TMI Tax Updates - e-Newsletter
January 29, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
PMLA
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Rate of Tax on Services - CGST / UTGST / SGST / IGST - Goods and Services Tax - Item wise schedule as amended
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GST:
Services - General Exemption from GST - CGST / UTGST / SGST / IGST - Goods and Services Tax - Item wise schedule as amended
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GST:
Rates of Tax on Goods - Schedule 1 - IGST @ 5% - CGST @ 2.5% - SGST / UTGST @ 2.5% - Goods and Services Tax - Item wise schedule as amended
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GST:
Rates of Tax on Goods - Schedule 2 - IGST @ 12% - CGST @ 6% -SGST / UTGST @ 6% - Goods and Services Tax - Item wise schedule as amended
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GST:
Rates of Tax on Goods - Schedule 3 - IGST @ 18% - CGST @ 9% - SGST / UTGST @ 9% - Goods and Services Tax - Item wise schedule as amended
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GST:
Rates of Tax on Goods - Schedule 4 - IGST @ 28% - CGST @ 14% - SGST / UTGST @ 14% - Goods and Services Tax - Item wise schedule as amended
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GST:
Rates of Tax on Goods - Schedule 5 - IGST @ 3% - CGST @ 1.5% - SGST / UTGST @ 1.5% - Goods and Services Tax - Item wise schedule as amended
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GST:
Rates of Tax on Goods - Schedule 6 - IGST @ 0.25% - CGST @ 0.125% - SGST / UTGST @ 0.125% - Goods and Services Tax - Item wise schedule as amended
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GST:
Goods - General Exemption from GST - CGST / UTGST / SGST / IGST - Goods and Services Tax - Item wise schedule as amended
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GST:
Concessional GST rate of 5% on scientific and technical equipments supplied to public funded research institutions. - Notification as amended
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GST:
Concessional rate of GST on Old and used Vehicles - Notification
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GST:
Absolute Exemption from IGST on inter-State supplies of goods - Notification as amended
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GST:
IGST Rate Schedule u/s 5(1) - notifying rates of IGST @ 5%, 12%, 18%, 28%, 3% and 0.25% on supply of goods. - Notification as amended
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GST:
Special procedure with respect to payment of tax by registered person supplying service by way of construction against transfer of development right and vice versa. - Notification
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GST:
Categories of services on which integrated tax will be payable under reverse charge mechanism (RCM) under IGST Act - Notification as amended
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GST:
Exemptions on supply of services under IGST Act - Notification as amended
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GST:
Rates for supply of services under IGST Act - Notification as amended
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Income Tax:
Capital gain computation - market value of conveyance deed taken u/s 50C - if at all any suppression of sale consideration should be assumed, it should be on the basis of stamp duty valuation as at the point of time when the sale consideration was fixed. - AT
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Income Tax:
Eligible for deduction u/s. 10A - These amounts are incomes u/s. 41(1), if they are allowed as deduction in earlier year. Since the amounts are directly connected to the business, the excess provision reversed is certainly having a nexus with the business. - AT
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Income Tax:
Claim of deduction u/s 40(b) - amount surrendered in the course of survey U/s. 133A - working out the salary paid to the partner in terms of section 40(b) - The character of the income does not change dependent upon the section to be applied - claim allowed - HC
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Income Tax:
Rectification of mistake u/s 154 - miscalculation of interest is, at best, an arithmetical error and it needs no elaborate cogitation or adjudication, long drawn or otherwise, to hold that there was an error committed. - HC
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Customs:
Exemption from duty of Customs on import of (i) Satellites and payloads (including Ground equipments) and (ii) Scientific and technical instruments, apparatus, equipment, accessories, parts, components, spares, tools, mock ups and modules, raw material and consumables required for launch vehicles and satellites and payloads
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Corporate Law:
Companies (Appointment and Qualification of Directors) Amendment Rules, 2018 - Notification
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Service Tax:
Valuation - The composition scheme should be available to the appellant and cannot be denied on the ground that it did not specifically exercise the option regarding opting for the works contract service - AT
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Central Excise:
Classification of goods - Mucosat, Nurofit, MOD Caps, Kalpadyn-MC, Nerosafe etc. - the goods were classifiable under CETA 3003.10 and not under 2108.99 - AT
Articles
Notifications
Companies Law-
F. No. 1/22/2013 C-V-Part-III - dated
26-1-2018
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Co. Law
Companies (Appointment and Qualification of Directors) Amendment Rules, 2018
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F. No. 1/13/2013 CL-V, part-I, Vol.II - dated
20-1-2018
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Co. Law
Companies (Incorporation) Amendment Rules, 2018
Customs-
05/2018 - dated
25-1-2018
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Cus
seeks to amend Notification No.50/2017-Customs (Rate).
GST-
9/2018 - dated
25-1-2018
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CGST Rate
Seeks to amend Notification No.45/2017-Central (Rate)
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08/2018 - dated
25-1-2018
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CGST Rate
Concessional rate of CGST on Old and used Vehicles
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07/2018 - dated
25-1-2018
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CGST Rate
seeks to amend Notification No.2/2017-CGST (Rate)
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06/2018 - dated
25-1-2018
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CGST Rate
seeks to amend Notification No.1/2017-CGST (Rate).
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01/2018 - dated
25-1-2018
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GST CESS Rate
seeks to amend Notification No.1/2017-Compensation Cess (Rate)
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10/2018 - dated
25-1-2018
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IGST Rate
Seeks to amend Notification No.47/2017-IGST (Rate)
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09/2018 - dated
25-1-2018
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IGST Rate
Concessional rate of GST on Old and used Vehicles
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08/2018 - dated
25-1-2018
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IGST Rate
Seeks to amend Notification No.2/2017-IGST (Rate)
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07/2018 - dated
25-1-2018
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IGST Rate
seeks to amend Notification No.1/2017-IGST (Rate).
