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Income Tax
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2012 (11) TMI 68
Reopening of assessment - unaccounted Foreign travel expenses - disallowance of 1/4th of claim - Held that:- Considering the decision taken in CIT, Delhi Versus M/s. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] there was no tangible material before A.O. to come to conclusion that there was escapement of income. The Assessing Officer has no power to review and has the power to re-assess. CIT (A) has also given a finding that the reasons for issuing notice u/s. 148 are the same which were considered by the A.O. during the original assessment proceedings and therefore it amounts to change of opinion - apart from recommendation of audit party, the A.O. was not having any fresh information so as to form belief that the income has escaped assessment. The Ld. D.R. could not controvert the findings of CIT (A) by bringing any contrary material on record - in favour of assessee.
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2012 (11) TMI 67
Penalty u/s 271(1)(c) - Held that:- In the quantum appeal the addition is confirmed partly on the basis of estimates and not on any defects - it is not in dispute neither by the AO nor by the CIT (A) that the sales effected by the assessee are bogus, thus the penalty levied on the assessee is just on the basis of conjecture and surmises - in favour of assessee.
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2012 (11) TMI 66
Unexplained cash credit u/s.68 - CIT(A) deleted the addition - Held that:- The assessee has explained that Ms. Sharmistha B. Naik was a partner in M/s.Jamna Organizers having a capital of Rs.35,40,000/- and advanced a loan of Rs.3,80,000/- & furnished confirmation letter along with the Bank statement & income tax return - Next of Ms. Ranjanben N. Naik, it was noted that she was also a partner of M/s. Jamna Organizers and out of her capital of Rs.35,40,000/- she had given a loan of Rs.3,80,000/- to the assessee with a confirmation along with bank statement and the copy of return were also filed - The next party was M/s. Jamna Organizers who has furnished that on encashment of FD the amount was advanced. It was explained that the said firm was constituted in the year 1990 and thereafter regularly filing the return, hence subjected to tax regularly. The position of income declared and taxes paid of last several years have also been placed on record. Therefore, it was explained that there were fixed deposits of Rs.16.65 lacs and Rs.12 lacs respectively which were duly disclosed in the books of accounts. Those FDs got matured during the year under consideration and the proceeds were credited in the bank account out of which the impugned amount was advanced - no point of undisclosed income arises - in favour of assessee. Restricting the disallowance at 5% instead of 10% by CIT - Held that:- Considering the nature of business the part-relief granted by CIT(A) was purely a matter of estimation, therefore no legal adjudication is needed - in favour of assessee.
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2012 (11) TMI 65
10% of salary disallowed - Held that:- A.O. has considered the salary register to be not in order only for the reason that revenue stamps were not affixed in all cases before making payment of salary. Apart from the aforesaid, the A.O. has not pointed out any discrepancy or shown any instance to prove that salary expenses are not genuine. The A.O. has thus disallowed the expenses on adhoc basis without bringing any tangible evidence on record - in favour of assessee. Disallowance of packing expenses - Held that:- It is a fact that in the assessee’s line of business, packing expenses are required to be incurred and the expenses are not doubted. It is also true that assessee is required to furnish the necessary evidence called for by AO which he was unable to satisfy, thus considering the nature of expenses and the totality of facts, it will meet the ends of justice if the expenses of disallowance is restricted to Rs.30,000/- instead of Rs.76,740/- made by A.O. - partly in favour of assessee. Disallowance out of telephone expenses - Held that:- The assessee has submitted that out of total telephone expenses of Rs.1,52,703/- the expenses of telephone installed at shop is of Rs.1,32,972/-, thus disallowance at 20% is on higher side ends of justice will be met if disallowance is restricted to 10% - partly in favour of assessee.
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2012 (11) TMI 64
Penalty u/s.271(1)(c) - excess claim of deduction u/s. 80HHC - Held that:- No material facts were concealed by the appellant. No income has been detected or unearthed which was not disclosed by the assessee. The addition has arisen only on account of different views having been taken as to the nature of certain items of income. This is purely a debatable matter. More than one view was clearly possible. As the D.R. could not controvert the finding of CIT (A) by bringing any contrary material on record no infirmity in the order of the CIT (A) in deleting the penalty - in favour of assessee. Disproportionate increase in remuneration to the Managing and Executive Directors - CIT(A) deleted the addition - Sec. 40A(2)(a) - Held that:- The assessee is a public limited company and is governed by the provisions of Companies Act, 1956. Schedule XIII of the Companies Act provides the remuneration payable to Directors based on the effective capital and net profits of the Company. As per the provisions of Schedule XIII, the assessee is entitled to pay Rs.73.21 lacs as remuneration to its Directors but has paid only Rs.48.25 lac which is well within the limits prescribed by the Companies Act - As decided in CIT Versus Shriram Pistons And Rings Limited [1989 (8) TMI 51 - DELHI HIGH COURT] when the Company Law Board (CLB) had approved the remuneration it could not be said that the expenditure was excessive or unreasonable - in favour of assessee.
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2012 (11) TMI 63
"Pradhanmantri Gram Sadak Yojna" - addition of interest on account of unutilized grants - CIT(A) deleted the addition - Held that:- As decided in CIT Versus Gujarat Safai Kamdar Vikas Nigam [2011 (5) TMI 815 - GUJARAT HIGH COURT] it was a scheme envisaged for implementation of certain Government programmes in particular, to uplift the living condition of manual scavengers and other Safai Kamdars involved in similar activities. Assessee Corporation was not sole trustee, Scheduled Caste Development Board was also liable for implementation of the scheme to be supervised by a Committee headed by the Deputy Minister which included other Government officials, Tribunal committed no error in holding that the grant in question fulfills the requirement of section 11(d)(1) read with section 12(1)thus tax appeal is dismissed - there was a direction contained in the Government circular releasing grant in favour of the assessee thus such amount shall not form corpus of the assessee - in favour of assessee. ]
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2012 (11) TMI 62
Notice u/s 158BD - block assessment - addition to income - Held that:- It is clear that the Assessing Officer who has seized of the mater against the raided person has to reach a satisfaction that undisclosed income belongs to such other person & recording of satisfaction is mandatory and imperative before assumption of jurisdiction under section 158BD. The additional ground as raised by the assessee against the validity of notice issued u/s. 158BD goes to very root of the initiation and legality of proceedings. After considering all the aspects of the matter, it would subserve the interest of natural justice, if this additional ground is remitted back to the file of CIT(A) to decide this issue on merit - As the additional ground of assessee’s appeal is remitted back to the file of CIT(A) the remaining grounds do not call for any adjudication at this stage because the matter is already restored back - in favour of assessee for statistical purposes.
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2012 (11) TMI 61
Recurring royalty /fees - capital v/s revenue - Disallowance u/s 37(1) - CIT(A) allowed the claim - Held that:- The issue is covered in favour of the appellant by the orders of ITAT, Ahmedabad in appellant’s own case for A.Y. 2005-06 to 2007-08 relying on CIT V/s Ashoka Mills Ltd. [1995 (10) TMI 35 - GUJARAT HIGH COURT] wherein held that the payment of royalty was clearly under the agreement between the assessee and other partly, since not merely the ownership of a trade mark but even the right to use the said trade mark could be parted with for a consideration - the two companies in question were distinct entities dealing at arm's length and it certainly could not be urged that the payment was made for any consideration other than business & held in favour of the assessee that the payment of royalty in question was a revenue expenditure - appeal decided in favour of assessee.
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2012 (11) TMI 60
Unsecured loans u/s.68 - assessee failed to produce any of the depositors/cash creditors - Held that:- As decided in DCIT Vs Rohini Builders [2001 (3) TMI 9 - GUJARAT HIGH COURT] in terms of Section 68 by proving the identity of the creditors by giving complete address, GIR number / PAN, copies of assessment orders wherever readily available and it has also proved the capacity of the creditors by showing that the amount was received by the assessee by a/c payee cheques drawn from the bank account of the creditors and the assessee is not expected to prove the genuineness of cash deposited in the bank accounts of those creditors because under law, the assessee can be asked to prove the source of the credit in his books of accounts but not the source of the source. As in the present case in respect of all the loan creditors, the evidence regarding filing of return of income has been brought on record by the assessee which contains PAN also of all the depositors. Along with this, the assessee has also brought on record the balance sheet of each of such loan creditors along with bank statement of the loan creditors in question - addition made by the A.O. u/s 68 is not sustainable - in favour of assessee. Disallowance of interest payment on unsecured loans - Held that:- Since the addition on account of unsecured loans itself is deleted, the disallowance of interest cannot survive - in favour of assessee.
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2012 (11) TMI 59
Disallowance u/s.14A - Held that:- As decided in Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - DELHI HIGH COURT] the expression “expenditure incurred” refers to actual expenditure and not to some imagined expenditure - A.O. in the present case A.O. has estimated the expenses at 1.5% of the exempted income. He has not given any finding with respect to the expenditure incurred on administrative-head by the assessee & has disallowed it on adhoc basis - in favour of assessee. Write off of inter-corporate deposit (ICD) - disallowance as the assessee is not in the business of non-banking financing company - Held that:- From the records it can be concluded the assessee had taken the plea that the write off be allowed as business loss or as bad debts. The assessee had not taken the plea of considering the same to be a capital loss and its allowability before the A.O. or CIT (A). This plea is taken for the first time before us therefore the matter of allowability of Rs.75 lakhs as capital loss needs to be examined as it was not examined earlier - matter remitted back to the file of A.O. for its verification and to decide it as per law - in favour of assessee for statistical purposes. Contribution of sponsorship expenses for the construction of Mehasul Bhavan (Collector Office) - Revenue v/s capital - Held that:- As decided in Shri Venkata Satyanarayana Rice Mill Contractors Co. vs. CIT [1996 (10) TMI 2 - SUPREME COURT] any contribution made to the welfare fund was not opposed to public policy and that the same was motivated purely by commercial consideration, and that the deduction was allowable under section 37(1) - as in the present case assessee has paid Rs.20 lakhs for construction of Mehsul Bhavan but the assessee is not the owner of the Asset and has also not acquired any capital asset. The expenses have been incurred for the purpose of business, thus to be allowed as revenue expenditure - in favour of assessee. Write off of obsolete meters - CIT(A) deleted the disallowance - Held that:- The assessee has explained that the three phase electro meters were lying idle since long in the inventory & were was found that they were susceptible to tempering by the customers. The assessee has contacted suppliers for modification of meters but it was found to be not feasible & in the meantime with introduction of electronic meters, mechanical meters became outdated and obsolete - as the assessee follows the policy of valuing inventories after taking into consideration the net realizable value & in the case of inventory written off, the assessee had already considered the salvage value while writing off the obsolete meters A.O. has presumed that 30% value of such meters would be realized in future and accordingly made disallowance, thus disallowance has been made on the basis of presumption and without placing any material on record - in favour of assessee.
