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Income Tax
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2012 (8) TMI 203
Remission of deferred sales tax liability - whether chargeable to tax as business income or is exempt - Miss. application filled by the Revenue against order - Held that:- On comparison of the question noted by the Revenue and framed and answered by the Special Bench of the Tribunal, it is found that there is a mistake in the wordings of the question mentioned by the Revenue inasmuch as the highlighted portion of the question..."against the future value of ₹ 3,37,13,393/- " mentioned by the Revenue does not exist in the question framed by the Special Bench of the Tribunal. To invoke the provisions of section 41(1) the first requirement is as to whether in the assessment of the assessee, an allowance or deduction has been made in respect of loss, expenditure or the trading liability incurred by the assessee whereas in the present case of assessee he has obtained the benefit of deduction of sales tax liability u/s. 43B as per CBDT Circular No. 496 dated 25.9.1987 which clearly stated that “...the statutory liability shall be treated to have been discharged for the purposes of Section 43 B”(emphasis supplied). Thus, the benefit of deduction was allowed for the purpose of section 43 B only and not under any other provisions of the Act. There is no dispute that the Assessing Officer has also applied the aforesaid Board Circular while giving the benefit of deduction u/s. 43 B, thus it is settled law that the circulars are binding on the department - as the first requirement of section 41(1) has not been fulfilled in the facts of the present case deferred sales tax liability will not be chargeable to tax as business income of the assessee - no mistake in the order of the Tribunal under the provisions of section 254(2). As the assessee itself has used the expression ‘remission’ of the loan liability. However, the position in law is well settled that making of an entry or absence of an entry cannot determine rights and liabilities of parties - no material to show that the finding given by the Tribunal are contrary to the settled position of law - in favour of assessee.
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2012 (8) TMI 202
Rent free accommodation provided to the Assessee, an employee of Suzuki Motors Corporation (Japan)- collaboration agreement between M/s. Suzuki Motors, Japan and M/s. Maruti Udhyog Ltd., India - Held that:- In terms of Section 5(1)(c) r.w.s. 6(6) the assessee was a person “not ordinarily resident” in India and that the salary earned in Japan for employment under Suzuki Motors Corporattion cannot be assessed in his hands in the assessment made in India - since the assessee did not fall within the purview of Income Tax Act, 1961 there was therefore no question of bringing any amount paid to him by his foreign employer to taxation. Tax the salary of the assessee earned outside India - Reliance on the provisions of Article 15 of India Japan DTAA holding that the provisions of DTAA override the provisions of taxing statute - Held that:- The provisions of Section 90(2) of the Income Tax Act, 1961 are clear that the provisions of the said Act shall be applicable to the extent they are more beneficial to the assessee to whom the relevant DTAA applies - Since in the present case, the provisions of Section 6(6) r.w.s.(5)(1)(c) and Section 9(1)(i) were beneficial to the assessee the same should have been preferred by the authorities over DTAA and the income earned by the assessee outside India during the year under consideration ought to have been held to be not taxable in India as per the said provisions. It was confirmed by Suzuki Motors Corporation (Japan) that the amount of daily allowance received by it from Maruti Udhyog Ltd., India in terms of license agreement was not paid by it to any individuals including the assessee. It is pertinent to note here that nothing has been brought on record either by the Assessing Officer or by the learned CIT (A) to dispute this position - therefore, the income of the assessee earned in India alone was taxable in his hands in India and the income earned by him outside India was not taxable in India as rightly claimed - in favour of assessee.
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2012 (8) TMI 201
Treatment to tax paid on the facility of rent free accommodation by the employer - taxable or exempt ? - Held that:- The combined reading of Rule 3 of Income Tax Rules, 1962 with Section 17(2)it excludes the tax components borne in respect of the perquisite and rent free accommodation paid by the employer - benefit given by this Court in CIT v. Telsuo Mitera [2012 (6) TMI 88 - DELHI HIGH COURT ] to assessee - decided against revenue.
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2012 (8) TMI 200
Mud Engineering Services - income derived in India for the services rendered to Naptogaz - whether covered under the provisions of section 44BB or is liable to be independently taxed as "fees for technical services" in terms of section 9(1)(vii) - Held that:- Explanation (2) to section 9(1)(vii) depicts that the consideration received for rendering technical services will not be fees for technical services if it is consideration for any 'construction, assembly mining or like project undertaken by the recipient' - As in this case doing the work of Mud Engineering cannot be understood as the undertaking of the mining project and is only performing certain services for Naptogaz. At best,consideration received by the applicant for the services it renders is fees for technical services within the meaning of section 9(1)(vii). Section 44BB(1) clearly states that fees for technical services received for rendering services in connection with prospecting for or extraction or production of mineral oils, cannot be brought under this section if section 44DA or section 115A of the Act applied to it and as the applicant is a non-resident receiving consideration for the technical services rendered by it, from an Indian company so clearly section 44DA or section 115A(b) would be attracted - the income-derived by the applicant in India is liable to be independently taxed as 'fees for technical services' in terms of section 9(1)(vii) - in favour of assessee.
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2012 (8) TMI 199
Treatment of repair work as rendered as technical services in view of the Section 9(1)(vii) - the repair works in question are the works done by the foreign companies abroad - Held that:- This is a case where the assessee obtained works orders from third parties and the items such as turbines are required to be repaired or refurbished and for this, these items are sent abroad to Saudi Arabia and Singapore for repairs and refurbishment by the non resident companies abroad - The payment for the repair work is made by assessee for carrying out the work and not for performing any technical service, since no intellectual aspect is involved in the repairs and refurbishment activity carried out by those foreign companies - as the assessee personnel do not accompany these items therefore, there is no involvement of assessee’s personnel in getting the items repaired or refurbished. On examining every activity undertaken it can be concluded that none of the works involve services of technical nature as activities involve assembly, disassembly, inspection, reporting and evaluation - as decided in Lufthansa Cargo India Private Limited V/s. Dy. CIT [2004 (6) TMI 273 - ITAT DELHI-B ] routine maintenance repairs are not FTS & that the payments made by the assessee to non-residents workshops outside India do not constitute payment of fees for managerial, consultancy or Technical services as defined in Explanation 2 to section 9(1)(vii) - in favour of assessee.
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2012 (8) TMI 198
Addition u/s 68 - unexplained amounts received towards Share Capital money - ITAT deleted the addition - Held that:- Viewing a pattern in the way funds were moved into the accounts of those investors was common to each of them as the amounts were received within a few days or weeks before the shares were allotted and there was no material to show how they knew that shares could be purchased - AO’s efforts to get them involved, through summons were unsuccessful and the applicant made no attempt to assist the AO in these proceedings - the material provided about the share applicants’ financial and fiscal standing was sketchy as they did not respond to summons under Section 131. Thus alleged investors belong to a Group who were not carrying on any real business activity and were engaged in the business of providing accommodation entries working as entry operators - the inferences drawn by the AO were justified and warranted - addition to a commission amount paid to the accommodation entry providers out of the undisclosed income of the company to assessee's income - against assessee.
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2012 (8) TMI 197
Selection of Assessment Year for fixing the income - Held that:- As the assessing officer has accepted the assessee’s offer and added back a sum of Rs.55,19,650/- for the assessment year 2009-2010 no useful purpose would be served in considering the question of law, as the same amount cannot be added back for two separate years.
