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Showing 421 to 440 of 1180 Records
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2013 (8) TMI 763
Deduction u/s 37 - Provision for Suraksha Fund - Suraksha Fund created by the order of Office of the Registrar, Co-operative Societies, Rajasthan - diversion by overriding title - Held that:- Any contribution made by the assessee to a fund which directly connected or related to carrying on assesee's business or which results in benefit to the assesee's business has to be regarded as deduction allowable u/s 37 of the Act. The decision of Hon'ble Apex Court in the case of Associated Power Co. Ltd. vs CIT (1995 (11) TMI 5 - SUPREME Court) is not applicable. - Decided in favour of assessee.
Deduction u/s 37 - Premium paid to LIC leave encashment group scheme - CIT upheld disallowance - Held that:- Leave encashment is not a statutory liability and even in the case of provision being made the deduction was allowed as business expenditure, when the liability was not actually incurred in the previous year. It was not a provision which was disowned but an actual liability towards premium paid on insurance policy and the liability was allowable as a deduction u/s 37 being an expenditure incurred for the purpose of business - The CIT proceeded on a totally wrong premise in finding the claim to be only u/s 43B(f) and then disallowing it. The order of AO allowing deduction to assessee in the case of premium paid towards the valid insurance policy, ensuring the satisfaction of liability for leave encashment by the insurer cannot be held to be erroneous and was not liable to be revised u/s 263 for the reason of being prejudicial to the revenue - Following decision of CIT vs. Hindustan Latex Ltd. [2012 (6) TMI 713 - KERALA HIGH COURT] - Decided in favour of assessee.
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2013 (8) TMI 762
Deduction u/s 35(2AB) - Weighted deduction - expenditure on R & D facilities - whether CIT(A) erred in restricting disallowance of the expenditure on R&D to 50% from 150% made by the AO. - The assessee contended that the Assessing Officer disallowed the claim u/s 35(2AB) without correspondingly allowing the revenue expenditure which was added to the computation of income, which tantamounts to double addition - Held that:- matter remanded back to the file of the AO to grant weighted deduction u/s 35(2AB). The balance expenditure if any not approved by the DSIR will have to be considered for deduction under section 35(1) or under normal provisions of the Act. The expenditure has been incurred by the R & D facility of the assessee approved by the Government of India. Merely because part of the expenditure incurred by the approved R & D facilities is not considered for weighted deduction under Section 35(2AB) would not render that expenditure is not towards R & D or not for the purposes of the business. Allowability of such expenditure u/s 35(1) or under other appropriate provisions of the Act will have to be considered. - Decided against Revenue.
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2013 (8) TMI 761
Revision u/s 263 - erroneous and prejudice to revenue order – Held that:- As held in the case of Malabar Industries Co. Ltd., Vs. CIT [2000 (2) TMI 10 - SUPREME Court], the Commissioner can exercise revision jurisdictional u/s 263 if he is satisfied that the order of the assessing officer sought to be revised is (i)erroneous; and also (ii) prejudicial to the interests of the revenue – Assessing officer should be fair not only to the assessee but also to the Public Exchequer. The Assessing Officer has got to protect, on one hand, the interest of the assessee in the sense that he is not subjected to any amount of tax in excess of what is legitimately due from him, and on the other hand, he has a duty to protect the interests of the revenue and to see that no one dodged the revenue and escaped without paying the legitimate tax. The Assessing Officer is not expected to put blinkers on his eyes and mechanically accept what the assessee claims before him - The Commissioner may consider an order of the Assessing Officer to be erroneous not only when it contains some apparent error of reasoning or of law or of fact on the face of it but also when it is a stereo-typed order which simply accepts what the assessee has stated in his return and fails to make enquiries or examine the genuineness of the claim which are called for in the circumstances of the case.
Arbitrariness in decision- making would always need correction regardless of whether it causes prejudice to an assessee or to the State Exchequer - While making an assessment, the ITO has a varied role to play. He is the investigator, prosecutor as well as adjudicator. As an adjudicator he is an arbitrator between the revenue and the taxpayer and he has to be fair to both. His duty to act fairly requires that when he enquires into a substantial matter like the present one, he must record a finding on the relevant issue giving, howsoever briefly, his reasons therefor.
