TMI Tax Updates - e-Newsletter
January 3, 2017

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• CBEC prescribes Declaration form to be filled up by NRIs for depositing Specified Bank Notes (SBNs) on arrival

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Highlights / Catch Notes

• Income Tax:

  If the assessee disputes the value as per stamp valuation authority to be substituted in place of sales consideration for the purpose of calculation of capital gain, then the AO should refer the capital asset to valuation Officer for determination u/s 50C(2) - AT
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• Income Tax:

  Additions towards VAT component of unaccounted sales - Since, the net profit of the assessee has been estimated on total turnover, there is no need for separate additions towards VAT component - AT
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• Income Tax:

  Doctrine of mutuality - assessee club had made investments in the mutual fund it was not an investment with the member but with an outsider or a non-member, therefore, the principle of mutuality would not apply. - HC
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• Customs:

  Declaration form to be filled up by NRIs for depositing Specified Bank Notes (SBNs) on arrival-reg.
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• Customs:

  Rejection of refund claim - Commissioner of Appeals and also the Tribunal have both grossly erred in not looking into the additional evidence, which has been produced before the Appellate Commissioner - HC
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• Customs:

  Valuation - imported Soap Flakes - since the Ld. Commissioner has not considered the IIT report and also not granted cross examination and certain statements were not provided to the appellant, natural justice was violated by the adjudicating authority. - AT
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• Customs:

  When the Department is unable to complete it’s enquiry at given time of ten months, the Customs Broker should not be made suffer - the Department cannot be allowed to continue the prohibition on the appellant. - AT
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• Corporate Law:

  Removal from directorship - allotment of shares without petitioner knowledge - Period of limitation as per the provisions of Limitation Act - petition dismissed on more than one grounds - Tri
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• Corporate Law:

  Restoration of company name - in view of the admitted fact, that the provisions of sub-section (1) & (2) of Section 560 of the Companies Act have not been complied, it is just and proper to restore the name of the company in the register of the Registrar of Companies. - HC
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• Service Tax:

  Renting of Immovable Property Services - co-owners of property - their tax liability should have been determined by considering their individual rental receipts and not collective one, benefit on notification was extended. - AT
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• Service Tax:

  Lease rental charges for motor vehicles - fleet management fee - appellants failed to sustain legally their plea regarding non-applicability of the provisions of Service Tax to the transactions of renting of motor cabs and on such consideration received. - AT
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• Service Tax:

  100% EOU - refund of cenvat credit - Rule 6(6)(v) would be covering even all exports of final products by a 100% EOU and therefore, would not be hit by Rule 6(1) as far the eligibility of Cenvat credit on input/input services used in manufacture of final products exported by a 100% EOU is concerned - AT
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• Central Excise:

  Rejection of refund - when the amount has been paid on the objection raised by the audit, it is deemed that the same has been paid “Under Protest” and the refund claim filed by the Appellant is in order - AT
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• Central Excise:

  Return of goods - disallowance of CENVAT credit - it is immaterial whether the good were brought back to the factory from which they were originally removed or into another factory belonging to the same assessee - AT
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• VAT:

  Classification of goods - batteries for the purposes of Radio Communication Receivers (RCRs) - Battery is certainly fitted for RCRs or used in Cars and for other diverse purposes and unless a battery is fitted into a RCR or so to say a Car, it would be non-functional and such RCRs or/and Cars will not start and will not function. - rate of tax is 4% - HC
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Articles

• GST DAILY DOSE OF UPDATION BY CA PRADEEP JAIN
• TRANSITIONAL PROVISIONS-PART-V
• Calculation of Tax under House Property Income.

Notifications

• Central Excise

• 37/2016 - dated 31-12-2016 - CE
  Amendments in various notifications

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• 50/2016 - dated 31-12-2016 - CE (NT)
  Seeks to Amend Notification No. 49/2008-Central Excise (N.T.), dated the 24th December, 2008

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• 49/2016 - dated 31-12-2016 - CE (NT)
  Amendments in the First Schedule to the Central Excise Tariff Act, 1985

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• Customs

• 57/2016 - dated 31-12-2016 - ADD
  Amendments in various notifications

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• 68/2016 - dated 31-12-2016 - Cus
  Seeks to Amend Notification No. 69/2004-Customs, dated the 9th July, 2004

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• 67/2016 - dated 31-12-2016 - Cus
  Amendments in various Notifications

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• 66/2016 - dated 31-12-2016 - Cus
  Seeks to amend notification No. 152/2009-Customs dated 31.12.2009 so as to provide deeper tariff concessions in respect of specified goods imported from Korea RP under the India-Korea Comprehensive Economic Partnership Agreement (CEPA) w.e.f. 01.01.2017 and to carry out editorial changes as a result of HS 2017 changes

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• 65/2016 - dated 31-12-2016 - Cus
  Seeks to amend notification No. 53/2011-Customs dated 01st July, 2011 so as to provide deeper tariff concessions in respect of specified goods imported from Malaysia under the India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA) w.e.f. 01.01.2016 and to carry out editorial changes as a result of HS 2017 changes

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• 64/2016 - dated 31-12-2016 - Cus
  Seeks to further amend Notification No. 69/2011-Customs, dated 29th July, 2011 so as to provide a deepen the concessional rate of basic customs duty in respect of tariff item 8408 20 20 [engines of a kind used for the propulsion of specified motor vehicles – of cylinder capacity exceeding 250 cc] and 8708 40 00 [gear box and parts thereof, of specified motor vehicles], w.e.f. 1st of January, 2017, when imported under the India-Japan Comprehensive Economic Partnership Agreement (IJCEPA) and to carry out editorial changes as a result of HS 2017 changes

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• 63/2016 - dated 31-12-2016 - Cus
  Seeks to amend notification No. 46/2011-Customs dated 01.06.2011 so as to provide deeper tariff concessions in respect of specified goods when imported from ASEAN under the India-ASEAN Free Trade Agreement w.e.f. 01.01.2017 and to carry out editorial changes as a result of HS 2017 changes

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• 62/2016 - dated 31-12-2016 - Cus
  Seeks to withdraw BCD exemption, available to specified fabrics, of value equivalent to 1% of the FOB value of exports in the preceding financial year, for manufacture of textile garments for exports, subject to the specified conditions [S. No. 284A of Notification No. 12/2012-Customs dated 01.03.2012 refers]

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• 150/2016 - dated 31-12-2016 - Cus (NT)
  Amendments in the First Schedule to the Customs Tariff Act, 1975

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Circulars / Instructions / Orders

• Customs - 60/2016 - dated 31-12-2016
  Declaration in respect of Specified Bank Notes

News

• RBI Reference Rate for US $

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• RBI introduces Facility for Citizens and NRIs who were Abroad for Exchange of SBNs

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• Large scale achievements made under various Schemes including PMJDY; 26.03 crore accounts opened as on 21st December, 2016 under PMJDY out of which 15.86 crore accounts are in rural areas and 10.17 crore in urban areas; Deposits worth ₹ 71,557.90 crore mobilsed under the Scheme; 1,26,985 Bank Mitras deployed; 51,745 claims registered under PMJJBY till 28th December, 2016 out of which 48,023 have been disbursed;.

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Case Laws:

• Income Tax

• 2017 (1) TMI 122
  Validity of reopening of assessment - Held that:- Merely by virtue of the non-action on the part of the assessing officer in the case of the present assessee, i.e. by his failure to issue a notice under section 143 (2) of the Act, the Department gets the advantage of another four years from 31.3.2002 to initiate proceedings for re-assessment. This obviously can neither be the proper interpretation of section 147 nor the intention of Legislature. It is incorrect to state that the Assessing Officer had no opportunity as the statute grants him full opportunity to scrutinize the assessment if he felt it was necessary and expedient for him to do so. Having chosen not to, he cannot resort to the provisions of S.147 in the absence of any new or fresh material indicating escapement of income. - Decided in favour of assessee.

