TMI Tax Updates - e-Newsletter
September 3, 2014

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. AUDIT UNDER SECTION 142(2A) OF INCOME TAX ACT, 1961

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. RBI cancels Certificate of Registration

2. A High Level Committee Constituted for Considering the Proposals for Assessment of Income arising or accruing before 1st April, 2012 on Account of Retrospective Amendments to the Provisions Related to Indirect Transfer

3. RBI Reference Rate for US $

4. Auction for Sale (Re-Issue) of Government Stocks

Notifications

Customs

1. 74/2014 - dated 2-9-2014 - Cus (NT)

Seeks to Amend Notification No.12/97-Customs (N.T.) dated 2nd April, 1997

VAT - Delhi

2. No. F.3(349)Policy/VAT/2013/289-310 - dated 21-8-2014 - DVAT

Modification in the effective date of Notification No.F.3(349)Policy/VAT/2013/645-657 dated 19/08/2013.

Circulars / Instructions / Orders

Income Tax

1. PRESS RELEASE - dated 2-9-2014

Cases regarding retrospective amendment of 2012 to be scrutinized by a committee to be constituted by CBDT.

FEMA

2. 24 - dated 2-9-2014

Exim Bank's Line of Credit of USD 89.90 million to the Government of the Republic of Congo

3. 23 - dated 2-9-2014

Three divisions of Foreign Exchange Department shifted to FED CO Cell at New Delhi

Highlights / Catch Notes

Income Tax

• Enhanced Compensation Taxable u/s 45(5)(b); No Benefit for Errors in Previous Tax Computations.

  Case-Laws - HC : Enhanced compensation received – Taxability of amount u/s 45(5)(b) – The assessee or Revenue cannot take advantage of a wrong computation or failure to tax or erroneous taxation in an earlier year - HC
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• High Court Criticizes Assessment for Lack of Clarity on Income Exemption u/s 10(15)(iv)(c) and TDS Deduction Issues.

  Case-Laws - HC : TDS not deducted u/s 195 - taxability would depend on whether the income was exempt u/s 10(15)(iv)(c) of the Act - The assessment order is woefully silent and quiet on the material aspects - HC
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• Reopening of Tax Assessment u/s 147 Unjustified Due to Lack of Tangible Evidence of Income Escapement.

  Case-Laws - HC : Reopening of assessment u/s 147 - There has to be some tangible material on the basis of which a reason to belief can be formed that some income had escaped assessment - the AO has failed to prove any escapement of income - HC
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• Provision for Bad Debt Not Deductible for MAT Calculation u/s 115JA Without Proper Write-Off per Section 36(1)(vii).

  Case-Laws - HC : Computation of book profits u/s 115JA – MAT - the assessee has made the provision for the bad debt but without written of the bad debt as per Section-36(1)(vii) of the Act - the deduction is not allowable as claimed by the assessee - HC
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• Court Clarifies TDS Deduction: Distinction Between 'Rent' u/s 194I and 'Work' u/s 194C for 2% Rate.

  Case-Laws - HC : TDS deduction u/s 194C @ 2% or u/s 194I – on comparison of the two explanations added to Sections 194-I and 194-C of the Act, it was never the intention of the legislature to overlap any of the items mentioned within the meaning of 'rent', by including the same within the meaning of 'work' under Section 194-C of the Act - HC
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• Insurance Company Deducted TDS Twice on Compensation Interest; Petitioner Advised to File Application Referencing Court Decision.

  Case-Laws - HC : TDS deducted by insurance company on interest on compensation received whereas TDS was already deducted on lump sum amount – petitioner to submit appropriate application before the insurance company and point out the decision of the Division Bench of the Court. - HC
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• Section 36(1)(viia) Deductions: Limit on Rural Bank Advances Cannot Exceed Bad Debt Provisions.

  Case-Laws - AT : Advances made to rural branches of bank – Whether deduction u/s 36(1)(viia) can exceed the amount of provision for bad and doubtful debts - Held no - AT
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• Irregularities and embezzlement lead to financial loss determination for the previous year.

  Case-Laws - AT : Provision towards fraud – the incident which resulted in irregularities/embezzlement occurred during the previous year – thus, the loss has to be held to have crystallized during the previous year - AT
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• Income Tax Act Section 10(23C)(iiiab): Educational Activity Benefit Doesn't Require Direct Teaching or School Operation.

  Case-Laws - AT : Claim of benefit u/s 10(23C)(iiiab) - Activity educational or not - the assessee itself need not impart education to the students and it need not be necessarily school or college for the claim of benefit - AT
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Customs

• Applicant Seeks Duty Exemption for Premier Flex 3000 Imports Under Notification No. 21/02-Cus; Stay Granted on Payment.

  Case-Laws - AT : Applicant imported Premier Flex 3000, Polyester Reinforced Black Finish, Polyester Reinforced Natural Granule Finish on “High Sea Sales“ basis and claimed exemption of duty under Notification No.21/02-Cus - stay granted - AT
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• Refund Claim Jurisdiction Clarified: Deputy Commissioner Designated as Proper Officer for Appellant's Case Handling.

  Case-Laws - AT : Entitlement of refund claim - Jurisdiction - Their jurisdictional Deputy Commissioner is also the proper officer for the appellant. - AT
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Corporate Law

• Arbitration Awards Are Final: Courts Cannot Reassess Decisions Unless Procedural or Jurisdictional Errors Exist.

  Case-Laws - SC : Arbitration award - Once the Arbitrator has applied his mind to the matter before him, the Court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the Arbitrator would prevail - SC
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Service Tax

• Hero Honda Dealer Successfully Claims CENVAT Credit for GTA, Insurance, and Telephone Services in Authorized Service Station Case.

  Case-Laws - AT : CENVAT Credit - Appellant, authorized dealer of Hero Honda two wheelers, availed credit of tax paid on GTA service, insurance service and telephone services; utilized it for the output service of Authorised Service Station - credit allowed - AT
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• Assessee Must Pay Service Tax on GTA Services Despite Transporters' Payment, Rules Commissioner (Appeals.

  Case-Laws - AT : GTA Services - no justification in the view of Commissioner (Appeals) that in as much as it was the assessee who was required to pay the service tax as GTA recipient, the same is required to be confirmed even though the transporters have deposited the same - AT
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Central Excise

• CENVAT Credit on Fabricated Capital Goods Valid if Goods Received, Duty-Paid, and Used in Manufacturing Final Product.

