Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 21, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Wealth tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Transfer of PANs Of Non-Resident Assessees - Order-Instruction
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AMENDMENT IN NOTIFICATION NO. S.O. 709(E)-IT DATED-20-08-1998 - COST INFLATION INDEX - REGARDING - Notification
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Service tax paid by the assessee could not form part of amount for the purpose of deemed profits u/s 44BB unlike the other amounts received towards reimbursement - AT
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Penalty u/s 271D - share application money - Since there is nothing on record to suggest that the receipt of application money is in the nature of loan or deposit the provisions of section 269SS are not attracted. - AT
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Transfer of leasing rights of Films - considered to be 'goods' OR 'sale'? - Rule 9B(6), - "sale" of rights of exhibition of a feature film would include the "lease" of such rights - SC
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Claim of depreciation on property which was exchanged for another property in respect of which the assessee had forgone/surrender the tenancy rights - claim of depreciation allowed - HC
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Deduction u/s 80P (2)(d) - whether provision of section 14A are applicable to the deductions u/s 80P(2)(d) - Held yes - HC
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Since assessee was having substantial reserve funds with it and the AO had merely gone by a presumption that investments were made out of borrowed funds disallowance under Section 36(1)(iii) was not warranted - AT
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Reversal of interest - interest income which was taxed in the past by offering in the books of accounts forming part of the total income declared, however the same was a doubtful of recovery, therefore the assessee-company had justification to reverse that entry by charging the same in the P&L account - AT
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Interest u/s 244-A - as the amount in question was deposited as tax and not as interest, and also that even if a presumption could be drawn that the amount was deposited as interest, the interest under Section 244A (1) of the Act, was payable on interest - HC
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Payment of royalty - Revenue expenditure or capital expenditure - assessee never became the owner of such know-how but was merely granted a licence to use the same in manufacturing process. - held as revenue in nature - AT
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Liberty is given to the Department to move the High Court pointing out that the Circular dated 9th February, 2011 (regarding monetary limit of appeals by the Department), should not be applied ipso facto, particularly, when the matter has a cascading effect. - SC
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Reassessment - section 150 - it is clear that the order passed by the Hon'ble High Court in the assessee’s case for the said Assessment Year was not in the nature of a direction hence the provision of Sec. 150(1) of the Act will not be applicable. - AT
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Capital Gain – AO determine deemed consideration in respect of transfer of land as per sec. 50C. - Therefore addition on account of non-refundable deposit is not justifiable - AT
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Loan or deposit - Section 269SS - Penalty u/s 271D -transactions effected through journal entries - no penalty - HC
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Arrears of wages - the liabilities arising out of the Monesana Wage Board award were justifiably deductible as expenditure, and not covered by Section 43-B - HC
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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 - HC
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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
Customs
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Refund of excess fine and penalty - non production of original challan - The grievance of the department seems to be genuine, as later, if someone brings the original chalan and claims this money, the Department would be in difficulty - HC
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Classification - Import of Long Pepper - differential duty – description of 'Long Pepper' as 'Pippali' by these appellants in the Bills of Entry would not amount to ‘misdeclaration’ - no penalty - AT
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100% EOU - Duty cannot be demanded on the goods which have been destroyed due to unavoidable accident/natural causes on the ground that they have not been used for the intended purpose - HC
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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
FEMA
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Policy on foreign investment in Power Exchanges - FDI GUIDELINES
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Review of the policy on Foreign Investment (FI) in companies operating in the Broadcasting Sector - FDI GUIDELINES
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Review of the policy on Foreign Direct Investment in the Civil Aviation sector - FDI GUIDELINES
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Review of the policy on Foreign Direct Investment- allowing FDI in Multi-Brand Retail Trading. - FDI GUIDELINES
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Amendment of the existing policy on Foreign Direct Investment in Single-Brand Product Retail Trading - FDI GUIDELINES
Corporate Law
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Whether SEBI has the power to investigate and adjudicate relating to issue and transfer of securities by listed public companies matter as per Sec 11, 11A, 11B of SEBI Act and under Sec 55A of the Companies Act Or is it the MCA which has the jurisdiction under Sec 55A (c) of the Companies Act ? - SC
Indian Laws
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10 States who gave their assent to FDI in retail
Service Tax
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GTA service - Service Tax liability is on the person paying the freight - Service provider did not pay the freight and therefore there is no tax liability on their part - AT
Central Excise
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Cost Inflation Index for the Financial Year 2012-13 - Notification