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• 2017 (1) TMI 121
  Validity of reopening of assessment - non issue of notice - contention raised by the petitioner is that though, in the notice, the date '31.3.2004' is mentioned, it was served only after six years and the same was issued without assigning any reason - Held that:- The original assessment is shown to have been made for the year 1997-98. Thereafter, a notice under section 148 of the Act was issued after four years that too without assigning any reason for re-opening the assessment and when it was sought for by the assessee, it was furnished by the Department only by their communication dated 19.12.2005. It appears that the reason for re-opening the assessment was not shown to be the failure on the part of the assessee in disclosing the returns with full and true material facts. Such being the case, no care has been taken to issue the notice within four years from the end of the assessment. Though the wordings used in the section concerned is issue of notice, that does not mean affixing the signature itself will amount to issue of notice, but, the said notice has to be set in motion to get the meaning of the term 'issue of notice' and as far as the case in hand is concerned, since the notice has been served on the petitioner by hand delivery only in February 2005, in the absence of contention to the contrary, the stand of the assessee has to be accepted. It has been observed further that though the Department had relied on explanation (1) to Section 147 of the Act and contended that mere furnishing of the account book is not sufficient and particulars should have been given, this should have been disclosed in the notice concerned in detail, but, in the absence of the same, this court cannot accept the stand of the Department.- Decided against revenue

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• 2017 (1) TMI 120
  Reopening of assessment - amount already been included within the fold of assessment by way of an appropriate order under sec 154 - Held that:- Taking action for rectification of an assessment order under section 154 would not debar the department from taking separate steps for reassessment under Section 147 of the Act. We thus do not find reason to interfere with the order of the first appellate authority as the ld. CIT(A) has rightly upheld the action of the AO in computing the income of ₹ 5,53,520/- in the reassessment. - Decided in favour of revenue Grant of exemption u/s 54(1)/(2) denied - Held that:- Requirement under 54E are to be complied with strictly and for failure to make compliance, the benefit cannot be granted to the assessee. In our view, both CIT(A) & Tribunal has not committed any error merely because separate account is opened. The capital account is required under the statute to be opened within six weeks. Therefore, the issue is also required to be answered in favour of the department against the assessee. Penalty u/s 271C (1)(c) - Held that:- In view of the bonafide mistake by the assessee, we are of the opinion that the provisions under 271C will not be attracted therefore, issue no. 3 is required to be answered in favour of the assessee. It is only that the assessee could not follow the procedure exactly. In that view of the matter, basic requirement of 271C (1)(c) of the Act are absent and hence, levy of penalty is unjustified.

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• 2017 (1) TMI 119
  Undisclosed investment in the cost of construction of the immovable property - valuation of said property revealed that the value as declared by the assessee was not correct - ITAT deleted the addition - reassessment - Held that:- The judgment of the Supreme Court which is sought to be relied upon by the Tribunal in the case of Amiya Bala Paul Vs. C.I.T.,[2003 (7) TMI 4 - SUPREME Court] is fully applicable to the facts of the case. Taking into consideration that the independent valuation was not done on the basis of valuation of DVO, the addition were made and after considering both the orders of CIT(A) and Tribunal and the decision of Hon'ble Supreme Court, we are of the opinion that the view taken by the Tribunal is just and proper. - Decided against revenue

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• 2017 (1) TMI 118
  Claim of deduction under section 80IB(10) - rejection of claim on the ground that the residential units exceeded the specified limit of 1500 sq. ft. - Held that:- The terrace area needs to be excluded from the built up area and if the same is excluded , then the resultant built up area is well within the 1500 sq.ft limit prescribed in the statute and hence rejection of deduction u/s 80IB(10) of the Act on this ground by the Learned AO is not in order. - Decided in favour of assessee

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• 2017 (1) TMI 117
  Imputing of interest on amounts outstanding from the associated enterprises in terms of section 92(1) - not charging interest from both associated enterprises as well as non-associated enterprise debtors and that the delay in realization of export proceeds - Held that:- It was a common point between the parties that there was uniformity in the act of the assessee in not charging interest for the belated recovery from its associated enterprises as well as non-associated enterprises, but in so far as the issue as to whether the delay in ultimate realization of export proceeds in both cases is same or not is also required to be verified, having regard to the judgment of the Hon’ble High Court in the case of Indo-American Jewellery (2013 (1) TMI 804 - BOMBAY HIGH COURT). A perusal of the said details reveal that the Transfer Pricing Officer has culled out the delay in excess of 365 days in the cases of associated enterprises and for such delay he has imputed interest @ 10.75%. So however, in the case of non-associated enterprises also there is a delay in recovery beyond the period of 365 days. So however, the extent of such delay is not emerging from the discussion in the orders of the authorities below because the Transfer Pricing Officer has confined his working to the delay in the case of associated enterprises alone. The rival counsels agreed that for this purpose, the matter may be restored back to the file of the Transfer Pricing Officer/Assessing Officer. Deduction allowable under section 10AA - Held that:- Income tax authorities erred in setting-off of losses amounting to ₹ 2,14,77,088/- of assessment year 2009-10 from the business income of the current year before allowing exemption under section 10AA of the Act. Accordingly, we set-aside the order of the CIT(A) and direct the Assessing Officer to recompute the deduction allowable under section 10AA of the Act, as above. See CIT VS Black And Veatch Consulting Pvt. Ltd. [2012 (4) TMI 450 - BOMBAY HIGH COURT] Non granting credit for the Fringe Benefit Tax (FBT) paid on 15/6/2010 towards regular income tax - Held that:- Necessary credit deserves to be allowed to the assessee in terms of the CBDT Circular dated 29/1/2010. On this aspect of the matter, the Ld. Departmental Representative had no objection and accordingly the matter is restored back to the file of Assessing Officer, who shall allow appropriate relief in accordance with law. Thus, Ground of appeal of the assessee succeeds for statistical purposes.

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• 2017 (1) TMI 116
  Calculation of capital gain - determining the FMV - Adoption of value of the property as per Stamp Valuation Authorities for the purpose of section 50C - lower authorities have not referred the matter to the Valuation Officer before substituting the stamp value as per stamp valuation authority as consideration for the purpose of calculating the capital gain - Held that:- From the facts and ratio laid down by Hon'ble High Court in the case of Sunil Kumar Agarwal [2014 (6) TMI 13 - CALCUTTA HIGH COURT ] if the assessee disputes the value as per stamp valuation authority to be substituted in place of sales consideration for the purpose of calculation of capital gain , then the AO should refer the capital asset to valuation Officer to determine the full value of the consideration received or accruing as a result of transfer of capital asset u/s 50C(2) of the Act. In the instant case before us the assessee is disputing the substitution of stamp valuation as per stamp valuation authority as FMV for the purpose of calculation of capital gain and the matter of determining the FMV should be referred to the DVO. Hence, in the present case, we are inclined to set aside the order of the CIT(A) and restore the issue back to the file of the AO for fresh adjudication of the issue of long term capital gain arising out of sale of plot after referring the matter to DVO and hearing the assessee by affording a fair and reasonable opportunity. The appeal of the assessee is allowed for statistical purposes.

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• 2017 (1) TMI 115
  Addition made u/s 153A/144C - transfer pricing adjustment addition - Held that:- When undisputedly complete details of income along with books of account and audited balance sheet have been filed by the assessee company during the assessment proceedings completed u/s 143 (3), no addition can be made in the absence of incriminating material, if any, unearthed during the search only. The contention of the ld. DR that non-furnishing of Form 3CEB by the assessee company during normal assessment proceedings is enough for reassessment of the case is not tenable because when all the transactions entered into by the assessee company with its AE supported with books of account and audited balance sheets have been brought on record during assessment proceedings completed u/s 143(3) it was for AO/TPO to apply their mind to make assessment accordingly. More so, it is not case of the revenue that the assessee has suppressed the international transaction with its AE during the assessment proceedings concluded u/s 143(3) of the Act. Even otherwise, the issue in controversy has already been decided in favour of the assessee for AYs 2006-07 and 2007-08 wherein reassessment was made u/s 153A consequent upon the search and seizure operation conducted on 21.01.2011. Vide order dated 14.12.2016 (supra), Hon’ble jurisdictional High Court held, in assessee’s own case for AYs 2006-07 and 2007-08 by following the law laid down in Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT), that completed assessment u/s 143(3) of the Act interfered with by AO/TPO u/s 153A is not tenable in the eyes of law. In view of what has been discussed above, we are of the considered view that without entering into the merits of this case, the addition made in this case u/s 153A/144C of the Act is not sustainable in the eyes of law, hence deleted. - Decided in favour of assessee.

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• 2017 (1) TMI 114
  Nature of income - activities from business income - process of fabrication - Held that:- Tribunal has observed that process of fabrication, manufacturing and fixing steel liners and steel radial gates falls under manufacturing and income earned on there activities is business income. We are of the opinion that the view taken by both the authorities is just and proper. No substantial question is required to be considered and, we confirm the view taken by the Tribunal.