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2012 (11) TMI 58
Whether income from house property estimating at 10% of value of property – Assessee submitted that the 3 flats and one shop having value of which comes to are being used for assessee’s political activities - AO treat it as violation of the provisions of section 22/23 and estimated 10% of the investment in such House Property as the notional income – Held that:- Assessee has also not furnished the details of payment of Municipal Taxes. In totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO to ascertain as to whether the 3 flats and a shop in question are being used for the political activities of the assessee or not. Issue remand back to AO A house in village of assessee is being used for agricultural activities – AO estimates 10% of the investment in such House Property as the notional income - Held that:- Since in the assessment order AO has determined the agricultural income at Rs. 75,000/-. Therefore, if the house at Village is used for agricultural activities then no notional rent could be computed. Therefore restore back the same to AO for fresh verification Assessee has 2 vacant plots - AO has adopted 10% of the investment value as the notional rent under head income from house property – Held that:- Since the adoption of 10% of the investment appears to be on the higher side. We, therefore, direct the AO to adopt 8% of the investment as the notional rent from such house properties. Addition on the basis of report of valuation officer on under constructions property – AO made reference to Department valuation officer to determine cost of construction, in absence of books – Held that:- As the assessee neither produced books of accounts before the AO nor any books of accounts were found during the course of search could not be controverted by the assessee. Therefore under these circumstances AO rightly referring the matter to the DVO for determining the cost of construction. Whether CIT(A) accepting the report of DVO after passing the assessment order by AO – Held that:- Since the DVOs report was received after passing of the order by the AO, therefore, the CIT(A) was fully justified in accepting the report of the DVO. It is the settled proposition of law that the powers of the CIT(A) are co-terminus with that of the powers of the AO. He may confirm, reduce, enhance or annul any assessment made by the AO. Issue decides in favour of revenue
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2012 (11) TMI 57
Transfer Pricing – Arm Length Price - International transaction of export/sale of spares and components to the Associate Enterprises - The TPO rejected the application of external TNMM adopted by the assessee - The TPO analyzed the profitability of the exports to its AE on one hand and compared it to the profitability of the exports undertaken to third parties (i,e. non- AEs)- TPO noticed that the net profit margin (on cost) pertaining to export sales to AEs was on lower side – Such transaction are carried out in three categories - Category ‘A’ - Sale of spares to third party distributors as well as to the AEs for the purposes of servicing the vehicles sold - Export to third parties (i.e. non-AEs) is comprised of only Category ‘A’ transactions, which has yielded the margin of 56.58%, whereas the exports to its AEs comprise of transactions of all three Categories, i.e. ‘A’, ‘B’ and ‘C’, which has yielded the margin of 11.63% and therefore the two are incomparable - Held that:- In so far as the transactions of this category representing export of spares and components which are required for the purpose of servicing of vehicles sold by the assessee company, the transactions undertaken with third party distributors (i.e. non-AEs) are comparable to the transaction with the AEs. The profit margin (on cost) in relation to export to AEs is 67% and on transactions of exports to third party distributors (i.e. non-AEs) is 56.58% and the same clearly depicts that the transaction undertaken by the assessee. Therefore, same have been undertaken at an arm’s length price and the same does not require any transfer pricing adjustment as done by the income-tax authorities. Issue decides in favour of assessee Category ‘B’ & ‘C’ – ‘B’ is in relation to Sourcing of components required by the overseas AEs for manufacture of two and three-wheelers – ‘C’ is in relation to Sourcing of components required by the overseas AEs for manufacture of four-wheelers – Assessee contended that for benchmarking the transactions between the assessee and the AEs in respect of such activities, comparison has to be consider with operating margins earned by third party support service providers in India - Held that:- As the margins declared by the assessee on such activity at 11.05% compare favorably with the average operating margins earned by third party support service provider companies in India which worked out to 5.1%. Therefore, the aforesaid plea of the assessee is liable to be examined with respect to its factual aspects. Issue remand back to the file of the AO Whether benefit of +/-5% allowed u/s. 92C(2) applicable on pending appeals - The amended proviso to Sec. 92C(2) was applicable w.e.f 1.10.2009 – Applicability of amendment is to be effective in respect of AY 2009-10 and subsequent years – Held that:- Following the decision in case of UE Trade Corporation India (2010 (12) TMI 224 - ITAT, NEWDELHI) which are on similar lines against the applicability of amendment prospectively. Therefore, we find no justification in the action of the lower authorities from disentitling the assessee from its claim of +/-5% while computing ALP in terms of erstwhile proviso to Sec. 92C(2). Issue decides in favour of assessee & remand back to AO Depreciation on goodwill - Assessee had entered into an agreement with party - Out of the total purchase consideration, certain sum was debited to goodwill in the account books and claimed depreciation on the same – Held that:- Where the matter has been restored for re-adjudication by the AO in the past years, in the instant year also we deem it fit and proper to restore the matter to the file of the AO. Additional depreciation on computers installed in factories – Whether additional depreciation allowed on computer installed in factory - Held that:- Following the precedent we allow assessee’s claim of additional depreciation on computers installed in its factory. Issue decides in favour of assessee. Depreciation in respect of lease hold rights in land – Held that:- In order of Tribunal has restored the matter to the file of the AO to examine whether lease hold rights acquired for the purpose of business are in the nature of commercial or business rights as contemplated in Sec. 32(1)(ii). Issue remand back to AO. Deduction in respect of premium paid over the period of lease – Lease hold premium paid for acquiring lease hold rights - Held that:- As concluding from the facts the AO for fresh adjudication on the basis of any further submissions that may be sought to be raised by the assessee in the ensuring remand proceedings. Issue remand back to AO.
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2012 (11) TMI 56
Whether Administrative & Other Expenses on account of exchange loss compensation and termination fee due to premature termination of contract deduction would be allowable to the assessee. Premature termination of Contract - Following the judgement of Supreme Court in case of [Bharat Earth Movers Vs. CIT 2000 (8) TMI 4 - SUPREME COURT] if a business liability has definitely arisen in the accounting year, deduction should be allowed although the liability may have to be quantified and discharged at a future date. Therefore, in the interest of justice and equity, and in the light of the judgement of the Hon’ble Supreme Court of India, the amount paid as termination fee has to be allowed to the assessee in the assessment year 2004-05 and not in subsequent years - in favour of assessee. Exchange rate fluctuations - Held that:- As there is no written covenant with regard to the same, it cannot be construed that either of the parties are liable to compensate for loss on account of fluctuation in exchange rates. Therefore, the amount paid by the assessee to M/s. SMTPL on account of compensation for loss suffered due to exchange rates cannot be held to be an allowable expenses in the hands of the assessee – in favour of revenue.
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2012 (11) TMI 55
Disallowance of 20% of the payments made in cash exceeding Rs.20,000/- u/s 40A(3) of the IT Act – Held that:- AO needs to examine as to whether the transactions of the assessee with the sellers was for the first time, wherever it is found that a new transaction for the first time with the said party, then the assessee shall get the relief - if it is found that the assessee has been dealing with the said parties earlier also and has been making payments in cash and also by cheques, the AO is directed to verify the cash payments or the cheque payments followed by the cash payments and only if it is found that the cheque payments followed the cash payments, it can be presumed that the assessee has gained the confidence and the said parties started accepting the cheque payments by the assessee - payments made by the assessee in cash exceeding Rs.20.000/- ought to be accepted as having been made for the purpose of business expediency of the assessee firm - matter remanded to AO
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2012 (11) TMI 54
Penalty under section 271(1)(c) – Held that:- If the assessee is able to offer an explanation, which is not found by the authorities to be false, and assessee has been able to prove that such explanation is bona fide and that all the facts relating to the same have been disclosed by him, the assessee shall be out of the clutches of explanation 1 to section 271(1)(c) of the Act, and in that case, the penalty shall not be imposed - Section 250(6) of the Act mandates that the order of the CIT(A) while disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision - CIT(A) has not passed a speaking order on the issues raised in this appeal while the assessee contends lack of opportunity - matter remanded to CIT(A)
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2012 (11) TMI 53
Undisclosed source in respect of capital – appellant is filing its return of income U/s 44AD - Held that:- Assessee has stated that assessee has been doing business for more than 12 years. Therefore capital balance is fully justified - Assessing Officer in his remand report has stated that the household expenditure is estimated at Rs.50,000/- per annum, then for the 10 years the expenditure would be at Rs.5 lakh - assessee has made payment towards LIC and also PF account. Admittedly, this amount is outgoing from the capital account and same would have been in the earlier years also. Moreover, the assessee has not given any details of the household expenditure - it cannot be presumed that assessee was not incurring any household expenses - CO of the assessee is dismissed
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2012 (11) TMI 52
Whether expenditure incurred by the assessee for construction of structures on railway property for smooth handling of containers is revenue in nature – AO disallowed the expense by invoking the provisions of section 35D as in the nature of preliminary expenses - Held that:- Expenditure in question cannot be termed as preliminary expenses - By incurring the expenses, the assessee did not acquire any new asset having enduring benefit - expenses were incurred for smooth running of existing business by constructing rams for loading & unloading and no permanent structure came into existence, rather the expenses were incurred for replacement and repairs of existing structures like rams etc. – In favor of assessee
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2012 (11) TMI 51
Addition u/s 69 of the Income Tax Act on account of unexplained investment in shares – Held that:- No increase in the value of investment - books of accounts of the assessee have not been rejected by the assessing officer - assessee appellant has explained that the difference in Notes to Accounts was noticed only because of typographical error and no fresh investment was made during the relevant year as the assessee succeeded in categorically confirming that no new or additional shares were acquired during the F.Y. 2001-02 - assessing officer has not brought any substantial detail or documentary or other evidence to rebut the fact that the difference noted in Notes to Accounts was only because of typographical error and on the other hand, the audited accounts of the assessee show that there was no change in the figure of investment as per Balance Sheet dated 31.3.2001 and 31.3.2002 and there was no increase in the value of the investment in the said balance sheets – addition deleted