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2012 (8) TMI 196
Denial of claim of Section 80 IB (3)- Revenue held total investment in the assessee's two units exceeded Rs.1 crore - ITAT decided that investment in Unit-I only is to be taken into consideration - Held that:- ITAT on noticing the text of Section 80IB and analyzing the facts stated that as both the units were separately located, the deduction is to be seen with respect to investment made in each unit separately not-with-standing the fact that proprietor of both the units is the same. As decided in CIT Versus DEWAN KRAFT SYSTEM P. LTD. [2007 (2) TMI 149 - HIGH COURT , DELHI ]where profits of two eligible units were sought to be clubbed and adjusted towards the loss claimed in the unit which had been granted the benefit under Section 80IA - as in the present case the assessee has not admittedly claimed the benefit u/s 80IA for the relevant assessment year in respect of Unit No.2 the question of clubbing the investment for purpose of common undertaking does not arise - Section 80-IA(5) directs the income tax authorities to treat the initial unit as an entirely separate entity to the extent the benefit has to be given - in favour of assessee.
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2012 (8) TMI 195
Treatment to the income earned from sale and purchase of shares - Capital gain or business income ? - Held that:- As the issue stands covered in favour of the assessee by the decision of the Tribunal in assessee’s own case for A.Y. 2004-05 allowing the claim of Short term capital gain and Long term capital gain on sale of shares and redemption of mutual funds - as no decision reversing the decision of the Tribunal was filed & in absence of any contrary material brought to notice against the order of the Tribunal - decided against revenue. Fees paid to portfolio manager of Asset Management Company - should be allowable in computing income whether under the head “Business” or under the head “Capital gains" ? - Held that:- As decided in Homi K. Bhabha Vs. ITO [2011 (9) TMI 104 - ITAT MUMBAI]professional Fee or Management fee to portfolio manager is not deductible against capital gains - Considering the genuineness and essentiality of the payment of fee to the Portfolio manager and undisputedly for the predominantly for the said twin purposes of acquisition and sale of the securities, the claim has to be allowed - the claim of the must not be rejected for want of the express provisions in section 48 - decided in favour of assessee.
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2012 (8) TMI 194
Refusal to grant approval in terms of Section 35(1)(ii) - assessee being Scientific Research Institution - Held that:- As decided in Indian Planetary Society Versus CBDT [2009 (7) TMI 14 - BOMBAY HIGH COURT]CBDT has the power to make a reference to the Central Govt. which alone has the jurisdiction to decide the question in terms of Section 35(3) and the governing Rules - The CBDT could not be unaware of the legal position having regard to the mandate of Section 35 and to decide the matter itself without authority of law - As the direction of the Court had to be construed within the frame work of law and the CBDT could only refer the matter to the Central Govt. but not to decide the matter itself - order for denial of grant is set aside and matter is sent back to CBDT to decide afresh - in favour of assessee by way of remand.
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2012 (8) TMI 193
Disallowance of provision for doubtful debts - Held that:- When the assessee had debited the profit and loss account, the doubtful debts are simultaneously taken to the balance sheet, bringing the reduction on the assets side - Looking the total provision at the end of 31.03.1993 of Rs.79,73,725/- (Rs.43,51,034/- + Rs.36,22,691/-), effectively, the assessee seems to have written off the bad debts only to the extent of Rs.21,80,278/-. Since these are the figures culled out from the papers given by the assessee in respect of the assessment year 1993-94, the question of how much of an amount had actually been written off has to be seen only by the Assessing Authority by looking into the accounts of the assessee - issue is remanded back to the files of the Assessing Officer for passing a fresh order of assessment
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2012 (8) TMI 192
Treatment of Prize Winning Tickets (PWT) in the books of assessee - AO stated that liability was an artificial creation as it was without any monetary transaction - Held that:- The assessee is only a sole selling agent and the ultimate liability is that of the State Government - the actual sale of lottery tickets and lottery prize distribution is done by sub-agents who are responsible for distribution of profits. These sub-agents credit the assessee with amounts of PWT payable & the assessee passes similar entries in respect of such PWT amounts payable to its stockist. Eventually the stockist, makes a similar entry to square up accounts with the Government in the State Lotteries Department and as that transactions take place on a day-to-day basis and it is on the next day that the credit entry in respect of PWT payable is squared up when a debit entry is passed consequently there was no need for any cash payment - no substantial question of law arises for consideration - in favour of assessee.
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2012 (8) TMI 191
Transfer pricing – rejection of comparable uncontrolled price [CUP] method and determination on the basis of adjusted ALP - According to assessee it was corporate policy of AEs all over world that after payment of costs, profits were shared equally between AEs that had participated in transaction – Held that:- in the appellants own case appeal filed by the assessee was allowed and hold that the additions on account adjustment in arm's length price is uncalled for and accordingly the adjustment is rejected – Assessee’s appeal allowed
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2012 (8) TMI 190
Re-assessment - Assessee had claimed deduction under Section 80-IA of the Act not only with respect to electricity produced by it, but also for lignite mined by it – Held that:- AO considered income-tax reimbursement not as income derived from power generation activity. All these would amply show that Assessing Officer had applied his mind at the time of original assessment proceedings. Re-assessment having been started after the lapse of four years period from the end of the relevant assessment year - Re-assessment was initiated only based on change of opinion and there was no other tangible record and information available with the Assessing Officer for initiating such reassessment proceedings - Revenue’s appeal for assessment year 2002-03 is dismissed Disallowance under Section 14A of the Act - exempt income earned was from tax free bonds issued by Electricity Boards and such bonds were issued pursuant to Government order. Interest was automatically credited to the bank account and there was no expenses for such income earned – Held that:- Even prior to that year, A.O. was duty bound to compute disallowance under Section 14A by applying a reasonable method – matter remanded to AO Addition made for reversal of sale - as per the assessee, it had to be either allowed as bad debts since amounts were irrecoverable or as business loss - Held that:- assessee having already accounted and offered to tax the amounts as per the tariff in the power purchase agreement, it could claim as a bad debt the excess billings which it came to know, only on determination of tariff by CERC.
