-
Income Tax
-
2012 (6) TMI 269
Income - accrual - interest on sick advances - NPA - assessee-company, wholly owned by the Government of Kerala, engaged in the business of marketing of products manufactured by M/s. TTPL, advanced money to various other Government of Kerala undertakings on direction of Government of Kerala - non-accounting of interest income on ground of advances becoming sick - Revenue contended accounting of same since assessee was following the mercantile system of accounting - Held that:- Guidance Note on Accrual Basis on Accounting issued by the ICAI lays down that where the ultimate collection with reasonable certainty is lacking, the revenue recognition is to be postponed to the extent of uncertainty involved. In the instant case, the assessee did not account the interest income as there was uncertainty about its recovery. The apprehension or the situation foreseen by the assessee has been vindicated by the subsequent developments i.e. all the companies have gone into liquidation. Addition made on account of accrued interest income is directed to be deleted. See Brahamputra Capital & Financial Services Ltd v. ITO(2008 (4) TMI 361 (Tri)) - Decided in favor of assessee.
-
2012 (6) TMI 268
Principal of natural justice - High Court on petition of assessee directed Tribunal to disclose material collected by the Revenue in the course of various searches and surveys, connected with the dispute in question, which is not yet disclosed and which may be relied upon by the Tribunal - reference to Special bench - dissenting views of all the three members - Held that:- It has been noticed above that both the sides are at variance in reading the majority conclusion drawn by the three members of the earlier special bench. After going through such orders The majority view is in favor of the Revenue and against the assessee. As such, in so far as the tribunal is concerned, it cannot issue any direction to the AO to disclose the material in a particular manner or to a particular extent.
-
2012 (6) TMI 267
Commission to Managing Director holding 39.9% of shareholding - dis-allowance on ground that assessee has not distributed the dividend from the very inception and the amount of commission could be paid as a profit or dividend income - Held that:- Distribution of dividends is one component. It does not give the meaning that if an assessee failed to distribute the dividend, then payment of any commission would take the colour of dividend. The commission paid to managing Director is linked with the sales turnover of the assessee and to the performance of the directors. It has nothing to do with the shareholding pattern - dis-allowance held to be unjustified - Decided in favor of assessee. Admission of additional evidences - Rule 46A - first appellate authority deleted the addition made by AO after admitting and going through additional evidences - Held that:- Sub-rule (3) of Rule 46A suggests that first appellate authority shall not take into consideration any evidence produced under sub-rule (1) of Rule 46, unless the Assessing Officer has been given an opportunity to rebut the evidence taken on record. Since no opportunity was given to the AO, therefore, order is set aside on this issue and issue restored to the file of the Assessing Officer for readjudication.
-
2012 (6) TMI 266
Allowable expenditure on repair- the tribunal held that the expenditure of is capital in nature – Held that:- The CIT (A) and the Tribunal have considered the finding against the Assessee on the basis of the survey report of the Insurance Company with no opportunity was ever given to the Assessee to dispute the correctness of the said survey report held to be violation of principles of the natural justice - It is open to ITO to collect materials to facilitate assessment even by private enquiry but if he desires to use the material so collected, the Assessee must be informed of the material and must be given an adequate opportunity to explain it and controvert the contents of it – in favour of assessee. Determining the profits exempt u/s 80HH & 80-I - Mode of apportionment of expenditure – Held that:- As in assessment proceedings no details of expenses were furnished by the assessee to establish that the particular expenses were incurred in its particular unit out of its two units -thus in the absence of any details being made available by the Assessee the expenses incurred in the various heads are required to be treated for both the units - Tribunal attempt in order to arrive at a just figure of expenses of each unit the expenses to be bifurcated and divided in the ratio of turnover of both the units is acceptable- in favour of the Revenue.
-
2012 (6) TMI 265
Interest paid in respect of capital borrowed – borrowed capital is utilized for purchasing shares of the two companies claiming the amount as a deductible business expenditure – disallowance by Revenue as not a permitted deductions within the scope of Section 36(1)(iii) - Held that:- The tribunal which has reversed the decision of the assessing officer and the affirming order of the appellate commissioner has not recorded a positive finding as to what exactly was the business activity of the assessee and as to how the activity constituted a business activity and the borrowing also constituted an investment, which is in the nature of a capital investment for the purpose of business of the assessee - in the absence of a commensurate finding on the part of the tribunal remand the matter back for reexamination and to record a proper finding and then apply the legal principles.
-
2012 (6) TMI 264
Tribunal remitting the issue of claim of deduction u/s 10B to the file of the AO – Tribunal stated that CIT(A) has not followed the requirement of Rule 46A - assessee contested that all details have been furnished to the AO who was also given an opportunity in the course of appellate proceedings before the CIT(A) – Held that:- The documents that were placed before the CIT(A) related to Form 56G and the documents pertaining to local sale and export sale a certificate granted by the Export Commissioner as regards the separate location of the export unit - in the course of the appeal before the CIT(A), details in support of the various columns in Form 56G were placed before the Assessing Authority for his remarks and report - the order of the Tribunal shows that there is hardly any reference as to the fresh material which went unnoticed or which had not been placed before the Officer for offering his comments – absolute compliance of the provisions of Rule 46A (3)no justification in granting the order of remand - in favour of assessee.
