TMI Tax Updates e-Newsletter
Aug 11,2012

Expenditure on foreign travel and medical treatment of the Managing Director and his wife - Tribunal treated it deduction u/s 37(1) - Held that:- Managing Director of the assessee company who resigned on 3.11.96 and the above said expenditure was incurred only after this date and that expenditure incurred by M.D. was reimbursed only due to the fact that the said person was main person in the family controlling the business of the assessee company - His wife, who accompanied him was a Director in the company - in the absence of any obligation on the part of the company to meet the medical and traveling expenses, the payment made could not be treated as one of commercial expediency & was purely a personal one - against assessee.

Denial of claim of deduction u/s 43B - assessee deposited the bonus amounts payable to the workers into a separate bank account - Held that:- The deduction is available only on the sum actually paid by the assessee on or before the due date for furnishing the return of income under Section 139(1) - deemed payment could not be treated as actual payment to qualify for deduction u/s 43B disagreeing with the submission of the assessee that depositing the amount in a bank, even if it be in a separate account, would satisfy the provisions of Section 43 B as actual payment - u/s 43 B only actual payment and not any notional or deemed payment that would be relevant for considering the deduction - against assessee.

Addition to the income under the head “income from house property” - amount paid by the tenants to DSL was nothing but a part of the rent and the same should be added to the rental income received by the assessee - Held that:- No case has been made out to prove that the entire transaction was the result of a collusive arrangement to divert the income which was in truth and fact earned by the assessee.

The assessee being the owner of the property, is assessable under Section 22 only in respect of the annual letting value of the same as the services for maintenance of the common areas and facilities were found to have been actually rendered by DLS and not by the assessee. DLS may be part of the same group, but it is a separate corporate entity carrying on business as service provider for maintenance of properties. The arrangement between the tenants and DLS is a part of the business transaction entered into in the regular course of the business of DLS - assessee firm has not been found to have actually enjoyed the service charges paid to DLS and had no domain over the recovery of the maintenance charges nor had any role to play in the business activities of DLS - in favour of assessee.

Treatment of unutilized balance available in "consumer deposit account" - AO added the unutilized balance of such account to the total income of the assessee - Held that:- Considering the sale agreement produced by the assessee shows that these amounts are not the part of the total sales consideration and also the balance sheet disclosing how the amounts were treated as liability in the books of accounts - the customer deposit accounts are with respect to various services in the apartments, like power connection, water connection, Cable TV connection etc which are necessarily to be taken out by the individual owners of the apartment after the respective apartments are certified fit for occupation by the local authority - pointing of assessee to the fact that after utilization what remains is refunded completely to the customers the issue requires a second look at the hands of the AO - issue is thus remanded back to the AO for fresh consideration

Application for rehabilitation scheme to BIFR - Department claimed that relief flowing from Section 72A should not be granted by the BIFR itself without considering by the department - Held that:- A reading of the Section 32 shows that in case of amalgamation of a sick industrial company with another company, the provisions of Section 72A would apply in relation to such amalgamation, with the modification that the power of Central Govt. under that section may be exercised by the Board, without any recommendation by the specified authority referred to in that section - As the amendment in Section 32 had not been made by the Parliament the provision continues to dictate that the power of the Central Government under Section 72A shall be exercised by the Board without the recommendation of the specified authority even though under the amended Section 72A, no role is prescribed to the Central Government with or without the recommendation of the specified authority - thus it cannot be said that the BIFR fell into an error by directing the concession to be granted itself, rather than requiring the Income Tax Officer to examine this aspect of the concession - in favour of assessee.

Legality of allowing the claim for deduction by way of filing revised statement of income during the assessment proceedings - revenue contended that since the assessee has not claimed the deduction in its original return, the assessee cannot claim any benefit which the assessee has forgotten to claim while filing the return - Held that:- It is found that TDS on the alleged payment was deposited on 19.05.2007 i.e. in the F.Y. 2007-08 relevant to the AY under consideration. Even by the pre amendment provision of section 40(a)(ia), the said payment was allowable in the year of payment of TDS i.e. the year under consideration. Even if no revised statement of income was filed , the claim was allowable as the deduction has been claimed on the payment of TDS . We do not find any reason to interfere with the findings of the CIT(A) - Appeal of revenue dismissed.

