax Act: Income Must Be Directly from Long-Term Finance Business to Qualify for Benefits.

  Case-Laws - AT : Long term financing - benefit of section 36(1)(viii) - inclusion in the profit and gains - a) Interest on Bank deposits, b) Interest on advances / deposits, c) Dividend on investments, d) Misc. receipts - condition in the Section that the income should be “derived from” the business of providing long-term finance was not satisfied - AT
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• Bank Charges: Upfront Fees and Prepayment Penalties Classified as Revenue Expenditure, Not Capital Expenditure.

  Case-Laws - AT : Revenue expenditure versus capital expenditure - Bank Charges being Upfront fee for term loan / Prepayment penalty charges - no justification on the part of the revenue to capitalize the said expenditure. - AT
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• Court Dismisses Block Assessment Due to Lack of Evidence; Additions Based on Speculation and Guesswork Deemed Invalid.

  Case-Laws - AT : Block assessment - Unexplained investment - estimated profit on difference in work in progress - It is only on the basis of hypothetical assumptions and the additions are purely on guess work and without any material evidences. - AT
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• Section 69C Update: Evidence Needed to Prove Assessee's Expenses Exceed Family's Reported Household Costs.

  Case-Laws - AT : Addition u/s 69 C - low household expenses - there must be evidence on record which may prove that the assessee had incurred expenses much more than what has been shown by the family members - AT
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• Roads Built Near Factories Eligible for Depreciation Benefits Under Income Tax Regulations.

  Case-Laws - HC : Building includes roads laid in the proximity of factory for the purpose of providing access to factory and other buildings within compound and they are entitled to depreciation - HC
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Customs

• CBEC Circular Allows Export Oriented Units to Supply Goods to Other EOUs or STP Units with Valid Licenses.

  Case-Laws - AT : According to CBEC Circular No. 49/2000-Cus dated 22.5.2000 that EOU trading units were allowed to supply the goods to other EOU/STP units against valid advance license or specific customs entitlements - AT
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• Confiscated Left-Hand Drive Vehicle for License Violation; Warehousing Permitted Under Chapter 87 Explanatory Note.

  Case-Laws - AT : Imported vehicle has been confiscated for violation of licence on the ground that vehicle is Left Hand Drive and is not permissible under the explanatory note to Chapter 87 - warehousing of the goods allowed - AT
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• High Court reviews scrip revalidation request under SFIS, focusing on customs compliance and legal interpretation.

  Case-Laws - HC : Claim of revalidation of the scrip under the SFIS - HC
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FEMA

• FEMA 1999: Streamlined Compounding Process for Foreign Exchange Violations Promotes Compliance and Reduces Penalties.

  Circulars : Foreign Exchange Management Act, 1999 (FEMA)-Compounding of Contraventions under FEMA, 1999 - Circular
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• FEMA Circular Urges Banks to Boost Risk Management, Currency Exposure Control, and Transparency in Inter-Bank Transactions

  Circulars : Risk Management and Inter Bank Dealings - Circular
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• Guidelines Update on EEFC, DDA, and RFC Accounts under FEMA: Key Changes for Foreign Exchange Management and Compliance.

  Circulars : Exchange Earner's Foreign Currency (EEFC) Account, Diamond Dollar Account (DDA) & Resident Foreign Currency (RFC) Account - Review of Guidelines - Circular
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Indian Laws

• CBDT Clarifies Extension of Tax Return Filing Deadline to Assist Taxpayers Facing Challenges in Meeting Original Deadlines.

  News : CBDT's Clarification on extension of due date of filing of returns
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Service Tax

• Finance Arrangement Deemed Business Auxiliary Services for Service Tax Purposes in Recent Decision.

  Case-Laws - AT : Services provided was to arrange finance - it is settled that the appellant's activities shall fall within the category of BAS - AT
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• Cenvat Credit Unavailable for Input Services in Trading Activities for Service Tax Credit Purposes.

  Case-Laws - AT : Cenvat credit – Input service - Service Tax credit in respect of input service attributable to trading activities is not available. - AT
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• Service tax payments can be corrected if initially paid under the wrong accounting code, ensuring accurate records.

  Case-Laws - AT : Payment of service tax under wrong accounting code – adjustment of payment in the correct account code are allowed. - AT
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Central Excise

• Manufacturers Accused of Undervaluing Grey Fabric, Resulting in Duty Shortfall; Central Excise Valuation Under Scrutiny.

  Case-Laws - AT : Valuation - Job work - fabric + job work charges – alleged that merchant manufacturers suppressed the value of grey fabric, which resulted in short payment of duty by the assessee - AT
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VAT

• Guidelines for Timely Submission and Processing of VAT and Sales Tax Returns for Quarter Ending June 30, 2012.

  Circulars : ARRANGEMENTS FOR RECEIPT AND MOVEMENT OF QUARTERLY RETURNS FOR QUARTER ENDING 30-06-2012. - Circular
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• Sixth Schedule Amendment: Streamlined VAT Exemption and Refund Processes to Enhance Tax Compliance and Administration Clarity.