In the present case, there is no description what enquiry he has caused to come to the conclusion that the assessee is entitled for deduction u/s. 80IC of the Act - Regarding allowability of deduction u/s. 80IC of the Act from Assessing Officer's order. The assessee produced copy of letter dated November 6, 2006 addressed to the Assessing Officer and one more letter dated 15.12.2008. There is one more letter regarding claim of the assessee u/s. 80IC of the Act. It has to be noted that these letters do not bear any acknowledgement from the Assessing Officer or from the Inward section of the Department - In these circumstances, we are of the opinion that the CIT is justified in exercising his powers u/s. 263 of the Act.
Manufacture of water purifiers - Assembly - Deduction u/s 80IC of the Income Tax Act, 1961 - The case of the assessee is that the assessee is engaged in the manufacturing activity and hence, the assessee is entitled for deduction u/s 80IC of the Act. The case of the DR is that the assessee is not engaged in the manufacture and it is only engaged in the work of assembling of various parts of purifier and joining them so as to make water purifier an there is no value addition to this product – Held that:- In the case under consideration, the assessee company does the assembling work to prepare water filter cum purifiers. It purchases various components like, 'chassis, body, top cover, back cover, pumps, PCB, wire harness, some hardware and plastic components from different vendors from all over India, assembles these components to get a finished product - A new distinct article which is called 'water purifier' came into existence having commercial market and the original commodity no longer remained and the new product has recognized as distinct commodity - Assessee is engaged in the manufacture of water purifiers and therefore entitled for deduction u/s 80IC.
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2013 (8) TMI 760
Land to be agricultural land or not – Non cultivation – Held that:- the land in question was acquired in the year 1959. Even the Village Administrative Officer had certified the same to be agricultural but not cultivated for more than two years as in the year 2007. Hence, it is held that once a parcel of land is agricultural, the mere fact that it is lying uncultivated for a short span of time would not change its nature in the absence of any other material contrary to the same. Therefore, no merit in the argument raised by the Revenue – Decided against the Revenue.
Date of agreement to sale land – Date of execution of the agreement – Held that:- On 20.4.2007, the assessee had executed unregistered agreement with the vendee delivering possession of the property in question. Even in the agreement dated 20.8.2007, the parties reiterated that possession had already been exchanged on 20.4.2007 – Relying upon the judgment in the case of Bakthavatsalam Gowtham [2013 (8) TMI 759 - ITAT CHENNAI], it has been held that as per sec.2(47)(v) of the Act, mere parting of possession of an immovable property under sec.53A of the Act in case of unregistered agreement amounts to a valid transfer - Merely because an agreement to sale has not been registered, which otherwise is in the nature of agreement referred to in section 53A cannot be taken out of ambit of section 2(47)(v) of the Act when parting of the possession of immovable property has taken place.
Distance of land from the municipal limit for deciding the land to be agricultural land – Method to be adopted - Method of straight line on horizontal plane or as per crow's flight - Contention of the Revenue that the land fell within the notified area as the distance was within 4.5 KMs by following ‘crow fly’ method - Assessee’s specific contention was that actual road distance between municipality and the land transferred was 5.1 kms ie. more than the notified area limit of 5 KMs – Held that:- The reckoning of urbanization as a factor for prescribing the distance is of significant which would yield to the principle of measuring distance in terms of approach road rather than by straight line on horizontal plane - Once the statutory guidance of taking into account the extent and scope of urbanization of the area has to be reckoned while issuing any such notification then it would be incongruous to the argument of the Revenue that the distance of land should be measured by the method of straight line on horizontal plane or as per crow's flight because any measurement by crow's flight is bound to ignore the urbanization which has taken place – Reliance has been placed upon the judgment in the case of Radhasoawami Satsang v. CIT(1992) [1991 (11) TMI 2 - SUPREME Court] – Decided against the Revenue.
