Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 11, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Wealth tax
Articles
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Combined reading of section 10(10CC) & 17(2iv) shows that Taxes borne by the employer were obligation, otherwise such payments would have been payable by the assessee. - exempt under the provisions of section 10(10CC) & non-monetary consideration - AT
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Penalty u/s 271(1)(c) – merely making a wrong claim in the return of income cannot a ground for imposing penalty u/s 271(1)(c) of the Act as it neither amounts to furnishing inaccurate particulars nor amounts to concealment of income. - AT
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Whether in real estate business tripartite sale on basis of MOU is business income or income from other source - held as business income - AT
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Licence fee from various telecommunication and cable network operators on account of installation of towers/antennas on terrace of the property - Receipts were held as income from other sources. - AT
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Addition made on account for rejection of books u/s 145 - AO has given one hour to produce details - Case remand back to AO - AT
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Deduction under section 80IB - manufacturing process - the conversion charges received is in course of manufacturing activity by using the same machinery and labour - deduction allowed - AT
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Depreciation on the LPG Cylinders - loaning of the cylinders against security deposit - depreciation allowed - AT
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Assessment of interest on compensation on acquisition of land - AO was not justified in totally ignoring the claim of petitioner without examining - AT
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Non deduction of TDS - Levy of interest u/s 201(1A) is automatic, however it is not so in case of imposition of penalty u/s 271C. Section 273B provides a discretion to the AO towards imposition of penalty u/s 271C - AT
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If donations are received compulsorily for the admission of students, the assessee would not be entitled for exemption either under S.10(23C) or under S.11 of the Act - AT
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Additions u/s 68 - capital introduced by partners - - The availability of funds with the partners was not at all disclosed in their respective returns of income. - addition confirmed. - AT
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Deduction under section 80-IA(4)(ii) – telecommunication services - If the assessee can be given exemption, then a person running even a public call office (PCO) should be entitled for the same deduction. - AT
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Shareholders of the company can gift their shares in favour of the company. - There is no bar - HC
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Merely because the company has earned profits by selling some of the shares, that doesn't mean that the company is engaged in shares trading. - HC
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AO made addition as per TDS certificates without bringing to the notice of the assessee as to which of the income was covered under tax deducted at source certificate and which part of the income remained undisclosed - no addition - AT
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Interest paid to Head office (Japanese banking company) by assessee (PE-Indian branch) - not chargeable to tax in India. - AT
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A credit in the assessee's books of account, signifying a receipt, or a liability, has to be satisfactorily explained, to keep section 68 at bay. - AT
Customs
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The concept of manufacture in the Central Excise law cannot be brought into for the purpose of 100% EOU Undertaking service activities. - AT
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Bona fide purchaser of a car which is cleared by the Customs Department is not liable to pay redemption fine even if the car was under valued and the original importer is liable to pay the difference in duty - HC
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Subletting of the customs area to some non-vessel operating cargo carriers - there is no restriction on the appellants not to sublet the premises - no specific contravention - no penalty u/s 117 - AT
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Interest – territorial jurisdiction – determination of the appellate forum based upon the situs of the Tribunal would lead to a anomalous result - HC
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Unjust enrichment - Refund - Non-availment of Modvat credit, C.A. certificate to the effect that the duty incidence has not been passed on by the respondent are sufficient supporting documentary evidences for Balance Sheet as main documentary evidence. - CGOVT
DGFT
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Modification in the description of import item under SION A2337. - Public Notice
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Corrections/Amendments in Appendix 37A and Appendix 37D of Handbook of Procedures Volume I. - Public Notice
Corporate Law
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When Official Liquidator can not proceed with the winding up of the Company for want of funds or for any other reason, the Court can make an order dissolving the Company from the date of that order. - HC
Wealth-tax
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Penalty u/s 18(1)(c) of wealth tax act - Had the assessee been put to notice with respect to explanation(4) of section 18(1)(c) of the Act and consequently given opportunity to rebut the presumption, perhaps the situation would have been different. - HC
Service Tax
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Non payment of service tax on commission paid to the agent located outside India - revenue-neutrality - penalty waived - AT
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The question of penalty proceedings would arise only when there could be valid recovery proceedings under Section 73(1) of the Act. That is the reason when the ‘non obstante’ clause in Section 80 refers to only Sections 76, 77 and 78 and not to Section 73 of the Act. - HC