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2012 (11) TMI 50
Disallowance of the exemption u/s 80IB(10) - assessee firm engaged in the business of civil construction developing building and housing projects – alleged that since the assessee was not selling any constructed properties to customers and the sums so received were credited as construction receipt and further only the registry of the land was made, the assessee merely acted as a contractor, the deduction is not allowable – Held that:- Land for housing project was purchased by the assessee and subsequently conversion of the same was obtained for residential use by the assessee. The assessee thereafter constructed residential units and gave possession of such completed houses to the customers, therefore, the assessee acted as a builder and developer - housing project of the assessee was approved by the local authority on 3.1.2004 i.e. before 1.4.2004, therefore, the assessee was expected to complete the construction on or before 31.3.2008. The assessee was also supposed to get completion certificate from the local authority - no such certificate was issued by the local authority before 31.3.2008, therefore, it is clear that the assessee has not fulfilled the conditions laid down under the Act - Even till today, no evidence has been produced that the local authority issued the completion certificate to the assessee - appeals of the assessee are dismissed
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2012 (11) TMI 49
Adjustment on account of MODVET credit u/s 145A of the I.T. Act – Held that:- Difference in addition to inclusive of excise duty which have been confirmed by the CIT(A) but there is no difference in other years - addition on account of elements of tax duty, cess or fees paid in the sales, purchase and inventory is not justified Disallowance of customer loss - related to local party and foreign party - export sale was made through sister concern - claimed loss in November, 2004 and machinery was sold in 1998-99 but business loss was claimed in the year under consideration - transaction was related to sister concern who had exported the goods to Egypt – Held that:- Assessee has shown this sale transaction in income in earlier year or in current year as per Section 36(2) of the I.T. Act. The A.O. has not doubted the claim of the assessee and had not stated that these claims are bogus. The claim has been written off in the books of account. Law after 1st April, 1989, the assessee has to establish that debt was written off in the books of account not necessary to establish that in fact had become irrecoverable u/s 36(1)(vii) of I.T.A Act - customer loss in all three years are allowed subject to verify from the assessment record of M/s Himson Overseas Pvt. Ltd. that no deduction of same amount has been allowed by it’s A.O Disallowances of 50% of erection expenses - expenses have gone up whereas turnover has gone down - work was completed by the sister concern – Held that:- A.O. had not brought on record any material for excessive payment u/s 40A(2)(b) of the Act made to M/s Himson Techno Services Pvt. Ltd. The A.O. had disallowed lump-sum expenses on estimate basis. These payments were for erection and technical work. The comparable rates were not available being an engineering work - addition deleted Addition u/s 41(1) of the I.T. Act - Addition on account of cessation of liability – alleged that the assessee had shown creditor of Rs.37,25,695/- more than three years – Held that:- A.O. has not brought on record any evidence that the liability had been obtained by the assessee by way of remission or cessation. The burden of proof lies on the revenue. The appellant had filed confirmation of its sister concern - assessee has been showing these liabilities in balance sheet and same has not been written off – addition deleted Addition u/s 40(a) - late payment of TDS – Held that:- Assessee had paid TDS late, not within the financial year, it means payment in next year. The act has been amended w.e.f. 01.04.2010 and a proviso has been inserted in Section 40(a)(ia) of the Act - Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid - A.O. is directed to verify the payments and allow the TDS payment Disallowances of expenses u/s 14A of the I.T. Act – Held that:- Assessee received dividend income and tax free bond income - A.O. disallowed 10% expenses out of administrative managerial expenses - CIT(A) had found 10% expenses in A.Y. 2005-06 and in A.Y. 2006-07 reasonable and confirmed the addition. In A.Y. 2007-08 and in A.Y. 2008-09 he also confirmed addition made under Rule 8D - disallowance u/s 14A rightly confirmed
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2012 (11) TMI 48
Revisionary powers under section 263 - conditions for exercise of revisionary powers – Held that:- It cannot be said that Commissioner lacks jurisdiction in invoking his revisional jurisdiction - order of the Commissioner may be wrong. But it does not necessarily mean that all wrong orders are situations invoking want of jurisdiction - Tribunal in its wisdom remanded the matter to the original authority and it is only after the assessing authority opines one way or other there may be scope for further development - appeal is dismissed
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2012 (11) TMI 47
Writ petition – pre-deposit – financial hardship – deemed dividend - Held that:- Appellate authority considered the petition for stay and passed Ext. P6 order, whereby the petitioner was directed to satisfy 50 % of the demand, in 'ten' equal monthly installments, so as to avail the benefit of interim stay - condition imposed by the appellate authority, directing the petitioner to remit 50 % of the disputed liability so as to avail the benefit of interim stay is on the higher side - petitioner is directed to remit 1/3rd of the disputed liability
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2012 (11) TMI 46
Disallowance u/s 14A of the Act – alleged that assessee has not been able to prove correctness of the claim that no expenditure was incurred in connection with the income which does not form part of the total income under the Act – Held that:- Even in the post Rule 8D period, the Assessing Officer has to satisfy first of all the correctness of the claim of the assessee in respect of the expenditure incurred which does not form part of the total income under the Act, once he is satisfied on an objective and for cogent reasons that the amount of such expenditure as claimed by assessee is not correct then only he is required to determine the amount of expenditure on the basis of a reasonableness and acceptable method or apportionment - Matter remanded to Assessing Officer Regarding claim of set off of losses incurred in the eligible unit under section 10B with the positive income of the other non-eligible units – Held that:- There is no provision in section 10B by which a prohibition has been introduced by the Legislature in setting off of a loss which is sustained from one source falling under the head of profits and gains of business against income from any other source under the same head - unabsorbed depreciation can be carried forward to a subsequent year does not militate against the entitlement of the assessee to set-off a loss which is sustained by an eligible unit against the income arising from other units under the same head of profits and gains of business or profession - Legislature not having introduced a statutory prohibition, there is no reason to deprive the assessee of the normal entitlement which would flow out of the provisions of section 70 - export oriented unit has incurred the loss and the assessee has adjusted this loss against that profit from other business - appeal of the assessee is allowed.
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2012 (11) TMI 23
Re-opening of assessment - Held that:- The assessment has been re-opened within four years from the end of the assessment year and further the return filed by the assessee had been processed earlier only u/s. 143(1) - no simultaneous action u/s 154 and also u/s 147 of the Act, as contended by the assessee, thus as decided in ACIT Versus Rajesh Jhaveri Stock Brokers P. Limited [2007 (5) TMI 197 - SUPREME COURT] so long as the ingredients of section 147 are fulfilled, AO is free to initiate proceeding u/s 147 and failure to take steps u/s 143(3) will not render the AO powerless to initiate reassessment proceedings even when intimation under section 143(1) - revenue's appeal is allowed Disallowance of deduction u/s. 80HHD - Held that:- As decided in assessee's own case relying on HOTEL AND ALLIED TRADES P. LTD. Versus DCIT (ASSESSMENT) [2007 (4) TMI 120 - HIGH COURT, KERALA] deduction u/s. 80HHD has to be computed with reference to the "profits and gains of the business as a whole" - Assessee not entitle for deduction by treating each unit separately - revenue's appeal is allowed. Deduction u/s. 80-IA - Held that:- AO has computed deduction u/s 80-IA on the amount of Gross total income as reduced by the deduction given u/s 80HHD whereas a combined reading of the provisions of sub sec. 7 of sec. 80-IA and sec. 80AB would suggest that the computation of deduction u/s 80-IA made by the AO would be correct only if the Gross total income consisted of, only income of that nature which is eligible for deduction u/s 80-IA. The aggregate amount of deductions under chapter VIA shall be restricted to the amount of Gross total income - as the break up details of the Gross total income is not borne out of record. Hence, the issue of computation of deduction u/s 80-IA requires fresh examination - in favour of assessee by way of remand. Interest u/s. 234C on the tax payable u/s. 115JA - Held that:- As decided in Jtc. I. T., Mumbai Versus M/s Rolta India Ltd. [2011 (1) TMI 5 - SUPREME COURT OF INDIA] the assessee is liable to pay interest for short payment of advance tax even on the income computed u/s 115JB - against assessee. Deduction of carry forward depreciation while computing book profit u/s 115JB - Held that:- First of all, clause (iii) of Explanation 1 to sec. 115JB, which is extracted above mandates that the deduction of amount of loss brought forward or unabsorbed depreciation whichever is less should be as per books of account. Hence the assessee was wrong in law in claiming deduction of carry forward depreciation, which was determined under the income tax Act. Secondly, the AO has given a specific finding that there is no carry forward loss as per the books of account, in which case, the assessee is not eligible to claim any deduction under clause (iii) in view of specific provisions contained in clause (b) of the Explanation given under the above said clause (iii) - against assessee.
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2012 (11) TMI 22
Addition of capital gain - conversion of the firm into company - CIT(A) deleted the addition - Held that:- As decided in ACIT, Mangalore v. Unity Care & Health Services [2005 (6) TMI 209 - ITAT BANGALORE-A] When a conversion of a firm into company takes place under the provisions of Companies Law, such conversion can be construed only as occasioned by operation of law. Hence, no controversy could arise on the application of that principle even for purposes of capital gains under section 45(4). By insertion of section 47(xiii), it cannot be said that the conversion of a firm into a company under part IX is to be first treated as dissolution of firm within the meaning of section 45(4) and only if condition as contained in section 47(iii) are complied with, the exemption will be available. Section 47(xiii) applies only to a case of transfer by sale, but there is no authority for capital gain at all in the absence of a transfer under Part IX of the Companies Act inasmuch as such conversions do not fall within the definition of ‘transfer’ under section 2(47). Where a firm becomes a limited company under Part IX of the Companies Act, 1956, section 45(4) is not attracted as the very first condition of transfer by way of distribution of capital asset is not satisfied.In the circumstances, latter part of section 45(4) which refers to computation of capital gains under section 48 by treating the fair market value of the asset on the date of transfer, does not apply - in favour of assessee.
