TMI Tax Updates - e-Newsletter
September 7, 2012

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. Services taxable earlier but exempted w.e.f 01.07.2012

   By: Meenu Garg

News

1. Rate of Exchange of Conversion of Foreign Currency into Indian Currency or Vice Versa Relating to Imported and Export Goodsnotified; To Come into Effect from 7th September, 2012 .

2. Assessment of Black Money Parked Abroad by Indian.

3. Multilateral Convention in Tax Matter.

4. IT Platform to Integrate Central and State Indirect Taxes Regime.

5. Money Deposited through Bulk Deposits.

6. New Pension Scheme for Workers without benefit of Formal Pension.

7. Surplus Amount of CPSEs for Expansion and Overseas Acquisitions.

8. NPA of Nationalized Banks.

9. CCI issues Order against Chemist & Druggist Association, Baroda.

10. Violation of Accounting Principles.

11. Misuse of Public Issue Funds.

12. ICAI Committee.

13. Frauds in DDCA.

14. Fraud in Reebok India.

15. Income Tax Overseas Units.

16. Risk Management System For Trading in Stocks.

17. Investment Tracking System.

18. Rs. 86,000 Crore Indirect Tax Revenue Locked up in Litigation.

19. Raids by DRI.

20. Increase in Number of Foreign Companies.

21. NABARD Loan to Energy Projects.

22. 19 Entities Restrained From Securities Market Trading.

23. Complaints Regarding Sanction of Education Loan.

24. Setting up of NIMZs.

25. UNIDO Findings on Industrial Growth.

26. Circulation of Draft IPR for Inter-Ministerial Consultation.

27. Growth of Rubber Cultivation.

28. Import of Areca nuts.

29. International Trade Centre in J&K.

30. Easy Loan to Poor And Weaker Sections.

31. LIC Social Security Scheme.

32. Restructuring Corporate Debt.

33. Relaxation of NBFC Norms.

34. NABARD Loan to Energy Projects.

Notifications

Customs

1. 80/2012 - dated 6-9-2012 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from 07th September, 2012.

Circulars / Instructions / Orders

FEMA

1. 24 - dated 6-9-2012

Exim Bank's Line of Credit to the Government of Mongolia .

Customs

2. 25/2012 - dated 6-9-2012

Verification mechanism and monitoring of export obligation under duty exemption/ reward Schemes- reg.

3. 24/2012 - dated 5-9-2012

Making E-payment of Customs duty mandatory-regarding.

Highlights / Catch Notes

Income Tax

• Supreme Court: No Interest u/ss 234B and 234C if Seized Amount Not Considered in Assessment Order.

  Case-Laws - SC : Levy of Interest u/s 234B, 234C - As the Assessment Order does not give effect to the amount seized and there is no Demand Notice claiming interest on advance tax, interest cannot be levied - SC
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• Business Losses Deductible from Book Profits u/s 115JB for MAT; Stock Valuation Losses Not a 'Provision'.

  Case-Laws - AT : MAT - Book profit u/s 115JB - Business loss was allowable on ordinary commercial principles in computing profits. - Since claim is direct loss in valuation of stock in trade and as this cannot be considered as a ‘provision’ as provided under Explanation-1 - AT
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• Depreciation on Ansal Plaza parking allowed for individuals with control and use rights, not just owners.

  Case-Laws - HC : Depreciation on car parking at Ansal Plaza - assessee is not the owner - depreciation is allowed to the person in whom for the time being vests the dominion over the building and who is entitled to use it- HC
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• Land Value for Stamp Duty Set by District Revenue Officer is Binding u/s 50C of Income Tax Act.

  Case-Laws - AT : Valuation u/s 50C - the value of the land adopted by the District Revenue Officer for the purpose of fixation of stamp duty, is binding on the assessee. - AT
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• Tax Officers Can't Do Ex Parte Assessments Without Notice for Voluntary Returns u/s 139(1.

  Case-Laws - HC : Best judgement assessment ex-parte u/s 144 - The C.B.D.T. has rightly directed that in case where the return is furnished voluntarily under Section 139 (1), the I.T.O. cannot proceed to make ex parte assessment under Section 144 without serving notice under Section 139 (2) or as the case may be under Section 148. - HC
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• Assessing Officer Can Restore Penalty Levy; Section 275(1A) Limitations Don't Apply, ITAT Authority Questioned.

  Case-Laws - HC : Restoring the issue of levy of penalty to the file of AO - whether ITAT has such powers? - apprehension that any order in the penalty proceedings may be barred by limitation under section 275(1A), is not well founded. - HC
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• Compensation for Child's Death in Airport Escalator Accident Exempt from TDS as It's Considered Damages.

  Case-Laws - Commission : T.D.S. deduction on the compensation paid to parents whose child dies in an escalator maintained by an Airport Authority - compensation is by way of damages. - No TDS
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• Court Rules Plot Sales as Business Income, Not Capital Gains, Due to Frequent Transactions.

  Case-Laws - AT : Income from sale of plots - business income OR capital gains - The frequency of purchase and sale belies the stand of the assessee - against assessee. - AT
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• Rebate u/s 88E: Calculate based on derivative income at 30%, capped by actual STT paid.

  Case-Laws - AT : Rebate u/s 88E in respect of STT - rebate has to be calculated with respect to the income from derivative transaction included in the total income @ 30% subject to the limit of STT actually paid. - AT
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• Section 41(1) Income Tax Act: Unclaimed Debts Recognized as Income to Ensure Proper Tax Accounting.

  Case-Laws - AT : Deemed income u/s 41(1) - if the assessee did not claim the debt as bad in earlier years then the claim of assessee will be accepted that he has already been offered as income by the assessee in his computation of income - AT
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• Court Rules in Favor of Assessee: Manufacturing Sales Unsustainable Without Evidence of Purchases.

  Case-Laws - AT : Addition on account of unproved purchases - without purchases, there cannot be any manufacturing of sales - in favour of assessee. - AT
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• Cash Payments on Same Day Not Disallowed u/s 40A(3); Amendment Not Retrospective.

  Case-Laws - AT : Multiple cash payments are made to same party on a single day - no disallowance u/s.40A(3) - amendment in not not retrospective in nature - AT
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• Appellate Tribunal Permits Assessee to Submit Additional Evidence in Income Tax Case, Impacting Taxable Income Assessment.

  Case-Laws - AT : Addition to income - additional evidence submitted by assessee allowed - AT
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• Valuation Method for Capital Gains Tax: Stamp Duty Ready Reckoner Rate Inapplicable to Residential Buildings.

  Case-Laws - AT : Valuation of Sales price under Capital gain - Whether rate adopted by register valuer on the basis of stamp Duty Ready Reckoner, 2005 for Developed Land FSI will applicable to residential building - held no - AT
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• Income-Tax Department Recognized as Creditor, Can Object to Claims Against Transferor Company Under Tax Obligations.

  Case-Laws - HC : If any amount is required to be payable to the Income-tax Department by the transferor company, the Income-tax Department can be said to be a creditor so far as its claim against the transferor company is concerned. Considering the same, it cannot be said that the Income-tax Department has no locus to put forward its objections in this behalf. - HC
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• Tax Credit Excludes Surcharge and Education Cess under MAT Section 115JAA; Applies Only to Income Tax Paid.

  Case-Laws - AT : Disallowance of credit of surcharge and education cess - MAT u/s 115JAA - if only income tax is paid under the provisions of section 115JB it is natural that tax credit u/s 115JAA will only be of income tax and not of surcharge and education cess - AT
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• Court Rules Rent Arrears Are Taxable Only in Year Received, Not When Due; Assessee Wins Mesne Profits Case.

  Case-Laws - HC : Reopening of assessment - the arrears of rent received by the assessee (as mesne profits) could not be brought to tax for the previous years, when they fell due. They could be brought to tax only during the year of receipt - HC
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• Court Rules Tax Authorities Can't Demand More Evidence Once Document Truth Presumed in Seizures.

  Case-Laws - HC : Having once drawn the presumption that the contents of the documents (of the assessee) taken into possession during the search were true, the revenue could not have, consistently with that presumption, proceeded to require the assessee to produce materials in support of the expenditure entries - HC
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• Legal System Ensures Fairness: Law Can't Demand Impossible Actions, Especially in Tax Compliance.

  Case-Laws - AT : The law cannot possibly compel a person to do something which is impossible to perform - AT
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• Reassessment u/s 147 Not Allowed if Issue Previously Settled Without New Evidence.

  Case-Laws - HC : Reopening of assessment u/s 147 - once that aspect of the matter had been gone into in the earlier round, it was not open to the AO to reagitate it in the second round without any other / fresh material - HC
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• Interest Accrues on Seized Assets if Decision Not Made Within 120 Days of Seizure Date.

  Case-Laws - HC : Claim of interest - If a decision to hold or withhold monies/assets discovered during a Search is not taken with the prescribed period of 120 days, interest would start to run from the date of the Seizure itself - HC
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• Supreme Court to Decide Tax Treatment of Compensation from Takeover Consent Decree: Income or Capital Receipt?

  Case-Laws - SC : Taxability on Compensation received under consent decree in this civil appeal - takeover arrangement - Income from other sources OR capital receipt - SC
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• Company Only Liable for Ad Expense Reimbursement if Individual Demands It; No Demand, No Obligation Added.

