TMI Tax Updates - e-Newsletter
January 2, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Highlights / Catch Notes
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Income Tax:
Deduction u/s 80IA(4) - the object of including “inland port” as an infrastructure facility and also that customs clearance also takes place in the inland container depot, the assessee’s claim that the inland container depots were inland ports under Explanation (d) to sec. 80IA(4) required to be upheld - AT
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Income Tax:
Addition on account of deemed interest on advance - if income does not result at all, there cannot be a tax, even though in book keeping, an entry is made about a hypothetical income which does not materialize - AT
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Income Tax:
Claim of depreciation - Bifurcation of slump price into the value of tangible assets and intangible assets - Ultimately after the slump price has been attributed first to the value of tangible assets, then the balance is to be attributed to intangible assets and once the same is done and whether it is under the umbrella of know-how, trademarks, patents or goodwill, it makes no difference since all these are covered under the umbrella of intangible assets, which are eligible for claim of depreciation under section 32(1)(ii) - AT
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Income Tax:
TDS u/s 194C OR 194J - payee recipient had to merely issue its intellectual/technical skills without any physical work through employee or deploy assets - its recipient’s information technology related integrated service activities amount to technical services only. The assessee’s reliance on its itemized billings of the above services in classifying the same as bundled payments/services cannot be accepted - AT
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Income Tax:
Penalty u/s 271(1)(c) - a disproved explanation of the assessee would undoubtedly lead to levy of penalty under Sec. 271(1)(c), however, the same would not be applicable as regards an unproved explanation - AT
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Customs:
Demurrage charges - once consignment is handed over to the Port Trust by the steamer agents, duly endorsing the bill of lading or issuing the delivery order but the goods detained at Port Trust for want of clearance from Customs authorities, the demurrage has to be collected by the Port Trust only from the consignee and not from the steamer agents. - HC
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DGFT:
Export of all varieties of onions will be allowed only on Letter of Credit (LC) subject to a Minimum Export Price (MEP) of US$ 850 F.O.B. per Metric Ton till 20.01.2018.
Articles
Notifications
News
Case Laws:
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Income Tax
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2018 (1) TMI 27
Disallowance u/s 14A r.w. Rule 8D of the Income Tax Rules, 1962 - whether disallowance u/s 14A r.w. Rule 8D can be made in a case when there is no exempt income? - Held that: - similar issue decided in the case of Commissoner of Income Tax (Ii) Kanpur Versus M/s. Shivam Motors (P) Ltd. [2014 (5) TMI 592 - ALLAHABAD HIGH COURT], where it was held that in absence of any tax free income earned by the assessee, disallowance u/s 14A could not be made - disallowance made by AO deleted. Disallowance u/s 36(1)(iii)/ addition on account of notional income u/s 5 of the Act - Held that: - Gateway has neither provided for interest in its books of accounts nor paid any interest till date. The other condition of improbability of realization is also applicable here - the addition cannot be made even u/s 5 of the Act - the addition of ₹ 83,91,532/- made by the AO in AY 2009-10 and ₹ 3,22,04,906/- in AY 2010-11 deleted. Appeal allowed.
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2018 (1) TMI 26
Penalty u/s 271(1)(c) of the ITA 1961 - disallowance of deduction under Chapter VIA - Held that: - as observed by the CIT(A), the assessee had not even furnished the details as regards which all investments the said deduction was claimed by him, the same not only fails to inspire any confidence as regards the said claim, but rather, raises serious doubts as regards the veracity of the same - it is neither a case of a bonafide claim of excess deduction, nor a case of mere unproved or unsubstantiated claim of deduction of the assessee - even if the assessee was unable to place on record the supporting documents to substantiate his claim, then nothing stopped him from at least furnishing the details of the investments in respect of which such deduction was claimed by him, which we find had not been done by him - penalty upheld. Penalty - cash deposit of ₹ 4,81,600/- in the bank account of the assessee - Held that: - a disproved explanation of the assessee would undoubtedly lead to levy of penalty under Sec. 271(1)(c), however, the same would not be applicable as regards an unproved explanation - as the explanation of the assessee as regards the cash deposit of ₹ 4,81,600/- had though remained unproved to the satisfaction of the A.O, however, the same had and not been disproved and conclusively found to be false, therefore, no penalty under Sec. 271(1)(c) would be called for in his hands on the said count - penalty set aside. Appeal allowed in part.
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2018 (1) TMI 25
Addition on account of disallowance of depreciation - it was alleged that the assessee had failed to satisfy the requisite condition contemplated under Sec. 32(1) of the Act as regards user of the machinery for the purpose of its business - Held that: - the assessee was entitled to depreciation on the diagnostic machines installed at the customers site - reliance placed in appellant own case M/s Lilac Medicare Pvt. Ltd. Versus ACIT- 8 (3) (OSD) , Mumbai [2016 (11) TMI 1504 - ITAT MUMBAI], where it was held that the installation of the diagnostic machines owned by the assessee and forming part of its Block of assets at the customers site, being a part of the business of the assessee, and rather as a matter of fact a modus operandi adopted by the assessee to boost its sales of reagents, therefore the latter being found to have duly satisfied the requisite conditions contemplated u/s 32(1) of the Act, is thus entitled to deprecation on the said diagnostic machines. Appeal allowed.
