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Showing 161 to 180 of 1051 Records
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2013 (1) TMI 903
Issues involved:
The issue involves liability to pay Service Tax under Reverse Charge Mechanism for services rendered by the appellant abroad and the eligibility to avail Cenvat credit on such taxes paid.
Summary:
Issue 1: Liability to pay Service Tax under Reverse Charge Mechanism
The appellant, engaged in Courier Agency Services and Air Travel Agency Services, appointed Courier Agents outside India to deliver items abroad. The Revenue demanded Service Tax for the years 2008-09, 2009-10, and 2010-11 on payments made to these agents. The appellant contended that since the services were rendered abroad, there was no liability to pay Service Tax in India. They argued that they had already paid Service Tax on the entire amount collected from customers in India for delivering items abroad, making the situation revenue neutral. The Commissioner, however, disagreed and confirmed the Service Tax demand along with penalties under Section 76 and Section 77. The appellant challenged this order.
The appellant's counsel argued that as per the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, if the services are not partly performed in India, the Service Tax liability under Reverse Charge Mechanism is not attracted. They cited relevant tribunal decisions to support their contentions. They also highlighted that in a revenue-neutral situation, there is no need to pay tax separately. The appellant sought a stay on the recovery of the dues.
Issue 2: Eligibility to avail Cenvat credit on taxes paid
The Tribunal analyzed the nature of services provided by the appellant, classifying them under Courier Service falling under sub-clause (f) of clause 105 of Section 65 of the Finance Act, 1994. Considering the Taxation of Services Rules, 2006, which state that Service Tax liability arises only when services are partly performed in India, the Tribunal found that the services rendered by the Courier Agency outside India were not partly performed in India. Therefore, prima facie, Service Tax liability would not be attracted. The Tribunal referred to previous cases where relief was granted in similar situations. Additionally, the Tribunal noted that even if the Service Tax liability under Reverse Charge Mechanism is discharged, the appellant would be eligible to avail input service credit under the Cenvat Credit Rules, 2004, making the situation revenue neutral.
In light of these considerations, the Tribunal granted an unconditional waiver of pre-deposit of the dues and stayed the recovery during the appeal process.
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2013 (1) TMI 902
The Karnataka High Court directed respondents not to encash the petitioner's bank guarantee until the Appellate Authority pronounces orders on the appeal filed by the petitioner. An interim order was passed to keep the bank guarantee alive until the writ petition is disposed of. The Appellate Authority must comply with the court's earlier order to dispose of the appeal within three months.
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2013 (1) TMI 901
The Supreme Court denied the appellant's request for more time to file an affidavit of valuation, as a last chance had already been granted. The matter was listed before the Hon'ble Judge in Chambers for appropriate orders for non-prosecution. (Case Citation: 2013 (1) TMI 901 - SC)
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2013 (1) TMI 900
Issues Involved:
1. Whether the petitioner is entitled to cross-examine witnesses before submitting a reply to the show cause notice.
2. Whether the impugned orders dated 27-11-2012 and 27-12-2012 are valid.
Summary:
Issue 1: Entitlement to Cross-Examine Witnesses Before Submitting Reply
The petitioner argued that cross-examination of witnesses whose statements were recorded by the authority was necessary prior to submitting a reply to the show cause notice, to properly defend its case. The petitioner relied on the Supreme Court decision in *Lakshman Exports Limited v. Collector of Central Excise, 2002 (143) E.L.T. 21 (S.C.)*.
The respondent contended that the petitioner could not cross-examine witnesses before submitting its reply, as adjudication had not yet commenced. The respondent relied on the decision in *Commissioner of Central Excise, Meerut-I v. Parmarth Iron Pvt. Ltd., 2010 (260) E.L.T. 514 (All.)*, which stated that cross-examination is only required after adjudication proceedings have commenced.
The Court held that the petitioner must first submit its reply to the show cause notice before being entitled to cross-examine witnesses. The Court emphasized that at the stage of the show cause notice, there is no adjudication, and it is only a step in the process of adjudication. The principles of natural justice require cross-examination only after adjudication proceedings have commenced and if the Revenue seeks to rely on the statements or documents.
