Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 20, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Wealth tax
Indian Laws
Articles
News
Notifications
Customs
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55/2012 - dated
18-9-2012
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Cus
Seeks to amend Notification 12/2012-Customs - Prescribes effective rate of duty on import of goods.
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54/2012 - dated
17-9-2012
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Cus
Amends Notification No. 12/2012-Customs,dt.17.03.2012 related to exemption to maize bran from basic custom duty
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53/2012 - dated
13-9-2012
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Cus
Amends Notification No. 52/2003- Customs - Exemption to specified goods imported on procured by EOU's, STP Units, EHTP units etc. for specified purposes.
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F.No. 437/40/2012-Cus. IV - dated
17-9-2012
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Cus (NT)
Appointment of Common Adjudicating Authority in respect of M/s Asian Hotels Ltd., Hyatt Regency, Bhikaji Cama Place, New Delhi.
Income Tax
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37/2012 - dated
12-9-2012
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IT
Income-tax (Eleventh Amendment) Rules, 2012 - Insertion of rules 31ACB, 37J, Form Nos. 26A & 27BA.
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32/2012 - dated
17-8-2012
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IT
DOUBLE TAXATION AGREEMENT - AGREEMENT FOR EXCHANGE OF INFORMATION AND ASSISTANCE IN COLLECTION WITH RESPECT TO TAXES WITH FOREIGN COUNTRIES - LIBERIA.
LLP
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F. NO. 1/11/2012-CL V - dated
14-9-2012
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LLP
Limited Liability Partnership (Second Amendment) Rules, 2012.
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Delay in filing the special leave petitions - Where huge revenue/demand from the Department is involved, invariably, there is inordinate delay in filing appeals before the High Court under Section 260A and in filing special leave petitions before this Court - SC
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Validity of notice issued u/s 148 - There is not a whisper about the Additional Commissioner or the Joint Commissioner having granted the approval. - the assessment cannot be sustained in law - HC
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whether such interest income should be taxed on accrual basis in the year of allotment of debenture itself or whether it should be taxed on spread-over basis? - on the ground of matching principle - decided in favor of assessee - SC
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Power to transfer cases - section 127 - the petitioner had expressly requested for a personal hearing, thus he impugned order is liable to be set aside on the ground that the petitioner had not been heard - HC
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Whether interest paid in respect of borrowings for acquisition of capital assets not put to use in the concerned financial year can be permitted as allowable deduction under section 36(1)(iii) - held yes - SC
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Rectification of mistake - Notice u/s 154 - notice u/s 148 issued squarely on the basis of notice under Section 154 - both the noticses set aisde - SC
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Chargeability of interest u/s 234D - assessee contested no interest apply to refunds granted prior to 1/06/2003 - even if, a refund has already been granted the same would be subject to the provisions of section 234D - HC
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Parliament having chosen one method of dealing with donations i.e. as in the case of section 80G, the adoption of another route as business expenditure would not be permissible - HC
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Tax free bonds - benefit u/s 10 (15) (iv) - The expression “in respect of,” unlike the term “on,” has a wider connotation and would embrace a larger subject matter. On the other hand, “interest … on the bond or deposit” would mean what is actually yielded by the bonds and nothing else. - HC
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The Parliament has not only used two different terms namely “securities” and “units” in Section 94(7)(b)(i) and 94(7)(b)(ii) but has dealt with them separately providing different minimum periods of holding for “securities” and “units” - HC
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Proceeding for non-deduction of TDS u/s 201 - The assessee cannot escape from liability of taxation by challenging the provisions of Act in different forums. - AT
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Capital Gain on sale of trees - the legal position with regard to the taxability of the old Grevelia trees cannot be changed in the year under consideration, merely because the present AO has a different view. - AT
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Addition u/s 68 - The opening cash balance cannot be said to be any sum found credited in the books of the assessee maintained for the previous year. - AT
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DOUBLE TAXATION AGREEMENT - AGREEMENT FOR EXCHANGE OF INFORMATION AND ASSISTANCE IN COLLECTION WITH RESPECT TO TAXES WITH FOREIGN COUNTRIES - LIBERIA. - Notification
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Joint development agreement - Assessment of capital gain for Asst. Year 2007-08 - transfer of property - held as transfer - liable to capital gain - AT
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Addition u/s 43B - Conversion of interest payable in equity shares - As liability can be discharged in a number of ways, it does emphasize the fundamental principle that unless 'actual payment' is made, the restriction placed in section 43B will hold good and deduction cannot be allowed. - AT
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Concealment of income - survey u/s 133A - assessee contested as error in exercise of jurisdiction by the Asstt. Commissioner of Income Tax, Circle-IV (1) Agra as the corporate office was shifted to Delhi - against assessee. - HC
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As the transaction of lease and sub lease was proved to be bogus no question of allowance of depreciation arises here - HC
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Gift from NRIs - Department queried about financial capacity of the donors to make the gift(s) - HMay be the money came by way of bank cheques and was paid through the process of banking transaction but that itself is of no consequence - SC
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The assessee, who has already got deduction under Section 37 to re-work and claim the benefit under Section 35AB on the basis of amortization of capital expenditure- SC
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Deduction u/s 80IA - That raw material or input gets converted into a texturised yarn by reason of the thermo mechanical process held as amount to manufacture. - SC
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The interest paid has to be allowed as deduction u/s 36(1)(iii) as in existence during the assessment year 1999-2000 as a transaction of borrowing is not the same as a transaction of investment - HC
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Indra Vikas Patra – As IVPs assessed in the hands of company then how these IVPs can assess in the hands of assessee. - And there was nothing wrong to keep IVPs which are bearer in nature in the personal locker of directors. - AT
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Can genuine business expenditure disallow merely because of wrong nomenclature - As the recipient confirmed the receipt, on which TDS deducted & shown as income in his return. - claim of expense allowed - AT
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Provisions for bad and doubtful debt though statutorily required under the RBI guidelines do not qualify for deduction as business expenditure - AT
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Assessee’s society is covered by the doctrine of mutuality and this amount was not taxable - income received from the members is exempt and the income received from nonmembers is taxable - AT
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Disallowance of expense on account of late deposit of TDS u/s 40(a)(ia) – amendment to the provisions of Sec.40(a)(ia) of the Act, by the Finance Act, 2010 is retrospective from 1.4.2005 - AT
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Legal and professional charges - capital or revenue in nature – Fee paid to advocates for SLP filed before the Supreme Court - held as revenue in nature - AT
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Disallowance u/s 14A r/w Rule 8D - provisions of Rule 8D shall apply with effect from assessment year 2008-09 onwards. The Order of CIT (A) & AO is perverse - AT
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Condonation of delay of 290/287 days in filing appeals - Assessing Officer, meanwhile, got seriously preoccupied in the work - delay condoned being explained - HC
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Income-tax (Eleventh Amendment) Rules, 2012 - Insertion of rules 31ACB, 37J, Form Nos. 26A & 27BA. - Notification
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Section 144C of the Income-tax Act, 1961 - Dispute resolution Panel-Reference to - Reconstitution of DRP at specified areas of jurisdiction. - Order-Instruction
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Instructions regarding Income limits for assigning cases to Deputy Commissioners/Assistant Commissioners/ITOs - Order-Instruction
Customs
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Refund – unjust enrichment – Merely because the interest amount was not shown as recoverable amount from the customers, clause of unjust enrichment cannot be attracted - AT
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Amends Notification No. 52/2003- Customs - Exemption to specified goods imported on procured by EOU's, STP Units, EHTP units etc. for specified purposes. - Notification
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Seeks to amend Notification 12/2012-Customs - Prescribes effective rate of duty on import of goods. - Notification
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Amends Notification No. 12/2012-Customs,dt.17.03.2012 related to exemption to maize bran from basic custom duty
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Provisional release of the goods - import of silk yarn - directed to release the goods in question on the petitioner paying the customs duty equivalent to 75% of the value of the goods - HC
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Import of goods – rejection of transaction value – no reference to any contemporaneous goods - no justifiable reasons to reject the transaction value and to enhance the value of the goods in question - AT
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Import - prohibited goods - Goods were old and used cut pieces, and cuttings etc. of various articles of iron and steel - the same were in fact melting steel scrap - Classifiable under Chapter 72 and not under 73 - not prohibited goods - AT
DGFT
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Allocation of quantity of Rough Marble and Travertine Blocks for import for Financial Year 2012-13. - Trade Notice
FEMA
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Establishment of Liaison Office (LO) / Branch Office (BO) / Project Office (PO) in India by Foreign Entities – Clarification. - Circular
Indian Laws
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IT : Notified Cost Inflation Index for Financial Year 2012-13.