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2012 (8) TMI 189
Disallowance towards interest - term loan availed by the assessee was in fact utilized for the purpose of acquisition of the specific asset - assessee has transferred some funds to the group concerns – Held that:- Assessee has not indicated the purpose for which the loan was advanced or the commercial expediency which necessitated advance of funds by the assessee - when the funds were diverted and the assessee paid interest on the borrowed funds, the proportionate interest relatable to funds transferred to group concern has to be disallowed – against assessee Addition of Rs. 1 lakh towards the amount outstanding in the name of sister concern of the assessee - assessing officer added the outstanding amount in the name of sister concern since three years' period has been expired – Held that:- Provisions of section 41(1) found that the principle that the expiry of period of limitation prescribed under the Limitation Act cannot extinguish the debt but it will only prevent the creditor from enforcing the debt. Therefore, the provisions of section 41(1) are not applicable - assessing officer is not justified in adding back the amount of Rs. l lakh to the total income of the assessee – In favor of assessee Deduction u/s 80IB for extracting granite from granite hills and crushing granite boulders - DR submitted that extracting granite from granite hills cannot be considered to be a manufacturing activity – Held that:- Tribunal had an occasion to consider the very same issue in the assessee's own case and found that the activity of the assessee amounts to manufacture - Since the activity of the assessee was considered by the co-ordinate bench of this Tribunal and held to be manufacturing activity entitled for deduction u/s 80IB, for the sake of consistency - assessee is entitled for deduction u/s 80IB of the Act
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2012 (8) TMI 188
Disallowance on account of cash payments exceeding prescribed limits - provisions of sec.40A(3) – Held that:- Payments are made to the Government of India (South Western Railway) towards purchase - payment made by the assessee in cash to the south western railway, who insisted for cash payment were covered by the exception laid down in Rule 6DD(b) of the Income-tax Rules 1962, as such, it was outside the purview of the provision contained in sec.40A(3) of the Income-tax Act – addition deleted – In favor of assessee
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2012 (8) TMI 187
TDS – disallowance u/s 40(a) (ia) of the Income Tax Act on the ground that assessee failed to deduct the TDS while making payments to the transporters - AO’s opinion is that assessee has availed services of the truck drivers or transporters for carrying out the work of M/s. Jai Prakash Associates thus there exist sub contractor ship and the assessee should have deducted the tax – Held that:- Assessee has not assigned any sub contractor ship to any of the transporter. He has simply hired the trucks for carrying out his contract - payments have been made by M/s. Jai Prakash directly to those drivers such payment is to be construed as made to the assessee - AO is not justified in making disallowance u/s 40(a)(ia) of the Act on account of non deduction of TDS u/s 194C(2) of the Income Tax Act - disallowance deleted – In favor of assessee
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2012 (8) TMI 186
Proceedings u/s 263 of the Act - disallowance of unpaid leave encashment by invoking the provisions of sec.43B(f) of the Act – Held that:- Operation of the decision of the Hon'ble Kolkata High Court referred to by the assessee in the case of M/s. Exide Industries Ltd. & Anr. In support of its case has been stayed by the Hon'ble Supreme Court - Supreme Court has observed that assessee would during the pendency of this Civil Appeal, pay tax as if section 43B(f) is on the Statute Book but at the same time it would be entitled to make a claim in its returns - assessing officer is directed to add back to the total income being encashment of earned leave not paid by the due date u/s 43B
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2012 (8) TMI 185
Applicability of provisions of sub-section(4) of section 80P – whether the provision applicable only to co-operative banks and not to credit co-operative societies – Held that:- New proviso to section 80P(4) which is brought into statute is applicable only to co-operative banks and not to credit co-operative societies - intention of the legislature of brining in co-operative banks into the taxation structure was mainly to bring in par with commercial banks. Since the assessee is a co-operative society and not a co-operative bank, the provisions of section 80P(4) will not have application in the assessee's case and therefore, it is entitled to deduction u/s 80P(2)(a)(i) of the Act
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2012 (8) TMI 184
Whether revised return u/s 139(5) of the Act was nonest - in original return of income, filed within time, the assessee has shown positive income while in the revised return the assessee as shown positive income from business but a huge loss under income from other sources which has resulted in negative income – Held that:- Revised return is a loss return which should have been filed within the time specified u/s 139(3) of the Act - loss return filed beyond the time limit prescribed u/s 139(3) of the Act was null and void - claim of the assessee for the loss return is also not acceptable and even if it is found to be genuine, then such loss in this year cannot be allowed to be carried forward to subsequent year for set off as the loss return was not filed within the time specified u/s 139(3) of the Income-tax Act - revised return of income is nonest – against assessee
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2012 (8) TMI 183
Addition u/s 68 of the Act - unexplained cash credits – Held that:- Assessee did not care to submit even confirmations of the sixteen creditors before the AO and there is no material on record, establishing creditworthiness of these creditors or genuineness of transactions nor the ld. CIT(A) recorded any findings on these aspects - CIT(A) suffers from lack of reasoning and is not a speaking order – matter remanded to CIT Disallowance u/s 40A(2)(a) of the Act – according to AO interest paid @ 15% paid excessive and unreasonable – Held that:- There is nothing to suggest that the AO ever brought any material on record on this aspect before concluding that interest @ 15% was excessive or unreasonable nor even cited any comparable instances in respect of the fair market value of the interest on unsecured loans. In view the foregoing, especially when there is no material on record to hold that payment of interest @ 15% pa to unsecured creditors was excessive – disallowance deleted Disallowance of depreciation on computer accessories like printer & scanner – Held that:- Printer and Scanners are integral part of the computer and therefore claimed depreciation @ 60% - depreciation on Printers and Scanners is allowable @ 60% - In favor of assessee
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2012 (8) TMI 182
Allowability of rent paid to the owner of the property by the assessee - Assessing Officer rejected the claim of expenditure only on the basis that the investment for the construction is made by the society – Held that:- In the same building the top floor was rented at Rs. 25 per sq. ft - ground floor which is paying Rs. 35 per sq. ft. since 1995 - charging of rent at Rs. 10 per sq. ft. is very reasonable and there is no basis for the lower authorities to reduce the rent claimed by the assessee. In our opinion, the claim of the assessee is justified and the same has to be allowed - payment of Rs. 10 per sq. ft. is reasonable instead of Rs. 9 per sq. ft. determined by the CIT(A). Whether CIT erred in allowing "P-money" as petrol expenditure without proper evidence - entry in the seized material wherein "P-money" was written - Assessing Officer is of the view that "P-money stands for pocket money and treated it as undisclosed income of the assessee - According to the assessee "P-money" indicates money for petrol utilised for vehicles used by the assessee – Held that:- There was no material on record to show on what basis the Assessing Officer had reached to the conclusion - no conclusive evidence to show that "P-money" reflects pocket money in the absence of corroborative material to hold that the "P-money" suggests the pocket money – In favor of assessee
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2012 (8) TMI 181
Reopening of assessment – Held that:- As conditions of Sec. 147 of the Act are fulfilled, AO is free to initiate proceedings u/s. 147 of Act and failure to take steps for regular assessment u/s. 143(3) will not render the AO powerless to initiate reassessment proceedings even when summary assessment with intimation u/s. 143(1)(a) of the Act had been issued - under substituted section 147 as amended by Finance Act 1999, existence of only the condition that if AO for whatever reason has reason to believe that income has escaped assessment, confers jurisdiction in reopening the assessment - action of AO to initiate reassessment proceeding is in accordance with law. Disallowance of expenses - Held that:- Loss from House property is not the actual loss but it is because of claim of various charges of services claimed as rendered which in fact is not the additional charges having consequential additional rental income, but, as held above is an incidental services related with maintenance of House property for which standard deduction is duly provided under the I.T. Act - AO is right not to setting-off of brought forward non allowable loss
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2012 (8) TMI 180
Penalty u/s. 271(1)(c) of the Income-tax Act - disallowance of interest expenditure - Assessing Officer disallowed the expenditure on the ground that the assessee claimed the set off against the interest income of the minors. Since the assessee could not explain the loans and utilization of the funds, the Assessing Officer disallowed the same – Held that:- If the assessee has explained the fact during the penalty proceedings, which are neither found bogus nor false, then the explanation of the assessee has to be considered on the parameters of bonafide. The assessee has disclosed all these fact before the Assessing Officer that the interest expenditure pertains to the borrowed funds, which was utilised for investment in the shares - mere disallowance of claim of expenditure would not lead to attract penalty provisions u/s 271(1)(c) of the act - appeal filed by the assessee is allowed.
