TMI Tax Updates - e-Newsletter
July 26, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Depreciation - software was also registered as trademark. AO's objection that, on mere development of a new software depreciation as an intangible asset cannot be granted therefore would not survive - HC
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Income Tax:
Undisclosed income - even if a date of end of block period was wrongly mentioned, the provisions of Section 292-B would save the notice - Non mentioning of status of the assessee, would not invalidate the notice, as it was only a mistake, which was curable - HC
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Income Tax:
Search and Seizure - Assessing Officer not mentioned as to from where the document was found. If that is the fact, then, there cannot be any presumption under section 292C - AT
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Income Tax:
Right to practice as Income-tax Practitioner (ITP) - u/s 288(2)(v) & (vi)- Mere possession of educational qualification without conducting departmental examination by the Board itself is not sufficient to have any right to practice as Income-tax Practitioner - AT
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Income Tax:
Allowance of deduction u/s 80IA - the unabsorbed depreciation set off in earlier years cannot be reduced from the profits for computing the deduction u/s 80IA - AT
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Corporate Law:
Jurisdiction to entertain the petition - f the five different acts were done in five different localities - any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence u/s 138 - SC
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Service Tax:
Cenvat Credit - Rule 6 - interpretation of the term “allowed“ - Rules cannot be interpreted in such a way so as to make them nullity - there is no reason given as to why the word “allowed” should be interpreted in a narrow way - AT
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Service Tax:
Refund - any service tax paid/ remitted by a service provider is liable to be refunded to the provider who has remitted service tax in relation to taxable services provided to the unit to carry on authorized operations in a SEZ - AT
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Central Excise:
Limitation – Extended period of 5 years - the proviso cannot interpreted to mean that since Revenue has knowledge of suppression, the extended period of limitation cannot be legitimately invoked - AT
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Central Excise:
Cenvat Credit - housekeeping, gardening services and construction of compound wall are the services which are required in furtherance of business activity and manufacturing of final product - credit allowed - AT
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VAT:
Penalty u/s 22(2) of the TNGST - Having regard to the patent illegality on account of absence of jurisdiction as per the proviso as it stood during the relevant assessment year - Order of Tribunal set aside - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2013 (7) TMI 701
Disallowance u/s 14A - Expenditure for dividend income - Tribunal cancelled disallowance since no expenditure proved - Held that:- It transpires from record that the assessee's own funds were at higher than the investment made by it and with nothing to indicate that the borrowed funds were utilised for the purpose of investment in shares and for earning dividends - Both the CIT (Appeals) and the Tribunal have noted that the assessee had sufficient funds available with it, which was more than the amount it invested for earning the dividend income, both these authorities have correctly approached the issue by setting aside the order of disallowance under Section 14A of the Act in respect of interest expenditure - Decided against Revenue. Deduction u/s 10(2)(xv) - Corporate Debt Restructuring - Tribunal deleted disallowance - Held that:- For the waiver of the loan, the payment has been made to the financial consultants. This was for the purpose of business and the same was held to be allowable under Section 37(1) of the Act - Once the expenditure is held to be revenue in nature incurred wholly and exclusively for the purpose of business, it can be allowed in its entirety in the year in which it is incurred - when the spreading is done for over a period of six years and as the assessee respondent has no objection to such revenue expenditure being spread out, though it could have insisted for this amount to be allowed in the year under consideration, with no such objection having been raised, the Revenue would not succeed in this issue as the expenditure is held to be revenue in nature - Following decision of Madras Industrial Investment Corporation Limited Versus Commissioner of Income-Tax [1997 (4) TMI 5 - SUPREME Court] - Decided against Revenue. Income u/s 28(iv) - Held that:- If an amount is received in the course of a trading transaction, even though it is not taxable in the year of receipt as being of revenue character, the amount changes its character when the amount becomes the assessee's own money because of limitation or by any other statutory or contractual right. When such a thing happens, common sense demands that the amount should be treated as income of the assessee - As the assessee company was not found to be carrying on the business of obtaining loan, the Court held that the remission of such loan by the creditors was not a benefit arising out of such business and, therefore, such remission of unsecured loan was not taxable at the ends of the assessee - Following decision of CIT v. Chetan Chemicals Pvt. Ltd. [2001 (10) TMI 12 - GUJARAT High Court] - Decided against Revenue.