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Motor Vehicles Tax Act, 1974 - purchase of trucks which were earlier seized by the customs authorities and against with demand of duty is pending - Plaintiffs ought to have paid the taxes claimed by the Department under protest. - since they did not obtain NOC from transport department, no relief - HC
Service Tax
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Service Tax on commission - status - Commission agent versus dealer - from the perusal of facts, circumstances and agreement, assessee has been held as commission agent - AT
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Service tax on reverse charge basis on legal services received prior to 7.9.2009. - not leviable - AT
Central Excise
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Provisional assessment in terms of Rule 7 of Central Excise Rules - considering genuine difficulties in ascertaining the normal transaction value for goods, provisional assessment allowed - AT
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Cenvat credit on paints, varnish, Thinner, Rivtex – in the course of manufacturing of final product - credit allowed - AT
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SSI Exemption - Supply of OEM - manufacturing of parts and accessories of motor vehicles and tractors including trailers - decided partly in favor of assessee - HC
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Benefit of Notification No. 67/95-C.E. - capital goods - The burden to prove that the impugned items fall under the scope of exemption notification is squarely on the assessee - AT
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Cenvat credit of courier services -patching the final products to their customers and it is on F.O.R. basis. - credit to be allowed if found in order - AT
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Provisions of Rule 96ZO of Central excise Rules, permitting the minimum penalty for delay in payment without any discretion and without having regard to extent and circumstances for delay are held to be ultra vires of the Act - HC
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Warehousing of Petroleum products under central excise - storage loss beyond - limit of 0.5% - No set off of a gain or loss in a tank is permitted against the loss or gain in another tank - CGOVT
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Valuation of demo bike under central excise - Assessees have not been able to demonstrate any difference between the ‘demo bikes’ and the ‘normal bikes’ sold to dealers - transaction value cannot be accepted - AT
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Demand of excess paid drawback – recovery of duty drawback after revision in rate can be initiated u/s 11A read with Rule 16 of duty drawback rules, 1998 - CGOVT
Case Laws:
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Income Tax
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2012 (9) TMI 525
Penalty u/s 271D - whether transactions effected through journal entries would amount to acceptance of any loan or deposit otherwise than by account payee cheque or account payee bank draft within the meaning of Section 269SS to attract levy of penalty under Section 271D of the Income Tax Act, 1961 - Held that:- Receiving loans / deposits through journal entries would be in violation of Section 269SS but the transactions in question were undertaken not with a view to receive loans / deposits in contravention of Section 269SS but with a view to extinguish the mutual liability of paying / receiving the amounts by the assessee and its sister concern to the customers. In the absence of any material on record to suggest that the transactions in question were not reasonable or bonafide no reason to interfere with the order of the Tribunal in deleting the penalty of ₹ 22.99 crores. Deletion of penalty of ₹ 2.10 crores a specific finding of fact recorded by the Tribunal is that the loan was received by the assessee by way of a cheque. The above finding is based on the documents produced before the Tribunal. Nothing is brought on record even in this appeal to suggest that the loan was received otherwise than account payee cheque. Accordingly, deletion of the penalty of ₹ 2.10 crores cannot be faulted - appeal decided in favour of assessee.
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2012 (9) TMI 524
Expenditure on Joint Venture for Insurance business and other expenses - market research expense on life insurance business in India - ITAT allowed it as deductible expenditure in the hands of assessee - Held that:- the mere circumstance that common funding of the (proposed) business existed, and there was a management which conceived the start of the new business activity, did not make the proposed joint venture business an “existing business” for the expenditure to qualify as revenue expenditure - These expense are pre-start up expenses in respect of an aborted activity - against assessee. Deduction towards provision for salary, Provident Fund, Monesana Wage Board - Held that:- The character of the amounts in this case is pure and simple arrears of wages, which were directed to be paid as a result of wage revision exercise mandated by an award. - the Tribunal was justified in holding that the liabilities arising out of the Monesana Wage Board award were justifiably deductible as expenditure, and not covered by Section 43-B - As the Tribunal itself did not grant relief in respect of contributions to Provident funds, and allowed only such portions as were actually paid - against revenue.
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2012 (9) TMI 523
Delay in filing the special leave petitions - Held that:- Where huge revenue/demand from the Department is involved, invariably, there is inordinate delay in filing appeals before the High Court under Section 260A and in filing special leave petitions before this Court - direct the Registry to forward a copy of this Order to the Hon'ble Finance Minister and Hon'ble Law Minister for doing the needful at the departmental level so that such cases of revenue leakages do not recur. Place these matters on 17th September, 2012, in order to enable learned Additional Solicitor General to make a statement in this regard.
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2012 (9) TMI 522
Validity of notice issued u/s 148 - non-fulfillment of mandatory requirement of Section 151(2) - approval of the Joint Commissioner not taken - Held that:- Respondents have failed to produce the approval of the Additional Commissioner or the Joint Commissioner either in the affidavit in reply or even otherwise. Whether the approval was granted or not is an objective fact which can be established only by producing the approval. It is not the respondents' case that the approval was in fact granted, but is misplaced. In affidavit in reply, it is expressly stated that the impugned notice was issued “with the approval of CIT-2, Mumbai.” There is not a whisper about the Additional Commissioner or the Joint Commissioner having granted the approval. The alleged approval therefore, in any event, is contrary to the provisions of section 151 and therefore notice reopening the assessment cannot be sustained in law - Decided in favor of assessee
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2012 (9) TMI 521
Interest income arising on the difference between purchase price of the debenture and redemption price after six years - Taxation on interest income on accrual basis in the year of allotment of debenture itself or to be taxed on spread-over basis - Held that:- The case of Taparia Tools Limited vs. JCIT [2003 (1) TMI 83 - BOMBAY HIGH COURT] refers to matching principle in order to arrive at the real income of the assessee wherein it is held that in this case as concerning with the ascertainment of true profits under the Income-tax Act and in order to ascertain such profits the true accounting principles need to be followed and to apply those principles in the light of the method of accounting followed by the assessee. As find from the records that the assessee has computed his interest income arising on the difference between purchase price of the debenture and redemption price after six years and calculated the income on amortization basis - the civil appeals filed by the assessees allowed.
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2012 (9) TMI 520
Power to transfer cases - Shift of registered office from Delhi to the State of Maharashtra - Held that:- The Director General or Chief Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him - the word “may” in Section 127 should be read as “shall”. The requirement of giving an assessee a reasonable opportunity of being heard wherever it is possible to do so, is mandatory. The discretion of the authorities is only as to what is a reasonable opportunity in a given case and on the question, whether it is possible in a given case to provide the opportunity. As in the present case assessee on several occasions had appeared before respondent no.1 who had passed the impugned order - the petitioners' objections were filed on 19.12.2011 and the impugned order was passed on 05.01.2012 i.e. within 16 days as the Paragraphs 6 & 7 of the affidavit in rejoinder refer to the petitioner's letter dated 19.12.2011 and the impugned order dated 05.01.2012 respectively. No details have been furnished as to when the petitioner's Counsel were heard. Paragraph 8 merely states that the sequence of facts and correspondence indicate that sufficient opportunities of being heard were given to the petitioner without furnishing details in respect of the alleged hearing. Paragraph 8 of the rejoinder further states that the petitioner had indicated in its letter that it preferred to submit its objection in writing and that the same were therefore considered before passing the impugned order. This is incorrect. In the correspondence which we have already referred to the petitioner had expressly requested for a personal hearing, thus he impugned order is liable to be set aside on the ground that the petitioner had not been heard - in favour of assessee.
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2012 (9) TMI 519
Whether interest paid in respect of borrowings for acquisition of capital assets not put to use in the concerned financial year can be permitted as allowable deduction under section 36(1)(iii) of the Income-tax Act, 1961? - Held that:- Yes, as decided in Dy. CIT v. Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT OF INDIA ] - in favour of assessee.
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2012 (9) TMI 518
Rectification of mistake - Notice u/s 154 - Held that:- The said notice is totally vague as AO has not even indicated as to on what basis he has allowed excess set-off - notice u/s 148 issued squarely on the basis of notice under Section 154 - both the noticses set aisde - in favour of assessee.
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2012 (9) TMI 517
Chargeability of interest u/s 234D - excess refund made on the assessee - assessee contested no interest apply to refunds granted prior to 1/06/2003 even in respect of assessments completed after the cut-off date of 1/06/2003 - Held that:- As there was no provision of interest on the grant of refund under Section 143(1) it became necessary to provide for the same by having a charging provision. This was done by section 234D in respect of all pending assessments in which refund was given. Thus even if, a refund has already been granted the same would be subject to the provisions of section 234D A declaratory amendment in an Explanation 2 to section 234D which specifically provides that it shall also apply to an assessment year commencing before 1/06/2003. The only qualifying criterion is that proceedings in respect of such assessment is completed after 1/06/2003. Once the Explanation is held to be retrospective in relation to the assessment years commencing before 1/6/2003 it would not be open to restrict the operation of section 234D only with effect from 1/6/2003. Under the Act what is brought to tax is not the income of the assessee in the assessment year but the income of the assessee in the previous year. The liability to tax arises on account of the Finance Act which fixes the rate at which the tax is to be paid. The law to be applied is as existing on the 1st day of April of the previous year - in favour of revenue.
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2012 (9) TMI 516
Reopening of assessment u/s 147 - denial of benefit of Section 80HH - Held that:- Law as declared by the jurisdictional High Court that the civil construction work carried out by the assessee would be entitled to the benefit of Section 80HH which view was squarely reversed in the case of Commissioner of Income-Tax vs. N.C. Budharaja and Co. and Another, reported in [1993 (9) TMI 6 - SUPREME COURT] thus any subsequent reversal of the legal position by the judgment of the Supreme Court does not authorise the Department to reopen the assessment, which stood closed on the basis of the law, as it stood at the relevant time - in favour of assessee
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2012 (9) TMI 515
Contingent liability - Disallowance claim of deduction for wage revision - ITAT allowed it - Held that:- Relying on the decision of Bharat Earth Movers Versus Commissioner of Income-Tax [2000 (8) TMI 4 - SUPREME COURT ] in this case, the Tribunal had noticed that there was no dispute as regards the terms of employment of the workers and officers & that provision for wage revision was based on past experience, interim Pay Commission of government employees, previous Pay Commission’s reports of public sector employees, union demands and other relevant factors. The Tribunal also held that with the expiry of one wage settlement or agreement, invariably, there is a time lag when another fresh wage revision agreement is negotiated and entered. The deduction claimed for that period cannot be termed as contingent because the wage and the probable revision or rates of revision would be within the fair estimation of the employer, thus liability could not be characterized as contingent but was in fact ascertained the quantification, however, had not happened - in favour of assessee Denial of benefit claimed u/s 10 (15) (iv) (h) - interest earned on tax free bonds between the date of their application by the assessee and the date of their allotment - Held that:- Interest payable on “bonds or deposits” [referred to Section 10(15)(1)(iv)(fa)] would mean interest earned by such amount or deposit. On the other hand, interest paid in respect of such bonds, as is the case with tax free interest bonds under sub-section 15(1)(iv)(h), connotes an entirely different intention. The expression “in respect of,” unlike the term “on,” has a wider connotation and would embrace a larger subject matter. On the other hand, “interest … on the bond or deposit” would mean what is actually yielded by the bonds and nothing else. The Tribunal noticed correctly that interest would include hedging transaction charges payable on account of currency fluctuation. Such being the amplitude of the provision, the fact that interest was paid for a brief period of about six days in the present case would not make it any less an amount of interest payable “in respect of the bonds” in question - the conclusion by the AO might have been justified but this case, the time lag is extremely small less than a week - in favour of assessee. Disallowance of donations claimed as business expenses u/s 37 (1) - assessee had claimed expenditure on account of donations under section 80G of the Act in its returns - Held that:- Parliament having chosen one method of dealing with donations i.e. as in the case of section 80G, the adoption of another route as business expenditure would not be permissible - against assessee. Disallowance of set of loss of one project eligible for deduction u/s 80 HHB against the profits of other projects - Held that:- the deduction is allowable to the assessee in regard to each project. - the deduction u/s 80HHB is to be computed in regard to each project separately - loss from another unit cannot be reduced from the profit of eligible unit - following the decision in Commissioner of Income-Tax, (Central) Madras Versus Canara Workshops Pvt. Limited [1986 (7) TMI 5 - SUPREME COURT] decided in favour of assessee.
