TMI Tax Updates - e-Newsletter
February 13, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Reopening of assessment - short levy of tax - It is now too late for the Petitioner to assert that its objections to the reasons on the basis of which the assessment is sought to be reopened must be addressed at this stage - HC
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Income Tax:
Exemption - Surplus - The provisions of Section 10(23C) cannot be interpreted regressively to deny exemptions. So long as the institution exists solely for educational purposes and not for profit, the test is met - HC
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Income Tax:
Loss on wind mills and change in the method of valuation of stock - the assessee was justified in writing off the investment in the windmills as bad debt - HC
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Income Tax:
Revised return - rectified return was in fact a new return - u/s 139 (5), it is not open either to rectify or to revise return after there was a delay in filing a said return in time - HC
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Income Tax:
Expenditure on construction/renovation of leased buildings - revenue v/s capital - held ass capital in nature - AT
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Income Tax:
Profits chargeable to tax - the burden to prove that a particular benefit or receipt falls within the four corners of the provisions of sec.41(1) lies upon the revenue. - AT
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Income Tax:
Addition u/s. 50 r.w.s. 50C - Sec. 50C is applicable on sale of depreciable asset and hence valuation adopted by stamp valuation authority to be taken into consideration - AT
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Income Tax:
Acceptance of the loss in the revised returns u/s 139(5) – Change of status of assessee - how the brought forward losses could change the status of the assessee? - AT
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Income Tax:
Disallowance u/s 40(a)(ia) – TDS - reimbursement of salary to the deputed personnel would not attract deduction of tax at source - AT
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Customs:
Unjust enrichment - Consumer Welfare Fund - refund of cash security which was made in terms of the Board's circular does not attract the provisions unjust enrichment - AT
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Corporate Law:
Filing of Balance Sheet and Profit and Loss Account in eXtensible Business Reporting Language(XBRL) mode for the financial year commencing on or after 01.04.2011 - Circular
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Corporate Law:
Relaxation of additional fees and extension of last date in filing of various forms with the Ministry of Corporate Affairs-reg. - Circular
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Corporate Law:
Winding up petition - the machinery of winding up should not be allowed to be utilised merely as a means of realizing its debts. - HC
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Corporate Law:
Non allotment of shares applied nor returned the share application money - the prosecution has proved the guilt of the petitioners beyond a reasonable doubt. - HC
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Indian Laws:
New President and Vice-President of the Institute of Chartered Accountants of India
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Indian Laws:
India Poised to be the Leading International Trading Hub for Rough Diamonds Task Group report to make recommendations to help India retain its primacy as a trading hub
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Indian Laws:
MoS (Finance) urges SPMCIL to focus its Marketing Activities to Source New Business Opportunities and Diversify into Unexplored Newer Business areas
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Indian Laws:
Second Meeting of Joint Committee Of Business Development Cooperation Between India And Colombia
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Service Tax:
Non-discharge of Service Tax liability - two SCN were issued - overlapping of demand on the same issue - FAA was correct in setting aside the Order-in-Original. - AT
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Service Tax:
Refund of un-utilized CENVAT credit - Export - rent paid on car park, cafeteria, terrace of the building, in-house training, CA services etc - refund allowed - AT
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Central Excise:
CENVAT credit on inputs used in a process considered as manufacture - Indisputably, the respondent paid duty on their finished goods and hence there is no question of a second payment of the same duty to the Central Government under Section 11D. - AT
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Central Excise:
CENVAT Credit - CHA services - the appellant are eligible for availment of CENVAT Credit and which has been reversed by them under protest is liable to be refunded to them. - AT
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Central Excise:
Penalty - It cannot be said by any stretch of imagination that the appellant was prejudiced because the particular clause under which he was sought to be penalised was not indicated in the show cause notice. - HC
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Central Excise:
CENVAT credit on GTA service - The law is against the appellant for the period from 1/4/2008 as the definition of input service under Rule 2(l) of the CENVAT Credit Rules 2004 was amended - AT
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VAT:
Notification regarding procedure and form for filing Audit Report. - Notification
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2013 (2) TMI 270
Voluntary Disclosure of Income Scheme, 1997 - appellant disclosed its stock, cash etc. of the years 1994-95, 1995-96 and also of the year 1996-97 - whether, because of disclosure of stock on 26th December, 1997 pertaining to the years 1994-95 and 1995-96 as well as cash and amount of sundry debtors, they shall continue to be good for the year 1997-98? - whether the appellant was entitled to the benefit of increase in the stock, cash and the amount of sundry debtors of previous years due to disclosure of undisclosed stock, cash and the amount of sundry debtors of previous years - Held that:- Presumption of existence of the stock, cash and the amount of sundry debtors can be taken at least for the years under consideration, which are only 3 years and therefore, the Revenue under wrong impression that the assessee is claiming the benefit of VDIS for the year 1997-98, proceeded to reject the appellant’s claim of increase in stock, cash and the amount of sundry debtors for the relevant years, ignoring the fact that such undisclosed assets’ extinction has not been proved, nor any effort has been made by the AO to find out whether those stock, cash and the amount of sundry debtors have been sold or utilized and increase of stock, cash and the amount of sundry debtors because of increase in the stock, cash and the amount of sundry debtors due to voluntary disclosure of the appellant under the Scheme of 1997, was not continuing in the hands of the assessee. Therefore, stock, cash and the amount of sundry debtors, on account of disclosure of the appellant on 26th December, 1997, pertaining to the closing date of 31st March, 1996 and pertaining to previous year 1995-96 and assessment year 1996-97 be the opening balance as on 1st April, 1996 and effect of increase in the