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Cenvat credit on input services namely, Courier service and insurance premium on vehicles cannot be denied - these services are related to activity of business. - AT
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Beneficiation of coal activity - Business auxiliary services - Activity of loading /unloading of the coal for bringing the coal into washery fall under the category of cargo handling services - Decided in favor of assessee - AT
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Taxability on allotment fees - Revenue brought it under the service tax to be rental receipt from immovable property - need to be tested by the officers at grass root level - AT
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As stated in Section 11B of the Central Excise Act,1944, the appellants are entitled for refund from the relevant date i.e. settlement of the dispute between the parties - AT
Central Excise
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The Cenvat Credit availed on manufacturing activity can be utilized for discharging the deemed liability on commission paid to foreign agents under Business Auxiliary Services - AT
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Entitlement of the appellant to avail Cenvat credit - 100% E.O.U. - Export under bond - exemption notification no. 30/2004-C.E. - demand confirmed against them while denying the credit is not justified. - AT
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Refund claim of SAD - unjust enrichment - CA certificate is sufficient as per the Board’s Circular No. 18/10-Cus., dated 8-7-2010, to discharge the liability of bar of unjust enrichment - AT
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Non payment of duty - as the appellant has paid the duty before issuance of the SCN, and there is no quantification of the interest, in that view the penalty is reduced to 25% - AT
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Refund - Government cannot retain the amount collected without authority - amount so paid by applicant is to be treated as voluntary deposit with department and same is to be returned the way it was initially paid - CGOVT
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Clandestine removal of goods - electricity bills disclosed the actual consumption of electricity and the Revenue has been able to show that the appellants suppressed production of M.S. ingots - AT
Case Laws:
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Income Tax
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2012 (9) TMI 234
Income tax on salary paid by employer – Weather tax paid by foreign employer on salary is eligible u/s 10(10CC) – It’s monetary or non-monetary perquisite - Tax is calculated & paid by employer on behalf of assessee - Held that:- From the Combined reading of section 10(10CC) & 17(2iv), it can be concluded that taxes borne by the employer were obligation, otherwise such payments would have been payable by the assessee. Therefore are exempt under the provisions of section 10(10CC) & non-monetary consideration as decided in the case of RBF Rig Corporation (2007 (11) TMI 334 - ITAT DELHI-F). Decision in favor of assessee
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2012 (9) TMI 233
Addition on account of scrap sales - assessee engaged in the business of manufacture and export of ready made garments - addition made on ground that assessee has disclosed lower scrap sale in comparison to other exporters in similar trade - Held that:- It is observed that AO has not found any defect in the books of accounts of the assessee. There is no finding about assessee’s supressed production. Manufacturing production and trading accounts have been duly accepted during preceding three years though assessments were completed u/s 143(3) and no addition on this account was ever made. Current year’s figures of production and trading has also not been doubted. AO made the addition purely on the basis of estimate. More importantly, the ITAT in assessee’s sister concern had deleted the addition made on this account. CIT(A) in his order tried to distinguish assessee’s case with the case of assessee’s sister concern on the basis of raw material used by both parties which according to him was different but did not bring on record any thing to support his findings that material used by assessee generated more scrap as compared to assessee’s sister concern. Therefore, on facts, addition is directed to be deleted - Decided in favor of assessee.
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2012 (9) TMI 232
Penalty u/s 271(1)(c) – business income or capital gain - AO treat the gain as short term capital gain and initiated penalty proceeding u/s 271(1((c) - Assessee accepted the decision of the AO and went with the tax authorities by not contesting the issue and by paying the tax as required by the AO – Held that:- merely making a wrong claim in the return of income cannot a ground for imposing penalty u/s 271(1)(c) of the Act as it neither amounts to furnishing inaccurate particulars nor amounts to concealment of income. - Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). - decision in Reliance Petro Products (P) Ltd. (2010 (3) TMI 80 - SUPREME COURT) followed. - In favor of assessee.
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2012 (9) TMI 231
Addition made u/s 69B as unexplained investment – Can AO made addition on the basis circle rate of property – Whether Sec. 50C is applicable on purchaser – Assessee purchase agricultural land as stock in trade – AO found difference between circle rate & purchase rate of property - AO made addition by invoking Sec. 50C, Sec 142A & Sec. 69B as unexplained investment - Held that:- As the AO made addition on the basis of a presumption which according to I.T. Act can only be raised against seller, cannot be made in the hands of the purchaser. And provisions of sec. 142A cannot be applied against a transaction which is stock in trade. Decision in favor of assessee. Addition made on account of tripartite sale – Whether in real estate business tripartite sale on basis of MOU is business income or income from other source - Held that:- Assessee duly account for the income as business income The assessee is into the business of real estate and a tripartite property deal was a business transaction and the difference of earning revenue from MOU has been duly offered as business income. Decision in favor of assessee.
