Income Tax
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Merger with the parent company - no capital gain chargeable to tax under the Act in terms of section 45 read with section 48 can be said to arise. - it cannot be postulated that section 47(via) takes the transaction out of the clutches of section 45 - The merger involved in this case, is not exempt from capital gains tax under section 47(via). - AAR
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The capital gains arising out of the proposed buyback of shares is not taxable in India in view of paragraph 4 of Article 13 of the DTAC between India and Mauritius. - AAR
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India - Germany DTAA - Receipt of license charges / royalty - Distinction has to be made between the acquisition of a 'copyright right" and a "copyrighted article". - AT
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Business loss assessed by the AO cannot be set off against the amount taxed u/s 68 as unexplained cash credits taxed under section 68 cannot be pegged to any head of income- - AT
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Income - receipt of advance payment - due to inadvertence the amount was credited to the accounts of the assessee in the balance-sheet - no addition - HC
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Reassessment proceedings – Notice for 3 years - AO has not issued separate notice under section 148 and instead had issued a composite notice which does not meet the requirement of section 148 of the Act - HC
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Computer data processing services and sale of computer stationery held as industrial undertaking engaged in the business of "manufacture" within the meaning of section 80-I - HC
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If the judgment passed by High Court is erroneous, the revenue should have challenged the said order. - At any rate that cannot be a ground for invoking Section 263 of the Act - HC
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Alleged Under invoicing and suppression of additional turnover - merely on the basis of SCN issued by the Commsisioner, of Central Excise, additions made by the AO cannot be sustained - AT
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Dis-allowance u/s 40(a)(ia) - non-deduction of TDS from wheeling and transmission charges - applicability of Section 194J or 194C - No TDS - AT
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Denial of deduction u/s 80-IA - When the assessee exercises the option, only the losses of the years beginning from the initial A.Y. are to be brought forward and not the losses of the earlier years which have been already set off against the income of the assesseec - AT
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Best judgement assessment - rejection of books of account - joint venture is making profit without executing any work. - Estimation of profit at 10% of the gross receipts directed. - AT
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Income from house property - determination of annual value - the rateable value under the Municipal law has to be adopted as annual value u/s. 23(a) - Held - AT
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Provision made for leave salary allowed as deduction - HC
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Capital gains - Denial of Deduction u/s. 54EC of the Act – investment in REC bonds - payment of the maturity proceeds to any one of the bond holders is not a material factor for deciding the ownership of the bonds - AT
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Penalty for non deduction of tax at source - bona fide belief proved - penalty set aside - AT
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TDS u/s 194H - The payment of commission though mentioned in receipt issued by the franchisee/commission agent does not amount to discharge an obligation by an overriding title rather the said payment amounts to discharge an obligation after such income reaches to the assessee. - AT
Customs
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Regarding exemption of import duty on oil cakes thereby amending Notification 12/2012-Customs, dated 17-03-2012 - Notification
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Levy of CVD on Gum Arabic waste imported – the gum arabic waste/reject is only a natural gum and as per the Board s clarification dated 28/06/2007 CVD is not leviable on gum arabic in raw form. - AT
DGFT
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Policy for issue of import licenses of Rough Marble and Travertine Blocks for the Financial year 2012-13. - Notification
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Amendment in para 4A.2.1 of FTP (RE-2012) / 2009-14 regarding Export of Cut & Polished Diamonds sent abroad for Certification/ Grading & re-import. - Notification
FEMA
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Anti-Money Laundering (AML) / Combating the Financing of Terrorism (CFT) Standards - Money changing activities - Circular
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Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) Standards - Cross Border Inward Remittance under Money Transfer Service Scheme (MTSS) - Circular
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FEMA (Borrowing or Lending in Foreign Exchange) (Amendment) Regulations, 2012 - Amendment in Schedules I and II - Notification
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FEMA (Transfer or issue of any Foreign Security) (Second Amendment) Regulations, 2012 - Amendment in regulation 21 - Notification
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FEMA (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2012 - Amendment in Schedule II - Notification
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FEMA (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2012 - Amendment in regulations 2 and 22 - Notification
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FEMA (Transfer or issue of security by a person resident outside India) (Second Amendment) Regulations, 2012 - Amendment in regulations 2 & 5 and insertion of regulation 13 - Notification
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Foreign Direct Investment by citizen / entity incorporated in Pakistan - Circular
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Overseas Direct Investments – Rationalisation of Form ODI - Circular
Corporate Law
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How to calculate / determine 'Net Worth' of the bidder for the purpose of tender - Contingent Liability on Revenue Account - HC
Wealth-tax
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Valuation - exempted asset under wealth tax - residential house - even though the assessee did not stay in the house so long, this house is exclusively for residential purpose, the condition as enumerated in the third proviso to Rule 3 are satisfied - AT
Service Tax
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Export of services - various issues - provided outside India - Delivered Outside India - Services rendered in India - Used in India etc. - AT
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Demand of service tax - development of customized software which they are exporting - it is a case of revenue neutrality – waiver of pre-deposit allowed - AT
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Demand of Service Tax was confirmed on account of money transfer services - delivery in the instant case, is complete only when it is received by the recipient in India. - AT
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Penalty - non-payment of service tax – Appellants paid the Service Tax promptly as soon as it was pointed out before issue of show cause notice and taking registration also - penalty waived - AT
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Non-incaution of value of the sale of SIM card in gross taxable value – no mala fide can be attributable to the appellant so as to invoke the extended period of limitation - AT
Central Excise
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Input services - Rent a cab services - for transportation of their employees from their residence to the factory premises - Cenvat Credit allowed - AT
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Cable distribution boards are accessories for poly machines and that the MS channels and angles used are accessories to the said cable boards - eligible for CENVAT credit - AT
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Failure to furnish the re-warehousing certificate within stipulated period of 90 days - 100% EOU - demand of duty confirmed - penalty set aside - AT
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SSI Exemption - The appellant did not opt for availing the benefit of Notification No. 8/2003-CE dated 01.3.2003 at the beginning of the financial year thus option for the availment is not in accordance with the Central Excise Rules - AT
VAT
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Online submission of Tax Rate Wise Stock held on 31st day of March - Circular
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Income Tax
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2012 (8) TMI 623
Merger with the parent company - Article 8 of the Swiss Merger Act - the applicant had set up a wholly owned subsidiary in India of Switzerland company - Held that:- As the merger and consequent transfer of all assets and liabilities did not generate any gain & on a merger, the transferor is effaced. The transaction undertaken is apparently one sanctioned by Swiss law. The gain if any in this case is not determinable within the scope of section 45 and section 48 of the Act as postulated in the Ruling in Dana Corporation (2009 (11) TMI 32 - AUTHORITY FOR ADVANCE RULINGS ) - no capital gain chargeable to tax under the Act in terms of section 45 read with section 48 can be said to arise. As condition no. (iii), to satisfy that definition what has taken place is amalgamation as defined in section 2(1B), is not satisfied as the shareholders of the applicant merging with ‘company C’ do not or cannot become shareholders of company ‘C’ as company ‘C’ is the only shareholder of the applicant,relaxation of section 47 (via) will be granted but that may be in respect of the shareholders proportion, reduced from 75% to 25%, but the condition itself is not dispensed with. Therefore, in this case, it cannot be postulated that section 47(via) takes the transaction out of the clutches of section 45 - The merger involved in this case, is not exempt from capital gains tax under section 47(via). No obligation on ‘Company C’, parent company to withhold taxes under section 195.