Issue 2: Validity of Impugned Orders
The petitioner sought to quash the orders dated 27-11-2012 and 27-12-2012, which directed the petitioner to submit its reply to the show cause notice and denied the request for cross-examination of co-noticees.
The Court found no illegality or infirmity in the impugned orders. The Court noted that the petitioner had been given sufficient opportunity to file its reply and that repeated requests for time to file the reply were seen as delaying tactics. The Court concluded that the petitioner's insistence on cross-examination before submitting a reply was not justified.
Conclusion:
The writ petition was dismissed, and the Court upheld the validity of the impugned orders, emphasizing that cross-examination is only required after the commencement of adjudication proceedings.
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2013 (1) TMI 899
Issues involved:
The issues involved in the judgment include detention of goods at Nhava Sheva Port, objection raised by Customs Authorities, interpretation of legal provisions, and permission for export of goods.
Detention of Goods at Nhava Sheva Port:
The petitioners sought relief to restrain the authorities from detaining 1250 boxes of RMD Gutkha at Nhava Sheva Port and to allow the goods to be shipped to the consignee. The goods were held up due to objection raised by Customs Authorities based on a letter from the Food and Drug Administration (FDA) and a Government of Maharashtra order.
Interpretation of Legal Provisions:
The petitioners argued that since the goods were manufactured in Gujarat and not brought into Maharashtra for distribution or sale, the objection raised by the authorities invoking the order dated 19 July, 2012, was unjustified. The Advocate General contended that allowing the goods into Maharashtra for export could lead to diversion for local consumption, making enforcement difficult.
Permission for Export:
The Court suggested a solution where the petitioners could export the goods if they agreed not to bring any further gutkha and pan masala into Maharashtra without prior declaration. The Advocate General agreed not to raise objections if the petitioners accepted this condition. Consequently, the Court directed the Customs Authorities to permit the export of the 1250 boxes of RMD Gutkha without relying on the previous objection.
Legal Clarifications:
The Court clarified that the order did not exempt the petitioners from other legal export requirements and did not express an opinion on the legal issues raised in the petition. The petition was disposed of with liberty for the petitioners to raise the same contentions in future proceedings. Additionally, there was no restriction imposed on bringing gutkha and pan masala into Maharashtra for any purpose, with the issue to be decided according to the law when challenged.
This judgment allowed the export of goods under specific conditions, considering the circumstances of the case and ensuring compliance with legal requirements.
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2013 (1) TMI 898
Issues involved: Disallowance of expenses u/s 40(a)(ia) for deducting tax at lower rate.
Summary:
Issue 1: Disallowance of expenses under section 40(a)(ia) for deducting tax at lower rate
The AO disallowed expenses as the assessee had deducted tax at lower rates compared to the rates applicable under the law for payments made to certain parties. The AO observed discrepancies in tax deductions for payments to M/s. Mehta Bros., M/s. Shivji Kanji & Co., and M/s. Devendra Roadways. The disallowance totaled to Rs. 44,77,792. In appeal, CIT(A) held that the certificate for deduction at lower rates u/s 197 issued by the AO was valid for the entire assessment year. CIT(A) noted discrepancies in tax deductions by the assessee for different parties and calculated the shortfall. CIT(A) deleted the disallowance for some parties but upheld it for M/s. Devendra Roadways, resulting in a total disallowance of Rs. 15,90,108. The assessee appealed against the confirmed addition, while the revenue appealed against the relief granted by CIT(A) for all three parties.
Issue 2: Interpretation of section 40(a)(ia) and relevant case laws
The ld. AR argued that once tax had been deducted, even at a lower rate, no disallowance should be made u/s 40(a)(ia). The argument was supported by the Tribunal's decision in DCIT vs. Chandrabhoy & Jassobhoy and the judgment of the Hon'ble High Court of Calcutta in CIT vs. S.K. Tekriwal. The ld. DR, however, relied on the AO's order.
