TMI Tax Updates - e-Newsletter
November 16, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
TMI SMS
Highlights / Catch Notes
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GST:
Classification of goods under GST - Since the Respondent declared that Polypropylene Leno Bags manufactured by weaving polypropylene strips (tapes) under Tariff Heading 3923 29 90 for claiming duty drawback, and no explanation could be offered as to why the Tariff Heading should be changed now to 6305 33 00, it is not permissible under the doctrine of equitable estoppels.
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GST:
Liability of GST - supply of online educational journals or periodicals to IIM - There is no exemption from GST on supply of online educational journals or periodicals to the Indian Institute of Management, Bengaluru.
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GST:
Liability of GST - as the said contract comprises of two or more supplies (i.e. transportation, supply of packing material & incentives) and one of which is principal supply i.e. custom milling of paddy, it shall treated as composite supply - rate of GST to be determined based on principal supply i.e. 5%.
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Income Tax:
Penalty imposed u/s 271D r.w.s. 269SS - the entry in the books of account on description and treatment is not decisive as to the nature of the transaction
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Income Tax:
Revision u/s 263 - deduction claimed u/s 80IC - Merely because of percentage of profit is less in Vijayawada unit and more in Rudrapur plant the assessment made under section 143(3) cannot be held as erroneous.
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Income Tax:
TDS on Interest - The interest has been paid on account of directions of Special Court and hence, there is no requirement of TDS.
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Income Tax:
Presumptive income - Once the assessee’s income is accepted u/s 44AE, then the provisions of section 44AA and 44AB are not applicable and consequently there can be no default on the part of the assessee for maintaining the regular books of account as well as getting the same audited.
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Income Tax:
Presumptive income - Application of income u/s 44AD or 44AE - when the assessee fulfills the conditions as prescribed u/s 44AE, then the income computed by the assessee on the basis of said provision cannot be disturbed by applying the other basis which is not applicable in the case of the assessee
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Income Tax:
Assessment u/s 153C - non issue of notice - Non recording of satisfaction - The above conditions of Section 153C are mandatory for taking action against the assessee under section 153C of the I.T. Act. - Assessment quashed.
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Income Tax:
Exemption u/s 54F - LTCG - three flats - while the flats at 13th & 14th Floor are duplex flats joined with each other but the fact remains the third flat is situated on the immediate next floor i.e. 15th floor of the same building which is in the immediate vicinity - Benefit of exemption allowed.
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Customs:
The valuation of the goods in question being food supplements, not containing beef has to be done under rule 7 of the Valuation Rules (deductive method).
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State GST:
Benami GST Registration – Instructions on measures to prevent evasion of tax.
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Service Tax:
Rectification of mistake - Difference of opinion of adjudicating authority than that of the aggrieved party cannot be called as error apparent. It amounts to rehearing of the case, which is not permissible at this stage.
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Service Tax:
CENVAT Credit - input services - repair and maintenance of the hard surfaced container yard installed in the ground located within the yard - Since the activity of repair is specifically finding place in the inclusive parts of the definition, credit allowed.
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Central Excise:
Penalty u/s 11AC of CEA on PSU - Inasmuch as the appellant is admittedly a public sector undertaking, and also by appreciating the fact that no evidence stands produced by the Revenue indicating any intent on the part of the assessee, penalty cannot be imposed on appellant
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Central Excise:
CENVAT credit - once the duty has been paid on the legitimately purchased inputs, the appellants are very much entitled for availing credit of the same and it will not make any difference whether the goods have been procured from a unit which is based in area-based exemption or otherwise.
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Central Excise:
CENVAT Credit availed while availing area based exemption under said notification - The self credit of refund taken by the appellant have been sanctioned by the authorities below, therefore, without challenging the same, the show cause notice cannot be issued to the appellant.
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Central Excise:
Returned goods - CENVAT credit of goods brought back in the factory - Rule 16 is wide enough to cover the case of the Appellants in view of the wordings used in it which inter alia includes “any other reason” for receiving the duty paid goods.
Articles
Notifications
Customs-
93/2018 - dated
15-11-2018
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Cus (NT)
Exchange Rates Notification No.93/2018-Custom(NT) dated 15.11.2018
GST - States-
EXN-F(10)-31/2018 - dated
12-11-2018
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Himachal Pradesh SGST
Corrigendum - Notification No.60/2018-State Tax, dated the 31st October, 2018
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61/2018-State Tax - dated
5-11-2018
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Himachal Pradesh SGST
Amendments in the Notification of the Government of Himachal Pradesh No. 50/2018-State Tax, dated the 17th September, 2018
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LLR-D(6)-15/2018-LEGN. - dated
3-11-2018
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Himachal Pradesh SGST
THE HIMACHAL PRADESH GOODS AND SERVICES TAX (AMENDMENT) ORDINANCE, 2018.
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58/2018-State Tax - dated
27-10-2018
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Himachal Pradesh SGST
Notifies the persons whose registration under the said Act has been cancelled by the proper officer on or before the 30th September, 2018 furnish the final return in FORM GSTR-10 of the said rules till the 31st December, 2018.
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S.O. No. 81-57/2018-State Tax - dated
6-11-2018
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Jharkhand SGST
Amendment in the Notification No. 50/2018-State Tax dated the 26th September, 2018.
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S.O. No. 80-56/2018-State Tax - dated
6-11-2018
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Jharkhand SGST
Exemption from Registration To Persons Making Inter State Supplies Of Handicrafts.
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ERTS(T) 65/2017/Pt. II/29-58/2018-State Tax - dated
26-10-2018
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Meghalaya SGST
Notifies the persons whose registration under the said Act has been cancelled by the proper officer on or before the 30th September, 2018,furnish the final return in FORM GSTR-10 of the said rules till the 31st December, 2018.
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ERTS(T) 65/2017/Pt. II/28-57/2018-State Tax - dated
23-10-2018
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Meghalaya SGST
Amendment in the Notification No. ERTS(T)65/2017/Pt-I/240, dated the 13th September, 2018.
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ERTS(T) 65/2017/Pt. II/27-56/2018-State Tax - dated
23-10-2018
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Meghalaya SGST
Seeks to supersede Notification No.ERTS(T)65/2017/Pt/27 Dated 1-Nov-2017
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60/2018-State Tax - dated
8-11-2018
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Mizoram SGST
The Mizoram Goods and Services Tax (Thirteenth Amendment) Rules, 2018.
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58/2018-State Tax - dated
8-11-2018
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Mizoram SGST
Seeks to provide taxpayers whose registration has been cancelled on or before the 30th September, 2018 time to furnish final return in FORM GSTR-10 till 31st December, 2018
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57/2018-State Tax - dated
8-11-2018
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Mizoram SGST
Amendment in the Notification of the Government of Mizoram No. 50/2018- State Tax dated the 25th September, 2018.
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56/2018-State Tax - dated
8-11-2018
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Mizoram SGST
Supersession of the Notification No.J.21011/1/2017-TAX/Vol-I/Pt(i), dated the 3rd October, 2017.
