TMI Tax Updates - e-Newsletter
October 10, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. EXEMPTION ON INPUT SERVICES TO EXPORTERS

   By: Dr. Sanjiv Agarwal

News

1. Dr. M. Veerappa Moily Details MCA Initiatives at EEC 2012

2. Rate of Exchange of Conversion of Foreign Currency into Indian Currency or Vice Versa Relating to Imported and Export Goods Notified; to come into effect from today

3. 14 Proposals of Foreign Direct Investment approved

4. Will Take Full Advantage of Soil Moisture to Maximise Crop Production in Coming Rabi: Shri Pawar Agriculture Minister Confident of 4% Annual Growth of Farm Sector in 12th Plan

5. Online issue of Central Declaration Forms

6. Auction for Sale of Government Stocks

7. SPMCIL Presents Dividend Cheque of Rs. 116.49 Crore for 2011-12 to the Finance Minister

8. I&B Ministry Clarifies on Power Consumption by Cable STB Cable STBs consume less power than a CFL light

9. Text of the Inaugural Address by the Union Finance Minister Shri P Chidambaram at the Economic Editors’ Conference 2012 today

10. 14 Proposals Amounting to Rs 113.35 Crore of Foreign Direct Investment Approved by FIPB

11. Lord Mayor of London Calls on Anand Sharma Anand Sharma Raises Visa issues, Fate on Indian Students at LMU

12. India and France sign Administrative Agreement in the field of Sustainable Urban Development

Notifications

Customs

1. 47/2012 - dated 8-10-2012 - ADD

Anti-dumping duty on imports of new/unused pneumatic non radial bias tyres, tubes and flaps with or without tubes or flap of rubber, having nominal rim dia code above 16" used in buses and lorries originating in or exported from People’s Republic of China and Thailand

2. 93/2012 - dated 9-10-2012 - Cus (NT)

Rate of exchange of conversion of each of the foreign currency with effect from 10th October, 2012

3. 04/2012 - dated 5-10-2012 - Safeguard

Imports of Carbon Black (for rubber application) into India from the People's Republic of China

VAT - Delhi

4. F. 5(54)/Policy-II/VAT/ 2011-12/726-738 - dated 4-10-2012 - DVAT

Amendment in Sixth Schedule of the Act for grant of facility to the Embassy of Republic of Gabon.

Circulars / Instructions / Orders

VAT - Delhi

1. 20 - dated 9-10-2012

Review of Assessment of the dealers on the basis of 2A and 2B data mismatch for the Tax period First Quarter 2012-13.

2. 19 - dated 8-10-2012

Department of Trade & Taxes shall henceforth issue Central Declaration Forms or Certificates to the dealers only on every Wednesday and Friday. And Central Declaration Forms or Certificates shall not be issued on Mondays henceforth

3. PUBLIC NOTICE - dated 6-10-2012

Waiver of Security for registration under DVAT Act, 2004.

Income Tax

4. 8/2012 - dated 5-10-2012

Income-tax deduction from salaries under section 192 during the financial year 2012-13

Highlights / Catch Notes

Income Tax

• Voluntary Spending on 20-Point Programmes for Oppressed Classes Qualifies as Business Expenditure, Not Just Statutory Obligations.

  Case-Laws - AT : Expenditure on 20-Point Programmes for the welfare of the oppressed classes of Society, - Just because the expenses are voluntary in nature and are not forced on the assessee by a statutory obligation, these expenses cannot cease to be a business expenditure - AT
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• Penalty u/s 271G of Income Tax Act Requires Caution, Applied Only When Clearly Justified Circumstances Exist.

  Case-Laws - AT : Levy of Penalty u/s 271G - When the penalty provision is very severe, it should be applied with great caution and only if circumstances sufficiently justify invoking the penal provision. - AT
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• Assessee Denied Exemption u/s 54: Property Lacks Amenities, Not Qualified as House Under Income Tax Act.

  Case-Laws - HC : Exemption under the head Income from House Property - lack of amenities - the property was not a house and the assessee was not entitled to the benefit under Section 54 of the Act. - HC
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• Technical Service Receipts Taxed at 10% Due to Permanent Establishment in India, Not 25% as Revenue Authorities Claimed.

  Case-Laws - AT : Fees for Technical Services - The receipts are liable to tax @10% as Fees is received in connection with PE and Place of Profession in India as against 25% claimed by revenue. - AT
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• Illegal Space Use Fines Non-Deductible Under Income Tax Act Section 37(1.

  Case-Laws - AT : Deduction u/s 37(1) - Misuse charges were also paid for illegally using the space for a period of time till the infraction was noticed by the DDA and it ordered the removal of the infraction - No deduction - AT
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• High Court Affirms ITAT's Decision on Deductions for Unit Expansion u/ss 80I and 80IB of Income Tax Act.

  Case-Laws - HC : Deduction under section 80I / 080IB - allocation of expenses - expansion of existing unit or setting of new identifiable unit - ITAT has correctly found the facts and allowed the deduction - HC
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• Foreign Car Depreciation in Iraq Allowed u/s 32(1)(ii) of Income Tax Act for Business Use Abroad.

  Case-Laws - HC : Depreciation on motor cars purchased and used in Iraq - the second proviso to Section 32(1)(ii) was not to deny depreciation on foreign cars used in foreign countries for business abroad - HC
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• High Court Orders Probe into Audit Fee Delay; Costs to Be Deducted from Responsible Officials' Salaries.

  Case-Laws - HC : Delay in fixation of special audit fee - CIT directed to conduct an inquiry and fix responsibility of the person or persons who was/were responsible for the delay and the said costs shall be deducted from the salary of the concerned person or persons. - HC
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• High Court Rules Non-Compete Fee as Revenue Expenditure, Not Capital, in Business Activity Case.

  Case-Laws - HC : Non-compete fee paid to Sri.U.Mohan Rao - revenue expenditure v/s capital expenditure - the payment was in respect of the performing of the business of the assessee - held as revenue in nature - HC
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Customs

• Anti-dumping duty imposed on certain rubber tires for buses and lorries from China and Thailand.

  Notifications : Anti-dumping duty on imports of new/unused pneumatic non radial bias tyres, tubes and flaps with or without tubes or flap of rubber, having nominal rim dia code above 16“ used in buses and lorries originating in or exported from People’s Republic of China and Thailand - Notification
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• Conversion of Shipping Bill Allowed After Duty Drawback Refund Proof Submitted, Initially Denied Under Different Scheme.

  Case-Laws - AT : Conversion of shipping bill from duty drawback scheme to advance licence scheme denied -conversion allowed on submission of proof of refund of duty drawback - AT
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• Amendment in Bills of Entry allowed with documentary proof existing at time of goods clearance.

  Case-Laws - AT : Requested for amendment in the Bills of Entry - Amendment has to be allowed when a request is based on documentary evidence, which was in existence at the time of clearance of the goods - AT
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• India Updates Import Rules for Carbon Black from China, Affecting Rubber Industry Stakeholders.

  Notifications : Imports of Carbon Black (for rubber application) into India from the People's Republic of China - Notification
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Corporate Law

• Court Orders Separate Meetings for Creditors in Amalgamation Scheme; Aligns with Company Law Procedures for Creditor Approval.

  Case-Laws - HC : Scheme of Amalgamation - directed to hold separate meetings of the Un-Secured Creditors of the Transferor Company and Secured Creditors and Un-Secured Creditors of the Transferee Company - HC
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Service Tax

• No Cenvat Credit for Hiring Buses to Transport Employees' Children for School and Tuition, Not an Input Service.

  Case-Laws - AT : Hiring of buses for children of the employees for transportation to the schools and tuition is not an Input Service and Cenvat Credit cannot be taken on this activity - AT
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• No Registration Needed for Unused Premises; No Time Limit on Claiming Cenvat Credit.

  Case-Laws - AT : Cenvat Credit - there is no requirement to apply for the registration when premises was under construction and when no service was being provided - There is no time-limit for taking credit - AT
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• Court Rules Textbooks, Mock Tests, and Coaching as Unified Activities for Service Tax Liability on Coaching Centers.

  Case-Laws - AT : Service Tax Liability on coaching centers- sale of text books,conducting of mock test series and coaching classes was not an independent activity - prima facie against assessee - AT
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Central Excise

• Goods Cleared Under MUL Brand Excluded from Turnover Calculation for Small Scale Industry Exemption Benefit.

  Case-Laws - AT : The value of the goods cleared under brand name of MUL on payment of duty can not be included for the purpose of computation of turnover under SSI exemption benefit. - AT
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• Refund Claim Denied: Missing Duty Payment Confirmation from Jurisdictional Central Excise Superintendent, No Triplicate Certification Provided.

  Case-Laws - CGOVT : Rejection of refund claim - no confirmation of duty payment from the jurisdictional Central Excise range Superintendent in the form of duty payment certification in triplicate. Copy of ARE-1 - rebate claim inadmissible - CGOVT
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• Voluntary Overpayment of Duties Treated as Deposit, Not Duty Liability.

  Case-Laws - CGOVT : Any amount paid in excess of duty liability on ones own volition cannot be treated as duty, but it has to be treated simply a voluntary deposit - CGOVT
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• Appellate Tribunal lacks jurisdiction in central excise rebate matters; appeal entertained in error due to statutory limits.

  Case-Laws - HC : Rebate – jurisdiction of Tribunal – exclusion of the jurisdiction of the appellate Tribunal is expressly stated in the Statute - Tribunal was in error in entertaining the said appeal - HC
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• Inventory Shortages Alone Don't Prove Guilt for Alleged Clandestine Removal Under Central Excise Laws.

  Case-Laws - AT : Clandestine removal - admission of shortages without there being any admission of clandestine removal, cannot be considered to be conclusive evidence to establish the guilt of the assessee - AT
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• Distributing Chemicals in Original Packaging Not Considered Manufacturing Under Chapter Note 11, Chapter 29, Tariff Rules.