-
2012 (6) TMI 263
Provisions of Section 40(a)(ia) is retrospective or not - Tribunal not considering the issue raised by the Revenue – Held that:- Referring to the circular of the Board 1/2009 dated 27.3.2009, particularly with reference to the amendment brought under the Finance Act, 2008 FOR Section 40(a)(ia) with retrospective effect from 1.4.2005, CIT (A) held that since tax deducted at source had been paid well before the due date for filing the return of income, the assessee was entitled to have the deduction - Since the Tribunal had gone only on the aspect of the actual deduction and had not gone into the applicability of the provisions of law considered by the CIT (A) for granting relief the proper course would be to remand the matter back to the Tribunal to re- consider - in favour of assessee.
-
2012 (6) TMI 261
Undisclosed income - Pursuant to the notice assessee filed return in Form No.2B declaring undisclosed income of Rs.3 lakhs. However, apart from this declared undisclosed income, the assessing officer made an addition of Rs.4,15,000/-. Even though the assessee made specific plea that out of Rs.4,15,000/- Rs.3 lakhs represents gift received from Non Resident Indians, Assessee not only failed to prove it but did not even pursue the contest against assessment – Held that:- with reference to the undisclosed income of Rs.3 lakhs which though claimed as a gift, the assessee miserably failed to prove it. Penalty u/s 158BFA (2) of the I.T.Act - penalty is mandatory at least on above amount Regarding balance amount of Rs.1,15,000/- Held that:- it is only an additional amount after rejection of cash flow statement. some leniency can be shown to the assessee in respect of this amount because with the tax and penalty and the interest for delay in payment of tax the assessee would otherwise end up paying more than the undisclosed income.
-
2012 (6) TMI 260
Unexplained cash credits - unexplained cash credits were treated as unaccounted income and assets in the hands of the assessee – Held that:- in Sandeep Kumar (2007 (4) TMI 59 (HC) ). No substantial question of law arising from the findings of the Tribunal because it is only a case of assessee's failure to establish the cash credits with acceptable evidence about the genuineness, capacity and creditworthiness of the donors and the details and the accounts of donors. Decided against assessee
-
2012 (6) TMI 259
Validity of notice u/s 148 – block assessment order u/s 158BC - Held that:- Hon'ble High Court has given liberty to issue notice as per law which means that if the notice fulfils the other conditions laid down in the Act, the Assessing Officer can issue notice, afresh. Otherwise also, the very section 147 of the Act empowers the Assessing Officer to initiate re-assessment action in respect of escaped income within the prescribed time, and no authority can stop him for doing so. after striking down the directions of the ld. CIT(A) and the liberty was only for issuance of notice u/s 148 of the Act which the Assessing Officer otherwise possesses. reasons recorded are the same and identical on the basis of which action u/s 147/148 was initially initiated. So, on the basis of same reasons which have already been quashed by the Tribunal, notice issued u/s 148 would not survive. When the particular direction/liberty has been quashed by the Tribunal such a direction no longer survives. no provision in law to take action u/s 147 under the direction of any authority or Court. appeal of the Revenue stands dismissed.
-
2012 (6) TMI 258
Reopening of the assessment - original assessment for assessment year 1992-93 was completed in this case on 31-3-1995 by making addition of Rs. 80 lakhs received by the assessee – Held that:- no finding or directions have been issued in assessment year 1992-93 to tax the same income in the assessment year under appeal which is also inherently impossible in view of the findings that it is capital receipt. provisions of section 150 of the Income-tax Act would not apply in the case of the assessee and since the reopening of the assessment is made after a period of six years from the end of the assessment year as per section 149 of the Income-tax Act, therefore, it is clearly time-barred. it is finally decided between the parties that such a receipt is a capital receipt; therefore, no income chargeable to tax would have escaped assessment. no addition of Rs. 80 lakhs can be made in the hands of the assessee. appeal of the assessee is allowed
-
2012 (6) TMI 257
Disallowance of expenses - Assessing Officer was of the opinion that the agreement did not contain any clause as per which the aircraft was to be utilized by the assessee for its guests and premier clients to avail of these facilities. Therefore, there was no commercial expediency in the said agreement. He was also of the opinion that the taxi operator was the subsidiary of the assessee and, therefore, this agreement was merely a device to make payment to the said taxi operator to reduce its tax liability – Held that:- disallowance under section 40A(2) could only be made if the revenue had discharged its burden of proving that the expenditure so incurred was excessive or unreasonable having regard to the fair market value of the goods, services or the facilities for which the payment was made. Officer to show that similar facilities were available to the assessee at a lower price or that the assessee had made excessive payments. Consequently, in the absence of the such findings the Tribunal concluded that the provision of section 40A(2) could not be invoked for disallowing the said expenditure. under the same agreement the payments made earlier have been held to be genuine accepting the genuineness of the agreement and treating the same as incurred in connection of the business. provisions of Section 40A(2)(b) of the Income tax Act are not attracted in the present case. appeal dismissed
-
2012 (6) TMI 256
