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Showing 141 to 160 of 886 Records
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2013 (3) TMI 753
Issues Involved:
1. Addition on account of alleged and unproved purchase of steel.
2. Claim of deduction u/s 80-IB(10) for various projects.
Summary:
1. Addition on account of alleged and unproved purchase of steel:
- ITA Nos. 4796/M/2011 (Assessee) & 172/M/2012 (Assessee) (A.Y. 2003-04):
The A.O. observed that the assessee showed purchases from M/s. Maulik Steel Corporation and M/s. Vaishali Steel Enterprises, but the addresses were non-existent. Despite payments made by account payee cheques, the A.O. treated the purchases as non-genuine and added Rs. 13,17,659/-. The Ld. CIT(A) upheld this addition. The Tribunal restored the issue back to the A.O. for verification of bank details and cheque numbers, allowing the ground for statistical purposes.
- ITA Nos. 4797/M/2011 (Assessee) & 5195/M/2011 (Department) (A.Y. 2004-05):
Similar issues were raised, and the Tribunal decided similarly, allowing the appeal for statistical purposes.
- ITA Nos. 4798/M/2011 (Assessee) & 5196/M/2011 (Department) (A.Y. 2005-06):
The Tribunal decided similarly, allowing the appeal for statistical purposes.
2. Claim of deduction u/s 80-IB(10):
- ITA Nos. 4796/M/2011 (Assessee) & 172/M/2012 (Assessee) (A.Y. 2003-04):
The assessee claimed deduction u/s 80-IB(10) for Madhav Srishti, Phase I, which was initially denied by the Ld. CIT(A). The Tribunal restored the issue back to the A.O. for verification in light of the decision in CIT vs. Brahma Associates, allowing the ground for statistical purposes.
- ITA Nos. 4797/M/2011 (Assessee) & 5195/M/2011 (Department) (A.Y. 2004-05):
The A.O. disallowed the deduction for Madhav Srishti, Phase II, citing commercial exploitation of amenities. The Ld. CIT(A) allowed the deduction, and the Tribunal upheld this, dismissing the Revenue's appeal.
- ITA Nos. 4798/M/2011 (Assessee) & 5196/M/2011 (Department) (A.Y. 2005-06):
The Tribunal restored the issue back to the A.O. for verification of the transfer of club house facilities to residents, allowing the appeal for statistical purposes.
- ITA Nos. 4799/M/2011 (Assessee) & 5197/M/2011 (Department) (A.Y. 2006-07):
The Tribunal decided similarly, allowing the appeal for statistical purposes.
- ITA Nos. 4800/M/2011 (Assessee) & 5198/M/2011 (Department) (A.Y. 2007-08):
The Tribunal decided similarly, allowing the appeal for statistical purposes.
- ITA Nos. 4801/M/2011 (Assessee) & 5199/M/2011 (Department) (A.Y. 2008-09):
The Tribunal decided similarly, allowing the appeal for statistical purposes.
- ITA Nos. 4802/M/2011 (Assessee) & 5416/M/2011 (Department) (A.Y. 2009-10):
The Tribunal decided similarly, allowing the appeal for statistical purposes.
Conclusion:
All appeals were either allowed for statistical purposes or dismissed based on the verification and substantiation of claims, particularly concerning the genuineness of steel purchases and the eligibility for deductions u/s 80-IB(10).
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2013 (3) TMI 752
The Supreme Court dismissed the case but granted the petitioner six weeks to reply to a show cause notice. The Adjudicating Authority was directed to decide the issue within four months.
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2013 (3) TMI 751
Issues Involved:
The department appealed against the CIT(A)'s order deleting an addition of Rs. 28,32,675 made during assessment year 2008-09.
Details of the Judgment:
Issue 1: Addition of Rs. 28,32,675
- The AO observed that the assessee, deriving income from salary and trading in cloth, had taken a loan of Rs. 28.32 lakhs from Shri Pravin Hirji Thakkar for a land purchase.
- The AO found discrepancies in Shri Pravin Hirji Thakkar's income tax return filings, leading to doubts about the loan source.
- The CIT(A) deleted the addition, stating that all details proving the loan's genuineness were filed and not found false.