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2012 (8) TMI 622
India Mauritius DTAC - buy back of shares from Indian subsidiary/applicant by AWIL United Kingdom - taxability - Held that:- No adequate material has been disclosed to justify a finding that the applicant or its principal has resorted to the devising of a scheme for avoidance of tax. It may be true that the applicant was incorporated in Mauritius and the investment made through it for acquiring shares of the Indian company to take advantage of the Indian Mauritius DTAC but that by itself is no ground to discard the claim of the applicant for benefit under the India Mauritius DTAC - . Once it is held that the applicant is entitled to invoke the India Mauritius DTAC, then it is clear that Article 13 of the said DTAC is attracted - the capital gains arising out of the proposed buyback of shares is not taxable in India in view of paragraph 4 of Article 13 of the DTAC between India and Mauritius. Applicability of Section 47 - Held that:- Section 47 (iv) has to be read as conferring benefit in three situations, one, when the parent company holds the whole of the share capital of the subsidiary, two, when the nominees of the principal hold the whole of the share capital of the subsidiary and three, when the principal and the nominee together hold the whole of the share capital of the subsidiary - There appears to be no justification in reading “or” as “and” to hold that when a principal and its nominee hold the whole of the share capital, that case will also come within the ambit of the provision thus the proposed transaction is not exempt by virtue of section 47 (iv) Whether sections 92 to 92F will apply to the transaction ? - Held that:- As the present is an international transaction between related parties, and income arises out of it. Hence, sections 92 to 92F of the Act are attracted.
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2012 (8) TMI 621
Reduction of Arm's Length Price by TPO - CIT(A) allowed the appeal of assessee - ITAT set aside the order of the CIT (A) and remanded the matter to the AO for fresh adjudication - Held that:- The Tribunal does not state that the material, including the comparables, furnished by the appellant was inadequate & the department/respondent also do not contend that the comparables were inadequate. They have analyzed the same in a particular manner whereas the CIT(A) has analyzed the same in a different manner. Although the order very fairly permits the appellant an opportunity of filing fresh comparables the appellant is willing to proceed before the Tribunal on the basis of the existing material including the comparables already furnished no purpose would be served by remanding the matter to the AO or for that matter, even before the CIT(A) for a fresh decision on the existing material - as the Tribunal has not held that it is not possible to arrive at the ALP on the basis of the existing material it must therefore now decide the matter - in favour of assessee.
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2012 (8) TMI 620
Receipt of Gift as remission of liability and hence taxable u/s. 41(1) - Held that:- The gift is given by a person to another person who is personally related to him, the remission of trading liability takes place in business relationships taking place only due to adverse business situation faced by a business concern. In the instant case, nothing was brought on record by the department to show that the assessee's business was in critical condition, which would warrant remission of liability for its survival - assessee has declared an income of Rs. 16,13,228/- during the year under consideration, which fact shows that the business of the assessee was in healthy condition - in favour of assessee.
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2012 (8) TMI 619
Denial of deduction u/s 80-IB(10) - the first plan was approved on 23.6.2003 and the project has not been completed before 31.3.2008 as per sub-clause (i) section 80-IB(10) - Held that:- The assessee firm acquired further land of 20 R on the same date and revised the building lay-out, which were originally prepared by the erstwhile holder of rights and the plan so revised (inclusive of the additional land of 20R) got sanctioned by the PCMC on 31.7.2004 only. It is only after that date, the assessee thus commenced the development and construction of the housing project in question. Quite clearly, the project in question is quite distinct and separate from the project reflected by the PCMC sanction dated 23.6.2003, in view of the above features AO has been unduly influenced by the remark ‘revised sanction’ contained in 11 PCMC approval dated 31.7.2004. In fact, the Explanation to section 80- IB(10)(a) pressed into service by the Revenue refers to the approval granted to the same housing project more than once and the said Explanation is not relevant in a case where the approval is granted to different housing projects. As project in question reflected by the sanction of PCMC dated 31.7.2004 is different than the project intended under PCMC approval dated 23.6.2003, the Explanation to section 80-IB(10) cannot be invoked so as to reckon the period of completion of construction as contained in clause (i) or (ii) clause (a) to section 80-IB(10) and the appellant is justified in asserting that it commenced development and construction of housing project on 31.7.2004 and not on 23.6.2003 and accordingly, the last date for completion of construction has to be calculated as per sub-clause (ii) of clause (a) to section 80-IB(10) in terms of which the assessee is required to complete the construction within four years from the end of the financial year in which the project was approved by PCMC, i.e. upto 31.3.2009 - in favour of assessee.
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2012 (8) TMI 618
India - Germany DTAA - Receipt of license charges from Indian Joint venture entities - right to use Opus software was treated as Royalty income by Revenue - Held that:- In order to qualify as royalty payment, within the meaning of Section 9(1) (vi) and particularly clause (v) of Explanation-II thereto, it is necessary to establish that there is transfer of all or any rights (including the granting of any license) in respect of copy right of a literary, aliistic or scientific work. Section 2 (0) of the Copyright Act makes it clear that a computer programme is to be regarded as a 'literary work' - Thus, in order to treat the consideration paid by the cellular operator as royalty, it is to be established that the cellular operator, by making such payment, obtains all or any of the copyright rights of such literary work. In the presence case, this has not been established. It is not even the case of the Revenue that any right contemplated under Section 14 of the Copyright Act,1957 stood vested in this cellular operator as a consequence of Article 20 of the Supply contract. Distinction has to be made between the acquisition of a 'copyright right" and a "copyrighted article". Even assuming the payment made by the cellular operator is regarded as a payment by way of royalty as defined in Explanation 2 below Section 9(1) (vi), nevertheless, it can never be regarded as royalty within the meaning of the said term in article 13 para 3 of the DTAA - the consideration received by the assessee in that case allowing the use of the software was not considered as a royalty and instead, it was held as business receipts in the hands of the assessee - in favour of assessee.
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2012 (8) TMI 617
Penalty under section 158BFA(2) of the Act for concealing the income – Held that:- alleged items was examined, thoroughly and in detail, by the Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal and by a reasoned order, both came to a conclusion that additions are based on estimation only – A fact or allegation based on estimation, cannot be said to be correct only, it can be incorrect also - penalty was wrongly imposed by the Assessing Officer – addition deleted
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2012 (8) TMI 616
Unexplained Cash credit – Held that:- Amounts are taxed under the provisions of Chapter VI for the reason that their nature and source are not known - what is taxed under the specific provisions of Chapter VI cannot be pegged to any of the sources/heads of income as specified in Chapter IV - unexplained cash credits have to be brought to tax under section 68 and not under section 56 Set off of loss from business against the income being unexplained cash credits u/s 68 – Held that:- Income assessable u/s 68 cannot be assessed under any particular head of income including income from other sources u/s 56 - business loss assessed by the AO cannot be set off against the amount taxed u/s 68 as unexplained cash credits taxed under section 68 cannot be pegged to any head of income - appeal filed by the department is allowed.