  Case-Laws - AT : CENVAT credit - fabrication of capital goods - in the absence of dispute of receipt of capital goods in the appellants' factory, their are duty paid character and use in the manufacture of final product, denial of substantive credit on the basis of alleged provision infractious cannot be upheld - AT
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Case Laws:

• Income Tax

• 2014 (9) TMI 59
  Enhanced compensation received – Taxability of amount u/s 45(5)(b) – Whether any capital gain arose on receipt of compensation because of the acquisition of land in which the assesse had tenancy rights only – Held that:- Section 45(5) has been interpreted by the Supreme Court in CIT vs. Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] - the profits and gains from transfer of a capital asset by compulsory acquisition was chargeable under the head “capital gains”- here the sub-lease was for a period of 17 years and the assessee also had constructed a super-structure, a factory, which was constructed by the predecessor of the assessee - once it was held that it was possible to ascertain the cost of acquisition of tenancy rights then it follows that capital gains could be computed and shall be payable - the compensation received in the year by the assessee has to be taxed - For the purpose of taxation of enhanced compensation received, cost of acquisition is to be taken as NIL as per the statutory mandate of Section 45(5) - The stand that the compensation received in any year pertains to only one transfer and gain, has been undone and negated by enactment of Section 45(5). There is no evidence that original compensation received by the assesse was not taxed and there is no such factual finding to that effect by any authority - each assessment year/order is separate and distinct - The assessee or Revenue cannot take advantage of a wrong computation or failure to tax or erroneous taxation in an earlier year – as decided in Commissioner of Income-Tax Versus DP Sandu Bros. Chembur P. Ltd. [2005 (1) TMI 13 - SUPREME Court] - it is possible to compute and calculate cost of acquisition of tenancy rights and gain on transfer of tenancy rights is taxable as capital gains - Income has been certainly earned is not exempt from tax – Decided in favour of revenue.

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• 2014 (9) TMI 58
  TDS not deducted u/s 195 - Amount paid to non-resident foreign company – Interpretation of section 40(a)(i) and 9(1)(v) – Held htat:- Revenue has not placed the relevant documents under which the payments were made or relating to the settlement. Revenue has not placed even copy of the report given by the DCIT - Full particulars and details regarding the purchase price, whether there was specific stipulation regarding delayed payment, consequences, when did the title in the goods pass to the respondent assessee etc. are not on record and not discussed in the assessment order - in the absence of the details and documents and keeping in mind the findings of fact recorded by the Tribunal, it is difficult to answer the questions and issues - the provision was not specifically invoked by the AO - taxability would depend on whether the income was exempt u/s 10(15)(iv)(c) of the Act - The assessment order is woefully silent and quiet on the material aspects - the amount paid was in settlement of delayed payment for the goods purchased and was not paid in respect of any borrowing made from the Kashpo International Ltd. – Decided against Revenue.

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• 2014 (9) TMI 57
  Net profits estimated @ 5% against 10% - Account books not furnished – Held that:- The Tribunal observed that the assessee has received the construction work from the government department and assessee has not done any private work during the assessment years under consideration - AO has made the addition on estimate basis – it was uphold by the CIT(A), but the Tribunal has again examined the books of account and estimated N.P. @ 5% on estimation basis - Relying upon The Commissioner Trade Tax, Lucknow Vs. M/s Herbochem Industries, Barabanki [2009 (8) TMI 1119 - ALLAHABAD HIGH COURT] - Thus, no substantial question of law arises for consideration – Decided against Revenue.

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• 2014 (9) TMI 56
  Application u/s 154 – Rectification of order - Reconsideration of turnover – Held that:- The assessee through this application u/s 154 before the AO sought reconsidering and re-determining the turnover, which was confirmed by the Tribunal on which there being no dispute which has already attained finality as income has been computed and reduction has been ordered by Tribunal by computing commission/brokerage @ 0.6% on the turnover determined and question of change in turnover has not been raised before CIT(A) or before Tribunal in earlier proceedings by way of any permissible mode and the action of the assessee to seek interference in already settled issue up to ITAT level is not permissible u/s 154. The Tribunal has observed that the figure represents genuine as well as fictitious turnover - This was the basis on which the entire appellate proceedings were heard and decided - there is merit in the submission of the Revenue, which was accepted by the Tribunal that the subject matter of appeal at that time included in its ambit the question of turnover involved and the observations of the Tribunal cannot be read in isolation, but meaningfully without indulging in semantics - what the assessee wants and seeks, by way of rectification, is re-examination of entire bank accounts and re-computation of the turnover - the assessee wants enquiry on whether or not the assessee had received commission even when cheques had bounced or whether commission was paid on the transactions which had been made through the stock exchange - the Tribunal made it clear that 0.6% rate of commission would apply to the entire transaction of Rs. 104.76 crores including the transactions which were genuine, i.e. the transactions which were recorded in the stock exchange - this cannot be undertaken in exercise of power u/s 154 - the order passed by the Tribunal rejecting the application u/s 154 cannot be interfered – Decided against Assessee.

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• 2014 (9) TMI 55
  Reopening of assessment u/s 147 cancelled on technical grounds –Reason to believe - Held that:- The reasons recorded by the AO mentions about the undisclosed investments in the business, purchase of car, acquisition of immovable properties as well as the deposits in various banks - the addition had been made on account of investments made in the purchase of shares - the reasons recorded by the AO has no nexus or a live link with the addition made by him in the assessment order - There has to be a live link between the reasons recorded and the additions so made in the assessment order - Income chargeable to tax that has escaped assessment has been provided u/s 147 of the Act - With effect from 1st April, 1989, Section 147 underwent an amendment to the effect that if the AO had "reasons to believe" that any income chargeable to tax had escaped assessment, the AO could assess or reassess such income - "Reasons to believe" has been a subject matter of interpretation by various Courts in various decisions – relying upon Indra Prastha Chemicals Pvt. Ltd. and others Vs. Commissioner of Income Tax and another [2004 (8) TMI 86 - ALLAHABAD High Court] - The reason to believe does not mean purely subjective satisfaction on the part of the AO. It means that the belief must be held in good faith - the formation of the opinion and belief is a condition precedent without which the AO will not have jurisdiction to initiate proceedings for reassessment - The reasons for the formation of the belief must have a rational connection, which is germane to the issue and must have a direct nexus - there must be some fresh material, which would give rise to the formation of the belief that income had escaped assessment and, therefore, the fresh material, which comes to the notice of the AO has to have a direct nexus or a live link with the formation of the belief that there has been an escapement of income - The foundational requirement for reopening the assessment is, that there must be a reason to believe that income had escaped assessment - There has to be some tangible material on the basis of which a reason to belief can be formed that some income had escaped assessment - the AO has failed to prove any escapement of income - initiation of proceedings u/s 148 of the Act is invalid – Decided against Revenue.

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• 2014 (9) TMI 54
  Provision for debts and nonperforming assets – Computation of book profits u/s 115JA – Held that:- While resorting to the provisions of Section 115JA on the basis that the total income of the company as computed under the Act is less than 30 per cent of its book profits, the AO has to accept the authenticity of the accounts maintained by the company in accordance with the provisions of Part II and Part III of Schedule VI to the Companies Act, 1956, which are certified by the auditors and passed by the company in its general meeting - The AO has only the power of examining whether the books of account are duly certified and whether such books have been properly maintained in accordance with the Companies Act - Item (c) of the Explanation to section 115JA is not attracted to the provision for bad and doubtful debts. The provision for bad and doubtful debts is made to cover up probable diminution in the value of the assets, i.e., a debt which is an amount receivable by the assessee - Such a provision cannot be said to be a provision for a liability, because even if the debt is not recoverable no liability can be fastened on the assessee - Any provision made towards irrecoverability of a debt cannot be said to be a provision for liability - the provision for bad and doubtful debt is made to cover up the probable diminution in the value of the asset - the assessee has made the provision for the bad debt but without written of the bad debt as per Section-36(1)(vii) of the Act - the deduction is not allowable as claimed by the assessee – thus, the order of the Tribunal is set aside and the matter is remitted back to the AO – Decided in favour of Revenue.