Capital vs revenue expenditure - nature of the expenditure on account of advertising and marketing incurred by the assessee in different assessment years. The AO was of the view that the expenditure which was incurred on neon signs and glow signs was capital in nature as these signs are semi- permanent fixtures fixed at numerous retail outlets of the assessee and providing enduring benefit. Therefore, out of the total expenditure incurred on advertising and publicity, expenditure which was specifically attributed to the glow signs and neon signs (it was major component of advertising and marketing expenditure) was disallowed as the revenue expenditure – Held that:- In the case of Assam Bengal Cement Co. Ltd. (1954 (11) TMI 2 (SC)) , if the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business, it is properly attributable to capital and is of the nature of capital expenditure. If on the other hand it is made not for bringing into existence an asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure. If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically. glow signs boards have a short life, they decay with the effect of weather, and require frequent replacement. These observations may not be entirely correct having regard to the literature qua neo sign board produced by the learned counsel for the Revenue. However, this fact would not alter the ultimate decision as it is still obvious that no asset of permanent nature is brought into existence. by putting the neon signs and glow signs, no asset of permanent nature is created. Simply because self-life of such neon signs is more, may not be of any significance once we keep in mind the important aspect on which the expenditure is incurred i.e. on advertising and marketing. no question of law arises and these appeals are accordingly dismissed
-
2012 (6) TMI 241
Applicability of AS-7 to Developer - assessee engaged in business of construction of Civil Work and Road Construction as a Contractor, had entered into an agreement with GSRTC for the development of a shopping complex - Revenue on observation that assessee was authorized to collect advances from the customers, opined that the assessee should have declared profit of the said project on percentage of completion method - Held that:- Facts reveal that assessee was developing the commercial complex and, therefore, acting as a developer. Also, units of complex were to be transferred to lessees on approval of GSRTC, which was not received till the end of the accounting period. Further, since only part money was received, hence shown as an advance and sales were not materialized till the end of the year. Since the assessee can be termed as a contractor as also a developer, therefore the Revenue can be recognized in terms of AS-9 and not As-7. It was wrong on the part of the AO to assess the income irrespective of the year of completion of project when the amount received in advance has not reached certainty and that too the AO has merely estimated 10% as the recognition of Revenue of the construction contract, without assigning any specific basis of such an estimation. Thus, percentage completion method could not be applied. Deletion of addition upheld - Decided in favor of assessee.
-
2012 (6) TMI 240
Registration u/s 12A - denial on ground that welfare of dogs and taking care of sick animals do not fall under the purview of Section 2(15) - Held that:- Whilst the charitable sector is enormous and very diverse, the aims of each and every charity, whatever their size, must be for public benefit. Public benefit is therefore central to the work of all charities. Thus, advancement of animal welfare directed towards prevention or suppression of cruelty to animals or prevention or relief of suffering by animals are nothing but charity. This would definitely, fall within the object of "general public utility". Order of the CIT is quashed and he is directed to grant assessee registration sought u/s 12A - Decided in favor of assessee.
-
2012 (6) TMI 239
Deduction u/s 54B - denial - sale of agricultural land standing in assesee's name - purchases of land in name of son and daughter-in-law - Held that:- Bare reading of Section 54B does not suggest that assessee would be entitled to get exemption for the land purchased by him in the name of his son and daughter-in-law. In the facts and circumstances of the case also aforesaid inference has not been drawn. Same is question of fact. No substantial question of law arises in appeal. Secondly, word 'assessee' cannot be given a liberal interpretation, as it would be tantamount to giving a free hand to the assessee and his legal heirs and it shall curtail the revenue of the Government, which the law does not permit. Thus, Tribunal has rightly disallowed the exemption u/s 54B - Decided against the assessee.
-
2012 (6) TMI 238
Annulling the assessment passed u/s 147/143(3)by CIT - assessment reopened – return declaring nil income after claiming set off of unabsorbed depreciation & book profits - addition of Rs.10,70,000/- being the 25% of royalty capitalized - Held that:- the AO reopened the assessment completed on 24.3.2003 u/s 143(3) of the Act merely on the basis of facts already available before him at the time of original assessment proceedings there is nothing to suggest that all the primary facts were not disclosed by the assessee at the time of original assessment nor any failure on the part of the assessee to disclose fully and truly all the material facts has been ascribed in the circumstances - It is well-settled that if a notice under section 148 of the Act has been issued after four years from the end of relevant assessment year there being no proof of failure on the part of the assessee to disclose fully and truly all material facts and thus, liable to be struck down – as during the course of assessment proceedings the AO raised a specific query relating to royalty expenses and indisputably, the assessee submitted a detailed reply no point of hiding any information – against revenue.