- The department appealed, arguing that the AO's decision was justified.
- The Tribunal found that Shri Pravin Hirji Thakkar's income was assessed, tax paid, and the loan given to the assessee through proper channels.
- The Tribunal concluded that the onus to prove the loan's genuineness was discharged by the assessee.
- The Tribunal upheld the CIT(A)'s decision to delete the addition, dismissing the department's appeal.
This judgment highlights the importance of proving the genuineness of transactions and the burden of proof on the assessee in tax matters.
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2013 (3) TMI 750
Issues involved: Assessment of penalty under Section 271(1)(c) of the Income Tax Act, 1961 in relation to quantum addition pending before the High Court.
Judgment Summary:
Issue 1: Assessment of penalty under Section 271(1)(c) of the Income Tax Act, 1961
The Tribunal upheld the order of the Commissioner of Income Tax (A) stating that no penalty is leviable upon the respondent-assessee. The question was whether profits from the sale of land should be taxed as capital gains or business income. The penalty was deleted as the respondent-assessee had succeeded in the quantum proceedings, and there was no quantum addition. It was also noted that there was no concealment of facts by the respondent-assessee, and in a case where two views are possible, no penalty should be imposed.
Issue 2: Independence of penalty proceedings from quantum proceedings
The Revenue argued that since the High Court entertained its appeal from the quantum proceedings, the appeal regarding penalty should also be entertained. However, it was clarified that penalty proceedings are separate from quantum proceedings. Mere rejection of a claim in quantum proceedings does not automatically lead to the imposition of a penalty under Section 271(1)(c) of the Act. The Supreme Court precedent in Commissioner of Income Tax v. Reliance Petroproducts (P) Limited established that mere rejection of a claim does not warrant a penalty unless there is concealment of income or furnishing of inaccurate particulars.
In conclusion, the Court dismissed the appeal, emphasizing that the penalty cannot be imposed solely based on the rejection of a claim in the quantum proceedings without meeting the requirements of Section 271(1)(c) of the Act.
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2013 (3) TMI 749
Issues involved: Appeal against the order of the CIT(A)-III, Kochi for the block period 1997-98 to 2002-03 and period covering 01-04-2002 to 18-12-2002, including appeal against rectification order u/s 154.
Issue 1: Jurisdiction of notice u/s 158BD
The taxpayer argued that the notice u/s 158BD issued by the Dy. CIT was void ab initio due to lack of jurisdiction. The representative contended that the delay of one year and three months in issuing the notice u/s 158BD after completion of assessments in the case of searched persons was unreasonable and arbitrary.
Judgment: The Tribunal referred to the Kerala High Court case of CIT vs Bimbis Creams & Bakes, where it was held that the assessing officer must act swiftly after completing assessments on searched persons. The Tribunal found the delay in issuing the notice u/s 158BD unreasonable and arbitrary, quashing the consequential order passed by the assessing officer.
Issue 2: Time limit for notice u/s 158BD
The Revenue argued that there is no specific time limit prescribed in the Income-tax Act for issuing notice u/s 158BD. The assessments of search persons were completed before issuing the notice u/s 158BD, which, according to the Revenue, was done within a reasonable period.
Judgment: The Tribunal, citing its previous decision in A.C.I.T. vs Cicy P Thomas, emphasized the need for the assessing officer to issue the notice within a reasonable period, even though no specific time limit is mentioned in the Act. The Tribunal held that issuing the notice after two years from the completion of assessment against the searched person is barred by limitation.
Issue 3: Validity of assessment order
The Tribunal considered the arguments from both sides regarding the validity of the assessment order based on the timing of issuing the notice u/s 158BD. The taxpayer's representative contended that the delay rendered the assessment proceedings arbitrary.
Judgment: Relying on the decisions of the Kerala High Court and the Gujarat High Court, the Tribunal concluded that the delay of one year and three months in issuing the notice u/s 158BD was unreasonable and arbitrary. Consequently, the Tribunal quashed the consequential order passed by the assessing officer.
In conclusion, the Tribunal allowed the taxpayer's appeal in IT(SS)A No.01/Coch/2011 while dismissing the appeals of the revenue in IT(SS)A. No.02 & 03/Coch/2011 based on the findings related to the jurisdiction and timing of issuing the notice u/s 158BD.