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2012 (9) TMI 514
Disallowance of short term capital loss on sale of mutual funds units - assessee contested that the capital loss on sale of units would be covered by Section 94(7)(b)(i) and in such case the units which are in fact securities are required to be kept only for a period of three months after the recorded date and not for a period of nine months as required under Section 94(7)(b)(ii) - Held that:- The submission made by assessee that “units” are included within the meaning of the word ”securities” and therefore, Section 94(7)(b)(i) is applicable and the period of holding has to be only three months does not impress us. The Parliament has not only used two different terms namely “securities” and “units” in Section 94(7)(b)(i) and 94(7)(b)(ii) but has dealt with them separately providing different minimum periods of holding for “securities” and “units”. It is settled position in law that Parliament would not have used words in vain and a construction which renders redundant any part of the statute must be avoided. Therefore, units would be governed by the provisions in respect thereof in Section 94(7)(b)(ii). A view to the contrary would render the provisions of Section 94 relating to units otiose. Further, there is no warrant to read the meaning of the word securities as defined in the Securities Contract (Regulation) Act, 1956 to interpret the meaning of the word securities in Section 94(7). Clause (d) of the Explanation to Section 94(7) provides that units shall have the meaning assigned to it in clause (b) of the Explanation to Section 115AB. Section 115AB Explanation (b) defines units to mean a unit of a mutual fund specified in Section 10(23D) or of the Unit Trust of India. The definition therefore identifies the type of unit. It does not equate units with securities or vice versa. Section 10(23D) does not do so either. The reliance upon Section 10(23D) Explanation (c) is entirely misplaced. It refers not to securities but to the SEBI - No substantial questions arises - against assessee.
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2012 (9) TMI 513
Penalty u/s 271(D) - Difference of opinion between the members of Tribunal on stay application - notice demanding payment of the penalty and threatening of coercive action in the event of default issued - Held that:- As a case of stay is pending before tribunal it shall expeditiously hear and pass orders on stay and in the meantime subject to the petitioner remitting an amount of Rs.15,00,000/- towards penalty within three weeks from today, further proceedings pursuant to Ext.P6 notice will be kept in abeyance.
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2012 (9) TMI 512
Whether interest u/s 234B is chargeable in the case on the revised computation of income at a higher figure made consequent to withdrawal of claim for exemption u/s 80IB(9) in the light of retrospective amendment to section 80IB by Finance Act(2) of 2009 - Held that:- Assessee is not liable for interest u/s 234B on ground that assessee had not withheld any money belonging to the Government and the interest payable on account of enhanced compensation was unknown to the assessee on the date of completion of assessment. Therefore, the assessee could not have included the interest received on enhanced compensation in the assessment year while estimating his income for the purposes of calculation of advance tax for the relevant years. Therefore, there was no question of levying interest u/s 234B. See CIT vs. Anand Prakash (2009 (2) TMI 30 - DELHI HIGH COURT) - Decided in favor of assessee
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2012 (9) TMI 510
Disallowance of Licence fees – AO made addition on basis that mere existence of an agreement is not sufficient to prove commercial expediency in respect of this payment - Held that:- As in earlier years Tribunal in its appellate order held that the licence fee paid to M/s RPG Enterprises was an allowable expenditure. Therefore, there cannot be any dispute that the question of existence of commercial expediency has to be decided on the facts prevailing in each case. Decides in favour of assessee Disallowance of interest expenditure – Relating to investment in subsidiary company – Whether there was any commercial expediency in making the investment in subsidiary companies or whether the interest bearing funds have actually been diverted - Held that:- Assessee has established the commercial expediency in making interest free advances to its subsidiary companies. It has also established that it has only utilized only interest free funds for the said purpose. Following the decision of Hon’ble Supreme Court in the case of S.A. builders delete the addition. Case decides in favour of assessee. Disallowance in respect of delayed payments of Employees Contribution to PF, Labour welfare fund and ESI – Payment made before the date of filing of return u/s 139(1) - Held that:- Following the order of the Tribunal in the appellant’s own case previous assessment year, the disallowance of delayed payments of Employee’s contribution to provident fund, labour welfare fund and employees state insurance respectively which were paid before the due date of filing of the return is deleted. Decision in favour of assessee Addition of amount realised on sale of old and unyielding rubber trees – AO treating it as revenue receipt under Rule 7A - Rule 7A, the income from rubber estate has to be apportioned in the ratio of 65 : 35 and the 35% of the income is to be assessed as business income - AO brought to tax 35% of the amount realised on sale of old and unyielding trees as salvage value got from an exhausted stock – Held that:- As Rule 7A applies only to a person who carries on the combined activity of growing rubber trees and also manufacturing or processing of field latex or coagulum obtained from rubber plants. Following the decision of Supreme Court in case of Kalpetta Estates Ltd (1996 (7) TMI 4) in holding that the Rubber trees constitute Capital assets shall hold good even after the introduction of Rule 7A. Decides in favour of assessee Disallowance of loss from business units – AO hold that these are defunct units and no business is carried on therein and further there is no possibility of revival of these units – Held that:- As the assessee has proved the fact of generation of income from these two activities. And AO has disallowed the claim of loss from these units without properly appreciating the facts. Decision in favour of assessee Capital Gain on sale of trees - Trees are grown to afford shade to the tea bushes – AO was taking consistent stand in the earlier years that no capital gain or capital loss can be computed on sale of Grevelia trees, as the cost of acquisition could not be ascertained - Held that:- The AO has changed his stand in the instant year and has proceeded to assess the Capital gain on sale of Grevelia trees. Therefore, the legal position with regard to the taxability of the old Grevelia trees cannot be changed in the year under consideration, merely because the present AO has a different view. And also AO has not brought any new fact or view regarding taxability. Decision in favour of assessee Capital gains on slump sale u/s 50B – Assesse sold its two rubber estates – Assessee did not return any capital gain as these estates are agricultural lands - AO took the view that the transfer has been made on going concern basis – Held that:- Following the decision with same facts in assessee’s own case by ITAT in earlier years that the assessee did not conduct any slump sale of an undertaking even though in the sale deed it was stated that the sale of rubber estate was made on going concern basis. Therefore sale of two estates in the year under consideration cannot be termed as “slump sale”. Decision in favour of assessee Computation of Book profit u/s 115JB – Inclusion of profit on sale of two rubber estates - Assessee claimed the profit on sale of the two estates as agricultural income which is exempt u/s 10 – Held that:- In previous year judgement given by Tribunal in assessee’s own case held that sale of rubber estate is agricultural income and hence it is not required to be included in computing the book profit u/s 115JB. Decision in favour of assessee Disallowance of Provision for gratuity in computation of Book Profit u/s 115JB – Held that:- On the basis of decision in case of ILPEA Paramount (2010 (2) TMI 45) & Eastern Power Distribution Co. of AP Ltd.(2011 (3) TMI 547) held that the provision for gratuity liability cannot be added for the purpose of computation of book profit. Decision in favour of assessee Disallowance of share capital related expense – AO disallow share transfer charges and the professional charges paid to registrar and share transfer agents – Held that:- AO disallowed the above said expenses under the impression that they have been incurred in connection with the sale of shares, the capital gain of which is exempt. Therefore AO made the impugned disallowance without properly appreciating the nature of expenses. Decision in favour of assessee
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2012 (9) TMI 509
Assessment u/s 147 without disposing objection raised by assessee – Held that:- Assessment framed without disposing of the objections raised by the assessee deserves to be set aside. In the case of GKN Driveshafts (India) Ltd. (2002 (11) TMI 7) Supreme court held that on receipt of reasons, the noticee is entitled to file objection to issuance of notice and the AO is bound to dispose of the same by passing a speaking order. If the AO proceeds with the proceedings without disposing of the objections raised by the assessee, the entire proceedings are vitiated. Decision in favour of assessee Validity of notice u/s 148 – Time limit for issuing notice u/s 148 – AO issue notice after the expiry of 4 years - Held that:- Onus is upon the AO to bring something on record to establish that the income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, for that assessment year. Nothing has been recorded by the AO in the reasons recorded for reopening the assessment that the income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The assessment framed consequent to the invalid notice issued under section 148 of the Act deserves to be annulled. Appeal decides in favour of assessee
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2012 (9) TMI 508
Suppression of stock – Assessee made advance payment to party against purchase of land – Balance amount to be paid to seller was added to closing stock and same was offered for Tax u/s 153A – Closing stock become opening stock of next year – Held that:- As the variance in the closing stock as a result of advance amounts having been considered as part of the closing stock. By deleting the advance drive correct value of closing stock. Therefore, upheld the order of CIT(A). Decision in favour of assessee Interest u/s 234A & 234B – Held that:- If AO made the impugned addition and same is deleted by CIT(A) & ITAT. When there is no demand of Tax then on what amount interest is to be levied. Therefore, Decision in favour of assessee. Whether only income which escapes assessment can be brought to tax in assessment u/s.153A – Held that:- Assessee can claim any new deduction out of the income assessed u/s 153A. The AO will ascertain if the incurring of the liability is certain and that it has been estimated on a reasonable basis. He will allow the deduction subject to satisfaction. Therefore case remand back to AO.