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SSI unit - Classification - ‘Microfined Red Oxide’ and ‘Microfined Jet Black Oxide’ - Burden to prove classification of the product is clearly on the department - department has not proved that the products cleared from other branches fall under Tariff Heading 3206.90 - AT
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Rebate claims - Unless and until duty paid character of exported goods is proved the rebate cannot granted - Once the supplier is proved non existent, it has to be held that goods have not been received. - no rebate - CGOVT
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Cenvat credit - merger of two units - No prior permission is required at the time of merger of one unit to another unit - appellants have correctly taken the credit subject to verification by the concerned officers - AT
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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
Case Laws:
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Income Tax
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2012 (9) TMI 564
Computation of gross receipts for the purposes of taxation u/s 44BB - Whether service tax will be included ? - the assessee is an Australia Company - Held that:- Service tax which is a statutory liability, would not involve any element of profits and a service provider is collecting the same from its customers on behalf of the Government and, accordingly, same cannot be included in the total receipts for determining the presumptive income as decided in Islamic Republic of Iran Shipping Lines (2011 (4) TMI 637 - ITAT MUMBAI) - service tax paid by the assessee could not form part of amount for the purpose of deemed profits u/s 44BB unlike the other amounts received towards reimbursement - Decided against Revenue
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2012 (9) TMI 558
Penalties u/s. 271(1)(C) - disallowing the commission paid by the company - CIT(A) deleted the levy - Held that:- Addition in this case has been primarily made on the basis of statement given by Mr. Meattle and Jhunjhunwala, Directors of the company as during the course of penalty proceedings assessee company requested the AO to cross examine both the directors whose statement was relied upon by the AO in disallowing the commission paid by the company. As agreeing with the CIT(A)’s observation that penalty proceedings is separate proceedings and AO should have allowed cross examination of both the persons which has been denied due to time baring matter when the set aside order was passed on 25.3.1996. Thus, the whole assessment / reassessment is based upon the statement of two persons mentioned above and no opportunity was allowed in the penalty proceedings to cross examine them. Thus penalty levied without allowing opportunity to the company for cross examination of both the persons are liable to be cancelled As assessee company has given documents in support of the commission payments and the payments have been made by account payee cheques also & in the penalty proceedings assessee was not sought opportunity to cross examine those two persons, the same was not provided by the Assessing Officer no levy of penalty u/s. 271(1)(c) can be warranted - in favour of assessee
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2012 (9) TMI 557
Penalty u/s 271D - violation of provisions of sec. 269SS for accepting the deposits in cash - CIT(A) deleted the levy - Held that:- As is apparent from the order of Addl. CIT, there is nothing on record to show that these transactions were attached with certain conditions or stipulation as to period of repayment, rate of interest, manner of repayment, etc. so as to treat the said transactions as deposits. The Revenue have not placed before us any material suggesting that the transaction was actually in the nature of loans or deposit. Since there is nothing on record to suggest that the transaction is in the nature of loan or deposit, apparently, the provisions of section 269SS are not attracted. When the CIT(A) found as a fact that the amount of Rs.14,81,208/- was indeed received by the assessee from the aforesaid two directors as share application money, we are not inclined to interfere with the findings of the CIT(A)& as the AO did not even attempt to examine as to whether or not the share application money can be treated as “loan” or “deposit” within the meaning of provisions of sec. 269SS penalty cannot be imposed - Also there is nothing on record, suggesting any tax planning or infraction of relevant provisions with malafide intention. Moreover, transactions are between the directors and the company and that too towards share application money/capital - in favour of assessee.
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2012 (9) TMI 556
Transfer of leasing rights of Films - considered to be 'goods' OR 'sale'? - Held that:- As decided in CIT v. B. Suresh [2009 (3) TMI 4 - SUPREME COURT] Profits are embedded in the "income" earned. Earning of income depends on sale of goods and services - the word "sale" would also include "lease" as indicated in Rule 9A(7) which states that for the purposes of Rule 9A, the "sale" of the rights of exhibition of feature films would include the "lease" of such rights. Similarly, under Rule 9B(6), it has been, inter alia, provided that "sale" of rights of exhibition of a feature film would include the "lease" of such rights - in favour of assessee.
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2012 (9) TMI 555
Claim of depreciation on property which was exchanged for another property in respect of which the assessee had forgone the tenancy rights - surrender of tenancy rights - Held that:- The Revenue does not dispute the existence of such an agreement with the landlord, which showed the payment of consideration for the surrender of tenancy rights. It is also not disputed by the Revenue that the purchase of the premises by the assessee was from M/s.Harsaran Singh Constructions Pvt. Ltd., which had nothing to do with the landlord. Given the fact that tenancy right is a capital asset, as decided in CIT Vs. D.P.Sandhu Bros Chembur P. Ltd.(2005 (1) TMI 13 - SUPREME COURT ) that the surrender of tenancy rights amounted to transfer and hence, being a capital receipt, on the facts thus placed before this Court that the amount paid on account of surrender of tenancy rights being given by the assessee to the builder, there is no exchange of one property for the other. Hence no hesitation in accepting the plea of the assessee to hold that the assessee is entitled to depreciation - in favour of assessee.