Judgment:
The Tribunal held that under section 40(a)(ia), if tax has been deducted, even at a lower rate, no disallowance should be made. The Tribunal cited the decision in DCIT vs. Chandrabhoy & Jassobhoy and the judgment of the Hon'ble High Court of Calcutta in CIT vs. S.K. Tekriwal to support this interpretation. Therefore, the Tribunal set aside the CIT(A)'s order and deleted the disallowance made. The appeal of the assessee was allowed, and that of the revenue was dismissed.
Note: The judgment was pronounced on 16.01.2013 by the Appellate Tribunal ITAT Mumbai, with Shri Rajendra Singh, Accountant Member, and Shri Amit Shukla, Judicial Member presiding over the case.
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2013 (1) TMI 897
Furnished inaccurate particulars of income - penalty levied u/s.271(1)(c) - Held that:- Transaction in respect of the share trading was duly disclosed at the time of filing of the return - Income was shown as longtern capital gain and part of the income was also shown as speculative business - assessee disclosed the names of the companies, description of the shares, date of transfer of shares, sale consideration, cost of acquisition and the index cost and considered the gain as long-term capital - thus there is no allegation of concealment of facts - the addition was made merely because of change in the head of income - Therefore in absence of any inaccuracy in the particulars of income or concealment of facts the penalty must not be levied - Decided in favor of assessee
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2013 (1) TMI 896
Issues involved: Appeal against CIT(A) order directing AO to allow deduction u/s 80IB(10); Acceptance of claim by CIT(A) despite restriction in Board's notification; Eligibility for deduction u/s 80IB(10) based on furnished documents; Admission of new evidence in contravention of Rule 46.
Deduction u/s 80IB(10): Assessee, a builder, claimed deduction u/s 80IB(10) for a project approved by local authority. AO found non-fulfillment of basic condition, disallowed deduction. CIT(A) allowed deduction citing CBDT clarification making project eligible for deduction from AY 2005-06 onwards. ITAT upheld CIT(A) decision based on prior year's ruling and rejected department's appeal.
Board's Notification Restriction: Department argued restriction in Board's notification dated 05.01.2011, limiting deduction for projects approved between 01.04.2004 to 31.03.2008. CIT(A) clarified applicability of notification to all projects approved within specified period, making income eligible for deduction u/s 80IB(10) from AY 2005-06 onwards.
Eligibility based on Furnished Documents: Assessee submitted documents to CIT(A) supporting eligibility for deduction u/s 80IB(10), not previously furnished to AO. CIT(A) considered documents and allowed deduction based on fulfillment of conditions, leading to ITAT upholding the decision.
Admission of New Evidence: Department raised objection to CIT(A) admitting new evidence contrary to Rule 46. ITAT noted issue carried from previous year, lack of specific evidence cited by department, and rejected department's grounds on this issue.
General Grounds: Remaining grounds raised by department were of general nature and were dismissed by ITAT without detailed discussion.
In conclusion, ITAT Mumbai dismissed the department's appeal against CIT(A) order allowing deduction u/s 80IB(10) for the assessee, based on fulfillment of conditions and prior rulings. The decision was upheld regarding the applicability of Board's notification and admission of new evidence, with general grounds being rejected.