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09/2018 - dated
25-1-2018
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UTGST Rate
Seeks to amend Notification No.45/2017-UTGST (Rate).
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08/2018 - dated
25-1-2018
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UTGST Rate
Concessional rate of UTGST on Old and used Vehicles
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07/2018 - dated
25-1-2018
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UTGST Rate
Seeks to amend Notification No.2/2017-UTGST (Rate).
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06/2018 - dated
25-1-2018
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UTGST Rate
Seeks to amend Notification No.1/2017-UTGST (Rate)
GST - States-
Tax/4(53)/GST-NOTN/2016/22 - dated
15-11-2017
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Manipur SGST
Seeks to extend the due date for submission of details in FORM GST-ITC-04 till 31.12.2017
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Tax/4(53)/GST-NOTN/2016/21 - dated
15-11-2017
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Manipur SGST
Seeks to extend the time limit for furnishing the return by an Input Service Distributor in Form GSTR-6 for the month of July, 2017 till 31.12.17.
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Tax/4(53)/GST-NOTN/2016/20 - dated
15-11-2017
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Manipur SGST
Seeks to extend the time limit for furnishing the return in FORM GTR-5A, for the months of July to October, 2017 by a person supplying online information and database access or retrieval services from a place outside India to a non-taxable online recipient, till 15.12.2017.
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Tax/4(53)/GST-NOTN/2016/19 - dated
15-11-2017
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Manipur SGST
Seeks to extend the time limit for furnishing the return by a non-resident taxable person, in FORM GTR-5, for the months of July to October, 2017 till 11.12.2017.
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Tax/4(53)/GST-NOTN/2016/18 - dated
15-11-2017
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Manipur SGST
Seeks to extend the time limit for filing of Form GSTR-4 till 24.12.2017
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Tax/4(53)/GST-NOTN/2016/17 - dated
15-11-2017
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Manipur SGST
Seeks to extend the due dates for furnishing of Form GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores.
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Tax/4(53)/GST-NOTN/2016/16 - dated
15-11-2017
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Manipur SGST
Seeks to mandate the furnishing of return in FORM GSTR-3B till March, 2018 by the 20th of the succeeding month.
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5/10/2017-FD(TAX)-18/2017-State Tax - dated
15-11-2017
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Manipur SGST
Seeks to exempt all taxpayers from payment of tax on advances received in case of supply of goods.
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5/10/2017-FD(TAX)-17/2017-State Tax - dated
15-11-2017
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Manipur SGST
Seeks to exempt suppliers of services through an e-commerce platform liable to collect tax at source under section 52.
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5/10/2017-FD(TAX)-16/2017-State Tax - dated
15-11-2017
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Manipur SGST
Waiver the amount of late fee payable return in FORM GSTR-3B.
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5/10/2017-FD(TAX)-15/2017-State Tax - dated
15-11-2017
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Manipur SGST
Seeks to prescribe quarterly furnishing of return in FORM GSTR-1for those taxpayers with aggregate turnover of less than ₹ 1.5 crores.
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66/2017 - dated
15-11-2017
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Sikkim SGST
Seeks to exempt all taxpayers from payment of tax on advances received in case of supply of goods
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65/2017 - dated
15-11-2017
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Sikkim SGST
Seeks to exempt suppliers of services through an e-commerce platform from obtaining compulsory registration
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64/2017 - dated
15-11-2017
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Sikkim SGST
Seeks to limit the maximum late fee payable for delayed filing of return in FORM GSTR-3B from October, 2017 onwards
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (1) TMI 1149
Detention of goods - inter-state sale - goods not accompanied by valid documents as prescribed under the State Goods and Service Tax Rules (for first three consignments) - absence of invoice evidencing the sale (for fourth consignment) - Held that: - it is not in dispute that there is no document prescribed under the Central Goods and Services Tax (CGST) Act and Rules for the purposes of covering an interstate movement in respect of consignments which have to suffer tax under the Integrated Goods and Services Tax (IGST) Act, the detention on the part of the respondents cannot be held to be valid and justified. In respect of the 4th consignment, the detention is justified inasmuch as what is shown in Ext.P3 delivery chalan is that the transaction is an interstate sale, whereas the document accompanying is only a chalan and not the invoice which is a prescribed document to evidence a sale. The 1st respondent directed to release the three consignments, to the petitioner, on the petitioner producing a copy of this judgment before the said respondent - As regards the third consignmen, the respondents are directed to complete the adjudication proceedings in respect of the detention of the said consignment within a period of one week - petition disposed off.