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2012 (9) TMI 507
Addition on account of Opening cash balance in books of accounts – During survey u/s 133A, neither the books of accounts nor the vouchers were made available - In course of assessment proceedings, the cash book and ledger and two Nandi files containing vouchers relating to previous assessment years are produced and the same was impounded – AO made addition on the basis of such opening cash – Held that:- As the receipts from business were deposited in another account and the same was also withdrawn as self- withdrawals. The opening cash balance cannot be said to be any sum found credited in the books of the assessee maintained for the previous year. Upheld the decision of CIT(A) in favour of assessee Addition on account of unexplained creditor u/s 68 - Assessee did not produce creditor, to satisfactorily explain the credit in his account – Held that:- The said sum in creditor’s account was already disallowed u/s 40(a)(ia), which was of labour charges paid to creditor. Therefore CIT(A) was justified in his conclusions, as sustaining the said disallowance would amount to making disallowance twice. Decision in favour of assessee Addition on account of outstanding amount towards expense - Books of account and other relevant materials were impounded during assessment proceeding by AO - AO has not allowed the assessee to take photocopies of the impounded books of account and other documents – Held that:- As the assessee was not in a position to furnish the name and complete addresses of the creditors. In the remand report, the AO is silent on this aspect except merely stating that the assessee failed either to furnish the full address of the persons. Therefore issue remand back to AO Disallowance in respect of cash payment of expenses exceed Rs.20,000/- AO invoking provisions of Sec.40A(3) disallowed 20% thereof in addition to the total income – Held that:- These expenses are in respect of labour charges which are already disallowed. Therefore making disallowance u/s 40A(3) of the Act would amount to double disallowance. Decision in favour of assessee Disallowance of certain expense on account of failure to produce relevant detail - The assessee could not furnish the full details viz., name and address of the persons to whom the payments of expenses were made - AO has not reported any specific finding as to whether the expenditure claimed is excessive, bogus or not related to the assessee business. Books of account were impounded and kept under his custody and copies of the same were not provided to the assessee. Therefore, assessee could not furnish the requisite details. Issue remand back to AO.
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2012 (9) TMI 506
Disallowance of interest expense – AO is of view assessee paid higher interest on borrowings and gave those funds at lower rate of interest - Difference between interest paid and interest received was treated as expenditure not incurred for the purpose of business and disallowed – Held that:- Assessee having both interest free funds and interest bearing funds were used for the purpose of business of the assessee and there was necessity to borrow funds. Therefore with regard to the interest free funds having been given owing to commercial expediency also requires examination. Case remand back to AO.
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2012 (9) TMI 505
Block assessment - addition on account of agricultural income - assessee disclosing higher agricultural income - Held that:- Though the assessee claims that a rubber plantation to the extent of 1.85 acres was purchased on 17-10-1996, no material is produced to support the contention of the assessee either before the lower authorities or before this Tribunal. Moreover, no material was found during the course of search operation. Hence, CIT(A) rightly restricted agricultural income at Rs.2,46,000 as against Rs.5,46,926 adopted by the AO. Addition on account of deficiency found in the cash flow statement of assessee's wife - Held that:- No material was found during the course of search operation. CIT(A) rightly observed that if at all there is any deficiency, the same has to be considered as undisclosed income of the assessee’s wife and not as undisclosed income of the assessee. Addition towards low personal expenses - Held that:- In the absence of any material found during the course of search operation this Tribunal find that there cannot be any addition as undisclosed income. Deletion of addition is confirmed. Direction of the CIT(A) to verify the confirmation letter in respect of loan of Rs.2 lakhs - Held that:- When the assessee filed the confirmation letter, it is the duty of the AO to examine the same. The creditworthiness, identity of the creditor and genuineness of the transaction has to be examined in the light of the material available on record.
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2012 (9) TMI 504
Validity of Best Judgement assessment framed u/s 144 on opinion that return filed pursuant to notice u/s 148 was belated - assessee contesting the order on ground that neither a notice u/s 142(1) nor a notice u/s 143(2) was issued before completing the best of judgment assessment - Held that:- Admittedly, assessee had filed return u/s 139(1) and assessee was not issued a notice u/s 143(2) nor u/s 142(1). Hence, none of the three conditions which, would have given the AO power to make a best judgment assessment, was satisfied. Further, the assessee had filed a return pursuant to the notice u/s 148 though beyond the period mentioned in the said notice, and this was done before the date of assessment. AO having considered such return for finalizing the assessment, was duty bound to comply with the requirement of the Act for issuing notices. Requirement of Section 143(2) would apply even where re-assessment proceedings are initiated. Since no notice was issued either u/s 143(2) or 142(1), CIT(A) was justified in holding the re-assessment to be not valid and quashing such re-assessment - Decided in favor of assessee
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2012 (9) TMI 502
Dis-allowance u/s 40(a)(ia) - non-deduction of taxes at source from transportation charges - Held that:- In view of the fact that the assessee has duly filed all the relevant 15J declarations, the CIT(A) was justified in deleting impugned dis-allowance u/s 40(a)(ia) r.w.s. 194C Dis-allowance u/s 40(a)(ia) - assessee claims it to be reimbursement of expenses - Held that:- Matter is to be restored to the file of the Assessing Officer for verification as to whether the payments are in the nature of reimbursements or not, and with a direct ion that if the payments are indeed in the nature of reimbursements, the disallowance u/s. 40(a) (i), to that extent, will stand deleted.
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2012 (9) TMI 486
Assessment of capital gain for Asst. Year 2007-08 - transfer of property - assessee contested that as per Joint development agreement or the Supplementary agreement no event resulting in transfer of property took place in the previous year relevant to Asst. Year 2007-08 but in 2006-07 - Held that:- A contract can be termed to be "of the nature referred to in Section 53A of the Transfer of Property Act" it is one of the necessary preconditions that transferee should have or is willing to perform his part of the contract - on examining the JDA dated 21.12.2005 and the Supplementary Agreement dated 3.4.2006 fact revealed is that the assessee given possession of the property vide clause No. 6, however, the consideration receivable by the assessee in the form of flats is specifically determined by the Supplementary Agreement dated 3rd April, 2006. Being so, there is no progress pursuant to the Development Agreement in the A.Y. 2006-07 and nothing has been brought on record by the assessee to show that the development activities and determination of the consideration in A.Y. 2006-07 and no material is brought on record regarding the construction cost incurred in the year 2006-07, hence developer in the A.Y. 2006-07 had not shown his readiness or having made preparation for compliance of the agreement - thus as it is not possible to hold that the transferee is willing to perform his obligation in the A.Y. 2006-07 though the JDA was entered on 21.12.2005 the conditions laid down in section 53A of Transfer of Property Act were satisfied in A.Y. 2007-08, capital gain has to be taxed in A.Y. 2007-08 only - aginst assessee. Determination of cost of construction with regard to transfer of long term capital asset - Held that:- The sales consideration 'in the case of developer's case cannot be adopted because while selling the properties, the developer may have considered several factors like the floor on which a particular premises is situated, personal relationship between the buyer and the developer and so on & if the assessee itself had constructed the property, it can be presumed that the assessee also must have incurred, by and large, the same cost thus it is the actual cost of construction only which should be, adopted as the sales consideration in the case of the assessee - thus in the present case the cost of construction as determined in the case of the developer and adopted by the AO cannot be accepted, accordingly direct the AO to consider price inflation for each assessment year from 2001-02 to 2008-09 and determine the cost of construction per flat to be received by the assessee - in favour of assessee for statistical purposes.
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2012 (9) TMI 485
Addition u/s 43B - Conversion of interest payable in equity shares - interest was neither paid during the financial year nor within the due date - CIT(A) deleted the addition - Held that:- As decided in CIT v. Reinz Talbros Pvt. Ltd [2001 (3) TMI 26 - DELHI HIGH COURT] the liability was discharged by way of issuance of shares & when the assessee issues shares the assessee does not incur any expenditure as the assessee is not to make any payment legally towards shares issued. The shares cannot be equated with debentures, which is purely by way of loan and the same are required to be repaid on maturity. However, in respect of shares the company is under no obligation to make any payment in respect of such shares where share holders accept payment of pro rata dividend when such dividend is declared. Thus by issuance of shares the assessee cannot be said to have incurred any expenditure and hence issuance of shares in lieu of interest liability cannot be considered to have been payment towards expenditure. Accordingly the interest liability discharged is not an allowable expenditure. As liability can be discharged in a number of ways, it does emphasize the fundamental principle that unless 'actual payment' is made, the restriction placed in section 43B will hold good and deduction cannot be allowed. In view of these discussions, as also bearing in mind entirety of the case, the grievance of the Assessing Officer is upheld and restore the disallowance of ₹ 68,18,318/- - against assessee.
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2012 (9) TMI 484
Concealment of income - survey u/s 133A - assessee contested as error in exercise of jurisdiction by the Asstt. Commissioner of Income Tax, Circle-IV (1) Agra as the corporate office was shifted to Delhi - Held that:- The petitioner did not file income tax return at Agra for the assessment year 2000-2001. Without any intimation or getting the jurisdiction transferred to Delhi the assessee had filed return at Delhi for the assessment year 2002-03. The Assistant Commissioner of Income Tax-IV (1) Agra proceeded in accordance with the law requiring the petitioner to furnish return/information. The petitioner participated in the proceedings. It was only at the end of the assessment period that the petitioner company intimated with AO at Agra that his office has shifted from Agra to Delhi and that he has filed income tax return with ACIT, Range-I, Delhi. Earlier no information was given of this suo-moto change of place of filing of return at Delhi. A survey was conducted u/S 133-A on 24.4.2001 in which a large number of incriminating documents were found depicting serious defects in the books of accounts. Shri Ravindra Kumar Agrawal-the Director of the company had created large number of fictitious concerns, which were not doing any business. In the circumstances the AO completed the assessment on protective basis - As the Director of the company appeared and filed reply to the notice and clearly stated before the AO that his company was assessed to tax with Company Circle-1 (2) at Agra. The petitioner thus acquiesced to the jurisdiction which the AO at Agra already possessed and allowed him to complete the assessment proceedings for the assessment year 2001-02 in the circumstances no error in exercise of jurisdiction by the Asstt. Commissioner of Income Tax, Circle-IV (1) Agra is found - against assessee.