-
2012 (6) TMI 237
Adjustment made by the TPO to the arm's length price - rejecting the documentation maintained by the assessee and conducting the search of the comparables and also obtaining the information and documentation not available in public domain by exercising his powers u/s 133 – Held that:- Considering the case of Genisys Integrating Systems (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax[2011 (8) TMI 952 (Tri)] wherein this Tribunal has directed the AO to adopt the filter of turnover and also to give the assessee an opportunity of rebutting the information and documents obtained by the TPO by exercising his powers u/s 133(6) -remand these two issues to the file of the AO to re-consider the same as per the guidelines issued - in favour of assessee by way of remand. Adjustment sought by the appellant towards receivable, marketing and credit risk borne by the comparables - assessee has claimed the risk adjustment which is not allowed by the TPO on the ground that the assessee also has the risk of having a single customer – Held that:- the assessee had acquired the business earning income out of the said transaction by cost plus basis, thus, it can be seen that the assessee has not encountered the risk of having a single customer, whereas the same cannot be said as regards the comparables - the comparables were dealing in open market and were prone to the marketing and technical risks, thus the risk encountered by the assessee cannot be said to be the equivalent risks attached to the comparables - the risk attributed to the assessee by the TPO is an anticipated risk whereas the risk attributed by the assessee to the comparables is an existing risk - direct the TPO to decide the percentage of risk adjustment to be made. Computation of the deduction u/s 10A by excluding an amount from the ambit of export turnover without excluding the same from ambit of total turnover – Held that:- As decided in the case of CIT v. Tata Elxsi Ltd. [2011 (8) TMI 782 (HC)] the AO to exclude the amount both from the export turnover as well as the total turnover for the purpose of computing the deduction u/s 10A of the IT Act – in favour of assessee. Not providing the benefit of +/- 5 percent of the range at the time of computing the transfer pricing adjustment – Held that:- As decided in the Genisys Integrating Systems (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax[2011 (8) TMI 952 (Tri)] direct the AO to give plus or minus 5% variation for the purpose of computing the ALP.
-
2012 (6) TMI 236
Capital gain – enhanced compensation received on compulsory acquisition – assessee claimed capital loss - agricultural land – Held that:- CBDT has issued a notification in terms of section 2(14)(iii)(b) and that the land in question is situated in Village Kundli being an area adjoining the local limits of Panchkula municipality, which has already been notified by the CBDT for the purpose of section 2(14)(iii)(b) of the Income-tax Act and is therefore a capital asset. The order of the ld. CIT(A) is completely silent in this behalf also. assessee had neither filed any evidence before any of the authorities below to show his ownership of agricultural land nor filed details of expenses. All these aspects have not been looked into by the CIT(A). In this view of the matter, the order passed by the CIT(A) is vacated and the matter is restored to his file for a fresh decision. appeal filed by the Department is treated as allowed for statistical purposes.
-
2012 (6) TMI 235
Deemed dividend - Whether loans obtained by the assessee from its subsidiaries were in the nature of deemed dividends as per section 2(22)(e) of the Income-tax Act – assessee company had received loan amounts from different subsidiaries and those borrowed funds were in turn advanced to other subsidiaries – Held that:- The assessee company has not availed any benefit out of those loans availed from its subsidiaries. The assessee company had not retained those loan funds for its own activities. All the loan amounts have been redistributed to subsidiaries. These are normal business transactions carried out by any holding company. Where regular business transactions are carried on by an assessee in its ordinary course of business in the above manner, they cannot be treated as deemed dividend for the purpose of section 2(22)(e) of the Act.
-
2012 (6) TMI 234
TDS under Section 194-I or 194C - 'work' u/s 194C - contractors for rendering transportation services for goods and passengers by buses, cars, Sumos, Utility Vans, etc - Held that:- two explanations added to Sections 194-I and 194-C of the Act, it was never the intention of the legislature to overlap any of the items mentioned within the meaning of 'rent', by including the same within the meaning of 'work' under Section 194-C of the Act. - Since the agreement for carriage of goods by vehicles other than railways comes within the purview of explanation of 'work' within the meaning of Section 194-C of the Act. it is settled law that where two interpretations are possible, the one which is favourable to the assessee should be adopted. Tribunal below was quite justified in adopting the case of the assessee in the facts of the present case. Decided in favor of assessee. [Birla Cement Works (2001 (2) TMI 8 (SC) )]
-
2012 (6) TMI 233
Whether the Tribunal was justified in holding that in order to transfer a file by an Assessing Officer to another Assessing Officer to assess an assessee based on information gathered in search conducted on the premises of another assessee, the Officer transferring the file should record his satisfaction about the undisclosed income to be assessed at the hands of other assessee under Section 158BD of the Income Tax Act, 1961 – Held that:- in Manish Maheshwari (2007 (2) TMI 148 (SC)) if satisfaction is not recorded by the Assessing Officer for transferring the file under Section 158BD, the assessment made under Section 158BC is invalid. appeal filed by the Revenue dismissed.
-
2012 (6) TMI 232
Whether the consideration paid by the Indian customers or end users to the assessee - a foreign supplier, for transfer of the right to use the software/computer programme in respect of the copyrights falls within the mischief of 'royalty' as defined under sub-clause [v] to Explanation 2 to Clause [vi] of section 9[1] of the Act – Held that:- yes, it is within the mischief of 'royalty' as defined under sub-clause [v] to Explanation 2 to Clause [vi] of section 9[1] of the Income Tax Act, 1961. Decided in favour of the revenue and against the assessee. Appeal is allowed.
