TMI Tax Updates - e-Newsletter
December 5, 2012

Case Laws in this Newsletter:

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

TMI SMS

• Dishonor due to change in authorized signatories - authorised signatory liable to be prosecuted along with the company even after resignation. - SC

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• Cost Accounting Records - Various Rules Amended - Form for filing XBRL document in respect of compliance report and other documents with the Central Government

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• Service tax registration form ST 1 amended to include accounting codes - Notification

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Articles

1. Composition Scheme for on-going works contract prior and post 1st July, 2012

   By: Bimal jain

2. Ex-Senior officers appearing as Consultants before Lower authorities

   By: vasudevan unnikrishnan

News

1. FDI Policy for Mining Sector

2. Revision of Income Criteria for Eligibility Under Various Housing Schemes for the Economically Weaker Sections (EWS) and the Lower Income Group (LIG)

3. Inter-Ministerial Task Force on Coal

4. Crop Insurance Schemes for Compensation of Loss to Farmers

5. Kisan Credit Cards for Flow of Credit to Farmers and Increasing Financial Inclusion

6. Providing Financial Assistance to Farmers Through Subsidy Schemes

7. Enhancing Cold Storage Capacity in the Country through Various Schemes

8. Steps for Regulating the Working of Contract Farming

9. Signing of the Bilateral Swap Arrangement between Japan and India

10. Auction for Sale of Government Stocks

11. Under-Recovery on Diesel Effective 01.12.2012 goes past at Rs 10 per litre mark Sharp increase in Under-recovery for December on Domestic LPG, Remains high on PDS Kerosene at Rs 30.93 per Litre OMCs Incurring Daily Under-Recoveries of Rs 420 Crore Crude Oil Price for Indian Basket rises to US$ 109.51 per barrel on 30.11.2012

Notifications

Companies Law

1. G.S.R. 868(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Telecommunication Industry) Amendment Rules, 2012 - Amendment In Rule 2 And Forrm - A

2. G.S.R. 867(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Petroleum Industry) Amendment Rules, 2012 - Amendment in rule 2 and Form A

3. G.S.R. 866(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Electricity Industry) Amendment Rules, 2012 - Amendment In Rule 2 And Form - A

4. G.S.R. 865(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Sugar Industry) Amendment Rules, 2012 - Amendment In Rule 2 And Form - A

5. G.S.R. 864(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Fertilizer Industry) Amendment Rules, 2012 - Amendment In Rule 2 And Form - A

6. G.S.R. 863(E) - dated 30-11-2012 - Co. Law

Cost Accounting Records (Pharmaceutical Industry) Amendment Rules, 2012 - Amendment in rule 2 and form - A

7. G.S.R. 862(E - dated 30-11-2012 - Co. Law

Companies (Cost Accounting Records) Amendment Rules, 2012 - Amendment in rule 2 and form - A

8. G.S.R. 861(E) - dated 30-11-2012 - Co. Law

Amendment in rule 2 and substitution of form-I - Companies (Cost Audit Report) Amendment Rules, 2012

Customs

9. 51/2012 - dated 3-12-2012 - ADD

Regarding imposition of definitive anti-dumping duty on imports of digital offset printing plates

Service Tax

10. 48/2012 - dated 30-11-2012 - ST

Service tax registration form ST 1 amended to include accounting codes

Circulars / Instructions / Orders

VAT - Delhi

1. 23 - dated 3-12-2012

Framing of Default Assessment Orders

Highlights / Catch Notes

Income Tax

• Understanding "Lack of Inquiry" vs. "Inadequate Inquiry" in Section 263 Revisions: Key Differences for Commissioners.

  Case-Laws - HC : Revision u/s 263 - One has to keep in mind the distinction between “lack of inquiry” and inadequate inquiry”. - If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Section 263 - HC
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• Section 143(2) Notice Invalid: Failed to Comply with CBDT Instructions, Raising Legitimacy Concerns in Tax Scrutiny.

  Case-Laws - AT : Validity of Notice issued u/s 143(2) - selection of cases of corporate assesses for scrutiny - notice issued u/s 143(2) of the Act for assumption of jurisdiction was not in terms of the instructions of the CBDT - AT
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• Mobilization Money Not Automatically Income: Tax Deduction by Builder Doesn't Classify as Assessee Income for the Year.

  Case-Laws - AT : Merely because tax at source has been deducted by the builder, the receipt of mobilization money cannot be deemed as income of the assessee for the year under consideration - AT
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Customs

• Anti-Dumping Duty Imposed on Digital Offset Printing Plates to Protect Domestic Industries from Unfair Competition.

  Notifications : Regarding imposition of definitive anti-dumping duty on imports of digital offset printing plates - Notification
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Corporate Law

• Supreme Court: Resigned Signatory Still Liable for Dishonored Cheque u/s 138, Despite Change in Authorization.

  Case-Laws - SC : Dishonor of Cheque u/s 138 - dishonor due to change in authorized signatories - authorised signatory liable to be prosecuted along with the company even after resignation. - SC
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Service Tax

• Service Tax Registration Form ST 1 Updated to Include Accounting Codes for Improved Process Efficiency and Clarity.

  Notifications : Service tax registration form ST 1 amended to include accounting codes - Notification
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VAT

• Kerala High Court: No Article 14 Violation for Lack of Floor Value on Cashew Nuts Under Kerala VAT Act.

  Case-Laws - HC : Kerala Value Added Tax Act – cashew nuts - Floor value for cashew nuts and cashew kernels have not been fixed in other States is no reason to attract the provisions of article 14 of the Constitution of India - HC
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• New Circular Sets Standard Procedure for Issuing Default Assessment Orders in VAT and Sales Tax Cases

  Circulars : Framing of Default Assessment Orders - Circular
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Case Laws:

• Income Tax

• 2012 (12) TMI 95
  Addition as income from other sources for the credits appearing in the bank account – alleged that bank account not belong to the assessee – Held that:- during the course of assessment proceedings, certain information was gathered u/s 133(6)/131 which is available in the assessment record. - However, in the assessment order, we do not find any whisper about such information. - If the information is against the assessee, he should have been confronted with this information and if the information was in favour of the assessee, then to that extent, addition should not have been made. AO made the addition of entire receipt credited in the assessee’s bank account. The assessee has claimed that most of the receipt is either the loan taken by the assessee or repayment of the loan which was given by the assessee. He also stated that the parties from whom loan was taken or who refunded the loan to the assessee have affirmed those facts to the AO in writing. If it is so, then the addition in respect of that credit should not have been made - matter is restored back to AO for making assessment afresh

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• 2012 (12) TMI 94
  Validity of Re-assessment Proceedings – Unexplained Addition u/s 68 – bogus credit - accommodation entries - credit worthiness and genuineness of transaction - Following the decision of court in case of [Commissioner of Income-tax Versus Vishal Holding & Capital (P.) Ltd. 2010 (8) TMI 634 - DELHI HIGH COURT ] Held that:- Assessee had produced copies of accounts, bills and contract notes issued by M/s. MKM Finsec Pvt. Ltd., and had been maintaining books of account as per Companies Act - Assessing Officer has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee. The assessee has also produced best possible evidence to support its claim - AO has not verified details in respect of the material, which has been relied upon by him, he has not provided any findings of the investigation to the assessee. Therefore, in these circumstances, the addition made by the Assessing Officer cannot be said to be on the basis of some evidence that was put to the assessee in the course of assessment proceedings. CIT(A) has correctly deleted the addition - order of CIT(A) on the issue in question is upheld - In the result, revenue ‘s appeal is dismissed.

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• 2012 (12) TMI 93
  Determination of arm's length price - rule of consistency – Held that:- External comparable prices for the impugned assessment year 2006-07 supplied by the assessee, when accepted by the Assessing Officer for the assessment year 2007- 08, must be accepted for that year in view of the absence of material facts and also in view of the rule of consistency - rule of consistency is relevant to Income-tax matters and Assessing Officer cannot be ignore the same - appeal filed by the assessee is allowed for statistical purposes

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• 2012 (12) TMI 92
  Deduction u/s 80I - disregarding the fact that the report of chartered engineer upon which the Ld. CIT(A) relied does not state categorically that none of the machineries were transferred to new unit - alleged that almost whole work was got done from out side on job work basis and assessee simply assembled the machinery and is therefore not eligible for deduction u/s 801 - Hold that:- Deduction u/s 80I cannot be denied if an assessee get the machinery manufactured or fabricated from outsiders and thereafter assembling the machine itself - claim u/s 80I to the assesses Co. is eligible heaving reference to the manufacturing activity carried out by the assessee during the relevant years, for which supporting purchase of raw materials and manufacturing have been adduced before me which are reflected in the relevant P & L accounts - final product have been manufactured by the assessee Co. Similar factual position is verified with other assessment years - AO is accordingly directed to allow the claim u/s 80I

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• 2012 (12) TMI 91
  Addition on account of bogus expenses – Held that:- Nature of business of the assessee clearly proves that component of labourers is necessary for doing the business of the assessee. The assessee maintained complete records of the payments for labour charges and the outstanding payments have been cleared - With regard to Shyam Steels Pvt. Ltd. the assessee purchased old and used D. G. Sets from them and the assessee submitted before the authorities below that it is a registered dealer under Sales Tax and regularly assessed to income tax and payment is made through account payee cheques. Similarly, commission payments have been made through account payee cheques - addition deleted – in favor of assessee Addition on account of bogus purchases – Held that:- Sale value of oil coolers was disclosed in the books of accounts which the AO himself admitted - On verification of the books of accounts, bills and vouchers found the contention of the assessee to be correct. The assessee filed ledger account, copy of the draft and bills of M/s. Akil Corporation at pages 71, 72 and 73 of the paper book to show that purchase of Rs.1,18,000/- have been made which are recorded in the books and payments are made through banking channel - addition deleted – in favor of assessee Addition on account of excess payment to persons specified u/s 40A (2) (b) of the IT Act – alleged that major purchases were made from the sister concern which is more than 42% of the total purchases and 65% of the D. G. Sets were also purchased from them - AO was of the view that the assessee could have purchased the same directly instead of purchasing it through sister concern – Held that:- AO has not compared the prices paid by the assessee to the sister concerns with the market price for proving that these concerns were made excessive or unreasonable payments - AO has not brought any evidence or material on record to prove as to how the payments made to the sister concerns were excessive or unreasonable as compared to fair market value of these services or facilities – addition deleted – in favor of assessee