  Case-Laws - AT : Deemed manufacture - Appellants are clearing chemicals in the same packing without disturbing the original packing - same does not amount to manufacture as per the Chapter Note 11 of Chapter 29 of the Tariff - AT
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• High Court Rules Cenvat Credit Unavailable for Non-Manufacturing Processes u/r 4 of Cenvat Credit Rules.

  Case-Laws - HC : Claim of Cenvat credit on capital goods - Rule 4 of the Cenvat Credit Rules cannot come to the rescue of the petitioner, as the process in question itself does not amount to process of manufacture - HC
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VAT

• Guidance on Resolving Form 2A and 2B Data Mismatches for 2012-13 Q1 to Ensure VAT Compliance.

  Circulars : Review of Assessment of the dealers on the basis of 2A and 2B data mismatch for the Tax period First Quarter 2012-13. - Circular
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• Central Declaration Forms Now Issued Only on Wednesdays and Fridays, No Longer Available on Mondays.

  Circulars : Department of Trade & Taxes shall henceforth issue Central Declaration Forms or Certificates to the dealers only on every Wednesday and Friday. And Central Declaration Forms or Certificates shall not be issued on Mondays henceforth - Circular
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• Delhi VAT Act Waiver: Simplified Registration Process Removes Security Deposit Requirement for Businesses Under DVAT Act 2004.

  Circulars : Waiver of Security for registration under DVAT Act, 2004. - Order-Instruction
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• Court Rules on Interstate vs. Intrastate Sales Under Central Sales Tax Act; Impacts VAT and Sales Tax Assessments.

  Case-Laws - HC : Inter state sale or Intra state sale - Central Sales Tax Act, 1956? - requirement of agreement versus movement of goods - Sale in the court of import - An important decision - HC
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• Sixth Schedule Amendment: New Tax Regulations for Gabon Embassy on VAT and Sales Tax Compliance.

  Notifications : Amendment in Sixth Schedule of the Act for grant of facility to the Embassy of Republic of Gabon. - Notification
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Case Laws:

• Income Tax

• 2012 (10) TMI 224
  Disallowance of depreciation on civil work in the installation of windmill @ rate of 80% - AO contended that depreciation at the rate of 80% was allowable only on the device of windmill and not on the entire cost including civil works, electrical installation, development expenses and other machinery etc. - Held that:- The depreciation is allowable on renewable energy device which also includes windmill. The depreciation at the rate of 80% is allowable on the entire device which is capable of generating electricity using wind energy. There is no provision in the Act to bifurcate the device into several parts and allow depreciation thereon at different rates of depreciation. The foundation, civil and electrical works are necessary for the installation of the windmill and is clearly part and parcel of the windmill project. Therefore depreciation at the rate of 80% is allowable. Issue decides in favour of assessee Disallowance of expenditure u/s 14A r.w.Rule 8D – Assessee contended that introduction of Rule 8D is w.e.f. AY 2008-09 and is not applicable for the year under consideration i.e. AY 2007-08 - No internet bearing funds have been used for earning exempt income - Held that:- Issue need to be remand to the AO to decide issue with reference to the decision in case of Walfort Share & Stock Brokers P. Ltd. (2010 (7) TMI 15 - SUPREME COURT). Issue remand back to AO.

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• 2012 (10) TMI 223
  Disallowance of expense incurred on earning exempt income - AO has disallowed 10% of the exempted income – Held that:- Following the decision in case of Godrej & Boyce Mfg. Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT) that Rule 8D which has been notified on 24th March 2008 would apply from the A.Y. 2008-09 only. Since we are concerned with the A.Y. 2004-05, the said Rule cannot be invoked. Respectfully following those guidelines issue remand back to AO. Disallowance of renovation expense – Renovation expense incurred on leased property, and the lease period is remaining for few months, is a capital or revenue in nature - Assessee took space on lease for a period of five years on lease and license basis – Assessee contended that expenditure was incurred wholly and exclusively for the purpose of business - No enduring benefit had accrued to the assessee nor was any capital asset created - Held that:- Since the expenditure was incurred in the month of March 2004 as per the terms of the license agreement and the license period was coming to an end in June 2005. They are routine maintenance and repair expenses which the assessee would have had to incur in the normal carrying on of its business. The nature of the work shows that no additional space or capital advantage was derived by incurring the expenditure. Issue decides in favour of assessee. Mark to Market Loss - Disallowance of the provision for loss on “Mark to Market” basis in respect of trading in derivatives - Assessee holds derivatives as its stock-in-trade - Follows the principle “cost or market price, whichever is lower” in valuing the derivatives – Held that:- As the loss due to a fall in price below cost is allowed even if such loss has not been actually realized. The derivatives have been treated as stock-in-trade then there is nothing unusual in the assessee valuing each derivative by applying the rule cost or market whichever is lower. ICAI in its guidelines have also approved of the rule of prudence which really means that while anticipated losses can be taken note of while valuing the closing stock, anticipated profits cannot be recognized. The anticipated loss cannot be treated as a contingent liability. Issue decides in favour of assessee

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• 2012 (10) TMI 222
  Deduction u/s 80IB – Assessee engage in business of construction and developer – AO argued that assessee has violated the provisions of 80IB (10) by constructing, more than 1500 sq.ft. per unit – Assessee contended that total built up area of none of the flats exceeds 1500 sq.ft. if balcony/terrace are excluded – Held that:- Following the decision in case of HAWARE ENGINEERS & BUILDERS PVT LTD (2012 (6) TMI 386 - ITAT MUMBAI) that definition of built up area as per Sub-section 14(a) of Sec. 80 IB is inserted by Finance Act (No.2) w.e.f. 1st April 2005 and therefore, the same is applicable only in respect of the projects approved after 1st April 2005 and consequently balconies/terrace cannot be included in the built up area of the flats in the assessee’s housing project which was approved prior to 1st April 2005 and A.Y. involved in the impugned appeal is A.Y. 2004-05. Since after excluding the projections and balconies, none of the combined flat exceeds the built up area of 1500 sq.ft., a fact brought on record by the Ld CIT(A) and not controverted by the Revenue. Therefore benefit of deduction u/s. 80 IB (10) cannot be denied. Issue decides in favour of revenue

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• 2012 (10) TMI 216
  Disallowance u/s 43B(f) towards provisions for leave encashment - Held that:- As decided in assessee’s own case in the preceding years that both the parties admitted that as per sec 43B(f) amount unpaid in respect of leave encashment deserves to be disallowed - against assessee. Disallowance u/s 14A - Held that:- Respectfully following the decision in the preceding year, in the current year also, we feel it appropriate to restore the issue to the file of the AO, with the direction to recompute the disallowance u/s 14A - in favour of assessee by way of remand. Interest u/s 234B & 234C - exclusion while computing the book profits under section 115JB - Held that:- As decided in Jtc. I. T., Mumbai Versus M/s Rolta India Ltd.[2011 (1) TMI 5 - SUPREME COURT OF INDIA] there is no exclusion of section 115J/115JA in the levy of interest under section 234B. The expression “assessed tax” is defined to mean the tax assessed on regular assessment which means the tax determined on application of section 115J/115JA in the regular assessment. Interest under section 234B is payable on failure to pay advance tax in respect of tax payable under section 115JA - against assessee. Carry forward of unabsorbed depreciation loss of earlier years without setting off the same against the capital gains - Held that:- The provisions of the Act are very clear and the plain meaning simply suggests that adjustment is required to be made and the AR’s reliance of the word may used in section 71(2), saying, it means that the Act gives an option to the assessee either to adjust or not to adjust business loss with capital gains will be of no use, because in the General Clauses Act, the word may has been interpreted to mean as shall, also, and in that case, the provisions of section 71(2) shall become absolute. View taken by the revenue authorities and pointed out that under all circumstances unabsorbed depreciation shall become current years’ depreciation, which shall in any case will have to be given first adjustment against any income is acceptable - against assessee.

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• 2012 (10) TMI 215
  Disallowance u/s 14A - 0.5% of average investments yielding tax free income - Held that:- No working on the disallowance are found, and how the assessee has arrived at figure of Rs. 8,16,657/- and how and why 0.5% of average of investment yielding tax free income was excessive. In this sense, it would be appropriate to restore the issue to the file of the AO, as done in the preceding year with a direction, that a reasonable disallowance under section 14A may be arrived at, as per law. Disallowance of prior period expenses - Held that:- As decided in Union Bank of India Vs ACIT [2012 (6) TMI 500 - ITAT MUMBAI] even though such expenses are treated technically as prior period expenses, it relates to a continuous flow of expenditure. Therefore, there is no justification in disallowing the expenditure, otherwise normally eligible for deduction - in favour of assessee. Disallowance of lease premium expenses - Held that:- The claim of expenses made by the assessee have been treated as capital in nature and hence cannot be allowed, has been decided by the Special Bench in the case of JCIT Vs Mukund Limited [2007 (2) TMI 358 - ITAT MUMBAI], as conceded by the AR. Respectfully following the decision rendered by the Hon’ble Special Bench, we sustain the disallowance of Rs. 1,55,20,622/-, as made by the revenue authorities - against assessee. Short allowance u/s 36 - Held that:- CIT(A) erred in not deciding on the issue of short allowance under section 36(1)(viia), based on total income computed by the AO. We, therefore, set aside the order of CIT(A) on this issue and direct the AO to decide the issue afresh - in favour of assessee by way of remand. Disallowance of bad debts claimed - CIT(A) allowed claim - Held that:- As decided in M/s. Vijaya Bank Versus Commissioner of Income Tax & Anr. [2010 (4) TMI 46 - SUPREME COURT] though a mere debit to the profit and loss account would constitute a provision for a bad and doubtful debt, yet that would not constitute actual write off. But where besides debiting the profit and loss account and creating a provision for bad and doubtful debt, the assessee has simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the assets side of the balance-sheet, and, consequently at the end of the year, the figure in the loans and advances or the debtors on the assets side of the balance-sheet is shown as net of the provision for “impugned bad debt”, the assessee will be entitled to the benefit of deduction under section 36(1)(vii), as there is an actual write off by the assessee in his books. Disallowance cannot be made on an apprehension that if the assessee failed to close each and every individual account of its debtor, it may result in the assessee claiming deduction twice over - in favour of assessee.