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2013 (7) TMI 700
Stay application - Opportunity for personal hearing not given - Held that:- proposition of law is that the second respondent while examining an application for stay under section 220(6) of Income Tax Act, 1961 is required to pass a speaking order and if personal hearing is sought for, the same has to be extended - Assessee in the application for stay has sought for personal hearing which undisputedly has not been afforded by second respondent. Therefore matter has to be remitted back to second respondent for adjudication afresh on this issue - Decided in favour of assessee.
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2013 (7) TMI 699
Determination of Arm's length price - Tribunal held Comparable used by TPO were not functionally comparable in respect of the services rendered by the respondent/assessee - Held that:- assessee has not conducted a proper T.P.study and has wrongly chosen comparables - CIT(A) has the power to accept fresh claim of the assessee. Marketing support services cannot be compared with turn key Engineering services - services rendered by the respondent / assessee to its associated enterprise are in the nature of marketing services which are entirely different to the set of services in the nature of engineering services rendered by the so called four comparables. Consequently, the adjustment arrived at by the Transfer Pricing Officer and the addition made by the Assessing Officer cannot be sustained on the basis of the Transfer Pricing Study with regard to the four companies which were clearly functionally not comparable - Decided against Revenue.
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2013 (7) TMI 698
Disallowance of depreciation - Intangible asset - Tribunal deleted disallowance - Held that:- assessee had developed a software which had a special application. In fact, such software was also registered as trademark. Assessing Officer's objection that, on mere development of a new software depreciation as an intangible asset cannot be granted therefore would not survive - in the reopened proceeding, full facts were before the Assessing Officer - Decided against Revenue.
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2013 (7) TMI 697
Disallowance u/s 37 - Services rendered by the commission agents - Tribunal deleted the disallowance - Held that:- entire issue hinges on appreciation of material on record. The Commissioner as well as the Tribunal concurrently held that there was sufficient evidence on record of the assessee having paid commission to the agents who had rendered service as per the agreements. Such payments were made through cheques and were found to be genuine. Commission agents in no way related to the assessee company and the payments were duly reflected in their income returns - Decided against Revenue. Disallowance u/s 14A - Investment in subsidiaries and administrative expenses - Held that:- Tribunal has bifurcated the expenditure in two parts first related to investment of Rs. 5907.18 lakhs in foreign subsidiaries, it was held that the dividend income from such subsidiaries is taxable in India and that therefore, Section 14A would have no applicability. The remaining amount pertain to investment of Rs. 38 Crores [rounded off] made in Indian subsidiaries. In this respect, the Tribunal noted that the assessee had to its disposal, own interest free funds many times over the investment in question. As per the balance sheet as on 31st March 2005, the assessee had interest free fund of Rs. 929.57 Crores - Decided against Revenue. Deduction u/s 80IB - Tribunal granted deduction - Held that:- Following decision of Nirma Industries Limited v. Deputy Commissioner of Income-Tax [2006 (2) TMI 92 - GUJARAT High Court] - Decided against Revenue.
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2013 (7) TMI 696
Determination of arm's length price - TPO used 3 major companies as comparable - Tribunal held that assessee was not comparable with Infosys Technologies Ltd., as Infosys Technologies Ltd. was a large and bigger company in the area of development of software - Held that:- It is a common case that Satyam Computer Services Ltd. should not be taken into consideration. The tribunal for valid and good reasons has pointed out that Infosys Technologies Ltd. cannot be taken as a comparable in the present case. This leaves L&T Infotech Ltd. which gives us the figure of 11.11 %, which is less than the figure of 17% margin as declared by the respondent-assessee - assessee had furnished details of workables in respect of 23 companies and the mean of the comparables worked out to 10%, as against the margin of 17% shown by the assessee - No substantial question of law arises - Decided against Revenue.
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2013 (7) TMI 695
Undisclosed income - CIT made addition made on account of jewelry seized - Tribunal deleted addition holding that block period mentioned in assessment was incorrect - Held that:- assets of silver jewellery/silver were requisitioned on 3.4.2000, but it came into possession of the authorized officer of the department on 16.02.2001, therefore, the block period would begin on 16.02.2001, and not on the date of issuance of notice under Section 132-A of the Act or on 3.4.2000, or on any previous date when the requisition was made - There was no error mentioning the block period in the notice, which can be held as invalid. We may also add here that even if a date of end of block period was wrongly mentioned, the provisions of Section 292-B would save the notice - Non mentioning of status of the assessee, would not invalidate the notice, as it was only a mistake, which was curable - Decided in favour of Revenue.