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• 2012 (12) TMI 90
  Addition on account of right to receive royalty fees – Held that:- Asseasee company entered into agreement with Dr. Syed Mohd. won Syed Hussein and Dr. Lourdenedin of Kaulalumpur on 28.8.7S. The company agreed to provide technical knowhow - assessee company has received total consideration of Rs.4.75,000/- for both the agreements which has been added to the value of the goodwill. This part of consideration is liable to be taxed as amount received in lieu of income - assessee did not produce any further evidence or material justifying their case for non-taxability of the amount in question – addition upheld

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• 2012 (12) TMI 89
  Disallowance of Sales promotion expenditure - rewards point can be redeemed by the customers by way of rebate from the sale price while making additional purchases at the assessee’s stores – disallowance of claim on the ground that the expenditure is an unascertained expenditure – Held that:- As and when the customer of the assessee makes a particular purchase, the customer is given a monetary right, in the form of rebate in the cost of goods that he may purchase at a future date. Thus, as and when a right is given, the assessee incurs a liability which it has claimed as marketing expenditures. The assessee, based a historical data, in a scientific manner, has estimated that only 50% of the reward points given are likely to be encashed by the customers. Out of this, 50% gross profit margin is reduced and the balance is only claimed as expenditure - assessee has also proved that this is a consistent accounting policy being followed year after year – Disallowance deleted – In favor of assessee

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• 2012 (12) TMI 88
  Deduction u/s 35D in respect of amortization of expenditure incurred on initial public offer of Equity shares – alleged that the appellant is not an industrial undertaking – Held that:- Assessee company is carrying on banking business in India - Section 35D allows authorization of certain preliminary expenses only to an ‘industrial undertaking’ incurred before commencement of business, or after the commencement of his business, in connection with the extension of his ‘industrial undertaking’ or in connection with his setting up of a new ‘industrial unit’ and financial institutions are not eligible for the same” - assessee is a bank and not an ‘industrial undertaking’ for the purpose of section 35D – against assessee. Revision u/s 263 - possible view - held that:- the AO has not examined issue and simply without applying the mind allowed the claim of the assessee, therefore, the order of the AO becomes erroneous and prejudicial to the interests of the Revenue. - the order passed by the CIT u/s 263 o upheld.

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• 2012 (12) TMI 87
  Penalty under section 271(1)(c) of the Income Tax Act - alleged that under Rule 5(2) of the IT Rules furnishing of a certificate from the competent authority in respect of pant & machinery, (in this case moulds) to qualify for depreciation @ 40% was necessary and since the assessee was unable to furnish & comply with the said requirement ,the depreciation on such assets is restricted to 25% only – Held that:- Assessee cannot be charged with having concealed particulars of income - requirement of Rule 5(2) have been duly complied with, as the assessee was using technology developed in an institution recognized in this behalf by the Secretary, Department of Scientific and Industrial Research, Government of India - technology used by the assessee is the same as was used by him in the past for manufacture of sleepers - though the addition is justified in the quantum proceedings, imposition of penalty on such addition is not warranted – In favor of assessee

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• 2012 (12) TMI 86
  Disallowance made on account of payment made by the assessee to the spouse of its diseased partner – Held that:- Deed of partnership referred to in the supplementary partnership deed, the main logo and mark “GAGRATS” were assigned along with goodwill and all tangible and intangible rights to Mr. J.R. Gagrat and Mr. R.J. Gagrat jointly as their absolute and exclusive property - when the name, logo and mark belonged to Mr. J.R. Gagrat and Mr. R.J. Gagrat, there was no question of payment for their use to the wife of Mr. J.R. Gagrat especially in the event of his retirement - payment of Rs. 12 lakhs made to Mrs. M.J. Gagrat, therefore, was not a case of diversion of income by overriding title and it was only case of giving benefit to one individual who was neither a partner of the firm nor in any way related to the professional work of the firm - it was clearly a gratuitous payment made by the assessee firm which was not an allowable business expenditure u/s 37(1) – In favor of revenue

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• 2012 (12) TMI 85
  Minimum Alternate Tax (MAT) - Book adjustment - Deduction under section 80HHC – Held that:- Deduction allowable under section 80HHC has been done away with in a phased manner and since assessment year 2005-06, no deduction is allowable. The clause (iv) of Explanation 1 to section 115JB(2) has also been omitted by the Finance Act 2011 w.e.f. 1.4.2005 and, therefore, from assessment year 2005-06, book profit is not required to be reduced by the amount of profit eligible for deduction under section 80HHC as deduction under section 80HHC is no longer available from assessment year 2005-06 - assessee is not entitled for any deduction under section 115JB(2) - assessee will not be entitled for any reduction of book profit on account of section 80HHC deduction or profit eligible for deduction under section 80HHC – In favor of revenue

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• 2012 (12) TMI 84
  Deduction u/s 80IB - Ownership vs Builder - held that:- Fact that Assessee was not the owner would not disentitle assessee from claiming relief u/s 80IB(10) of the Income Tax Act. As decided in Commissioner of Income-Tax V. Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT], Gujarat High Court considered the question on ownership as a condition for grant of deduction under Section 80IB(10) in depth and accepted the case of an assessee similarly placed. It held that the provisions nowhere require that developers who are the owner of the land alone would be entitled for grant of deduction under Section 80IB(10). Therefore, assessees were entitled to the benefit u/s 80IB(10) even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners – Decided against the Revenue. Whether Tribunal was right in holding that the provisions of Sec 80IB(10) provide for partial deduction to housing project with respect to residential flats with built up area of less than 1500 sq.ft. where the same project contains flats with built up area exceeding 1500 sq.ft - held that:- Assessee was not entitled to relief in respect of those flats, which exceeded 1500 sq.ft. it is evident that what the assessee had undertaken is not a mere construction, but developing and constructing of a project, which qualifies for deduction u/s 80IB of the Income Tax Act. Deduction contemplated therein is oriented towards the project and not with reference to an assessee. It is no doubt true that the project has to be done by the assessee, but then, when the deduction is specific enough as regards the particular activity, administrative process, is purely at the hands of the Statutory Authority concerned, over which, the assessee could not have any control, the Explanation cannot, in any manner, have a negative effect on a factual aspect of the matter, namely, completion of the construction. Thus, in a case like this, where, the local authority, being the Corporation, had already certified about the completion of the project as per the approved plan, the fact that one of the Authorities, namely, Chennai Metropolitan Development Authority had issued a letter only on 13.6.2008, per se, cannot negative the assessee's claim for deduction. In the light of the above-said facts, Revenue's appeal is rejected. Though the assessee had complied with the extent of built-up area as per clause (c) and the assessee is entitled to have the benefit of deduction under Section 80IB of the Income Tax Act, since the Tribunal had remanded the portion of the built-up area for verification before the Assessing Officer and a factual enquiry has to be made thereon as to whether the built-up area is in fact 1500 sq.ft. or more than that In the circumstances, we confirm the order of the Tribunal on the remand portion. when the local authority, being part of Chennai Metropolitan Development Authority and also the approving authority, thus having certified about the completion, we do not find any justifiable ground to invoke Explanation (2) to sub-section (10) of Section 80IB of the Income Tax Act for the purpose of negativing the claim. In any event, going by the fact that the Explanation cannot have a control on the substantive provision, as a matter of construction, we agree with the assessee's contention and we have no hesitation in confirming the order of the Tribunal.

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• 2012 (12) TMI 83
  Enhancement of Assessment - power of CIT(A) to enhancement - held that:- When, in the course of considering the assessee's appeal on a different issue, the CIT (A) thought it fit to exercise his enhancement powers with reference to one aspect of assessment, which was not the subject matter of the appeal, it is no doubt true that Sec 251 of the Income Tax Act provides for such authority and jurisdiction to enhance the assessment.- But, then, Sub Section (2) of Section 251 of the Act, stated that such authority could be exercised only subject to the assessee being given a reasonable opportunity to show cause against such enhancement - order of tribunal set aside - matter remanded back to CIT(A) Spreading over of interest - assessment of income - held that:- In contrast to the decided case relating to claim of deduction as expenditure, the case on hand is related to the assessment of income. Even though the parameter for considering the expenditure and income is not the same, yet, the principle to be followed is that when the instrument concerned is certain as to its period of life and specifically points out to a particular interest amount to be paid on the maturity date, the question of assessing the entire interest in the first year itself, does not arise. - the question of assessing the entire interest income of Rs.3,10,43,664/- in the assessment year 1997-98 does not arise and that the Revenue would be entitled to assess a sum of Rs.3,37,431/- alone for the assessment year 1997-98 and the balance amount of Rs.3,07,06,233/- has to be assessed for the assessment year 1998-99.

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• 2012 (12) TMI 82
  Broken period interest - classification of the securities as permanent or current - allowability of interest of securities held as investments and stock in trade - held that:- in view of decision in T.C.(A).No. 455 of 2008 dated 30.10.2012, decided against the assessee. Set off of carried forward losses of earlier years - held that:- there is no consideration of the said question by the Tribunal - matter remanded back to AO. Valuation of securities in respect of stock-in-trade - matter remand to the Assessing Officer for his consideration on the issue in terms of the decision of the Apex Court in the case of UCO Bank Vs. CIT [1999 (9) TMI 4 - SUPREME COURT] Disallowance of Interest - Assessee submitted that when the consistent case of the assessee is that they had not expended anything in making investment for the tax free securities, the Tribunal committed serious error in upholding the order of the authorities below restricting 2% of the income earned towards the estimated expenditure. Learned counsel for the assessee pointed out that when the assessee had not expended anything on the investment in securities, there is no question of proving any such expenditure in earning income from tax free securities. It is seen from the order of the assessment that the assessee earned income from investment on tax free securities as specified in Section 10(15) of the Income Tax Act. When the assessee was specifically asked as to the expenditure incurred thereon, the assessee submitted that there was no expenditure incurred or expended for earning such interest income. The Officer held that in the absence of any evidence, the claim could not be considered. We agree with the assessee's contention that there could be no evidence that could be let in, to prove the non-existent expenditure; the assessee could nevertheless have substantiated the nature of the securities in which it had invested and the source from which it had invested. Since no details are available on this - restore the assessment back to the Assessing Officer for the purpose of enabling the assessee to let in evidence, particularly, as to the source to which it made investments. Depending on the materials available, it is open to the Officer to pass orders thereon - Tax Case (Appeal) is dismissed. No costs.