stock, cash and the amount of sundry debtors due to increase of the previous years’ increase in stock, cash and the amount of sundry debtors is required to be given. AO even after rejecting the books of accounts of the assessee for the purpose of declaring opening stock of the assessee, relied upon the same statement of accounts and books of accounts produced by the assessee and without enquiry, declared that the assessee sold out undisclosed stock of the earlier years in those years itself. The Tribunal in impugned order even went to the extent of declaring that disclosure made was not voluntary but it was a compulsion on the part of the applicant to opt for VDIS as it was caught by the Department with unaccounted income at the time of survey under section 133A on 26th December, 1997. The Tribunal failed to understand the VDIS, which nowhere says and nowhere prohibits any person from disclosing his income, who is under fear of being caught. The Scheme gives benefit upon disclosure of income provided that his disclosure is in accordance with the Scheme of disclosure and once a disclosure is accepted by the Revenue, then it cannot be questioned in subsequent proceedings by holding that the disclosure was not voluntary. Once the Scheme permits disclosure of previous years stock, cash and the amount of sundry debtors and there may be presumption of continuation of holding stock, cash and the amount of sundry debtors for a reasonable period in the light of the judgment of J.K. Cotton Manufacturers Ltd. (1994 (2) TMI 3 - SUPREME COURT), then the assessee is entitled to take the benefit of increase in stock, cash and the amount of sundry debtors and consequence thereof - Tribunal also failed to appreciate the Circular Nos.754 and 755 issued by the CBDT - in favour of the assessee
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2013 (2) TMI 269
Reopening of assessment - short levy of tax - income earned by the assessee is to be assessed under the head capital gains as per the provisions of section 115AD r.w. Article 13 of the DTAA between India and Singapore instead of business income as claimed by the assessee - proceedings initiated under Section 263 as AO had erred in allowing to the Petitioner the benefit of Article 13(4) of the India Singapore DTAA - Held that:- The record before the Court would indicate that the reasons for reopening the assessment were disclosed to the Petitioner initially by a letter dated 15 October 2007 of the DDIT (International Taxation)-3(2), Mumbai and once again on 7 January 2008 by a communication of the DDIT (International Taxation)-4(2), Mumbai. The latter communication specifically intimated to the Petitioner that “requisitions in terms of the decision of the Supreme Court in the case of GKN Driveshafts” as referred “have, therefore, been met with”. Following the disclosure of reasons for reopening the assessment, nearly a year elapsed before an order of assessment was made on 29 December 2008. No steps were taken to move this Court, if the Petitioner had any subsisting grievance that its objections to the reasons for reopening were not dealt with by a speaking order. The Petitioner chose to stand by and wait until an order of assessment was passed on 29 December 2008. The Petitioner participated in the proceedings before the AO which resulted in the order of assessment dated 29 December 2008. In the proceedings, pursuant to the notice under Section 263, the Petitioner urged that it had not been provided enough time to furnish details during the proceedings and it was on this basis that the proceedings were remitted back to the AO for fresh consideration. In that view of the matter, following the order under Section 263, the proceedings have been restored to the Assessing Officer to frame a fresh assessment order de novo after affording the Petitioner an opportunity of being heard. There is no merit in the contention of the Petitioner that the Assessing Officer must now first dispose of its objections to the reopening of the assessment before proceeding to frame an assessment. The proceedings have been restored before the Assessing Officer for passing a fresh order of assessment. It is now too late in the day for the Petitioner to assert that its objections to the reasons on the basis of which the assessment is sought to be reopened must be addressed at this stage. Having perused the reasons on the basis of which the assessment is sought to be reopened, AO has not acted outside his jurisdiction while issuing a notice under Section 148 - against assessee.
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2013 (2) TMI 268
Benefit of Section 10(23C)(iiiab) denied - institution substantially funded by government must receive at least 75% of its receipts from government grants - benefit of Section 11 was granted - Held that:- As decided in Educational Institution v/s. Additional CIT [1997 (2) TMI 3 - SUPREME COURT] the decisive or acid test is whether on an overall view of the matter, the object is to make a profit. A surplus may arise in the activity of the trust after meeting the expenditure incurred for conducting educational activities was held not to dis-entitle the trust for the benefit of the provisions of Section 10(23C). The fact that the Petitioner has a surplus of income over expenditure for the three years in question, cannot by any stretch of logical reasoning lead to the conclusion that the Petitioner does not exist solely for educational purposes or, as that Chief Commissioner held that the Petitioner exists for profit. The test to be applied is as to whether the predominant nature of the activity is educational. In the present case, the sole and dominant nature of the activity is education and the Petitioner exists solely for the purposes of imparting education. An incidental surplus which is generated, and which has resulted in additions to the fixed assets is utilized as the balance-sheet would indicate towards upgrading the facilities of the college including for the purchase of library books and the improvement of infrastructure. With the advancement of technology, no college or institution can afford to remain stagnant. The Income-tax Act 1961 does not condition the grant of an exemption under Section 10(23C) on the requirement that a college must maintain the status-quo, as it were, in regard to its knowledge based infrastructure. Nor for that matter is an educational institution prohibited from upgrading its infrastructure on educational facilities save on the pain of losing the benefit of the exemption under Section 10(23C). Imposing such a condition which is not contained in the statute would lead to a perversion of the basic purpose for which such exemptions have been granted to educational institutions. The provisions of Section 10(23C) cannot be interpreted regressively to deny exemptions. So long as the institution exists solely for educational purposes and not for profit, the test is met. Direct that the CIT(A) shall, in determining whether the Petitioner should be granted an exemption under Clause (iiiab) do so, without being influenced by any observations contained in the impugned order of the Chief Commissioner of Income-tax which, to the extent that it holds that the Petitioner does not exist for educational purposes and that it exists for the purposes of profit is quashed and set aside - in the event that the Petitioner is held not to be entitled to the benefit of an exemption under Section 10(23C) (iiiab), the Petitioner would in that event be entitled to the benefit of an exemption under Clause (vi) of Section 10(23C).