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2012 (8) TMI 615
Income - advance payment remitted by M/s. India Gems and Beads, USA, for supply of goods, but due to inadvertence the amount was credited to the accounts of the assessee in the balance-sheet – Held that:- Nature of any payment received cannot be decided with the accounting treatment given - even if due to mistake or mis understanding if the accountant has credited the said money into the capital account of the appellant it cannot become the part of capital and then obviously it shall be in the nature of advance payment which certainly cannot be part of revenue receipts because looking to the nature of business the revenue receipt shall be the export proceeds only and not the advance amount received - addition made by the Assessing Officer was not in accordance with the accounting principles
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2012 (8) TMI 614
Reopening the assessment - assessment is sought to be opened beyond a period of four years of the end of the relevant assessment year – Held that:- Assessing Officer did not hear the objections of the assessee nor did he pass a separate order on those objections - Assessing Officer has acted arbitrarily and in a manner clearly contrary to law in passing an order without disposing of the objections of the assessee - order of reassessment quashed and set aside
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2012 (8) TMI 613
Reassessment proceedings – Held that:- Each assessment year is taken to be an independent unit of assessment and the provisions of the Act applies separately, even where there has been escapement of income, the Assessing Officer is obliged to issue separate notice for each assessment year - Assessing Officer in the present case admittedly has not issued separate notice under section 148 of the Act and instead had issued a composite notice which does not meet the requirement of section 148 of the Act - entire reassessment proceedings are wholly without jurisdiction
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2012 (8) TMI 612
Reopening the assessment - assessment is sought to be opened beyond a period of four years of the end of the relevant assessment year – Held that:- Assessing Officer did not hear the objections of the assessee nor did he pass a separate order on those objections - Assessing Officer has acted arbitrarily and in a manner clearly contrary to law in passing an order without disposing of the objections of the assessee - order of reassessment quashed and set aside
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2012 (8) TMI 611
Charitable purpose within the meaning of section 2(15) of the Income-tax Act – Held that:- Assessee is providing sports facilities as a part of its activities consisting of badminton, table tennis, billiards, cricket and skating among others - assessee provides service to its members does not detract from the position that it advances a general public utility. The advancement of any object of benefit to the public or a section of the public as distinguished from a benefit to an individual or a group of individuals would be a charitable purpose - Assessing Officer did not determine whether the requirements of section 11 were fulfilled - matter remanded back to the Assessing Officer
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2012 (8) TMI 610
Disallowance of loss - Tribunal allowed the appeal and granted the benefit to the assessee – Held that:- Once the Tribunal accepted the explanation of assessee and accordingly, deleted the additions in question made by the Assessing Officer and the Commissioner of Income-tax (Appeals), then it would not involve any substantial issue of law as such - court in its appellate jurisdiction under section 260A ibid, would not again de novo hold yet another factual inquiry with a view to find out as to whether the explanation offered by assessee and which found acceptance to the Tribunal is good or bad, or whether it was rightly accepted, or not – appeal dismissed
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2012 (8) TMI 609
Deduction under section 80-I of the Act - computer data processing services and sale of computer stationery – Held that:- Activity undertaken by the assessee can be termed as industrial undertaking engaged in the business of "manufacture" within the meaning of section 80-I of the Act
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2012 (8) TMI 608
Power under Section 263 of the Act - assessee has income from capital gains and has claimed exemption under Section 54F of the IT Act for the investment made in a new asset - Assessing Officer accepted the return filed by the assessee - revisional Authority issued a notice under Section 263 of the Act and after hearing the assessee passed an order taking away the benefit on the ground that investment made beyond the time period – Held that:- Tribunal accepted that Investment made by the assessee being within the time specified under sub-section (4) of Section 139 of the I.T.Act, the assessee is eligible for exemption under Section 54F of the I.T.Act - If the judgment passed by this Court is erroneous, the revenue should have challenged the said order. At any rate that cannot be a ground for invoking Section 263 of the Act
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2012 (8) TMI 594
Interest expenditure on borrowed funds - assessee engaged in the business of construction and development following “completed contract method” - Revenue contended that interest identifiable with the project should be allowed only in the year when the project is completed and the income from that project is offered for taxation - Held that:- Since the assessee follows project completion method and recognises revenue on completion of contract method and all costs relatable to individual project is shown as work in progress, therefore, interest attributable to the project should be allowed only in that year when the project is completed and the income from that project is offered for taxation. In present case, since only 1 project is completed, matter is restored to the file of the AO to determine and allow the proportionate interest attributable to the said project completed. Dis-allowance of development charges and extra payments - Revenue contended that same will be allowable only against the particular project in respect of which the same has been incurred and not as overhead expenses - AY 08-09 - Held that:- It is undisputed that plot in question for which the expenditure has been incurred was sold during AY 2006- 07 and no provision what so ever has been provided for future obligation on account of sale of the said property. Transaction has been completed and profit has already been booked during AY 2006-07. Hence, in absence of any legal or contractual obligation to incur any further expenditure the said expenses cannot be allowed as a revenue expenditure during the impugned assessment year. Dis-allowance u/s 40(a)(ia) on account of non-deduction of TDS from Audit fees - Held that:- Though assessee contended that TDS on audit fees was made on the basis of the bills issued by the Auditors subsequently, however, no proof for this has been produced by the assessee either before the AO or before the CIT(A) and even before us. Hence, dis-allowance upheld.
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2012 (8) TMI 593
Alleged Under invoicing and suppression of additional turnover - assessee contended that Revenue assumed under invoicing on the basis of SCN issued by the Commissioner of Customs & Central Excise and order passed by Settlement Commission for Customs and Central Excise - AY 02-03, 03-04, 04-05 - Held that:- There is no case of additional turnover warranting any addition to the turnover disclosed. As such, the allegation of under-invoicing is also not fully supported by the orders of the Excise authorities. Prima facie, we are not agreeing with the CIT(A)‘s decision in relying on the order of the Settlement Commission, as merely on the basis of SCN issued by the Commsisioner, of Central Excise, additions made by the AO cannot be sustained. There is requirement of going into factual calculations. Further, proceedings under Central Excise laws do not have a direct bearing on the proceedings under the Income-tax Act, inasmuch as the proceedings under the Excise laws determine the correct duty leviable to goods of the traded, whereas the objective of the proceedings under the Income-tax Act is to arrive at the correct income of the assessee. Therefore, matter restored to the file of the AO, for fresh examination Estimation of G.P. without rejection of books of accounts - alleged low G.P. - AY 05-06 - Held that:- It is not permissible to resort to estimation of the income of the assessee in terms of S.145(3), without rejecting the books of account maintained, a decision that follows the discovery of incompleteness, inaccuracy, etc. in the said books. Further, AO has not pointed out any defects in the books. Also, material seized at the time of search in the case of the assessee, has no bearing or relevance to the determination of the income of the assessee for the year under appeal. There is no scope for estimated additions in matters of search assessment s made u/s 153A of the Act. Addition made is deleted - Decided in favor of assessee.