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2012 (11) TMI 21
Revisionary powers used by CIT(A) - order of the A.O. was erroneous - allowance of set-off of unabsorbed depreciation by AO - Held that:- As decided in GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX [2012 (8) TMI 714 - GUJARAT HIGH COURT] that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001, thus once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. CIT was not justified by passing order invoking Section 263 of the Act by holding that the unabsorbed depreciation of assessment year 1997- 98 and 1998-99 set off by the learned AO in the relevant assessment year is erroneous and prejudicial to the interest of the revenue and thereby canceling the assessment order passed u/s 143(3) - in favour of assessee.
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2012 (11) TMI 20
Contribution to gratuity fund - disallowance of payment as the said fund is not approved - Held that:- It is not rebutted by the Revenue that the assessee company has made application for seeking approval from the competent authority for Heubach Colour Ltd. Employees Group Gratuity-cum-life assurance (Cash Accumulation) Scheme & assessee has been making reminder to the concerned authorities but no response has been received under these circumstances, it would subserve the interest of justice if this issue is remitted back to the file of AO for fresh decision to verify the status of application of the assessee, in case, the concerned authority has accorded approval to the gratuity fund, the AO shall decide the issue afresh in accordance with law after providing reasonable opportunity of being heard to the assessee - in favour of assessee for statistical purposes.
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2012 (11) TMI 19
Depreciation - Disallowance as asset not put to use - business of assessee not in existence - Held that:- It is pertinent to note that the assessee had conducted business transactions by achieving a turnover of Rs.4,06,214/- and also incurred some business expenditure in order to achieve the same. Further it is not a pre-condition by any statute to incur expenditure for the purpose of conducting business or to establish the existence of any business activity. All the activities which revolve round the business may not result in fiscal expenditure. It appears from the above transaction that the assessee was in possession of soft-wares which he had sold during the year. There is nothing to establish that the assessee had not used the building and furniture during the previous year. Such inference cannot be made due to absence of electricity expenditure. It is evident from the profit & loss account of the assessee that the assessee had incurred expenditure such as office maintenance expenditure which clearly establishes that the office of the assessee was in operation, thus it can be fairly concluded that the assessee was in continuance of its business during the relevant previous year and, therefore, it is entitled to claim the depreciation - in favour of assessee
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2012 (11) TMI 18
Bad debts claim disallowed - the loan given does not find any mention in the list of loans and advances - CIT(A) allowed the claim - Held that:- CIT (A) has given a finding that assessee is an NBFC. However, from the material on record it is not clear that whether the assessee though being an NBFC has in fact advanced loans to parties as part of is business. The matter be remitted back to the file of A.O. with a direction to him to verify and pass an appropriate order as per law after considering the factual position in light of the decision of Apex Court in the case of T.R.F. LTD. Versus CIT (2010 (2) TMI 211 - SUPREME COURT) wherein held that after the assessment of section 36(1)(vii) w.e.f. 01.04.1989, in order to obtain a deduction in relation to bad debts it is enough of the bad debt is written off as irrecoverable in the accounts of the assessee - in favour of revenue for statistical purpose.
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2012 (11) TMI 17
Penalty u/s 271(1)(c) - disallowance of adjustments in respect of international transactions - Held that:- It is an undisputed fact that the international transactions were reported by assessee in Form 3CEB. Transfer Pricing adjustments have been made only in relation to certain activities stated by Transfer Pricing Officer to be of international transactions. As per Explanation 7 to Sec. 271(1)(c) no penalty is leviable if the assessee proves that the price charged or paid in such transaction was computed in accordance with the provisions contained in Sec. 92C and in the manner prescribed under section in good faith and with due diligence - As in the present case the assessee has furnished all the required details called for from time to time. Assessee had also disclosed material facts before the A.O. The A.O. has not given any finding indicating that the assessee had failed to offer any information or the information provided was false. The assessee has not concealed any material fact and the information given by the assessee has not been found to be incorrect - in favour of assessee.
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2012 (11) TMI 16
Expenditure on Scientific Research - disallowance of 100% deprecation for transfer of machinery from production department to research & development department - Held that:- The assessee had purchased two machines namely Hot Setting Vaccum Plant and Plastic Injection Mounting Machine in the financial year 1994-95 for the purpose of manufacturing of its product. The machinery were installed and used for the purpose of production and the assessee claimed depreciation on it. In the year under appeal, assessee transferred the aforesaid machines from its production department to Research & Development (R & D) Department. The assessee could not furnish necessary evidence to support its contention that the machineries were actually transferred to the R & D Department from the Production Department and whether the machines were actually used for the purpose of stated research activity & also that the machineries were actually transferred to the R & D Department from the Production Department and the machines were actually used for the purpose of stated research activity. As under Section 35 what is allowable is “expenditure incurred” which means actual spending/paying of money as decided in Multi Metals Limited Versus CIT [2002 (2) TMI 98 - RAJASTHAN HIGH COURT] - against assessee.
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2012 (11) TMI 15
Unexplained Cash Credit – Held that:- In respect of fresh capital introduced by the partners, no addition can be made in the hands of the firm although the Revenue is at liberty to consider the said investment in the hands of the partners if he is not able to satisfy the source of investment - addition can be made in the hands of partners only - Appeal of assessee is allowed.
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2012 (11) TMI 14
Attachment of Property - Held that: Valuation of the property mentioned in Ext.P8 has not been done by any external agency, still going by the statements contained in Ext.P8, the property mentioned therein is worth Rs.2.95 crores. Therefore, there is no reason to continue the attachment covered by Ext.P6 once the petitioner furnishes adequate security to take care of the interest of the respondents. With this in mind writ petition is disposed off - petitioner shall deposit an amount of Rs.75,00,000/- within one month and the title deeds pertaining to the property - property is free from encumbrance and that they will not deal with the property in any manner until the appeal is decided and the documents are released - once the petitioner complies with the above directions, the attachment effected as per Ext.P6 will be lifted - Tribunal is directed to dispose of Ext.P5 appeal with notice to the parties concerned and as expeditiously as possible.
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2012 (11) TMI 13
Taxability of Income from insurance business - The dispute in this case is in adopting the amount of surplus or deficit as per actuarial valuation. - held that:- ‘actuarial valuation made in accordance with the Insurance Act, 1938’ do mean that the actuarial valuation done in accordance with the Insurance Act, 1938. The action of AO in relying on the IRDA Regulations is not according to the law. Assessee had submitted its accounts, which are in accordance with the Insurance Act, 1938. Instead of examining these statements, just because assessee has shown total surplus in the accounts in similarly named Form-I( under Regulation 8), AO wants to tax the amount which is after taking into account the transfer of assets by way of fresh capital from shareholder’s account. This in a way is taxing fresh capital infused into business indirectly which cannot be done as this is not business surplus but infusion of capital directly. The assessee working of actuarial surplus/ deficit is in accordance with Rule 2 of First Schedule. - Decided in favor of assessee. Disallowance u/s 14A - held that:- the provisions of section 14A are not applicable. - section 44 has overriding effect. Surplus of pension schemes - exemption u/s 10(23AAB) - AO did not allow the amounts on the reason that these incomes are part of income of life insurance business and it is included as income by the actuary, therefore, they cannot be exempted. - held that:- exemption under Sec 10 allowed. Taxability of incomes in Shareholder’s account - held that:- Capital gains or Income from other sources. - Being non-obstante clause, sec. 44 mandates that the profits and gains of insurance business shall be computed in accordance with the rules contained in First Schedule. - Therefore, the incomes in Shareholder’s account are to be taxed as part of life insurance business only, as they are part of same business and investments are made as part of solvency ratio of same business. - AO is directed to treat them as part of Life Insurance Business and tax them u/s 115B. Regarding the issue of treating negative reserve and disallowing the amount. - held that:- The mathematical reserve is part of Actuarial valuation and the surplus as discussed in Form-I under Regulation 4 takes into consideration this mathematical reserve also. Therefore the order of the CIT(A) is approve. Moreover the Assessing Officer has no power to modify the amount after actuarial valuation was done, which was the basis for assessment under Rule 2 of 1st Schedule r.w.s. 44 of the I.T. Act. Decided in favor of assessee and against the revenue.
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2012 (11) TMI 12
Reassessment - whether reasons recorded for reopening the assessment does not stand legal security. - held that:- We do not find any error of law in the order of the Tribunal in deleting the additions and on the same grounds we do not find any legal error in the order of the Tribunal in holding that the interest charged under Section 139 (8) and 215/217 was not sustainable.
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2012 (11) TMI 11
Block assessment - search - Presumption as to assets, books of account, etc u/s 292C - ITAT decided that seized documents alone were not sufficient to draw any definite conclusion regarding the existence of undisclosed income. - held that:- The phrase “in any proceeding under this Act” are important. They permit the Assessing Officer to invoke the presumption that the seized documents belonged to the person searched, that the contents of the seized documents/books of accounts are true and that the signature of every other part of the books of accounts or documents which purports to be in the handwriting of any particular person are in that person’s handwriting etc., even in the assessment proceedings. After the insertion of the section, the judgment of the Supreme Court in P.R. Metrani v. CIT [2006 (11) TMI 136 - SUPREME COURT] can no longer be called in aid to hold that the presumption is not available to the Assessing Officer in making the assessment. The Tribunal has reasoned that the seized papers are loose papers and not books of accounts. We are unable to appreciate the significance or sequitur of the statement made by the Tribunal. It is not necessary that the seized documents should be in the form of proper books of accounts so that they can be relied upon for the purpose of making additions. Unable to approve the approach adopted by the Tribunal. If it had found that there were procedural lapses on the part of the Assessing Officer while making the assessment, the proper course for it would be to not to invalidate the assessment or delete the additions but to remand the assessment to the Assessing Officer so that the procedural lapses which had prejudicially affected the assessee can be set right and the assessment be completed after duly complying with the rules of natural justice. - Order of tribunal set aside - matter remanded back.