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2012 (9) TMI 230
Addition on account of undisclosed sources/unexplained cash credit against sale of VIDS 97 declared jewelery(diamonds) on 09.01.98 – sum received through cheque - Revenue contended source of the ‘packet of cut and polished diamonds’ remain unexplained on ground that diamonds declared under VDIS were embedded in the necklace, earrings etc. and were not loose diamonds – also considered sale of jewelery to Kamal Gems and D.M. Corporation as sham nature of transactions – alleged purchasers of diamond M/s D.M. Corporation and M/s Kamal Gems were not found at the time of investigation conducted by ADIT (Inv), Surat Held that:- On bare reading of the report of ADIT(Inv), Surat dated 17.3.2010, it is observed that there is no specific fact showing that in the month of March 1998, there was no business in the name of M/s Kamal Gems in specific premises at Saiyedpura and of M/s D.M. Corporation at Ambika Society. There is also no mention about the fact that instead of aforesaid parties, any other firm/person or entity was using that premises in the month of March, 1998. Therefore, it is observed that the AO relied on the incomplete and ambiguous report submitted by ADIT(Inv), Surat and his findings that the assessee failed to substantiate the creditworthiness and genuineness of said purchasers cannot be sustained as the AO did not properly appreciate the evidence relevant to this fact. Accordingly, addition is deleted – Decided in favor of assessee.
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2012 (9) TMI 229
Survey - books impounded reveal indulging of assessee in unaccounted sale and purchase outside the books of account - addition made for unexplained investment in business outside the books - addition on account of gross profit worked out on sales not recorded in books of a/c - addition of extra profit on turnover recorded in regular books of accounts - Held that:- it is found that at the time of survey the assessee himself admitted additional income of Rs.14,00,000/- and while filing return of income the assessee has surrendered only Rs.11,50,000/-. There are no convincing reasons for reducing the declaration made at the time of survey. We find whatever the items of additions which are estimated by the A.O. are covered by disclosure made at the time of survey for Rs.14,00,000/-. We, therefore, find that it will be fair and justice to both sides and to cover all lapses and deficiency which have been pointed by Revenue authorities if addition to the extent of Rs.2,50,000/- is sustained out of the total addition of Rs.23,40,650/- made by the A.O. We accordingly sustain addition to the extent of Rs.2,50,000/- and balance amount of addition is deleted - Decided partly in favor of assessee
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2012 (9) TMI 228
Addition made by invoking S28(iv) treating certain liabilities as in-genuine liability - Held that:- In present case, assessee has shown liability of the aforesaid amounts in its books of account and the balance sheet. The liability is still existing, which is also noted in balance sheet. It is also evident that these were old loans, which were accepted by the Revenue in the preceding assessment year in the scrutiny assessment. Thus, these were opening balance coming up in the assessment year under appeal. The assessee has not written off or squared up any of the amounts in the accounts of the assessee. The amount in question has not been transferred to the P/L A/c. There is no waiver of the loan and the amounts have not been transferred to any reserve fund of the assessee. Therefore, the same cannot be treated as income of the assessee because the liability still existing in the books of the assessee. Dis-allowance u/s 14A - Held that:- Addition is clearly unjustified in the matter. Firstly, assessee has shown that investments have been made in shares in AYs starting from 1991-92 to December, 2006 and Nov. 2007. Thus, no investment has been made in the AY under appeal. Secondly, no borrowed funds have been used for the purpose of investment. AO has not proved any nexus between the borrowed funds and the amounts invested in shares in assessment year. Further, sufficient funds and profits are available to the assessee to make investment though no investment has been made in this year, but it was made several years back. Thirdly, interest received by the assessee are in a sum of Rs.2,62,656/-, but interest paid was Rs.1,48,913/-, thus, assessee practically did not incur any expenditure on the interest. Hence, provisions of section 14A have been wrongly applied. Addition is, therefore, deleted. Dis-allowance u/s 36(i)(iii) - loan given to HUF for no business consideration - Held that:- It is observed that assessee has sufficient capital, profit and interest-free funds available with him for the purpose of investment. No nexus between the borrowed funds and interest free funds has been established by the AO on record. Therefore, the addition would be unjustified in the year under consideration - Decided in favor of assessee
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2012 (9) TMI 227
Addition made u/s. 36(1)(iii) treating the proportionate investment made towards purchase of property out of borrowed funds - Held that:- No reasons have been shown as to why proportionate interest has been disallowed in this case when sufficient capital withdrawals and taxable income is available to the assessee for the purpose of making investment in the property. Also, no loan was taken during the assessment year under appeal, instead there was reduction in unsecured loans. Hence it is held that assessee had sufficient funds for the purpose of making investment in the properties. Dis-allowance made is deleted hereby Adhoc addition made to cover possible leakages - Held that:- Assessee produced all the bills and vouchers in respect of the expenses. Nothing is pointed out specifically in the assessment order as to which of the expenses are not verifiable. Therefore, the addition is clearly unjustified - Decided in favor of assessee
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2012 (9) TMI 226