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2012 (9) TMI 554
Deduction u/s 80P (2)(d) - whether provision of section 14A are applicable to the deductions u/s 80P(2)(d) - Held that:- As decided in The Punjab State Cooperative Milk Producers Federation Ltd. v. Commissioner of Income-Tax and another [2011 (3) TMI 615 - PUNJAB AND HARYANA HIGH COURT] that under Section 14A, any expenditure incurred by the assessee for earning income which does not form part of total income under the Act shall not be an allowable expenditure. The assessee is entitled to deduction under Section 80P(2)(d) after deducting the expenditure attributable to the earning of such income - against the assessee
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2012 (9) TMI 553
Claim of compensation paid as allowable business expenditure - the assessee allowed possession of the land to the intending purchaser only after payment of full consideration and registration of sale deed. In some cases, since the intending purchaser did not want to buy the land as per mutual agreement and advance received was refunded along with some excess amount as return on investment. This excess amount was termed as compensation. - AO did not accept the submissions of the assessee on the ground that compensation was nothing but consideration to reacquire the rights in plots. - CIT(A) deleted the addition. - Held that:- order passed by the CIT(A) is cryptic and grossly violative reflecting non application of mind by the concerned authority to the issues/points raised before it - set aside the order of the ld. CIT(A) and restore the matter to his file for deciding the aforesaid issues - in favour of revenue. Disallowance of repair and maintenance of building - no documentary evidence to be treated as revenue expenditure - CIT(A) deleted the addition - Held that:- The assessee did not produce all the bills and vouchers in relation to expenditure incurred on repairs to building and the CIT(A),without ascertaining the nature of construction or verifying the bills/vouchers or any other material concluded that expenditure was incurred on temporary structures. There is nothing to suggest that the assessee produced the relevant bills & vouchers before the ld. CIT(A) nor seems to have verified the genuineness of expenditure or even recorded any such findings - as CIT(A) without disclosing any basis or giving opportunity to the AO, concluded that expenditure was on temporary structure it is appropriate to vacate the findings of the CIT(A) and the matter is to be remanded to the AO to go into the matter afresh - in favour of revenue.
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2012 (9) TMI 552
Profits derived from export of granite - denial to claim deduction as per sub-section 1-B of Section 80HHC - AY 1988-1989 - Held that:- Answered against the assessee as decided in case of Gem Granites v. CIT [2004 (11) TMI 13 - SUPREME COURT] reading of the 1984 circular by holding that the circular expressly provided that polished and processed granite did not fall within the meaning of word "minerals" in 80HHC(2)(b) as it stood before 1991 - against assessee. Denial of Investment allowance on mining granite from quarries activities and exporting - cutting, polishing, etc. which does not tantamount to manufacture for the purpose of Section 32A - Held that:- Answered in favour of assessee as decided in case of Gem Granites v. CIT [2004 (11) TMI 13 - SUPREME COURT]
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2012 (9) TMI 551
Disallowance of interest and finance charges - Non business investments in UTI Money Market Fund & shares of M/s MPIPL out of borrowed funds - CIT(A) deleted the addition - Held that:- Considering total investments made by the assessee both UTI Money Market Fund and MPIPL came to only ₹ 48 lakhs. When viewed against the substantial reserves and surplus available with assessee, it cannot be said for definite that any loan funds were utilized for the purpose of investments. No doubt, assessee was unable to show a one-to-one matching between the investments and surplus funds. However, the Assessing Officer has also not been able to bring out any link between borrowed funds and investments. Share purchased by the assessee in M/s MPIPL was for having controlling interest therein and AO himself has noted that assessee had purchased 1216 out 2200 shares from the promoters of the said company. It is also not disputed that the said company was engaged in the same line of business - since assessee was having substantial reserve funds with it and the AO had merely gone by a presumption that investments were made out of borrowed funds disallowance under Section 36(1)(iii) was not warranted - against revenue. Disallowance u/s 14A - investments made by the assessee were not out of any surplus funds - CIT(A) deleted the addition - Held that:- There is no dispute that during these two years, Rule 8D of Income-tax Rules, 1962, was not applicable in view of the decision of Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] as Rule 8D applicable from Assessment Year 2008-09 and assessment years in question is 2006-07 and 2007- 08 thus the matter requires a re-visit by the A.O as disallowance for earlier period to be determined on reasonable basis - in favour of revenue for statistical purposes. Disallowance u/s 14A - CIT(A) partially deleted the disallowance to third limb of Rule 8D, i.e. 5% on the average value of investments - Held that:- As D.R. fairly admitted that Rule 8D was applicable from impugned assessment year and therefore, the A.O. was obliged to compute the deduction in accordance with the said rule & had not applied Rule 8D for making disallowance under Section 14A the matter has to go back to the A.O. for consideration afresh, in accordance with law - in favour of revenue for statistical
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2012 (9) TMI 550
Disallowance of reversal of interest - Held that:- The assessee is a Government Company engaged in the business of providing long-term finance for Industrial projects. The assessee has followed a system of accounting in respect of penal interest on accrual basis and as and when it was charged from the customer the same was shown as income of the assessee. Subsequently, on settlement with the parties the penal interest is either waived or reduced - Since the Board had taken the decision during the current year, therefore the amount of previous year’s expense had been charged to P&L account in the current year. On that basis, the decision taken by the Board cannot be held as an unsubstantiated decision and the interest income which was taxed in the past by offering in the books of accounts forming part of the total income declared, however the same was a doubtful of recovery, therefore the assessee-company had justification to reverse that entry by charging the same in the P&L account - in favour of assessee. Addition on account of interest waived - CIT(A) deleted the addition - Held that:- Facts have revealed that the amount in question pertained to penal interest which stood allowed therefore, following the directions of the Tribunal, the CIT(A) has directed that the waiver of penal interest is allowable. This findings of the CIT(A) being inconsistent with the order of the Tribunal is hereby allowed - against revenue. Addition of interest amount reverse pertaining to the earlier year - CIT(A) deleted the addition - Held that:- CIT(A) has found that the assessee has wrongly computed the higher income than the actual receivable, therefore rectification was correctly made. In the absence of any contrary material, this finding of ld.CIT(A) is hereby confirmed - against revenue. Addition being the interest waived pertaining to the earlier year - CIT(A) deleted the addition - Held that:- Facts have revealed a finding was given that there was an overlapping between the waiver of the penal interest and the amount pertaining to preceding year but the exact position of overlapping of the amount has not been placed on record, therefore we refer this item of waiver of penal interest back to AO to verify the same - in favour of Revenue by way of remand. Addition being the amount of interest waived pertaining to the earlier year - CIT(A) deleted the addition - Held that:- As that the amount was waived in terms of the settlement with the customer no fallacy in the deletion made by ld.CIT(A) - against revenue.