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• 2012 (12) TMI 81
  Setting off of Unabsorbed Depreciation and Losses - held that:- A reading of Section 32(2) thus makes it clear that if the unabsorbed depreciation allowance could not be wholly set off under clause (i) and clause (ii)a, the amount of depreciation not so set off can be set off from income from other head, if any, available for that assessment year. The language of Section 32(2) is very clear and there is hardly anything contained in Section 72(2) to prevent such set off of carried forward depreciation being given to the assessee under the head of income from business or income from other sources. The Revenue does not deny the fact that as far as the income from other sources are concerned, there could be no set off of business loss or carried forward loss. Section 72(2) is as regards set off of business loss as against the income from profits and gains of business or profession and if there is loss as well as unabsorbed depreciation, the set off shall be first on the business loss as against the business income and then on unabsorbed depreciation. What is spoken to under Section 32(2) is as regards set off of unabsorbed depreciation as per clause (ii) of sub section (1) and when the unabsorbed depreciation could not be set off as against the income from business or profession by reason of there being no income available under the said heads and where there is income from other sources, effect must be given to Section 32(2) of the Act for that assessment year - rejecting the Revenue's plea, there by confirming the order of Tribunal. The above Tax Case (Appeal) is dismissed. No costs.

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• 2012 (12) TMI 80
  Excess claim of Deduction u/s 80HHC - Reopening of Assessment - held that:- if the Assessing Officer has reason to believe that income has escaped assessment it confers jurisdiction on the Assessing Officer to reopen the assessment. Thus, the case herein is covered by the main provision and not the proviso. - So long as the ingredients of Sec 147 are fulfilled, the Assessing Officer is free to initiate proceeding u/s 147 and failure to take steps under Section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation u/s 143(1) had been issued - it is seen that prima facie adjustments were made under Section 143(1-A) of the Act on a debatable issue, which was subsequently set aside by the Commissioner and thereafter there being no regular assessment rightly, the Officer assumed jurisdiction under Section 147 of the Act as a case of an escaped assessment for making the original assessment under Section 147 of the Act - Decided in favor of revenue. Decision in Assistant Commissioner of Income-Tax Versus Rajesh Jhaveri Stock Brokers P. Limited [2007 (5) TMI 197 - SUPREME COURT]followed.

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• 2012 (12) TMI 79
  Expenditure on Iron rolls - Capital vs Revenue Expense - assessee does not claim its expenditure as replacement of whole machinery or repairing of machinery as such = Held that:- Whether expenditure is "revenue" or "capital in nature" would depend upon several factors, namely, nature of the expenditure, nature of business activity etc. - In the case of Commissioner of Income Tax Vs. Ramaraju Surgical Cotton Mills (2007 (8) TMI 39 - SUPREME COURT OF INDIA), the Supreme Court considered the decision in the case of CIT Vs. Saravana Spinning Mills P.Ltd reported in (2007 (8) TMI 16 - SUPREME COURT OF INDIA) and in the case of CIT Vs. Janakiram Mills Ltd [2005 (4) TMI 39 - MADRAS HIGH COURT] and pointed out that in considering whether the expenditure is revenue or capital in nature, the proven tests have been evolved that if the expenditure is of the nature not leading to the increased production capacity and the same remaining as constant, even after replacement, then, the expenditure would be revenue in nature. Given the technicalities on the "revenue" and "capital expenditure", "current repairs" and its application to a finding based on facts, Assessing Officer should have adverted to the various facts involved in the use of steel rolls to arrive at the decision as to whether the assessee is entitled to deduction under Section 37 of the Act or not. When the authorities below had not adverted to any of these, proper course herein would be to set aside the order of the Income Tax Appellate Tribunal. Accordingly, the order of the Income Tax Appellate Tribunal is set aside and the matter is restored to the files of the Assessing Officer to consider the claim of the assessee in the background of the nature of the expenditure incurred by the assessee and to the decisions of the Apex Court as referred to above and thereafter arrive at a finding - In the result, the Tax Case Appeal stands disposed of with the above observation. No costs.

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• 2012 (12) TMI 78
  Agent of the non-resident u/s 163 – Representative assessee - Assessee enter into an agreement with foreign company for purchase of certain machineries – Assessee had to pay only contract price for supply, installment and erection of the machinery - Foreign company deputed one its employees for supervising the work in India – Salary payment was made by the foreign company – According to AO such employee was employed in India, on such receipts, he was liable for taxation therefore assessee should be treated as the agent u/s 163 of such employee – Held that:- When the impugned notice was issued, assessee was described as an agent of the foreign company. This, in our view, is a vital defect in the notice itself. Foreign company & its employee were two different entities. It can, however, not be denied that the foreign company and its employee were legally completely in different position vis-a-vis the petitioner-company. Therefore the notice was wholly defective. In favour of assessee Validity of notice u/s 148 – AO issued notice u/s 148 came to be issued treating the assessee as an agent of the foreign company – Held that:- Mere passing reference or remark in the reasons recorded which ordinarily unless the assessee demands, are not supplied to the assessee, cannot be seen as a formal order against which the assessee could exercise his right of appeal. Following the decision in case of Kanhaya Lal Gurmtjkh Singh (1970 (12) TMI 33 - PUNJAB AND HARYANA HIGH COURT) that before issuing notice u/s 148, the AO must pass an order u/s 163(2) treating the assessee as an agent. In favour of assessee

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• 2012 (12) TMI 77
  Deduction under section 10A of the Income Tax Act - 100% Export oriented unit for Software – Held that:- There was a change of name, which is also duly approved by the ROC - Copy of declaration of Software export through data communication link with the company in SOFTEX from the Software Technology Park of India along with purchase orders made by the customers, confirmation of the same, invoice raised to clients and foreign inward remittance certificates from banks confirming receipt of money in the form of foreign exchange were furnished. Certificate regarding qualification of both the Directors was also furnished. The assessee company has made genuine exports, earned foreign exchange, which is not doubted by any other authorities except the A.O - exemption under section 10A of the Income Tax Act allowed – In favor of assessee

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• 2012 (12) TMI 76
  Addition on account of unaccounted income – alleged that addition was on presumption basis - appellant feeling that the Tribunal did not consider number of contentions raised and voluminous evidence produced while disposing of the appeal, filed an application for rectification under Section 254 of the Act – Held that:- There was no error in the decision of the Assessing Officer - reasons recorded by the Tribunal in the original order were rather brief. However, in the subsequent order which is impugned before us, such reasons have been indicated, evidence is evaluated and the findings of the Revenue authorities is confirmed – appeal dismissed - In favor of revenue

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• 2012 (12) TMI 75
  Rectification of mistake - Investment allowance - Section 32A – alleged that the assessee had not used the plant and machinery for its business and the same was given on lease rent from 1991- 92 - Held that:- Plant and machinery was hired out for a temporary period, which does not amount to transfer. Further the machinery was given on lease basis - On this ground the Assessing Officer in the original order had accepted the assessee's claim for investment allowance under Section 32A of the Act - such issue being debatable, the order could not have been varied in exercise of powers under Section 154 of the Act read with Section 155(4A) of the Act – in favor of assessee

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• 2012 (12) TMI 72
  Unexplained Investment u/s 69 - Whether transactions pertain to investment or sale of shares - Held that:- AO came to a conclusion that the transaction was an investment in SAIL on 17.12.2007 of assessee which was unexplained. Now the data available on record indicate that these are not purchase transactions but sale transactions by M/s Credit Suisse Ltd on behalf of various other funds being managed by Threadneedle Asset management Ltd. Once these are sale transactions, provisions of section 69 does not apply, which can be invoked for unexplained investment. Unless complete inquiry was conducted, it is not proper on the part of AO to make an assessment of sale of transactions as investment, as is done in this case. - matter remanded back - appeal filed by assessee is allowed for statistical purposes.

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• 2012 (12) TMI 71
  Adjustment in Transfer Pricing - held that:- whatever be the method followed or adopted for arriving at the ALP, the ALP can only be determined on the value of international transactions alone and not on the entire turnover of assessee at entity level. If this sort of adjustment is permitted, this will result in increasing the profit of assessee on the entire non-AE transactions also, which is not according to the provisions of Transfer Pricing mandated by the Act. The finally comparables margin on the updated data arrived at by the TPO was 6.29% as against assessee's margin of 5.19%. Therefore, the addition on margin of 1.10% can only be determined on the AE transactions. With reference to royalty and the liquidated damages - genuineness of expenditure - whether the relevant royalty payments made on various projects were also taken into account in segmental data - held that:- it is not necessary for the assessee to show that any legitimate expenditure incurred by him was also incurred out of necessity. It is also not necessary for the assessee to show that any expenditure incurred by him for the purpose of business carried on by him has actually resulted in profit or income either in the same year or in any of the subsequent years. The only condition is that the expenditure should have been incurred "wholly and exclusively" for the purpose of business and nothing more. It is this principle that inter alia finds expression in the OECD guidelines Even Rule 10B(1)(a) does not authorise disallowance of 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 or that in view of the continued losses suffered by the assessee in his business, he could have fared better had he not incurred such expenditure. These are irrelevant considerations for the purpose of Rule 10B TPO should not have undertaken determining the ALP at nil whereas the jurisdiction provided to him is to determine the ALP of the transactions under the method(s) provided under the Act. Therefore, on legal principles also this adjustment made by AO cannot be upheld.

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• 2012 (12) TMI 70
  Revision u/s 263 - erroneous or prejudicial to revenue - Setting aside Assessment - one time regulatory fee - held that:- One has to keep in mind the distinction between “lack of inquiry” and inadequate inquiry”. If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Section 263 of the Act, merely because he has a different opinion in the matter. It is only in cases of “lack of inquiry”. In the present case, the records reveal that the assessee was specifically queried regarding the nature and character of the one-time regulatory fee paid by it as well as the bank and stamp duty charges. A detailed explanation in the form of statements and other documents required of by the Assessing Officer were produced at the stage of original assessment. Clearly this was not a case of “No Enquiry”. The lack of any discussion on this cannot lead to the assumption that the Assessing Officer did not apply his mind. The proceeding in fact shows that Assessing Officer directed his mind specifically on this aspect and then concluded that the expenditure was in the revenue field. Under these circumstances, the Commissioner could not have validly exercised his supervisory or revisionary power under Section 263. As far as the other issues i.e. bank guarantee charges and stamp duty are concerned, this Court is of the opinion that the decision in India Cements Limited Versus Commissioner Of Income-Tax, Madras [1965 (12) TMI 22 - SUPREME COURT] conclude the issue. These expenses had to be regarded as falling properly in revenue filed - CIT (A) did not specifically furnish any reasons to say why the original assessment order was unsupportable in law, in the final order made by him on 30.03.2009 - question of law framed has to be answered in favour of the assessee and against the Revenue. The appeal, being meritless, has to fail and is therefore dismissed.