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• 2014 (9) TMI 53
  Revision of order u/s 263 – Prejudicial to the interest of revenue – Held that:- CIT has merely observed in its order passed u/s 263 that the AO did not make inquiry as per the direction of CIT(A) but without mentioning any reason - the AO while making de-novo assessment, as per the order of the CIT(A), has made the necessary inquiry pertaining to the sale of agricultural produce by M/s Shiva Bhandar - the assessee has taken land on lease and earned fixed income by selling agricultural produce to M/s Shiva Bhandar who further sold to M/s Food Department - the AO has made necessary inquiry while passing the fresh assessment order in pursuance to the direction issued by the CIT (A) - there was no occasion for the CIT to pass an order u/s 263 of the Act – there was no reason to interfere with the order passed by the Tribunal – Decided against revenue.

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• 2014 (9) TMI 52
  Block assessment made – Deletion of addition made by Tribunal – Undervaluation of cost of land and building - whether on the basis of the material collected subsequently and that too during the course of the block assessment proceedings u/s 158BC of the Act, such addition could have been made - Held that:- The AO directed to make addition being the difference of value of land and the cost of construction with respect to the building ‘Ravi Darshan’ on the basis of the report of the District Valuation Officer, which was obtained during the course of the block assessment proceedings – Following the decision in Commissioner of Income-tax Vs. Kantilal B. Kansara (HUF) [2010 (8) TMI 741 - Gujarat High Court ] - addition u/s 158BD of the Act can be made only in respect of the material disclosed at the time of search or pursuant to any inquiry made in relation to the search - the addition was made by the AO solely based upon the report made by the District Valuation Officer, which was referred during the course of the assessment proceedings - the report of the DVO cannot be stated to be material found during the course of the search and addition made on the basis of the District Valuation Officer’s report was not permissible – thus, the order of the Tribunal is upheld – Decided against Revenue.

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• 2014 (9) TMI 51
  TDS deduction u/s 194C @ 2% or u/s 194I – Buses on hire given for exclusive possession for a period of 2 years - Application of Board circular no. 558 dated 28 March 1990 when the Board Circular was issued prior to the introduction of Section 194(A) - Held that:- In Circular No.558 dated 28 March 1990, the Board clarified that the provisions of section 194C would have to be examined with reference to the terms and conditions of each contract – Held that:- The Tribunal did not commit any error of law in invoking section 194C which provides under Explanation III that work includes the carriage of goods and passengers by any mode of transport other than by railways – relying upon Assistant Commissioner of Income Tax (Tds) Versus M/s. Lotus Valley Education Society [2013 (9) TMI 976 - ALLAHABAD HIGH COURT] - on comparison of the two explanations added to Sections 194-I and 194-C of the Act, it was never the intention of the legislature to overlap any of the items mentioned within the meaning of 'rent', by including the same within the meaning of 'work' under Section 194-C of the Act. Also in Three Star Granites (P.) Ltd. Vs. Assistant Commissioner of Income Tax [2013 (12) TMI 546 - KERALA HIGH COURT] it has been held that the agreement does not require the owner of the vehicle to do any work at all - It is the assessee who makes use of the vehicles and the equipment - He pays hire charges on the basis of the number of hours of use and thus clearly the appellant is not justified in contending that Section 194C applies - all the work under the contract was required to be done by the assessee itself and no work within the meaning of section 194C was done by the owner of the vehicle - thus, the Tribunal was correct in holding that the liability of the assessee was to deduct tax at source u/s 194C and not u/s 194I – Decided against Revenue.

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• 2014 (9) TMI 50
  Keyman insurance premium deleted – Tribunal was of the view that the amount has earlier been also allowed as deduction – Held that:- The Tribunal has not decided the issue on merits and has dismissed the appeal solely on the ground of and considering the fact that with respect to AY 2005-06 the amount of premium on the Keyman Insuance Policy was held to be admissible deduction as business expenditure - when for AY 2005-06, the issue was sought to be re-opened by way of re-assessment proceedings which was set aside solely on the ground of jurisdiction and was not decided on merits, the Tribunal ought to have decided the issue on merits and has materially erred in considering the fact that for A.Y. 2005-06, the Revenue has accepted that the premium of Keyman Insurance Policy of the partners of the firm is wholly and exclusively for the purposes of business is allowable as business expenditure, however, factually, even for AY 2005-06 the said issue was sought to be re-opened by the Revenue by way of re-assessment proceedings – it was held to be bad on the ground of jurisdiction and not on merits – thus, the matter is liable to be set aside and matter remitted back to the Tribunal to decide the appeal – Decided in favour of Revenue.

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• 2014 (9) TMI 49
  Invocation of section 68 – amount received from stock of bullion treated as sum found credited in the books – Held that:- Section 68 applies where any sum is found credited in the books of an assessee and for which the assessee offers no explanation about the nature and source or where the explanation offered is not, in the opinion of the Assessing Officer, satisfactory - the sum credited may be charged to income-tax as the income of the assessee for the previous year - there has been no attempt on the part of the Tribunal to determine as to whether section 68 could have been invoked – the AO had made it abundantly clear that he was invoking the provisions of section 68 by adding the entire sale proceeds as income of the assessee - it is primarily for the Tribunal to consider as to whether the invoking of section 68 was in order – thus, it would be appropriate to restore the proceedings for a fresh consideration – Decided in favour of Assessee.

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• 2014 (9) TMI 48
  TDS deducted by insurance company on interest on compensation received whereas TDS was already deducted on lump sum amount – Held that:- In Smt. Hansaguri Prafulchandra Ladhani And Others Versus The Oriental Insurance Company [2006 (10) TMI 383 - GUJARAT HIGH COURT] it has been held that the income tax liability of the claimants to pay tax on the interest accrued on the compensation awarded to them shall arise if such interest income accrued in the concerned financial year together with other income of the respective claimants in that financial year exceeds the chargeable limit as specified in the provisions of the Income tax Act, 1961 in force for the relevant years - The insurance company has already deducted the tax on the entire interest amount as one lump sum amount – the SLP is relegated to the petitioner to submit appropriate application before the insurance company and point out the decision of the Division Bench of the Court.

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• 2014 (9) TMI 47
  Penalty u/s 271(1)(c) – Onus discharged by assessee - Claim of deduction on interest on FDR u/s 10A – Held that:- Assessee rightly contended that the FDRs had been furnished and given as security for obtaining overdraft limits – relying upon CIT Vs. Delhi Brass and Metal Works Ltd. [2008 (11) TMI 42 - HIGH COURT DELHI] - the defence taken by the assessee that the FDRs on which interest had accrued or was paid, had been obtained for issue of bank guarantee or for taking overdraft facility for the purpose of business – the defence was bonafide and the assessee has been able to discharge onus under Explanation to Section 271(1)(c) – thus, the order of the Tribunal is upheld – Decided against Revenue.