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2012 (9) TMI 549
Reopening of assessment u/s.147 - the return was processed u/s.143(1) - Held that:- As decided in ACIT Versus Rajesh Jhaveri Stock Brokers P. Limited [2007 (5) TMI 197 - SUPREME COURT] an intimation u/s.143(1) could not be treated to be an order of assessment. It was held that there being no assessment u/s.143(3), the question of change of opinion did not arise. The AO had jurisdiction to issue notice u/s.148 for bring to tax income escaping assessment in an intimation u/s.143(1) and did not render the AO powerless to initiate re-assessment proceedings - against assessee. Disallowance of deduction on “Gola” i.e. wastage income u/s.10B - Held that:- On questioning that what was the related expenditure which was having a direct nexus for production of this by-product, assessee has fairly expressed not to further argue this ground and let the issue to be decided after considering the facts as available on records. Thus the Revenue Authorities have rightly rejected the said claim of the assessee after considering the manufacturing process and the manner in which the said by-product was generated - against assessee. Disallowance of deduction u/s 10B on DEPB income - Held that:- As decided in Maral Overseas Ltd. vs. Addl.CIT [2012 (4) TMI 345 - ITAT INDORE] once an income forms part of the business of the income of the eligible undertaking of the assessee, the same cannot be excluded from the eligible profits for the purpose of computing deduction u/s 10B of the Act. As per the computation made by the Assessing Officer himself, there is no dispute that both these incomes have been treated by the Assessing Officer as business income. - the undertaking is eligible for deduction on export incentive received by it in terms of provisions of Section 10B(1) read with Section 10B(4) of the Act - Decided in favor of assessee.
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2012 (9) TMI 548
Addition made on account of higher Gross Profit rate – The G.P. rate is on higher side as compare to earlier years in the assessee’s own case - GP rate also more than the comparable case quoted by AO for the same assessment year - Held that:- In AY 2005-06, in assessee’s own case, the GP rate of 2.37% was accepted by the Revenue. AO himself considered u/s 143(3) the GP rate of 2.65% in AY 2006-07 to be reasonable. Therefore, ITAT did not find any justification for applicability of GP rate of 4.90% by AO. The gross profit rate disclosed by the assessee at 3.63% is better as compared to earlier two years of assessee’s case and also better than the comparable case of Sat Paul & Sons quoted by the Assessing Officer for AY 2007-08. Appeal allowed in favor of assessee.
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2012 (9) TMI 547
Penalty u/s 271(1)(c) - Assessee has fulfilled all the conditions for eligibility of deduction u/s 10A and claim the same – AO disallow the same on the basis of CBDT Circular dated 6th January, 2005 stated that the deduction under Section 10A would be permissible only in respect of receipt after the date of registration with STPI – AO levy penalty u/s 271(1)(c) on basis of claim of the assessee under Section 10A was patently wrong and false – Held that:- As claim made for deduction u/s 10A was bona fide and merely because the Assessing Officer did not accept the same, it would not amount to either concealment of income or furnishing of inaccurate particulars following the decision of SC in Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80) & Delhi High Court in Zoom Communication Pvt. Ltd. (2010 (5) TMI 34). Decision in favour of assessee.
