Income Tax
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Admission of application for advance ruling - mere filing of return does not attract bar on the admission of the application as provided in section 245R(2) - AAR
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Taxability of payments made towards line production services - shooting outside India for the show 'Wipe Out' - not chargeable to tax as per the provision of section 9(1)(i) of the IT Act - AAR
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Whether proceedings u/s 153A are invalid since no panchnamas were drawn/issued after search u/s 132 - this would not affect the validity of the search. - HC
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Whether variable licence fee - amortized u/s 35ABB - payment of licence fee was capital in part and revenue in part - Capital expenditure will qualify for deduction as per Section 35ABB - HC
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Disallowance u/s 40A(3) The assessee made cash payment to the agricultural land seller villagers which are covered under second proviso to section 40A(3) of Rule 6DD(h) of the Rules - AT
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Validity of assessment u/s 147 Merely because the block assessment was not upheld by the authorities under the Income-tax Act, it cannot be reason enough in this case to invoke section 147 of the same - AT
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Applicability of section 161(1A) - the MF being itself a Trust, could it possibly be a beneficiary of a Trust - The income is taxable in the hands of assessee and not in the hands of beneficiary - AT
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Penalty u/s.271B The assessee could not explain any reasonable cause for not getting the accounts audited before the specified date and furnish the same by that date - penalty confirmed - AT
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Income from inland haulage charges Inland haulage charges are not only incidental but also closely connected with direct operations of ships - not taxable as per DTAA - AT
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Education cess and surcharge tax payable @ 12.5% under Article 11(2) of DTAA is inclusive of surcharge and education cess - AT
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The assessment on a company which has been dissolved by amalgamation u/s 391 and 394 of the Companies Act, 1956 is invalid - Provisions of Section 292B of the Act are not applicable in such a case - AT
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With amendment to section 55(2) the tenancy rights attained legal cognizance -As such there is need for first deciding if the assessee's rights in the property constitutes a tenancy rights within the meaning of section 55(2) - AT
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Sub-section (5) of section 184 is exception to Rule and would clearly disentitle the assessee for claiming deduction by way of salary and remuneration etc. in case the assessee made a failure as provided u/s. 144 - AT
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Applicability of section 248 Appeal by person denying liability to deduct tax in certain cases - There is no fault with CIT(Appeals) entertaining such appeal of the assessee - AT
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The commission has been paid to non-resident outside India for services rendered outside India - where the non-resident agent operates outside India, no part of his income arises in India - AT
Customs
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Valuation - the value of new car which is required to be picked up for arriving at the value of second hand car on the basis of determination of formula has to be value exclusive of VAT of 15%. - AT
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Valuation of goods - royalty and the licence fee are not payable on the imported goods but on the goods manufactured and sold in India - no addition - AT
Service Tax
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Classification of service - Supply of Tangible Goods for Use Service or storage and warehousing service - Services rendered by the appellant in respect of mother vessels cannot be classified under Storage and Warehousing Services' - AT
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If the agreement does not provide for transfer of assets at the end of the lease term during which monthly user charges are collected, and all risks and rewards incidental to ownership are not transferred, such leasing activities would not fall under the category of financial lease coming under the banking and financial service - AT
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Demand of service tax under reverse charge - this is not just a case of revenue neutrality; but a special case of revenue-neutrality involving the same person taking credit of tax paid - the allegation of suppression is not sustainable - AT
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At least the appellate authority has exercised the discretion to some extent even though he could have waived the entire penalty under Section 80 of the Finance Act, 1994 which provides for complete waiver of penalty when there was a reasonable cause for failure on assessees part in non payment of Service Tax - Order of Commissioner (Appeals) confirmed - AT
Central Excise
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Refund claim rejected on bar of limitation filing an appeal against the order of confirmation of the demand amounts to protest and the consequential relief is liable to be granted to the assessee on the success of their appeal without raising the power of limitation. - AT
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Goods Inputs and/or Capital goods under Rule 2 (k) and Rule 2 (a) of the Cenvat Credit Rules, 2004 Applicant had availed the CENVAT Credit on Rails initially claiming it as capital goods and later as inputs - stay granted partly - AT
VAT
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Inter-state sales of diesel generator - necessarily a person who had procured the orders for the Pondicherry seller for the buyers in Kerala would not become a purchaser of the goods and for that reason itself the petitioner will not become a purchaser - HC
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Income Tax
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2013 (12) TMI 1118
Admission of application for advance ruling - Determination of status of assessee - Independent company or AOP - On Shore Services Contract - offshore supply of all goods - Held that:- mere filing of return does not attract bar on the admission of the application as provided in section 245R(2) of the Act. We are of the view that only when the issues are shown in the return and notice under section 143(2) is issued, the question raised in the application will be considered as pending for adjudication before the Income-tax Authorities. In the present case the application was filed on 4.4.2012. Return of income was filed on 30.11.2011 i.e. before filing the application. However, notice under section 143(2) was issued on 8.8.2012 i.e. after the date of the application. Following which ruling in Hyosung Corporation (2013 (8) TMI 487 - AUTHORITY FOR ADVANCE RULINGS) we hold that the question raised by the applicant in the present case is not already pending before the Income-tax Authorities and therefore, the application is admitted.
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2013 (12) TMI 1117
Taxability of payments made towards line production services - shooting outside India for the show 'Wipe Out' - Nature of payment - Fee for Fees for Technical services ('FTS') or Royalty - withholding tax u/s 195 - non-fiction format show Bigg Boss (Big Brother) and has also other reality shows in India such as Fear Factor - Khatron Ke Khiladi etc. - Held that:- The payments made by the applicant towards line production services provided by Endemol ARG in accordance with the agreement entered into by the applicant with Endemol ARG is not 'fees for technical services' as the services falls under 'work contract' as defined in Explanation to Section 194C of the IT Act. - The payments made by the applicant to Endemol ARG for availing the line production services under the agreement is not chargeable to tax as per the provision of section 9(1)(i) of the IT Act. - No TDS liability u/s 195 - Decided in favor of assessee.