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H.12018/243/2017-LJD - dated
29-10-2018
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Mizoram SGST
The Mizoram Goods and Services Tax (Amendment) Ordinance, 2018 (Ordinance No. 3 of 2018).
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J.21011/1/2017-TAX/Vol-l/Part-l - dated
22-10-2018
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Mizoram SGST
Notification regarding TDS.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (11) TMI 663
Classification of goods - PP Leno Bags - whether classified under CTH 39232990 or under CTH 63053300 - Benefit of Duty Drawback - Doctrine of equitable estoppels - Held that:- Polypropylene Leno Bags are manufactured by the Respondent by weaving polypropylene strips (tapes). Polypropylene is a variety of plastic and it is a fact that the Respondent declared the Polypropylene Leno Bags voluntarily under Tariff Heading 3923 29 90 and enjoyed the duty drawback. No cogent reason could be offered by the Respondent as to why and how the Tariff Heading is now sought to be changed from 3923 29 90 to 6305 33 00. Since the Respondent declared that Polypropylene Leno Bags manufactured by weaving polypropylene strips (tapes) under Tariff Heading 3923 29 90 for claiming duty drawback, and no explanation could be offered as to why the Tariff Heading should be changed now to 6305 33 00, it is not permissible under the doctrine of equitable estoppels that the Respondent is allowed to take such a divergent stand now. Ruling:- The item Polypropylene Leno Bags (PP Leno Bags) manufactured by the respondent be classified under Tariff Heading 39232990.
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2018 (11) TMI 662
Liability of GST - education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force - long duration post graduate diploma/ degree granting programmes offered by the Indian Institute of Management, Bengaluru - reverse charge mechanism - supply of online educational journals or periodicals to the Indian Institute of Management, Bengaluru - Applicability of entry no. 66 in the presence of specific entry no. 67. Held that:- The two competing entries of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 relevant to the issue are Entry no. 66 and 67. Both these entries relate to services falling under the Heading 9992. The Heading 9992 appears at serial number 581 in the Annexure: Scheme of Classification of Services attached to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. There are six Groups of various Education Services under the Heading 9992 covering all services from pre-primary education services to specialized education services. All educational services provided by an institute, which leads to a qualification/ degree, recognized by the law, for the time being in force, are exempt from payment of GST - both Serial no. 66 and 67 are related to all educational services covered under the same Heading 9992. This leads us to the inescapable conclusion that Serial Number 67 has been carved out specifically and only for the educational services provided by the Indian Institutes of Management. The Indian Institutes of Management have been segregated from all other educational institutes and the educational services provided by them are subject to different treatment in terms of exemptions. Therefore in so far as educational services provided by Indian Institutes of Management are concerned, the provisions contained in Serial no. 67 alone shall apply. Ruling:- There is no exemption from GST on long duration post graduate diploma/ degree granting programmes offered by the Indian Institute of Management, Bengaluru. There is no exemption from GST on supply of online educational journals or periodicals to the Indian Institute of Management, Bengaluru.
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2018 (11) TMI 661
Liability of GST - supply of goods as well as service - composite supply - business of job work activity of custom milling of paddy involving milling activity, transportation of rice and usage charges of gunny bags - Held that:- The transportation of paddy and rice are conditionally exempted under specific Notifications. All supplies would be treated as exempted supply only when the transportation works would be given full and unconditional exemption under corresponding Notification. On account of conditional exemption, the supplies involved in the instant case in hand would be exigible to tax. The part-exemption as sought by the applicant for the service supply of transportation of paddy and rice is not eligible to them, the same being under a false premise - The said supply involved here cannot be separated from the tax computation of composite supply - the custom milling of paddy being the principal supply (predominant supply) involved in the case in hand, the same would attract GST (2.5% CGST and 2.5% SGST). Ruling:- There being a single contract for all above supplies of goods services and as the said contract comprises of two or more supplies (i.e. transportation, supply of packing material incentives) and one of which is principal supply i.e. custom milling of paddy, it shall treated as composite supply. The tax liability on a composite supply shall be decided as a supply of such principal supply under N/N. 31/2017-CT(R) N/N. 11/2017-CT (Rate) dated 28-06-2017 serial No. 26. (c), vide state notification no. F-10-82/2017/CT/V(146) dated 13.10.2017 i.e. 5%.
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Income Tax
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2018 (11) TMI 660
Application for stay u/s 254(2A) - Held that:- The prayer made is for a direction to dispose of the pending appeal before the Income Tax Appellate Tribunal. We are afraid we cannot issue any such direction, having regard to the scope of the special leave petition. The petition is accordingly dismissed. Pending interlocutory applications, if any, shall stand disposed of.
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2018 (11) TMI 659
Rectification of mistake - imposition of penalty based that one Sh. Pradeep Kumar Bansal had provided accommodation entries and that the credit claimed was not genuine - Held that:- Special Leave Petition is dismissed.
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2018 (11) TMI 658
Addition u/s 40A - purchases of meat in cash in excess of ₹ 20,000/ - whether assessee has fulfilled the condition laid down in Rule 6DD? - Tribunal deleted the addition confirmed by HC - Held that:- Special Leave Petition is dismissed.
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2018 (11) TMI 657
Business Transfer Agreement (BTA) - Assessee transferred its business to Neila Retail Private Limited, should have been added to its income - Held that:- When the matter was called out, nobody appeared for the petitioner. Despite grant of time, counsel for the petitioner has not taken fresh steps to serve the notice on the sole respondent. Hence, the Special Leave Petition is dismissed for non-prosecution.
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2018 (11) TMI 656
Addition u/s 68 - assessee had claimed bogus expenses - CIT(A) deleted the additional sum after verifying the expenses and observing that the payments were made through banking channels and that the service providers, in respect to whom expenses were claimed, were income tax assessee - ITAT confirmed these findings - Held that:- Special Leave Petition is dismissed in view of the low tax effect.
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2018 (11) TMI 655
Interest earned on sums lent to the contractor constituted a separate stream - “other sources of income” OR “business income” - Held that:- Special Leave Petition is dismissed.
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2018 (11) TMI 654
TDS u/s 195 - Disallowance u/s 40(a)(ia) - reimbursement of expenses - receiving the amounts and arranging for provisional services connected with the Event - Held that:- SLP dismissed.
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2018 (11) TMI 653
Claim for exemption under section 10(23C)(vi) - whether Assessee’s activities including charging a franchisee fee could not be regarded as a charitable activity within the meaning of section 2(15) - as per HC purpose for which section 10(23C)(vi) was introduced, is adequately fulfilled and not disadvantageously circumvented by vested parties - Held that:- SLP dismissed.
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2018 (11) TMI 652
Addition u/s 68 - unexplained cash credit - initial year of commencement of business - Held that:- SLP dismissed.
