TMI Tax Updates - e-Newsletter
January 23, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Highlights / Catch Notes

• Income Tax:

  An individual, who holds a bachelor degree from a recognised Indian University or institution, or has passed the intermediate level examination conducted by the ICAI or the ICSI or the ICMAI, shall be eligible to act as Tax Return Preparer
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• Income Tax:

  Perquisite in lieu of salary u/s 17(2)(iii) - difference in value between stamp duty valuation and actual sale value - Merely because the assessee happens to be a director of the company, provisions of section 17(2)(iii) of the Act cannot be applied to the assessee without establishing the fact that the assessee is an employee of the company and the benefit given is in the nature of salary. - AT
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• Income Tax:

  Deduction u/s.80IB(10) - The joint venture was merely used as conduit to facilitate execution of housing project work, the actual work was done by the two members of JV. All the expenditure for the execution of project was incurred by the individual members and not the joint venture. Therefore, the deduction was rightly claimed by the members - AT
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• Income Tax:

  Addition u/s 68 - genuineness of share transactions - For the only reason that the payment of purchase has been made after a lapse of 9 months cannot render the purchase as non genuine unless and otherwise any material is brought on record which could negate this fact. - AT
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• Income Tax:

  Disallowing contribution to gratuity fund - Once the provisions of contribution to gratuity fund are specifically covered by Section 36(1)(v), as is the admitted position on the facts of the case, section 37(1) can obviously not have any application - AT
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• Income Tax:

  Nature of receipts - royalty / FIR or reimbursement of expenses - The appellant is merely arranging Corporate IT services. The payments are received for such services and not for the right to use of equipment (hardware or software) - Such payments were not in the nature of royalty or FIS - AT
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• Income Tax:

  Penalty u/s 271(1)(c) - Though section 69B is a deeming fiction but in the matter of penalty proceedings, such deeming fiction cannot be extended so as to hold assessee guilty of concealment of income or furnishing of inaccurate particulars when the addition on account of deeming fiction is based on some kind of estimate given by a Govt. Valuer. - AT
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• Income Tax:

  If the partners of the firm are aggrieved by the reopening of the assessment in their hands, it is for the partner to challenge the same in appropriate forum. - AT
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• Income Tax:

  Eligibility to deduction u/s 54B and u/s. 54F - assessee has not deposited the net sale consideration in the capital gain account - belated investment - beyond the due date specified u/s 139(1) but within the date specified u/s 139(4) - benefit of deduction allowed - HC
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• Customs:

  Classification of goods - Optical Fibre Cables (OFC in short) imported by Vodafone Group of Companies and used in Telecommunication are not classifiable under Customs Tariff Heading 8544 and they would fall under customs Tariff Heading 9001. - AT
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• Customs:

  Penalty on CHA u/s 114 (iii) of CA, 1962 - It has been alleged that appellants were one of the three CHAs whose services were utilized in filing the shipping bills of the fictitious export firms - Penalty reduced
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• Corporate Law:

  Delegation by Central Government of its powers and functions - Consequential amendment since section 194 and section 195 relating to forward dealing and insider trading omitted - Section 458 of the Companies Act, 2013
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• Corporate Law:

  Punishment for fraud - to bring thresholds with respect to compounding provisions relating to fraud without imprisonment - Section 447 of the Companies Act, 2013
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• Corporate Law:

  Lesser penalties for One Person Companies or small companies - lesser penalties (not be more than one-half) for one person companies and small companies - Section 446B of the Companies Act, 2013
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• Corporate Law:

  Factors for determining level of punishment - New Section 446A of the Companies Act, 2013
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• Corporate Law:

  Compounding of certain offences - to enable Tribunal to compound offences punishable with fine only or with fine or imprisonment or both - Section 441 of the Companies Act, 2013
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• Corporate Law:

  Transitional provisions - till the time a Special Court is established, the trial of offences shall be continued with Court of Session or Court of Metropolitan Magistrate or a Judicial Magistrate of the First Class - Section 440 of the Companies Act, 2013
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• Corporate Law:

  Offences to be non-cognizable - to include member along with shareholders in respect of complaint with respect to taking cognizance of offences under the Act by the Court - Section 439 of the Companies Act, 2013
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• Corporate Law:

  Application of Code to proceedings before Special Court - Amendment as a consequence of amendments to section 435 - Section 438 of the Companies Act, 2013
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• Corporate Law:

  Establishment of Special Courts - to include appointment of Metropolitan Magistrate or a Judicial Magistrate of the First Class by Central Government in Special Court in case of offences punishable under the Act with imprisonment of not more than two years - Section 435 of the Companies Act, 2013
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• Corporate Law:

  Selection of Members of Tribunal and Appellate Tribunal - to align with Supreme Court directions - Section 412 of the Companies Act, 2013
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• Corporate Law:

  Qualifications of Chairperson and Members of Appellate Tribunal (NCLAT) - eligibility for technical members with Supreme Court directives with respect to qualifications of Technical Member - Section 411 of the Companies Act, 2013
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• Corporate Law:

  Constitution of Appellate Tribunal - Jurisdiction extended to hear the appeal against the order of National Financial Reporting Authority (NFRA) - Section 410 of the Companies Act, 2013
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• Corporate Law:

  Qualification of President and Members of Tribunal (NCLT) - to provide for eligibility for technical members with Supreme Court directions - Section 409 of the Companies Act, 2013
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• Central Excise:

  Rebate of duty - export of goods - bank realization certificate has no link with the factum of export of the goods and non-submission of the same cannot be made, the basis for denial of the rebate of duty on the exported goods. - AT
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• Central Excise:

  Manufacture - ore concentrate - various processes such as crushing, screening, sorting by hydraulic machines and washing with high pressure water was performed by machines - processes undertaken by the appellant will incur the mischief of Chapter 4 and Excise duty will be payable by the appellant - AT
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• Central Excise:

  CENVAT credit - the activities of the assessee at the two separate premises in question were clearly interlinked. 'Factory' under Section 2(e) of the Act, means any premises where part of manufacturing processes connected with the production of goods is carried on - Tribunal has made no error in allowing the assessee to utilize CENVAT credit on capital goods against the duty payment on sugar and molasses. - HC
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• VAT:

  Condonation of delay in filing appeal - time limit prescribed u/s 35H(1) is absolute and unextendable u/s 5 Limitation Act. Since court has to respect the legislative intent, limitation cannot be extended u/s 5 of Limitation Act. - HC
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Notifications

• GST

• 02/2018 - dated 20-1-2018 - CGST
  Seeks to extend the last date for filing FORM GSTR-3B for December, 2017 till 22.01.2018

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• GST - States

• 75/2017-State Tax - dated 30-12-2017 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Fourteenth Amendment) Rules, 2017.

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• 74/2017-State Tax - dated 29-12-2017 - Maharashtra SGST
  Notifies the date from which E-Way Bill Rules shall come into force.

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• 73/2017-State Tax - dated 29-12-2017 - Maharashtra SGST
  Waiver the late fee payable for failure to furnish the return in FORM GSTR-4.

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• 72/2017-State Tax - dated 29-12-2017 - Maharashtra SGST
  Extends the due dates for monthly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of more than ₹ 1.5 crores.

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• 71/2017-State Tax - dated 29-12-2017 - Maharashtra SGST
  Extends the due dates for quarterly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of upto ₹ 1.5 crore.

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• 70/2017-State Tax - dated 29-12-2017 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Thirteenth Amendment) Rules, 2017.

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• 69/2017-State Tax - dated 21-12-2017 - Maharashtra SGST
  Extension of time limit for furnishing FORM GSTR-5A for the period of July,2017 to December,2017 upto 31.01.2018

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• 68/2017-State Tax - dated 21-12-2017 - Maharashtra SGST
  Extension of time limit for furnishing FORM GSTR-5 for the period of July,2017 to December,2017 upto 31.01.2018.

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• 67/2017-State Tax - dated 21-12-2017 - Maharashtra SGST
  Extension of time limit for filling of FORM GST ITC-01 for period of July 17 to November 17 upto 31.01.2018.

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• GST 1017/C.R. 216/Taxation-1 - dated 28-11-2017 - Maharashtra SGST
  Provisions of sub-rule (i), (ii), (iii), (iv), (v), (vi) and (vii) of rule 2 of the Maharashtra Goods and Services Tax (Sixth) Amendment) Rules, 2017.

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• 66/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  Exemption to all tax payers from payment of tax on advances received in case of supply of goods.

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• 65/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  Exemption to suppliers of services through an e-commerce platform from obtaining compulsory registration.

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• 64/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  Maximum late fee payable for delayed filing of return in FORM GSTR-3B from October, 2017 onwards.

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• 63/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  Extension of the due date for submission of details in FORM GST-ITC-04.

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• 62/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  Extension of the time limit for furnishing FORM GSTR-6 for the month of July, 2017.