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2018 (1) TMI 24
Bogus purchases - purchase from grey market - Held that:- In the present case though the assessee had in his statement recorded under Sec. 133A recorded during the course of the survey proceedings admitted that the purchases made from the aforesaid parties were bogus and had offered the purchase consideration of ₹ 60,08,692/- as his income, as well as the A.O had also gathered information that the aforesaid supplier parties had admitted before the Sales tax authorities that they had merely provided accommodation entries and had not carried out any genuine sales, however, independent of the aforesaid facts, the CIT(A) had sustained the addition primarily for the reason that the assessee had failed to substantiate the genuineness of the purchase transactions by placing on record supporting documentary evidence. We find that the CIT(A) after appreciating the fact that the purchases were recorded in the stock register and the corresponding sales of the same had been accepted by the A.O, therefore, had fairly concluded that the addition in the hands of the assessee was liable to be restricted to the extent of the profit element involved in making of the purchases, which could safely be concluded to have been made by the assessee from the Open/grey market. As regards the claim of the assessee that the lower authorities had erred in taking the quantum of the alleged bogus purchases at ₹ 60,08,592/- as against ₹ 59,83,592/-, we find that the aggregate of the purchases for the year under consideration as had been reproduced at Page 2 & 3 of the assessment order works out to ₹ 60,08,592/-. We find that as there is neither anything available on record which could go to prove that there is any such mistake, nor any assistance from the assessee who had chosen not to put up an appearance during the course of hearing of the appeal, therefore, we are constrained to conclude that the lower authorities had rightly adopted the bogus purchases at ₹ 60,08,592/-.
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2018 (1) TMI 23
Penalty u/s 271(1)(c) of the ITA - suppression of facts - Held that: - the assessee has proved the source of money and department has no material to establish the case against the assessee that the assessee has concealed income and suppressed the facts and also deliberately furnished inaccurate particulars of income - penalty to be deleted - appeal of assessee allowed.
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2018 (1) TMI 22
Penalty u/s 271(1)(c) of the IT Act - addition made u/s.68 of the IT Act - validity of notice - Held that: - There can be no doubt that penalty u/s. 271(1)(c) of the Act is levied for concealing particulars of income or for furnishing inaccurate particulars of such Income, which are the two limbs of this provision - In the present case, neither the assessee nor anyone else could make out as to whether the notice u/s. 274 r.w.S. 271 of the Act was issued for concealing the particulars of income or for furnishing inaccurate particulars of such income disabling it to meet with the case of the Assessing Officer. There are a catena of judgments highlighting the necessity for identifying the charge for which the assessee is being visited and in all those decisions, Hon'ble Courts have repeatedly held that where the jurisdictional notice is vague, similar to the one in the present case, the consequent levy cannot be sustained. Penalty set aside - appeal of the assessee is allowed.
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2018 (1) TMI 21
Addition on account of jewellery u/s. 69A - CBDT in their Instruction 1916 dated 11/05/1994 gave powers to the department of taking into account the status of the family, customs and practices of the community to which the family belongs - Held that:- The claim of gifts has been there before assessing officer and therefore the argument that before CIT(A) in earlier submission this claim was not put up carries no weight for the purpose of dismissal of the claim itself. And, as for Wealth tax returns, it needs to be understood that there is always a cyclical kind of rotation between the item being re-made, gifts received etc. This is recognized by the CBDT in their Instruction 1916 dated 11/05/1994 when they gave powers to the department of taking into account the status of the family, customs and practices of the community to which the family belongs. Therefore rejection in the manner done by the appellate authority is not justified at all. The CBDT Instruction 1916 dated 11th May 1994, in particular clause (iii) has to be looked into in background perspective of Raymond Group to which assessee belongs. The assessee has to attend social gatherings. The family functions are conducted on large scales and the list of invitees again is the cream of the society. A necessary concomitant is remaking of the jewellery; for repetition of the same items in any Indian society, including that of assessee, is bound to be looked down upon. Another necessary corollary is the spate of gifts that are received and, frequently, these are ornaments and jewellery, often high value items. Keeping the status of assessee s family in mind as well as customs and practices of the community to which the family belongs as detailed in preceding paragraphs/ the benefit of CBDT Instruction 1916 dated 11th May 1994, is warranted for assessee. No merit for the addition so made on account of Gold and Diamond jewellery. - Decided in favour of assessee
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2018 (1) TMI 20
Short deduction of TDS - TDS u/s 194C OR 194J - information technology outsourcing services in the nature of technical, managerial and consultancy services - Held that:- It is an undisputed fact that this “LSA” has been executed as per the Master Services Agreement “MSA” (supra) between assessee's parent and the very payee. We notice that this MSA is basic foundation which nowhere forms part of the case file. Nor has the assessee placed it on lower authorities’ record. The above following “LSA” aimed to regulate necessary terms of information technology and related services to be rendered by the payee in lieu of assessee’s payments. The assessee is fair enough in not disputing the fact that it has not handled or operated even a fraction of services on its own throughout all these assessment years. It seeks to take refuge under the contractual format on the other hand to come out of rigor of Section 194J of the Act. We are of the opinion that it is not the medium of contract or payment but the nature of services rendered by the payee which is the crucial factor to determine whether or not they amount to technical or professional services. The assessee cannot succeed in treating its payments u/s.194C by taking recourse to a written contract document. More particularly when it has come on record the payee itself had been issuing press release(s) alike the one already extracted hereinabove. The assessee has not made even a single attempt in the course of hearing to rebut the same. We therefore observe that its recipient’s information technology related integrated service activities amount to technical services only. The assessee’s reliance on its itemized billings of the above services in classifying the same as bundled payments/services cannot be accepted in view of the forgoing discussion that it is the recipient only who is wholly responsible for handling / providing all information technology related services. We also deem it appropriate to observe that hon’ble Delhi high court’s judgment DIT vs. Rio Tinto Technical Services [2012 (1) TMI 5 - DELHI HIGH COURT] has held that the above exclusion clause in Section 9(1)(vii) explanation 2 is to be read as a project in the nature of construction, assembly, mining only. We thus reject assessee’s argument seeking to invoke the above exclusion clause u/s.9(1)(vii) explanation 2 of the Act. We find no merit in assessee’s next argument of having acted in bonafide belief as well in deducting TDS @2% only qua its impugned payments as based on judgment Gwalior Rayon Silk Co. Ltd. (1983 (9) TMI 24 - MADHYA PRADESH High Court) case as well as all the abovesaid facts/circumstances discussed leave no doubt much less formation of such relief that the payee “CSCIPL” had in fact rendered technical services only requiring TDS deduction u/s.194J of the Act. We thus affirm both the lower authorities’ findings holding the payee recipient to have rendered technical and professional services. The assessee’s further plea that such technical services are nowhere in the nature of consultancy only is without any substance as there is no such isolated condition provided in the Act wherein all the relevant facts and circumstances have to be appreciated.