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2013 (12) TMI 1116
Whether proceedings u/s 153A are invalid since no panchnamas were drawn/issued after search u/s 132 - Held that:- The aforesaid contention of the 22 petitioners has to fail in the present cases for several reasons. The said contention was not raised against the first order under Section 153A passed by the Assessing Officer which was made subject matter of challenge in a revision before the Commissioner under Section 264 of the Act. The Commissioner has set aside the first assessment orders under Section 153A of the Act and has passed an order of remand for fresh adjudication vide order dated 16th March, 2012. The petitioners have not questioned and challenged the orders dated 16th March, 2012 and have accepted the same. There is certainly lapse and failure to comply with the requirements of search and seizure manual as the panchnama did not contain names of the 22 petitioners and does not record any suspension of search. Even the obstruction and presence of third persons were not mentioned in the panchnamas. But this would not affect the validity of the search. Assessment orders under Section 153A cannot and should not be permitted to become a matter of writ proceedings as the first appellate forum. The first appellate statutory authority can deal with the questions and issues raised before us, whose jurisdiction indeed has been invoked with appeals being preferred by the petitioners. We do not think that the contentions and issues raised, merit or justify their examination and decision in writ petitions in exercise of extra ordinary jurisdiction. Writ petition dismissed - Decided against the assessee.
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2013 (12) TMI 1115
Whether variable licence fee paid by the assessees was properly deductible as revenue expenditure or or capital expenditure which is required to be amortized under Section 35ABB of the Income Tax Act, 1961 - The licence was issued under a statutory mandate and was required and acquired, before the commencement of operations or business, to establish and also to maintain and operate cellular telephone services. - Held that:- payment of licence fee was capital in part and revenue in part and it would not correct to hold that the whole fee was capital or revenue in entirety. The licencees i.e. the assessees in question required a licence in order to start or commence business as celluar telephone operator. The requirement to procure a licence or pay licence fee was a precondition before the assssee could commence or set up the business in question. The fee was certainly paid to the Government for permitting and allowing an assessee to set up/start cellular telephone service which otherwise was not permitted or prohibited under the Telegraph Act. In a way, it was a privilege granted to the assessee subject to payment and compliance with the terms and conditions. The expenditure incurred for establishing or for setting up/construction of any factory/business would be capital, but the amount paid on yearly basis for running or operation of the factory/business would be normally revenue in nature. - Decided partly in favor of revenue. Power to Court to bifurcate and divide the licence fee into capital and revenue and what percentage or ratio should be attributed to revenue and capital account. - Held that:- The difficulty in apportionment cannot be a ground for rejecting the claim either of the Revenue or of the assessee. Such an apportionment was sanctioned by courts in Wales v. Tilley, Carter v. Wadman (H.M. and T. Sadasivam v. Commissioner of Income-tax, Madras. In the present case apportionment of the compensation has to be made on a reasonable basis between the loss of the agency in the usual course of business and the restrictive covenant. Basis of apportionment - Held that:- t it would appropriate and proper to divide the licence fee into two periods i.e. before and after 31st July, 1999. The licence fee paid or payable for the period upto 31st July, 1999 i.e. the date set out in the 1999 policy should be treated as capital and the balance amount payable on or after the said date should be treated as revenue. Capital expenditure will qualify for deduction as per Section 35ABB of the Act. - Decided partly in favor of revenue.
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2013 (12) TMI 1114
Disallowance u/s 40A(3) Cash payment for purchase of land - Held that:- The assessee has made payment to various villagers for purchase of agricultural land - Normally farmers would insist on cash payments, specially when such payments involve huge amounts for the simple reason that they would like to avoid the risk of receiving cash at the town where the sale deed is to be registered before sub-registrar and which may be far way from the sellers' village Perusal of the second proviso to s. 40A(3) shows that the object of the legislature is not to make disallowance of genuine cash payments which have to be compulsorily made by the assessee in view of absence of banking facilities at the place of payment - The assessee made cash payment to the agricultural land seller villagers which are covered under second proviso to section 40A(3) of Rule 6DD(h) of the Rules Decided in favour of assessee.
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2013 (12) TMI 1113
Gain on sale of shares capital gain or business income Held that:- Following Associated Industrial Development Co. (P.) Ltd [1971 (9) TMI 3 - SUPREME Court] - If any body proves that the share purchased kept under the investment portfolio and the same are kept under the stock-in-trade, then the same treatment is to be given - The assessee has shown all the purchases under the head investment portfolio - This fact has been admitted by the departmental authority in previous two years, where the short term capital gain shown by the assessee has been accepted - Following V.A.Trivedi [1987 (1) TMI 12 - BOMBAY High Court] - The period of the holding and number of transactions cannot be the only basis to determine whether the assessee has carried out the business in shares transactions - It may be one of the relevant consideration but cannot be the main consideration for deciding whether the assessee in this case is engaged in a business or not All the surrounding circumstances should also be looked into Decided in favour of assessee.
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2013 (12) TMI 1112
Validity of assessment u/s 147 Held that:- As per AO, certain income has escaped assessment by reason of incorrect allowing of deduction under section 54F of the Act for the reason that the assessee had not acquired the dominion over the new residential property within the stipulated two years - The said issue was a subject matter of consideration in the block assessment framed under section 158BC read with section 158BD - The same point cannot be taken up by the Assessing Officer to hold that any income has escaped assessment within the meaning of section 147/148 when the block assessment u/s 158BC was not uphold by CIT(A) - Following Smt. Mira Ananta Naik v. Dy. CIT [2008 (8) TMI 800 - BOMBAY HIGH COURT] - There is much substance in the contentions of Shri Nadkarni that the search having resulted in block assessment - In these proceedings the income tax assessed and taxed after it was brought to the notice of the Assessing Officer. Merely because the block assessment was not upheld by the authorities under the Income-tax Act, it cannot be reason enough in this case to invoke section 147 of the same - The reasons recorded by the Assessing Officer, reproduced in the earlier part of this order do not show any reasonable basis for the Assessing Officer to conclude that there was any escapement of income - The initiation of proceedings by issuance of notice under section 147/ 148 in the present case is flawed and void ab initio Decided in favour of assessee.