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2013 (3) TMI 748
Issues involved: The judgment involves the following issues:
1. Whether the Tribunal correctly confirmed the order of CIT(A) without appreciating the fact that the assessee's income should be assessed under the principle of mutuality.
2. Whether the Tribunal correctly confirmed the order of CIT(A) regarding the assessee's entitlement to exemption under section 11 of the Income Tax Act.
Issue 1: Assessment under principle of mutuality
The Court considered whether the Tribunal was correct in confirming the order of CIT(A) without appreciating that if the assessee is a mutual concern, the income should be assessed under the principle of mutuality. The Court noted that the assessee was registered under section 12A of the Income Tax Act as a charitable institution. However, it was argued that if the assessee/institution is a mutual concern, the income should be assessed differently.
Issue 2: Exemption under section 11
The Court examined whether the Tribunal correctly upheld the order of CIT(A) stating that the assessee is entitled to exemption under section 11 of the Income Tax Act. The parties acknowledged that similar questions were raised by the revenue in a previous case before the Court. The Court referred to its previous order where it did not entertain the appeal filed by the revenue. Consequently, the Court found no reason to entertain the current appeals and dismissed them without costs.
This judgment addressed the issues of assessment under the principle of mutuality and the entitlement to exemption under section 11 of the Income Tax Act. The Court's decision was based on the previous order and the lack of grounds to entertain the appeals.
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2013 (3) TMI 747
Issues involved:
The appeal against the order of the Income Tax Appellate Tribunal for the Assessment Year 2006-07, regarding the justification of additions made under Section 68 of the Income-tax Act, 1961.
Issue I:
The ITAT's justification in disregarding the assessee's failure to prove creditworthiness, identity, and genuineness of transactions as required u/s 68 of the Act.
The Assessing Officer added amounts under Section 68 of the Act to the assessee's income, contending that the burden of proof was not met. However, the first Appellate Authority overturned this decision, which was upheld by the Tribunal citing the precedent of CIT Vs. M/s. Lovely Exports Pvt. Ltd. (216-CTR-195).
Issue II:
The ITAT's justification in ignoring the specific facts of the case and relying on the judgment of Lovely Exports, despite evidence of a common introducer and questionable investments by petty businessmen.
The Tribunal's decision to confirm the CIT (A)'s order deleting the addition of Rs. 40 lakh u/s 68 was based on the Lovely Exports case, which the appellant argued was distinguishable due to the failure to produce creditors/share-applicants for verification.
Issue III:
The ITAT's justification in confirming the deletion of the addition u/s 68 despite the assessee's failure to produce creditors/share-applicants for verification.
Despite a notice issued u/s 142(1) for verification, the assessee failed to produce the necessary parties, leading to questions about identity and creditworthiness. The ITAT upheld the deletion, which the appellant argued was unjustified.
Issue IV:
The ITAT's justification in confirming the order of CIT (A) despite the distinguishable facts from the Lovely Exports case.
The ITAT upheld the CIT (A)'s decision, ignoring the distinction between the present case and Lovely Exports due to the failure to verify the identity of creditors/share-applicants.
Issue V:
The ITAT's justification in confirming the deletion of the addition u/s 68 despite the failure to prove the identity and creditworthiness of share applicants/creditors.
The ITAT upheld the deletion of Rs. 40 lakh from the total share capital, ignoring the failure to prove identity and creditworthiness. The appellant cited the decision of the Hon'ble Apex Court of Chhatisgarh in the case of Kushal Prasad Manhar Vs. CIT (2010) 236-CTR-192 as relevant.
The Court dismissed the appeal summarily, citing the precedent set by the Apex Court and previous decisions that additions under Section 68 in such cases are not warranted, finding no substantial question of law involved in the appeal.
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2013 (3) TMI 746
Issues involved: Review petition seeking modification in the order dated 31.07.2012 passed in W.P. No.7187/2012 under Section 133A of the Income Tax Act.
