TMI Tax Updates - e-Newsletter
August 22, 2012
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Wealth tax
Highlights / Catch Notes
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Income Tax:
Deduction u/s 54EC - long term capital gain on sale of factory building on 22.03.2006 - investment in REC bonds on 31.01.07 - period of limitation - HC
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Income Tax:
Promoting the vegetarianism among the people so that they can change their living habits and take the necessary steps for the betterment of humanity, which is undoubtedly a charitable object - AT
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Income Tax:
Whether or not the payment for transmission charges can be termed as "rent" for the purposes of section 194-I - AT
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Income Tax:
Non serving of notices of hearing to assessee - appeals of the Revenue could not be heard on merit in absence of proper service of notice upon assessee - AT
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Wealth-tax:
Whether property leased out is not assessable to wealth-tax - certainly the assessee is entitled to the exemption, because the same is used in leasing business - HC
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Service Tax:
Business Auxiliary Services - Job work - appellants working under job work, under the provisions of Rule 4(5)(A) - Revenue contending the same to be under BAS - AT
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Service Tax:
Just because the electricity has not been directly supplied, but has been supplied through M.P. Electricity grid, it cannot be said that the wind mills are not captive power plant - services, in question, received by the appellants have to be treated as input services eligible for Cenvat credit - AT
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Central Excise:
Penalty u/s 11AC on account of wrong availment of 100% Cenvat Credit on capital goods during the period July, 2008 - Penalty set aside. - AT
Articles
Notifications
Case Laws:
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Income Tax
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2012 (8) TMI 528
Validity of reopening of assessment - AY 81-82, 82-83 and 83-84 - income from house property - arrears of compensation received under Requisition Act not offered to tax by assessee - assessee contested reopening on ground that same was within knowledge of AO since receipt of such arrears were mentioned in its Notes of Account for AY 83-84 and that it would be accounted for in AY 84-85 - Held that:- Once the absence of the relevant material before the AO is established, the burden is on the assessee to establish that the AO in some manner and for some reason had knowledge of such material and considered it while making the assessment orders. An AO is not concerned with only one assessee or three assessment orders. The exigencies and the burden of the work may well result in his inability to correlate the material between various assessment proceedings even though made only within a few days of each other. The burden would rest heavily upon the assessee to establish otherwise. There is nothing on record that persuades us to come to a conclusion that the AO while making the assessment orders for the A.Ys. 1981-1982 and 1982-1983 recollected Note 16 to its Accounts for year ending 31.12.1982 included in the return of income for the A.Y. 1983-1984. Thus, reassessment proceedings for the AYs 1981-1982 and 1982-1983 are upheld. AY 83-84 - Held that:- It is not even suggested that the AO was aware of the provisions of the Requisition Act, 1952 when he made the original assessment orders. In any event, Note 16 of the Accounts did not state that the payment was made pursuant to the provisions of the Requisition Act, 1952. It merely referred to the fact of the enhancement of compensation. This was therefore, further material which the AO was informed about only subsequently. The possession of such information subsequently justified the AO to have reason to believe that the income chargeable to tax had escaped assessment. Reopening of AY 83-84 upheld - Decided against assessee
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2012 (8) TMI 527
Deduction u/s 54EC - long term capital gain on sale of factory building on 22.03.2006 - investment in REC bonds on 31.01.07 - denial on ground that investment was not made within specified time of six months expiring on 21.09.06 which was however extended upto 31.12.06 by CBDT circular - assessee contended non-availability of bonds during the period - Held that:- Lex not cogit impossibila (law does not compel a man to do that which he cannot possibly perform). Contention of the revenue that assessee should have purchased the bonds before 3/8/2006 when they were available is not sustainable as the time given by the statue is six months from the date of sale and, therefore, the respondent was entitled in law to wait till 21/9/2006 to invest in the bonds. In present case, bonds were not available from 4/8/2006 to 22/1/2007. Last date for investment had been 21/9/2006 which was extended upto 31/12/2006. The respondents admittedly invested in the bonds on 31/1/2007 i.e. within nine days of their being available once again from 22/1/2007. Considering that the bonds were not available for such a long period, an extension of merely nine days is extremely reasonable. Further, contention of Revenue that assessee should have invested in bonds of National Highway Authority is also not sustainable since choice of investing in one of the two organizations is with the respondent and the appellant revenue contrary to the statue cannot force the respondent to invest only in the bonds of one in preference to the other. Deduction allowed - Decided in favor of assessee Legal and professional charges - dis-allowance - non furnishing of details of expenses - Held that:- It is found that respondent has not submitted the details of the legal and professional expenses allegedly incurred by it viz, reasons for consultation, the dates of consultation and names of the Consultants. Hence, dis-allowance directed - Decided in favor of Revenue Depreciation - dis-allowance - Held that:- same is answered in favor of assessee by decision in case of CIT vs G. R. Shipping Ltd