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• 2014 (9) TMI 46
  Exercise of jurisdiction under Article 226 - Reopening of assessment u/s 148 – Rejection of assessee’s objection – Held that:- The assessment sought to be reopened was for a period of more than 4 years from the end of the relevant assessment year - Therefore a higher degree of satisfaction is required in cases where the assessment sought to be reopened is beyond four years - during the original assessment proceedings the AO had proceeded on the basis that the purchase details furnished by the petitioners including the bills of purchase are genuine - The information obtained subsequent to the assessment indicate that certain purchase details may not be genuine - the occasion to consider the genuineness of the purchase bill was never a subject matter of scrutiny in the proceedings u/s 143(3) of the Act for A.Y. 2006-07 and 2007-08 – the notice issued for reassessment u/s 148 cannot be interfered – Decided against Assessee.

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• 2014 (9) TMI 45
  Stamp Duty disallowed – Whether stamp duty charges are included within the scope of the expenditure enumerated u/s 35D(2)(c) - Held that:- The stamp duty charges claimed as deduction by the assessee included the charges pertaining to both the issue of bonus shares and the IPO - the expenditure related to the issue of bonus shares is revenue expenditure as held in Commissioner of Income-Tax Versus General Insurance Corporation [2006 (9) TMI 116 - SUPREME Court] - the items of expenditure mentioned in section 35D(2)(c) of the Act is only illustrative and not restrictive – following the decision in Commissioner Of Income-Tax Versus Shree Synthetics Limited [1985 (11) TMI 45 - MADHYA PRADESH High Court] - thus, all expenditure incurred in connection with the issue of IPO, etc. including stamp duty to be allowable expenditure u/s 35D of the Act - stamp duty charges incurred by the assessee for the public issue of shares etc. is allowable as deduction u/s 35D of the Act – Decided against Revenue. Deduction u/s.80JJA – Held that:- Section 80JJAA of the Act allows for deduction of additional wages paid to new workmen for an industrial undertaking - a company that is engaged in development, design and manufacture of software should be considered as being an industrial undertaking for the purposes of section 80JJAA of the Act - As the assessee is engaged in the development and manufacture of software, the assessee is covered within the definition of industrial undertaking - the assessee would be eligible for deduction u/s.80JJAA in respect of salary paid to the software engineers not employed in the supervisory role – CIT(A) had taken note of the notification issued by the Government of Karnataka and concluded that as per the notification issued, the assessee company engaged in the development of software is covered by the Industrial Disputes Act, 1947 - the decision of the CIT (A) is upheld in allowing the assessee deduction u/s.80JJAA of the Act – Decided against Revenue. Deduction u/s.10A – Held that:- The assessee is engaged in the business of mobile value added services, which involve content development in its STP unit - the assessee has a dedicated studio in its STP unit where music related content is developed - The assessee also procures music and other content from third parties - The assessee also uses other advanced equipments which includes several hardware and systems like Sound Cards, Monitors, MIDI Controllers, Microphones, etc. which are used for development of content - These equipments, both hardware and software systems, are used for processing before it is made available for use by the customers - Once all the activities in the process are complete, the mobile compatible content is uploaded on the software platforms in the servers - the assessee s activity of "developing content" and "conversion of the procured content into mobile readable format" would qualify to be classified as "Content Development" or "Data Processing" specified in CBDT s Notification NO.11521 and therefore the assessee can be considered as rendering IT Enabled Services. The content developed by the assessee is uploaded on software platforms which are then transferred to the servers situated outside India from where it is accessed by mobile subscribers of that country – it would qualify as exports for the purposes of section 10A of the Act - the assessee satisfies the twin conditions of export of computer software and repatriation of exports proceeds in convertible foreign exchange as prescribed in section 10A of the Act - the assessee is entitled for deduction u/s.10A of the Act – Decided against Revenue. Legal i.e. that expenditure would go to protect the patent and not create the patent per se - the expenditure incurred as legal charges for filing the patent application is revenue expenditure incurred in the course of the assessee s business and is to be allowed as a deduction – Decided in favour of assessee. Adjustment in Depreciation – Whether MRBs are to be classified as plant and machinery or computers for the purposes of depreciation - Held that:- The function of MRBs is to support a combination of functions, performed in conjunction with the computer and servers - The MRBs are boards which are connected to computer servers which assist in receiving calls and would function only when attached to the computer - The MRBs increase the working capacity of the computers to the extent the computers receive calls and convert them into digital form - The MRBs work in conjunction with and as a part of the computer servers and cannot, in any way, be called as telecom equipment - DCIT V Datacraft India Ltd.[2010 (7) TMI 642 - ITAT, MUMBAI ] - a distinction has been drawn between a computer component being a necessary accessory to be called a "computer component" and not being a necessary component - The MRBs operate along with the servers and computers and are a necessary component of the "computer system" - The MRB cannot function without the computers and the computers cannot perform the necessary functions required in the case on hand without the presence of the MRBs - the MRBs are to be classified as "computers" for the purposes of the claim of depreciation @ 60% - Decided in favour of Assessee.

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• 2014 (9) TMI 44
  Provision towards fraud – Crystallization of loss - Whether the deduction can only be allowed if fraud is established and whether the loss claimed by the assessee can be said to have crystallized during the previous year – Held that:- The AO accepted the fact that the assessee bank has a well placed mechanism to identify frauds and initiate recovery action - the figures mentioned in the FIR is only a provisional figure which is arrived at for the purpose of filing an FIR immediately on occurrence of the fraud - The vigilance report is prepared after detailed study - there is bound to be a difference in the figures between the vigilance report and FIR lodged - Since the vigilance report is prepared after a deeper study, that figure should be considered as a loss to the assessee - the incident which resulted in irregularities/embezzlement occurred during the previous year – thus, the loss has to be held to have crystallized during the previous year – the order of the CIT(A) is upheld – Decided against Revenue. Advances made to rural branches of bank – Whether deduction u/s 36(1)(viia) can exceed the amount of provision for bad and doubtful debts - The Assessee made a claim for deduction u/s.36(1)(viia)(a) of the Act of Rs. 23,80,55,247. This was rejected by the AO for the reason that the deduction u/s.36(1)(viia) of the Act is allowed only to the extent PBDD in respect of rural advances is created in the books of accounts. - But CIT(A) allowed the claim of the Assessee - Held that:- What has to be seen by the AO is as to whether PBDD is created (irrespective of whether it is in respect of rural or non-rural advances) by debiting the Profit & Loss A/C. To the extent PBDD is so created, the Assessee is entitled to deduction subject to the upper limit of deduction laid down in Sec.36(1)(viia) of the Act. To avoid possible claim for double deduction in respect of one and the same debt first as PBDD and thereafter as Bad Debts, the legislature has already provided in Sec.36(2)(v) of the Act that where such debt or part of debt relates to advances made by an assessee to which cl. (viia) of sub-s. (1) applies, no such deduction shall be allowed unless the assessee has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debts account made under that clause. - Decision in the case of Catholic Syrian Bank (2012 (2) TMI 262 - SUPREME COURT OF INDIA) distinguished. - Decided in favour of revenue.