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• 2012 (12) TMI 69
  Eligibility of Deduction u/s 80IB and 80IB(10)- Whether Private terrace area should be included in the built up area of the flats for the purpose of making out statutory extent of built up area as per Clause (a) Section 80IB(14) of the Income Tax Act and deduction in case of constructed flats exceeding built up area of 1500 sq.ft. residential flat / 2000 sq.ft. commercial flat - held that:- the open terrace area cannot form part of the built up area; in the result, the assessee would be entitled to deduction under Section 80-IB(10) of the Act and that the assessee would be entitled to proportionate relief as regards the units having built up area not more than 1500 sq.ft. 7. As far as the Revenue's contention that for the purpose of Section 80-IB(10) deduction, the assessee should have owned the property is concerned, the same is liable to be rejected - Decided in favor of assessee.

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• 2012 (12) TMI 68
  Reopening of assessment - loss incurred on sale of repossessed vehicle - Capital vs Business loss - held that:- It was a Business Loss. - Considering the history of the assessee and peculiar facts as well as the replies and reasoning taken by the Assessing Officer himself while dealing with the audit objections, it cannot be said that there was any tangible material in the possession of the Assessing Officer for forming opinion that the expenditure/loss under consideration could be capital loss and not business loss requiring him to initiate action u/s 147 of the Act - no reason to interfere therein for our own reasons stated hereinbefore and reject the grounds raised in appeal by the revenue - Decided in favor of assessee.

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• 2012 (12) TMI 67
  Validity of Notice issued u/s 143(2) - selection of cases of corporate assesses for scrutiny - held that:- No disallowance of Rs. 5 lacs or more and in any case no finding is available from the order of the authorities below that an identical issue had arisen in the year under consideration. Moreover, it is also seen that each of the disallowances made in A.Y. 2004-05 were lump sum disallowances, which cannot be said to be arising in the succeeding year. since notice issued was not in terms of the instructions issued by the CBDT, proceedings are invalid. - judgment of Hon’ble Andhra Pradesh High Court in the case of CIT Vs. Smt. Nayana P. Dedhia [2004 (8) TMI 99 - ANDHRA PRADESH HIGH COURT] relied upon. Further, Once the CBDT has issued instructions for assumption of jurisdiction for selection of cases of corporate assesses for scrutiny and assessment thereof, the same have to be followed in letter and spirit by the AO. The burden lies on the authority assuming jurisdiction to show and establish that such instructions have duly been complied and satisfied in letter and spirit. However, in the instant case, for the reasons stated above, instructions issued by the CBDT are not shown to have been satisfied for assumption of jurisdiction. Thus, we are in agreement with the contention raised by the appellant that notice issued u/s 143(2) of the Act for assumption of jurisdiction was not in terms of the instructions of the CBDT - Hence, both the notice and the assessment framed are held to be without valid jurisdiction and stand quashed as such - notice as well the as assessment is quashed, we do not consider it necessary to render any decision on merits of the other grounds raised in both these appeals, as the necessary consequence thereof shall follow in the light of judgment rendered by the Hon’ble Calcutta High Court in the case of Rawatmal Harakchand Vs. CIT [1978 (3) TMI 10 - CALCUTTA HIGH COURT] - In the result, assessee’s appeal stands allowed and that of the department is dismissed.

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• 2012 (12) TMI 66
  Mobilization Advance - Mobilisation advance which is initially released against Bank Guarantee is to extend financial assistance within the terms of contract to the contractor to mobilize the man and material resource for timely and smooth take off of the project or procurement of equipment, material or other services contract. ”The amount received as mobilization advance is not towards a contract receipt, but is merely an advance for mobilizing resources by the assessee for carrying out the work of its customer/client. This amount is required to be adjusted proportionately against the running bills for the work certified. The amount of mobilization account that has been adjusted during the year under consideration has been included as assessee’s income whereas the balance outstanding remains as a current liability for the year. The same is liable to be adjusted against the future running bills in the subsequent year. Essential this receipt was not in the nature of income. Merely because tax at source has been deducted by the builder, the receipt of mobilization money cannot be deemed as income of the assessee for the year under consideration - no error in the decision reached by CIT (A) in deleting the addition on this count - no merit in this ground raised by the revenue, the same stands rejected. Treatment of Outstanding liability as Ceased Liability u/s 41 (1) - Held that:- This is a case of a private limited company wherein the liabilities are appearing in its books of account. The balance sheet being a public document, it cannot be said that the assessee has not acknowledged the debt towards its creditors. The liability under the circumstances cannot be taken to be a ceased liability - CIT (A), therefore, cannot be said to have erred in deleting the addition. As provisions of Section 41 (1) of the Act are not applicable to a case like this and finding no merit in this ground, the same is also rejected. Decision in Commissioner of Income-Tax Versus Sugauli Sugar Works Pvt. Limited [1999 (2) TMI 5 - SUPREME COURT] followed - In the result, appeal filed by Revenue is dismissed.

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• 2012 (12) TMI 65
  Disallowance of Depreciation on computer peripherals/accessories - held that:- Computer accessories and peripherals form an integral part of the computer system as the computer cannot be used without computer accessories and peripherals and consequently they are part of the computer system. Hence, they are also entitled to depreciation at the higher rate of 60% - there is no reason to interfere with the order of CIT(A) and accordingly, his order is uphold. Hence, ground taken by the Department for A.Y. 2006-07 is rejected. Decision in COMMISSIONER OF INCOME TAX Versus BSES YAMUNA POWERS LLD. / BSES RAJDHANI POWERS LTD. [2010 (8) TMI 58 - DELHI HIGH COURT] followed. Taxability of Advance from Customers - works contract - held that:- Income tax proceedings of one year are not binding on other year and each year is independent from the other. from terms and conditions of the Purchase Order and the Chart placed on record it is clear that the assessee is following the percentage completion of the work as closing work in progress which is shown as opening work progress in next year. The assessee is following said method/policy consistently. On execution of the contract/purchase order, the assessee is showing the income of the said contract in the respective assessment year. Therefore, the assessee is recognizing revenue upon the completion of the contract i.e. transfer of the significant risk and rewards of ownership to the customers and not on/with reference to receipt of advances as per the Accounting Policy No. 4. The said fact has not been disputed by the department. Considering the said facts and Accounting Policy followed by CIT(A) - CIT(A) has rightly observed that the results of one year cannot be disturbed by picking up and applying a method in isolation when the assessee is following the method of accounting regularly which had been accepted by the Department in the preceding assessment year and the work in progress in the preceding year has been shown as opening work in progress in the subsequent year and the revenue has been recognized on completion of the Purchase Order - order of CIT(A) is upheld and reject the ground taken by the Department.

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• 2012 (12) TMI 64
  Disallowance on account of discarded moulds and dyes - held that:- Once an assessee claims any expenditure/deduction in its return, the onus is on the assessee to substantiate its claim by submitting the relevant documents/evidences. Contention of AO was that no details as regard the type of dyes/moulds, their number etc., their use and the amount incurred on those dyes/moulds were submitted. Assessee should have placed additional evidences at least before the learned CIT(A) even if the AO did not give opportunity to the assessee to place the copies of the bills and other evidences to justify the claim in respect of the dyes/moulds which were discarded by the assessee and claimed as discarded/obsolete items on the revenue account. However, in the interest of justice and considering that in the earlier years on similar facts the Tribunal has restored the matter for fresh consideration, respectfully following the order of the Tribunal dated 29th February, 2012 for A.Y. 2006-07, restore the matter to CIT(A) with the direction to decide the issue afresh in accordance with law after considering the evidences as may be placed before him and also keeping in view his earlier order in assessee’s case for the preceding assessment year(s) - Therefore, the ground of appeal taken by assessee is allowed for statistical purposes.

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• 2012 (12) TMI 63
  Withdrawl of Exemption u/s 80G - held that:- Approval once granted u/s 80G(5)(vi) of the Act shall continue in perpetuity. Even if assessee files an application for seeking renewal of exemption u/s 80G(5) of the Act after 1st October, 2009,learned DIT(E) is to dispose of the application in accordance with the amended provisions ie Commissioner will also have the power to withdraw the approval if the Commissioner is satisfied that the activities of such institution or fund are not genuine or are not being carried out in accordance with the objects of the institution or fund - set aside the impugned order of the learned DIT(E) and accordingly, approval under sec. 80G(5) of the Act already granted to the assessee vide order dated 14th August, 2007 upto 31st March, 2010, shall continue in perpetuity unless and until the competent authority takes appropriate action in accordance with law to withdraw the same - DIT(E) to allow the exemption u/s 80G(5)(vi) of the act - issue in appeal of assessee is allowed.

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• 2012 (12) TMI 62
  Penalty u/s. 271(1)(c) of the Act – capital gain – Held that:- Assessee had shown Short Term Capital Gain on sale of one flat and also showed advances of Rs. 7,00,000/- against sale of another flat - assessee entered into an agreement with M/s. Celica Investment & Trading Co. Pvt. Ltd. (herein after referred as Celica) and surrendered its tenancy right. In lieu thereof the assessee got from M/s. Celica in the form of 8 flats admeasuring 4055 Sq. ft - it was a Long Term Capital Gain on transfer of tenancy rights - assessee initially contended that tenancy right was surrendered in assessment year 1994-95 but it was held by Tribunal on the basis of the fact that surrender of tenancy had taken place in assessment year 2001-02 and accordingly, Long Term Capital Gain has arisen to assessee in the assessment year 2001-02 - there was concealment of particulars of income by assessee to the extent of Long Term Capital Gain – penalty upheld Limitation - Held that:- Penalty proceedings has been initiated by AO on the basis of fresh assessment order dt. 21.12.2009. The assessee has not disputed said fresh assessment order in any appeal. Hence, penalty proceedings as per clause (c) of Sec. 275(1) of the Act could be passed on or before 30.6.2010. Since penalty order is passed on 25.6.2010, it is well within time as provided u/s. 275 of the Act.