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2012 (11) TMI 10
Reopening of assessment - escapement of income – change of opinion - AO issued notice under Section.148 on 31.03.08 to reopen the assessment - amendment to Explanation-1 to section 115JB was brought by the Finance (No.2) Act, 2009 with retrospective effect from 01.04.2001 - Held that:- Assessing Officer could not have reasons to believe on 31.03.08 that the income had escaped assessment on the ground that the provisions for bad and doubtful debts were not added back in computing the book profit under Section 115JB of the Act - on the date of issue of notice for reassessment on 31.03.08, there was no amendment to Explanation-1 to section 115JB - no fresh material available with the Assessing Officer on the basis of which he could have justifiable formed reasons to believe that any income chargeable to tax had escaped assessment in the instant case - initiation of reassessment proceedings in the instant case was bad in law and consequently the impugned order is liable to be cancelled - appeal of assessee is allowed
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2012 (11) TMI 9
Penalty u/s. 271(1)(c) - addition on account of unutilised Modvat Credit, depreciation on motor car and expenditure incurred on Research and Development – Held that:- Claim of any expenditure has to be proved by the assessee with corroborative evidence. Mere making of a claim is not sufficient. - Entries in the books of accounts or auditors reports or Board of Directors Meeting cannot take place of a piece of genuine evidence. - If assessee fails to produce the same, his claim also fails. In the case under consideration, the assessee has failed miserably to substantiate and support claim made by it - such transactions do not suffer from any deficiency as far as factum of 'going out' of sum is concerned. But in the case under consideration basic fact of spending of money for purchasing items for R&D purposes itself missing. As a result, penalty levied for filing inaccurate particulars and thus concealing the particular of income is confirmed - Appeal filed by the assessee is dismissed
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2012 (11) TMI 8
Disallowance under sec. 40(a)(ia) of the Act - credit for TDS is to be given in the case of the person in whose hands income is taxable and that too in the year in which the corresponding income is taxed - assessee entered into a consortium agreement with 12 other members who are travel agents for booking air tickets through the platform provided by M/s Amadeus Pvt. Ltd. – Held that:- Assessee did not claim the said amount as expenditure in its accounts, no tax was deducted at source by the assessee - no disallowance could be made in terms of provisions of sec. 40(a)(ia) of the Act - income accrues when the assessee acquires the right to receive the same. The terms of the consortium agreement do not reveal any such right in favour of the assessee - Since the assessee only distributed the income in terms of the agreement and this did not amount to incurring of an expenditure nor the assessee claimed any - disallowance deleted
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2012 (11) TMI 7
Addition u/s 68 of the Act – income from undisclosed sources – Held that:- Assessee files confirmations and affidavits and on the other hand the parties are not found at the addresses when the assessing officer issues summons to them - undated confirmations and affidavits must have been obtained by the assessee when pay orders were received from these entities. - Therefore, the contention of the assessee that share application money was genuinely received by the assessee is not proved - Since the creditworthiness and genuineness of the transaction have not been proved - AO was justified in making the addition u/s 68 of the Act – In favor of Revenue
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2012 (11) TMI 6
Interest on borrowed capital – alleged that the borrowed capital on which interest was paid by the assessee was diverted by the assessee for providing interest free advances to its sister concerns – Held that:- Onus which was on the department for making the disallowance by bringing on record some material to show nexus between interest free advance and interest bearing borrowed capital was not at all discharged by the Revenue - borrowed funds were utilized for the specific projects for which they were borrowed - it is not the case of the Revenue that interest bearing fund were diverted by the assessee for non-business purpose - in favor of assessee
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2012 (11) TMI 5
Addition out of interest expenses - alleged that appellant company has diverted borrowed funds for interest free advance/loans given to associate concerns and directors of the appellant company - assessee submitted that the assessee has Rs.2.13 crores as capital and sundry creditors (without interest) and advances to sister concern was Rs.49.47 lakhs only, and therefore, own funds available without interest with the assessee, were much more than the advance made to the sister concern – Held that:- Assessee has advanced a sum of Rs.49.47 lakhs to its sister concern without interest which is fully covered with the interest free capital and sundry creditors amount available with the assessee, and therefore, no addition/disallowance in this case is called for - in favour of the assessee Addition on account of salary paid to relative of the Directors – Held that:- Onus was on the assessee to prove that the salary was paid to the lady directors of the assesseecompany on account of services rendered by them. We find that the assessee could not produce any evidence in support of its case - In the absence of any evidence to prove that two lady directors have rendered some services to the assessee-company - disallowance made was justified
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2012 (11) TMI 3
Addition on account of low yield of oil from cotton seeds - suppression of sales proceeds – Held that:- Yield of oil from cotton seeds depends upon many factors and cannot be fixed, such as date of sowing and time of harvesting, quality of seeds, quality/type of extraction mill - Traditional Ghanis yields lower oil recovery than solvent extraction and yield also depends upon the fact that whether extraction is made from kohlu or through skilled or unskilled labour - he cannot certify the exact yield during the year under consideration - addition of Rs. 3 lakhs in this case will meet the ends of justice – in partly favor of revenue Addition on account of resale and manufacturing of cattle feed by applying low GP rate – Held that:- Assessee has shown to have sold almost the entire self manufactured feed in cash on varying rates - sale rates can still be higher or lower but he has picked up two instances of sales - Assessing Officer was not satisfied about the genuineness and correctness of the cattle feed manufacturing account, which was rejected - addition sustained by the CIT(A) at Rs. 2 lakhs is on lower side - addition of Rs. 3 lakhs on this count will meet the ends of justice. The Assessing Officer is directed to recompute the income of the assessee accordingly Disallowance of proportionate interest paid to the bank relevant to so called interest free advances made by the appellant – Held that:- These have been made out of CC A/c which carries interest rate of 15% - disallowance reduced
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2012 (11) TMI 2
Cancellation of Registration u/s. 12AA(3) of the Act – allegation relating to Contribution to Churches – Held that:- Merely a sum of RS. 22,500 was incurred in this regard - It is only information relating to assessee Hospital of the various facilities available along with timings for general OPD, free OPD, emergency services - Since these institutions approached the assessee, the advertisements were given to them - amount involved was very meager and it cannot be said that amount was meant for benefit of any particular community Cancellation of Registration u/s. 12AA(3) of the Act – Sale of medicines in the Pharmacy – Held that:- Activity of pharmacy is an integral part of the Hospital running activity which is not a commercial activity - The income is ploughed back for Hospital activity - It has been further been submitted that 50% margin is without considering salaries of pharmacy department, doctor's salary, contract employees payment, administrative over heads like electricity, maintenance, other utilities, depreciation etc. - this amount is ploughed back for the charitable activities of the Society - sale of medicine in the pharmacy is certainly a charitable activity Cancellation of Registration u/s. 12AA(3) of the Act – Smile Surgery Projects – Held that:- Smile Surgery Project is an International Charitable - Organization providing assistance to the children born cleft lips and platelet - Hospital doesn't charge the patients under this project. The cost incurred may be less than the amount reimbursed by the Smile Project or it may be more which has to be borne by the Hospital - There is no commercial or business element as alleged - Smile Project cannot be said to be commercial activity Cancellation of Registration u/s. 12AA(3) of the Act – Fun Fair Fund - assessee has submitted that the Fair is conducted by the employees of the Society wherein the employees of the Hospital participate and hold lucky draw – Held that:- Amount collected is used to make ex-gratia payment to the exNemployees on retirement, exigencies - income is reflected in the statement of total income of the respective years - activity cannot said to be commercial/business activity - employees are part and parcel of the society - Any activity undertaken to help them cannot be considered as non-charitable Cancellation of Registration u/s. 12AA(3) of the Act – Manufacturing of Medicines – Held that:- Assessee does not manufacture any medicines. The pharmacy undertakes only compounding, mixing and diluting the medicines already available with the assessee. This is done for reducing the strength of the medicine, making it cost effective when smaller doses are required or in case medicines are available in large proportions in the market it is made into smaller portions for patients - Hospital is running for the past 125 years and the Drug Controller conducts regular inspection of the Hospital - income resulting from medicines given to patients is again utilized for the Hospital activity - it cannot be said that assessee is indulging in the manufacturing activity of the medicines. Cancellation of Registration u/s. 12AA(3) of the Act – Withdrawal of exemption from Import Duty – Held that:- Duty exemption was withdrawn citing certain noncompliance, assessee has filed appeal before CESTAT challenging the order of withdrawal and that the assessee has complied with all the terms for exemption - machineries imported are used by the Hospital namely remote control X-ray system and whole body C.T. Scan. The exemption is with respect to duty under Customs Act and does not make the assessee non-charitable Cancellation of Registration u/s. 12AA(3) of the Act – Alteration in MOA - Communication with Revenue authorities – Held that:- Chart depicting the minor amendments carried out by the assessee has been submitted - change does not alter the basic object of medical relief - object of the assessee would remain the same before the amendment as well as after the amendment. Therefore, no adverse inference can be drawn against the assessee There is no reason for cancellation of registration u/s. 12AA(3) of the Act - appeal filed by the assessee is allowed.
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2012 (11) TMI 1
Disallowance of expenditure – arm's length price (ALP) - it is the case of the Revenue that assessee does not require to make any payment with regard to Second Line Support (SLS) obtained by it from its AE. As against that it is the case of the assessee that SLS services have been availed to minimum level where the assessee on its own is not able to resolve the problem as most of the problems have been resolved at the level of the assessee. - Held that:- it will be wrong to hold that the expenditure should be disallowed only on the ground that these expenses were not required to be incurred by the assessee. At the same time it has also to be seen that whether the price paid by the assessee is at arm's length The term 'arm's length price' has been defined in section 92F which means a price which is applied or proposed to be applied in the transactions between the persons other then Associate Enterprises in uncontrolled conditions. It is only because of that their Lordships in the aforementioned decision have observed that "the quantum of expenditure can no doubt be examined by the TPO as per law but in judging the allowability thereof as business expenditure, he has no authority to disallow the entire expenditure or a part thereof on the ground that the assessee has suffered continuous losses." Earlier to this they have observed that Revenue cannot disallow any expenditure on the ground that it was not necessary or prudent for the assessee to have incurred the same or that in the view of the Revenue the expenditure was unremunerative. Looking into observations of their Lordships, it has to be held that reasonableness of an expenditure has not been excluded from determination. Decision in CIT v. EKL Appliances Ltd. [2012 (4) TMI 346 - DELHI HIGH COURT] relied upon - Decided partly in favor of assessee.