Employees’ contribution to PF and ESIC - dis-allowance - belated payment - Held that:- If the employee’s share of contribution is paid before the due date of filing of the return u/s 139(1), then no dis-allowance can be made - Decided in favor of assessee.

Following precedent year decision deduction is allowed in respect of interest paid to the parent company and depreciation on expenses under the head R & D treated as capital expenses is allowed - Decided in favor of assessee.

Deduction u/s 36(1)(viii) - banking company - CIT, invoking his jurisdiction u/s 263, denied deduction on ground that assessee did not satisfy this initial condition of being a financial corporation - validity of revisionary proceedings - Held that:- In case of Union Bank of India vs ACIT (2012 (6) TMI 500 - ITAT MUMBAI ) it has been held that “government company” are financial corporation within the meaning of proviso to section 36(1)(viii) and thus entitled the bank to deduction u/s 36(1)(viii) even in the years up to 2006-2007. Hence, when one of the possible views has been taken by the Assessing Officer, the CIT cannot exercise his jurisdiction u/s 263 on that aspect of the matter.

However, revisionary order is upheld in respect of erroneous deduction provided by AO in case for provision for bad and doubtful debts. Matter is restored back to file of AO for the purpose of computation of deduction u/s 36(1)(viii) - Appeal partly allowed. since more than 51% shares of the assessee-bank were held by the Central Government, it was a “government company” as defined u/s 617 of the Companies Act and as such it became financial corporation within the meaning of proviso to section 36(1)(viii). On the contrary, the ratio in the case before the Cochin Bench of the Tribunal is not attracted because there the assessee was a foreign bank, namely, Federal Bank Limited, which obviously is not a Government company as per the Companies Act, 1956.

Search and seizure - no opportunity of cross examination of the persons provided to assessee, based on whose statements substantial addition had been made on account of disallowance of deduction u/s 80IB(10) and other dis-allowances - Held that:- The request for cross examination had been made only before CIT(A) which had not been acceded to by CIT(A). In our view, order of CIT(A) confirming various additions made by AO without allowing the assessee an opportunity of cross examination of the parties whose statements had been used against the assessee cannot be sustained. Order of CIT(A) set aside and matter restored back with a direction to allow the assessee opportunity of cross examination by remanding the matter back to AO.

Plea for condonation of delay in filing appeal - assessee contended that delay in filing the appeal is mainly attributed to medical reasons, death of parents, family disputes and ignorance of law - Held that:- Considering the entire gamut of facts, the available material on record and averments of the assessee, which is supported by an affidavit, photographs and medical reports, in the absence of any contrary materials brought to our notice we deem it fit and proper to hold that the assessee had bona fide and sufficient reasons for delay in filing the appeals. In the interest of substantial cause of justice, such delay is condoned - Decided in favor of assessee.

Deduction u/s 80IB - Housing project - denial of deduction on ground that since assessee has sold plot of land to the customers and no residential unit was sold and only after transferring the plot, the assessee has constructed the building as a contractor, hence deduction is available to builder and not contractor - Held that:- Merely because the assessee had entered into agreement for sale of plot so as to enable the customer to have a loan facility from bank and other financial institutions will not go to prove that the assessee has not undertaken any construction. Not only as per project approval letter but also as per the certificate issued by the Office of Sub Divisional Officer, the assessee has not only conceived the entire housing scheme but also executed the work as per approved plan.

Further, assessee had entered into comprehensive sale agreement with the customers for the purpose of sale of complete residential units. As per the agreement, the possession of residential unit remained with the assessee till final instalment is paid. In view of these facts, we do not find any merit on the part of AO’s action for treating the assessee merely as a contractor rather than a Developer. However, since revenue alleged that said project allowed commercial complex, we restore this aspect to the file of the AO to physically verify the project and if he finds that no commercial unit is constructed, he should allow the claim of deduction u/s 80IB(10) - Decided in favor of assessee for statistical purposes.