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2013 (1) TMI 895
Issues Involved:1. Deletion of addition on account of unexplained cash found during the search. 2. Deletion of addition on account of unexplained investment in furniture. 3. Deletion of addition on account of unexplained investment in jewellery. Summary:Issue 1: Deletion of Addition on Account of Unexplained CashDuring the search, cash amounting to Rs. 1,48,530/- was found at the assessee's premises and Rs. 3,21,485/- at his second residence. The assessee claimed the cash was from savings and related to concerns where he was a member or partner, providing balance sheets as evidence. The AO added Rs. 4,70,015/- as undisclosed income. The ld. CIT(A) deleted the addition, noting the AO did not dispute the cash balances of various concerns and it was common for businessmen to keep business cash at home. The Tribunal upheld the ld. CIT(A)'s decision, rejecting the Department's appeal. Issue 2: Deletion of Addition on Account of Unexplained Investment in FurnitureDuring the search, several furniture and fixtures were found at the assessee's house. The AO added Rs. 5.00 lacs to the income due to the lack of source details for these items. The ld. CIT(A) reduced the addition to Rs. 3.00 lacs, considering household withdrawals and the absence of exact purchase prices. The Tribunal further reduced the addition to Rs. 50,000/-, noting sufficient withdrawals in preceding years and the assessee's disclosure of Rs. 1.16 crores towards unexplained investments. The Department's appeal was rejected, and the assessee's cross-objection was allowed in part. Issue 3: Deletion of Addition on Account of Unexplained Investment in JewelleryGold jewellery (8723.60 gms), silver jewellery (523 gms), and stones (184 carats) valued at Rs. 1,31,44,804/- were found during the search. The AO added this amount as unexplained jewellery, rejecting the assessee's explanations and supporting documents. The ld. CIT(A) deleted the addition, accepting the assessee's evidence of wealth tax returns, gift deeds, and VDIS declarations. The Tribunal upheld the ld. CIT(A)'s decision, noting the jewellery was found with family members and the assessee had already offered Rs. 1.16 crores as additional income for unexplained investments, avoiding double taxation. The Department's appeal was dismissed. Conclusion:The appeal of the Department was dismissed, and the cross-objection of the assessee was allowed in part. The order was pronounced in the open Court on 23-01-2013.
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2013 (1) TMI 894
Issues involved: Challenge to order for recovery of excess rebate and imposition of penalties, limitation period for show cause notice, revenue neutrality.
Challenge to order for recovery of excess rebate and imposition of penalties:
The petitioners, a company engaged in manufacturing goods, challenged an order for recovery of excess rebate of &8377; 16.78 Lacs and imposition of penalties by the Revisional Authority. The company exported goods through merchant exporters and claimed rebate on excise duty paid. The Department alleged overvaluation of goods and sought to recover the excess rebate amount. The petitioners contended that rebate should be calculated based on actual export valuation of &8377; 9.44 Crores, not the amount received from merchant exporters. The Department argued that excise duty should be paid only on the amount realized by the company. The petitioners also raised objections regarding the limitation period for the show cause notice and claimed revenue neutrality.
Limitation period for show cause notice:
The petitioners argued that the show cause notice was barred by limitation, as the Department could only invoke extended period of limitation in cases involving fraud, collusion, or willful misstatement. They maintained that necessary details were provided to the Department at the time of rebate claim sanction, and longer limitation period was not applicable. The Court noted that majority of rebate claims fell outside the six-month limitation period under Section 11-A of the Act. The petitioners had paid the total excise duty of &8377; 81.31 Lacs, which was not disputed, and claimed rebate on this amount.
Revenue neutrality:
The Court considered the case as one of revenue neutrality, where the petitioners essentially paid higher excise duty and received rebate from the Department. Even if the excess duty amount was not paid by the petitioners, the cenvat credit of equivalent value remained in their account. The Court accepted the argument that the petitioners should not be directed to pay the differential duty amount and then claim cenvat credit, as it would not affect the revenue position. The impugned order of the Government and the excise authority were quashed, and the petition was allowed based on the principle of revenue neutrality.