  Notifications : Amendment in Sixth Schedule - Regarding grant facilities for exemption/refund of VAT - Notification
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Case Laws:

• Income Tax

• 2012 (8) TMI 44
  Addition made u/s 68 - non genuine loan / advance - Held that:- The assessee had placed on record a confirmation from the creditor and that the amount was received by account payee cheque and subsequently repaid by account payee cheques - no inquiry has been made by AO from the bank or from the creditor on the contrary he had asked the assessee to furnish the copies of return of income, financial statement and bank statement of the lender. No independent inquiry through Inspector or by issuing summons to the creditor was made for verification of veracity of claim of assessee before making addition, the action of the A.O. treating the receipt of loan/advance as income of the assessee is not justified - in favour of assessee. Addition made in closing stock - building materials purchased in the month March not shown as stock - Held that:- Considering assessee's explanation that it is a common practice that the material is supplied to the supplier as and when it is required, however, bill is sent later on & that even otherwise also an addition of closing stock is revenue in nature since the closing stock of this year becomes the opening stock of the next year - this issue is restored back to the file of Ld. CIT(A) for fresh adjudication - in favour of assessee for statistical purpose. Disallowance u/s. 40(a)(ia) - Held that:- The payments made to transporters will attract the provisions of section 40(a)(ia), wherein, the appellant was bound to deduct the TDS and remit the same in Govt. account before the due date - as it is evident that the tax was deposited in the government account on -7-04-2006 well before filing of income tax return and that the AO has wrongly computed figure of TDS which is paid in time - this issue is restored back to the file of AO who is directed to verify the claim of the assessee, if the tax is deposited before filing of income tax return such amount shall be deleted from the addition and rest other amount be decided afresh as per law after giving opportunity of being heard - in favour of assessee for statistical purpose. Disallowance of interest notionally charged - Held that:- Considering assessee's submission that AO has ignored to appreciate that the assessee has not given loan from interest bearing fund was given out of accumulate profits - restored back to the file of Assessing Officer who is directed to verify the claim of assessee - in favour of assessee for statistical purpose.

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• 2012 (8) TMI 43
  Justification of CIT(A) assuming jurisdiction u/s.264 - wrong carry forward of speculation loss - Held that:- Sec. 73(4) was amended with effect from 1.4.2006 to the effect that “no loss shall be carried forward under this section for more than four assessment years immediately succeeding the assessment year for which the loss was first computed.” The assessee was having brought forward speculation loss pertaining to A.Y. 2000-01 which the AO has allowed to be carry forward. However, in the assessee’s case, the brought forward loss of A.Y. 2000-01 has already expired in A.Y. 2004-05 - set aside with order with direction that the Assessing Officer should verify whether the assessee is eligible to avail carry forward speculation loss pertaining to the A.Y. 2000-01 in view of the amended provisions of sub-section (4) of Sec. 73. Computation of book profit u/s 115JB without adding the amount disallowed u/s 14A - Held that:- As the expenditure disallowed interest of the exempted income was not added back while computing book profit for the purpose of Section 115JB though, it was required to be added back under clause (f) of Explanation 1 of Section 115JB the Order is also set aside to the file of the AO for re-adjudication, as the details and explanations submitted by the assessee during the course of proceedings us. 263 were not adjudicated by the AO - No infirmity into the order passed by CIT as is evident from the records that AO has not applied his mind whether clause (f) of the Explanation 1 of Section 115JB was applicable or not and as also not examined the issue of eligibility of set off of carry forward speculation loss as provided in amended Section 73(4).

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• 2012 (8) TMI 42
  Addition in respect of gifts of immovable properties - assessee submitted that mistake of the accountant as journal entries were wrongly made to the credit side of the Capital Account - Held that:- CIT(A) has given a finding on the basis of remand report of the A.O that no revised balance sheet was produced before AO and also the balance sheet of earlier years to which assessee contented that he was not given opportunity to explain the revised balance sheet - as in the interest of justice this matter is remitted back to the file of AO to adjudicate afresh after giving sufficient opportunity to the assessee - in favour of assessee for statistical purposes. Addition made under Section 68 - Held that:- Considering the assessee submission that if he is afforded opportunity he will furnish confirmation from Sh. Rahul V shah and Shri Naresh V. Shah who gave interest free loan to the assessee and place genuineness and credit worthiness - this issue is remitted back to the file of AO for fresh decision of the transaction - in favour of assessee for statistical purposes. Addition of income in respect of on-money on sale of agricultural land - Held that:- Finding force into the contention of assessee that if it is proved that land was agriculture land, therefore, would not be subject to capital gain tax liability. Therefore, after considering totality of facts, this issue is also remitted back to the file of AO fresh decision. Addition of entire alleged on money involved in the sale of land at village Godhavi as the income of the Assessee failing to appreciate the fact that the land in question was owned and sold jointly by the appellant with his wife - this issue is also restored to the file of AO for fresh adjudication

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• 2012 (8) TMI 41
  Disallowance of bad debts claimed - CIT(A) deleted the disallowance - Held that:- Considering settled law by the decision rendered in the case of T. R. F. Ltd. Vs CIT [2010 (2) TMI 211 - SUPREME COURT ] that it is not necessary for the assessee to establish that debt to have become irrecoverable. Bad debts can be charged to the profit & loss account of the assessee if they are written off in the books of accounts of the assessee as irrecoverable - in favour of assessee. Addition on account of interest invoking section 14A - CIT(A) deleted the addition - Held that :- From the chart imbedded in the assessment order & the balance sheet duly certified by the Chartered Accountants it is evident that the assessee’s capital as on 01-04-2005 was Rs.96,58,043/- and as on 31-03-2005 was Rs.1,14,64,439 clearly established that the investment made by the assessee earning exempt income u/s 10(34) being either Rs.60,78,419/- or Rs.80,56,190/- flows from the own funds of the assessee being Rs.1,14,64,439/- as on the date of such investment - In such circumstances, disallowance u/s 14A made by the AO is not warranted because the assessee had made the investments from his own funds viz. “Own Capital” and not from the “interest bearing funds” - in favour of assessee. Addition on account of agricultural income - CIT(A) deleted the addition - Held that:- CIT(A) has deliberated the issue in detail and after perusing the evidences produced before him has observed that the learned AO had made such addition of Rs.2,56,000/- merely on the basis of conjecture and surmises as AO had failed to make any inquiry on the submission of the assessee and disallowance was made on ad hoc basis - in favour of assessee.