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2018 (1) TMI 19
Reopening of assessment u/s 147 read with section 148 of the Act - disallowance of the claim of deduction under section 10B of the Act - manufacturing activity or not? - Held that: - the AO has formed an opinion during the course of original assessment proceedings and this reopening is merely on change of opinion, which is not permissible under section 147 of the Act - From the very reasons recorded by AO for reopening of assessment, it is clear that the AO was of the view that the AO was wrongly allowed on the ground that process of making power from whole Spices do not constitute manufacture within the meaning of section 10B of the Act - this is merely change of opinion and nothing else - appeal dismissed.
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2018 (1) TMI 18
Disallowance of salary paid to family members of the management of the society.- Held that:- It is observed that the assessee runs a school having a strength of 1030 students. Smt. Kiran Gupta, who was paid ₹ 1,12,800/-, is the Principal and President of the society. Shri R.K. Gupta, who was paid ₹ 1,38,000/- is the Secretary of the society, looking after overall work at the school. The other two persons, namely, Shri Rohit Gupta and Miss Nidhi Gupta are B.Ed. and drew salary at a nominal level. Payments made to these persons are not excessive, calling for any disallowance. Similar expenses were incurred in the succeeding years as well, which got allowed at the hands of the Assessing Officer. Under these circumstances, the disallowance was wrongly sustained. Disallowance of depreciation and interest - Held that:- It is observed from the assessee’s submissions made before the authorities below that the cars were used by the society for its work of school. The assessee submitted that these cars were used for various purposes, such as, liaisoning with DIOS and CBSE Board etc. Such contentions have not been refuted with any cogent evidence except for the fact that no service of driver was availed and, further, the log book was not maintained. It is seen that the assessee society has used vehicles in the succeeding years as well for which no disallowance of depreciation has been made. CIT(A) erred in sustaining the disallowance of depreciation and the same is directed to be deleted. Disallowance of interest - AR contended that the Assessing Officer did not grant adequate opportunity to the assessee to put forth the evidence in support of this contention - Held that:- Considering the entirety of the facts and circumstances as prevailing in the instant case, set aside the impugned order on this score and remit the matter to the file of Assessing Officer for examining the contention of the assessee in the light of evidence, which it proposes to file Addition of surplus of income - AR contended that the ld. CIT(A) did not give any opportunity before treating utilization of surplus as not backed by any evidence - Held that:- Ends of justice would meet adequately if the impugned order on this issue is also set aside and the matter is restored to the file of Assessing Officer for deciding it afresh as per law, after allowing a reasonable opportunity of being heard to the assessee.
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2018 (1) TMI 12
Non-allowance of depreciation on various assets purchased for lump sum consideration - Bifurcation of slump price into the value of tangible assets and intangible assets - power of enhancement exercised by the CIT(A) by disallowing depreciation on assets which were acquired under slump sale agreement - Held that:- Though under the Toll Agreement, it was decided that the said Panki site would be transferred at the value of ₹ 1 lakh, which we shall consider in the paras hereinafter; but the parties did agree to understanding to carry on the business in a particular manner. On analysis of the terms of BTA and Toll agreements, it transpires that the value of land at Panki was not part of slump price since the same was not transferred on the date of signing of BTA and TCA. ICI India Ltd. owned 279.30 acres of land, out of which catalyst business was being carried on part of it i.e. 27.53 acres, which admittedly, was to be transferred to the assessee. The said land was under lease with Kanpur Development Authority, for which necessary permission was required before the land could be transferred. Hence, the conclusion of CIT(A) in this regard that the land at Panki was transferred and its value as per valuation done by KDA works out to ₹ 174.36 crores is without any basis. In the absence of any land at Panki being transferred under the BTA, there is no merit in findings of CIT(A) in this regard. Ultimately after the slump price has been attributed first to the value of tangible assets, then the balance is to be attributed to intangible assets and once the same is done and whether it is under the umbrella of know-how, trademarks, patents or goodwill, it makes no difference since all these are covered under the umbrella of intangible assets, which are eligible for claim of depreciation under section 32(1)(ii) of the Act. The goodwill is also an intangible asset eligible for said depreciation as held by the Hon'ble Supreme Court in CIT Vs. Smifs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT). In view thereof, we find no merit in the stand of learned Departmental Representative for the Revenue and the same is rejected. The stand of learned Departmental Representative for the Revenue that there could be instances where WDV can be changed and since in the present case there was allocation which was different from the actual cost, then harmonious construction was to be given to the provisions of said section does not stand. We find no merit in the stand of learned Departmental Representative for the Revenue that actual cost for entire block could be examined in the succeeding year if there were circumstances necessitating such change. We find no merit on the same and the same is rejected. Since we have decided the issue both on merits and also on preliminary issue of whether the WDV of assets could be disturbed in the succeeding year, we hold that the issue of enhancement whether can be made by the CIT(A) or not becomes academic in nature and the same is not adjudicated. Accordingly, we direct Assessing Officer to allow claim of depreciation on tangible assets; know-how, trademark and patents; goodwill and non-compete fee. However, the value of intangible assets would be reduced by ₹ 13 crores on account of value of Panki land. The grounds of appeal raised by the assessee are thus, partly allowed.