Non applicability of TDS provisions u/s 194C & consequently the charging of interest u/s 201 & 201(1A) - the assessee is a CONSORTIUM - Held that:- Considering facts of the present cases where the contract amounts are received by the assessee-JVs, which were transferred to one of the respective constituents, who actually executed the contract and the income of the JV was treated as NIL - CIT(A) opined the assessee as the one regularly making TDS on the said contract amount and in fact, fact of the matter in these cases is that the assessees made TDS under protest subsequent to survey, which is completely ignored - CIT(A) merely dismissed the assessee’s grounds relying on the assessee’s compliance in effecting TDS but did not discuss the fact that made assessee to effect TDS, i.e. events that occurred during the survey operations. CIT(A) should have given attention to the grounds raised before him and gone to the root of the matter as to why the assessee is aggrieved on the issue of the requirement to deduct TDS and the liability on the assessee etc.

The contract sums were taxed subsequently in the hands of one of the constituents of the assessee-Consortiums and to avoid double tax, the said amounts were never taxed in the hands of the assessee - consortium. This is a relevant fact that the CIT(A) should have considered, while deciding as to why one must make TDS, when the JV - assessee are created to procure a contract and never to execute the same by themselves with the intention to earn income - the objection raised by the Learned Departmental Representative about the requirement of fresh adjudication on the said issue relating to liability to make TDS under S.201(1) is required to be approved - matter is restored to the file of the first appellate authority for fresh adjudication - in favour of assessee for statistical purposes.

Addition on account of discount allowed by the State Government on early repayment of deferred sales tax, loan holding the same to be income of the assessee for the year and not a capital receipt as claimed by the assessee - difference between the payment made against the future liability on account of deferred sales-tax is a capital receipt and could not be treated as a remission of cessation of liability assessable under section 41(1)(1) of the Act - addition made by the Assessing Officer in the instant case by invoking the provisions of section 41(1) of the Act is untenable – In favor of assessee

Addition on account of debit balance written off on reconciliation – Held that:- Claim is on account of small balances, which were outstanding from the various customers on account of rejections, counting shortage etc., Since the amounts were not recovered, the same have been written off as irrecoverable - lower authorities were not justified in rejecting the claim of the assessee - ground raised by the Revenue is accordingly dismissed.

Guarantee commission paid to the Directors of the Company – Held that:- What the company loses by way of guarantee commission, it would gain by saving of interest and avoidance of restrictive covenants. The payment of guarantee commission was, therefore, commercially justified - payment, therefore, could not be called in question as being influenced by any extra-commercial considerations and it must be taken that it passed all the test laid down in section 40(c) - whole of the guarantee commission shall be allowed - guarantee commission was not excessive and was an allowable deduction - ground raised by the Revenue is accordingly dismissed.

Applicability of Clause (ii) of sub-rule(2) of Rule 8(D) of the I.T. Act - funds of the assessee are from a common pool and there was no exclusively pertaining to capital expenditure on purchase of equipment - assessee received Dividend income which it claimed as exempt - assessee has an outstanding loan - on which it has paid interest – Held that:- Matter remanded to the file of the AO for making reasonable disallowance under section 14A r.w. Rule 8D in the light of the decision of the Hon’ble Bombay High Court in the case of Godrej & Boyce Manufacturing Company ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT ) - Assessee is Partly-allowed.

Rejection of books of accounts - assessee has not been submitting the daily report to the Market Committee which were required to be submitted as per agreement with the Market Committee - AO accordingly, rejected the books of account by invoking the provisions of section1 145(3) of the Act

As regards the employment of 34 persons - no material in the possession of the AO to support the factum of employment of 34 alleged employees by the assessee - no work done by them. There was no question of any payment of any salary to them for any alleged work in the contract business. No collection of market fee or RDF has been brought on record by the AO – AO not justified in rejecting books of accounts of the assessee

As regards the commission income - assessee was not required to maintain books of account in respect of collection of Market fee and RDF and since the payments are collected in the name of Market Committee, they are deposited with the Market Committee only. All the details for the collections which were tallied weekly were available with the AO – Held that:- Collections made from commission agents till the amount of the contract entered is not the income of the assessee and, therefore, the assessee is not required to maintain books of account with regard to income of other persons. Therefore, the books of account to that extent cannot be rejected by the A.O - no estimation of income can be made

Assessment under section 144 of the Act – Held that:- AO is not justified in making any addition to the income of the assessee, even if the books of account are rejected u/s 145(3) of the Act, on the basis of the material on record, which was available before the AO as well as before the ld. CIT(A). The Ld. CIT(A) is not justified in sustaining the addition on this account.