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• 2012 (12) TMI 61
  Setting off of closing provision determined by the AO u/s. 36(1)(viia) against the bad debts written off - Held that:- Credit balance for the purpose of considering provisions for bad and doubtful debt u/s. 36(1)(viia) will be opening credit balance i.e. balance brought forward as on 1st April to the relevant accounting year – In favor of assessee Disallowance made by the AO with regard to payment to Master Card International and Visa Card International – Held that:- Even if no TDS was deducted on the payments made to Visa International and Master Card International, it could not be disallowed in view of Article 26(3) of Indo-US DTAA because no disallowance could be made in respect of payments made to residents on ground of non-deduction of tax at source – In favor of assessee Addition on account of Unmatured forward exchange contracts – Held that:- Anticipated losses on account of existing obligation as on 31st March, determinable with reasonable currency, being in the nature of expenditure/accrued liability, have to be taken into account while preparing financial statement - matter should be restored to AO to consider liability which has accrued as per Accounting Policy consistently followed by assessee as on 31.3.1998 and accordingly to allow said claim to that extent - appeal is allowed for statistical purposes

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• 2012 (12) TMI 60
  Late filing of the audit report in form 10CCB – alleged that the assessee should have filed the audit report in the prescribed form no.1OCCB along with the return of income as required under section 80IA(7) read with section 80IB(13) of the IT – Held that:- Assessing officer was not right in rejecting the appellant’s claim for deduction under section 80-18(10) on the ground that the audit report was not submitted in time or was defective - requirement of filing the audit report along with the return is directory and not mandatory – In favor of assessee Deduction u/s.80IB(1O) – alleged that the assessee did not own one acre of land at the time of commencement of project and also at the time of approval of the project – Held that:- Area of plot of land at the time of approval of the first plan has a limited when it was revised after adding the deficit area in the area of plot and finally the project was completed on the plot of land having more than one acre as required under clause (b) of sec. 80IB(10) - when the project was completed on the plot of land having more than one acre, then the condition as prescribed u/s 80IB(10)(b), is fulfilled because the plan was sanctioned and occupancy certificate was issued by the local authorities to the project on more than one acre of land - approval of the project has per clause (a) of sec. 80IB is relevant for completion of the project within the prescribed time period - assessee has complied with the requirement of having the project on the area of plot of land minimum of one acre - in favour of assessee Deduction u/s.80IB(1O) - ownership of land – alleged that the assessee is not the full-fledged owner in respect of an area of one acre which is the minimum requirement for eligibility for deduction uls.80IB(1O) as the assessee has sold undivided interest over the land held by entering into agreements with individuals for transfer of undivided share of interest in land and into contracts for construction of residential units – Held that:- Assessee has developed the project in its own name; therefore, transfer of undivided share in the land to the identified buyers of the constructed residential units is only a modus-operandi by the assessee to transfer the project in two parts viz constructed units and interest in the land separately. This method appears to be adopted by the assessee to save the stamp duty as different rate is applicable if the residential unit along with the undivided interest is sold together in comparison of the rate applicable on separate sale of land and building. Further, this arrangement was to facilitate the finance from banks – In favor of assessee Disallowance of interest – alleged that assessee firm had advanced a peak interest free loan to the sister concern - Assessing Officer held that there was diversion of interest bearing funds for non business – Held that:- Assessee was having sufficient credit balance in the bank account as well as advances received from the customers when the advance was given to the sister concern - in the absence of direct nexus between the interest bearing funds and advance given to the sister concern, the disallowance is not justified – in favor of assessee

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• 2012 (12) TMI 59
  Deduction u/s.80IB(10) – denial of deduction because the assessee had constructed more commercial area than permitted under clause (d) of sec. 80IB(10) – Held that:- Assessee commences the project but is able to complete only in the previous year relevant to asst. yr. 2005-06. As per the change in law from asst. yr. 2005-06 with regard to the area of commercial space in a housing project the assessee would loose his eligibility to claim deduction. In such cases, there is definitely grave hardship to the assessee - legislature would not have intended to take away a vested right without clear words to that effect in the provisions of s. 80-IB(10) as amended by the Finance Act, 2005, w.e.f. 1st April, 2005 - law as it existed in the asst. yr. 2004-05 when the assessee submitted its proposal for slum rehabilitation and the permission for carrying out the development was accorded on 17th Nov., 2003 and when the assessee commenced development is to be applied - Revenue’s appeal is dismissed

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• 2012 (12) TMI 58
  Corpus donation – alleged that corpus donations were utilized for the objects of the Trust and, therefore, to that extent the assessee was not entitled to exemption under section 11 of the Act – Held that:- In the light of the confirmation letters of the donors, donations in question were towards corpus funds - addition deleted - there was utilization of funds for the objects of the Trust the action of the AO in taxing the donations received was not proper – In favor of assessee Whether expenditure on cultural activities like shows rath yatra, art festivals etc. are application of income in accordance with the objects of the trust – alleged that donations were made to institutions which were not related with the cultural activities or for promotion and advancement of culture – Held that:- Same are various donations given to organizations which have organized events for celebration of festivals and for arts festivals etc. - this is nothing but an expenditure for promotion of arts, culture and literature. Hence to the extent of the details produced for Rs.4,78,0751- Officer has erred in coming to the conclusion that this is not an application of income towards its objectives. Hence to this extent the addition is deleted and the ground is partly allowed Addition on account of donation – alleged that assessee has invested donations in a manner contrary to sec.11(5) thereby violating the provisions of sec.11(5) - Held that:- Donations have been received as corpus donation towards the end of the previous year. They were invested in the manner prescribed in the subsequent month i.e. April 2005 - there is no provision which contemplates making of investment of donation within any particular period or a provision which says that absence of making investment will result in the trust losing exemption u/s.11 of the Act - these donations have been invested in the manner required in the month of April, 2005 – in favor of assessee

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• 2012 (12) TMI 57
  Disallowance under Section 40A(2)(b) of the Income Tax Act – Held that:- Assessing Officer has not pointed out the payment made to the specified persons is excessive and unreasonable - No comparative figure was given by the Assessing Officer in the assessment order - there was no occasion to invoke Section 40A(2)(b) of the Act - Assessing Officer had made only adhoc disallowance under the said provision without pointing out how the payments made to the specified persons were excessive or unreasonable – In favor of assessee Addition on account of unexplained creditors under Section 41(1) of the Income Tax Act – Held that:- Even after the remand of the proceedings before the Assessing Officer, he was unable to bring any material on record to show that the liability had ceased - by virtue of limitation, the liability cannot be said to have ceased. The Assessing Officer was not able to establish that liability had ceased or that the creditors were bogus. Even if the creditors were not genuine, addition could not be made under the year in consideration - even though the amount initially was not taxable in the year of receipt, the amount changed its character when it became the assessee's own money because of limitation or by any such statutory or contractual right – addition deleted

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• 2012 (12) TMI 56
  Disallowance on account of payment made to the Foreign Agent – Held that:- Confirmation letter from M/s. Vistar Trading LLC from the foreign country confirming the nature of business and the amount of commission received by it for the sale of goods to three parties directly from the buyers - letter also reflected that the foreign agents did not have any sister concern in India - abundant material concerning the identity of agent and genuineness of the transactions as well as services rendered as also with regard to the amount received by it - disallowance deleted Disallowance of claim of export commission – Held that:- Gross export proceeds never reached the assessee, no such income had therefore accrued to the assessee and this was because of an obligation or compulsion to deduct the commission from the export invoices which clearly showed this to be a case of diversion of income by overriding title - amounts deducted from the export invoices were thus clearly allowable as deduction – disallowance deleted – In favor of assessee

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• 2012 (12) TMI 55
  Deduction u/s.80IB(10) r.w.s. 80IB(1) – ownership of land – Held that:- Assessees were entitled to the benefit under Section 80IB(10) of the Act even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners - in favour of the assessee Estimation of income - Addition on account of payment received from one Trilok Associates and Goyal Designs – alleged that no evidence could be adduced by the assessee-respondent, when he was asked to reconcile the receipts – assessee submitted that books of account were destroyed on account of fire – Held that:- Net profit @ 8% was estimated by the CIT(Appeals) applying Section 44AD of the Act to the given facts and accordingly, the respondent-assessee was assessed - entire amount of receipt cannot be treated as income and resultantly estimated the income from the contract work at the rate of 8% - in absence of books of account, total income could not have been treated as the receipt – In favor of assessee

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• Customs

• 2012 (12) TMI 111
  Determination of Nature of Impugned Goods - alloy steels vs non alloy steel - held that:- A reading of the order of the Tribunal clearly pointed out that when the chemical test of the impugned goods pointed out the nature of goods sought to be exported and that with an uncertainty to the extent of 200% error margin writ large on the results, the test done by the Revenue is uncertain to support its claim on misdeclaration. Revenue does not deny the fact that National Metallurgical Laboratory is not a laboratory of the respondent's choice, but an authoritative institution to speak on materials like the impugned consignments. The remand order at the first instance itself was on account of the Revenue pointing out to the discrepancy between the respondent's test and the Revenue's report. As agreed to between the parties, the matter was once again referred to National Metallurgical Laboratory. When confronted with the error margin, the further plea for once again calling for further report from the Scientist, appears as a cry in vain. Thus, when a reading of the order of the Tribunal does not disclose any perversion in the finding, in the nature of absence of material on the factual finding, we do not find any question of law arising out of the order of the Tribunal for admitting this case by this Court. Hence, we have no hesitation in rejecting this appeal at the admission stage itself - In the circumstances, the above Civil Miscellaneous Appeals are dismissed at the admission stage itself. Consequently, connected MPs are closed. No costs.

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• 2012 (12) TMI 110
  Import - Polybutylene Teraphthalate (BPT) - prayer is that BPT Polyester itself is entitled to exemption granted by Notification No. 28/2006 - Revenue submits that PET and BPT are two different goods. HSN classification brings out PET itself is different good, although belongs to saturated Polyester category. When the legislature did not intend to grant exemption to BPT, they have not used that term in the earlier Notification No. 28/2006-Cus., dated 20-3-2006 – Held that:- BPT is a member of the Polyester family as per HSN Explanatory Notes - This view is also fortified when Polyester chips is also referring to its member goods in Notification No. 89/89-C.E., dated 1-3-89 as well as Notification No. 40/90-C.E.(N.T.), dated 8-11-90. Notification No. 28/2006-Cus., dated 20-3-2006 exempts polyester chips without specifying other sub-species - it cannot be said that BPT does not belong to the Polyester family - no reason to deny the benefit of exemption to the appellant foe the reasons stated above - appeal is allowed.