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• 61/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  Extension of the time limit for furnishing FORM GSTR-5A for the months of July to October, 2017

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• 60/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  Extension of time limit for furnishing FORM GSTR-5, for the months of July to October, 2017

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• 59/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  GSTR-4-Extension time limit for filing of FORM GSTR-4.

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• 58/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  Extends the time limit for furnishing the details of outward supplies GSTR-1-Due dates for suppliers, having turnover above ₹ 1.5 crore.

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• 57/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  GSTR-1-Due dates for suppliers, having turnover upto ₹ 1.5 crore.

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• 56/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  Extension of due date GSTR-3B.

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• 55/2017-State Tax - dated 15-11-2017 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Twelfth Amendment) Rules, 2017.

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• 47/2017-State Tax (Rate) - dated 14-11-2017 - Maharashtra SGST
  Amendment to Notification No.12/2017 ST(R) exemption for admission to protected monument etc.

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• 46/2017-State Tax (Rate) - dated 14-11-2017 - Maharashtra SGST
  Amendment to Notification No.11/2017 ST(R) tax rates for restaurants,job work on handicraft goods etc.

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• 45/2017-State Tax (Rate) - dated 14-11-2017 - Maharashtra SGST
  Seeks to provide concessional GST rate of 2.5% on scientific and technical equipments supplied to public funded research institutions.

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• S.O.075/P.A.5/2017/S.9/2017. - dated 1-11-2017 - Punjab SGST
  Amendment in Notification No. S.O. 35/P.A.5/ 2017/S.9/ 2017, dated the 30thJune, 2017

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• S.O.074/P.A.5/2017/S.11/2017 - dated 1-11-2017 - Punjab SGST
  Amendment in Notification No. S.O.37/P.A.5/ 2017/S.11/2017, dated the 30th June, 2017

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• S.O.073/P.A.5/2017/Ss. 9, 11, 15 and 16/2017 - dated 1-11-2017 - Punjab SGST
  Amendment in Notification No. S.O.17/2017/P.A.5/Ss.9, 11, 15 and 16/2017, dated the 30th June, 2017

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• S.O.072 /P.A.5/2017/S.9/2017 - dated 1-11-2017 - Punjab SGST
  Changes to rates of tax applicable to motor vehicles

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• S.O.071/P.A.5/2017/S.11/2017 - dated 1-11-2017 - Punjab SGST
  Amendment in Notification No. S.O.32/P.A.5/2017/ S.11/2017, dated the 30thJune, 2017

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• S.O.070/P.A.5/2017/S.9/2017 - dated 1-11-2017 - Punjab SGST
  Amendment in Notification No. S.O.28 /P.A.5/2017/ S.9/2017, dated the 30th June, 2017

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• S.O.069/P.A.5/2017/S.11/2017 - dated 1-11-2017 - Punjab SGST
  Amendment in Notification No. S.O.18/P.A.5/2017/ S.11/2017, dated the 30th June, 2017

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• S.O.067/P.A.5/2017/S.54/2017 - dated 27-10-2017 - Punjab SGST
  Amendment in Notification No. S.O. 29/P.A.5/2017/S.54/2017, dated the 30th June, 2017

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• S.O.066/P.A.5/2017/S.11/2017 - dated 27-10-2017 - Punjab SGST
  Amendment in Notification No. S.O.66/P.A.5/2017/S.11/2017

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• S.O.065/P.A.5/2017/S.9/ 2017 - dated 27-10-2017 - Punjab SGST
  Amendment in Notification No. S.O.16/P.A.5/ 2017/S.9/2017, dated the 30th June, 2017

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• Income Tax

• 04/2018 - dated 19-1-2018 - IT
  Tax Return Preparer (Amendment) Scheme, 2018

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• SEZ

• S.O. 337 (E) - dated 12-1-2018 - SEZ
  Central Government rescinds the Notification No. S. O. 1966 (E) dated 20.11.2007

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Circulars / Instructions / Orders

• GST - States - 01 T of 2018 - dated 1-1-2018
  Manual filing and processing of claim of refund of excess balance in electronic cash ledger.
• GST - States - 11/2017-MGST - dated 21-12-2017
  Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03
• GST - States - 50 T of 2017 - dated 7-12-2017
  Submission of Bond/ Letter of Undertaking by the Exporter in respect of Exports without payment of Integrated Tax under IGST Act.

News

• Trying to bring petrol, diesel under GST: Pradhan

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• FICCI PRE-BUDGET MEMORANDUM 2018-2019

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• Pre-Budget Memorandum 2018 Suggested Amendments in respect of Indirect Taxes for Finance Bill, 2018 By : Chamber of Tax Consultants

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• 'Jaitley should contain fiscal deficit in Budget 2018-19'

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• Auction for Sale (Re-issue) of Government of India Floating Rate Bonds AND Government Stock

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• Accepting of Unique Identity Number (UIN) of Foreign Diplomatic Missions/UN Organizations while making supplies

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• The Government of India, the Government of Uttarakhand and the World Bank sign $120 million Loan Agreement to improve access to Water Supply Services in the Hilly State of Uttarakhand

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• RBI Reference Rate for US $

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• National Investment and Infrastructure Fund (NIIF) makes its First Investment; NIIF has partnered with DP World to create an investment platform for ports, terminals, transportation and logistics businesses in India

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• The Government of India enters into an agreement with ONGC for the Strategic Sale of its 51.11% equity share-holding in HPCL at a consideration of ₹ 36,915 crore.

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Case Laws:

• GST

• 2018 (1) TMI 1003
  Validity of Tender process initiated by the Geological Survey of India, Eastern Region by a notice inviting tender dated April 27, 2017 - Held that: - action of the authorities in obtaining information from the participants as to the tax implications cannot faulted - On evaluation, the authorities found the price quoted by the successful bidder to be lower than that of the petitioner after taking GST implications. Such a decision cannot faulted as being perverse - there is no material irregularity in the decision making process of the respondent authorities or their decision warranting an interference by the writ Court - petition dismissed.

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• Income Tax

• 2018 (1) TMI 1004
  Computation of deduction under Section 80 HHC - as per tribunal for the purposes of applying explanation (baa) below Sub-Section 4B of Section 80HHC only the 90% of the net interest remain after allowing a set off of interest paid - held that:- This question of law is covered by decision of this Court in Commissioner of Income Tax Etc. v. Shri Ram Honda Powers Equipment Ltd. (2007 (1) TMI 86 - HIGH COURT, DELHI) and ACG Associated Capsules P. Ltd. v. The Commissioner of Income Tax, Central-IV Mumbai (2012 (2) TMI 101 - SUPREME COURT OF INDIA). The Assessing Officer will apply their ratio on applicability and effect of Explanation (baa) and compute deduction under Section 80 HHC. Addition u/s 41(1) - Tribunal deleted the addition - Held that:- No error in the findings and reasons given by the Tribunal. The respondent assessee is a company and accounts were audited as per the mandate of the Companies Act. In the accounts, the respondent assessee had accepted and acknowledged its liability. The creditors can rely on the said acknowledgment - many of the creditors were paid, adjusted or eased in the subsequent years as accepted by the Commissioner of Income Tax (Appeals) and the Tribunal. No special facts or reasons were given by the Assessing Officer to hold and observe that the liabilities had ceased and amounts should be added under Section 41(1) - Decided in favour of assessee

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• 2018 (1) TMI 1001
  Credit of the TDS and tax paid as reflected and accepted in AS-26 claimed - discrepancy between the TDS reflected in AS-26 and the certificate(s) given by the assessee - Held that:- This will be examined. In case there is any discrepancy between the TDS reflected in AS-26 and the certificate(s) given by the assessee, the assessee would be asked for explanation and accordingly, the order would be passed. The petitioner will visit the office of the Assessing Officer on 18.01.2018 at 11:30 a.m. along with all the necessary papers and documents. In case of deficiency, same would be pointed out and required documents would be furnished. Once the documents are furnished, the refund order along with interest payable as per law would be issued within a period of 21 days thereafter. Respondent would file a compliance affidavit, in terms of the above directions within six weeks

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• 2018 (1) TMI 1000
  Eligibility to deduction u/s 54B and u/s. 54F - assessee has not deposited the net sale consideration in the capital gain account - belated investment - beyond the due date specified u/s 139(1) but within the date specified u/s 139(4) - whether specific provisions of Section 54B(2) and 54F(4) which refers to the due date of Section 139(1) and not Section 139(4) - Held that:- Admittedly, while considering the prosecution, the provisions are to be very strictly construed whereas in the case of exemption and other benefits, it is to be construed from the statue very liberally. The contention of Mr. Singhi that under Section 139, investment is to be made before the return is filed otherwise it will render the provision nugatory is to be considered in the light that while considering the case, Karnataka High Court in Fathima Bai 2008 (10) TMI 563 - KARNATAKA HIGH COURT) has considered the provisions and interpreted the same. Even the same is accepted by the Punjab and Haryana High Court and Gauhati High Court which has taken the view contrary to Kerala High Court decision. In that view of the matter, three High Courts have taken the view and the tribunal has followed the Karnataka High Court which has followed the earlier Gauhati judgment which has been independently supported by the Punjab Harayana High Court. - Decided in favour of the assessee

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• 2018 (1) TMI 993
  Deemed dividend u/s 2(22)(e) - company M/s. First Tek Pvt. Ltd. had advanced a sum of ₹ 35 lakhs to M/s. Vijetha Constructions which in turn has executed promissory note in favour of the assessee, thereby derived the benefit of advance to M/s Vijetha Constructions from the company in which the assessee has substantial interest - Held that:- The deemed dividend is applicable in circumstances of payment made by the company to the shareholder, having beneficial ownership of 10% or more than 10% of the shares, the amount should have been provided by way of loan or advance to shareholder and such amount should be for the benefit of the shareholder and the company should have sufficient reserves. In the instant case, it is established that the payment of ₹ 35 lakhs by cheque No.685243 was towards the consideration for purchase of flat from M/s. Vijetha Constructions by M/s. First Tek Pvt. Ltd and none of the conditions or clauses discussed above are applicable in the case of the assessee - benefit out of payment made to M/s. Vijetha Constructions by M/s. First Tek Pvt. Ltd, hence, no case for holding the amount as deemed dividend - Decided in favour of assessee.

