Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
August 30, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deemed dividend u/s 2(22)(e) - The amount collected by the firm belongs to the company concerned. This amount is to be sent by the firm to the company promptly along with statement of account but the same was not done properly - Assessee deliberately retained or allowed to be retained the funds in the firm - held as deemed dividend - HC
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Rate of depreciation of books purchased for college library - Books were given to the students for which library charges were collected by the assessee-society. - as per para 9(ii) of the Schedule of Depreciation of the Income-tax Rules depreciation is to be allowed @ 100% - AT
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Deduction u/s. 80IB - business of development of customized software on job work basis - he mere fact that one of the input is owned by the client itself, does not mean that the property in the product never belonged to the assessee - AT
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Limitation u/s 149 of the Income tax act for issue of notice u/s section 148 Date of issue of the notice - date of issue would be the date on which the same were handed over for service to the proper officer which, in the facts of the present case, were postal authorities - AT
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Deduction u/s 37 - Stamping fee and ROC fee for increase in authorized share capital - these expenses cannot be said to be expenses in connection with right issue and public issue, and therefore these expenses are to be disallowed - AT
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Transfer price - The revenue derived from unrelated party transactions at 20.30% of the aggregate revenue of the appellant, cannot be the reason for disregarding internal comparability analysis undertaken by the appellant. It would be appreciated that the appellant in the course of its business enters into several software development contracts of small volume. - AT
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Exemption u/s 10(23FB) - AO is duty bound to enquire whether the assessee trust is registered under the Registration Act, 1908 and has been granted certificate of registration by SEBI under SEBI (Venture Capital Funds) Regulations, 1996. But his role is confined to satisfy himself with such certificates granted and not beyond - AT
Customs
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Excessive Claim of duty drawback - There was misdeclaration of description, quantity, quality and shortage of goods which were attempted to be exported - stay granted partly - AT
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Rejection of value - Only in special circumstances particularized in Rule 4(2) of the Customs Valuation Rules, 1988, valuation needs to be done under the Customs Valuation Rules. If these special circumstances are absent, it is mandatory for the Customs to accept the price actually paid or payable for the goods in the particular transaction - AT
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Mis-declaration of value - Undervaluation of Goods Extensive price negotiation was on record - Detailed justification why the manufacturer cannot give further discount was on record - So suddenly the prices cannot come down to 1/4th - undervaluation proved - AT
Wealth-tax
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Inclusion of aircraft u/s Section 2(ea)(iv) - Computation of Net Wealth - The use of an aircraft for commercial purposes does not necessarily entail hiring to third parties, ferrying of passengers or leasing of the aircrafts for consideration - HC
Service Tax
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Taxability of Marketing and Support Services - The place of provision of service to be provided by the applicant to Tandus China and Tandus US shall be the location of the service recipients, i.e. in China and US respectively, in accordance with Rule 3 of Place of Provision of Service Rules, 2012 - AAR
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Yaga Camps - Taxability of residential as well as non-residential yoga courses - Health Club and Fitness Service - While the department has a case on merit, the bulk of the demand would be time barred as only normal limitation period would be available - AT
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CENVAT credit in Input Services - The activity was the trading activity and Cenvat credit cannot be taken on input services used for such activity. - Stay granted partly. - AT
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Refund Claim - Revenue had rejected the refund claims only on the ground that the said refund would not fall under the category of Export of Services Rules, 2005 and hence Rule 5 will not be applicable was incorrect conclusion - AT
Central Excise
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Provisional Assessment - Refund Claim - Claim of interest - rejection of refund claim on the ground that the appellant did not challenge the order finalizing the provisional assessment - rejection of refund claim is not correct - AT
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Confiscation of the excess found goods - It is a case of mere non-entry in the RG-23 Part-I register - No confiscation - AT
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Classification of Goods - HIV detection kits and Hepatitis C detection kits containing antigens obtained from micro-organism cultures, immobilised on a porous immuno-filtration membrane and which work on antigen-antibody reaction (neutralisation) would be covered by Heading 30.02 - AT
VAT
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Investment based exemption - The exemption was granted on the fixed capital investment made by the entrepreneur - Further, if any further investment was made by installing new machines then the benefit of exemption to the production of goods from such new machines was not available - HC
Case Laws:
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Income Tax
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2013 (8) TMI 823
Deduction u/s. 80IB - CIT declined deduction - Held that:- assessee is engaged in the business of development of customized software on job work basis - software produced by the assessee is not a map simpliciter but an interactive digital product which produces lots of reports and relevant information, on the basis of various inputs including maps of the area. The fact that it is produced on a platform not owned by the assessee is irrelevant inasmuch as what is being transferred by the assessee is not the platform but the end product. The mere fact that one of the input is owned by the client itself, does not mean that the property in the product never belonged to the assessee. In any case, all this is really irrelevant inasmuch as there is a specific direction from a coordinate bench to the effect that all that is to be seen is the point of time when property in end product is transferred. It is clear that the product, i.e. software, comes into existence after carrying on several processes, and its only on completion of these processes, the property in the product can be transferred to the customer. The transfer of property is therefore not an ongoing process at the each stage of work as will be the case of a provision for services - Following decision of of CIT vs. Oracle Software India Ltd. [2010 (1) TMI 9 - SUPREME COURT OF INDIA] - Decided in favour of assessee.
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2013 (8) TMI 822
Unexplained investment - Capital investment - CIT deleted addition - Held that:- evidences which were made available and explanations offered with supporting material before the CIT(A) were not produced before the Assessing Officer and the CIT(A) did not give an opportunity for the Assessing Officer to peruse the same before passing his order, which is not in line with the provisions of Rule 46A - Matter remitted back to the file of Assessing Officer - Decided in favour of Revenue.
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2013 (8) TMI 821
Disallowance u/s 14A - Disallowance made as per Rule 8 - Held that:- calculation of disallowance was based on Rule 8D only and the same cannot be sustained in the assessment year 2007-08 - Neither the Assessing Officer nor the learned Commissioner (Appeals) has pointed out any defect in the working of the calculation of disallowance under section 14A furnished by the assessee and has not pointed out any specific expenditure incurred for earning of dividend income - Decided in favour of assessee. Depreciation - BSE Membership card - intangible asset - section 32(1)(ii) - Held that: - On the analysis of the Rules of BSE, it is clear that the right of membership (including right of nomination) gets vested in the Exchange on the demise/ default committed by the member; that, on such forfeiture and vesting in the Exchange the same gets disposed of by inviting offers and the consideration received thereof is used to liquidate the dues owed by the former/ defaulting member to the Exchange, Clearing House, etc. - the right of membership (including the right of nomination) vests in the Exchange only when a member commits default. Otherwise, he continues to participate in the trading session on the floor of the Exchange; that he continues to deal with other members of the Exchange and even has the right to nominate subject to compliance of the Rules. Moreover, by virtue of Explanation 3 to Section 32(1)(ii) the commercial or business right which is similar to a "licence" or "franchise" is declared to be an intangible asset. - Therefore, the right of membership, which includes right of nomination, is a "licence" or "akin to a licence" which is one of the items which falls in Section 32(1)(ii) of the 1961 Act. The right to participate in the market has an economic and money value. It is an expense incurred by the assessee which satisfies the test of being a "licence" or "any other business or commercial right of similar nature" in terms of Section 32(1)(ii) - Following decision of Techno Shares and Stocks Ltd. v/s CIT [2010 (9) TMI 6 - SUPREME COURT OF INDIA] - Decided against revenue.