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2012 (8) TMI 592
Assessment framed u/s 153A - search or requisition - addition u/s 68 of long term capital gain on sale of shares on ground of them being sham transactions - Held that:- After perusing the orders of Lucknow bench in the cases of Members of Arora group, we have held that order of the FAA in deleting the addition made u/s. 68 needs no interference. Since orders passed by the AO and FAA for the AYs under consideration are same as in the case of Smt. Pooja Arora and Sh. Praveen Kumar (Individual). Therefore, following the said orders we uphold the order of the FAA. Same is held in respect of addition made on ground of low withdrawals for house-hold expenses and gift received by Assessee HUF since additions made on aforesaid ground has been restricted or deleted by Lucknow bench while assessment of group - Decided against Revenue
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2012 (8) TMI 591
Dis-allowance u/s 40(a)(ia) - non-deduction of TDS from wheeling and transmission charges - applicability of Section 194J or 194C - Held that:- Applicability of Section 194J and also Section 194C was examined in the case of Jaipur Vidyut Vitaran Nigam Ltd (2009 (4) TMI 489 - ITAT JAIPUR-A) wherein it was held that such payments by the assessee are not liable for deduction of tax either u/s 194J or 194C. It is clear that all the parties involved with generation, transmission and distribution of electricity are to comply with the direction of State Load Dispatch Centre and the Regulatory Commission for achieving the economy and efficiency in the operation of power system and therefore question of any person rendering service to another does not arise. Since there are no major difference between the terms of the agreement and facts considered in that case and the terms of contract in the present case and there being no contrary decision brought on record, contentions of the department that these charges should be held liable for deduction of tax under either of the sections 194C/194J are rejected - Decided in favor of assessee Depreciation - reduction - receipt of contribution/grant subsidies towards cost of capital asset - Revenue contended that contribution should be reduced from the cost of the assets for the purpose of computing allowable depreciation in accordance with the provisions of Explanation 10 to sec. 43(1) - Held that:- Applying the provisions of Explanation 10 to Section 43(1), we decline to interfere in the dis-allowance sustained by the CIT(A) - Decided against assessee. Alleged Understatement of revenue - income offered on estimated basis pertaining to the remaining days of March for which the bills were issued in April - Held that:- CIT(A) rightly observed that there was no case that the revenue pertaining to the electricity supplied in March 2007, was not accounted for by the appellant in the year under consideration or in subsequent year. In absence of the issue of bills, the appellant offered the revenue on estimate basis in accounts for the electricity supplied in March 2007. Also, this practice was being followed by the appellant regularly and prior period income / expenses were being accounted for regularly. Such estimation was based on scientific basis i.e. based on actual bill/ consumption of power by the consumer in the past. Appellant has also explained that as per binding nature of accounting policies and principals under ESSAR 1985, it was mandatory to recognize revenue only when the right to collect the revenue arose. Thus, the estimation of revenue was not arbitrary - Decided in favor of assessee assessee remained liable to refund the security deposit of Rs.50.60 lakhs to its customers and hence the AO was not justified in considering the unpaid security deposit of Rs.50.60 lakhs the
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2012 (8) TMI 590
Transfer pricing - adjustment to international transaction in the nature of marketing support services, consultancy services and low end services to group companies - assessee contesting adjustment on various grounds - assessee contended exclusion of companies who are earning extraordinary profits - objection to arbitrary rejection of comparable - objection to inclusion of certain companies viz CMC Ltd. for having 58.82% related party transactions, ICC International Agriculture Ltd. & TSR Darashaw for having significantly higher operating margin than the average margin - Held that:- It is observed that specific issues raised by the assessee before DRP have not been addressed and decided by way of a speaking order. It can be seen from the list of comparables selected by TPO that none of the other parties except ICC, TSR and CMC Ltd. have margin of more than 26.67%. If out of 13 comparables except three comparables do not have margin of the magnitude which ICC & TSR have then there is a merit in the contention of the assessee that these comparables should not be taken as comparable on account of their having super normal profits. Nothing contrary to this has been demonstrated by Revenue Further, contention of the assessee that the loss making companies which have been excluded being not persistent loss making companies should be excluded is also required to be examined in detail. Hence, matter should be restored back to the file of DRP with a direction to pass a speaking order. It is also held that appropriate relief should be given to assessee for safe harbour of 5% as per laws. Dis-allowance of marketing expenses incurred in foreign currency - business expediency - Held that:- It is observed that assessee has furnished chart to show that all these expenses have been recovered as cost has also been able to show that most part of the cost is incurred on the media covering Indian territory. Since DRP has passed non-speaking order hence matter restored back to the file of DRP with a direction to bring all these facts on record and re-decide this issue. Dis-allowance of travelling expenses incurred in respect of travel to countries like USA, UK, Hong Kong , Sri Lanka etc, except Singapore where AE of the assessee is situated - Held that:- When complete details are filed, dis-allowances cannot be made on adhoc basis as it has to be brought out that a particular expenditure was not incurred for the purpose of business of the assessee. Matter restored back - Decided in favor of assessee for statistical purposes
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2012 (8) TMI 589
Denial of deduction u/s 80-IA - Held that:- As it is only during the assessment year under consideration, i.e. 2007-08 that the assessee company exercised the option of claiming deduction under section 80-IA and, therefore, losses suffered in the earlier years cannot be considered by wrongly interpreting section 80-IA(5) as application of section 80-IA(5) is canvassed to be applicable only after the option is exercised by the assessee in terms whereof losses of the period prior to the exercise of option are not liable to be set off while computing deduction under section 80-IA. As decided in Velayudhaswamy Spinning Mills P. Ltd. & Others Versus ACIT (2010 (3) TMI 860 - MADRAS HIGH COURT) holding that as per Sub-section (5) of Section 80IA, profits are to be computed as if such eligible business is the only source of income of the assessee. When the assessee exercises the option, only the losses of the years beginning from the initial A.Y. are to be brought forward and not the losses of the earlier years which have been already set off against the income of the assessee - there is no question of setting off notionally carried forward loss against the profits of the units and the assessee is entitled to claim deduction under section 80-IA on the current assessment year on the current year profit - in favour of the assessee
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2012 (8) TMI 588
Rejecting the claim of agricultural income - Held that:- Exactly for this reason the ITAT earlier has set aside the assessment specifically directing the AO to examine the MRO and the person responsible for maintaining the Adangal register and thereafter decide the issue after giving an opportunity of cross examination to the assessee but the ITAT’s direction has not been complied - AO ignored the assessee's submission of certified true copy of the revenue records (pahani) which clearly proves ownership of land in the name of assessee - also the copy of sale deed reveals that the assessee had purchased the land with standing crop and mandava evidencing that the assessee was having some income from agriculture - restore the assessment back to the file of the AO to examine the MRO or the person maintaining Adangal register - in favour of assessee for statistical purpose.