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• 2017 (1) TMI 113
  Deemed dividend u/s 2(22)(e) - whether the subsidiary company Double Dot Finance Ltd is a company in which public are substantially interested and thereby deemed dividend has not arisen in the hands of the assessee? - Held that:- The subsidiary company viz Doubledot Finance Limited is not a Private Limited Company but is a company in which public is substantially interest as more than 51% (58.53%) of the Equity share capital of Doubledot Finance Limited has been held unconditionally throughout the financial year by Crescent Finstock Limited (the appellant company). It is not envisaged by law that only wholly owned subsidiary of a Listed Company shall be company in which the public are substantially interested.If one were to carefully consider the totality of the provision as contained in section 2(18)(B), it is abundantly clear that the stipulation of “Wholly owned subsidiary” applies only to the Holding Company and not to the company in which the shares are held. Section 2(18)(B) has also made a further distinction between subsidiary companies which are in the nature of Manufacturing Companies and Nonmanufacturing companies in order to qualify as a subsidiary it is sufficient that only 40% of the shares be held by the Holding Company whereas in the Non-manufacturing section it has to be not less than 50% - Decided in favour of assessee Disallowance made under rule 8D(2)(iii) of the Income Tax Rules - Held that:- Simply relying on rule 8D, for the purpose of disallowance, cannot be held to be applicable, because the Assessing Officer having regard to the accounts of the assessee as well as the nature of expenses incurred which can be said to be attributable for the earning of exempt income, has not pointed out what are the expenses which could be said to be have been incurred or attributable on the administrative expenses. Only when the Assessing Officer is not satisfied with the correctness of the claim of the assessee, he can proceed to apply rule 8D. In this case, such a requirement has not been fulfilled by the Assessing Officer. Accordingly, we do not find any merit in the disallowance made by the Assessing Officer under rule 8D and accordingly, the disallowance made by the Assessing Officer under rule 8D and confirmed by the learned Commissioner (Appeals) stands deleted - Decided in favour of assessee

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• 2017 (1) TMI 112
  Penalty u/s 271AAA (1) - undisclosed income in a statement under sub-section (4) of Section 132 - assessment completed u/s 153B - Held that:- When the assessment in this case was completed u/s 153B(1)(b) of the Act at ₹ 1,74,98,810/- (including surrendered amount of ₹ 1,70,43,170/-) and the assessee has paid tax due with interest which has not been questioned by the AO to substantiate the manner in which the said undisclosed income was derived, the assessee is entitled for to avail of the benefit of the amnesty provisions contained u/s 271AAA (2) read with section 132 (4) of the Act. Consequently, appeal filed by the assessee stands allowed and penalty stands deleted.

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• 2017 (1) TMI 111
  Penalty u/s 271(1)(c) - suppression of receipts - discrepancy in accounting the professional receipts found during survey - Held that:- The income of the assessee was assessed purely on estimated basis which is further fortified by the fact that addition was reduced by the FAA and also by the tribunal in quantum appeal. In our view, it is trite law that in case difference of opinion, where the addition is made on the basis of estimation, conjecture and surmises, the penalty u/s 271(1)(c) cannot be levied. We are, therefore ,inclined to set aside the order of the ld.CIT(A) and direct the AO to delete the penalty. - Decided in favour of assessee

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• 2017 (1) TMI 110
  Transfer pricing adjustment - TPO rejected the internal TNMM method adopted by the assessee for the bench marking transactions with AE since the volume of transactions with a non AE is not significant- Held that:- We notice that the sales to the non AE is insignificant and is amounting to only ₹ 34 crores whereas the sales to AE is around 235 crores. For a proper bench marking of ALP, there should be adequate sales turnover for the assessee with the non AE and AE’s. In the instant case, since the sales turnover of the assessee with the non AE is insignificant compared to the overall export turnover of this division, the internal TNMM adopted by the assessee, according to us, has been rightly rejected by the TPO. Non adjustment to the working capital - Held that:- We notice that the assessee in its TP study has not given adequate details for grant of working capital adjustments. Moreover, the comparables selected by the assessee has not been granted the working capital adjustment. Hence, the TPO has rightly rejected the claim of the assessee to grant working capital adjustment. Receipts from sale of scrap and export entitlement should be included in the operating profits - Held that:- The scrap is the bi-product of the direct manufacturing, and prima facie, we are of the view that the same ought to have been reduced from the raw-material cost. If the receipts on account of sale of scarp goes to reduce, cost of raw materials, needless to say it is part of operating profits. Similarly, the export entitlements is also nothing but realization of export sales and is closely linked to the export. The assessee has produced the TPO’s order for the asst year 2013-14 wherein the TPO had accepted assessee’s TP study including the receipt on account of sale of scrap and export entitlement as part of operating profits. Therefore, we are of the view that this matter needs fresh examination by the TPO and accordingly we remit this issue to the TPO for de-nova consideration. The TPO shall dispose of the issue as expeditiously as possible after affording a reasonable opportunity of hearing to the assessee. Upward revision of Tooling division - as argued by the assessee that the TPO disregarded the lower capacity utilization of the assessee's plant - Held that:- We notice that the Tooling Division of the assessee has been in operation for more than ten years. There is no specific reasons given by the assessee as to why the capacity utilization is only at 40% and it should be given adjustments. Normally adjustment is given for underutilization of capacity when the unit is in its infancy, lockout due to workers unrest, power cuts etc., In the instant case, the assessee has not stated any specific reason for underutilization of its capacity. Moreover the assessee has not furnished any details with regard to the capacity utilization of the comparables. Since there is no adequate information as regard to the capacity utilization of the comparables; we deem it appropriate that no adjustment needs to be granted for underutilization of assessee’s plant in the tooling division. Upward transfer pricing adjustment of patent cost - Held that:- We notice that for the assessment year 2012-13, the assessee had returned back this amount of patent cost as no more payable and has offered it for taxation. Hence, the assessee has accepted the decision of the TPO since the patent cost was no more payable by the assessee. If at all what has been returned in the assessment year 2012-13, is to be deleted, the assessee has to move a rectification petition for AY 2012-13 and no direction can be given by us. Grant of additional depreciation - Held that:- The eligibility for deduction of additional depreciation stands admitted, since 50 per cent thereof had already been allowed by the AO in the the immediately preceding assessment year. Therefore, obviously, the balance 50 per cent of the deduction is to be allowed in the current year, thus we direct the Assessing Officer to grant additional depreciation of balance 10% for the current assessment year namely asst.year 2011-12. It is ordered accordingly. Addition made u/s 14A r.w.r 8D - Held that:- It is an admitted fact that there were common administration expenses for all business activities including the investment activities of the assessee. The assessee incurred routine expenses to maintain its establishment and towards administration. Necessarily, a portion of said expenditure has to be attributed for managerial and directors’ remuneration. Managerial staff and directors are involved in making decisions on investments. Such being the case, a portion of this managerial remuneration and director’s remuneration should be attributable towards investment, the return on which is exempt being dividend income. Therefore, the Assessing Officer has rightly invoked the provisions of section 14A r.w.r 8D(iii) of I T Rules and disallowed ₹ 13,65,688/-.

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• 2017 (1) TMI 109
  Penalty u/s 271(1)(c) - amount reflected in the profit and loss account, but was not shown in the balance sheet or included in the return - whether the assessee was eligible to any lenience in the penalty proceedings on account of certificate issued under Section 230A of the Act - Held that:- Tribunal ought to have weighed the effect of the certificate issued under Section 230A as well as the material facts and particulars to determine as to whether there is any concealment or inaccuracy in the particulars furnished to render a final decision on the appeal filed by the Revenue against the decision of the CIT (Appeals). We are afraid that such consideration has not come true. Therefore, it is a situation where the decision has been rendered without appropriately appreciating the facts, materials and evidence, in accordance with law, which would in turn give rise to substantial question of law when the issue is deliberated in this appeal under Section 260A of the Act. The substantial question of law formulated as above is answered accordingly. We are, therefore, of the view that this is an eminently fit case for an order of remit to the Tribunal for re-consideration of the matter in the light of what is stated above. Matter set aside to Tribunal for reconsideration.

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• 2017 (1) TMI 108
  Penalty u/s 271(1)(c) - as per revenue assessee has deliberately concealed particulars of his income and furnished inaccurate particulars of his income, which is evident from the fact that the department had unearthed several discrepancies during the course of survey - assessee admitted additional income through revised returns - Held that:- The assessee has admitted additional turnover to cover up the deficiencies found during the course of survey. The assessee also filed revised returns in response to notice u/s 148 of the Act, admitting additional turnover disclosed during the course of survey. The assessee has estimated net profit of 17.5% on such additional turnover. Though the A.O. has estimated 60% net profit on additional turnover, the ITAT finally directed the A.O. to estimate net profit of 20% on additional turnover declared by the assessee. Though there is a slightly higher income finally assessed consequent to the findings of the ITAT, it is mainly because of estimation of net profit which cannot be considered as concealment of income, which warrants levy of penalty u/s 271(1)(c) of the Act. We further observed that when assessee surrendered additional income to cover up the deficiencies found during the course of survey and offered additional income by filing revised return in response to notice u/s 148 of the Act, the A.O. was incorrect in levying penalty for concealment of particulars of income and furnishing inaccurate particulars of income. It is not automatic that whatever amount has been offered by the assessee, penalty is to be imposed. Generally, concealment provision cannot be invoked in case of surrender of addition, if surrender is made specifically on condition that no penalty will be levied or if surrender is made with a view to buy peace or to avoid harassment or litigation. In this view of the matter we are of the view that the assessee neither concealed particulars of his income nor furnished inaccurate particulars of income, which warrants levy of penalty u/s 271(1)(c) of the Act. The income finally assessed is merely an estimation of income without reference to any concealment of particulars of income. - Decided in favour of assessee