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2013 (8) TMI 820
Disallowance of interest paid on unsecured loans to the persons specified under section 13(3)/40A(2)(b) of the Income-tax Act, 1961 - Substantial loan was borrowed by the assessee from the parties specified under section 40A(2)(b) of the Act besides other creditors. But interest was paid at the same rate i.e. @ 18% per annum to both the types of creditors - Nothing is placed on record to establish that the assessee has paid lesser rate of interest to the financial institutions. Moreover, no loan was borrowed from the financial institutions in the impugned assessment year - Since the assessee has paid interest @ 18% per annum to all types of its creditors, disallowance of excess payment of interest on the ground that higher rate of interest was paid to the persons specified under section 40A(2)(b) of the Act cannot be sustained Decided against the Revenue. Rate of depreciation of books purchased for college library - Assessee claimed depreciation @ 60% on book purchased for college library, but the Assessing Officer allowed depreciation only @ 15% by holding that the books are plant and machinery and the assessee is running an educational institution and is not engaged in the business of lending library Held that:- There is force in the contentions of the assessee that due to fast changing technology around the globe, the reference books also become obsolete in a short span - Books were given to the students for which library charges were collected by the assessee-society. Therefore, as per para 9(ii) of the Schedule of Depreciation of the Income-tax Rules depreciation is to be allowed @ 100% - Decided against the Revenue. Reference under section 142A of the Act was made to the DVO for estimating the value of college building of the assessee-society without rejecting the books of account Held that:- Reliance is placed upon the Apex court judgment in the case of Sargam Cinema vs. CIT [2009 (10) TMI 569 - Supreme Court of India ], wherein it was held that without rejecting the books of account, reference to the DVO cannot be made In the present case, assessing Officer has not rejected the books of account of the assessee. The assessee's books of account are properly audited and no defect has been pointed out therein. There is no specific finding of the Assessing Officer for rejection of the books of account. Therefore, reference to the DVO was made without rejecting the books of account. Thus, the reference to the DVO was not sustainable in the eyes of law as per the aforesaid judgment of the Hon'ble Apex Court and estimation made on the basis of the DVO's report deserves to be deleted Decided against the Revenue.
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2013 (8) TMI 819
Deduction u/s 57(iii) or section 36(1)(iii) of the Income Tax Act Colourable transaction for tax avoidance - Assessee is a partner of M/s. Sahara India (Firm); and Director in various companies of M/s. Sahara Group. For the assessment year 1997-98, the assessee has filed loss return for ₹ 36,48,09,550/-. While completing regular assessment, the Assessing Officer disallowed the interest of ₹ 36,57,27,195/- claimed by the assessee as interest paid on loan for purchase of shares under the head "income from other sources" Held that:- Assessee is a partner in the firm, known as M/s. Sahara India (Firm), where he is holding 62% shares and remaining shares are lying with other partners including Smt. Swapna Roy, the wife of the assessee. Thus, for all the purposes, the firm has become propriety concerned. This firm has collected the money from the public, on behalf of various companies of Sahara Groups - Firm has retained the money for a longer period without transmitted to the concerned companies. The firm has also borrowed the funds on interest from SIMBCL; a company of the group. The assessee has invested this amount in a few companies of Sahara Groups, which were suffering heavy losses - Loans were taken by the assessee on interest and invested in other loss making companies of the same Group. In the instant case, the assessee has invested the amount in the companies, which were already suffering heavy losses. So, there was no chance to receive any pecuniary benefits. Perhaps in the past also, the assessee might have invested some amounts without any financial benefit. In these circumstances, fresh investment made by the assessee cannot be considered for business purposes specially when the assessee is running a financial entity. The assessee is Managing Director in M/s. Sahara India Financial Corporation Ltd. (SIFCOL) and was aware about the financial health of all the companies of the group - Firm M/s. Sahara India had received money in the form of loan/advance from public and SIMBCL; SIFCOL; and Sahara India Housing Corporation Ltd. (SIHCL) and had retained it for a considerable period, before investing in loss making companies of the group - It appears that the interest paid on borrowed funds was not for exclusively and wholly for the purposes of business. No prudent businessman would like to make an investment in loss suffering companies when the firm itself has borrowed the funds on interest Reliance has been placed upon the case of McDowell & Co. Ltd. vs. C.T.O.,[1985 (4) TMI 64 - SUPREME Court ], wherein the Hon'ble Apex Court observed that it is the duty of the Court to expose of colourable device by uplifting the corporate veil Decided in favor of Revenue. Taxability of perquisites Section 17(2) read with section 295(2)(c) of the Act - Assessee is a partner in M/s. Sahara India (Firm) and a Director in various group companies. The assessee was also receiving the salary income from M/s. Sahara India Financial Corporation Ltd. The assessee was enjoying the facilities of the free accommodation, furniture and fixtures, facility of servants, chauffeur driven car, telephone facility, facility of free water, electricity and foreign travel etc Held that:- Perquisite denotes to a benefit amounts or advantage mostly in kind and enjoyed by the employee at the cost of employer, generally in addition to the salary or wages to which he is entitled - Perquisite is a part of salary and taxable. So, the perquisite will have to come under the clutches of the Income-tax. Being the salaried person, the assessee is entitled for the standard deduction on the salary. The remaining perquisite is taxable - Valuation of the perquisite, Section 295(2)(c) of the Act provides that CBDT may make rules for the determination of the value of any perquisite chargeable to tax under this Act in such manner and on such basis as appears to the Board to be proper and reasonable. Deemed dividend u/s 2(22)(e) of the Income Tax Act - Assessee was the Managing Director of M/s. Sahara India Financial Corporation Ltd., which is a Residuary Non-Banking Company collecting deposits from the public. The assessee was also a partner in M/s. Sahara India (Firm) which was acting as an agent of the said company for mobilizing the deposits. The assessee was the beneficial owner of the shares of M/s. Sahara India Financial Corporation Ltd. (SIFCOL); M/s. Sahara India Airlines Ltd.; M/s. Sahara India International Corporation Ltd.; as also a partner holding substantial interest in M/s. Sahara India (Firm). The assessee was having 62% share as partner in M/s. Sahara India (Firm) and remaining major share was holding by other partners including his wife Held that:- The amount collected by the firm belongs to the company concerned. This amount is to be sent by the firm to the company promptly along with statement of account but the same was not done properly - Assessee deliberately retained or allowed to be retained the funds in the firm - The firm was supposed to send the money to the company promptly. Moreover, the Firm has shown the loan/advances from the company on its liability side in the balance-sheet, therefore, it is a loan for the firm. In the instant case, no circumstances were explained by the assessee for what reason the heavy deposits made by the investors were retained by the assessee in the Firm for a longer period. For this reason alone, it is a case of deemed income as the assessee is a shareholder in all the companies Decided in favor of Revenue. Section 64(1)(ii) of the Income Tax Act - Spouse of individual is in receipt by way of salary, commission, fees or any other form of remuneration whether in cash or in kind from a concern in which such individual has a substantial interest - Smt. Swapna Roy, the spouse of the assessee, was drawing a net income of ₹ 6,22,230/-. The AO has clubbed the income of Smt. Swapna Roy, the wife of the assessee, with the income of the assessee Held that:- Smt. Swapna Roy is a post-graduate and is also a Director in many companies. She has expertise in business matter also. She is a separate assessee since long, so, her income cannot be clubbed Decided against the Revenue.
