TMI Tax Updates - e-Newsletter
June 26, 2012

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise

Articles

1. COST ACCOUNTING RECORDS AND COST AUDIT.

   By: DR.MARIAPPAN GOVINDARAJAN

2. NON RECEIPT OF ITR-V FORM ELECTRONICALLY FILED WITHIN TIME – VALIDITY OF RETURN?

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. STEP CLOSER TO THE GOODS AND SERVICE TAX (GST)

2. Anand Sharma urges Antwerp Bourse to establish institutional linkage with Bharat Diamond Bourse

3. RBI announces Further Liberalisation Measures for Capital Account Transactions

4. Adjustment of excess service tax paid for the discharge of service tax liability for the subsequent period

Notifications

Companies Law

1. G.S.R. 298(E) - dated 5-6-2012 - Co. Law

The Limited Liability Partnership (Amendment) Rules, 2012

Customs

2. 42 /2012 - dated 22-6-2012 - Cus

Seeks to amend Notifications 100/2009-Cus, 101/2009-Cus, 102/2009-Cus and 103/2009-Cus all dt.11-09-2009 and 104/2009-Cus dt.14-09-2009

Income Tax

3. 24/2012 - dated 19-6-2012 - IT

Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of fiscal evasion with foreign countries - Norway

Circulars / Instructions / Orders

Service Tax

1. 16/2012 - dated 14-5-2012

Electronic refund of service tax paid on taxable services used for exports of goods

Income Tax

2. 4 of 2012 - dated 20-6-2012

Income-tax authorities - Instructions to subordinate authorities - Authorization of AOs in certain cases to rectify/reconcile disputed arrear demand

3. F. No. 225/124/2012/ITA.II - dated 20-6-2012

Income-tax authorities - Instructions to subordinate authorities - Order extending due date for filing Form 49C for F.Y. 2011-12

FEMA

4. 135 - dated 25-6-2012

Foreign investment in India by SEBI registered FIIs in Government securities and SEBI registered FIIs and QFIs in infrastructure debt

5. 134 - dated 25-6-2012

External Commercial Borrowings (ECB) – Repayment of Rupee loans

Companies Law

6. 14/2012 - dated 21-6-2012

Imposing fees on certain e-forms filed with ROC, RD or MCA(HQ) under MCA-21 where at present no fee is prescribed.

Highlights / Catch Notes

Income Tax

• Income-tax authorities extend Form 49C filing deadline for financial year 2011-12 to aid taxpayer compliance.

  Circulars : Income-tax authorities - Instructions to subordinate authorities - Order extending due date for filing Form 49C for F.Y. 2011-12 - Order-Instruction
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• Income Tax Authorities Issue Guidelines to Assessing Officers for Rectifying Disputed Arrear Demands, Streamlining Processes.

  Circulars : Income-tax authorities - Instructions to subordinate authorities - Authorization of AOs in certain cases to rectify/reconcile disputed arrear demand - Circular
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• Section 90: India-Norway Pact to Prevent Double Taxation, Boost Trade, and Enhance Tax Compliance and Cooperation.

  Notifications : Section 90 of the Income-tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of fiscal evasion with foreign countries - Norway - Notification
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• TDS Disallowance u/s 40(a)(ia): Clarification on Sub-Contractor Classification and Risk Transfer in Contracts.

  Case-Laws - AT : Dis-allowance u/s 40(a)(ia) - TDS u/s 194C - Until and unless risk and responsibility of the contract undertaken by the assessee is shifted to the sub-contractors, it cannot be held that these persons are the sub-contractors of the assessee. - AT
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• Expenditure on Rubber Replantation Must Be Capitalized, Not Deducted as Revenue, per Income Tax Rule 7A.

  Case-Laws - HC : Entitlement under Rule 7A of ITR for deduction of expenditure incurred on replantation of rubber - Expenditure incurred for planting and development of the plantation up to maturity has to be necessarily capitalised and is not allowable as a revenue expenditure. - HC
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• CIT Invokes Section 263 on Interest Waiver in Book Profit; Assessment Order Not Flawed or Detrimental to Revenue.

  Case-Laws - AT : Adding back of interest waiver to the book profit u/s. 115JB - CIT invoked the provisions of section 263 - the Assessing Officer having computed the income of the assessee in accordance with the normal provisions of the Act, thus cannot hold that the assessment order passed is erroneous so far as prejudicial to the interest of revenue - AT
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• Court Deletes Cash Credit Addition u/s 68; Decision Lacks Consideration of Factual Evidence in Gift Case.