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2018 (11) TMI 651
TDS u/s 194A on Interest - interest credited/paid on the fixed deposit receipts purchased by the New Okhla Industrial Development Authority (NOIDA) - Whether NOIDA is a corporation established by U.P. Industrial Area Development Act, 1976 and not a body established under the aforesaid Act? - Held that:- The Special Leave Petition stands disposed of in view of the judgment passed “Commissioner of Income Tax (TDS) Kanpur and Ors. vs. Canara Bank [2018 (7) TMI 664 - SUPREME COURT OF INDIA]
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2018 (11) TMI 650
Grant of stay - Department from recovering 80% tax arising out of such additions - Held that:- Prima-facie the question that would arise is the High Court has admitted the Tax Appeal against the quantum additions and also after by-parte hearing and on recording the reasons prevented the Department from recovering 80% tax arising out of such additions, can the revenue proceed to recover the penalty, which is admittedly relatable to such additions. AO undoubtedly has a discretion to grant stay against the recovery of the penalty amount and in the process impose suitable conditions. In any case, the Court in exercise of writ jurisdiction failed as possible, either to stay the demand fully or without conditions. In the facts of the present case what should be the correct approach. We would like to hear the respondents in further detail. To enable the respondent to file reply, let there be notice returnable on 11.12.2018. By way of ad-interim relief, respondents are prevented from carrying further recovery of the penalty.
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2018 (11) TMI 649
Penalty imposed u/s 271D r.w.s. 269SS - Held that:- To attract provisions of Section 269SS, the amount paid in cash must be either loan or deposit. In the present case the assessee and M/s Saamag Construction Ltd. had entered into a joint venture and payments were made by M/s Saamag Construction Ltd. in terms of the MoU. These payments were not to be refunded. Essential attributes of a loan or deposit, is the right to claim payment and obligation to re-pay. This was missing. On completion of project, the net profit was to be distributed between the assessee and M/s Saamag Construction Ltd. It is a well settled principle applicable to income tax that entry in the books of account on description and treatment is not decisive as to the nature of the transaction as held in Kedarnath Jute Mfg. Co. Ltd. Vs. CIT [1971 (8) TMI 10 - SUPREME COURT]. Clearly Section 269SS does not apply to every transaction. Therefore Section 269ST of the Act was enacted by Finance Act, 2017 w.e.f. 01.04.2017. This section postulates that no person shall receive an amount of ₹ 2,00,000/- or more in aggregate in cash from any person in respect of a single transaction or in respect of transactions relating to one event or occasion, otherwise than by way of account payee cheque, account payee bank draft or by way of electronic clearing system through a bank account. The said Section 269ST of the Act is not applicable to the present assessment year.
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2018 (11) TMI 648
TDS u/s 195 - freight of paid to non-resident shipping companies or their agents - non deduction of tds - Held that:- Now it is stated that the view taken by the Division Bench of this Court in the case of CIT Vs. Orient (Goa) Private Ltd. reported in [2009 (10) TMI 575 - BOMBAY HIGH COURT] is expressly held to be not laying down the correct law. It stands overruled by a Larger Bench judgment of this Court comprising of three Judges rendered in the case of Commissioner of Income Tax Vs. V.S. Dempo and Co. P. Ltd [2016 (2) TMI 308 - BOMBAY HIGH COURT]. This decision is reported in [(2016) ]. In the light of the Larger Bench judgment of this Court, both sides concede that the Appeal has to be allowed. The view taken up by the Tribunal cannot be sustained. Its order is, therefore, set aside. The question framed is answered in favour of the assessee and against the Revenue
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2018 (11) TMI 647
Penalty u/s 271(1)(c) - ESOP claim u/s 37 - Held that:- It is pointed out that the ITAT granted relief in this regard for A.Y. 2007-08 and that order was upheld by this Court in Principal Commissioner of Income Tax-6 Vs. New Delhi Television Ltd. [2016 (7) TMI 1486 - DELHI HIGH COURT] The judgment of this Court shows that the substantive addition under Section 37, was held to be not unwarranted. The Court had approved the ITAT order which had in turn relied upon the ruling of the Tribunal in Biocon Limited v. DCIT [2013 (8) TMI 629 - ITAT BANGALORE]. Besides, the Madras High Court had taken a similar view in CIT Chennai v. PVP Ventures Ltd. [2012 (7) TMI 696 - MADRAS HIGH COURT]]. Furthermore, we notice that the assessee’s ESOP claim under Section 37 for the previous year 2006-07 too had been upheld by the Tribunal – which was affirmed by this Court. In these circumstances no question of law arises in this matter.
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2018 (11) TMI 646
Reopening of assessment - change in method of accounting in relation to NPAs - Held that:- The concurrent findings of both the CIT (Appeals) and the Tribunal is that this new method of accounting was duly notified and recorded in para 7.3 of schedule 17 of the audited accounts for the assessment year 2006-2007. This factual position is not disputed or factually challenged. AO had noticed this objection but did not dwell and specifically examine and answer the same in the re-assessment order. There was quietus on the said aspect by the Assessing Officer, who had impliedly admitted the factual position of full and true disclosure of material facts. This is not a case where inference or interpretation on the basis of the note was to be drawn. The new and amended method of accounting for NPAs was declared and notified in clear words. We therefore do not see any reason and ground to interfere with the finding on absence of failure to disclose full and true material facts. Provision for fraud cases treated as expenditure in the profit and loss account - The second reason for re-opening, which is not pressed, this claim was accepted during the course of original assessment proceedings. CIT(Appeals) had, on the said aspect, observed that a specific query was raised by the AO vide item No.16 of questionnaire dated 26.5.2008, to which reply dated 20.6.2008 was furnished by the respondent/assessee. CIT(Appeals) had accordingly held that the ground would not be a valid and good reason to reopen the concluded assessment. The Revenue has accepted the decision of the Commissioner of Income Tax(Appeals) on the second aspect and did not challenge this finding.
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2018 (11) TMI 645
Disallowance u/s 14A r.w.r 8D - AO has not recorded his satisfaction regarding the correctness of the self disallowance made by the assessee - Held that:- Rule 8D is not mandatory and would come into play only when the Assessing Officer comes to the conclusion and records his satisfaction that he was not satisfied with the correctness of the disallowance made by the assessee, having regard to the accounts placed before him. This is a necessary and mandatory precondition for the Assessing Officer to invoke and apply Rule 8D of the Rules. Thus, Rule 8D cannot be applied unless this satisfaction is recorded by the AO. In the present case the AO has not recorded his satisfaction regarding the correctness of the self disallowance made by the assessee under Section 14A, as is mandatory in terms of sub section (2) of Section 14A to invoke and take recourse to Rule 8D of the Rules. Thus, the Assessing Officer, did not act as per and in terms of the statute. - Decided against revenue.