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2012 (8) TMI 587
Best judgement assessment - rejection of books of account - low profits - assessee being Joint Venture executing major portion of work awarded to it by NHAI through sub-contractor - deduction of 10 to 20% from the gross value of work and paying the remaining amount to the sub-contractor at the stage of awarding work to the sub-contractors - Held that:- It is evident that joint venture is making profit without executing any work. Therefore, considering such modus operendi, profit disclosed at 4.68% is abnormally low compared to the actual profit derived from such type of work. It is also a fact found on record that the assessee’s final accounts were qualified by a report of an Auditor which raises a doubt regarding correctness of the accounts. Hence, AO was justified in rejecting the books of account. Estimation of profit at 10% of the gross receipts without allowing any further deduction towards depreciation and interest is directed. Status of the joint venture held as an AOP charging tax at the maximum marginal rate - Held that:- Assessee has failed to produce any evidence to show the existence of partnership between the members of the joint venture. Therefore, treating the joint venture as AOP cannot be faulted. However, it is seen from the Article25(4) of DTAA between India and Korea that the foreign company should not be subjected to tax which is more burdensome than tax imposed on similar entities of the concerned State. Thus, sole issue of determining whether such nature of income is within the purview of DTAA between India and Korea is restored to the file of CIT(A)
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2012 (8) TMI 585
50% disallowance of depreciation - Held that:- The facts are not clear in the period for which the machinery had been used by the assessee. The discussion in assessment order and date of acquisition of machines is non-speaking - remitted back to A.O. to work out the period eligible for depreciation. Disallowance made under section.40 (a) (ia) - Held that:- Considering assessee' s submission that question of TDS arise only to that payment made against ‘service’ of labour and he is making payments regarding ‘conversion charges’ as well as payments against supply of ‘material’ and ‘labour’ the issue of deciding the nature of payments is remitted back to AO for afresh consideration & disallowance to the amount ‘payable’ by the end of previous year need to be warranted & there cannot be a disallowance in the case of amounts already paid by assessee before 31st of March of previous year - in favour of assessee for statistical purposes. Disallowance of foreign exchange fluctuation loss, partial disallowance of foreign travel and sales promotion expenses, disallowance of partners’ remuneration - Held that:- All the grounds involving question of facts are not maintainable as they were not raised by assessee before CIT(A)as the grounds not raised and adjudicated before CIT (A) are not maintainable before Tribunal.
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2012 (8) TMI 584
Revising the estimated cost of construction by CIT(A) - cost of construction assessed by Departmental Valuation Officer (DVO) - revenue contested against CIT(A) in allowing further relief over and above the ‘in toto’ relief allowed - Held that:- CIT(A)has not made any fundamental interference in the valuation made by the DVO and accepted by the assessing authority as modifications granted is in valuation of swimming pool were not on any technical ground, but on an accounting ground as the assessee had constructed the swimming pool and other structures in the subsequent year, and this modification worked out to Rs. 9,89,425/-. Modification in granting 3% reduction towards direct purchase of materials as direct and bulk purchase of materials normally yield a reasonable discount in the procurement price. Therefore, relief of 3% granted by CIT(A) is justifiable. Modification granted by reduction of 15% from CPWD rates which have been adopted by the DVO is not unreasonable as comparing it to CPWD rates, State PWD rates are less. On the basis of this difference, reliefs have been granted to the assessees in a number of cases both by the Tribunal as well as by the High Courts. Therefore the reduction of 15% is only just and proper - contention of the assessee that CIT(A) has not considered the entire amount spent by the assessee on the construction of the swimming pool is not acceptable as the CIT(A) has considered the same in his rectification proceedings - against revenue & assessee.
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2012 (8) TMI 583
Assuming jurisdiction u/s. 263 by CIT(A) - deduction u/s.10A allowed by AO which includes deduction on unrealised export proceeds - Held that:- As decided in Morgan Stanley Advantage Services (P.) Ltd. Versus Income-tax Officer, 15(3)(2), Mumbai [2009 (3) TMI 640 - ITAT MUMBAI ]the case in favour of the assessee in which the assessee had applied for extension of time for remittance of foreign exchange but no formal approval from RBI was received for the purpose of section 10A - As no dispute to the fact that the assessee had applied to the RBI vide letter dated 11-09- 2006 requesting for extension of time for realisation of export proceeds and after receiving a reply from the RBI directing the assessee to approach the authorised dealer in this regard the assessee vide letter dated 06-11-2006 applied to ICICI Bank Ltd. for extension of time for realisation of export proceeds - Since in the instant case the AO has allowed deduction u/s.10A on the basis of the report of the Auditors as well as the various documents furnished before him, therefore the same is a possible view and cannot be termed as erroneous for invoking jurisdiction u/s. 263 by CIT(A)- in favour of assessee.
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2012 (8) TMI 582
Addition of income from house property - AO stated that Annual Value as offered by the assessee was understated - CIT (A) deleted the addition - Held that:- As decided in DCIT Versus Reclamation Realty India (P) Ltd. [2010 (11) TMI 477 - ITAT, MUMBAI] the rateable value under the Municipal law has to be adopted as annual value u/s. 23(a) & that the A.O. has grossly erred by calculating the annual let out value by estimating the market value of the property at ₹ 1,20,00,000/- ignoring the fact that the Municipal Rateable Value given by the Government Authority i.e Mumbai Municipal Corporation at ₹ 1,58,372/- - against revenue. Treating the monies advanced to assessee as deemed dividends - Held that:- Deemed dividend can be assessed only in the hands of a person who is a shareholder of the lender company and not in the hands of a person other than shareholder & the expression ‘shareholder’ referred to in section 2(22)(e) refers to both a registered shareholder and beneficial shareholder - It is not in dispute that the assessee company is not holding any share in the company who provided advances i.e. neither the assessee company is a registered share holder nor beneficial share holder in the said company the provisions of section 2(22)(e) are not applicable - inclined to uphold the findings of the ld. CIT (A) in deleting the addition made by the A.O - against revenue.
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2012 (8) TMI 581
Disallowance of dividend income u/s 14A r.w.r. 8D - CIT(A) curtailed the disallowance - Held that:- As decided in GODREJ AND BOYCE MFG. CO. LTD. Versus DCIT AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] the provisions of rule 8D would apply with effect from assessment year 2008-09 and prior to assessment year 2008-09, when rule 8D was not applicable AO must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record - thus the matter is remitted back to the file of the AO with a direction decide the issue afresh in the light of the said judgment after providing reasonable opportunity of being heard to the assessee - in favour of assessee.