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Income Tax
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2018 (1) TMI 1159
Deemed dividend u/s 2(22)(e) - whether Section 2(22)(e) gets attracted inasmuch as a loan has been made to a shareholder, who after the amendment, is a person who is the beneficial owner of shares holding not less than 10% of the voting power in the Company - whether the loan is made to any concern in which such shareholder is a partner and in which he has a substantial interest, which is defined as being an interest of 20% or more of the share of the profits of the firm? - Held that:- The whole object of the amended provision would be stultified if the Division Bench judgment were to be followed. Ankitech’s case [2011 (5) TMI 325 - DELHI HIGH COURT ], in stating that no change was made by introducing the deeming fiction insofar as the expression “shareholder” is concerned is, according to us, wrongly decided. The whole object of the provision is clear from the Explanatory memorandum and the literal language of the newly inserted definition clause. This is why “shareholder” now, post amendment, has only to be a person who is the beneficial owner of shares. One cannot be a registered owner and beneficial owner in the sense of a beneficiary of a trust or otherwise at the same time. It is clear therefore that the moment there is a shareholder, who need not necessarily be a member of the Company on its register, who is the beneficial owner of shares, the Section gets attracted without more. To state, therefore, that two conditions have to be satisfied, namely, that the shareholder must first be a registered shareholder and thereafter, also be a beneficial owner is not only mutually contradictory but is plainly incorrect. Also, what is important is the addition, by way of amendment, of such beneficial owner holding not less than 10% of voting power. This is another indicator that the amendment speaks only of a beneficial shareholder who can compel the registered owner to vote in a particular way, as has been held in a catena of decisions starting from Mathalone vs. Bombay Life Assurance Co. Ltd., [1953 (5) TMI 25 - SUPREME COURT OF INDIA]. This being the case, we are prima facie of the view that the Ankitech judgment (2011 (5) TMI 325 - DELHI HIGH COURT ) itself requires to be reconsidered, and this being so, without going into other questions that may arise, including whether the facts of the present case would fit the second limb of the amended definition clause, we place these appeals before the Hon’ble Chief Justice of India in order to constitute an appropriate Bench of three learned Judges in order to have a relook at the entire question.
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2018 (1) TMI 1158
Directions for fresh Transfer Pricing (TP) study for benchmarking of the international transactions involving the Assessee and its Associated Enterprises (AE) - Held that:- A perusal of the impugned order of the ITAT reveals that there was indeed no occasion for the ITAT to direct the TPO to undertake a fresh TP study analysis to benchmark the international transactions undertaken by the Assessee. The issue before the ITAT was whether three comparables viz., Apitco, Choksi and Wapcos were rightly included and the Assessee’s three comparables viz., Educational Consultants (India) Limited, ITDC and In House Productions Ltd. were rightly excluded. This required an FAR analysis to be undertaken vis-a-vis these comparables. Direction to the TPO to allocate the expenses on the basis of gross margin in the agency segment and not in the ratio of sales for the purpose of computing ALP of the international transactions, had nothing to do with the above issue concerning selection of comparables. For the latter purpose, Rule 10B (2) read with Rule 10B (3) of the Income Tax Rules require the said exercise to be undertaken with reference to inter alia “the functions performed/taken into account, assets ought to be employed and the risks assumed” by the tested party and the comparable. A specific characteristic of the property transferred or services provided in both the controlled and uncontrolled transactions had to be taken into consideration. It is not understood why the ITAT did not undertake such exercise regarding the correctness of the inclusion and exclusion of comparables. - matter restored before ITAT - Consequently, the Court answers the question framed in the affirmative, that is, in favour of the Assessee and against the Revenue
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2018 (1) TMI 1157
Deemed dividend u/s 2(22)(e) - Held that:- The fact that the amount had been advanced as loan from M/s Beehive Technologies Private Limited is undisputed. It is also undisputed that the assessee is not a shareholder in M/s Beehive Technologies Private Limited. The Assessing Officer has also noted that on perusal of bank statement, it was found that Shri Tushar Kothari i.e. the assessee had received payment of ₹ 10 lakh in his HDFC account from M/s Beehive Technologies Private Limited. Thus, it is very much evident that the impugned amount has not been given by M/s Beehive Systems Private Limited in which the assessee is a shareholder. See CIT Versus ANKITECH PVT LTD. & OTHERS [2011 (5) TMI 325 - DELHI HIGH COURT] - Decided in favour of assessee
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2018 (1) TMI 1156
Capital gain computation - market value of conveyance deed taken under section 50C - Held that:- In a situation in which there is significant difference between the point of time when agreement to sell is executed and when the sale deed is executed, therefore, should ideally be between the sale consideration as per registered sale deed, which is fixed by way of the agreement to sell, vis-à-vis the stamp duty valuation as at the point of time when agreement to sell, whereby sale consideration was in fact fixed, because, if at all any suppression of sale consideration should be assumed, it should be on the basis of stamp duty valuation as at the point of time when the sale consideration was fixed. We restore this issue back to the file of AO to verify whether ₹ 10,00,000/- was received by the assessee on the date of registration by cheque or not. If the assessee produces the evidence that he has received the money by cheque then the stamp valuation should be taken as on 19.08.2006 - Decided in favour of assessee for statistical purposes.
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2018 (1) TMI 1155
ALP determination - TPA - comparable selection - Held that:- We find that the issue before the ITAT was the average margin of the comparables and it had been confirmed at 29.51%. The Tribunal has, thereafter, directed only for re-computing the ALP after allowing the marketing expenses. Therefore, there was no discretion left to the authorities below for re-computing the ALP. The remand was only for the calculation of the ALP and not for verification of the expenses which have already been accepted and quantified by the TPO in the earlier proceedings. Therefore, the AO/TPO are directed to calculate the ALP exactly in the way directed by the ITAT. - Decided in favour of assessee
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2018 (1) TMI 1154
Eligible for deduction u/s. 80P (2) - amount deposited by assessee in bank and interest earned thereon - Held that:- As decided in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO [2015 (2) TMI 995 - KARNATAKA HIGH COURT] the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore they had deposited the money in a bank so as to earn interest. The said interest income is attributable to carrying on the business of banking and therefore it is liable to be deducted in terms of Section 80P (1) of the Act. As the facts in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. are tallying with the present case we decide the issue in favour of the assessee in both years. - Decided in favour of assessee
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2018 (1) TMI 1153
Trading addition - shortage / excess of the goods - independent inquiry on the basis of the information received from the Central Excise Department - Held that:- The basis of making addition by the Assessing Officer was that during the survey operation, the Central Excise Department found there was excess of raw material. It is the contention of the assessee that the ld. CIT(A) has not taken into consideration the fact that some scrap was generated during the manufacturing process, which gave difference between the raw material and finished goods. As assessee has contended that the first appellate authority under the Central Excise Act i.e. Commissioner of Appeal-1, Central Excise vide order dated 02/1/2013 has given a finding that there was no sufficient material on record to establish clandestine removal on clearance by the appellant. It is stated by the assessee that on the date of survey, actual production of MS Bars was 29668.220 MT whereas consumption of MS Ingots was 31781.160 MT resulting into burning loss of 1015.810 MT, scrap generation of 1018.865 MT and mis roll of 78.265 MT. We find that this fact is not considered by the ld. CIT(A) while deciding this issue. Had the ld. CIT(A) taken into account this fact that this addition would not have been sustained. - Decided against revenue.
