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Showing 321 to 340 of 934 Records
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2013 (2) TMI 621
Income escaping assessment - notice u/s 147/148 - non mentioning of AY in the notice - assessee participated in the reassessment proceeding. - appeal was allowed in part by the CIT(A) against the order u/s 147 - validity of assessment u/s 292B and 292BB - held that:- No party can claim to have vested right in injustice being done because of some slip of pen, or omission causing no prejudice to anyone. The section is intended to ensure that an inconsequential technicality does not defeat justice. Nature of mistake will determine whether a return, order or proceeding is vitiated or not.
The only defect which could be pointed out is that the assessment year was not mentioned in the reasons recorded by the Assessing Officer. Unless it is shown that assessee was misled by not mentioning the assessment year in the reasons recorded, we are of the view that if the reasons recorded relate to a particular year, the reassessment proceeding initiated relate to that particular year and the assessee participated in the reassessment proceeding without raising any objection, such an objection cannot be raised by the assessee at a subsequent stage of the proceeding.
Order of the Tribunal cannot be sustained - Decided in favor of Revenue.
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2013 (2) TMI 620
Refund claim on service tax paid denied - service tax paid under Section 66A(1) of the Finance Act, 1994 was not listed under Rule 3(1) of the CENVAT Credit Rules and hence, no CENVAT Credit could be allowed on the said amount of service tax paid and accordingly, no refund was admissible - Held that:- Payment of service tax under Section 66A(1) had been subsequently inserted as clause (ixa) in Rule 3(1) of the CENVAT Credit Rules, 2004 by amending the said Rule and giving retrospective effect to the said amendment from 18.04.2006. Hence, the refund of CENVAT Credit on the said input service is admissible under Rule 5 of the CENVAT Credit Rules. Thus the claim for refund under CENVAT Credit Rules is admissible to the Appellant.
For the refund amounts of Rs.430/- and Rs.2691/-, it is necessary that the xerox copies of the documents produced have to be examined by the adjudicating authority afresh, to ascertain its admissibility. Accordingly, the case is remanded to the adjudicating authority for the limited purpose of verification of documents on the eligibility of refund claims of Rs.430/- and Rs.2691/-.
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2013 (2) TMI 619
Cenvat credit on the input packing materials that had gone into the manufacture of exempted products - Non maintenance of separate inventory/records - appellants manufactured both dutiable as well as exempted product - demand for recovery of Modvat credit wrongly availed and equivalent amount of penalty - Held that:- Modvat credit against all these Invoices were not availed by the appellants during the material period 1998-1999 to 2001 - 2002.
The 23 Nos. of Invoices involving the credit of Rs.88,000.33, were considered by the Commissioner (Appeals), but the benefit was not extended fully on the ground that the benefits were already extended to them in the impugned show-cause notices. But as find that in the show-cause notice, the demand was calculated on pro rata basis and not on actual basis. Accordingly, in view of the scrutiny/examination of Department, it can safely be concluded that the appellants did not avail modvat credit against 26 Nos. of Invoices involving credit of Rs.88,000.33 and also 17 Nos. of Invoices involving credit of Rs.99,825/-. The entire amount of cenvat credit not availed by them during the said period, works out at Rs.1,87,825/-, which clearly covers the amount of cenvat credit alleged to have been wrongly availed on the common inputs/packing materials used in or in relation to the manufacture of dutiable as well as exempted products. In these circumstances the appellants had not availed cenvat credit of Rs.1,48,630/- on the input packing materials that had gone into the manufacture of exempted products - in favour of assessee.
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2013 (2) TMI 618
Cenvat credit on royalty charges - Held that:- The appellants were engaged in the manufacture of Sharon brand plywood along with their own brand, that is, in the manufacture of plywood, they had affixed the brand name of Sharon and cleared it from their factory. Therefore, it can be inferred that the service tax paid on the royalty, (IPR Services) were used in or in relation to the manufacture of their Sharon branded plywood . Thus, it is squarely covered under the definition of input services laid down under Rule 2 (l) (ii) of Cenvat Credit Rules, 2004 - in favour of assessee.