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Customs
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2012 (11) TMI 83
Charge under Section 135 of the Customs act - unauthorized possession of 79 gold biscuits of foreign origin – Held that:- Nothing to show that the said biscuits had been imported into India in a lawful manner - Once the accused was found in possession of gold biscuits of foreign origin and he has not been able to prove that the same had been imported lawfully into India, he is liable to be charged under Section 135 of the Customs Act - Though the accused did not confess his guilt in the said case, but the (sic-offence is) made out against the accused - Trial Court has analysed the material in the right perspective, correctly negate his plea, chargesheeted the Petitioner-accused for the commission of indicated offence and recorded the cogent grounds in this respect - no patent illegality or legal infirmity has been pointed out by the learned Counsel for the Petitioner-accused, so, the impugned orders deserve to be maintained
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2012 (11) TMI 82
Undervaluation – import of old and used machinery – enhancement of value – Held that:- the depreciated value as certified by Chartered Engineer, U.K. is only 7.25% of the invoice value in 1970, whereas he certified that the residual life of the machine is more than 15 years subject to proper maintenance and procedure being followed and also that the spares presented were either new or in good enough condition to represent 80% of the normal life expectancy and that the technology involved equivalent was consistent with present day practice which has not radically changed. It does not make any economic sense to import a machine which has only 7.25% as residual value as declared by importer. It is to be noted that the invoice produced is not of any manufacturer or any person who was actually using machine earlier and is of a scrap dealer in U.K. Reliance upon the report of Chartered Engineer - held that:- The first two are of facts and the third is an opinion. So there is no infirmity in accepting the facts and rejecting the opinion. Old and used machinery is inherently prone to undervaluation - In fact from the Government of India has amended the import policy to the effect that old and machinery having residual value less than 80% of the original value is not allowed for import. Adjudicating authority has followed the valuation method prescribed by Board for arriving at reasonable price and at the ‘ time of assessment the respondent accepted the price suggested by Revenue - Decided in favor of revenue.
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2012 (11) TMI 81
Transaction value - Related person – alleged that supplier and the respondents related in terms of Rule 2(2)(iv) of the Customs Valuation Rules – Held that:- In terms of Rule 2(2)(iv) persons can be deemed to be related only if any person directly or indirectly owns, controls or holds 5% or more of the outstanding voting stocks or shares of both of them - only if a third person directly or indirectly owns, controls voting stocks or shares of both the supplier and the importer, then the supplier and the importer can be deemed to be related - supplier and the respondents are not related - whether the relationship has influenced the price and whether the price approximates any of the test values as provided under Rule 4(3) do not arise in the absence of relationship itself not being established. Such examination is envisaged only where relationship is first established. The interpretation given by the original authority would amount to re-writing of Rule 2(2)(iv) to read that if the supplier has more than 5% of the shares in the importing company, then both would be deemed to be related. There is no warrant in law to do so. As regards the question of dealing with the royalties, licence fee etc., there are adequate provisions in the Customs Valuation Rules [for example, Rule 9(1)(c)] to deal with the same. - It cannot also uphold arbitrary enhancement of value by 20% without there being any basis for it.
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2012 (11) TMI 39
Whether CESTAT has discretionary power u/s 129A (5) to condone the delay caused in filing the appeal under Section 129D(3) - appeal by revenue in compliance of direction by the Committee of Chief Commissioners of Customs or Commissioner of Customs to pass certain orders - Held that:- From the plain language of Section 129D(4), it is clear that Section 129A has been incorporated in Section 129D. The applications made by the Commissioner under Section 129D(4) shall be heard as if they were appeals made against the decision or order of the adjudicating authority and the provisions relating to the appeals to the Tribunal shall be applicable in so far as they may be applicable. Consequentially, Section 129A(5) has become integral part of Section 129D(4) & if the Tribunal is satisfied that there was sufficient cause for not presenting the application under Section 129D(4) within prescribed period, it may condone the delay in making such application and hear the same. In the present case the provisions relating to the appeals to the Tribunal have been made applicable to an application made under Section 129D(4) and it has been further provided that such application shall be heard as if it was an appeal made against the decision or order of the adjudicating authority. Any delay in presentation of appeal under Section 129A is condonable by the Tribunal by virtue of sub-section (5) thereof. It is competent for the Tribunal to invoke Section 129A(5) where an application under Section 129D(4) has not been made within the prescribed time and condone the delay in making such application if it is satisfied that there was sufficient cause for not presenting it within that period.
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2012 (11) TMI 38
Benefit of exemption under Indo-Sri Lankan Free Trade Agreement - whether there is liability of the assessee to pay duty - determination of the rate of duty payable – Held that:- Question has to be adjudicated buy the Apex Court under Sec. 130(c) of the Customs Act, 1962 as it does not fall within the purview of Sec. 129 of the Act - appeals are rejected reserving liberty to the assessees to approach the Apex Court.
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2012 (11) TMI 37
Rebate claim – cenvat credit with DFIA Scheme - Held that:- The effect of retrospective legislation is that Notification No. 40/2006-Cus., dated 1-5-2006 never prohibited rebate on export of goods under DFIA Scheme, if the Cenvat Credit of duty paid on imported/procured raw material have been availed. No restriction in the said Notification No. 40/06-Cus., dated 1-5-2006, on claiming rebate of duty paid on exported goods and availment of Cenvat Credit - applicant has complied with all the provisions and procedure as laid down in Rule 18 of Central Excise Rules, 2002 and Notification No. 19/04-C.E. (N.T.), dated 6-9-2004 and there is no dispute about the export of duty paid goods, the rebate claim is admissible to the respondent – rebate claim allowed
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Corporate Laws
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2012 (11) TMI 80
Restoration of name in ROC Register - Non filing of statutory documents - Held that:- The ROC has no objection if the name of the Company is restored in the ROC, however, company be directed to file the pending Annul Returns since 1994 and Balance Sheets since 1993 till date along with the requisite late filing fee as prescribed under the law. This order is passed subject to payment of cost of Rs.50,000/- to be deposited with the Central Government.
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2012 (11) TMI 79
Scheme of Amalgamation - claim made by the unsecured creditor for outstanding dues - Held that:- There is no dispute that the Transferee Company will remain in existence even after the post sanctioned scheme. There is no substance in the apprehension so raised. The Transferee Company permitted the concerned Authorities to take appropriate action or steps, if any. The pendency of such investigation in no way should be the reason not to sanction the scheme. The Official Liquidator has filed his report dated 26th September, 2012, stating that the affairs of the Petitioner Company have been conducted in a proper manner and that the Petitioner Company may be ordered to be dissolved - in spite of being on notice the said unsecured creditor of the Petitioner Company has not appeared before this court neither has filed his objection before this Court. Thus the objection is without merit and is rejected. The rights of the unsecured creditor of the Petitioner Company are not affected From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. None of the parties concerned have come forward to oppose the Scheme in the Court - scheme of Amalgamation s well within the frame work of law and the record and as it is difficult for the Court to deal and decide the business strategies as it is not the court's domain. Petitioner Company to pay costs of Rs. 10,000/- each respectively, to the Regional Director and to the Official Liquidator, High Court Bombay.
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2012 (11) TMI 36
Winding up - credit facilities granted by the appellant bank - cheques deposited by both the companies dishonoured - demand notice u/s 434 by bank followed by winding-up proceeding - Held that:- If we give a close look to the order particularly the operative portion, we would find, the learned Judge admitted the winding up petition for the exact amount that was found to be due and payable by the company to the creditor and asked the company to make payment of the said sum together with interest at that rate of 10% per annum on and from a date that would commensurate with the date of dishonour of relevant cheques along with costs as a condition precedent to stall the advertisement process that would make the winding up petition a representative one. In case the company would pay the amount they would be entitled to resist the process otherwise the process would continue which might culminate in a final order of winding up.If we give a close look to Section 434 a creditor having a claim more than a minimum amount prescribed therein would be entitled to maintain his petition. The test is whether the company would be able to resist the same by disputing the claim bona fide. As in the present case number of letters written by the company admitting their liability that would foreclose the scope of the company to dispute the claim. The company from time to time suggested repayment proposals. The correspondence predominantly suggests, the claim was never disputed - unable to accept the contention of the appellant that bank is not a secured creditor. Even if the provisions of Debt Recovery Act or SARFAESI Act would empower the Bank to recover their dues through special mode prescribed therein that would not operate as a bar to apply for winding up, thus no scope of interference. As the Bank already advertised the notice in newspaper and the winding up petition has already taken its representative character. Dismissal of these appeals would not preclude the company to make any proposal for the payment before the learned Company Judge and in case such proposal is made the learned Company Judge would be at liberty to deal with the same.
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2012 (11) TMI 35
Reduction of Capital Redemption Reserve - Held that:- The reduction of the Capital does not involve either diminution of liability in respect of the unpaid share capital or payment to any shareholder of any paid up Share Capital, and hence, there is no requirement to comply with Section 101 (2) of the Act. No objection has been received to the proposed reduction of Capital from any other party - Mr. Rajeev Vasudeva, Director and Authorized Signatory of the Petitioner Company has filed an affidavit dated 21.09.2012 confirming that no objection has been received by the Petitioner or their legal counsel pursuant to the notice of hearing published in the aforesaid newspapers. Thus considering the facts and circumstances of the present case, the Resolution dated 22.05.2012 and the Form of Minutes proposed at “Annexure K” to be registered under Section 103 (1) (b) for reduction of Capital Redemption Reserve of the Petitioner Company are approved.
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Service Tax
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2012 (11) TMI 86
Benefit of abatement under Notification No. 12/03-ST - Mandap Keeper service - whether food and beverages supplied during such function conducted in the banquet halls, where separate bills/invoices were raised, is required to be treated as part of "Mandap Keeper service", or the same would amount to separate transaction – Held that:- Supply of food and beverages is the sale transaction, chargeable to sales tax (VAT), inasmuch as the appellant has paid sales tax in respect of the same - food items have been supplied under separate invoices and have discharged the sale tax liability are required to be followed for extending the benefit of notification in question – full stay granted.