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2013 (7) TMI 694
TDS u/s 194H - nature of payment - commission or discount - Demand u/s 201 - Whether In deleting the demand raised u/s 201(1) 201(1A) on account of commission u/s 194-H treating the same as discount allowed to the distributors - the CIT (A) and also the ITAT rightly held that the payments being made by the assessee to the distributor were incentives and discounts and not commissions – there was no infirmity in the findings of the CIT (A) and also ITAT - both the assessee and the distributor have been collecting and paying their sales tax separately - both the parties have clearly understood and accepted the agreement between them - it could not be said that the relation between them was that of principal-agent - it was clearly stipulated to be an arrangement between them on principal-to-principal basis – appeal decided against revenue.
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2013 (7) TMI 693
Nature of Interest - Capitalization - company is a fully owned subsidiary of NHAI for carrying out the National objective of road development in the country - Return of income was filed - the company was under pre-operation stage, all expenditure and income was capitalized under the head 'Capital Work-in-progress' - Held that advances to subsidiary companies found to be made for business consideration, onus to prove commercial expediency is discharged and deduction of interest is allowable - court relied upon the judgement in C.I.T. vs Bharti Televenture Ltd.(2011 (1) TMI 326 - DELHI HIGH COURT) - Court set aside the order and hold that the interest payable by the assessee company on sub-debt to NHAI was given under business expediency and the same is allowable u/s 36(1)(iii) - the addition be deleted by allowing interest paid to NHAI on sub-debts. Whether the regular assessment in this case was completed at an income u/s 143(3) - the addition was made on the basis of auditor's remarks in item no. 2(vii) in the auditor's report - no effort has been pressed in action for verifying confirmation from the creditors - appeal is restored to AO with a direction that he shall re-decide the issue de novo by affording due opportunity of hearing to the assesse – appeal decided in favour of revenue.
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2013 (7) TMI 692
Validity of order - Whether the CIT (A) is justified in making arbitrary disallowance on the ground of non availability of the reasons variation in the GP Ratio which had been filed alongwith the GP/ NP comparative chart – Held that:- order passed by the CIT (A) is cryptic and grossly violative of one of the facets of the rules of natural justice - every judicial/ quasi-judicial body/ authority must pass a well reasoned order which should reflect the application of mind by the concerned authority - section 250(6) also mandates that the order shall state the points for determining the decision and the reasons for the decision – Vodafone Essar Ltd. Vs. DRP(2011 (12) TMI 22 - Delhi High Court) held it is obligatory on its part of the quasi- judicial body to ascribe cogent and germane reasons as the same is the heart and soul of the matter - a decision does not mean merely a conclusion but it embraces within its fold the reasons forming basis for the conclusion - set aside the order of the CIT (A) and to restore the matter for deciding the issues/ grounds raised by the assessee before it – appeal decided in favour of assessee.
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2013 (7) TMI 691
Whether CIT(A) has erred in deleting the addition made by the AO on account of adjustment in respect of arm's length price - the effort put in by the assessee for producing television serial or acquisition of television serial as per its own specifications and guidelines is much more than the acquisition of the exhibition rights of Hindi feature films which are already produced by others - more markup in the case of transfer of television software is justified as compared to transfer of exhibition rights of Hindi feature films - the TPO has not given any other comparable or reason for applying the markup of 15% on cost of Hindi feature films except that the assessee itself has applied markup of 15% in respect of transfer of television right - more markup in the case of transfer of television software is justified as compared to transfer of exhibition rights of Hindi feature films – appeal decided in favour of revenue.
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2013 (7) TMI 690
Fringe Benefit Tax (FBT) - Nature of expenditure - Whether the expenditure was incurred by the assessee for channel placement which is made to third persons and there is no employer-employee relationship between the assessee and the recipient - the Circular of the CBDT as well as the decision of Hon'ble Apex Court in the case of R & B Falcon (A) Pty.Ltd. Vs. CIT (2008 (5) TMI 2 - Supreme court ) (supra) would be squarely applicable - Held that:- In respect of payment to third persons, FBT is not applicable because no fringe benefit is enjoyed by the employee/recipient - payment is in the nature of expenditure incurred for the purpose of business expenditure incurred by the assessee is not in the nature of expenditure for sales promotion and has incurred the expenditure for broadcasting of its channels on the desired bands - appeal allowed in favour of assessee.