  Case-Laws - AT : Cash credit - addition u/s 68 - gift - deleting the addition only on the legal grounds without appreciating the facts on record does not bring proper result. - AT
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• CIT Cannot Overrule Assessing Officer's View on Unexplained Cash Credits u/ss 68 and 69 Unless Order is Flawed.

  Case-Laws - AT : Revision u/s 263 - Unexplained cash credit under section 68 / 69 of the Act – CIT cannot replace his own opinion and substitute with that of the Assessing Officer. He can revise the assessment order only and only when the twin conditions i.e erroneous and prejudicial to the interests of the Revenue, are fulfilled. - AT
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• Revaluation Reserve Affects Balance Sheet, Not Profit and Loss; No Book Profit Reduction for Assessee.

  Case-Laws - HC : MAT - creation of the revaluation reserve account being referable to the balance-sheet assets portion and not by way of appropriation to the profit and loss account, the question of the assessee claiming reduction to the book profit did not arise. - HC
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• High Court Rules Bonuses from Previous Years Cannot Be Deducted from Book Profits u/s 115J for Tax Purposes.

  Case-Laws - HC : Whether Tribunal was right in holding that earlier year's bonus is to be deducted from the book profit under section 115J - held no - HC
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• TDS Applicability on Medical Equipment Maintenance Contracts: Section 194C vs. Section 194J of Income Tax Act.

  Case-Laws - AT : Contract to maintain operation theatre and surgical equipments, RO system, CT Scan Machine, MRI machine, Lift, Sterlisation and Medical equipments - TDS under Section 194C or 194J - AT
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• Keyman Insurance Premiums for Partners Now Deductible as Business Expenses, Boosting Financial Relief for Companies.

  Case-Laws - HC : Keyman Insurance Policy - premium paid for the partners - The premium paid on the Keyman Insurance Policy is allowed as business expenditure - HC
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• High Court Rules Typed Copy of Partnership Deed Satisfies Compliance u/s 184(2) of Income Tax Act.

  Case-Laws - HC : Partnership firm or AOP - original partnership deed was not with the assessee but was filed before the Registrar of Companies. Before the Assessing Officer a typed copy of the partnership deed duly signed by all the partners was filed. - sufficient compliance of Section 184(2) of the Act. - HC
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Customs

• Proposed Amendments to Customs Notifications 100-104/2009-Cus: Updates on Regulations and Procedures.

  Notifications : Seeks to amend Notifications 100/2009-Cus, 101/2009-Cus, 102/2009-Cus and 103/2009-Cus all dt.11-09-2009 and 104/2009-Cus dt.14-09-2009 - Notification
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• Countervailing Duty Demanded on Imported Goods Due to Brand Name Affixed, No MRP Declared on 20 kg Packages.

  Case-Laws - AT : CVD demand on the imported goods based on MRP as the goods were imported in 20 kg packing having no MRP declared on the imported package - The appellants affixed the brand name on the imported package - AT
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FEMA

• SEBI Regulates Foreign Institutional Investors in Indian Government Securities and Infrastructure Debt Under FEMA Guidelines.

  Circulars : Foreign investment in India by SEBI registered FIIs in Government securities and SEBI registered FIIs and QFIs in infrastructure debt - Circular
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• New FEMA Circular: Guidelines for Using External Commercial Borrowings to Repay Rupee Loans with Compliance Conditions.

  Circulars : External Commercial Borrowings (ECB) – Repayment of Rupee loans - Circular
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Corporate Law

• New Fees Introduced for Electronic Forms Filed with Registrar of Companies Under MCA-21 System Update.

  Circulars : Imposing fees on certain e-forms filed with ROC, RD or MCA(HQ) under MCA-21 where at present no fee is prescribed. - Circular
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• Amendment to LLP Rules 2012: Streamlining Compliance, Enhancing Efficiency, and Simplifying Business Operations for LLPs.

  Notifications : The Limited Liability Partnership (Amendment) Rules, 2012 - Notification
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Indian Laws

• India Moves to Implement GST for Simplified Tax Structure and Unified Market, Aiming to Boost Economic Growth

  News : STEP CLOSER TO THE GOODS AND SERVICE TAX (GST)
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• Company Offsets Overpaid Service Tax Against Future Liabilities, Streamlining Tax Management Per Regulations.

  News : Adjustment of excess service tax paid for the discharge of service tax liability for the subsequent period
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Service Tax

• New Guidelines for Electronic Refunds on Service Tax for Exported Goods to Speed Up Process and Ensure Compliance.

  Circulars : Electronic refund of service tax paid on taxable services used for exports of goods - Trade Notice
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• Co-operative banks must pay service tax for banking and financial services per Section 65 (105)(zm) and 65 (12) rules.