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2012 (8) TMI 526
Validity of reopening of assessment subsequent to intimation received u/s 143(1)(a) - AY 94-95 - Held that:- Intimation u/s 143(1)(a) could not be treated as an order u/s 143(2) and there was no change of opinion in initiating proceedings u/s 147 r.w.s. 143(2). See CIT Vs Ideal Garden Complex P.Ltd (2011 (9) TMI 731 - MADRAS HIGH COURT) - Decided against assessee. Amount received under restrictive covenant - Revenue receipt vs Capital receipt - Held that:- It is observed that agreement of sale between the purchaser company and seller company, in which the assessee was the Director dated back to 1.4.93. Assessee was offered employment vide letter dated 8.10.93, to which assessee submitted acceptance vide letter dated 19.10.93 indicating the acceptance to join the services effective from 1.11.1993 and non-compete agreement was entered into on 15.10.93. Thus, non compete agreement and the employment agreement formed part of the same transactions. Going by the fact that the assessee was offered employment as early as 8.10.93, the restrictive covenant entered into on 15.10.1993 would not be called as independent agreement. Therefore, any amount received under the so called non compete agreement, would only be treated as salary for the purpose of assessment and thus revenue in nature - Decided against assessee.
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2012 (8) TMI 525
TDS on rent - demand and interest being raised u/s 201(1) and 201(1A) determining TDS remitted by the assessee on lease rent of Rs. 9 Crores p.a. as against the lease rent of Rs. 6 Crores p.a. paid by the assessee - assessee made provision for 9 crores in books of ccount for lease rentals on ground of non determination of rent at 6 crores or 9 crores in view of differences amongst the members of the land lord's family - added back entire sum of Rs. 9 crores debited to its P/L A/c for year ended 31.03.07 and offered the same to tax - lease agreement dt.1.12.2007, agreed for 6 crores p.a. - assessee reversed the provision for lease rent to the extent of Rs. 3 Crores and remitted the TDS applicable on the actual lease rent of Rs. 6 Crores with interest for delayed remittance Held that:- It is the income which determines the extent or amount of tax to be deducted at source. Income sought to be taxed by taxing statutes is always the real income. In the instant case, it is clear that the lease rent for the relevant period was fixed at Rs. 6 Crores p.a.. Assessee has only claimed Rs. 6 Crores as an expenditure and that too in the period relevant to AY 08-09 when the rent payable was agreed upon. Land lord was also entitled to receive only Rs. 6 Crores as lease rent for the period relevant to AY 2007-08. Contention that TDS ought to be made on Rs. 9 Crores and not on Rs. 6 Crores, is both absurd and untenable. Difference of Rs. 3 Crores on which Revenue is seeking TDS and also interest thereon is not anybody's expenditure or income. Further, contention that following the Mercantile System of Accounting, the lease rent falls due every month by virtue of a contractual obligation and hence the period of delay should be reckoned from the date on which the rent falls due for each of the months, does not hold good as the provision of section 194-I very clearly state that the liability to deduct TDS arises only and only when an assessee makes payment of rent or when the assessee debits rent as an expenditure in the books of accounts, whichever is earlier - Decided in favor of assessee.
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2012 (8) TMI 524
Exemption u/s 11 - charitable Trust established with the objects for providing relief to the poor, promotion of vegetarianism, distribution of Prasad, and advancement of any other objective in furtherance of ethical and philosophical principles of Krishna Consciousness - denial on ground that entire character and focus of assessee has become totally commercial and there is generation of huge profits year after year a part of which is diverted to the related concern - Held that:- Preparation of vegetarian food items and selling the same was mainly for popularising the vegetarian food habits and in this way the assessee is engaged in promoting the vegetarianism among the people so that they can change their living habits and take the necessary steps for the betterment of humanity, which is undoubtedly a charitable object of the assessee. Deduction u/s 80G - denial - Held that:- The major portion of the income received by the assessee was donated to ISKCON which is a Public Charitable Trust of worldwide recognition and reputation and any donation from one charitable trust to another charitable trust constitute application of income for the charitable purposes - Decided in favor of assessee.