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2013 (7) TMI 689
FMV adopted on the date 1/4/81 for the purpose of computation of Capital Gain - Assessee has declared the FMV as on 1.4.81 on the basis of the report of the Registered Valuer who has determined the value of the building at Rs.20,04,207/- and that of the land at Rs 44,25,600/- totalling to Rs.64,29,807/- - By taking FMV of the building consisting of basement, ground floor and first floor, has arrived at a depreciated cost of the Building as on 1.4.1981 of Rs.20,04,207/- - As per RV the cost of the land comes to Rs.3,66,36,191/-, at the time of its sale. The registered valuer has adopted the decrease in land rate @7 ½% per annum per square foot and has arrived at its FMV as on 1.4.81 at Rs. 44,25,600/- - Thus, the total cost of the property in question comes to Rs.64,30 lakhs - Held that:- Even as per the backward indexation by taking advantage of CBDT Circular No. 636 dated 31.07.1992 the value of the land as on 1.4.1981 would be around the same as determined by the Registered Valuer – Also, relying upon the decision in the cases ITO vs. Smt. Lalitaban B. Kapadia [2007 (9) TMI 294 - ITAT BOMBAY-K], value so claimed by the assessee is FMV of the Capital Asset – Decided against the Revenue.
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2013 (7) TMI 688
Reviewing the order under section 254(2) of the Act - Assessee filed the appeals against the impugned order of the Tribunal dated 26.9.20123 before the Hon'ble Bombay High Court and the Hon'ble Bombay Court has admitted the question of law – Held that:- Since the question of law has already been admitted by the Hon'ble High Court, the question of considering the impugned order of the Tribunal u/s 254(2) of the Act does not arise – Also, reliance is placed upon the judgment in the case of Pankaj Rathi V/s CIT[ 2011 (8) TMI 15 - CALCUTTA HIGH COURT], wherein it has been held that when the appeals have been filed, the Miscellaneous Applications before the Income Tax Appellate Tribunal, itself "needless to mention, parallel proceedings for achieving the same purpose cannot be allowed to be done in a self same matter” – Decided against the Assessee.
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2013 (7) TMI 687
Search and Seizure - Whether Documents seized are ‘Dumb Documents’ – Presumption u/s 292C - Held that:- The document seized from the appellant's premises are not dumb documents. Names of the partners and contractors are appearing in seized material. From the words "Extra Bill", "Adjustment Bills", it is clear that the appellant has inflated the expenses. It is the duty of the appellant to explain the nature of the expenses and the sources for such expenses - The decisions relied on by the appellant is distinguishable since those cases are concerned with dumb documents – Decided in favor of Revenue. Documents seized not mentioned in panchnama - Relevant Page-71 appearing in the loose paper of Annexure A-1, which has been placed in the paper book at Page-77 was not found during the course of search and seizure action in case of the assessee from any of its premises – Held that:- In the panchanama prepared in case of the assessee this annexure or document does not find any mention about such kind of annexure or loose paper - The loose papers which have been mentioned in the panchanama are entirely different and the annexure "A-1 / Page-71" on which the Assessing Officer has placed reliance is entirely different - The alleged seized document on which the Assessing Officer has made the addition does not belong to the assessee and, hence, no addition is called for. Further, the said document which contains some entries is not based on double entry system as there is no matching debit / credit side entries. Various instances have been pointed out to show that there is no co-relation between the debit and credit side entries and, hence, it cannot be said that these entries suggest any kind of inflated expenses. Even the Assessing Officer not mentioned as to from where the document was found. If that is the fact, then, there cannot be any presumption under section 292C which postulates that onus is upon the assessee to explain the nature of all the documents and the entries given therein, if found from the possession of the assessee at the time of search. Under these facts and circumstances and without going into the merits of the addition, this matter required to be restored back to the file of the Assessing Officer to verify this fact – Decided against the Revenue.