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2018 (1) TMI 11
Deemed dividend u/s. 2(22)(e) - assessee submitted that it was not a shareholder in M/s. J.K.M.Overseas (P) Ltd - Held that:- Since the Assessee in the present case is not a shareholder in the lender company, we are of the view that no addition of Deemed dividend u/s. 2(22)(e). See CIT Vs. Universal Medicare Pvt. Ltd.,(2010 (3) TMI 323 - BOMBAY HIGH COURT) and CIT Vs. Ankitech Pvt.Ltd. & others (2011 (5) TMI 325 - DELHI HIGH COURT) Disallowance u/s 14A - Held that:- AO has not given the basis on which he arrived at the disallowance u/s 14A of the Act. In the absence of the basis of the disallowance by the AO we are of the view that the addition made by the AO was rightly deleted. Addition of receipt of undisclosed insurance commission - Held that:- The information received by the AO was a general information and based on TDS returns filed by various persons at various places. The AO could not co-relate the details of the persons from whom the assessee is stated to have received commission. In such circumstances the very basis of the conclusion by the AO that the assessee received insurance commission is devoid of merit. In our view the CIT(A) rightly deleted the addition made by AO as it was not based on any material brought on record.
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2018 (1) TMI 10
Reopening of assessment - non disposing assessee’s objections by a separate order before passing the assessment order - Held that:- As per ‘GKN Driveshafts (India) Ltd. vs. ITO’ (2002 (11) TMI 7 - SUPREME Court), where the assessee has filed objections before the AO to the reasons recorded for initiating proceedings to reopen the completed assessment, the AO is enjoined upon to decide the objections by a separate speaking order before passing the assessment order. This mandate of the law laid down by the Hon’ble Supreme Court has clearly been flouted, as the AO has not disposed of the assessee’s objections by a separate order before passing the assessment order. The ld. CIT(A) did not decide this issue, though the assessee had specifically raised it before the ld. CIT(A). Therefore, the impugned order is set aside and the matter is restored to the file of the AO to first decide the assessee’s objections in accordance with law on affording adequate opportunity of hearing to the assessee and to only thereafter pass the assessment order. The assessee, no doubt, shall co-operate in the fresh proceedings before the AO. All pleas available under the law shall remain so available to the assessee.
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2018 (1) TMI 9
Addition of sundry creditors - Held that:- Since the factum of the assessee having filed the details of sundry creditors by way of written submissions (supra) dated 03.02.2014 before the AO stands accepted by the AO himself, there is no question of the assessee having improved its case at the stage of rejoinder to the AO’s remand report. The ld. CIT(A) has clearly gone wrong in rejecting such details at the threshold without verifying/getting verified the same. The AO at the first instance, had erred in not verifying these details before making the addition. This issue is, thus, remitted to the AO for deciding it afresh in accordance with law, on making necessary verification of the sundry creditors as claimed by the assessee. The assessee shall be afforded adequate opportunity of hearing by the AO Addition made as surplus of Income over Expenditure - grant of registration u/s 12AA was rejected - Held that:- The assessee was granted registration w.e.f. 01.04.2013. As per the said proviso to section 12A(2), in such a case, the provisions of section 11 and 12 of the Act shall apply in respect of any income derived from property held under the trust of any assessment year preceding the assessment year immediately following the financial year in which the application for registration is made (on or after 01.06.2007), for which, assessment proceedings are pending before the AO as on the date of registration and the objects and activities of the trust remain the same for such preceding assessment year. In the assessee’s case, though the application for registration was initially rejected, the Tribunal restored the matter to the ld. CIT, vide order dated 05.02.2014. The CIT granted registration by allowing that very application. It is also undisputed that the objects and activities, which are educational in nature, remain unchanged. As such, the aforesaid proviso to section 12A(2) is squarely applicable. Therefore, as rightly held by the ld. CIT(A), the AO should have granted the benefit of sections 11 and 12 of the Act to the assessee. Addition on account of deemed interest on advance - Held that:- Since the AO did not bring anything on record to establish that the assessee had actually earned interest on the advances made, the ld. CIT(A) has, while deleting the addition, rightly relied on ‘CIT vs. Shoorji Vallabhadas’ (1962 (3) TMI 6 - SUPREME Court), wherein, it has been held that if income does not result at all, there cannot be a tax, even though in book keeping, an entry is made about a hypothetical income which does not materialize; and that where the income cannot be said to have resulted at all, there is, obviously, neither accrual, nor receipt of income, even though an entry to that effect might have been made in the books of account. Accordingly, on this issue also, the Department’s grievance has no legs to stand on and it is rejected.