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• 2018 (1) TMI 992
  Addition u/s 69 on account of undisclosed investments - Held that:- From findings of Ld.CIT(A) except for the opening cash balance, we do not want to interfere with the other findings of Ld. CIT(A). He has allowed opening cash of ₹ 2,00,000/- for the assessee. In the instant case all the other income as well as cash flow has been taken together for the assessee and his wife. We therefore accepting the same reasoning as given by Ld. CIT(A) are of the view that it would be justified to accept a sum of ₹ 2,50,000/- each as the opening cash balance of both the assessee and his wife. The assessee accordingly gets relief of ₹ 3,00,000/- over and above the relief granted by Ld.CIT(A) of ₹ 3,56,630/-. In the result the addition made u/s 69 of the Act is sustained to ₹ 9,88,370/-. In the result of the assessee are partly allowed. Addition u/s 68 - Held that:- No possible source of income justifying the alleged cash deposit in the bank account of Shri Rajesh Singh Chouhan has been brought on record. Copy of bank account of another lender Shri Mithlesh Singh Chouhan has not been placed on record till date. We therefore in the given facts and circumstances of the case are inclined to confirm the view of the Ld.CIT(A) as the assessee has been unable to prove the creditworthiness of the alleged cash credit of ₹ 4,00,000/-. We, therefore find no infirmity in the orders of Ld.CIT(A) confirming the addition - Decided against assessee Undisclosed interest income addition - assessee has been unable to prove that the interest income earned from fixed deposit receipts were not earned by the him during the year - Held that:- Since the assessee has not shown the interest income of ₹ 51,760/- earned on FDR’s is his return of income, no interference is called for in the findings of Ld. CIT(A) and therefore Ground is dismissed.

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• 2018 (1) TMI 991
  Addition u/s 68 - genuineness of share transactions - treating the short term capital gain as income from undisclosed sources - Held that:- The relevant documents in the paper book prove beyond doubt the genuineness of sale of equity shares. It is also not disputed that the share of IFCI Ltd were dematized after the purchase and they have been debited from this account at the time of sale. As far as purchase is concerned the shares have been purchased through a registered broker who is a member of Stock Exchange, Bombay having SEBI registration No.INB010005219. For the only reason that the payment of purchase has been made after a lapse of 9 months cannot render the purchase as non genuine unless and otherwise any material is brought on record which could negate this fact. Addition has been made for the unexplained credit but nowhere right from the assessment proceedings and till the proceedings before the appellate authority, revenue authorities have ever doubted the source of amount of sale consideration which the assessee received through banking channel from sale of shares held in Dmat account through the recognized stock exchange which is verifiable from the contract note. Both the lower authorities erred in treating the alleged transaction of sale of equity shares as a sham transaction. - Decided in favour of assessee

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• 2018 (1) TMI 990
  Reopening of assessment - partnership firm - Deemed dividend u/s 2(22)(e) - whether to be assessed only in the hands of the partners and not in the hands of the assessee-firm - whether the Tribunal had exceeded its jurisdiction while holding deemed dividend cannot be assessed in the hands of the assessee-firm and but only in the hands of the partners of the assesseefirm, who are the beneficial shareholders of the lender company, viz., M/s.KTC Automobiles Private Limited? - Held that:- If the partners of the firm are aggrieved by the reopening of the assessment in their hands, it is for the partner to challenge the same in appropriate forum. In the instant case, there is no apparent mistake in the order of the ITAT dated 30.08.2013, warranting our interference u/s 254(2) of the I.T.Act. Therefore, we see no reason to interfere with the order of the Tribunal

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• 2018 (1) TMI 989
  Penalty proceedings u/s 271(1)(c) - deemed dividend addition u/s 2(22)(e) - additions u//s 69B - Held that:- As addition stands deleted by the Tribunal and therefore, penalty on said addition cannot be sustained. Accordingly, the same is directed to be deleted Difference in the purchase value of the plot as shown in the registered sale deed and the estimate made by the Valuation Officer to whom reference was made by the AO - Held that:- The addition has been made purely on the basis of the estimate given by the Valuation Officer and the value of the transaction shown in the registered sale document. If no material has been brought either by way of inquiry by the AO or some tangible information has into his knowledge that the purchase consideration of ₹ 38,50,000/- for the plot No. D-101 is less or assessee has paid extra than what has been mentioned in the registered sale document, then no penalty for either concealment of income or furnishing of inaccurate particulars can be levied. Though section 69B is a deeming fiction but in the matter of penalty proceedings, such deeming fiction cannot be extended so as to hold assessee guilty of concealment of income or furnishing of inaccurate particulars when the addition on account of deeming fiction is based on some kind of estimate given by a Govt. Valuer. If nothing incriminating is found against the assessee, then such a valuation report alone cannot be the basis for levy of penalty. Apart from that the assessee’s explanation that the plot No. D-101 was adversely located in comparison to plot no. D-102 has not been rebutted and it is quite possible that two similar adjacent plots may have different market value, because of different location in terms of direction, facing of the plot, geometrical shape, Vastu factors, etc. All these factors in India do have impact on the value of the property. Such a probable factors cannot be ignored and even under Explanation 1, the assessee’s explanation does constitute probable explanation which has not been found to be incorrect by way of any material on record. Thus, we delete the penalty

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• 2018 (1) TMI 987
  Disallowance of legal and professional charges - Held that:- As decided in assessee’s own case for the assessment year 2009-10 [2016 (1) TMI 772 - ITAT DELHI] the work assigned to the consulting firm was completed in F.Y. 2004-05. The assessee has maintained the books of account in mercantile system and he did not make any provision in this regard in his books of account. There appears no good reason to make payment of legal fee during the year for such work which stood completed 3-4 years before the payment of such fee. There is no agreement on record to indicate that the assessee may make such payments whenever he thinks fit. - expenses allowed. - Decided in favor of assessee. Payment of rates and taxes - whether capital expenditure - Held that:- the payments were made based on laws of the Government and in connection with the business. The bills or receipts of the payments nowhere show that the alleged payments were in the nature of penalty. - claim of expenses allowed as revenue expenditure - Decided in favor of assessee. Addition u/s. 43B - payments made late on account of ESI and Provident Fund - Held that:- In this case the payments were made before filing of the due date of the return of income and hence the same is allowable under section 43B. Our aforesaid view is fortified by the decision of the Hon’ble Supreme Court of India in the case of CIT vs. Alom Extrusions Ltd. (2009 (11) TMI 27 - SUPREME COURT) wherein, it has been held that the employer's contribution was liable to be allowed, since it was deposited by the due date for the filing of the return. - Decided in favour of assessee.