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2012 (8) TMI 580
Disallowance on account of provision made for leave salary – Held that:- Provision made by the appellant-company for meeting the liability incurred by it under the leave encashment scheme proportionate with the entitlement earned by the employees of the company, inclusive of the officers and the staff, subject to the ceiling on accumulation as applicable on the relevant date, is entitled to deduction out of the gross receipts for the accounting year during which the provision is made for the liability – In favor of assessee Decision of apex court in Bharat Earth Movers's case [2000 (8) TMI 4 - SUPREME COURT] followed.
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2012 (8) TMI 579
Disallowance was also made on account of claim of loss in the paddy account – unexplained sundry creditors - Held that:- Certain statements of certain farmers were recorded by the Inspector of Income-tax, but it were recorded behind the back of the assessee - appellant had submitted bills and necessary documents to the Assessing Officer - transactions were made through the mandi system, an independent market mechanism to ensure that all transactions are conducted at fair market prices - in a situation where the appellant had discharged its responsibility by furnishing necessary details - onus was on the Assessing Officer to bring on record the evidence to show that motive behind the two transactions was evasion of income-tax – in the absence of such evidence – disallowance is deleted – in favor of assessee
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2012 (8) TMI 578
Capital gains - Denial of Deduction u/s. 54EC of the Act – investment in REC bonds, out of the amount received - wife of the assessee, was the main-holder of the certificate and the assessee alongwith his son are only the nominees of the first beneficial owner – Held that:- Requirement for claiming deduction u/s. 54EC of the Act was fulfilled in the instant case by virtue of the fact that the funds invested emanated from the sum received out of the transfer of long term capital asset and that it was invested within a specified time - payment of the maturity proceeds to any one of the bond holders is not a material factor for deciding the ownership of the bonds - Assessing Officer was directed to allow claim of deduction u/s. 54EC of the Act. Denial of Deduction under section 54F of the Act – on the ground that assessee called for the municipal approved plan and the assessee could not furnish the same - claimed to have purchased two flats – Held that:- Assessing Officer directed to give the assessee one more opportunity to prove that the sale deeds with reference to which assessee claims to have purchased the property was the same which was occupied by the assessee and it is legally permitted to be constructed by the municipal authorities - assessee is at liberty to show that he is legally entitled to claim deduction under section 54F - claim of deduction under section 54F of the Act is set aside to the file of the Assessing Officer.
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2012 (8) TMI 577
Penalty - Deduction of tax at source - Payment to non-residents - Penalty u/s 271C of the IT Act - lower deduction of tax - assessee contended that it received 'Nil deduction certificate' issued by DDIT (International Taxation), being the Assessing Officer of the Contractor Company - assessee company obtained confirmation letter from the DDIT (International Taxation), confirming the above certificate – Held that:- Assessee acted bona fidely and not deducted tax from payment made to the Contractor Company under the specific contract - section 273B of the Act does not make a levy of penalty under section 271C of the Act mandatory - assessee would not be liable to penalty if he is able to prove that there was a reasonable cause for failing to deduct the tax - certificate earlier issued u/s 194C (4) of the IT Act and clarification thereof issued by DDIT (International Taxation), Chennai, was of the bona fide belief that it was required to deduct TDS u/s 194C of the IT Act and not u/s 195 of the IT Act which is applicable in case of non-resident – penalty set aside - appeal of the assessee is allowed.
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2012 (8) TMI 576
TDS u/s 194H - payment of commission - Diversion by overriding title - tri-party agreement - held that:- The relationship between the assessee and franchisee/commission agent is of principal and agent. - Where an amount of fees received by an agent, he receives it for and on behalf of his principal. The terminology used by the assessee that it will be a charge for payment of commission to the franchisee/commission, in our view, is against the principles of law of agency and hence the same is immaterial. The payment of commission amounts to discharge an obligation after such income reaches to the assessee. There is no quarrel with the principles enunciated in the aforesaid decisions but keeping in view the law laid down by the Hon'ble Apex Court in the case of Sitaldas Tirathdas (1960 (11) TMI 17 - SUPREME COURT) that the case is one of application of a portion of the income to discharge an obligation, we are of the view that the assessee's case falls outside the rule laid down in Raja Bejoy Singh Dudhuria's case. The payment of commission though mentioned in receipt issued by the franchisee/commission agent does not amount to discharge an obligation by an overriding title rather the said payment amounts to discharge an obligation after such income reaches to the assessee. Since the assessee is liable to deduct TDS on the payment of commission under the provisions of section 194H of the Act and has failed to deduct the same, therefore, the Assessing Officer was justified in disallowing the payment of commission of Rs. 56,30,173 under the provisions of section 40(a)( ia) of the Act
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2012 (8) TMI 575
Disallowance on account of employer’s contribution to ESI – alleged that assessee company had not paid employers’ contribution before the due date prescribed – Held that:- Assessee paid the amount in question in the financial year relevant to the assessment year under appeal - when the liability is crystallized and the amount is paid, deduction shall have to be allowed in favour of the assessee as per the provisions of law and further the claim of the assessee should be allowed even with the help of section 43B of the Income-tax Act – disallowance deleted - appeal of the assessee is allowed Disallowance on account of bad debts written off – Held that:- Amount in question has been written off as bad debt in the profit and loss account of the assessee as irrecoverable - it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable - It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee - assessee has satisfied the requirements of section 36(1)(vii ) of the Income-tax Act – addition deleted – In favor of assessee Disallowance of expenses claimed as export commission – Held that:- Assessee explained the reasons for inflating the commission which was due to mainly inflating the prices in the invoices - authorities below merely compared the commission with the preceding assessment year and rejected the claim of the assessee – CIT has not given any finding on the matter in controversy in the light of the submissions of the parties and documentary evidences available on record -commission cannot be disallowed by comparing with the earlier years due to the explanation of the assessee supported by documents – matter remanded to CIT - appeal of the assessee is allowed for statistical purposes
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Customs
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2012 (8) TMI 604
Levy of CVD on Gum Arabic waste imported – Held that:- Gum arabic is a natural gum and not liable for CVD as it is extracted from the tree itself by making hole on the tree and some part of the gum which drops on the soil, that becomes gum arabic waste/rejects and this is the only product they have imported which does not have purity as natural gum arabic is having purity. Therefore, the gum arabic waste/reject is only a natural gum and as per the Board s clarification dated 28/06/2007 CVD is not leviable on gum arabic in raw form. Therefore, they are not liable to pay CVD on the imported goods – appeal allowed
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2012 (8) TMI 574
Import of old and used photocopiers - Once the goods have been released on payment of redemption fine and nothing is left at this stage to consider about the claim of the appellant as to description of the goods disclosed in the bills of entry was proper, there is no scope to discard the order of the authority below except consideration on the quantum of penalty.
