TMI Tax Updates - e-Newsletter dated: February 14, 2012 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws


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TMI Tax Updates - e-Newsletter February 14, 2012 Case Laws in this Newsletter: Income Tax Service Tax Central Excise Wealth tax Highlights / Catch Notes Customs: Appointment of Common Adjudicating Authority. - Ntf. No. F.No. 437/07/2012-Cus. IV Dated: February 10, 2012 Visit to Get Source Customs: Amends Notification No. 39/96-Customs - Exemption to specified goods imported by Defence, Coast Gaurd, Deptt. of Revenue, Police Forces, HAL, specified ordnance Factories and for ATVP, IGMDP, SAMYUKTA, LCAP, SANGRAHA, DIVYA DRISHTI and DHANUSH Programmes. - Ntf. No. 06 /2012-Customs Dated: February 9, 2012 Visit to Get Source Customs: Corrigendum to Notification No. 113/2011 – Customs. - Ntf. No. CORRIGENDUM Dated: February 8, 2012 Visit to Get Source Customs: Seeks to impose anti-dumping duty on import of Coumarin, originating in, or exported from, the People’s Republic of China. - Ntf. No. 12/2012 –Customs (ADD) Dated: February 8, 2012 Visit to Get Source Customs: Time bound Customs clearance of Cargo from Ports/Land Customs Stations/Air CargoComplexes, CFSs/ICDs - regarding. - Cir. No. F. No.450/160/2011-Cus.IV Dated: February 13, 2012 Visit to Get Source Central Excise: Amendment in the CENVAT Credit Rules, 2004. - Ntf. No. 01/2012-Central Excise (N.T.) Dated: February 9, 2012 Visit to Get Source Central Excise: Amends Notification No.64/95-Central Excise - Exemption to goods supplied for defence and other specified purposes. - Ntf. No. 04/2012 - Central Excise Dated: February 9, 2012 Visit to Get Source Articles PERSONAL PENALTY IN SERVICE TAX Notifications Central Excise 04/2012 - dated 9-2-2012 - CE Amends Notification No.64/95-Central Excise - Exemption to goods supplied for defence and other specified purposes. 01/2012 - dated 9-2-2012 - CE (NT) Amendment in the CENVAT Credit Rules, 2004. Customs 12/2012 - dated 8-2-2012 - ADD Seeks to impose anti-dumping duty on import of Coumarin, originating in, or exported from, the People’s Republic of China. 06 /2012-Customs - dated 9-2-2012 - Cus Amends Notification No. 39/96-Customs - Exemption to specified goods imported by Defence, Coast Gaurd, Deptt. of Revenue, Police Forces, HAL, specified ordnance Factories and for ATVP, IGMDP, SAMYUKTA, LCAP, SANGRAHA, DIVYA DRISHTI and DHANUSH Programmes. CORRIGENDUM - dated 8-2-2012 - Cus Corrigendum to Notification No. 113/2011 – Customs. F.No. 437/07/2012-Cus. IV - dated 10-2-2012 - Cus (NT) Appointment of Common Adjudicating Authority. Circulars / Instructions / Orders Customs - F. No.450/160/2011-Cus.IV - dated 13-2-2012 Time bound Customs clearance of Cargo from Ports/Land Customs Stations/Air CargoComplexes, CFSs/ICDs - regarding. News SPMCIL Celebrates its Foundation Day; Bank Note Paper Line unit with Annual Capacity of 6000 MT to be Commissioned by 2013 end in Hoshangabad(MP);to become a Debt Free Company by 31st March 2012 Case Laws: Income Tax 2012 (2) TMI 124 Dis-allowance of bad debts – share broker - Revenue did not doubted share transaction and that amount has been written off in the books of account of the assessee - objection regarding whether the transaction resulting in bad debt were undertaken in the individual capacity of B. Ahuja(client) or on behalf of the company employing him - dis-allowance of interest paid on delayed payment to NSE, DSE – revenue contending it to be penalty – Tribunal deleted aforesaid dis-allowances - Held that:- Deduction is allowed u/s 36(1)(vii) in view of decision in case of T.R.F. Ltd. Vs. CIT (2010 - TMI - 76626 - Supreme Court ) holding that after 1st April, 1989, it is enough if the bad debt is written off in the books of accounts of the assessee and it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. Revenue has not been able to controvert findings of Tribunal and show that the payment was, in fact, in nature of penalty and not normal interest on delayed payment. Deletion of dis-allowance is upheld – Decided in favor of assessee. 2012 (2) TMI 123 Pre-emptive purchase u/s 269UD – allocation of residential plot on 24.02.94 – Assignee of letter of allocation entering into agreement with builders for development of plot on 12.06.96 – Revenue contending evaluation of FMV of property on the date when form 37-I was filed i.e. 25.08.2000 – petitioner contending for evaluation on date of agreement – Held that:- Division Bench in the order dated 18.10.2010 while remitting matter back observed that the private agreement can be looked into by the Appropriate Authority. From the past history of transaction it is obvious that the parties had contracted on the basis of the then prevailing market rate of land. Moreover, this sale consideration is comparable with other instances in which the Appropriate Authority had granted the permission/No Objection Certificate during the relevant period. Therefore, condition stipulated in Section 269UD of difference being more than 15% between the fair market value and the apparent sale consideration is not satisfied. Hence, impugned order is set aside and direction is issued to Appropriate authority to grant permission/No Objection Certificate within stipulated time. See DLF Universal Ltd (2000 - TMI - 5795 - SUPREME Court) – Decided in favor of petitioner. 