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2018 (11) TMI 644
Addition of unexplained credit entries recorded in the impounded papers - Held that:- As perused the impounded documents appearing at BI-1 to BI-3 which pertains to transactions entered into with the farmers with whom the transactions did not materialize and amount was refunded by the by the assessee. In these impounded documents there are credits and debit entries. However this fact is not disputed that the A.O has merely made the addition if the unexplained credit entries without giving any set off of unexplained debit entries appearing in these documents. Complete details of such debit and credit entries were placed before the first appellate authority and they were duly incorporated in the appellate orders of CIT(A). We find that the peak credit is shown at ₹ 2,90,346/-. This figure of peak credit has not been controverted by the revenue authorities. In the case of Tirupati Construction Company [2014 (11) TMI 806 - GUJARAT HIGH COURT] has upheld the decision of I.T.A.T Ahmedabad Bench holding that “only peak of debit and credit entries of the seized papers/diary could be assessed as undisclosed income in the hands of the assessee, and there was no justification for adding the entire receipt side of the seized papers” - Thus both the lower authorities erred in confirming the addition of ₹ 6,02,895/- being the total of unexplained credit amount appearing in the impounded documents and set off of debit entries appearing in the very same documents should have been given to the assessee. - Decided in favour of assessee Addition made u/s 41(1) - liability outstanding for more than 3 years - cessation of liability - Held that:- A.O has merely made addition u/s 41(1) being the creditors pending for payments more than 3 years without providing on record any evidence to prove that the alleged creditor M/s. Kartik Traders is not genuine. In case the information was called for by the revenue authorities from M/s. Kartik Traders and it refused to have any such outstanding liability then would have been the merit for the addition made by AO. However in the instant case the genuineness is not challenged by M/s. Kartik Traders as the credit balance of alleged sundry creditors appears in audited balance sheet. During the financial year 2012-13 the alleged amount has been paid by the assessee as on 31.01.2001 and the outstanding balance is Nil. No merit in the addition confirmed by the first appellate authority u/s 41(1) - decided in favour of assessee.
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2018 (11) TMI 643
Addition under the head Income from "House Property" - ALV of residential house - Held that:- DR could not distinguish any facts of the present Assessment Year with the earlier Assessment Years i.e. 2004-05 to 2009-10 wherein the Tribunal allowed the identical issue in favour of the assessee as held Assessing Officer was not justified in violating the rule of consistency on the issue of ALV of the property in question, already accepted by the Revenue in early AYs under similar facts and circumstances of the case. The Assessing Officer is thus directed to delete the additions in question made in the Assessment Years under consideration on the basis of a notional value of ₹ 73,80,000/- per annum as against ₹ 24,000/- per annum declared by the assessee being the annual rent received or receivable. The issue raised in the grounds is thus decided in favour of the assessee.
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2018 (11) TMI 642
Revision u/s 263 - deduction claimed u/s 80IC - CIT has landed and suspicion due to less profit in Vijayawada unit and substantial profit in Rudrapur unit - Held that:- After having examined the details of expenditure and claim made by the assessee at the time of original assessment, there is no reason to suspect the correctness of the claim of the assessee. Merely because of percentage of profit is less in Vijayawada unit and more in Rudrapur plant the assessment made under section 143(3) cannot be held as erroneous. Though CIT was of the view that the assessee has not debited any expenditure in respect of managerial remuneration and less expenditure in the case of power and fuel and NIL expenditure in the case of labour, the same was explained by the assessee stating that no excess expenditure was incurred by the assessee after commencement of Rudrapur plant in respect of managerial remuneration. Similarly, in the case of labour expenditure, the assessee has categorically stated that there was no expenditure relating to the Rudrapur plant. The reason for difference in power & fuel expenses was explained by the assessee stating that Vijayawada unit is supported by backup of DG sets and it was operating electrical flameless furnaces for Vijayawada unit. CIT should not have take up the case for revision basing on the additions made in Assessment Years 2011-12. Each A. Yr. is independent and record also is separate. AO has called for all the details necessary before allowing the deduction under section 80IC and there is no error in the assessment order. The Ld. Pr. CIT was unable to specify any issue which made the assessment as erroneous or prejudicial to the interests of the Revenue - decided in favour of assessee.
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2018 (11) TMI 641
Registration u/s 12AA eligibility - proof of charitable activities - Held that:- Appellant society was enjoying the registration granted to it by the CIT(E), Ghaziabad u/s 12AA of the Act. Understand how can the CIT(A) question the authority of the CIT(Exemptions) for granting registration u/s 12AA of the Act. CIT(Exemptions) to decide the allowability or otherwise of the registration u/s 12A. CIT(A) should not have made any observation on that aspect and should have restricted himself to the issues raised before him. At the most, the CIT(A) could have enhanced the addition made by the Assessing Officer, which is within his powers. But by no stretch of imagination it can be accepted that the first appellate authority is making enhancement while commenting on the powers of the CIT(Exemptions). First appellate authority has crossed his powers in deciding the appeal and, therefore, his findings have to be set aside. Coming to the action of the Assessing Officer, find that the AO has doubted the surplus ₹ 6,36,591/- without examining each and every item of income. Therefore, restore this issue to the file of the AO. AO is directed to examine each and every item of income and decide the issues afresh after allowing reasonable opportunity of being heard to the assessee. Accordingly, the enhancement is set aside and the order of the Assessing Officer is restored back to his file.
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2018 (11) TMI 640
Revision u/s 263 - erroneous claim of deduction u/s 54 - date for reckoning the deduction u/s 54 - Held that:- In the submissions made before the AO, the assessee has convinced the AO that the date for reckoning the deduction u/s 54 for trasferring the property was 29.06.2008. Since the AO has taken a conscious decision after verification of the complete information the and the same is one of the possible views as per law, the assessment order passed u/s 143(3) r. w. s. 147 not be held to be erroneous. Though prima facie, there appears to be some confusion with regard to the reckoning the date of transfer of the property, whether it is to be reckoned from the date of agreement or from the date of sale deed, on the set of facts both the views are possible thus it amounts to difference of opinion between the AO and the Pr. CIT, but not render the order erroneous. Since there is no error in the order passed by the AO, we hold that the Pr. CIT has incorrectly taken up the case for revision u/s 263 and the same is unsustainable. The assessee has acquired the land prior to the sale of property d completed the construction within the time limit allowed u/s 54 of the Act. The intention of the legislature for giving the benefit is to encourage housing in the country. Since the assessee has acquired the property d completed the construction within the period of limitation prescribed by the Act, we hold that the assessee’s case is squarely covered by the decision of this tribunal in the case of Dy. CIT,Circle-2(1) Vs. Dr CHALASANI MALLIKARJUNA [2016 (10) TMI 1032 - ITAT VISAKHAPATNAM]. Accordingly, we hold that the assessment passed by the AO u/s 147 r. w. s. 143(3) dated 27. 03. 2015 is neither erroneous nor prejudicial to the interest of the revenue - Decided in favour of assessee
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2018 (11) TMI 639
Disallowance of interest expenses - disallowance u/s 37(1) as well as by invoking the provisions of section 40(a)(ia) for non-deduction of tax - Held that:- Assessee is a limited company engaged in the business to act as financial consultant and broker for generating and mobilizing FDs for other companies and corporate loans and that of trading in shares. Interest is provided in the accounts on the basis of order of Special Court. As per order of Special Court the assessee was required to make full payment of interest and in case there is TDS deducted on the same, there would have been violation of court order. Similar issue has arisen one of the group companies of the assessee i.e. Sam Leasco Ltd. wherein Hon’ble Special Court has specifically directed not to deduct TDS. The interest is on account of directions of Special Court and hence, there is no requirement of TDS. Accordingly, find no infirmity in the order of CIT(A) and hence, the same is confirmed. This issue of Revenue’s appeal is dismissed.