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• 2012 (8) TMI 40
  Allocation of expenses between the DTA and EOU unit - expenses are to be charged to the EOU also in order to compute the benefit u/s 10B - Re assessment made u/s 147 r.w.s. 143(3) - Held that:- It is well settled that if the entire material has been placed by the assessee before the A.O. at the time when the original assessment was made and the A.O. applied his mind to that material and accepted the view taken by the assessee, merely because he did not express this in the assessment order that by itself would not come as a ground to a conclude that assessee has escaped assessment and therefore, the assessment needed to be reopened. On the other hand, if the A.O. did not apply his mind and omitted a lapse, there is no reason why the assessee should be made to suffer the consequence of that laps. The question of such claim was subject matter of enquiry at the stage of original assessment proceedings with a questionnaire dated 18.03.2004 in which A.O. specifically required the assessee to furnish certified copy of the profit and loss accounts and the balance sheet of the unit EOU claiming exemption of income u/s 10B and to furnish the same along with the detail of sales/purchases, other income and major expenses to which assessee replied furnishing complete break up of the profit and loss accounts, as per schedule-VI of the Companies Act, showing separately for EOU and other units, thus the assessment order is sought not to be reopened though within the period of four year as it is case of change of opinion - order of quashing the reassessment proceedings - in favour of assessee.

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• 2012 (8) TMI 39
  Reopening of assessment u/s 147 - Held that:- As under Section 151(2) no notice can be issued u/s 148 by AO who is below the rank of Joint Commissioner after the expiry of 4 years from the end of the relevant AY unless the Joint Commissioner is satisfied, on the reasons recorded by such AO, that it is a fit case for the issue of such notice - as in present case the Additional Commissioner of Income Tax forwarded the proposal submitted by the AO to the CIT. The approval which has been granted is not by the Additional Commissioner of Income Tax but by the Commissioner of income Tax - this is not a fit case for the issuance of a notice under Section 148 & CIT is not a Joint Commissioner within the meaning of Section 2(28C) - the reopening of assessment by the A.O. u/s 147 is not sustainable - in favour of assessee.

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• 2012 (8) TMI 38
  Addition on account of annual letting value of the house property - Held that:- The assessee had chosen Mumbai house for self occupied and for ALV to Ahmedabad house which he submitted before the A.O. even then he had assessed the ALV at Mumbai house - the Rent Control Act is applicable in Mumbai thus the annual valuation u/s 23(1)(a) cannot exceed the standard rent under the Rent Control act. The A.O. had accepted the ALV on the basis of Rent Control Act in earlier years as well as subsequent year in scrutiny assessment whereas in year under consideration, the A.O. had taken basis of capital value of property. Such estimation is not justified - CIT(A) was correct in deleting the addition.

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• 2012 (8) TMI 37
  Disallowance of Professional fees - that the expenditure either falls u/s 14A or was incurred for earning income taxable under the head capital gain - assessee claimed exemption u/s Section 28(va)(ii)- Held that:- Disallowance of professional fees includes Rs.45 lacs paid as consultancy fees for investment advisory services - the assessee company has invested in fixed assets, debentures, advances, ICD and bank deposits, immovable property and shares and mutual funds etc and therefore, it cannot be said that the services rendered by these two persons is in respect of investment in shares - no income is reported by the assessee under the head ‘income from other sources’ being on account of investment other than investment in shares for which this payment of professional fee was said to have been paid by the assessee - the entire payment of professional fee has to be considered towards earning of dividend income in the absence of any other income from any other investment being shown by the assessee - in favour of assessee. Inclusion of Sales Tax and Excise Duty in total turnover for the purpose of computation of deduction u/s 80HHC - Held that:- As decided in Commissioner of Income-Tax Versus Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] excise duty and sales tax were includible in the "total turnover", which was the denominator in the formula contained in section 80HHC(3) as it stood in the material time - direction of CIT(A) for excluding it thus warranted - against revenue. Reduction of export shortage from the turnover - Held that:- The export turnover can be verifiable from the report in Form No.l0 CCAC & assessee has also provided invoice wise FOB value realized for the whole year - this proves that the claim of shortage is further paid as compensation which makes the cost of exports higher, but actually does not reduce the export turnover. In fact, this is a normal business practice in all trades where shortage in handling is compensated by payment, but does not mean that the goods were not cleared or payment not received for the full amount of export turnover - against revenue.

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• 2012 (8) TMI 36
  Deemed Dividend u/s 2(22) - held that:- As per the decision of Special bench of the Tribunal rendered in the case of Bhaumik Colour (2008 (11) TMI 273 - ITAT BOMBAY-E), section 2(22)(e) can be invoked only in such a case where the person who has received the loan is having shareholding in the company who has given the loan and such person should be a registered as well as beneficial shareholder of that company which has given the loan. In the present case, this is noted by Ld. CIT(A) on page 1 of his order that the assessee company is a closely held company with Shri Hariprasad Yadav and Shri Anil H. Yadav holding 22.09% & 51.14% of shares respectively and these two people are holding 12.8% and 24.60% shares in the sister company Sai Jyoti Fashions Pvt. Ltd. This goes to show that the loan taker company i.e. the assessee company is neither a registered shareholder nor the beneficiary shareholder of loan giving company and, therefore, as per this decision of Special bench of the Tribunal, the amount received by the assessee company as loan from Sai Jyoti Fashions Pvt. Ltd. cannot be assessed as deemed dividend in the hands of this assessee company by invoking the provisions of Section 2(22)(e) of the Income tax Act, 1961.

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• 2012 (8) TMI 35
  Treatment of long term capital gain as business income - Held that:- Persuing the material on record except of few shares, all the shares were held for 10 years or more, it cannot be said that these shares were held by the assessee as business asset or stock in trade, thus it has to be admitted that the profit earned by the assessee after holding the shares for such a long period cannot be assessed as business income - as decided in Commissioner of Income-Tax Versus Rewashanker A. Kothari [2006 (1) TMI 80 - GUJARAT HIGH COURT ] to treat the gain under the head "Capital gains" and not as "Income from business" - in favour of assessee.