Judgment Summary:
The petitioner filed a review petition seeking modification in the order dated 31.07.2012 passed by the High Court in W.P. No.7187/2012. The Court had expressed a tentative opinion and dismissed the writ petition in limine. The petitioner was concerned that this opinion might be treated as binding by the authorities. The respondents argued that the opinion was tentative and the authorities should decide independently. The Court found no case for interference at that stage and clarified that its opinion should not influence the authorities' decision-making process. The Court modified the order to state that the writ petition is disposed of, and emphasized that the words "tentative opinion" should not hinder the authorities in deciding the petitioner's objections in accordance with the law.
In conclusion, the review petition seeking modification in the order dated 31.07.2012 was disposed of with the Court's clarification that its opinion was tentative and should not affect the authorities' independent decision-making process regarding the petitioner's objections under Section 133A of the Income Tax Act.
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2013 (3) TMI 745
The Gujarat High Court issued an oral order on a case with citation 2013 (3) TMI 745. Justices Akil Kureshi and Sonia Gokani presided over the case. The petitioner was represented by Mr. SN Soparkar and Mr. B S Soparkar. The respondents were allowed to continue assessment, but a final order required court permission. Direct service was permitted.
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2013 (3) TMI 744
Issues Involved:
1. Disallowance of interest expenditure u/s 36(1)(iii).
2. Enhancement of disallowance u/s 14A read with Rule 8D.
Summary:
1. Disallowance of Interest Expenditure u/s 36(1)(iii):
The assessee challenged the disallowance of Rs. 1,45,91,805/- made by the AO u/s 36(1)(iii) for interest-free advances to subsidiary companies. The AO disallowed the interest expenditure on the grounds that the assessee had borrowed funds which could have been used for interest-free loans, there was no commercial expediency, and the assessee was charging interest from another sister concern but not from the subsidiaries. The CIT(A) confirmed this disallowance. The Tribunal, however, noted that the assessee had sufficient interest-free funds from the proceeds of share capital and dividends, and thus, the interest-free loans were given out of these funds. The Tribunal also referenced several judicial precedents supporting the view that if interest-free funds are available, no disallowance is warranted. Consequently, the Tribunal directed the deletion of the disallowance made u/s 36(1)(iii).
2. Enhancement of Disallowance u/s 14A read with Rule 8D:
The CIT(A) enhanced the disallowance u/s 14A by Rs. 1,72,81,626/-, which was not initially disallowed by the AO. The assessee argued that the investments were made out of interest-free funds, and there was no nexus between borrowed funds and the investments. The Tribunal observed that for the previous years, the assessee had sufficient interest-free funds and no disallowance was made in those years. The Tribunal also noted that the assessee had received substantial interest-free proceeds during the relevant year, which were sufficient to cover the investments and loans given. Therefore, the Tribunal held that there was no nexus between borrowed funds and the investments, and the provisions of Rule 8D(2)(ii) were not applicable. The Tribunal directed the deletion of the enhanced disallowance made by the CIT(A) u/s 14A read with Rule 8D.
Conclusion:
The appeal of the assessee was partly allowed, with the Tribunal directing the deletion of the disallowances made u/s 36(1)(iii) and u/s 14A read with Rule 8D.
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2013 (3) TMI 743
Issues involved: Challenge to directions issued by CIT(A) regarding deduction under s. 10A of IT Act for specific units and assessment years not subject to appeal.
Summary:
The petitioner filed a petition under Art. 226/227 of the Constitution of India seeking to expunge directions issued by CIT(A) in an order dated Nov. 30, 2012, pertaining to deduction under s. 10A of the IT Act for specific units and assessment years not part of the appeal. The petitioner challenged the directions as exceeding the CIT(A)'s jurisdiction under s. 251 of the IT Act, pre-judging the issue of deduction, and issuing non-binding directions to the Assessing Officer (AO) for other years. The respondents argued that the directions were not binding, and the AO could act independently as per law. The High Court held that the directions in the impugned order shall not be binding on the AO, allowing the AO to proceed with assessment proceedings independently. The petition was disposed of with the petitioner given the option to approach the Tribunal for any further grievances from the CIT(A)'s order.
In conclusion, the High Court clarified that the directions issued by the CIT(A) were not binding on the AO and allowed the AO to proceed independently with assessment proceedings. The petitioner was granted the option to approach the Tribunal for any further grievances from the CIT(A)'s order, with the Tribunal considering any delay in filing the appeal.