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• 2012 (12) TMI 109
  Refund claim – excess payment of duty because of arithmetic mistake - prayer was made to amend the quantity mentioned in the shipping bill in terms of Section 154 of the Customs Act - Held that:- Refund claim was time-barred as the provisions of Section 154 was not applicable to a refund claim - Section 154 of the Customs Act which is an enabling power not containing any time limit cannot be used to defeat the specific time limit for claiming the refund of any alleged excess duty paid – refund claim rejected

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• 2012 (12) TMI 108
  Transaction value – alleged that value of the goods was significantly lower than the contemporaneous values, the adjudicating authority doubted the genuineness of the declared value and asked the appellant to provide further information – Held that:- To avoid delay, the importer can declare the higher value or can accept the enhanced value and in such cases, such value even if it is not a transaction value it will prevail - once the value enhanced is accepted, there is no need for any further action. Similarly, if the importer declares the higher value and if that is accepted by the customs authorities, naturally no case would be initiated or investigated - reliance of the adjudicating authority on contemporaneous price to reject the transaction value and to ignore the transaction value without considering the submission at all was not in order – in favor of appellants Detention charges – Held that:- Goods were neither seized nor detained is correct and therefore not giving any direction to the adjudicating authority for wavier of detention charges, is also correct

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• 2012 (12) TMI 52
  Suspension or Revocation of CHA licence - territorial jurisdiction of the commissioner - Withdrawal of show cause notice - held that - It is apparent that the respondent authorities realising the mistake, have issued the above letters to the respondent's counsel to inform this court that the show-cause notice will be withdrawn immediately, accepting the plea taken by the petitioner. The statements made by the Assistant Commissioner (Legal) in the above two letters are recorded and the authority is directed to issue proper proceeding for withdrawal of the show-cause notice forthwith. It is incumbent on the department to ensure that such error do not occur in future giving rise to undue delay in initiating proper proceedings.

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• 2012 (12) TMI 51
  Provisional Release of Goods - secondhand used Digital Multifunction Printing and Copying Machines as well as secondhand used Photocopier Machines - held that:- In the present case, no order has been passed by the Customs Department on the bill of entry having regard to the Notification issued by the DGFT. As to whether the goods are restricted goods or freely importable and whether it should be released on certain terms on adjudication is a matter to be decided by the Competent Authority in accordance with the provisions of the Customs Act taking note of the Foreign Trade Policy as applicable. It is not for the Court to decide as to the applicability and effect of the DGFT Notification at this stage. - Matter remanded back to the Assessing Authority is directed to assess the goods in question in terms of the Customs Act read with the relevant Foreign Trade Policy.

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• 2012 (12) TMI 50
  Condonation of delay of approximately 155 days in filing of the appeals - Held that:- The allegation made by the applicants is that Rajesh Manocha was also responsible for the failure to deposit Rs. 3,64,386/-, as this fact was not brought to the notice of the management. Subsequently, Rajesh Manocha left the services of the applicant JMD Oils Pvt. Ltd. and a new manager was appointed. After appointment of the new manager, the aforesaid order dated 25-3-2011 came to the knowledge and notice of the persons concerned and the management. Steps were taken and present appeals have been filed. - Delay condoned subject to cost of Rs. 25,000/- Non-compliance of the Stay Order - applicant had failed to deposit – held that:- Keeping in view the aforesaid position we answer the question of law mentioned above in affirmative and in favour of the appellant-assessee and the appeal is allowed. - Appeal restored before tribaunal.

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• 2012 (12) TMI 49
  Whether customs officers have powers to determine RSP for the purpose of levy of additional duty of customs (CVD), when the same is not declared by the importer – Held that:- CVD is leviable on the imported goods on the basis of RSP. Merely because the RSP has not been declared, it does not mean that CVD is not leviable. The assessing officer can adopt any reasonable means to determine the RSP so long as the provisions of the tax liability are in force. - Assessing officer has adopted RSP of comparable goods as the basis for determination and computation of duty liability. Such a procedure adopted for operationalising the levy cannot be considered to be unreasonable - customs officer is empowered to determine RSP if the same is not declared by the importer at the time of importation by adopting reasonable means - method adopted by the customs officer for determination of RSP and consequential addl. duty of customs is reasonable - appellants directed to make pre-deposit

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• Corporate Laws

• 2012 (12) TMI 107
  Claim of liquidated damages - Consequences for breach of the contract - winding up petition filed on account of alleged dues - can an amount of unexpired lock-in period be treated as debt ? - Held that:- The petitioner is claiming payment on the basis of lock-in period mentioned in the Master Service Agreement (MSA) with respect to the sites procured by the respondent from the petitioner. Winding up petition is filed on that basis. The defence of the respondent is that it does not own any definite or certain amount to the petitioner and there is no admitted debt and also mentioned that he has already tendered an amount of Rs.1.13 Crores to the petitioner and, therefore, the petition has become infructuous. It is clear that no doubt the respondent had, to some extent, accepted its fault and also stated in reply dated 9.2.2010 that delay for completion of the project was result of lack of inflow of funds. However, on reading of reply dated 9.2.2010, one cannot say that the respondent had accepted its fault in entirety. Loans from banks/financial institutions could not be raised due to non-availability of title deeds of the project land which was to be deposited with the bank for creating equitable mortgage etc. Moreover, even if breach is accepted and the clause relating to liquidated damages gets triggered, still the obligation of the petitioners to prove that because of non-completion of the project in time, it has suffered some loss though proof of actual loss may not be required. In the communication dated 9.2.2010 itself, the respondent highlighted that there were no willing buyers in the market. Therefore, it cannot be said that even if this area in constructing form was made available to the petitioner, it could have been able to sell the same. Therefore, of the opinion that at present, having regard to the legal position explained above, 'debt' has not got crystallized and the matter needs evidence. Thus dismiss this petition. Where the premises were given by the petitioner to the respondent on license basis vide lease and license agreement dated 18.2.2008. Lock-in period of 33 months was prescribed and the entire amount is claimed on account of premature termination of agreement by the respondent. The petitioner is claiming total amount of the lock-in period. It is nowhere stated as to how it has suffered any loss on this account and whether the liquidated damages stipulated in the agreement are genuine pre-estimate damages,the consequence of that would be to dismiss this petition as well.

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• 2012 (12) TMI 106
  Dishonour of Cheque u/s 138 - dishonor due to change in authorized signatories - Stop Payment instructions and post-dated cheque - held that:- There is in our view no qualitative difference between a situation where the dishonour takes place on account of the substitution by a new set of authorised signatories resulting in the dishonour of the cheques already issued and another situation in which the drawer of the cheque changes his own signatures or closes the account or issues instructions to the bank not to make the payment. So long as the change is brought about with a view to preventing the cheque being honoured the dishonour would become an offence under Section 138 subject to other conditions prescribed being satisfied. Stoppage of cheque after notice to the drawer - held that:- dishonour on the ground that the payment has been stopped, regardless whether such stoppage is with or without notice to the drawer, and regardless whether the stoppage of payment is on the ground that the amount lying in the account was not sufficient to meet the requirement of the cheque, would attract the provisions of Section 138. Regarding offer to settlement after dishonor - held that:- The offer made by the respondent-company was in any case conditional and subject to the settlement of accounts. So also whether the cheques were issued fraudulently by the authorised signatory for amounts in excess of what was actually payable to the appellant is a matter for examination at the trial. That the cheques were issued under the signature of the persons who were authorised to do so on behalf of the respondent-company being admitted would give rise to a presumption that they were meant to discharge a lawful debt or liability. Allegations of fraud and the like are matters that cannot be investigated by a Court under Section 482 Cr.P.C. and shall have to be left to be determined at the trial after the evidence is adduced by the parties. Dishonor of cheque after resignation by the signatories after issuance of cheque - held that:- Just because the authorised signatories of the cheques have taken a different line of defence than the one taken by by the company does not in our view justify quashing of the proceedings against them. - authorised signatory liable to be prosecuted along with the company even after resignation. Rebuttable presumption - held that:- The instant matter however do not relate to a case of ‘stop payment’ instruction to the bank as the cheque in question had been returned due to mismatching of the signatures but more than that the petitioner having neither raised nor proved to the contrary as envisaged under Section 139 of the NI Act that the cheques were not for the discharge of a lawful debt nor making the payment within fifteen days of the notice assigning any reason as to why the cheques had at all been issued if the amount had not been settled, obviously the plea of rebuttal envisaged under Section 139 does not come to his rescue so as to hold that the same would fall within the realm of rebuttable presumption envisaged under Section 139 of the Act.

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• 2012 (12) TMI 54
  Sanction of Scheme of Amalgamation - dispensation/convening of Meetings - held that:- In view of approval accorded by the Shareholders and Creditors of the Petitioner Companies; representation/reports filed by the Regional Director, Northern Region and the Official Liquidator, attached with this Court to the proposed Scheme of Amalgamation, there appears to be no impediment to the grant of sanction to the Scheme of Amalgamation. Consequently, sanction is hereby granted to the Scheme of Amalgamation under sections 391 and 394 of the Companies Act, 1956. The Petitioner Companies will comply with the statutory requirements in accordance with law. Certified copy of the order be filed with the Registrar of Companies within 30 days from the date of receipt of the same. In terms of the provisions of sections 391 and 394 of the Companies Act, 1956, and in terms of the Scheme, the whole or part of the undertaking, the property, rights and powers of the Transferor Company be transferred to and vest in the Transferee Company without any further act or deed. Similarly, in terms of the Scheme, all the liabilities and duties of the Transferor Company be transferred to the Transferee Company without any further act or deed. Upon the Scheme coming into effect, the Transferor Company shall stand dissolved without winding up. It is, however, clarified that this order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable in accordance with any law; or permission/compliance with any other requirement which may be specifically required under any law - Petitioner Companies would voluntarily deposit a sum of Rs.1,00,000/- in the Common Pool fund of the Official Liquidator within three weeks from today. The statement is accepted - Petition is allowed in the above terms.

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• 2012 (12) TMI 53
  Arbitration agreement – application for injunction restraining respondent no.1 from further pursuing its request for arbitration – Held that:- Alleged that the arbitration agreement contained in the agreement is void and/or unenforceable, a decree of permanent injunction restraining the defendant no.1 in the suit, their officers, employees, etc. from initiating and/or continuing with the said arbitration proceeding – this is a case where the learned Trial Judge ought to have passed an interim order of injunction pending the final disposal of the application for injunction - appellant had been able to make out a prima facie case - direct that there shall be an interim order of injunction in terms of prayers of the application for injunction filed in connection with the present appeal

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• Service Tax

• 2012 (12) TMI 114
  Display of the latters logo/marks/sign on the uniform of the cricketers - Player of cricket received fees from M/s. Royal Challengers Sports Pvt. Ltd. for playing IPL (Indian Premier League) tournaments - Royal Challengers were the franchisee of the Board of Control for Cricket in India (BCCI). - Held that:- It is evident from the records of this case that the contentions raised by the assessee in his replies to the show-cause notices were not heeded by the adjudicating authority which chose to rely on Wikipedia and other materials without referring to the contentions of the assessee. It appears, to Wikipedia was elaborately referred to in the impugned order without putting the assessee on notice, which by all means amounts to violation of natural justice. Further, the case of department considered by the learned Commissioner mainly based on the MoUs executed by Royal Challengers with the owners of logo/mark/sign which were displayed by the cricketer on his uniform during the course of the tournaments, but no copy of any such MoU was supplied to the assessee, nor even mentioned in the list of relied upon documents attached to the show-cause notices. This is yet another instance of denial of natural justice to the appellant. Matter remanded back for de novo adjudication in accordance with law.