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• 2012 (8) TMI 34
  Addition on account of undisclosed cash credit - CIT(A) deleted addition - Held that:- As per copy of the bank statement it can be concluded that all the withdrawals are on account of payment to LIC of India and all the deposits are cash deposits - the explanation of the assessee cannot be rejected without bringing on record the evidences that these payments to LIC by the assessee from bank account is not on behalf of the customers of the assessee but on assessee’s own behalf as no such material has been brought on record by the A.O. - affidavit filed with the A.O. in which it was stated that the cash deposited in the bank account is assessee’s own income was just one day before her delivering a premature baby was filed under duress belief that once income is admitted, there will be no further I.T. proceedings - as there are no cash withdrawals and no personal expenditure of the appellant was met out of the bank account, AO’s observation that the appellant’s explanation is a concocted story does not stand to reason - in favour of assessee.

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• 2012 (8) TMI 33
  Addition on account of excess stock and cash - survey u/s 133A - Held that:- Sales tax authorities had carried out survey at the assessee’s premises declaring excess stock to the extent of 34.310 mt. whereas IT dept. declared excess stock of 586.826 mt at survey conducted immediately after 3 days of survey by sales tax authorities - These three days included two holidays - as decided in CIT vs. Anandha Metal Corporation (2004 (7) TMI 49 - MADRAS HIGH COURT ) that return accepted by the Commercial Tax Department is binding on the I.T. authorities and the A.O. has no jurisdiction to go beyond the value of the closing stock declared by the assessee and accepted by the Commercial Tax Department - in favour of assessee. Addition on account of sundry creditors & advance against supply though trading liability - Held that:- The assessee shows the advance from customers and sundry creditors as its liability in the balance sheet, thus merely because the liabilities are outstanding for many years, it cannot be inferred that the said liabilities have ceased to exist. The assessee has not written back the amount and the outstanding liabilities are still in existence would prove that the assessee acknowledges its liability as per the books of accounts - the Revenue has also not brought any material on record to prove that the purchases & advance are not genuine and the creditors have remitted the amounts due to them section 41(1)cannot be attracted there is nothing to suggest that the assessee has obtained any benefit either by way of remission or cessation of any liability while the aforesaid liabilities are continually admitted by the assessee in their balance sheet - in favour of assessee. Addition on account of belated payment of Provident fund and ESIC - Held that:- As deduction of statutory liability towards Provident fund and other funds referred to in clause (b) of sec.43B is permissible if the payments are made by the assessee before the due date of submission of return u/s. 139(1) Addition on account of belated payment need to be deleted - in favour of assessee. Initiation of penalty u/s. 271(1) (c ) as the same is consequential the same is not adjudicated

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• 2012 (8) TMI 32
  Denial of claim of deduction u/s 80IB - the “industrial undertaking” should not be formed by “splitting up” or “re-construction” of a business already in existence - Held that:- No evidence with the AO through which it could be demonstrated that the machinery was transferred from old unit to new unit with no iota of evidence to say that it was a case of “ splitting up of the old business”. The old unit was closed down way back in the year 1998 and the new unit had come up in the year 2002 and an entirely new building was constructed with the deployment of new technology to manufacture new type of telephone instrument - as assessee has successfully demonstrated that the new unit was set up with the substantial investment in plant & machinery no force in the grounds of the Revenue for denial claim of deduction - in favour of assessee.

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• 2012 (8) TMI 31
  Addition on account of unaccounted on-money paid for purchase of Shop - assessee contested against inordinate delay in inflation of action u/s.158BD and proceedings u/s.158BD - Held that:- The search u/s.132 was conducted on 29.10.1999 at developers which means that the investment in the properties was made earlier to the said date - proceedings u/s.158BD in the case of the Assessee was initiated 5 (five) years later thus there has been an inordinate delay in initiating and completing the proceedings u/s.158BC r.w.s. 158BD - Explanation regarding the investment in the said properties was furnished by the Assessee and if the Authorities failed to utilize and communicate such information on time, then the Assessee could not be penalized and kept in the loop of the Authorities for such a long period of 7 (seven) years - against revenue.

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• 2012 (8) TMI 30
  Addition on account of unaccounted on-money paid for purchase of flat - assessee contested against inordinate delay in inflation of action u/s.158BD and proceedings u/s.158BD - Held that:- The search u/s.132 was conducted on 29.10.1999 at developers business premises which means that the investment in the properties was made earlier to the said date - proceedings u/s.158BD in the case of the Assessee was initiated 5 (five) years later thus there has been an inordinate delay in initiating and completing the proceedings u/s.158BC r.w.s. 158BD - Explanation regarding the investment in the said properties was furnished by the Assessee and if the Authorities failed to utilize and communicate such information on time, then the Assessee could not be penalized and kept in the loop of the Authorities for such a long period of 7 (seven) years - against revenue.