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• 2014 (9) TMI 43
  Transfer pricing adjustment - Selection of comparables – Huge difference in turnover – Functionally different unit - Held that:- The three companies are having huge turnover, as compared to the assessee's turnover of about Rs. 22 crores – following the decision in Capital IQ Information Systems India Ltd. V/s. DCIT [2014 (3) TMI 626 - ITAT HYDERABAD] - the companies having high turnover cannot be selected as comparable with companies having reasonably small turnover – it has been rightly held by the lower authorities that the activity of the company as a KPO service - it cannot be said that the company is comparable to the assessee as the comparable to a company providing purely ITE services, as it is engaged in providing purely KPO services. The activities undertaken by the said company vis-à-vis the activities of the assessee before it, which is engaged in providing only ITE Services to its AE, had remitted the issue to the file of the TPO for considering afresh with the following observations – thus, the matter is remitted back for fresh consideration regarding the selection of comparable - exceptional events like merger/demerger does impact the profitability of a company - it is necessary to look into this aspect before selecting a particular company as comparable - when the assessee itself has selected it as a comparable in its TP Study, it is to be assumed that the assessee has considered all the aspects including the fact of outsourcing of ITES activities to third party vendors and functional comparability - the company has outsourced the IT enabled services to third party vendors, the matter is remitted back to the AO/TPO for fresh consideration of the issue of comparability - The TPO has admitted that the company has two segments, and only the IT Enabled Services Segment, relating to engineering design services was considered by the TPO for comparability analysis - the functions performed by the Engineering Design services segment of the company cannot be considered as a comparable to the ITES/BPO functions – Decided partly in favour of Assessee. Exclusion of communication charges – Computation of deduction u/s 10A – Held that:- The AO has excluded the amount from the export turnover, on the ground that expenses are attributable to delivery of product outside India - this cannot be a ground to reject the contention of the assessee – relying upon CIT V/s. Gem Plus Jewellery [2010 (6) TMI 65 - BOMBAY HIGH COURT] - while upholding the exclusion of communication charges attributable to delivery of product outside India from the export turnover, it has to be excluded from the total turnover, while computing the deduction u/s 10A of the Act, for maintaining principle of parity - the orders passed by different benches of the Tribunal including the benches of the Tribunal at Hyderabad - the AO is directed to reduce the communication charges both from the export turnover as well as the total turnover, while computing deduction u/s 10A of the Act – Decided in favour of assessee.

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• 2014 (9) TMI 42
  Condonation of delay – Delay of 1804 days – Sufficient cause - Rejection of application for registration u/s 12AA - Held that:- There is no straight jacket formula to measure what constitutes sufficient cause. It depends upon the facts of each individual case - Condonation of delay is not a matter of empty formality - The assessee is required to show sufficient cause that the assessee was either bona fide or was prevented by sufficient cause from pursuing the remedy - The assessee has to establish that there was no negligence or inaction or want of bona fide and the right granted under law to challenge the order was not abandoned - the assessee was earlier enjoying exemption u/s10(20A), but after omission of the provision from 1.4.2002, the assessee itself started filing returns of income voluntarily declaring income for the assessment years 2003-04, 2004-05; and 2005-06 - Only on 15.3.2007, the assessee made an application for registration under S.12AA of the Act - The justification/reasons for making such application, as discovered from the order of the DIT(E) is that its counterpart Visakhapatnam Urban Development Authority was granted registration under S.12AA of the Act, vide order dated 31.7.2006. Belated filing of appeal is not just the only aberration or stand alone instance of lapse on the part of the assessee – there were several instances which clearly demonstrate the casual and negligent approach of the assessee in dealing with issues pertaining to income-tax, which under the normal circumstances require greater attention - the assessee did not produce its books of account and information called for in spite of availing sufficient opportunity - the assessee is not only negligent in filing appeal before the Tribunal, but also in the matter of pursuing its application, before the DIT (E) for getting registration u/s12AA by producing the books of account and other information - it is quite certain that there is no reasonable cause for the delay, and the filing of the present appeal is only a knee jerk reaction of the assessee – thus, it is not a fit case for condonation of delay - the plea of the assessee for condonation of delay is rejected – Decided against Assessee.

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• 2014 (9) TMI 41
  Claim of benefit u/s 10(23C)(iiiab) - Activity educational or not - Whether the assessee society is earning profit year to year and printing and publishing of prescribed text book and providing to the students at a cheaper rate is not an educational activity – Held that:- No part of the surplus generated by the assessee was parted by it for the purpose other than aid to Government schools for construction of building, repairing of building, furniture, scholarships to the students etc. - it has not distributed any profit to anybody in any of the assessment years under consideration - all the shares of the society is with the Government of M.P. and Board of Governors of the Society, his ministers and Secretaries of various Departments of M.P. Government and there is no provision for distribution of profit, in the registration of the society itself – Relying upon Haryana State Counselling Society Versus Chief Commissioner, Income Tax, Panchkula [2010 (5) TMI 170 - PUNJAB & HARYANA HIGH COURT] - merely because an educational institution accumulates income, it does not go out of the purview of Section 10(22)/10(23C)(vi). - there is nothing in the Income Tax Act to support the proposition that educational institution cannot generate any surplus. Entire fund has been invested by the State Government either in the form of initial contribution or through accumulation of surplus, therefore, the assessee was not required to be approved by prescribed authority for the purpose of claim of exemption u/s 10(23-C) - as the object of the assessee society vis-à-vis, its constitution remains the same for the AY 1999-2000 and onwards, the claim of deduction on account of assessee being other educational institution is to be allowed u/s 10(23C)(iiiab). The assessee society was established only for the purpose of advancement of education by printing and publishing of text books as prescribed by the Government - all institutions working in all other States of India were held to be eligible for claim of exemption u/s 10(22) - there was no justification on the part of lower authorities for decline of claim of exemption u/s 10(22)/10(23C) – also in Commissioner Of Income-Tax, Karnataka I Versus Academy Of General Education, Manipal [1983 (8) TMI 18 - KARNATAKA High Court] - the assessee itself need not impart education to the students and it need not be necessarily school or college for the claim of benefit - in its account even though the assessee has not included income of Colleges, established under separate trust - the assessee has given grants to some of those schools, it was held that the assessee was entitled for claim of exemption u/s. 10(22) – Decided in favour of Assessee.