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2012 (9) TMI 546
Disallowance of Expenditure on ad-hoc basis - Held that:- As AO had given sufficient opportunities to assessee but assessee did not attend the proceedings and during remand proceedings also, verification of books of accounts along with various expenses could not be done. Assessee submits require documents with AO which AO has denied. Matter remanded back to revenue
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2012 (9) TMI 545
Dis-allowance u/s 80IC - interest on late payment of sale bills and miscellaneous income contended by Revenue as income from other sources - Held that:- Assessee is entitled to the relief with respect of deduction u/s 80IC in relation to interest on late payment of bills, but in the absence of details of miscellaneous income, such relief could not be granted to the assessee in this regard. Dis-allowance u/s 43B - belated payment of contribution towards employees provident fund - Held that:- Since same is paid before the due date for filing of the return hence allowed. Addition on account of repair and maintenance and labour charges - dis-allowance u/s 40(a)(ia) - assessee now placing reliance on decision in case of Merilyn Shipping & Transport - Held that:- Since issue raised in this ground does not arise from the order of CIT(A), hence, impugned order is not interfered with - Decided partly in favor of assessee
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2012 (9) TMI 544
Withdrawal of the interest allowed u/s 244-A - the total payment made by the assessee-company being less than the total interest payment - Held that:- Where valuable rights of refund and interest is involved, the Income Tax Authorities are not required to draw assumption on the quantum of the amounts. In this case there is no other material placed by the respondents to justify the inference other than the quantum of the amount being less than the interest payable, to support the assumption that the deposit was of interest and not of tax. To test the assumption, if we deduct the interest of Rs.1, 83, 53, 133/- out of the total amount of Rs. 3, 61, 46, 374/- liable to be paid by the petitioner, the amount of tax comes to Rs. 1, 77, 93, 241/-, which is more than the amount deposited by the petitioner. Thus as the amount in question was deposited as tax and not as interest, and also that even if a presumption could be drawn that the amount was deposited as interest, the interest under Section 244A (1) of the Act, was payable on interest - petitioner-company will also be entitled to interest on this amount from the date of deposits - in favour of assessee.
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2012 (9) TMI 543
Addition for expenditure incurred earning dividend income u/s 14A - CIT(A) deleted the addition - Held that:- In terms of decision of in Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax (2011 (11) TMI 267 - DELHI HIGH COURT ) even where the assessee claims that no expenditure has been incurred in relation to income which does not form part of total income, the AO is required to verify the correctness of such claim but in the instant case the AO was handicapped, because of failure of the assessee to furnish relevant details/particulars and accounts while making the disallowance in terms of provisions of sec. 14A. - set aside the order of the ld. CIT(A) and restore the matter to the file of the AO for deciding the issue, afresh - in favour of revenue for statistical purposes. Payment of royalty - Revenue expenditure or capital expenditure - CIT(A) deleted the addition - Held that:- As the assessee was granted a licence for using the know-how to be applied in the manufacturing process. The assessee was required to pay royalty for using such know-how. However, the assessee never became the owner of such know-how but was merely granted a licence to use the same in manufacturing process. The know-how at all the time remains the property of the licensor. At the end of the licence period the assessee was to forthwith return all the plates and drawings, data material and other documents supplied by the licensor to it. Therefore, in view of the ratio laid down by the Hon’ble Supreme Court in the case of CIT Vs. 69 ITR 692 of India Ltd. [1967 (12) TMI 3 - SUPREME COURT] the payment is to be considered as revenue expenditure and no part thereof can be considered as capital expenditure - in favour of assessee.
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2012 (9) TMI 542
Application of Circular dated 9th February, 2011 - Held that:- Liberty is given to the Department to move the High Court pointing out that the Circular dated 9th February, 2011 (regarding monetary limit of appeals by the Department), should not be applied ipso facto, particularly, when the matter has a cascading effect. There are cases under the Income Tax Act, 1961, in which a common principle may be involved in subsequent group of matters or large number of matters. In our view, in such cases if attention of the High Court is drawn, the High Court will not apply the Circular ipso facto. See Surya Herbal Ltd (2011 (8) TMI 137 - SUPREME COURT OF INDIA)
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2012 (9) TMI 541
Bad debt u/s 36 – Whether assessee has to establish that debt has become irrecoverable to claim expense – Assessee is in business of money lending for many years - The debtor company is under the same management - Doing business from the same premises - Directors have substantial interest in it – Held that:- Following the decision of Supreme court in case of T.R.F.Ltd. (2010 (2) TMI 211) it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. AO has not examined whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. It is not the case of the revenue to disallow any part of such bad debt as has been written off by the lender in its books of accounts. Appeal decides in favour of assessee
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2012 (9) TMI 540
Reassessment - section 150 - assessment in pursuance of an order on appeal – AO added back amount written off by bank, which was payable by assessee by invoking Sec.41(1) – High court accepted the fact that amount was not eligible for tax in the year of appeal but for subsequent years – “Hon'ble Court held that "if the same is not disclosed by the assessee in the subsequent year, it is open to Revenue to take action in accordance with law” – Assessee did not file any return in subsequent year for said income – AO initiated proceedings u/s 147 to tax the said amount by issuing notice u/s 148 in accordance with Sec 150(1) – Held that:- Following the decision of Supreme Court in case of Rajinder Nath (1979 (8) TMI 3) in this case HC held (i) the High Court gives liberty to the assessee to show the said amount in the subsequent years, and (ii) If the same is not shown by the assessee in the subsequently years, it is open for the revenue to take action in accordance with law. Therefore, it is clear that the order passed by the Hon'ble High Court in the assessee’s case for the said Assessment Year was not in the nature of a direction hence the provision of Sec. 150(1) of the Act will not be applicable. Decision in favour of assessee.