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2013 (3) TMI 742
Issues involved: The judgment involves the issue of treating profit from share transactions as capital gain instead of business income u/s 143(3) of the Income-tax Act, 1961 for Assessment Years 2007-08 and 2008-09.
Assessment Year 2008-09:
The revenue appealed against the CIT(A)'s direction to treat profit from share transactions as Capital Gain instead of Business income, citing the magnitude & frequency of transactions, purchase to sale ratio, multiplicity of transactions, and negligible dividend income compared to the money invested. The AO observed the assessee's transactions in scrips of 60 companies with about 260 trade transactions, holding periods ranging from 1 day to 315 days, and utilization of borrowed funds for share trading. Despite the assessee's claim of maintaining an investment portfolio consistently, the AO treated the short term capital gain as trading income. The CIT(A) analyzed the transactions and upheld the claim of the assessee, noting that the majority of profits were derived from transactions with holding periods exceeding 20 days, rejecting the revenue's contention.
Assessment Year 2007-08:
Similar to the previous year, the revenue raised concerns about the utilization of borrowed funds for share trading, frequency of transactions, and purchase to sale ratio, arguing that the activities in the share market had a trade color. The AO treated the short term capital gain as trading income based on the frequency and magnitude of transactions. The CIT(A) considered the past assessments and accounts, where revenue accepted the income from shares as capital gains, and upheld the assessee's claim, emphasizing the consistent treatment of investments in the books of account. The judgment dismissed the revenue's appeals for both assessment years, affirming the CIT(A)'s decision.
Conclusion:
The Appellate Tribunal upheld the CIT(A)'s decision to treat the profit from share transactions as capital gain instead of business income for both Assessment Years 2007-08 and 2008-09, based on the consistent treatment of investments in the assessee's books of account and past assessments. The appeals of the revenue were dismissed.
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2013 (3) TMI 740
The Bombay High Court considered whether the Tribunal's order was perverse for ignoring key documents in confirming an addition of Rs. 2.73 Crores under Section 68 of the Act. The Court also examined whether the Tribunal was justified in not admitting additional evidence from a loan creditor.
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2013 (3) TMI 739
Issues involved: Whether payment of royalty towards technical know-how is liable to tax under the category of "Consulting Engineer's Services".
The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise & Customs (Appeals), Nashik. The lower appellate authority relied on a previous decision of the Tribunal in the case of Bajaj Auto Ltd. and held that the activity in question does not fall under the purview of Consulting Engineer's Services. The appellant, M/s. Supreme Industries Ltd., was allowed the appeal based on this decision. The Revenue challenged this decision, stating that they have filed an appeal before the Hon'ble High Court of Bombay against the Tribunal's decision.
The learned Additional Commissioner (AR) representing the Revenue informed that the matter is still pending before the Hon'ble High Court of Bombay.
The appellant's counsel referred to a similar case of Arvind Fashions Ltd. v. Commissioner of Service Tax, Bangalore, where the Tribunal held that payment of royalty for technical know-how is not taxable under Consulting Engineer's Services. The Revenue had appealed this decision before the Hon'ble High Court of Karnataka, which upheld the Tribunal's view.
After considering the submissions from both sides, the Tribunal concluded that the service received by the appellant does not fall under the category of Consulting Engineer's Services. The payment of royalty for technical know-how is not covered within the scope of this service. Therefore, the appeal was dismissed as the Tribunal found no merit in it.
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2013 (3) TMI 738
Issues involved: Interpretation of Notification No. 4/2004-Service Tax for exemption of duty on services provided to SEZ units, determination of service consumption within SEZ, evidence requirement for claiming benefit under the notification, imposition of penalties.
Summary:
Issue 1: Interpretation of Notification No. 4/2004-Service Tax
The appellant, engaged in man-power supply to SEZ units, claimed benefit under Notification No. 4/2004-Service Tax. The notification exempts taxable services provided to SEZ units from duty subject to certain conditions. The appellant contested a demand for Service Tax, arguing their eligibility under this notification.