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2013 (12) TMI 1111
Applicability of section 161(1A) - taxability of income in the hands of beneficiary Revision u/s 263 by CIT - Whether the assessee is a Trustee (or representative- assessee) u/s. 161(1) - Held that:- While the A.O. considers it to be a AOP, the assessee claims that of an individual, with the ld. CIT states of being not a valid trust, holds the asset in its own right (refer paras 2.2(i) and 2.3( c) of this order). In our view, this aspect would stand to be considered only after a clear understanding of the transaction. Further, the MF being itself, as we understand, a Trust, could it possibly be a beneficiary of a Trust (inasmuch as it is only the beneficiary which in law is the assessee, being represented by a trustee), for which its terms as well as the permissible avenues, including the mode and manner of making investments by it, would also be relevant. The question of application of sections 61 and 63 also does not arise. It is only where through the artifice of an arrangement the income is shifted to other than the beneficial owner that the said provisions would come into play. Following Malabar Industrial Co. Ltd [2000 (2) TMI 10 - SUPREME Court] - Non application of mind is a matter of fact, and inferential one, which has to be inferred on the basis of the material on record, including the order considered as passed without application of mind, and the facts and circumstances of the case - Following Sunbeam Auto Ltd [2009 (9) TMI 633 - Delhi High Court] - There has been no application of mind in the matter by the A.O. The income is taxable in the hands of assessee and not in the hands of beneficiary - Revision u/s 263 upheld Decided in favor of Revenue.
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2013 (12) TMI 1110
Rectification of mistake Held that:- If the concerned person/assessee makes an application during the course of assessment proceedings to adjust the remaining amount towards his future liability, the Assessing Officer after passing of 120 days from the last date of execution of search and seizure operation is liable, either to return the remaining amount to the assessee/concerned person and or to adjust the same towards his future liability if a specific request has been made by the assessee in this respect - If the amount remains with the Assessing Officer/tax authority after 120 days then the Central Government is liable to pay interest @ one half percent per month on the remaining amount - No automatic duty or liability has been prescribed under section 132B to adjust cash seized towards future liability of the assessee Appeal is partly allowed in favour of assessee for reworking of interest liability.
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2013 (12) TMI 1109
Levy of interest u/s 201(1A) Held that:- Following Solar Automobiles India (P) Ltd v. Deputy Commissioner of Income-tax [2011 (9) TMI 637 - KARNATAKA HIGH COURT] - The interest is payable for the period it is not paid after deduction - The principal liability of paying tax is that of the creditor and a statutory duty is cast on the debtor to deduct tax on the income of interest payable and remit the same to the company irrespective of liability of the principal debtor - The AO has to find out whether the creditors (hospitals) have filed their returns and paid the taxes. If they have filed the returns and paid the taxes, the liability of the asessee ceases from the day they have paid the taxes - This exercise has not been done by the AO - He had adopted the due date of filing of return of income for the purpose of calculation of interest u/s 201(1A) The issue was restored for fresh decision.
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2013 (12) TMI 1108
Penalty u/s.271B failure to get its accounts audited and furnished before prescribed date u/s 44AB - Waiver of penalty u/s 273B - Held that:- The audit report signed by the auditors in the instant case is dated 01-08-2008 - The assessee is required to get its accounts audited before the specified date i.e. 31st of October 2006 - The assessee has not given any details regarding the name of the previous auditor, the date of resolution appointing the new auditor and copy of any correspondence between the assessee company and the old auditor or the assessee company with the new auditor or correspondence between the new auditor and the old auditor - Delay in obtaining the auditor report was due to change of the auditor and delay in getting NOC from the previous auditor remains unsubstantiated - The assessee was tied up in court litigation the order of which was announced on 14-12-2007 - The assessee failed to substantiate the reason for delay between December 2007 till 01-08-2008 - The assessee could not explain any reasonable cause for not getting the accounts audited before the specified date and furnish the same by that date Decided against assessee.
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2013 (12) TMI 1107
Penalty u/s 271(1)(c) Unaccounted production - Held that:- Normally the penalty cannot be levied on estimated income alone The assessee has not credited the additions of Rs.2,09,94,965/- and Rs.23,53,160/- in case of Shree Om Rolling Mills Pvt. Ltd., and SRJ Peety Steels Pvt. Ltd., respectively in their respective books of accounts - Sale of two days having been found as result of search Assessee has paid tax to that extent The assessee have to pay penalty on these two days sale However on income estimated for the whole year penalty cannot be levied Partly allowed in favour of Revenue.
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2013 (12) TMI 1106
Income from inland haulage charges Held that:- The income from operation of ships in international traffic is exempt under Article 8 of DTAA between India and Belgium - Article 8(2)(b)(ii) also exempts any activity directly connected with shipping Following assessee's own case in 2001-02 - Inland haulage charges are not only incidental but also closely connected with direct operations of ships Decided against Revenue.
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2013 (12) TMI 1105
Education cess and surcharge Whether the rate of TAX as per DTAA is inclusive of Education Cess and Surcharge Held that:- The non-resident assessee has earned interest from partnership firm in India As per article 11(2) if recipient is beneficial owner of interest, tax so charged shall not exceed 5% of gross interest if the interest is paid by the bank and in other cases 12.5% of the gross interest - The assessee is the beneficial owner of interest and tax charged cannot exceed 12.5% of gross interest As per DTAA between India and UAE - Tax has been defined in Article-2(2)(b) as per which income tax included surcharge - Therefore, tax referred to in Article 11(2) @ 12.5% also includes surcharge Following DIC Asia Pacific Pte Ltd [2012 (6) TMI 686 - ITAT, KOLKATA] Decided in favour of assessee.