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2013 (8) TMI 818
Limitation u/s 149 of the Income tax act for issue of notice u/s section 148 Date of issue of the notice is relevant Held that:- Relying upon the judgment in the case of Kanubhai M.Patel (HUF) Vs. Hiren Bhatt Or His Successors To Office and Others [2010 (7) TMI 704 - Gujarat High Court], it is held that date of issue would be the date on which the same were handed over for service to the proper officer which, in the facts of the present case, were postal authorities In the instant case, the notice was handed over to the postal authorities on 1st April, 2008 which was beyond the period of limitation of six years provided in Section 149 Barred by limitation. Incorrect mention of address in the Notice u/s 148 of the Income Tax Act Held that:- The notice has to be sent at the address of the assessee given in its record with the Income-tax Department and not with some other address which might have been given by the Investigation Wing. The notice was issued in March, 2008 and the assessment was completed in December, 2008 and, in the assessment order, the Assessing Officer himself has given a different address than what was given in the notice under Section 148 - Notice was issued at the incorrect address and the same cannot be said to be valid issue of notice if the same is wrongly addressed Decided against the Revenue. Sufficiency of reasons to be recorded for issuance of Notice u/s 148 Held that:- Relying upon the judgment in the case of Sarthak Securities Co. P. Ltd [2010 (10) TMI 92 - DELHI HIGH COURT], it was held that only information received by the Assessing Officer was that M/s Aayushi Stock Brokers (P) Limited is found to be providing accommodation entries in the form of bogus share transactions, bogus share capital etc - Detail given is only with regard to name of the bank, ledger account number and amount. Even the nature of transactions is not given, much less to establish that the above transactions are in the nature of accommodation entries - Assessee has only sold the shares through M/s Aayushi Stock Brokers (P) Limited and the sale proceed has duly been considered while computing the income of the assessee for the assessment year under consideration - Reasons did not satisfy the requirement of Section 147 Decided against the Revenue.
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2013 (8) TMI 817
Power of CIT to invoke section 263 for revision of assessment Held that:- Whether under the facts and circumstances of the case, the assessee was eligible for deduction under Section 80IA or not is a controversial issue and on the issue there are two opinions and if the A.O. has taken one then the order of the A.O. cannot be cited to be erroneous order - When the A.O. is satisfied then it is not necessary to discuss such matter in the order. The assessee has established that the assessee has furnished relevant documents in reply to the queries raised by the assessee. The view taken by the A.O. is after considering the material and submission of the assessee. The order of the A.O. cannot be said to be erroneous. CIT merely want further verification or according to him adequate verification. Such verification does not cover to exercise the power under Section 263 of the Act - Order of A.O. is not erroneous and this basic condition for invoking section 263 of the Act has not been satisfied Decided in favor of Assessee.
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2013 (8) TMI 816
Accrual of interest - Mercantile system of accounting - Accounting Standard notified u/s145A. - CIT held that since the appellant has been following mercantile system of account the accrued interest has to be included in the total income - Held that:- No pleading made on behalf of the assessee specifically averring that the reliance placed by the lower authorities on the order of the CIT(A) - Decided against the assesse. Disallowance of software expense - Held that:- in the preceding assessment year the very disallowance had been made treating software expenses as 'capital' in nature - no reason to interfere in the findings of the CIT(A) - Decided against the assesse.
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2013 (8) TMI 815
Search and seizure - Shortage of stock found during search and seizure - CIT deleted addition made by A.O. - Whether order made by CIT is without any basis - Held that:- CIT is giving the basis of his decision that the shortage of finished goods occurred only on account of non inclusion of unfinished jumbo reel/parent reel lying on the floor which was subsequently cut into small reels and entered into RG-1 register against production on 14.07.2009 and 15.07.2009. This basis given by CIT(A) in support of his decision is totally contrary to the facts. If some jumbo reels and parent reels lying on the floor on the date of search i.e. on 16.07.2009 were not included in the inventory of finished goods then how such non inclusion in the inventory of finished goods on the date of search can explain the finished goods as per RG-1 register on 16.07.2009. The basis of Ld. CIT(A) is this that from the inventory of goods, it is clear that inventory of unfinished reels on the floor was not taken in stock as on 16.07.2009. Even if it is correct, it is not relevant for the purpose of explaining the shortage in the stock of finished goods on the date of search because it is admitted position of fact that in the RG-1 register, only finished goods is entered as production and therefore, the search team was required to take stock of only finished goods for the purpose of comparing the available stock of finished goods as compared to book stock of finished goods. There is no basis of exclusion form opening stock of finished goods as on 16.07.2009 because the production on 14.07.2009 and 15.07.2009 is included in the RG-1 register and the same must be available with the assessee on the date of search i.e. 16.07.2009 in the form of finished goods and the same cannot be explained by availability of unfinished goods on the date of search. The exclusion on account of dispatch on 16.07.209 is also without any basis in the facts of the present case when there is no finding given by CIT(A) that such dispatch on 16.07.2009 is before the inventory taken by the search party. Generally, the search is carried in the morning hours and hence, any dispatch on the date of search cannot be before taking the inventory by the search party and in some cases, there can be such dispatch but then this has to be brought to the notice of the search party and evidence may be brought on record about the time of dispatch and the time of taking inventory by the search party and in the absence of any such evidence produced by the assessee, the reconciliation statement is not acceptable - There order of CIT is without any basis and reversed - Decided in favour of revenue.