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2013 (8) TMI 759
Capital gain - transfer u/s 2(47) - taxability in the year in which agreement took place or in the year in which sale deed registered - Held that:- merely because an agreement to sale has not been registered, which otherwise is in the nature of agreement referred to in section 53A cannot be taken out of ambit of section 2(47)(v) of the Act when parting of the possession of immovable property has taken place - The sale deed in respect of above transaction was registered in financial year 2006-07 relevant to the year under consideration and on which stamp duty was charged on the value of Rs. 23,50,85,500/-. The assessee offered capital gains in respect of the above transaction in assessment year 2004-05 which was duly assessed by the Assessing Officer u/s 143(3) in the assessment of the assessment year 2004-05 - Therefore, property in question has already been treated as transfer by the assessee in assessment year 2004-05 and therefore, in respect of that transfer, capital gains cannot be assessed in the assessment of assessment year 2007-08 - Decided against Revenue.
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2013 (8) TMI 758
Penalty under section 158BFA (2) - Block assessment u/s 158BC - Determination of Undisclosed income – Held that:- Pre-condition for the imposition of penalty under Section 158 BFA (2) is that there must be a determination of the undisclosed income by the Assessing Officer under clause (c) of Section 158 BC of the said Act. If this is not satisfied, then there would be no question of imposing any penalty.
In the scheme of block assessments, it is settled position of law that the income for the block period has to be determined on the basis of the seized material found during the course of search. The seized material is to be supplied to the assessee and it is supposed to compute true undisclosed income from the seized material - The ultimate income which is to be assessed as an income for the block period is the reduced amount than what has been computed by Assessing officer - Facts suggest that there was no attempt of concealment or furnishing inaccurate particulars, it is difference of the opinion about the income assessable from the material - There was no deliberate attempt at the end of assessee in computing wrong income from the seized material.
Penalty imposed in the present case is not sustainable because the enhancement of undisclosed income by the Assessing Officer has been made on estimated basis and we are unable to see any reason or material which proves beyond the shadow of doubt that there was actual income in the hands of assessee and further that the income was not disclosed in the return filed u/s 158BC of the Act. - Decision in ACIT vs Shanti Kumar Chhabra [2007 (10) TMI 334 - ITAT JAIPUR-A] followed - No penalty - decided in favor of assessee.
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2013 (8) TMI 757
Exemption u/s 54 - scope of the term 'a residential house' – construction of 7 flats - building development agreement in respect of existing dwelling house - Held that:- Relying upon the judgment in the case of CIT vs. Smt. K.G. Rukmini Amma[ 2010 (8) TMI 482 - Karnataka High Court ]following its earlier decision in case of CIT vs. D.Anand Basappa [2008 (10) TMI 99 - KARNATAKA HIGH COURT], in which it have been held that the expression "a residential house" as appears in section 54 of the Act, cannot be interpreted in a manner to suggest that the exemption would be restricted to a single residential unit – In the present case, considering the totality of the facts and circumstances in the light of consistent view of different High Courts including the jurisdictional High Court, lower authorities were not correct in restricting the exemption under section 54F of the Act to only one flat by interpreting the words "a residential house" in a manner which has been held to be an incorrect interpretation
The assessee is entitled for exemption under section 54F of the Act in respect of all the seven flats - Assessing Officer, therefore directed to compute capital gain, if any, after allowing exemption under section 54F of the Act in respect of all the seven flats which were received by the assessee under the development agreement. In view of our aforesaid finding, the other issue as to whether the long term capital asset transferred by the assessee under development agreement was simply a land as held by the department or a residential house along with land as claimed by the assessee so as to entitle it for exemption under section 54 of the Act has become inconsequential and therefore, not required to be adjudicated upon – Decided in favor of Assessee.