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• 2012 (10) TMI 214
  LPG Bottling Plant - disallowance of Deduction u/s 80HH,80I/80IA - Held that:- every manufacture characterised as production but every production need not amount to manufacture. Even the activity, which is something which brings the commercially new product into existence, then the activity constitutes production. - the process of bottling of LPG makes the LPG capable of being marketed and used by the individual consumers as a domestic kitchen fuel. The process by which the LPG is filled up in the cylinder makes it possible and viable commercial product - in favour of assessee. Denial of claim for 1/6th under section 35 AB - Held that:- Considering the claim of assessee that if under section 35AB is allowed for 1/6th of the amount, then the assessee does not press the allowance of the claim at 100% under section 37 (1) AO is directed to allow the claim under section 35AB to the extent of 1/6th of the amount for the assessment year 1993-94, 1994-95 and 1995-96 as it was allowed in the first year. Deduction u/s 43B in respect of excise and custom duty paid during the year and included in the value of closing inventory - Held that:- Following the order in Berger Paints India Ltd. Versus CIT [2004 (2) TMI 4 - SUPREME COURT] allow deduction for entire amount of excise duty and custom duty paid by the assessee irrespective of the excise duty and custom duty included in the valuation of assessee’s closing stock at the end of the accounting year. The assessee gets relief accordingly - in favour of assessee. Expenditure on 20-Point Programmes - Disallownce of expenditure u/s 37(1) - Held that:- the expenditure on 20-Point Programmes was incurred in view of specific directions of the Government of India solely for the welfare of the oppressed classes of Society, for which even the Constitution of India sanctions positive discrimination, and for contribution to all around development of villages, which has always been the central theme of Government’s development initiatives. Thus even if an expense is incurred voluntarily, it may still be construed as ‘wholly and exclusively’. Just because the expenses are voluntary in nature and are not forced on the assessee by a statutory obligation, these expenses cannot cease to be a business expenditure which was, beyond dispute or controversy, at the instance of the Government, and was to discharge the assessee’s obligations towards society and as a responsible corporate citizen - in favour of assessee. Entertainment expenses towards employees accompanying the guests - Held that:- In the absence of any material and details regarding the exact number of staff and guest on these occasions, no reason to interfere with the orders of the lower authorities on this issue. Accordingly, confirmed the disallowance made by the authorities below - against assessee. Disallowance of dividend expenditure - Held that:- The distribution and payment of dividend is application of income and not an expenditure laid out for earning the income or incurred wholly and exclusively for the purpose of business of the assessee. Accordingly, we do not find any merit in the additional ground raised by the assessee claiming that dividend paid as the business is business expenditure - against assessee.

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• 2012 (10) TMI 213
  Non giving reasonable opportunity to the assessee by the AO - Undisclosed income - search and seizure - Held that:- Though AO issued 3 to 4 show cause notices one after another without giving sufficient time to the assessee to file the necessary details, however, when the CIT(A) issued a remand order and the assessee was given another opportunity to file all the details and evidence as well as defend the case during the remand proceedings, then the said grievance of the assessee against the AO is no more exist. Accordingly, no substance or merit in the ground of the assessee and the same is dismissed - against assessee. Unexplained investment in paintings - Holding the assessee as Trader in paintings - Held that:- For AY 2003-04 only part payment was shown to be made as per the invoices seized during the search operation and despite the opportunities given by the CIT(A), the assessee failed to furnish any evidence to show that the balance payment was made by the ultimate purchaser and the company has received the commission income. The addition has not made solely on the ground that the assessee purchased and owned these paintings, but it was made on the ground that only part payment has been shown in the invoices, which are in the name of the assessee and therefore, the balance payment was made through hawala route - against assessee. Trader in paintings - For AY 2009-09 find force and merit on the point that some of the paintings belong to the company and written off because of low/commercial value, if the said claim of the assessee is supported by the relevant record. Both AO and CIT(A) have not examined the said factual claim of the assessee and rejected the same on technical grounds that the assessee did not declare the same at the time of search, thus set aside the issue of addition on account of unexplained investment in paintings for the assessment year 2008 – 09 to the record of AO to reconsider it afresh as assessee is at liberty to produce any evidence with regard to the valuation of the paintings - in favour of assessee for statistical purposes. Addition on account of low drawings - unexplained expenditure on account of personal household expenses under section 69C - Held that:- the issue requires a proper verification and examination at the level of AO - Also as regards the estimate of personal expenditure at Rs.40,000/- to Rs. 50,000/- per month by the CIT(A) the assessee is directed to produce the electricity bill and telephone bills for the relevant period before the AO in this respect. Unexplained source for purchase of land - Held that:- AO has made an addition of Rs. 4 lakhs as unexplained investment whereas in view of the new facts brought out by the assessee that the actual consideration paid for purchase of land is Rs. 15 lakh, the issue requires to be considered afresh. As that the issue was not properly verified by the authorities below and decided the same summarily accordingly the issue remitted back to AO for deciding the same after considering all the relevant facts and material. Unexplained increase in the capital account - addition on account of opening capital balance - Personal effect - Held that:- it is clear from the order of CIT(A) that the explanation of purchase and sale was rejected without examining the correctness of the same. Therefore, the issue is required to be examined on the point of correctness of the factual aspect as claimed by the assessee. Cash found in the locker - Held that:- It is clear from the record that the assessee never took this plea that the locker of HDFC Bank belongs to the company and not to the assessee. Even no record was filed to show this fact. Therefore, this fresh plea cannot be accepted without investigation of facts. Hence, no entertainment of this fact at this stage is required. In the absence of any material to show the availability of the funds to correlated with the cash found in the locker, no merit in the grounds of the assessee hence the same is dismissed - against assessee.

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• 2012 (10) TMI 212
  Cancel the registration granted u/s 12AA - as per Memorandum of Association assessee's activities have not been found to be genuine - Held that:- On going through the MOA and other Bye-laws it is an institution registered in India for all purposes of law. The assessee, The Institute of Chartered Shipbrokers (ICS) having its headquarters at London cannot be construed as an agent of a foreign institution. The foreign institution, ICS of London, is a world professional body controlling the profession of shipbrokers around the world and granting professional affiliations. The programme of professional education imparted by the assessee Institute in India is not in the nature of coaching or tuition. The Institute at London is an Institute established by a Royal Charter and recognized world-wide as the nodal agency of design, improving and controlling the profession of ship-broking. The examinations conducted by the Institute to enable the registered students to enroll as members of the Institute require continuous study for a period of three to four years. What is imparted by the assessee Institute in India is professional education like chartered accountancy, law, architecture, etc. The syllabus prescribed for the examination covers almost all areas of shipping industry including maritime laws. Thus here is nothing on record to show that the assessee is engaged in any commercial or professional activities in India by way of consultancy or professional advices and they are not earning any income by way of carrying on any trade or commerce. The income of the assessee is the fees collected from the students and the expenses are incurred for running the Institute for imparting professional education to its registered students. The income of the assessee Institute is not utilized for any private initiation or for the benefit of any interested person. The expenditure is incurred only for the purpose for which the Institute is established - Thus the assessee continues to enjoy the registration under section 12AA, as if there was no interruption - in favour of assessee.

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• 2012 (10) TMI 211
  Non speaking order and non grant of sufficient opportunity of being heard - dispute regarding allowance of business expenditure - Held that:- Perusal of the order shows that Assessing Officer has not applied his mind on any of the issues. The only reason assigned by the AO is that reply of the assessee is not acceptable, but why it is not acceptable is nowhere disclosed. It emerges out from the record that CIT(A) has called for certain information and assessee was in the process of collecting those information. It has filed adjournment application through registered post also because the first appellate authority refused to entertain them. Considering the assessment order being non speaking and non grant of sufficient opportunity of hearing demonstrated by the assessee in the adjournment application, it is held that end of justice would be met if issues are set aside to the file of CIT(A) for re-adjudication.

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• 2012 (10) TMI 210
  Dis-allowance u/s 14A - non-claim of any expenditure by assessee in relation of dividend income - assessee contended that mode of acquisition of shares was through amalgamation and no shares having been acquired either out of interest bearing funds or surplus funds - Held that:- It is evident from the record that the assessee has earned dividend mainly from shares of 'OBC' and 'CG' which was acquired through amalgamation of two companies. Further, it is also noticed that most of the expenses are directly attributable to assessee's business as per the details furnished. Hence, it cannot be held that assessee might have incurred any kind of expenditure for earning of dividend income. Moreover, looking to the fact that assessee has itself disallowed 1% of the dividend income as an expenditure. Hence, no further disallowance is called for. Deduction of Short Term Capital Loss on sale of shares of M/s BILT - acquired vide transfer from holding company at book value (Rs 128.02 per share) as per the provisions of section 49(1)(iii)(e), when market value was Rs. 73.3 per share - dis-allowance - Held that:- It is seen firstly, that transaction is between parent company and subsidiary company which cannot be treated as transfer as it is undisputed fact that assessee is a 100% subsidiary of its parent company; secondly, the shares have been transferred as per the book value and, therefore, the cost of acquisition of the asset shall be deemed to be the cost of which it has been shown in the books of the parent company i.e. previous owner. In these circumstances whether the cost of the shares was higher or lower does not make any difference. In view of clear cut provisions of S47(iv) r.w.s. 49(1)(iii)(e), deduction of short term capital loss by the AO is legally not correct - Decided in favor of assessee