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2013 (8) TMI 814
Deduction u/s 37 - Stamping fee and ROC fee for increase in authorized share capital - CIT disallowed deduction - Held that:- , these two expenses are incurred for authorized share capital, and hence even after call off of public issue by the assessee, the benefit is available to the assessee in respect of this increase in authorized share capital, and hence these expenses cannot be said to be expenses in connection with right issue and public issue, and therefore these expenses are to be disallowed - Following decision of Brooke Bond India Limited Versus Commissioner of Income-Tax [1997 (2) TMI 11 - SUPREME Court] - Decided against assessee. Deduction u/s 37 - Expenditure for raising capital through composite issue - CIT disallowed deduction - Held that:- With the approval of SEBI, the assessee was to increase the share capital and thereby promote its business activity. However, the same got aborted due to reasons beyond its control - Following decision of Commissioner of Income Tax Vs. M/s. Essar Oil Limited [2008 (10) TMI 387 - Bombay High Court] - Decided in favour of assessee.
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2013 (8) TMI 813
Penalty u/s 271(1)(c) - Addition in long term capital gain - Held that:- When for the addition made by the A.O. which is confirmed by the Tribunal, a substantial question of law is admitted that the issue is not free from debate - It cannot be said that the assessee has concealed his income or furnished inaccurate particulars of income and, therefore, penalty is not justified - Decided in favour of assessee
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2013 (8) TMI 812
Difference in the arm's length price of the 'international transaction' - TPO evaluated the international transactions applying TNMM at entity level by comparing the net operating profit margin of the assessee with uncontrolled net operating profit margin of comparable uncontrolled enterprises - DRP confirmed additon made by TPO - Held that:- The most direct comparison has been provided by way of comparable uncontrolled transactions entered into by the associated enterprise with unrelated parties, in India, for rendering similar software development services. The internal comparison undisputedly provides the most reliable and direct benchmark for establishing the arm's length price of such international transactions of rendering software development services entered into by the appellant - CUP could appropriately be applied considering internal comparable uncontrolled transactions entered into by the appellant with unrelated parties - The TPO was not justified in ignoring the aforesaid comparable uncontrolled transactions placed on record and instead embarking upon a less direct benchmarking exercise by resorting to comparison of profits of external comparables - The internal comparables available in case of an assessee are to be preferred for the purpose of benchmarking of international transactions even in the case where TNMM is applied, instead of relying on external comparables - Decided in favour of assessee. The revenue derived from unrelated party transactions at 20.30% of the aggregate revenue of the appellant, cannot be the reason for disregarding internal comparability analysis undertaken by the appellant. It would be appreciated that the appellant in the course of its business enters into several software development contracts of small volume. TPO in his order, while conducting fresh search has selected companies with turnover in excess of 1 crore. However, the TPO himself has rejected the internal comparable with a turnover of 2.97 crores used by the appellant for benchmarking analysis, holding is to be very small as against the sales made to associated enterprise. Since the TPO himself has accepted companies with turnover more than 1 crore, this argument of the TPO seems inconsistent with his own approach. The internal benchmarking analysis undertaken by the appellant, therefore, has wrongly been rejected by the TPO and the Transfer Pricing adjustment made in respect of the international transaction of software development services rendered to the associated enterprise, calls for being deleted. Transfer Pricing adjustment in respect of international transactions of payment of marketing and management support services - Held that:- Assessee does not have any sales or marketing office outside India and therefore the entire third party business of the appellant is generated as a result of the market support services provided by HSC, USA. The increase in revenue of more than 3 times of the revenue of immediately preceding year is pursuant to the significant marketing activity undertaken by HSC, USA - The associated enterprise, HSC USA, does not undertake any business activity of its own and was created solely for the purpose of rendering marketing and aforesaid management support services to the appellant. The operating costs incurred by the HSC USA relate entirely to the operations of the appellant in India and there is no other revenue reflected in the profit and loss account of the associated enterprise. Nature of costs being incurred by HSC USA for the aforesaid services, are, payroll, insurance, general office running expenses, etc. - The international transactions of rendering of marketing and management support services by the associated enterprise has independently been demonstrated to be at arm's length applying TNMM, taking associated enterprise as the tested party. Such international transactions undertaken in the Transfer Pricing study, has otherwise not been disputed by the TPO - Transfer Pricing adjustment made by the TPO in respect of international transactions of payment of marketing and management support services is not sustainable and is liable to be deleted - Decided in favour of assessee.
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2013 (8) TMI 811
Penalty u/s 271(1)(a) of the Income Tax Act Claim of loss on account of transfer of units of US-64 and and also carry forward and set-off of loss in subsequent years - Disallowance of the loss on the transfer of units of US-64 - Conversion of the units into tax-free bonds by the UTI, the issuer, at a per unit price of Rs.12/- as against the face value (cost) of Rs.10/- per unit - Assessee had in its return of income filed a note with its computation of income disclosing all details about the sale of US 64 units, the loss and resultant carry forward Held that:- Reliance is placed upon the judgment in the case of Sandvik Asia Ltd. vs. CIT [2004 (1) TMI 45 - BOMBAY High Court] and it was held that at the highest it can be said that the assessee's claim is not sustainable in law, and which would not make it susceptible to penalty, and which is without doubt the ratio of the decision in the case of Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT ]. Further, decision by the hon'ble high court in the case of Nalin P. Shah & Othrs.[2013 (8) TMI 496 - ITAT MUMBAI] is rendered in an identical fact situation, wherein it has been held that the impugned claim is not liable to be visited with penalty u/s. 271(1)(c) as there is under the circumstances no furnishing of inaccurate particulars of income. The fact situation in the instant case being identical, therefore, constrained on the ground of consistency to adopt the same view as has found approval by the hon'ble jurisdictional high court Decided in favor of Assessee.
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2013 (8) TMI 810
Capital expenditure or Revenue expenditure - Expenditure on acquiring fire fighting equipments and on safety measures - CIT allowed expenditure as Revenue expenditure - Held that:- even if the expenses are incurred in respect of fire fighting equipments in the present year and in A.Y. 2006-07, it is to be seen as to whether the same is in respect of acquiring new equipments or in acquiring some parts of the existing equipments - No evidence available for previous year - Matter remitted back - Decided in favour of Revenue. Disallowance u/s 14(A) - Held that:- no such disallowance is called for when the own interest free funds is far in excess of investment in tax free securities and the A.O. could not prove any nexus between interest bearing borrowed funds and such investment in tax free securities - However, in previous year disallowance was made therefore - Decided in favour of Revenue. Deduction u/s 80IA(4) - Held that:- assessee is entitled to deduction u/s 80IA(4) of the Income-tax Act 1961 irrespective of whether the product is sold in the market or is used by the assessee itself. This was also held that market value of such own consumption should be considered for working out profits and gains for the purpose of allowing deduction u/s 80IA of the Act. So, this goes to show that the assessee is eligible for deduction u/s 80IA for the power used for own plant as captive consumption - A.O. has compared the rate by which various power supplying companies are purchasing power from the power generating companies whereas the assessee has adopted the price at which electric supplying companies are supplying power to the power consumers - where two views are possible, the view favourable to the assessee should be followed - if own power production was not there, the assessee was required to pay for such power at the same rate at which power is sold by GEB. Hence, because of own power production, the assessee has that much saving in power cost which is the income of power plant - Following decision of CIT vs. Ahmedabad Manufacturing Calico Printing Co. Ltd. [1986 (3) TMI 46 - GUJARAT High Court] - Decided against Revenue. CIT(A) has directed the AO to verify the claim of the assessee that the claim made by the assessee for deduction in respect of LTC was disallowed in earlier year and only to the extent, the liability created by the assessee but disallowed in the assessment only, the writing back of liability can be excluded from income. The matter is restored back by Ld. CIT(A) to the file of A.O. for a decision after verifying the facts.