Penalty under section 271(1)(c) of the Act - on concealing the income and furnishing inaccurate particulars of income – Held that:- When no addition remains in pursuance of order mentioned hereinabove, no penalty u/s 271(1)(c) can be sustained - no infirmity in the order of the ld. CIT(A), who has rightly deleted the addition

Claim for deduction u/s 80HHC of the Income-tax Act - in relation to the DEPB amount – alleged that assessee not fulfilled the conditions stipulated in the said third proviso to sec. 80HHC(3) of the Act – Held that:- Assessee will be liable to tax and will be entitled to exemption from tax according to the strict language of the taxing statute and if as per the words used in explanation (baa) to Section 80HHC read with the words used in clauses (iiid) and (iiie) of Section 28 - Assessing Officer is directed to compute the deduction under Section 80HHC in the case of the appellants in accordance with the judgment in the case of Topman Exports (2009 (8) TMI 827 - ITAT MUMBAI ) - assessee are allowed for statistical purposes.

Capital gain or business income - Trading of shares – assessee holding shares as a investment – Held that:- Assessee had submitted the explanation that he is mainly doing the business of poultry farm but also doing business in trading of shares - AO has not appreciated the explanation of the assessee that he has made the investments also as available at PB-40 and such details were available with the AO as well as before the CIT(A) - if any shares after purchase are sold to pay off the loan then the intention of making the investment cannot be held to be as an intention to trade in shares to hold the same as stock-in-trade - AO is not justified in treating short-term capital gain declared by the assessee as business income - appeal of the assessee is allowed

Addition made u/s.40A(2)(b) - CIT(A) deleted the additions - Held that:- The A.O. made hypotheticated calculation in assessment order without any base and material. The addition was made on presumption. In both years, there is no nexus between the borrowed fund and interest free loan - The assessee did not take substantial interest in the business of the specified person or the specified person has a substantial interest in the business of the assessee - A.O. has not brought on record any evidence regarding the assessee has substantial interest in M/s. Yuletide Industries Private Ltd. and M/s Covenent Investment Co. Ltd. and vice versa. - as interest free loan given to alleged sister concern were part consideration of service rendered by both the companies. Therefore, in both the years, the order of ld. CIT(A) are confirmed and appeal of the revenue are dismissed.

Adjustment of Excise Duty on purchase, sales and closing stock u/s 145A - Held that:- Considering amendment w.e.f. 01.04.1999 in Subclause b of Section 145A adjustment to include the amount to any tax, duty, cess or fee actually paid or incurred by the assessee to bring goods to the place of its location and condition as on date of valuation is required to adjust as per law by the A.O - A.O. is directed to make suitable adjustment as per law.

Dis allowance of Peripheral Development Expenses - CIT(A)allowed partial relief - Held that:- As suggested by the Committee being a Government Body, the ITAT, Cuttack Bench in assessee’s own case for AYs 1999-2000 and 2002-03 has held such expenditures allowable u/s.37 as revenue in nature by placing reliance on various judicial pronouncements on the issue. The learned CIT-DR could not bring any decision contrary to the above. Therefore, the facts and issue being the same in the present Assessment Year the expenditure claimed under the head “Peripheral Development Expenses” is allowable u/s.37 - in favour of assessee.

Computation of deduction u/s.80HHC - Non inclusion of sales tax and Excise Duty while arriving at total turnover by assessee - Held that:- Direction to exclude Excise duty and Sales tax from the total turnover for the purpose of deduction of Section 80HHC as decided on in the case of CIT v. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT]that excise duty and sales tax were includible in the "total turnover", which was the denominator in the formula contained in section 80HHC(3) as it stood in the material time - against revenue.

Deduction of 90% of the entire incomes credited to the P & L account for the purpose of deduction u/s.80HHC - Held that:- As decided in case of ACG Associated Capsules (P) Ltd [2012 (2) TMI 101 - SUPREME COURT OF INDIA]that ninety per cent of not the gross interest/rent but only the net interest/rent, which has been included in the profits of the business of the assessee as computed under the heads ‘PGBP’ is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business - Matter remanded back to A.O. to work out the deductions – Decided in favor of assessee

Dis allowance of expenses under the head “Miscellaneous Expenses” - includes an amount of interest on land compensation which is capital expenditure - Held that:- As the assessee has paid interest on the delayed payment of compensation for the land acquired by the assessee - as capitalization of the asset has not been disputed therefore interest payment on delayed compensation cannot be allowed as revenue expenditure - CIT(A) confirming the disallowance is therefore upheld and the ground raised by the assessee is dismissed.