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2012 (8) TMI 523
Validity of reassessment proceedings made in absence of any notice issued u/s 143(2) - notice issued u/s 142(1) to which assessee responded - subsequently no notice issued u/s 143(2) - Held that:- On the reply to the notice u/s 142(1), reiterating the original return which was found incorrect, the AO should have follow up by a notice u/s 143(2). Merely because the matter was discussed with the assessee and the signature is affixed, it does not mean the rest of the procedure of notice u/s 143(3) stood complied with. In completing the assessment u/s 148, compliance of the procedure laid down u/s 142 and 143(2) is mandatory. On the admitted fact that beyond notice u/s 142(1), there was no notice issued u/s 143(2), and in the light of the fact that the very basis of the reassessment was the failure on the part of the assessee in not disclosing the capital gains arising on the transfer of property for assessment and that admittedly the assessee had requested the officer to accept the original return as a return filed in response to Section 148, we hold that there was total failure on the part of the Revenue from complying with the procedure laid down u/s 143(2), which is mandatory. Although on merits, contention of the assesee that the capital gains would not be assessable at the hands of the firm is not acceptable, yet for the reasons that in the absence of notice u/s 143(2) reassessment could not be held to be validly made - Decided in favor of assessee
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2012 (8) TMI 522
Determination of arms' length price - assessee had purchased at a higher price from its AE than the cost at which it purchased similar items from non-AEs - assessee contested that there were minimum order quantity restrictions for purchases from non-AEs which were not there for purchases from AEs - Held that:- DRP has specifically mentioned that rate of purchase from AEs had crossed the tolerance limit only in 6 items of 35 item code material purchased by the assessee from the same AE - AEs of the assessee was giving the designs, placing orders supplying raw materials substantially and finally purchasing its products, thus if assessee had an intention to price its products and purchases so as to give undue benefits to the AEs outside India then it could have done so in other voluminous transactions it entered with the AEs - Out of Rs. 227.244 crores worth transactions with AEs, TPO found that in all cases other than 6 items coded purchases of materials nothing warranting a revision of ALP was there in such a scenario, it will be difficult to believe that assessee had indulged in a pricing methodology to benefit its AEs with regard to purchase of material falling in six item codes - to take 6 items from a pack of 35 and consider only these six items for making a revision of ALP will not give a fair result at all - TPO and AO stepped into the shoes of the assessee to decide on which of the items, it should pay more and in which items it had paid more, ignoring those items on which it had paid less - since number of items on which revision of ALP has been done is insignificant when compared to the total number of purchases and total volume of international transactions addition on account of revision in ALP was not called for and addition stand deleted - in favour of assessee. Exclusion of telecommunication and foreign currency expenses from export turnover - Held that:- As decided in Income-Tax Officer Versus Sak Soft Limited [2009 (3) TMI 243 - ITAT MADRAS-D] calculation of deduction u/s 10B calls for excluding from export turnover, freight, telecommunication charges and expenses incurred in foreign exchange - in favour of assessee.
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2012 (8) TMI 521
Addition u/s 68 on account of share application money and cash creditors - assessee requested for one more opportunity with a promise to furnish the details relating to the identity, creditworthiness and genuineness of the transactions regarding cash creditors as well as share application money - Held that:- In the interest of justice, we set aside all the grounds raised in the appeal to the file of the AO with a direction to adjudicate the same afresh - Decided in favor of assessee for statistical purposes. Valuation of Closing stock - addition - inclusion of Excise Duty in valuation - AO contended that liability to excise duty was an ascertained liability not eligible for deduction u/s 43B - Held that:- CIT(A) rightly observed that even if such excise duty as is payable on the uncleared goods is added under the provisions of section 145A and payment of excise duty in respect of such enhanced value of closing stock is not allowed as per sec. 43B, such unilateral treatment would throw out unrealistic picture of the profits during the year. No infirmity found in the order of the CIT(A) directing the AO to delete the addition - Decided against Revenue
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2012 (8) TMI 520
Reassessment order u/s 147 - the assessee has purchased a new software and it does not come under up gradation or for renewal of the existing software - Held that:- CIT (A) has simply affirmed the reassessment order without deciding the issue in its right perspective by only saying that objection of the assessee was raised before the AO only by letter dated 27.12.2010 which is not valid in law and has not considered the issue properly - CIT (A) ignored to note assessee's contention that the original assessment was completed under section 143(3) by considering the same material - remit the matter back to the CIT (A) to decide the matter afresh - in favour of assessee for statistical purposes.