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2018 (1) TMI 7
Undisclosed capital gain on sale of shares - assessment u/s 153C - Held that:- Proceedings under section 153C of the Income Tax Act does not apply to the facts of the present case as the documents are not belonging to the assessee. - Decided against revenue
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2018 (1) TMI 2
Deduction claimed by the assessee u/s 80IA(4) - assessee is engaged in the business of operation of Container Freight Station (CFS) - Held that:- Keeping in view of the facts and circumstances of the case and by following the decision in assessee’s own case for the Assessment Year 2011-12 [2015 (12) TMI 365 - ITAT Visakhapatnam] and Assessment Year 2012-13 [2017 (4) TMI 1056 - ITAT VISAKHAPATNAM] also case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT) held that profits and gains from infrastructure undertakings (infrastructure facility), set up within precincts of port, then, having considered its proximity to sea-port and its activities, it can be safely concluded that deduction admissible under sub-section (4) of section 80-IA can be claimed by both ICDs and CFSs. Also in assessee's own case having regard to the provisions of the Customs Act, the communication issued by the Central Board of Excise and Customs as well as the Ministry of Commerce and Industry, the object of including “inland port” as an infrastructure facility and also that customs clearance also takes place in the inland container depot, the assessee’s claim that the inland container depots were inland ports under Explanation (d) to sec. 80IA(4) required to be upheld - Decided in favour of assessee.
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2018 (1) TMI 1
Long term capital gain or short term capital gain - exemption u/s 54F - Assessment of long term capital gains in exchange of land for row houses - Held that:- Bombay High Court in the case of Chaturbhuj Dwarakadas Kapadia [2003 (2) TMI 62 - BOMBAY High Court] held that the year of chargeability of capital gain is assessable in the assessment year in which it was entered into the development agreement. The ITAT held that the development agreement results into transfer of capital asset and the year of chargeability is the year in which the said contract was executed. In the instant case, the development agreement was executed on 24.12.2000 and given possession of land to the developer and allowed the developer to take up the construction and enter into all the contracts for obtaining the permission for civil authorities. The developer was also permitted to mortgage, transfer, create charge in respect of the 50% of the constructed area relating to the developer. Hence, the capital gains for transfer of land in respect of the developer’s share cannot be assessed in the assessment year 2006-07 and relates back to the assessment year 2001-02. Hence, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. The revenue’ appeal on this ground is dismissed. Sale consideration of 3 row houses - AO taxed the market value of the four row houses as long term capital gains for transfer of land in A.Y.2006-07 - Held that:- The sale value of the three row houses involve the long term capital gains in respect of transfer of land and short term capital gains in respect of the row houses. The assessee has sold the land which was acquired in the year 1999 in the year 2005-06. Therefore, the consideration received for transfer of land would be taxed as long term capital gains and the consideration received for sale of row houses would be taxed as the short term capital gains. Ld.CIT(A) also has taken the same view. Since there was a difference in actual sale consideration the valuation as per 50C of I.T.Act, the full value of consideration should be adopted as per the stamp valuation authority which was ₹ 89,51,843/-. Accordingly, we uphold the order of the Ld.CIT(A) and is dismiss the revenue’s appeal on this ground. Cost of construction - Held that:- The assessee had acquired the his share of built up area in exchange of transfer of 50% of land. The transfer of land attract capital gains in the year of transfer as held by us. The assessee did not get the constructed area free of cost. Therefore the constructed area received by the assessee in exchange of land required to ascertained as per the cost incurred by the builder or the stamp valuation authorities and the same required to be allowed as deduction. Hence, we hold that CIT(A) has rightly held that assessee is entitled for deduction of cost of construction from the sale consideration. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. In the result, appeal of the revenue on this ground is dismissed. Sale of three row houses as short term capital gain instead of long term capital gains - Held that:- the actual delivery of the row houses to the assessee took place in 2005-06. i.e. the construction, completion and handing over of the constructed houses was in 2005-06 and the assessee has sold the row houses immediately on receipt of the same. The assessee did not retain the row houses for more than 36 months as required u/s 2(29A) and 2(29B) to hold the same as a long term capital asset . Since the assessee was holding the asset for less than 36 months, the CIT(A) rightly held that the transfer of land should be assessed as long term capital gains and the transfer of row houses to be assessed as short term capital gains. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld Deduction u/s 54F - Held that:- In the instant case, the assessee owns two residential houses, one is plot No. HIG-1B-102, Seethammadhara and the four row houses received in exchange of transfer of land. Therefore, the assessee has not satisfied the conditions for allowing deduction u/s 54F. Accordingly,we hold that the CIT(A) has rightly rejected the claim of deduction u/s 54F of I.T.Act and we uphold the same. The assessee’s appeal on this ground is dismissed. Entitlement to deduction u/s 54 - Held that:- In the instant case, the land is the long term capital asset and the residential house is a short term capital asset. The right in constructed area was acquired by the assessee in the year 1999-2000 by transfer of land. Though for the purpose of taxing the capital gains, the taxing authority is right in his approach for the purpose of taxing capital gains of residential house as short term capital gains and the land as long term capital gains, when assessee has sold both in a single transaction, the assessee is entitled for deduction u/s 54(1)
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Customs
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2018 (1) TMI 33
Confiscation - redemption fine - penalty - Whether the Tribunal was justified in holding that a case for penalty/confiscation under Sections 111 and 112 of the Customs Act is made out on the facts brought on record by the Revenue? - the decision in the case of Well Weave Fabrics Pvt. Ltd. Versus Commissioner [2017 (3) TMI 1589 - RAJASTHAN HIGH COURT] contested, where it was held that the Department has failed to establish that the finding which has been arrived at by the Tribunal is wrong - Held that: - there is no cogent reason to entertain the appeal - appeal dismissed.