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2013 (8) TMI 809
Exemption u/s 10(23FB) - Conditions laid by SEBI not fulfilled - CIT granted exemption - Held that:- assessee has filed consent application and the alleged violation of provisions of regulations has been settled according to the consent terms and the fact remains that the approval granted by the SEBI has not been withdrawn - AO is duty bound to enquire whether the assessee trust is registered under the Registration Act, 1908 and has been granted certificate of registration by SEBI under SEBI (Venture Capital Funds) Regulations, 1996. But his role is confined to satisfy himself with such certificates granted and not beyond - entries made in the register of independent body should be accepted as true and they should not be questioned while deciding the issue relating to the matters concluded by the entries made in such registers - Following decision of ITO Vs. Gujarat Information Technology Fund [2011 (5) TMI 572 - ITAT AHMEDABAD] - Decided against Revenue. Amendment to Section 10(23FB) - restriction or requirement regarding the source of income for grant of exemption u/s. 10(23FB) - Held that:- There is no restriction or requirement regarding the source of income for grant of exemption u/s. 10(23FB). It is only by Finance Act, 2007, w.e.f. 1 s t April, 2008, an amendment to section 10(23FB) was brought about restricting the exemption under that section to income from Investment by the Venture Capital Fund in a venture capital undertaking. For this purpose, the said clause (c) of Explanation 1 has also been amended to define "Venture Capital Undertaking". This amendment was made effective from 1.4.2008. By no stretch of imagination can this amendment can be considered as clarificatory applicable to earlier Assessment Year. - Decided against the revenue. Disallowance of Trusteeship and Management Fees - Non fulfillment of Venture Capital Fund Regulations - CIT deleted addition - Held that:- assessee has incurred expenditure as per the terms of the Deed and the AO has not brought out any material on record to prove that the assessee has not incurred genuine expenditure - Decided against Revenue.
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Customs
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2013 (8) TMI 799
Excessive claim of duty drawback - Suppression of quantity of goods - Whether there was wilful suppression of the quantity/number area and measurement of carpets and goods were overvalued to claim excess drawback for such non-existing or short accounted exports Held that:- The test reports relating to attempted exports clearly established material discrepancy in composition of the goods attempted to be exported - declaration relating to contents of the carpets attempted to be exported, quality as well as measurement thereof resulted in serious discrepancy found in physical examination - there was no mention of other misc. materials used in the manufacturing process. Misdeclaration of goods - Whether the quality of the carpets and the value declared by the exporter in their export documents was correct or the same was liable to be rejected for misdeclaration Held that:- There was misdeclaration of description, quantity, quality and shortage of goods which were attempted to be exported. Stay application waiver of pre deposit - Duty drawback - Whether the assessee deliberately facilitated fraudulent exports for claim of higher drawback rendering them to penal action Held that:- Fraudulent past exports were proved to be making fictitious purchases recorded by the appellant without explaining the manufacture and cost data of the exports -Its records were fabricated - So also the cost data relating to attempted exports were not furnished - it was difficult to appreciate assessees pleadings to be merited at this stage since fraud nullifies everything since draw back was availed in excess of admissibility - assessee was ordered to submit some amount as pre deposit decided against assessee.
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2013 (8) TMI 798
Mis declaration of goods penalty u/s 112 redemption of fine - importer filed appeal for setting aside the penalty and redemption fine Held that:- applicants had not made out a prima facie case for waiver of predeposit of the entire amount of penalty - there was no dispute that the goods are mis-declared - the contention that it was not a case of willful mis declaration which could only be determined after hearing the appeal at length. Stay application waiver of pre deposit - court ordered 10% amount of penalty to be submitted with the department on such submission the stay would be granted decided in favour of assessee with conditions.
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2013 (8) TMI 797
Application for modification of stay order - Assessee contended that the demand of duty was on import of capital goods and the adjudicating authority while quantifying the demand should have allowed permissible depreciation of value in terms of the Board's Circular No. 305/136/92-FTT r.w. Notification No. 52/2003-Cus. - whether on the available records prima facie case was made out by the parties Held that:- An order was sought to be modified the appellate Tribunal should at the outset look for a prima facie case for modification - In case no prima facie case was found by the Tribunal the modification application would be rejected without the need to hold elaborate hearing - court followed the judgement of Baron International Ltd. Vs. UOI (2003 (9) TMI 97 - HIGH COURT OF JUDICATURE AT BOMBAY) - the parameters of a modification application of this kind - The Hon'ble High Court almost ruled out the permissibility of review of any order for pre-deposit. - the miscellaneous application had rejected for want a prima facie case for modification of the Stay Order appeal decided against the assessee.
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2013 (8) TMI 796
Provisional assessment Demand of differential duty Interest u/s 111(m) Confiscation of goods Penalty u/s 114A - Assesse had satisfied all the guidelines prescribed Held that:- The question of re-determination of value under Rules 5 to 8 of the Customs Valuation Rules did not arise at all relying upon - Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai [2000 (11) TMI 139 - SUPREME COURT OF INDIA ] - Order for re-determining the value of the machinery under importation was not sustainable in law -the confiscation of the goods and imposition of fine and penalty were also not sustainable in law - Only in special circumstances particularized in Rule 4(2) of the Customs Valuation Rules, 1988, valuation needs to be done under the Customs Valuation Rules. If these special circumstances are absent, it is mandatory for the Customs to accept the price actually paid or payable for the goods in the particular transaction; conversely, if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent Rules Decided in favor of assesse.