  Case-Laws - HC : Reimbursement of advertisement expenses - Even assuming that he is entitled to reimbursement of the marketing expenses, the liability of the company to pay him the said would arise only in the event of his having demanded the same - no addition - HC
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• Section 54F Deduction: Investment Timing Crucial for Tax Relief; Source of Funds Irrelevant if Conditions Met.

  Case-Laws - AT : Disallowance of the deduction U/s. 54F - money has no colour and all that is required to be eligible for relief under S.54F of the Act is compliance with the condition of investment within the specified time. - AT
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• Educational Institution's Exemption Request u/s 11 Denied Due to Lack of Condition Verification.

  Case-Laws - AT : Educational Institution - exemption u/s 11 - Assessee’s argument that the benefit of S.11 should be granted in the alternative, without verification of conditions specified in S.11 of the Act, cannot be accepted on its face. - AT
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• Section 68: No Addition Needed if Donors Confirm Gift Under Oath and Through Banking Channels.

  Case-Laws - AT : Addition u/s 68 - when the donors were examined by the Assessing Officer on oath and they conformed the transaction of gift through banking channel and by cheques, than there is no scope of any doubt of identity and creditworthiness of the donor. - AT
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Customs

• Systematic Verification of Export Obligations Under Duty Exemption and Reward Schemes to Enhance Transparency and Accountability.

  Circulars : Verification mechanism and monitoring of export obligation under duty exemption/ reward Schemes- reg. - Circular
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• New Foreign Currency Exchange Rates Effective September 7, 2012, Announced Under Customs Regulations.

  Notifications : Rate of exchange of conversion of each of the foreign currency with effect from 07th September, 2012. - Notification
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• Electronic Customs Duty Payments Now Mandatory for Importers and Exporters to Boost Efficiency and Transparency.

  Circulars : Making E-payment of Customs duty mandatory-regarding. - Circular
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• Court Orders Provisional Release of Goods Despite Dispute Over Declared Value, Imposes Specific Conditions for Compliance.

  Case-Laws - HC : Non release of goods - the value of the goods shown by the petitioner could not be accepted - provisional release directed subject to conditions - HC
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• Interest on Refunds: Entitlement Starts Three Months Post-Application Until Sanction.

  Case-Laws - AT : Interest on refund - appellant is eligible for the interest from three months after the date of filing of the refund application till the amount of refund is sanctioned to him - AT
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• Acquittal Ordered Due to Non-Compliance with Customs Act Sections 100-105; Lack of Independent Witnesses Cited.

  Case-Laws - HC : Order of acquittal - Search and seizure was not conducted in accordance with Sections 100 to 105 of the Customs Act inasmuch as independent witnesses - accused is entitled to be acquitted - HC
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• Customs Law: Issuing a Show Cause Notice within six months doesn't require registered post service u/ss 110(2), 124(a).

  Case-Laws - HC : Computation of period of limitation for issuance of SCN - Neither Section 110(2) nor Clause (a) of Section 124 of the Act contemplates service of notice in strict sense within a period of six months from the date of giving/issuing the same by registered post which mode has been prescribed under the Act. It merely speaks about giving of the notice - HC
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• High Court Rules Against Arbitrary DEPB Scheme Restriction Imposed in 2011; Deems Condition Unfair and Unreasonable.

  Case-Laws - HC : The petitioner is disentitled to the benefit of the DEPB scheme by virtue of a restriction imposed on 22-9-2011, made effective nine days later. - To inflict such an arbitrary condition, which is declared to be legally unsustainable, and yet insist that during the interregnum a fresh condition operates to deny the citizen the relief he is justly entitled to, is unfair and unreasonable. - HC
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• Tribunal Rules: Authorities Cannot Withhold Bank Guarantees or Refunds; Decision is Final.

  Case-Laws - HC : Decision of the Tribunal having assumed finality, is not open to the respondent authorities to either withhold release of the bank guarantees or to withhold refund - HC
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FEMA

• Exim Bank Grants Line of Credit to Mongolia for Development Projects Aiming to Boost Infrastructure and Economic Growth.

  Circulars : Exim Bank's Line of Credit to the Government of Mongolia . - Circular
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Service Tax

• Penalties for Renting Property u/ss 76-78 Imposed; Section 80A Allows for Non-Imposition of Penalties.

  Case-Laws - AT : Penalty imposed u/s 76, 77 & 78 - renting of immovable property - case is squarely covered for non imposition of penalties under Section 80A - AT
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• Court Rules in Favor of Assessee: Excess Service Tax Paid Can Be Adjusted in Subsequent Periods.

  Case-Laws - AT : Non adjustment of excess service tax paid with service tax liability in the subsequent period - in favour of assessee. - AT
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• Commissioner's Order Deemed Unsustainable for Exceeding Show Cause Notice Scope by Disallowing Cenvat Credit Without Notification.

  Case-Laws - AT : Commissioner, while adjudicating the same has travelled beyond the scope of show cause notices by disallowing the Cenvat credit for which the appellant had not been put on notice - order is not sustainable - AT
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• Maharashtra VAT Act Amendment: Coercive Tax Recovery Measures Stayed for Developers Until October 31, 2012, per Section 2(24).

  Case-Laws - SC : As per amendment in section 2(24) of Maharashtra Value Added Tax Act, 2002 w.e.f. June 20, 2006 on or before October 31, 2012, the coercive process for recovery of tax, interest or penalty shall remain stayed in case the concerned developers - SC
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• Marketing Services by GIPL and Abacus Classified as "Business Auxiliary Services" u/s 65(19) of Finance Act 1994.

  Case-Laws - AT : Activity appears to be the marketing and promotion of the services being provided by the GIPL and Abacus and hence, the same appears to be covered by the definition of “Business Auxiliary Services” under Section 65(19) of the Finance Act, 1994- AT
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Central Excise

• Address Error Correction Allowed Post CENVAT Credit for Input Services Under Central Excise Regulations.

  Case-Laws - AT : Input services - CENVAT Credit - the mention of the address of the service receiver as head office of the appellant and not the factory premises is a rectifiable error and could be done so post availment of CENVAT Credit - AT
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• Assessee pays duty and interest after communication delays; no penalty imposed.

  Case-Laws - HC : Penalty - Assessee wrote letters to the authorities - In return, he did not receive any information - was pointed out that the duty is payable, he paid the duty and interest - no penalty - HC
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• Duty Debit Insufficient to Prove Clandestine Goods Removal; Statements Alone Not Enough Evidence.

  Case-Laws - AT : Clandestine removal of goods - mere debit of duty at the time of visit of the officer by itself is no ground for holding against them - statements itself cannot prove the fact of clandestine removal
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• Rule 11(3) CENVAT Credit Rules 2004: Reversal Required for Duty on Inputs, Not for Capital Goods or Input Services.

  Case-Laws - AT : Rule 11 (3) of CENVAT Credit Rules, 2004 specifically provides for only reversal of CENVAT Credit taken on the duty paid on the inputs and the said rule is silent about the reversal of CENVAT Credit taken of Central Excise duty paid on capital goods as well as on the Service Tax paid on the input services - AT
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• Citing Rule 57C Instead of Rule 57H(7) Doesn't Invalidate SCN; Cenvat Credit Demand is Upheld.

  Case-Laws - AT : Since the correct facts had been narrated in the SCN hence citation of Rule 57C and not Rule 57H(7), would not vitiate the SCN. Cenvat credit demand upheld. - AT
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Case Laws:

• Income Tax

• 2012 (9) TMI 136
  Penalty u/s 271(1)(c) - nondisclosure of short term and long term capital gain - CIT(A) deleted the levy - revised return filed by assessee - Held that:- As the assessee submitted revised return since in the original return long term capital gain on UTI liquid plus fund institution plan was claimed exempt u/s 10(38) as also to reflect correct figures of sale of land at Kheri Sadh and rental income, thus merely because the assessee disclosed additional income suo motu after issue of a notice u/s 143(2), does not amount to detection of concealment by the AO. It is not the case of the AO that in reply to a query of the AO, some new facts were discovered or the AO had dug out some information which was not furnished by the assessee. In such circumstances no penalty is leviable - As decided in the decision in CIT v. Suresh Chandra Mittal (2001 (6) TMI 63 - SUPREME COURT) that when an assessee files a revised return showing higher income and gives an explanation that he offered higher income to buy peace of mind and avoid litigation, penalty cannot be imposed merely on account of higher income having been subsequently declared - thus in this case even though the revised return was found to be invalid, the AO accepted the income as declared in the revised return and computation & did not bring any material on record that the declaration of income made by the assessee in his revised return or his explanation was not bonafide - in favour of assessee.

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• 2012 (9) TMI 135
  Levy of Interest - Held that:- As the Assessment Order does not give effect to the amount seized in the calculation of tax payable at the end of the AY in question and there is no Demand Notice claiming interest on advance tax due on 15th September, 15th December and 15th March interest cannot be levied as decided in assessee's own case Commissioner of Income-Tax Versus Gold Tex Furnishing Industries [2002 (8) TMI 6 - DELHI HIGH COURT] - in favour of assessee.