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2012 (8) TMI 573
Restoration of CHA licence - Fraudulent export of prohibited narcotics drugs - violation of the provisions of Regulation 13 of CHALR, 1984 read together with Regulations 13(b), 13(e) and 19(8) of CHALR, 2004 - The appellant has suffered for a period of 6 years and is ready to give any undertaking to work diligently in the future years. - Difference of opinion - matter referred to larger bench.
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Corporate Laws
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2012 (8) TMI 603
How to calculate / determine 'Net Worth' of the bidder for the purpose of tender - Contingent Liability on Revenue Account - writ petition on Contingent Liability to a Revenue Account would only be such sums as would be recorded in the balance-sheet - Held that: - If a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. Except contingent liability on account of “Capital Commitments” disclosed by the bidders in their Annual Reports, all other items of contingent liability reported by the bidders in their Annual Reports as per Accounting Standard (AS-29) issued by ICAI were considered for the purpose of net worth sufficiency - Empowered Committee of Secretaries was apprised that there has been no definition in any ICAI standards that contingent liability on revenue account means on account of any amount of demand created by revenue authority such as Income Tax, Sales Tax, etc.- as on calculation of net worth has been supported by audit firm who have concluded that the evaluation of net worth is in accordance with the NIO. Any deviation from the said provisions would result in denial of level playing field to all bidders and could result in litigation, thus it is apparent that the minutes of Notice Inviting Tender meetings have recorded a stand which is against the one projected by the writ petitioner. As these are mere opinions and the final decision has to be taken by the Cabinet Committee on Economic Affairs - Since the Cabinet Committee on Economic Affairs is yet to take a decision we hold the writ petition to be premature.
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Service Tax
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2012 (8) TMI 607
Export of services - Demand of Service Tax on Business Auxiliary Services - denial of benefit of exemption Notification No.13/2003 dated 20/06/2003 and under the Export of Service Rules,2005 - assessee contested against invoking extended period of limitation - period in question is from 01/07/2003 to 19/11/2003 and from 18/03/2005 to 05/12/2007 - Held that:- Notification No.6/99-ST dated 28/02/1999 exempted services provided to any person in respect of which payment is received in Indian in convertible foreign exchange was rescinded and subsequently re-issued vide Notification No. 21/2003-ST dated 20/11/2003 which remained in force till 14/03/2005. During the intervening period i.e. from 01/03/2003 to 19/11/2003, the Board clarified vide Circular dated 25/04/2003 that " Service tax is a destination based consumption tax and it is not applicable on export of services. Export of services would continue to remain tax free even after withdrawal of Notification No.6/99, dated 09/04/1999." In the light of this clarification issued by the Board, the assessee has a prima facie, case for waiver of pre-deposit of dues adjudged for the period 01/07/2003 to 19/11/2003. From the period from 15/03/2005 onwards as per Export of Service Rules, 2005 that a taxable service shall be treated as ‘export of service' only if such service so ordered is delivered outside India and used in business outside India & in the instant case, the service of promotion of marketing of goods manufactured by the supplier has taken place in India and the said service is for the purpose promoting the business of the foreign manufacturer in India, thus the activity does not come within the scope of export of service during the period from 15/03/2005 to 18/04/2006. From the period from 19/04/2006 to 28/03/2007 though the condition of receipt of payment in convertible foreign exchange is satisfied, the conditions relating to delivery of service outside India and the use of the service outside India are not satisfied because the promotional activity undertaken by the service provider is in India and it can be used only in promoting the business in India. Therefore, the use of service is not outside India. The same position will prevail during the period up to 30/05/2007. Even for the period from 01/06/2007 onwards, the condition relating to service be provided from India and used outside India is not satisfied. Therefore, the demand of service tax for the period 18/03/2005 to 05/12/2007 appears to be prima facie correct in law - as activities are rendered in India and their effective use and enjoyment are in India and therefore, the benefit of the services rendered also accrue in India and hence leviable to service tax. The appellant failed to obtain service tax registration under business auxiliary service, failed to pay service tax and also failed to file statutory returns for the said services. They did not disclose to the department about the existence of the agreement with VIASYS and receipt of consideration towards the service rendered. These acts of the appellant clearly constitute suppression of facts on their part, thereby attracting the invocation of extended period of time for demand of service tax - not made out a case for complete waiver of the pre-deposit of the dues adjudged - direct the appellant to make a pre-deposit of Rs. 25 lakhs - partly in favour of assessee.
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2012 (8) TMI 606
Demand of service tax - services charges for technical know-how and technical assistance – Held that:- Question falls squarely within the exception carved out in Section 35G, ‘an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment’, and the High Court has no jurisdiction to adjudicate the said issue - appeal is rejected as not maintainable
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2012 (8) TMI 605
Whether the activities carried on by the assessee as Del Credere agents falls within the category of clearing and forwarding agent – Held that:- Question falls squarely within the exception carved out in Section 35G, ‘an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment’, and the High Court has no jurisdiction to adjudicate the said issue - appeal is rejected as not maintainable
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2012 (8) TMI 597
Demand of service tax - applicant is an STP unit engaged in the development of customized software which they are exporting - new set of agreements between the applicant and their subsidiary – Held that:- Applicant is paying Service tax under the category IT services with effect from 16-5-2008 and in view of exporting the product/services, they are receiving refund in terms of Rule 5 of the CENVAT credit rules - period prior to 18-4-2006 no Service tax liability will be attracted in respect of services received by the applicant - it is a case of revenue neutrality – waiver of pre-deposit allowed
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2012 (8) TMI 568
Waiver of pre-deposit - demand of Service Tax was confirmed on account of money transfer services - contention of assessee is that it is covered under export of services - Held that:- delivery in the instant case, is complete only when it is received by the recipient in India. Therefore, the service provided by the applicant would not be covered under export of services – applicant is directed to make a pre-deposit of 25% of demand
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2012 (8) TMI 567
Penalty - Erection, Commissioning or Installation service – non-payment of service tax – Held that:- Service liability is not shown separately - invoice is simply VAT/S.T. invoice - Appellants paid the Service Tax promptly as soon as it was pointed out before issue of show cause notice and taking registration also - They have not even questioned whether Sales Tax and Service Tax were leviable on the same transaction - lenient view as contemplated under Section 80 of Finance Act, 1994 - penalties under various Sections of Finance Act, 1994 imposed on the appellants are set aside and interest on service tax & service tax demand are upheld as not contested.