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• 2018 (1) TMI 986
  Decline of claim of exemption u/s.54F - assessee has purchased more than one residential house out of the sale proceeds of capital gain - Held that:- The issue under consideration is squarely covered by the decision in the case of CIT vs. Late Khoobchand M. Makhija [2013 (12) TMI 1525 - KARNATAKA HIGH COURT] wherein held that exemption u/s.54 is available even in respect of two house property / flats being acquired out of the sale proceeds of long term capital gain. Applying proposition of law to the facts of the instant case, we found that assessee has invested more than the sale proceeds of the industrial gala for purchase of two flats. Respectfully following the decision of Karnataka High Court, we do not find any merit for decline of assessee’s claim of deduction u/s.54 for investment in two flats out of sale proceeds of long term capital gains within the stipulated period provided in the Act. - Decided in favour of assessee

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• 2018 (1) TMI 983
  Payment received on providing corporate IT services etc. to group entities - receipts claimed by the assessee as reimbursement on cost basis - receipts liable to be taxable in the hands of the assessee either as royalty or fee for included services under the relevant articles of the DTAA between India and USA - PE in India - Held that:- The appellant, being the ultimate holding company, maintains a centralized IT centre for its group companies across the globe. Such a system enables the appellant to achieve uniformity, confidentiality and economies of scale. For providing such services, the Appellant has entered into an Agreement dated 1 June 2001 with various group companies. The terms of the Agreement (Clause 1.2 and 2.4) clearly provide that all direct and indirect costs for providing Corporate IT services would be charged from the group companies. Further, the Agreement provides for allocation key by which the total cost (direct and indirect) would be recovered from the group companies. Accordingly, the Agreement itself substantiates that only cost of providing Corporate IT services is recovered from the Indian group companies. From the invoice it is seen wherever there is extra charge on the basis of allocation key, the same is adjusted by way of reversal in the invoice to ensure the recovery is made only for actual cost. The appellant company itself is not having its core activity in the nature of providing corporate IT services. The entire "Cargill group" is engaged in the business of International marketer, processor and distributor of agricultural food and industrial products. The company does not have its core strength in providing corporate IT related services, which is evident by the fact that no such corporate IT services have been provided to any outside entities. Thus, neither the company has the core strength nor is in possession of any secret processes or commercial and industrial information, which it could be held to be passing on to its group entities in India and worldwide. The group has decided to have a centralized corporate IT system to facilitate globalization, for cost effectiveness and synergy in the working of various group entities of the appellant company across the world. AO could not bring out any adverse evidence on record that may suggest that the appellant had passed on any commercial or industrial information or secret processes to the Indian group companies that may be treated as royalty. The appellant company's globalised corporate IT system facility is also developed by its vendors and in fact it is the appellant, which has received the services for setting up the globalised corporate IT system. Qua its group companies, the appellant has only facilitated use of the common facility in its own business interest, for which the proportionate direct and indirect cost have been recovered. The appellant is merely arranging Corporate IT services. The payments are received for such services and not for the right to use of equipment (hardware or software). The payer is using their services through leased line/internet/internet services providers. The appellant had categorically stated that no amount of profit was embedded in such payments. AO has not brought out any evidence on record that may question this averment of the appellant. Under the circumstances, the very basis of the Ld. AO of treating such payment as royalty in nature is held as misplaced. Such payments were not in the nature of royalty or FIS, the natural corollary of the this observation is that such payment was in the nature of reimbursement of actual direct and indirect costs recovered by the appellant company from its group companies, which does not have any element of profit embedded therein. Also following decision of Delhi High Court in the case of CIT vs Industrial Engineering Projects Pvt. Ltd. [1992 (7) TMI 38 - DELHI High Court] such payment cannot be held as taxable under the domestic law as well - Decided in favour of assessee.

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• 2018 (1) TMI 982
  Penalty u/s 271(1)(c) - disallowance u/s 80IA in respect of power plant and disallowance of interest in relation to investment made with the subsidiary companies - Held that:- Coordinate Bench in the quantum proceedings [2016 (10) TMI 1115 - ITAT JAIPUR] for the matter in relation to both the additions namely claim u/s 80IA in respect of power plant and disallowance of interest in relation to investment made with the subsidiary companies which is the subject matter of penalty order and form the basis for levy of penalty u/s 271(1)(c) by the AO has been set aside to the file of the Assessing Officer to examine the matter of afresh. Where the very basis for levy of penalty has been set-aside to the file of the AO, it is not necessary for us to go into the merits of the case and the penalty order passed u/s 271(1)(c) deserves to be set-aside. In the result, the ground taken by the Revenue is dismissed.

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• 2018 (1) TMI 980
  Entitlement towards claim of deduction u/s 54 - claim restricted only in respect of the residential property at Mumbai - scope of amendment - Held that:- Hon’ble High Court of Madras in the case of CIT Vs. Smt. V. R. Kampagm [2014 (8) TMI 899 - MADRAS HIGH COURT] had clearly held in context of a similar amendment that was made available to Sec.54F, that the same was effective from 01.04.2015, which thus made it clear that prior to the said amendment the assessee was entitled the claim deduction in respect of investments made in more than one residential house. We find that a similar view had also been taken by the Hon’ble High Court of Andhra Pradesh in the case of CIT Vs. Syed Ali Adil (2013 (6) TMI 278 - ANDHRA PRADESH HIGH COURT). As prior to A.Y 2015-16 no restriction was placed by the legislature in respect of investments in the residential houses that an assessee could make for claiming deduction under Sec. 54 of the Act. We thus are of the view that the claim of deduction raised by the assessee under Sec. 54 in respect of investment made towards purchase of residential house at Mumbai and Pune was well in order. We thus in context of the issue under consideration set aside the order of the CIT and uphold the claim of deduction as was raised by the assessee - Decided in favour of assessee.

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• 2018 (1) TMI 978
  Disallowance on account of depreciation - assessee has ceased to carry on its business - Held that:- It is not the case of the revenue that the assessee has ceased to carry on its business permanently. It is only a case of temporary lull in the business against which the machineries were not put to use. On introduction of concept of block assets the provisions of section 32 of the Act by the Tax Laws (Amendment) Act, 1986, which came into force w.e.f 1-4-1980 the concept of usage of asset(s) for the purpose of claiming of depreciation has become redundant. Several decisions cited by the assessee before the CIT-A clearly permits the allowance of depreciation, when the machineries are kept for ready to use. On perusal of the case laws relied on by the assessee before the CIT-A, in our opinion that the CIT-A has rightly appreciated the facts and has rightly come to the conclusion that the assessee is entitled to claim the deprecation and accordingly, directed the AO to delete the impugned addition - Decided against revenue Disallowance on account of interest - loan for non business purpose - Held that:- As clear from the findings of the CIT-A that the term loan and working capital loan both were availed by the assessee. The assessee used only interest bearing loan for the purpose of business i.e term loan used for acquiring plant & machinery and working capital loan used for working capital, which has been demonstrated by the assessee. Therefore, the disallowance on interest for non business purpose is totally erroneous and unjustified. This disallowance cannot be sustained. The existence of own fund of the assessee is far better than the advances given by the assessee. The decisions as relied on by the CIT-A clearly supports the case of the assessee. Therefore, the CIT-A was justified in directing the AO to delete the addition - Decided against revenue

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• 2018 (1) TMI 977
  Deduction u/s.80IB(10) - DR submitted that the assessee is not engaged in development of a housing project and it is Brahma Skyline (JV) that has developed the housing project and not the assessee who had only provided the land to the joint venture formed i.e. Brahma Skyline JV - Held that:- We concur with the findings of Commissioner of Income Tax (Appeals) in holding that the assessee was not merely contributor of the land but was engaged in the development of housing project. That apart, it is a well settled law that owner of the land as well as developer of the land both are eligible for claiming deduction u/s. 80IB(10) in respect of housing project where the owner contributes the land and the other party develops the housing project. In the present case, as is emanating from records the assessee has also contributed towards the development of housing project. Apart from contributing land, the assessee was purportedly instrumental in removing of encumbrances from land and marketing of flats. Thus, the assessee is also eligible for claiming deduction u/s. 80IB(10) of the Act. Benefit of section 80IB(10) - whether can only be granted to an AOP and not to the assessee - Held that:- No merit in this contention of the Revenue. The assessee and M/s. Brahma Builders, the two constituents of Brahma Skyline JV had agreed to share gross receipts of the joint venture in the ratio of 32% and 68% and not the net profits. The joint venture was merely used as conduit to facilitate execution of housing project work, the actual work was done by the two members of JV. All the expenditure for the execution of project was incurred by the individual members and not the joint venture. Therefore, the deduction was rightly claimed by the members - Eligibility of deduction u/s. 80IB(10) to the assessee confirmed - Decided against revenue

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• 2018 (1) TMI 976
  TP adjustment - adoption of RPM method as against TNMM method - Held that:- As relying on assessee's own case for the assessment year 2008-09 as relying in the case of DCIT Vs Delta Power Solution India P. Ltd.[2016 (4) TMI 803 - ITAT DELHI] are of the view that the ld. CIT(A) was fully justified in directing the AO/TPO to adopt RPM as the most appropriate method instead of TNMM applied by them. Accordingly, we do not see any infirmity in the impugned order and do not see any merit in this appeal of the department.