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• 2017 (1) TMI 107
  Reopening of assessment - addition towards unexplained cash deposits in bank account - Held that:- We find that the assessee has withdrawn cash on various dates. Unless the A.O. proves that cash withdrawals has been utilized for personal expenditure or deployed for acquisition of assets, the sources available in the form of cash withdrawals cannot be ignored while considering credits in the bank account. Therefore, we are of the view that the A.O. was erred in making additions towards total credits found in the bank account. Hence, we direct the A.O. to work out peak credits found in the bank account and make additions to the peak credit instead of total credits found in the bank account. Undisclosed income out of additional unaccounted sales and estimation of net profit - Held that:- The assessee has estimated additional turnover of ₹ 70 lakhs for the assessment year 2011-12. But the CIT(A) has enhanced the turnover to ₹ 1.40 crores without any basis. Therefore, we are of the view that the CIT(A) was incorrect in enhanced turnover from ₹ 70 lakhs to ₹ 1.40 crores, accordingly we direct the A.O. to accept turnover declared by the assessee. In so far as assessment year 2012-13, the assessee has admitted an unaccounted turnover of ₹ 1,45,76,675/- for the period of 4 months from Dec’11 to Mar’12 and further ₹ 60 lakhs for the period of 8 months from Apr’11 to Nov’11. As against this, the A.O. has estimated an additional turnover of ₹ 2,91,53,350/- for the period of 8 months based on the turnover of the period Dec’11 to Mar’12. Though the CIT(A) has reduced turnover estimated by the A.O. from ₹ 2,91,53,530/- to ₹ 80 lakhs, fails to give any reasons for estimating higher turnover of ₹ 80 lakhs. Therefore, we are of the view that the CIT(A) was incorrect in adopting higher turnover as against turnover declared by the assessee. Hence, we direct the A.O. to adopt turnover declared by the assessee in the revised return filed in response to notice u/s 148 of the Act. Estimation of net profit the assessee has declared a net profit of 12.99% to 16.74% for the year ended 31.3.2010 and 31.3.2011, we deem it appropriate to direct the A.O. to estimate net profit of 20% on total sales including unaccounted sales. Accordingly, we direct the A.O. to estimate net profit of 20% on total sales for the assessment year 2011-12 and 2012-13. Additions towards VAT component of unaccounted sales - Held that:- We find force in the arguments of the assessee, for the reason that the turnover of the assessee has been determined on estimation basis. It is also fact that the assessee also not collected VAT separately in the sales bills. Since, the net profit of the assessee has been estimated on total turnover, there is no need for separate additions towards VAT component. The CIT(A) after considering the relevant details directed the A.O. to delete additions made towards VAT. We do not find any error or infirmity in the order of the CIT(A). Hence, we inclined to uphold the CIT(A) order and reject ground raised by the revenue. Interest u/s 234A & 234B of the Act is consequential and mandatory in nature and accordingly, the A.O. has rightly levied interest on total income determined, accordingly, we uphold interest charged u/s 234A & 234B of the Act.

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• 2017 (1) TMI 106
  Receipts towards lease rentals - ‘income from house property' or 'business income' - Held that:- The assessee was carrying the same activities of leasing the building for software technology and earning maintenance charges before rescindment of approval for deduction u/s 80IA and later years. There is no change in the activities during the year of deduction u/s 80IA and later years. Merely, because the deduction u/s 80IA withdrawn, whether the activities can be regarded as different The objects of creating the company and partnership firm are similar. Hence, the conclusion can be drawn that both are created to carry on the business of leasing out the properties to make profit. In our considered view, the object of running business to make profit by leasing out the property will be charged to tax only under the head ‘income from business and not income from house property. The assessee has established the business only to earn income from leasing out the property, hence, assessee is eligible to treat the rental income as business income and eligible to claim the related expenditure as business expenditure. Accordingly, the grounds raised by the assessee is allowed

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• 2017 (1) TMI 105
  Disallowance made under section 36(1)(iii) - interest paid on borrowed capital on account of alleged interest free advance given to related parties - Held that:- In the facts and circumstances of the present case because of direct nexus between the OD limits raised by the assessee and its direct utilization for making interest free advances to Shri R.C. Khinvasara, the interest relatable to the said advances merits to be disallowed in the hands of assessee. Accordingly, the disallowance of interest paid on borrowed capital on account of alleged interest free advance given to related parties is upheld in the hands of assessee. Since direct nexus is established between interest free advances made by the assessee out of interest bearing funds, there is no merit in the reliance placed upon by the learned Authorized Representative for the assessee on the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT). - Decided against assessee

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• 2017 (1) TMI 104
  Doctrine of mutuality application - earning interest income of FDRs and mutual funds arises out of the funds invested with non-members - Held that:- On facts there is no dispute that in the present case FDRs were taken by the assessee club from the banks and the bank cannot be said to be regular members of the assessee club. Therefore, any transaction between the assessee club and the bank could not be said to be the transactions between the members and the interest earned on the amount in the bank would not attract the principle of mutuality. The assessee club had made investments in the mutual fund it was not an investment with the member but with an outsider or a non-member, therefore, the principle of mutuality would not apply. - Decided against the assessee.

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• 2017 (1) TMI 103
  Benefits of tax holiday under Section 80 IC - incorrect name of the village - the name of village “Nandpur Narka Topa” was erroneously written as “Nandpur Narka Ropa” due to some typing or clerical mistake - correction of name in the notification - Held that:- Due to some mistake committed by someone in the district level itself at the time of sending of the proposal, the name of village, within which petitioner’s Unit is situated, was not mentioned correctly and incorrect name was mentioned and, due to this reason, the petitioner’s Unit could not get the benefit of that notification. The question is whether any injustice, which is caused to the party by some wrong action of the government official, should be permitted to continue on the technical ground? My answer to this query is no. The law is made to give justice to all. In my view, this Court, under Article 226 of the Constitution of India, can pass appropriate order for giving justice to the aggrieved party. The Principal Secretary Micro, Small & Medium Enterprises, Government of Uttarakhand, in her counter affidavit, has, in clear words, written that the actual name of the village is “Village Nandpur Narka Topa” and there is no village in the name of “Village Nandpur Narka Ropa” in Tehsil Bazpur. The mistake was certainly committed by some official working in the revenue department of district Udham Singh Nagar. The petitioner cannot be held responsible for that mistake. Considering all the those facts mentioned herein above and also considering the statement given by the learned Assistant Solicitor General for Union of India on 04.06.2015 that appropriate decision correcting name of the village can be taken.

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• Customs

• 2017 (1) TMI 75
  Classification of imported goods - Calcium Carbonate - classified under CTH 2530.90 or under CTH 3824.90? - time bar - Held that: - the issue is squarely covered by the tribunal decision in case of Gulshan Sugar & Chemicals Works [1998 (12) TMI 541 - CEGAT, NEW DELHI] wherein the same goods was held to be classified under CTH 38.24 - the goods “coated calcium carbonate" is classifiable under Chapter 3824.90. Extended period of limitation - Held that: - when the matter was under dispute, appellant changed the description in the Bill of Entry. They, earlier were declaring as "coated calcium carbonate' but subsequently in the Bill of Entry of the relevant period, they have ignored the word "coated". This shows clear intention of the appellant that they intentionally suppressed the correct description of the goods to mislead the department - there is suppression of facts on the part of the appellant therefore the demand for longer period was rightly confirmed. Appeal dismissed - decided against appellant.

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• 2017 (1) TMI 74
  Waiver of penalty, interest and redemption fine - valuation of imported goods - raw material Stainless Steel Powder - Held that: - As regard the penalty the adjudicating authority rightly imposed equal amount of penalty as provided under 28AC of the Customs Act, 1962, which adjudicating authority has no discretion to reduce. As regard the option of 25% of penalty, we find that there are contrary judgments of the Hon'ble High Courts on the issue. Moreover adjudicating authority has not considered the judgments cited by the rivals. Therefore it is in the interest of justice that Commissioner should consider the judgments thereafter decide whether appellants are entitle for option of 25% penalty. As regard the demand of interest, we find that interest is chargeable under Section 28AB. However as submitted by the Ld. Counsel that the interest was chargeable at different rates in the different period in terms of notification issued from time to time - we find that adjudicating authority has arbitrarily applied @24% interest rates without any authority. Therefore the same is not sustainable. We hold that adjudicating authority should re-quantify the interest as per the rates prevailing from time to time. As regard the redemption fine, we find that since the goods were not available and same was neither seized nor released provisionally, the redemption fine was not warranted. This issue has been decided by this Tribunal larger bench in case of Shiv Kripa Ispat Ltd vs. Commissioner [2009 (1) TMI 124 - CESTAT MUMBAI] - the redemption fine dropped. Issue of penalty and interest matter stands remanded to the original adjudicating authority - redemption fine dropped - appeal disposed off - partly decided in favor of appellant - matter on remand.