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2013 (2) TMI 617
Utilization of credit of additional excise duty of Textiles & Textile Articles towards payment of basic excise duty denied - assessee contested that credit was utilized after due permission of Assistant Commissioner, therefore the demand is not sustainable - Held that:- There is no provision under the Cenvat Credit Rules for utilization of credit of additional excise duty towards payment of basic excise duty and the only provision in the rules for the refund or rebate under Rule 5 of rules is admissible for accumulated credit of additional excise duty in respect of inputs used in the manufacture of exported goods. Prima facie it is not a case for total waiver of duty, thus the applicants directed to deposit ₹ 9,00,000/- within eight weeks. Compliance on 1.3.2013.
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2013 (2) TMI 616
Refund claim of Service Tax paid for services received and utilised for export of goods - rejection of claim as filled before an inappropriate authority - Held that:- Jurisdictional Deputy Commissioner of Central Excise, Division-V (City), Ahmedabad-II rejecting the claim rather should have forwarded this application filed for the refund by the appellant to the jurisdictional Assistant/Deputy Commissioner of Service Tax, Ahmedabad City,an exclusive Service Tax Commissionerate.
Remit the matter back to adjudicating authority, with a direction to him to forward the same to jurisdictional Assistant/Deputy Commissioner of Service Tax for processing the same in accordance with the law & to treat this as a refund claim filed within limitation and decide the issue at the earliest.
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2013 (2) TMI 615
Bank guarantee for release of boat detained - order for levying penalty forwarded to the Bank and the Bank guarantee encashed - assessee contested against non communication of penalty order to him - Held that:- Penalty order was issued from the office of the 1st respondent only on 7/1/13. However, respondents have no material to prove that this order has so far been served on the petitioner. Therefore, prima facie, there is force in the contention of the petitioner that it was without serving a copy of the order on the petitioner, the bank guarantee furnished by them is sought to be enforced.
In such circumstances directing that further proceedings in pursuance to Ext.P4 for the encashment of the bank guarantee will stand stayed for a period of one month from today. In the meantime, it will be open to the petitioner to obtain a copy of Ext.P4 and pursue the statutory remedies that are available to them. It is also directed that, if the period of the bank guarantee expires in the meanwhile, petitioner shall keep the bank guarantee alive.
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2013 (2) TMI 614
Liability to pay tax on a club - contention of the petitioner that the club paying tax under Section 4(2A) is not liable to pay tax under Section 4(2) Kerala Tax on Luxuries Act, 1976 - Held that:- Provision of Section 4(2A) renders members of clubs also liable for tax at the rate as indicated therein and the tax liability of the members is in addition to the liability of the clubs under Section 4 of the Act. Therefore, this provision will not be of any assistance to the petitioner.
The judgment of this Court was confirmed by the Division Bench in Trivandrum Club v. Sales Tax Officer(2013 (1) TMI 606 - KERALA HIGH COURT) - against the petitioner/ assessee.
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2013 (2) TMI 613
Manufacturing - Immovable - Proviso to Section 11A(1) of the Central Excise Act attracted relying on decision of CCE, Visakhapatnam v. Mehta and Co. [ 2011 (2) TMI 2 - SUPREME COURT OF INDIA] - assessee contested that as on the date when the impugned order was passed i.e. 31.1.2011, the Supreme Court did not pass such an order as it was passed on 10.2.2011 - Held that:- There appears to be an error apparent on the face of the records, as the authority could not have relied upon a Supreme Court decision which has not been pronounced on the date when the impugned order was passed by the authority.
Writ petition allowed and the matter is remanded to the respondent for passing fresh orders on merits - in favour of assessee.
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2013 (2) TMI 612
Attachment orders - stay application pending Held that:- As Tribunal had passed an order granting interim stay on the matter till the disposal of the stay application the department is not allowed to issue an attachment notice to the banker - As the said demand draft has been deposited in the credit of the exchequer the Revenue is directed to refund the amount received from the HDFC and not to proceed with recovery measures during the pendency of the stay application forthwith.