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• 2018 (1) TMI 975
  Eligibility to get registration u/s 12A - deeming category of registration - Held that:- We find that before the Ld. CIT(A), the assessee itself had considered the facts that the assessee trust is eligible to take advantage of provisions of sections 11 & 12 from the A.Y. 2008-09. Having considered the provision of section 12A were unable to accept the contention of the assessee that he is entitled for the benefit under the deeming category of registration. These additions grounds of assessee are dismissed. Adhoc disallowance of car Running & maintenance Expenses - Held that:- We find merit into the contention that AO has made ad hoc disallowance on estimate basis. No material is placed on record that the vehicles were used by the assessee for other than the business activity - AO was not justified in disallowing the depreciation and insurance on cars. Further, the AO made disallowance on ad hoc basis in respect of conveyance and travelling expenses, student welfare expenses and also without bringing any material evidence on record. Direct the AO to delete this disallowance. Disallowance made by invoking provisions of section 40(a)(ia) - Held that:- As in case of CIT vs. Ansal landmark [2015 (9) TMI 79 - DELHI HIGH COURT] it has been confirmed the findings of the Tribunal that if the recipient had offered thepayment for taxation no disallowance u/s 40(a)(ia) can be made. Respectfully, following the same we hereby set aside this issue to the file of the AO to verify whether the recipients have offered the payment made to them for tax. These grounds of the assessee are partly allowed for statistical purpose.

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• 2018 (1) TMI 974
  Addition u/s 68 - genuineness of the transaction - bifurcation of sum of ₹ 1.80 crores [in the name of various parties] in short time for obtaining the sand contract from the Government. - Held that:- 7/12 extracts furnished by the assessee could never demonstrate conclusively that the lands belong to the individual payees and the income is actually earned by them which formed the source of making of cash payments to the assessee. Leave alone the bills evidencing the fact of conducting agricultural operations on the said lands, the payees has no evidence to show the fact of earning the Agricultural income by way of the sale bills for earning of the agricultural income. We also perused the said extracted portions of the order of the AO as well as the order of CIT(A) and find the reasoning given by them is one possible view. Assessee needed a sum of ₹ 1.80 crores in short time for obtaining the sand contract from the Government. Based on the principle of probability, we find it most likely that the assessee had to use the names of the 45 payees for mobilising the said amount - Creation of cash books/records for all the 45 payees and recording the each cash transactions at the rate of ₹ 20,000/- per day, non exclusion of the weekends and Sundays too comments the hurriness of the assessee. It is undisputed fact that the payees are not assessed to tax at that time or at the time of assessment or now. The assessee failed to show up all the payees before the AO. Therefore, we confirm the conclusions drawn by the AO/CIT(A) at the relevant point of time. It is the settled law relating to provision of section 68 that the assessee is under obligation to discharge all the conditions specified in the said section cumulatively to the AO. As such, the entries in the books of account are not determinative. - Decided in favour of revenue

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• 2018 (1) TMI 972
  Non deduction tax at source u/s 194C - amount paid to the sub-contractors - Held that:- The AO does not dispute the assessee having passed on the amount to the sub-contractor. So, it stands admitted/undisputed by the AO that the assessee did not receive the amount and the addition made by the AO was unsustainable. Section 40(a)(ia) provides for non-deduction of a sum payable, on which, no TDS has been made or, where made, it has not been paid. In the present case, the factum of payment of TDS by the concerned Departments on the payment made, has been taken due note of by the AO. This does not stand disputed by the ld. CIT(A). But CIT(A) has introduced an altogether new aspect, that is, no TDS having allegedly been made by the assessee on payment made to the sub contractor - as the assessee has merely passed on the amount to the sub-contractor and TDS stands duly made thereon. That being so, there is, evidently, no violation of the provisions of section 40(a)(ia)- That being so, the addition made by the ld. CIT(A) is deleted. - Decided in favour of assessee

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• 2018 (1) TMI 971
  Addition as perquisite in lieu of salary u/s 17(2)(iii) - difference in value between stamp duty valuation and actual sale value - assessee is a director of the company - Held that:- There is nothing on record, either in the assessment proceeding or in the order of the first appellate authority to suggest that the Assessing Officer has made any enquiry to ascertain the fair market value of the property. Even, he has not conducted any enquiry with the company which has sold shops to the assessee to ascertain the fair market value of the property sold to the assessee. In the absence of any enquiry conducted by the Assessing Officer to demonstrate that the value adopted for stamp duty purpose is the actual fair market value of the properties sold, it cannot be said that a benefit in the nature of perquisite as provided under section 17(2)(iii) of the Act has been given to the assessee by the company. Merely because the assessee happens to be a director of the company, provisions of section 17(2)(iii) of the Act cannot be applied to the assessee without establishing the fact that the assessee is an employee of the company and the benefit given is in the nature of salary. Without factually establishing the existence of employer–employee relationship between the company and the assessee it cannot be assumed that the assessee has been given a benefit in lieu of salary, even, in the absence of contract of employment between the company and the assessee. This is so because as per section 17(2)(iii)(a) of the Act, the director to whom any benefit or amenity is granted must be an employee of the company. Merely on the basis of the difference between stamp duty valuation and actual sale consideration the Assessing Officer has concluded that a benefit in the nature of perquisite has been given to the assessee by the company. However, there is nothing on record nor any positive finding by the Assessing Officer on the basis of any enquiry to suggest that the fair market value is the value determined for stamp duty purpose. There is no allegation by the Assessing Officer that any consideration over and above the sale value has changed hands. That being the case, the addition made by the Assessing Officer by treating the difference in value between stamp duty valuation and actual sale value cannot be treated as perquisite u/s 17(2)(iii) of the Act. Though, AO has consciously not referred to the provisions of section 50C of the Act, however, there is no room for doubt that applying the deeming fiction of section 50C, the Assessing Officer has adopted the stamp duty value as the deemed sale consideration while making the disputed addition. Therefore, in view of the aforesaid, we hold that the addition made is unsustainable - Decided in favour of assessee. Applicability of section 28(iv) - purchase of shop rooms - Held that:- We are unable to agree with the decision of FAA since, the transaction relating to purchase of shop rooms has been shown as an investment activity by the assessee in its books. Moreover, in the assessment year 2010–11, the Department has accepted it as an investment activity. So, if at all there is any benefit or perquisite, even assuming the argument of the Department, it cannot be said to be arising from a business or exercise of a profession by the assessee. In any case of the matter, we have already held that AO has failed to establish that by merely the reason of difference between stamp duty valuation and actual sale consideration actually any benefit did arise and accrue to the assessee. That being the case, it cannot be treated as a profit and gain of business or profession u/s 28(iv) of the Act. Applicability of section 56(2)(vii)(b) - Held that:- Undisputedly the transfer of shop rooms to the assessee and his wife was not without consideration. Therefore, as per the provisions of section 56(2)(vii) of the Act as it existed in the relevant assessment year, no addition under the said provision can be made. See case of Sandeep Srivastava [2015 (7) TMI 1262 - ITAT MUMBAI] - Decided in favour of assessee

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• 2018 (1) TMI 956
  Disallowing contribution to gratuity fund - the gratuity fund was not approved on the date of contribution - whether as the approval was in process and hence, the contribution was allowable as a deduction - allowability u/s 37 or 36 - effective date - Held that:- Notwithstanding the effective date of approval set out by the Commissioner in his approval order, the approval granted to the employees’ gratuity trust must be treated as effective from 1st January 2010, and, on that basis, the contribution made by the assessee to the said trust must be held to be admissible as deduction under section 36(1)(v). The assessee thus succeeds in the appeal. The alternate plea of the learned counsel which was so emphatically argued before us, is anyway only fit to be noted and rejected since, as clearly provided by Section 37(1) itself, only such expenses can be considered for deduction under section 37(1) which are not “expenditure of the nature described in sections 30 to 36”. Once the provisions of contribution to gratuity fund are specifically covered by Section 36(1)(v), as is the admitted position on the facts of the case, section 37(1) can obviously not have any application. - Decided in favor of assessee.

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• Customs

• 2018 (1) TMI 979
  Benefit of N/N. 102/2009 dated 11.09.2009 - EPCG Scheme - import of Capital goods - It was observed that instead of indigenous procurement, the appellants made imports vide Bill of Entry No.3386290 dated 03.05.2011 and 3400925 dated 04.05.2011 against the subject authorization from Chennai port whereas no import could have been made as authorization has already been invalidated for direct import - extended period of limitation. Held that: - when it is not disputed that the licences had indeed been produced to the concerned officers at the time of import - from the facts on record, no irresistible evidence has been put forth to prove the charge of wilful suppression by the appellant and justification of extended period of limitation - SCN not having been issued within the normal period of limitation will have to be considered as time-barred. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 973
  Penalty on CHA u/s 114 (iii) of CA, 1962 - It has been alleged that appellants were one of the three CHAs whose services were utilized in filing the shipping bills of the fictitious export firms allegedly floated by Shri K. Gunasekhar, S.Divakaran and his associate Shri K. Jayaraman - Misuse of Drawback Benefit - appellants have pleaded ignorance of their actions and the consequences that came about therefrom. Held that: - appellant had either enabled the grant of CHA identity card to the henchmen of the main operators which enabled shipping bills to be filed or facilitated the operators by their fraudulent activity - In respect of the other appellants, notwithstanding their common protestations that they had only lent their name for starting a company, for opening bank accounts giving signed blank cheques etc., it does not appear to reason that all these appellants were babes in the wood. They surely were aware of what was happening - We therefore afraid that their arguments do not cut any ice. Litigants are expected to come with clean hands. - appellants herein certainly cannot escape penalties. Penalty though levied but reduced - Appeal allowed in part.