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2013 (2) TMI 267
Disallowance of business loss - Tribunal sett aside the matter of to the file of AO - Held that:- When the Tribunal has taken care to remand the issue to the AO to examine all relevant aspects of the matter, such as, whether the payment was actually made, whether Bombay High Court had allowed such claim and whether the assessee had made such a claim for any subsequent years, to our mind, there is nos reason to interfere -in favour of assessee for statistical purposes. Disallowance of bad debts - ITAT deleted the addition - Held that:- Tribunal committed no error in deleting the addition as assessee having bad debts written off in the books of accounts, it was thereafter not necessary any further to establish that bad debt had in fact become bad - in favour of assessee. Disallowance of loss on wind mills and change in the method of valuation of stock - ITAT deleted the addition - Held that:- As the assessee company in the annual report of the Board of Directors had noted that the Government was not coming out with long term policy for development of non-conventional energy sources which prompted the Company to reduce the energy devision during the year. The machines were also seized by the Bank having a first charge under the order of the Bombay High Court. Considering such aspects, finding that the title of the machines was also in doubt, the Company decided to write off the same. Revenue’s objection that the same was a capital loss was rejected observing that windmills were treated as stock in trade in the assessee’s project. The Revenue’s contention that the assessee had altered its method of valuation was also dealt with observing that the assessee found that windmill had no realizable value and therefore its valuation was changed to adopt to the cost or its realizable value whichever is less. Such method was found acceptable by different High Courts. Here also, the Tribunal having considered all relevant aspects of the matter and having come to the conclusion that the assessee was justified in writing off the investment in the windmills as bad debt - in favour of assessee.
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2013 (2) TMI 266
Invalidity of revised return - contention of the assessee that the said return was filed before the due date for filing the return u/s. 139 (4) thus it could be deemed as a rectified return u/s. 139 (4) and not a revised return u/s 139 (5) - Held that:- Benefits of sub clause 5 of Section 139 clearly stipulates that it is applicable in respect of applications which are filed under section 139 sub clause 1 and 2. It does not make any reference to a delayed return or a return filed after the stipulated time, as envisaged under section 139 (4). Thus Section 139(5) would not apply to the applications which are filed under section 139 (4). In the present case, it is an admitted position where the appellant had not furnished the return within time allotted to him under sub sections (1) and (2) and therefore, his case clearly falls within the provision of section 139 (4). Section 139 (5) merely stipulates that it is applicable to any person who has furnished the return under sub sections (1) or (2). In the present case, therefore, if the appellant had filed the return in time, and thereafter had filed a rectified return, he could be permitted to do so under the said provision. Therefore, from the aforesaid provisions it can be seen that the Legislature in its wisdom had intended to give the benefits of filing a revised return only to those persons who fall within the four corners of section 139 sub sections (1) and (2) of the said Act. If the legislature had intended to also give the same benefits to an assessee who had not furnished the return within time, it would have said so in sub clause (5). The very fact that sub clause 4 is not referred to in sub clause (5) clearly indicates the intention of the legislature. See Kumar Jagdish Chandra Sinha (By Legal Representatives) Versus CIT [1996 (4) TMI 5 - SUPREME COURT] wherein held that the rectified return was in fact a new return. Thus under section 139 (5), it is not open for the appellant to either rectify or revise his return after there was a delay in filing a said return in time. Viewed from any angle, there is no infirmity in the order passed by the ITAT (Appeals) - against assessee.
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2013 (2) TMI 265
Expenditure on construction/renovation of leased buildings - revenue v/s capital - Held that:- As decided in CIT Versus Madras Auto Service Pvt. Limited [1998 (8) TMI 1 - SUPREME COURT] it is essential that the expenditure incurred on the construction of any structure on the leased premises should result in saving of the revenue expenditure at the subsequent stage. In the present case, from the pleadings of both the sides, it cannot be ascertained whether the assessee is getting enduring benefit of revenue nature from the additional structure or renovation/repairs undertaken by the assessee on the leased out premises. Thus the case of the assessee very much falls within the ambit of Explanation 1 of section 32(1) held to be of capital nature - appeals of the assessee dismissed being devoid of merit. Renovation of existing shed and new electrical fittings are capital in nature & expenditure on demolition, dismantling etc. can only be allowed as revenue - partly in favour of revenue. Addition made u/s 68 on account of unexplained cash credit - CIT(A) deleted the addition - Held that:- Order of the CIT(A) shows that during the course of appellate proceedings, the assessee was able to produce documents and the details of repayment made through cheque. Even the bank confirmations were filed by the assessee showing that the cheques issued by the assessee were encashed by the respective parties. The assessee had also furnished identity of persons with complete details of addresses and the FD applications showing details. After satisfying himself with the documents, the CIT(A) has allowed the ground of appeal of the assessee. The DR could not controvert the findings of the CIT(A) on this issue, therefore no reason to interfere with the findings of the CIT(A) - against revenue.