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2012 (9) TMI 483
Disallowance of deduction towards renovation of property - AO treated the transactions as bogus - ITAT allowed it - Held that:- The expenditure was incurred, according to the assessee, in anticipation of its entering into joint venture agreement with the Japanese collaborator & the premises in question over which the expenditures were made were leased to the assessee for a period of five years, the assessee further subleased the premises for the same period - it is not understandable as to why the original lease could not be cancelled when the original owner PHWA and sublessee i.e. PWH are under the same management - There is nothing mentioned in clear words in the said agreement as to why lease rental to be charged from PWH is as high as Rs. 461, 500/- per quarter as against Rs. 105, 000/-per quarter payable by assessee to PWHA, in fact in agreement dated 28-05-1996 even the basic facts would as to how assessee acquired the right to lease the premises to PW- H are not mentioned. As there is no reference of earlier agreement dated 05-04-1996 in agreement dated 28-05-1996 in spite of the fact that both agreements were signed by the same person these facts leads to the conclusion that the said arrangement of lease and sublease is not bona fide genuine - against assessee Disallowance of depreciation on renovation - ITAAT allowed it - Held that:- As the transaction of lease and sub lease was proved to be bogus no question of allowance of depreciation arises here - against assessee
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2012 (9) TMI 482
Gift from NRIs - Department queried about financial capacity of the donors to make the gift(s) - Held that:- As the ITAT has only stated that the two donors were assessed to tax at Singapore but not at all answered about the financial capacity of the donors this not answer the query raised by the Department. The burden is on the assessees to show that the amount received by purported gift(s) from the two donors was a "gift" in the legal sense who contended that no opportunity was given to prove their case - the impugned Orders of the High Court and the ITAT is set aside and ITAT is directed to re examine - open to the assessees to produce relevant evidence in the light of case of Commissioner of Income Tax vs. P. Mohanakala [2007 (5) TMI 192 - SUPREME COURT] transactions though apparent were held to be not real ones. May be the money came by way of bank cheques and was paid through the process of banking transaction but that itself is of no consequence - in favour of Revenue by way of remand.
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2012 (9) TMI 481
Claim of revenue expenditure u/s 37 - assessee had actually imported the "knowhow" - claim of the assessee for deduction of earlier years' expenditure pertaining to AY 1991-1992 cannot be allowed in AY 1992-1993 - Held that:- No view on the applicability of Section 35AB or Section 37 is required as during the pendency of this civil appeal, the assessee has got deduction u/s 37 as claimed, thus at this point of time, it would not be fair to ask the assessee, who has already got deduction under Section 37 to re-work and claim the benefit under Section 35AB on the basis of amortization of capital expenditure - against revenue.
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2012 (9) TMI 480
Texturing and twisting of polyester yarn - Denail of deduction u/s 80IA - Held that:- As decided in C.I.T., Mumbai Versus M/s. Emptee Poly-Yarn Pvt. Ltd. [2010 (1) TMI 18 - SUPREME COURT OF INDIA] if an operation/process renders a commodity or article fit for use for which it is otherwise not fit, the operation/process falls within the meaning of the word "manufacture - polyester yarn is a semi-finished product, it is a raw material/input. That raw material or input gets converted into a texturised yarn by reason of the thermo mechanical process held as amount to manufacture - in favour of assessee.
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2012 (9) TMI 479
Partial denial of deduction u/s 33AC - remanding the case back to the file of the Commissioner - Held that:- As decided in CIT Vs. Ganesh Builders [1977 (3) TMI 11 - BOMBAY HIGH COURT] in a case like where alternative arguments on facts are possible and varying findings can be given, it is desirable that the appellate authority gives all findings of fact and not dispose of the matter merely on a point of law. This would facilitate final disposal of the matter by the High Court, whose jurisdiction is limited merely to the question of law by the added Chap. XX-A. Here in this case the ITAT has dealt with the finding that ITAT which was hearing an appeal from the order of the Assistant Commissioner of the Income Tax has substantially dealt with the ground no.2 referred to in the first para of its order and while deciding the ground no.2 against the appellant has also set aside the finding on the aforesaid question in the appellant's favour without substantially considering the same - the order in appeal of the ITAT is hereby set aside and the matter is remanded back to the ITAT for a fresh consideration.
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2012 (9) TMI 478
Disallowance of interest paid on borrowed loans on a pro-rata basis - ITAT allowed it - Held that:- As decided in DEPUTY COMMISSIONER OF INCOME-TAX Versus CORE HEALTH CARE LTD. [2008 (2) TMI 8 - SUPREME COURT OF INDIA] interest paid on borrowed funds has to be allowed in terms of Section 36(1)(iii)which provides that deduction should be allowed in respect of payment of interest on amounts borrowed even in respect of capital used for the purposes of business or profession - As in the present facts, there could be no dispute that the respondent-assessee was in the business of running business centers and the borrowed capital on which interest was paid was utilized for the purpose of constructing/establishing further business centers - thus the interest paid has to be allowed as deduction u/s 36(1)(iii) as in existence during the assessment year 1999-2000 as a transaction of borrowing is not the same as a transaction of investment - in favour of assessee. Disallowance of repairs and maintenance charges - ITAT allowed it - Held that:- The appellant is in the business of running business centres which are required to be kept in proper condition with appropriate ambiance. Therefore, expenses on account of repairs and maintenance is an on going process for a business such as the one run by the respondent assessee. Further, the quantum of amount spent can never be a factor by itself to conclude that the expenses are of a capital nature and not expenses on revenue account. Thus the expenses are incurred not for bringing any new asset into existence and therefore the expenditure is incurred not on capital but revenue account - in favour of assessee.
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2012 (9) TMI 477
Addition on account of undisclosed gold ornaments - Held that:- Some of the jewellery was belonged to the assessee - The balance jewellery belonged to his wife and daughter and source of acquisition was explained - partly in favour of assessee. Undisclosed Investments in shares & securities to be from - Held that:- The assessee’s wife as well as his daughter had disclosed all the shares and securities in their respective returns which had been filed before the date of search. - Decided in favour of assessee. Addition on expenditure on furniture and renovation was made only statement recorded u/s 132(4). Thus, there is no basis of addition of ₹ 1,15,000/- and CIT(A) was not right in confirming the addition - in favour of assessee. Expenditure on Religious fuctions - Held that:- appellant had not explained the source of expenditure on religious function. - the addition of ₹ 30,000/- on account of religious function - against assessee. Addition on Expenditure on tour to Singapore & Goa - Held that:- The appellant had not filed any evidence regarding Singapore as well as Goa tour for explaining the source of expenditure. Therefore, CIT(A) was right in confirming the addition - against assessee. Addition on Household Expenses - Held that:- CIT(A) was right in holding the addition of ₹ 30,000/- on account of household expenditure - against assessee. Addition on account of stamp paper purchase - Held that:- Persuing the statement u/s 132(4) the assessee had hardly purchased stamps valued ₹ 710/- during the year under consideration and remaining stamps were either purchased by other parties or purchased by the assessee in different years. Thus, the CIT(A) was not justified in holding the addition of ₹ 13,650/- - in favour of the assessee. Addition on account of speculative trading - Held that:- It is evident from the documents seized that some of the dividends slips were in the name of assessee and his family members. - the estimate made by the A.O. appears to higher side further the assessee had disclosed shares and securities in the name of the family members in their return. Therefore the CIT(A) order is confirmed to the tune of ₹ 7,00,000/- instead of ₹ 15,00,000/- - partly in favour of assessee. Addition on account of payment made to Modern Engineering and Moulding Company - Held that:- It is undisputed that this transaction is in the name of Assessee’s daughter who was assessed to tax and had own source of income. The payments were made though drafts which were not pertained to year under consideration. Therefore, CIT(A) was not justified in confirming the addition - in favour of assessee. Estimation of professional income on the basis of general client ledger found at the time of search - Held that:- Except client general index register, nothing incriminating document was found whereas the appellant had admitted that he was not reflected full income in the regular books of account. - the addition made by the A.O. appears to higher side, therefore the addition under this head is confirmed to ₹ 2,00,000/- & remaining addition of ₹ 3,33,500/- is deleted - partly in favour of assessee.
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2012 (9) TMI 476
Addition to income on account of Indra Vikas Patra found from locker – AO issue notice u/s 148 on the basis of CBI raid - Held that:- Though assessee is also director in Company. The investment and income from IVPs has been duly reflected in the balance sheet & P&L of the company. As IVPs assessed in the hands of company then how these IVPs can assess in the hands of assessee. And there was nothing wrong to keep IVPs which are bearer in nature in the personal locker of directors. Appeal decides against department.
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2012 (9) TMI 475
Disallowance of commission expense - AO issue notice u/s 133 to service provider for examination in respect of commission income - Notice could not be severed due to change in name of payee’s companies at the address provided - AO directed assessee to produce service provider - Assessee unable to produce payee - Submit certificates along with replies from payee - Assessee submit details such as payment through cheque, TDS has been deducted & deposited, commission shown as income in ITR of recipient and confirmations along with agreements - Held that:- As assessee submit details such as payments were made by cheques and after deduction of TDS and the income was reflected in returns of income. If notice could not be served due to change in name of Company, then fresh notice needs to be issue with new name of recipient. Therefore, AO has to use his powers to issue notice u/s 133 of summon regarding examination of the payee.Case remand back to AO for fresh examination. Can genuine business expenditure disallow merely because of wrong nomenclature - Assessee receives fund to finance its project - Assessee paid him certain sum which is compensatory in nature for providing fund & shown as commission expense - TDS has been deducted & also shown as income in return of recipient - Held that:- As the recipient confirmed the receipt, on which TDS deducted & shown as income in his return. Therefore it is genuine business expenditure of the assessee though wrongly claimed by assessee as commission expenditure. Decided in favor of assessee.