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2013 (8) TMI 756
Unexplained credit u/s 68 of the Income Tax Act – credit worthiness of lender - genuineness of transaction - onus to prove - Held that:- In the present case, the assessee did not able to establish the cash credits mentioned above as genuine credits. The assessee's stand from the beginning and also before us is that the cash credits are genuine. The assessee never took specific stand that these unexplained cash credits are referable to the income from disclosed sources - In order to delete this addition, the assessee is bound to explain the source of credit, genuineness of the transaction and the capacity of the lender to advance the same. As the assessee failed to explained these criteria – confirmation of order of Commissioner(A) has been done – Reliance is placed upon the CIT v. Maduri Rajaiahgari Kistaiah [1975 (12) TMI 8 - ANDHRA PRADESH High Court] -and in the case of CIT v. Devi Prasad Viswanath Prasad [1968 (8) TMI 5 - SUPREME Court] wherein held that on rejection of books of account, business income estimated, addition towards unexplained cash credit separately valued – Decided against the Assessee.
Whether Intangible addition in the past would take care of the unexplained credit in the present – Held that:- When the alternate plea that tangible additions in the past could take care of cash credits of current year is not taken at the earlier stage and no materials are placed on record to substantiate the same, rejection of such plea would be justified – Reliance is placed upon the judgment of R. Dalmia (Decd.) Versus Commissioner of Income Tax.[2001 (8) TMI 26 - DELHI High Court] – Decided against the Assessee.
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2013 (8) TMI 755
Unexplained Credit – Addition u/s 68 - Assessee is a Public Limited Company. - Money borrowed through fixed deposit in a scheme under the Company (acceptance of deposit) Rule, 1975. credit worthiness - genuineness of transaction - onus to prove – Held that:- The Hon'ble Calcutta High Court in the case of C. Kant and Company vs. CIT (1980 (6) TMI 21 - CALCUTTA High Court) held that in respect of credit entry it is necessary for the assessee to prove not only the identity of the creditors but also to prove the capacity of the creditors, the advance money and genuineness of the transactions. Similar view has been taken by the Hon'ble Rajasthan High Court in the case of Kamal Motor vs. CIT 131 Taxman 155 (Raj.). - mere filing of the confirmatory letters will not discharge the onus that lies on the assessee.
In the case under consideration, the assessee failed to furnish even confirmation of the depositors for which the CIT(A) has sustained the addition. The Hon'ble Calcutta High Court in the case of CIT vs. Precision Finance Pvt. Ltd. held that mere payment by account payee cheque was not sacrosanct nor could it make a non-genuine transaction as genuine.
As per the judgment in the case of CIT vs. United Commercial and Industrial Co. (P) Ltd.[1989 (5) TMI 18 - CALCUTTA High Court], wherein it was held that The primary onus lies on the assessee to prove the nature and source of credits in its accounts. It is necessary for the assessee to prove prima facie the identity of his creditors, the capacity of such creditors to advance the money and lastly the genuineness of the transactions. Only when these things are proved by the assessee prima facie and only after the assessee has adduced evidence to establish the aforesaid facts does the onus shift on to the Department. - Decided against the assessee.
Additin where fixed deposits taken during the earlier years - fixed deposits renewed during the year - Held that:- In the instant case, fixed deposits which were renewed during the year - In fact these fixed deposits were taken in earlier year, therefore, to that extent addition is not warranted - The assessee has furnished a chart of such 244 depositors amounting to Rs.29,84,000/- which has been placed in the Paper Book – Accepted the contention of the Assessee that section 68 requires that credit must be in the previous year and not of earlier year for the purpose of making addition in the income since renewal of fixed deposits are not credit of this year, therefore, addition cannot be made in the year under consideration - Balance addition of Rs.23,98,000/- (Rs.53,82,000.00 - Rs.29,84,000.00) sustained and confirmed and matter pertaining to addition of Rs.29,84,000/- is being sent back to the file of the A.O – Appeal of the assessee is partly allowed for statistical purpose.
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2013 (8) TMI 754
Deduction u/s.54 - Joint ownership in property - assessee was owner of 50%. - Though the capital gain was computed in the hands of the assessee but exemption under section 54 was not granted in the assessment order passed under section 143(3) of the Act on the ground that assessee is not owner of the house property which was sold and no income has been assessed relating to the said property in the hands of the assessee under the head "house property".