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• 2012 (10) TMI 209
  Validity of notice issued u/s 148 beyond a period of 4 years from the end of relevant AY - assessment reopened on ground that payment of royalty and FTS is not allowable as 100% revenue expenditure and was to be treated as 25% capital expenditure - Held that:- It is observed that reasons recorded by the AO for issuing notice u/s 148 are based on the material which was before him at the time of original assessment. Also, “reason to believe” should come into existence only when some material facts have not been disclosed or furnished by the assessee at the time of assessment u/s 143(3) and which came to the knowledge of the AO subsequent to completion of original assessment. Assessee having made full disclosure of material facts in the return accompanied by several annexures and enclosures, the assessment could not be reopened beyond four years from the end of relevant assessment year only for the reason that certain income has been wrongly assessed under a wrong head of income. In present case, we are unable to see existence of any additional material or opinion subsequent to the completion of assessment for the year under consideration. Therefore, on merits, the action of the AO for reopening of assessment by issuing notice u/s 148 after substantial lapse of time and after expiry of four years from the end of relevant AY is not justified - Decided in favor of assessee Condonation of delay in filing appeal by Revenue - 48 days - Held that:- It is observed that the initial decision and action was taken at appropriate time and a letter of authorization was sent. However, due to transfer and handing over and taking over charge by respective officers, this communication was delayed and finally this appeal could be filed with a delay of 48 days. Since there is no malafide or willful omission of duty on the part of the officers of the Revenue and the cause offered for the same seems to be bonafide and acceptable, delay is condoned

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• 2012 (10) TMI 208
  Dis-allowance of business expenses - assessee having agricultural income, and other income comprising of interest on FDR, rental income, profit on sale of mutual fund and provision written off - Revenue contended that none of the receipts bear the character of business receipts and unless, there is any business activity, business expenses cannot be allowed - Held that:- It is observed that assessee is in real estate business. Assessee has conducted preliminary activities which are necessary for business of the assessee. They include identification of suitable sites and getting them evaluated by lawyer. These activities are very much part of assessee’s business. In subsequent period assessee has also acquired two plots for development. In this regard it is incorrect to state that only business income can prove the existence of business. Aforesaid activities would include vehicle and other transportation expenses, administrative expenses, Lawyer fee, depreciation on the assets used for business. Hence, in the background of the aforesaid discussions there is considerable cogency in the proposition that assessee’s business has commenced. Accordingly, order is set aside - Decided in favour of the assessee.

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• 2012 (10) TMI 207
  Validity of assessment framed u/s 143(3) – assessee contesting order on ground of notice being issued on 22.12.07 after the expiry of 12 months from the end of the month in which the return of income was filed i.e. 28.11.06 whereas Revenue contended notice being issued within the prescribed limitation on opinion of it being first issued on 12.10.2007 by speed post – Held that:- Section 27 of the General Clauses Act contains a presumption that where any Central Act requires any document etc. to be served by post, then the service shall be deemed to be effected where the envelope is properly addressing, proper stamps affixed thereon and posted by registered post, and unless the contrary is proved, the service is deemed to have been effected at the time at which the document would be delivered in the ordinary course of post. In view of this provision, a presumption arises that the notice has been served on the assessee within 2-3 days of posting. In present case, it is not the case that there is no office copy of this notice or that the notice was not addressed properly, or notice has been received back. Furthermore, the corresponding address on the said notice was same as on which subsequent notice u/s. 142(1) was complied with and it is held that the notice has been duly served on the assessee. Since, CIT(A) has not decided the merits of this case, we remit the issues on merits of the case of the files of the CIT(A).

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• 2012 (10) TMI 206
  Transfer pricing adjustments - ALP - AO while framing the assessment did not carry out the directions of the DRP in this behalf. - held that:- AO has not carried out the rectification order passed by TPO and passed the assessment order without carrying out the DRP directions. - the issue of assessee being a non-risk bearing agent has to be looked into along with the suitability comparables. - matter remanded back to AO to reconsider the issue of transfer pricing in accordance with law after giving the assessee an opportunity of being heard. - at the time of dictation of this order, the issue of 92C [(+) (-)] adjustment is proposed to be amended which shall be kept in mind.

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• 2012 (10) TMI 205
  Levy of Penalty u/s 271G - Question of determination of arm’s length price - Penalty equal to 2% of the value of international transaction i.e. worth Rs. 43,16,682/ - has been imposed on the assessee - Held that:- No Penalty can be imposed in a case where the assessee proves that there was reasonable cause for a particular failure - in favour of assessee. The penalty prescribed under section 271G is very severe. - When the penalty provision is very severe, it should be applied with great caution and only if circumstances sufficiently justify invoking the penal provision.

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• 2012 (10) TMI 204
  Expenditure of Rs.12,00,000/- under the head "Provisions on Standard Assets" Section 36(1)(viia) - Held that:- Deductions made on account of provision on standard asset and was disallowed and added to the returned income of the assessee as the assessee was unable to give any explanation and documentary evidence in support of his claim. Payments made to petrol pump of Rs.28,33,460/- For purchase of petrol used in such hired vehicles- Held that:- addition of Rs.28,33,460/- made by the AO was disallowed and added to the returned income of the assessee as the payment made was not liable to TDS. Admission of addition evidence - Rule 46A - held that:- The Ld. CIT(A), without application under Rule 46A and without recording any reason for admitting the documents and explanation filed before him and without affording reasonable opportunity to examine such evidence or documents filed before him by the AO had decided the issue in favour of the assessee, which is clear violation of principle of natural justice. It is not a case under Rule 46A(4) that the ld. CIT(A) had directed the assessee for production of any document to enable him to dispose of the appeal. - Matter remanded back to AO for denovo decision.

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• 2012 (10) TMI 203
  Exemption under the head Income from House Property - Section 54 - purchase of residential house - Held that:- a house was one which could be used by the assessee for his residence and putting up of tin sheds for being used by somebody to reside without there being basic living amenities like bathroom, kitchen, electricity etc., would not pass the definition/test of "dwelling unit" or a "house". - the property was not a house and the assessee was not entitled to the benefit under Section 54 of the Act. - in favour of Revenue.

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• 2012 (10) TMI 202
  Fees for Technical Services - Assessee carried out work with ONGC, Reliance Industries Ltd., Hardy Exploration & Production (India) Inc. & Westerngeco International Inc. GSPC & Cairn Energy India Pvt. Ltd. for the acquisition and processing of 3D seismic data along with its personnel and equipments. Question is whether The contention of revenue was justified in imposing Tax @25% on Revenues worth Rs. 671,54,604 earned from Cairn Energy India Pty. Ltd. and Hardy Exploration & Production (India) Inc. as against charging the whole revenue of Rs. 756,17,15,932/- @10%. The Assessee contended that fee for technical services whether rendered in connection with prospecting for or extraction or production of mineral oil or otherwise will be assessable either u/s 44DA or section 115A of the Act depending on fact whether such receipts are effectively connected with Permanent establishment or Fixed place of Profession. As decided in case of [CGG Veritas Services, SA Versus Additional Director of Income-tax, (International Taxation 2012 (4) TMI 280 - ITAT DELHI] as entire project has to be executed by the assessee and all the terms of contract are similar with the only difference that the other party is a non-resident company. The amount received by the assessee will be assessable u/s 115A of the Act. Held that:- The receipts are liable to tax @10% as Fees is received in connection with PE and Place of Profession in India - Appeal is allowed in favour of assessee.

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• 2012 (10) TMI 201
  Revision u/s 263 - Restoring the matter back to Tribunal - Order of assessment passed found erroneous in so far as it was prejudicial to interest of revenue - held that:- The Assessing Officer has not done the mistake but it has been committed by the Tribunal of not giving the reasons for maintaining the order of the Commissioner of Income Tax, which has been impugned before the Tribunal. - Appeal is allowed and Case remanded back to the Tribunal.

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• 2012 (10) TMI 200
  Additions on account of royalty - revenue expenditure or capital expenditure - Assessing Officer has made the impugned addition by comparing the royalty paid vis-a-vis sales of a particular year – Held that:- Assessee has submitted various copy of agreements with authors as well as detailed chart of royalty calculation - Considering these agreements and detailed chart of royalty, Ld. Commissioner of Income Tax (A) has held that the entire royalty payment is on revenue account and the disallowance made by the Assessing Officer - matter is remitted to the file of the Assessing Officer

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• 2012 (10) TMI 199
  Disallowance u/s 14A - investments in shares of companies and units of mutual funds - It is mentioned that the investments have been made with a view to earn dividend - investments have been made in this year from interest-free funds available with the assessee - no dividend had been received from various companies – Held that:- No evidence on record to suggest that any investment in shares or units has been made in this year out of borrowed funds on which interest is payable by the assessee - payment of interest is in respect of income other than dividend income. In such a situation, the interest cannot be said to be a kind of general expenditure incurred for earning of various kinds of incomes. Therefore, the provision contained in Rule 8D(2)(ii) is not applicable - AO has to examine the expenditure and its nexus with the earning of tax-free income, as provided in sub-section (2) of section 14A. If there is no such nexus, the disallowance cannot be made - no interest expenditure had been incurred for earning tax-free income - provision contained in Rule 8D(2)(ii) cannot be invoked Disallowance of misuse charges - assessee constructed commercial space in the basement which was not permissible as per master plan - misuse charges were paid in respect of the aforesaid space – Held that:- Misuse charges were also paid for illegally using the space for a period of time till the infraction was noticed by the DDA and it ordered the removal of the infraction - nature of interest on misuse charges is the same as misuse charges - Explanation-1 to section 37(1) provides inter-alia that any expenditure incurred for any purpose which is prohibited by law shall not be deemed to have been incurred for the purpose of business and no deduction or allowance shall be made in respect of such expenditure - this provision is clearly applicable to the case of the assessee – in favor of revenue

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• 2012 (10) TMI 198
  Deduction under section 80I / 080IB - allocation of expenses - expansion of existing unit or setting of new identifiable unit - Alleged that Unit at Urse which was described as Unit-II was in fact an expansion of the existing unit, Unit-I - depreciation of Unit-II at Urse – Held that:- (i) There was a substantial investment of funds in the Unit which was set up in the previous year relevant to the Assessment Year 1994-95; (ii) New plant and machinery was installed; (iii) The Unit was housed in a new building constructed at site and was an independent viable Unit capable of producing goods manufactured by itself; and (iv) There was a substantial increase in the capacity of production. - Order of ITAT upheld – in favor of assessee