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2013 (12) TMI 1104
Stay of demand Transfer pricing adjustment - Held that:- Adjustment has been made with respect to entire average capital employed in the business company whereas, the adjustment as per law, is required to be made only with respect to transaction with the AE - The recovery of the demand is stayed for a period of six months or till the disposal of appeal, whichever comes earlier Decided in favour of assessee.
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2013 (12) TMI 1103
Assessment of amalgamated company Valid or not Held that:- Following Micra India Pvt.Ltd [2013 (11) TMI 679 - ITAT DELHI] - On amalgamation, the company seizes to exist in the eyes of the law - Assessment upon a dissolved company is impermissible as there is no provisions in Income Tax Act to make an assessment thereupon - The assessment on a company which has been dissolved by amalgamation u/s 391 and 394 of the Companies Act, 1956 is invalid Following Spice Entertainment Ltd. Vs. CIT [2011 (8) TMI 544 - DELHI HIGH COURT] - Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. - Provisions of Section 292B of the Act are not applicable in such a case. - The framing of assessment against a non-existing entity/person is not a procedural irregularity but a jurisdictional defect as there cannot be any assessment against a dead person Decided against Revenue.
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2013 (12) TMI 1102
Acquisition of agricultural land Transfer of capital asset or not Held that:- The land in question is located beyond 8 kms of the municipal limits of the Jamnagar - The land was located beyond 19 kms from the centre of the city of Jamnagar - The records of the Revenue Department shows that the lands are described by the District Collector, Jamnagar as agricultural lands - There is no incriminating material in the possession of the Assessing Officer to hold that the land in question is capital asset within the meaning of section 2(14) Decided against Revenue.
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2013 (12) TMI 1101
Surrender of tenancy/occupancy rights Capital gain or income from other sources - Held that:- The fact whether the assessee was a tenant or not was not determined through any document or order of the court The assessee has not furnished copies of the orders which contain the direction to the occupants of the premises to make payment to the landlord and there is no clarity on the nature of such payment - The assessee has acquired some rights in property either legal or otherwise The CIT was directed to examine whether the assessee was tenant and has acquired any tenancy rights or not the Commissioner of Income-tax (Appeals) shall also adjudicate how the "right to remain in possession of the premises or right to litigate" are different from "the right to tenancy" as both the rights allow the assessee to reside in the premises With amendment to section 55(2) the "tenancy rights" attained legal cognizance -As such there is need for first deciding if the assessee's rights in the property constitutes a "tenancy rights" within the meaning of section 55(2) The issue was restored for fresh adjudication.
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2013 (12) TMI 1100
Provision of PACS Manager salary Held that:- Following ACIT vs Rajasthan State Cooperative Bank Ltd., Jaipur [2013 (9) TMI 38 - ITAT JAIPUR] - Allowability of contribution by the Apex Bank for PAC Mangers salary is a statutory liability which is crystallized at the end of every year - The contribution once made become at the disposal of Registrar of Cooperative Society which is payable as and when demanded by the Registrar Cooperative Society alongwith interest on it - It is not contingent liability but a statutory liability which is crystallized at the end of every year and hence the liability is allowable Decided in favour of assessee. Premium of leave encashment Held that:- Following CIT vs Hindustan Latex Ltd. [2012 (6) TMI 713 - KERALA HIGH COURT] - Leave encashment is not a statutory liability and even in the case of provision being made the deduction was allowed as a business expenditure - It was not a provision which was disowned but an actual liability towards premium paid on insurance policy and the liability was allowable as a deduction u/s 37 being an expenditure incurred for the purpose of business Decided in favour of assessee.
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2013 (12) TMI 1099
Penalty u/s 271(1)(c) Deprecνation on Portal & e-Commerce Site - Held that:- Following CIT Vs. Reliance Petro Product P. Ltd. [2010 (3) TMI 80 - SUPREME COURT] - Expenses incurred on developing Portal & e-Commerce Site is neither fixed asset nor an intangible asset as per section 2(11)(b) - AO disallowed depreciation - It is only disallowance of expenditure only on the basis that this is not an asset. The expenses are genuine, which are not denied by the AO. It is not doubted that the assessee has not developed Portal & e-Commerce Site and nothing is false - There is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c) Decided against Revenue.
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2013 (12) TMI 1098
Remuneration to partners Held that:- The assessee also failed to file the return of income as required u/s. 142(1) of the IT Act and also failed to comply with the notice u/s. 144 of the IT Act. Therefore, the provision of section 144 of the IT Act has been rightly invoked against the assessee for framing the exparte assessment order - Sub-section (5) of section 184 is exception to Rule and would clearly disentitle the assessee for claiming deduction by way of salary and remuneration etc. in case the assessee made a failure as provided u/s. 144 of the IT Act - The assessee claimed deduction on account of salary and remuneration in the original return of income - The findings of the AO are supported by the details filed in the return of income by the partners in which they have declared the amount of salary received from the assessee firm and as such specific material was available with the Revenue Department to prove that the assessee paid salary to these partners for which deduction has been claimed Decided against assessee.
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2013 (12) TMI 1097
Deduction u/s 40(b) liquor business - whether the assessee is to be treated as a firm and consequent benefit of salary and interest would be given to the partners - Held that:- Following assessees own case for the A.Y. 2003-04, 2005-06 and 2006-07 - From 1-4-1994 sections 184/185 have been amended and the earlier procedure of examining genuineness of firm has been dispensed with - As per the amended law, the firm shall be allowed registration if a certified copy of a deed, duly signed by all the partners showing the shares of the partners is filed, the firm is allowed to be registered - U.P. Excise policy does not prohibit constitution of partnership firm for carrying liquor business, so also licenses obtained by individuals can be converted into partnership firm on compliance of certain requirement - The assessee firm is eligible for registration u/s 184/185 and consequently eligible for deduction u/s 40(b) in respect of salary, interest as per law Decided against Revenue.