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2012 (8) TMI 179
Addition on the Annual Letting Value on account of notional interest on interest free security received by the assessee – Held that:- There was no rent paid and in lieu of that rent excessive deposit was made, the usufruct of that deposit could be considered as rent for determining the annual letting value - AO had not carried out any exercise for determination of the fair market value of the property but had added the notional rent @ 12% per annum on interest free security deposit - it cannot be treated as part of annual letting value – in favor of assessee
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2012 (8) TMI 178
Disallowance of exemption under section 54B of the Income Tax Act – assessee alleged that he is the owner of agricultural land - assessee sold land in the relevant previous year - From his share of sale consideration, the assessee purchased another piece of agricultural land and claimed exemption under section 54B of the Income Tax Act, 1961 – Held that:- As per revenue records no crop was cultivated/agricultural activity undertaken on the land owned by the assessee - no cultivation of crop/agricultural activity on the land in question owned by the assessee in the past two years preceding the date of sale - assessee during the course of his submission placed on record photocopies of some bills to show that agricultural activity was undertaken by the assessee on the land in question - these bills were never produced either before the Assessing Officer or before the learned Commissioner of Income Tax - appeal of the assessee is dismissed.
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2012 (8) TMI 166
Writ petition on order barring the assessee from questioning the order passed by the CIT & staying the assessment proceedings before the AO and directing the Revenue to produce all the records pertaining to the assessments completed u/s 153A/ 143 (3) - Disallowance of the technical know-how fees - Held that:- The order as barring the assessee from questioning the order passed by the CIT on the ground that he did not exercise his independent mind but merely proceeded on the lines as dictated by the CBDT would not be proper, for no Court can plausibly lay down the grounds on which an order, which is to be passed, can be challenged by the aggrieved party - as the assessee cannot also be prevented from taking up the plea in the appeals filed before the Tribunal against the orders passed by the CIT consequently, the Tribunal cannot be faulted for directing, by its order to the Revenue to produce the assessment records and the records relating to the proceedings under Section 263 for the relevant assessment years as unless these records are made available to the Tribunal, it will not be able to take a view on the assessee's challenge that the CIT did not exercise his independent mind while initiating proceedings under Section 263. Power of tribunal to stay - Held that:- The order of the Tribunal in staying the assessment proceedings is well settled by the judgment in ITO v. Mohd. Kunhi, (1968 (9) TMI 5 - SUPREME COURT ) that while exercising its appellate powers under the Income Tax Act Tribinal has also the power to ensure that the fruits of success are not rendered futile or nugatory and for this purpose it is empowered, to pass appropriate orders including orders of stay - staying the assessment proceedings pending before the AO consequent to the directions of the CIT given in orders passed under Section 263 is part of the exercise of the appellate power of the Tribunal under Section 254 (1) with an aim to prevent multiplicity of proceedings and harassment to the assessee, with the possibility of the proceedings before the AO becoming meaningless if ultimately the order passed by the CIT is found to be invalid on grounds of jurisdiction or on merits - As it has not been shown before us by the petitioner as to what error was committed by the Tribunal in passing the stay orders, nor was it argued that the Tribunal did not exercise its discretion on the basis of settled parameters for granting stay of proceedings - writ petition dismissed.
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2012 (8) TMI 165
Addition as unexplained investment in excess/shortage of stock - ITAT deleted the addition - Held that:- No material has been brought to show that the findings of Tribunal are perverse that departmental personnel had not followed any of the basic steps of stock checking and had proceeded to inventorise the stock in a haphazard manner - the revenue was directed to place on record the documents or material on the basis of which it can be said that the factual findings recorded by the Tribunal are mentioned wrong but till the date of final hearing of the appeal the revenue has not been able to produce any document or material to buttress its challenge to the Tribunal’s findings - that no substantial question of law arises - in favour of assessee. Disallowance of the expenses - ITAT deleted the disallowance - Held that:- The seized material should be followed in its entirety and both the receipts and the payments are to be taken into consideration and it would be unjust and contrary to the principles of income tax law to take note of only the income part reflected in the seized material, excluding the expenditure part reflected in the same seized material, provided the expenditure part is allowable as business expenditure - as the expenses represent turning charges, overtime payments, payments to temporary workers, remuneration to excise consultants, incentives etc.are expenses incurred by the assessee for the purpose of the business deletion of disallowed expenses is thus warranted - in favour of assessee. Levy of surcharge u/s 113 - ITAT deleted the levy - Held that:- According to the judgment of in Commissioner of Income Tax v. Suresh N. Gupta (2008 (1) TMI 396 - SUPREME COURT ) it was held that “even without the proviso under Section 113, the Finance Act, 2001 was applicable to a block assessment year passed under Chapter XIV-B. The amendment made by inserting the proviso to Section 113 was merely clarificatory and that the Finance Act of the year in which the search was initiated would apply" - Tribunal therefore was in error in holding that since the search was conducted on 29.08.1996, at a time when the proviso to Section 113 was not in existence, the levy of surcharge was not proper - against assessee.
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2012 (8) TMI 163
Addition on account of unexplained loan - Held that:- The assessee received the amount and thereafter, repaid the amount, which has been transferred back to the same bank account, thus from the aforesaid transactions it is clear that the amount of Rs. 39,00,000/- remaining outstanding as on 31.03.2006 has been repaid by the assessee in the subsequent F.Y. 2006-07 except by an amount of Rs. 2,15,000/- transferred to current account of the creditor - verifying the assessment records of the creditor it is a registered Company with the ROC & also assessed by ITO, Ward 12(3), New Delhi - As the assessee has been able to prove the identity of the creditor as well the credit worthiness of the creditor and genuineness of the transaction the addition of Rs.39 lakh made by the AO on account of loan taken from H.G. Exim P. Ltd. stands deleted - in favour of assessee.
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2012 (8) TMI 162
India-Mauritius DTAC - sale of shares of a US Company holding 100 per cent shares of company incorporated in India by a Mauritian company to another US company - Held that:- The beneficial ownership has not prevailed over the apparent legal ownership & Company law also recognized the recorded owner of the shares and not the person on whose behalf it may have been held thus the applicant is justified in its view that capital gains arising on the sale of shares of Exevo Inc., US by Copal Market Research Ltd. ("CMRL") to the applicant would not be chargeable to tax in India in the hands of CMRL. Earn-out would be part of the full value of consideration receivable by CMRL i.e.seller as the share purchase agreement also provided for the seller to get 'earn-out' consideration calculated as per a formula contained in clause 5.3 of the agreement and subject to clause 3.8 and 5.5 of the agreement. Section 115JB of the Act would apply even to a foreign company but no ruling on this point as nothing was argued on it. There would be no liability in the applicant to withhold tax under section 195. Sale by a Mauritian company of the shares held by it in an Indian company to a Cyprus company - Held that:- The Capital Gains arising on the sale of shares of Indian company helb by Mauritian company are not chargeable to tax in India in the hands of the applicant as the transactions are held to be taxable in India, going by the DTAC, the transactions which give rise to capital gains, can be taxed only in Mauritius, in view of paragraph 4 of Article 13 of the India-Mauritius DTAC Earn-Out consideration would be part of the full value of consideration receivable by the applicant - no obligation on Moody's Group Cyprus Limited, Cyprus to withhold tax under section 195.