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2013 (1) TMI 893
Issues Involved:1. Adjustment made u/s 115JB of the Income Tax Act, 1961. 2. Disallowance of expenses u/s 14A of the Income Tax Act, 1961. Summary:1. Adjustment made u/s 115JB:The dispute relates to the adjustment made by the AO in the computation of book profit u/s 115JB. The AO noted that the assessee had earned gross profit from the sale of its rights in immovable property, which was not shown in the P&L Account but taken directly to the balance sheet. The AO concluded that the P&L account was not prepared in accordance with Part-II and Part-III of Schedule-VI of the Companies Act, and re-worked the book profit accordingly. The CIT(A) confirmed the adjustment, leading to the assessee's appeal before the Tribunal. The assessee argued that the issue was covered by the Supreme Court judgment in Apollo Tyres Ltd. vs. CIT (255 ITR 273), which held that once accounts prepared as per the Companies Act are verified by the authorities, the AO cannot make changes. The DR, however, cited the Bombay High Court's decision in CIT vs. Veekaylal Investment Co. P. Ltd. (249 ITR 597), supporting the AO's adjustment. The Tribunal, after considering the records and rival contentions, found that the issue was settled by the Supreme Court in Apollo Tyres Ltd. (255 ITR 273), which limited the AO's power to examine whether the books of account are certified by the authorities under the Companies Act and to make adjustments as provided in the Explanation to section 115J. The Tribunal noted that subsequent judgments of the Bombay High Court in CIT vs. Akshay Textiles Trading And Agencies P. Ltd. (304 ITR 401) and CIT vs. Adbhut Trading Co. P. Ltd. (338 ITR 94) reiterated this position. Consequently, the Tribunal set aside the order of CIT(A) and deleted the addition made by the AO. 2. Disallowance of expenses u/s 14A:The second dispute concerns the disallowance of expenses u/s 14A related to income exempt from tax. The AO allocated expenses on a proportionate basis and disallowed a sum of Rs. 8,02,702/-. The CIT(A) directed the AO to re-compute the disallowance as per Rule 8D, which the assessee appealed against. The Tribunal noted that the Bombay High Court in Godrej and Boyce Mfg. Co. vs. DCIT (328 ITR 81) held that Rule 8D is applicable only from AY 2008-09, and for prior years, disallowance should be made on a reasonable basis. The Tribunal set aside the order of CIT(A) and restored the matter for re-examination in light of the Bombay High Court's judgment, directing a fresh order after hearing the assessee. Conclusion:The appeal of the assessee was allowed, with the Tribunal setting aside the CIT(A)'s orders on both issues and providing directions for re-examination and deletion of the adjustments made by the AO. Order pronounced in the open court on 23.01.2013.
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2013 (1) TMI 892
Whether the income earned from the sale of shares is admissible as business income or capital gains - Held that:- The assessee was carrying business of investment in shares for last 30 years and for the last 25 years was assessed to tax under the head capital gains and not under the head of profit and gains of business by the revenue - The revenue never treated the shares as stock in trade of the respondent assessee - hence assessee is not carrying on business of shares trading- thus no question of law arises - appeal is dismissed in favor of assessee
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2013 (1) TMI 891
Capitalisation as a part of Expenses - Assessee company is engaged in the business of commercial construction claimed deduction in respect to administrative expenses, employee's remuneration and interest. AO said that these costs ought to have been also capitalized and, accordingly, the assessee had under-disclosed profit. Assessee explained that the construction to the extent not sold, i.e., on which no profit stands booked yet, represents only the assessee’s work-in-progress (WIP), i.e., stock-in-trade, and not a purchase of any asset/s. In fact, even if it were so, i.e., on capital account, the interest on borrowed capital would be allowable u/s. 36(1)(iii).
HELD THAT:- (i) Administrative expenses & Employee's Remuneration - Any cost that adds value thereto, i.e., enables the bringing of the relevant inventory to the stage of its completion and location as at the year-end, is to be taken into account for the purpose. Administrative expenses, as it appears, are only general in nature, and even with regard to the employee’s remuneration, there is nothing to indicate that it represents an element of either direct cost of production or even of production overhead, which only would enable its inclusion as a part of the cost of production/construction. As such, being fixed (period) cost, these stand to be written off to the profit and loss account in the year of being incurred.
Entire addition to the returned income is accordingly deleted.
ii) Interest Expenditure- Deduction u/s 36 (1)(iii) - Allowed or not? - A project, or part thereof, may be partly sold or even remain unsold for quite some time after its completion. While revenue would stand to be booked only on the part, if any, sold, the interest cost would continue to be incurred on the entire capital, even as no corresponding gain inures in terms of value addition to the project, which stands in fact completed, so as to increase its cost by loading the said cost thereon. It is for these reasons that interest (financing) cost is normally considered as only a period (fixed) cost, and charged to the operating statement for the year in which the same is incurred.