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• 2017 (1) TMI 73
  Rejection of refund claim - rule 5 - production of additional evidence - unjust enrichment - Section 130 of the Customs Act,1962 - Whether the adjudicating authority has refused to admit evidence which ought to have been admitted? - Whether the appellant was prevented by sufficient cause from producing before the authority any evidence which is relevant to any ground of appeal? - Held that: - certain amount of discretion in the matter of admitting additional evidence before the Commissioner (Appeals) was built into the Rule. The appellate authority is, therefore, required to apply his mind as to whether the plea of the appellant to admit additional evidence falls within the aforementioned four exceptions or not and then admit the additional/fresh evidence. Whereas, the Commissioner (Appeals) has proceeded as if there is an absolute bar contained in Rule 5 from entertaining any such additional evidence. Clearly, the approach adopted by the Commissioner of Appeals is erroneous. The anxiety is to confine the authorities concerned strictly to the requirements contained in the statute while making assessments of taxes/duties while at the same time allow the person concerned to press home such plea/material available, which would mitigate his liability. Commissioner of Appeals and also the Tribunal have both grossly erred in not looking into the additional evidence, which has been produced before the Appellate Commissioner - the additional evidence produced before the Commissioner of Appeals is liable to be acted upon, as the exceptions carved out in Rule 5 are satisfied - question answered in favor of appellant - appeal allowed by way of remand.

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• 2017 (1) TMI 72
  Refund claim - manufacture of Internal Combustion (I.C.) Engines - classified under Tariff Item No.29 of the First Schedule to the Central Excise Act, 1944 - The argument of the petitioners is that the classification of their I.C. Engines for Dumper Application has been an issue consistently raised, but throughout the petitioners have succeeded in satisfying the Authorities that the attempt to classify them under a distinct special item cannot succeed. Held that: - differential duty cannot be recovered on the ground of short levy when the duty levied is on the basis of the approved classification list. It is submitted that in the latter Judgment of the Hon'ble Supreme Court in the case of ITW Signode India Ltd. Vs. Collector of Central Excise, [2003 (2) TMI 75 - SUPREME COURT OF INDIA], the argument before the Hon'ble Supreme Court was that Section 11A of the Central Excise Act, 1944 has been amended by Finance Act, 2000 with effect from 17111980. That is made with a view to change the basis of the Judgment in Cotspun Limited [1999 (9) TMI 87 - SUPREME COURT OF INDIA]. It is in these circumstances that the earlier view was brought to the notice of the Bench dealing with the case of ITW Signode India Ltd. The matter was then referred to a Larger Bench. Then our attention is invited to the decision of the Larger Bench ITW Signode India Ltd. Vs. Collector of Central Excise [2003 (11) TMI 114 - SUPREME COURT OF INDIA], and it was held therein that Section 11A of the Central Excise Act, as amended by Section 110 of the Finance Act, 2000 making a provision for reopening of the approved classification list is a valid piece of legislation. Petition dismissed - decided against petitioner.

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• 2017 (1) TMI 71
  Valuation - imported Soap Flakes - whether the goods to be classified as Soap Flakes or Soap Noodles - natural justice - Held that: - The adjudicating authority held that the goods is of Grade I, accordingly the import was undervalued and accordingly enhanced the value. The adjudicating authority has relied upon some custom laboratory analysis report, however it appears that due to lack of clarity in the report matter was referred by the department to the IIT, which has given its reports - on going through the documents and records, it was found that since the Ld. Commissioner has not considered the IIT report and also not granted cross examination and certain statements were not provided to the appellant, natural justice was violated by the adjudicating authority. Since the impugned order is suffering from non compliance of the natural justice, it is in the interest of justice that adjudicating authority should re-consider the matter a fresh after observing the principles of natural justice - appeal allowed by way of remand.

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• 2017 (1) TMI 70
  ADD - import of vitrified tiles from China PR - individual dumping margin in respect of the exports of vitrified tiles made to India - Held that: - It is clear that at the time of filing request for new shipper review, the appellants were aware that M/s Foshan Hongligao Trade Co. Ltd. is actual holder of export licence in China and details regarding VAT paid on inputs etc. are required for verification. The DA has called for details of refunds received on exports of goods. These particulars were not submitted to the satisfactory extent. The DA has discounted the claim that the said exporting company is only facilitating the documentation handling for export. The export is done by person holding export licence. The DA has examined the complete channel of export. On careful examination of the company involved in export and the appellant status while claiming the new shipper review, the DA concluded that no individual dumping margin is justified in respect of the appellant - appeal rejected - decided against appellant.

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• 2017 (1) TMI 69
  Valuation - inclusion of Royalty in assessable value - there is preliminary deficiency in the facts of the case. From the facts, it is not clear that what all goods were imported by the appellant from their collaborator. It is also not known that which goods were procured from AGM. From the facts appearing in the shareholders agreement, the technical knowhow fees is towards various assistance provided by the foreign collaborator, which includes recipes, manuals for proper selection of raw material, naming possible suppliers of raw material etc. Held that: - in absence of actual details of the material imported and the material procured from AGM, it cannot be ascertained, whether the technical knowhow fees has influenced the value of the imported goods. We are therefore of the considered view that the matter needs to be re-considered after ensuring the facts about the nature of the goods imported and procured indigenously from AGM and also the final product manufactured by the appellant - appeal disposed off - matter on remand.

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• 2017 (1) TMI 68
  Maintainability of appeal - prohibition passed under Regulation 23 of the CBLR, 2013 - whether appeal before the Tribunal maintainable u/s 129A of the Customs Act, 1962? - Held that: - in CHALR, 2004 the remedy of filing appeal before the Tribunal was only against the order of revocation and suspension. However, the legislature very consciously brought amended provision by way of Regulation 21 in CBLR, 2013 that any order passed under CBLR, 2013 Regulation is appealable before the Tribunal under Section 129A - this appeal is clearly maintainable against the prohibition order. Validity of prohibition order - Held that: - the offence report was received on 11.03.2014. However after the lapse of more than two years there is no whisper regarding any proceeding of enquiry by the Department and the appellant is out of the job in three sections of the Mumbai Customs for more than two years. This Tribunal has been taking consistent view even in case of suspension of licence, that if the enquiry proceeding is not completed within stipulated time period of nine months, the suspension order was revoked and the CHA was allowed to operate - reliance was placed on the decision of the case of Bombay Shipping Agency Vs. Commissioner of Customs (General), Mumbai [2014 (3) TMI 317 - CESTAT MUMBAI],where it was held that when the Department is unable to complete it’s enquiry at given time of ten months, the Customs Broker should not be made suffer - the Department cannot be allowed to continue the prohibition on the appellant. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2017 (1) TMI 62
  Cause title of the application - Deletion of respondent Nos.4, 9, 11, 12 and 16 as the case against them cannot be sustained - Held that:- As from the report of the chartered accountant submitted on 30.04.2007, it transpires that there is no record with the official liquidator with regard to the date of the respondent Nos.4 and 16 being appointed as directors of the company in liquidation. Report of the chartered accountant also indicates that the respondent Nos.9, 11 and 12 has ceased to be directors of the company in the year 1997 and were therefore obviously not directors of the company as on 17.04.2002 when the winding up order was passed. In this view of the matter, the cause title of the application in issue be allowed to be amended and the respondent Nos.4, 9, 11, 12 and 16 be deleted therefrom.

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• 2017 (1) TMI 60
  Restoration of company name - provisions of sub-section (1) & (2) of Section 560 of the Companies Act have not been complied with by the respondent authority before striking off the name of petitioner company from its register - Held that:- In view of submission of learned counsel for the parties and, in view of the admitted fact, that the provisions of sub-section (1) & (2) of Section 560 of the Companies Act have not been complied, it is just and proper to restore the name of the company in the register of the Registrar of Companies. It is hereby directed that the name of the petitioner company be restored in the register of the Registrar of the Companies and the notification published in respect of petitioner-company would stand set aside. Since the name of the petitioner company was notified in the gazette way back in the year 2010 and six years have elapsed since then, therefore, a cost of ₹ 75,000/- (Rupees Seventy Five Thousand only) is imposed on the petitioner, which shall be deposited in the account of the Registrar of Companies, Uttarakhand (respondent no.2) within a period of six weeks from today.

