If on the basis of an agreement between the State authority and the concessionaire for construction of roads, the contractor is authorised to collect the toll charges from the users of the roads for the services rendered and the entire activity is done on Build-Own/Operate-Transfer basis, there is no service tax liability. Construction of roads has been specifically excluded from the scope of service tax levy both under “Commercial and Industrial Construction Service” and “Works Contract Service”. Further repair and maintenance of roads have also been exempted from service tax retrospectively in this year’s budget. Thus the intention of the Government is to keep out road construction activity from the purview of service tax. If that be so, how can service tax be levied on the very same activity under Business Auxiliary Service (BAS)? Such a view does not appeal to any reason or logic.
The appellant being an IT related service provider, undisputedly, the recruitment of manpower was, obviously for rendering those services and what further details were required by the department are not forthcoming. Similarly, the ‘security agency services’ are used for securing their office premises. Therefore, there is no justification for interfering with the order of the Commissioner (Appeals) allowing refund of credit in respect of these services.
Section 37 of the Central Excise Act, 1944 is a rule making power of the Government. Sub-section (1) of section 37 provides that the Central Government may make rules to carry into effect the purposes of the Act. Sub-section (2) of section 37 provides that in particular and without prejudice to the generality of the foregoing power such rules may provide for various issues contained in clauses (i) to (xxviii) of the said sub-section. Clause (xx) which is relevant for our purpose reads as under:
Incentive scheme was framed as a part of Government’s initiative to encourage modernization of existing industries in under-developed areas. The main purpose of the scheme was to accelerate the industrial development and to disperse industries to under-developed areas as well as to provide additional employment.
The undisputed fact is that the property in question is an I.T. Park, with all infrastructure facilities and services. This is not a simple building. The Ministry of Commerce and Industries, notifies certain building as I.T. Park only if various facilities and infrastructure, as specified by the Department, are provided. It is an undisputed fact that all the technical requirements, infrastructures, facilities and services are being provided in this building and it was only for this reason that not only the Ministry of Commerce & Industries, but also the CBDT notified the same as an I.T. Park which entitles the assessee to earn certain incentives.
The partnership is governed under the provisions the Indian Partnership Act, 1932. Section-4 defines partnership as “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”. Section-5 provides that the relation of the partnership may be reduced in writing through a contract between them while Section-7 provides that where there is no written contract, the partnership be treated as partnership at will.
We find that with regard to the investment of Rs. 5907.18 lakhs in foreign subsidiaries, no disallowance can be made under section 14A because dividend income from foreign subsidiaries is taxable in India. Regarding balance investment of Rs. 38 crores approximately in Indian subsidiaries, we find that interest-free own funds of the assessee is many times more than this investment because interest free funds available with the assessee as on March 31, 2005 as per the balance-sheet as on that date is of Rs. 929.57 crores. There is no finding given by the Assessing Officer regarding any direct nexus between interest bearing borrowed funds and investment in Indian subsidiaries. Hence, in our considered opinion, no disallowance under section 14A can be made out of interest expenditure in the facts of the present case. Accordingly, ground Nos. 2 and 3 of the Revenue’s appeal are rejected.
Appellant is a registered mandap keeper and was issued a show cause notice. There could be a situation where the appellant could be under a bona fide belief as to not to discharge the Service Tax liability on the advance amount received, during the material period, the issue of Service Tax liability under the Mandap Keeper services also was in litigation finally settled by Hon’ble Apex Court in the case of Tamilnadu Kalyana Mandapam Association v. Union of India[2004] 136 Taxman 596. I find that the appellant had discharged the Service Tax liability on being pointed out. As the appellant is not contesting the Service Tax liability and interest thereof, in my view, the lower authorities should not have issued the show cause notice as provisions of section 73(3) may apply in this case. Be that as it may, the judgment of the Tribunal in the case of Chintamani Mangal Karyalaya (P.) Ltd. (supra) in an identical issue, has held in favour of the appellant.
Tribunal relying on its decision in case of Radhe Developers v. ITO [2008] 23 SOT 420 (Ahd.) held that respondent assessee would be eligible for deduction under section 80-IB(10) of the Act on the housing project development though the assessee may not be the owner of the land.
In the present case, admittedly there is no past demand which has remained unpaid. Therefore only when the Assessee files a return of income quantifying his total income for the assessment years in question can it be said that there has arisen tax liability for the relevant AYs. The due date for filing return of income or the fact that advance tax was due on a particular date will not make the liability of the Assessee an “existing tax liability” on those dates. The Hon’ble Karnataka High Court in the case of CIT v. R.V. Raibagy & Co. & others ITR Case Nos. 4 to 10 of 2003 dated 29.3.2005 has also taken the view that adjustment of seized cash against tax due u/s.140A of the Act, on income declared in a return of income filed should be allowed.