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2013 (2) TMI 264
Profits chargeable to tax - assessee has acted as commission agent for the transaction - addition invoking provisions u/s 41(1)(a) - Held that:- Sec.41(1) is a deeming fiction and seeks to tax receipt or benefit which may not strictly be 'income', the burden to prove that a particular benefit or receipt falls within the four corners of the provisions of sec.41(1) lies upon the revenue. The conclusion drawn by the CIT(A) by invoking u/s 41(1) are purely on surmises. There is no evidence on record, to show that a sum of Rs. 25,30,792.86 which was admittedly, liability payable by the assessee to M/s IMC was adjusted towards the commission payable to the assessee by M/s IMC. The fact that no confirmation was filed from M/s IMC cannot lead to the conclusion that there was a cessation or remission of liability of the assessee warranting invocation of provisions of sec.41(1). The reliance placed by the Assessee on the decision of CIT v. Shri Vardhman Overseas Ltd. [2011 (12) TMI 77 - DELHI HIGH COURT] supports the plea of the Assessee. In that case the Assessee wrote of the liability by crediting the amounts outstanding in the profit and loss account but showed them as liability in the Balance Sheet confirming a fact that the liability is reflected in the balance sheet of the Assessee was an acknowledgement of liability which can be relied upon by the credit for saving limitation of time for action by legal proceedings u/s.18 of the Limitation Act, 1963. In the present case there is not even such a write off in the profit and loss account. In such circumstances, the action of the revenue authorities in brining to tax the disputed amount by invoking provisions of Sec.41(1) cannot be sustained. Even assuming that the Commissioner has sustained the addition on the basis that a sum of Rs. 25,30,792.86 is commission income of the assessee, the same is without any evidence and is purely on surmises, therefore deserves to be deleted - in favour of assessee.
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2013 (2) TMI 263
Non deduction of TDS u/s 194J - disallowance u/s 40a(ia) - Held that:- As decided in Merilyn Shipping & Transports Visakhapatnam V/s. ACIT Range-I, Visakhapatnam [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] the provisions of S.40a(ia) are applicable only in respect of the expenditure which remains payable as on 31st of the March of the relevant previous year, and such disallowance cannot be made in respect of the expenditure which has already been paid during the relevant previous year, though without deducting tax at source - thus set aside order of the CIT(A) and directing AO to allow the claim to the extent already paid. Deduction under S.10A - disallowance in the absence of requisite proof and details furnished by the assessee - CIT(A) allowed the claim - Held that:- The assessee is a software developer and this is not the first year of operation. In earlier years also, the assessee has claimed exemption under S.10A which was allowed by the AO as well. The assessee has filed all the requisite details as required under S10A before the CIT(A), thus no infirmity in the action of the CIT(A) in granting deduction under S.10A - AO cannot disturb the exemption under S.10A in the middle of the period, having granted the same in the earlier years, unless he has material to show that the assessee has violated any of the provisions of S.10A - in favour of assessee. Disallowance of US branch expenditure - assessee furnished the additional evidence as per Rule 46A(1)- Held that:- Effective opportunity of hearing has been granted by the CIT(A) to the AO,the Revenue has not placed any material to suggest that the CIT(A) has not given reasonable opportunity of hearing to the assessing officer. In the circumstances, the order of the CIT(A) is upheld that the expenses incurred by the assessee in foreign branch is for the purposes of business only and has to be treated as expended for the purposes of business. Further that enhanced income, if any, on account of any disallowance, is construed as income from exports only, consequently boosting the income eligible for exemption under S.10A. Even on that count also, the claim of be assessee has to be allowed. Expenditure claimed towards product development expenditure - Allowance as expenditure is not allowable for amortization - Held that:- As seen from the order of the CIT(A), this expenditure has been incurred by the assessee year after year and 10% of the product development expenditure is written off in the year under consideration. This being expenditure of regular nature, and has been incurred by the assessee for the purpose of business, we find no infirmity in the order of the CIT(A) on this issue - in favour of assessee.