  Case-Laws - AT : Whether a co-operative bank can be held to be liable for service tax in respect of providing banking and other financial services as covered by the expression "or any other body corporate, or any other person" used in Section 65 (105)(zm) and sub-section 65 (12) - held yes - AT
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• Taxpayers Can Offset Excess Service Tax Paid Against Future Liabilities, Easing Overpayment Corrections.

  Case-Laws - AT : Adjustment of excess service tax paid for the discharge of service tax liability for the subsequent period allowed - AT
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• Liability for Service Tax under GTA: Consignment Agents Responsible, Not Appellants Paying Through Agents.

  Case-Laws - AT : Person liable to pay service tax under GTA -It is not possible to hold that the appellants are paying the freight through their agents and are therefore liable to pay service tax. Consignment agents squarely fall under the category of persons who are liable to pay service tax since they have paid the freight amount themselves. - AT
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Central Excise

• Legal heirs not liable for deceased's duties under Central Excise Act; exempt from recovery responsibilities.

  Case-Laws - HC : Recovery of duty from a successor in business - legal heirs of a deceased assessee - the legislature has consciously kept away the legal heirs from answering to liabilities under the Act. - HC
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• Service tax refund in export contracts: Does delivering goods abroad extend the 'place of removal' beyond India?

  Case-Laws - AT : Refund of service tax - Merely because as per the terms of export contract, the goods have to be delivered at the customer's premises abroad, can it be said that the place of removal is extended to a place outside India. - AT
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Case Laws:

• Income Tax

• 2012 (6) TMI 577
  Dis-allowance u/s 40(a)(ia) - TDS u/s 194C - assessee engaged in business of forklift hiring, gives on hire forklift vehicles either owned by him or taken on hire from outside parties - dis-allowance made of hire charges paid to outside parties on hire of forklift vehicles on account of non-deduction of taxes - Held that:- For application of provisions of Section 194C in this case it has to been seen, whether the assessee has entered into any kind of sub-contract with the outside parties from whom he has hired the forklift vehicles on random basis to fulfil his own commitment towards his principals. There is no material on record to remotely suggest that there was any kind of oral or a written contract or sub-contract with the outside parties from whom he has taken the forklift vehicles. Until and unless risk and responsibility of the contract undertaken by the assessee is shifted to the sub-contractors, it cannot be held that these persons are the sub-contractors of the assessee. Hence, assessee was not liable to deduct TDS u/s 194C(2) in relation to payment made to the outside parties and accordingly there is no violation of Section 40(a)(ia) - Decided in favor of assessee.

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• 2012 (6) TMI 576
  Validity of revisionary proceedings u/s 263 - denial of deduction u/s 54F on ground that assessee is not eligible to claim exemption as the assessee had offered income from two house properties at Trichy and Bangalore respectively u/s 64(1)(iv) for which the assessee was considered to be the deemed owner of the said properties - Held that:- If the house properties situated at Trichy and Bangalore are owned by the assessee's wife then the same cannot be considered as owned by the assessee for disallowing exemption u/s 54F. We find that the assessee has brought no material before us to show that either the house property situated at Trichy or Bangalore is not owned by him. CIT also has brought no relevant material on record to show that both the house properties were owned by the assessee. The circumstances in which the income from both the house properties were shown in the return of income by the assessee is also not clear from materials available before us. We, therefore, set aside the order of the CIT and restore the issue back to the file of the CIT for proper enquiry and verification.

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• 2012 (6) TMI 575
  Deduction u/s 10A - exclusion of foreign currency expenses from export turnover and not from the total turnover while computing deduction - Held that:- If an item is excluded from the export turnover, the same should also be excluded from the total turnover to maintain parity between the numerator and denominator while calculating the deduction u/s 10A - Order of lower authorities set aside - AO directed to reduce impugned expenses both from export turnover as well as total turnover - Decided in favor of assessee Transfer pricing - Adjustment in ALP of the contract software research and development services transaction entered by the Appellant with its associated enterprise - AO without giving any opportunity of being heard adopted ALP suggested by TPO on ground that submissions of the assessee were already considered by the Transfer Pricing authority while passing the order u/s. 92CA - Held that:- Issue remanded back to the file of the AO/TPO to be decided afresh after providing due and reasonable opportunity of being heard to the assessee. Benefit of +/- 5% adjustment u/s 92C(2) - AY 2006-07 - assessee contended for standard deduction of 5% as provided under erst while proviso to section 92C(2) before making adjustment for the transfer price on ground that amendment brought in by Finance (No: 2) Act of 2009 is prospective in operation and will be applicable from AY 2009-10 and onwards - Held that:- Proviso is not a procedural piece of legislation and therefore, unless it is so clearly intended, the newly amended proviso cannot be understood to be retrospective in nature. In fact, it is a well-settled proposition that the statutory provisions as they stand on the first day of April of the AY must apply to the assessment of the year and the modification of the provisions during the pendency of assessment would not generally prejudice the rights of the assessee. We therefore find no justification to deny the benefit of +/-5% to the assessee in terms of the erstwhile Proviso for the purposes of computing the ALP - Decided in favor of assessee.