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2018 (1) TMI 1152
Transfer Pricing adjustments - selection of comparables - Held that:- Assessee is engaged in the business of developing software design, development and modification services related to semi-conductors and also provides marketing and technical support services which are generally categorized as ‘software development services’, thus companies functionally dissimilar with that of assessee need to be deselected from final of comparable.
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2018 (1) TMI 1151
TPA - comparable selection criteria - Held that:- Business profile of the assessee is a software development service provider to its AE, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2018 (1) TMI 1150
Unaccounted income received from Red Chillies - addition has been made on the basis of documents seized during the search from the premises of Personal Secretary of the assessee - CIT-A deleted the addition - Held that:- It is not the case of the Revenue, the difference amount which has been explained to be included in the head of unidentified parties is of any different amount. Hence, if the receipt shows unidentified parties and the same is exactly agreeing with the difference between the receipt shown from Red Chillies and its difference from the agreement, the assessee’s explanation that the same is actually an amount received from Red Chillies deserves to be accepted. Hence, the submission of the assessee is cogent and the addition in this regard is not justified. - Decided in favour of assessee Unaccounted income received from London Speaker Bureau-Global Leadership Forum 2006 - contention of the assessee that the loose paper found was a draft unsigned contract for attending the event namely the Global Leadership Forum 2006 for a consideration of US $50,000 - Held that:- The assessee has not produced any evidence or any letter whereby she has demanded the balance amount to be paid. It is quite unbelievable that in an international performance engagement, the assessee will be paid only half the amount after the performance and she will not make any presentation or submission for realization of the same. Hence, in our considered opinion that addition is based upon cogent material and the assessee has not been able to dislodge the same. Commissioner of Income Tax (Appeals) has deleted the addition on irrelevant reasoning. The addition has not been made on jotting in a loose sheet. Rather, it is based upon a full fledged engagement letter, the veracity of which has not been doubted. Furthermore, the case laws referred by the ld. Commissioner of Income Tax (Appeals) are in context of different facts and circumstances not applicable here - Decided against assessee
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2018 (1) TMI 1148
Rectification of mistake u/s 154 - rectifying the mistakes committed under Section 220 for calculating interest on refund - Held that:- As seen from the proviso to sub-section (2) of Section 220, evidently, there can be variation in charging interest, and such variation can be effected through correction under Section 154 of the Act. Therefore, we fail to countenance the assessee's contention that Section 154 of the Act is unavailable for rectifying the mistakes committed under Section 220 of the Act. Even otherwise, miscalculation of interest is, at best, an arithmetical error and it needs no elaborate cogitation or adjudication, long drawn or otherwise, to hold that there was an error committed. As to correcting a mistake committed by an authority in calculating interest on refund, it is always open for the authorities to rectify that mistake. Again, in our reckoning, the reasons assigned to our interpretation of Section 220 apply here, too. - Decided against assessee
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2018 (1) TMI 1147
Claim of deduction u/s 40(b) - working out the salary paid to the partner in terms of section 40(b) - amount surrendered in the course of survey U/s. 133A - the surrender amount was shown as business income and assessed as business income - Held that:- It is undisputed that the Assessing Officer has brought to tax the amount of ₹ 1,55,289/shown as other income in profit and loss account as income from business under Section 28 of the Act. The assessment order does not classify the same as income from other sources or under any other head. Once the aforesaid position is accepted, then for the purpose of computing book profit as defined in section 40(b), the other income of ₹ 1,55,289/has also to be considered to be part of income from business arrived at in accordance with the Chapter IVD of the Act. It is not open to the Revenue to contend that the amount of ₹ 1,55,289/is part of business income while computing the tax payable but not so for the purposes of Section 40(b) of the Act. The character of the income does not change dependent upon the section to be applied. This issue has not been examined at all by the authorities under the Act. It goes to the root of the dispute. - Decided in favour of appellant/assessee
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2018 (1) TMI 1146
Eligible for deduction u/s. 10A - nature of income/ additions u/s 41(1) - inclusion of interest income and other income earned by assessee - whether these incomes are incidental to the business and are to be treated as ‘business profits’? - Held that:- For excess provisions reversed pertain to provisions created in immediately previous financial year 2007-08 which are considered excess, including audit fee excess. These amounts are incomes u/s. 41(1), if they are allowed as deduction in earlier year. Since the amounts are directly connected to the business, the excess provision reversed is certainly having a nexus with the business. As far as the bad debts recovered are concerned, as seen from the ledger copy placed on record, these bad debts are previously written-off so to that extent profit in those years has come down. Therefore, the recovery of the bad debts certainly has a business connection. Miscellaneous receipts as seen from the ledger copy, these are incentives received from airlines, recovery of subscription from the employees, notice period payments recovered from the employees who retired or resigned, recovery of salary advances etc., and also includes sale of scrap. These amounts are part