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2012 (9) TMI 539
Capital Gain – Assessee enter into Joint Development Agreement with developer in respect of land – Assessee get 45% of the built up area in lieu of transfer of 55% of the undivided portion of the vacant land in favour of the developers for construction – AO treat it as transfer of 55% of the land in favour of the developer was a deemed transfer in year in which agreement enter into & deposit also – AO made addition on basis of value determined by sub- registrar as deemed consideration u/s 50C – Held that:- As the information obtained by AO u/s 133(b) from sub registrar regarding deemed consideration, could not use against the assessee before the same was put to the assessee. Violating of the principles of natural justice. Therefore issue remand back to AO. Non-refundable deposit in respect of enter into agreement for transfer of land - The assessee received a non-refundable deposit - Held that:- AO determine deemed consideration in respect of transfer of land as per sec. 50C. Therefore non-refundable deposit is not justifiable as the AO has estimated the amount of consideration chargeable to tax u/s. 50C. Decides in favour of assessee
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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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Customs
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2012 (9) TMI 538
Denial of Refund of excess fine and penalty - non production of original challan for paying the penalty & photocopy was produced - Held that:- The grievance of the department seems to be genuine, as later, if someone brings the original chalan and claims this money, the Department would be in difficulty as there is no time limit fixed in Ext.P3 for refund. Accordingly the assessee is directed to produce the documents pertaining to the identity of the person with correct proof of address and also bank account number along with indemnity bond with an undertaking to the Department so that genuine apprehension expressed by the Department could be satisfied to a large extent - there cannot be award of 6% interest on the amount to be refunded.
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2012 (9) TMI 537
Classification - Import of Long Pepper - differential duty – misdeclaration - parties had evaded duty by deceptively describing the goods as “Pippali” and wrongly classifying it under SH 1211.90 with intent to pay duty at lesser rate than what was applicable to “Long Pepper” classifiable under SH 0904.11 – Held that:- Name of the commodity in Hindi is also seen as ‘Pippali’ in this book. It is, therefore, not deniable that what is known in English as “Long Pepper” is known as ‘Pippali’ in Sanskrit - description of Long Pepper as ‘Pippali’ by these appellants in the Bills of Entry would not amount to ‘misdeclaration’ to attract Section 111(m) of the Customs Act and, consequently, no penalty can be imposed on these appellants under Section 112 of the Act - demands of duty set aside - redemption fine set aside; Redemption fine – Held that:- Goods imported by the appellant were allowed to be cleared on payment of duty based on their declaration, without any bond or other undertaking - when the order-in-original was passed by the Jt. Commissioner, the goods were not physically available for confiscation - no redemption fine was liable to be imposed under Section 125 of the Act in lieu of confiscation of the goods
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2012 (9) TMI 536
100% EOU - loss of the capital goods/raw material/consumable - imported/procured indigenously duty free under the provisions of Notification No. 52/2003-Customs - Applicability of Explanation to Rule 6 of Central Excise - fire accident took place in the premises of the assessee – Held that:- Duty cannot be demanded on the goods which have been destroyed due to unavoidable accident/natural causes on the ground that they have not been used for the intended purpose - raw materials/capital goods which are in the premises of production would not be hit by the Explanation to Rule 6 of the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 – in favor of assessee
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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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Corporate Laws
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2012 (9) TMI 559
Listing of Optionally Fully Convertible Debentures ('OFCDs') on any recognized stock exchange in India being Public Issue under Section 73 r.w.s. 60B - Whether SEBI has the power to investigate and adjudicate relating to issue and transfer of securities by listed public companies matter as per Sec 11, 11A, 11B of SEBI Act and under Sec 55A of the Companies Act Or is it the MCA which has the jurisdiction under Sec 55A (c) of the Companies Act ? - Held that:- SEBI Act is a special law, a complete code in itself containing elaborate provisions to protect interests of the investors - SEBI Act is a special legislation providing SEBI with special powers to investigate and adjudicate to protect the interests of the investors. It has special powers and its powers are not derogatory to any other provisions existing in any other law and is analogous to such other law and should be read harmoniously with such other provisions and there is no conflict of jurisdiction between the MCA and the SEBI in the matters where interests of the investors are at stake. The legislative intent and the statement of objectives for the enactment of SEBI Act and the insertion of Section 55A in the Companies Act to delegate special powers to SEBI in matters of issue, allotment and transfer of securities. The Court observed that as per provisions enumerated under Section 55A of the Companies Act, so far matters relate to issue and transfer of securities and non-payment of dividend, SEBI has the power to administer in the case of listed public companies and in the case of those public companies which intend to get their securities listed on a recognized stock exchange in India. The Supreme Court held that SEBI does have power to investigate and adjudicate in this matter. Hybrid OFCDs - Whether it falls within the definition of "Securities" within the meaning of Companies Act, SEBI Act and SCRA to grant SEBI jurisdiction to investigate and adjudicate ? - Held that:- Although the OFCDs issued