Issue 2: Determination of service consumption within SEZ
The adjudicating authority alleged that the services were not consumed within the SEZ, leading to the demand for Service Tax and penalties. The appellant provided evidence of supplying labor to SEZ units, but the authority found the evidence insufficient to prove consumption within the SEZ.
Issue 3: Evidence requirement for claiming benefit under the notification
The appellant submitted evidence of supplying labor to SEZ units for in-factory consumption, but the authority required proper accounts from the service recipients to establish service consumption within the SEZ. The appellant expressed willingness to provide additional evidence to prove service consumption within the SEZ.
Issue 4: Imposition of penalties
The authority confirmed the demand for Service Tax, imposed penalties, and the appeal was made to the Tribunal. Both sides presented their arguments, with the Revenue supporting the authority's findings.
The Tribunal considered the submissions and found that the services provided by the appellant were eligible under the notification. As service provision and consumption occur simultaneously, the evidence of employing workers in the SEZ was deemed sufficient to establish service consumption within the SEZ. The case was remanded back to the adjudicating authority for fresh consideration based on this observation, directing the appellant to produce additional evidence of worker's register and muster roll to support their claim under the notification.
Therefore, the appeal was allowed by way of remand, keeping all issues open, and the stay application was disposed of accordingly.
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2013 (3) TMI 737
Issues involved: Discrepancy in income reflected in balance-sheet and ST-3 Returns, liability to discharge Service Tax on specific amounts, imposition of penalties.
Summary:
The appeal challenged an Order-in-Original passed by the Commissioner of Service Tax, Mumbai, regarding discrepancies in income. The appellant contested the demands of Service Tax, interest, and penalties imposed by the department.
Discrepancy in Income:
- The appellant's income reflected in the balance-sheet differed from figures in ST-3 Returns.
- Department demanded Service Tax of Rs. 92,90,999/- for specific amounts received by the appellant.
- Appellant argued non-receipt of certain incomes and reversal of entries in books of account.
Specific Amounts Disputed:
1. 2005-06 Income (Rs. 5,00,000/-):
- Appellant maintained accrual-based accounts, not receiving the income, hence no Service Tax liability.
2. 2006-07 Sale of Space (Rs. 2,70,26,284/-):
- Income pertained to pre-taxable period, supported by documentary evidence predating tax applicability.
3. 2006-07 Dandia Income (Rs. 29,21,753/-):
- Event organized by appellant for self, not constituting taxable Event Management service.
4. 2007-08 Programme Producer's Service (Rs. 4,50,00,000/-):
- Income from event rights transfer predating taxable period, no Service Tax liability.
5. 2007-08 Misc. Income (Rs. 1,00,000/-):
- Incentive received already discharged of Service Tax liability.
Adjudication and Decision:
- Appellant lacked documentary evidence during initial adjudication, leading to demand confirmation.
- Tribunal directed a fresh consideration by the adjudicating authority with submission of supporting evidence by the appellant.
- The appeal was allowed for remand, and the stay application was disposed of, ensuring appellant's opportunity for a fair hearing.
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2013 (3) TMI 736
Issues involved:
- Condonation of delay in filing appeal
- Classification of service under "Business Auxiliary Service" vs. "Manpower Supply Services"
- Demands for service tax, interest, and penalties
- Exclusion of certain amounts from service tax liability
- Verification of original duty paying challans and documents
Condonation of delay in filing appeal:
The COD application was filed to condone a delay of 251 days in filing the appeal. The delay was attributed to the appellant not being informed promptly about the order. The appellant argued that denial of condonation would result in a miscarriage of justice. Citing a Supreme Court decision, the COD application was allowed.
Classification of service:
The appellant was supplying manpower to a company and classified the service under "Business Auxiliary Service" to avail an exemption. The department disagreed and issued a notice proposing to classify the service under "Manpower Supply Services," leading to a demand for service tax. The appellant contested, stating they had paid service tax and submitted challans. The department demanded original challans, which the appellant failed to provide, resulting in the demand confirmation.
Demands for service tax:
The demands were based on discrepancies between income shown in balance sheets and ST3 returns. The appellant argued for exclusions such as employees' contributions, toll collection charges, and services to the Military Engineering Services. The appellant offered to pre-deposit a reduced amount, which was accepted. The matter was remanded for fresh consideration.