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• Insolvency & Bankruptcy

• 2017 (1) TMI 61
  Removal from directorship - allotment of shares without petitioner knowledge - Period of limitation as per the provisions of Limitation Act - Held that:- As been stated in para 2 that his shareholding was reduced from 33% to 1.91%. The aforesaid general assertion has been explained in para 6.5 of the petition. According to para 6.5, the allotment of shares by increasing the share capital was made on 06.10.2009, 19.9.2009, 22.01.2010 and 03.02.2012. The allegation is that the allotment of shares was made without his knowledge which he obviously has acquired on 23.2.2011 and even that later increase has come to his knowledge. The allegation that the petitioner was not aware of the Board meetings held in year 2009, 2010 or 2011 would pale into insignificance because on his own showing, the petitioner had the knowledge in 2011. The petitioner also had the knowledge of his removal as director which is evident from the perusal of the reply at para 10 dated 23.2.2011 (P-3). It is thus evident that the cause of action to the petitioner has arisen in the year 2009 to February, 2012. The present petition has been filed first on 01.10.2015 before the erstwhile CLB and then re-filed somewhere in 2016. Taking the period of limitation on the date of first filing on 01.10.2015, it is hopelessly time barred as apart of the cause of action had arisen to the petitioner in February, 2012. There is no provision for condoning the delay in filing of suits and such like rights are known as 'imperfect rights.' In other words, these rights are recognised by law but no complaint of their breach could be made on account of efflux of time. Even otherwise, it is extremely doubtful whether the petitioner has locus standi to file such a petition because his shareholding on the date of filing the petition is barely 1.91% which is far below the 10%. We have also been told by the learned counsel for the respondent that the claim of the petitioner is not correct with regard to number of shareholders when he asserted that the number of shareholders was 07. According to Mr. Midha, learned counsel for the respondents, the number of shareholders is 13. It is thus doubtful whether the petitioner fulfills all the requirements of Sec. 399 of the Companies Act, 1956. The argument of learned counsel for the petitioner that the petitioner was in depression has failed to impress us. Learned counsel has placed reliance on medical certificates issued by Dr. Rani Susan Abraham (Annex. P-T). A reference has also been made to the Homeopathic treatment for depression, anxiety, neurosis, Insomnia and related issues. Petitioner then argued that the petitioner was involved in litigation with his wife and reconciliation could take place only in the year 2014. We have not been able to persuade ourselves to accept the illness of the petitioner as a cause for extending the period of limitation because firstly, the period of limitation cannot be extended in a suit and the present proceedings are the original proceeding which are in the nature of a suit. The adjudication made by this Tribunal result in passing of a decree which is executable as such. Therefore, we reject the aforesaid submissions. The petition is dismissed as barred by limitation. However, the petitioner shall be entitled to claim the unclaimed dividends as per the statement made by the learned counsel for the respondents.

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• Service Tax

• 2017 (1) TMI 102
  Condonation of delay - time limitation - It is on record that the Assistant Commissioner's order dated 17.2.2012 was received by the appellant on 27.2.2012. The appeal against the Additional Commissioner's order was filed before the Commissioner (Appeals) on 28.3.2013 - whether the appellant's appeal before the Commissioner (Appeals) was time barred and whether the period of delay was far beyond that which can be condoned by the Commissioner (Appeals)? Held that: - Section 35 of the Central Excise Act, 1944 provides than an appeal may be filed to the Commissioner (Appeals) against any decision or order passed by the Central Excise officer lower in rank than the Commissioner within the period of 60 days from the date of communication of such order. Commissioner (Appeals) has also been given the discretion to condone the delay in such filing if the appeal is filed within a further period of 30 days beyond the period of 60 days allowed. In the present case, I find that the appeal is filed after the expiry of 9 months and 27 days. It is obvious that the delay in filing the appeal is much beyond the period of 30 days for which Section 35 vested the discretion with the Commissioner (Appeals). Since appeal has been filed beyond such period, it has been rightly dismissed by the Commissioner (Appeals). Appeal dismissed - decided against appellant.

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• 2017 (1) TMI 101
  Renting of Immovable Property Services - appellants were co-owners of property and received the rent separately as per their share in the property - Notification No. 06/2005-ST dated 01.03.2005 - amount of rent within threshold limit or not? - Held that: - the issue has already been dealt by this Tribunal in the case of CCE, Nasik Vs. Deoram Vishrambhai Patel [2015 (9) TMI 790 - CESTAT MUMBAI] wherein this Tribunal has held that the ownership of the Property and providing of taxable renting of immovable Property by the four appellants in this case is in their individual capacity and, therefore, their tax liability should have been determined by considering their individual rental receipts and not collective one, benefit on notification was extended. For the subsequent period the appellants have been granted the benefit of the Notification No. 06/2005-ST dated 01.03.2005 ibid. The demand of service tax is not sustainable as the appellants are entitled for benefit of Notification No. 06/2005-ST dated 01.03.2005 ibid - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 100
  Renting of cabs - evasion of tax - suppression of facts - Held that: - It is therefore evident that the appellants have resorted to suppression with an intent to evade service tax. As for the plea of the appellants that there were calculation errors and change of duty, given the above finding of deliberate suppression, the plea of calculation errors and bona fide mistake is not tenable. In any event, it was responsibility to the appellants to calculate and apply the rate correctly. Benefit of reduced mandatory penalty - option of 25% of penalty within 30 days - Held that: - the question of reduced penalty by the Tribunal was examined by this Tribunal in BSL Vs. CCE, Jaipur-II [2016 (6) TMI 74 - CESTAT NEW DELHI], wherein it was held that Gujarat High Court judgment in the case of Ratnamani Metals & Tubes [2013 (12) TMI 1397 - GUJARAT HIGH COURT], no longer remains good law and therefore, can no longer be followed while the law laid down by Gujarat High Court in the case of Rajshree Dyg. & Ptg. Mills (P) Ltd. v. Commissioner [2014 (9) TMI 291 - GUJARAT HIGH COURT], becomes good and binding law to be followed - benefit of reduced mandatory penalty cannot be extended to the appellants. Appeal dismissed - decided against appellant.

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• 2017 (1) TMI 99
  Interest on delayed payment of tax - imposition of penalties u/s 76 and 77 - Dredging Services - Held that: - The Ld. Counsel has explained that the appellant was under the belief that they have paid excess service tax and sought the same to be adjusted in the subsequent period. Taking in to consideration these contentions as well as the fact that the appellant is a Government of India under taking, the penalty imposed u/s 76, in my view is unwarranted - I do not find any reason to interfere with the penalty of ₹ 10,000/- imposed u/s 77 as the appellants did not file their returns in due time - appeal disposed off - decided partly in favor of appellant.

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• 2017 (1) TMI 98
  Lease rental charges for motor vehicles - fleet management fee - non-payment of service tax - sale transaction or provision of service - N/N. 9/04-ST and 1/06-ST - the exact legal nature of the transaction between the appellant and their client has to be understood before arriving at a decision of service tax liability of the consideration received by the appellant - Held that: - the clients were never became owners of the cabs. They can use the cabs as long as they are paying rent to the appellant for such usage. The clients do not possess full effective control of the cabs, which are leased to them by the notices. As recorded by the Original Authority, the appellants do not fulfil the attributes as laid down by the Hon'ble Supreme Court to determine and conclude the transaction to be a deemed sale. As such, we find that the appellants failed to sustain legally their plea regarding non-applicability of the provisions of Service Tax to the transactions of renting of motor cabs and on such consideration received. Inclusion of fleet management charges in the taxable consideration - Held that: - the appellant did not produce any evidence to indicate that the gross amount charged by them is inclusive of service tax payable. In fact the liability to service tax has been contested by the appellant. Hence, in terms of the provisions, it cannot be concluded that the gross amount is inclusive of service tax when no reference has been made to the service tax in the basic documents for realising the consideration. The appellants are liable to service tax as confirmed by the Original Authority. However, the demand shall be restricted to the normal period and the penalty under Section 78 is not sustainable. The benefit of abatement in terms of N/N. 9/04-ST and 1/06-ST shall be allowed on production and verification of supporting documents for fulfilment of the conditions stipulated therein - appeal disposed off - decided partly in favor of appellant.

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• 2017 (1) TMI 97
  100% EOU - Refund claim - the finished goods exported by the respondent are exempted from payment of excise duty vide N/N. 4/2008-CE-dated 01-03-2006 issued under Section 5A of Central Excise Act,1944. That the impugned goods being exempted goods were exported by appellant who are 100% EOU - whether the provisions of rule 6(6) Cenvat Credit Rules, 2004 is applicable and respondents are eligible to take credit on service tax paid on input services? - is refund justified? - Held that: - The Tribunal in the case of Neo Foods Pvt.Ltd. Vs Commissioner of Customs (Appeals), Bangalore [2009 (1) TMI 171 - CESTAT Bangalore] have analysed and discussed the issues in detail. The tribunal in the said case held that Rule 6(6)(v) would be covering even all exports of final products by a 100% EOU and therefore, would not be hit by Rule 6(1) as far the eligibility of Cenvat credit on input/input services used in manufacture of final products exported by a 100% EOU is concerned - Decided against the revenue.