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• 2018 (1) TMI 965
  Smuggling - illegal exports to Nepal - “Urad Ki Dal” - opportunity of cross-examination - Held that: - If the appellant is disputing the factual positions and if the various deponents’ statements have retracted from their earlier statements, such cross-examination is required to test the veracity of their statements as also to establish the factual position. Such cross-examination was necessary, especially in view of the fact that the Adjudicating Authority himself found incorrectness of the statement of Shri Kamlesh Gupta - The Hon’ble Supreme Court in the case of Arya Abhushan Bhandar Versus Union of India [2002 (3) TMI 54 - SUPREME COURT OF INDIA], has observed that non-production of such witnesses for cross-examination results in breach of natural justice - matter remanded to the Lower Authorities for afresh decision, after affording the cross-examination of the witnesses In as much as, the Adjudicating Authority has not provided the cross-examination, the impugned order is in violation of the principles of natural justice and is required to be set aside on the said ground itself. Separate penalty on Shri Rahul Mishra - Held that: - The charges of collusion against the said appellant are not substantiated by any evidence - As such in the absence of any evidence to the contrary, there is no justifiable reason to impose penalty on the said appellant. Appeal allowed in part and part matter on remand.

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• 2018 (1) TMI 960
  Penalty on CHA in terms of Regulation 22 of Customs Broker Regulations 2013 - entire act was done by the assessee's employees without knowledge of the Directors - Held that: - On appreciating the fact that FSSAI has subsequently issued the NOC that the goods have been cleared for home consumption and in the absence of any evidence to show that present CB was actively involved in improper action of his employee Shri Hemant Pol and was having any knowledge of the illegal act done by his employees, there are no reasons to impose penalty upon the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 959
  Classification of goods - Optical Fibre Cables (OFC) - Whether OFC imported by Vodafone Group of Companies and used in Telecommunication are classifiable under Customs Tariff Heading 8544 and eligible for exemption under N/N. 20/2005 dated 01/03/2005 or they would fall under Customs Tariff Heading 9001 leviable to basic Customs Duty at 10% under N/N. 21/2002-Cus dated 01/03/2002? - The entire argument of the appellant hinges on their claim that the 'Dual Acrylic Coating' amounts to sheathing of fibre. Interpretation of statute - the term 'Sheath' or 'Sheathed' as it appears in the Tariff and HSN - Held that: - The HSN is relevant for the proper classification of the said product - It is apparent the term coating and sheathing have different meaning in the tariff. In fact the term 'sheath' has been used to describe separate object as can be seen from the table 4.3.1 above. It is seen that the expression used in many places is 'encased in rigid sheath', 'encased in sheath', 'in a sheath composed of layers of paper', 'in a sheath of lead or tin', 'machines for braiding a wire sheath on hose of rubber', 'consisting of a simple wire mesh sheath' etc. which clearly indicates that 'sheath' is by itself an object. In those circumstances it is seen that the tariff does not recoganise coating as sheathing and treats the two as different. The term 'sheath' refers to a separate object which is used to encase other items. Whether the telecommunication wires and cables are classifiable under heading 85.44 and therefore the fibre optic cables used for telecommunication should also be classified under the same heading? - Held that: - all insulated conductors (including enamelled or anodised) are classifiable under heading 85.44. The heading is not limited to telecommunication wires. It covers all insulated wires and cables, including those used for telecommunication. The tariff has deliberately chosen to differentiate between the optical fibre cables containing individually sheathed fibres and others. The tariff /HSN classifies them separately in different headings and different chapters. The legislature if it wished to classify all optical fibre telecommunication cables under heading 85.44 could have stated so. The HSN specifically mentions only the telecommunication wires made up of insulated wires. It is seen that the tariff entries do not make any distinction on the basis of use of the product. The sole distinction is based on the basis of the manner in which the fibres are 'sheathed' - it is obvious that the coating over the cladding is feature of all optical fibres (including those used in medical imaging and mechanical engineering inspection) and not merely those used in telecommunication. The literature and other evidence relied upon by the referral bench and also produced by both the parties during this hearing does not establish that the dual acrylic coating' results in 'individually sheathed fibre'. Optical Fibre Cables (OFC in short) imported by Vodafone Group of Companies and used in Telecommunication are not classifiable under Customs Tariff Heading 8544 and they would fall under customs Tariff Heading 9001. Reference disposed off.

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• 2018 (1) TMI 954
  Release of detained goods - Betel Nuts - Held that: - Non furnishing of the bonds in proper form cannot be a reason for seeking any clarification in the order of the High Court. We have gone through the order of the High Court dated 30.5.2017 not once but several times and found that it is crystal clear which could be understood even by a layman. Therefore, seeking a clarification of the said order by an Officer of the rank of the Assistant Commissioner is beyond our comprehension - petition disposed off.

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• Corporate Laws

• 2018 (1) TMI 969
  Selection of CFS services at Port - Forced diversion of the ships to Pipavav or forced the ships to visit both Pipavav as well as GTIPL - Held that:- CCI found that OP-1 is also providing facility of “Direct Port Delivery” which facilitates direct delivery of goods without intervention of any CFS operator to accredited and approved consignees. CCI found no substance in the claim that OP-1 is in vertical anti-competitive agreement. The impugned order concluded that no case of contravention of any of the provisions of Section 3(4) Act has been made out. It can be seen that by providing “Direct Port Delivery” facility, O.P.-1 has provision of better services. When in market a service provider is giving better services, merely pointing out market share, it is attracting is not enough. We find that the impugned order is well reasoned and the submission made by Appellant questioning this order do not find force. The case of the Appellant that the OP-1 blocks the Terminals at Jawaharlal Nehru Port with its own ships to force ships to dock at Papavav suffers from a basic fallacy. The Appellant has relied on chart to show movement of ships. From the chart it is pointed out that ships visiting GTIPL also visit Pipavav Terminal and vice versa. If this is so, there is no substance in the argument that OP-1 was blocking the Terminals at Jawaharlal Nehru Port so as to divert the ships to Papavav. If the ship was visiting GTIPL and then visiting Pipava Terminals also, by that itself it cannot be stated that prima facie case is made out that the Appellant forced diversion of the ships to Pipavav. The entries made in the chart relied on, cannot be said to be making out a prima facie case. There has to be some evidence worth the name to show that it was the OP-1 who forced diversion of the ships to Pipavav or forced the ships to visit both Pipavav as well as GTIPL. There could be various reasons including need of delivery or pick up of cargo at both Terminals and merely pointing out the chart is not enough to start an investigation under the Act.

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• Service Tax

• 2018 (1) TMI 996
  Whether the imposition of 50% penalty is just and reasonable on the totality of the facts and circumstances of the cases in hand as the substantial question of law arising for decision in these appeals? Held that: - it had been the consistent case of the Appellant before the authorities that the non-payment of the service tax was on account of payment of entire service tax by the service provider - the penalty component ought to have been reduced from what it is now paid to 50%, on the peculiar facts and in circumstances of the case in hand, particularly when the CENVAT Credit availed was reversed. Reasonably, the amount of penalty can be pegged at 25%, that is to say half of the penalty imposed by the authorities below. The penalty will stand reduced to be 25% - appeal allowed in part.

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• 2018 (1) TMI 994
  Refund of unutilized CENVAT credit - circular dated 23-8-2007 - case of Revenue is that in view of the circular as well as provisions of law, the assessee cannot be permitted to reverse the entries and in fact should have applied for refund of the amount due to him - Held that: - somewhat similar controversy came up before the Gujarat High Court in case of S. Subrahmanyan & Co. v. Commissioner [2011 (3) TMI 396 - CESTAT, AHMEDABAD], where it was held that Correction not requiring any lis between the parties.technical view that even in such cases where admitted wrong entries are made and are rectified immediately thereafter, an assessee is required to file refund application is to shake the assessee’s faith in the judicial system. There is no error committed by the Tribunal while holding that the amount which has already been paid in cash to satisfy the demand of the revenue with respect to the service tax on GTA is fulfilled, there was no question of not reversing the amount paid from their CENVAT credit account - Further, the circular is dated 23-8-2007 and the period in question is March, 2006 to March, 2007, therefore the Tribunal was right in holding that the circular dated 23-8-2007 is having no application. The amount paid from CENVAT credit account was required to be reversed - appeal dismissed - decided against Revenue.

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• 2018 (1) TMI 981
  Classification of services - transportation service charged Service Tax in the invoice under the category of Goods Transport Agency Services - The case of the Department is that the service provider by the appellant is not classifiable under GTA services but correctly classifiable under Clearing and Forwarding Agency Services - Held that: - on identical issue of the appellant itself, Gupta Coal India Ltd Versus Commissioner of Central Excise, Nagpur [2017 (10) TMI 289 - CESTAT MUMBAI], where the entire facts and the contract is same in that case. In the present case, only difference is of the period, in the earlier Tribunal s order period was 2005-06 to 2009-10 and in the present case period is 2010-11, where it was held that It would appear that transportation is the most prominent of these and the classification that was declared by the appellant cannot be faulted for its legality. More so, as the impugned order has failed to consider such an option. Nay, even the show cause notice is regrettably bereft of such a scrutiny. The activity of the appellant is not classifiable as ‘clearing and forwarding agents service’ and the demand on that head must fail. Appeal allowed.