Verification of documents:
The adjudicating authority failed to verify the service tax payments and other relevant documents submitted by the appellant. The contributions towards ESIC and PF were found non-taxable. Services provided to non-commercial entities like Military Engineering Services were also deemed exempt from service tax. The case was remanded for a thorough reconsideration of all issues.
Conclusion:
The appeals were allowed by way of remand, with the appellant directed to make a pre-deposit and submit all necessary documentary evidence. The matter was to be heard afresh by the adjudicating authority.
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2013 (3) TMI 735
Short payment of service tax - manpower recruitment or supply agency service - appellant failed to discharge service tax on reimbursement of wages received by them (by way of debit notes) from their client M/s. Tidewater during the period November 05 to December 08.
Held that: - the OWNER shall furnish CONTRACTOR from time to time with a scale of wages applicable to the SEAFARER. The owner reserves the right to revise such scale at any time on a prospective basis. OWNER shall reimburse the CONTRACTOR, the applicable wages of each SEAFARER incurred as an expense to the CONTRACTOR - the respondent’s contentions that the Seafarers are employees of M/s. TIPL and the service rendered by them is “manpower recruitment” and not “manpower supply” have no basis whatsoever.
Whether the service rendered by the respondent is taxable under “manpower recruitment or supply agency” service or “ship management service”? - Held that: - sub-clause (68) relating to manpower recruitment or supply agency service occurs first compared to sub-clause (96a) relating to ship management service. Therefore, the classification sought in the present case by the Revenue under “manpower recruitment or supply agency” service cannot be faulted at all.
Whether the respondent was acting as a Pure Agent of M/s. TIPL? - Held that: - When one reads the Agreement entered into by the respondent with M/s. TIPL, it is seen that none of the four elements described above are present. The agreement is not one between an agent and a principal; it is one between two principals. Secondly, the respondent is engaging the seafarers, responsible for their conduct, payment of wages/salaries/other compensations, for their termination and repatriation. For such services rendered, the respondent is getting compensated in two ways, one by way of re-imbursement of the wages/salaries of the seafarers and second by way of daily compensation based on the number/type of seafarers supplied. Thus the question of treating the respondent as a ‘pure agent’ of M/s. TIPL does not arise at all from the terms and conditions of the agreement.
Whether both the amounts received, that is, reimbursement of wages and daily compensation are leviable to Service Tax? - Held that: - The Respondent charges for the services rendered by way of two debit notes, one debit note for the daily compensation and the other for the wages of the seafarers. Merely because he has split up the gross amount charged into two elements, it does not mean that only one of them is the gross amount charged and the other is not. The modus operandi adopted in splitting up the gross amount appears to be only for the purpose of avoiding/evading service tax and nothing else. Therefore, the total/gross amount charged for the service rendered is the sum total of both the debit notes, as per the provisions of Section 67 - In the present case, we have determined the value in terms of the provisions of Section 67 of the Finance Act, 1994 and not under Rule 5(1) of the Valuation Rules. Therefore, we do not find any conflict between the issue considered herein.
Whether any part of the demand is time-barred and whether there has been any suppression of facts on the part of the respondent? - Held that: - If there was any intent to evade service tax, they need not have shown the amounts received under the category of pure agents. Therefore, the extended period of time cannot be invoked to confirm the service tax demand.
Whether the penalty is imposable on the appellant? - Held that: - Penalty under Section 78 is imposable only when any of the following 5 elements are present, namely, fraud, collusion, willful mis-statement, suppression of facts or contravention of the provisions of the Act or rules made thereunder, with intent to evade payment of service tax - these elements are not present in the instant case. In view of the same, penalty is not imposable under Section 78 of the Finance Act, 1994.
Penalty u/s 76 - Held that: - No mens rea is required for imposition of penalty under Section 76 and mere failure to pay Service Tax along with interest will attract the provisions - the appellant has not produced any evidence before us for waiver of penalty under Section 76 - penalty u/s 76 upheld.
Appeal allowed in part.
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2013 (3) TMI 734
Issues involved:
The issues involved in this case are related to Service Tax liability on construction and repair services, liability under GTA services, and demands under 'Management, Maintenance or Repair Service' and 'Construction Service' for specific periods.