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• 2012 (8) TMI 19
  Receipt of gift from 76 persons - unexplained gift versus genuine gift - opportunity to prove genuineness - held that:- It is trite law that Evidence Act is not strictly applicable to the income tax proceedings as the proceedings being quasi judicial proceedings as opposed to judicial proceedings the A.O. no doubt is not fettered by technical rules of evidence, however like any other judicial proceedings even in the income tax proceedings the issues are decided on the basis of evidences. - It is a fundamental principle of natural justice that no material should be relied upon against a party without giving him an opportunity of explaining the same. The right to know the materials on which the AO is going to take a decision in the remand proceedings is a part of the right to defend oneself. The AO, therefore, while taking action by virtue of the powers vested in him and before making an adverse order in pursuance of such power is obliged to provide to the affected person a 'reasonable opportunity of being heard. Such requirement underscores a point that the order is not dependent on the sweet will of the concerned authority. It will have to be according to law. It is justiciable. Rules of natural justice are not embodied rules. They are only means to an end and not an end in themselves. Their aim is to secure justice or to prevent miscarriage of justice. It is, therefore, not possible, to make an exhaustive catalogues of such rules. Fairness has to be ensured, whatever be the rule. If fairness is shown by the decision-maker to the man proceeded against, the form and features of the rule is not of much relevance. No arguments based on legal propositions have been advanced by the Sr. D.R. addressing the fact that where there are contradictory statements by 4 out of the 21 witnesses as to which statement should be relied upon and why, similarly how and why the statements of 21 witnesses should be given a blanket application to the remaining 55 witnesses has been left unaddressed in a zeal to canvass the confirmation of the addition sustained. The expression "natural justice" is not capable of static or precise definition. It cannot be imprisoned in the strait-jacket of cast-iron formula. All it means fairness in action. The principles will vary with varying situations of statutory bodies and rules prescribed by the Act under which they function. They yield to and change with the exigencies of different situations and do not apply in the same manner to situations which are not alike. They are neither cast in a rigid mould nor can they be put in a legal strait-jacket formula. They are not immutable, but flexible. Matter remanded back to AO with direction.

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• 2012 (8) TMI 18
  Taxation on accrual of interest income - the mercantile system of accounting - Held that:- The assessee received Rs.11 lakhs in the liquidation proceedings consequent on the winding up of the company on 18.03.2008 with effect from 22.04.2002. Therefore, even in respect of the debt written off in 2007, the assessee had received Rs.11 lakhs, which may not be in full quit of the amount due and payable to the assessee herein - that the assessee was following the mercantile system of accounting, hence, the accrual theory of interest income was to be assessed in the year in which it had accrued and had become due. Thus, even though the assessee had followed the mercantile system of accounting, the materials placed before the AO and before the Tribunal, do not, in any manner, advance the cause of the assessee to substantiate its contention that the accrued interest was only hypothetical income and hence, not available for taxation - against assessee.

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• 2012 (8) TMI 17
  Accrual of interest - period of holding - Held that:- The right to receive interest on the Government securities vested in the respondent only on the due date mentioned in the securities. Consequently, interest accrued on the securities only on the due dates and cannot be said to have accrued to the respondent on any date other than the date stipulated therein - As in respect of the securities held by the respondent on 31st March, 2001, the due date for payment of interest thereon had not arrived on 31st March, 2001 and that the respondent sold some of such securities prior to the next due date for payment of interest. It is only the holder of the security on such date to whom interest can be said to have accrued. In any event interest did not accrue to the respondent on 31st March, 2001, as admittedly interest was not payable on that date as per the terms of the said securities - The appellate authorities, therefore, rightly deleted the addition made by AO as interest income. Receipt of consideration towards the sale of the securities - DTAA between India and Cyprus - the appellant's case is that the respondent's case does not fall within Article 14(4) only because it falls within Article 11(4) - Held that:- The governing provision of Article 11(4) is that interest means income from a debt-claim of every kind and a debt-claim arises on account of a transaction that creates a debtor-creditor relationship and the consideration received by the respondent in respect of the sale of the said securities is a capital gain - rejecting the submission that the gain from the sale of the said securities falls under Article 11(4), it follows that the same falls under Article 14(4).

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• 2012 (8) TMI 16
  Non deduction of tax at source - demand raised and interest thereon - that assessee had applied for advertisement contracts which was called for by tender of AUDA Held that:- CBDT vide Circular No,.275/201/95-IT(B) dated 29-1-1997 states “no demand visualized u/s. 201(1) should be enforced after the tax deductor has satisfied the Officer in charge of TDS that taxes due have been paid by the deductee assessee - the factual position as confirmed by CIT (A) that AUDA is subject to tax and is filing its return of income since the details of taxes and dates of payment of taxes by AUDA have not been examined by the AO while passing the order u/s. 201(1) r.w.s. 201(1A) & 221, in the interest of justice it is fit to refer the matter back to the file of A.O.

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• 2012 (8) TMI 15
  Addition on account of the excess stock found during the course of survey – Held that:- Some stock of sarees goes out of fashion and fetches very less value which may have even less than the cost price thereof and no suitable deduction on this count was allowed by the AO while valuing the stock of the assessee - assessee has produced copies of accounts in respect of several creditors which shows that there is already a trade cycle of 2 to 4 months from the receipt of goods to the payment made by the assessee to the creditors - entire addition of Rs.15,00,210/- on account of excess stock found at the time of survey, could not be sustained in the hands of the assessee - addition on account of excess stock found during the course of survey is restricted to Rs.5 lacs as against the addition of Rs.15,00,210/- made by the AO - appeal of the Revenue is partly allowed.

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• 2012 (8) TMI 14
  Additions on account of estimation of gross profit rate @28% on the unaccounted turnover – Held that:- AO could not adduce any cogent reason for applying the higher GP rate of 28% - assessee has declared GP rate of 13.06% to 21.76% in various assessment years 1998-1999 to 2003-2004 which shows an average rate of GP at 18.36% - No reason to justify the higher GP rate of 28% was given by the AO - AO directed to work out the addition on account of GP on undisclosed turnover - Revenue’s appeals is partly allowed. Additions on account of unaccounted investment being 1/6th of initial unaccounted capital - assessee has contended that this investment is to be made in the first month and there is a turnover of remaining period - assessee has also contended before the AO that its business cycle period of one time turnover is 25 to 35 days – Held that:- It would be reasonable to estimate unaccounted initial investment at 1/12th of unaccounted invested capital as against 1/6th thereof estimated by the AO - Revenue’s appeals are partly allowed.