-
2012 (6) TMI 231
Revision u/s 263 - Whether CIT erred in holding that the deduction u/s. 80IA/80IB is not allowable to the Appellant Company on the ground that the unit owned by the Appellant Company does not manufacture or produce any article or thing - assessee is engaged in the business of buying different types of tea from the market, blending them in different proportions and thereafter sells the tea in the market - assessee has claimed that it is an industrial undertaking engaged in manufacturing activity and entitled for deduction u/s. 80IA/80IB of the Act – Held that:- assessee is engaged in the "Processing" activity only and there is no manufacturing activity of any kind. action of the AO in allowing the assessee's claim is erroneous and also prejudicial to the interest of revenue because income has been subjected to excessive allowance by deduction u/s. 80IA/80IB of the Act. In the absence of any specific enquiries on processing vs manufacturing of the various product of tea by blending various tea. AO failed apply his mind on the issue. order of the CIT does not call for any interference. - appeal of the assessee is dismissed
-
2012 (6) TMI 230
Deduction claimed u/s 54F of the Income Tax Act – long term capital gain – purchase of new property jointly in the names of the assessee and his wife - The AO allowed 50% of the exemption claimed under sec. 54F of the Act - Held that:-assessee is entitled to benefit of sec. 54F with reference to the total investment of Rs. 3,28,15,000/- invested by him towards purchase of new residential house property purchased in his own name along with his wife. - Decided in favor of assessee.
-
2012 (6) TMI 229
Capital vs revenue expenditure – Accounting Standards and GAAP, AS1 and AS26 - Amount paid to Club as corporate membership fee. - The AO was, however, of the view that the amounts paid to a club membership which was a payment once and for all, resulting in an enduring benefit to the assessee and, thus, treated the same as capital expenditure – Held that:- the gross income of the assessee is Rs.90,00,000. The assessee has claimed Rs.15 lakhs as expenses for obtaining corporate membership in the club thereby declaring a net income of Rs.75 lakhs in its return of income. It amounts to approx. 16.67% of the gross income of the assessee which is on a higher side thereby distorting the correct income of the assessee for the previous year. Following the matching concept, the materiality concept and Accounting Standard AS 26 in the assessee's case before us, the amount of Rs.15 lakhs claimed as expenses towards corporate membership for a period of 15 years has to be apportioned in ten years proportionately from the date of obtaining the membership. However, if the amount paid is negligible, it will be appropriate to write off the expense in the year in which such expense is incurred. We further make it clear that the expenditure incurred by way of fees for obtaining corporate membership in a club is revenue and prepaid in nature and has to be written off in the year in which it is incurred or to be apportioned for a period not exceeding ten years, as the case may be - Appeal of the Revenue is partly allowed
-
2012 (6) TMI 228
Deduction under Section 80HHC - appellant submitted that the Tribunal committed a fundamental error inasmuch as they have not considered eligibility of the respondent-assessees for deduction under Section 80HHC with respect to the profit on transfer of DEPB benefit – Held that:- matters remanded to the Tribunal with specific direction to them to consider the eligibility of the respondent-assessees for benefits under the proviso introduced, and if the respondent-assessees are found eligible then only to consider the question of computation of the relief Expenditure on issue of bonus shares – Held that:- in view of the case of General Insurance Corpn. (2006 - TMI - 6547 - SUPREME Court - Income Tax), decided in favor of assessee.
-
Customs
-
2012 (6) TMI 255
Shortage of goods found during stock verification - demand imposed - assessee contended that shortage of goods occurred due to fire accident - applicability of Rule 12 of SEZ Rules, 2003 and regulation 28 of SEZ (Customs Procedure) Regulations, 2003 - Held that:- Demand of customs duty foregone does not arise as the goods were in the factory premises when the fire accident took place. It is undisputed that departmental officers have been informed of such accident. Also Tribunal held in case of Satguru Polyfab Pvt. Ltd (2011 (2) TMI 403 (Tri))that when there is an accidental fire resulting in destruction of goods, it cannot be said that it amounts to use of goods for unauthorized operations. Similarly the second term namely failure to account for also cannot be applied since the shortage has been accounted for by fire accident and no evidence has been brought out by Revenue to show that goods have been procured or released elsewhere. Therefore, impugned order is set-aside - Decided in favor of assessee.
-
2012 (6) TMI 254
Challenging the Powers of first appellate authority to remand the matter back to adjudicating authority - Held that:- As the issue needs to be factually verified by the adjudicating authority as regards export obligation discharge certificate which were not submitted this exercise would be better left to the adjudicating authority, to be done with the documents available in the hands of the respondent as well as the authorities - against revenue.
-
2012 (6) TMI 226
Penalty u/s 112 - Non- clearance of goods by assessee by filing B/E - assessee contended abandonment of goods and that foreign supplier (TIL) has already contracted to sell these goods to another entity(WTPL) - Import General Manifest (IGM) amended accordingly - Held that:- It is seen that appellant herein has clearly been indicated as a person who is not an importer by the action of foreign supplier TIL and WTPL. Further, IGM has also been amended. As the said contract has already broken down and the foreign supplier has sought for change of the importer's name and subsequently also sought for re-export of the goods, in our considered view, the current appellant cannot be visited with any penalty u/s 112 inasmuch as the said provisions will apply only to a situation wherein there is a violation of the provisions of Section 111 of Customs Act, 1962 by an importer.
-
2012 (6) TMI 225
Levy of penalty u/s 114 of the Customs Act is in respect of export cargo for getting undue benefit under DEPB scheme - goods exported was garments - knitted T-shirts- declaring an average value at Rs.175 per piece. However, on enquiry customs found that the average market value per piece will not be more than Rs.40 – Held that:- version of the appellant in respect of the yarn was bogus. violation of S.113 leading to consequent confiscation u/s 113, penalty is levied under S. 114 of the Customs Act. However, counsel for the appellant submitted that penalty is based on estimation of value based on market enquiry. - Penalty reduced from Rs.3 lakhs to Rs.2 lakhs.