Licence fee from various telecommunication and cable network operators on account of installation of towers/antennas on terrace of the property and parking rent - Income from house property vs Income from other sources - Held that:- CIT(A) placing reliance on the decision in case of Mukherjee Estate P. Ltd (2000 (3) TMI 35 - CALCUTTA HIGH COURT) opined that whatever additional income is derived over and above the letting out of property on hire cannot be treated as property income merely because of its nexus with such property. Receipts were held as income from other sources. Considering entirety of facts, circumstances and material on record, conclusion drawn by the CIT(A) is confirmed - Decided against assessee
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2012 (9) TMI 225
Addition made on account for rejection of books u/s 145 - Assessee is not disclosing its correct business turnover – AO has given one hour to produce details - Assessee fail to produce complete books of accounts - AO applying survey calculations of the earlier year to compute turnover – AO has not been given adequate opportunity to produce necessary papers and documents - CIT (A) delete addition basis on earlier years ITAT order – Held that:- As there is a considerable distance and it was not practically possible to produce details within the given time which was very short - CIT(A) failed to remand back the matter to the AO for giving opportunity to the assessee to produce necessary books in order to do proper verification. No parity in facts and circumstances in this year and in the earlier years. Case remand back to AO
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2012 (9) TMI 224
Disallowance of deduction under section 80IB - DFRC sales, DFIA sales, Interest receipts & Conversion charges - Held that:- As decided in M/s Liberty India Versus Commissioner of Income Tax [2009 (8) TMI 63 - SUPREME COURT] duty drawback, rebate etc. should not be treated as adjustment (credited) to cost of purchase or manufacture of goods - They should be treated as separate items of revenue or income and accounted for accordingly - duty drawback, DEPB benefits, rebates etc. cannot be credited against the cost of manufacture of goods debited in the Profit & Loss account for purposes of Sections 80-IA/80-IB as such remissions (credits) would constitute independent - sales from DFRC and DFIA cannot be treated as profit from the eligible business of the industrial undertaking for computation of deduction u/s. 80IBsource of income beyond the first degree nexus between profits and the industrial undertaking - against assessee. The interest income also cannot form part of the profit derived from the eligible business of the industrial undertaking for claiming deduction u/s. 80IB - against assessee. Conversion charges - Held that:- As the eligible business of the assessee is manufacturing of biscuits and the assessee has received the conversion charges by carrying out the manufacturing process on behalf of ITC Ltd and as the word 'manufacture' is of much wider connotation it would include any process as a result of which a different commodity having distinct name, use and character emerges from the raw material - the conversion charges received is in course of manufacturing activity by using the same machinery and labour which were used for manufacturing assessee's own product has a direct nexus with the eligible business of the assessee and the profit derived from conversion charges has to be included in the profit of the business for computing deduction u/s. 80IB - in favour of assessee.
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2012 (9) TMI 223
Addition on capital introduced by the partners u/s. 68 - Held that:- partner had invested an amount of Rs. Rs. 17,53,653 towards capital contribution in the partnership firm by way of demand drafts having a capital of Rs. 19,05,96.58 as on 31.3.2005, thus it can be concluded having sufficient source of funds towards contribution made in the capital of the firm and could not be treated as unexplained at the hands of the assessee firm - no addition. Investment made by the other partner - Held that:- As the assessee has furnished the names and addresses of the parties from whom partner has collected advances of an amount necessary enquiry could have been made to find out the genuine findeness of the claim of the assessee but no such enquiry has been made either by the AO or by the CIT (A) - matter remanded back. Addition made towards unexplained credit - Held that:- The onus is on the assessee to prove the creditworthiness of the persons who have given the loan on credit which was not proved excepting the confirmation letter, the assessee has failed to produce any other document to prove the creditworthiness of Shri Tatiparti Venkata Rami Reddy - against assessee. Disallowance of 25% of an expenditure - Held that:- Considering the nature of expenditure claimed and proportion of such expenditure with regard to the total turnover of the assessee firm it is reasonable to restrict the disallowance to 10% of the total expenditure claimed - partly in favour of assessee.
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2012 (9) TMI 222
Revision u/s 263 by CIT - CIT directing the AO to re-examine the outstanding liability in the names of HPCL and IOCL - Held that:- as it is standard practice with the public sector undertaking like HPCL and IOCL that they sell their products only against advance payment in the shape of Demand Drafts, the doubt entertained by the CIT is quite justified. These facts are not at all examined by the AO while completing the assessment which is very much evident from assessment order itself - against assessee. Addition towards quality control charges - Held that:- Since the assessee has executed work under Central and State Governments’ authorities only, the fact of deduction towards quality control can be easily ascertained from the concerned department under which the assessee executed the work. In the circumstances, therefore, addition can be made only after verifying facts from the concerned department - in favour of assessee for statistical purposes. Disallowance of deduction claim on Sub-contractor expenses - Held that:- It is therefore necessary to ascertain whether in fact any work has been executed by sub-contractor for which payment was made to him by the assessee as these facts have not been properly brought on record - direction to the AO to make necessary enquiry in this regard - in favour of assessee for statistical purpose. Depreciation on the temporary staff quarters - Held that:- once the AO has disallowed the expenditure claimed by holding it as a capital expenditure then the assessee is entitled to avail depreciation on such capital expenditure - in favour of assessee.