Disallowance of claim of additional depreciation - Plants and Machinery installed in its new industrial undertaking called “Rolled Product Unit” Held that:- As per Section 32(1)(iia) inserted by the Finance Act, 2002 both acquisition and installed of plant or machineries should take place after 31st March,2002 to enable the assessee to claim additional depreciation of 15% if it achieves substantial expansion by way of increase in the installed capacity by not less than 25% in the previous year - As RPU unit though acquired by the assessee on amalgamation which the amalgamated Company had started commencement of installation of the said unit after 1.4.2002 (during F.Y. 2002-03 and 2003-04) enabling the UNIT to become operative and capable of manufacturing Rolled products for Commercial purpose. - as the assessing authorities have not examined this aspect of the case whether any such plant and machinery acquired and installed after 1.4.2002 in the said plant by the assessee - restore this issue to the file of the Assessing Officer for reconsideration - in favour of assessee.

Disallowance of Prior Period adjustments - the expenses relates to payment for hiring of helicopter from Govt. of Orissa for visit of Minister - Held that:- As the helicopter was hired during the month of April, 2002, the hiring charges to be paid by the assessee was only crystallized during the AY under consideration on the basis of bill drawn on the assessee by another Govt. Agency i.e., Coal India Ltd. Therefore, the income having crystallized during the year under consideration to Coal India Ltd., thus concluding that the said expenditure can be allowed in the AY under consideration correspondingly - in favour of assessee.

Disallowance of Other Misc. expenses - Held that:- The accounting procedures adopted by the assessee should not leave a room for the assessee to park majority of the expenses to the tune of ₹ 76 lakhs as Misc. Expenses when the AO sought to disallow part of the expenses not pertaining to the business which the learned CIT(A) reduced heavily - to put a bar on such practice, a token disallowance has been made by the CIT(A) - against assessee.

Disallowance of the loss claimed on revaluation of non- moving stores & spares - CIT deleted it - Held that:- If an item is lying in the inventory either unsold or unutilised, if there is a change in the intrinsic value, an assessee can revalue such assets, and claim the loss on account of revaluation as a charge against profits as decided in vs. CIT [1953 (10) TMI 2 - SUPREME COURT]- in favour of assessee.

Dis allowance of addition of payment under benevolent Scheme - CIT deleted it - Held that:- Deleted by ITAT, Cuttack Bench in assessee’s own case for the AYs 1993-94 to 1998-99 & 2000-01. thus follow the same - decided in favour of assessee.

Addition being donation made to Sports Authority of India - Held that:- Following the CIT case decided of Cloth & General Mills Co. Ltd [1978 (4) TMI 75 - DELHI HIGH COURT] CIT(A) has deleted the impugned addition in concluding that the payment to Sports Authority of India is not in the nature of donation but in the nature of advertisement and publicity, which is an allowable expenditure - Whenever newspaper coverage or radio or TV coverage took place, the name of assessee would be mentioned as one of the sponsors, thus the expenditure is therefore clearly for the enhancement of the brand value and image of the company.

Capital gain – sale of land - whether the long-term capital gains on sale of land was to be assessed in the hands of the partnership firm or in the hands of partner of the assessee firm – Held that:- Late J.M. Sharma had carried on a business. On his death, eight persons consisting of four sons and three daughters and his wife became the legal heirs of his estate. The business was carried on by his four sons by constituting a firm - land property belonging to his estate was not specifically assigned to the partnership firm either by act, deed or conduct - shares of two partners were transferred to the remaining partners by stating specific consideration and finally one of the partners sold his share to the remaining partner and thereby ultimately the property came into the individual hands of Shri Jayant Kumar Jethalal partner of the firm - property belonged to Shri Jayanthkumar Jethalal as his individual property and, therefore, the capital gain is assessable to tax in his individual capacity. The long-term capital gain cannot be assessed in the hands of the firm - long term capital gain is assessable to tax in the hands of the partner - against Revenue