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2013 (7) TMI 686
Disallowance under section 14A - Disallowance of indirect interest expenditure – Held that:- Disallowance of Indirect Tax expenditure cannot be disallowed in the assessee's case, firstly, the assessee has not claimed any interest in the Profit & Loss account and, secondly, the same has been debited to the assessee's own capital account – Disallowance of interest on the dividend income in the hands of minor – Held that:- No expenditure can be disallowed because apparently no expenditure has been debited to the minor's account. Disallowance of Rs. 4,48,753, being attributable to ½% of the average investment - Assessee has failed to prove that no interest bearing funds was used for acquisition of shares – Held that:- Assessee has interest free funds also and most of the investments have been made out of such funds - Thus, set aside the impugned order passed by the learned Commissioner (Appeals) and restore the issue of disallowance under rule 8D to the extent of ½% of the average investment to the file of the Assessing Officer to examine whether or not the assessee had made acquisition in the investment out of interest free funds.
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2013 (7) TMI 685
Registration of Charitable Society under section 12AA of the Income Tax Act - The assessee was directed to produce the books of account, audit report, bills and vouchers to justify the claim of genuineness of activities of the assessee society - No written submissions, books of account, bills and vouchers and other relevant documents justifying the claim of society was furnished – Counsel along with ITP for the appellant argued that on the date of hearing before the ld. CIT, Gwalior, the books of account, bills and vouchers, audit report and evidences of activities of the assessee were furnished - Counsel for the assessee Shri S.M. Sinha filed his personal affidavit, in which he has affirmed to have produced the books of account and all supporting documents before the ld. CIT on the date of hearing - Held that:- Considering the submissions of the ld. counsel for the assessee supported by his personal affidavit, the matter sent for reconsideration at the level of the ld. CIT. Right to practice as Income-tax Practitioner - Section 288(2)(v) & (vi) of the IT Act - Claimed that since retired departmental Officer, therefore, without any certificate of registration as ITP can appear before the Income-tax Authorities and the Tribunal – Held that:- Section 288(2)(v) & (vi) provides the meaning of authorized representative who have passed any accountancy examination recognized by the Board or any person who has acquired such educational qualifications prescribed by the Board in this behalf - Section 50 of the IT Rules provides accountancy examinations recognized in case of departmental officers and such departmental examination shall be conducted by the CBDT under sub-section (4) of section 50 of the IT Rules - Mere possession of educational qualification without conducting departmental examination by the Board itself is not sufficient to have any right to practice as Income-tax Practitioner - Provisions of the IT Act and IT Rules clearly prove that Shri B.D. Giri is not Income Tax Practitioner as recognized in the Income-tax Act and Rules. Therefore, without any certificate of registration in his favour under the above provisions, he cannot practice before the IT authorities and the Tribunal.
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2013 (7) TMI 684
Allowance of deduction u/s 80IA after setting off unabsorbed losses and depreciation – Held that:-Issue is squarely covered in favour of the assessee by the decisions of the Hon'ble Madras High Court in the case of Mohan Breweries and Distilleries Ltd reported in [2007 (10) TMI 354 - ITAT MADRAS-B ], wherein it has been held that the assessee- company is eligible for deduction u/s 80IA in respect of the income from Windmill installed by it and the unabsorbed depreciation set off in earlier years cannot be reduced from the profits for computing the deduction u/s 80IA of the Act - However, matter be restored to find out the claim of the assessee that the losses were already adjusted against the profits of ineligible units of the assessee in earlier years and directed the ld. CIT(A) for adjudicating the issue afresh accordingly - Decided in favor of Assessee.
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Customs
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2013 (7) TMI 683
Validity of conviction - Whether in the absence of exact quantity/percentage of narcotic drug/psychotropic substance found in the seized contraband the punishment for contravention in relation to manufactured drugs and preparations is to be imposed u/s 21(a) or u/s 21(b) of the Narcotic Drugs and Psychotropic Substances Act, 1985 - Held that:- the conviction passed by the trial Court u/s 21(c) of the N.D.P.S. Act was liable to be set aside - the appellant/accused was convicted u/s 21(a) of the N.D.P.S. Act and sentenced to undergo rigorous imprisonment for six months - the appellant/accused had already undergone the sentence as modified by the Court he was ordered to be set at liberty - in the absence of Purity Test the contraband seized shall be construed only as a small quantity. it is absolutely necessary to conduct Purity Test to ascertain the exact quantity of the – in the case of contraband which is neither a mixture nor a preparation and if the contraband is a Narcotic Drug/Psychotropic Substance simplicitor - there was no need for Purity Test - the entire quantity of Narcotic Drug/Psychotropic Substance shall be taken into consideration for deciding as to the same is a small quantity or a commercial quantity or an intermediate quantity for the purpose of conviction - appeal decided in favour of accused.