2012 (2) TMI 122 Education society registered u/s 12A – denial of registration u/s 10(23C)(vi) – discrepancies in accounts pointed out on the basis of the records produced during the course of proceedings u/s 10(23C)(vi) - Held that:-Prescribed authority is required to examine various aspects and thereafter issue directions/stipulations and impose conditions. On violation of the said conditions and stipulations, it is open to the prescribed authority to cancel the registration. The distinction between assessment proceedings and proceeding under Section 10(23C)(vi) has been explained and elucidated by the Supreme Court in case of American Hotel and Lodging Association Education Institute (2008 (5) TMI 17 - SUPREME COURT OF INDIA). Order of remit is being passed to decide the application for registration u/s 10(23C) (vi) of the Act afresh. Further, interim order passed on 28.11.2011 staying the reassessment proceedings u/s 148 for the A.Y. 2009-10, is vacated and comes to an end. It will be open to the A.O. to proceed in accordance with law. 2012 (2) TMI 121 Validity of notice issued u/s 147/148 – Tribunal affirmed the order of CIT(A) declaring that the notices u/s 147/148 were void as the words "Pvt. Ltd." were missing – asseseee filed declarations under VDIS 1997 – in view of same notices were issued u/s 147/ 148 for A.Y. 1992-93 to 1995-96 – Held that:- It has not been held by the Tribunal or the CIT (A) that there was misnomer or misdescription because the words 'Private Limited' were missing in 4 out of 5 notices though the name "Jagat Novel Exhibitors" were clear. Therefore, it has not resulted in misnomer or misdescription of parties which is fatal and makes the entire proceedings null and void – Decided in favor of Revenue. 2012 (2) TMI 120 Deduction of lease equalization charges from lease rental income - lease equalization charges is a method of re-calibrating the depreciation – debits and credits of same to P&L A/c square off each other over the full term of lease period – Revenue contending for dis-allowance of same on ground that there is no provision for it under the I.T. Act - whether in determination of the real income of the assessee recourse can be taken by the assessee to the Guidance Note issued by ICAI - Held that:- As long as the method employed for accounting of income meets with the rudimentary principles of accountancy, one of which, includes offering only revenue income for tax, we cannot find fault with the assessee debiting lease equalization charges in the AYs in issue, in its P&L A/c. This represents true and fair view of the accounts; a statutory requirement u/s 211(2) of the Companies Act. As explained by us, the rationale is that over the entirety of the lease period the said debit would work itself out – Decided in favor of the assessee. 2012 (2) TMI 119 Deduction u/s 80HHC – whether to be allowed on basis of adjusted book profits u/s 115JA or profit arrived at on the regular basis - Held that - Deduction u/s 80HHC in a case of MAT assessment is to be worked out on the basis of the adjusted book profit and not on the basis of the profit computed under the regular provisions of law. See DCIT vs. Syncome Formulations (I) Ltd (2007 - TMI - 59552 - ITAT BOMBAY-H ) - Decided in favor of assessee. 2012 (2) TMI 118 Transfer petition - validity of Section 80HHC challenged – Held that:- Looking to the large number of matters pending in various High Courts and since the question relates to vires, it would be beneficial if all the matters are decided by one High Court in the Country. Therefore, all the matters which have been filed/transferred to this Court be sent to the High Court of Gujarat. 2012 (2) TMI 117 Setting off loss of share trading against income from service charges – both falling under same head “PGBP” - Revenue contending loss in share trading to be speculative loss – Held that:- The explanation to sub section (1) of section 73 provides a deeming definition of when a company is deemed to be carrying on a speculation business, however, applying the provisions of Section 73(1) to determine whether a company is carrying on speculation business would reverse the order of application. In present case, Tribunal was justified, in holding that the assessee fell within the purview of the exception carved out in the explanation to Section 73 and that consequently the assessee would not be deemed to be carrying on a speculation business for the purpose of Sec. 73(1) – Decided in favor of assessee. 