by the two companies are in the nature of "hybrid" instruments, it does not cease to be a "Security" within the meaning of Companies Act, SEBI Act and SCRA. It mentions that although the definition of "Securities" under section 2(h) of SCRA does not contain the term "hybrid instruments" the definition of "securities" under Section 2(h) of the SCR Act is an inclusive one, and can accommodate a wide class of financial instruments. The OFCDs issued by the two Companies fall well within this definition. As in this case such OFCDs were offered to millions of persons there is no question about the marketability of such instrument. And since the name itself contains the term "Debenture", it is deemed to be a security as per the provisions of Companies Act, SEBI Act and SCRA. OFCDs to persons who subscribed to the issue is a Private Placement - Whether the issue not to fall within the purview of SEBI Regulations and various provisions of Companies Act ? - Held that:- Though the intention of the companies was to make the issue of OFCDs as private placement but it fails to be so when such securities are offered to more than 50 persons. Section 67(3) specifically mentions that when any security is offered to and subscribed by more than 50 persons it will be deemed to be a Public Offer and therefore SEBI will have jurisdiction in the matter and the issuer will have to comply with the various provisions of the guidelines issued for a public issue. Although the Sahara companies contended that they are exempted under the provisos to Sec 67 (3) since the Information memorandum specifically mentioned that the OFCDs were issued only to those related to the Sahara Group and there was no public offer, the Supreme Court however did not find enough strength in this submission. The invitation/offer of OFCDs, in the present controversy, was admittedly made to approximately 3 crore persons and was subscribed to by 66 lakh persons therefore, to accept the contention of the SEBI, that the OFCDs issued were by way of an invitation “to the public”. The Supreme Court also observed that issue of OFCDs through circulation of Information memorandum to public attracted provisions of Section 60B of the Companies Act, which required filing of prospectus under Section 60B(9) and since the companies did not come out with a final prospectus on the closing of the offer and failed to register it with SEBI, the Supreme Court held that there was violation of sec 60B of the Companies Act also. Listing provisions under Sec 73 - Whether it applies to all public issues or depends upon the intention of the company to get listed ? - Held that:- Any issue of securities is made to more than 49 persons as per Sec 67(3) of the Companies Act, the intention of the companies to get listed does not matter at all and Sec 73 (1) is a mandatory provision of law which companies are required to comply with. Section 73(1) of the Act levies an obligation on every company intending to offer shares or debentures to the public to apply on a stock exchange for listing of its securities. The Court observed that the contention that they did not want their securities listed does not stand. The duty of listing flows from the act of issuing securities to the pubic, provided such offer is made to fifty or more than fifty persons. Thus after the amendment to the Companies Act, 1956 on 13.12.2000, every private placement made to fifty or more persons becomes an offer intended for the public and attracts the listing requirements under Section 73(1). Public Unlisted Companies (Preferential Allotment Rules) 2003 - Whether it will apply in this case? - Held that:- And in the existence of Sec 67(3) it is implied that even the 2003 preferential allotment rules were required to comply with the requirement of Sec 67(3). The Supreme Court observed that even if armed with a special resolution for any further issue of capital to person other than shareholders, it can only be subjected to the provisions of Section 67 of the Company Act, that is if the offer is made to fifty persons or more, then it will have to be treated as public issue and not a private placement. The Court observed that 2003 Rules apply only in the context of preferential allotment of unlisted companies, however, if the preferential allotment is a public issue, then 2003 Rules would not apply. OFCDs as Convertible Bonds - Whether they are exempted from application of SCRA as per the provisions of sec 28(1)(b) - Held that:- As contemplated in Section 28(1)(b), is not to the convertible bonds, but to the person to whom such share, warrant or convertible bond has been issued, to have shares at his option. The Act is, therefore, inapplicable only to the options or rights that are attached to the bond/warrant and not to the bond/warrant itself. Thus as per section 28(1)(b) it is only the convertible bonds and share/warrant that are excluded from the applicability of the SCRA and not debentures which are separate category of securities in the definition contained in Section 2(h) of SCRA. No illegality in the proceedings initiated by SEBI as well as in the order passed by SEBI (WTM) and the entire amount will have to be refunded collected through RHPs by Saharas with 15% interest per annum to SEBI from the date of receipt of the subscription amount till the date of repayment, within a period of three months from date of this order which shall be deposited in a Nationalized Bank bearing maximum rate of interest - appoint Mr. Justice B.N. Agrawal, a retired Judge of this Court to oversee whether directions issued by this Court are properly and effectively complied with by the SEBI (WTM) from the date of this order.
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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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Service Tax
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2012 (9) TMI 563
Refund of Service Tax claimed by the service providers - Held that:- The refund of duty or any other sum due to an assessee should not be denied for mere technical or procedural lapses if it is otherwise due to substantially on merits - as no reasoning has been given by the Revisionary authority as to how the refunds are denied only for technical or procedural lapses the impugned orders is set aside with direction to the authorities to come to a conclusion after recording reasoning, on following the principles of natural justice.
