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2016 (3) TMI 808 - AT - Service TaxRelated party transactions - Whether the respondents are associated enterprises in terms of Section 92A of the Income Tax Act, 1961 or not - Held that:- on the basis of the definition of associated enterprises as per Section 92A ibid, the respondent is an associate enterprises of the service recipient. The respondent is managing and controlling the mutual fund. Therefore, it is clearly covered under the definition of associate enterprises. On the issue of point of taxation the relevant Section 67 of the Finance Act 1994 is reproduced below: Point of taxation - Whether to be decided on the date of provisional entries of the transaction in the books of account or on the date of final entry and invoice made by the respondent - Held that:- the provisional entries were made with a specific description of transaction. The explanation does not make any distinction between the provisional entries and the final entries made subsequently. As per the explanation, the moment first time any entry is made irrespective whether it is provisional or final entry the same will be covered under the debit entries as specified under the explanation. Therefore there is no scope in the said explanation to give different treatment to the provisional entries or final entry. So, once debit entries were made even though provisional basis and subsequently final entries are made, it is only the adjustment in the books of account and for this reason the entries made at the first time cannot be said to be irrelevant for deciding the point of taxation. Demand of interest and penalties under Section 76 & 77 of the Customs Act, 1962 - Held that:- the service tax became due in accordance with the date of provisional entries made first time by the respondent in their books of account. Therefore, there is a delay in payment of service tax which attracts interest. With regard to imposition of penalties, the show cause notice was issued for demand of interest and there is no dispute regarding the payment of service tax. As the issue involved is in the nature of interpretation of valuation section and the penal provisions are invoked only for non-payment or short payment of service tax. Therefore, it is only for demand of interest and the penalties under Section 76 & 77 are not imposable. - Decided partly in favour of the Revenue
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