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2012 (9) TMI 221
Disallowance of depreciation on the LPG Cylinders - loaning of the cylinders against security deposit - ITAT has directed the AO to make necessary investigation to ascertain whether the assessee has actually purchased the cylinders - Held that:- ITAT had remanded the matter only for the limited purpose of finding out whether the assessee has purchased the cylinders or not. Therefore, it was not open for the Assessing Officer to again go into the issue of loaning of cylinders. Referring to the terms and conditions mentioned in the subscription vouchers it can be concluded that the ownership of the cylinders always remain with the assessee even after loaning of the cylinders against security deposit & that the consumers have no right over the cylinders and the consumer cannot sell, mortgage or otherwise dispose of the cylinders. It has further been provided that the subscriber can take refund of the security deposit on surrendering cylinder along with the subscription voucher - Had it been the sale of cylinders as alleged by the Revenue authorities then the assessee will be under no obligation to refund the security deposit and there will be no restriction on the consumer also either to sell or mortgage the cylinder - direct the Assessing Officer to allow depreciation on the cylinders - in favour of assessee.
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2012 (9) TMI 220
Assessment of interest on compensation on acquisition of land - income in the hand of individual or HUF - reopening of the assessment made u/s 147 - Held that:- From the return filed in compliance with the notice issued u/s 148 it is clear that the assessee from very inception of the assessment proceedings has taken a stand that the compensation along with interest awarded on acquisition of land does not belong to him but to the HUF. It is also a fact that the Land Reforms Tribunal in its order has observed that the agricultural land is an ancestral property and not a self acquired property. The pahani patrika also records the character of the land as ancestral property. When the assessee has taken a specific stand in the reassessment proceedings that the compensation awarded belongs to the HUF as the land acquired was an ancestral property belonging to the HUF, the AO was not justified in totally ignoring the claim of petitioner without examining it while completing the assessment. The CIT (A) has also not recorded any finding with regard to the ancestral character of the land - restore the matter to the file of the AO to re examine the assessee’s claim - in favour of assessee for statistical purpose.
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2012 (9) TMI 219
Validity of the order passed u/s 263 by the CIT - Held that:- Going through the order of the CIT as well as the assessment order it can be found that the AO has not dealt with specific issues raised by the CIT in his order passed u/s 263. It is also seen from records that the CIT has passed his order after giving due opportunity of hearing to the assessee. We therefore do not find any infirmity in invoking jurisdiction u/s 263 by the CIT - against assessee Computation of the windmill income - interest paid on loan is to be deducted from the income of power generation while computing deduction u/s 80IA - Held that:- The assessee was sanctioned term loan on 20-5- 2004 and disbursement of the loan started from September, 2004. It is also seen that by the time the loan was taken the assessee has started generating income from windmill, thus it is necessary to find out whether the loan was taken for the windmill project. Since the CIT has not brought any material on record which could suggest that the concerned loan was taken for windmill project it is proper to set aside the order of the CIT and direct the AO to examine the end utilisation of loan amount - in favour of assessee for statistical purposes. Direction for applicability of section 40a (ia) - Held that:- If any amount remains payable on the date of balance sheet on which tax was not deducted at source only that amount can be disallowed by invoking provisions contained u/s 40a (ia)- direct the AO to examine the facts and find out whether the amount has been paid within the relevant previous year or remains payable on the date of balance-sheet - in favour of assessee for statistical purposes. Direction for applicability of section 40A (2)(b) with regard to purchase of film - Held that:- As seen from the order of the CIT that he has only directed the AO to examine the applicability of section 40A (2)(b) and reasonableness involved in payment of consideration with regard to purchase of film . Since the AO has not examined this issue which is very much relevant for the assessment, the CIT set aside the assessment. Since the CIT has not directed the AO to disallow payment made by applying the provisions of section 409A (2)(b) and has only directed to examine the issue, the assessee can raise the contentions before the AO with regard to applicability of section 40A (2)(b) and also reasonableness of the payment made - against assessee.