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2012 (9) TMI 474
Addition on account of accommodation entries - Reopening of assessment u/s 147 - Weather notice u/s 148 can be issued on the basis of information which AO already have – AO issue notice u/s 143(2) and 142(1) – Assessee did not appear before the AO - AO re-assess income u/s 144 read with section 147 – Held that:- During assessment u/s 143(3) AO gets information about search from investment wing before completion of assessment u/s 143(3) - Assessing Officer did not get any chance to examine the depositors – Case remanded back to AO
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2012 (9) TMI 473
Disallowance of Provision for doubtful debt - Assessee is an NBFC – Assessee claim provision for doubtful debts as per RBI guidelines – Held that:- Following Special Bench decision of ITAT in the case of New India Industries Ltd. (2007 (10) TMI 325) and wherein it was held that RBI Act do not over-ride the provisions of the Income Tax Act, 1961 so far as compliance of Income tax provisions are concerned. Therefore, provisions for bad and doubtful debt though statutorily required under the RBI guidelines do not qualify for deduction as business expenditure. Appeal decides in favour of revenue Disallowance of expenses attributable to exempted income u/s 14A - Assessee had earned interest on bonds exempt u/s 10(23G) – Held that:- AO had to first give finding as to the fact that he is not satisfied with the correctness of the claim in respect of such expenditure. While rejecting the claim of assessee with regard to expenditure or no expenditure as the case may be in relation to exempt income, the AO would have to indicate cogent reasons for the same. Therefore case remand back to AO. Disallowance of excess depreciation being @ 40% on vehicles - Assessee had claimed depreciation on motor lorries/taxis and motor cars at higher rate of 40% in case of motor lorries/taxies instead of 20% - There was no fresh leasing transactions have been undertaken in the assessment year - 40% has been allowed by the Tribunal in previous assessment year – Held that:- As decided by Delhi High Court in case of MGF (2006 (7) TMI 125) that vehicles owned by a NBFC leased to third party are eligible for higher rate of depreciation @ 40%. Appeal decides in favour of assessee. Addition on account dividend income – Assessee claim exemption u/s 10(33) for the period 1999 to 2007 - AO made addition on the basis that dividend income during that year was not exempt as section not applicable to assessment year 2003-04 – Held that:- AO did not talk about sec. 10(34) or sec. 80M, as same was applicable for the respective year. Since the claim of assessee was not examined by the Assessing Officer u/s 80M. Case remand back to AO. Charging of interest u/s 234B & 234D and withdrawal of interest u/s 244A – Held that:- As charging of interest u/s 234D is not applicable to the said assessment year. As regards interest u/s 234B and 244A, These are of consequential nature and the determination of interest under these sections will depend upon the final outcome of the case. Appeal decides in favour of assessee.
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2012 (9) TMI 472
Addition on account of membership subscription from its members by society – Held that:- As the assessee meets all the three conditions which are that the assessee is a registered society, the members of which has come together for fulfillment of a common cause, secondly the appellant exists for the benefit of members only and thirdly there is prohibition on distribution of profit to any past or current members and on winding up, the surplus remains the properly of its members. Therefore assessee’s society is covered by the doctrine of mutuality and this amount was not taxable in view of judgment by Bombay High Court in case of Willingdon Sports Club (2008 (3) TMI 134). Decided in favour of Assessee. Addition on account of Grant received from Govt. of India – Capital Grant which is 50% of cost of project, received by society towards cost of setting up integrated waste management facility for all the members – Held that:- In the case of mutual concern, income received from the members is exempt and the income received from nonmembers is taxable. The amount is a capital receipt and is not liable to tax. Taxability depends upon whether it was received from members or nonmembers is not correct because as per the provisions of Income tax charging of tax comes into picture only when the nature of receipt is revenue and no capital receipts are taxed. Decision in favour of assessee. Addition on account of interest income – Assessee had claimed that it is following cash system of accounting - Booked income as and when it is received - Held that - In view of existence of concept of mutuality and in view of various judicial pronouncements relied upon by assessee, the interest income whether booked on cash basis or on receipt basis is exempt in the case of assessee is a society. Decision in favour of assessee.
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2012 (9) TMI 471
Validity of notice issued u/s 148 - Notice u/s 148 was issued by any other ITO on the basis of information from DIT(Investigation), who does not jurisdiction over assessee - Whether the reassessment framed by the AO, in pursuance to a notice u/s 148, issued by ITO, who did not have jurisdiction over the case of the assessee, is valid or invalid –- Held that:- The basic requirement u/s 147 is that the AO has reason to believe that any income chargeable to tax has escaped assessment. Reason to believe must be that of the concerned AO, having jurisdiction over the case, who has relevant returns and other material in his possession. Such belief can be of jurisdictional AO alone and not of any other AO or authority. Therefore, It is well-settled that if a notice u/s 148 of the Act has been issued without the jurisdictional foundation u/s 147 of the Act being available to the AO, the notice and the subsequent proceedings will be without jurisdiction and thus, liable to be struck down. Decision in favour of assessee
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2012 (9) TMI 470
Disallowance of expense on account of late deposit of TDS u/s 40(a)(ia) – Whether provision amended by finance act. 2010 in respect of Sec. 40(a)(ia) is applicable prospectively or retrospectively – Assessee has made the payment of TDS in the next F.Y in respect of payments made/credited before March – As per AO, assessee’s claim such expenses in the next year therefore made addition – Held that:- Following the decision of Hon’ble Calcutta High Court in case of VIRGIN CREATIONS (2011 (11) TMI 348), that amendment to the provisions of Sec.40(a)(ia) of the Act, by the Finance Act, 2010 is retrospective from 1.4.2005. Consequently, any payment of tax deducted at source during previous years relevant to and from AY 05-06 can be made to the Government on or before the due date for filing return of income u/s.139(1) of the Act. Decision in favour of assessee.
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2012 (9) TMI 469
Addition on account of unrealized gain from forward contract – Offered for tax by the assessee - Corresponding entry is also disclosed as ‘Unrealized Profit on Forward Exchange Contracts and Financial Instruments’ as “Loans and Advances” in Balance sheet – Held that:- As the assessee has already offered the impugned amount in its audited accounts therefore, again addition of the same will lead to double taxation. Decision in favour of assessee. Legal and professional charges, capital or revenue in nature – Fee paid to advocates for SLP filed before the Supreme Court, die modification charges and payment of court fees - Held that:- As the assessee had not obtained benefit of any enduring nature by way of this expenditure. These expenditures which are incurred in the ordinary course of business have to be allowed to the assessee and the same cannot be disallowed by treating the same as capital in nature. Decided in favour of assessee. Disallowance of depreciation u/s 32 – Rate of depreciation on computer accessories and peripherals - Held that:- Following the decision of Delhi High court in case of BSES Rajdhani Powers Ltd. (2010 (8) TMI 58), that computer accessories and peripherals such as, printers, scanners and server etc. form an integral part of the computer system as they cannot be used without the computer. Hence, same are the part of the computer system and entitled to depreciation at the higher rate of 60%. Decision in favour of assessee.
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2012 (9) TMI 468
Undisclosed income of another person u/s 158BD - validity of assessment proceedings u/s 158BC r.w.s. 158BD, when proceedings was initiated after the completion of the assessment of the person searched - search u/s 132 carried out at the business premise of Ohm Developers on 29.10.1999 and assessment of same completed on 30.11.2001 - notice u/s.158BD r.w.s. 158BC issued to assessee on 22.01.2007 - Held that:- Several Co-ordinate Benches have unanimously held that the belated issuance of notice u/s.158BD was barred by limitation. Therefore, CIT(A) rightly deleted the addition on observation that there was an inordinate delay in initiating and completing the proceedings u/s.158BC r.w.s. 158BD. Though, the Act does not lay down any time limit for initiating proceedings u/s.158BD yet, equity demands that proceedings should not be kept pending indefinitely and the Sword of Damocles be kept hanging over the head of the taxpayer for an indefinite period - Decided in favor of assessee
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2012 (9) TMI 467
Disallowance u/s 14A r/w Rule 8D - Do Rule 8D read with Section 14A apply retrospectively – Section 14A, as introduced by virtue of the Finance Act, 2001, was with retrospective effect from 01.04.1962. Rule 8D, which was introduced by virtue of the Notification No.45/2008 dated 24.03.2008. Held that:- Following the decision of Delhi High Court in case of Maxopp Investment Ltd. (2011 (11) TMI 267) & Bombay High Court in case of Godrej & Boyce Mfg. Co. Ltd. (2010 (8) TMI 15) that Rule 8D of the which was introduced by virtue of Notification No.45/2008 dated 24.3.2008 is prospective in operation and cannot be regarded as being retrospective. Therefore provisions of Rule 8D shall apply with effect from assessment year 2008-09 onwards. The Order of CIT (A) & AO is perverse and supported by misinterpretation of the provisions of the Act and rules made thereunder. Case remand back to AO.
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2012 (9) TMI 466
Whether the amounts (representing salary and benefits payable by GTE-OC to expatriate employees) reimbursed by the applicant to GTE Overseas Corporation, ('GTE-OC') is 'income' accruing to GTE-OC and, therefore, whether the same is liable to deduction of tax in accordance with the provisions of section 195 of the Income tax Act – Held that:- The question as to whether the receipt is really an income or reimbursement is a pure question of fact, which has to be arrived at based on the various clauses in the agreement between the parties. In the context of the discussion in paragraph 13 of the order of the Advance Rulings Authority, we have no hesitation in rejecting the plea of the assessee. - Decided against the assessee.