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• Customs

• 2014 (9) TMI 64
  Waiver of pre deposit - Exemption of duty under Notification No.21/02-Cus., dated 01.03.2002 - applicant imported Premier Flex 3000, Polyester Reinforced Black Finish, Polyester Reinforced Natural Granule Finish on "High Sea Sales" basis and claimed exemption of duty under Notification No.21/02-Cus., dated 01.03.2002 - registration of the project import is done by NPCI - violation of the condition of the notification - Held that:- under Regulation of the project, the asessee is required to register the project with the Customs authority before importation. In this case, the registration of the project import is done by NPCI and therefore, there is violation of the condition of the notification. They are required to comply with the condition of the Notification. We find that the Tribunal, in the applicant's own case vide Stay Order No.537/06, dated 04.05.2006 granted unconditional stay following the earlier stay order of the Tribunal in the case of Hindustan Construction Company Ltd. Vs Commissioner of Customs, Trichy reported in [2005 (12) TMI 551 - CESTAT CHENNAI]. On a query from the Bench, the learned Counsel for the applicant drew the attention of the Bench to the letter dated 17.05.2003 of M/s. NPCIL, wherein it is mentioned M/s. Simplex Concrete Piles (India) Ltd. subsequently changed to M/s. Simplex Infrastructure Ltd., applicant herein. Prima facie , on perusal of the certificate under Customs Notification No.21/2002, dated 01.03.2002 issued to M/s. NPCIL, a Govt. of India Enterprise, we find that it is a fit case for waiver of pre-deposit of duty along with interest. - Stay granted.

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• 2014 (9) TMI 63
  Suspension of CHA License - Regulation 20(2) of CHALR 2004 - Held that:- Department that report was received on 01.01.2013 to pass the suspension order dated 30.01.2013, Appellant pleads that when no order was passed under Regulation 20 (2) of CHALR 2004 within 15 days of receipt of the report, there is violation of the said Regulation, since 15 days time is stipulated by law on that behalf. According to appellant, the law laid down by Hon'ble High Court of Delhi in the case of Schankar Clearing & Forwarding vs. C.C. (Import & General) reported in [2012 (8) TMI 760 - DELHI HIGH COURT] was not followed by respondent Revenue. The report of investigating agency dated 09.03.2011 resulted in adhoc suspension of the CHA on 10.10.2011. There after, power under Regulation 20(2) was exercised to pass the order dated 24.01.2012 which was post decisional hearing order. The appellant in that case came to Tribunal against order dated 24.01.2012 with grievance of violation of the Regulations of CHALR 2004. Against order of dismissal of appeal by Tribunal, Hon'ble High Court held that both the orders i.e. order dated 10.10.2011 and 24.01.2012 were unsustainable being contrary the provisions to CHALR 2004 and those orders were set aside. The authority was allowed liberty to proceed with the enquiry and pass any order in accordance with law after granting opportunity to the appellant following procedure of law in that case. - Decided in favour of CHA.

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• 2014 (9) TMI 62
  Imposition of penalty - DEPB claim - fault of ‘CHA’ and ‘G’ card holder - Penalty on exporter - Held that:- Record reveals that there was deliberate mis-declaration by the exporter in respect of value and quantity of the goods attempted to be exported. But ettempt to export such mis-declared goods failed. Therefore, the inference that may be drawn is that the exporter appellant apprehending that the goods may be confiscated, choose to avail the option of redemption fine and took back the goods. In such circumstance, imposition of penalty of Rs. 3,00,000/- does not appear to be unreasonable. Therefore, the appeal of the exporter is dismissed. - Decided against the assessee. So far as the CHA is concerned, he does not appear to be innocent. He acted on his own volition for the gain of each other i.e. exporter and himself. Therefore, relieving CHA from penalty shall be improper. Accordingly, penalty of Rs. 50,000/- imposed on CHA is confirmed and his appeal is dismissed - Decided partly in favour of CHA.

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• 2014 (9) TMI 61
  Entitlement of refund claim - Jurisdiction - whether the application filed well within time is required to be considered for the purposes of the refund, though filed before a wrong officer or as to whether the subsequent refund application filed on 8.6.2012 has to be taken into consideration for the purpose of limitation - Held that:- Admittedly, Deputy Commissioner, Central Excise Division is the jurisdictional Deputy Commissioner of the appellant and by treating the same as proper officer, the appellant had filed the application before him. If the said Deputy Commissioner was not competent to pass the refund claim, he should not have either accepted the said letter or should have returned the same to the assessee for filing it before the proper officer. Instead of the same, refund claim was kept by the Deputy Commissioner for a period of above three months and was returned only thereafter. For an assessee, it is not possible to find out as to who is the proper officer in the Revenue to deal with the refunds filed by them. Their jurisdictional Deputy Commissioner is also the proper officer for the appellant.

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• Corporate Laws

• 2014 (9) TMI 60
  Arbitration award - scope of court to interfere - Division Bench of the High Court affirmed the award of the Arbitrator - Held that:- the scope of interference of the Court is very limited. Court would not be justified in reappraising the material on record and substituting its own view in place of the Arbitrator’s view. Where there is an error apparent on the face of the record or the Arbitrator has not followed the statutory legal position, then and then only it would be justified in interfering with the award published by the Arbitrator. Once the Arbitrator has applied his mind to the matter before him, the Court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the Arbitrator would prevail. - Decided against the appellants.

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• Service Tax

• 2014 (9) TMI 79
  Rent a cab service - Penalty u/s 76 & 78 - Held that:- Earlier decision of the Tribunal in the case of Kuldeep Singh Gill (2010 (4) TMI 283 - PUNJAB & HARYANA HIGH COURT) is in favour of the assessee, therefore we find that it is not a case for imposition of any penalty under Sections 77 and 78 of the Finance Act. The penalties imposed under the impugned order are set aside, otherwise the demand with interest is upheld - Decided in favour of assessee.

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• 2014 (9) TMI 78
  Waiver of pre-deposit of service tax - scientific and technical consultancy service - option as provided under rule 6 (3) (ii) of the Cenvat Credit Rules not filed - Held that:- Applicants were reversing proportionate credit which is in respect of non taxable service as per the provisions of Rule 6 (3) (ii) of the Cenvat Credit Rules in view of the earlier adjudication order dated 31.3.2011. The applicant has made out a case for waiver of pre-deposit of the dues. In the facts and circumstances of this case, the pre-deposit of the dues is waived and recovery thereof stayed for hearing of the appeals - Stay granted.

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• 2014 (9) TMI 77
  CENVAT Credit - Appellant, authorized dealer of Hero Honda two wheelers, availed credit of tax paid on GTA service, insurance service and telephone services; utilized it for the output service of Authorised Service Station - Revenue viewed the credit inadmissible, adjudicated demand for recovery of irregular credit along with interest and penalty, upheld by Commissioner (Appeals) and agitated herein - Held that:- issue involved in this case stands decided in favour of the Appellant by the Tribunal judgement in case of M/s. Badrika Motors (P) Ltd. reported in [2014 (1) TMI 316 - CESTAT NEW DELHI], which in turn, is based on the Tribunals judgements in the cases of Sri Venkanna Motors Pvt. Ltd. (2009 (3) TMI 877 - CESTAT BANGALORE) and CCE, Tirupathi Vs. Shariff Motors (2009 (3) TMI 155 - CESTAT, BANGLORE). In view of this, the impugned order is not sustainable - Decided in favour of assessee.