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2013 (2) TMI 262
Addition of purchase tax to closing stock not included therein - Held that:- As in assessee's own case for A.Y. 2004-05 ITAT added purchase tax to the cost of value of closing stock by holding that as per provisions of section 145A, the value of purchase tax has to be taken into account while valuing the closing stock. Also observed that in the light of the decision of CIT v. Mahalaxmi Glass Works (P.) Ltd. [2009 (4) TMI 182 - BOMBAY HIGH COURT] the opening stock valuation should also be correspondingly adjusted - thus set aside the issue to the file of the Assessing Officer to re-compute in line with the view taken therein. Addition made to closing stock u/s. 145A on account of Modvat credit - Held that:- The assessee has been consistently followed exclusive method and by virtue of insertion of section 145A the assessee has to follow inclusive method in which event, similar adjustment has to be made to the opening stock, purchases, sale and closing stock also. Even if there is no tax impact, section 145A has to be applied for valuation of opening stock, purchases, sale, and closing stock, as held by in the case of Cabot India Ltd.'s (2009 (10) TMI 656 - BOMBAY HIGH COURT) and Nicholas Piramal India Ltd. [2009 (8) TMI 224 - BOMBAY HIGH COURT]. The Assessing Officer is directed to recompute accordingly. Addition u/s. 50 r.w.s. 50C - assessee contested against invoking sec 50C as it is depreciable asset and hence valuation adopted by stamp valuation authority should not be taken into consideration - Held that:- With regard to applicability of provisions of section 50C, in the case of depreciable assets, the issue now stands squarely covered in the case of ITO v. United Marine Academy [2011 (4) TMI 15 - ITAT MUMBAI] wherein held that sections 50 & 50C operate in two different fields and if the value adopted by the stamp valuation authority is accepted by the purchaser/seller there cannot be any variation for limited purposes of computing the consideration received, under section 50C. In the light of the decision cited no infirmity in the order passed by CIT(A)- against assessee.
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2013 (2) TMI 261
Relief u/s 10A - disallowance as per clause 4 of the permission letter issued by STPI assessee would intimate the STPI in respect of the commencement of commercial production - conditions of Section 10A(2)(ii) & (iii) not been compiled - Held that:- As per the application dated 10.04.2006, filed by the assessee with STPI for registration as STP unit conversion from DTA to STP unit. Thus, the fact remains, the assessee company was converted to STP unit and, therefore, there was no restructuring and or transferring of the business as such. The conditions as mentioned in section 10A(2)(ii) & (iii) are not violated as there is neither splitting up or the re-construction of the business already in existence because conversion and splitting up or the re-construction are completely different terms. Moreover, conversion cannot be termed as transfer. The circular No.1/2005 dated 06.01.2005 stating that an undertaking set up in domestic tariff area which is subsequently approved as 100% EOU is eligible for deduction u/s 10A as relied by the assessee would be applicable on the present case also. The finding of the authorities that the intimation with regard to commercial production was not given, therefore, the permission as given STPI became non-existent is not acceptable as there is nothing on record suggesting that permission granted was subsequently, cancelled or withdrawn on the basis that the assessee could not give intimation to STPI in respect of the beginning of commercial production. Moreover, in the subsequent year, STPI itself had intimated to the AO that condition of intimation is immaterial. Thus the assessee is entitled for exemption u/s 10A - in favour of assessee. Depreciation on computers - disallowance as no genuine purchases - Held that:- From the records, it is transpired that the AO has not made inquiry from the office of the assessee about the installation of computers etc. But fact remains that assessee did not controvert the report of Inspector by seeking cross-examination at any stage. AO has also not given any finding in respect of the evidence, i.e payment by cheque, how they are not credible. Such payments could not have been made in vaccum, money have traveled to some destination. AO did not feel it proper to find out the ultimate destination of money paid by the assessee company claimed to have been paid as price of computers. Therefore this issue is remitted back to the file of AO, to decide afresh - in favour of assessee for statistical purposes. Disallowance u/s 40(a)(ia) - purchase/hiring of software - Held that:- It is not disputed that the payments were made during the year and no amount was payable at the end of the financial year, thus relying on Merilyn Shipping & Transports, Visakhapatnam vs. ACIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] wherein held that only the outstanding amount or the provision for expense liable for TDS is sought to be disallowed in the event there is a default of TDS thus AO is directed to delete the addition made - in favour of assessee.
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2013 (2) TMI 260
Acceptance of the loss in the revised returns u/s 139(5) – Change of status of assessee - Whether Order of CIT(A), was justified, where the assessee has to be assessed as Artificial Juridical Person when he accepted the revised return filed by the assessee including the brought forward losses as a local authority - Artificial Judicial Person (AJP) or A Local Authority – Change the status of the assessee - Exemption u/s 10(20A) - Held that:- No reason was assigned by the A.O. to correlate the discrepancies observed in the original and revised returns insofar as it was not the assessee's endeavour to explain the brought forward losses in the revised return. The CIT(A), confirming the status as assessed by the A.O. but not indicating as to how the brought forward losses could change the status of the assessee. Remand back to AO
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2013 (2) TMI 259