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• 2012 (12) TMI 113
  Condonation of delay of 383 days in filing Appeal – rebate claim for service tax paid on input services used for rendering exported services. - Following the judgement of court in case of [RAM NATH SAO @ RAM NATH SAHU AND OTHERS Versus GOBARDHAN SAO AND OTHERS 2002 (2) TMI 1280 - SUPREME COURT] held that:- each case has to be examined with reference to the facts of the case. The question whether there is a negligence on the part of the appellant is a very relevant question. Further the standards to be adopted while dealing with different types of litigation also has to be different. The standards applicable for a case involving suspension of CHA licence or in the matter of taking steps for substitution of heirs to a property cannot be applied to a matter involving refund of taxes paid. The appellants have been negligent in pursuing the remedies available to them. The power granted to the Tribunal under Section 86(5) is to be exercised only if there has been sufficient cause for the delay. We are not satisfied that the reasons explained are reasonable and sufficient to justify the delay of 383 days. - Decided against the assessee.

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• 2012 (12) TMI 112
  Cenvat Credit - Removal of inputs and capital goods for providing output servcies - Rule 3(5) - Held that:- If any Inputs or Capital goods are removed outside the premises of the provider of output service for providing such service, there is no requirement for any demand of duty or reversal of credit. Hence, the impugned order is set aside and the appeals are allowed.

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• 2012 (12) TMI 73
  Claim of Refund on Input Services - Classification of Service - whether a particular service falls under the category “business auxiliary service” or “information technology service” - services of “preparation of Federal Tax Returns, preparation of State, Local Tax Returns, Co-sourcing services, Analyzing Client Data and calculating estimates of tax amount, preparation of the extension requests, preparation of the Consolidated Federal and the State/Local Returns and in filing of returns and from preparing and filing of property tax bills” on behalf of their clients by the assessee - held that:- Sec 65 (19) of the Act defines “business auxiliary service” and excludes “information technology service” which is defined in the explanation to the said Section as “any service in relation to designing, developing or maintaining of computer software, or computerised data processing or system networking, or any other service primarily in relation to operation of computer systems. The CBEC in its circular No.59/8/2003 dated 20-06-2003 clarified that only if the output service provided by a service provider is in the nature of the above operations i.e. in relation to operation of computer systems, the exclusion of such output service from “business auxiliary service” would operate and that the mere fact that a personal computer or a laptop has been used for providing the service does not, ipso facto, make the service an “information technology service”. It directed that in such cases, individual service has to be examined with reference to the explanation provided in the definition of business auxiliary service and only such output services which qualify to be IT services in terms of the said explanation shall remain excluded from taxable service under the heading “business auxiliary service”. Com(A) and Tribunal have rightly held that the above activities even though performed by using computer programmes are not in relation to computer systems, that this is supported by the SOFTEX forms submitted by them to STPI wherein they have mentioned that they export “services” only and not “software” and they have declared their exports as “others-Back Office Services”. where a person is providing a service of analysis of case law/precedents by using software such as Manupatra or SCC online to another. In such a case, the service provider, merely because he is using a computer to provide the said service, cannot be said to be providing “information technology service” to the service receiver. The contention of the Revenue, if accepted, would require this Court to ignore the words “ primarily in relation to computer systems/programming” in the explanation in Section 65 (19) of the Act. Such an interpretation cannot be given because it is settled principle of law that effort should be made to give meaning to each and every word used by the legislature in a statute and one cannot brush aside words in a statute as being inapposite surplusage, if they can have appropriate application in circumstances conceivably within the contemplation of the statute as held in Aswini Kumar Ghose Vs. Arabinda Bose AIR 1952 SC 369, 377 para 26 - Revenue is not entitled to raise in this appeal, the contention that there is no nexus between the input service availed by the assessee and the output service provided by it as such a substantial question of law was not framed by it at the time of filing of the appeal and the appeal was not admitted to consider the said issue - Tribunal and the Commissioner (Appeals) have given valid reasons to reject the said contention - no merit in the appeal and therefore the appeal is dismissed. No costs.

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• 2012 (12) TMI 38
  Storage and Warehousing Services - Held that:- Rental charge has been paid by the appellant on the goods exported by them. Moreover, the helium gases imported by them was carried on in these storage tanks,otherwise the goods cannot be imported by the appellant - Storage charges paid by the appellant are not covered under the category of ‘Storage and Warehousing Services'- remand the matter back to the Commissioner (A) to pass an order on merits without insisting for any pre-deposit.

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• 2012 (12) TMI 37
  Business Auxiliary Services - Held that:- There is no service carried out by the appellants but actually they have done the activity of purchase and sale which comes within the purview of 'sale of goods' and sales tax is attracted. The Commissioner (Appeals)'s finding that the appellant is doing the activity of marketing and distribution of products and it comes within the ambit of Business Auxiliary Service is not correct finding especially, in the light of the appellants having paid full value for the Sim Cards to the BSNL and sold the same on the profit margin - Impugned order is set aside and appeal allowed itself.

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• 2012 (12) TMI 36
  Recovery of Service tax along with Interest and Penalties - Business Auxiliary Service - Held that:- Taxable value of service is payable on the gross value of the service received by the person providing services. In this case, there is no proof that the disputed amounts have been received by the appellant. On the contrary prima facie assessment of the evidence presented shows that the impugned amount was not received by the appellant - Requirement of pre-deposit for admission of appeal is waived and there shall be collection of such dues during pendency of the appeal.

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• Central Excise

• 2012 (12) TMI 105
  Cenvat Credit on GTA Services - Whether factory gate at the port of export would be the place of removal when the goods are cleared for export with bond – held that:- Respondent would be eligible for cenvat credit of service tax paid on GTA services availed for transportation of the goods from the factory to the port from where the goods were placed on board the vessel for export to their overseas buyer - issue stands decided in favour of the respondent as per judgment of Tribunal, that the respondent’s contract with the overseas buyers was on C that in view of this, the place of removal would be the port from where the goods were exported – no merit in the revenue’s appeal - same is dismissed.

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• 2012 (12) TMI 104
  Excisable Goods - reversal of cenvat credit – held that:- Appellant is engaged in manufacture of sugar and molasses in which process the waste product i.e. Bagasse and press mud are generated, it cannot be said that the appellant possibly could have maintained separate account for inputs for production of excisable items sugar and molasses and exempted items i.e. Bagasse and press mud. - Bagasse generated in the course of crushing of sugarcane is not an excisable item notwithstanding the amendment of Section 2(d) of the Central Excise Act, 1944 vide Finance Act, 2008 which became operative w.e.f. 13.05.2008 - Bagasse and press mud being waste product those cannot be termed as excisable goods so as to attract the provision of Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules, 2004 - impugned order is, therefore, not sustainable and is set aside - appeal as well as stay petition is allowed.

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• 2012 (12) TMI 103
  Denial of exemption at Sr. No. 91 of Notification No. 6/2006-C.E., - exemption was available to all goods supplied against International Competitive Bidding subject to condition that the goods in question should have been eligible for exemption from duties of Customs when imported into India – Held that:- Deemed export benefits dealt within para 8.6.1 and 8.6.2 deal with incentive granted by DGFT and not exemption granted by Ministry of Finance and there is no reason to refer to those conditions so long as they are not referred to in the notification claimed - relief from excise duty is not granted through the mechanism of deemed export but administered through exemption notification issued - Revenue has not made any case that any of the conditions specified in the exemption notification is not fulfilled - exemption cannot be denied for the reason that sub-contractor did not take part in International Competitive Bidding - waiver of pre-deposit allowed

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• 2012 (12) TMI 102
  CENVAT credit on outdoor catering service – Held that:- When the assessee provides outdoor canteen facilities because of a statutory obligation imposed on him under Section 46 of the Factories Act, it becomes a condition of service as far as the employees are concerned. He has paid the service tax on outdoor canteen services - cost incurred in rendering such service will be included in the cost of production - credit of service tax would be allowable to a manufacturer even in cases where the cost of the food is borne by the worker – matter remanded to original authority in de novo proceedings to ascertain whether respondent employed more than 250 workers during the material period - it is found that the relevant conditions have been satisfied by the respondent, they would be entitled to the CENVAT credit in

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• 2012 (12) TMI 101
  Demand - fraud - attachment of the property - department's request for continuance of attachment and directed the appellant to deposit an amount of Rs.6 crores - appellant's submission that the attachment of the property by the Revenue should be ordered to be released so as to enable him to dispose the same and deposit Rs.6 crores as directed by the Tribunal – Held that:- Difference of opinion between members regarding following issues - Whether it is justified to revoke the notice of attachment in respect of all the four items of properties at this stage when the stay order has not taken effect at all - Whether in the facts and circumstances of the case it will be better to order release of properties only to the extent necessary to raise Rs. Six crores at this stage - Whether it will be appropriate to allow the Revenue to take action to realize Rs. 6 crores by completing the process of attachment and sale of such property - matter referred to larger bench.