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• 2014 (9) TMI 76
  Goods transport agency service - payment of service tax using cenvat credit - Held that:- Panchamahal Steel Ltd. vs. CCE & ST, Vadodara reported in, whereby the Tribunal, after relying upon the decision of the Hon'ble Punjab & Haryana High Court in the case of CCE vs. Nahar Industrial Enterprises Ltd. reported in [2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT], decision of the Hon'ble Himachal Pradesh High Court in the case of CCE vs. Auro Spinning Mills reported in [2011 (7) TMI 849 - Himachal Pradesh High Court] and the decision of Hon'ble Delhi High Court in the case of CST vs. Hero Honda Motors Ltd. reported in [2012 (12) TMI 734 - DELHI HIGH COURT], held in favour of the assessee. The period in dispute is prior to the amendment on 1.3.2008 to the provisions of Rule 2(p) of the Cenvat Credit Rules. - Decided in favour of assessee.

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• 2014 (9) TMI 75
  Waiver of pre deposit - Renting of immovable property - Failure to obtain registration - Failure to file return and remit tax - Held that:- Since the appellant Municipal Corporation had rented out its properties to poor and under-privileged sections of the society, in discharge of a Constitutional obligation flowing from the provisions of Article 243W (introduced by the 74th Amendment of the Constitution), it can be considered to have provided any taxable service liable to the levy of tax by the Union Legislature. Since the service provided by the appellant Municipal Corporation do not fall within the scope of the limitations on Union Legislative Power specified in Article 289 of the Constitution. However, the appellant appears to have an eminently arguable case with regard to the legitimacy of invoking the extended period of limitation, in the facts and circumstances of the case. - Partial stay granted.

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• 2014 (9) TMI 74
  GTA Services - liability of service recipient whereas transporter has deposited the service tax - extended period of limitation - appellants have produced one-to-one entry of service tax claim of GTA services in GRs and ST deposited in Govt. accounted by the transport agency - Held that:- no justification in the view of Commissioner (Appeals) that in as much as it was the assessee who was required to pay the service tax as GTA recipient, the same is required to be confirmed even though the transporters have deposited the same. Transporters were charging S.T from the appellants in as much as the same stands reflected in the consignment notes issued by them. As the appellants were paying the service tax to the transporters for further deposit with the Govt., they cannot be held guilty of any mala fide suppression to invoke the longer period of limitation. The demand having been raised on 01.11.2010 for the period 01.01.2006 to 31.03.2010 is barred by limitation, except a few months falling within the limitation. Accordingly, I set aside the demand on the point of limitation and remand the matter to the original adjudicating authority for quantification of duty falling within the limitation period - Decided in favour of assessee.

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• 2014 (9) TMI 65
  Condonation of delay - appeal has been filed after the expiry of 91 days from the date of communication of the order - penalties under Section 78 - Held that:- appeal shall be presented within two months from the date of receipt of the decision or order and if the appellant is prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, the appellate authority can condone the delay and allow the appeal to be presented within a further period of one month. Thus, the total time period of 3 months is available to the appellant to file the appeal. In their application for condonation of delay, the appellant has pleaded that they were awaiting for decision on the same issue in respect of other Branches, and, therefore, the delay occurred - appeal has been filed on 17/02/2014. The General Clauses Act defines a month as a British Calendar month and it is not defined in terms of number of days. Therefore, in the present case, the appeal has been filed in time i.e. within the condonable period. Therefore, the period is not beyond the condonable period and the appellate authority should have condoned the delay. matter remanded back - Delay condoned.

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• Central Excise

• 2014 (9) TMI 70
  Duty demand on employee of Company - Suppression of production and clandestine removal - Held that:- Penalty has been imposed on the Managing Director of the assessee firm under Rule 26 of Central Excise Rules, 2002. Rule 26 provides that for imposition of penalty on any person, if such person had dealt with goods which he knew was liable for confiscation. In the present case, neither in the show-cause notice nor in the adjudication order, is there any proposal or findings to the effect that the goods are liable to confiscation. In the absence of such a proposal or finding imposition of penalty under Rule 26 cannot be prima facie sustained - waiver from pre-deposit of penalty adjudged against the appellant and stay recovery thereof during the pendency of the appeal is granted - Stay granted.

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• 2014 (9) TMI 69
  Reversal of CENVAT Credit - whether the amount equivalent to the credit originally taken has to be reversed or not for the clearance of the capital goods after usages for a considerable period - Held that:- Madras High Court in the case of CCE Vs. Rogini Mills Ltd. [2010 (10) TMI 424 - MADRAS HIGH COURT] accepted the decision of the Tribunal, reversal of CENVAT credit of 2.5% for each quarter of an year, from the date of taking of CENVAT credit. The Larger Bench of the Tribunal in the case of Navodhaya Plastic Industries Ltd. (2013 (12) TMI 82 - CESTAT CHENNAI ), following the decision of the Hon'ble Madras High Court answered the reference accordingly - issue should be examined in the light of the decision of the Larger Bench in the case of Navodhaya Plastic Industries Ltd. (supra). Accordingly, I set aside the impugned orders and remit the matter to the adjudicating authority to decide afresh after considering the decision of the Larger Bench in the case of Navodhaya Plastic Industries Ltd. (supra) - decided in favour of assessee.

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• 2014 (9) TMI 68
  Benefit of CENVAT credit - Non filing of declaration - fabrication of capital goods - Held that:- non-filing by itself will not result in denial of credit. One such reference can be made to the decision of Hon'ble High Court of Madras in the case of CCE, Chennai Vs. ITC Ltd. [2007 (11) TMI 188 - HIGH COURT MADRAS]. In any case, I find that the appellants had actually filed the declaration in March, 2000 and it is not the case of non-filing of declaration, but a case of late filing of declaration, if at all. As per the appellants in as much as they got themselves registered in March, 2000 only, they could not have filed the 57-T declaration prior to getting registered themselves. In any case, I find that in the absence of dispute of receipt of capital goods in the appellants' factory, their are duty paid character and use in the manufacture of final product, denial of substantive credit on the basis of alleged provision infractious cannot be upheld. As regards the doubt about the use of some of the parts in the fabrication of the capital goods - matter remanded back - Decided in favour of assessee.

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• 2014 (9) TMI 67
  Denial of CENVAT Credit - credit on the wire rods and used in the conversion of wires - Held that:- The retrospective amendment in Rule 16 is aimed at facilitating wire drawing units, which had paid a sum equal to the duty leviable on drawn wire after availing the credit of duty paid on inputs for the said period. It is aimed at regularizing availment of credits at two stages and payment of an amount representing duty at one stage. The purpose of the amendment is to regularize credit taken at the input stage (on wire-rod), credit taken by the downstream user of drawn wire and the amount paid as central excise duty on clearance of drawn wire. In other words, wire drawing units, which had paid sum equal to duty leviable on drawn wire, would be eligible to avail the credit of duty paid on inputs and utilize the same for payment of duty on drawn wire for the period of amendment. The sum paid by the wire drawing unit in such cases will be treated as duty and shall be allowed as credit to the buyer of drawn wire in terms of the amendment. This amendment would not create any additional liability on any wire drawing unit which did not pay duty on drawn wire during the period of amendment. - Following decision of VENUS WIRE INDUSTRIES PVT. LTD. Versus COMMR. OF C. EX., RAIGAD [2007 (12) TMI 332 - CESTAT, MUMBAI] - Decided against Revenue.