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2012 (11) TMI 85
Interest on delayed payment of service tax – Held that:- Appellant has admitted the liability to pay service tax, which he has recovered from the customers, along with interest thereon - there is a delay in payment of service tax, the appellant is liable to pay interest thereon on the defaulted payment under Section 75 of the Finance Act, 1994. Interest liability will accrue from the due date for the payment of service tax till such time the payment is actually made. Penalty - penalties have been imposed under Section 76 for delay in payment of service tax, under Section 77 for filing of returns belatedly and under Section 78 for suppressing the fact of receipt of service tax from the customer – Held that:- Penalty under one of the said provisions will suffice considering the fact that the appellant is a small service provider - orders passed by the lower authorities, the option/facility for paying penalty @ 25% of the penalty determined within a period of 30 days from the date of receipt of the order was not been give - order passed is incorrect as far as imposition of penalty is concerned - appellant is liable to penalty under Section 78 of the Finance Act equal to the service tax defaulted. However, the said penalty shall stand reduced to 25%, if the said liability is also discharged within 30 days from the date of receipt of this order along with the balance of service tax due and interest liability thereon as discussed above. Penalty under Section 77 is upheld.
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2012 (11) TMI 70
Denial of input service credit on the ground that assessee are not covered by the definition of input service - Held that:- Telephone services and rent-a-cab service used in connection with the business activity of the company are covered by the definition of input services - service of transportation of the employees to the factory is admissible for cenvat credit as input service under Rule 2(1) of Cenvat Credit Rules, 2004 - in favour of assessee
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2012 (11) TMI 44
Application for waiver of pre-deposit - non-compliance with Section 35F of the Central Excise Act – Held that:- Payment of over Rs. 32 lakhs prior to issue of show cause notice by appellant for which even their appeals, perhaps, would not have been dismissed for non-compliance with Section 35F of the Act, if reasonable opportunity of being heard was given - the pre-deposit of over Rs. 10 lakhs is found to be sufficient for the learned Commissioner (Appeals) to deal with the assessee s appeals on merits - Impugned order is set aside and request the Commissioner (Appeals) to dispose of the assessee s appeals on merits without insisting on any pre-deposit but after giving them a reasonable opportunity of being heard.
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2012 (11) TMI 43
CENVAT credit of the service tax paid on GTA service, tyre retreading service and shifting of household articles of employees – Held that:- As regards benefit of service tax paid for shifting of household goods of employees, issue is covered against assessee by the decision of this Tribunal and accordingly the demand for service tax is upheld - As regards tyre retreading service, it is part of vehicle maintenance and therefore the benefit of service tax credit has to be allowed - whether service tax credit is available in respect of vehicle maintenance has been decided by the Tribunal in their own case that vehicle maintenance is an 'input service'
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2012 (11) TMI 42
Valuation - inclusion of TDS amount in the value of services – alleged that appellant had calculated and discharged the Service tax liabilities excluding the Income tax Value which resulted in short payment of service tax – Held that:- Gross amount billed in terms of the above example is Rs. 100/- and TDS of Rs. 5/- was paid by Service receiver directly to the Income Tax Department. The gross amount billed and paid to the service provider abroad is only Rs. 100/- and thus in terms of the decisions by Hon’ble Tribunals the taxable value of service can only be in terms of contract/invoice raised which is only Rs. 100/- and not Rs. 100/- plus Rs. 5/- (TDS) - appellant had to pay service tax only on the amount billed and paid to the service provider abroad - appellant had discharged service tax on the amount billed and paid - appellant need not pay anything more than what they have paid already as no case is made against them - Appeal allowed
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2012 (11) TMI 33
CENVAT credit of service tax paid - Out-door Catering Services - Held that:- As decided in CCE, Nagpur Versus Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] that the service tax paid on outdoor catering services by the canteen located in the respondent's manufacturing premises has to be considered as an input service relating to business and that CENVAT credit is admissible in respect of the same. Thus the appellant is eligible for the benefit of service tax credit proportionate to the actual amount spent - matter is remanded back to original adjudicating authority for a limited purpose of verifying as to whether appellants have recovered any amount from the employees towards the catering services - in favour of assessee.
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Central Excise
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2012 (11) TMI 78
CENVAT Credit of Service Tax paid - Rent-a-cab utilized for transportation of employees from Vadodara to the factory in village Ankhi - Held that:- As decided in M/s. Maruti Suzuki Ltd. Versus Commissioner of Central Excise, Delhi-III [2009 (8) TMI 14 - SUPREME COURT] CENVAT Credit benefit will be available if the service can be related to the business of manufacture. In this case, the factory is located in a village and the village does not have adequate facilities for employees and therefore to get the proper employees, it becomes necessary for the assessee to provide transportation facility from the nearest city. Therefore, it cannot be said that the assessee is providing transportation facility to its employees as a welfare measure, but it is necessity to ensure that the manufacture takes place properly - in favour of assessee.
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2012 (11) TMI 77
Notification No.29/2004 and 30/2004 - duty confirmed along with interest and penalties - Held that:- The issue involved needs to be decided based upon the factual matrix, as to whether the appellant is able to co-relate the lot-wise receipt of the fabrics, processing done on it and subsequent sale of the same in order to come to a conclusion as to whether the appellant has availed the benefit of Notification No.29/2004 and 30/2004 correctly or not. As assessee produced a Chartered Accountant's certificate and submitted that he has gone through the entire records lot-wise and given the certificate of receipt and consumption of the fabrics in availment of benefit of Notification No.29/2004 and 30/2004 but the adjudicating authority has recorded in OIO that the appellant could not produce all the relevant records but had produced some of the records for verification. Thus the adjudicating authority, instead of verifying the some of the records and giving benefit to that extent to the appellant, had confirmed the entire demand as demanded by Show Cause Notice, without giving any benefit after verification of records which was produced - direct the lower authorities to conduct verification at the earliest and come to a conclusion, after following the principles of natural justice - in favour of assessee by way of remand.
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2012 (11) TMI 76
Manufacturing of Goods at Unregistered places - confiscation - imposition of redemption fine - Held that:- Sheds were not registered under Central Excise nor the appellant informed about the existence to the Department - appellant contravened the provision of Rule 9 of Central Excise Rules, 2002 and are therefore liable to penalty under Rule 25 of the Central Excise Rules, 2002 - keeping in view the overall facts and circumstances of the case, penalty is reduced to Rs.10,000/- (Rupees ten thousand only) on the appellants barring that entire order of the ld. Commissioner is set aside - Appeal is allowed to that extent.
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2012 (11) TMI 75
Condonation of delay of one year and 26 days in filing the appeal - contention of the applicant is that the concerned employee who was dealing with Excise matters expired on 12.2.2010 and thereafter the applicants took sometime to appoint another employee and thereafter a consultant was appointed and due to this process undertaken by the applicant, there is a delay in filing the appeal – Held that:- During the employment said employee, the period for filing appeal has already expired - applicants failed to show sufficient cause to file the appeal within the period of limitation - appeal dismissed
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2012 (11) TMI 74
Cenvat credit –manufacture of Telecommunication equipment – alleged that use of inputs in R & D did not result in manufacture of dutiable final products and therefore they were not eligible for Cenvat Credit on such inputs used in R & D – Held that:- Noticee has informed that at present they do not have any R & D section as the same was stopped in 1997-98, as they are reported to have suffered heavy losses - noticee for the present is not doing any R & D work not they have maintained any record of R & D work done by them in the past. The noticee can correlate the inputs upto the issue stage but have no system to identify whether inputs in question have been used in the R & D work or manufacture of goods cleared on payment of duty - revenue is presuming that such inputs did not result in manufacture of final products. Inputs used in trial productions or destructive testing or trial production also are eligible for Cenvat credit. Revenue has not made out any case that the inputs were cleared without payment of duty or they were destroyed in the process of so called R & D; - appellants are eligible for Cenvat credit on the impugned inputs – in favor of assessee
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2012 (11) TMI 73
Waiver of pre-deposit - Applicants availed credit at their Borivali plant in respect of the service tax paid regarding taxable services received at various depots – Held that:- Tribunal as a judicial body must follow principles of consistency when it decides the cases - Tribunal in applicants' own case set aside the demand which was confirmed on the same grounds in appeal - applicants have made out a strong prima facie for waiver of pre-deposit of the duty, interest and penalty
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2012 (11) TMI 72
Penal proceeding under Rule 96ZP – Held that:- Mere fact that without mens rea one can be punished or penalty could be imposed is not a blanket power without providing any justification - penal provision of Rule to the extent of providing mandatory minimum penalty without any mens rea is excessive and unreasonable restriction on fundamental right and is arbitrary - exercise of such power by way of subordinate legislation is not permissible when rule making authority for levying penalty is limited to default “with intent to evade duty - appeal of Revenue is dismissed
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2012 (11) TMI 71
Turnkey project - manufacturing plant and supply of plant and machinery in addition to erecting the plant at the work site as per the design layout, etc. provided by the buyer - They discharged Excise duty on the entire contract amount - they raised a debit note on the buyer towards reimbursement of travelling expenses to the customer’s site for undertaking erection and commissioning work – Held that:- Demand of the Department for inclusion of travelling expenses from the factory to the customer’s site for erection and installation work cannot form the part of the transaction value under Section 4 of Central Excise Act, 1944 and, therefore, excise duty demand on such value is not sustainable in law.
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2012 (11) TMI 69
Refund of duty paid under protest – unjust enrichment - respondent deposited the amount at the investigation stage and the proceeding initiated against them were dropped by ld. Commissioner (Appeals) order – Held that:- It is a case of refund of deposit of duty and not a refund of duty therefore the principle of unjust enrichment which is applicable to refund of duty is not applicable in this case - unjust enrichment is not applicable where amount deposited under protest – In favor of assessee
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2012 (11) TMI 34
Non payment of Duty - clearance of exempted goods without maintenance of separate accounts in respect of inputs used - demand for 8% of the value with interest & Penalty - Held that:- As decided in Alpha Drug India Ltd. v. CCE, Chandigarh [1999 (12) TMI 274 - CEGAT, NEW DELHI ] that the clearance under Chapter X or under bond is not the same thing as clearance of goods wholly exempt or goods chargeable to nil rate of duty. Therefore, the provisions of the Rule 57 C are not applicable - in favour of assessee.
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2012 (11) TMI 32
Imposition of penalty - CENVAT Credit on LSHS attributable to electricity used elsewhere other than factory - Held that:- Issue on non-availability of CENVAT Credit is finally settled in assessee's own case against them by relying on the decision of Hon'ble Supreme Court reported in CCE Versus M/s. Gujarat Narmada Fertilizers Co. Ltd. (2009 (8) TMI 15 - SUPREME COURT). As decided in assesse's own case wherein in view of the fact that Hon'ble High Court of Gujarat as well as the Tribunal had taken a view in their favour & when two views are possible and the Tribunal and Hon'ble High Court had taken a view in assessee's favour, it would be unfair to uphold the penalty imposed on the appellant in this case - thus penalty imposed is set aside, while upholding the demand for CENVAT Credit and interest thereon - partly in favour of assessee.