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• 2017 (1) TMI 96
  Rejection of refund claim - time bar - Mining of Mineral, Oil or Gas - composite services - period prior to 1.6.2007 - erroneous payment of tax - Held that: - It is an admitted fact that service tax has been levied under the category of mining and mineral oil or gas only w.e.f. 1.6.2007. The service tax was paid by the service providers undertaking the mining activity during the period prior to the above date and the same has been reimbursed to the service providers by the appellant. As such, the refund itself becomes admissible on merits. However, the refund claim stands filed on 7.7.2009 for the tax paid prior to 1.6.2007 and hence, it has been filed beyond the period of one year permitted under Section 11 B - refund rightly rejected on ground of time bar. Hon’ble High Court has allowed the refund of tax making use of its extra ordinary jurisdiction conferred upon them under Article 226 of the Constitution of India. Admittedly, such powers are not vested in this Tribunal. The Tribunal has been created in the statute and cannot exercise such weeping powers, which are bestowed upon the High Courts. Consequently, we are unable to extend the benefit of these High Courts decisions. Refund rejected - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 95
  CENVAT credit - Enterprise Resource Planning Software system based services - denial on the ground that the credit availed prior to taking registration and the services do not qualify as input services - Held that: - the CENVAT Credit Rules does not mandate taking registration for availing credit. The issue was discussed in the case of M/s. M Portal India wireless Solutions Pvt. Ltd., Vs. CST, Bangalore, [2011 (9) TMI 450 - KARNATAKA HIGH COURT] and was held that Registration not compulsory for refund - the credit availed prior to taking registration is admissible. Credit on meal coupons denied stating these are welfare measures - Held that: - The Tribunal as well as various High Courts have held that credit availed on outdoor catering services is eligible for credit. Providing meal coupons are nothing but providing food for employees and is similar to outdoor catering services or providing canteen facilities - credit allowed. Credit allowed - appeal allowed - decided in favor of assessee.

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• 2017 (1) TMI 94
  Cargo handling services - port services - failure to pay tax - demand of tax interest and penalty - section 80 - Held that: - it has to be stated there is absolutely no defence put forward by the appellant in regard to liability for payment of service tax and interest. The only contention put forward is that the default in paying tax occurred because there was a delay in reconciliation of the amounts received for the service of cargo handling and GTA service, as the GTA services were discharged under the reverse charge mechanism. This is not a reasonable ground to invoke Section 80 of the Finance Act for setting aside penalty imposed. The appellant being a registered service provider is bound to maintain internal accounts and at least avoid delay after the first show-cause notice - demand justified - appeal dismissed - decided against assessee.

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• 2017 (1) TMI 93
  Rejection of Refund claim - GTA services - reverse charge mechanism - rejection on the ground that the appellant did not produce sufficient evidence to show that they had discharged service tax - Held that: - The appellant has not produced sufficient documents to show that they have paid service tax. The e-mail produced by the appellant cannot be accepted as it is not a legal document for discharge of service tax liability. The appellant has not produced invoice/bill or challan. In view thereof, I do not find any infirmity in the impugned order - appeal dismissed - decided against appellant.

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• Central Excise

• 2017 (1) TMI 92
  SSI exemption - clubbing of clearances - denial on the ground that all the three units were managed by one Shri Kishore Hansraj Salia - As per the Hon'ble Supreme Court judgement in the case of Gajanan Fabrics Distributors [1997 (5) TMI 50 - SUPREME COURT OF INDIA], it was held that if the units have been recognized as separate entities then it cannot be clubbed - Held that: - three units do not appear to be a proprietorship firm of one Shri Kishore H Salia. However, the aspect of the status of the individual unit has not been dealt by the original authority, which is very vital to arrive at a conclusion whether all the three units can be clubbed or not. Therefore, we are of the view that the matter needs reconsideration, in the light of the Hon'ble Supreme Court's judgement of Gajanan Fabrics Distributors and on the facts of the ownership of all the three units - appeal disposed off - matter on remand.

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• 2017 (1) TMI 91
  CENVAT credit - outdoor catering service - travel agency service - Held that: - this Tribunal vide its judgment in appellant's own case BELL CERAMICS LTD. Versus COMMISSIONER OF C. EX., BANGALORE [2010 (9) TMI 583 - CESTAT, BANGALORE] has allowed the appeal by holding that the appellant is entitled for CENVAT credit on outdoor catering as well as rent-a-cab service and both these services fall in the definition of ‘input service’ as contained in Rule 2(l) of CENVAT Credit Rules, 2004 - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 90
  Cenvat credit - fake invoices - principles of natural justice - Held that: - I find that the ld. Commissioner (Appeals) has recorded as grounds of appeal that the appellant claimed that the inputs carried by the transporters were entered into factory and the description of the same had been duly recorded in the input records. In that event, Commissioner (Appeals) should have given opportunity to the appellant to produce copies of the transport documents. Since, such opportunity was not given by the ld. Commissioner (Appeals) before holding that the appellants did not submit the transport documents, he has violated observance of principles of natural justice. Therefore, the matter is remanded back to ld. Commissioner (Appeals) for De-novo Adjudication of impugned Order-in-Appeal by setting aside the impugned Order-in-Appeal dated 26/11/2009 - appeal allowed by way of remand.

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• 2017 (1) TMI 89
  100% EOU - Refund claim - whether deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rules, 2004? - Held that: - the issue is no more res integra and is covered in favour of the appellant by the decision of the Gujarat High Court in the case of CCE vs. Shilpa Copper Wire [2010 (2) TMI 711 - GUJARAT HIGH COURT], where it was held that the clearances made by one 100% EOU to another 100% EOU which are deemed exports are to be treated as physical exports for the purpose of entitling refund of unutilized Cenvat credit contemplated under the provisions of Rule 5 of the Cenvat Credit Rule, 2004 - appeal allowed - matter remanded to verify the quantum of deemed export on the basis of the document produced by the appellant - appeal allowed by way of remand.

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• 2017 (1) TMI 88
  Condonation of delay - delay of one day in filing appeal - Held that: - the reasons given for filing the appeal late by one day is not intentional and deliberate but on account of bona fide reason and moreover it was very much within the power of the Commissioner (A) to condone the delay up to the period of 30 days on showing sufficient reasons but the learned Commissioner (A) chose not to exercise the discretion. In view of the facts and circumstances, I condone the delay of one day in filing the appeal - matter remanded to Commissioner (A) with the direction to decide the appeal on merits - delay condoned - appeal allowed - matter on remand.

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• 2017 (1) TMI 87
  Clandestine removal - in denovo proceeding, the adjudicating authority had not considered certain evidences of resale of the Bags resulting into erroneous confirmation of demand. Assessee prays that the matter may be remanded to the adjudicating authority for re-consideration of the evidences and pass an appropriate order, accordingly - Held that: - In the remand proceeding, all the evidences produced by the appellant were considered at length while recomputing the demand. The evidences now produced by the appellant, in my opinion, is repetition of the same and no new facts have been brought on record, whereby, the demand could be further reduced. Hence, their request for remand of the case of again, in my view, would not resolve the dispute but increase the life of litigation. Imposition of penalty on the partnership firm and on partner - Held that: - penalty cannot be imposed both on partnership firm as well as on the partner in view of the judgement of the Hon’ble Gujarat High Court in Pravin N. Shah's case [2012 (7) TMI 850 - GUJARAT HIGH COURT]. Appeal partly allowed - the matter is remanded to the adjudicating authority for the limited purpose of extending the benefit of discharging 25% of penalty, subject to fulfilment of the conditions - decided partly in favor of appellant.

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• 2017 (1) TMI 86
  CENVAT credit - MS plates, Channels, Joists, Angles, Beams, HR Coils etc - irregular availment - suppression of facts - time bar - Held that: - I find that the notice has been issued basing on the ER 1 returns. This itself shows that the appellant has disclosed the details of availing credit and therefore, there is no evidence to establish any suppression on the part of the appellant - As the issue whether the credit is admissible on MS items used for fabrication of capital goods /structural support was contentious during the relevant period, I find that the extended period is not invokable. The demand is held to be time barred - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 85
  Refund - unjust enrichment - Held that: - as per the judgment of Larger Bench of the Supreme Court in the case of Addison & Co Ltd. [2016 (8) TMI 1071 - SUPREME COURT] wherein it was held that if the credit note is issued in respect of duty already paid to the buyer, the incidence of such duty does not stand passed on to any other person. As regards the sales tax matter pending before the sales tax appellate authority we are of the view that the adjudicating authority can take an affidavit from the appellant to the effect that in case it is held that the sales tax is not payable then the amount of sales tax paid by the appellant shall become part of the transaction value and accordingly the appellant shall return the refund amount in accordance with law - Appeal allowed by way of remand.

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• 2017 (1) TMI 84
  Evasion of duty - Clandestine removal - Held that: - in the case of Continental Cement Company Vs. Union of India [2014 (9) TMI 243 - ALLAHABAD HIGH COURT] that clinching evidence is required of purchase of raw material, use of extra electricity, sale of final products, clandestine removal transportation, payment, realization of sale proceeds, mode and flow back of funds. Further, the court has held that clandestine clearance is a serious charge and demand cannot be confirmed based on presumptions and assumptions. We are of view that Hon’ble Allahabad High Court will be applicable here. In the absence of any suitable evidence, we find that the demand of excise duty cannot be sustained - Appeal allowed.