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2018 (1) TMI 32
Demurrage charges - Is the Petitioner Company liable to pay the demurrage charges to ICD for the consignments not cleared by custom authorities? - Held that: - the issue is no longer res integra and is decided in the case of Trustees of the Port of Madras v. K.P.V. Sheikh Mohd. Rowther & Co. Pvt. Ltd. and another [1995 (3) TMI 105 - SUPREME COURT OF INDIA], wherein it has been held by the Supreme Court that once consignment is handed over to the Port Trust by the steamer agents, duly endorsing the bill of lading or issuing the delivery order but the goods detained at Port Trust for want of clearance from Customs authorities, the demurrage has to be collected by the Port Trust only from the consignee and not from the steamer agents. The respondents were justified in claiming the demurrage charges from the petitioner Company and the petitioner Company is liable to pay the said demurrage charges till the goods were released from the ICD - petition dismissed.
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2018 (1) TMI 31
Waiver of detention charges - the waiver of demurrage charges has been ordered by the Department from 23-5-2017 to 7-7-2017 and the same have not been obeyed - Held that: - the petitioner approached this Court by way of filing this writ petition on 10-7-2017 and subsequently, the matter was adjourned at the instance of the respondents to get proper instructions from their clients. Therefore, till the cargo is released, the demurrage charges have to be waived. Thus, there will be a direction to the respondents 5 and 6 to waive the demurrage charges/detention charges of the said container from 23-5-2017 till the date it is released - petition disposed off.
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2018 (1) TMI 30
Recovery of Duty Drawback - Rule 16A of the Customs & Central Excise Duty Drawback Rules, 1995 - Held that: - reliance placed in the case of Surinder Singh Versus Union of India & Others [2016 (10) TMI 566 - SUPREME COURT], where it was held that Rule 16A is a clarificatory provision clarifying the position of law which already exists in the form of Section 75 of the Customs Act, 1962, and therefore, will have retrospective effect - the recovery u/s 16A is not permissible - petition allowed.
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2018 (1) TMI 29
Prohibited goods - whether the goods in question which had been re-exported were ‘prohibited goods’ within the meaning of Section 111 and Section 112(d) of the Customs Act, 1962 read with Section 2(33) thereof had not been examined in the order dated 22nd December, 2014? - Held that: - the appellant did not question the refusal by the FSSAI to grant NOC - the appellant accepted the decision of the FSSAI which rendered the goods in question as ‘prohibited’ and then sought and was granted permission to re-export it on payment of redemption fine, the question urged in the Ground E has been rendered academic - appeal dismissed.
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Corporate Laws
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2018 (1) TMI 8
Oppression and mismanagement - Whether the Company petition is maintainable under section 397/398 of the Companies Act, 1956 in the light of allegation that the petitioner is not holding minimum 10 % shareholding of the Company, as prescribed under Company law? - Held that:- The respondent Nos. 2 to 5 having ceased to be Directors of the Company and also divested their investment by way of shares in Company, they have no locus standi to interfere in the affairs of Company. Therefore, all the impugned transactions made by Respondent No. 2 to 4, and their family members interest with respect to the properties of the Company mentioned supra are declared to be illegal and they are liable to be set- aside. Since all the concerned parties, in whose favour the impugned sale deed were executed have already made a party to the present CP, there is no further notice required to be issued to them before setting aside the impugned sale deeds. When the respondent No. 5 ceased to be Director of the Company, he cannot file Form No. 32 on 09.02.2005 with Registrar of Company. Therefore, the same is liable to be seaside with directions to the Registrar of Companies (Respondent No. 9) not recognise the same. It is also relevant to point here as stated supra, the resignation of Respondent No. 5, transfer of shares in question etc are affirmed by way evidence given by the second respondent before a court of law in OS No.931 of 2006. The contention of the respondent the evidence given in a suit cannot be relied upon in other proceedings like in the present proceedings cannot be accepted.