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2013 (8) TMI 795
Mis-declaration of value - Undervaluation of Goods Duty Short paid - Whether undervaluation was proved was to be decided on the basis of the facts of each case - The commodity involved and the parties involved also were relevant - In the case the commodity involved was sophisticated mechanical equipment and measuring instruments which were not sold in bulk - Extensive price negotiation was on record - Detailed justification why the manufacturer cannot give further discount was on record - So suddenly the prices cannot come down to 1/4th - In the facts and circumstances of the case the finding of the Commissioner was upheld that the transaction Value declared were liable to be rejected - Collector of Customs, Bombay v. Shibani Engineering Systems, Bombay [1996 (8) TMI 106 - SUPREME COURT OF INDIA ] - abnormally discounted prices cannot be accepted - the prices declared in the Bill of Entry merits were rejected and goods should be assessed on the basis of prices at which goods were offered in the records seized. Whether demand can be issued without challenging the assessment was also settled in UOI v. Jain Shudh Vanaspati Ltd.[1996 (8) TMI 108 - SUPREME COURT OF INDIA ] - the allegation was regarding mis-declaration of value as was evidenced from correspondence sized from the assesse - Where there was such mis-declaration or suppression the extended period of five years specified in Section 28 of the Customs Act was applicable - amount worked out for short levy of duty could not be accepted - the matter was remitted back to the adjudicating authority for re-quantification of short-levy - The penalties also need to be decided afresh in view of the likely reduction in duty liability
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Corporate Laws
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2013 (8) TMI 794
Winding up Petition - Inability to Pay Dues Dishonour of Cheque - no payment being made and criminal proceedings had been initiated - The winding up petition was presented by the respondent against the appellant company claiming balance of price of goods sold and delivered by the respondent were remained unpaid Held that:- The grounds appear to be substantial to pass the said order and the Court found that there was any bona fide dispute had been raised on the basis of the material placed before the Court The company had failed to raise a bona fide dispute in the matter on the basis of the material placed before the Court - there was no ground to interfere with the order passed by the Honble Single Judge. There was no illegality and/or irregularity in respect of the order so passed by His Lordship - there was no ground made out by the appellant to entertain - The defence which had been taken by the appellant cannot be tried to be a bona fide defence or can raise any issue to be decided - It appears that the plea taken by the appellant was without any materials and cannot be entertained at all - without materials/particulars it was difficult to come to such a conclusion with regard to fraud.
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Service Tax
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2013 (8) TMI 806
Taxability of Marketing and Support Services - Place of provision of services - What would be the place of provision of the marketing and support services in terms of the Place of Provision of Service Rules 2012 introduced vide Notification No. 28/2012 S.T. - Held that:- The place of provision of service to be provided by the applicant to Tandus China and Tandus US shall be the location of the service recipients, i.e. in China and US respectively, in accordance with Rule 3 of Place of Provision of Service Rules, 2012; and The provision of service by the applicant to the two recipients named above will amount to export of service within the meaning of Rule 6A of Service Tax Rules, 1994 - It hardly needed to be added that if any material difference was noticed in the facts relating to the transaction when the actual determination was made, it would be open to the concerned authorities to act appropriately according to law. Export of Taxable Services - Notification No. 2/94 - Whether the marketing and support services would qualify as export of taxable services under Rule 6A of the Service Tax Rules , 1994 introduced vide Notification No. 2/94 S.T. - Held that:- The provisions of Rule 6A of Service Tax Rules, 1994 were satisfied in the case and therefore this would be a case of export of service.
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2013 (8) TMI 805
Condonation of delay Delay of more than 1(one) year Power of Commissioner(A) to condone the delay Held that:- Principle has been settled by the Honble Supreme Court in the case of Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT OF INDIA] - Accordingly, the ld. Commissioner (Appeals) cannot condone the delay beyond three months in addition to the statutory limit of three months for filing the appeal under Section 85 of the Finance Act, 1994 Decided against the Assessee.
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2013 (8) TMI 804
Taxability of residential as well as non-residential yoga courses - Health Club and Fitness Service u/s 65 (105) (zw) r.w. section 65(51) and (52) - yoga camps stay - Held that:- the various yoga courses, residential as well as non-residential, being organized by the appellant are for general physical well-being and there is nothing on record to prove, that these courses are meant for specific element. - appellants plea that their services are not covered by the definition of health and fitness service not accepted. - Prima facie case is against the assessee. Extended period of limitation - Held that:- since March 2004 there was correspondence between DYM trust. While the department was of the view that the activity of the trust were taxable as health and fitness service, the stand of DYM trust was that the same is not taxable, but ultimately sometime in March 2005, the required information was furnished to the department by DYM trust. However surprising, no further action was taken by the department and as such no show cause notice was issued. It is only in 2011 that fresh inquiry was initiated against Patanjali Yogpeeth Trust, without any reference to the earlier correspondence of the sister trust with the department. - prima facie neither longer limitation period of five years can be invoked nor penalty under Section 78 of the Finance Act would be excisable. While the department has a case on merit, the bulk of the demand would be time barred as only normal limitation period would be available. - Pre deposit ordered to be made for Rs. 40 Lacs - stay granted partly.
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2013 (8) TMI 803
Nature of Business - Business Auxiliary Service OR Clearing and Forwarding Agent Services - Whether the appellant can be held to be clearing and forwarding agent of their principals - Held that:- The service being provided by them was the service of commission agents covered in the definition of Business Auxiliary Service - The definition and scope of clearing and forwarding agents stand clarified by the Board in the circular and COMMISSIONER OF CENTRAL EXCISE, DELHI Versus D. R. POLYMERS [2013 (6) TMI 262 - CESTAT NEW DELHI] - Clearing and forwarding agents only received dispatch orders from the principals and prepares the invoices on behalf of the principals - He was not free to sell the goods on its own - the assessee was selling the goods received from the principal, on his own and under the cover of his invoices and was paying sales tax on the same Tribunal held that he cannot be considered to be clearing and forwarding agent of the principal. The taxability of Appellants service as Business Auxiliary Service (Commissioner Agent) and whether during the period w.e.f. 10-9-2004, they would be eligible for exemption under Notification No. 13/2003-S.T. as amended by Notification No. 8/2004-S.T had not been considered by the Commissioner (Appeals) - for this purpose the matter will had remanded back to Commissioner of Central Excise (Appeals). If service tax was chargeable on the Assesses service by treating the same as Business Auxiliary Service then longer limitation period would not be applicable and service tax would be demandable only for normal limitation period - Penalty u/s 76 and 78 would be liable to be waived u/s 80 and as such no penalty would be imposable - Matter Remanded Back regarding eligibility for exemption under Notification No. 13/2003-S.T., dated 1-3-2003 as amended by Notification No. 8/2004-S.T., dated 10-9-2004 in respect of period w.e.f. 10-9-2004 and qualification of Service tax demand which would be receivable only for normal limitation period, if it is held that the Appellant are not eligible for exemption vide Notification No. 13/2003-S.T. as amended by Notification No. 8/2004-S.T.