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• 2012 (6) TMI 574
  Dis-allowance of foreign exchange loss of Rs 49.12 lacs - Tribunal while allowing appeal of assessee, directed admission of foreign exchange loss to the entire extent of Rs. 99.23 lacs - Held that:- Tribunal directed the admission of foreign exchange loss to the entire extent of Rs. 99.23 lacs on the premise this was the amount which had been disallowed by the Assessing Officer which is a mistake of fact. Hence, we set aside the order of the Tribunal and deem it proper to remand the matter to the Assessing Authority to re-determine the income after taking note of foreign exchange loss of Rs 49.12 lacs. Expenditure incurred over the office premises for renovation and paying compensation to the lessor which was taken on lease by the assessee - revenue or capital expenditure - Held that:- Amount of Rs 6.73 lacs actually spent by the assessee as a revenue expenditure could have been allowed as a deduction, however, other amount of Rs. 22,19,000/- admittedly paid by the assessee to its lessor can never partake the character of a revenue expenditure and not even as a capital expenditure as the assessee has not constructed the building part but the amount is paid to the lessor. Order of the Tribunal is set aside to this extent and on these two aspects, the matter is remanded to the Assessing Authority.

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• 2012 (6) TMI 573
  Addition of Income tax Receivable to the income of assessee - ignoring the submissions of the appellant that the said income tax (MAT) receivable has never been reimbursed to the assessee - changing the head of income and taxing the same under the head ‘income from other sources’- Held that:- It is relevant to first adjudicate if the additional evidences should be entertained and the consequences of the said decision thereof - examining the additional evidences furnished reveals the correspondence that took place between the assessee and the APTRANSCO and that the said documents do not require any investigation into the basic facts of the issue as they are merely the correspondence between both the parties - issue relating to the correct head of income will be decided after deciding the issue of chargeability - papers filed being admitted the impugned order of the CIT(A)is set aside and restore the matter to the file of the AO for deciding the issue, duly considering, among other things, the additional evidence filed - in favour of assessee for statistical purposes. Entertaining an additional ground by CIT(A)which was not raised before the AO - AO contested that no revised return was filed - Held that:- As decided in Goetze (India) Ltd. vs. CIT [2006 (3) TMI 75 (SC)]that when making of a new claim before the Tribunal or for that matter the CIT(A), who is also not the assessing officer, but who is the appellate authority, assessee does not have to initiate a new claim before them by way of filing the revised return of income - can be done by way of letters or by way of filing revised computation - against revenue. Granting of deduction u/s 80IA by CIT(A)- deemed income through insurance premia - Held that:- Every receipt of the industrial undertaking is not an eligible profits derived from the said undertaking. With the categorization done by the Supreme Court based on a logic ie eligible profits and ineligible ancillary profits, the said distinction has to be looked into by the AO while adjudicating the issue - no clear finding of the Revenue authority that it is not derived from the business of the undertaking, there is no clarity as to whether the said income falls as operational income or ineligible ancillary profit - directed to AO TO gather the relevant facts and decide the issue afresh - favour of assessee by way of remand. Netting of the excess premium received - Held that:- As decided in Lalsons Enterprises Versus Deputy Commissioner Of Income-Tax [2004 (2) TMI 294 (Tri)]the benefit of netting of the excess premium received against the insurance premium amount paid during the year, for taking into account only the differential amount for exclusion from the income eligible for relief under S.80IA of the Act - against revenue.