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2012 (8) TMI 519
Non deduction of tax at source from rent u/s 194-I - Demand raised u/s 201(1)/201(1A) - whether or not the payment for transmission charges can be termed as "rent" for the purposes of section 194-I - Assessee purchases power from various sources and distributes and sells to the consumers - Held that:- As evident from a plain reading of the agreements under which impugned payments have been made are for the services of transmission of electricity and not the use of transmission wires per se - transmission lines used for transmission of electricity to the assessee and to various other entities effectively in the control of PGCIL, without any involvement of the assessee in actual operations of the same. It is a condition precedent for invoking section 194-I that the asset, for the use of which the payment in question is made, should have some element of its control by the assessee. Here is a case in which the assessee has no control over the operations of the transmission lines, and all that he gets from the arrangements is that he can draw the electrical power purchased from PGCIL's transmission lines in an agreed manner - in a situation in which the payment is made only for the purpose a specific act, i.e. power transmission in this case, and even if an asset is used in the said process, the payment cannot be said to be for the use of an asset - section 194-I has no application so far as the impugned payments for transmission of electricity is concerned. The authorities below were thus quite unjustified in brushing aside the assessee's contentions to the effect that since PGCIL has already discharged all his income-tax obligations, demands under section 201(1) cannot be raised at all - as the provisions of section 194-I cannot apply in respect of payments made for transmission of power by the PGCIL , the impugned demands raised under section 201(1) read with sections 194-I and 201(1A) read with section 201(1A) are cancelled - in favour of assessee.
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2012 (8) TMI 518
Disallowance of reimbursement of expenses u/s 40A (2) (b) - Held that:- As the assessee is sharing staff, office premises, etc. with its parent company the allocation of the expenses have been identified as per the memorandum of understanding which were to be borne out by the parent company and to be reimbursed by the assessee. Nowhere the AO has spelled out as what were the expenses, which have been reimbursed are unreasonable or excessive looking to the fair market value of the services and expenses reimbursed - nowhere it has been brought on the record as to how the reimbursement of 33.98 crores on salary account for use of parent company’s employees is unreasonable or excessive - no concrete evidence or material to allocate the unreasonable and excessive expenses for the purpose of disallowance under Section 40A (2). Once, the CIT (A) has come to the conclusion that arrangement of expenses is correct and bonafide and is in accordance with the terms of agreement between both the parties, then no ad hoc disallowance of any amount is called for - in favour of assessee.
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2012 (8) TMI 517
Claim for the lower rate of tax at 35% in the light of the amendment of section 90 with retrospective effect from 1st April, 1962 - claim for benefit of non-discrimination as per Article 25 of the India Korea DTAA - Held that:- As decided by tribunal in assessee's own case in A.Y. 2002-03 DTAA recognizes the fact that the amendments made in the IT Act are not affected in so far or they are not in conflict with the specific provisions of the DTAA. Therefore the amendment made in section 90 (2) by way of insertion of explanation is applicable in so far as it is not in conflict with the provision of DTAA - in the event of conflict between international law, the Court must follow municipal law - DTAA did not prescribe any separate or specific rate or any particular criteria to be applied on income of Korean companies assessed in India - The word "less favourable" has not been defined either in the DTAA or in IT Act. Therefore, it cannot be constructed to mean that levy of higher rate on the income on non-domestic company would be "less favorable" - against assessee. Addition on account of unrealized profits on revaluation of securities - Held that:- As the assessee has valued its closing stock scrip-wise by following 'cost or market price, whichever is less' method as per which the appreciation in the value due to the higher market value has been ignored but the depreciation in the value of the other items of stock has been reflected. Thus amount on revaluation of securities represents the excess of market price over the cost price in respect of certain scrips and further going by the method of valuation adopted by the assessee the same cannot be added to the total income - in favour of assessee. Addition