of business income and has a direct nexus with the activity of assessee. Therefore, since these amounts have a direct nexus (under the Company Law, these are to be reported as other incomes), We are of the opinion that these amounts are to be considered as part of business income and cannot be excluded for the purpose of deduction u/s. 10A of the Act. For interest income it is not known in the present facts of the case whether the interest income is earned on short term deposits out of surplus funds or long term deposits which has no connection with the business activity of assessee. Even though the AO has treated the income as ‘business income’, there is no finding whether the interest income has a nexus with the business of the ‘undertaking’. Just because the assessee has earned interest income out of the business it may not be eligible for deduction unless it has nexus with the business of undertaking. Thus in the interest of justice, we restore the issue to the file of AO to give proper findings on the nature of interest income earned and accordingly, consider the claims of assessee
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2018 (1) TMI 1145
Addition under the head business profit - CIT(A) deleted the addition - non speaking order by CIT-A - Held that:- CIT(A) has deleted the addition made by the AO under the head business profit; without appreciating the totality of facts discussed and also case laws mentioned in the assessment. It is also noted that Ld. CIT(A) also not discussed the merit of the case and not given any proper justification and reasoning for the deletion of the addition. It is further noted that Ld. CIT(A) also not discussed the Remand Report of the AO, which is contrary to law and itself establish that Ld. CIT(A) has passed the non-speaking and laconic order, which in opinion need to be remitted back to the file of the Ld. CIT(A) to decide the same denovo. See ACIT vs. M/s Shukla & Brothers [2010 (4) TMI 139 - SUPREME COURT OF INDIA] No infirmity in the arguments advanced on behalf of the Department, that no reasons have been recorded for rejecting the contentions raised, this legal infirmity has, in fact, prejudicially affected the case of the assessee before us. - Thus remit back the case to the file of the Ld. CIT(A) with the direction to hear the case de novo and pass appropriate and speaking order in accordance with law, after giving adequate opportunity of being heard. - Decided in favour of revenue for statistical purposes.
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2018 (1) TMI 1144
Addition invoking the provisions of section 68 in respect of loan credit - genuineness of transaction proved - Held that:- We find that the assessee has produced copy of Pan Card, Income Tax returns acknowledgement, letter from RBI, Bank statements depicting this entry of loan of ₹ 1.50 crore, auditor report, financial statements etc. to prove the creditworthiness of the party, genuineness of transaction and sources of transaction. We find that in earlier years i.e. AY 2010-11 also, the assessee has obtained loan of ₹ 1.12 crores from the same party, wherein exactly on identical circumstances CIT(A) deleted and further, Tribunal has confirmed the order of CIT(A). Sr. Departmental Representative could not controvert how genuineness of transaction is not proved. In view of the above facts and circumstances and the issue is consistently allowed in favour of assessee, respectfully following Tribunal orders in earlier years, we confirm the order of CIT(A) deleting the addition. The appeal of Revenue is dismissed.
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2018 (1) TMI 1143
TPA - comparable selection criteria - Held that:- Companies functionally dissimilar with that of assessee need to be deselected from final list of comparable when compared to assessee as engaged in rendering software services. We find that if the comparables selected by the assessee and approved by us and BCL are considered for benchmarking, the arithmetic average mean would be within the plus/minus 5% limit. In other words, the IT. s entered into by the assessee for the year under appeal would be at Arm’s length. Therefore, we can say that no TP adjustment was required. We also find that the assessee was not given benefit of working capital adjustment. In the case of Capgemini India (P. )Ltd. (2015 (4) TMI 586 - ITAT MUMBAI), it was held that working capital adjustment cannot be denied to the assessee only on the ground that the assessee had not made any claim in the TP study if it is possible to make such adjustment as working capital adjustment will improve the comparability. In our opinion, the claim made by the assessee should have been considered.
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2018 (1) TMI 1142
Gains arising out of sale of shares/units - treated as business income instead of short term capital gain - set off speculation losses - Held that:- As decided in assessee's own case [2012 (3) TMI 544 - ITAT MUMBAI] We were informed that in earlier years when assessee suffered Capital Loss the AO treated them as business loss and Speculation loss - as seen from the paper book placed, the assessee had made specific request to the Assessing Officer to set off speculation losses determined in earlier year’s consequent to change of head from short term capital loss to speculation loss on the same set of transactions. Therefore, we are of the opinion that this aspect of the claim has to be examined by the authorities, since earlier year orders were not available on record. In case the Assessing Officer treated the short term capital loss in earlier years as business income and consequently as speculation loss by virtue of provisions of section 73 Explanation (2), similar treatment is also required in this year. Respectfully following the principles laid down by the Hon'ble Bombay High Court in the case of Lokmat Holdings [2010 (2) TMI 94 - BOMBAY HIGH COURT] the assessee’s contentions prima facie are to be allowed. Since it requires examination of the treatment given by AO in earlier years, we are of the opinion that the matter can be restored to the file of the CIT (A) who after giving due opportunity to the Assessing Officer and the assessee, should examine and consider the claim afresh - Therefore, respectfully following the same, we restore the issue back to the file of Ld. CIT(A) on similar lines.