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2012 (9) TMI 562
Waiver of pre-deposit - stay order was received by the appellant on 21/08/2010 wherein a direction was given to make pre-deposit within 5 days of the receipt of the order – Held that:- Appellant failed to make the pre-deposit till 26/08/2010, therefore, the first appellate authority has dismissed their appeal for non-compliance of the order of pre-deposit - appellant has made pre-deposit of the entire amount of service tax. Therefore, considering the same is sufficient and the first appellate authority has not passed the order on merits, we remand the matter back to the first appellate authority to decide the issue on merits
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2012 (9) TMI 561
Waiver of pre-deposit – demand on freight amount mentioned in the invoices under which the inputs were supplied to the appellant - demand is based on Rule 2(1)(d)(v) of the Service Tax Rules, 1994 - lower authorities have held that the appellant was liable to pay Service Tax on GTA Service which was used for supply of their inputs by M/s. RIL – Held that:- Sub-clause (v) was inserted in Rule 2(1)(d) only on 3.12.2004 and the same cast Service Tax liability on the person paying the freight - Appellant did not pay the freight and therefore there is no tax liability on their part - waiver of pre-deposit and stay granted
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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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Central Excise
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2012 (9) TMI 535
Rejection of appeal for non-compliance of pre-deposit - Held that:- The appellant has taken various defenses before the first appellate authority including the question of limitation, an issue not considered while passing the interim order of pre-deposit the issue needs to be reconsidered by first appellate authority without insisting any pre-deposit.
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2012 (9) TMI 534
Availment of CENVAT Credit on fake invoices - disposal of appeal on non deposit of amount to hear and dispose the appeal - Held that:- As in this kind of issues assessee is directed to deposit 20% of the amount of CENVAT Credit sought to be reversed, the case is remitted back to he first appellate authority to consider the issue on merit subject to the condition that the main appellant will deposits an amount of Rs.4 lakhs within a period of twelve weeks from date of order.
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2012 (9) TMI 533
Unauthorized clearance - suppressing of actual production and engaged in clandestine removal without payment of duty - Held that:- As nothing submitted to contradict concurrent finding of both the Authorities below against suppression of clearances which was outcome of suppressed production, this calls for confirmation of duty element - against assessee. Penalty imposed under Rule 25 of Central Excise Rules, 2002 - Held that:- As penalty imposition by adjudication is without finding the element of section 11AC & there was no confiscation done therefore, the present case certainly falls under Rule 25 of Central Excise Rules, 2002, thus order to reducing the penalty to Rs. 10,000/- under Rule 25 may not be improper.
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2012 (9) TMI 532
SSI unit - Classification - ‘Microfined Red Oxide’ and ‘Microfined Jet Black Oxide’ - confiscating land, building, plant and machinery - redemption on payment of fine - classification - appellant had bought various colour oxides and sold them either as such or after repacking them in small packings in their premises – Held that:- Burden to prove classification of the product is clearly on the department - department has not proved that the products cleared from other branches fall under Tariff Heading 3206.90, the question of shifting the burden to the appellants for the purpose of extending the benefit of exemption does not arise - values of clearances of the impugned products by the appellant are within the exemption limit as provided under Notification No. 1/93 - classification as per the order of the Commissioner - demand of duty, order of confiscation and imposition of penalties set aside
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2012 (9) TMI 531
Rebate claims - goods were exported - Alleged that Applicant is the supplier of the grey fabrics and has endorsed a fraudulent invoice - applicant is also an exporter who has claimed rebate of such duty reflected on the fraudulent invoices endorsed by him but routed through the processor - Applicant had been pleading that goods are exported and duty was paid and he made the payment to the suppliers of grey fabrics – Held that:- Unless and until duty paid character of exported goods is proved the rebate cannot granted - Once the supplier is proved non existent, it has to be held that goods have not been received. However, the applicant’s claim that they have received goods but how they have received goods from a non-existent supplier is not known - duty paid character of exported goods was not proved which is a fundamental requirement for claiming rebate under Rule 18 of Central Excise Rules, 2002 – rebate claim rejected
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2012 (9) TMI 530
Cenvat credit - Cenvat credit has been denied on the ground that the appellant has not intimated to the department prior to the merger in respect of the unit of M/s. Pankaj Glass Works with the appellant - Held that:- No prior permission is required at the time of merger of one unit to another unit - Therefore, the appellants have correctly taken the credit subject to verification by the concerned officers and there is no violation of any rule by the appellants – in favor of assessee
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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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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 560
Suggestions made by the Implementation Committee for elections of SCBA - Held that:- Considering the principle of ONE BAR ONE VOTE that persons who had contested elections to the Executive Committee of any Court annexed Bar Association, other than the SCBA, during any of the years from 2007 to 2012, could not be allowed to vote to elect the Office Bearers of the SCBA or to attend the General Body meetings of the SCBA. It was further mentioned that the same would also include a person who had cast his vote in any election to the Executive Committee of any Court annexed Bar Association, other than the SCBA, for the above-mentioned years. Through inadvertence, the Supreme Court Advocate-on-Record Association(SCAORA) had not been excluded, although, it formed an integral part of the SCBA. Thus judgment is need to be modified including the words “AND THE SCAORA” after the words “OTHER THAN THE SCBA”.
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