on account of upfront guarantee commission - Held that:- As decided in Dy. DIT (International Taxation) v. Chohung Bank [2009 (6) TMI 693 - ITAT MUMBAI] the period of guarantee had nothing to do with the assessee's right to receive the commission and accordingly the amount was brought to tax by him in the hands of the assessee for A.Y in question holding that the said income was accrued to the assessee at the time when the corresponding guarantees were issued - accepted the alternative contention of the assessee relating to double taxation of the same amount in two years and accordingly directed the A.O. to exclude from the income of the assessee the amount of upfront guarantee commission offered in the subsequent year on accrual basis which was already taxed on receipt basis - against assessee. Disallowance of interest paid by the Indian Branch of the assessee bank to its Head office - Held that:- As decided in Sumitomo Mitsui Banking Corpn. v. Dy. DIT (IT) [2012 (8) TMI 450 - ITAT, MUMBAI] that although the interest paid to the Head office of the assessee bank by the Indian branch which constitutes its PE in India is not deductible as expenditure in the domestic law being payment to self, the same is deductible while determining the profit attributable to the PE which is taxable in India as per the provisions of article 7(2) and 7(3) of the relevant 'Tax Treaty' read with Paragraph 8 of the Protocol which are more beneficial to the assessee - in favour of assessee. Disallowance of 'salary' paid to expatriate employees from Head Office to the Indian Branch u/s 44C - Held that:- Section 44C includes expenditure that is common in nature & that the benefit of the said expenditure is derived both by the Head Office and the Branch - that payment of salary made in the case of the assessee was to expatriate employees who were working actually with the assessee in India though the payment was made to them by the Head Office outside India the expenditure incurred on such payment thus was incurred exclusively for the branch in India and the same was not covered within the purview of sec. 44C - salary paid to expatriate employees deputed from Head Office to Indian Branch was an expenditure to be allowed in full - in favour of assessee.
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2012 (8) TMI 516
Receipts of the service fees - fee for technical services OR business receipt - DTAA between India and Singapore - Held that:- Assessee being a company, and having Permanent Establishment in India, its receipts will be liable to be assessed as per provisions of Article-7 of the above DTAA - The taxability of royalty for fee for technical services in the State in which it arise on the gross amount at the specified rate will not be applicable if these receipts are effectively connected with PE or fixed base. In that case provisions of Article -7 or Article -14 will apply. It has already been mentioned that Article-14 will not be applicable to the facts of the present case and thus these receipts of the assessee are liable to be assessed under Article-7 of the aforementioned DTAA for which the assessee also does not have any objection. Just and proper to restore the issue to the file of AO with a direction to assess the assessee on these receipts under Article-7 of the DTAA after giving the assessee reasonable opportunity of hearing. On taxability of the interest issue it just and proper to restore the said ground also to the file of AO with a direction to readjudicte the issue afresh
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2012 (8) TMI 515
Block Assessment framed u/s. 153BC (c) - search and seizure operation - assessee contested against invoking of extended period of limitation - Held that:- Panchnama dated 3.1.2003 is not a panchnama which finds mentioned in Explanation 2 to section 158BE which reveals that except from passing the revocation order u/s 132 (3) of the prohibitory order passed on 21st December, 2002 no other activity had taken place. Hence, the limitation cannot be governed by the said panchnama. The search essentially was concluded and completed vide panchnama dated 21st December, 2002, when order under the second proviso to section 132(1) was passed deemed seizure of stock of goods of Rs. 25,43,500/- statement of one person was recorded and a restrain order u/s 132 was passed. Panchnama dated 21st December, 2002 was the last panchnama as described in Explanation 2 to section 158BE and, therefore, the limitation has to be commenced from the said panchnama which will be 31st December, 2004. As against that, the impugned assessment is passed on 31.1.2005 which is not passed within the limitation described in section 158BE. The assessment, therefore, is bad in law and has to be quashed - ‘Panchnama’ dated 1.11.2002 cannot give extended time to the A.O for further 2 months when in fact, in the case of these assessees, the search was finally concluded on 6.9.2002 - in favour of assessee.