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• 2014 (9) TMI 66
  Denial of CENVAT Credit - Testing samples - whether the CENVAT credit relatable to samples taken for testing within the factory is liable to be reversed - Held that:- Tested samples of copper concentrate were ultimately fed into the primary smelter but the plea was rejected as it was not supported by any documentary evidence. The Assistant Commissioner of Central Excise for the earlier period vide order dated 27.11.2007 dropped the demand after examining the report of the Superintendent. It is seen from the adjudication order that the appellant produced the copies of sample register instead of original documents. It was observed by the adjudicating authority that the register was a prepared one and the appellant had not convinced the adjudicating authority as to its genuineness. appellant should be given a reasonable opportunity to produce the original register before the adjudicating authority. It is also noted from the earlier adjudication order that the Superintendent of Central Excise verified the register and the demand was dropped on the basis of the verification report of the Superintendent. So, the adjudicating authority should proceed on the basis of the verification report of the Superintendent as it was done for the earlier adjudication order. Matter remanded back - Decided in favour of assessee.

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• CST, VAT & Sales Tax

• 2014 (9) TMI 73
  Maintainability of appeal - Nonpayment of pre-deposit amount of 60% of the tax demanded - Held that:- First Appellate Authority has dismissed the appeal preferred by the appellant on the ground of noncompliance of the order of pre-deposit and even the learned Tribunal has also dismissed the appeal solely on the ground of non-deposit of the amount of pre-deposit i.e. 20% of the total tax liability i.e. Rs. 16,73,500/- and in the facts and circumstances of the case considering the financial hardship pleaded by the appellant and so that the appeal preferred by the appellant is considered by the first Appellate Authority on merits, we are of the opinion that if the appellant is directed to deposit a total sum of Rs. 10,00,000/- as pre-deposit and on that the appeal preferred by the appellant is directed to be decided and disposed of by the first Appellate Authority on merits, it will meet the ends of justice and it will be in the fitness of things - Decided partly in favour of assessee.

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• 2014 (9) TMI 72
  Rejection of the application under Samadhan Scheme - balance of the admitted tax payable by the appellant was more than 10% - Whether the appellant is entitled to avail the Samadhan Scheme as per the provisions of the Tamil Nadu Sales Tax (Settlement and Arrears) Act, 2011 - Held that:- As per Rule 3(5) of the Rules, if the designated authority finds any defect or omission in the applications, he shall return such applications for rectification of the defects within ten days from the date of receipt of the said application. However, in the case on hand, the first respondent, did not do so, but, without considering the said provision, had passed the impugned order and the learned Judge had also confirmed the same. Admittedly, the appellant, on verification of the records, found that it had inadvertently reported the turnover as inter-state sale and hence, the appellant had also filed an appeal before the authority concerned. It is the specific plea of the appellant that had the appellant been provided with an opportunity to rectify the defects in the taxable turnover reported, the appellant would be in a position to show that the balance of the admitted tax payable should be within 10%. Though the appellant was denied to rectify the same, the learned Judge had not considered the same and rejected the writ petition, which, in our opinion, warrants interference - Decided in favour of assessee.

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• 2014 (9) TMI 71
  Revision application - non-compliance of requirement of Chapter 27 Rule 5(2) of High Court Rules - Held that:- Affidavit of service has to accompany revision application, but proviso to sub Rule 2 provides, that, if due to lack of time or for any other sufficient reason, affidavit of service is not accompanying the application filed by Commissioner of Trade Tax, such affidavit must be filed within three weeks' of the date of institution of application. Therefore, a revision would be treated to be validly filed by an assessee if it is accompanied by affidavit of service, but in case of revision filed by Commissioner of Trade Tax, affidavit of service must accompany revision, but for valid reasons, this condition would stand dispensed with, but, the affidavit of service then, must be filed within three weeks' of the date of institution of application. It is true that revision filed by Revenue, may not be dismissed for technical reasons, but where service has not been effected upon assessee for several years all together and Commissioner of Trade Tax apparently has failed to comply with statutory requirement of filing affidavit of service, this Court finds no justification, still to continue with said revision to remain pending and give further opportunity to Revenue, after such a long time - revision was filed in 2008 and till date affidavit of service has not been filed. In my view, it is fit case where this Court must reject revision having not been filed in accordance with rules and for non-compliance of requirement of Chapter 27 Rule 5(2) of High Court Rules - Decided against Revenue.

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• Indian Laws

• 2014 (9) TMI 40
  Suspension of employees - Imposition of punishment - Violation of principle of natural justice - Service of copy of reasons for punishment - Held that:- order of punishment would stand vitiated in case the reasons so recorded by the Disciplinary Authority for dis-agreement with the Enquiry Officer had not been supplied to the delinquent and his explanation had not been sought - whenever the disciplinary authority disagrees with the enquiry authority on any article of charge, then before it records its own findings on such charge, it must record its tentative reasons for such disagreement and give to the delinquent officer an opportunity to represent before it records its findings. The report of the enquiry officer containing its findings will have to be conveyed and the delinquent officer will have an opportunity to persuade the disciplinary authority to accept the favourable conclusion of the enquiry officer. The principles of natural justice, as we have already observed, require the authority which has to take a final decision and can impose a penalty, to give an opportunity to the officer charged of misconduct to file a representation before the disciplinary authority records its findings on the charges framed against the officer - Following decision of Punjab National Bank & Ors. v. Kunj Behari Misra [1998 (8) TMI 594 - Supreme Court of India] - Decided in favour of Appellant.

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• 2014 (9) TMI 39
  Distribution of compensation granted - Divorce of husband and wife - Whether a divorced wife is a widow and hence dependent of the husband at the time of his death, within the meaning of Section 2(1)(d) of the Workmen's Compensation Act, 1923 - Held that:- for the purpose of enquiry under the Act, 1923, the respondent cannot be said to be enjoying the status of widow of deceased Kishore. Once we find that so far as the enquiry under the Act, 1923 is concerned, the respondent was not the widow of deceased Kishore, she would be out of the scope and ambit of the definition of the term, 'dependent' as given in Section 2(1)(d) of the Workmen's Compensation Act, 1923, which describes, inter alia, a widow of a deceased workman as his dependant. respondent cannot be termed as a widow in this case and as such the first impugned order passed by learned Commissioner, Chandrapur cannot be sustained in law. It would then follow that the subsequent order refusing to revise the first order can also be not upheld - Following decision of Smt. Rambai Vs. Ramesh Kumar reported at [1995 (7) TMI 421 - MADHYA PRADESH HIGH COURT] - Decided in favour of appellants.

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