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• 2012 (8) TMI 13
  Long term financing - benefit of section 36(1)(viii) - inclusion in the profit and gains - a) Interest on Bank deposits, b) Interest on advances / deposits, c) Dividend on investments, d) Misc. receipts - held that:- following the decision in (2011 (11) TMI 380 - DELHI HIGH COURT) wherein at was observed that though the aforesaid items of income can be said to be “attributable” to the business of providing long-term finance, that was not sufficient to attract the provisions of Section 36(1)(viii) and that the condition in the Section that the income should be “derived from” the business of providing long-term finance was not satisfied - Decided against the assessee. Deduction u/s 36(1)(viii) - held that:- When we compare the provisions of sec. 36(1)(viii) and sec. 80IB(1), we find that in both cases, deduction is allowable in respect of profits derived from relevant business. - Regarding service charges on SDF loans, admittedly, there is no finance given by the assessee as the entire financing in SDF Loans is by the Govt. and not by the assessee and the assessee is getting only some service charges for rendering certain services in that connection. Hence, this receipt can be said to be attributable to the business of proving long term finance but cannot be said to be derived from the business of providing long term finance. - Decided against the assessee. Alternative contention of the assessee that entire receipt on account of bank interest cannot be reduced from business profit for the purpose of calculating deduction u/s 36(1)(viii) allowable to assessee. - held that:- AO directed to work out the net profit which is liable to be disallowed as deduction u/s 36(i)(viii) after considering the assessee’s contention. In view of these facts, this issue is restored to the file of the Assessing Officer. Disallowance u/s 14A read with rule 8D - held that:- Sub-ss. (2) and (3) of s. 14A as well as r. 8D are prospective and not applicable retrospectively; however, even prior thereto, s. 14A required the AO to first reject the claim of the assessee with regard to the extent of such expenditure; for cogent reasons and then to determine the amount of such expenditure on the basis of a reasonable and acceptable method of apportionment - matter remanded back to AO.

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• 2012 (8) TMI 11
  Block assessment - Unexplained investment - estimated profit on difference in work in progress - remuneration as undisclosed income - held that:- the assessee has justified the payment of onmoney for purchase of land and he has filed necessary cash flow statement to explain the sources for on-money payment and details of advances received for Usha Enclave to justify the sources of fund. The assessing officer has conducted series of investigation and probed the assessee, which proves that the advances are genuine. - The assessing Officer justified his addition purely on guess work stating that the assessee has no chance of diverting advances for purchase of property and he would have used all the money for construction of building itself. It is not able to prove that the work in progress declared by the assessee with the support of valuation report from registered valuer is not correct. It is only on the basis of hypothetical assumptions and the additions are purely on guess work and without any material evidences. - Decided in favor of assessee. Estimation of profit - held that:- The CIT(A) has rightly estimated the 8% profit on difference in work in progress and given relief for the balance and his order needs no rectification.

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• 2012 (8) TMI 10
  Addition on account of low gross profit - rejection of the book results by invoking section 145(3) - Held that:- The primary reason weighing with the Assessing Officer to hold the book results as unreliable is on account of incurrence of site expenses of Rs 51,13,893/- which was unverifiable as it was entirely based on self-made vouchers. Secondly, the labour payments of Rs 62,62,166/- was also found abnormally increased to 28.97% in comparison to 14.92% and 20.23% incurred in assessment year 2003-04 and 2004-05 respectively -no credible and convincing explanation has been rendered by the assessee. Section 145(3) of the Act has been correctly invoked by the Revenue authorities in this case. Quantum of income determined by the Assessing Officer after rejection of the book results - Held that:- The estimation is quite excessive and unjustified considering past history wherein level of profits declared by the assessee are not so huge, we deem it fit and proper that an addition of Rs 5,00,000/- would suffice to plug the leak of revenue, if any, on this account. Disallowance invoking section 40(a)(ia) - non deduction of tax a source - held that:- Find fit and proper to remit the matter back to the file of AO for a decision afresh as the remand is necessitated in view of the decision of the Special Bench in the case of Merilyn Shipping & Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) whereby it has been laid down that the disallowance under section 40(a)(ia) shall be limited to only such expenditure which is found payable as on 31st March of the year and not to expenditure which has otherwise been actually paid during the year itself - appeal of assessee partly allowed.

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• 2012 (8) TMI 9
  Addition u/s 69 C - low household expenses - Held that:- No evidence was brought on record by the Revenue which may prove that the assessee has incurred expenses on the household drawing much more than what has been shown by her family members. The household drawing has merely been estimated by the AO without pointing out any specific expenditure being incurred by the assessee - for applicability of section 69C there must be evidence on record which may prove that the assessee had incurred expenses much more than what has been shown by the family members - against revenue. Addition on account of property income - the assessee owned two properties out of which one was used for residential purpose and the other remained vacant - ALV of the property other than that occupied by the assessee was determined u/s 23(1)(a) r.w.s. 23(4)(B) - Held that:- Assessee was owner of only one property which was vacant during the year under appeal as the same was not let out during the year and other property belongs to her husband as born out by the written submissions filed by the assessee with municipal tax receipts in the name of her husband and the computation of income filed along with return of income by her husband to show that the other property was self acquired property of her husband - the A.O. has not brought any material on record to show that the property owned by assessee was ever let out - against revenue.