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2012 (9) TMI 465
Condonation of delay of 290/287 days in filing appeals - According to the applicant, Assessing Officer was directed to forward all relevant documents with his comments through the office of the Additional Commissioner which was received by him (Assessing Officer) on October 9, 2007 - Assessing Officer, meanwhile, got seriously preoccupied in the work for "completing 99 time barring assessments arising out of search and seizure cases by December 31, 2007". As the exercise was voluminous and complex in nature, there was a considerable delay in processing the same, the situation being compounded by acute shortage of staff in the office of the Assessing Officer – Held that:- As the situation was beyond his control, the Assessing Officer, eventually, dispatched the relevant documents for filing the appeals as contemplated to the office of the Commissioner, which was received by him on January 11, 2008 - thereafter, his office wrote to the standing counsel of the Department on the same date seeking his opinion regarding the advisability of filing an appeal under section 260A of the Act - delay of 290/287 days in preferring the accompanying appeals is hereby condoned
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Customs
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2012 (9) TMI 501
Petition for cancellation of bail granted - the assessee is alleged to have been found in possession of a controlled substance invoking applicability of rigours of Section 37 of the NDPS Act - Held that:- At this stage after the order had been dictated, learned counsel for the petitioner states that the goods seized from the respondent are not controlled substances but are psychotropic substances, this is strange as Special Judge, NDPS, New Delhi had proceeded on the basis that the respondent had been charged with possession of a controlled substance chargeable under Section 9A r.w.s. 25A of the NDPS Act and there is no averment or ground in the petition that the seized substance is not a controlled substance or that Sections 9A and 25 A are not applicable. In fact, the present petition is supported by an affidavit of an officer of the Customs Department and has been pending in this Court for the last more than four years. However, in the interest of justice, one opportunity is given to the petitioner to amend its petition, if it so desires, subject to payment of costs of Rs.50,000/-. Half the costs shall be paid to the respondent and the other half shall be deposited with the Delhi High Court Legal Services Committee within two weeks.
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2012 (9) TMI 500
Refund – unjust enrichment – refund has been rejected only on the ground that in their books of accounts, the appellant had shown amounts of duty as claims recoverable from Customs but the amount of interest was not shown as recoverable from customs – Held that:- Merely because the interest amount was not shown as recoverable amount from the customers, clause of unjust enrichment cannot be attracted - appellant is eligible for the refund
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2012 (9) TMI 499
Penalty under Section 112(b)(ii) of the Act – Export and importing of same goods under different names - exemption under advance licence - Conspired with Customs Inspector - Whether Tribunal was right in law in confirming the penalty on the appellant when charges against M/s. MNS Exports have been set aside – Held that:- Mere fact that M/s. MNS Exports Private Ltd., have been absolved cannot be a ground to absolve the appellant herein as he is liable to be imposed penalty under Section 112(b)(ii) of the Act and the quantum of penalty awarded is also justified - appeal is dismissed.
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2012 (9) TMI 464
Provisional release of the goods - import of silk yarn - Held that:- As the value of the silk yarn imported by the petitioner, from Vietnam, had been fixed, as USD29.5 per kilogram the respondents are directed to release the goods in question on the petitioner paying the customs duty equivalent to 75% of the value of the goods, as fixed by the authorities concerned, at USD29.5 per kilogram. For the balance 25% of the customs duty payable by the petitioner, the petitioner shall furnish a personal bond to the satisfaction of the respondents.
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2012 (9) TMI 463
Import of goods – rejection of transaction value – goods were imported by the appellant from a trading company at Macau and the goods were found to be of Chinese origin - goods were described in the import invoice as ceiling lamp, wall lamp etc. 100% examination of the goods revealed that the ceiling lamp was fitted with bulb & CFL - Revenue entertained a view that the goods were mis-declared and there was an incomplete declaration. They also felt that on above account the invoice did not reflect the correct value – Held that:- There is virtually no evidence on record to reject the transaction value. Further there is neither any reference nor any evidence to the effect that the importer has paid any under hand consideration to the supplier of the goods - no reference to any contemporaneous goods - no justifiable reasons to reject the transaction value and to enhance the value of the goods in question - imposition of separate penalties on the proprietary firm as also on the Proprietor is against the settled principles of law
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2012 (9) TMI 462
Classification – import of goods - scrap of iron & steel/re-rollable as well as reusable - department alleged that the goods classified under the Chapter 73 were restricted items and per EXIM policy – Held that:- Goods were old and used cut pieces, and cuttings etc. of various articles of iron and steel. Hence the same were in fact melting steel scrap, which is classifiable under Chapter 72 - Revenue’s appeal rejected
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Corporate Laws
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2012 (9) TMI 498
Winding up of company carrying a project of colonization - Applications for further develop the colony demarcate the plots and allot - Held that:- Considering the size of the land the 143 claimants of the plots in the said Yojana do not constitute the entire body of plot holders in the said Yojana / proposed colony thus the question of entrusting the development of the entire land / project comprising of vast land other than which the appellants have agreed to purchase and which belongs to the company in liquidation, does not arise - Official Liquidator has rightly contended that the appellants being the purchasers of handful of plots, cannot be expected to bear the development cost of the entire land. Since the appellants have been found to be bona fide purchasers and even Sale Deeds exist in their favour, at the time of putting the land / Project to auction, the learned Company Judge should, without undermining the value of the land / Project, explore the possibility of doing the same on as is where is basis i.e. with the highest bidder acquiring the Project with commitments in favour of the appellants.
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2012 (9) TMI 461
Winding up proceedings - BIFR finally vide order dated 23rd February, 2000 recommended winding up of the company. - on initiation of winding up proceedings, the ex-directors of the company filed an application stating that they have taken steps to settle the matter with the creditors and workers. - winding up was stayed - Held that:- the company got a life line for the third time. The first one was before the BIFR; the second one was when they entered one time settlement with the PNB and the third when they entered into agreement with ACE Ltd. The company again defaulted. The scheme was propounded way back in 2005. The scheme original propounded was based on OTS payment for PNB. The said OTS payments were not made. Payments were ultimately made to PNB by ACE Ltd. in terms of the deed of assignment. It appears that Directors of the company are in occupation of the residential accommodation belonging to the company in Delhi measuring 3000 square yards. They are using and residing in the said residential property without making any payment. The workers in their application CA 117/2004 had made a claim of more than R.5.45 crores along with details. We do not think the scheme as propounded can be implemented and enforced today. - Company to be wound up.
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Service Tax
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2012 (9) TMI 528
Intellectual property rights - service tax liability - Stay for waiver of pre-deposit, interest thereof and penalties u/s 76 and 78 - Held that:- Perusing the agreement entered between the appellant and service recipient it provides for requirement of appellant's permission for transfer of technical knowhow by the licencee to any other person who wish to manufacture same product by using the process developed by the appellant herein. This itself would indicate that there is no permanent transfer of intellectual property right to the licencee in the agreement. Be that as it may, the appellant has not made out a prima facie case for complete waiver of pre-deposit of the amounts involved & is directed to deposit an amount of Rs.4 lakhs (Rupees Four Lakhs only) within a period of eight weeks from date of order.
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2012 (9) TMI 527
Demand along with interest and penalties on the ground that assessee proving "Maintenance and Repair Service" – Held that:- report dated 30.12.2009 of the Assistant Commissioner (Anti-Evasion) relied upon by the Commissioner was not supplied to the assessee and a higher demand than what was claimed by the assessee has been confirmed - violation of principles of natural justice - matter remand to Commissioner for fresh consideration - Appeal is allowed by way of remand
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2012 (9) TMI 526
Power of commissioner to remand the matter – input service credit - no reason to deny the Cenvat credit simply on the ground that the invoices have been issued in the name of Head office address –Held that:- In respect of all the input service invoices raised in the name of appellant s Hyderabad Office, the adjudicating authority should verify invoices, purchase orders and any other document(s) submitted by the appellants and confirm on the basis of it as to whether the services are given in Pune Unit or otherwise - Commissioner (Appeals) has passed an appropriate order in accordance with law and, therefore, the matter needs re-quantification/verification at the end of the adjudicating authority.
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2012 (9) TMI 491
Commission agent - service tax demand and equivalent amount of penalty imposed u/s 78 - Held that:- Considering the agreement entered between company and applicant it is concluded the applicant was appointed as a sole distributor for marketing the products in the state of Sikkim on behalf of them. From a conjoint reading of clause 11 and 12 along with clause 7 of the said agreement, prima facie, it would be difficult to appreciate that the relations between M/s.YBL and the applicant are that of a seller and purchaser as if the beer is sold at a price to the applicant and the applicant ultimately sales to retailers, then in that event, the applicant is eligible to a discount on the invoice itself or on some conditions subsequent to the event of sale. Besides, clause 12 indicates that the applicant is required to collect the sale proceeds from the retail sale of the goods and to deposit the same to company's Bank account Scrutinizing the balance sheet and ledger maintained by company wherein the amount had been paid to applicant was shown as commissions on sales and sales promotion expenses, a fact not controverted by the applicant. In these circumstances, the applicant could not able to make out a prima facie case for waiver of entire amount of duty and penalty - assessee not pleading on financial hardship direction to deposit 25% of the Service Tax involved in this case within a period of 8(eight) weeks from the date of communication of this order.
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2012 (9) TMI 490
Clearing & Forwarding Agent services - Stay filed for waiver of pre-deposit - Held that:- As decided in appellant's own case in Gudwin Logistics Versus Commissioner of Central Excise [2011 (12) TMI 262 - CESTAT, AHMEDABAD] for no liablity to pay service tax for the period 01.04.2009 to 31.03.2010 has held in favour of the assessee and hence the Stay Petition for waiver of pre-deposit of amounts involved is allowed and take up the appeal itself for disposal - in favour of assessee.
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2012 (9) TMI 489
Waiver of pre-deposit of service tax, penalty - services received by assessee from legal professionals, trade mark, consultants, advertisement charges and also for business auxiliary services, technical testing etc. – Held that:- as regards to legal professional charges there cannot be any demand on service tax on such services rendered prior to 7.9.2009. As regards the demand of service tax on advertisement charges, it needs to be considered as the issue is arguable one, and can be considered at the time of final disposal of the appeals. Applicants directed to deposit an amount of Rs.2 lakhs condition of the pre-deposit of the balance amounts involved is waived
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2012 (9) TMI 488
Penalty – Held that:- Education Cess is meant for specific purpose i.e. for welfare of the state, the appellant is not entitled to get credit of the same - Looking to the welfare aspect of the law, there should not be penalty on the appellant under Section 76 of the Finance Act, 1994 - appeal is partly allowed annulling penalty.
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Central Excise
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2012 (9) TMI 497
Seeking Interim order to dispense with the deposit of the duty payable and penalty during the pendency of the appeal - Held that:- As appeal Exhibit P3 as well as Exhibit P4 petition filed as early as in October,2011 have not been taken up for hearing so far - Directions to the 3rd respondent to expedite the hearing of the appeal. The petition for interim orders will be considered after hearing the petitioner, within a period of two months from date of order.