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• 2012 (12) TMI 100
  SSI Exemption - value of clearance – appellant were also manufacturing medicines under the brand-name of others for which they were paying duty without availing benefit under the above notification – alleged that exemption could not be availed on any clearance beyond the value limit of Rs. One crore, even if the first clearances included duty paid clearance – Held that:- with the reference of case of K.N. Chari Rubber Plastics (2001 (4) TMI 157 - CEGAT, CHENNAI ) - exemption for small scale units allowed – in favor of assessee

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• 2012 (12) TMI 99
  Whether goods procured duty free from DTA by a DTA unit for manufacture of finished goods when cleared to a unit in SEZ shall amount to export – Held that:- Clarification issued by Board vide Circular No. 29/2006-Cus., dated 27-12-2006 clarifying that section 2(m) of SEZ Act, 2005 envisages that supply of goods or providing services, from DTA to a SEZ unit or SEZ developer shall constitute export - supply of goods to buyers who had further supplied the same to SEZ have to be held as eligible exempted clearances in terms of Rule 19(2) read with Notification No. 43/2001-C.E. (N.T.) – in favor of assessee

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• 2012 (12) TMI 98
  Denial of exemption under Notification No. 5/99-C.E. - alleged that required certificate was not produced at the time of clearance the appellants were not eligible for the exemption - manufacture of Cotton and Synthetic yarn - sale to National Handloom Development Corporation Lucknow – Held that:- Condition involved in this case is of a type where compliance after clearance of goods cannot be fatal to the claim - whether the certificates produced cover the quantities issued, whether it is issued by the proper authority etc. have not been verified by the lower authorities - matter remanded to the lower authority

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• 2012 (12) TMI 97
  Refund – export - adjudicating authority after going through refund claims and all the relevant documents has sanctioned the refund claims to the appellants holding that the assessee is eligible for refund to the extent of ratio of export turnover to the total turnover - appeals filed by the Revenue were decided by the Commissioner (Appeals) vide impugned Order-in-Appeal holding that the excess refund sanctioned to the assessee are liable to be rejected and recovered from them – Held that:- Commissioner (Appeals) has given finding only in those cases where excess refund was granted to the assessee on the basis of proportionate credit and he has not considered the cases where less refund were sanctioned to the assessee, though the appeals were filed by the Revenue in respect of all 16 Orders-in-Original - matter remanded back to the original adjudicating authority to examine and decide the refund claims on the basis of actual use of inputs gone into the manufacture of final product exported under bond or under letter of undertaking month-wise

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• 2012 (12) TMI 96
  Communication of orders to parties – Held that:- Communication of the order to authorised agent of a person is sufficient communication. Thus when the order was passed by the Tribunal on 22nd July, 2010 in presence of counsel of the appellant, the order shall also be deemed to be communicated on the same date and the submission of the appellant that unless the order is received by the appellant in person, the order shall not be treated to be communicated to the appellant, cannot be accepted - appeal is dismissed

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• 2012 (12) TMI 48
  Writ petition against the stay order directed the assessee to depsoit 50% of demand - section 35F - held that:- In the present case, merely because the appellate authority has for one period taken a view in favour of the assessee, it cannot be binding on the Commissioner as prima facie case for grant of stay, as it is evident from the narration of facts that in respect of two different periods, the issue is before the Appellate Tribunal, one appeal by the assessee petitioner and the other by the Department. The original authority on two instances has held against the petitioner assessee. It is to be noted that exemption is not a matter of right. The petitioner assessee has to satisfy the conditions of the Notification and that is denied by the Department on more than one occasion by adjudicating on facts and in law. The issue is still at large before the Appellate Tribunal. This court finds that the order under challenge is neither unreasonable nor it would cause undue hardship on the petitioner. Therefore, the order under challenge is a balanced order taking note of the assessee's claim as well as the interest of the Department and it is in accordance with Section 35F of the Central Excise Act. - writ petition dismissed - decided against assessee.

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• 2012 (12) TMI 47
  Waiver of Pre-deposit of duty, Interest and Penalty - goods were cleared without payment of duty stating the intended clearance for Export - held that:- In absence of Notification granting exemption to the good cleared to the unit availing EPCG benefit, the applicants had not made out a case for waiver of duty - applicants are directed to deposit the entire duty amount within a period of six weeks. On deposit of the duty amount, pre-deposit of interest and penalty is waived and recovery thereof is stayed during the pendency of the appeal.

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• 2012 (12) TMI 46
  Availability of Cenvat credit on the welding electrodes used in maintenance and repair of the Machinery - Following the decision of court in case of [Vandana Global Ltd. Versus CCE 2010 (4) TMI 133 - CESTAT, NEW DELHI] held that:- If Steel items are used in the manufacture of capital goods, they are required to be held as admissible cenvatable items. It is the Revenue's contention in the memo of appeal that as the steel items were used in repair and maintenance of parts and accessories of plant and machinery and for replacement of worn out parts. Even if that be so, the said items have to be held as used in fabrication of capital goods - no infirmity in the finding of Com(A)- appellant s appeal is allowed and Revenue s appeal is rejected.

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• 2012 (12) TMI 45
  Demand – shortage of scrap – manufacturer sent the goods for job-work. After the completion of job-work the goods and scrap is returned to the appellant – alleged that they have cleared the aluminium and brass scrap on the ground that the appellant has mixed the case and sold at a lesser value – Held that:- They received and keep stock of scrap in a contention can be mixed manner under the head of iron and steel scrap. Their accepted because the scraps in question are highly valued in comparison to iron and steel scrap. It is not feasible that these are treated in such a cheap manner by business people. Separate customers and separate foundries exist to deal with scraps of separate metals. Further, the stock taking report shows that the different scraps were found and weighed separately. Hence receipt in mixed condition, keeping stock in mixed condition under the head of iron and steel scrap etc are afterthought only - department could not produce any evidence in respect of lesser value of scrap and the whole case is based on assumption and presumption. No investigation whatsoever has been carried out from the purchasers - appeal is allowed

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• 2012 (12) TMI 44
  Classification of printing plate processor and parts – alleged that adjudicating Commissioner took note of the oral submissions made at the time of personal hearing before her, and has accepted the alternative classification under Heading 8442 prayed for by the appellants themselves – Held that:- Same classification is proper as the legal text under the heading covers machinery, apparatus and equipments for making plates. Parts also technically get classified under the same heading as ordered by the adjudicating Commissioner - goods are classifiable under Heading 8442 and the duty demand would have to be reworked out accordingly As regards the issue of small scale exemption - extended period of limitation - Held that:- Non-declaration of use of other’s brand name despite having knowledge about the same, amounts to suppression - in regard to the demand relating to non-availability of small scale exemption, the extended period of limitation is applicable on the ground of suppression - matter remanded for the limited purpose of re-quantifying the duty demand in this regard to the original authority - penalty imposed under Rule 173Q

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• 2012 (12) TMI 43
  Demand of duty – denial of benefit – demand raised and confirmed in respect of destroyed cigarettes – alleged that appellant showed excess destruction in the quality control laboratory so as to avoid small amount of duty – Held that:- Cigarettes meant for quality control test are not liable to duty. It is also on record that cigarettes being sent to the laboratory are being recorded in the statutory records. Mere non maintenance of the destroyed quantity of cigarettes in the laboratory when the appellants are claiming that 100% destructions were made cannot be made the ground for denial of the benefit - demand set aside

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• 2012 (12) TMI 42
  ROA application – Held that:- In the case of ECIL (S.C.) did away with the requirement of the Committee’s permission - earlier judgments of the Apex Court introducing the requirement of the Committee’s permission for PSUs came to be recalled - appeal is restored

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• 2012 (12) TMI 41
  Chargeability of interest - differential amount paid for inputs removed as such - reversal of equal amount of credit, done before issue of show cause notice on being pointed out – Held that:- This is not a case of wrong availment of credit - payment of differential amount under Rule 3(4) of the Cenvat Credit Rules, 2002, there appears to be no provision of charging of interest nor is the Ld. DR able to show any such provision - no interest is chargeable Penal liability – Held that:- Case would be covered under the provision of Rule 13(1) of Cenvat Credit Rules, 2002 as there is a contravention of Rule 3(4) in as much as the entire amount of credit as required under the amended provision was not reversed initially. For such contravention which was not on account of fraud, mis-statement, collusion etc. penalty reduced

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• 2012 (12) TMI 40
  Whether CENVAT credit of the service tax paid on certain services viz. rent-a-cab service, outdoor catering service, telephone service was admissible – Held that:- Credit in question is admissible to them inasmuch as all the said services were availed in relation to the business of manufacturing the final product - definition of input was not restricted to services used in or in relation to manufacture of final products but the same also extended to all services used in relation to the business of manufacture of final products - appeal is allowed in so far as rent-a-cab service and telephone service are concerned Regarding outdoor catering service – Held that:- Where a manufacturer avails outdoor catering service in compliance with the mandatory requirement under Section 46 of the Factories Act, it can be said to have been availed in relation to the business of manufacturing the final product. Section 46 of the Factories Act makes it obligatory for the manufacturer to maintain a canteen for their employees in the factory where the number of employees is 250 or more - cost of outdoor catering service to be included in the cost of production of the final product - admissibility of CENVAT credit on outdoor catering service shall be reexamined by the original authority - admissibility of CENVAT credit on outdoor catering service shall be reexamined by the original authority

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• 2012 (12) TMI 39
  100% EOU – demand of duty of Excise on certain capital goods which were claimed to have been transferred to another 100% EOU but found not to have been accounted for by the appellant - demand of duty is in respect of the capital goods mentioned in Annexures - II and III to the show-cause notice – Held that:- Many of the capital goods mentioned in the two annexures are covered by re-warehousing certificates issued by the proper officer having jurisdiction over the recipient unit M/s. Agro Dutch Industries Ltd. In respect of some other goods, the appellant has claimed that these goods were used, over a period of time, in the manufacture of larger equipments and that such larger equipments were re-warehoused in the recipient unit - there is no reference whatsoever to any specific re-warehousing certificates or other documents produced by the appellant. It just contains an account of the manner in which a 100% EOU must maintain the records - adjudicating authority should have endavoured to ascertain whether the assessee could reconcile the capital goods mentioned in Annexures - II and III to the show-cause notice with the re-warehousing certificates and other documents produced by them. This exercise, it appears, was not even attempted – matter remanded to Commissioner

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• CST, VAT & Sales Tax

• 2012 (12) TMI 115
  Punjab Value Added Tax - Detention of goods – alleged that attempt to evade/avoid tax was made by the petitioner by not reporting the paddy/rice at the barrier - goods were meant for trade and not covered by proper/genuine documents – Held that:- Vehicle has to be released in accordance with provisions of Section 51(6)(a) of the Act. In respect of the goods, the explanation under Section 51(7) of the Act must be interpreted in the light of the provisions of sub Section (5) of Section 62 of the Act. Accordingly, the principles of harmonious construction would lead us to a conclusion that 30% of the penal amount be deposited by the petitioner - writ petition stands disposed of

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• 2012 (12) TMI 74
  Kerala Value Added Tax Act – business of trade and exporting of cashew nuts - objecting to the fixation of floor rates – Held that:- Floor value for cashew nuts and cashew kernels have not been fixed in other States is no reason to attract the provisions of article 14 of the Constitution of India - revision of floor value was on the basis of a study conducted by the committee of experts and this court lacks any expertise to sit in judgment over the conclusions of these experts - there is no material to conclude that the quality of the cashew mentioned in exhibits P6 and P7 is comparable with any one of the grades of the cashew mentioned in exhibit P3 and therefore in my view, exhibits P6 and P7 cannot be pressed into service. Further there is no material before this court to hold that the floor value fixed is illegal for any reason - circulars can be relied on only for the purpose of levy of advance tax as contemplated under section 47(16A) of the KVAT Act and in cases where undervaluation is detected, adopting floor value fixed as a guideline, proceedings under the KVAT Act can be initiated.

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