Service Tax liability on construction and repair services:
The appellant, a partnership firm engaged in construction and allied activities, did not discharge Service Tax amounting to Rs. 59,89,498 under the category of 'Management, Maintenance or Repair Service'. The firm also had Service Tax liabilities for other services provided. The appellant argued that since the definition of construction service excluded construction related to railways, they were not liable to pay Service Tax on the said activity. However, the Tribunal clarified that maintenance or repair work of properties, including railways, falls under 'Management, Maintenance or Repair Service' and is taxable. The appellant was directed to make a pre-deposit of Rs. 15 lakhs, with the balance of dues waived upon compliance.
Liability under GTA services:
The appellant contended that they were not liable to pay Service Tax under GTA services as the transporter did not raise any consignment notes on them, and the freight expenses were below the threshold for benefit under Notification No. 34/2004-S.T. The Tribunal found merit in the appellant's argument regarding demands under GTA services and construction services, indicating that they may be covered under exemption Notifications or pertain to services rendered prior to the imposition of tax.
Demands under 'Construction Service' for specific periods:
Regarding demands under 'Construction Service' for specific periods, the appellant argued that the services pertained to construction of railway track and alignment work on railway lines undertaken before the levy on construction services. The Tribunal considered the appellant's submissions and directed them to make a pre-deposit of Rs. 15 lakhs, with the balance of dues waived upon compliance.
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2013 (3) TMI 733
Issues involved:
The judgment deals with waiver of pre-deposit of service tax demands confirmed against the applicants under various categories including 'construction service', 'commercial or industrial construction service', 'construction of complex service', 'construction of residential complex service', and 'renting out immovable property service'.
Construction of Complex Service:
A demand of Rs. 20,23,911/- was confirmed under 'construction of complex service' for housing tenements constructed for Nagpur Improvement Trust (NIT) for the period 2005-2010. The applicants argued that since NIT leased the units to poor individuals, the demand was not sustainable. Citing the explanation to Section 65(91a) of the Finance Act, 1994, the Tribunal found merit in the applicants' case and granted 100% waiver of pre-deposit for this demand.
Commercial or Industrial Construction Service:
A demand of Rs. 6,75,573/- was confirmed under 'Commercial or Industrial Construction Service'. The applicants contended that they undertook construction activities on land leased from the Municipal Corporation, and as they themselves did the construction without providing services to others, they were not liable to pay service tax. The Tribunal agreed with the applicants' submission and granted 100% waiver of pre-deposit for this demand as well.
Construction of Residential Complex Service:
Another demand of Rs. 2,40,729/- was confirmed for construction of residential complex services provided to buyers. The applicants argued that since the provision for levy of service tax came into effect after the period in question, the demand was not sustainable. Acknowledging this, the Tribunal granted 100% waiver of pre-deposit for this demand.
Construction of Residential Complex for MHADA:
A demand of Rs. 1,28,189/- was confirmed for construction of residential complex for MHADA. The applicants contended that as the complex had below 12 residential units, it did not fall under the definition of a residential complex, making them not liable for service tax. Accepting this argument, the Tribunal granted 100% waiver of pre-deposit for this demand.
Renting Out Immovable Property Service:
A demand of Rs. 15,53,841/- was confirmed for renting out immovable property service. The applicants had already paid Rs. 9,16,400/-, which was deemed sufficient in compliance with relevant sections. Therefore, the Tribunal waived the pre-deposit of the balance amount of service tax, interest, and penalty.
Commercial or Industrial Construction Service to MTDC and Railway:
A demand of Rs. 9,83,532/- was confirmed for construction services to MTDC and Railway. While a portion was not disputed, the applicants contested the part related to MTDC, claiming that construction of tourist complexes leased by MTDC did not attract service tax. The Tribunal found the defense insufficient for 100% waiver and directed the applicants to deposit Rs. 2,50,000/-.
In conclusion, the Tribunal directed the applicants to make a pre-deposit of Rs. 3,61,121/- within four weeks. Upon this deposit, pre-deposit of the remaining amounts of service tax, interest, and penalties was waived, with recovery stayed during the appeal's pendency. Compliance was to be reported by 26-4-2013.
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