-
Corporate Laws
-
2012 (6) TMI 253
Application u/s 446 of the Companies Act - prayer to direct respondent (one of the secured creditors), to furnish details of the interest accrued on the sale proceeds of assets, possession of which was taken over by respondent and to direct the respondent to deposit Rs. 5,00,000/- out of the sale proceeds of Rs. 75,00,000/- - Held that:- Since balance amount of Rs. 19,42,000/- is available with the respondent under the common head which is available to all the secured creditors as well as for meeting the other eventualities, a sum of Rs. 5 lacs from the said amount to be deposited with Official Liquidator for taking up further proceedings of liquidation of the Company by inviting claims from all concerned. Therefore, at this stage, the direction to furnish details of the interest earned is not necessary to be granted in this application.
-
2012 (6) TMI 252
Whether the provisions contained in sections 24, 24A and 26 of the Chartered Accountants Act, 1949 (for short ‘the Act’) operate as a bar against the prosecution of a person who is charged with the allegations which constitute an offence or offences under other laws including the Indian Penal Code (IPC) - a person who is not registered with the Institute of Chartered Accountants of India as Chartered Accountants, but he being not a Chartered Accountant impersonated in the public as such, and performed such functions which are being performed by a Chartered Accountant - After conducting investigation, the police filed challan in the Court of Chief Judicial Magistrate, Betul (‘the trial court’), who passed order dated 10-3-2003 for framing charges against the respondent under sections 419, 468, 471 and 472 IPC – Held that:- interpretation to section 195(1)(b)( ii), whereby the bar created by the said provision would also operate where after commission of an act of forgery the document is subsequently produced in Court, is capable of great misuse. appeals are allowed. The impugned order is set aside and the matter is remitted to the trial court for considering whether the allegations contained in the complaint lodged by Brij Kishor Saxena constitute any offence under the IPC
-
2012 (6) TMI 224
Winding up – directors – Non filing of statement of affairs - non-compliance of requirements - criminal proceedings – Held that:- since the company was ordered to be wound up on 07.11.2005 at the first instance, in any event, the Directors had time till 28.11.2005 for the purpose of filing their statement of affairs. The question would therefore be as to whether there was any intervening circumstance between the said dates which has made it impossible for the respondents to file the statement of affairs? The records and documents relating to the company was also in the premises and has been taken over by the Bank, the first respondent has addressed a letter to the Manager, - These aspects would indicate that there was reasonable cause for the respondents in not complying with the requirement. nature of a criminal proceedings the benefit of reasonable cause is to be granted to the respondents since the facts in the instant case as noticed above would disclose that the respondents were prevented by reasonable cause from filing statement of affairs within the time provided in law and also the non-rectification was due to the very same cause which has still continued to exist. respondents are to be exonerated. application is accordingly disposed of.
-
2012 (6) TMI 223
Impact of refusal of listing with NSE - public issue - refund of share application money - sought for a consequential direction to the respondents to desist from taking any coercive steps in pursuance of notice - Whether default of the merchant banker in payment of interest as envisaged under section 73(2) of the Companies Act, which has led to failure of the petitioner to pay interest as envisaged under section 73(2) of the Act, the petitioner cannot be found fault with and proceeded against by respondent No. 1 – Held that:- whether respondent No. 1 can proceed against the petitioner as proposed under the impugned show-cause notice can only be decided after the petitioner files its objections and makes out a case of lack of jurisdiction on the part of respondent No. 1 with reference to the interpretation of scope and object of the SEBI Act and the provisions of the Companies Act, besides the Regulations and the Guidelines, if any, issued under the SEBI Act. respondent No. 1 will not proceed against the petitioner under section 15C of the SEBI Act, the petitioner is permitted to file its objections to the impugned show-cause notice. writ petitions are disposed of
-
Service Tax
-
2012 (6) TMI 274
Taxability of treasury services being provided by Bank where government does not have its own treasury and maintaining currency chests on behalf of Reserve Bank of India (RBI) - services of payment and receiving money on behalf of government in respect of various transactions - Revenue contended aforesaid services to be covered under definition of other financial services - Held that:- Exemption to the principal would be available to the agent also. For this purpose, since the agent is eligible for the exemption which is available to the principal in terms of the relationship with the principal of the agent and not because of exemption granted specifically to the agent or principal, we have to hold that the appellant is eligible for exemption. If RBI were to undertake the activity there would have been no question of levy of service tax. Therefore, we hold that the benefit of exemption available to RBI would be available to the agent i.e. Canara Bank. In view of the fact that appellant is held to be eligible for exemption as an agent of RBI, other issues are not considered at this stage. Limitation - Since question involves interpretation of law and facts in this case, therefore, we consider invocation of extended period is not called for. Penalty also set aside - Decided in favor of assessee.