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Insolvency & Bankruptcy
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2018 (1) TMI 6
Corporate Insolvency Resolution Process - Held that:- Default as contemplated under the provisions of IBC, 2016 has been established by the Financial Creditor viz-a-viz the Corporate Debtor and in the circumstances the Petition stands admitted
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Service Tax
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2018 (1) TMI 15
Business Auxiliary Service - whether the income earned out on account of service claimed as export under the category of Business Auxiliary Service is chargeable to service tax during the period 01.04.2009 to 31.03.2011? - marketing activities like maximizing the markets for Microsoft products including all local advertising, dissemination of information to potential customers, commenting on any developments in the territory affecting the software industry, investigating feasibility for new markets for Microsoft products etc. - Held that: - an identical issue has been examined by this Tribunal in the appellants own case M/s. Microsoft Corporation (I) (P) Ltd. Versus CST. New Delhi [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)], where it was held that the services are being provided by the appellant to Singapore Recipient company and to be used by them at Singapore, may be for the purpose of the sale of their product in India, have to be held as export of services - such services provided to M/s Microsoft Operations P. Ltd. Singapore, amount to export of services and hence are not liable to service tax, we hold that the services being provided by appellants satisfy the conditions of Export of Service Rules, 2005, hence are not liable to service tax. Valuation - includibility - reimbursement received on account of services claimed as exported - Business Auxiliary Services - Held that: - the Business Auxiliary Services in relation to MSS is covered as export of service under Export of Service Rules, 2005, the reimbursement in relation to MSS would also therefore, be not liable to service tax. Levy of service tax - maintenance and repair of software - Board Circular No.256/1/2006-CX-04 dated 07.03.2006 - Held that: - The appellants have argued that product support services have been held to be non taxable in their own case by the Division Bench of this Tribunal because there was no difference of opinion on this issue between the two members and accordingly the issue is covered by the Final Order no.53737/2014 dated 23.09.2014 - demand set aside. Reverse charge mechanism - expenditure on foreign currency - Held that: - the fact remains that the Ld. Commissioner has given no findings at all on the above demand in the impugned order and it would be in the interest of justice that the supporting evidence for the impugned period are submitted before the adjudicating authority, who will carefully examine the evidence in respect of this particular demand and given his findings and conclusion on the evidence and the submissions of the appellant made before him. The matter pertaining to service tax on foreign expenditure for 17.04.2006 to 31.03.2009 is remanded back to the Ld. Adjudicating authority to pass a fresh adjudication order after giving fair opportunity to appellants to defend their case - appeal allowed by way of remand.
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2018 (1) TMI 5
Levy of service tax - receipts relating to deposits received from the tenants by the appellant - Rentals receipts from open plot - Parking fees - Held that: - the deposits were received from the tenants by the appellant do not have the character of rental receipts being security deposits that shall not form part of gross value and shall not be liable to service tax. Rentals receipts from open plot - Held that: - Rentals receipts from open plot shall be exigible to service tax with effect from 01/07/2010 and not prior to the statutory provision inserted in terms of clause (v)(b) under Section 65(105)(zzzz) of the Finance Act, 1994. Parking fees - Held that: - Parking fees received by the appellant from farmers not being in coverage of the taxable entry under Section 65(105)(zzzz) of the Finance Act, 1994, that shall not be taxable. Penalty - case of appellant is that tax having been paid on the receipts from renting of immovable property with interest, there may not be levy of penalty - Held that: - Levy of service tax on renting of immovable property has travelled to various legal forums from the date of inception of levy. Therefore, there was confusion among tax payers for which there may be no levy of penalty on the appellant on renting of immovable property. Appeal allowed in part.
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2018 (1) TMI 4
Refund claim - taxes having been paid on certain services provided by it which were not taxable service - time limitation - When the order of the appellate Commissioner is read, it demonstrates that he has only examined the question of admissibility of refund of tax without examining the law relating to levy of service tax? - appellant says that larger Bench of this Tribunal has already decided the issue by its order dated 17.10.2016 in the case of Commissioner of Central Excise & Service Tax-III Vs. State Bank of Patiala [2016 (10) TMI 800 - CESTAT NEW DELHI] - Held that: - It may be stated that while deciding the question referred to the larger Bench, at no stage, pendency of the matter before the Apex Court has been taken into account. When the very scope and ambit of N/N. 22/2006-ST is under sub-judice before the Apex Court, it is premature on the part of the Tribunal to overreach the jurisdiction of the Apex Court - both the matters remanded to the learned adjudicating authority - appeal allowed by way of remand.
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Central Excise
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2018 (1) TMI 16
Captive consumption - job-work - goods goods cleared to their job workers without payment of duty - N/N. 67/95-CE dated 16.3.1995 - Held that: - it is admitted fact that these dies have been manufactured by the appellant in their factory and sent to the job worker for further manufacturing intermediate goods - Admittedly, the dies have not been used captively in the factory of the appellant. Therefore, the benefit of the N/N. 67/95-CE is available to the appellant. CENVAT credit - Revenue neutrality - Rule 4 (5) (b) of CCR - Held that: - if the appellant had paid duty on dies, the appellant was entitled to take Cenvat credit thereof immediately. In that circumstance, we find that is Revenue neutrality situation - it is case of Revenue neutrality as whatever duty they had paid on the dies, immediately they were entitled to the take Cenvat credit of the same. If that being the situation, in that circumstance, as per Rule 4 (5) (b) of the Rules, Cenvat credit has been taken by the appellant on these dies, the appellant is not required to reverse the credit as the same are cleared to the job workers for further manufacture of the goods. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 14