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• 2012 (6) TMI 572
  Computation of deduction u/s 10A - assessee submitted that the AO excluded communication charges from the export turnover without reducing from the same from the total turnover Held that:- As decided in Commissioner of Income-tax Versus Tata Elxsi Ltd.[2011 (8) TMI 782 (HC)]that when certain expenses incurred towards telecommunication charges attributable to the delivery of the computer software outside India are reduced from the export turnover, then they are to be reduced from the total turnover also - in favour of assessee. Transfer pricing adjustment - the assessee's case handed to the TPO for the determination of Arm's Length Price (ALP) - assessee contested that TPO has not adopted a uniform and consistent policy for adopting or rejecting the comparable for both the software services and the IT enabled services - Held that:- In the case of some of the comparable, TPO has stated to be in the business activity of software development, but they have not given any details or any bifurcation of their development and trading activities separately - if the activity of product development would be compared with the software development services offered by the assessee which are both functionally different grave injustice would be done - TPO cannot adopt or pick and choose different methodology or different filters for analyzing the transfer pricing adjustment for the same or similar type of activities - remand the issue to the file of the AO/TPO to reconsider the ALP adjustment in the light of these observations. If any information is sought to be used against the assessee, the same has to be furnished to the assessee and thereafter, taking into consideration the assessee's objections, if any, only then can the TPO proceed to take a decision. If the assessee seeks an opportunity to cross examine the party, the assessee shall be provided such an opportunity. standard deduction of plus or minus 5% to be given to the assessee, while making the transfer pricing adjustment - in favour of assessee for statistical purpose.

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• 2012 (6) TMI 571
  Penalty levied u/s 271(1)(c)on account of unexplained investment - assessee contested that transactions which were shown by the assessee as purchase and shares on behalf of the clients - Held that:- The transactions recorded by the assessee were in fact the investment of the assessee and not the purchases on behalf of the clients and the addition has been made by the AO on the basis of the evidence found that the client’s ID did not match, hence established that the true nature of transaction has not been recorded by the assessee in the books of account- presenting the incorrect facts and that too regarding the nature of transactions recorded in the books of account calls for levy of penalty - the contention of the assessee that the assessee’s claim is denied due to non production of confirmation of the parties cannot invite penal provisions, is not acceptable - once the addition has been sustained and the assessee’s explanation was not found correct, then the provisions of Explanation 1 to sec. 271(1)(c) is applicable and penalty levied against the assessee is justified - against assessee.

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• 2012 (6) TMI 570
  Entitlement under Rule 7A of ITR for deduction of expenditure incurred on replantation of rubber - appellant is a Plantation Company jointly set up by the State and Central Governments engaged in rubber cultivation - Held that:- Expenditure covered by Rule 7A(2) does not cover expenditure incurred for replantation of an area and only provides for deduction of expenditure for infilling through replacement of dead trees or other trees that have become useless, which is not the case here - Rule 7A(2) is in the same line as Rule 7B(2) - yielding healthy rubber plantation does not admit replacement of dead plants within such area as new saplings cannot grow under shade and is never done by any planter - If the appellant's claim is allowed the portion of the agricultural income determined by the Central Income Tax Officer will be in direct conflict with the Scheme of assessment of agricultural income under the State AIT Act which prohibits deduction of expenditure on re plantation of an area and only an incentive is provided by way of re plantation allowances under Rule 3 of the State Agricultural Income Tax Rules - the assessee has no case that they have incurred any expenditure for infilling the yielding area and the expenditure incurred is only for replantation after cutting and removing old plantation, there is no question of considering or allowing the claim under Rule 7A(2) - against assessee.

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• 2012 (6) TMI 569
  Adding back of interest waiver to the book profit u/s. 115JB - CIT invoked the provisions of section 263 - assessee contention that the amount withdrawn from a reserve or provision has to be considered for book profit if it is allowed as deduction in earlier years - Held that:- The amount withdrawn from reserve or provision i.e., waiver of interest cannot be considered as part of book profit since it was never allowed in the computation of book profit of the company in any of the earlier years since the company never had any book profit being sick industrial undertaking as decided in Narayanan Chettiar Industries vs. ITO [2005 (7) TMI 71 (HC)]- the provision for interest was made in earlier year as interest payable was added back to the income of the assessee as the liability was not paid while computing the regular income of the assessee - the Assessing Officer having computed the income of the assessee in accordance with the normal provisions of the Act, thus cannot hold that the assessment order passed is erroneous so far as prejudicial to the interest of revenue - in favour of assessee.

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• 2012 (6) TMI 568
  Disallowance of interest u/s 14A in respect of exempt income from dividends - assessee contested that disallowance made by invoking sec. 14A according to which, AO cannot enhance the assessment or reduce the refund for any asst. year beginning on or before 1.04.2001 - Held that:- Considering the Proviso to sec. 14A inserted by the Finance Act, 2002 with retrospective effect from 11.05.2001 and CBDT Circular No.14 of 2001 dated 12th December, 2001 no deduction shall be made in respect of any expenditure incurred by the assessee in relation to income which does not form part of total income under the Income-tax Act and were assessments proceedings have become final before 1.04.2001, the assessment should not be reopened under sec. 147/154 of the Act to disallow expenditure relatable to exempt income by applying the provision of sec. 14A. In the case of the assessee, processing under sec. 143(1) was made and thereafter AO issued notice u/s 143(2) in order to verify the claims made in the return of income. Therefore, the assessee's case has not been reopened under sec. 147 nor the settled issues have been intended to be upset u/s 154 - the AO was justified in disallowing the claim of interest u/s 14A - against assessee.