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2013 (7) TMI 682
Value of imported goods - related persons – validity of order - the assessee was engaged in the manufacture of transmission gears and was importing cutting for use as capital goods in its manufacturing operations in India from related persons – the suppliers of the assessee were related - whether the relationship between the two had affected the price of goods imported - Court confirmed the decision of the tribunal - from a plain reading of the order dated 23 February 2007 of the Tribunal that the impugned demand which is sought to be raised on the basis of the orders dated 24 December 2003 and 24 April 2006 is unsustainable - the addition was not warranted since it was beyond the scope of the order of remand which had earlier been passed by the Tribunal- the revenue had not challenged the order of the adjudicating authority on the ground that no finding had been recorded as to whether the relationship between the parties has influenced the price – appeal allowed – decided in favour of assessee.
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2013 (7) TMI 681
Classification of goods - Assessee had exported woven fabrics containing 85% or more by weight of synthetic filament yarn (dyed and printed) polyester” under claim of drawback under Tariff item no. 540702A of the Drawback Schedule - department viewed that the exported goods were not eligible for the benefits of drawback in terms of tariff item No. 540702-A, but under Tariff Items No. 540705 - Held that:- Goods cannot be classified under Tariff Item No. 540705 - Government finds that the exported goods merit classification under Tariff Items No. 540702 and not under Tariff Item No. 540705 as claimed by the department - the printed and coloured textile materials had also been brought under the purview of “dyed” textile materials - the chemical examiner’s report states that the goods as “printed” - In term of para (10) of the Notification No. 81/2006-Cus. (N.T.) the printed textile materials should also be treated in the category of dyed fabric for claiming drawback benefit - Tariff Item No. 540705 includes description of goods as “Other (grey) - exported goods being printed in nature cannot be classified as grey fabric – decided against department.
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Service Tax
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2013 (7) TMI 705
Cenvat Credit - Rule 6 - interpretation of the term "allowed" - Taking of and utilisation of credit - Revenue contended that they are distinct and different - clarification issued by the CBEC makes it clear that the assessee was allowed to take credit for the purpose of utilisation - There is no reason for interpreting the term “allow” in a narrow and restrictive manner as urged by the Revenue - the purpose and objective of CENVAT credit Rules it to allow a manufacturer/output service provider not only to take the credit but also to utilize the same for the purposes specified in the said Rules - said interpretation urged by the Revenue defeats the object and purpose of the CENVAT Credit Rules - Rules cannot be interpreted in such a way so as to make them nullity - there is no reason given as to why the word “allowed” should be interpreted in a narrow way – appeal decided against revenue
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2013 (7) TMI 704
Violation of principle of natural justice - Notice of hearing of stay application not forwarded to assessee's counsel - CIT[A] passed ex-parte order - Held that:- impugned order is unsustainable for violation of due process as the was denied a fair and reasonable opportunity to pursue the stay application, pending the substantive appeal, before the Commissioner (Appeals) and the order which directed the appellant to remit the penalty component is also unsustainable as the same was passed without adequate notice - Decided in favour of assessee.
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2013 (7) TMI 703
Taxable service to SEZ unit – refund rejected - refund claimed by the assessee as the recipient of the taxable service of Architect, Interior Decorator and Consulting Engineer services provided - Held that :- Rejection of the assessee’s claim was unsustainable - Notification No. 9/2009-ST enable claim of exemption by developers or units in SEZ by way of refund of service tax paid for services used in relation to authorized operations in SEZ - insofar as the claim for refund is filed within six months or within such extended period as the AC or DC of Central Excise shall permit - provisions of the 2005 Act are provided an overriding effect vide Section 51 - the immunity to service tax in respect of taxable services provided in relation to SEZ is a legislatively enjoined immunity - any service tax paid/ remitted by a service provider is liable to be refunded to the provider who has remitted service tax in relation to taxable services provided to the unit to carry on authorized operations in a SEZ – order set aside – appeal decided in favour of assessee.