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2012 (8) TMI 161
DTAA between India and Austria - claim of absolute exemption from levying of tax in India - assignment of work to sub contractor by original assessee/applicant - Held that:- That under paragraph 3 of Article 5 of the DTAC, the applicant shall be deemed to have a PE in India and to carry on business through that PE if it provided services and facilities in connection with prospecting or extraction or exploration of mineral oil in India - as activities of the applicant are by its PE or deemed PE and consequently, the whole of the income arising out of the contract will be attributable to that PE. Exception contained in section 9(1)(vii) was confined to consideration received for mining or like project undertaken by the recipient - As in a case before us where the applicant had only surveyed the area earmarked by the contractor who had undertaken the mining project and rendered technical services to enable that person to perform the mining job itself, the exemption contained in Explanation 2 to section 9(1)(vii) of the Act was held to have no application - That person can at best be said to render technical services or services 'in connection with' the mining activity undertaken by the original contractor - the revenues earned by the applicant are not taxable in accordance with section 44BB and are taxable only as fees for technical services. Taxes on payments made by Essar Oil Limited under the sub-contract in question to be withheld under section 195 would be at 10.56% of the amount to be paid.
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2012 (8) TMI 160
Denial of claim of loss - advance given for supply of chlorine gas cylinders - supplier went into liquidation - Held that:- To allow the claim of loss as desired by assessee it is required to whether an expenditure is on the capital account or on revenue - whether the unrecoverable advances given to Supplier were in order to secure a capital advantage and thereby create an asset of enduring nature or if it was in the normal course of business for acquiring stock in trade no factual material about the life of the cylinders, the number of times they are used, and the average time they are held before their replacement by the assessee has been given - Undoubtedly, they are necessary to supply the finished product to the assessee’s customers yet, these facts by themselves are insufficient and not helpful for discerning a complete picture, essential to decide the main issue - matter is remanded back to the appropriate AO to ensure a just ascertainment of the nature of the expenditure incurred.
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2012 (8) TMI 159
Disallowance of deductions u/s.80IB (10) from the income computed as undisclosed income u/s. 69A - no such claim of deduction u/s 80IB is made by the assessee in the return of income for the block period - Held that:- A fresh claim could be urged before the Appellate authorities even if the claim was not made in the return of income filed before the AO. As in this case, the search took place in 2002 therefore, the present case is governed by Chapter XIVB of the said Act - as Section 158BB of Chapter XIVB deals with computation of undisclosed income of the block period as amended by the Finance Act, 2002 with retrospective effect from 1/7/1995 the total income or loss has to be computed in accordance with the provisions of the said Act and the same would include Chapter VI-A of the said Act. Section 80IB of the said Act is a part of Chapter VIA of the Act. In view of the above, while computing the undisclosed income for the block period the respondent-assessee is entitled to claim deduction from its income under Section 80IB. Undisclosed income found in the form of cash was explained as having been acquired while carrying on business as a builder and this explanation was accepted by the AO, no question of application of section 68,69 and 69A, 69B and 69C - in favour of assessee.
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2012 (8) TMI 158
Interest paid on income-tax refund - does it bears the character of income and is exigible to tax ?- Held that:- Unless there is an exact indication in the Income Tax Act itself, that interest payable on income tax refund amounts fulfill the basic character as income (defined under Section 2(24) of the Income Tax Act) cannot be ignored - It is no doubt true that this amount cannot be treated as interest income since the assessee did not earn it through conscious choice or voluntarily, nor was it engaged in the activity of investing its amount and earning interest but the basic characteristic of income being what it is, the amount received towards statutory interest has to be subject to tax under the head "income from other sources" & and is exigible to tax - in favour of revenue.
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2012 (8) TMI 157
Additions to the returned income - difference between the cost of construction as disclosed by assessee and as estimated by the District Valuation Office - Held that:- Since AO had not rejected the books of accounts u/s 145(3), by pointing out any defect, the reference to the DVO was not valid and therefore, his report could not be used for framing assessment u/s 143(3) read with Section 153A. The scope and ambit of section 69B and 69C are altogether different. The connotation to the investment appearing in section 69B has to be in the context of investments made in some property or any other type of investment and it could not be the business expenditure. The word " investment" contained in section 69B deals with investment in bullion, jewellery or other valuable article, etc. If the contention of learned counsel for the Revenue is accepted and the expression is given a wider meaning as sought to be made out, the provisions of section 69C shall be rendered otiose. Except the report of the DVO on which the AO relied upon there was nothing on record to suggest that there was any other evidence to disbelieve the expenditure shown by the assessee. In fact the seized documents pertaining to this company were duly confronted vide questionnaire and the reply furnished thereof satisfactorily explains the transactions recorded therein which have been verified vis-ŕ-vis books of account/Balance Sheet - as can be seen from a comparison of the valuation by the assessee with that of the DVO the variation is only 3.86 % which is a very minor variation - As AO did not examine the variations, with specific reference to any items of expenditure that were unreasonable additions made cannot be warranted - in favour of assessee.
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2012 (8) TMI 156
Disallowance of guest house expenses and depreciation on guest house - ITAT allowed it - Held that:- As decided in Britannia Industries Ltd. v. CIT [2005 (10) TMI 30 - SUPREME COURT] that the intention of the legislature in introducing sub-sections (3), (4) and (5) of Section 37 is clear and was intended to exclude the expenses towards rents, repairs and also maintenance of premises/accommodation used for the purpose of any accommodation in the nature of guest house indicated in sub-section (4) of Section 37 - against assessee.
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2012 (8) TMI 155
Rejecting the claim of refund - the petitioner under the Kar Vivad Samadhan Scheme 1998 claimed for settlement of the arrears of the assessment year 1992-93 - Held that:- The adjustment of the refund amounts together with interest, did not at all prejudice the petitioner under the Kar Vivad Samadhan Scheme, 1998 - It is also pertinent that the revision itself was delayed. Ofcourse the petitioner contends that the same was due to the appeal filed against the letter of rejection but that alone cannot enable the petitioner to file a delayed revision -as there is no prejudice caused to the petitioner and that there is absolutely no illegal enrichment by the department no revision can be ordered at this stage and the petitioner's claims for the same is devoid of merit.
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2012 (8) TMI 154
Disallowance of claim of unpaid liability in respect of salaries - ITAT allowed the claim - Held that:- It would not be logical to say that a debtor or an employer, holding on to unpaid dues, should be given the benefit of his showing the amount as a liability, even though he would be entitled in law to say that a claim for its recovery is time barred, and continue to enjoy the amount. Because with effect from 1-4-1997 by virtue of Finance Act, 1996 an Explanation was added to Section 41 which spells out that “loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof” shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause”. The expression “include” is significant as Parliament did not use the expression “means”. Necessarily, even omission to pay, over a period of time, and the resultant benefit derived by the employer/assessee would therefore qualify as a cessation of liability, albeit by operation of law - decided against assessee.