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• 2012 (9) TMI 134
  Diminishing in the value of assets - AO added it in arriving at the book profit as provided under section 115JB - Held that:- Considering assessee’s submission that this amount was not a provision of diminishing in value of the assets but a loss suffered by assessee in the valuation of stock in trade which, however, was claimed separately in the Profit & Loss A/c unable to agree with the Revenue on making adjustment of loss suffered in the valuation of closing stock. There is no dispute with reference to the fact that assessee is in the business of share trading and as part of business activity, it has offered income from shares and securities and claimed diminution in value of stock in trade. There is also no dispute with the fact that this loss was allowed in regular computation and not a provision - As rightly held by the Hon'ble Supreme Court in the case of Dr T A Qureshi (2006 (12) TMI 91 - SUPREME COURT) business loss was allowable on ordinary commercial principles in computing profits. Since claim is direct loss in valuation of stock in trade and as this cannot be considered as a ‘provision’ as provided under Explanation-1, the action of AO and the CIT (A) cannot be upheld - in favour of assessee. Disallowance made u/s 14A r.w.r. 8-D - Held that:- As seen from the balance sheet of assessee as on 31.03.2008 there are no fixed assets and assessee has shown investment of Rs. 1,51,12,500/- at the end of the year as against Rs..5,53,62,500/- at the beginning of the year. Assessee’s stock in trade were shown at Rs. 40,69,22,495/- as against nil in the last year. This indicates that most of the business activities started only during the year and the investment had come down. As against these amounts, AO in the assessment order has taken the closing investment yielding exempt income at Rs..50,20,34,995/- including the stock in trade which is not income yielding exempt income, earning business profits. There is no opening amount which was taken at NIL where as assessee had investments at the end of last year which got reduced in this year. Thus the basis for calculation by AO itself is wrong - Further out of the total amount of interest claimed which were shown interest at Rs. 2,91,38,496/-, there seems to be no examination of interest claims and to whom it is paid, thus it is required restore the matter back to the file of AO to examine the nature of interest expenditure, the amount of dividend earned and the nature on which it is earned - in favour of assessee for statistical purposes.

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• 2012 (9) TMI 133
  Non deduction of TDS on Installation and commissioning charges - CIT(A) deleted disallowance - Held that:- The amount in question paid by the assessee company to M/s Mesto Automation SCADA Solutions Ltd. towards installation and commissioning charges was for services that were ancillary and subsidiary as well as inextricable and essentially linked to the sale/supply of SCADA system and the same, therefore, was not chargeable to tax in India in the hands of M/s Mesto Automation SCADA Solutions Ltd. as fees for included services by virtue of article 12(5)(a) of the DTAA between India and Canada being favorable to the assessee - The assessee, therefore, was not liable to deduct tax at source from the said payment and the disallowance u/s 40(a)(i) was not sustainable - in favour of assessee. Restricting the disallowance of incidental expenses to the extent of 25% - revenue appeal - Held that:- As the Tribunal in assessee’s own case for assessment year 2001- 02 upheld the order of the CIT(A) restricting the disallowance made on account of incidental expenses to the extent of 25%, thus respectively following the same judgment revenue appeal is dismissed - in favour of assessee.

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• 2012 (9) TMI 132
  Disallowance of depreciation on car parking at Ansal Plaza - absence of registered title in favour - Held that:- As decided in Mysore Minerals Ltd. Versus CIT [1999 (9) TMI 1 - SUPREME COURT] that the intention of the Legislature in enacting section 32 would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purposes of his business or profession - in favour of assessee. Addition on payment towards an unrecognized Provident Fund Trust - ITAT deleted the addition - Held that:- A reading of the letter dated 25.08.1976 would indicate that apparently no express approval by the Provident Fund Commissioner to the scheme formulated by the assessee had been actually taken into account by the income tax authorities at the relevant time but in 12 successive assessments, the authorities accepted its position that the scheme was a recognized one - As the tax implication in the present case is far below the prescribed limit of Rs. 10 Lakh as the demand or disallowance itself was Rs. 9,08,359/- and the tax payable on that would be roughly around 1/3rd of the said amount the Court is of the opinion that no interference is called for the appeal is consequently dismissed.

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• 2012 (9) TMI 131
  Determination of undisclosed income - Held that:- The search was conducted on 19.01.1996 and thereafterwards, upto 09.02.1998, there were enquiries going on and the notice was issued only on 27.02.1998. The facts are self-evident that no sufficient opportunity was granted to assessee before finalising the assessment. The Order of Tribunal is set aside on the question of violation of the principles of natural justice, that the assessee was not granted sufficient time to counter the notice of assessment that within three days of receipt of the notice, the assessment was finalized - directions to the assessee to file its objections within two weeks from the date of receipt of a copy of this order and on receipt of the objection, the Assessing Officer shall finalize the assessment within four weeks from the date of receipt of the objection from the assessee - in favour of assessee for statistical purposes.

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• 2012 (9) TMI 130
  Valuation u/s 50C - value fixed by the District Revenue Officer - held that:- The assessee in the income-tax proceedings cannot take the plea that since he was not a party in other proceedings, the same is not binding on him. In the present case, the value of the land adopted by the District Revenue Officer for the purpose of fixation of stamp duty, is binding on the assessee. There is no force in the appeal of the assessee - against assessee. Exemption u/s 54F - The return was filed by the assessee far beyond the time limit - Revenue appeal - Held that:- The assessment was completed under the provisions of section 143(3). At no point of time before the CIT(A) the plea of belated return was raised by the Revenue. Even otherwise, the delay in filing of the return has no bearing on exemption to which the assessee is entitled under the provisions of the Income Tax Act - It is an admitted fact that the entire amount of capital gains has been invested by the assessee in the construction of new residential house within the period prescribed under the provisions of section 54F(1) - against Revenue.

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• 2012 (9) TMI 129
  Completion of assessment ex-parte u/s 144 - defective return filed by assessee in response to a notice u/s 139 (2) - Held that:- The C.B.D.T. circular No.281, dated 22-09-1980 is in the nature of a clarification to the assessing authorities that when there is a default in rectifying a defect in the return as intimated by the I.T.O. by the assessee, the return of income has to be treated as an invalid return and further proceedings will have to be taken on the footing that the assessee had failed to file the return. The C.B.D.T. has rightly directed that in case where the return is furnished voluntarily under Section 139 (1), the I.T.O. cannot proceed to make ex parte assessment under Section 144 without serving notice under Section 139 (2) or as the case may be under Section 148. This circular is binding on the AO. As in the present case when the assessee filed a defective return, and did not rectify the defects which were pointed out by the I.T.O., the AO was bound to treat the return of income as invalid and take further proceedings on the footing that the assessee had failed to furnish the return & could not have proceeded to make ex parte assessment u/s 144 without serving notice u/s 139 (2) or as the case may be u/s 148 - against revenue.

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• 2012 (9) TMI 128
  Restoring the issue of levy of penalty to the file of AO - whether ITAT has such powers? - Held that:- As the appeal against the quantum proceedings has been admitted and is pending hearing in this Court the Tribunal, instead of deciding this issue as to penalty under section 271, by the impugned order restored the same to the file of the Assessing Officer with a direction to decide the issue of levy of penalty after the decision of this Court in the said appeal, thus no prejudice has been caused to the appellant even qua the penalty proceedings - apprehension that any order in the penalty proceedings may be barred by limitation under section 275(1A), is not well founded.

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• 2012 (9) TMI 127
  T.D.S. deduction on the compensation paid to parents whose child dies in an escalator maintained by an Airport Authority - Held that:- The respondent should not have deducted the T.D.S. as in the instant case, the compensation is by way of damages. The damages paid for the death of a person cannot be equated with income as such. As decided in Ghaziabad Development Authority. Versus Dr. N. K. Gupta. [2002 (9) TMI 292 - NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION] interest to the complainant has not been awarded on the basis of any deposit made by the complainant or the GDA being the borrower of any money of the complainant. Here interest payment is by way of damages and merely describing the damages as by way of interest does not make them as interest under the Income-tax Act and thus the provisions of section 194A were not applicable and the GDA was clearly wrong in deducting the tax deducted at source from the interest payable to the complainant - thus, the opposite party-Airport Authority of India Ltd. is directed to pay the TDS amount alongwith interest @9% p.a. to the Decree Holder, within a period of 30 days and to recover the said amount form the Income Tax Department, as per law - in favour of decree holders.

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• 2012 (9) TMI 126
  Penalty u/s 271(1)( c ) - claim of deduction of issue expenses u/s 35D & diminution in value of shares investment - Held that:- It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars - the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)( c ) - in favour of assessee.

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• 2012 (9) TMI 125
  Income from sale of plots - business income OR capital gains - Held that:- The assessee had purchased nine plots at Coimbatore which were sold the same at higher price within a short span of six months thereby generating profit. The reason given by the assessee in the written submissions for treating the income as capital gains are not convincing - the sequence of events show that the assessee had purchased plots to earn profit in the course of business. The frequency of purchase and sale belies the stand of the assessee - against assessee. Addition on unexplained investment - Held that:- As the assessee has not been able to explain source of investment the CIT(A) has rightly upheld the addition as unexplained investment after deducting the amount already included in the income returned by the assessee - against assessee. Disallowance of expenses towards improvement and development of the plots - Held that:- Except for the bald statement of the assessee, there is nothing on record to show that any expenditure was incurred by the assessee for the development of plots. Even assessee was not able to show any document to substantiate the claim - against assessee.