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2012 (8) TMI 514
Penalty u/s 271(1)(c) - concealment of particulars - alleged violation of provision u/s 13(1)(c) by letting-out shops on long lease to the relatives of Directors who are the persons as referred to u/s 13(3) and claiming exemption u/s 11 - Held that:- As CIT(A) noted that AO himself mentioned that it is from facts mentioned in the audit report in Form No.10B filed by the assessee that the possible violation of Section 13, in fact, came to the AO’s notice. In that view, appellant cannot be said to have either concealed or furnished inaccurate particulars of its income, and even the provisions of Explanation-1 to Section 271(1)(c ) are not attracted since there was no concealment or furnishing of inaccurate particulars with regard to factual aspects which had clearly been disclosed by the appellant. Further, AO has not brought on record to show that the contention of the assessee is wrong in respect of the rent charged to others who are not the directors or otherwise interested parties being at par. Therefore, deletion of penalty u/s 271(1)(c) upheld - Decided in favor of assessee.
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2012 (8) TMI 513
Non serving of notices of hearing to assessee - Held that:- As no intimation was given by the Departmental Representative whether service of the notice had been effected on the assessee or not the appeals of the Revenue could not be heard on merit in absence of proper service of notice upon assessee - it was obligatory on the part of the Income-tax authority to effect service of notice of hearing on the assessee since the service could not be effected by post at the address given by the revenue in the memorandum of appeal. The practice of getting the service of notice effected on the respondent assessee in a revenue's appeal wherein notices of hearing could not be served on the assessee by post is fully in conformity with the judicial powers and jurisdiction of the Tribunal and does not in any manner run contrary to any provisions of the Statute - The Tribunal was therefore well within its powers to direct the Income-tax department to effect service on the assessee - once revenue is not able to get exact address of assessee, how it will follow the same, in case matter is decided in favour of revenue - against Revenue.
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2012 (8) TMI 512
Disallowance of non-deduction of TDS on reimbursement of the salary cost - DTAA between India and UK - Held that:- CIT (A) has allowed the assessee’s claim for reimbursement of the expenses of salary cost considering undisputed fact that these expenses were in the nature of reimbursement. So there is no income element at all. As decided in CIT vs. Siemens Aktiongesellschaft [2008 (11) TMI 74 - BOMBAY HIGH COURT] the amount received by German company under the agreement with three Indian companies was not taxable in India before insertion of an Explanation to section 9 (2) with retrospective effect from 01.06.1976 - As the agreement was entered into before June 1, 1976 the income would not be a Royalty from patent, copy rights or trade mark and like, within the meaning of DTAA but would fall under expression ‘commercial or industrial profit’. In absence of permanent establishment, such income would not be taxable in India for agreement dated March 15, 1969, work was done in Germany and there was no transfer of licence of any existing technical knowhow , thus in view of this the sum claimed to be reimbursement of expenses was held to be not taxable in India - in favour of the assessee
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2012 (8) TMI 511
Quantum of addition under the head ‘income from other sources’ - assessee contested that if an amount of Rs. 4 lakhs is disallowed from the agricultural income, the same amount cannot be treated as income from other sources - Held that:- That the assessee himself has disclosed an amount of Rs. 15 lakhs as agricultural income the AO may accept or may not accept that the entire amount is agricultural income - the disallowed portion of agricultural income has always to be treated as taxable income in the hands of an assessee under an appropriate head. If no specific head of income is attributable from the facts of the case, the same should be taxed under the head ‘income from other sources’. As the quantum of addition sustained by the CIT(A) that some modification is called for as the agricultural income offered by the assessee for the subsequent assessment year was Rs. 13.5 lakhs accordingly, the addition of Rs. 4 lakhs made by the Commissioner of Income-tax(Appeals) is reduced to an addition of Rs. 2 lakhs - partly in favour of assessee.
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2012 (8) TMI 510
Reduction of tax-free interest income from loss on sale of securities - Held that:- As decided in C.I.T., Mumbai Versus M/s. Walfort Share & Stock Brokers P. Ltd. [2010 (7) TMI 15 - SUPREME COURT] that in cases arising before 1st April, 2002 (A.Y. 2002-03) losses pertaining to exempt income could not be disallowed - in favour of assessee. Allocation of common expenses for the purposes of computing deduction u/s 80I - Held that:- Tribunal referring to the directions given for the assessment year 1993-94 wherein common expenses were directed to be apportioned in the ratio of material consumed by the new 80I undertaking to the total material consumed by the assessee-corporate entity as a whole, instead of on the basis of sales of the respective unit and for this purpose, the issue was restored back to the Commissioner of Income-tax (Appeals) for adjudication afresh who after examining the issue allowed the deduction u/s 80-I relying on working of deduction as directed by Tribunal - find no error in the order of CIT(A)- in favour of assessee.