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2012 (11) TMI 31
Power of Commissioner (Appeals) to condone the delay – The appellant filed appeals after five years from the date of receipt of the orders. - Held that:- As per the provisions of Section 35 of the Central Excise Act, 1944, the Commissioner (Appeals) can not condone the delay - applications for condonation of delay are therefore dismissed.
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2012 (11) TMI 30
Restoration of appeal – Tribunal granted unconditional waiver of pre-deposit - applicants were under a bona fide belief that their appeal is pending before this Tribunal - enquiry was conducted by the Superintendent Preventive regarding the payment of penalty – Held that:- No notice of hearing order was sent to the applicant - order passed by this Tribunal is an order dismissing the appeal for non-prosecution - in the case of absence of appellant, the Tribunal is to pass the order on merits after going through the records available before it. In the case of Viral Laminates [1998 (4) TMI 136 - HIGH COURT OF GUJARATD] the Hon’ble High Court has held Rule 20 of CESTAT (Procedure) Rules as ultra vires. - applicant should be heard on merits - application for restoration of appeal allowed
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2012 (11) TMI 29
Condonation of delay - assessee submitted that order passed by the Commissioner (Appeals) is not one on merits – Held that:- In the case of Singh Enterprises (2007 (12) TMI 11 - SUPREME COURT OF INDIA) that an order of Commissioner (Appeals) dismissing an appeal on the ground that the appeal was filed beyond condonable period of delay was not liable to be interfered with by the Tribunal or a High Court. - Delay not condoned.
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2012 (11) TMI 28
Penalty under Section 11AC – alleged that suppression of fact regarding the valuation of goods under Section 4 of Central Excise Act - contention of the respondent is that they were not aware of the change in the provisions of law at the material time and there was no suppression of fact with intent to evade payment of duty on their part – Held that:- After the amendment, the provisions applicable to packages intended for retail sale, did not apply to packages containing quantity of more than 25 Kgs. or 25 Ltrs. However, from 14-1-2007 to 30-11-2007, the respondent continued paying duty on value of the goods on the basis of pre-amended provisions of law and the respondents have paid duty on 6-10-2009 and there was no suppression of fact with intent to evade duty - Revenue’s appeal dismissed.
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2012 (11) TMI 27
Refund claim – procedure to claim refund claim – Held that:- even though appellants wrote on 23-3-2009 that they were eligible for refund of the amount paid as per Commissioner (Appeals) order dated 3-10-2005 reply by the department did not treat it as a refund claim but told them that they had not preferred any refund claim. - he proper course for the department was to point out the omission rather than stating that no refund application has been filed. - the letter dated 21-3-2009 received by the department on 24-3-2009 should have been treated as a refund claim and considered and dealt with accordingly. - matter is remanded to the original adjudicating authority.
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2012 (11) TMI 26
Waiver of pre-deposit – cenvat credit - returned goods - Department submits that when goods received from outside were input and that did not undergo manufacturing process, there should be denial of Cenvat credit – Held that:- Rule 16(1) of Central Excise Rules, 2002, does not create any embargo to avail Cenvat credit in respect of finished goods consigned from a different unit to Bolpur Unit by fiction of law treating such finished goods as input. The finished goods were treated under law as input which need not undergo processing since accountability was only safe-guard measure provided to grant Cenvat credit. To such extent, applicant is correct to have bona fide belief of availing canvat credit - waiver of pre-deposit allowed
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2012 (11) TMI 25
Penalty – overvaluation – alleged that FOB value export is less than the value declared by the exporters – Held that:- FOB value declared by the appellant cannot be discarded in lighter manner - cost to manufacture is not relevant for arriving at the FOB value as manufacturer might make huge profit and only fact is the selling price of the manufacturer on the basis of which, the FOB value cannot be rejected - manufacturer’s selling price cannot be the price at which the goods are ordinarily sold in the wholesale market in India and in the absence of contemporaneous export, the Revenue’s contention cannot be acceptable - M/s. Rochees Watches has already given a bank guarantee of Rs. 1.10 crore – waiver of pre-deposit allowed
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2012 (11) TMI 24
SSI Exemption - Whether branded goods should be clubbed with unbranded goods for the purpose of implementation of mandate of Notification No. 8/02 – Held that:- Branded goods when differentiated from unbranded goods both are not in equal footing - In no uncertain terms it has been stated in the notification that branded goods should be excluded from computation of SSI limit - there are branded and unbranded goods manufactured by the respondent, SSI benefit claimed by the respondent should not be denied - Revenue’s appeal is dismissed.
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Wealth tax
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2012 (11) TMI 45
Right of user charges - Addition to wealth - property in question consisting of jewellery and silver vessels - Held that:- A.O. rightly denied the deduction towards Right of user of Rajal. Following the decision of the Tribunal in assessee’s own case in the earlier years, the view taken by the Commissioner of Wealth Tax (Appeals) is upheld subject to the rider that when the decision of the High Court in respect of the earlier years is available, the A.O. will apply the same in respect of all the assessment years under appeal - against assessee.
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Indian Laws
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2012 (11) TMI 84
Arbitration Act 1940 - Challenge to the award by arbitrator - unreasoned award - held that:- Once the arbitrator would choose to publish an unreasoned award it would be too difficult for the Court to interfere with the same. The Court of law was not the Court of appeal over the award of the arbitrator. It could only be interfered with when it was patently perverse. The present award would not satisfy such test. The arbitrator published a money award for Rs. 86258 along with interest at the rate of 6% per annum. What would be the basis of the said award, is unknown to us. Hence, we are not competent to examine the same. Transfer of tenancy award - held that:- The arbitrator made alternative provision that would take care of the absurdity, if any, in the award. The learned Single Judge observed, Kamal Kumar resigned in 1983 without considering the assertions of his heirs to the extent that he had acted as partner for next five years until his death. The documents filed before the arbitrator were not considered. In any event, learned Judge also observed that the award was bad in view of allotment of tenancy that was not permissible under the tenancy law. We fail to appreciate, as observed herein before, the arbitrator having published an alternative award by giving money compensation in lieu of such allotment would remove the legal obstacle, if any, on that score. Hence the award could not be faulted on that ground. Period of limitation - application after 30 days of receipt of notice - held that- there was stamp of Court on September 19, 1998. Hence it was within the period of limitation. Even if it was not so, the order of remand would make it specifically clear that the Division Bench referred the issue back to the learned Single Judge for being heard afresh. Once it was so the plea of limitation would not be applicable.
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2012 (11) TMI 41
Appointment of arbitrators - Arbitration and Conciliation Act, 1996 - procedure for appointment of arbitrator and the actual appointment of the arbitrator - held that:- Given the definition of the word ‘appointment’, in our view, section 11 does not say that the Chief Justice could alone exercise the general power of judicially determining whether the pre-conditions for such appointment have been fulfilled. To hold otherwise would, not only be contrary to the express language of the section, but it would also mean that the Chief Justice could by designation clothe any person or institution with the power to discharge judicial functions. the procedure that is being followed by the Calcutta High Court with regard to the consideration of the applications under Section 11 of the 1996 Act is legally impermissible. The piecemeal consideration of the application under Section 11 by the Designate Judge and another Designate Judge or the Chief Justice, as the case may be, is not contemplated by Section 11. The function of the Chief Justice or Designate Judge in consideration of the application under Section 11 is judicial and such application has to be dealt with in its entirety by either Chief Justice himself or the Designate Judge and not by both by making it a two-tier procedure as held in Modi Korea Telecommunications Ltd.. The distinction drawn by the Division Bench of Calcutta High Court in Modi Korea Telecommunications Ltd. between the procedure for appointment of arbitrator and the actual appointment of the arbitrator is not at all well founded. - matter restored to High Court for appropriate consideration. Orders passed by the Chief Justice or the Designate Judge under Section 11 of the 1996 Act which have attained finality and the awards pursuant to such orders shall remain unaffected insofar as the above aspect is concerned.
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2012 (11) TMI 40
Termination of tenancy rights - replacement of the tin-sheet by a concrete slab was undertaken by the tenant - is replacement in question took place in contrary to clauses (m), (o) and (p) of Section 108 of the Transfer of Property Act ? - Held that:- The use of the word ‘permanent’ in Section 108 (p) of the Transfer of Property Act, 1882 is meant to distinguish the structure from what is temporary. The term ‘permanent’ does not mean that the structure must last forever. A structure that lasts till the end of the tenancy can be treated as a permanent structure. The intention of the party putting up the structure is important, for determining whether it is permanent or temporary. The nature and extent of the structure is similarly an important circumstance for deciding whether the structure is permanent or temporary within the meaning of Section 108 (p) of the Act. Removability of the structure without causing any damage to the building is yet another test that can be applied while deciding the nature of the structure. Thus applying the above tests to the instant case the structure was not a temporary structure by any means. The kitchen and the storage space forming part of the demised premises was meant to be used till the tenancy in favour of the respondent-occupant subsisted. Removal of the roof and replacement thereof by a concrete slab was also meant to continue till the tenancy subsisted. The intention of the tenant while replacing the tin roof with concrete slab, obviously was not to make a temporary arrangement but to provide a permanent solution for the alleged failure of the landlord to repair the roof. The construction of the passage was also a permanent provision made by the tenant which too was intended to last till the subsistence of the lease. The concrete slab was a permanent feature of the demised premises and could not be easily removed without doing extensive damage to the remaining structure. Such being the position, the alteration made by the tenant fell within the mischief of Section 108 (p) of the Transfer of Property Act and, therefore, constituted a ground for his eviction in terms of Section 13(1)(b) of the West Bengal Premises Tenancy Act, 1956. Set aside the order passed by the High Court that any such replacement of the roof did not tantamount to violation of TPA Act and restore that of the trial Court & the tenant given one year’s time to vacate the premises in his occupation subject to his filing an undertaking further subject to the condition that the respondent shall either pay directly to the appellants or deposit in the trial Court compensation of the premises @ Rs.1500/- p.m. from 1st October, 2012 till the date of vacation to made by the 15th of every succeeding calendar month failing which the decree shall become executable by the Court.