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2013 (2) TMI 611
Management, Maintenance or Repair Service - period from 16-6-2005 to 30-9-2008 - activities connected with roads, which included repairs, restoration, improvement and re-asphalting of the existing roads - held that:- The rival contentions with reference to the definition of the three services viz. ‘commercial or industrial construction service’, ‘works contract service’ and ‘management, maintenance or repair service’ indicate that the question whether the roads repaired/renovated/maintained/asphalted by the appellant could be considered to be an ‘immovable property’ within the meaning of this expression found in the definition of ‘management, maintenance or repair service’ is highly debatable. - stay granted
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2013 (2) TMI 610
Franchise service - right to collect toll in respect of Yenam-Yedurulanka in Bridge - bridge was constructed by the appellant under a ‘Build-Operate-Transfer’ (BOT) Agreement - assignment of the work to the subsidiary - held that:- On a perusal of the definition of “franchise” given under Section 65(47) under the Finance Act, 1994, we note that it refers to an agreement by which the franchisee is granted representational right to provide service identified with the franchisor whether or not any ‘service mark’ is involved. Prima facie, in the absence of such an agreement, the appellant themselves would have provided the service to the people/State Government in respect of the bridge under the BOT agreement. They did provide this service for nearly 41/2 years also. For the rest of the period, this right was granted to the subsidiary-company with all the obligations and rights associated with it and that company has been rendering the same service, apparently, in exercise of representational right granted by the appellant.
Prima facie, therefore, the arrangement between the appellant and the subsidiary-company would fit in the definition of ‘franchise” and, for that matter, the appellant and the subsidiary- company should be appropriately called franchisor and franchisee. - pre-deposit ordered for an amount of Rs. 3 crores - stay granted partly.
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2013 (2) TMI 609
Suo motu credit of the differential amount of service tax - lesser payment made by the customers - held that:- In view of clause (ii) of Rule 4B, the monetary limit of Rs. 50,000/- for taking suo motu adjustments cannot also be applied in respect of the appellants. - Technically, there is a violation of Rule 4A inasmuch as the credit has not been adjusted in the succeeding period but the appellants have provided a reasonable explanation as to why this could not be done since the settlement of the value of the services was arrived only on 28-6-2008. - The only other violation is regarding not providing intimation to the jurisdictional officers within 15 days of making adjustment.
At the most, for the minor infraction of the rule, some penalty could have been imposed on the appellants but the lower appellate authority has set aside the penalty in its entirety and the Department is not in appeal against the same.
The appellants cannot be denied adjustment of the excess tax paid by them as such denial would amount to recovering tax for the same services twice. - Decided in favor of assessee.
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2013 (2) TMI 608
Period of limitation for rectification u/s 154(7) - stay of the demand raised by the petitioner - Held that:- The entire demand of Rs.92,54,79,604/- in respect of the assessment year 2004-05 is time barred because the notice itself under section 154 was issued after four years from the end of the financial year in which the assessment had been originally framed.
In the year 2005-06 the demand had been initially quantified at Rs.225.86 crores which has been reduced by a sum of Rs.30 crores because the petitioners have paid the said sum in March 2012. The balance is, therefore, Rs.195,86,36,433/-. The original demand of Rs.225.86 crores comprised of two components i.e. Rs.114 crores towards the alleged principal tax liability and Rs.110 crores towards the purported interest liability.
Rs.110 crores interest liability can be broken up into three components first being an amount of Rs.75 crores raised as per the demand notice under section 156 dated 16.03.2012 for a period prior to the date of notice, thus this demand is ex facie bad inasmuch as section 220(2) contemplates charging of interest for nonpayment of a demand raised under section 156 and that, too, after 30 days thereof. In the present case the demand itself was raised on 16.03.2012 therefore there cannot be any interest charged for a period prior to it.
Interest demanded of Rs.15 crores u/s 234B - As decided in Abdul Wahid and Company case [2010 (6) TMI 85 - MADRAS HIGH COURT] when the liability for payment of additional tax itself was created for the first time, based on the subsequent amendment, in the year 2005, with retrospective effect from 01.04.1998, it would be incongruent to expect the assessee to have satisfied the requirement of payment of advance tax as prescribed under Section 234 (B) of the Income Tax Act – interest u/s 234B can not be imposed
Sum of Rs.30 crores has been demanded on the basis of disallowance of the annual licence fee amount on the issue of whether the same was capital or revenue in nature. The Tribunal, in the case of the assessee itself decided in favour of the assessee.