Held that:- assessee is owner of the land upon which building was constructed by the funds made available by the husband of the assessee in pursuance to an agreement - If the terms of aforementioned agreement are kept in mind then it cannot be said that assessee was not owner of the building which was sold by her. Upon the basis of aforementioned agreement revenue has assessed the husband of the assessee and has computed long term capital gain on 50% of the sale proceeds and exemption has also been granted under section 54 - AO after verifying the evidences filed by the assessee has accepted the claim of the assessee regarding deductibility of Rs.25.00 lacs, which was paid to the tenant as compensation. This fact itself has established that the property of the assessee was occupied by the tenant.
The requirement of section 54 is that the income of the building which is being sold should be chargeable under the head "income from house property". The requirement of section is not that the assessee must earn income from said property. If there was a tenant then the income from the property was chargeable to tax. Therefore, exemption also cannot be denied to the assessee on the ground that assessee did not show any income chargeable under the head income from house property - Decided in favour of assessee.
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2013 (8) TMI 753
Comparison - Arm’s length price – Comparability of price with the chosen company - whether Assessee is in merely functional advisory consultancy service without any risk to its sister companies – Held that:- Apropos assessee's contention that assessee is in merely functional advisory consultancy service without any risk cannot be accepted as in preceding two years the ITAT [2012 (10) TMI 779 - ITAT, DELHI] has held that it is in marketing services which carry elements of risk and the assessee's services are to be treated as marketing services.
Relying upon the decision in the case of MCI Com India (P.) Ltd[2012 (10) TMI 790 - ITAT DELHI], it has been held that companies like EIL, Rites, Wapsos and TCE are engineering companies and provide end to end solutions and therefore they cannot be compared with those assessee who were into providing marketing support services to the parent company. They were held to be functionally not comparable with thee engineering companies - Therefore, they are to be excluded - Matter to go back to the file of AO /TPO who will determine the T.P. adjustments by excluding Vapi and WAPCOS comparables.
Rate of depreciation on computers – Assessee charged depreciation @ 60% - Held that:- It is well settled that computers and peripherals are eligible for depreciation @ 60%. Besides assessee's opening WDV cannot be disturbed.
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2013 (8) TMI 752
Royalty income - sale of Microsoft software products to the Indian distributors – selling/licensing of software through independent distributors to the end users under the End User License Agreement (EULA). – MS Corp is the sole owner of intellectual property rights vested in Microsoft software. It has granted exclusive license to manufacture and distribute Microsoft products to one of its wholly owned subsidiaries, M/s Gracemac (now merged with MOL Corporation), which, in turn, granted similar non-exclusive rights to its wholly owned subsidiaries, Microsoft Operations Pte.Ltd., Singapore (MO Singapore) to manufacture Microsoft products in Singapore and distribute such products in Asia (excluding non-English language products in China and Taiwan). The assessee has been appointed as a distributor of Microsoft products in India by MO Singapore.
Held that:- MRSC reproduced certain software products and distributed the same through chain of distributors in India. Therefore, the very appointment of distributors by MRSC in India, had business connection in India. But, MRSC cannot be taxed again on the same income by way of royalty for exploitation of same rights which had been assessed in the hands of Gracemac, otherwise it would result in double taxation -Decision in the case of Gracemac Corpn. and Microsoft Corpn. Versus ADIT [2010 (10) TMI 583 - ITAT, DELHI] followed. – Decided in favor of Assessee.
Penalty for concealment u/s 271(1)(c) of the Income Tax Act – Held that:- As income has not been held to be assessable in the hands of the assessee, no justification in levy of penalty, therefore, the order of the CIT (A) deleting the penalty is upheld on the ground that as the income itself is not assessable in the hands of the assessee, there is no question of levy of penalty.