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2013 (8) TMI 802
Demand after 2004 on GTA servcies for the period before legislative measures commencing from the Finance Act 2000 - Held that:- No provision have however been brought to our notice which enables the adjudicating or an appellate authority to review the decision of this Tribunal dated 2.11.2005 whereby the respondent/assessees appeal against the order of adjudication dated 28.2.2003 as confirmed by the appellate order dated 3.3.2005 was reversed and the assessees immunity to service tax liability, declared. As this Tribunal decision dated 2.11.2005 (in the assessees case) having attained finality no adjudicating or appellate authority could ignore the order dated 2.11.2005. The appellate authority by the order impugned (by Revenue) in this appeal concluded that the finality of this Tribunals order dated 2.11.2005 is not liable to be ignored nor a fresh order of assessment passed contrary thereto. The conclusion by the adjudicating authority is impeccable and not liable to be interfered with. A substantially similar issue fell for consideration in Kisan Sahkari Chini Mills Vs. CST [2013 (5) TMI 57 - CESTAT, NEW DELHI], wherein following the judgment of the Gujarat High Court in CCE Vs. Eimco Elecon Ltd. [2010 (7) TMI 477 - GUJARAT HIGH COURT], it was held that the demand issued on or after 2004 or latter in respect of short levy, the assessee before us is not maintainable. - Decided in favor of assessee.
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2013 (8) TMI 801
CENVAT credit in Input Services - assesse took credit of service tax paid on input services which were common to both taxable services and non-taxable activities - Revenue was of the view that the assesse took Cenvat credit more than what was attributable to taxable service - Notice was issued for recovering such credit taken and utilized duty was demanded along with interest and penalty - Held that:- The activity was the trading activity and Cenvat credit cannot be taken on input services used for such activity. - Stay granted partly.
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2013 (8) TMI 800
Refund Claim - Export of services - booking orders for the foreign supply for supply of goods in India - Held that:- The adjudicating authority had rejected the refund claims only on the ground that the said refund would not fall under the category of Export of Services Rules, 2005 and hence Rule 5 will not be applicable was incorrect conclusion - The assesse was entitled to refund under Rule 5 on the Service tax paid by them in respect of export of business auxiliary service - exemption was admissible to the assessee in respect of business auxiliary service exported by them. The benefit of such export was derived by the recipient located outside India and was utilized outside India - M/s. Em Jay Engineers Versus Commissioner of Central Excise, Mumbai [2010 (5) TMI 221 - CESTAT, MUMBAI] and KSH International Pvt. Ltd. Versus Commissioner of Central Excise, Belapur [2010 (1) TMI 143 - CESTAT, MUMBAI] - assesse was directed to file the declarations as required under Notification No. 12/2005 read with Export of Services Rules, 2005 before the adjudicating authority and the adjudicating authority on receipt of such declaration will process refund claims Order set aside Decided in favor of assesse.
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Central Excise
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2013 (8) TMI 793
Benefit of notification no.67/95-C - Cenvat credit on the captively consumed molasses - Held that:- since the molasses were being used for exempted as also for dutiable products, the appellant was liable to pay 8% of the value and the exempted final products in terms of Rule 57CC. As such, their refund claim of Rs.14,10,236/- is not called for. However, as they were availing the credit of duty paid on the purchased molasses, they were also entitled to the credit of duty paid on the captively consumed molasses. - the cenvat credit of duty paid on the captively consumed molasses would be available to them. - Decided partly in favor of assessee.
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2013 (8) TMI 792
Provisional Assessment - Refund Claim - Claim of interest - rejection of refund claim on the ground that the appellant did not challenge the order finalizing the provisional assessment - Held that:- the refund claim could not have been rejected on the ground that the finalization order has not been challenged. - No doubt that there are no estoppels in statutory matters. Nevertheless, it is the duty of the officers also to advice the assessee properly. Having returned the refund claim with an observation that it is premature, which should have been filed after finalization of the assessment, the rejection of the refund claim after finalizing on the ground that the assessment order was not challenged, to say the least is illogical and in view of the observations made is illegal also since the Assistant Commissioner who is implementing the Central Excise Act and Rules did not even bother to follow the rules and provisions of the Act before making such observations. - Decided in favor of assessee. Regarding interest on refund - Held that:- According to Rule 7(5) of Central Excise Rules, 2002, where the assessee was entitled to refund consequent to order of final assessment under sub-rule (3), subject to this sub-rule (6), provides for verification of unjust enrichment, there shall be paid an interest on such refund at the rate specified by the Central Government by Notification issued under Section 11BB of the Act from the first day of the month succeeding the month by which such refund is determined, till the date of refund. Unjust Enrichment Opportunity to Produce evidence - Whether the AC was correct in taking a view that refund was not admissible on the ground of unjust enrichment at the time of finalization of the assessment in the absence of any evidence produced by the assessee or without giving an opportunity to the assessee - Held that:- besides the CA certificate which itself contains the relevant details, the appellant had produced direct sales register, the details of discount passed on and also an affidavit by the DGM (works). Issuance of Credit Notes - The appellants have submitted documents for finalization within three months from December 31st, 2010 and therefore the credit notes were issued much before the two years period and further, from the ledgers and the documents produced, it was quite clear that there cannot be any doubt about the passing on the benefit of discount to the dealers - Refund allowed - Decided in favor of Assessee.
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2013 (8) TMI 791
Confiscation of the excess found goods - Commissioner set aside confiscation and reduced penalty - Held that:- Revenue has not advanced any evidence on record to show that such non-entry of the goods in the statutory records was with an malafide intention to clear the same without payment of duty. Further, it is clear from the statement of the Manager that majority of the sole pairs were of rejected quality - It is a case of mere non-entry in the RG-23 Part-I register - Following decision of Bhillai Conductors (P) Ltd. Vs. CCE, Raipur [2000 (1) TMI 105 - CEGAT, NEW DELHI] - Decided against Revenue.
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2013 (8) TMI 790
Default in Payment of Duty even in Grace Period - Penalty u/s 11A and 11AC - Whether a penalty equal to the illegally utilized CENVAT credit could have been imposed on the assessee under Rule 15(2) of the CENVAT Credit Rules, 2004 - The assesse committed default in payment of duty for the period upto 5th January 2009 - They failed to take even the benefit of grace period prescribed under Rule 8(3) of the Central Excise Rules Held that:- The conduct of the assesse directly attracted Section 11AC of the Act - For the period after 5th January 2009, the assesse chose to utilize CENVAT credit for payment of duty on consignment wise clearances of goods - The conduct amounted to non-payment of duty on such goods thereby attracting Section 11A for recovery and Section 11AC for penalty. The intent to evade payment of duty in the prescribed manner is common to both the above ingredients viz. wilful mis-statement of facts and contravention of a rule - Rule 15(2) clearly provides that, in such situations, the manufacturer shall also be liable to pay penalty in terms of provisions of Section 11AC of the Act - the assesse had failed to substantiate their case against the penalty imposed on them under Rule 15(2) read with Section 11AC Appeal Dismissed.