Disallowance u/s 40(a)(ia) – TDS on reimburse of expense - The assessee is a Joint Venture Company promoted by GAIL & HPCL for distribution and marketing - GAIL and HPCL deputed their personnel who worked under the control and management of Joint Venture - Salary, cost of these employees are a charge on the profits of the assessee - The employees were carrying out the work of the Assessee as its employees not carrying out the work on behalf of GAIL or HPCL – Held that:- Such payment cannot be considered as payment towards work executed by GAIL and HPCL in the course of work contract. Following the decision in case of UNITED HOTELS LTD. (2004 (11) TMI 293 - ITAT DELHI-E) that reimbursement of salary to the deputed personnel would not attract deduction of tax at source – In favour of assessee Disallowance of expense - Feasibility studies of earlier years, written off – Amount represents payments made to GAIL and HPCL during F.Y. 2004-05 and 2005-06 towards reimbursement of cost of salary of certain employees - These employees were engaged in planning, procurement of fixed assets, liaison with Government authorities for various approvals and other activities pertaining to various projects proposed to be undertaken in respect of its CNG business - Held that:- Following the decision in case of LIC Housing Finance Limited. (2006 (4) TMI 183 - ITAT BOMBAY-H) that all the expenditure specified in Sec. 35D (2) incurred before commencement of business is eligible for amortisation u/s. 35D (1)(i). Direct to A.O. to consider said expenditure u/s 35D – In favour of assessee
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Customs
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2013 (2) TMI 258
Notification NO. 1/2009 dated 2 January 2009 challenged - an appeal would lie against the order passed by the CESTAT under Section 9C of the Customs Tariff Act, 1975 or 9A(8) - Held that:- No merit in the submissions which have been urged on behalf of the Petitioners. The Court is bound to adopt a plain and literal meaning of the words which have been used by Parliament in Section 9A(8) of the Customs Tariff Act, 1975. The statutory provision specifically incorporates all the provisions of the Customs Act, 1962 relating to appeal as far as may be, in their application to the duty chargeable under Section 9A. Under Section 130, an appeal has been provided to the High Court against a determination that has been made by the Tribunal and similarly under Section 130E an appeal has been provided to the Supreme Court against an order of the Tribunal on a question involving rate of duty or of valuation of the goods for the purposes of assessment. In relation to the Customs Act, an appeal under sub-section (2) of Section 130 can be filed by the Commissioner of Customs or the other party aggrieved. The provisions of the Customs Act, 1962 inter alia in relation to appeals have been incorporated in Section 9A(8) of the Customs Tariff Act, 1975 and must, therefore, necessarily apply in a manner that would make the appellate provision intelligible and workable. It would not be appropriate for this Court to exercise the jurisdiction under Article 226 of the Constitution, having regard to an alternate remedy by way of an appeal which is available in accordance with law.
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2013 (2) TMI 257
Unjust enrichment - Section 27(2) of the Customs Act, 1962 - Consumer Welfare Fund - Benefit under Project imports - Refund claim filed for refund of 2% security deposit - Circular No.89/95-Cus dated 09/08/1995 - Held that:- The payment of cash security was made in terms of the Board's circular and the circular makes it abundantly clear that it is only a cash security and not any other payment. If that be so, the provisions of Section 27(2) which applies to duty and interest thereon, does not apply to cash securities made. In favour of assessee
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Corporate Laws
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2013 (2) TMI 256
Winding up petition - Petitioner gave the Respondent property on rent to which he defaulted to pay rent from 1st May 2010 and finally some cheques were received in January, 2011 which did not clear the arrears - apart from not making payment of arrears the Respondent also did not hand over vacant possession of the rented premises to the Petitioner on 31st May, 2012 - Respondent claimed that possession of the rented premises was handed over to it only in December 2010 & that it had been wrongly made to pay rent from 1st May 2010 - Held that:- In response to query whether there is any document to show that in fact possession of the vacant premises was handed over on 1st May, 2010 and not December, 2010 as contended by the Respondent in its reply dated 9th July, 2012 to the Petitioner’s legal notice petitioners advocate submitted that correspondence exchanged between the parties and the payments made by the Respondent of service tax in December 2011 itself acknowledged that rent became payable from May 2010. His submission was that if in fact possession had not been handed over in May 2010 itself the Respondent ought to have raised such an objection when called upon to pay the service tax. He submitted that service tax for the period from May 2010 was paid without demur by the Respondent and this itself demonstrated the defence now taken was sham. In the absence of any document showing that in fact possession of the premises were handed over to the Respondent in May, 2010 and in light of the stand taken by the Respondent that possession was handed over to it only in December 2010, the said issue raises a disputed question of fact which cannot be decided without evidence led by the parties. In the circumstances this Court is unable to come to the conclusion at this stage that the defence of the Respondent is sham, false or mala fide. If indeed there is an arbitration agreement between the parties there is no reason as to why it cannot avail of that remedy and must necessarily seek the remedy of winding up. The Court recalls the observation in NEPC India Ltd. v. Indian Airlines Ltd. (2002 (8) TMI 783 - HIGH COURT OF DELHI) to the effect that “the machinery of winding up should not be allowed to be utilised merely as a means of realizing its debts.” Accordingly, this Court declines to entertain the present petition and dismisses it as such. However, open to the Petitioner to seek other appropriate remedies that may be available to it in accordance with law.