Penalty u/s 158BFA (2) - addition made is on account of various electronic goods found during search from the residence of the assessee – Held that:- Assessee is not entitled to complete immunity from payment of penalty on the undisclosed income returned by them under clause (a) of section 158BC - when the assessee consistently failed to prove his bona fides at every stage in quantum proceedings and even in penalty proceedings, apparently onus laid down upon the assessee is not discharged and consequently, the levy of penalty under section 158BFA(2) of the Act is justified with reference to the undisclosed income determined by the AO to be in excess of the returned income

Charitable trust - denial of exemption under section 11 of the Act – Held that:- In the absence of any such cancellation of registration under section 12A - there is no justification in denying the exemption allowable under section 11 to the assessee while completing the assessment - assessee is allowed for statistical purposes.

Valuation - import of old/used digital multifunction print and copying machines. - goods were not accompanied by the Chartered Engineer's certificate from the load port and hence the value has been re-determined by ascertaining the value from a local Chartered Engineer. The appellants have also, accepted the value determined by the customs authorities as per the assessment of the local Chartered Engineer - The valuation done by the adjudicating Commissioner is upheld.

Penalty – confiscation – redemption fine - Import of Secondhand Multifunctional Photocopiers - import licensing restrictions - violation of the import restriction – Held that:- Repeated offences and that the respondents are repeatedly importing second-hand digital photocopiers without licences, undervaluing the same and in one case even the quantity was found to be mis-declared - fines and penalties imposed by the original authorities in these cases of repeated offences are not unreasonable - no justification for reducing the fine imposed

Project import - Inclusion of value of drawings and designs – Held that:- department wants to include the value of the drawings and designs in the value of the machinery which has been assessed to duty under Project Imports under Heading No. 9801; at the same time, they do not want to give the benefit of Project Imports for drawings and designs on the ground that, if that value is included it would exceed the value recommended for Project Imports by the sponsoring authority - Drawings and designs are rightly classifiable under Heading No. 49.06 and the benefit of duty-free import under this Heading has to be extended to the goods in question - entire demand is unsustainable in law

Mr. Kishore Rajaram Chhabria as the Managing Director of SWC had misused his fiduciary relationship by causing the take over of BDA, which was always considered as a subsidiary of SWC - Held that:- There is only one person behind the corporate bodies constituting Mr. Kishore Rajaram Chhabria’s group of companies - The distillery of BDA at Aurangabad was divested from SWC and its network of subsidiaries and group companies. However, in the suit, the then plaintiffs were unable to obtain any interim order with regard to this distillery, even up to the stage of Supreme Court - that if Mr. Kishore Rajaram Chhabria and his group of companies thought that by the schemes of merger and demerger the original cause of action of SWC was being given up, they were sadly mistaken as settlement between two individuals cannot bind any body corporate.

On examination of the schemes of merger and demerger it can be concluded they were schemes between body corporates and no clause suggests that the cause of action of the original plaintiffs was extinguished. If the shares of BDA or its distillery were to be transferred to another company or group of companies, that transfer was subject to the original cause of action which the original plaintiffs had against Mr. Kishore Rajaram Chhabria and BDA. That had to be expressly given up at the time of transfer of undertakings and other assets under the schemes - there is devolution of interest of the original plaintiffs upon the applicant, United Spirits Ltd granting them leave to prosecute the suit in place of the original plaintiffs.

Imposition of penalty - whether the appellant had violated Section 9(1)(b) of FERA - transaction to sell the flats to the two directors were non resident Indians - Held that:- Apart from the statement of the appellant recorded to the effect that the two directors in whose name the receipt was received were persons resident outside India there is no material on record to suggest that on the date of receiving the amount, the appellant was aware of this fact and even from the statement recorded also cannot be inferred that the appellant on the date of issuing the receipts was aware of this fact.

The Appellate Tribunal has drawn adverse inference against the appellant solely on the ground that the appellant has not produced the agreement entered into by the appellant with the two directors as apart from issuing receipts, no agreement was entered into - it was adverse on the part of Tribunal to arrive at a conclusion that an agreement must have been entered into by and between the appellant and the two directors and impose penalty of Rs.34 lacs upon the appellant - the Prothonotary and Senior Master is directed to refund the amount of Rs.7.50 lacs with accrued interest to whom the assessee has deposited with the direction of Court - in favour of assessee.