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• 2012 (9) TMI 124
  Dis allowance of depreciation on membership cards of BSE and NSE - Held that:- As depreciation in this case had been allowed in the earlier year and therefore depreciation has to be allowed and only in the year in which the asset is sold or discarded, demolished, destroyed, the money payable in respect of the asset has to be reduced from the WDV under the provisions of section 43(6) as in the present case, it was pointed out that the card was neither sold nor discarded nor destroyed/demolished and therefore, depreciation had to be allowed on the basis opening WDV - restore the issue to the file of AO for passing a fresh order after examining all aspects - in favour of assessee for statistical purposes. Disallowance of software expenses - Revenue OR Capital expenditure - Held that:- As decided in Alembic Chemical Works Company Limited Versus CIT, Gujarat (1989 (3) TMI 5 - SUPREME COURT) that the assessee had acquired application software to execute jobs in the field of inventory management etc. which had to be updated from time to time based on the changing needs and is to be allowable as revenue expenditure - against revenue. Disallowance of rebate under section 88E in respect of Security Transaction Tax - Held that:- AO himself has calculated income from derivative transactions amounting to Rs.30,89,407/- which is included in the total income and as regards the normal share transaction, the AO has calculated loss which is not included in total income this year and has been carried forward as speculation loss. Therefore, rebate has to be calculated with respect to the income from derivative transaction included in the total income @ 30% subject to the limit of STT actually paid. The STT paid in respect of derivative transaction was Rs.2,56,449/-, therefore, deduction has to be limited to Rs.2,56,449/-. Disallowance of claim of deduction against the share of profit in the branch - non deduction of TDS - Held that:- In this case, the assessee was only sharing profit with M/s. JSMS who was managing only day to day affairs of the branch whereas policy decisions were taken by the assessee and the entire investments had also been made by the assessee therefore, hold that the arrangement was not a case of joint venture, thus claim need to be allowed - the word “payable” used in section 40(a)(ia) has to be given its natural meaning and would be applicable only to expenditure which is payable as on March 31 of every year and can not be invoked to disallow amount which have already been paid during the previous year - allow the claim of the assessee subject to verification of the claim that no amount remained outstanding at the end of the year - in favour of assessee

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• 2012 (9) TMI 123
  Addition on accrued income on actionable claim - that Official Liquidator of the High Court had allowed the claim in favour of the assessee - Held that:- On perusal of the notice of admission of proof it reveals that the claim to the extent of Rs.8,06,69,709/- was allowed and it was not paid to the assessee and the aforementioned claim after a gap of almost one year i.e. on 10/1/2007 was transferred by the deed of assignment by the proprietary concern of the assessee to “Grand”, thus the said amount cannot also be said to have accrued to the assessee as what has been ordered by the Official Liquidator is the notice of admission of proof and not the admission of the payment to be made of the said amount. The payment of the said amount will depend upon several other circumstances and it is a matter of fact that till date the assessee had not received any amount and cannot be taxed in the hands of the assessee - in favour of assessee. Deemed income u/s 41(4) - Held that:- The mention of section 41(4) in the computation of income filed by the assessee suggests that the assessee had earlier claimed the debt as bad debt. Therefore it just and proper to direct the AO to verify from the assessment records of the assessee that whether or not assessee has claimed the debt of “Swadeshi” as bad debt and if the assessee did not claim the debt as bad in earlier years then the claim of assessee will be accepted that he has already been offered as income by the assessee in his computation of income - in favour of assessee for statistical purposes.

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• 2012 (9) TMI 122
  Penalty u/s 271(1)(c) - disentitled for deduction u/s 80HHC - Held that:- AO initiated the penalty proceedings for ‘furnishing of inaccurate particulars’ but finalized the penalty for ‘concealment of income’ - Even though assessee has not contested the issue at the time of assessment, even after giving explanation that the amount was assortment charges/service charges, AO should have examined the nature of amount and should not have disallowed just because the amount was classified as export commission. Just because assessee has not contested the working made by AO it does not automatically lead to penalty under section 271(1)(c). Each and every addition made in the assessment cannot automatically lead to levy of penalty for concealment of income or furnishing inaccurate particulars of income - on the facts of the case there is no case for levy of penalty just because the claim was disallowed in the assessment and assessee has not contested - against assessee.

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• 2012 (9) TMI 121
  Addition on account of unproved purchases - Held that:- It is a matter of common sense that there is no possibility of production if there is no raw material. Without input, there could not be any output. Additionally, the assessee has also proved that if the purchases are not taken into account, then the results are going to be unrealistic and the G.P. had to go high rate away from any reasonable percentage. Even if those concerns were bogus parties, but the basic question is that without purchases, there cannot be any manufacturing of sales - in favour of assessee. The computation of undisclosed income even of the block period has to be made u/s. 158BB and as per Explanation annexed to this Section, the total income or loss of each previous year, for the purpose of determination of undisclosed income, be taken as the total income or loss computed in accordance with the provisions of this Act and the only rider is that the same should be without giving effect to set off of brought forward losses or unabsorbed depreciation - the Legislature has made it clear that the undisclosed income is also required to be determined or computed in accordance with the provisions of I.T. Act, so the basic principle of determination of income has to be followed particularly in a case when the income is out of a trading activity of the assessee.

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• 2012 (9) TMI 120
  Disallowance u/s. 40A(3) - multiple cash payments are made to same party on a single day - Held that:- As none of the payments to the same party in each instance was more than Rs. 20,000/- although the aggregate of the payments to the same party on the same day is more than Rs. 20,000/- therefore, respectfully following the decision in the case of CIT Versus Ashok Iron and Steel Rolling Mills (2009 (10) TMI 414 - ALLAHABAD HIGH COURT) no disallowance u/s.40A(3) in the impugned case can be made. Since the amendment to section 40A(3) was brought to the statute book by the Finance Act 2008 w.e.f. 01-04-2009 wherein the words “aggregate of payments made to a person in a day” was inserted, therefore, same in our opinion being not retrospective in nature cannot be applicable to assessment year 2006-07, i.e. year for which the assessee is in appeal before us - in favour of assessee.

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• 2012 (9) TMI 119
  Addition to income - additional evidence submitted by assessee - Held that:- As per the provisions of Rule 46A of Production of additional evidence before the Deputy Commissioner (Appeals) and Commissioner (Appeals)first stage is the assessee sought permission for admission of additional evidence, the next stage would come that such permission would be granted by recording reasons and thereafter the additional evidence would be sent to AO for examination. In the present case additional evidence produced before the CIT(A) by assessee were sent to the concerned officer which impliedly shows that according to the CIT(A) it is a-prima facie case and only after adducing the additional evidence he should asked for Remand Report from the concerned AO. In view of this subsequent review to withdraw the order for entertaining additional evidence by not calling the Remand Report is not justified - thus it is advisable to restore matter - in favour of assessee for statistical purposes.

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• 2012 (9) TMI 118
  Capital Gain 50C - Weather AO can make reference to DVO u/s 55A - AO could not have record any opinion as to existence of difference between the value of the asset as claimed by the assessee and the fair market value - Held that:- Reference can be made to DVO u/s 55A when AO records opinion that value had been underestimated by assessee as decided in case of HIABEN JAYANTILAL SHAH (2008 (4) TMI 292 - GUJARAT HIGH COURT) - However if the fair market value declared by the assessee is supported by the estimate of the registered valuer and the value so claimed is more than the fair market value as per the AO, no reference to the DVO u/s 55A can be made - Decided in favor of Assessee. Valuation of Sales price under Capital gain - Defects/inconsistencies in the DVO's Valuation of the property - Whether rate adopted by register valuer on the basis of stamp Duty Ready Reckoner, 2005 for Developed Land FSI will applicable to residential building - Held that:- The assessee transferred residential building and not Land. The rate as applicable to Land should not be applied when the property under transfer is 'Residential Building. The value is calculated on the basis of rates applicable to the residential building - Decision, Ground partly allowed. Exemption u/s 54 - Can assessee claim exemption for two residential houses on two different stories of same building u/s 54 - Held that:- As decided in case of K.C. Kaushik (1990 (4) TMI 38 - BOMBAY HIGH COURT) - the assessee to be entitled to exemption u/s 54 only in respect of one residential house - Decided in favor of Revenue.

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• 2012 (9) TMI 117
  Disallowance of land development expense under head PGBP - Assessee paid advance which is in excess of sale price of land prior to the transfer of ownership - Land is developed by the seller and he has incurred the expenses - Meanwhile price of land rises due to development work in that area & seller of land not wiling to refund the advance on account of certain developmental work - Advance claims as land development expense - Held that:- Payment made through cheque but without any documentary evidence & bills of parties regarding the nature of development works. Assessee submit the affidavits before CIT(A) evidencing the receipt of the sum received by seller. CIT(A) did not ask the remand report from the AO and also did not confront to the AO the new evidences produced by the assessee. Tribunal on the basis of Natural justice remand this issue back to the AO to verify from the record as to whether the recipients accepted the payment made by the assessee for peaceful possession of the land and accordingly decide the issue, after providing due and reasonable opportunity of being heard to the assessee - Decision remanded back to AO.