-
2012 (6) TMI 273
Stay petition - secondary transport charges - denial of the abatement of 75% from the value of service available as per Notification No.13/2008, dt.1.3.2008 - tax paid before issuance of SCN - details not furnished before lower authorities - Held that:- Details viz worksheets, Chartered Accountant's certificate could not be furnished since the appellant closed down the business in 2010 itself and it took time to get the certificate prepared and also get the statement prepared so that there is no mistake on their part even though the calculations have been made and payment has also been made. Accordingly, the impugned order is set aside and the matter is remanded to original adjudicating authority, who shall decide the issue afresh after considering the worksheets submitted by the appellant
-
2012 (6) TMI 272
Penalty - authorized service station - liability of Service Tax on the incentive received from the bank, who provided finance to the purchaser of the vehicles - Revenue alleged suppression of facts - period involved June 2003 to June 2005 - Held that:- Issue has finally being clarified by the Board vide Circular No.87/05/2006-ST, dt.6.11.2006. Commissioner has rightly waived penalty relying upon decision rendered in case of Akar Motors vs CCE (2010 (8) TMI 213 (Tri)) wherein it is held that in situations where Board issued a clarification that there was doubts and clarifies the doubts, persons who are liable to service tax cannot be held to be liable to suppression of facts and imposition of penalty - Decided against the Revenue
-
2012 (6) TMI 271
Condonation of delay - appeal in this case is filed after a lapse of one year - extraordinary discretionary jurisdiction – Held that:- amount of service tax and penalty demanded is not very large. Further, in any case it is a question of payment of tax from one Central Government Department to another Central Government Department. not inclined to exercise extraordinary discretionary jurisdiction and, therefore, the petition is dismissed. petition is disposed of
-
2012 (6) TMI 270
Waiver of pre-deposit - Business Auxiliary Service and Cargo Handling Service – Held that:- one Agreement is in respect of extraction and transfer of coal, and the second one is in respect of transportation of coal within the mining area. As the Applicant is undertaking the activity of mining, which comes under the scope of Service Tax with effect from 1-7-2007, the transportation of coal within the mining is not subjected to Service Tax, pre-deposit of the Service Tax and penalties are waived and recovery of the same is stayed, Stay Petition is allowed
-
2012 (6) TMI 245
Rejection of refund claim of Service Tax on service of C&F agent, transportation of goods, terminal charges etc. – Held that:- Sample invoices produced by assessee gives the details of shipping bill number, date of shipping bill, name of the party, the name of the port to which the goods are to be exported, name of the vessel etc. , thus to be concluded that the invoices can be linked with the export goods and therefore the refund cannot be rejected on this ground – against revenue. Photo-copies of the invoices were produced and the original copies were not produced – Held that:- CBE&C vide Circular No.112/06/2009-ST, dt.12.03.2009 has clarified that normally certified copies of the documents should be accepted and it is only in the case of in-depth enquiry that the original documents needs to be verified - Since the requirement is satisfied appeal filed by the Revenue has no merit. Rejection of refund claim on fumigation charges, a specialized process for cleaning the containers - Held that:- As decided in RAMDEV FOOD PRODUCTS PVT. LTD. Versus CCE, AHMEDABAD [2011 (3) TMI 1256 (Tri)]there has to be a written agreement between the buyer and the seller about testing and analysis of the product – as the assessee fairly agree that they do not have a written agreement, the benefit of refund would not be admissible – against assessee.
-
2012 (6) TMI 244
Refund claim - SEZ unit - rejected on the ground that the appellant did not submit copies of invoices and proof of payment and further the refund claim was not filed within 6 months from the date of services received - Held that:- Notification does not require the invoices to be submitted but the documents to show that Service Tax has been paid. The confirmation in original from the service provider giving the details of Service Tax received by them in the light of this requirement, can be said to be sufficient. In any case, it is found that copies of invoices and proof of payments are being submitted. Therefore, the rejection of claim on this ground is not correct. Condonation of delay - Held that:- Taking note of the fact that the notification itself was issued in March 2009, a liberal approach for condonation of delay was required. Order is set aside and the matter is remanded to original adjudicating authority to consider the refund claim afresh.
-
2012 (6) TMI 243
Consulting Engineering Service and Erection, Commissioning or Installation Service – Held that:- As the demand has been confirmed without taking into consideration the scope of all the contracts, therefore predeposit of the Service tax, interest and penalties are waived. Stay Petition is allowed.
-
2012 (6) TMI 242
G.T.A. service and maintenance and repair service activity - Held that:- transportation of faulty transformer was made under a different contract while repair and maintenance of transformer was done under a different contract and both being different contracts are governed by their own terms, no merit in stay application and appeal of Revenue. - appeal of Revenue dismissed
-
Central Excise
-
2012 (6) TMI 251
Dropping of demand raised u/s 11D of Central Excise Act, 1944 - Held that:- Lower authority have rightly dropped demand on the ground that for invoking the provisions of Section 11D, two conditions have to be fulfilled viz. the person should be liable to pay the duty under Central Excise Act and the duty collected in excess by the said person represent the duty of Central Excise as well as on the ground that no documentary evidence, to the effect that the excess amount collected on account of upward revision of price was representing Central Excise, has been brought on record - Decided against the Revenue.
-
2012 (6) TMI 250
Clandestine removal of goods - confiscation of goods held on ground that same had not been entered in RG-1 records - assessee justified non entry on ground that goods were in semi-finished condition and had to pass quality control - Held that:- Revenue has nowhere contended that the goods were of recent manufacture, hence appellant's stand that they were manufactured for last 3-4 years stands accepted. If that be so, allegations of clandestine removal without making their entry in RG-1 register cannot sustain. The visual examination by the officers who are not technical experts in MDF boards, cannot be made the basis for arriving at a different finding. It has very clearly come-up on records in the shape of deposition of various persons that the boards in question were still in semi-finished condition and were not ripe for making their entry in RG-1 register. Confiscation of the same is neither justified nor warranted - Decided in favor of assessee.