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2018 (11) TMI 638
Bogus purchases - deemed income u/s 41(1) - Held that:- AO did not brought any evidence on record to hold that such liability has ceased to exist or remitted by the creditor; that the said liability is being shown as payable by the assessee in his balance sheet reflects that this liability is payable by the assessee and that the confirmation from M/s Hindustan Trading Company which was duly signed by the said party further goes to prove that such sum has not been remitted by the creditor. The entire disallowance on account of bogus liability is bad in law in the absence factual material on record. As such, we find no error in finding of CIT(A) on this issue and accordingly confirm finding of CIT(A) on this issue. All the grounds pertaining to bogus liability are rejected.
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2018 (11) TMI 637
Invalidity of assessment proceedings u/s 153C - Held that:- Assessment proceedings were taken up on various occasions and assessment order under section 143(3) r.w.s. 153C was passed on 30.12.2008. In such scenario, where assessment of searched person was completed on 27.03.2006, then the handing over of seized documents by AO of searched person to the jurisdictional AO of assessee on 15.06.2007 is belated and is beyond the period prescribed in section 153C for initiation of proceedings under section 153C of the Act. Accordingly, we hold so. Even the Circular issued by CBDT dated 31.12.2015 lays down such proposition, in turn, applying the ratio laid down by the Hon'ble Supreme Court in the case of M/s. Calcutta Knitwears (2014 (4) TMI 33 - SUPREME COURT). Accordingly, we hold that proceedings initiated under section 153C of the Act are beyond the time prescribed and hence, are invalid and consequently, assessment order passed under section 143(3) r.w.s. 153C of the Act stands annulled
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2018 (11) TMI 636
Revision u/s 263 - claim of deduction u/s 80IA(4) - Reopening of assessment - Held that:- Allowability of deduction which was by earlier order passed under section 143(3) dated 01.06.2012 was not disturbed. Once the said assessment order has become final, then second order passed by AO u/s 143(3) r.w.s. 147 merely dropping re-assessment proceedings cannot be held to have decided the issue of eligibility of claim of deduction under section 80IA(4) of the Act. The said issue stands settled in favour of assessee by earlier order dated 01.06.2012, which has not been disturbed by any of the authorities. The exercise of jurisdiction by Commissioner in such circumstances by issuing show cause notice and holding the assessee to be not eligible for claiming the deduction under section 80IA(4) does not stand. Where the Commissioner had exercised jurisdiction against second assessment order passed i.e. dropping 147/148 proceedings, then the stand of Commissioner in holding that the assessee was not eligible to claim the aforesaid deduction, cannot stand in the eyes of law because the said order does not decide the said issue. Original assessment order was consequent to picking up the issue during CASS of claim of deduction under section 80IA(4) of the Act and even re-assessment proceedings were vis-ŕ-vis aforesaid deduction by assessee, who was the partnership concern. AO has already taken a view in this regard and the same cannot be disturbed by Commissioner on the same grounds as that would amount to change of opinion. Further, in any case, under the provisions of section 80IA(4) an enterprise is entitled to claim the aforesaid deduction and the Commissioner is wrong in proposing that the company is entitled to claim the aforesaid deduction. Even on this ground, the order of Commissioner under section 263 of the Act, fails. Hence, we hold that exercise of jurisdiction by Commissioner under section 263 of the Act is both invalid and bad in law. In respect of balance shown in the Balance Sheet and corresponding interest, no such issue was decided in 148 proceedings neither in reasons recorded for reopening nor in the final assessment order dropping the said proceedings. Hence, the Commissioner has exceeded the jurisdiction vested under section 263 of the Act and the said issue could not form the basis for initiating 263 proceedings against the assessee. Accordingly, even for the second issue, order of Commissioner is both invalid and bad in law. - Decided in favour of assessee.
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2018 (11) TMI 635
Revision u/s 263 - directions to the AO for examining the twin issues of interest income and export incentive income for their eligibility u/s. 80IB deduction - Held that:- The revenue authorities have to adopt only netting formula whilst excluding assessee s income to be not derived from eligible business. Such a netting exercise admittedly leaves behind negative interest income of ₹4,21,71,315.15 (supra). This sufficiently indicates that even if the P.CIT s directions under challenge are upheld at this stage in principle, net result thereof would be assessment of a negative figure only. All this leads us to the conclusion that the AO s action assessing assessee s positive interest income of ₹3,48,13,006/- has been wrongly taken as an instance of an assessment both erroneous as well as the one causing prejudice to the interest of the revenue in absence of any revenue loss. P.CIT has erred in law as well on facts in exercising his revision jurisdiction vested u/s 263 of the Act in a revenue neural instance qua the former interest income issue. Accept assessee s and reject those raised at the Revenue instance on the former issue of non eligibility of interest income amounting ₹3,48,13,006/- for the purpose of computing u/s 80-IB deduction. Revision jurisdiction qua the assessee s assistance from Government of India under the Foreign Trade Policy SHIS Scheme (State Holder Incentive Scrip) - Held that:- Case records suggest that the assessee has availed Government of India s assistance / incentive for import of capital goods relating to manufacturing activity in plastic sector. It is thus an instance involving reimbursement of cost of running eligible business forming profits qualifying for sec 80-IB deduction. The assessee s paper book all the relevant details of the impugned sum of ₹1,16,89,000/- regarding purchase made out Buss Kneader Plant, Varex Coex 7 Layer Blown Film, Flexographic Press Machine, Super Combi Laminating Machine; all purchased in the relevant previous year. Corresponding specimen copies of bills of entry / utilization form part of records between pages 24 and 50 in paper book. The same are not disputed at the Revenue s behest very fairly. All this sufficiently indicates that the impugned assistance availed under SHIS Scheme has been wrongly treated to be at par with an export incentive. Thus assessee s assistance received of ₹1,16,89,000/- under SHIS Scheme is towards cost incurred for import of capital goods in polymer manufacturing. It is in the nature of a revenue receipt eligible for sec. 80-IB deduction since the scheme provides for the purpose of importing capital goods utilized in polymer manufacturing thereby reimbursing running cost of business as against that in the nature of DEPB / Duty drawbacks credited in profit and loss account forming subject-matter of adjudication in Liberty India [2009 (8) TMI 63 - SUPREME COURT]. CIT-DR fails to rebut the basic fact that this SHIS Scheme states its purpose to be for providing investment its upgradation of technology only. It also imposes actual user conditions. Thus P.CIT has erred in directing the Assessing Officer to frame afresh assessment qua the twin issues of interest as well as incentive subsidy thereby holding the regular assessment in issue to be erroneous causing prejudice to interest of the revenue. - Decided in favour of assessee.