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2013 (12) TMI 1096
Applicability of section 248 Appeal by person denying liability to deduct tax in certain cases - The assessee, after deducting such tax at source, moved before the CIT(Appeals) under Section 248 for a ruling that there was no necessity for deducting tax at source - Held that:- There was an employee-employer relationship between the assessee and expatriate employees and withholding of tax on salaries of such employees having been already done by M/s CMS RDC, assessee was not obliged to deduct any tax - Such deputed employees were filing returns in India - Assessee was not required to deduct tax at source on reimbursement of salaries given to M/s CMS RDC - Section 248 does enable an assessee to file an appeal even after deduction of tax at source claiming that no tax was required to be deducted at source since such appeal is only for a declaration regarding tax liability There is no fault with CIT(Appeals) entertaining such appeal of the assessee Decided against Revenue.
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2013 (12) TMI 1095
Applicability of section 172 Payments towards shipping business of the non-residents through shipping agents - Held that:- Special procedures are provided u/s. 172 of the Act for payment of taxes in case of any shipping owners or charters by non-resident - The Board Circular No. 723 dated 19-09-1995 (supra) clarifies that the provisions of section 172 would apply and no deduction of tax is required to be made as per provision of section 194C of the Act Decided against Revenue. Purchase of Lac and Shellac Disallowance on account of inflation of local purchase - Held that:- No defects have been pointed out by the AO to show that there was any inflation in the purchases Disallowance cannot be made on the basis of estimation Decided against Revenue. Commission paid to non-resident Held that:- The commission has been paid to non-resident outside India for services rendered outside India Following G.E India Technology Centre (P.) Ltd v. CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] CBDT Circular No. 786 dated 07-07-2000 as also Circular no. 23 dated 23-7-1969 clarifies that where the non-resident agent operates outside India, no part of his income arises in India - Decided against Revenue. Disallowance of supervision charges, export expenses, packing expenses, lorry hire charges and motor car and telephone expenses Held that:- All the disallowance are made on estimate basis and no specific defect has been pointed out by the AO Decided against Revenue. expenditure under the head foreign travelling Held that:- Foreign travel by husband of the assessee was exclusively for the business purpose of the assessee - Assessee's husband was also promoting his own business during the same time Decided against assessee.
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Customs
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2013 (12) TMI 1094
Confiscation of goods - Provisional release of seized helicopter on the provision of bond of full value of the seized helicopter and the bank guarantee for 10% of its value - Held that:- petitioner is not the original importer and a buyer of the helicopter in good faith, as is even suggested by the authority (DRI) who issued the show cause notice, the interests of justice would be served if the respondents are directed to release the helicopter provisionally on the condition of bond for the full value of the helicopter and the bank guarantee of 5% value of the helicopter - Decided partly in favour of assessee.
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2013 (12) TMI 1093
Penalty u/s 117 - Whether penalty can be imposed upon the appellant for delay in exporting the container for which a bond was executed under the provisions of Notification No.104/94-Cus dtd 16.3.1994 - Held that:- a penalty under this section can be imposed when there is a contravention of any of the provision of the Customs Act 1962 for which no express penalty is elsewhere provided. It is not brought out by the lower authority as to which provision of the Customs Act 1962 has been violated by the appellant. For non full-filling the conditions of Notification No.104/94-cus dtd 16.3.1994 only customs duty could be demanded from the present appellant but that issue has been decided in favour of the appellant. In the absence of any disclosure as to which provision of the Customs Act 1962 has been violated miscellaneous penalty under Sec 117 of the Customs Act 1962 can not be imposed - Decided in favour of assessee.
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2013 (12) TMI 1092
Valuation - Whether for picking up the value of new car from the parker's car guide, the element of VAT is required to be taken into consideration or not - Held that:- no VAT was paid by the appellant at the time of purchase of second hand car and no such claim stands made by the appellant. The question is as to whether for arriving at the correct assessable value of the second hand car based upon the value of the new car as reflected in the Parker's guide, the element of VAT is to be included or not - appellant has produced on record certificate from the parker's guide that price of the new cars listed in the guide are recommended retail price which are inclusive of VAT and car tax. Further evidence stand placed on record that VAT during the relevant period in 1986 was 15%. As such according to declaration of law by the Tribunal, the value of new car which is required to be picked up for arriving at the value of second hand car on the basis of determination of formula has to be value exclusive of VAT of 15%. As such, we agree with the appellant appearing in person that the value of car imported by him is required to be reassessed accordingly - Decided in favour of assessee.
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2013 (12) TMI 1091
Stay application - Waiver of pre deposit - violation of conditions of the Notification No. 52/2003-Cus., dated 31-3-2003 - Held that:- Goods were imported duty free by availing benefit of Notification No. 52/2003-Cus, dated 31-3-2003 by the appellant who is an EOU. It is also not in dispute that the goods inputs which were imported were transferred to another EOU of the same appellant under CT-3 certificate. Since the goods are transferred to another EOU, the denial of benefit of Notification No. 52/2003, in our considered view, seems to be prima facie incorrect. On reading of Notification No. 52/2003-Cus., we find that the appellant is, prima facie, eligible to transfer the goods to another 100% EOU for further manufacture - Prima facie case in favour of assessee - Stay granted.
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2013 (12) TMI 1090
Valuation of goods - Rejection of transactional value - Held that:- there is no reference to contemporaneous higher prices of identical goods. Reference is placed only on NIDB data which cannot be made basis for enhancing the value in the absence of positive evidence showing transaction value to be incorrect. Further Revenues stand that the importer failed to submit manufacturers invoice or manufacturers price list, by itself cannot be held to be a ground for enhancing the value unless the evidence to the contrary is shown - Decided against Revenue.