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• 2012 (10) TMI 181
  Maintenance of accommodation provided to employees and Executives in Iraq - ITAT allowed the claim - Held that:- the intention of the assessee was not to provide “guest house” accommodation for those who visited the project site on “tour” or “visit”. - Even though the accommodation provided in this case was for the entire duration of the project, what is sought by Section 37(4) and 37(5) is the type of accommodation provided to the employee who merely used them on transitory or temporary basis – having regard to the controlling expression of “tour” and “visit” but also undermine the object of the provision appeal decided in favour of the assessee. Depreciation on motor cars purchased and used in Iraq - ITAT allowed the claim - Held that:- As decided in CIT (Central), Patiala Versus Punjab Chemi.Plants Ltd. [2010 (7) TMI 782 - PUNJAB AND HARYANA HIGH COURT] the second proviso to Section 32(1)(ii) was not to deny depreciation on foreign cars used in foreign countries for business abroad - No dispute that the expenses incurred for the upkeep of the vehicles, were otherwise business expenses, the depreciation, therefore, was directly relatable to business rather than the use of foreign or luxury cars by executives of the assessee - in favour of the assessee. Rental income from the flats - assessable as "income from other sources" OR ' house property ' - Held that:- As the assessee-company was not the "legal owner" of the property in the flats & relying on judgment of the Supreme Court in CIT Versus Podar Cement Pvt. Ltd. [1997 (5) TMI 2 - SUPREME COURT] " owner " is a person who is entitled to receive income from the property in his own right, the rental income from the flats was assessable as "income from other sources" u/s 56 - in favour of assessee. Provisions for completed expenses and expenses incurred on completed project - ITAT allowed the claim - Held that:- As decided in CIT Vs. Triveni Engineering and Industries Limited [2010 (11) TMI 90 - DELHI HIGH COURT] Tribunal has allowed the provision made by the assessee for losses on the ground that the assessee was following completed contract method and provision had been made on account of losses and on the precedent judgement - in favour of assessee.

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• 2012 (10) TMI 180
  Delay in fixation of special audit fee - Held that:- The petitioner’s services were availed more than 6 years ago and the final report of its special audit received on 22.09.2006. The facts would also show that the assessment proceedings in respect of the special audit too have been completed. In any event there is no reason why the department dragged its feet and chose not to release the fee of the petitioner after fully availing its services. Thus for the inordinate delay in fixation of the fee, which cannot be countenanced, the petitioner should be appropriately restituted. The concerned superior authority i.e. Chief Commissioner or any officer designated in this regard shall consider the appeal or representation against the order of the fixation and take consequential action, if any, within six weeks provided the writ petitioner prefers the appeal or representation within a week - The respondent shall pay interest @ 8% per annum on the sum of Rs.12,96,541/- for the period 01.01.2007 till 24.09.2012 when the amount was actually paid. The writ petitioner’s rights to claim any further amount either by way of balance fee or interest thereon are expressly reserved. Having regard to these circumstances the Court directs payment of Rs.50,000/- as costs to the writ petitioner. The costs shall be paid within two weeks - in favour of auditor.

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• 2012 (10) TMI 179
  Delay in filing appeal - petitioner has challenged three orders - writ petition - Held that:- The last date for filing an appeal before the ITAT was 5.1.2008. It is of vital importance to note that the petitioner had by its letter dated 14.12.2007 i.e. before the time for filing an appeal had expired, instructed its CA in writing to file an appeal before the Tribunal. On 14.1.2008, the petitioner's Manager resigned. On 25.1.2008 the petitioner received through its CA the papers and proceedings in respect of the appeal to be filed. The appeal fees were paid on 31.1.2008. On 10.2.2008 the appeal papers were signed by the office bearers of the society. On 21.2.2008 the appeal was received by the Tribunal by post. There was thus a delay of about forty five days in filing the appeal. Neither the extent, nor the nature of the delay warrants the drastic consequences of denying the petitioner an opportunity of defending its case on merits. It is not as if there was no explanation for this delay. The appellant has indeed filed an appeal challenging the order dated 23.7.2009 along with a notice of motion for condonation of delay. It was contended that in view thereof, this writ petition is not maintainable is not agreeable. This writ petition is comprehensive and challenges all the impugned orders. In order to obtain complete relief the petitioner cannot be faulted for having filed this writ petition. The petitioner has been put to considerable expenses and effort merely to obtain a hearing on merits. The petitioner can, by no stretch of imagination be said to have waived its rights. This is clear from the fact that the petitioner has duly and diligently prosecuted the appeals in respect of the three other assessment years. But for the unfortunate circumstances fourth appeal would also have been heard on merits in the normal course. The petitioner is not entirely at fault for the delay and negligence in prosecuting the fourth appeal - The Tribunal is directed to hear the petitioner's appeal on merits - in favour of assessee.

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• 2012 (10) TMI 178
  Scrap sales - whether included in the total turnover while computing deduction u/s 80HHC - Held that:- As decided in COMMISSIONER OF INCOME-TAX Versus SHIVA DISTILLERIES LTD. [2007 (2) TMI 103 - HIGH COURT, MADRAS] scrap sales could not be taken as a part of turnover & should be excluded on the computation of the total turnover for the purpose of Section 80 HHC - in favour of assessee. Computation of deduction u/s 80HHC - whether 90% of gross interest without deducting expenses incurred in earning the interest income has to be excluded from the business profits - Held that:- As decided in ACG Associates Capsules Pvt. Ltd. vs. CIT [2012 (2) TMI 101 - SUPREME COURT OF INDIA] Ninety per cent of not the gross interest/rent but only the net interest/rent, which has been included in the profits of the business of the assessee as computed under the heads ‘PGBP’ is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business - in favor of assessee. Disallowance of depreciation - assessee claimed deduction u/s 35AB - Held that:- The expenditure incurred by the assessee was for the purpose of getting the technical knowhow by the assessee on manufacturing and processing of goods. Going by the provisions of Section 35AB and the Explanation on technical knowhow no hesitation in holding that the assessee is entitled to the relief under Section 35AB only, and not to the claim of depreciation under Section 32 relying on decision in case Godrej Soaps Limited, Escorts And Another Versus Union of India And Others [1992 (10) TMI 1 - SUPREME COURT] - against assessee. Non-compete fee paid to Sri.U.Mohan Rao - revenue expenditure v/s capital expenditure - Held that:- It is not denied by the Revenue that U.Mohanrao was the Chairman and Managing Director of some of the companies which got merged with the assessee company. The said U.Mohanrao had access to all information starting from manufacturing process, knowhow to the clientele and the products, including the pricing of the products. By a process of amalgamation, the assessee had acquired the business of the amalgamating companies. However, for the fruitful exercise of its business as a business proposition, the assessee thought it fit to enter into a non-compete agreement with a person who had the knowledge of the entire operations, so as to get the full yield of the amalgamated company's business. In that context the assessee took a commercial decision to pay non-compete fee to U.Mohanrao and going by decision reported in CIT vs. Coal Shipments P. Ltd (1971 (10) TMI 6 - SUPREME COURT) that the payment was in respect of the performing of the business of the assessee, hence no hesitation in holding that the expenditure is only on revenue account and not on capital account - in favour of assessee.

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• 2012 (10) TMI 177
  Arms Lenth Price - Allocation of 80% of unbilled hours to the Associated Enterprise - assessee submission that he suffered losses in the aftermath of bomb attack on World Trade Centre on 9/11 in US - Held that:- CIT (A) even though accepts the fact that the difference in man hours paid to the AE and billed to the clients is due to recession and slump in software industry after the 9/11 incident, he nevertheless making his own interpretation of the agreement came to a conclusion that assessee can be allowed benefit at 20% out of the loss arising from payment made for extra 3500 man hours as the AE had four times risk in the transactions.The aforesaid conclusion of the CIT (A) is without a reasonable basis. When the assessee has paid to the AE for a minimum of 25 persons as per the terms of the agreement whereas it could bill its client for 10 persons the CIT (A) was not justified in coming to the conclusion that the assessee could be given benefit of 20% out of the loss arising on account of excess payment made for 3500 man hours. It is a fact that assessee's business suffered due to recession as result of 9/11 incident and assessee ultimately had to close down its operations. The CIT (A) also does not dispute this fact. Thus finding force in assessee's contention that assessee's income being exempt there was no need on its part to transfer its income to its AE whose profit was taxable. The assessee has demonstrated before us the ALP at Rs.12,99,42,172/- after deducting cost of 1370 man hours @61.39USD and the payment made by it to the AE to be within +/-5% of the ALP range which are inclined to accept. Thus the order of CIT (A)is set aside and AO is directed to verify the invoices raised by the assessee on its clients and invoices raised by the AE on the assessee to find out the actual unbilled hours lost in November, 2001. If the assessee's claim will be found to be correct, then no addition can be made under the Transfer Pricing Regulations - in favour of assessee for statistical purposes.

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• 2012 (10) TMI 176
  Unaccounted excess stock - CIT(A) deleted the addition - Held that:- As borne out from the record that the stock of gold mentioned in the approval memos were found at the premises of the assessee and at the time of survey the entire stock was inventorised. Whatever the excess stock was found the same was surrendered by the assessee. Thus no reason for further addition of Rs..4,64,139/- was called for. Thus, the finding given by the CIT(A) is based on correct appreciation of facts and we do not find any reason to deviate from the same - aginst revenue. Addition on account of estimated profit on basis of seized documents from search/survey operation from office of Anoopchand group - Held that:- CIT(A) has given the benefit of estimated income to be set off against unaccounted investment in stock-in-trade which cannot be disturbed as no other unaccounted investment was found in the course of survey and the undisclosed income can be set off against unaccounted stock found which has been surrendered by the assessee at the time of survey following the decision reported in Anantram Veerasinghaiah & Co. Vs. CIT, [1980 (4) TMI 2 - SUPREME COURT] - in favour of assessee.