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• 2012 (8) TMI 8
  Whether road constructed within factory premises should be treated as part of building for depreciation purposes – Held that:- Roads constructed inside and within boundary wall of premises, be it a building or factory, are meant to augment utilization thereof, such roads are eventually intended to augment utilization of building/factory by providing access thereto - Building includes roads laid in the proximity of factory for the purpose of providing access to factory and other buildings within compound and they are entitled to depreciation

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• Customs

• 2012 (8) TMI 29
  Penalty – 100% EOU imported goods duty free by availing benefit of Notification No. 53/1997-Cus - these duty free goods against the advance license to another 100%EOU - adjudicating authority has held that the company, being 100%EOU trading unit could not have sold the goods under advance license as per the provisions of Para 9.21 of the Export Import Policy – Held that:- According to CBEC Circular No. 49/2000-Cus dated 22.5.2000 that EOU trading units were allowed to supply the goods to other EOU/STP units against valid advance license or specific customs entitlements - company had cleared the goods imported by them on which the customs duty was foregone to advance license holders EOU – penalty set aside Regarding penalties on the Directors – Held that:- In the absence of any duty liability on the main Company, the provisions of Section 112 and 117 for imposition of penalties on the Directors cannot be invoked - to that extent it imposes penalty on the appellants herein, is liable to be set-aside

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• 2012 (8) TMI 28
  Redemption fine - penalty under Section 112 (a) of the Customs Act – import of 2 Nos Off Road Mining Truck with accessories and filed bill of entry for warehousing - imported vehicle has been confiscated for violation of licence on the ground that vehicle is Left Hand Drive and is not permissible under the explanatory note to Chapter 87 – Held that:- Goods allowed to be warehoused and at the time of ex-bonding the appellants shall produce required licence with endorsement thereon and after it is found in accordance with the law the adjudicating authority shall consider the same and if those are found in order shall release the goods - warehousing of the goods allowed

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• 2012 (8) TMI 7
  Claim of revalidation of the scrip under the SFIS - Held that:- The terms of the SFIS and the authorization issued under it states that if the goods had reached in the India by the date of expiry of the authorization i.e.30.04.2011, the petitioner could have qualified for extension to facilitate their clearance - in this case The goods in fact reached on 26.05.2011 - a fact known to the petitioner when it booked them after entering into contract with the foreign supplier, on 18.04.2011 - against assessee.

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• 2012 (8) TMI 6
  Valuation of imported goods - limitation – alleged that appellant has not filed any appeal within the prescribed period of 60 days before the Commissioner (Appeals) - appellant has filed an appeal within the extended period of limitation of 30 days. The contention of the appellant (for condonation of delay) has not considered by the Commissioner (Appeals) holding that the reason stated is not satisfactory - matter remand back to the Commissioner (Appeals) to pass an order on merits after giving reasonable opportunity to the appellants

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• Corporate Laws

• 2012 (8) TMI 27
  Sanction of the Scheme of Amalgamation - Held that:- In view of the approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation / reports filed by the Regional Director, Northern Region and the Official Liquidator, attached with this Court to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation - in terms of the Scheme of Amalgamation, the whole or part of the undertakings, the properties, rights and powers & all the liabilities and duties of the Transferor Company be transferred to the Transferee Company, without any further act or deed be transferred to and vest in the Transferee Company - Petitioner Companies would voluntarily deposit a sum of Rs. 1,00,000/- in the Common Pool fund of the Official Liquidator - scheme ao amalgamation granted.

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• 2012 (8) TMI 5
  Winding up petition - Held that:- Present claim is clearly time barred as under Article 14 Schedule 1 of the Limitation Act, a period of limitation for three years is prescribed for the price of goods sold and delivered where no fixed period of credit is agreed upon - limitation has to commence from the date of delivery of the goods. Article 1 would be applicable only for the balance due on a mutual, open and current account in which case, the limitation would commence in terms of Article 1 of the Limitation Act. Conspicuously the first petition did not speak of the parties having a running account and this was averred only in the amended petition. The petitioner has failed to show that there was a mutual, open and current account where there were reciprocal demands made by the parties after May, 2003. Petition has been filed in November, 2007. It is time barred.

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• Service Tax

• 2012 (8) TMI 49
  Demand of service tax – alleged that assessee is holder of service tax registration and they did not pay Service Tax on taxable service viz. Banking & Other Financial Services and Business Auxiliary Services - assessee contended that the financial agreements of the assessee is not taxable under the Banking Financial Services (BFS) on the ground that as per the definition of BFS under section 65(12) the assessee has the option or is entitled to own the asset at the end of lease period - as per agreement they are the owner of the asset and there is no clause in the agreement which say that their clients had the option to purchase the asset on expiry of the lease agreement – Held that:- As a lot of factual verification was not done, expert consultation was not made any total demand has been drastically curtailed without adequate verification or analysis, the entire matter may be remanded for de novo adjudication - order set aside and matter remanded to the Original Authority

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• 2012 (8) TMI 48
  Services provided was to arrange finance - Business auxiliary service (BAS) - held that:- in the case of Chambal Motors (P) Ltd & Bhatia & Co.(2008 (7) TMI 69 - CESTAT, NEW DELHI), it is settled that the appellant s activities shall fall within the category of BAS. The appellants are small business entity. Perusal of the adjudication order shows that the confusion of the law at the insertion had caused hardship in determining liability and law was under debate. Law being in infancy stage for the impugned period, the appellants deserve consideration under Section 80 of the Finance Act, 1994. - Penalty waived.

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• 2012 (8) TMI 47
  Consulting Engineers Services - application for waiver of pre-deposit of service tax - Held that:- As the appellants main objective is to undertake construction activities for and on behalf of the serving employees of Government of M.P. in the Police Department, the appellant body consists various working officers of the Police department, who are managing the affairs of the Corporation, neither the corporation nor the individuals handling the said corporation are professionally qualified engineers or an engineering form, in which case they would not be prima facie covered by the definition of consulting engineers as appearing in Section 65 (31) - in favour of assessee.