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2012 (9) TMI 218
Levying penalty u/s. 271C - Non deduction of TDS - an order u/s. 201 (1A) by AO raising a demand - TDS u/s. 194J as against sec. 194C - Held that:- Considering submission of assessee that he was under bonafide impression that he was not required to deduct tax at source since the recipient company is filing its returns regularly and paying legitimate tax dues by way of advance tax and self assessment tax - When there is no loss of revenue to the department on account of failure on the part of the assessee to deduct tax at source, penalty should not have been imposed u/s 271C Levy of interest u/s 201(1A) is automatic, however it is not so in case of imposition of penalty u/s 271C. Section 273B provides a discretion to the AO towards imposition of penalty u/s 271C considering the reasonableness of the cause shown by the assessee for failure on its part to deduct tax at source. It is seen from the penalty order u/s 271C that the AO has accepted the fact that the recipient of the printing and processing charges i.e., M/s. Prasad Productions Pvt. Ltd., has declared income received in its return of income filed and has paid taxes. Therefore, no order u/s 201 was passed against the assessee treating it as an assessee in default - in favour of assessee.
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2012 (9) TMI 217
Rejection of exemption claim u/s 10(23C)(iv) - non approval from the prescribed authority - assessee society is registered u/s. 12A - CIT(A) allowed the claim - Held that:- If donations are received compulsorily for the admission of students, by whatever name it may be called, i.e. donation, building fund, auditorium fund, etc. over and above the prescribed fee, from the students, the assessee would not be entitled for exemption either under S.10(23C) or under S.11 of the Act As the issue is relating to allowability of exemption under S.11 or under S.10(23C), and while adjudicating on this issue one has to see the eligibility of claiming of deduction under S.11. This aspect has not been properly addressed by the CIT(A)/AO while granting the alternative claim of the assessee for exemption under S.11. Since the Assessing Officer has no occasion to examine the claim of the assessee under S.11 suitable directions to be given to the Assessing Officer for verification and to find out whether the assessee has received any money over and above the fees prescribed and thereafter decide the issue afresh - in favour of revenue for statistical purposes
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2012 (9) TMI 216
Additions of capital introduced by partners - CIT (A) deleted the addition - Held that:- The explanation given by the assessee regarding source of fund available to the partners to introduce capital is not supported by any evidence - The availability of funds with the partners was not at all disclosed in their respective returns of income. Being so, it is not possible to come to a conclusion that the partners are having sources to introduce capital in the firm - that in such a situation where there is a credit entry in the books of account of the assessee and there is no satisfactory explanation, then it will be deemed to be the income of the firm and will be added to the income of the firm and can be accordingly taxed. The view taken by the CIT (A) appears to be erroneous on the face of it - against the assessee. Addition made on account of estimation of income - CIT (A) restricted the addition to Rs. 75,000 - Held that:- The books of account of the assessee are not reliable and expenses were not supported by proper vouchers. Being so, AO is justified in rejecting the books of account and estimating the income. However, the estimation of income at 10% of the gross receipts is at higher side, thus the net profit at 9% of gross receipts instead of 10% as estimated by the Assessing Officer need to be made - CIT (A) was not justified in sustaining only Rs. 75,000 towards this count without any basis - partly in favour of Revenue.
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2012 (9) TMI 215
Deduction under section 80-IA(4)(ii) – Held that:- Assessee herself has not developed any telecommunication service system or as such she is not operating and maintaining any system independently - in order to get exemption as provided under section 80-IA, it is necessary for the assessee to obtain licence from the Department of Telecommunication (DOT), Government of India or from the Telecom Regulatory Authority of India (TRAI) on the basis of a written agreement, which the assessee has not obtained - assessee is not eligible for deduction provided under section 80-IA(4)(ii).
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Customs
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2012 (9) TMI 214
Suspension of CHA license - illegal import of OPC and illegal export of goods which are prohibited goods - Held that:- The Commissioner while exercising his power vested in him under Regulation 20 (2) of CHALR, 2004, has suspended the CHA license by recording the reason for which he has come to the conclusion for the said suspension with immediate effect. He has also ordered for the proceeding for revocation of license under Regulation 20 (2) of CHALR, 2004. Net result of suspension or revocation of the license is to stop/end the operation and that the Commissioner has ordered for revocation of license under Regulation 20 (2) of CHALR, 2004 and the Department has already been issued the show-cause notice under Regulation 22 of CHALR, 2004, it can be find that the proceedings for revocation of license are on and are likely to be completed. Therefore, revoking the suspension at this stage would clearly give relief to the appellant for interim period while the proceedings for revocation of license is already on. In these circumstances no reason to interfere with the impugned Order-in-Original and the same is upheld and the appeal is dismissed - against assessee.