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2012 (9) TMI 496
Non receipt of relied upon documents - Held that:- On perusal of the reply to the show cause notice it can be find that the appellant had taken various grounds in defence against the show cause notice issued to them which both the lower authorities have not considered the said reply in its proper perspective - as the adjudicating authority has only recorded in the findings that the appellants were giving documents and hence relying upon the earlier order in original confirms the demands is defective as once an order in original is set aside by first appellate authority's order and remanded back to adjudicating authority, nothing survives except for the show cause notice. As the adjudicating authority should have decided the matter on the merits of the case from whatever records available with him, the said adjudication order is a non speaking order. Direction to the appellant to approach the lower authorities to take the copies of the relied upon documents to file further submissions.
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2012 (9) TMI 495
Disallowance of provisional assessment in terms of Rule 7 of Central Excise Rules - Held that:- As the appellant manufacture and clear more than 1000 varieties of printing ink which are sold from the depots and due to variety of factors such as market forces, competition, quality and the quantity taken up by the purchaser, they are not able to determine the greatest aggregate value of the goods in terms of the Valuation Rules - thus considering genuine difficulties in ascertaining the normal transaction value for goods cleared there was no reason for disallowing the facility of provisional assessment as also the appellant is enjoying such facility of provisional assessment in respect of similar products cleared from their factory at Mumbai - in favour of assessee.
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2012 (9) TMI 494
Cenvat credit – cenvat credit taken by the respondents on paints, varnish, Thinner, Rivtex and other such items – Held that:- Paint, varnish etc. are required by the respondents in the course of manufacturing of their final product - respondent has correctly taken the credit on these items
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2012 (9) TMI 493
SSI Exemption - Supply of OEM - manufacturing of parts and accessories of motor vehicles and tractors including trailers - department in SCN has alleged availing of exemption wrongly and irregularly through mis-statement – alleged that appellant availing two notification simultaneously – Held that:- Department could at best have added the value of OEMs at Rs. 43158 to the OEMs of Rs. 41358/- to the value of home consumption of Rs. 4,99,805.41 and after reducing therefrom the amount of Rs. 5 lacs allowed for clearance without payment of excise duty under Notification 71/78 to the small scale units. It is because of the reason that Notification No. 71/78-C.E., dated 1st March, 1978 provides that clearance for original equipment manufacturer shall be made at nil rate and in all cases, the value shall not exceed Rs. 5 lacs - petitioner availed remainder of excess duty under Notification No. 101/71 to the tune of Rs. 43158 but for this, he would have been entitled to avail the duty exemption on the entire value of home consumption of Rs. 4,99,805.41 under Notification No. 71/78 as this figure was below Rs. 5 lacs - even when it is to be treated as a case of non-disclosure under Notification 71-78, it occurred due to bona fide error on the part of the petitioner in mis understanding the provisions of two notifications. Petition is thus partly allowed. Order of the authorities below is set aside and it is held that the department would be entitled to recover the excise on the value of OEMs of Rs. 43158/- and the benefit claimed by the petitioner under Notification No. 71/78 shall be maintained. In the above circumstances no penalty or interest would be charged.
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2012 (9) TMI 492
Benefit of Notification No. 67/95-C.E. - in respect High Alumina Refractory Cement Clinker, Mineral Substances not elsewhere specified etc. – Original authority denied the exemption on the ground that the said notification exempts capital goods used within the factory of production and meaning of the term “the capital goods” shall be as in Rule 57Q of the Central Excise Rules, 1944 - Held that:- Appellants are claiming the benefit of Notification No. 67/95-C.E. in respect of impugned materials. The burden to prove that the impugned items fall under the scope of exemption notification is squarely on the assessee - appellants have failed to prove that the impugned items fall under the scope of the notification – against assessee
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2012 (9) TMI 460
Imposition of equivalent penalty u/s 11AC - Held that:- As the adjudicating authority has imposed penalty of Rs.4 lakhs under various Rules read with Section 11AC of Central Excise Act, 1944 and this order of the adjudicating authority was not challenged by the Department before the first appellate authority, the Revenue cannot agitate the issue for imposition of penalty under Section 11AC - against revenue.
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2012 (9) TMI 459
Denial of cenvat credit of courier services - Held that:- The first appellate authority has considered the issue on a presumption that the appellants were dispatching the final products to their customers and it is on F.O.R. basis. It is the findings that the appellant also recovered the cost from the courier services for any damages on the way as there is no contract between the customer and courier company. Accordingly, in terms of Board's Circular No.97/8/2007-ST dated 23.08.97 they are eligible for Cenvat Credit of service tax paid on courier services. As the documents indicate that the appellant had utilized the services of courier for sending the samples to their overseas customers for approval to remit the matter back to the adjudicating authority only to verify the factual detail as to whether the credit availed by the appellant of the service tax paid on the courier services is in respect of dispatch of the sample or otherwise - in favour of assessee by way of remand.
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2012 (9) TMI 458
Whether Excise Tribunal right in holding that minimum penalty should have been 100% of the excise duty leviable – Held that:- Exercise of such power by way of subordinate legislation is not permissible when rule making authority for levying penalty is limited to default “with intent to evade duty” - Section 37, which is the rule making power, is clear that penalty can be imposed only when the assessee is guilty of intending to evade the payment of duty, the penalty cannot be imposed without such intention. Furthermore, even when intention may be there, the penalty must be reasonable and cannot, in all cases, be fixed at 100% of the excise leviable – against revenue Provisions of Section 96ZO permitting the minimum penalty for delay in payment without any discretion and without having regard to extent and circumstances for delay are held to be ultra vires of the Act
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2012 (9) TMI 457
Demand of duty and penalty - warehousing of Petroleum products - storage loss beyond the permissible limit of 0.5% - applicant neither paid any duty on it nor mentioned such losses in the monthly return which was beyond the permissible limit - applicant has contended the cumulative losses for the month may be calculated for all the storage tanks – Held that:- No set off of a gain or loss in a tank is permitted against the loss or gain in another tank - applicant has not furnished specific reasons for more losses in certain storage tank. Therefore there is no ground for condoning losses exceeding the permissible limit – demand and penalty confirmed
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2012 (9) TMI 456
Duty demand and penalty - demand has been confirmed on the ground that since the price for 2 nos. of ‘Demo Bikes’ was 50% lower than the price fixed for retail customer, the price was not the sale consideration for sale – Held that:- Assessees have not been able to demonstrate any difference between the ‘demo bikes’ and the ‘normal bikes’ sold to dealers - The demo bikes are put to test and usage as desired by prospective buyers and the assessees also permits such usage to enhance the marketability of their bikes to overcome their competitors in attracting customers - transaction value cannot be accepted and the value of normal bikes has correctly been adopted and differential duty charged thereon - appeal is partly allowed by upholding duty demand and interest but setting aside penalty.
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2012 (9) TMI 455
Demand of excess paid drawback – applicant initially filed claim for drawback as per brand rate fixed by the LTU, Bangalore, which was sanctioned by the original authority - Subsequently the LTU, Bangalore revised/refixed brand rate of drawback in case of the applicant – Held that:- Once the brand rate is revised by the proper authority; the original authority i.e. drawback sanctioning authority was required to take consequential action w.r.t. revision of brand rate. As such, the Drawback sanctioning authority was right in demanding excess paid drawback in terms of Rule 16 of Drawback Rules, 1998. Decision in M/s. Indian DyeStuff Industries Ltd. v. UOI (2002 (2) TMI 132 - HIGH COURT OF BOMBAY) followed.
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Wealth tax
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2012 (9) TMI 529
Reassessment of taxable wealth - notice u/s. 16(5) r.w.s. 17 - Held that:- As the notices under section 17 were issued to the assessee in all the 3 assessment years directing it to file the returns of wealth which were not filed by the assessee & thereafter notices were issued to assessee directing it to submit the details of wealth again there was no compliance contravening the provisions of Sec. 16(5). Hence there was no infirmity on the part of W.T.O. in making the assessment by invoking the provisions of section 16(5) r.w.s. 17 of the W.T. Act - against assessee. Whether the vehicles were used for hiring of the vehicles or for any other purpose - determination of taxable wealth in the years under consideration - Held that:- Since the facts and circumstances of the case in the present appeals are identical to that of A.Y. 1999-2000, the decision of coordinate Bench of previous year is followed and remit matter back to the file of WTO to examine the lease agreements and arrive at a conclusion as to whether the recipients of the vehicles had hired out the vehicles as stipulated under W.T. Act and pass appropriate orders on merits after giving reasonable opportunity of hearing to the assessee. The assessee shall submit all the information required by WTO to determine the taxable wealth - in favour of assessee for statistical purposes.
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Indian Laws
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2012 (9) TMI 487
Motor Vehicles Tax Act, 1974 - Compensation to the plaintiffs - plaintiffs purchased a Truck Bearing No. 3386 in public auction held by defendant no. 4 on 3rd June, 1986 by paying full amount for which the plaintiffs had bidded - truck was seized by Customs Authorities on 30th August, 1982 on the ground that contraband was being carried in the said truck - Directorate of Transport had informed that the Customs Authorities have informed that the vehicle was seized by them on 30th August, 1982 and that transferee is liable to pay the outstanding taxes. It was also stated that the vehicle could not be transferred unless no objection certificate was produced from the Union Bank of India, Panaji since the vehicle was under hire purchase agreement with the bank – Held that:- Plaintiffs ought to have paid the taxes claimed by the Department under protest. In my considered opinion, in view of the admitted position that NOC from the financier was not obtained at the time of seeking transfer of the vehicle in the name of plaintiff no. 1, no fault can be found with respondent no. 2 in not transferring the vehicle in favour of plaintiff no. 1 - mere fact that defendant nos. 1 and 2 have not challenged that part of the decree by itself would not be sufficient to grant relief of compensation in favour of the plaintiffs solely on the ground that the relief of registration of vehicle in favour of the plaintiffs has been granted by the trial Court - as it rejected the prayer for compensation cannot be faulted - appeal stands dismissed
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