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2018 (1) TMI 1141
Eligibility to deduction u/s 80IA for windmill - initial assessment year - set off of the losses from windmill units with non-eligible export business profits - Held that:- This issue is squarely covered in assessee’s own case for AY 2009-10 [ 2015 (1) TMI 1369 - ITAT MUMBAI] which was finally affirmed by Hon’ble Bombay High Court [2018 (1) TMI 1120 - BOMBAY HIGH COURT]dismissing the Department Appeal as held that sub-section (2) of section 80IA gives an option to the assessee for claiming the deduction under the section for any 10 consecutive assessment year out of 15 years beginning from the year in which the undertaking or the enterprise develops and begin to operate. The 15 years is the outer limit within which the assessee can choose the period of claiming the deduction. After the amendment there is no definition for initial assessment year in the Act and there is option to the assessee in selecting the year of claiming relief under s. 80-IA. In view of this, we are of the opinion that there is no question of setting off notionally carried forward unabsorbed depreciation or loss against the profits of the units and assessee is entitled to claim deduction under s. 80-IA on current assessment year on the current year profit. Accordingly, we allow the claim of the assessee Disallowance of additional depreciation claim by assessee of wind mill purchase during the year - Held that:- As decided in assessee'e own case for AY 2007-08 [2012 (2) TMI 640 - ITAT MUMBAI] wherein held For the application of s. 32(1)(iia) what is required to be satisfied is that the setting up of a new machinery or plant should have been acquired and installed after 31st March, 2002 by an assessee, who was already engaged in the business of manufacture or production of any article or thing and there is no requirement that the setting up of a new machinery or plant should have any operational connectivity to the article or thing that was already being manufactured by the assessee - Revenue appeal dismissed.
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2018 (1) TMI 1140
Penalty u/s. 271(1)(c) or 271AAA - search and seizure action was carried out after 01/06/2007 - Held that:- Intention of the Legislature is clear to this extent that in a case wherein search was initiated before 1.6.2007, provisions u/s 271(1)(c) will be applicable and in search initiated after 1.6.2007 (but before 1.7.2012) provisions u/s 271AAA of the Act will be applicable. These provisions are thus not applicable simultaneously but these are period specific. Considering the above, we hold that penalty u/s. 271(1)(c)was not leviable for the year under appeal, as it fell within the specified period. In the cases relied upon by the assessee, the issue has been deliberated upon by the Tribunal and it has been held that penal provisions of section 271(1)(c)cannot be invoked in cases where action u/s. 132(1)was initiated after 01.06.2007. The FAA has, after analyzing the provisions of both the sections, held that penalty could be levied u/s. 271AAA of the Act for the year under consideration - Decided against revenue
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Customs
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2018 (1) TMI 1139
Principles of Natural Justice - denial of request for cross-examination - suspension of CHA License - Section 138B of the Customs Act, 1962 - Held that: - The provision of Section 138B and principles of natural justice demand that before passing an order based on certain statements, the authority has to follow the principles mentioned therein. By now it is a well settled principle that when specific request for cross examination is made the original authority has to give his finding on such request in terms of Section 138B of the Customs Act - In the present case, the procedure stipulated for due admission has not been followed. Matter remanded to the original authority for a fresh consideration by providing adequate opportunity - appeal allowed by way of remand.
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2018 (1) TMI 1138
Maintainability of appeal - validity of assessment order - case of Revenue is that the appellant cannot be said to have grievance over the assessment order that was passed on the inputs furnished by him - Held that: - the assessed Bill of Entry is definitely an assessment order which can be appealed against to the Commissioner (Appeals). However, for justifying such an appeal, there should be grievance caused to the importer by way of assessment done in the Bill of Entry. It is not forthcoming whether at the stage of filing the Bill of Entry, the appellant had declared the miscellaneous charges as EUR 6748.34 or whether the same had been added by the assessing officer. The appellant has also not filed the copy of the check list, filed along with the Bill of Entry to ascertain this aspect. Matter remanded for reexamination of the issue - appeal disposed off by way of remand.
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PMLA
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2018 (1) TMI 1121
Seeking regular bail u/s 3 and 4 of PMLA - Held that:- The petitioners have been in custody for more than 10 months, the nature of evidence is primarily documentary in nature, which documents have been collected, the trial is likely to take some time, the maximum sentence that can be awarded to the petitioners if convicted would be seven years imprisonment and that the petitioners have no previous involvement except the SFIO complaint on the same transaction in which they have been granted bail, this Court deems it fit to grant bail to the petitioners. It is therefore, directed that the petitioners be released on bail on their furnishing personal bond in the sum of ₹2 lakhs each with two sureties of the like amount, subject to the satisfaction of the learned Trial Court, further subject to the condition that the petitioners will not leave the country without the prior permission of the court concerned.
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Service Tax
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2018 (1) TMI 1136
Cognizance taken against the accused persons - section 83 of the Finance Act, 1994 and Section 14 of the Central Excise Act, 1944 - Held that: - it is not a penal provision, wherein the Court can 958/2008, take cognizance of such provision. Even Section 14 of the Central Excise Act is tices with not a penal provision which only prescribes the procedure for summoning a witness - Section 14 of the Central Excise Act says that it is empowered to summon pliance of persons to give evidence and to produce document in the inquiry. Therefore, the long with alleged order of taking cognizance under the above said provisions is bad in law today. It is clearly a non-application of mind by the Judicial Officer before passing the impugned order. Further, the learned counsel has also submitted as noted above with regard to the jurisdiction, no order has been passed by the trial Court. Therefore, in my opinion, these two important aspects has to be considered by the trial Court. If the Court does not take cognizance of the offence, it cannot proceed with the case by summoning him. The order dated 21-4-2016 passed by the Principal Senior Civil Judge & CJM, Mangaluru, in PC No. 16/2016 in taking cognizance under the above said provisions is hereby quashed. However, the matter is restored on to the file of the Trial Court to pass appropriate orders - appeal allowed in part.
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2018 (1) TMI 1135
Erection, commission or installation service - abatement under Composition scheme - Held that: - there is no service tax liability on composite works contract service prior to 01/06/2007 - on this composite works contract, the appellant were discharging service tax w.e.f. 01/06/2007 - no tax liability will arise on such service irrespective of the date of receipt of consideration for the same - appeal allowed.