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• 2012 (6) TMI 567
  Disallowance u/s 14A Act r.w.r. 8D of the Rules - the assessee submitted that no expenditure was incurred in relation to the investments in question – Held that:- Determining the amount disallowable as per provisions of Rule 8D(2) the condition precedent is that the AO must come to a conclusion having regard to the accounts of the assessee that claim of the assessee that no expenditure was incurred in relation to exempt income is not correct – as no such satisfaction has been arrived at, computation of disallowable amount as per Rule 8D(2) cannot be sustained - in CIT Vs. Hero Cycles Ltd. [2009 (11) TMI 33 (HC)]held that disallowance u/s 14A requires a finding of incurring of expenditure where it is found that for earning exempt income, no expenditure has been incurred, disallowance u/s 14A cannot be sustained – in favour of assessee.

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• 2012 (6) TMI 566
  Cash credit - addition u/s 68 - gift - held that:- The addition could very well be justified even under section 69 of the Act. It is for the assessee to prove the sources of the credits in the bank account as the bank itself has acknowledged that the assessee has an asset in the form of credits in the passbook. It is only for this reason that the assessee ventured into furnishing the evidence in support of the claims of gifts stated to have been received by her. The assessee being found to be the owner of a particular asset is definitely under an obligation to disclose all the sources thereof to the satisfaction of the tax authorities. So, the quarrel whether it is section 68 or section 69 should not make a difference having regard to the subsisting obligation of the assessee to explain all the credits and sources of the investments found by the Revenue. In my view, the learned Judicial Member was unnecessarily in haste to get into the case laws without properly appreciating the facts of the case. It always happens whenever a judgment is appreciated without appreciating the facts that led to that particular decision. I am observing this because it was not the case of the assessee either before the AO or before the CIT(A) and the record that is produced by the assessee before the authorities and before the Tribunal is sufficient to indicate the fact relating to the maintenance of the books of account by the assessee, as discussecd by the learned Accountant Member. Therefore, in my view, deleting the addition only on the legal grounds without appreciating the facts on record does not bring proper result. - Decided against the assessee by three member bench.

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• 2012 (6) TMI 565
  Revision u/s 263 - Unexplained cash credit under section 69 of the Act – Held that:- When the creditors have furnished their confirmation regarding the transactions and their source of income and also furnished the facts of their being assessed with the Department, then in our opinion, all the three requirements as laid down by the precedents for proving cash credits stand fulfilled to the satisfaction of the Assessing Officer. But the appellate authority can further look into this aspect but not the CIT as has been done in this case. and the primary onus of the assessee gets discharged. On similar set of facts if he Assessing Officer has taken a decision, but which according to the ld. CIT, is not and should not be that decision, section 263 does not empower him to look on the issue from that aspect. The ld. CIT cannot replace his own opinion and substitute with that of the Assessing Officer. He can revise the assessment order only and only when the twin conditions i.e erroneous and prejudicial to the interests of the Revenue, are fulfilled. In this case, the assessment order is not at all erroneous, hence, it cannot be revised. order of the ld. CIT set aside and restore the assessment order. appeal stands allowed

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• 2012 (6) TMI 564
  MAT - Whether Tribunal was right in holding that the assessee was right in claiming deduction of the amounts withdrawn from the revaluation reserve during the assessment year, from the book profit under section 115JA - contended by the assessee that in view of the proviso, revaluation reserve created much prior to the introduction of section 115JA of the Act should be allowed as reduction in the computation – Held that:- if the reserve had been created at the first instance with reference to the profit and loss account, then, in the computation of profit the assessee would certainly be entitled to reduction. However, if at the first instance of the creation of reserve, the same is not referable to the profit and loss account, but to the balance-sheet, the question of granting relief to the assessee did not arise. assessee is not entitled to reduction in respect of the withdrawal from the reserve account in terms of section 115JA Explanation (i). Consequently, the order of the Tribunal is set aside. The tax case appeal stands allowed

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• 2012 (6) TMI 563
  Valuation - 50% of the share the assessee owns in the property. He acquired the same under a registered sale deed. 'The Appellate Commissioner accepted the valuation, on the basis of the valuation in the case of Sri S.K. Sanjay where the Tribunal has accepted the valuation. Apart from the consideration mentioned in the sale deed and ownerships slums on the property were taken into consideration in coming to the fair market value. valuation accepted by the Tribunal is just and proper and represents the true market value of the property. appeals are dismissed