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• 2012 (10) TMI 175
  Depreciation on leased assets - Finance lease vs Operating lease - Held that:- As decided in IndusInd Bank Limited Versus ACIT (2012 (3) TMI 212 - ITAT MUMBAI) it is a simple case of advancing of loan by the assessee to the lessee and the so called lease agreement, in the facts and circumstances of the present case, has been attempted to be used as a device to reduce tax liability of the assessee - the sole purpose of enabling the assessee to artificially fulfill the twin requirements of ownership and user of the asset so as to claim depreciation, to which it was not otherwise entitled as per law and thereby reduce its income in a mala fide manner - against assessee. Depreciation on UPS - as electrical installation OR an integral part of computer - depreciation @ 25% OR 60% - Held that:- It cannot be said that UPS are only for computers whereas printers do not have any other use other than with the computer. However it is for the assessee to establish that the UPS have been purchased as part of the computer systems. Therefore , in the interest of justice this issue is restored back to the files of the AO. Treatment of software license - as intangible assets OR an integral part of computer - Held that:- the AO has not gone into details of the software purchased by the assessee. The assessee has exhibited the copy of invoice for the purchase of software with each and every item mentioned in the invoice vis-a-vis the business of the assessee which was ignored by AO - this issue is restored back to the files of the AO - in favour of assessee for statistical purposes. Treatment of creditors outstanding more than 3 years as income - Held that:- as the assessee has taken the benefit of claiming these expenses in F.Y. 1999-2000 and now that the liability has been found not to be discharged. No reason to interfere with the findings of the CIT(A) and addition of Rs. 3,47,081/- is confirmed - against assessee. Disallowance of bad debts written off - Held that:- Sec. 36(1)(vii) has to be r.w.s 36(2). Section 36(2)(i) provides that “ no such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money lending which is carried on by the assessee”. Reading both these sections together, we find that the assessee has not brought any material evidence on record to substantiate its claim in the light of the provisions of Sec. 36(2)(i). In the interest of justice it is fit to restore this issue back to the file of AO - in favour of assessee for statistical purposes. Disallowance of expenses incurred on commission and brokerage - Held that:- the assessee was not even given an opportunity to reconcile the difference in the amount of confirmation received from the parties which has resulted into an addition of Rs. 38,88,596/-. Also that the CIT(A) has simply disallowed in respect of parties from whom confirmations have not been received and Rs. 65,93,011/- in respect of parties whose PA Nos were not available. As this issue needs further verification restore this issue back to the files of AO - in favour of assessee for statistical purposes. Disallowance u/s. 14A - Held that:- It is not disputed that the investments are made in earlier years. The assessee has also not claimed any income exempt from tax as the investments pertains to earlier year, thus no reason for making any disallowance during the year under consideration - in favour of assessee. Renovation expenditure & Architect fees - Revenue expenditure OR capital expenditure - Held that:- all the items of expenses give a benefits which are of enduring in nature - expenses cannot be termed as “current repairs”. - against assessee. Deduction u/s. 80G - ineligible donation given to M/s. K.C.Mahindra Trust - Held that:- It appears that the AO has not considered the certificate issued by DIT (Exem) Mumbai & rejected the claim because the receipt issued to donor does not bear the number and date of the order of the DIT (Exemption), thus restore this issue back to the file of AO to reconsider certificates submitted by assessee - in favour of assessee for statistical purposes. Penalty u/s 271(1)(c)- Held that:- The penalty has been levied on quantum additions made in the assessment proceedings for assessment year 2003-04 and also to the enhancement made by the Ld. CIT(A) during the course of appellate proceedings and as the quantum appeal has been restored back to the file of AO, accordingly this issue is also to be restored back to the file of AO - in favour of assessee for statistical purposes.

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• 2012 (10) TMI 174
  Disallowance u/s. 40(a)(ia) - violation of provisions of Sec. 194 - Held that:- Perusal of the assessment order show that the AO has made the additions on presumption that all the payments are made to sub-contractors without seeking any information/explanation/verification from the assessee and also the CIT(A) fell into the same error while disposing of the grievance of the assessee. This issue needs further verification at the assessment stage therefore deem it fit to restore this issue to the file of the AO - in favour of assessee by way of remand. Disallowance of labour charges - Held that:- On perusal of the assessment order of CIT(A) it is noted that the assessee has not substantiated claim of payment of labour charges - against assessee. Disallowance of expenses - expenses incurred in cash with self made vouchers - Held that:- The AO has made additions on adhoc basis under the account, thus find no reason to interfere with the findings of the CIT(A) who has restricted the total disallowance of 5% of the expenses. Disallowance of depreciation - Held that:- Disallowance of depreciation on vehicle is claimed on block of assets and with effect from 1.4.1989, the depreciation is claimed/allowed on block of assets and not on individual assets. Therefore, while confirming the findings of CIT(A) finding so far as depreciation on vehicle claimed is concerned, the AO is directed to delete the addition of Rs. 92,000/- from the total income - in favour of assessee. Liability of sundry creditors ceased to exist - addition u/s. 41(1) - Held that:- The assessee herself has admitted that the bills of KLB Fabricators and S.D.S Fabricators are over invoiced which itself prove that the assessee is not going to pay this amount. So far as liability of P&R Industries and PMB Engineering are concerned, the assessee has categorically stated that the companies have closed. Just because the assessee has given an assurance that these liabilities will be written back in A.Y. 2009-2010 will not exonerate the assessee as if liability has ceased to exist in the year under consideration, then it has to be added back in the year under consideration and not as per the assurance given by the assessee that it will be written back in A.Y. 2009-2010. No merit and logic in the submission of the assessee - against assessee. Rectification order u/s 154 of CIT(A) - additions made u/s. 41(1) allowed - Held that:- CIT(A) while adjudicating on the application made u/s. 154 was carried away by the submissions of the assessee without appreciating the fact that what assessee has stated during the course of the appellate proceedings was only a promise to consider the write back of liabilities in A.Y. 2009-2010 - the future promise made cannot become a reason for rectification of error apparent from record. The CIT(A) has grossly erred in rectifying the appellate order dt. 18.2.2010 - in favour of revenue.

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• 2012 (10) TMI 173
  Applicability of Accounting Standards - revised AS-7 prescribing percentage completion method OR AS-9 which provides for project completion method - assessee is a real estate developer - Held that:- As decided in Awadhesh Builders Versus Income-tax Officer, Ward 15(2)(4), Mumbai [2009 (12) TMI 665 - ITAT MUMBAI] in terms of revised guidelines described in AS-7, the income could be accounted only on completion of the project when the flats were sold. It was observed that since the assessee had followed one of the prescribed methods and the same method had been accepted in the earlier years, the method could not be changed by the AO in the subsequent year - as in the present case the undisputed facts in the case remain that project is completed only upto 16% & also the assessee has option to adopt work completion method( as decided in case supra) the income could not be assessed even with reference to AS-7. Moreover, the other undisputed fact is also not controverted that assessee did not sell any portion of the impugned project and has started earning lease rental from the said project on long term basis. Therefore, keeping in view all these facts, CIT(A) has rightly deleted the addition - against revenue. Interest received on FDR - Held that:- CIT(A) has rightly decided that since the assessee has capitalized all the cost of the project, the interest earned by it from FDR cannot be set off against interest paid - against assessee

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• 2012 (10) TMI 172
  Loss on exchange - sale of shares - capital or revenue - - Held that:- considering the order passed in Reliance Energy Limited. Versus DCIT, Special Range - 30, Mumbai [2005 (12) TMI 211 - ITAT BOMBAY-H ] the loss on foreign currency cannot said to have connection whatsoever with capital loss - loss suffered by the assessee on account of exchange difference as on the date of balance sheet is an item of expenditure allowable under section 37(1) of the Act. It is not notional and as per AS-11, if the accounts are maintained on mercantile basis the loss is allowable. - in favour of assessee. Income u/s 115JB - increased by being loss on exchange - Held that:- As the loss claimed by the assessee on diminution of foreign exchange is not notional loss and cannot be termed to be a provision, therefore, this ground of the assessee is also allowed. Excess dividend recovered by the assessee during the year which was not refunded to rightful owners - Income u/s 115JB increased by such amount - Held that:- it is only when there is a right to receive income, income can be said to have accrued. Without legally enforceable right there can be no accrual of income, thus as assessee has no lawful right to the receipt in question nor has it claimed such a right in such circumstances, the receipt will not assume the character of income in the hands of the assessee - decided in favour of assessee.

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• Customs

• 2012 (10) TMI 196
  Appeal against continuation of suspension of CHA license pending enquiry under Regulation 22 of CHALR, 2004 - assessee contended that prescribed time limit under Regulation 20(2) of CHALR, 2004 has not been followed - whether the timeframe prescribed under Regulation 20 is to be followed strictly or is to be interpreted liberally - whether the timeframe work as prescribed under the guidelines issued by CBEC through Circular No. 09/2010 dated 08.04.2010 are to be followed strictly by the Licensing authority or not - Held that:- In present case, investigation started in the month of December,2010, statement of the appellant recorded in June, 2011, Inquiry Report received in the month of April 2012 and licence has been suspended on 23.05.2012, vide order dated 18.06.2012. Since, vide order dated 23.5.2012. the licence was suspended by the Commissioner of Customs and also afforded an opportunity of post decisional hearing and thereafter order dated 18.6.2012 was passed. In these circumstances, the order dated 23.5.2012 is merged with order dated 18.6.2012 which is under challenge. Hence it cannot be said that the appellants are required to file separate appeal against the order passed by licensing authority dated 23.5.2012. The question is answered accordingly. As per provisions of the Regulation 20(2) of CHALR, 2004 the suspension order is to be passed within 15 days from the date of receipt of the report of investigating agency. From the records, it is found that report of the investigating agency was received on 25.4.2012 and the proposal to suspend the licence was put up before the Commissioner of Customs and the proposal was approved on 10.5.2012. From the record, further, it is found that draft suspension order in respect of the CHA is prepared and it was put to the Deputy Commissioner on 18.5.2012 and thereafter put to the Additional Commissioner on 21.5.2012 and ultimately signed by the Commissioner of Customs on 23.5.2012. Since order suspending the licence is only passed on 23.5.2012, hence no merit found in the contention of the Revenue that the order of suspension was passed on 10.5.2012 i.e. 15 days after receipt of the report of the Investigating Agency, and it is passed in violation of the provisions of Regulation 20 (2) of the CHALR, 2004 - Decided against Revenue