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2018 (1) TMI 1134
Extended period of limitation - case of Revenue is that Since the assessee-Respondents neither filed statutory return nor paid the Service Tax, they cannot take the plea against the limitation - Held that: - the Department has failed to establish that the appellant has intentionally evaded the service tax by suppression of facts. If the appellant bonafidely believed that the service provided by them are not taxable as held by the Department and accordingly did not pay the service did not file the service tax return for such services, then the appellant cannot be held guilty of suppression of facts with intend to evade service tax as required for invoking extended time and also for imposition of penalty under Section 78 of the Finance Act, 1994 - appeal dismissed - decided against Revenue.
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2018 (1) TMI 1133
Valuation - Erection, Commissioning or Installation Service - Since the appellant did not include the value of free supply material in the gross value charged by it, the benefit of abetment/ composition scheme was denied by the Department - Held that: - the contract executed by the appellant involved supply of material as well as for provision of labour. Thus, the activities undertaken by the appellant should fall under the preview of works contract for levy of Service Tax. The composition scheme should be available to the appellant and cannot be denied on the ground that it did not specifically exercise the option regarding opting for the works contract service - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1132
Business Auxiliary Service - Multi-level Marketing services for the consumer goods belonging to M/s. Fashion Suitings Ltd. - extended period of limitation - penalty - Held that: - Since the issue was resolved by the Tribunal in 2015, it cannot be said that non-payment of tax by the appellant is attributable to fraud, suppression of facts etc. with intend to defraud the Government revenue. Thus, the show cause notice issued on 21.08.2008 for the period from 19.09.2004 to 10.08.2008 is partly barred by limitation of time. Penalty - Held that: - there were confusions with regard to payment of service tax on Multi Level Marketing services under the taxable category of “Business Auxiliary Service” - benefit of Section 80 ibid should be available to the appellant for non-imposition of penalties. The appeal is allowed by way of remand to the Original Authority for quantification of the service tax demand within the normal period of limitation.
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2018 (1) TMI 1131
CENVAT credit - GTA Services - It appeared to the department that such utilization of cenvat credit was irregular since the service provided by the GTA for outward transportation does not become an output service for consignor or consignee in terms of Rule 2(p) and 2 (r) of the Cenvat Credit Rules, 2004 - Held that: - prior to 1.3.2008, there is no bar on the appellants for utilization of cenvat credit for discharging, as a consignor, the tax liability on GTA services availed for outward transportation - for the period 1.3.2008 to September 2008, i.e., the remaining part of the disputed period, by virtue of the amendment brought in Rule 2 (p) of the Rules vide Cenvat Credit (Amendment) Rules, 2008 w.e.f. 1.3.2008 appellant cannot utilize cenvat credit for discharging tax liability on the said GTA service for outward transportation. Cenvat credit so availed will then will have to be paid back along with appropriate interest liability thereof. For this limited purpose, we remand the matter to the adjudicating authority, only for the purpose of calculating the amount required to be paid back and the interest liability thereon for the period 1.3.2008 to September 2008. Penalty - Held that: - the issue per se was mired in confusion during the disputed period - penalty cannot be imposed. Appeal allowed in part and part matter on remand.
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2018 (1) TMI 1130
Classification of services - Tour Operator Service - Department took the view that the vehicles operated by the appellants are covered by permits issued by the Transport authorities under the Motor Vehicles Act and the point to point services operated by them would be liable to be classified under the category of "tour operator service" - extended period of limitation - Held that: - Appellant has conceded his liability for part of the period; there can then be no reason why such liability will not extend to the entire period covered by the notice. Accordingly, the tax liabilities will be demandable for the periods 1.4.2000 to 07.10.2004 and October 2005 to March 2007 - SCN not hit by limitation. Grant of cum tax benefit - Held that: - There is no allegation that appellant had collected service tax from their customers but had not paid the same to the exchequer. It is also a fact that the issue of taxability in respect of stage carriages/contract carriages and tour operators was mired in confusion during impugned period and only after the judgment of the Hon'ble Madras High Court in Secretary, Federation of Bus Operators Association of Tamil Nadu Vs UOI [2001 (4) TMI 7 - MADRAS HIGH COURT] wherein the matter had been settled - plea of cum duty benefit is granted - penalty set aside. Appeal allowed in part.
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2018 (1) TMI 1129
Abatement - photographic services - benefit of N/N. 12/2003-ST dt. 20.6.2003 - extended period of limitation - Held that: - the issue whether the cost of material has to be included in the value of taxable services in photographic services while discharging service tax liability was highly contentious during the disputed period and there were conflicting decisions - On such score, we are of the considered opinion that the appellant has made out a case on the ground of limitation - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (1) TMI 1128
SSI Exemption - clubbing of clearances - dummy units - grievance of Revenue is that the order passed by the Commissioner (Appeals) is not legal and proper, inasmuch as, the respondent No.3 was not a dummy unit of respondent No.1 and that the duty liability on the later has not been correctly computed by the adjudicating authority. Held that: - the ld. Commissioner (Appeals) has elaborately discussed that Perfect Engineers, the Respondent No.3 was not a dummy unit of Supershine Laundry Systems Pvt. Ltd., the Respondent No.1 and has also held that except recording of the statement, no other corroborative documentary evidences were produced by the Department to support such stand - In view of the fact that the Department has not produced any corroborative documentary evidences, indicating financial flow back and mutuality of interest between the Respondent No.1 & 3, the above observations made by the Commissioner (Appeals) in the impugned order is proper and justified and cannot be interfered with at this juncture. Appeal dismissed - decided against Revenue.
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2018 (1) TMI 1127
Quantification of tax liability - redemption fine - penalty - various metallic scrap cleared by the appellant - non-maintenance of proper records - Held that: - there is no prescribed format of maintaining accounts for excise purpose. As long as the required particulars to fulfill the provision of Central Excise Act/Rules made thereunder are available the same should satisfy as proper accounting. In the present case, the appellants claimed that the scrap seized by the officers on the ground of non-accountal were in fact accounted in the raw material register. Similarly, the duty calculation requires re-verification - appeal allowed by way of remand.