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• 2012 (6) TMI 562
  MAT - Whether Tribunal was right in holding that earlier year's bonus is to be deducted from the book profit under section 115J - assessee took the contention that the Assessing Officer should have deducted the bonus paid as well as the from the net profit arrived, since the donation and the bonus were actual cash outgoings from the current year's profit should have been deducted from the net profit - in computing the profit and loss account as per Part II of Schedule VI to the Companies Act, these expendi- ture really go in the computation of the profit and loss account - Held that:- when the profit and loss account of the assessee-company disclosed the net profit as Rs. 24,85,760 in accordance with Parts II and III of Schedule VI to the Companies Act, the assessee is not entitled to have the deduction of amounts assessed on the profit and loss appropriation account in the computation of net profit. tax case appeal allowed

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• Customs

• 2012 (6) TMI 561
  CVD demand on the imported goods based on MRP as the goods were imported in 20 kg packing having no MRP declared on the imported package - assessee contested that the goods will not qualify retail packages as defined under PC Rules and since the ultimate consumers of the imported goods are industrial consumers, the imported product is therefore exempt from affixing MRP on the imported packages as per rule 2A of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 - Held that:- As per the definition of 'Manufacturer' defined under Rule 2(h) of the PC Rules manufacturer includes any person who or which puts, or causes to be put, any mark on ay packaged commodity, not produced, made or manufactured by him and the mark claims the commodity in the package to be commodity produced, made or manufactured by such persons. The appellants after import of the goods affixed the brand name of “Henkel CAC Pvt. Ltd.” on the imported package which gives the indication that the product in question may be manufactured by the appellant - as claim of the assessee that the goods in question are being sold by them to the industrial consumers and this fact is verifiable from the records that the burden lies on the appellant to establish before the lower authorities that the provisions of Chapter II of the PC Rules are not applicable to the packaged commodity imported by them - a reasonable opportunity of producing evidence before the original authority to prove claim that they are covered under exemption from MRP based assessment under Rule 2A of PC Rules shold be given - decided in favour of assessee by way of remand.

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• Corporate Laws

• 2012 (6) TMI 560
  Application from unsecured creditors – Winding up – Secured creditors had objected to the passing of the winding up order - Secured creditors be restrained from selling the assets by private negotiation, instead to follow a transparent process - Held that:- The manner of appropriation of the amount realised would be subject to the proviso to Section 13(9) of SARFAESI Act and Section 529A of the Companies Act which operate in the same plane except that secured creditor would have the right to sell the property which would otherwise have been the function of the Official Liquidator. But, the Official Liquidator acting under the orders of the Company Court would have a role to play to an extent so as to protect the interest of the persons who would be entitled to the benefits of liquidation - the secured creditor/second respondent herein shall therefore have the right to sell the secured assets in terms of Section 13 of the SARFAESI Act as per the procedure contemplated under Rules 8 and 9 of the Rules, 2002 - transparent procedure to be adopted since it is alleged that there were irregularities committed when the movable secured assets were sold - The proposal for sale and the details of the valuation obtained for determining the modalities of sale shall be made available to the Official Liquidator – as there are no dues to employees and workmen this aspect to be considered when the secured creditor seeks leave of this Court to appropriate the amount realized by selling the secured assets as necessary directions could be issued at that stage safeguarding claims in future and the pari passu interest should be protected in that regard - justification for sale by private treaty need not be gone into since the secured creditor/second respondent is not averse to selling it by public auction.

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• 2012 (6) TMI 559
  Winding up - order admitted winding up petition against appellant company - Order passed without considering any evidence - order is passed based on the contents of the compromise petition filed by the parties - parties were not permitted to aduce the evidence – Held that:- Points for consideration have to be formulated and answered in the light of the material on record both oral and documentary evidence and the arguments addressed by learned counsel as well as keeping in mind the statutory provisions .order passed do not satisfy the legal requirements - matter is remitted back to the learned company judge to restore the petition to its original file and provide opportunity to the parties to lead evidence

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• Service Tax

• 2012 (6) TMI 582
  Whether a co-operative bank can be held to be liable for service tax in respect of providing banking and other financial services as covered by the expression "or any other body corporate, or any other person" used in Section 65 (105)(zm) and sub-section 65 (12) - Held that:- Tribunal held in case of Madhav Nagrik Sahkari Bank Ltd Vs. CCE Indore-I (2012 (3) TMI 283 (Tri)) that even the cooperative bank will be covered by the heading "any other body corporate, or any other person" used in Section 65(105)(zm) and sub-section 65(12) of the Finance Act, 1994 and would be liable to pay service tax. Hence directed to make pre-deposit and subject to deposit of the tax amount, pre-deposit of penalty and interest stands waived - Decided against the assessee.