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• 2012 (9) TMI 100
  Scheme of demerger - objection of Income-tax Department that the Scheme in question is floated with the sole object of avoiding the tax liability such as Income-tax, Stamp Duty, VAT, etc. and that the sole object is only to avoid capital gains tax - assessee contested that it is only the Central Government through Regional Director which is vested with the powers to raise the objections qua the Scheme and the Income-tax Department has no locus to raise such objections - Held that:- If any amount is required to be payable to the Income-tax Department by the transferor company, the Income-tax Department can be said to be a creditor so far as its claim against the transferor company is concerned. Considering the same, it cannot be said that the Income-tax Department has no locus to put forward its objections in this behalf. The segregation of telecommunications services and telecommunications infrastructure business reflects the global trend and has been adopted by telecommunication companies in India without objection. In fact, the Working Group under the Planning Commission has recommended sharing of infrastructure, and the present Scheme reserves flexibility to it for easing such process when required. It may be relevant to note that even the Central Government has not raised any objection to the Scheme and even the Department has not contended that the aforesaid objectives are imaginary. Therefore it cannot be said that the Scheme has no purpose or object and that it is a mere device/subterfuge with the sole intention to evade taxes, particularly when even the incidence of tax purportedly sought to be evaded is not established on facts. Transfer is void for want of consideration - Held that:- On agreeing with the view taken by the Delhi High Court that even if the consideration of one rupee can be said to be a valid consideration and it is not necessary that consideration is always a monetary consideration. In such type of cases wherein the reconstruction involves give and take and mutual/reciprocal promises and obligations, which can be said to be consideration for each other and it cannot be said that there is absolutely no consideration so far as Scheme of Arrangement is concerned. As approval accorded by the equity shareholders, secured and unsecured Creditors of the petitioner and the Regional Director, Western Region to the proposed Scheme of Arrangement, as well as the submissions of the Income Tax Department, sanction is hereby granted to the Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956 while protecting the right of the Income Tax Department to recover the dues in accordance with law irrespective of the sanction of the Scheme. However, while sanctioning the Scheme it is observed that said sanction shall not defeat the right of the Income Tax Department to take appropriate recourse for recovering the existing or previous liability of the transferor company and the transferor company is directed not to raise any issue regarding maintainability of such proceedings in respect of assets sought to be transferred under the proposed Scheme and the same shall bind to transferor and transferee company. The pending proceedings against the transferor company shall not be affected in view of the sanction given to the Scheme by this Court as the rights of the Income Tax Department of assessing, levying and collecting tax from the Appellant are not confiscated or expropriated so as to extinguish such rights.

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• 2012 (9) TMI 99
  Disallowance of credit of surcharge and education cess - MAT u/s 115JAA - Held that:- Section 115JB clearly talks that such book profit shall be deemed to be total income of the assessee and tax payable by the assessee on such total income shall be the amount of income tax at specified rate of tax which was 15% for the relevant year under consideration. The section does not talk about the income tax as increased by surcharge & education tax. It talks about only income tax. Therefore if only income tax is paid under the provisions of section 115JB it is natural that tax credit u/s 115JAA will only be of income tax and not of surcharge and education cess - against assessee. Interest u/s 234B & 234C - Held that:- As it is a mandatory provision and is consequential in nature and in view of our adjudication on ground 1 as decided against the assessee

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• 2012 (9) TMI 98
  Reopening of assessment - assessment was completed on the basis of enhanced annual letting value - decree was for mesne profits - Held that:- The “right” of a plaintiff/owner seeking possession and mesne profits (which were to be calculated and decreed after an enquiry) as “only an inchoate right”. Such being the case, the assessee could not be faulted in not quantifying the potential mesne profits likely to accrue in the future - the newly introduced Section 25-B was clarificatory in nature, as it encapsulated the law existing (i.e. that receipts towards mesne profits should be taxed in the year of their receipt). There is no infirmity in the findings of the Tribunal that even on merits, the arrears of rent received by the assessee (as mesne profits) could not be brought to tax for the previous years, when they fell due. They could be brought to tax only during the year of receipt - as during the year of receipt, the assessee had shown the amount so received as capital because character was clearly as that of income, as is evident from the ruling as decided in P. Mariappa Gounder Versus Commissioner of Income-Tax [1998 (1) TMI 3 - SUPREME COURT] liability became ascertained only with the order of the trial court comes and not earlier - thus as the revenue had not however, re-opened the assessment in respect of the year of receipt of the amounts the reopening of assessment is not warranted - in favour of assessee.

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• 2012 (9) TMI 97
  Addition on unaccounted income - disallowance of expenditure towards commission payments, sundry expenses and green box expenses - Held that:- Once the revenue seeks to draw a presumption, by relying on Section 132 (4A) that presumption has to be given full effect, thus if the correctness of the contents of books and other materials is to be presumed, such a deemed state of affairs would have to be assumed in respect of all entries in the books, and not merely the entries of income (or receipts). If the revenue was of the opinion that the expenses claimed towards “green boxes” was inadmissible or was excessive, or not genuine, in order to reject the entries in the books of account and other documents of the assessee, seized during the search, it ought to have relied on other materials. Having once drawn the presumption that the contents of the documents (of the assessee) taken into possession during the search were true, the revenue could not have, consistently with that presumption, proceeded to require the assessee to produce materials in support of the expenditure entries - as suspicion cannot replace proof, thus in the absence of any materials, in the form of documents, the revenue could not have denied the benefit of any expenses which would otherwise have inured to the assessee, as an allowable deduction under Section 37 (1) - So far as the heads of expenses are concerned, the revenue was unable to show how any of them were prohibited by law, or amounted to offences - in favour of assessee.

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• 2012 (9) TMI 96
  Non reflecting the income as shown in the TDS certificates - miscellaneous application - Held that:- Dismissal of Miscellaneous application holding that so far as the issue of TDS certificates are concerned, nothing had been submitted before the Bench, during the course of hearing, on 29.06.2009 leading to the order dated 04.08.2009. The Tribunal also held that as the appellant had already filed an appeal against the order dated 04.08.2009 to this court and the same is pending, it would not be appropriate for them to readjudicate the matter. Remanding the matter to the AO would not serve any purpose, as the appellant had consciously claimed credit of tax deduction on the basis of the TDS certificates and even enclosed the same along with the return of income, but failed to show it, as a part of the income. This entire excess income of Rs.19.22lacs would have not come to light but for the AO verifying each TDS Certificate. The return of income was duly signed and verified by the Directors of the company. In view of the above facts, the Tribunal concluded that no useful purpose would be served by remanding the matter back to the Assessing Officer - against assessee.

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• 2012 (9) TMI 95
  India-Thailand DTAA - Disallowance of Transponder Service Fee and consultancy charges - non deduction of TDS - Held that:- Disallowance on relying on explanation 5 to sec.9(1)(vi) and Explanation 6 to sec.9(1)(vi) cannot be warranted as the assessee cannot be held to be liable to deduct tax at source relying on the subsequent amendments made in the Act with retrospective effect. In the said case, Explanation to sec.9(2) was inserted by the Finance Act, 2007 with retrospective effect from 1.6.1976 and it was held by the Tribunal that it was impossible for the assessee to deduct tax in the financial year 2003-04 when as per the relevant legal position prevalent in the financial year 2003-04, the obligation to deduct tax was not on the assessee - the law cannot possibly compel a person to do something which is impossible to perform - in favour of assessee. Disallowance of higher rate of depreciation on vehicles given on lease - Held that:- Considering the Tribunal's order in assessee's own case for AY 1998-99 the matter is restored back to the file of the AO to decide the same afresh after giving the assessee an opportunity to produce all the evidence to support and substantiate its claim for higher rate of depreciation on the vehicles given on lease - in favour of assessee for statistical purposes. Disallowance of bad debts written off - Held that:- As decided in T.R.F. LTD. Versus COMMISSIONER OF INCOME-TAX [2010 (2) TMI 211 - SUPREME COURT] in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact has become irrecoverable. It is enough of the bad debt is written off as irrecoverable in the accounts of the assessee - in favour of assessee.

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• 2012 (9) TMI 94
  Reopening of assessment u/s 147 - non disclosure of existence of the permanent establishment and business connection in India - assessee contested against second occasion on which a notice u/s 148 has been issued - Held that:- As it is evident that the question of the petitioner having a permanent establishment in India had been gone into in the first round as apparent from the reasons dated 29.03.2007 read with the objections dated 14.09.2007 and the order dated 30.11.2007 and ultimately the assessment order dated 31.12.2007, wherein the lower rate of tax of 15% was employed - as throughout the proceedings in the earlier round, one of the questions that had been raised was with regard to the petitioner having a permanent establishment in India, once that aspect of the matter had been gone into in the earlier round, it was not open to the AO to reagitate it in the second round without any other / fresh material - the condition stipulated in the proviso to Section 147 is not satisfied and, therefore, the notice dated 30.03.2010, being admittedly beyond four years from the end of the relevant assessment year (i.e., 2003- 04), is barred by limitation - in favour of assessee.

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• 2012 (9) TMI 93
  Claim of interest for inordinate delay in releasing amount u/s 132-B (3) - Held that:- If a decision to hold or withhold monies/assets discovered during a Search is not taken with the prescribed period of 120 days, interest would start to run from the date of the Seizure itself - the reasonable and equitable rate of interest having regard to the circumstances would be 12%. A sum of Rs.33,72,907/- was adjusted against the demand outstanding against the petitioner’s brother vide letter dated 23.02.2007 - Held that:- The position of the respondents in adjusting Rs.33,72,907/- even for the purpose of payment of interest liability is clearly unwarranted as the assessment was completed on 26.12.2006, therefore, while calculating the interest, the respondents were clearly alive to this specific fact and in fact it worked out to a sum of Rs.7,42,616/- in these circumstances, the Court sees no justification in reducing that amount on the basis of the later event i.e. the adjustment under Section-132B (i) made on 23.02.2007. The liability as on 26.12.2006 was in respect of the whole amount of Rs.92,82,700/-. Thus the petitioner is entitled to interest for the period of 16 months on the total amount of Rs.92,82,700/- which works out to Rs.7,42,616/- after adjusting the sum of Rs.4,72,783/- paid on 11.5.2012. The balance shall be paid over to the writ petitioner within a period of four weeks from date of Order - in favour of assessee. The petitioner is entitled to interest @ 12 % p.a. on the balance sum of Rs.59,09,793/- for the period 1.3.2007 till 1.3.2011. These amounts shall be paid over to the petitioner within six weeks from date of Order - in favour of assessee. The concerned AO/Commissioner shall give a hearing to the petitioner with regard to the adjustment made under Section-132 B (1) (i) in respect of the sum of Rs.33,72,907/- by order dated 23.02.2007 and make a speaking order within two months from date of Order -in favour of assessee for statistical purposes.