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2013 (12) TMI 1089
Valuation of goods - Royalty and licence fee paid by the importer - Import from assessee's foreign collaborator - Commissioner held that Technical Assistance and Licence Agreement dated 15-4-1996 did not have a clause whereby or wherein the importer-appellant is legally obliged to pay licence fee as a condition of sale of the imported goods - Held that:- royalty has to be paid @ 3% on net sale value of the rubber products manufactured and sold by the Licensee in India. Similarly, licence fee has to be paid @ 1% of the net sale value of the rubber products manufactured and sold by the Licensee bearing the trade mark. In other words, these payments are liable to be made in respect of the goods manufactured and sold in India and not in respect of the goods under importation. The goods under importation may be raw materials or components for the manufacture of the goods in India but the royalty and the licence fee are not payable on the imported goods but on the goods manufactured and sold in India. It is evident that the payments made by way of royalty or licence fee has nothing to do with the imported goods nor is it a condition of sale for the imported goods. As already discussed earlier, these payments are required to be made in respect of the rubber products manufactured and sold by the licensee in India. The provisions of Rule 10(1)(c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 are not attracted and, therefore, we do not find any infirmity in the order passed by the lower appellate authority. - Decided against the revenue.
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Service Tax
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2013 (12) TMI 1129
Cenvat credit denied on Commercial Construction Services - Waiver of Pre-deposit Held that:- Commissioner of Central Excise (Appeals) had denied the benefit of Cenvat credit on the ground that appellant has not submitted any evidence like work contract agreement or invoices in support of their contention that construction services were used in repair and renovation of the factory - it is stand taken by the department that commercial construction service was used by the appellant in the construction of factory premises - appellants have strong prima facie case in their favour - Pre-deposit waived till the disposal stay granted.
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2013 (12) TMI 1128
Denial of Cenvat credit on garden maintenance service Waiver of Pre-deposit Held that:- Following Commissioner vs. Millipore India Pvt. Ltd. [2011 (4) TMI 1122 - KARNATAKA HIGH COURT] -Activities relating to business and any services rendered in connection there with, would form part of the input services - landscaping of factory garden would certainly fall under the concept of modernization, renovation, repair, etc. of office premises thus landscaping of factory garden to be an input service modernisation, renovation, repairs, etc. are specified ingredients of input service defined under Rule 2(l) of the CENVAT Credit Rules, 2004 waiver of Pre-deposits allowed till the disposal Stay granted.
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2013 (12) TMI 1127
Stay Application - Demand of service tax - Erection and commissioning service - Held that:- applicant is contesting the demand of tax liability and they are also disputing the quantification of demand. The learned counsel produced the balance sheet showing the loss. We find that the deposit already made by the applicant is sufficient for waiver of balance amount of tax, interest and penalty. Accordingly, we grant waiver of pre-deposit of balance tax, interest and penalty and stay its recovery during the pendency of the appeal - Prima facie case in favour of assessee - Stay granted.
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2013 (12) TMI 1126
Waiver of the pre-deposit - Security Agency Services - Ex parte decree passed - Impostion of equivalent penalty - Held that:- prima-facie, no case is made out for absolute grant of waiver and interests of Revenue warrant that the petitioner/appellant should deposit the entirety of the service tax assessed by the order in original as confirmed by the order of the appellate Commissioner (after taking credit for amounts of pre-deposit if any, before the appellate authority), including the component of interest and other penalties assessed but excluding the amount of penalty imposed under Section 78 of the Act - Partial stay granted.
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2013 (12) TMI 1125
Waiver of pre deposit - Benefit of Notification No.12/03 - value of materials tobe sold while providing the service - Benefit of exemption notification given till such time their business was treated as small-scale unit i.e., upto 2008, and, therefore, they were not paying service tax - Held that:- demand is issued invoking the extended period of time and in such a situation, where there was considerable confusion regarding actual position. In fact, there was a circular from CBEC to that extent that service tax may be levied in case of photographic services for the value of service rendered - Assessee directed to make a pre deposit - Decided against assessee.
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2013 (12) TMI 1124
Demand of service tax - Classification of service - Supply of Tangible Goods for Use Service or storage and warehousing services - Held that:- contract entered into between the appellant and the ONGC is one for supply of vessels on charter hire basis and the operation and control of the vessel remains with the appellant. The vessels are used to store the crude oil produced at Bombay High and also to transport the same to the refineries or to the ports situated in various parts of India. The purpose of production of oil is for its use and since the crude oil is produced offshore, they have to be necessarily transported to refineries situated onshore. Storage of crude oil is only incidental to the main activity of transportation and the vessels are hired only when pumping of crude cannot be made through pipelines laid under the sea bed or in specific weather conditions. Thus, the primary object of charter hiring the vessel is for transportation of crude from the place of production i.e. in the High Sea to the refineries in India and not for "storage and warehousing". Appellant herein, M/s. Shipping Corporation of India, does not provide for security of the goods, nor are they loading or unloading the goods, or stacking the goods, or maintaining the inventory of the goods. As per the agreement, these responsibilities rest with the recipient of the service which is ONGC. Thus, the mother vessels are being used only as temporary storage space apart from transporting the crude oil from Bombay High to refinery situated onshore or other ports in India - Services rendered by the appellant in respect of mother vessels cannot be classified under Storage and Warehousing Services' as defined in Finance Act, 1994 - Appellant have discharged service tax liability under the category of Supply of Tangible Goods for Use Service' as defined under Section 65(105)(zzzzj). Therefore, the tax paid by them has to be appropriated and accounted under the said taxable service - Decided in favour of assessee.
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2013 (12) TMI 1123
Demand of service tax - Classification of service - Banking and financial service - Held that:- As per Section 65(105) (zm) as it stood at the relevant time, the "taxable service" means any service provided or to be provided to a customer, by a banking company or a financial institution including a non-banking financial company, or any body corporate or commercial concern, in relation to banking and other financial services". The appellant is neither a bank or a non-banking financial company as defined in law. The appellant is also not a non-banking institution notified by the RBI whose primary business is of receiving deposits or lending money. Therefore, the appellant is not a service provider envisaged in law in respect of banking and financial services at the point of time. The appellant is a mere lessor of the land, plant and machinery owned by him. This Tribunal, in similar circumstances, in the case of GE India Industries (P) Ltd and Banswara Syntex, (2008 (7) TMI 29 - CESTAT, AHMEDABAD) held that if the agreement does not provide for transfer of assets at the end of the lease term during which monthly user charges are collected, and all risks and rewards incidental to ownership are not transferred, such leasing activities would not fall under the category of financial lease coming under the "banking and financial service" - Decided in favour of assessee.