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• 2012 (10) TMI 195
  Rate of conversion for measurement of timber imported – Held that:- There is no attempt on the part of the dealer to suppress the Turnover as alleged - petitioner filed an application for refund, which however was considered by the second respondent, allegedly in a wrong and perverse manner, leading to Ext. P7, whereby only a partial refund has been ordered – Matter requires to be re-considered by the second respondent, so as to assess the actual facts, as to whether the petitioner is entitled to have the balance refund, if any, on applying the correct conversion table - Ext. P7 issued by the second respondent is set aside and the second respondent is directed to re-consider the matter

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• 2012 (10) TMI 194
  Loss of Bill of lading – Held that:- Petitioner has apparently advertised the Loss of the bills of lading in the issue of ‘The Statesman’ published on July 15, 2010. According to the petitioner, there has not yet been any response. The respondent No. 4 being the shipping agent apprehends that the original bills of lading might have been endorsed and the shipping agent and/or its Principal may be liable for compensating the endorsee of the bills of lading - goods covered by the two consignments shall be released subject to clearance of all freight, demurrage and other charges as also the requisite to customs duty as assessed on the said goods

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• 2012 (10) TMI 170
  Requested for amendment in the Bills of Entry - According to the appellant, due to clerical/arithmetical error, all the Bills of Entry were assessed to duty @ 15% while Notification No.11/2005, prescribed the rate of duty as 10% ad valorem for import of Low Density Polyethylene – Held that:- Amendment has to be allowed when a request is based on documentary evidence, which was in existence at the time of clearance of the goods - Petitioner has paid the duty under mistake of law and or in the instant case by oversight, cannot result in being assessed to duty which was otherwise not payable – assessing officer has a duty to assess according to the law and refusal to amend the document would result in an irregular assessment - in terms of provisions of Section 149 of Customs Act, 1962, the Bill of Entry allowed to be amended Refund – Held that:- Relief of refund claimed is not maintainable before the order of assessment is amended or modified - he has not passed on the duties and as such the question of unjust enrichment would not arise in the matter

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• 2012 (10) TMI 169
  Reduction of fine and penalty - goods have been imported unauthorizedly without valid import licenses – Held that:- Lower appellate authority reduced the fines and penalties was unjustified - original authority has imposed fines ranging from 20% to 30% only and penalties ranging from 5% to 25% which are not arbitrary or unreasonable - respondents are repeatedly importing the same goods and they are not deterred by lower fines and penalties imposed in the past - fines and penalties imposed in these cases cannot be said to be excessive considering the repeated nature of offences - orders passed by the lower appellate authority reducing the fines and penalties are set aside and the impugned Orders-in-Original are restored in regard to imposition of fines and penalties.

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• Corporate Laws

• 2012 (10) TMI 193
  Scheme of arrangement (Demerger) - insufficient authorized share capital of the resulting company to accommodate allotment of equity shares to the shareholders of the demerged company as per report of Regional Director, Northern Region, MCA - Held that:- In response to the affidavit filed by the Regional Director, Northern Region, the petitioner companies through its Director, Mr. Ashwani Khurana, filed a reply on September 29, 2012 stating that there was a typing error in the valuation report submitted to the office of Regional Director, N.R. and the present authorized share capital of the resulting company is adequate and sufficient to allot equity shares to the shareholders of the demerged company. Also the petitioner company has not been done any wrong, nor is the purpose of the demerger to destroy evidence of any nature. He undertakes to cooperate in investigation, if any, ordered against the company. As no objection has been received to the Scheme of Arrangement (Demerger) from any other party. The petitioner companies have filed the affidavit dated 28th September, 2012 through Mr.Ashwani Khurana, Director submitting that he has not received any objection pursuant to the citations published on 18th August, 2012, and also Deputy Registrar of Companies appearing for Regional Director (Northern Region) has also stated that he has no objection to the present Scheme of Arrangement (Demerger) being sanctioned by this Court, thus the Scheme of Arrangement (Demerger) is hereby approved/sanctioned under Sections 391 and 394 of the Companies Act, 1956 - Resulting Company would deposit a sum of Rs.1,00,000/- in the Common Pool Fund of the Official Liquidator within three weeks from today.

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• 2012 (10) TMI 168
  Scheme of Amalgamation - prayer seeking directions for convening separate meetings of Un-Secured Creditors of the Transferee Company and Secured Creditors and Un-Secured Creditors of the Transferee Company - Held that:- This Court directs that separate meetings of the Un-Secured Creditors of the Transferor Company and Secured Creditors and Un-Secured Creditors of the Transferee Company shall be held on 30th October, 2012 at 13th Floor, Modi Towers, New Delhi 110019 at 11.00 a.m., 2.00 p.m. and 3.30 p.m. respectively. Appointment of Chairperson and the Alternate Chairperson for the meeting and the Transferor and the Transferee Company are directed to publish notice of the aforesaid proposed meetings in ‘Financial Express’ (English, Delhi edition) and ‘Jan Satta’ (Hindi, Delhi Edition) minimum twenty-one days in advance before the scheduled date of meetings - Voting by proxy is permitted & if the Quorum is not present in the meetings, the meetings would be adjourned for thirty minutes and the persons present in the meetings would be treated as proper Quorum. Chairpersons/ Alternate Chairpersons shall file their reports within two weeks of the conclusion of the meetings.

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• FEMA

• 2012 (10) TMI 197
  FEMA - Writ petition - provisions of the Revenue Recovery Act for recovery of the amount - search in the house of the petitioner as per the provisions of Section 37 of the Foreign Exchange Regulation Act, 1973 on 8-10-1993 - Tribunal directed the petitioner to deposit the penalty amount which is the pre-deposit - petitioner was unable to comply with the said order and ultimately, the second respondent has dismissed the appeal on 17-7-2007 - After dismissal of the appeal nearly 2½ years, at the instance of the Department, the third respondent Tahsildar has initiated proceedings under the provisions of Revenue Recovery Act to recover the amount and that has been challenged by the petitioner on the ground that the same is opposed to the principles enunciated under the Foreign Exchange Regulation Act - Held that:- It is certainly not open to the petitioner to quash the validity of such order of the Appellate Tribunal especially when the third respondent has proceeded to recover the amount under the Revenue Recovery Act - Tribunal’s order was on 17-3-2007 and the petitioner has chosen to challenge the same only in the year 2010 without resorting to the remedy of appeal to the High Court within 60 days and therefore, this writ petition is liable to be dismissed - writ petition fails and the same is dismissed

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• Service Tax

• 2012 (10) TMI 221
  Determination Of Service Tax Liability Under Business Auxiliary Service - Demand Of Service Tax due to Mismatch between Balance Sheet Income and ST-3 RETURN, Commission and Discount for Sale Of Vehicles, GTA Services is raised but assessee is unable to produce evidences and Documents at the time of assessment. Held that:- case is remanded back to adjudicating Authority to decide upon the chargeability to Tax on the basis of Evidences produced now.

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• 2012 (10) TMI 220
  Admissibility of Cenvat Credit- Input Service - Held that:- Service tax paid on transportation services provided to the staff for pickup and drop from their residence to the factory and hiring ambulance for taking injured employees for treatment is an Input Service - Cenvat Credit can be taken as these activities are relating to Business of assessee,as decided in case of CCE v. Stanzen Toyotetsu India (P.) Ltd. [2011 - TMI - 204471 - KARNATAKA HIGH COURT ]- Further hiring of buses for children of the employees for transportation to the schools and tuition is not an Input Service and Cenvat Credit cannot be taken on this activity. - Stay granted partly.

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• 2012 (10) TMI 183
  Cenvat Credit - Amount in question is Rs. 1,10,33,614/- Appellants are engaged in providing logistic services - Constructed an Internal Container Depot (ICD) at Pithampur in M.P.- During the period from October 2007 to July 2008 the Bills for the construction activity were raised by the constructing company to their head office at Mumbai - The appellant is taking Cenvat credit at their Pithampur ICD against the bills for construction activity for setting up the ICD and raised by the service provider addressed to the Mumbai office. The appellant contended there is no requirement to apply for the registration when premises was under construction and when no service was being provided from Pithampur - There is no time-limit for taking credit based on invoice issued by service provider. Held that:- pre-deposit of dues arising from the impugned order for admission of appeal is waived - in favour of appellant.

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• 2012 (10) TMI 182
  Condonation of delay of 16 days - Granted as main appeal filed in time. - Delay condoned. Service Tax Liability on coaching centers- Pre- schooling coaching- sale of text books- conducting of mock test series- Held that:- sale of text books,conducting of mock test series and coaching classes was not an independent activity, Service Tax paid has to be treated as as cum duty price and rate of duty has to be determined. The appellants has to make further deposit of Rs. 20,00,000/- (Rupees Twenty lakhs only) within a period of 8 weeks from today, subject to which pre-deposit of balance amount of duty and entire amount of penalty shall stand waived.