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2018 (1) TMI 1126
Interest on delayed payment of duty - section 11 A of the Central Excise Act, 1944 - extended period of limitation - Held that: - The SCN as well as the impugned order has invoked section 11 AA for demanding the interest liability. As brought out by the argument of the Id. counsel for the appellant, the said section has been introduced only in 2011 and therefore not applicable to the disputed period. Thus, the demand raised in the SCN has no legal basis - The Hon'ble High Court in the case of Hindustan Insecticides Ltd. [2013 (8) TMI 225 - DELHI HIGH COURT], held the issue in favor of assessee holding that limitation would mutatis mutandis apply for demand of interest - the impugned order is modified only to the extent of setting aside the demand of interest without disturbing the appropriation of the duty amount paid by the appellant - appeal allowed in part.
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2018 (1) TMI 1125
100% EOU - Refund of additional customs duty paid erroneously - rejection on the ground that the appellant is not eligible for the benefit of N/N. 23/2003 and also on the ground of unjust enrichment - Held that: - The subject goods were leviable to Sales Tax / VAT and the payment of Sales Tax / VAT was deferred to the point of sale. As there is no exemption from VAT / Sales Tax, per se, the benefit of the notification cannot be denied to them. Unjust enrichment - Held that: - appellant argues that the authorities below have assumed that the appellants have passed on the incidence of duty to the customers. That their accounts would show that the duty element has not been passed on to their customers. The appellant has presented an arguable case for reconsideration of the matter. We therefore deem it fit to remand the matter to the adjudicating authority for reconsideration of both the issues - appeal allowed by way of remand.
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2018 (1) TMI 1124
Benefit of N/N. 108/95-CE dated 28.08.95 - Whether the goods cleared without payment of duty under N/N. 108/95 dt. 28.8.1995 to the private contractor, instead of Project Implementing Authority is correct or not and the appellants is entitled to avail the benefit of the said notification? Held that: - the identical issue has been settled by Tribunal in favour of assessee in the case of Caterpillar India Pvt. Ltd. Vs CCE Pondicherry [2005 (3) TMI 243 - CESTAT, NEW DELHI] holding that the goods supplied under Central Excise N/N. 108/95 could be to the contractor who is the implementing authority and need not be to the Project Implementing Authority - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1123
Classification of goods - Mucosat, Nurofit, MOD Caps, Kalpadyn-MC, Nerosafe etc. - The department took the view that the products are Dietary supplement/Nutritional supplement which would merit classification under CETA 2809.99 attracting miscellaneous MRP based assessment under Section 4A ibid - appellant held classification under CETA 3003.10 - Held that: - a closer look at the xerox copies of such labels available in the appeal paper book indicates that all these products are basically multi-vitamins except MOD caps, which again are Methylcobalamin capsules, the pharmaceutical name for Vitamin-B12. For an item to merit classification under 2108, they should be “other edible preparations not elsewhere specified or included”. A close look at the sub-headings thereunder will indicate that items in the genre of edible preparations like lemonades, sharbat etc., find place thereat. The requirement of being “edible” is a prime necessity for attracting classification under 21.08. This being so, by no stretch of imagination, a product containing a bevy of vitamins, pharmaceutically produced and not even alleged to be a plant /fruit based extract, would merit classification under 21.08. The Tribunal in the case of Softesule Ltd. [2002 (6) TMI 92 - CEGAT, MUMBAI], had occasion to go into an identical matter and held that the impugned goods were classifiable under CETA 3003.10 and not under 2108.99 ibid. Appeal dismissed - decided against Revenue.
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2018 (1) TMI 1122
Failure to file returns as well as make debit entry in the CENVAT account - intentional mistake or just procedural error - Held that: - There was failure on the part of the appellant to make debit entry in the CENVAT account towards discharging duty liability. It is correct that there was sufficient balance during the relevant period in the CENVAT account for discharging the duty liability - Since there was sufficient balance in the CENVAT credit and appellant being a new registrant, it can be safely concluded that the same was only a procedural mistake - the appellant is liable to pay the interest upon the same. Penalty - Held that: - since there is no malafide intention to evade payment of duty, the penalties imposed are unwarranted and requires to be set aside. Appeal allowed in part.
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Indian Laws
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2018 (1) TMI 1137
Whether an award delivered by an Arbitrator, which decides the issue of limitation, can be said to be an interim award? - Whether such interim award can then be set aside under Section 34 of the Arbitration and Conciliation Act, 1996? Held that: - A reading of the Section 31(6) makes it clear that the jurisdiction to make an interim arbitral award is left to the good sense of the arbitral tribunal, and that it extends to “any matter” with respect to which it may make a final arbitral award. The expression “matter” is wide in nature, and subsumes issues at which the parties are in dispute. It is clear, therefore, that any point of dispute between the parties which has to be answered by the arbitral tribunal can be the subject matter of an interim arbitral award - More than one award finally determining any particular issue before the arbitral tribunal can be made on different aspects of the matters to be determined. A preliminary issue affecting the whole claim would expressly be the subject matter of an interim award under the English Act. The English Act advisedly does not use the expression “interim” or “partial”, so as to make it clear that the award covered by Section 47 of the English Act would be a final determination of the particular issue that the arbitral tribunal has decided. The award dated 23rd July, 2015 is an interim award, which being an arbitral award, can be challenged separately and independently under Section 34 of the Act. Such an award, which does not relate to the arbitral tribunal’s own jurisdiction under Section 16, does not have to follow the drill of Section 16(5) and (6) of the Act. Appeal allowed.
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