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2013 (12) TMI 1122
Demand of service tax - Penalty u/s 76, 77 and 78 - Suppression of facts - Intention to evade tax - Business auxiliary service - Commission agents - Assessee contends that entire activity of canvassing of orders was done outside India and hence cannot be taxed in India - Held that:- service falls under clause (i) of the definition of service under section 65 (19) of Finance Act 1994 - as per the provisions of Taxation of Services (provided from Outside India and Received in India), Rules 2006, the service is to be considered as imported and is taxable in the hands of the appellants - this service is an input service as defined under Rule 2 (k) of the Cenvat Credit Rules, 2004 because the service is in relation to sales promotion which is specifically included in the inclusive part of the definition. That being the case, the appellants were eligible to take credit of the service tax so payable if the appellants were to pay excise duty on any of the export goods. On textile products a voluntary scheme for payment of excise duty was in force. So the appellants could pay duty, take credit and utilize it either for local clearance or on any export consignment and get rebate. It is also seen that from 01-04-08, the government exempted such taxes subject to certain conditions by issuing notification 17/2008-ST. Part of the demand is after 01-04-08. Thus this is not just a case of revenue neutrality; but a special case of revenue-neutrality involving the same person taking credit of tax paid and also being eligible for relief from such tax incidence on account of the fact that services are used for export of goods. In such circumstances, there is no justification to slap a tax liability on an exporter of goods invoking extended period of time. Therefore, the allegation of suppression is not sustainable. Appellants are eligible for Cenvat credit as per law considering that such credit shall not be denied merely on account of under Rule 9 (1) (II) (bb) of Cenvat Credit Rules, 2004 - Interest as applicable will be payable. The penalties imposed under section 77 are upheld. However, penalties imposed under section 76 & 78 are set aside - Decided partly in favour of assessee.
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2013 (12) TMI 1121
Waiver of pre deposit - Demand of service tax - Site formation and clearance excavation and earth moving and demolition services - Held that:- From perusal of the appellants agreement with Rajasthan State Mines and Minerals Ltd. and Aravali FCI, Bikaner, it appears that their contract is essentially for mining of the gypsum and other activities - removal of overburden, loading of gypsum in trucks and levelling of mine/area, maintenance of the ramps and/or access roads, etc., are ancillary or incidental to the main area of the mining - requirement of pre-deposit of service tax demand, interest and penalty is waived for hearing of these appeals and recovery thereof is stayed till the disposal of the appeals - Following decision of M. Ramakrishna Reddy, Civil Contractors v. CCE & C, Tirupathi [2008 (10) TMI 115 - CESTAT, BANGALORE] and CCE, Hyderabad v. Vijay Leasing Company [2010 (12) TMI 782 - CESTAT, BANGALORE] - Stay granted.
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2013 (12) TMI 1120
Waiver of Penalty u/s 80 as imposed u/s 76 & 78 - Demand of service tax - Construction of residential complexes - Adjudicating authority reduced penalty u/s 78 and set aside penalty u/s 76 - Held that:- assessee is a small scale service provider and it is obvious from the records that he did not get registered and discharge Service tax liability as he was not aware of the provisions of law. As soon as the omission on his part was brought to his notice, he discharged the Service tax liability. For the year 2007-08 he discharged the duty liability in March, 2009 and for the period 2008-09 he discharged the liability in August, 2009 in respect of demand. He also discharged liability of interest in March 2009 itself - Therefore, it was a fit case for waiver of penalty under Section 80 of the said Finance Act which the adjudicating authority failed to do by taking into consideration the facts of the case which the appellate authority has done. He reduced the amount of penalty to the extent to Service tax paid by the respondent assessee. At least the appellate authority has exercised the discretion to some extent even though he could have waived the entire penalty under Section 80 of the Finance Act, 1994 which provides for complete waiver of penalty when there was a reasonable cause for failure on assessees part in non payment of Service Tax - Decided against Revenue.
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2013 (12) TMI 1119
Waiver of pre deposit - Demand of service tax - Commercial Training or Coaching - Held that:- As the applicants are organizing training course, seminars, workshops for consideration to improve the skills therefore prima facie, it cannot be said that the applicants are not imparting any Commercial Training or Coaching for imparting skill or knowledge or lessons on any subject - Revenue has taken into consideration the Memorandum of Association and other evidence on record which show that the applicants are undertaking the activities as mentioned in the Memorandum of Association - Conditional stay granted.
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Central Excise
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2013 (12) TMI 1088
Valuation of Goods under Section 4A OR Section 4 of Central Excise Act, 1944 - Waiver of Pre-deposit Penalty under Rule 25 of Central Excise Rules, 2002 Held that:- Appellant directed to deposit 10% of the duty liability as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.
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2013 (12) TMI 1087
Cenvat credit availed Duty discharged defaulting the Provisions of Rule 8 of the Central Excise Rules, 2002 - Waiver of Pre-deposit Held that:- Following SOLAR CHEMFERTS PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, THANE-I [2011 (6) TMI 640 - CESTAT, MUMBAI] - The appellant has discharged the default amount of central excise duty and interest in 2008 to 2009 the appellant has made out a prima facie case in their favour Pre-deposits waived till the disposal Stay granted.