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2012 (9) TMI 213
Import of car - undervaluation – confiscation – redemption fine – Held that:- Bona fide purchaser of a car which is cleared by the Customs Department is not liable to pay redemption fine even if the car was under valued and the original importer is liable to pay the difference in duty - in favour of assessee
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2012 (9) TMI 212
Duty, interest and penalty - irregularities in importing the goods - alleged that the appellant was the person who had master minded the entire activity, right from planning, creation managing and monitoring of all operations of M/s. Suntech with a mala fide intention to evade customs duty – Held that:- This is a case of mis-declaration, non-declaration and over declaration and under valuation of the goods consigned to M/s. Suntech. in respect of consignment received - in favour of the revenue
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2012 (9) TMI 207
Refund claim - unjust enrichment - adjudicating authority sanctioned the refund amounts but credited it to the consumer welfare fund – Held that:- Bar of unjust enrichment is applicable to the facts of this case when the appellants have filed a refund claim of SAD paid by them at the time of import of goods which were cleared by them on payment of VAT. As the appellants have obtained a certificate from Chartered Accountant confirming that the duty liability of SAD has not been passed on the buyers by the appellants, the same is sufficient as per the Board’s Circular No. 18/10-Cus., dated 8-7-2010, to discharge the liability of bar of unjust enrichment and the bar of unjust enrichment is not applicable to the case of the appellants - appellant is entitled for refund
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2012 (9) TMI 206
Withdrawal of permission - Export Processing Zone – import of used diesel engines for the purpose of re-construction and to export - subsequent permission granted was withdrawn by the Development Commissioner – Held that:- Withdrawal retrospectively is not permissible - sale in DTA on payment of duty based on the earlier permission granted to the Appellants, cannot be held to be in violation of the provisions of para 9.10(b). The term, “Manufacture” in the context of Exim Policy includes activities like re-construction and repair. - The concept of manufacture in the Central Excise law cannot be brought into for the purpose of 100% EOU Undertaking service activities. The finding of the Commissioner that the payment for DTA sale was not from EEFC Account, is clearly beyond the scope of the show cause notice
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Corporate Laws
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2012 (9) TMI 211
Winding up of company - application moved by Official Liquidator u/s 481 for dissolution of company - possession of the Regd. Office of the Company could not be taken - no assets available for realization - non-availability of books of accounts - factory premises and Fixed assets at factory taken over by UPEC and sold under SARFASI Act - no claims received by the Official Liquidator by secured & unsecured creditors and workmen of the company - Held that:- Supreme Court in case of Meghal Homes (P) Ltd. v. Shree Niwas Girni K.K. Samiti, held that when Official Liquidator can not proceed with the winding up of the Company for want of funds or for any other reason, the Court can make an order dissolving the Company from the date of that order. In view of aforesaid, the liquidation proceedings deserve to be brought to an end. The present application and the Company Petition No. 354/2005 are disposed off and the Official Liquidator is discharged.
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Service Tax
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2012 (9) TMI 238
Non payment of service tax on commission paid to the agent located outside India - invoking reverse charge mechanism - Held that:- As the appellant has paid service tax after issuance of the SCN the assessee's are liable to get the refund as the appellants are exporter, if they have paid the service tax they will get service tax paid by them by way of refund creating a situation of revenue-neutrality - invoking the provisions of Section 80 and waive penalty under Section 76 against the appellant is thus warranted - in favour of assessee.
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2012 (9) TMI 237
Denial of input service credit on rent-a-cab service - Held that:- The matter is remanded back to the adjudicating authority for verification whether rent-a-cab service availed by the appellant for the purpose of official use because as decided in CCE, Nagpur Versus Ultratech Cement Ltd.[2010 (10) TMI 13 - BOMBAY HIGH COURT] the appellants are entitled for input service credit on rent-a-cab service if the same is used by them for the official purpose and for bringing and dropping of their employees from their residence to the place of work as the said activity availed by them is in the course of business of manufacture - in favour of assessee by way of remand.
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2012 (9) TMI 236
Penalty - Scientific and Technical Consultancy Service – non-payment of service tax – assessee submitted that in respect of grant-in-aid consultations, service tax is not payable as per the guidelines issued by the Central Excise Department and CSIR and that the short payment of service tax was under bona fide condition of not properly classifying the funds received by IICT under dutiable consultation charges and exempted charges – Held that:- Penalty proceedings are not automatic and there ought to be necessary material to show that the assessee is guilty of willful suppression, fraud and misrepresentation. Under Section 80 of the Act if the assessee proves that there was a reasonable cause for the failure to pay the service tax, the competent authority can always drop the penalty proceedings. The question of penalty proceedings would arise only when there could be valid recovery proceedings under Section 73(1) of the Act. That is the reason when the ‘non obstante’ clause in Section 80 refers to only Sections 76, 77 and 78 and not to Section 73 of the Act. When the limitation period under Section 73(1) of the Act has expired and when the case does not fall under the proviso thereto, the question of penalty proceedings would not arise. Extended period of limitation – Held that:- Issue of show cause notice dated 21-2-2006 requiring to pay the service tax for the period from 16-7-2001 to 9-9-2004 - non-payment of service tax in respect of five above named projects is due to bona fide doubt regarding the activity
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2012 (9) TMI 235
Cenvat Credit on input services - denial of credit on the input service on the ground that these services were not used in or in relation to the manufacture of final product – Held that:- CAS-4 has considered all the services such as medical benefit, subsidized food, education allowance, canteen bill, etc., to form part of the cost of final products. Therefore, I agree with the learned Chartered Accountant that these services which have been received have been rendered only in relation to the manufacture of the final products - Cenvat credit on input services namely, Courier service and insurance premium on vehicles cannot be denied - these services are related to activity of business.