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2018 (11) TMI 634
Presumptive income - Application of income u/s 44AD or 44AE - Assessee is free to offer the income on presumptive basis under section 44AE - penalties levied under sections 271A and 271B - Held that:- AO has also estimated the income of the assessee by applying net profit @ 8% on the gross receipts. AO has not given any basis of adopting the net profit of 8% and, therefore, it is apparent that the net profit at 8% as adopted as per the provisions of section 44AD which is also part of the provision of computing the income on presumptive basis. Hence when the assessee fulfills the conditions as prescribed u/s 44AE, then the income computed by the assessee on the basis of said provision cannot be disturbed by applying the other basis which is not applicable in the case of the assessee. Hence, we delete the addition made by the AO in respect of the income from business of plying the trucks which were deployed with M/s. HG Infra Engineering Pvt. Ltd. Addition made on account of deposits made in the bank account of the assessee -Held that:- We note that the gross receipts of the assessee from the business of plying the trucks deployed with M/s. HG Infra Engineering Pvt. Ltd. is ₹ 61,16,640/- and there is also pension income of the assessee which is more than sufficient to explain the source of deposits of ₹ 5,23,020/- in the bank account. From the details of bank account it is evident that there are certain cash deposits and certain deposits by clearing cheques and, therefore, once the gross receipts of the assessee is more than ₹ 61 lacs, then the said gross receipt itself is a source for depositing the amount in the bank account of the assessee. Accordingly, no justification in making the addition on account of the deposits in the bank account of ₹ 5,23,020/- when the gross receipts of the assessee was found to be more than ₹ 61 lacs. Hence the addition is deleted. When the income is computed under the presumptive provisions of section 44AE, then the provisions of section 44AA and 44AB shall not apply in so far as they relate to the business of plying, hiring or leasing of goods carrier. Accordingly, once the assessee’s income is accepted under section 44AE, then the provisions of section 44AA and 44AB are not applicable and consequently there can be no default on the part of the assessee for maintaining the regular books of account as well as getting the same audited. Accordingly, the penalties levied under sections 271A and 271B are deleted - Decided in favour of assessee
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2018 (11) TMI 633
Exemption u/s 10(23C)(iiiad) eligibility - exemption u/s 11 - Disallowance of Excess of income over expenditure - institution existing solely for educational purposes - whether assessee is eligible for exemption u/s 10(23C)(iiiad) because the gross receipt of each institution is less than ₹ 1 crore? - Held that:- The judgment of CIT vs. Children’s Education Society [2013 (7) TMI 519 - KARNATAKA HIGH COURT] clearly holds that the gross receipt of each of the Institute/University/ Educational Institution which solely existing for educational purpose if less than the prescribed limit) which in this case is ₹ 1 crore) there is no need for getting the approval from the competent authority and the Income of such institution is exempt u/s 10(23C)(iiiad). Thus the issue of verification of gross receipts of various institutions run by the assessee society needs to be verified at the end of the A.O and if the contentions of the assessee are found to be correct as submitted before us and the A.O is also satisfied that all the institutions run by the assessee are existing solely for educational purposes and not for the purpose of profit coupled with the fact that the aggregate receipt of such institution is less than ₹ 1 crore then the AO may consider to grant the benefit of exemption u/s 10(23C)(iiiad) of the Act. - Decided in favour of revenue for statistical purposes.
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2018 (11) TMI 632
Assessment u/s 153C - non issue of notice - assessment order passed u/s 143(3) - Non recording of satisfaction - Held that:- A.O should have framed the assessment under section 153C of the I.T. Act in the case of the assessee and at the time of initiating the proceeding against the assessee, should have issued notice under section 153C of the I.T. Act which have not been done in this case. No satisfaction note have been recorded under section 153C of the I.T. Act for the assessment year under appeal. No assessment under section 153C have been framed. Further, no notice under section 153C have been issued and no incriminating material was found against the assessee for the assessment year under appeal. The above conditions of Section 153C are mandatory for taking action against the assessee under section 153C of the I.T. Act. The assessment order passed by the A.O. under section 143(3) of the I.T. Act, therefore, vitiated, void, illegal and bad in law and cannot be sustained. See M/S. BNB INVESTMENT & PROPERTIES AND SHRI RANJAN GUPTA VERSUS DCIT CENTRAL CIRCLE-1. [2018 (8) TMI 597 - ITAT DELHI] - Decided in favour of assessee.
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2018 (11) TMI 631
Addition on account of capital contributed by the assessee - accumulation of any agricultural income - Held that:- No evidence of accumulation of any agricultural income have been filed by assessee. CIT(A) without any basis of dairy business, accepted the explanation of assessee. CIT(A) despite noting the return for preceding assessment year 2008-2009 was filed simultaneously would show that it was filed with purpose to show opening capital balance on the assessment year under appeal. CIT(A) merely on giving benefit of doubt, accepted the explanation of assessee, therefore, the totality of the facts and circumstances would show that the Order of the CIT(A) cannot be sustained in law. The matter requires reconsideration. Set aside the impugned order and restore this issue to the file of CIT(A) with a direction to re-decide this issue strictly on the basis of merits and evidence available on record. CIT(A) shall give reasonable and sufficient opportunity of being heard to the assessee and the A.O. Ground No.1 of appeal of Revenue is allowed for statistical purposes. Cash payment u/s 40A(3) - Held that:- No interference is called for in the matter. Though in assessment year under appeal, CIT(A) has no power to set aside the issue to the file of A.O. but it is specific that the A.O. has not dealt with the submissions of the assessee as what was pleaded before him. Therefore, ultimately the matter would require reconsideration at the level of the A.O. Though we do not approve the Order of the CIT(A) in remanding the matter to the file of A.O. however, while setting aside the Order of the CIT(A), we direct the A.O. to examine this issue afresh in the light of material available on record. A.O. shall give reasonable and sufficient opportunity of being heard to the assessee. Accordingly, Ground No.2 of appeal of Revenue is allowed for statistical purposes. Addition on account of unsecured loans - Held that:- Bogus transaction and all documents are created and fabricated by assessee to rotate her unaccounted money through the alleged transactions of gift or loans. CIT(A) without verifying the facts and circumstances of the case and evidence on record, without any justification deleted the addition. The findings of the CIT(A) are perverse in nature and are liable to be set aside. Since assessee failed to prove the identity of the creditors, their creditworthiness and genuineness of the transaction in the matter, therefore, there is no reason for the A.O. to make further enquiry into the matter. A.O. has rightly rejected the explanation of assessee. CIT(A) was, therefore, not justified in deleting the entire addition without there being any evidence in support of explanation of assessee. We, accordingly, set aside the Order of the CIT(A) and restore the Order of the A.O. In the result, part of Ground No.3 of the Department is allowed. Unexplained cash credit on account of purchases, application fee and cost of furniture and cash in hand - Held that:- Since the issue of opening capital balance, loans etc., have been restored to the file of Ld. CIT(A) and loan of ₹ 12,90,000/- has been confirmed by us above, therefore, this issue requires reconsideration at the level of the Ld. CIT(A). The finding on the other grounds would be relevant for the purpose of disposal of this ground. We, accordingly, set aside the Order of the Ld. CIT(A) and restore this issue to his file with a direction to re-decide this ground of appeal afresh on merits by giving reasonable and sufficient opportunity of being heard to the assessee and A.O. Ground No.4 of appeal of Department is allowed for statistical purposes.