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2012 (8) TMI 509
Non eligibility for deduction u/s 80-IB (10) - CIT (A) allowed the claim - Held that:- As the investment made by the assessee for the project and the source for such investment which have been disputed or rebutted by the Revenue & not also disputed that assessee had purchased the land - assessee had entered into individual agreements with prospective buyers for sale of undivided share in such land and for construction of flats therein. But, this would not mean that assessee was not a developer of the project or that assessee was only a contractor. Assessee had obtained loans in its name and made substantial investment for promotion of the project - the assessee could establish that it was a project developer which satisfied the conditions specified in Section 80- IB (10) as disallowance could not have been done considering the assessee as a mere works contractor The term “works contract” in the Act is an inclusive definition. It does not include merely a works contract as normally understood. It has a wide definition which includes “any agreement” for carrying out building or construction activity for cash, deferred payment or other valuable consideration. The definition as given in that Act does not make any distinction based on as to who carries on the construction activity - in favour of assessee.
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Customs
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2012 (8) TMI 508
Demand of additional customs duty (CVD) - transaction value u/s 4 versus MRP based value u/s 4A - Held that:- As the goods were imported by the appellant in bulk and cleared for further process to party who undertook the process of packing, repacking, labeling and putting stickers of MRP which is process of manufacturing as per Section 2 (f) of the Central Excise Act, 1944 and finally cleared these goods on payment of Central excise duty as per Section 4A, thus the appellants have rightly discharged their duty liability as per Section 4 of the Central Excise Act, 1944 - in favour of assessee.
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2012 (8) TMI 507
Revocation of CHA Licence - charges under Article 13(a) of the CHALR 2004 - Held that:- The fact that the authorization from the importer also attested by the bank is fraudulently obtained came to know during the course of investigation when a report from the concerned bank was obtained. Therefore, at the time of clearance of the goods, appellant was under bona fide belief for acceptation the authorization. It is also a fact that at the time of clearance of the goods, the Customs officer has also not objected to the authorization - that the charges under Article 13(a) of the CHALR 2004 stands not proved as the authorization filed by the appellant was not objected by the Customs. While giving the personal hearing to the appellant, the Commissioner has not given notice to the appellant that he is not agreeing with the Inquiry Officer's report and the reasons for not agreeing with the report, thus the remaining charges also stands not proved - in favour of assessee.
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Corporate Laws
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2012 (8) TMI 502
Amalgamation - Scheme of arrangement – held that:- the scheme of arrangement being fair and reasonable and all statutory provisions have been complied with and it is not adverse to public policy, and pursuant to the order passed by this court, public notice has been taken out by the petitioners in the newspapers and none have appeared to oppose the scheme of amalgamation, the same is required to be approved. The official liquidator has also filed a report stating that the transferor companies have not conducted their business prejudicial to the interest of its shareholders or public at large. – Amalgamation approved.
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Service Tax
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2012 (8) TMI 531
Business Auxiliary Services - Job work - appellants working under job work, under the provisions of Rule 4(5)(A) of the Cenvat Credit Rules, 2004, converting the steel plates supplied by M/s S Ltd into steel shells, agitators, baffles etc. and sending the goods back to the said M/s S - Revenue contending the same to be under BAS - period prior to 16.06.2005 - Held that:- There is no dispute that the appellants were producing goods for the clients and not on behalf of the clients as can be understood from the fact that the appellants are manufacturing goods as job workers. Scope of Business Auxiliary Services as defined u/s 65(19) of the Finance Act, 1994 was expanded to include the production of goods on behalf of the clients which does not amount to manufacture u/s 2(f) of the Central Excise Act, 1944 w.e.f 16.05.2005. Since, services undertaken by the appellants is not covered by the definition, no service tax is attracted. Accordingly, impugned order is set-aside. See Sonic Watches Limited (2010 (9) TMI 397 - CESTAT, AHMEDABAD) and Auto coats Vs CCE(ST),COIMBATORE [2009 (4) TMI 112 - CESTAT, CHENNAI] - Decided in favor of assessee.