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• 2012 (9) TMI 92
  Taxability on Compensation received under consent decree in this civil appeal - takeover arrangement - Income from other sources OR capital receipt - Held that:- The matter needs to be remitted to the AO to consider various documents, such as Letter of Offer made for Fully Convertible Debentures, Resolution of the Board of Directors of the respondent when they applied for Fully Convertible Debentures, the terms and conditions on which the debentures were issued and the circumstances under which the debentures would get converted into shares, the pleadings in the suit, the Resolution of the Board of Directors of the respondent-Company when they agreed to give up their right to takeover M/s. Jenson and Nicholson Limited for a sum of Rs.75,00,000/- and whether there was any transaction, apart from the consent decree - case requires for de novo consideration in accordance with law.

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• 2012 (9) TMI 91
  Undisclosed income on account of royalty - ITAT deleted the addition as not assessable under Chapter XIV B of the Income Tax Act, 1961 - Held that:- The respondent had, in fact, not received any royalty with effect from October, 1999. Indeed, the appellant has not been able to indicate any evidence to the contrary. There is, however, nothing to indicate that the share-holder's agreement dated 17th November, 1999, between the respondent and BIIL was sham and bogus nor is there anything to indicate that the agreement was not implemented. As the trademark stood transferred to Jyothy Laboratories Limited, there would be no question of it continuing to pay royalty to the respondent - there was no undisclosed income and it is not even contended that these agreements were sham or bogus. Nor is it suggested that they were a device to launder money through BILL - no substantial question of law - in favour of assessee. Addition on account of reimbursement of advertisement expenses - Held that:- There is no material evidencing a reimbursement of the expenses to the respondent - this is a case where the respondent himself owns a large majority of the equity capital of the company and it would not, therefore, be unnatural for him not to have demanded the payment. Under clause 16(iii), the company was bound to reimburse the respondent only “on demand” from the respondent. The fact that the respondent's accounts are maintained on a mercantile basis would make no difference. Even assuming that he is entitled to reimbursement of the marketing expenses, the liability of the company to pay him the said would arise only in the event of his having demanded the same - that the primary facts were also disclosed in the books of accounts of the respondent as well as the company and that the AO was, therefore, not justified in making an addition in the block assessment - both the issues would not fall under the purview of Chapter-XIV B of the Act as no evidence was found during the course of search which would warrant their consideration only in the block assessment order - in favour of assessee.

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• 2012 (9) TMI 90
  Dis-allowance of deduction u/s 80HHC on export incentives being DEPB and DFRC - Held that:- Issue is settled in favor of assessee by the Judgment in the case of M/s Topman Exports V/s CIT (2012 (2) TMI 100 - SUPREME COURT OF INDIA) wherein it was held that only "Profit" element embedded in the consideration received on transfer of DEPB would be taxable under Clause (iiid) of Section 28 at the time of calculation of deduction u/s 80HHC. Matter restored to file of AO for re-computation of deduction u/s 80HHC - Decided in favor of assessee

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• 2012 (9) TMI 89
  Deduction u/s 10B - 100% EOU – adjustment made u/s 10B(7) r.w.s 80-IA(10) on ground that business between the Appellant and associated enterprises has been so “arranged” for earning more than ordinary profits which might be expected to arise in such eligible business - no revision in the ALP recommended by the Transfer Pricing Officer, however his clarificatory order mentioned that the excess profit shown by the assessee had to be considered for taxation - Held that:- Provisions of S80-IA(10) do not give an arbitrary power to the A.O. to fix the profits of the assessee. The A.O. has to specify as to why he feels that the profits of the assessee are being shown at a higher figure. Hence, A.O. is directed to re-work the deduction u/s 10B considering the profits shown by the assessee in Form No.56G filed by it. Addition as TP adjustment, while at the same time denying deduction u/s 10B on said sum, considering it to be excess profit - Held that:- Where computation of income was done, considering the ALP for the international transactions then the computation that has to be considered is one done based on the entries made in the books in respect of such international transactions. Assessee here had profits which were in excess of the profits of the comparable cases. This addition, therefore, stands deleted. Period of limitation – assesse contended that there being no transfer pricing adjustment, order u/s 143(3) itself ought have been passed before 31.12.2010, hence draft assessment order and all proceedings subsequent thereto became invalid – final assessment order passed on 27.9.2011 – Held that:- Reference made to the TPO, the order passed by the TPO, the draft assessment order passed by the Assessing Officer and the directions issued by the DRP are all pre-assessment procedures of aid and guidance provided to the assessing authority by the statute. If any irregularity is committed by the Assessing Officer in following the above set of pre-assessment procedures, such irregularity does not make the assessment order illegal. At the best, it makes the order only irregular. Ground stands dismissed. Deduction u/s 10B – denial even in respect of certain sale proceeds which were brought into India within the time limit prescribed u/s 10(3) on ground that receipts were in names which did not exactly tally with the names of the clients – Held that:- Since assessee could establish receipt of Rs. 4,04,94,820/- out of total exclusion of Rs. 7,05,40,982/- , exclusion is limited to a sum of Rs. 3,00,46,162/- being difference between Rs. 7,05,40,982/- and Rs. 4,04,94,820/-. However in case of exclusion of sale proceeds which were not mentioned in the draft assessment order u/s 144C and were excluded only in the final assessment on direction of DRP of further verification, it was held that DRP had no powers to issue directions which gave scope for “further enquiry”. Departure from the draft assessment order in a substantial manner so as to include items which were not originally considered, cannot be done On grievance of the assessee that the amounts which have been excluded from export turnover on account of non-realization within the time specified u/s 10B(3) ought have been excluded from total turnover for computation of deduction u/s 10B it is held that if unrealized export proceeds were excluded both from export turnover and total turnover, insofar as an assessee which was having only export sales, the export profit deductible u/s 10B, will remain same. Moreover, “total turnover” include all items which are business receipts. Same cannot be excluded from total turnover – Decided against assessee Exclusion of expenses incurred in foreign exchange and telecommunication expenses incurred in Indian currency from export turnover – assesse contending non-exclusion on ground that such expenses were not included in the export turnover at all - Held that:- When the expenses were incurred for delivery of computer software outside India, even if the assessee had not invoiced such amounts specifically in its bills raised on its customers abroad, the amounts would have definitely been fixed. Just because the invoices raised did not specifically mention recovery of telecommunication charges, we cannot say that the billed amounts were exclusive of such telecommunication charges. Further, Special Bench in case of Sak Soft Ltd (2009 (3) TMI 243 - ITAT MADRAS-D ) gave a final ruling of exclusion of freight, telecommunication charges or insurance incurred in Indian currency as well. Condition regarding incurring of the expenses in foreign exchange was limited only to technical services outside India. Nevertheless, A.O. is directed to exclude such amounts both from export turnover as well as from total turnover - Decided partly in favor of assessee

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• 2012 (9) TMI 88
  Disallowance of the deduction U/s. 54F - amounts deposited in capital accounts scheme out of the borrowed funds - Held that:- As decided in Muneer Khan Versus Income-tax Officer, Ward No. 7(2), Hyderabad [2010 (8) TMI 752 - ITAT HYDERABAD] that money has no colour and all that is required to be eligible for relief under S.54F of the Act is compliance with the condition of investment within the specified time. As the capital gains earned by the assessee can be utilized for other purposes, and as long as the assessee fulfills the condition of investment of the equivalent amount in the scheme specified or in the asset qualifying for relief under S.54F, by securing the money spent out of the capital gains or from other sources available to it either by borrow or otherwise, and the assessee are eligible for relief under S.54F in respect of the entire amount of capital gains so deposited - in favour of assessee

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• 2012 (9) TMI 87
  Educational Institution - exemption u/s 11 provided in absence of approval under sub-clause (vi) to the section 10(23C) – Revenue contesting the same and contended that approval under sub-clause (vi) to the section 10(23C) is distinct from registration u/s. 12A – Held that:- Assessee’s argument that the benefit of S.11 should be granted in the alternative, without verification of conditions specified in S.11 of the Act, cannot be accepted on its face. Following consistent view taken by the coordinated benches of Tribunal, in similar matters, including in assessee’s own cases for earlier years, we set aside the impugned order of the CIT(A) and restore the matter to the file of the AO with a direction to verify the aspect of donation, capitation fee etc. if any collected by the assessee, and further direct that if it is found that besides fulfilling other prerequisites for exemption under S.11, the assessee has not charged any money by whatever name it is called, i.e. donation, building fund, auditorium fee etc, over and above the prescribed fee for the admission of students, the assessee would be entitled for exemption under S.11, even though the notification under S.10(23C)(vi) have not been received by it. We direct accordingly – Decided partly in favor of Revenue for statistical purposes