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• 2012 (6) TMI 581
  Adjustment of excess service tax paid for the discharge of service tax liability for the subsequent period – Held that:- Considering submission that the appellants had wrongly mentioned the provisions of Rule 6 (4A) but in fact the provisions of Rule 6(3) will be applicable in this case no point to deny the adjustment to be made – in COMMISSIONER OF C. EX., MYSORE Versus POWERCELL BATTERY INDIA LTD.[ 2010 (3) TMI 357 (Tri)] it was decided that where an assessee has paid to the credit of Central Government service tax in respect of a taxable service the assessee may adjust the excess service tax so paid by him (calculated on a pro rata basis) against his service tax liability for the subsequent period – in favour of assessee.

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• 2012 (6) TMI 580
  Demand of service tax – C&F services - demands stand confirmed by taking the entire consideration figures from the balance sheet of the appellant – Held that:- Service Tax discharged by treating the services as Business Auxiliary services is to the tune of around Rs. 13,87 lakhs approximately. applicant-appellant directed to make further deposit of Rs. 2.5 lakhs

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• 2012 (6) TMI 579
  Waiver of pre-deposit - services of maintenance and repair – Held that:- no maintenance contract between the appellant and their client and services have been provided under the rate contract. As and when their client required the services of the appellants, they entrust the work to them at the rates agreed by them in the contract. Decided in favor of assessee.

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• 2012 (6) TMI 578
  Cenvat Credit – service tax paid on manpower recruitment, maintenance, electrical maintenance, ship fees, mobile phone services, insurance of building involved, service tax in rent a cab and the mobile services – Held that:- services were covered by Order of this Tribunal dated 20.1.2010 wherein the Tribunal has not allowed Cenvat credit in respect of the services given holding that these are not services connected to the manufacture of the goods in respect of the appellants - Credit not available Availment of Cenvat Credit on the canteen services – Held that:- Cenvat credit is not admissible to the appellants if the cost of the food is borne by the workers of the factory.

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• Central Excise

• 2012 (6) TMI 558
  Classification of the respondent s product Ponds Oil Control Face Wash - Revenue appeal that the same should be classified as Skin Care preparation falling under Chapter Heading 3304.00 of the Central Excise Tariff Act rather than under the Heading 3402.90 as Organic Surface Active Agent (OSA) accepted by Commissioner (Appeals) – Held that:- Since the disputed issue stands decided in favour of the respondents by several decisions of the Tribunal in MUL DENTPRO PVT. LTD. Versus COMMISSIONER OF C. EX., VAPI [2007 (8) TMI 150 (Tri)], ALFA PACKAGING Versus COMMISSIONER OF C. EX., VAPI [2010 (10) TMI 400 (Tri)] find no merits in the Revenue s appeal – against revenue.

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• 2012 (6) TMI 557
  Penalty on the Director for the Assessee Company – Rule 26 or Rule 27 – Held that:- As no excisable goods are confiscated and the offence alleged against these respondents are negligence, therefore, the said offence does not fall under Rule 26 of the Excise Rules - liable to pay Rs. 5,000 - penalty as ordered by the Tribunal – against revenue.

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• 2012 (6) TMI 556
  Recovery of duty from a successor in business - legal heirs of a deceased assessee - Held that:- the proviso is attracted to cases in which the person chargeable to duty transfers or dispose of the business which he is carrying on during his lifetime. If any amount was due from the predecessor in title, the successor in title is liable and it is to be recovered from him. We do not find any provision in the Act which foists any such liability in the case of intestate succession. In other words, there is no provision which empowers the authorities to recover due from a deceased assessee by proceeding against his legal heirs. The way Sec. 11 and 11A are worded, it is amply clear, the legislature has consciously kept away the legal heirs from answering to liabilities under the Act. In all the cases of such commercial activity being carried on, except that of an individual, the death of any person who is involved in the manufacturing activity, has no impact on the business or manufacturing activity. Even after his death, the manufacturing activity goes on, the legal entity which is carrying on the business is not disrupted and the commercial activity is continued without any interruption. In the case of an individual, on his death, the manufacturing activity comes to an end. To hold his legal heirs liable for the dues under the Act from the manufacturer who is the person who is charged with the duty to pay tax would be unreasonable.

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