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• 2012 (8) TMI 46
  Business Auxiliary Services – distributor of garments - small scale exemption in terms of Notification No.6/2005 – Held that:- matter remanded to original adjudicating authority for deciding the issue of applicability of small scale notification, afresh in the light of the observations made by the Tribunal in the case of Peoples Automobiles Ltd. (2011 (8) TMI 903 (Tri))

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• 2012 (8) TMI 45
  Cenvat credit – Input service - input for manufacturing unit as well as for registered dealer for sale were brought in the same truck – appellant taken cenvat credit of whole service tax paid – Held that:- Service Tax credit in respect of input service attributable to trading activities is not available.

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• 2012 (8) TMI 22
  Refund claims - under Notification No. 41/2007-ST - refund of service tax paid on GTA services in respect of transport of the impugned goods directly from the place of removal to the port from where the same were exported – Held that:- On the date of filing the claims, the requirement of the notification has been satisfied and the service taxes paid in respect of GTA services used for transport of the impugned goods for export from the place of removal to the port have become refundable - appeals are allowed

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• 2012 (8) TMI 21
  Penalties under. Sections 76, 77 and 78 of the Finance Act - Business Auxiliary Services - services provided by the appellant as regards the insurance of vehicle, loan from the Bank etc. and receiving the amount from the Bank and Insurance company to the services rendered – Held that:- activities rendered by the appellant could not have been taxed under the category of 'Business Auxiliary Services'. Provisions of Section 80 of the Finance Act invoked. Penalties imposed on the appellant under Sections 76, 77 and 78 of the Act set aside.

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• 2012 (8) TMI 20
  Payment of service tax under wrong accounting code – Held that:- while making the payment wrong service tax code relating to "erection, installation and commissioning", indicated merits to be considered and having regards to facts of the case and Board's Circular No.58/7/2003-ST, dated 20.05.03 issued from F.No.159/2/2003-CX-4 and therefore adjustment of payment in the correct account code are allowed. - it is for the Revenue to take up the matter with the P.A.O. - Decided in favor of assessee

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• Central Excise

• 2012 (8) TMI 26
  Limitation - demand was confirmed after denying the benefit of Notification No. 16/97 – Held that:- Demand is for the period from 30.9.1997 to 1.1.1998 and the show-cause notice was issued on 5.5.1998 by invoking the extended period of limitation on ground of suppression with intent to evade payment of duty - Commissioner (Appeals) has not given any finding on the contention raised by the appellant on the issue of limitation - matter is remanded to the Commissioner (Appeals)

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• 2012 (8) TMI 25
  Cenvat credit on service tax paid on 'Goods Transportation Agencies' beyond the place of removal – Held that:- In the case of ABB Ltd. (2011 (3) TMI 248 - KARNATAKA HIGH COURT ) if service tax is paid on transportation charges, it fell within the phrase "clearance of final products from the place of removal" and therefore, the assessee was entitled to CENVAT credit - in favour of the assessee

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• 2012 (8) TMI 24
  CENVAT credit of service tax paid on GTA service which was used for transportation of their final product from factory to the port for export - place of removal of the goods was the port of export – Held that:- Definition of 'input service' under rule 2(l) of the CENVAT Credit Rules, 2004 will squarely cover the above service which was used by the respondent for transportation of the goods from the factory to the place of removal

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• 2012 (8) TMI 23
  Duty on waste and scrap - SSI exemption - rebate of duty paid on inputs raw material used in the manufacture of goods under the provisions of Notification No. 41/2001 CE(NT) – Held that:- value of clearances during the years in question was below the ceiling limit prescribed in the SSI exemption Notification - benefit of Notification No. 89/95-C.E., dated 18-5-1995 granting exemption from payment of duty on waste and scrap arising in the course of manufacture of exempted goods is available to them as cycle parts exported by them are not liable to duty - in favour of assessee

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• 2012 (8) TMI 4
  Demand of duty and penalty under Section 11AC of the Act - assessee is coming to the assessable value of the goods after taking fabric + job work charges – alleged that merchant manufacturers suppressed the value of grey fabric, which resulted in short payment of duty by the assessee – Held that:- No evidence on record to show that the assessee connived with the merchant manufacturers in suppression of the price of the grey fabric. The differential duty has been paid by the merchant manufacturers as they admitted in their statements that they have suppressed the value of grey fabric. In absence of any evidence that the assessee has connived with the merchant manufacturers in suppression of the price of the grey fabric allegation of suppression with intent to evade duty is not sustainable – In favor of assessee

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• 2012 (8) TMI 3
  Waiver of pre-deposit – demand is confirmed in view of the unamended provisions of Rule 6 of the CENVAT Credit Rules 2004 – Cenvat credit on duty paid on inputs used in or in relation the manufacturer of goods cleared on payment of duty as well as common input services – Held that:- Retrospective amended provisions of Rule 6 was not taken into consideration by the adjudicating authority while passing the impugned order - matter is remanded to the adjudicating authority

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• 2012 (8) TMI 2
  Condonation of delay in filing the appeals - Board grants permission to prefer an appeal – Held that:- Revenue has not produced any review order as required under Section 35E of the Central Excise Act, 1944 in respect of the present respondents in spite of opportunities granted. As there is no order produced by the Revenue, passed by the Board, therefore, we find no merits in the applications - condonation of delay applications are dismissed.

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• 2012 (8) TMI 1
  Waiver of pre-deposit - CENVAT credit denied on MS Angles, Channels and similar items – period of limitation - show-cause notice was issued on 28.5.2009 for demanding duty for the period 2004-09 - assessee submitted that during the material period, there were decisions of this Tribunal which prompted the appellant to believe that they were entitled to avail CENVAT credit on MS Angles and similar items – Held that:- plea of bona fide belief was specifically raised in the reply to the show-cause notice but, there was no occasion for the Commissioner to consider it inasmuch as he was bent on rejecting the assessee s appeal for want of pre-deposit without looking into the merits of the case - case should be disposed of by the learned Commissioner (Appeals) on merits in accordance with law and principles of natural justice - appellant should make pre-deposit of the offered amount.

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