The petitioner sought to set off this sum of Rs.54 crores against a payment of Rs.87 crores for the assessment year 2008-09 which cannot be accepted inasmuch as focus is on the two assessment years 2004-05 and 2005-06 and this was not the issue when the impugned order dated 03.01.2013 was passed. Consequently, there is an outstanding alleged demand of Rs.54 crores on account of tax and Rs.20 crores on account of interest which is, prima facie, recoverale from the petitioner - a demand of Rs.74 crores would possibly be sustainable at the present stage the petitioner should deposit 75% of this figure of Rs.74 crores which would roughly come to Rs.55.5 crores round off to Rs.56 crores.
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2013 (2) TMI 607
Reference made to Transfer Pricing Officer - determination of the ALP by rejecting the TP study made by the assessee - as per TPO assessee is to be considered as Service Provider, working on Research and Development and not as Software Development as claimed by the assessee - Held that:- Assessee is a service provider for research and development in various fields of engineering (including computer software) as enumerated in the agreements between the assessee and its associated enterprises and the result of such research and development is being delivered to the clients/associated enterprise in the form of customized computer data through network/internet. Thus, even as per the assessee's submissions, it is conducting the research and development through its multi-disciplinary R&D centre JFWTC and its activities are for several streams/areas including Information Technology.
Thus it can be seen that it is catering to nearly all of GE's diverse business worldwide touching nearly every scientific discipline across the spectrum therefore rightly held by the TPO that the assessee is not into simple software development but is engaged in research and development in technical and engineering services on contract basis. Therefore, the TPO has rightly rejected the TP study conducted by the assessee and has rightly proceeded to select his own comparables in the field of Research and Development and redetermine the ALP - against assessee.
Whether the comparables adopted by the TPO are relevant and comparable to the assessee - Held that:- As rightly pointed out by the TPO and the CIT(A)/DRP for the relevant assessment years, the assessee is not in the business of software development but it is in the business of research and development in various fields of engineering including the computer software. The outcome of the research and development conducted by the assessee is delivered to the customers/AE through electronic media. The mode of delivery of result of research and development cannot determine the nature of the functions/activities of the assessee. Therefore, the TPO was right in conducting search on the data base 'prowess' using the word 'research and development'
Adoption of Vimta Labs as a comparable - Held that:- The relative risk profile of the comparable company, particularly on the factors of human involvement in the clinical trails needs to be evaluated and a determination made whether such differences in risk needs to be adjusted or whether such risks are not amenable for adjustment at all, as claimed by the assessee. In view of the observations and also inconsistencies in the approach of the assessee and also in view of the fact that the assessee was not given an opportunity of hearing for A.Y 2006-07 against adoption of Vimta Labs as a comparable and also in view assessee's submissions that there has been a change in the classification of the Vimta Labs in the database in AY 2006-07, and also additional evidence filed before us with regard to the risks encountered by Vimta Labs and Celestial Labs, it is deemed fit and proper to remand the issue to the file of the AO/TPO for reconsideration of the issue de novo for all the A.Ys.
Computation of deduction u/s 10A - Held that:- As decided in Yokogawa India case [2011 (8) TMI 845 - KARNATAKA HIGH COURT] for computing the deduction u/s 10A of the Act, the profit of eligible units have to be deducted at source and do not enter into the computation of income and as a consequence of which, the losses suffered by non eligible units cannot be set off against the profits of eligible units. Further it has been held that the depreciation and business loss of eligible units relating to the assessment year 2000-01 onwards is eligible for set off and carry forward for set off against the income post tax holiday as per the amended provision of sec. 10A(vi) amended with retrospective effect from 1/4/2001. Thus Losses of non-10A units cannot be set off against profit of 10A unit.
TP adjustment to the ALP on account of interest on external commercial borrowings - Held that:- The interest rate is depending upon the credit rating of the borrowings and also on the prices and economic conditions prevailing at the time of advancing the loan. The assessee has obtained the loans in the year 2001 and the issue has been considered by the TPO for the assessment years 2004-05 and 2005-06 and also for the assessment year 2008-09. After considering the assessee's submissions, the TPO accepted the rate of interest fixed in the loan agreements. In view of rules of uniformity and consistency interest rate on ECB should be taken as fixed in loan agreement in computation of ALP.