Demand of Service Tax – denial of benefit of exemption under Notification No. 6/2005-ST - demand on the ground that the appellant has availed CENVAT Credit on input services and capital goods – Held that:- Once the appellant avail CENVAT Credit on the capital goods received in the premises from where he provides taxable service, the benefit of exemption under Notification No. 6/2005-ST, would not be available - appellant is directed to deposit full amount of Service tax

Catering services - Denial of exemption for small service providers as per Notification No. 6/05-ST - appellant submits that for the purpose of calculation, Revenue is taking into account the entire receipts of the appellants whereas the taxable value should be taken after allowing abatement of 50% in terms of Notification No. 1/-90ST – Held that:- There is provision in the Notification to the effect that value of services exempted by other Notification should not be taken into account for calculating the aggregate value under Notification No. 4/07-ST - argument that they were providing only tea and snacks and such items were not substantial and satisfying mean also to be misplaced because the canteen was operated for providing meals to employees of AIL and tea and snacks were only items served at times intervening between that for substantial meals and that was not the main service provided – pre-deposit waived

Refund – Exemption of service tax paid by them under Notification No. 09/2009 as amended by Notification No. 15/2009 - Held that:- Adjudicating authority denied the refund claim on the ground they are not entitled to claim refund prior to the period, on which date they got the approval from the concerned authority - remanded the matter to the adjudicating authority to consider the claim filed by the respondent to examine whether the respondent has fulfilled the other conditions of the above said notifications or not

Installation, Erection and Commissioning Service – Held that:- Appellant are clearing the solar system through dealers also and the dealers further sell it to the customers and charge certain amount for installation - appellant are not charging installation charges separately, but for installation activity, they are liable to pay service tax - activity of installation of solar system falls under the category of Erection, Installation and Commissioning Service - matter remanded back to the original adjudicating authority to consider the records, documents for computation of service components in the activity of the appellant

Claim of refund under Rule 5 of Cenvat Credit Rules, 2004 against exportation of 100% Cotton Terry Towels under bond. - Revenue was of the view that since final product was exempted from excise duty they could not have exported the goods under bond and they could not have taken Cenvat credit on inputs used in the manufacture of such exempted goods. - held that:- this issue has been initially decided by the Bombay High Court in the case of Repro India (2007 (12) TMI 209 - BOMBAY HIGH COURT) and decision has been further affirmed by the Himachal Pradesh High Court in the case of CCE Vs. Drish Shoes Ltd. (2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT) - Refund allowed.

Common modvatable / cenvatable inputs in the manufacture of dutiable as also exempted final products. - demand provisions of Rule 6(3)(b) of Cenvat Credit Rules - held that:- matter remanded back.

Excisability of sugar syrup, being manufactured by the appellant at the intermediate stage of manufacture of edible biscuits and used by them captively - appellants contention that sugar syrup manufactured by them is not marketed on account of various factors like short shelf life etc. and hence the same is not excisable – Held that:- Matters were remanded for denovo decision with the direction to establish the marketability of the product and to decide the consequent excisability.

CENVAT credit on stockbroker's service - respondent used the services of a stockbroker for acquiring shares in another company - understanding was that the other company would supply electricity to the respondent subject to the condition that the latter would invest in the former – Held that:- Electricity was used by the respondent in the manufacture of their final products – there is clear nexus between the stockbroker's service and the manufacture of the goods - service clearly fell within the ambit of 'input service' as defined under Rule 2(l) of the CENVAT Credit Rules, 2004 – credit allowed

Reversal of Cenvt Credit - Rule 6(3) - generation of waste - fine was resulted while manufacture of Sponge Iron – Held that:- There is nothing on record to suggest that outcome of manufacture is controllable to eliminate fine which obviously generate - Revenue not brought out that the appellant knowingly generated fine and also knowingly arranged its situation to attract Rule 6(3) of Cenvat Credit Rules, 2004 - Proportionality aspect not being dealt by Rule 6(3) of Cenvat Credit Rules, 2004 and that Rule being subject to certain conditions the appellant shall succeed in absence of a case made from that angle - appeal is allowed