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2013 (7) TMI 702
Penalty u/s 76, 78 and 79 – assessee provided the service as recovery agent and it became liable to service tax - Held that:- The invocation of Section 80 for not imposing penalties u/s 76 and 78 would be proper – the assessee had shown reasonable cause for setting aside the penalty imposed on the them –firm is a proprietor concern and it is quite possible that the proprietor might have missed the notification or the introduction of new service - the family problems like mother suffering from cancer and daughter suffering can cause difficulties to any person – penalty imposed under Section 77 is upheld – decided in favour of assessee.
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Central Excise
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2013 (7) TMI 679
Limitation – Extended period of 5 years, if Revenue had the knowledge of suppression – Held that:- Relying upon the judgment in the case of Commissioner of Central Excise, Surat-I Vs Neminath Fabrics Pvt. Ltd. reported in [2010 (4) TMI 631 - GUJARAT HIGH COURT] - whenever there is non-levy or short levy of duty with an intention to evade payment of duty, or any of the circumstances enumerated in the Proviso to Section 11A(i) of the Central Excise Act, 1944; such suppression or willful omission is either admitted or demonstrated, invocation of the extended period of limitation would be justified; and that the proviso cannot interpreted to mean that since Revenue has knowledge of suppression, the extended period of limitation cannot be legitimately invoked – Decided against the Assessee.
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2013 (7) TMI 678
Demand of Pre-deposit - Held that:- Tribunal has directed the Applicant to deposit 25% of the duty of within a period of eight weeks from the communication of the order and on deposit of the said amount balance dues adjudged against all applicants were waived and its recovery stayed during pendency of the Appeals and it was also specifically directed that failure to deposit of the said amount would result in dismissal of the Appeals of all the Applicants without further notice. The applicant has neither complied with the said direction nor produced any order from any higher forum against the said order - Therefore, appeal is dismissed - Decided against Assessee.
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2013 (7) TMI 677
Condonation of delay - Penalty u/s 11AC - Commissioner dismisses appeal for delay - Held that:- Commissioner (Appeals) has no power to condone the delay beyond 30 days in addition to a statutory period of sixty days in filing the Appeal - Following decision of SINGH ENTERPRISES Versus COMMISSIONER OF C. EX., JAMSHEDPUR [2007 (12) TMI 11 - SUPREME COURT OF INDIA] - Decided against assessee.
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2013 (7) TMI 676
CENVAT Credit of Service Tax paid by cargo handling services (CHS) for the goods which were cleared for the purpose of export – Held that:- Relying on the decision in the case of Ultratech Cement [2010 (10) TMI 13 - BOMBAY HIGH COURT ] wherein the Hon’ble High Court of Bombay held that the assessee is entitled to avail input service credit on the services availed by them in the course of their business of manufacturing. Therefore, appellant is entitled to avail input service credit on the services in dispute – Decided against the Revenue.
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2013 (7) TMI 675
CENVAT Credit of Service Tax paid by the service provider on C&F services is availed as CENVAT Credit - Rule 2(l) of CENVAT Credit Rules, 2004 defines the input services which are used by provider of output taxable services and by the manufacturer for manufacturing of final product from the place of removal - Revenue s assertion is that C&F agent’s godown is not a place of removal and there must be nexus of manufacture and clearance of final product from the place of removal – Held that:- Relying upon the judgment of Hon'ble High Court of Bombay in the case of Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT ] and there is no dispute that C&F agent services were availed by the respondent-assessee in respect of clearing and forwarding of their final product in the market. This activity can be considered as an activity in relation to business of the respondent-assessee – Also, similar decision was passed in the case Commissioner of Central Excise, Vadodara Versus M/s. Inox India Limited[2013 (2) TMI 59 - CESTAT Ahmedabad ] – Credit available – Decided in favor of Assessee.
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2013 (7) TMI 674
Cenvat Credit on Input Services to be used in for the manufacturing of goods – Service provided of gardening, housekeeping and construction of compound wall and availed the CENVAT Credit – Alleged that all the services on which credit is allowed, is not required for the purpose of manufacturing activity of the respondent-assessee – Held that:- Relying upon the decision in the cases of CCE Pune Vs Raymond Zambaiti Pvt. Ltd. [2010 (3) TMI 402 - CESTAT, MUMBAI] ; CCE Hyderabad Vs Voith Turbo Pvt. Ltd. [2010 (8) TMI 229 - CESTAT, BANGALORE ] held that housekeeping, gardening services and construction of compound wall are the services which are required in furtherance of business activity and manufacturing of final product. I find that there is no dispute that the appellant is manufacturer of a final product and the services were rendered in respect of such unit – Cenvat Credit allowed – Decided against the Revenue.