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2013 (2) TMI 255
Non allotment of shares applied nor returned the share application money - contention of limitation raised by the petitioners against the prosecution - whether it was a continuing offence? - Held that:- The ROC is the person competent to initiate prosecution under the provisions of the Companies Act. If a violation of the provision of Act has been brought to his notice, he is certainly competent to initiate a prosecution on the basis of the information received. Ext.P5 is only in the nature of an information regarding commission of an offence under Sections 73(2A) and 73 (2B) of the Companies Act. On the basis of that information, the Registrar of Companies is certainly entitled to initiate prosecution by filing a complaint. Such initiation of prosecution cannot be faulted simply because the informant has not been examined as a witness. It is all the more so, since the facts stated in Ext.P5 cannot be disputed by the petitioners at all in this case. The fact that the petitioners should have refunded the application money by 15.4.1992 cannot be disputed by the petitioners. Ext.P5 intimation to the petitioners by the Registrar of Companies directing them to explain the default by the petitioners has been proved in evidence. Ext.P7 reply dated 3.11.1994 did not contain the particulars called for by the Registrar. At least as on 3.11.1994 the petitioners had not refunded the application money. So up to 3.11.1994 at least the offence was a continuing offence. The complaint was filed on 22.4.1995 well within the six months' period from 3.11.1994. Perhaps from the date when actually the application money was refunded, it may not be a continuing offence. But until the refund of the application money, the offence is a continuing offence. As such, I do not find any merit in the contention of limitation raised by the petitioners against the prosecution. This is a prosecution where the facts are not in dispute at all. The facts clearly establish the guilt of the petitioners. The petitioners were statutorily bound to refund the application money by 15.4.1992. Even as on 3.11.1994, when the petitioners submitted Ext.P7 reply to Ext.P5 letter by the Registrar of Companies, the application money had not yet been refunded. As such, the prosecution has proved the guilt of the petitioners beyond a reasonable doubt. In the above circumstances no merit in the contentions of the petitioners in this Criminal Revision Petition and accordingly, the same is dismissed.
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Service Tax
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2013 (2) TMI 276
Cenvat Credit on Courier services - Held that:- From the record, it emerges that the assessee had used such courier service for placing orders, filing quotation for procurement as well as marketing dispatch instructions, issuing cheque for procurement, sending stock transfer documents and also for receiving dispatch instructions from the marketing or the Head Office. The Tribunal was of the opinion that courier services therefore, be input service as defined under Rule 2(l) of the Cenvat Credit Rules - in favour of assessee
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2013 (2) TMI 274
Recovery of demand - stay application is pending consideration - Held that:- As stay application filed by the petitioner is not considered since the Tribunal was not sitting for certain period and as Tribunal may start sitting from the first week of February 2013. Writ petition is hereby disposed off directing the Tribunal to consider the stay application filed by the petitioner in the appeal before them within a time frame of three weeks till then no coercive steps against the petitioner will be taken.
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2013 (2) TMI 273
Non-discharge of Service Tax liability - two SCN were issued - FAA set aside the OIO as there is an overlapping of demand on the same issue by two different show cause notices - Held that:- There is no dispute that two show cause notices are issued by the Revenue authorities to the assessee herein for demand of the very same period and also alleges that he has not paid the Service Tax liability and on a specific query from the Bench, it was informed by Chartered Accountant that in de-novo proceedings the demands were confirmed by lower authorities and Stay Petitions were heard by the Tribunal and unconditional waiver was granted Since very same issue had come up before Tribunal the first appellate authority was correct in setting aside the Order-in-Original. No reason to interfere in such a well reasoned order - against revenue.
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2013 (2) TMI 272
Refund of un-utilized CENVAT credit - 100% EOU registered with STPI - Notification No. 5/2006-CE (N.T.) dated 14.03.2006 – Circular No. 120/01/2010-ST dated 19.01.2010 - Denied refund of service tax attributable to rent paid on car park – cafeteria - terrace of the building - in-house training of professionals - services of professionals like chartered accountant in preparation of returns/certificates in the course of their business activities – Held that:- Assessee has claimed that they have engaged the services of professionals for calculation of professional tax, income tax etc. These services are obviously in connection with the business activities of the assessee. Company employed more than 400 workers has taken the premises on rent excluding car park, cafeteria which are necessarily part and parcel of their business premises. In the facts and circumstances of the case, there is no justification to say that terrace of the building should not be treated as part of the business premises 'Outdoor Catering Services' the training services, and the professional services used by the assessee are all deserve to be treated as 'input services' in relation to their exports especially when they are 100% EOU coming under STPI scheme Revenue do not indicate any reason to question the validity of the finding of the Commissioner (Appeals) that these services should be as ‘input services' in relation to the ‘output services' rendered by the assessee. It merely says that the assessee has not made any attempt to prove that they are related to ‘output services'. Further, the ground relating to non-examination of fulfillment or otherwise of clause 5 of Notification was not a ground based on which original authority has rejected the refund claim. In favour of assessee
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2013 (2) TMI 271
Waiver of pre-deposit - Stay of recovery - Intellectual property service - Appellant had obtained technical information and technical assistance from the foreign company under a Technology Transfer and Licence Agreement - Pay royalty @ 3% on the net sales of the products manufactured in India - Held that:- Following the decision in case of G.B. ENGINEERING ENTERPRISES PVT. LTD.(2009 (7) TMI 1005 - CESTAT, CHENNAI) that the party was directed to pre-deposit, roughly, 30% of the total demand. Therefore, we direct the appellant to pre-deposit an amount of Rs.5 lakhs
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Central Excise
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2013 (2) TMI 254
CENVAT credit on inputs used in a process considered as manufacture - Held that:- The respondent had paid duty on their finished products. Naturally, they collected this duty from their customers. The department is asking the party to remit such collections also to the Government under Section 11D of the Central Excise Act. Both the lower authorities eminently negatived this view of the department by holding that Section 11D of the Act applied only to a person who had collected duty and not paid to the credit of the Central Government. Indisputably, the respondent paid duty on their finished goods and hence there is no question of a second payment of the same duty to the Central Government under Section 11D. It is unfortunate that such concurrent view of the original authority and the appellate authority on the point was sought to be challenged by the department. See Ashok Enterprises Vs. CCE, Chennai [2007 (11) TMI 67 - CESTAT, CHENNAI] - in favour of assessee.