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2013 (8) TMI 751
Revenue or Capital expenditure - Expenditure on renovation work - CIT allowed depreciation - Whether the said expenditure incurred by the assessee to renovate the said premises is to be allowed as capital expenditure or as a revenue expenditure - Held that:- On perusal of the agreement entered by the assessee, it is observed from the Clause 3.1 that none of the party is entitled to terminate this agreement during the said lock-in-period of 24 months beginning from 9.2.2007 till 8.2.2009. The above terms and conditions of the agreement itself establishes that the first lease agreement entered into by the assessee with its sister concern, a partnership firm to take the said premises on rent on monthly rent of ₹ 3000/- and thereafter spent the said amount of ₹ 59,65,000/- in the Financial Year relevant to the year under consideration and let out the said premises at monthly rent of ₹ 15,00,000/- appears to be a colourable device - expenditure has been incurred by the assessee for complete renovation of the building to suit the requirement of licensee - Said expenditure cannot be said to be a revenue expenditure but it is a capital expenditure giving enduring benefits to the assessee in the form of regular receipt of monthly rent and interest free refundable security deposits - CIT(A) has rightly held that the said expenditure incurred by the assessee in relation to the premises under consideration for complete renovation to suit the requirements of licencee is a capital expenditure and the assessee is entitled to depreciation - Explanation to section 32(1) of the Act also stipulates that all the expenditures incurred by the assessee in relation to lease premises for renovation or extension or improvement is entitled to depreciation as is shown by the assessee - Decided against Assessee.
Disallowance of expenditure incurred on repairs to Air conditioner - Held that:- expenditure has been incurred by the assessee towards cost of new compressor and to replace old damaged one, therefore, no new asset has come into existence. The said expenditure is revenue in nature as expenditure has been incurred to replace the damaged compressors of existing Air- conditioners - Decided in favour of assessee.
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2013 (8) TMI 750
Review petition - error on record - power to correct - writ jurisdiction of High Court - grant of promotional pay scale to the petitioners - Held that:- the Court while deciding the writ petition has not gone to the controversy involved in the writ petition and was misguided by the Supplementary Counter Affidavit of Sri Ashfaq Ahmad, who ignoring the earlier order of the Department as well as order of State Government has given an impression that claim of the petitioners being genuine would be given although after decision of the State of U.P. in similar matters, he was not competent do allow the claim of the petitioners. The conduct of Sri Ashfaq Ahmad, who was posted on such a high post was not proper. However earlier judgment dated 23.02.2012 suffers from error apparent on the face of record and is liable to be recalled/reviewed. The purpose of justice will not be served by rejecting the Review Application and perpetuating the error again. The writ petition is liable to be decided on merits. - Decision in Commissioner of Customs v. Hongo India Private Limited [ 2009 (3) TMI 31 - SUPREME COURT] followed.
Grant of Promotional Pay Scale – Whether the assesses who were sent on deputation from the Revenue departments, entitled to the same pay scale and other benefits as being provided to the Collections Amins of the Revenue department - Held that:- Thus the pay scale had already been provided, no relief can be granted in the Special Appeal - Relief to the petitioners cannot be denied due to pendency of the Special Appeal, which has no legs to stand - order set aside -The petitioners were also entitled to parity in pay scale and promotional pay scale was concerned - The petitioners have fundamental right under Article 14 of the Constitution for equal treatment - the counsel for the petitioners relying upon Article 14 and 39 (d) of the Constitution - the eligibility, mode of selection/ recruitment, nature and quality of work and duties and effort, reliability, confidentiality, dexterity, functional need and responsibilities and status of both the posts were identical - The petitioners had made statement in this respect which has not been specifically denied – the claim of the petitioners has been denied on an irrelevant considerations - The respondents were directed to grant the same benefits of pay scale and promotional pay scale etc. as given to the Collection Amins of the Revenue department of State of U.P.
Whether minimum qualification, mode of recruitment, nature of work and duties and degree of responsibility of the Collection Amins, in Revenue department and Collection Amins, in Trade Tax department are same and employer was the same as such the assesses were also entitled to parity in pay scale and promotional pay scale - Held that:- The petitioners had been illegally discriminated without any basis - at the time of sending the petitioners on deputations, they were given same salary, which they were drawing in Collectorate - The anomaly in salary had occurred for the first time due reasons that on the basis of report of Pay Rationalization Committee, by Government Order the pay scale of Collection Amins in Revenue department was refixed and promotional pay scale but same benefits had not been given to the Collection Amins in Trade Tax department - From the chart supplied by the Standing Counsel, it was proved that the petitioners were given Selection Grade, Promotional Grade and Next Higher Grade - Thus there was totally non application of mind at the time of passing the order and order was based upon false reasons.