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2012 (8) TMI 153
Non serving the notice under Section 143(2)- assessee contested against notice not being served within the stipulated period as provided under Section 143(2) (ii) - Held that:- Department sent the notice u/s 143(2) to the Assessee on the assessee's address, and that too through Speed Post which is more reliable mode therefore, it is required to be presumed that notice was delivered to the addressee in accordance with law under Section 282(1)- the notice sent through "Speed-post" did not return to the Income Tax Department as undelivered - no uncertain terms in terms of section 27 of the General Clauses Act, unless and until the contrary is proved by the addressee, service of notice is deemed to be effected at the time at which the letter would have been delivered in the ordinary course of business when it is sent to the addressee at his address by registered post. Speed post versus Registered post - held that:- There are two principal attributes of registered post: one, there is established system in which receipt of the mail is recorded; and two, movement of such mail as also its delivery is recorded. If the aforesaid attributes of registered post are present in any other class of mail or post forming part of an established system, that mail or post would, in substance, be registered post notwithstanding the name by which it may be called. 'Speed post' is a part of established system of delivery in which the receipt of mail as also its movement and delivery are recorded. "Speed Post" has all the principal attributes of "registered post". As the assessee has led no evidence to prove that the impugned notice was not received by him or that he was not responsible for its non-service and the details given by the AO in the assessment order included not only the receipt no. under which speed post was sent but also the tracking code, it is thus proved that a proper notice was issued to assessee in the course of the assessment proceedings. When any authority decides the matter on preliminary issue and if finding on that preliminary issue is reversed, then normally, the matter is required to be remanded for deciding the remaining issues, if the remanding authority/Court itself is not deciding the other issues - As CIT(A) allowed the assessee's appeal only on the ground of notice u/s 143(2) without deciding other issues now the matter is remanded to the C.I.T. (Appeal) for considering it afresh .
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2012 (8) TMI 152
Reopening of assessment - non deduction of TDS on the labour charges paid - assessee stated that he was covered under Section 44AB - Held that:- An individual or HUF should deduct tax at source under sub-section (2) of Section 194C on payments made to a sub-contractor and must establish that in the financial year immediately preceding the financial year in which such sum is paid or credited, total sales, gross receipts or turnover of such individual or HUF from profession or business exceeded the limits provided in Section 44AB and the accounts were thus compulsorily auditable. The assessee as an individual or HUF may be required to make the payments to a sub-contractor on the first date of the financial year or at any rate in the early part of the financial year when obviously assessee will not be in position to foresee whether total sales, gross receipts or turnover would exceed statutory limits and his accounts would be therefore required to be audited under Section 44AB, thus in such a situation, the assessee could not be expected to deduct tax at source - It is precisely for this reason that the liability of an individual or HUF to deduct tax at source upon the payments being made to the sub-contractor, is made relatable to financial year immediately preceding the year when such payment is made or credited - AO's reason to believe that the income chargeable to tax has escaped assessment is without any foundation and lacks validity - in favour of assessee.
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2012 (8) TMI 151
Liability to deduct TDS in respect of payments made for purchase of software from foreign company - Tribunal held that assessee had purchased only a right to use the copyright and the entire copyright itself the payment cannot be treated as Royalty as per the DTAA and treaties - Held that:- Payment made by the assessee to non-resident companies would amount to royalty within the meaning of Article 12 of the DTAA with the respective countries and there was obligation on the part of the assessee to deduct tax at source u/s. 195. Order of Tribunal set aside and assessment order restored. See CIT, International Taxation v. Samsung Electronics Co. Ltd (2011 (10) TMI 195 - KARNATAKA HIGH COURT) - Decided against Assessee
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2012 (8) TMI 150
Trading addition on account of suppression of sales - assessee, deriving income from the business of country liquor - CIT(A) provided partial relief - assessee contesting estimation made - Held that:- It is seen that the CIT(A) has already granted relief on two counts, firstly by estimating the total sales at Rs.1.3 crores against estimation of Rs.1.4 crores estimated by the AO and secondly the net profit was directed to be at 5% on the reduced estimation, especially when no sale vouchers were prepared by the assessee and rejection of books of accounts of the assessee was upheld. We find no infirmity in the conclusion drawn by the CIT(A). It is affirmed - Decided against assessee. Extinguishment of liability - addition u/s 41(1) - Held that:- Admittedly, from the AY 2002-03 the assessee had been showing these liabilities in the books of accounts and in spite of laps of mandatory period of three years after which debt cannot be recovered in the absence of part payment or acknowledgement and the assessee has also changed line of business i.e. from India made foreign liquor to country liquor and no payment of any sort was made to any of the parties mentioned in the assessment order, one undisputed fact is emerging that there is no intention on behalf of the assessee to repay the impugned amounts or any part thereof. Hence we find no merit in this ground - Decided against assessee. See CIT vs Karamchand Thapar & Others (1996 (8) TMI 2 - SUPREME COURT) Addition u/s 40A(3) - cash purchases - assessee contended that said purchases were made pursuant to the transfer permit issued by the excise department - Held that:- This is an undisputed fact that the payments were made at the directions of the excise authorities as the situation was not within the control of the appellant. Therefore, CIT rightly deleted aforesaid addition - Decided in favor of assessee.
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2012 (8) TMI 149
Unexplained cash and excess stock found during the search - reasons were assigned by the assessee showing that he was maintaining regular books of account and assessed to tax since long. Due to ill health – Held that:- Books of account were prepared were produced before the Assessing Officer during the course of assessment proceedings - Assessing Officer did not find any discrepancy in the books and, therefore, considering the extract of Section 158BA(3), it was clear that the transactions upto the date of search were recorded in the books on the basis of prime records, that is to say, other documents maintained in the normal course of business, and in such circumstances, there was no justification for treating the cash as unexplained if as per the books produced before the Assessing Officer the cash found tallied with the books
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2012 (8) TMI 148
Search - assessment order – limitation – Held that:- Panchanama was drawn on 7.2.1996 - Again a third visit was made and a panchanama came to be drawn on 25.4.1996 - order of assessment came to be passed on 24.4.1997 - time starts running from the date of the first Panchanama – assessment order should be passed within one year therefrom - entire order is set aside on the ground of bar of limitation
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2012 (8) TMI 147
Deduction under Section 80HHC of the Income Tax Act – Held that:- While computing the export profit on trading of goods under Section 80HHC(3)(b) of the Act the indirect costs allocable should be in accordance with Explanation (e) even when the indirect costs attributable to such export was identifiable and allocable - When once the assessee has not pointed out the indirect cost attributable to the export and contends that there was no indirect cost attributable to export, the same cannot be accepted and therefore, indirect costs have to be calculated in accordance with law - While so calculating, all the expenses involving indirect cost have to be included and no items can be excluded as done by the first appellate authority and therefore, the order passed by the ITAT directing the assessing officer to pass fresh orders after computing indirect cost in proportion to all the indirect costs incurred by the assessee attributable to export in the proportion inferred to in the order, is justified - in favour of the revenue
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2012 (8) TMI 146
Penalty levied under section 271(1)(c) – assessee received reimbursement of the tax liability incurred by the assessee in India - assessee had not offered the above reimbursed amount to tax under the bonafide belief that the same were not taxable – Held that:- It was a case of bonafide mistake and that there was no intention to evade tax - appeals are dismissed
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2012 (8) TMI 145
Reassessment proceeding under Section 147 – Disallowance of unabsorbed / unserved depreciation - period of limitation - amendment w.e.f. 1997-98 - Held that:- Depreciation has been wrongly allowed pertaining to the assessment year 1993-94 to 1997-98 to which the petitioner was not entitled - deemed to have escaped assessment within the meaning of Section 147 of the I.T. Act for which action under Section 147 was taken and the impugned notice under Section 148 is issued - depreciation which was allowed by the Assessing Officer while completing assessment under Section 143(3) was never before the 1st Appellate Authority and consequently before the ITAT - writ petition is dismissed.