Exclusions of telecommunication expenses and travelling expenses incurred in foreign currency from the export turnover but not making the corresponding reduction from the total turnover for the purpose of computation of deduction u/s 10A - Held that:- As decided in Tata Elxi Pvt. Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] when any expenditure is reduced from the export turnover, then the same should also be reduced from the total turnover for the purposes of computation of deduction u/s 10A.
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2013 (2) TMI 606
Applicability of Sec 194C - TDS provision on machinery hire charges prior to 13.7.2006 - whether the addition made by the AO has rightly been deleted by the learned CIT(A), holding that the provisions of s. 194C are not attracted - Held that:- Provisions of section 194C are applicable when the contract is entered into (i) for carrying out any work and (ii) supply of labour to carry out any work. Therefore, the main condition prescribed in s. 194C is that there must be carrying out of any work whether tangible or intangible.
In the instant case, the assessee was not under an obligation to carry out the work as it was not under the control of the lender and the possession of the machinery temporarily was passed to the assessee after entering into agreement with the lender. Therefore, in the present case, taking of the machinery and equipment on hire would not amount to a contract for carrying out any work as contemplated in s. 194C. The said contract i.e. taking of machinery and equipment on hire also cannot be treated with a contract for supply of labour. Therefore, the provisions of s. 194C were not applicable to the facts of the assessee's case, as such no disallowance was called for under s. 40(a)(ia) of the IT Act. See CIT Versus Poompuhar Shipping Corporation Ltd.(2006 (1) TMI 60 - MADRAS HIGH COURT)
The provisions of section 194-1 are not applicable to the facts of the present case because the previous year relevant to the assessment year under consideration ends on 31st March 2006 while insertion of the words "machinery or plant or equipment" has been made effective from 13th July, 2006 i.e. much after the end of the previous year relevant to the assessment year under consideration. Therefore, the provisions of s. 194-1 of the Act are also not applicable to the facts of the present - in favour of assessee.
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2013 (2) TMI 605
Benefit of registration u/s 12AA (1)(b)(ii) disallowed - certificate of exemption under section 80G(5) was also denied - Held that:- It can be construed that the case of the assessee trust is squarely covered by the law laid down by Foundation of Ophthalmic & Optometry Research Education Centre [2012 (8) TMI 777 - DELHI HIGH COURT] as perusal of the order passed under section 12AA shows that CIT has not commented on the objects of the Trust. The CIT after examining the statement of accounts formed an opinion that since no expenditure towards any charitable activity is shown in the statement of accounts, therefore carrying out of genuine charitable activities is absent in this case.
It would be relevant to mention here that the trust was formed on 11.1.2012, the application for registration under section 12AA was submitted by the appellant on 27.3.2012 i.e. within a period of three months of its creation. The school activities started in June, 2012, the appellant submitted its books of accounts upto September, 2012 before CIT. The CIT after examining the statement of accounts for such a short period, formed its opinion that the activities of trust are not charitable in nature. The CIT has not raised any objection on the objects of the trust. In our considered opinion, it was premature for CIT to judge the activities of the Trust by just glancing through the statement of accounts of the trust of such a short period. Therefore, set aside the order of the CIT and direct the CIT to grant registration to the assessee trust under section 12AA. Consequent to the registration under section 12AA also direct the CIT to consider the application of the assessee for grant of initial certificate of exemption under section 80G(5) - in favour of assessee.
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2013 (2) TMI 604
Fair market value for the purpose of computation of capital gain - assessee took it as at Rs. 5,588 per cent as on 01-04-1981 where as AO on the basis of the letter received from Sub Registrar has fixed at Rs.466 per cent - Held that:- For the purpose of estimating the fair market value as on 01-04-1981 consideration of the locality in which the land is situated, the accessability to infrastructure facilities, comparative sale instances in the locality, potentiality for future development, distance between the land and the bus stand, railways station, airport, etc has to be made. The guideline value fixed by the Sub Registrar is only a guideline value to ascertain the market value and may be one of the factors to be taken into consideration for estimating the fair market value, however, it cannot be the sole basis for fixing the fair market value as on 01-04-1981. As the taxpayers now claim that in the case of the neighbour the fair market value as on 01-04-1981 was fixed at Rs.2,300. Unfortunately, all these facts were not considered by the assessing authority therefore the assessing officer has to reconsider the issue in the light of all factors mentioned above and thereafter take a decision - in favour of assessee for statistical purposes.