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2013 (12) TMI 1086
Refund claim rejected on bar of limitation Held that:- The claim of refund was made by the appellant within a period of around two months from the date of passing of the order-in-appeal - Following Surbhi Enterprise Vs. CCE, Ahmedabad [2006 (12) TMI 25 - CESTAT,AHMEDABAD ] and Nepa Ltd. Vs. CCE, Indore [2002 (10) TMI 150 - CEGAT, NEW DELHI] filing an appeal against the order of confirmation of the demand amounts to protest and the consequential relief is liable to be granted to the assessee on the success of their appeal without raising the power of limitation. Relatability of debit to the demand Held that:- Merely because the appellant has not mentioned against the said debit that the same is relatable to the demand in question will not ipso facto go to show that the same is not in respect of the confirmed demand - the debit was relatable to the demand and the appellant are entitled to the refund order set aside Decided in favour of Assessee
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2013 (12) TMI 1085
Condonation of Delay Delay of one year far beyond the condonable period Held that:- The order-in-original was received by the party on 23.07.2010 and an appeal against the same was filed only on 08.08.2011 with a delay far beyond the condonable period of delay prescribed under Section 85 of the Finance Act 1994 Following Singh Enterprises Vs. Commissioner [2007 (12) TMI 11 - SUPREME COURT OF INDIA] - Section 5 of Limitation Act 1963 was not applicable and that the Commissioner (Appeals) was not empowered, under Section 35 of the Central Excise Act, to condone any delay beyond the condonable period of delay (30 days) prescribed the order of Commissioner (Appeals) sustained and appeal dismissed with the stay application.
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2013 (12) TMI 1084
Determination of Assessable value - Waiver of Pre-deposit Held that:- Following Ispat Industries Ltd. VS. Commr. of Central Excise, Raigad [2007 (2) TMI 5 - CESTAT, MUMBAI] - the assessable value of stock transferred goods should be determined as per the price at which such goods were sold to independent buyers - it cannot be denied that the price at which the goods were sold to independent buyers ought to be adopted for the purposes of determination of assessable value of goods, captively consumed as well as cleared to sister unit on stock transfer basis applicant directed to submit Rupees two crores as Pre-deposit upon such submission rest of the duty to be waived till the disposal Stay granted.
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2013 (12) TMI 1083
Determination of assessable value of cakes - Waiver of Pre-deposit Held that:- Following M/s Eastern Bakeries Pvt. Ltd. Vs. CC Ex., Kol.VII [2013 (5) TMI 322 - CESTAT KOLKATA] The Tribunal had already allowed the stay to the assessee for earlier period - the applicants are able to make out a prima-facie case for total waiver of duty and penalty Pre-deposit waived till the disposal of appeal Stay granted.
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2013 (12) TMI 1082
Denial of Cenvat credit - Goods Inputs and/or Capital goods under Rule 2 (k) and Rule 2 (a) of the Cenvat Credit Rules, 2004 Waiver of Pre-deposit Held that:- The Applicant had availed the CENVAT Credit on Rails initially claiming it as capital goods and later as inputs - The applicant had contended that initially they claimed the rails as capital goods and accordingly, capitalized the same in the Books of Accounts, but for the subsequent periods, the rails were claimed as inputs under Rule 2 (k) of Cenvat Credit Rules, 2004 - Following M/s. SAIL, DURGAPUR STEEL PLANT Versus COMMISSIONER OF CENTRAL EXCISE, BOLPUR [2013 (11) TMI 1411 - CESTAT KOLKATA] - the applicant directed to deposit 25% of the cenvat credit as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.
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2013 (12) TMI 1081
Assessee not registered as input service distributor Invoices raised and the services used at different units - Waiver of Pre-deposit Held that:- Prima-facie, the cenvat credit has not been availed correctly as per the procedure laid down under the Cenvat Credit Rules, 2004 - the applicant directed to deposit Rupees thirteen lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.
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2013 (12) TMI 1080
Inclusion of the value of pre-laminated boards in the assessable value - Goods manufactured on job work basis - Waiver of Pre-deposit Held that:- Following International Auto Ltd. Vs. Commissioner [2005 (3) TMI 132 - SUPREME COURT OF INDIA ] - the job-worker was not liable to pay duty on the input supplied by the principal manufacturer after availing CENVAT credit the assessee has established prima facie case in their favour waiver of Pre-deposits granted till the disposal stay granted.
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2013 (12) TMI 1079
Differential amount of duty - Addition of value of materials supplied free of cost - Waiver of Pre-deposit Held that:- Waiver and stay were granted on the basis of revenue-neutrality - there is nothing on record to indicate that the Stay Order was not accepted by the department Pre-deposits waived till the disposal Stay granted.
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CST, VAT & Sales Tax
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2013 (12) TMI 1131
Compliance of the interim order dated 18th January, 2012 - Stay of 50% of the accrued tax liability/ arrears under the U.P. Tax on Entry of Goods into Local Areas Act, 2007 - On 16.9.2012 High Court passed the order directing the counsel for the respondents to provide computation of the department to consider whether the demand is in excess of the amount, which the petitioner is required to deposit and secure by bank guarantee in compliance with the interim orders passed - On the same day on the request of the department the bank has allowed an amount to be encashed from the bank account - Whether the amount has been withdrawn before or after the communication of the interim order - Held that:- in case the petitioner furnishes bank guarantee of Rs.52 crores to the satisfaction of the Joint Commissioner (Commercial Tax) Corporate Circle (I), Commercial Tax Kanpur within a period of 15 days from today, he will not press any further demand in pursuance to the interim order - Decided partly in favour of Assessee.
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2013 (12) TMI 1130
Inter-state sales of diesel generator - Penalty u/s 45A of the K.G.S.T. Act - Held that:- The minimum requirement to be shown is that the petitioner had in fact purchased the aforesaid generators and thereafter it is sold to the buyers in question - offer and acceptance of the deal in question was between the local purchasers and the revision petitioner. It is found that the despatch of goods by the Pondicherry dealer and the consequential delivery as per the instructions given by the petitioner to local customers would make it a local sale between the local purchaser and the petitioner and therefore the transactions falls within the sale - the Pondicherry dealer had transferred the property in the goods to the buyers in Kerala directly. If that is the position, necessarily a person who had procured the orders for the Pondicherry seller for the buyers in Kerala would not become a purchaser of the goods and for that reason itself the petitioner will not become a purchaser - Decided against Revenue.