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2012 (8) TMI 144
Scope of Section 263 - Deduction under Section 80-HHC - computed without excluding charges which fall within the scope of Explanation (baa) to Section 80HHC of the Act – Held that:- Finding of the Commissioner in the orders issued under Section 263 is that the Assessing Officer has not considered the scope of Explanation (baa) of Section 80HHC of the Act - Commissioner had only pointed out the mistake prima facie committed by the Officer in making assessment without reference to the relevant statutory provisions and directed him to re-work the relief under Section 80HHC Even though counsel for the assessee contended that for the year 1993-94 Tribunal allowed these issues on merit - with regard to the exclusions to be considered from the total income as well as the turnover covered by the Commissioner's order – matter remanded to AO
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Customs
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2012 (8) TMI 176
Frivolous review petition - Review of the order wherein revenue directed to refund the excess fine and penalty consequent to the appellate order to the petitioner within 10 days from the date of the judgment - held that:- the stand of the petitioner in the review petition is totally hyper-technical and unreasonable. When an appellate authority allows an appeal filed against imposition of tax, duty, fine, penalty etc., it is the bounden duty of the assessing authority, as part of a democratic government, to refund the amounts covered by orders of the appellate authority, when appeals are allowed fully or partially. The same shall be refunded even without a formal request for the same. The reasons put forward by the petitioner in the review petition justifying the insistence on the production of original documents also does not impress me at all. When an import is assessed to duty and penalty and fine are imposed, necessarily, the assessing authority maintains a file in relation to the same, which will contain all the documents in original relating to the levy. When payment is made pursuant to the orders of the assessing authority, details of the same would also be available in that file. When appeal is filed by the importer against the orders of the assessing authority the file will contain orders and details relating to the same also. Therefore, there is no difficulty for the assessing officers to decide the claim for refund based on those documents, when the appeal is allowed in full or in part. The filing of this review petition itself is an abuse of the process of the court. - Review petition dismissed with cost of Rs. 25000/- Interest and cost to be recovered from the petitioner in the review petition and all officers responsible.
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2012 (8) TMI 175
Benefit of Duty Free Import Authorization (DFAI) - Revenue stated that on obtaining DFIA the assessee has availed the credit even if the credit is reversed or paid back along with interest after clearance of the goods - Held that:- As decided in Commissioner of Central Excise, Mumbai- I Versus M/s Bombay Dyeing & Mfg. Co.Ltd [2007 (8) TMI 2 - SUPREME COURT] the Cenvat credit taken if reversed before its utilisation, it amounts to not taking the credit - in the case of DFIA if the credit availed on inputs used in the manufacture of final products is reversed before it is utilised either by reversing the credit or by cash payment with interest, then, it should be treated that the assessee has not availed the credit and accordingly, the benefits under para 4.2.6 of the Foreign Trade Policy 2009-2014 cannot be denied while transferring the DFIA.
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2012 (8) TMI 143
Confiscation of diamonds – Held that:- Assessee had produced purchase vouchers in relation to the diamonds - proprietary firm was registered with the Sales Tax department - - in the event of seizure of non-notified goods burden of poof is on Revenue to prove that there was illegal import and inability of the litigant to produce documents showing legal importation does not ipso facto prove that the goods were smuggled - department has failed to discharge their burden to prove that these documents are fabricated and diamonds in question are illicitly purchased - in favour of the appellant
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2012 (8) TMI 142
Import of computer cases - Customs authorities denied the exemption on the ground that goods contain a USB card and hence a Populated Printed Circuit Board making the goods ineligible for the exemption – Held that:- What is contained in the computer case is an extension of PCB for ease of connection. But the same is not an electronic component or Populated PCB since it does not have active and passive electronic components like ICs, resistors, capacitors, relays, switches etc. - mere mounting of the USB port and audio port on a PCB does not make the PCB a Populated PCB - appellants are eligible for the impugned exemption under Notification No.21/2002
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Corporate Laws
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2012 (8) TMI 174
Application by creditor for winding up - outstanding dues and interest thereon - Held that:- As per the terms and conditions of the contract the Project Management Consultants has the authority to issue certificate once the work has been virtually completed and the company is obliged to pay the contractor in accordance with the certificate issued by the said management consultants specifying the sum of money in accordance with the final certificate issued in writing at the expiration of the period referred to as the "defect liability period" It appears from the certificate of Project Management Consultants that a final certificate was issued after the defect liability period of 12 months is over. A certificate was issued on 7th December, 2007 wherein Project Management Consultants asked the company to make payment to the contractor the petitioner herein, a sum of Rs. 52,28,095/- towards the work done by the petitioner. It also appears from the TDS certificate that the company has accepted that the petitioner is entitled to get an amount of Rs. 37,45,821 after deduction of tax amounting to Rs. 4,84,312. This amount of Rs. 37,45,821 was admittedly not paid to the petitioner. Thus it appears that there is no dispute about the debt and the company has failed and neglected to pay the aforesaid debt - the winding up petition is admitted,.
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2012 (8) TMI 141
Sanction of the Scheme of amalgamation - Held that:- Having regard to the averments made in this Petition and the materials placed on record and the affidavits filed by the Regional Director , Ministry of Company Affairs, Noida, and the Official Liquidator the Petition deserves to be allowed - no legal impediment to the grant of sanction to the Scheme of Amalgamation. Hence, sanction is hereby granted to the above mentioned Scheme of Amalgamation under Section 391(2) r.w.s. 394 of the Companies Act ,1956 and Consequent upon the merger /Amalgamation of the Companies the Transferor Company shall stand dissolved without being wound up. Learned counsel for the petitioners states that the petitioner Companies would voluntarily deposit a sum of Rs.1,00,000/- in the Common Pool Fund of the Official Liquidator.
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FEMA
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2012 (8) TMI 177
Imposing a penalty - violation of provision of Section 9(1)(f)(i) of FEMA - Held that:- As Appellate Tribunal against the three main accused held that they have not violated the provisions of and as the main accused are relieved of the charges on no satisfactory evidence have been produced to prove the alleged violations committed by them, then, the charges levelled against the appellant to the effect that he had aided and abetted the main accused in violating the provisions of law could not be said to have been proved. As the documents relied upon by the revenue do not establish violation of the provisions of law against the main accused the same set of documents cannot be said that the person who is alleged to have aided and abetted the main accused has violated the provisions of law - penalty levy cannot be sustained - in favour of assessee.
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Service Tax
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2012 (8) TMI 207
GTA services - Demand of service tax – denial of Notification No.32/04-ST - conditions are to the effect that GTA services provider gives a declaration on every consignment note that he has not availed the benefit of Cenvat Credit of duty paid on the capital goods as also the benefit of Notification No.12/03-ST - said declaration do not stands given by the transporters, the benefit stands denied - Held that:- In the absence of any prescribed format to make such declaration, the certificate given by the transporters are sufficient - matter remanded to original adjudicating authority for examining the said certificate
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2012 (8) TMI 206
Whether appellants who are actually selling SIM Cards of BSNL to the customers are liable to the service tax or not – Held that:- all the stay applications filed by the Revenue, are rejected.