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• 2017 (1) TMI 83
  Refund - Rule 5 of the CER, 2004 - N No. 5/2006 CE - Held that: - the appellant have furnished all the relevant documents to the satisfaction of the sanctioning authority and the sanctioning authority has clearly held that the appellant has fulfilled all the conditions stipulated in the Notification 5/2006 dated 14.03.2006 and there is no legally sustainable ground on which validly sanctioned refund order should be set aside and therefore in my considered view, the findings returned by the Commissioner (Appeals) on merit needs to be set aside and I set aside the same - Appeal allowed.

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• 2017 (1) TMI 82
  Whether the appellant is required to discharge the Central Excise duty for the period January 2000 to March 2000 as per the Compounded Levy Scheme and annual production of capacity fixed by the Commissioner of Central Excise, Aurangabad? - Held that: - the judgment of the Tribunal in the case of Shiv Surendra Steel Rolling Engg. Mills [ 2014 (7) TMI 699 - CESTAT NEW DELHI ] would be squarely applicable in the case in hand. In the said judgment, the Tribunal had clearly recorded that once Rule 96ZP was omitted from 01.03.2001 along with other Rules, the demand cannot be assessed even if the show-cause notice is prior to omission of the said Rules - Appeal allowed.

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• 2017 (1) TMI 81
  Valuation - transaction value or MRP based value - Sale on Retail sale price - cement and clinker - Notification No. 4/2006-CE - Held that: - the Original Authority did not examine the full scope alongwith settled case law to determine the correctness of appellant s claim for sale to institutional or industrial buyers. The factual position cannot be decided based on statement of officials of the appellant. We also note that due consideration has not been given to the appellant s plea on the statutory definition of retail sale under Rule 2 (q) of the PC Rules - Appeal allowed by way of remand.

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• 2017 (1) TMI 80
  Rejection of refund - Cenvat credit - Notification No. 214/86 - that as per express provisions provided under Rule 3 of Cenvat Credit Rules, 2004, credit is admissible to a jobworker on inputs used in jobwork activity undertaken in terms of Notification supra - In such circumstances, when the amount has been paid on the objection raised by the audit, it is deemed that the same has been paid “Under Protest” and the refund claim filed by the Appellant is in order - I also find from records that the Appellant has submitted the certificate issued by the Chartered Accountant, certifying that the said amount is shown as recoverable from the department in the accounts of the Appellant and the same has not been disputed by the revenue - Appeal allowed - decided in favor of the assessee.

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• 2017 (1) TMI 79
  Return of goods - disallowance of CENVAT credit on goods received back by the appellant owing to rejection by the customers - Held that: - Emphasis is placed on Rule 16 of Central Excise Rules 2002 which make it clear that the goods on which duty had been paid at the time of removal can be brought back for refining, reconditioning, etc. with the entitlement to take CENVAT credit as though such goods are received as inputs - it is immaterial whether the good were brought back to the factory from which they were originally removed or into another factory belonging to the same assessee - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 78
  CENVAT credit - various services - denial on the ground that the services are not input services - Held that: - the civil construction work and fabrication of steel structure are in relation to setting up of the factory, which was specifically finding place in the definition of input service effective upto 31st March, 2011. With regard to service tax paid on labour charges, I find from the submissions of the appellant that those services were availed for the activities relating to the manufacturing business and thus, should be considered as input service for taking of cenvat credit. Legal fees and land investigation charges during the period 2010-2011, were covered under the phrase “activities relating to business” contained in definition of input service and after such period, it was specifically defined as eligible input service for the purpose of taking credit. With regard to other services, namely, telephone service, fabrication of canteen furniture and insurance of vehicles, the said services were used within the factory, which have the indirect nexus with the manufacture of the final product, and thus, confirm to the definition of input service. CENVAT credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 77
  CENVAT credit - steel items namely, M.S. Channels, M.S. Plates, M.S. Flats etc. - denied on the ground that the said goods are not inputs used in or in relation to manufacture of the final product - Held that: - the issue involved in this case is squarely covered by the decision in the case of M/s. Topworth Steels and Powers Pvt. Ltd. vs. CCE, Raipur [2016 (9) TMI 1229 - CESTAT NEW DELHI], where it was held that the period involved is prior to July, 2009, and thus, the embargo created in the definition of 'input' after 07.07.2009 would have no application for denying the cenvat benefit. - Since the issue involved in this case is prior to 2009, the amended definition of 'input' w.e.f. 07.07.2009 is not applicable to the facts of this case - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 76
  Whether the appellant is required to pay duty as confirmed with interest and penalties on the clearances of the bought-out spares for the period 2001-2002 to 31.07.2005? - Held that: - the question of discharging Central Excise duty on the bought-out items supplied as spares does not arise at all. It is now a settled law that Central Excise duty is to be discharged on the goods manufactured and cleared by an assessee. It is nobody’s case that bought-out items supplied as spares is manufactured by the appellant. It is also on record that subsequent show-cause notices for the same issue were dropped, and nothing was brought to our notice that revenue is in appeal before Tribunal. If in an assessee’s case on the same issue subsequent show-cause notice’s are dropped, there cannot be any demands for the earlier period, more so when there is nothing on record to indicate that revenue is contesting the issue before higher judicial forums. We direct the adjudicating authority to verify the claim of appellant that for the period from January 2005 to August 2005, in this appeal, they had not availed any CENVAT credit on bought out items supplied as spares. If any CENVAT credit is availed as such clearances the same will be reversed with appropriate interest. Appeal allowed in favor of assessee - matter on remand for limited purpose.

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• CST, VAT & Sales Tax

• 2017 (1) TMI 67
  Rectification of mistake - order which could be passed subsequent to the period already elapsed - time bar - Held that: - the respondent department brought to the notice of court that the assessee was directed vide impugned order to appear on or before 30.1.1995 and there is nothing on record as to whether the assessee had appeared on or before 30.1.1995 or not. In my view that was only for the purpose of cutting time but then, A.O. ought to have issued notice and ought to have completed fresh assessment at-least as per time allowable u/s 10-B(2). Petition dismissed.

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• 2017 (1) TMI 66
  Detention of trucks - outstanding dues - interest - Held that: - present Special Civil Application is disposed of by permitting / allowing the petitioner to pay the balance amount of ₹ 41,57,317/with statutory interest at the rate of 18% per annum in four equal monthly installments commencing from December 2016 and the first installment shall be paid on or before 15.12.2016. In any case as agreed and undertaken, the entire amount of ₹ 41,57,317/along with statutory interest at the rate of 18% shall be paid and cleared on or before 31.03.2017 but in four equal monthly installments - application disposed off.

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• 2017 (1) TMI 65
  Imposition of penalty u/s 76(6) of the Act - transit sale - form 47 - no material was placed on record about the goods having been sold in transit and the Assessing Officer being not satisfied with the explanation furnished - Held that: - The documents placed on record does not prove that it is an interstate sale. The Tax Board has rightly held that there was contradiction in the very argument placed before the lower authorities that even if it was a transit sale, the due tax would be paid by the petitioner is contradictory as in the case of transit sale as per the CST Act, the tax is at concessional rate and there is no local tax. Penalty upheld - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 64
  Classification of goods - batteries for the purposes of Radio Communication Receivers (RCRs) - classified under Entry no.13 i.e. RCRs, taxable at the rate of 4% or will fall in the Residuary Entry V taxable at the rate of 12.5%? - Held that: - the batteries which were supplied by the assessee to the Army, were accessories of Radio Set STARS V 5W, and Radio Communication Receiver is incomplete/non-functional without the said part being placed. Once there is a specific certificate by the Army itself, who purchased the said batteries, in my view the finding reached by the Tax Board appears to be unjustified, and when Entry No.28 mentions about tax on 1 to 27, which includes RCRs and Radio Pagers, to be applicable at the rate of 4%, in my view any part including batteries would cover in Entry No.28. Battery is certainly fitted for RCRs or used in Cars and for other diverse purposes and unless a battery is fitted into a RCR or so to say a Car, it would be non-functional and such RCRs or/and Cars will not start and will not function. Once there is a specific rate of 4% for the parts sold, in my view the finding reached by the AO as well as the Tax Board is contrary to the specific Entry - the claim of assessee, in my view, appears to be just and proper and the rate of 4% was rightly paid by the assessee and is not required to be interfered with - petition allowed - decided in favor of assessee.

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• 2017 (1) TMI 63
  Imposition of penalty u/s 76(6) of the Act - incomplete form VAT-47 - declaration form VAT-49 was required to be carried and not VAT-47 - violation of provision of section 76 of the Act - Held that: - there is a categorical finding of fact by the Tax Board that the assessee produced declaration form VAT-49, which was required to be carried, immediately in pursuance to a show cause notice issued - when it is a finding of fact noticed by all the three authorities that declaration form VAT-49 was placed on record in pursuance to a show cause notice, the penalty has rightly been deleted by the DC(A) and rightly upheld by the Tax Board - penalty set aside - appeal dismissed - decided against appellant.

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