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2012 (8) TMI 530
Input service credit on after sales service – Held that:- Service of repair and maintenance of transformers during warranty period is a service covered by definition of input service and the assessees are entitled to take Cenvat Credit of service tax paid on such services - if after sale service expenses are included in the assessable value, the assessee is entitled for input service credit on the expenses incurred on after sales charges - appeal filed by the assessee is remanded to the adjudicating authority for verification whether after sales service charges are included in the assessable value or not as the assessee did not produce the Chartered Accountant's certificate before the adjudicating authority
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2012 (8) TMI 504
Whether the assessee is liable to pay service tax under licence and technical assistance agreements for the overhaul and installation & commissioning of the gas turbines with a foreign company – Held that:- question relates to payment of rate of duty/tax - said 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 - appeal lies to the Apex Court under Section 35L of the Central Excise Act, 1944 which alone has exclusive jurisdiction to decide the question - appeal is rejected as not maintainable
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Central Excise
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2012 (8) TMI 533
Denial of benefit of Notification No.74/93-CE dated 28.02.93 - Held that:- The benefit of Notification 74/93-CE is not available to the goods manufactured by the State Electricity Board as the benefit of Notification is available to the goods manufactured in the factory belonging to the State Government intended for use for the Govt. Department - the matter required reconsideration by the adjudicating authority afresh in view of decision of ASSTT. ENGINEER (CIVIL) Versus COMMISSIONER OF CENTRAL EXCISE, RAIPUR [2008 (9) TMI 105 - CESTAT NEW DELHI]the State Electricity Board is not a Govt.Department.
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2012 (8) TMI 529
Denial of cenvat credit - appellant in respect of their wind mills in Dewas availed the services of erection, installation and commissioning, repair and maintenance and also insurance and took Cenvat credit of the Service tax paid on these services - department was of the view since the wind mills are located far away from the factory and the power generated by the wind mill is not directly received in the factories of the appellants, the appellants would not be eligible for Cenvat credit – Held that:- there is nexus as the electricity generated by the wind mills has been used for running of the factories of the appellant and just because the electricity has not been directly supplied, but has been supplied through M.P. Electricity grid, it cannot be said that the wind mills are not captive power plant - services, in question, received by the appellants have to be treated as input services eligible for Cenvat credit
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2012 (8) TMI 506
Cenvat credit on inputs received from 100% EOU - appellants availing full Cenvat credit of CVD, Education Cess, Secondary and Higher Education Cess - Revenue contending inadmissibility in view of in view of Rule 3 of the Cenvat Credit Rules - Held that:- Issue is no more res integra. Availment of credit of Education Cess over goods supplied to them by 100% EOU is correct. See Shreya Pets Pvt.Ltd. vs. CCE, Hyderabad (2008 (9) TMI 351 - CESTAT, BANGLORE), Emcure Pharmaceuticals Limited vsl CCE Pune (2008 (1) TMI 147 - CESTAT, MUMBAI) Order set aside - Decided in favor of assessee.
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2012 (8) TMI 505
Penalty u/s 11AC on account of wrong availment of 100% Cenvat Credit on capital goods during the period July, 2008 - appellants reversed the entire cenvat credit availed wrongly along with interest before the issue of Show cause notice - Held that:- As in the show cause notice itself, it has been stated that the appellants have availed cenvat credit wrongly, therefore the provisions of Section 11AC are not attracted although, they have violated the provisions of Section 11AC, but not with intention to evade payment of duty. There was no intention to evade duty can also be ascertained by verification of their cenvat credit account, as the appellants are having sufficient cenvat credit balance in their account. Penalty set aside.
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2012 (8) TMI 503
Consulting Engineer Service – Held that:- Dispute regarding classification falls within the phrase “rate of duty” - It is only the Apex Court under Section 35L of the Act which is competent to decide the aforesaid question of law - appeal is rejected as not maintainable
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Wealth tax
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2012 (8) TMI 532
Whether property leased out is not assessable to wealth-tax and excludible from the operation of section 40 of the Finance Act, 1983 - as per section 40(3)(vi) of the Finance Act, there is an additional requirement that the building should be used by the assessee as godown or warehouse for the purpose of its business – Held that:- Let out assets are used by the assessee in its leasing business. If the leased out assets such as, godown, warehouse, hospital or other assets, come within the specified assets in section 40(3)(vi) of the Finance Act, certainly the assessee is entitled to the exemption, because the same is used in leasing business - assessee has leased out the property as a hotel and the lessee also used the same property as a hotel and there is no dispute and, therefore, the assessee comes within the specified assets as contemplated under section 40(3)(vi) of the Finance Act, 1983, and, therefore, the assessee is entitled to exemption from the Wealth-tax Act - in favour of the assessee
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