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2012 (9) TMI 205
Beneficiation of coal activity - Business auxiliary services - Held that:- As the beneficiation of coal carried out by the appellant is definitely a part of mining activity. The service provided by to any other person is relating mining or case has been brought under the ambit of service tax w.e.f. 1-6-2007 and in the case under appeal the period is prior to 1-6-2007 and therefore the conclusion is that for the relevant period the activity carried out by the appellant would not be liable to service tax as mining service.- in favour of assessee. Activity of loading /unloading of the coal for bringing the coal into washery fall under the category of cargo handling services - Held that:- As the appellant has entered into a contract with their customers for the purpose of beneficiation of coal, which would also include bringing the raw coal to their washery and supply the washed coal to their customers, thus it cannot be held that the appellant is cargo handling agency providing services to another person. Further, the said loading /unloading is required to be done by the appellant for himself. Such service is not being provided by him to any other person. The said activity is so integrally connected with the activity of beneficiation of coal that the same cannot be segregated and it cannot be held that the same was a different and separate activity falling under the definition of cargo handling services in as much - in favour of assessee.
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2012 (9) TMI 204
Taxability on allotment fees - Revenue brought it under the tax to be rental receipt from immovable property - Held that:- Considering sample copy of the receipt shown to impress that the receipts were of Fees in nature are need to be tested by the officers at grass root level - dispensing with requirement of pre-deposit appeal is remanded to learned Adjudicating Authority to re-do the adjudication examining nature of transaction, event of levy.
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Central Excise
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2012 (9) TMI 210
Utilization of Cenvat Credit for discharging the deemed liability - Held that:- The Cenvat Credit availed on manufacturing activity can be utilized for discharging the deemed liability on commission paid to foreign agents under Business Auxiliary Services as decided in Commissioner, Central Excise Commissionerate. Versus M/s Nahar Fibres [2010 (8) TMI 766 - PUNJAB AND HARYANA HIGH COURT] - in favour of assessee.
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2012 (9) TMI 209
Disallowance on Cenvat credit for default documents - invoice in the name of registered office was used for multiple claims by the appellant for it is various units - Held that:- The appeal is remanded back to the adjudicating authority to call for an affidavit from the appellant stating clearly that the present claim in this appeal is the only claim against the invoice concerned existed in the name of registered office and no multiple claim has been made or shall be made in respect of the same invoice and there should be specific statement in the affidavit that for any loss of Revenue in future in respect of the same invoice the appellant shall indemnify Revenue.
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2012 (9) TMI 208
Demand for duty - entitlement of the appellant to avail Cenvat credit - assessee is 100% E.O.U. - cleared the goods in those circumstances, at the same time had sought to avail exemption under Notification No. 30/2004-C.E., dated 9-7-2004 allegedly by mistake – Held that:- Once it is not in dispute that the appellants were 100% E.O.U. and all the goods manufactured by them were cleared for export and were actually exported under B-17 Bond executed by the appellants on 27-1-04, and there is a clear statement on the part of the appellants that reference to the Notification No. 30/04-C.E., dated 9-7-04 was by mistake on their part, considering the provisions of law comprised under Rule 6(6) of the Cenvat Credit Rules - demand confirmed against them while denying the credit is not justified.
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Wealth tax
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2012 (9) TMI 239
Penalty u/s 18(1)(c) of wealth tax act - concealment of wealth – Held that:- In the penalty order that the Assessing Officer passed, he did not give any clear findings as to for which breach such penalty was being imposed i.e. for concealment of the particulars of any asset or for furnishing inaccurate particulars of any asset. - AO erred in imposing the penalty without any clear findings as to whether there was concealment of particulars of any assets or providing of inaccurate particulars of any assets. His main thrust seemed to be on the ground of concealment of particulars which as we have noted was not a valid ground. - Decision in favour of assessee. Rebuttal of presumption u/s 18(1)(c) - For valuation of house property which is used wholly or mainly used for residential purposes, the formula provided under rule 1BB of the Rules is to be applied. The assessee instead, valued the property on the basis of its books of accounts. - Had the assessee been put to notice with respect to explanation(4) of section 18(1)(c) of the Act and consequently given opportunity to rebut the presumption, perhaps the situation would have been different.
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