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• 2018 (1) TMI 964
  GTA Service - It appeared to Revenue that activity of transport of foodgrains, sugar etc., comes under the purview of taxable service namely ‘Goods Transport Service’ as defined under Section 65 (50b) of the Finance Act, 1994 and taxable under Section 65 (105) (zzp) - Held that: - there is neither any allegation nor any finding that the appellants were issued a consignment note - in the facts of the present case, both the consignor and the consignee are same. Thus, there is no requirement also of issuance of any consignment note. Under such circumstances, the appellants are not liable to pay service tax as GTA, as defined under Section 65 (50b) read with Section 65 (105)(zzp) of the Finance Act. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 962
  Penalty u/s 76, 77 and 78 of FA - Commission paid to foreign commission agents - reverse charge mechanism - Held that: - during relevant period law was not clear and was subject matter of litigation before various courts. It is only with a declaration of law by the Hon’ble Bombay High Court decision in the case of Indian National Shipowners Association Vs. Union of India [2008 (12) TMI 41 - BOMBAY HIGH COURT], that the levy on reverse charge basis was upheld w.e.f. 18.04.2006 - The appellant have already paid the said duty alongwith interest. As such there is no justification for imposition to penalty upon them - appeal alllowed.

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• Central Excise

• 2018 (1) TMI 999
  CENVAT credit - Whether the CESTAT is correct in allowing the CENVAT Credit on plant and machinery as capital goods installed in the Co-generation power plant which is outside the approved factory premises and without bringing the same in their factory and without using the same in the manufacturing of finished goods? Held that: - Section 6 read with Rule 9 of the Central Excise Rules, 2002, requires a person such as the assessee-engaged in production or manufacture or any processes of production or manufacture of specified goods (sugar and molasses in the present case), has to compulsorily obtain registration. Certain notifications have also been issued under Rule 9 providing for conditions, safeguards, procedure etc. pertaining to grant of registration - Clearly if a person is manufacturing two different items at two different premises, he is required to obtain separate registrations in respect of such separate process involving separate premises. In the instant case, it has been found by the Tribunal that the bagasse produced at the premises engaged in manufacture of sugar and molasses, was consumed in entirety at the other premises being the co-generation power plant. Also, the Tribunal found that the electricity produced at the co-generation power plant at the other premises was used at the sugar and molasses plant and it was only in the off season that some part of electricity may have been sold to the State Electricity Department which as a fact was not found verified on record. In view of the provision of Section 2(e) of the Act read with Rule 2(t) of the Rules and as self classified by the CBEC circular/instructions, the activities of the assessee at the two separate premises in question were clearly interlinked. 'Factory' under Section 2(e) of the Act, means any premises where part of manufacturing processes connected with the production of goods is carried on. Therefore, once it had been found that electricity produced at one premise of the assessee had been used to manufacture of sugar and molasses at the other premise and also that the bagasse manufactured at the other premises of the assessee (sugar and molasses plant) had been used to generate electricity at the premise of the assessee generating electricity, it appears the two premises together would constitute the 'factory' of the assessee under Section 2(e) of the Act. While, there is no dispute that CENVAT credit had arisen to the assessee on the capital goods used to generate electricity, it is to be seen whether the said capital goods had been received in the 'factory of manufacture of final product' for the purpose of Rule 3(1), as above. Here, it is noted that the phrase 'factory of manufacture of final product' has not been defined under the Rules. By virtue of Rule 3(t) of the Rules read with Section 2(e) of the Act, the term 'factory' used in Rule 3(1) has to be given the same meaning as has been given to that word under the Act - the Tribunal has made no error in allowing the assessee to utilize CENVAT credit on capital goods against the duty payment on sugar and molasses. Appeal dismissed - decided against appellant-Revenue.

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• 2018 (1) TMI 997
  Refund of pre-deposit - period of limitation - Section 11 B(5) of the Central Excise Act, 1944 - Held that: - A refund will occur only if money is paid. Even, as per the orders passed by the CEGAT, the petitioner had pre-deposited such amount as a condition precedent for filing an appeal. Thus, the said deposit should abide by the final orders to be passed by the CEGAT in the petitioner's appeal petition. Such deposit amount cannot be appropriated towards the duty demand, unless and until the CEGAT dismissed the appeal. Thus, for all practical purposes, the said amount stood remained in a suspense account as a deposit pending appeal before the CEGAT. Therefore, Section 11 B(5) of the Central Excise Act, 1944 would have no application to the facts and cirucumstances of the case. Even assuming that the respondent construed the amount deposit as paid, limitation for filing application for refund can arise and will arise only after the order passed by the CEGAT dated 31. 10. 2002. Within hardly seven months from the said date, the petitioner made the first request, followed by remainder - Thus, going by these dates, the application filed by the petitioner is not hit by limitation. Petition allowed.

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• 2018 (1) TMI 995
  Withdrawal of Single appeal in respect of 8 appeals - Held that: - A single appeal in respect of all the 8 appeals decided by the CESTAT is not permissible and rather creates confusion and complication - we permit the counsel for the appellant to withdraw this appeal and to file separate appeals in respect of each of the assessees - appeal is dismissed as withdrawn.

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• 2018 (1) TMI 988
  Clandestine removal - case of the Department is based on four private note books seized from the residence of Shri Sarma on 9.12.2011 - serious discrepancies between statutory records and seized note books - Held that: - the impugned order did not deal with all the factual and legal submission made by the appellant before the Adjudicating Authority. Some of the crucial point were not examined that formed the basis formed for arriving at the conclusion of clandestine manufacture and clearance, as mentioned by the appellant - To manufacture the alleged quantity of M.S. Ingots and Sponge Iron, the appellants require huge quantities of raw materials. This aspect has not been considered analytically for a finding. It is relevant to note that if the appellant manufactures un-accounted quantity of both the M.S. Ingots and Sponge Iron and Sponge Iron have been used for further manufacture of M.S. Ingots, duty cannot be confirmed on both. It is important in such situation, to have independent corroboration about the reliability of such private records. If all statements and deposition during the cross examination are admittedly voluntarily made, preference for one statement ignoring other such statement and deposition during the cross examination, can be made when supported with due corroboration. The matter is remanded back to the Original Authority for a fresh decision after considering all the legal and factual issues raised by the appellant - appeal allowed by way of remand.

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• 2018 (1) TMI 985
  Clandestine removal - Gutka - illegal factory premises - denial of opportunity of cross-examination - closure of factory - declaration of machinery - Held that: - one machine has been declared by Shri Mukesh Katheil in his registered premises, but the same has been intimated as closed in the month of July, 2008. During the course of search, three undeclared premises have been detected where 12 packing machines were found working and engaged in packing ‘Paheli’ brand gutka bearing the registration number of Shri Mukesh Katheil. In terms of the Packing Machine Rules, Central Excise duty is liable to be paid on the 12 packing machines - the issue for adjudication is whether the duty liability is to be borne by Shri Mukesh Katheil, proprietor of M/s Shree Swaroop Products. It stands fairly established that Shri Mukesh Katheil, proprietor of M/s Shree Swaroop Product has taken on rent four premises and making use of raw material prepared in the premises adjacent to the registered factory, sent the raw material-mix to the three unregistered premises. In the three premises, by installing 12 machines illegally, gutka has been packed and sold bearing the brand name Paheli. On the basis of the evidences produced by Revenue, the case is fairly established. It is settled proposition that in quasi judicial proceedings, the level of evidence required to be produced is to be such that the case is established to the extent of preponderance of probability. The standard of proof need not be as required in the case of judicial proceedings. In the facts and circumstances of the case, Shri Mukesh Katheil has carried out manufacture of gutka using 12 packing machines in illegal factories - demand upheld. Penalties of ₹ 10 lakhs each on various persons - Held that: - all the persons have played an important part in abetting the clandestine manufacture of gutka in the illegal factories. They were all employees of Shri Mukesh Katheil and have worked in various capacities and have facilitated the huge evasion of Central Excise duty. Consequently, they are liable for penalty under Rule 26 of the Central Excise Rules, 2002 - penalties upheld. Appeal dismissed.