Clandestine removal of finished goods and raw material - fraudulent credit entries in PLA - CENVAT credit - penalties - personal penalties - natural justice - the first contention of the appellants is that the impugned order was passed ex-parte - Held that: - the show cause notice was issued on 04.04.2000 and the same was first adjudicated on 27.11.2003. The adjudication order was remanded by Hon’ble Tribunal vide Final Order dt. 25.06.2004 for fresh adjudication with a specific direction to the party to file reply in two months and to Ld. Commissioner to pass the final order within a period of 4 months from the date of receipt of the reply. In the remand proceedings, the appellants did not submit any reply despite repeated reminders and did not attend personal hearing despite being given a number of opportunities. We find that no reply was filed by the appellants either within the stipulated period or even till the date of adjudication. The opportunities given by the adjudicating authority have been narrated in the Paragraph 28-32 and 35 of the adjudication order. Hence, we find that sufficient chances were given to the appellants to present their case but the appellants did not avail those opportunities and hence we find that there is no violation of natural justice by the adjudicating authority. Further allegation of appellant is that the impugned order duty has been demanded on the basis of some unauthenticated entries in the resumed registers and notebooks - Held that: - None of the documents which were recovered were disputed by the appellants and none of the statements have been retracted. It is undisputed that the appellants had taken credit of ₹ 18.5 lacs in their PLA during 26.09.1997 to 19.12.1997 on different dates without making deposits of any amount in the bank and utilized such illegal credit in PLA for clearance of excisable goods. This shows the wanton and deliberate violation of the law done repeatedly over a period of time - Further, there were parallel invoices recovered from the factory and also from the Ludhiana depot, which clearly shows that the goods under these invoices have been cleared clandestinely without payment of duty. There is sufficient corroborative evidence in respect of the confirmation of demands which the Ld. Commissioner has described in detail in Para 41.1 and 41.2 and Para 44 of his order - Department has been able to successfully prove the allegations of clandestine removal and evasion of duty done in various ways by the appellants as also the taking of illegal credit and illegal utilization of such credit by the appellants. Penalty on Sh. Deepak Singh, M.D. - Held that: - he Managing Director was fully responsible for the fraud, which was played on the Revenue in various ways. Hence, separate penalty on Managing Director is fully justified. Penalty on Sh. VK Sachdeva, General Manager (Finance) - Held that: - overall superintendence of excise matters rested with him and he was the fully aware of the law and implications of its violation. He has willfully connived with the management. His role in the fraud has been proven and hence the penalty on Sh. V.K. Sachdeva has been correctly imposed. Penalty on Sh. N.M. Gupta, AGM (cost and accounts) - Held that: - Sh. N.M. Gupta, AGM has fully abetted in all the activities leading to clandestine removal of goods and clearance of goods without payment of duty and fraudulent evasion of central excise duty. Hence, the penalty imposed on him is fully justified. Personal penalties on three appellants - Held that: - In the present case, the appellant employees were very much aware that the goods were liable to confiscation and what they were doing had implications of contravention of the laws; still, they willfully and systematically connived with the management in clandestine removal of goods through different modus operandi - penalties on the Managing Director, Sh. Deepak Singh, Sh. V.K. Sachdeva and Sh. N.M. Gupta, are upheld. Appeal dismissed.
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2018 (1) TMI 13
SSI exemption - N/N. 8/03-CE - effect of rescinded notification - main contention of the appellant is that they continued to avail notification in question under mistaken belief and inadvertently that the said notification was holding the field during the relevant period - difference of opinion - Held that: - As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon'ble President to appoint the Third Member for resolving the issues: Whether in view of Revenue neutral situation, the benefit of N/N. 8/03-CE should be extended to the assessee and the appeal be allowed, as held by the Member (Judicial)? - matter referred to Third Member.
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2018 (1) TMI 3
CENVAT credit - input service - rent-a-cab service - period involved is July, 2013 to July, 2014 - Held that: - As per the amendment of definition of input service under rule 2(l) clause (B) rent a cab service falling under clause (zo) has been excluded from the purview of input service - Since there is categorical exclusion of rent a cab from the definition of input service credit on or after 1-4-2011, credit is not admissible - appeal dismissed - decided against appellant.
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2017 (12) TMI 1533
CENVAT credit - includibility - whether the freight insurance collected by the appellant separately over and above the invoice value by raising the commercial invoice is includible in the assessable value of the excisable goods? - Held that: - the purpose of showing freight separately in the invoice is only to show the actual amount of freight. However freight per say is not includible in the assessable value - Merely because the transportation charges are not mentioned in the excise invoice, the same cannot be charged to excise duty - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (1) TMI 28
Principles of Natural Justice - the petitioner appears to have misplaced both the orders and thereafter obtained certified copies of the same and came up with the above writ petitions - Held that: - In view of the admitted position that SCN was served on the petitioner and that even the orders of assessment were served on the petitioner, the case cannot strictly come under the category of denial of reasonable opportunity. But at the same time, it is seen from the order of assessment that when an audit was conducted, the petitioner had cooperated - the petitioner can be given one opportunity, despite their own follies - petition allowed.
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Wealth tax
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2018 (1) TMI 17
Disallowance of claim for deduction of debts incurred in relation to the taxable assets from gross wealth - Held that:- Admittedly, the assessee is engaged in hire purchase and leasing the vehicles. “Proportionate basis” for determination of the debt can be adopted if multiple assets were brought under wealth tax. In the computation of wealth, the assessee has declared value of own vehicles as well as value of leased vehicles and no other assets exist or compounded with any other assets so as to find difficult to determine the debt on proportionate basis. Thus, adoption of proportionate basis for determination of the debts does not arise in this case as rightly held by the ld. CIT(A). We find no fault if the assessee has borrowed the funds for acquiring capital assets, which is exactly, nothing but leased vehicles. However, the assessee has not brought on record and cogent evidences as to whether the borrowed funds were utilized for leased vehicles. From the above, the stated fact is that the assessee has, initially, acquired leased vehicles and thereafter borrowed funds from Banks and utilized. To accept the above contention of the assessee, the assessee is required to file complete details of acquisition of leased vehicles, utilization of borrowed funds for both the assessment years before the Assessing Officer and accordingly, the Assessing Officer is directed to verify the details as may be filed and decide the issue afresh in accordance with law after allowing sufficient opportunity of being heard to the assessee.
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