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2012 (8) TMI 565
Extended period of limitation - Demand of duty – non-incaution of value of the sale of SIM card in gross taxable value – Held that:- Since the earlier decisions of the Tribunal were in favour of the assessee, it has to be held that there was bona fide doubt about the non inclusion of the cost of SIM card in the value of services. If that be so, no mala fide can be attributable to the appellant so as to invoke the extended period of limitation - demand raised beyond the period of limitation is barred by limitation - no penalty is imposable upon the appellants
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2012 (8) TMI 564
Waiver of pre-deposit – denial of Cenvat credit of Service tax paid on stock brokers services - appellant is a promoter of Airtel JT Mobiles. They had held shares for a long time and finally they sold them and got out of the tag of promoters – Held that:- whether disinvest is business activity or not has to be considered in detail by examining the activities of the appellant over a period of time, its memorandum and articles of association and other relevant facts before coming to a conclusion – matter remanded - pre-deposit is to be waived
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Central Excise
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2012 (8) TMI 602
Non eligibility of cenvat credit - rent a cab services - Held that:- As decided in Stanzen Toyotetsu India (P) Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT] Rent-a-Cab service is provided by the assessee to these workers to reach the factory premises in time which has a direct bearing on the manufacturing activity & by no stretch of imagination can it be construed as a welfare measure. It is a basic necessity so as to ensure that the work force comes on time at the work place, the employers have taken this measure which has a direct bearing on the manufacturing activity. As undisputed fact of the case that the services of rent a cab services were received by the respondent for transportation of their employees from their residence to the factory premises and back to the residence and the service provider is registered and respondent is discharging the service tax liability billed on on such services rendered - no ground to deny the claim - in favour of assessee.
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2012 (8) TMI 601
Clandestine clearance of goods - non inclusion of the value of engine/motor in the value of Concrete Mixer Machine - Held that:- As the appellant neither rebutted the allegation nor contended anything in support of their defence the lower authority has rightly held that 112 nos. of CMMs have been clandestinely removed without payment of duty and appropriate duty - remand the matter to the lower adjudicating authority with a direction to redetermine the duty liability on the 112 CMMs.
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2012 (8) TMI 600
Waiver of pre-deposit - software licence key - contention of the applicant is that prior to 1.3.2006 the software was exempted from payment of central excise duty. It is only with effect from 1.3.2006 the software is liable to central excise duty – Held that:- Board vide circular dated 18.3.2011 in respect of the Customs Tariff has clarified that such keys which only permit the right to use the software are classifiable under Chapter Heading 49 of the Customs Tariff - matter is remanded to the adjudicating authority for de novo adjudication
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2012 (8) TMI 599
Manufacture of sugar - by-product bio-compost came into existence which is being cleared by the respondents without payment of duty – Held that:- Demand of amount of 8% in respect of Bio-compost is set aside - pre-deposit of whole of the amount of penalty is waived.
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2012 (8) TMI 598
Waiver of pre-deposit - Cenvat Credit - applicant is using MS plates, angles and channels to manufacture power cable distribution boards which are used in Poly Machines which are used in the manufacture of paper/paper boards – Held that:- Cable distribution boards are accessories for poly machines and that the MS channels and angles used are accessories to the said cable boards - eligible for CENVAT credit
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2012 (8) TMI 596
Input services - Cenvat Credit Scheme was amended by new Cenvat Credit Rules, 2004, effective from 10-9-2004 by which they were allowed to take Cenvat credit of Service tax paid on input services – Held that:-Asse ssee had taken insurance of their plant and machinery and paid service tax on such insurance against bills dated prior to 10-9-2004 - credit is taken contrary to provisions in Rule 9(1)(f) of Cenvat Credit Rules, 2004 - assessee has taken proportionate credit by adopting their own interpretation without intimation to department would justify to consider this as a case of mis-representation and suppression to invoke extended period for demanding the excess credit availed and utilized
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2012 (8) TMI 572
Failure to furnish the re-warehousing certificate within stipulated period of 90 days in terms of Rule 173 of Central Excise Rules, 1944 - 100% EOU - goods cleared without payment of duty - demand of duty and penalty imposed - assessee contended furnishing copy of letter issued by the consignor M/s.FACOR in lieu of certificate - Held that:- Commissioner(Appeals) has rightly observed that AR-3A duly countersigned by the officer in charge of the warehouse at destination only being the authentic document as prescribed in the statute, the certificate of the consignee produced by the appellant will be of no avail. Also, appellant could not produce anything contrary or new to the above. balance of duty confirmed, however, taking into consideration all the facts and circumstances of the case, penalty imposed under Rule 173Q is set aside.
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2012 (8) TMI 571
SSI Exemption - Contravention of provisions of Rule 8 of the Central Excise Rules, 2002 read with Notification No.08/03-CE dated 01.03.2003 - Held that:- The appellant did not opt for availing the benefit of Notification No. 8/2003-CE dated 01.3.2003 at the beginning of the financial year thus option for the availment is not in accordance with the Central Excise Rules - The duty and the Education Cess which they did not pay for not determining the value of Rs. 25,44,255/- in computation with the aggregate value for home consumption, is computable with the aggregate clearance value in terms of the Notification No.08/2003-CE dated 01.3.2003. Penalty under Rule 27 is not sustainable as it was not invoked in the impugned SCN.
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2012 (8) TMI 570
Disallownace of CENVAT credit - job-work charges for grooving - Held that:- As it is not disputed that the service provider has paid the service tax and once the service tax has been paid and service has been used in or in relation to the manufacture of the final products of the appellant, the appellant is rightly entitled to avail CENVAT credit - in favour of assessee. Manpower supply services - Held that:- As affidavit along with a copy of the muster roll in support of assessee's claim that they have used the labour in or in relation to the manufacture of the final products were not shown or produced before the lower authorities and, therefore, it will be appropriate to remand this matter back to the original adjudicating authority to consider the claim - in favour of assessee by way of remand.
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2012 (8) TMI 569
Alleged suppression of sales and wrong availment of benefit of Notification 64/95 dated 16.3.1995 - invokation of extended period of limitation - assessee engaged in the manufacture of IC engines, cleared goods manufactured to M/s. Goa Shipyard Ltd. by availing the benefit of Notification 64/95 - Held that:- It is found that respondents filed classification declaration before clearance of the goods. Also, necessary monthly returns alongwith invoices showing clearance of goods to M/s. Goa Shipyards Ltd. by claiming the benefit of Notification. In addition to this, also produced certificate from the competent authority that the goods in question are for use on board of naval ship. In these circumstances, the allegation of suppression with intent to evade duty is not sustainable. Demand beyond the normal period is held to be time barred - Decided against Revenue.
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2012 (8) TMI 566
CENVAT credit – Held that:- Appellant has not registered with the department as input service tax credit distributor, he cannot distribute service tax credit in respect of services availed elsewhere than in the unit where manufacturing activity is taking place and duty liability is discharged - appellant directed to make a pre-deposit
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Wealth tax
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2012 (8) TMI 595
Valuation - exempted asset under wealth tax - Assessing Officer noticed that the assessee has not occupied the property in question for residential purpose for the period of 12 months - Assessing Officer valued the property as per 2nd proviso to Rule 3 of Schedule III of WT Rules – Held that:- What is required is that the house should have been exclusively used by the assessee for residential purpose and should not have been let out for rent or used for any commercial or non-residential purpose - property in question is residential house which has not been let out or used for the purpose other than residential; therefore, even though the assessee did not stay in the house so long, this house is exclusively for residential purpose, the condition as enumerated in the third proviso to Rule 3 are satisfied - conditions as enumerated in third proviso to rule 3 of Schedule III were satisfied by assessee