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• 2018 (1) TMI 984
  Manufacture - ore concentrate - various processes such as crushing, screening, sorting by hydraulic machines and washing with high pressure water was performed by machines - The Department was of the view that in the light of Chapter Note 4 to Chapter 26, the processes carried out by the appellant resulted in the manufacture of ore concentrate and the same amounts to manufacture - Held that: - the Tribunal in the case of Rungta Mines vs. CCE [2016 (4) TMI 602 - CESTAT KOLKATA] has held that, processes which are very similar to those undertaken by the appellant, have been held to be covered by the Chapter Note 4 and the resultant goods are liable to Central Excise duty - above decision of the Tribunal is applicable to the present facts of the case and hence, it is concluded that the processes undertaken by the appellant will incur the mischief of Chapter 4 and Excise duty will be payable by the appellant - the Tribunal has also set aside the penalty. By following the same, in the present case too, the penalty imposed on the appellant is set aside. Benefit of exemption N/N. 63/95-CE dated 16.03.95 - Held that: - Since such benefit has not been claimed before the adjudicating authority, the matter is required to be remanded to the adjudicating authority to consider the same in the facts and circumstances of the present case - matter on remand. Appeal allowed in part and part matter on remand.

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• 2018 (1) TMI 970
  SSI units - clubbing of clearances - dummy units or not? - Held that: - both the units are registered separately under various authorities and being limited companies have to be held as separate units and entitled to the benefit of small scale Notification separately - benefit of SSI extended - appeal dismissed - decided against Revenue.

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• 2018 (1) TMI 968
  CENVAT credit - manufacture of dutiable as well as exempt goods - separate records not maintained - Rule 6(3) of the CCR - Held that: - The only requirement under the law is maintenance of separate records in respect of inputs used in the manufacture of dutiable as also exempted goods. As per the appellant such records stand maintained by them and produced before the adjudicating authority. This fact requires verification for which purpose, the impugned order set aside and matter remanded to the original adjudicating authority - appeal allowed by way of remand.

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• 2018 (1) TMI 967
  CENVAT credit on inputs used to manufacture goods, which are cleared on payment of duty - Manufacture taking place or not? - Held that: - without adverting to the fact as to whether the activities undertaken by the appellant amount to manufacture or not, it stands well settled that even if the activity undertaken by an assessee does not amount to manufacture of the final products which stands cleared on payment of duty, the benefit of cenvat credit cannot be disallowed - Inasmuch as the final product stands cleared by the appellant on payment of duty, we are of the view that the credit cannot be disallowed to the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 966
  Clandestine removal - shortage of stock - expendable polystyrene - Held that: - the issue is no more res-integra and has been settled by the Hon’ble High Court of Allahabad in the case of Commr. Vs. Minakshi Castings [2011 (8) TMI 896 - ALLAHABAD HIGH COURT] laying down that mere shortages, in the absence of any corroborative evidence, cannot lead to findings of the clandestine removal - demand in the present case is only based upon the shortages and cannot be upheld. CENVAT credit - duty paying documents - denial on the ground that input supplier was not having complete machineries to manufacture the goods - Held that: - the appellants have taken a categorical stand that the invoices in question contained the duty paying particulars and the consideration for the goods, was paid to the supplier by Account Payee Cheque. There is also no other alternative source of the procurement of raw materials shown by the Revenue, in which case, denial of credit was not justified. Appeal allowed in toto.

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• 2018 (1) TMI 963
  Clandestine removal - shortages and excesses of stock - the Revenue's entire case is based upon the shortages and excess, detected at the time of visit of the Officers - Held that: - It is well settled law that shortages detected at the time of stock taking cannot lead to conclusion of clandestine removal, in the absence of any corroborative evidence to that effect - apart from the alleged shortages, which are also being contested by the appellant as not being factual shortages, there is no other evidence on record to reflect upon the clandestine activities of the appellant. The Appellate Authority, having himself observed that there is no evidence to establish clandestine removal on the part of the appellant, should have set aside the demand, confiscation of the goods and penalties imposed upon the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 961
  Rebate of duty - export of goods - it has been alleged that the appellants did not export the goods amounting to ₹ 2,53,670/- and it appeared that the same were cleared by them otherwise - Revenue entire case is based upon non-submission of bank realization certificate - Held that: - Appellate Authority has himself arrived at a finding that there is no dispute regarding export of the goods and neither is there any allegation of short export of goods. If that be so, I fail to understand the reason for confirmation of demand - The demand of duty can be confirmed on the ground that appellant has not undertaken the export of the goods and as such allegedly diverted the goods to the local market in a clandestine manner - Once the Appellate Authority came to a conclusion that the goods have been exported, the very base for confirmation of demand of duty vanishes. Hon’ble High Court in the case of Jubilant Life Sciences Ltd. vs. Union of India [2016 (11) TMI 316 - ALLAHABAD HIGH COURT] has held that bank realization certificate has no link with the factum of export of the goods and non-submission of the same cannot be made, the basis for denial of the rebate of duty on the exported goods. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 958
  Refund claim - demand on the ground that SCN dated 11/03/2010 for demand of duty of the matching amount is pending for adjudication - Held that: - the rejection of refund claim without adjudicating the show cause notice dated 11/03/2010 is bad and against the provisions of natural Justice. The same also causes harassment to the assessee - the matter remanded back to the Adjudicating Authority to decide the show cause notice as well as the refund claim together, if not yet decided - appeal allowed by way of remand.

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• 2018 (1) TMI 957
  Issuance of Registration Certificate - manufacture of Branded Pan Masala & Branded Scented Tobacco - N/N. 35/2001-CE (NT) dated 26/06/2001 - Held that: - There is no dispute of the fact that the appellant applied for registration on 05/09/2013 and as per the N/N. 35/2001-CE (NT) dated 26/06/2001, the period of 7 days expired on 17/09/2013 - Once the Notification prescribes the period within which the registrations has to be granted, the registration would be deemed to have been granted on expiry of the period prescribed in the Notification. As such, when the Officers visited the factory, after the expiry of the said period, it has to be held that the registration was deemingly given to the assessee, thus, not justifying any confiscations or penalties imposed - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 955
  Reversal of CENVAT Credit availed on SED - inputs removed as such - Held that: - the learned Commissioner (Appeals) has dealt with aspect of payment of duty in respect of clearances made during the period from April, 2001 to December, 2001 - However, I find from the proceedings that the issue was not related to payment of duty but the issue was related to reversal of Cenvat Credit on removal of inputs as such I, further, find that Cenvat Credit of SED availed by the appellant on 01.01.2002 was admissible to them during the relevant months from April, 2001 to December, 2001 whenever inputs were brought into the factory. Therefore, debit of SED of ₹ 13,29,776/- after availing the same on 01.01.2002 has satisfied the requirement of Rule 57 AB of Central Excise Rules, 1944 and Rule 3 (4) of Cenvat Credit Rules, 2001 - appeal allowed.

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• CST, VAT & Sales Tax

• 2018 (1) TMI 998
  Condonation of delay in filing appeal - appeal have been filed beyond the extended period of limitation provided in Section 38 of the then TNGST Act, 1959 - whether, the appellate authority is empowered to condone the delay of the extendable period? - Held that: - In Commissioner of Customs & Central Excise v. Hongo India (P) Ltd., [2009 (3) TMI 31 - SUPREME COURT], the Hon'ble Apex Court considered a question, as to whether, High Court has power to condone the delay, in presentation of a reference application, under unamended Section 35H(1) of the Central Excise Act, 1944, beyond the prescribed period, by applying Section 5 of the Limitation Act, 1963. After considering the decisions in Singh Enterprises v. CCE, Jamshedpur [2007 (12) TMI 11 - SUPREME COURT OF INDIA], it was held that time limit prescribed u/s 35H(1) is absolute and unextendable u/s 5 Limitation Act. Since court has to respect the legislative intent, limitation cannot be extended u/s 5 of Limitation Act. In Chhattisgarh State Electricity Board's case [2010 (4) TMI 1031 - SUPREME COURT], the Hon'ble Apex Court held that Section 5 of the Limitation Act cannot be invoked by the Court to allow an appeal to be filed, under Section 125 of the Electricity Act, 1963, after more than 120 days. Delay cannot be condoned - appeal dismissed.

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• Indian Laws

• 2018 (1) TMI 1002
  Validity of assessment order - levy of Urban Land Tax - Held that: - the authority on facts concluded that the contention of the petitioner that the land is agricultural in nature is not tenable. Referring to Section 2(13) of the Act which states that no Urban Land Tax can be levied in respect of the land which is not capable of being used as a house site. But the petitioner themselves have admitted that the land is used for recreational and commercial purpose. Thus, on a re-appreciation of the factual position, the first respondent upheld the order passed by the second respondent. Inspection was conducted of the petitioner's lands which is clear from the fact that the usage of the land in respect of different survey numbers has been specifically mentioned which fact has not been denied by the petitioner. In such circumstances, the Original Authority, namely, the second respondent having done a factual exercise measured the property, ascertain the usage and then assessed the petitioner to tax, the correctness of which was tested by the first respondent in the revision by re-appreciating the factual position, this Court exercising jurisdiction under Article 226 of the Constitution cannot convert itself in to that of second Appellate Authority and interfere with the impugned order. Petition dismissed.

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