Relying on the judgement of COMMISSIONER OF INCOME-TAX VERSUS LOKHANDWALA CONSTRUCTION INDS. LTD. [2003 (1) TMI 93 - BOMBAY HIGH COURT], interest cost is to allowed u/s. 36(1)(iii), irrespective of whether it stands incurred in relation to stock-in-trade or on capital account, as the said section draws no such distinction.
Decision in favour of Assessee.
Disclosure of Gross Profit - In the verification proceedings u/s.143(3), it was explained that the said project had been completed as at the year-end up to 34%, and that the profit was booked and returned following the project percentage method, disclosing a gross profit of 23% on the cost of production as capitalized during the year - HELD THAT:- Considering the said cost as includable in the project cost may have a direct bearing on the gross profit rate, and which may therefore stand to decline from the reported and accepted rate of 23%, and cannot be presumed be remain as such, i.e., unchanged. Thus, no adjustment to the disclosed gross profit rate, on account of any of three items of expenditure under reference, is required under the given facts and circumstances of the case.
Revenue Appeal dismissed.
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2013 (1) TMI 890
Issues involved:
The judgment involves determining the eligibility of deduction u/s 35D for amortization of share issue expenses and whether expenses incurred in connection with a private share placement are eligible for amortization u/s 35D of the Income Tax Act, 1961.
Assessment Year 2000-01:
The Assessing Officer allowed deduction of share issue expenses under Section 35D of the Act for the assessment year 2000-01, which had to be amortized over 5 years. The Commissioner of Income Tax (CIT(A)) allowed the appeal, stating that reopening of the assessment was not justified. The revenue filed an appeal before the Tribunal, which held that the reopening of assessment was bad in law and upheld the allowance of expenses under Section 35D for the assessment year 2000-01.
Assessment Years 2002-03 to 2004-05:
For these years, the Assessing Officer disallowed the deduction under Section 35D, claiming that the expenses were not entitled to deduction. However, the CIT(A) allowed the appeal, stating that the assessee was entitled to deduction as the claim had been allowed in the assessment year 2000-01. The Tribunal held that once the claim under Section 35D has been allowed, it cannot be withdrawn in later years, especially for revenue expenditure.
Arguments and Decision:
The revenue contended that the benefit granted for the assessment year 2000-01 should not apply to subsequent years. However, the Tribunal's decision was upheld, stating that once a claim is examined and granted in the first year, it cannot be withdrawn in later years. The department's acceptance of the Tribunal's order for the assessment year 2000-01 precluded them from challenging its correctness. The Tribunal's reasoning was found to be sound, leading to the dismissal of the appeals for the assessment years 2002-03 to 2004-05.
Conclusion:
The appeals were dismissed, and no costs were awarded, as the Tribunal's decision regarding the deduction under Section 35D for share issue expenses was upheld for all relevant assessment years.
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2013 (1) TMI 889
Issues involved: Appeal against order u/s 263 of the Income Tax Act, 1961 for Assessment Year 2007-08.
Facts: The assessee initially declared income of Rs. 1,79,041/- which was later revised to Rs. 1,89,160/-. The case was processed u/s 143(1) and later selected for scrutiny assessment. The issues identified included treatment of shares and mutual funds as business income, incorrect exemption claim u/s 10(33), undeclared income from house property, and unverified liability. A show cause u/s 263 was issued, leading to objections and submissions by the assessee.
Assessee's Submission: The assessee argued that the issues raised were beyond the scope of scrutiny assessment proceedings and that the Assessing Officer lacked authority to examine them. The assessee also provided detailed responses on the merits of the case, including the nature of investments, absence of borrowed funds, and lack of business expenses claimed.
Assessing Officer's Order: The Assessing Officer accepted the income declared by the assessee based on the information received through AIR returns. The scope of enquiry under CASS was defined by CBDT Circulars, limiting scrutiny to aspects indicated in the AIR information. The AO requested specific details during assessment, and the investments in mutual funds were duly furnished by the assessee.