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• 2012 (9) TMI 86
  Addition made u/s. 69C - survey conducted u/s. 133A - Held that:- It is seen from the Agreement of Sale that an agreement is entered into between Shri N.R. Srinivas and others on the one hand and the assessee-company and Shri M. Sudhakar Reddy on the other hand for purchase of 12 acres 38 guntas of agricultural land for a total consideration of Rs. 1.95 crores, thus when the Agreement of Sale as well as the cash receipts indicate that the assessee-company is not the only one but transaction for purchase was made jointly with others addition should not have been made at the hands of assessee alone. As one of the promoters of the company had claimed that the entire amount of Rs. 1.95 crores was advanced by him for payment to the vendors with the confirmation letter it was the duty of the AO to make proper enquiry for finding out the genuineness of the confirmation letter and claim of payment but neither the promoter was summoned for examination nor has made any attempt to find out whether sufficient fund was available with promoter for making payment of Rs. 1.95 crores in cash - restore the matter back to the Assessing Officer who shall conduct necessary enquiry with regard to the payment - in favour of assessee for statistical purposes. Disallowance made u/s. 40 (a) (ia) - Held that:- As decided in case of Merilyn Shipping & Transports [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] section 40(a)(ia) is applicable only to expenditure which is payable as on 31st March of every year and cannot be invoked to disallow the amounts which are already been paid during the previous year, without deducting tax at source - Since the amount has been paid during the relevant previous year, no disallowance could be made u/s. 40 (a) (ia) - in favour of assessee.

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• 2012 (9) TMI 85
  Addition by invoking the provisions relating to the Transfer Pricing - assessee seeks stay of recovery of outstanding demand pending hearing - Held that:- The assessed income of Rs.14.49 crores by TPO is nearly twice the returned income of Rs.8.29 crores - the recovery proceedings under S.220(6) were initiated without attending to or expressly rejecting the stay application filed by the assessee before the AO, thus this approach is certainly not appreciated In the manner of picking up the comparables for applying the TNMM method and rejecting the comparables provided by the assessee there exists a lack of transparency as AO should have provided opportunity as to why the comparables relied upon by the assessee are not acceptable. And the objections raised by the assessee before the lower authorities were not met by passing a speaking order - the assessee deserves grant of conditional stay on paying the whole of the tax component if easy instalment is granted - partly in favour of assessee.

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• 2012 (9) TMI 84
  Addition u/s 68 - unexplained cash credits - gifts received from NRIs and persons other than NRIs - Held that:- In respect of gifts given by the non-NRI donors the same has been duly proved by the assessee by producing the donors before the AO along with all relevant evidence viz confirmation letter/affidavit, acknowledgement of return, balance sheet and capital account. Further when the donors were examined by the Assessing Officer on oath and they conformed the transaction of gift through banking channel and by cheques, than there is no scope of any doubt of identity and creditworthiness of the donor. However, as regards the gift given by few NRI donors, the matter is remanded to the record of the AO and the assessee is directed to produce the statement of bank account of the these donors or the donors in person for verification and examination - Decided partly in favor of assessee

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• 2012 (9) TMI 83
  Disallowance on account of commission paid to two partners who possessed certificate of diploma in pharmacy - commission paid to a partner who is not a working partner is not allowable in the case of assessment of the firm - commission which could be considered as part of remuneration is allowable in case the same is authorized by the partnership deed. If the partnership deed has not authorized, then the same cannot be considered for deduction in the assessment of the firm - in favour of the revenue

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• Customs

• 2012 (9) TMI 115
  Non release of goods - the value of the goods shown by the petitioner could not be accepted - Held that:- Directions for provisional release of the imported goods on the payment of the entire duty payable as per its declared value, and on the deposit of 30% of the differential duty, based on the value of the goods, as as per the show cause notice and shall execute a personal bond for the balance 70% of the differential duty - the authorities concerned shall adjudicate the matter and pass appropriate orders thereon, on merits and in accordance with law, without any undue delay.

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• 2012 (9) TMI 114
  Interest on refund - refund claim was admitted and sanctioned to the appellant but was credited to Consumer Welfare Fund - Held that:- As the reckoning of the period for the purpose of payment of interest under Section 11BB of the Act is concerned the liability of the revenue to pay interest commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) and not on the expiry of the said period from the date on which order of refund is made - Thus the appellant is eligible for the interest from three months after the date of filing of the refund application till the amount of refund is sanctioned to him - in favour of assessee.

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• 2012 (9) TMI 113
  Order of acquittal - offences punishable under Sections 135(1)(b)(i) of the Gold Control Act, 1968 - accused was carrying 50 gold pellets - accused had no permit or licence to carry the gold pellets – Held that:- Search and seizure was not conducted in accordance with Sections 100 to 105 of the Customs Act inasmuch as independent witnesses, who are also the inhabitants of the locality have not been examined - provisions of Section 212 of the Cr. P.C. which are applicable in respect of a proceeding conducted under the Cr. P.C. cannot be applied to the present - delay in obtaining the sanction order and there was also delay in filing the complaint and the said delays are not properly explained and even the mahazar witness to the sport mahazar and seizure mahazar were not examined before the court - accused is entitled to be acquitted of the offence with which he was charged

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• 2012 (9) TMI 112
  SCN – search and seizure – alleged that SCN given to the petitioner beyond the period of six months – Held that:- Show cause notice must be given before expiry of six months and issuance of notice by registered post within six months is a sufficient compliance in the eye of law, moreso, when the same has been received by the respondent as has been admitted - Neither Section 110(2) nor Clause (a) of Section 124 of the Act contemplates service of notice in strict sense within a period of six months from the date of giving/issuing the same by registered post which mode has been prescribed under the Act. It merely speaks about giving of the notice - it cannot be said that the legislature intended to achieve service of notice within six months from the date of seizure - appeal succeeds and is hereby allowed

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• 2012 (9) TMI 82
  Disentitlment to the benefit of the DEPB credit - the shipment could not be completed by a cut-off date for the “Let Export Order” mentioned by the circular dated 22-9-2011, i.e 30th September, 2011 - Held that:- The petitioner is disentitled to the benefit of the DEPB scheme by virtue of a restriction imposed on 22-9-2011, made effective nine days later. To inflict such an arbitrary condition, which is declared to be legally unsustainable, and yet insist that during the interregnum a fresh condition operates to deny the citizen the relief he is justly entitled to, is unfair and unreasonable. Furthermore the respondents are also wrong in contending that the issuance of the Tribunal’s order on 8-12-2001 does not constitute a “valid reason” in terms of the circular dated 22-9-2001 warranting manual endorsement on the LEO after 30-9-2011. In this case, the goods were neither detained, nor were subject to proceedings which culminated in any assessment order, in these circumstances, the insistence that the petitioner continue to maintain a bank guarantee for Rs. 2 crore is unwarranted. The customs authorities did not show how this condition, in addition to the bond insisted in the case of the shipment, was essential as the samples necessary for the investigation and issuance of show cause notice, if any, had been drawn. The goods were exported and the consideration was received in respect of the earlier shipments covered by the three bills bank realization certificate towards export proceeds in respect of the said shipping bills were received on 06.07.2011. In the circumstances, it would be unreasonable and unfair for the respondents, to continue to insist that the Bank guarantee for the amount of Rs. 2 crores should be maintained - the respondents are directed to treat the export in respect of the shipping bill dated 15-6-2011 as eligible to benefit of the DEPB scheme, and having been exported under it, on LEO basis - in favour of assessee.

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• 2012 (9) TMI 81
  Writ petition - demanding release of the bank guarantees and also refund of the amount pre-deposited in terms of the order of the Tribunal - alleged that the respondent authorities are withholding release of the bank guarantees as well as refund of pre-deposit – Held that:- Decision of the Tribunal having assumed finality, is not open to the respondent authorities to either withhold release of the bank guarantees or to withhold refund - respondent authorities directed to forthwith release the bank guarantees and further to refund the deposit

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• 2012 (9) TMI 80
  Demand of duty - appellants had not fulfilled the export obligation in terms of quantity of the goods to be cleared under the export licence – Held that:- Export obligation falling short in terms of quantity. There is no allegation in the show cause notice or finding in the order-in-original that the goods imported for fulfilling the export obligation had been diverted for some other purposes. In the absence of any evidence that the appellants had diverted duty free import for any other purposes for fulfilling the export obligation - penalty under Section 112 of Customs Act reduced

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• Service Tax

• 2012 (9) TMI 140
  Penalty imposed u/s 76, 77 & 78 - renting of immovable property - Held that:- No penalty shall be imposable for failure to pay service tax payable on the taxable service referred to in sub-clause (zzzz) of clause (105) of Section 65 subject to the condition that the amount of service tax along with interest is paid in full within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President - As the appellants though initially contested the service tax liability but on 28.09.11 paid the entire amount of service tax liability as confirmed by the lower authorities along with interest case is squarely covered for non imposition of penalties under Section 80A - in favour of assessee.

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• 2012 (9) TMI 139
  Non adjustment of excess service tax paid with service tax liability in the subsequent period - Held that:- As the adjudicating authority has himself accepted the ST-3 returns clearly indicating the adjustments being made by the appellant regarding the excess payment towards the subsequent liability, the show cause notice dated 15.10.09 seeking to demand the service tax liability during the material period in question is blatantly time barred - in favour of assessee.