Exemption u/s 54, 54F and 54EC denied - as per AO the taxpayers have deposited the amount in the fixed deposit in State Bank of Travancore, Pettah Branch, Trivandrum - Held that:- Unable to accept the claim of the taxpayers as legislature has framed the scheme for the purpose of giving exemption from the capital gain tax by asking the taxpayer to deposit the amount in the capital gain bond scheme. Therefore, if the taxpayer wants to take benefit of the scheme the money has to be deposited in the capital gain bond. Deposit of money in the fixed deposit cannot be construed as deposit in the capital gain bond, therefore the taxpayers are not eligible for exemption at all - against assessee.
Indexed cost of improvement declined - Held that:- As on the inspection of the land, the revenue authorities found that no improvement was undertaken by the taxpayers. No material is available on record to suggest that the taxpayer has undertaken any improvement in the land therefore no infirmity in the orders of the lower authority - against assessee.
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2013 (2) TMI 603
TDS on fees for technical services - DTAA between India and UK - whether the agreement entered into by the assessee and Xennia was about purchase for machinery only or it dealt with something more than that ? Held that:- Referring to the terms of the agreement clearly prove that Xennia had supplied the technology to the assessee. Not only the assessee was using it, it had the right over the Intellectual Property also. Agreement entered in to by the assessee-company allowed it 'to file patent application, design application or any such application for intellectual property rights arising out of foreground IP'. In these circumstances, the view of FAA is to be agreed that the transaction was not for sale of printer only & it included the technology also. When a particular technology was made available to the assessee by Xennia exclusively, it cannot be said that the agreement was only for sale of printer. Therefore, upholding the order of the FAA, effective Ground of appeal i.e. Ground No.1 decided against the assessee.
@ 15% or 10% as prescribed in section 115A(1)(b)(BB)- Perusing the provisions of the Act to be covered u/s. 115A(1)(b)(BB) as per the said provisions, tax on dividends, royalty and technical service fees in case of foreign companies has to be computed in a particular manner, if it is entered in to after a particular date. As neither the AO nor the FAA had any occasion to deal with the issue. Assessee had also not raised it before the FAA. So, in the interest of justice be restored to the file of the AO for the limited purpose of deciding the question of applicability of lower rate of tax for the transaction-in-question - in favour of assessee by way of remand.
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2013 (2) TMI 602
Disallowance u/s 14A r.w.r. 8D - assessee-company engaged in the business of investment in shares and securities - assessee contested the disallowance exceeding the amount of income earned - Held that:- Finding force in the assessee's argument that 'share application money', to the extent it is actually so, so that it only represents amount/s paid by way of application for allotment of shares, the same cannot be regarded as an investment in shares, or an asset (or asset class) yielding tax-free income, and neither is it capable of yielding any tax-free income. The same would, therefore, have to be excluded in working out the disallowance u/r. 8D.
Thus the exclusion of 'share application money' is not in the least for the reason that it did not yield any tax-free income for the relevant year, but for the reason that it is incapable of any such income. The same is only in the nature of application (offer) money, which would though, on allotment, get adjusted against the cost of the said shares, and only whereupon any rights in the investee company inure to the allottee. No rights, not even inchoate, in the share capital of the issuing company arise on the payment of the share application money, irrespective of the time period for which it may outstand. The same may at best yield interest income (for which a special procedure though has to be followed by the company concerned), which is in any case taxable, so that there is no scope for application of sec. 14A thereon.
As such, upon verification of the assessee's claim with regard to the share application money as on 31.03.2007 and 31.03.2008, as appearing in its balance-sheet/books of account, so that no shares had actually been allotted in its respect as at the relevant dates, the same shall be excluded by the AO from the qualifying amount in reckoning the average investment in working out the disallowance under rules 8D (ii) and 8D(iii). The A.O. will decide the matter per a speaking order, allowing the assessee a reasonable opportunity to present its case before him.
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