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2013 (8) TMI 749
Maintainability of Writ Petition - petition against initiation of inquiry - petition to declare the inquiry initiated was illegal, bad in law and outcome of the arbitrary exercise of the power and without jurisdiction - Territorial jurisdiction - Cause of action - According to the petitioner, since the summons/notices have been issued at the registered office of the petitioner and the replies are made therefrom, it would constitute a part of the cause of action.
The petitioner have the several branches across the country for providing services coming under the category of banking and other Financial Services, Business Auxiliary Services and Business Support Services attracting the service tax. The respondent no.3, the Commissioner of Service Tax at Kolkata issued several summons and notices to the petitioner Company for verification of the documents relating to the service tax on the finance lease under the category of Banking and other Financial Services and Business Auxiliary Services
Held that:- mere issuance of the notice or giving a reply would not constitute a cause of action - Decided against the assessee. Decision in National Textile Corporation Ltd. vs Haribox Swalram [2004 (4) TMI 527 - SUPREME COURT] followed.
Regarding the contention that the purported action of the respondent no.1 gives rise to an evil consequence at the place of the business of the petitioner at Kolkata, and thus the writ petition is maintainable.
Held that:- The evil consequence as tried to be contended by the petitioner must relate to the infringement of the rights as guaranteed under Constitution of India. No case of an infringement is made out in the writ petition. Rather it would appear from the pleadings made in the various paragraphs that compliance to the summons and/or notices is made and the entire facts as pleaded in the writ petition would reflect that the sheet anchor of the case founded on the action of the respondent no.1 to reopen the investigation which has already been concluded and dropped by the respondent no.3 - Decision in the case of Kusum Ingots and Alloys Limited [2004 (4) TMI 342 - SUPREME COURT OF INDIA ] followed.
The writ petition was dismissed for want of territorial jurisdiction.
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2013 (8) TMI 748
Franchisee services - The appellant entered into sub-licensing agreement with various seed procuring companies to transfer the technology obtained from BTC for a consideration in the form of sub-license fee and the Revenue seeks to levy service tax on this fee under ‘Franchisee services' - Held that:- The packages contain mark “Fusion BT” which only denotes that the seeds being sold contain Fusion BT genes, and it does not denote that the said mark is either a logo or a trademark or hallmark of the appellant - The department could not show that any logo or hallmark belonging to the appellant has been put on the packages manufactured/marketed by the sub-licensees.
A laptop containing a label of ‘windows', only denotes that the processor or the operating system/software, as the case may be in the said laptop and by putting such label, the laptop manufacturing company does not represent ‘Microsoft' or become the franchisee of ‘Microsoft'. - in a franchisee transaction the franchisee loses his individual identity and represent the identity of franchisor to the outside world, as in the case of ‘McDonald' the customers are not concerned with who owns the ‘McDonald's restaurant (franchisee) - The customers identify it with ‘McDonald (the franchisor).
The appellants had imported the Technology which is owned by BTC and patented in China - The said technology was imported in the form of the mother seeds and the same were multiplied in the laboratory by or on behalf of the appellants and given to the sub-licensee to further multiply for onward sale by them to the farmers for the purpose of growing commercial crop - The appellants were not granted any ‘representational right' from BTC to represent them in India, nor entitled to grant or they have actually granted any representational right to the sub-licensees.
The department failed to show that the appellant (the franchisor) granted representational rights to franchisee to sell or manufacture or provided service identified with them - order set aside – Decided in favor of assesse.
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2013 (8) TMI 747
CENVAT credit - Input service of advertisement service - Held that:- The main condition of the input service is that it has to be used for providing an output service - the output service of the applicant is to provide financial advice to mutual fund to invest the funds. The obligation of the Asset Management Company is to take all reasonable steps and exercise due diligence to ensure the investment of funds is not contrary to SEBI Regulation and the trust deeds.