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2012 (8) TMI 205
Application for waiver of pre-deposit, interest thereof and equal amount of penalty - Held that:- As appellant addressed to the Superintendent, Central Excise, having jurisdiction over his factory, about the activity conducted by them on the tender accepted by ONGC for laying down of pipelines for transportation of gas and despite this, revision authority has not called for any information nor gave any direction/ suggestion to the appellant to classify such activity of manufacture, thus the matter seems to be hit by limitation - application for waiver of pre-deposit of amounts involved is allowed
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2012 (8) TMI 204
Maintainability of appeal – Held that:- no provision for appeal to Tribunal against an order passed by the Commissioner of Service Tax under Section 84 of the Finance Act, 1994 as a revisionary authority after the amendment brought to Section 86 of the said Act w.e.f. 19/08/2009 under the Finance (No.2) Act, 2009. Appeal is rejected as not maintainable.
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2012 (8) TMI 169
Point of Taxation Rules, 2011 - rate of tax 10% or 12% - services which were provided before 01.04.2012 and even invoices were issued before 01.04.2012 and payment is received after 01.04.2012 - Held that:- no coercive action shall be taken for non-payment of differential service tax.
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2012 (8) TMI 168
Waiver of pre-deposit – Extended period of limitation – input service – denial of Cenvat credit - input services of Travel Agent, Custom House Agent, Tour operation, Telephone, Insurance and Courier etc and paid the service tax from the Cenvat Credit towards the payment of service tax liability for providing output services of repair, operation and maintenance, erection and commissioning – Held that:- these services are required for providing the output service by the appellant. CHA service was used for importing Water Treatment and Components for Water treatment Plant, which was used for installation or repair and maintenance etc. Similarly, the service of Tour operator and Courier service were also used in providing of service. Even if a view is taken that the term 'Used' cannot cover the definition of input service, it would be purely a question of interpretation and therefore, show cause notice could not have been issued invoking extended period. Show cause notice was issued in 2008 whereas, the period of demand is 2003-2004. Demand was time barred. Decided in favor of assessee.
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2012 (8) TMI 167
Allowance of refund claim of input services - GTA services,transit insurance on outward freight and CHA services - department agitating allowance - Held that:- GTA services for the period prior to 01.04.2008, till the place of delivery should be treated as "input services" as decided in the case of Commissioner of C. Ex. & S.T., LTU, Bangalore Vs. ABB Ltd [2011 (3) TMI 248 (HC)] CHA services - considering the case of CCE, Rajkot Vs. Rolex Rings Pvt. Ltd. [2008 (2) TMI 295 (Tri)]in respect of exported goods when the ownership rests with the exporter till delivery of the goods at the port, the place of removal should be treated as the port and therefore, the CHA services should be treated as "input services" in the light of inclusive definition of "input services". Transit insurance charges - As it is directly linked to GTA services, thus eligible for credit up to 31.03.2008 - Somaiya Organo Chemicals Versus CCE, Aurangabad [2010 (9) TMI 316 (Tri)] - in favour of assessee.
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Central Excise
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2012 (8) TMI 173
Pre-deposit of duties and penalties - whether the appellants are entitled to Cenvat credit of Service Tax paid on rent a cab service, used for carrying employees from their homes to the factory and dropping them back from the factory to their homes – Held that:- Services of transportation of employees to the factory is an admissible cenvatable /modvatable input services – In favor of assessee
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2012 (8) TMI 172
Clandestine removal of the goods - appellant firm who had removed the goods clandestinely, discharged the duty liability, interest and penalty to the extent of 25% of the duty involved – Held that:- Requirement of pre-deposit is waived and the appeal taken up for final disposal. Section 11A (1A) of Central Excise Act, 1944, if such person (the person liable to pay duty) has paid duty in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and the other persons to whom the notices are served under sub-section 1 shall without prejudice the provisions of Sections 9, 9A and 9AA be deemed to be conclusive as to the matters stated therein - Appeal allowed
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2012 (8) TMI 171
Non Compliance - the assesses, who had availed Modvat credit on the basis of modvatble invoices were directed to reverse the entire Modvat credit, the other appellants, who were registered dealers and had issued the invoices, were directed to deposit 50% of the penalty amounts imposed upon them. - appeals are liable to be dismissed for non-compliance with the provisions of Section 35F of the Central Excise Act.
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2012 (8) TMI 170
Waiver of pre-deposit - manufacture of MS ingots – alleged that applicants suppressed production of excisable goods and short paid the duty - demand is confirmed on the basis of electric consumption as well as after taking into consideration the data in respect of cost of production and sale considerations – Held that:- Per MT cost of production of finished goods was worked out on their reported turnover as per the audited financial account for the year 2007-08 the cost of production per MT for the period March 2008 to August 2008 is Rs.33,476/- whereas the transaction value per MT as per ER-1 returns is only Rs.31,690/- which is much less than even the cost of production - demand is not merely on the basis of electric consumption - Commissioner (Appeals) has not decided the appeals on merits - appeals filed by the appellants were dismissed for non-compliance with the provisions of Section 35F of the Central Excise Act as the appellants failed to comply with the conditions of the stay order passed by the Commissioner (Appeals) - matter is remanded to the Commissioner (Appeals) to decide afresh - appeals are disposed of by way of remand.
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2012 (8) TMI 140
Refund - manufacture of P.C. poles – Held that:- Assessments were not provisional and the respondents cleared the PC poles on payment of appropriate duty. Subsequent to the clearances, Maharashtra State Electricity Board reduced the price as per the terms of the contract – refund is not allowed
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2012 (8) TMI 139
Cenvat credit - electricity used outside the factory of production as well as in respect of peripheral area in the factory - demand on the ground that the appellant is liable to pay 10% on the price of electricity which is used outside the factory - Held that:- Electricity is not an excisable item as per Section 3 of CEA, 1944 and the manufacturer is liable to reverse the credit on duty availed as inputs used in the generation of electricity which is not used in the factory of the production- appellant has failed to show that the same is used within the factory, therefore this issue also requires reconsideration as in the show-cause notice the allegation is that the electricity is used in the peripheral area within factory gate - matter is remanded to the Commissioner
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2012 (8) TMI 138
Wrong utilization of CENVAT Credit - claim of exemption Notification No.64/1995-C.E. dated 16.03.1995 - Held that:- Looking into the ER1 returns filled by assessee no clear picture can be made out whether credit of tax availed is correct or not and whether it is in respect of a dutiable product or exempted product - thus it cannot be claimed that the assessee has disclosed the correct facts to the department - assessee has failed to make out a case for complete waiver of pre-deposit - direction to pre-deposit 50% of the duty demanded.
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2012 (8) TMI 137
Appeal dismissed on technical ground of non-compliance of the direction to make pre-deposit by the stipulated date - assessee contested that he did not comply with the order of pre-deposit because he was pursuing his writ petition filed against the order and subsequently withdrew the appeal and deposited the pre - deposit amount as directed along with balance demand - Held that:- The default on the part of the appellant was unintentional and it occurred only because the appellant had challenged the order of pre-deposit in High Court which he withdrew - since the entire amount of duty has been deposited, the order of the Commissioner (Appeals) is set aside and the matter is remanded back for hearing afresh for deciding on merits - in favour of assessee.
9911796707