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• Central Excise

• 2012 (10) TMI 217
  Maintainability of appeal - Revenue has proceeded on the premises that on 2-2-2009 it has been given time to cure the defect by 9-2-2009 as the next date fixed is 18-2-2009 – Held that:- Aforesaid premise is factually incorrect as the appeals were dismissed vide order dated 2-2-2009 - fundamental element of formation of opinion of filing the appeal is missing then no appeal is deemed to be instituted in the eyes of law - Revenue should not file appeals with scanty regard to law. Certainly, Revenue may be in jeopardy if its appeal is dismissed at maintainability stage. But casual approach in seeking remedy causes peril to Revenue - appeal is dismissed

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• 2012 (10) TMI 192
  Jurisdiction of Zonal Bench - appeal against order passed by the CCE, Thane-II appointed by a specific notification to adjudicate all arising out of the investigation conducted by the DGCEI all over the India - counsel contended that it would be improper to argue the matter before present Bench since the other appeals arising out of the same order in original are filed before the coordinate Bench at Mumbai - Held that:- As per CESTAT public notice 2/2005, matters which arise within the jurisdiction of the Zonal Bench, needs to be heard by that Zonal Bench only. Since in this case, the impugned order in original is falling in the jurisdiction of CESTAT Mumbai, all four stay petitions and appeals are transferred to Mumbai Bench for disposal

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• 2012 (10) TMI 191
  Benefit of SSI Exemption Notification No. 9/2003 - The Department was of the view that affixing the name - ‘Maruti’ of MUL on the transmitter - receivers cleared to the OEM i.e. MUL does not mean that the goods are branded goods for the purpose of exemption Notification No. 9/2003-C.E. as the transmitter - receivers are used by MUL as capital goods by attaching the same to the machinery used in their production line, that in respect of these goods duty at concessional rate should have been paid in respect of the clearances made before crossing the threshold limit of rupees one crore and their value should have been included while calculating the value of clearances eligible for concessional rate of duty, and if this is done, the appellant would reach the threshold limit of exemption much earlier. The intention of the customer whose brand name is affixed on the goods is not relevant for the purpose of this notification and so long as the goods manufactured for a customer bear the brand name of that customer i.e. the brand name of person other than the manufacturer, the SSI exemption would not be available, irrespective of whether the customer sells the goods as such or uses the same as inputs in the manufacture of other goods or uses the same as capital goods or part of capital goods. The value of the goods cleared under brand name of MUL on payment of duty can not be included for the purpose of computation of turnover under SSI exemption benefit.

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• 2012 (10) TMI 190
  Condonation of delay of 579 days - Application is barred by Limitation involving tax amount of Rs.28 lakhs - Held that:- It is true that the department acts on the basis of the action of the departmental officers. But there is a limit of inaction on the part of the departmental officials. Going by the apparent reading of the statements, it is hard to believe that the officials of the department would be inactive to such extent that has been projected in the application as because no document has been annexed supporting such statement. where the tax involvement is upto Rs.10 lakhs, no action shall be taken and for the balance amount of Rs.18 lakhs the proceeding ought not to be continued.

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• 2012 (10) TMI 189
  Rejection of refund claim - Goods were exported under Bond –no confirmation of duty payment from the jurisdictional Central Excise range Superintendent in the form of duty payment certification in triplicate. Copy of ARE-1, so the duty paid nature of the export goods is also not proved, which is the fundamental requirement for claim rebate under Rule 18 of the Central Excise Rules, 2002. In view of above, the rebate claim is rightly held as inadmissible to the applicant

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• 2012 (10) TMI 188
  Rebate claims - duty paid from Cenvat credit account on goods exported - original authority did not find rebate claims admissible as the applicants had claimed duty drawback - Held that:- Any amount paid in excess of duty liability on ones own volition cannot be treated as duty, but it has to be treated simply a voluntary deposit with the Government which is required to be returned to the respondent in the manner in which it was paid as the said amount cannot be retained by the Government without any authority of law - applicant is eligible for re-credit as per law

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• 2012 (10) TMI 187
  Refund – duty paid under protest - rejection of the refund claim on the ground that the payment made under protest was not in accordance with provisions of Rule 233B of Central Excise Rules 1944 – alleged that appellant nowhere mentioned that the appellant paid the duty under protest – Held that:- Demand was finally set aside by the Tribunal as time barred - no dispute that the challan dated 27-6-1998 vide which the appellant has paid Rs. 10,000/- has an endorsement ‘duty paid under protest’. This goes to show that the requirement that duty had been paid ‘under protest’ is met in the case – refund allowed - appeal is allowed

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• 2012 (10) TMI 186
  Rebate – jurisdiction of Tribunal – Held that:- Proviso to Section 35 categorically states that no appeal shall lie to the appellate Tribunal and the appellate Tribunal shall not have jurisdiction to decide any appeal in respect of any order referred to in Clause (b) that is an order passed by the Commissioner of Appeals under Section 35A, if such an order relates to rebate of duty of excise on goods exported to any country or territory outside India or exercisable materials used in the manufacture of goods which are exported to any country or territory outside India - exclusion of the jurisdiction of the appellate Tribunal is expressly stated in the Statute - Tribunal was in error in entertaining the said appeal - order passed by the Tribunal is illegal, contrary to law and cannot be sustained

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• 2012 (10) TMI 167
  Stay for waiver of pre-deposit of penalty - Held that:- The appellant had discharged duty liability on clearances made during the period January 2008 to March 2008, through RG23A Part II i.e. CENVAT account. Also that the appellant had enough balance in RG23A Part II to discharge duty liability. And that debiting RG23A Part II was no good as discharge of duty, but there is no default of payment of duty, which is found in this case as the appellant had not paid duty liability for the month of November 2007. The appellant has rectified the error by debiting the amount through PLA towards discharge of duty liability. The error of debiting the CENVAT account during the period January 2008 to March 2008 as mere technical lapse and reduce the penalty imposed by the adjudicating authority to Rs.5,000/- under Rule 25 of Central Excise Rules, 2002. Thus the penalty of Rs.60,000/- under Rule 25 of Central Excise Rules, 2002, needs to be restored as the findings reached are correct and there is no appeal filed by the assessee against such an order.

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• 2012 (10) TMI 166
  Clandestine removal - denial of CENVAT Credit - Held that:- As regards the statement of Managing Director, the appellant have taken a categorical stand that Managing Director was around 75 years old and was not keeping good health, the proceedings lasted till 11 hours in the evening and on being told that there was shortages of raw materials, he simplicitor agreed to debit the duty. Learned advocate submits that such statement cannot be held to be of any evidentiary value, in the absence of any evidence to reflect upon the clandestine clearance of raw materials. As no evidence on record indicating any removal of raw materials by the appellant, or their use in the manufacture of final product which does not stand reflected in the statutory records, thus admission of shortages without there being any admission of clandestine removal, cannot be considered to be conclusive evidence to establish the guilt of the assessee - in favour of assessee.

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• 2012 (10) TMI 165
  Demand of duty, interest and penalty – limitation - manufacture of Ice-Cream - Cenvat credit of duty paid on prefabricated (construction) building (cold room) consisting of wall, roof, door, flashing window, on an assumption that they are required to manufacture final products – alleged that wrong availment of credit – Held that:- Initiation of proceedings is barred by time - In the returns it is clearly mentioned that they availed credit under the aforesaid rules. The audit partly accepted the same. It is only in the second audit that they noticed the mistake and initiated proceedings - in the light of the aforesaid facts none of the other conditions prescribed in the Proviso exists in this case to extend the period of limitation of 5 years - Tribunal was justified in setting aside the order passed by the appellate authority and in restoring the order passed by the original authority – in favor of assessee

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• 2012 (10) TMI 164
  Deemed manufacture - chemicals - contention of Revenue is that from the financial year 1997-98 Chapter note 11 was introduced to Chapter 29 of the Tariff whereby labelling or re-labelling of containers and re-packing from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture – Held that:- Appellants are clearing chemicals in the same packing without disturbing the original packing - same does not amount to manufacture as per the Chapter Note 11 of Chapter 29 of the Tariff - allegation of suppression with intent to evade payment of duty is not sustainable - appeal is dismissed.

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• 2012 (10) TMI 163
  Claim of Cenvat credit on capital goods with respect to marble and granite - Petitioner has claimed that the process of cutting and polishing the granite and marble amount to manufacturing process falling within Chapter 25 of the Central Excise Tariff Act, 1985 - sawing of marble blocks into slabs and tiles for sale in both indigenous and foreign market – Held that:- Cutting of marble blocks into slabs does not amount to manufacture - Rule 4 of the Cenvat Credit Rules cannot come to the rescue of the petitioner, as the process in question itself does not amount to process of manufacture within the purview of Excise Law and Cenvat Credit Rules, 2004, the Rule 4 is inapplicable - reliance upon Rule 4 of the Rules of 2004 is of no avail - writ petitions dismissed

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• CST, VAT & Sales Tax

• 2012 (10) TMI 185
  Inter state sale or Intra state sale - Central Sales Tax Act, 1956? - requirement of agreement versus movement of goods - Held that:- The Tribunal fell into error in assuming that to avail exemption under Section 3(a) of the Act, the Agreement has to expressly stipulate for inter-state movement of goods, and the fact that in performance of the Contract, the appellant would have to move the goods from other States to Delhi would not suffice. - in favour of assessee. Sale in the court of import - held that- to determine whether the sale was in the course of import, the Court has to see whether the movement of goods through was integrally connected with the contract for their supply. - Questions such passing of title, or whether the end user has a privity of contract with the supplier, or where the consideration flows from, are not determinative or decisive of the issue. - Section 5 does not prescribe any condition that before a sale could be said to have occasioned import, it is necessary that the sale should have preceded the import. - in favour of assessee.

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• Indian Laws

• 2012 (10) TMI 218
  Information denied under RTI Act by CIC - information pertaining to service career - Held that:- The petitioner herein sought for copies of all memos, show cause notices and censure/punishment awarded to the third respondent from his employer and also details viz. movable and immovable properties and also the details of his investments, lending and borrowing from Banks and other financial institutions. Further, he has also sought for the details of gifts stated to have accepted by the third respondent, his family members and friends and relatives at the marriage of his son. Thus the details called for by the petitioner are qualified to be personal information as defined in clause (j) of Section 8(1) of the RTI Act. The performance of an employee/officer in an organization is primarily a matter between the employee and the employer and normally those aspects are governed by the service rules which fall under the expression "personal information", the disclosure of which has no relationship to any public activity or public interest. Also the disclosure of which would cause unwarranted invasion of privacy of that individual. Of course, in a given case, if the Central Public Information Officer or the State Public Information Officer of the Appellate Authority is satisfied that the larger public interest justifies the disclosure of such information, appropriate orders could be passed but the petitioner cannot claim those details as a matter of right. Thus the petitioner in the instant case has not made a bona fide public interest in seeking information, the disclosure of such information would cause unwarranted invasion of privacy of the individual under Section 8(1)(j) of the RTI Act - SPL rejected.

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