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2018 (11) TMI 630
Investment in property - Charge of income-tax - Year of assessment - investments in property made by the assessee in earlier years or in respect of deposits in bank accounts of the assessee made in earlier year which brought forward to this year - Held that:- On perusal of Section 4(1) of I.T. Act, it is obvious that in the year under consideration, no addition can be made in respect of investments in property made by the assessee in earlier years or in respect of deposits in bank accounts of the assessee made in earlier year which brought forward to this year for making cheque payments of the aforesaid total amount of ₹ 6,05,100/-. Moreover, in any case, when certain amounts were invested by the assessee and also, certain other amounts were deposited in the bank account of the assessee, in previous years relevant to earlier A.Ys.; such investments or deposits could not possibly have been out of the income of the previous year under consideration (relevant to A.Y. 2009-10). It is well settled that each year is separate and self-contained period. Income Tax is annual in its structure and organization. Firstly, in computation of assessee’s total income for the year under consideration, we direct the AO to delete the additions in respect of those amounts which were invested by the Assessee in earlier years i.e. before previous year 2008-09 relevant for A.Y. 2009-10. AO is directed to quantify this amount while giving effect to this order. Secondly, we also direct the AO to delete the addition amounting to ₹ 6,05,000/- which was made by the assessee during the year under consideration through cheque transactions of the assessee in her bank accounts in Allahabad Bank and Punjab National Bank; because, as stated earlier, it is not disputed that the assessee had sufficient deposits in her bank account at the beginning of the year to explain the source of aforesaid transactions by cheque. Thirdly, as far as investment totaling aforesaid amount of ₹ 6,53,100/- in cash is concerned, we restore the matter to the file of the AO with the direction to pass a fresh order on merits on this limited issue after considering the explanation of the assessee. At this stage we are expressing no opinion on merits of the explanation tendered by the assessee. AO will decide the issue on this limited point in accordance with law and facts of the case. This order is limited in its application to A.Y. 2009-10, which is the year under consideration for this appeal filed by assessee. Undisputedly, the investment in property has been made by the assessee partly in this year and partly in other years. Undisputedly deposits in the bank accounts of the assessee include deposits made in earlier years. Our observations, directions and order are applicable only for this particular appeal filed by assessee for A.Y. 2009-10. As no other appeal for any year is before us; we decline to express any opinion for any other year.
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2018 (11) TMI 629
Exemption u/s 54F - Long Term Capital Gain (LTCG) - separate unit - constructing a residential house - Held that:- In the present appeal, no doubt flat No.1502 is situated at 15th Floor while the other flats were situated on 13th & 14th Floor of the same building and the claimed deduction was rejected by the AO with respect to flat situated in 15th Floor by holding that it is separate and residential unit having separate entrance, therefore, it is a separate unit, consequently, cannot be considered as one unit to enable the assessee to claim the deduction. The fact remains that all the three flats are in the same building and also are situated on floors above each other i.e. 13th, 14th & 15th Floor, while the flats at 13th & 14th Floor are duplex flats joined with each other but the fact remains the third flat is situated on the immediate next floor i.e. 15th floor of the same building which is in the immediate vicinity. This question has been settled in CIT vs Gita Duggal [2011 (6) TMI 890 - ITAT DELHI] and also in SMT. KG. RUKMINIAMMA [2010 (8) TMI 482 - KARNATAKA HIGH COURT]. As further noted that the SLP, filed by the Revenue was dismissed by Hon'ble Apex Court. The only requirement, as per the section, is that it should be a residential house and there is nothing in the section which requires that the residential house should be built in a particular manner. A person may construct a house according to his requirements/needs and sometime due to compulsions. There may be several such consideration for a person while constructing a residential house. Identical ratio was laid in SMT. KG. RUKMINIAMMA [2010 (8) TMI 482 - KARNATAKA HIGH COURT]. So far as in CIT vs Raman Kumar Suri [2012 (12) TMI 421 - BOMBAY HIGH COURT] is concerned, it was decided rather in favour of the assessee, wherein, two flats were interconnected as one residential unit, wherein, exemption was disallowed on different facts. This decision is dated 27/11/2012, whereas, the decision in the case of CIT vs Syed Ali Adil [2011 (8) TMI 1104 - ITAT HYDERABAD] is of later date and the decision in CIT vs Gita Duggal is of [2011 (6) TMI 890 - ITAT DELHI]. The facts of the case of the present assessee are similar to the facts in Gita Duggal (decided by Hon'ble Delhi High Court) and the cases from Hon'ble Karnataka High Court. Thus, considering the totality of facts and the aforesaid decisions, this ground of the assessee is allowed. Addition on account of loss under the head ‘Income from House Property” - Held that:- We direct the Ld. Assessing Officer to examine the factual matrix and then decide in accordance with law. The assessee be given opportunity of being heard. Thus, this ground is allowed for statistical purposes. Demand of ₹ 49,04,380/-, as per the assessee, there is calculation mistake - Held that:- The assessee is directed to furnish the necessary evidence to substantiate its claim. Assessing Officer is directed to verify the claim of the assessee and if any calculation mistake is found, the same may be directed to be verified/corrected. Otherwise, AO may decide in accordance with law, thus, this ground of the assessee is allowed for statistical purposes. Appeal of the assessee is partly allowed for statistical purposes.
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2018 (11) TMI 628
Deduction u/s. 80G - donation has been made otherwise by way of money which is not allowable as per provisions of Section 80G(5D) - determination of the finer distinction between the cash donation and donation in kind - Held that:- As submitted that all works including placing of order of medical equipments required by hospital authorities, taking of delivery of goods, checking of quality and quantity of the medical equipments and getting installed these medical equipments in the hospitals are under direct supervision of the medical superintendent and at no stage assessee comes into picture nor it has any say in the supply of the equipments and installation thereof. As submitted that so far as assessee is concerned, it has paid the donation in money i.e. by way of issuing cheque from his bank account in favour of suppliers of medical equipments and in such a situation by no canon of law, can it be said that donation is in kind or nor in cash. The above contentions of the AR need to be tested in terms of actual verifiable documentation right from placing the order by the Hospital authorities, raising of invoices by the supplier on the hospital authorities, delivery/supply/installation at the hospital premises and payment by cheque by the assessee equivalent to the invoice value directly to the suppliers. However, we find that there is nothing on record in terms of verifiable evidence/documentation in support of aforesaid contentions so raised by the AR. Further, we find that there is no finding recorded by the AO or the CIT(A) examining the aforesaid contentions so raised by the AR. In absence of the same, we are unable to take a view in the matter and the matter deserves to be set-aside. Addition u/s.40(a)(ia) - certificate of accountants furnished by the assessee have not been furnished in accordance with rule 31ACB as amended w.e.f. 19.02.2013 in relation to interest payment made by it to a Non-Banking Finance Company namely S.E. Investment Ltd without deduction of tax at source - Held that:- As we have already set-aside the matter relation to deduction u/s 80G, in the interest of justice, this matter is also set-aside to the file of the AO to examine the same afresh after providing reasonable opportunity to the assessee. In the result, the ground is allowed for statistical purposes.