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2013 (8) TMI 789
SSI Benefit Under Notification No.175/86-CE and Notification No.1/93-CE - Benefit of the Notification was denied to the appellant in respect of certain branded goods cleared from their factory - Held that:- The appellant could not have claimed SSI benefit in respect of the branded goods - Following TRUPTI MULTI SERVICES Versus COLLECTOR OF CENTRAL EXCISE, PUNE [1998 (3) TMI 321 - CEGAT, NEW DELHI] - The affixture of the brand name on the package rather than on the goods contained therein would not make Notification No.175/86-CE/No.1/93-CE inapplicable - The appellants claim for SSI benefit under Notification No.175/86-CE and Notification No.1/93-CE was hit by para (7) and para (4) respectively of the notifications - Each of these barred SSI exemption to the specified goods where a manufacturer affixes the specified goods with a brand name or trade name (registered or not) of another person who was not eligible for grant of exemption under this Notification. Assignment of Brand Name - Whether the brand name was assigned to the appellant by its owner to be used in India - Held that:- Nothing contained in the trade mark agreement could be taken into account while deciding - The mere right of the appellant to use the brand name of the foreign company pursuant to an agreement between the two cannot entitle the appellant to contend that it ceased to be the brand name of the foreign company Decided against Assessee.
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2013 (8) TMI 788
Classification of Goods - AIDS (HIV I and II) Diagnostic Kits and Hepatitis B and Hepatitis C test kits - Heading 30.02 or Heading 30.22 - HSN based classification - Held that:- A comparison of HSN heading 38.22 and Central Excise Tariff Heading 38.22 would show that except for product group certified reference materials, in which is there, HSN Heading 38.22 but is not there in Central Excise Tariff heading 38.22, the Central Excise Tariff Heading 38.22 and HSN Heading 38.22 are identical. From a plain reading of Central Excise Tariff heading 38.22 it will be seen that it covers those diagnostic or laboratory reagents whether or not on a backing, which are not covered by 30.02. Since the goods, in question, are diagnostic reagents on a backing, for their classification under 38.22, their classification under Heading 30.02 has to be ruled out. Product group (ii) of Central Excise Tariff Heading 30.02 is identical with product group (iv) of HSN Heading 30.02 The Revenues plea is that the diagnostic kits, in question, being based on antigens or monoclonal antibodies derived from culture of micro-organism are not covered by Heading 30.02 and this heading covers only the cultures of micro-organism, not the reagents derived from micro-organism cultures. This contention of the Revenue is not correct In terms of Span Diagnostics Ltd. v. CCE, Surat[2007 (4) TMI 617 - SUPREME COURT OF INDIA] the product group Antisera and other blood fractions in Central Excise Tariff 30.02 would also include modified immunological products, whether or not obtained by biotechnological process.. HIV detection kits and Hepatitis C detection kits containing antigens obtained from micro-organism cultures, immobilised on a porous immuno-filtration membrane and which work on antigen-antibody reaction (neutralisation) would be covered by Heading 30.02, as in view of the above-mentioned HSN explanatory notes, this heading includes the diagnostic reagents of microbial origin other than those covered by Chapter Note 4(d) [corresponding to Chapter Note 3(d) of Central Excise Tariff Chapter 30], which covers - Opacifying preparations for X-ray examination and diagnostic reagents designed to be administered to patients, being unmixed products put up in measured doses or products consisting of two or more ingredients which have been mixed for such uses - and the products, in question, were not covered by Chapter Note 4(d) of Chapter 30 of HSN [Chapter Note 3(d) of Central Excise Tariff Chapter 30] as these products are not the products meant for being administered to patients for diagnostic purposes and are diagnostic reagents of microbial origin which work on the principle of antigen-antibody reaction - For the same reason, Hepatitis B detection kit which consisted of monoclonal antibodies (a reagent of microbial origin) conjugated with colloidal gold and polyclonal antibodies immobilised on a nitrocellulose strip and which also work as the principle of antigen - antibody reaction would be covered by Heading 30.02 order set aside Decided in favour of Assesse.
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CST, VAT & Sales Tax
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2013 (8) TMI 807
Investment based exemption - The assessee had installed new machines for enhancement of the production and claimed an exemption on the extra production - Revenue denied the exemption in view of the circular dated 11.07.2005 - Held that:- The petitioners cannot claim the tax benefit on the extra production manufactured from new machines which were never disclosed before DLC who had issued the certificates - The petitioners produced goods in excess by installing new machines subsequently to the issuance of eligibility certificate and the same was not based production as a result of the establishment of its original units - the assessee cannot interpret law in its own way - One cannot take advantage of his wrongs as per the maxim COMMODUMEX INJURIA SUA MEMO HABERE DEBET following Mrutunjay Pani v Narmada Bala Saimal [1961 (3) TMI 88 - SUPREME COURT]. The exemption was granted on the fixed capital investment made by the entrepreneur - Further, if any further investment was made by installing new machines then the benefit of exemption to the production of goods from such new machines was not available - It was expected that the petitioners will apply for fresh certificate regarding the installation of the new machines/investment, which resulted into extra production, but the same was not done - Provisions of Section 4A relates to Rule 25 and Form-XLVI, which was statutory form and was to be filled along with requisite documents were to be read in composite and not separate - The aforesaid provision also makes it abundantly clear that while applying for eligibility certificate necessary documents such as loan amount, land and machines were to be disclosed - After the grant of eligibility certificate, production from new machines were not eligible for grant of exemption of goods from payment of trade tax. Nothing was permissible under the garb of the certificate issued under Section 4-A of the Act by hiding the facts like the fixed capital investment from the DLC - Section 4A(5)(a) provided that a manufacturer shall be entitled to the facility of exemption from, or reduction in the rate of tax, notified under sub-section (1) - There was no reason to interfere with the Circular dated 11.07.2005 and letter dated 12.02.2004 issued by the Commissioner, Trade Tax, U.P - The same were hereby sustained along with reasons mentioned - Decided against Assessees.
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Wealth tax
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2013 (8) TMI 808
Inclusion of aircraft u/s Section 2(ea)(iv) - Computation of Net Wealth - Whether the aircraft owned by the Assessee and used for its business would be exempted from wealth tax - Held that:- The use of an aircraft by the executives or directors of a company for the purposes connected with its business would amount to use by the Assessee for commercial purposes - In case the Assessee was using the aircrafts for transporting its directors or executives for excursion purposes or for personal purposes the same would not qualify as use of the aircraft for commercial purposes and would not be exempt from wealth tax - the ITAT had recorded that it was undisputed that the two aircrafts were used by the Assessee for its business - Since this was the undisputed factual position the same would be exempt from wealth tax. The use of an aircraft for commercial purposes does not necessarily entail hiring to third parties, ferrying of passengers or leasing of the aircrafts for consideration - The intention of the legislature while creating the exception by using the expression used by the Assessee for commercial purposes was not to restrict the meaning of the words commercial purposes to running the same on hire or as stock in trade - There was no infirmity in the order of the ITAT - Decided against revenue.
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