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• 2012 (9) TMI 138
  Waiver of pre-deposit - demand - technical testing and analysis service – Held that:- Only with effect from 1-5-2006 an Explanation is added to Section 65(106) of the Finance Act, 1994 - By adding this Explanation, the activities of technical testing and analysis also made applicable in respect of testing undertaken for the purpose of clinical testing of drugs and formulations - Show Cause Notice was issued on 3-4-2007 i.e. after the introduction of Explanation to Section 65 (106) of the Act i.e. on 1-5-2006. The demand is from the period 1-7-2003 - applicants had a strong case for waiver of pre-deposit – pre-deposit waived

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• 2012 (9) TMI 137
  Waiver of pre-deposit – payment of service tax on provisional basis – demand on account of short payment of service tax – Held that:- None of the two show cause notices, the issue of wrong availment of Cenvat credit has been raised - Commissioner, while adjudicating the same has travelled beyond the scope of show cause notices by disallowing the Cenvat credit for which the appellant had not been put on notice - order is not sustainable - requirement of pre-deposit waived

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• 2012 (9) TMI 104
  Demand of service tax along with confirmation of interest and imposition of penalty - alleged that appellants have received commission from cell phone – Held that:- Assessee submitted that the excess amount, which stands confirmed by the Revenue as commission, is actually the profit earned by them on account of sale of mobile phones, on which they have already paid sales tax - denial of benefit SSI exemption - assuming that the differential amount was not on account of sale/purchase of mobiles and that the total clearance value during the preceding financial year was more than Rs.4 lakhs - matter remanded to original adjudicating authority

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• 2012 (9) TMI 103
  GTA services - Refund claim - rejected on ground export invoices numbers are not mentioned in the lorry receipt and the shipping bills as required under Notification 14/07-ST dated 6.10.07 as amended by Notification 3/2008-ST dated 19.2.2008 – Held that:- Case remitted to the original authority for verification of the of the claim of the Appellant on the use of GTA service in the export of goods by establishing a link between the lorry receipt and the export invoices and also the export invoices and shipping bills

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• 2012 (9) TMI 102
  Business Auxiliary Services – appellant use Computerized Reservation System (CRS) of two companies - appellant and GIPL and Abacus have joined hands in marketing and promotion of GIPL’s and Abacus’s activities in India in exchange for support fee – Held that:- In view of the appellant’s agreement with GIPL and Abacus, their activity appears to be the marketing and promotion of the services being provided by the GIPL and Abacus and hence, the same appears to be covered by the definition of “Business Auxiliary Services” under Section 65(19) of the Finance Act, 1994

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• 2012 (9) TMI 101
  Demand of service tax and penalty – rent-a-cab operator – Held that:- Appellant was issued a show cause notice without even giving him an opportunity to explain the situation - appellant had taken registration in May 2004 and the fact that it did not own any vehicle in 2004-2005, there is a possibility that he could have entertained a bona fide belief about the liability of service tax - no evidence was produced before original adjudicating authority and Commissioner (Appeals) did not allow them to produce any evidence - matter remanded to original adjudicating authority with direction to give a reasonable opportunity to the appellant to produce the evidence

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• Central Excise

• 2012 (9) TMI 111
  Input services - CENVAT Credit - the invoices do not bear the name and the address of the service recipient - Held that:- As the appellant has only one factory, wherein manufacturing of final product takes place and on removal Excise duty liability is discharged and these services are utilized for the purpose of the manufacturing activity and in relation to the business of the appellant, the mention of the address of the service receiver as head office of the appellant and not the factory premises is a rectifiable error and could be done so post availment of CENVAT Credit as decided in PAREKH PLAST (INDIA) PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, VAPI [2011 (6) TMI 595 - CESTAT, AHMEDABAD] - in favour of assessee.

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• 2012 (9) TMI 110
  Stay Petition is filed for waiver of pre-deposit - Held that:- As the issue needs detailed appreciation of the evidences and the grounds of appeal, taken by the appellant before first appellate authority the appellant has deposited an amount of Rs.3.30 lakhs during the proceedings before the lower authorities along with interest and 25% of the amount towards penalty the appellant should be put to some condition in order to hear and dispose the appeal, thus directed accordingly to deposit an amount of Rs.2.50 lakhs within a period of eight weeks from date of order.

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• 2012 (9) TMI 109
  Penalty - Assessee wrote letters to the authorities - In return, the assessee did not receive any information. On the understanding that the authorities have confirmed his understanding, he did not pay the duty - when it was pointed out that the duty is payable, he paid the duty and interest promptly- Held that:- assessee was in a benefit of doubt about the liability to pay duty, he was corresponding with the department and in those circumstances, it cannot be said that there is a wilful intention to avoid payment of tax – penalty set aside

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• 2012 (9) TMI 108
  Whether Rule 12CC of the C.E. Rules, 2002, Rule 12AA of the C.C. Rules, 2004 and Notification No. 32/2006-C.E. (N.T.), dated 30-12-2006 are ultra vires the provisions of the Central Excise Act, 1944 and the Constitution of India – Held that:- Central Government has made the Rules 12CC of the C.E. Rules, 2002 and Rule 12AA of the C.C. Rules, 2004 in the year 2006 without any authority of law which power was vested in the Central Government in the year 2010 by inserting clause (xiiia) in sub-section (2) of Section 37 and therefore, the two Rules are ultra vires the Central Excise Act, 1944 - Consequently, Notification No. 32/2006-C.E. (N.T.), dated 30-12-2006 issued in pursuance of Rule 12CC of the C.E. Rules, 2002 and Rule 12AA of the C.C. Rules, 2004 is not sustainable in law - writ petition is allowed

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• 2012 (9) TMI 107
  Clandestine removal of goods - demand of duty – penalty – Held that:- Appellants have contended that they had maintained proper records and the goods were cleared under challans to their sister unit - job work challan and job work register etc. were seized by the preventive officers, they were prevented their relying upon the same - mere debit of duty at the time of visit of the officer by itself is no ground for holding against them - statements itself cannot prove the fact of clandestine removal - appellants are contending that job work records were maintained by them but as they were seized by the officers, they were not produced before the authorities below - fact of production and clearance of goods on job work basis can be substantiate from the parallel records maintained by their sister unit - matter remanded to the original adjudicating authority for de novo adjudication.

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• 2012 (9) TMI 106
  Reversal of CENVAT Credit availed of the Central Excise duty paid on capital goods as well as input services - Held that:- As the provisions of Rule 11 (3) of CENVAT Credit Rules, 2004 specifically provides for only reversal of CENVAT Credit taken on the duty paid on the inputs and the said rule is silent about the reversal of CENVAT Credit taken of Central Excise duty paid on capital goods as well as on the Service Tax paid on the input services - the appellant has made out a prima facie case for waiver of pre-deposit of balance amounts involved in this case - in favour of assessee.

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• 2012 (9) TMI 79
  Waiver of pre-deposit – Cenvat credit – Held that:- KPIPL had never taken any delivery of material and they had never manufactured PVC compound and PVC Master Batches, which were allegedly sold to appellant - appellant had during this period allegedly purchased several consignments of PVC compound, etc. from KPIPL and had also availed cenvat credit - appellant shall deposit 50% of the cenvat credit

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• 2012 (9) TMI 78
  Non-reversal of cenvat credit in respect of inputs lying in opening stock at time of switching from paying duty at concessional rate under Notification No.1/93-CE to full duty exemption under Notification No.16/97-CE w.e.f. 1.4.97 - Held that:- Admittedly, appellant have not reversed the cenvat credit pertaining to inputs in stock or in process as on 31.3.1997; despite having availed the benefit of exemption notification No.16/97 from 1.4.97, which is a notification based on the value of clearances in a FY. Hence, in view of this under the provisions of sub-rule (7) of Rule 57H, at the time of opting for this exemption w.e.f. 1.4.97, the appellant were required to reverse the cenvat credit on the inputs in stock or in process or contained in the finished product lying in stock. Thus, the provisions of Rule 57H(7) are applicable to the appellant. Since the correct facts had been narrated in the SCN hence citation of Rule 57C and not Rule 57H(7), would not vitiate the SCN. Cenvat credit demand upheld. Further, in view of condition (i) of the Notification No. 16/97-CE, the option to avail of the exemption has to be made before effecting first clearances in a FY and such option once exercised, shall be final and cannot be withdrawn in the same FY under any circumstances. Therefore, their plea that if allowed to opt out of the exemption w.e.f. 1.4.97, their net duty liability would be only Rs. 1,21,712/- is without any merit - Decided against assessee

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• CST, VAT & Sales Tax

• 2012 (9) TMI 105
  Registration of Developers - Held that:- The time for registration by the developers as per clause (1) of the Trade Circular dated August 6, 2012 shall stand extended up to October 15, 2012 and the time for filing returns by the developers as per clause (m) of the said circular shall stand extended up to October 31, 2012. As per amendment in section 2(24) of Maharashtra Value Added Tax Act, 2002 w.e.f. June 20, 2006 on or before October 31, 2012, the coercive process for recovery of tax, interest or penalty shall remain stayed in case the concerned developers and in case the amendment is held to be unconstitutional and the tax so deposited is ordered to be returned by the State Government the same shall be returned along with interest at such rate that may be ordered by the court finally at the time of disposal of the matter.

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