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2013 (7) TMI 673
CENVAT Credit of Service Tax paid on rent-a-cab service - Service Tax paid on rent-a-cab service for transportation of their employees from the residences to the factory premises and back – Held that:- Relying upon the judgment in the case of Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT ] decided the case benefitting Assessee - Basic thrust of the Revenue’s appeal is inputs or input services used in or in relation to the manufacturing of final product – Also, relying upon the judgment of Hon'ble High Court of Karnataka in the case of CCE Bangalore Vs Stanzen Toyotetsu India Pvt. Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT] , and also in the case of Bell Ceramics Ltd. [2011 (9) TMI 792 - KARNATAKA HIGH COURT], allowed the Cenvat Credit – Decided in favor of Assessee.
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2013 (7) TMI 672
Section 35E of Central Excise Act, 1944 - Memorandum of appeal signed and presented by the Superintendent (Appeals), Central Excise & Customs, Surat-I, is maintainable or must be rejected - The Commissioner, Central Excise & Customs, Surat-I (the adjudicating authority), vide authorization letter dt.19.11.1999, directed the Superintendent (Appeals), Central Excise & Customs, Surat-I to apply to this Tribunal under Section 35E (2) of the Act, for determining certain points arising out of the adjudication order dt.31.08.1998 – Held that:- It is the symptic submission on behalf of Revenue and the respondent-assessee as well, that the several appeals to this Tribunal were preferred under Section 35B of Central Excise Act, 1944, under Memoranda of appeals, to all of which the Superintendent (Appeals), Central Excise & Customs, Surat-I, is the signatory - The appeals are accordingly rejected in terms of the judgment of High Court of Gujarat dt.13.11.2008 in COMMR. OF C. EX. & CUS., SURAT-II Versus SIDDHARTH PETRO PRODUCTS LTD.[ 2008 (11) TMI 67 - HIGH COURT GUJARAT] - Decided against the Revenue.
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CST, VAT & Sales Tax
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2013 (7) TMI 706
Penalty u/s 22(2) of the Tamil Nadu General Sales Tax Act - Tribunal confirmed penalty for collecting amount as contingency deposit - Held that:- It is not disputed by the Revenue that the amount in question collected as contingency deposit treated as illegal collection related to the relevant assessment years herein 1985-86 and 1986-87. Taking 31st March 1986 and 31st March 1987 as the relevant date for working out the limitation, the five year period expired on 1991 and 1992. The assessment orders in these cases were passed on 30.11.1998 after giving notice to the assessee. Having regard to the patent illegality on account of absence of jurisdiction as per the proviso as it stood during the relevant assessment year - Order of Tribunal set aside - Decided in favour of Assessee.
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Indian Laws
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2013 (7) TMI 680
Jurisdiction to entertain the petition for offence punishable u/s 138 - whether the Court would have territorial jurisdiction to try the accused for an offence punishable u/s 138 of the Negotiable Instruments Act where a cheque is deposited for collection or would it be only the Court exercising territorial jurisdiction over the drawee bank or the bank on which the cheque is drawn - Held that:- The Mumbai Court has jurisdiction to entertain the complaint – court relied upon the judgement of K. Bhaskaran vs. Sankaran Vaidhyan Balan and Another (1999 (9) TMI 941 - SUPREME COURT OF INDIA) - if the five different acts were done in five different localities - any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence u/s 138 - the complainant can choose any one of those courts having jurisdiction over any one of the local areas within the territorial limits of which any one of those five acts was done - the amplitude stands so widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence u/s138. whether the sending of notice from Delhi itself would give rise to a cause of action in taking cognizance under the N.I. Act – Held that:- The place where the cheque was presented and dishonoured has jurisdiction to try the complaint - issuance of notice would not by itself give rise to a cause of action but communication of the notice - Section 178 of the Code has widened the scope of jurisdiction of a criminal court and Section 179 of the Code has stretched it to still a wider horizon – appeal decided against the appellant.
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