2012 (2) TMI 116 Search & seizure – violation of human rights by the concerned officials of the Income Tax Department – confirmed by Bihar State Human Rights Commission – writ petition filed against such confirmation on various grounds - Held that:- Jurisdiction defect - With reference to Rule 8(1) of NHRC Regulations, 1994 Single Member Bench is competent to hear a complaint regarding violation of human rights. It is desirable that facts regarding the complaint being written to NHRC also, ought to be stated in the complaint to SHRC however, same cannot be a ground for rejection of the complaint filed before the SHRC. Continuous interrogation - Department has no plausible excuse for making interrogations till odd hours of second night till 3 A.M. Thus order of Commission is partially affirmed holding the department guilty of violating human rights but only to the extent indicated. Opportunity of being heard - In absence of an opportunity to defend themselves against such charge in an enquiry, Commission erred in issuing notice to the officials to show cause or respond as to why penalty may not be levied for awarding compensation to the complainant and is accordingly quashed. Writ application is partially allowed so far response of officials were sought for levying monetary penalty; it's challenge against findings of violation of Human Rights is dismissed. 2012 (2) TMI 115 Block assessment - cash found during the search conducted on 27.10.98 added u/s 68 – assessee had earlier filed declarations under VDIS 1997, on 23.12.97 – Tribunal deleted the addition in block assessment on ground that A.O. had made a similar addition in the regular assessment proceedings on protective basis – Held that:- Cash had been found at the time of search and was undisclosed income that can be brought to tax in the block assessment proceedings - Decided in favor of the Revenue. Service Tax 2012 (2) TMI 107 Classification of taxable services - revenue classified under "Consulting Engineer" - Assessee classified as "Erection, Commissioning and Installation" - Held That:- As per board circular from 01.07.03 to 09.09.04, services are classifiable under "Erection, Commissioning and Installation" Services, application for waiver of pre-deposit and stay was allowed. Central Excise 2012 (2) TMI 104 Cenvat - Common Modvatable inputs used in the manufacture of exempted as well as dutiable products – manufacture of biscuit - demand confirmed @ 10% of the value of the exempted products – appellant contested for reversal of Modvat credit relatable to inputs used in the manufacture of exempted final products – Held that:- In view of decision in case of CCE vs Maize Products(2008 - TMI - 48307 - High Court Of Gujarat At Ahmedabad), assessee can be directed even at the appeal stage to quantify the quantum of Modvat credit required to be reversed by them. Accordingly we set aside the order and remand the matter to the original adjudicating authority to quantify the credit along with the interest required to be reversed by them – Decided in favor of assessee. 2012 (2) TMI 103 Benefit of section 11AC denied – duty confirmed together with penalty & interest – Rs 8 lacs deposited against duty liability of 17.88 lacs - Held that:- In the present case, it is clear from the conduct of the assessee that he never wanted or showed any inclination to pay the duty amount or the interest and was throughout contesting the order in original on merits. In case the assessee had any grievance with regard to non-compliance of Section 11AC, the said grievance should have been raised at the earliest opportunity. The appellant should have deposited the duty amount. Therefore, we hold that no substantial question of law arises – Decided against the assessee. Wealth tax 2012 (2) TMI 106 Wealth Tax - taxability of net wealth of “AOP” – charge u/s 21AA of Wealth Tax Act, 1957 inserted w.e.f. 01.04.89 - A.Y. 1988-89, 1989-1990 – Held that:- S.21AA only ropes in an AOP for being assessed under the Wealth Tax Act but subject to the rider that it’s members should have the income or assets or both of the association on the date of its formation or at any time thereafter. Since in present case, second condition is not satisfied the assessee cannot be considered as falling within the ambit of S.21AA of the Act. Further, Circular No. 508 dated 29.06.1981 effects that company or a cooperative society or a society registered under the Societies Registration Act are outside the preview and ambit of Section 21AA. Cancellation of assessment by Tribunal is upheld for both the A.Y.s – Decided against the Revenue.
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