According to the Revenue, in terms of Rule 5 of Service Tax Rules, 2006, the applicant acted as a pure agent of the mutual fund and they incurred the advertisement expenses for the benefit of the mutual funds. It is also contended that the applicants outward service is only investment and advisory services rendered to the mutual funds, for which advertisement cannot be input service.- prima facie case is against the assessee - pre-deposit of Rs. 25 Lacs ordered - stay granted partly.
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2013 (8) TMI 746
Erection, Commissioning & Installation Service u/s 65(39) r.w 65(105)(zzb) - retrospective exemption regarding transmission and distribution of electricity - assesse claimed immunity to tax on the basis of Notification No. 45/2010 - Held that:- All taxable services provided in relation to distribution of electrical energy were exempt from the liability to service tax - The expression in relation to was of wide import and indicated all activities having a direct and proximal nexus with distribution of electrical energy - Distribution of electricity energy cannot be effectively accomplished without installation of sub-stations, transmission towers and installation of meters to record electricity consumption for periodic billing and recovery of charges.
M. P. Power Transmission Co. Ltd. vs. CCE Bhopal [2011 (2) TMI 982 - CESTAT, NEW DELHI ] - Revenue demand of service tax on transmission and distribution of electricity was declared unsustainable in view of Notification No. 45/2010 – the purpose of billing the consumer for electricity consumed it ws essential to install the electricity meter having capacity to withstand the load provided to the customer - any activity or service like erection, commissioning and installation of transmission towers and meters as also technical testing and analysis would constitute the activity of transmission and distribution by the service provider to the service receiver - and such service would be squarely covered under exemption provided under this notification – order was unsustainable and was accordingly quashed – Decided in favor of assesse.
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2013 (8) TMI 745
Marketing, Selling and After Sales Services - Valuation - assesse was not paying service tax on cost of spare parts reimbursed – Revenue was of the view that the assesse should had paid service tax on the value of service inclusive of the material used - Held that- There cannot be levy of service tax on value of spare parts used in repair service of motor vehicles - In such activity the cost of materials and the service itself can be clearly vivisected and was perceived as separate components by customers –relying upon BSNL Vs. UOI [ 2006 (3) TMI 1 - Supreme court] - there was no proof regarding value of goods involved – the reimbursement claims for value of goods show the items used and price of each item.
The argument of Revenue that spare parts of motor vehicles used in repair was of the same nature as chemicals used in photography because the former are in the nature of spare parts where a sale prior to replacement is acceptable as a concept and the latter has the nature of consumables cannot be accepted – Rule 6 (1) (vi) of Service tax (Determination of Value) Rules 2006 does not specifically state that the rule was about cost of spare parts.
Prima facie case is in favor of assessee - stay granted.
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2013 (8) TMI 744
Disallowance the interest paid at the rate of difference between two average rates (of borrowing funds and lending funds from and to sister concerns) without going into details of utilization of funds borrowed and the purpose of giving of loans – Held that:- AO has not mentioned anything in the assessment order as to under which provision, he has made addition of the differential interest rate - AO has not brought out any detailed facts on record proving nexus of funds borrowed with the funds given as loan to establish that the borrowed funds were diverted at lesser rate of interest to sister concern or other than business purposes - On the face of these findings of fact recorded by the ld. CIT(A) even the part addition sustained by the ld. CIT(A) is not justified - CIT(A) even should not have sustained the part addition because the AO has not pointed out as to how the conditions of section 36(1)(iii) have been violated in this case – Decided against the Revenue.
In the case under consideration, the case of the A.O. is that there is a loss on account of interest paid and received. The CIT(A) has also wrongly accepted the A.O.'s view without considering the section 36(1)(iii) of the Act. The loss in the interest account was on account of different rates charged from different parties on loans and advances taken and loans and advances given. For allowing deduction under section 36(1)(iii), it is to be seen whether conditions stated in section 36(1)(iii) has been satisfied or not. In the case under consideration, the assessee has satisfied all the conditions that the borrowed fund was used for the purpose of business as prescribed under section 36(1)(iii) of the Act. Also, it was not the case of the A.O. that the borrowed fund was not utilised for the purpose of business of the assessee.
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