-
2012 (6) TMI 249
Refusal to approve the proposal for issue of CT-1 certificates in a lot of 25, on the ground that appellant failed to give quantity, description and value of goods, while making application - Held that:- Basically the Commissioner is requiring the appellants to indicate the quantity, description and value in each of the CT-1 certificates before approving the lot of 25 to be issued by the Superintendent. Therefore, it would be in the interest of justice to allow the appellants to apply to Commissioner with necessary details afresh - Matter remanded back.
-
2012 (6) TMI 248
Reversal of the CENVAT credit - the applicant has availed Cenvat Credit on the goods received in their factory and thereafter they issued debit Notes to the material suppliers - Held that:- AS the demand has been raised on the debit notes issued by the appellant on their supplier without any explanation to it - since now they have produced a table showing explanation it needs re-examination at the end of the adjudicating authority - remand the matter to the original adjudicating authority to examine the issue afresh.
-
2012 (6) TMI 247
Validity of Registration granted to the appellant under Rule 9 - succession - Held that:- As present appellant is carrying on the manufacturing activity and he is also paying the excise duty on manufactured goods no reason to cancel the impugned registration - set aside the impugned order and allow the appellants to carry on his manufacturing activity under the registration already granted.
-
2012 (6) TMI 246
Whether imported custom duty paid goods falling in any of the Schedules to the Central Excise Tariff Act, 1985 would come within the ambit of the expression "excisable good" used in the text of sub-section (1) of Section 11D of the Central Excise Act – Held that:- From the Entry 84 of the Union List in the Seventh Schedule and from Sec. 3 of the Central Excise Act, only those goods are subject to central duties of excise which are manufactured or produced in India. imported customs duty paid goods will not come within the ambit of "excisable goods" used in the text of sub-section (1) of Section 11D of the Central Excise Act as those goods are not manufactured or produced in India. imported customs duty paid goods falling under the Schedule of Central Excise Tariff Act, 1985, are excisable goods but duty is payable under sub-section (1) of Section 11D of the Central Excise Act, by the manufacturer or producer or importer. as the appellants are not a manufacturer or producer therefore, as per the provisions of sub-section (1) of Section 11D of Central Excise Act, duty is not payable.
-
2012 (6) TMI 222
Period of Limitation - dispute regarding ineligibility of Cenvat credit availed under Business Auxiliary Services on the invoices raised by one of the Commission agent for sale of input/ raw materials - Held that:- Credit availed on the service tax paid on the sale of inputs by the appellant paid to the appellant's commission agent does not get covered under the Cenvat Credit Rules. Limitation - In SCN, no where it is alleged that cenvat credit has been availed with intention to evade payment of duty, nor any statement was recorded. In the absence of evidence indicating that the appellant had full knowledge of availing ineligible credit, show cause notice issued on 19.02.2009 is patently time-barred. Impugned order is set-aside only on the limitation ground - Decided in favor of assessee.
-
2012 (6) TMI 221
Cenvat credit - Rent-a-Cab service utilised for the purpose of transportation of employees to the place of work and vice-versa – Held that:- As decided in Commissioner of Central Excise, Bangalore-III, Commissionerate v. Stanzen Toyotetsu India (P.) Ltd.[ 2011 (4) TMI 201 (HC)] that any service used by the manufacturer whether directly or indirectly in or in relation to the manufacture of final products constitutes input service and the catering service, rent-a-cab and transportation services and the tax paid on the said services are stated as input services - substantial question of law framed answered in favour of the assessee.
-
2012 (6) TMI 220
Appeal dismissed by Commissioner (Appeals) for non-compliance with the provisions of Section 35F of Central Excise Act, 1944 - non-filing of application for waiver of pre-deposit of amount of penalty - Held that:- Since assessee contended that Stay Petition was not filed inadvertently and he undertakes to file the same if the matter is remanded back, hence assessee is directed to file stay petition. Matter remanded back to first appellate authority.
-
2012 (6) TMI 219
Deemed export - supply to mega power project - sub contractor - International Competitive Bidding (ICB) - applicants availed the benefit of Notification No.6/2006-CE dated 1.3.2006 and cleared the goods at nil rate of duty - Revenue wants to deny the benefit of Notification No.6/2006-CE on the ground that by invoking the provisions of Exim Policy – Held that:- Customs Notification 21/2002 does not provide any condition that the benefit is available subject to the provisions of the Exim Policy. Pre-deposit of duty, interest and penalty is waived for hearing of the appeal. The stay petition is allowed.
-
2012 (6) TMI 218
Deemed export - supply to mega power project - sub contractor - International Competitive Bidding (ICB) – denial of benefit of Notification no. 6/2006-CE dated 01.03.2006 by invoking the provisions of Exim Policy - Held that:- Customs Notification 21/2002 does not provide any condition that the benefit is available subject to the provisions of the Exim Policy. Pre-deposit of duty, interest and penalties is waived for hearing of the appeals. stay petitions allowed.