CIT's Decision: The CIT directed a fresh adjudication by the Assessing Officer on various issues, including the treatment of shares and mutual funds, exemption claim under Section 10(33), income from house properties, and verification of a loan. The CIT annulled the previous order u/s 143(3) and instructed the AO to reexamine the case for a judicious assessment.
Appellate Tribunal's Decision: The Tribunal noted that the CIT did not establish errors or prejudice in the AO's order, leading to the appeal being allowed. The Tribunal emphasized that the CIT did not find the AO's order erroneous or prejudicial to the Revenue, resulting in the impugned order u/s 263 being struck down.
Conclusion: The appeal by the assessee was allowed, and the impugned order u/s 263 was set aside due to the lack of findings by the CIT regarding errors or prejudice in the AO's order.
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2013 (1) TMI 888
Issues involved: Appeal against disallowance of cash expenses u/s 40A(3) of the Income Tax Act, 1961 for the assessment year 2008-09.
Summary:
Issue 1: Disallowance of cash expenses u/s 40A(3)
The assessee, a firm in film distribution and TV serial production, filed a return of income for the assessment year admitting total income of `41,43,170/-. During a survey, it was found that cash payments were made at shooting sites due to business compulsions. The Assessing Officer disallowed `6,88,366/- u/s 40A(3) of the Act. The CIT(Appeals) upheld the disallowance, stating that the payments were not voluntarily offered for taxation. The Tribunal considered the business expediency and the nature of payments made under section 40A(3) and 40A(3A) proviso. It was concluded that the cash payments were made under business compulsions and thus, section 40A(3) did not apply. The Tribunal reversed the CIT(Appeals) order and allowed the appeal filed by the assessee.
In conclusion, the Tribunal allowed the appeal filed by the assessee against the disallowance of cash expenses u/s 40A(3) for the assessment year 2008-09, based on the business expediency and nature of payments made at shooting sites.
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2013 (1) TMI 887
Issues involved: Challenge to Circular and Notification u/s Finance Act, 1994 regarding Service Tax on widening, carpeting, and repairs of roads.
Judgment Summary:
Challenge to Circular and Notification: The petitioner, engaged in construction activities, challenged the Circular dated 23-2-2009 and Notification No. 24/2009 dated 27-7-2009 issued by the respondent as contrary to the provisions of the Finance Act, 1994, regarding the levying of Service Tax on widening, carpeting, and repairs of roads. The petitioner's counsel and the Senior Standing Counsel for the respondents were heard. The Court noted that as per Section 97 of the Finance Act, 2012, no Service Tax shall be levied or collected in respect of management or repair of roads during the period from 16th June 2005 to 26th July 2009. It was further directed that any Service Tax collected during this period, which would not have been collected if the Act was in force, shall be refunded. Therefore, the petitioner was found not liable to pay any Service Tax on the management, maintenance, or repair of roads between the specified dates, and any collected tax would be refunded. The writ petition was disposed of accordingly, with the respondents instructed to amend, withdraw, or modify the show cause notice.
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2013 (1) TMI 886
Issues involved: Deletion of addition u/s 92CA(3) of the Income Tax Act, 1961.
Summary:
The appeal was against the deletion of an addition made by the Assessing Officer under section 92CA(3) of the Income Tax Act, 1961. The case involved transactions with Associated Entities (AEs) and independent parties. The Transfer Pricing Officer (TPO) rejected the Comparable Uncontrolled Price (CUP) method adopted by the assessee and applied the Transactional Net Margin Method (TNMM) instead, resulting in a proposed adjustment of Rs. 3.59 crores. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, considering the CUP method as the most appropriate. The Tribunal upheld the CIT(A)'s decision, stating that the TPO was not justified in rejecting the CUP method and that the geographical and date differences in transactions were adequately addressed by the assessee.