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2013 (2) TMI 253
CENVAT Credit on services like Custom House Agent - denial as the said services does not fall under the definition of input service - appellant paid the said amount under protest & later on filed a refund claim - Held that:- Service Tax paid by CHA services are eligible for availment of CENVAT Credit as decided in JSW Steel Ltd 2012 (2012 (12) TMI 141 - CESTAT, MUMBAI). To that extent, the appellant are eligible for availment of CENVAT Credit and which has been reversed by them under protest is liable to be refunded to them. CENVAT Credit on Service Tax paid on courier services - Held that:- As decided in case of Apar Industries Ltd 2010 (2010 (8) TMI 407 - CESTAT, AHMEDABAD also confirmed in high Court [2013 (2) TMI 276 - GUJARAT HIGH COURT] the appellant is eligible for availment of CENVAT Credit of Service Tax paid on the courier services - in favour of assessee.
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2013 (2) TMI 252
Imposition of penalty u/r 26 of Central Excise Rules, 1944 - assessee contested against Violation of principles of natural justice as lower authorities have not given the relied upon documents to the appellant to defend his case - Held that:- As the appellant herein did not file any reply accordingly, the appellant is directed to file a reply to the show cause notice before adjudicating authority on or before 25.02.2013. As the lower authorities have not given the relied upon documents to the appellant to defend his case it is directed to adjudicating authority to grant the copies of relied upon documents to the appellant within a period of 4 weeks from today on a specific request made by the appellant herein - in favour of assessee by way of remand.
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2013 (2) TMI 251
Penalty - principles of natural justice - appellant submitted that neither the show cause notice nor the adjudication order indicates as to which clause of Rule 173Q of Central Excise Rules was sought to be pressed into service for the purpose of penalising the appellant. - Held that:- When the appellant was told in no unequivocal terms that he had irregularly or illegally availed himself of the Modvat Credit benefit, the insistence that the particular clause sought to be invoked should also have been indicated insisting upon an empty formality - no violation of the principles of natural justice. - It cannot be said by any stretch of imagination that the appellant was prejudiced because the particular clause under which he was sought to be penalised was not indicated in the show cause notice. It is now well settled that violation of principles of natural justice simplicitor is not enough. One has to show the consequent prejudice suffered by him. It is not the case of Mr.Lahiri that if this clause had been indicated his client would have been in a better position to defend his case. Nor is it his case that his client was misled or could not know or did not know the charge he had to meet. - Decided against assessee.
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2013 (2) TMI 250
CENVAT credit on GTA service - Two show-cause notices were issued denying CENVAT credit for the period from January 2005 to August 2009 and another for the period from September 2007 to April 2008 - Held that:- For the period prior to 1/4/2008, the appellant can claim the benefit of CENVAT credit on GTA service used by them for outward transportation of final products from the factory to customers premises fully supported by the judgments of ABB Ltd's case [2011 (3) TMI 248 - KARNATAKA HIGH COURT] & Parth Poly Wooven Pvt. Ltd's case [2011 (4) TMI 975 - GUJARAT HIGH COURT] The law is against the appellant for the period from 1/4/2008 as the definition of input service under Rule 2(l) of the CENVAT Credit Rules 2004 was amended by Notification No. 10/2008 CE (NT) dated 1/3/2008 and, accordingly, with effect from 1/4/2008, the word upto was substituted for the word from preceding the expression the place of removal . In view of this amendment, it has to be held that the appellant cannot claim CENVAT Credit on GTA service used for outward transportation of their final products from the factory (place of removal) - thus challenge against denial of CENVAT credit for the period subsequent to 1/4/2008 fails.
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2013 (2) TMI 249
Interest on Refund claim delayed - Held that:- It is clear that the appellant would be entitled to interest for a period from the expiry of Three months from the date of application for refund till date of payment at the rate specified under Section 11BB as confirmed by view taken by I.T.C. Ltd. (2004 (12) TMI 90 - SUPREME COURT OF INDIA)- As appellant have been challenging the period for payment of interest and they have not challenged the rate of interest nor they have challenged the order wherein penalty was imposed in these circumstances no reason to interfere with the Commissioner (Appeals) order which is upheld and the appeal which is debarred of merit is dismissed.
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CST, VAT & Sales Tax
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2013 (2) TMI 275
Inclusion of turnover concerning supply of ballast for the purpose of compounding under Section 7(7) - revisional orders passed under Section 35 of the KGST Act - Held that:- Reading of Ext.P4 series of the revisional orders show that there is a specific finding by the revisional authority that the turnover for the supply of ballast to the railways is liable to be included for the purpose of Section 7(7). It is on that basis, the revisional authority has directed that fresh assessment shall be completed in accordance with law. It is pursuant to this direction, Ext.P8 series of orders were passed. Therefore, unless the petitioner succeeds in invalidating Ext.P4 series of orders of the revisional authority, petitioner cannot successfully impugn Ext.P8 series of orders. In other words, the remedy of the petitioner at this stage, is to pursue Ext.P9 series of appeals. For that reason, the writ petition fails and it is dismissed. The Tribunal is directed to consider the delay petitions and if delay is condoned, to consider the appeals on an expeditious basis.
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