The TPO's rejection of the CUP analysis based on geographical domain differences was considered valid by the Tribunal. However, the Tribunal noted that the assessee had mitigated the impact of geographical differences by comparing the FOB value of transactions with AEs and Non-AEs. The TPO's objection regarding the difference in dates of comparable transactions was also addressed by the Tribunal, emphasizing the need for comparison within the same financial year as per Rule 10B(4) of the IT Rules 1962. As the assessee had compared transactions with AEs and Non-AEs within the same financial year, the Tribunal found no justification for the TPO's rejection of the CUP method based on date differences. The Tribunal concluded that there was no infirmity in the CIT(A)'s order and dismissed the appeal filed by the revenue.
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2013 (1) TMI 885
Issues Involved:
1. Rejection of application for grant of registration u/s 12AA of the Income Tax Act, 1961.
2. Rejection of application for grant of approval u/s 80G(5) of the Income Tax Act, 1961.
Summary:
Issue 1: Rejection of application for grant of registration u/s 12AA of the Income Tax Act, 1961
The assessee Trust filed an application dated 22.12.2011 in Form No.10A for registration u/s 12AA of the Income Tax Act, 1961. The CIT rejected the application on the ground that post the amendment by the Finance Act, 2008, effective from 01.04.2009, any activity in the nature of trade, commerce, or business, or any activity rendering any service in relation to any trade, commerce, or business for a cess or fee or any other consideration ceases to be a 'charitable activity'. The CIT concluded that the assessee's claim is hit by the proviso to section 2(15) of the Act, thus the Trust cannot be considered for charitable purposes.
Upon review, the Tribunal noted that the CIT did not act according to the law and provisions of section 12AA. The CIT failed to apply his mind before rejecting the application, as evidenced by the order sheet and the RTI reply indicating that the file approval process was unclear. The Tribunal referenced similar cases where the CIT was directed to grant registration, such as Smt. Bimla Devi Gopal Prasad Press Wale Charitable Trust vs. CIT-1, ITA Nos. 288 & 289/Agr/2012. Consequently, the Tribunal directed the CIT to grant registration u/s 12AA of the Act.
Issue 2: Rejection of application for grant of approval u/s 80G(5) of the Income Tax Act, 1961
The assessee Trust also filed an application dated 22.12.2011 in Form No.10G for approval u/s 80G(5) of the Income Tax Act, 1961. The CIT rejected this application on similar grounds as the rejection of the 12AA application, citing the amendment by the Finance Act, 2008, and the proviso to section 2(15) of the Act.
The Tribunal, after hearing the representatives and reviewing the records, found that the CIT did not conduct a proper inquiry or provide a reasonable opportunity of being heard to the assessee. The Tribunal referenced the case of Shiksha Sankalp Society vs. CIT, ITA No.418/Agr/2010, where it was held that the CIT's order was not sustainable in law due to lack of proper inquiry and mechanical reliance on subordinate's drafts. The Tribunal directed the CIT to grant approval u/s 80G(5) of the Act.
Conclusion:
The Tribunal set aside the CIT's orders dated 21.06.2012 for refusal of registration u/s 12AA and approval u/s 80G of the Act. The CIT was directed to grant registration u/s 12AA and approval u/s 80G(5) with effect from the date the assessee requested. Both appeals filed by the assessee were allowed.
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2013 (1) TMI 884
Issues involved: Challenge against non-release of imported car, interpretation of Section 110 of the Customs Act, 1962 regarding time limit for holding seized goods.
In the present case, the petitioner challenged the action of the respondents for not releasing the imported car, a Lexus LS 600H, seized on 26.04.2011. The petitioner argued that as per a previous decision of the Court, the show cause notice should have been issued within one year of seizure u/s 110 of the Customs Act, 1962. Since the notice was not issued within the specified period, the goods must be released unconditionally. The Court, following the precedent, held in favor of the petitioner and ordered the release of the car.
The Court referred to Section 110(2) of the Customs Act, 1962, which deems the time limit for holding seized goods as mandatory. The failure to issue a show cause notice within the specified period results in the automatic return of the goods to the person from whose possession they were seized. The Court emphasized that the Customs authorities do not lose jurisdiction to issue a show cause notice even if the time limit is not met. Based on this interpretation, the Court concluded that since the show cause notice was not issued within one year of seizure, the goods must be released unconditionally. The writ petition was allowed accordingly.
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