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2018 (11) TMI 610
Application for stay u/s 254(2A) - Held that:- On an order passed by this Court [2018 (1) TMI 750 - BOMBAY HIGH COURT] dismissing the Writ Petition, inter-alia, on account of a very objectionable conduct of the President of the original petitioner-applicant before us and that order having been unsuccessfully challenged before the Hon'ble Supreme Court, we do not think that by an oblique or indirect method, we should allow restoration of that Writ Petition which stands dismissed.
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Customs
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2018 (11) TMI 627
Application for grant of Advance License - Foreign Trade (Development & Regulation) Act, 1992 - principles of natural justice - Held that:- It is an undisputed that the impugned orders dated 4th August 2018 are neither preceded by a show cause notice or grant of a personal hearing. The impugned orders are self evidently non speaking orders - Applications for grant of advance licence leading the impugned orders dated 4th August 2018 are restored to the Joint Director General of Foreign Trade Respondent No. 3 for fresh disposal in accordance with principles of natural justice.
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2018 (11) TMI 626
EPCG Scheme - fulfillment of export obligation - principles of natural justice - Held that:- Pursuant to the directions issued by the Department, the petitioner has submitted the ample proof to show that he has fulfilled the export obligations pursuant to the licence granted to him and that is also accepted by the officials of the respondent Department and a certificate to that effect was also issued. Further, consequent to the certificate issued, the bond/bank guarantee executed by the petitioner was also cancelled. While the matter stood thus, the second respondent without application of mind, had proceeded as if the petitioner has not fulfilled the export obligations and the impugned order came to be passed because of sheer non-application of mind. Impugned order set aside - petition allowed.
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2018 (11) TMI 625
Remand of matter for proper valuation of the goods for determination of fine and penalties - imports of 26 consignments of ‘old and used garments’ which were declared as ‘pre-mutilated and fumigated’ - Held that:- The failure of the original authority to comply with the direction in remand to disclose the margin of profit that prompted the fine and penalty, the matter would normally have to be remitted back by another remand order. However, the paucity of evidence and the negligible scope for ascertainment at this stage deters us from doing so - the confiscation of the goods under section 111(d) of Customs Act, 1962 is upheld - the ends of justice would be served by reducing the redemption fine to 10% of the ascertained value and penalty to 5% - appeal allowed in part.
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2018 (11) TMI 624
Evasion of custom duty - mis-declaration of the goods under import - Food supplements - smuggling - Absolute Confiscation - no redemption fine imposed - penalty. Held that:- Admittedly Mr Kshitiz Sharma had been importing food supplements in the past. This fact is evident from several bills of entry filed in the name of Kshitiz International. So far valuation as adopted by the revenue is concerned, the undeclared/mis-declared goods, being of Chinese origin and manufacture, are not similar or identical to the goods manufactured in USA and imported from USA - the valuation done by revenue under rule 3, 4 and 5 is erroneous and the same is set aside. The valuation of the goods in question being food supplements, not containing beef has to be done under rule 7 of the Valuation Rules (deductive method). The absolute confiscation of food supplements containing beef is upheld. The confiscation of food supplements not containing beef is also upheld but are redeemable on payment of duty (already released provisionally). However confiscation of A4 copy paper is set aside - as no redemption fine has been imposed by the ld Commissioner, the order of appropriation of the bank guarantee furnished towards redemption fine is bad and accordingly the same is set aside. Penalty u/s 112(a) read with Section 114AA of the Customs Act - Held that:- The appellant M/s Balaji Overseas is liable to penalty under Section 112(a) read with Section 114AA of the Customs Act. However, such penalty is restricted to 100% of the duty sought to be evaded, as worked in terms of para 21 of this order - So for the penalty on the partner Mr Kshitiz Sharma is concerned, the same is set aside in view of the penalty confirmed on the firm - So far penalty on M/s Him Logistics under Section 112 of the Act is concerned, they have not done any act of omission or commission attracting the provisions of section 112 of the Customs Act. Accordingly the penalty on them is set aside. Appeal allowed in part.
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2018 (11) TMI 623
Penalty u/s 11AC - Valuation - inclusion of amortization cost of moulds and dyes supplied free of cost by the customer of final product in assessable value - period January 1997 to September 2000 - Held that:- On this issue, there were conflicting judgments - it is fit case to view that the appellant had a bonafide belief due to lack of clarity on legal issue and grave interpretation of Valuation Rules involved. Since the SCN involved in the present case does not involve any suppression of fact or mis-declaration on the part of appellant, the penalty under Section 11AC was clearly not warranted - appeal allowed - decided in favor of appellant.
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Service Tax
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2018 (11) TMI 622
Rectification of mistake - difference of opinion of adjudicating authority - time limitation - the SCN in all these matters were issued prior to 10th May, 2013 and the amendment by way of sub-Section (2a) of Section 73 of the Act came into effect post 10th May, 2013 - Held that:- The rectification of the order is available only when error apparent on record occurs. Basically it can be typographical, arithmetical or calculation error. In addition, the term may extend to errors as that of skipping an important fact or ignorance of settled legal principal - The remedy lies in challenging the same before the higher forum. Difference of opinion of adjudicating authority than that of the aggrieved party cannot be called as error apparent. It amounts to rehearing of the case, which is not permissible at this stage. ROM Application dismissed.
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2018 (11) TMI 621
Rectification of mistake - case of appellant is that this Tribunal while deciding their appeals has erred in not allowing the benefit of cum-duty - Held that:- There is no apparent mistake on the record of the matter - The matter which is being contested by the appellant by filing miscellaneous applications will only amount to review of the original order of this Tribunal without any valid grounds - ROM application dismissed.
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2018 (11) TMI 620
Rent-a- Cab Operator Service - benefit of abatement under N/N. 1/2006-ST - SSI Exemption - Held that:- On allowing said abatement in none of the financial years from 2008-09 onwards during the period covered by these appeals none of the appellants crossed permissible limit for exemption under said Notification No. 06/2005 and, therefore, they were not liable to pay service tax during the period covered by these appeals - Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 619
CENVAT Credit - input services - repair and maintenance of the hard surfaced container yard installed in the ground located within the yard - Held that:- No new construction activities were carried out by the service provider, in order to fall under the exclusion clause provided in the definition of input service in Rule 2 (l) of the Rules - Since the activity of repair is specifically finding place in the inclusive parts of the definition, for consideration of the service as input service, the benefit of Cenvat Credit cannot be denied to the appellant - credit allowed - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (11) TMI 618
Invocation of extended period of limitation - malafide intent or not - a view was undertaken that the assessee should have paid Central Excise duty instead of paying the service tax - Held that:- The appellant registered themselves with the service tax department and started paying service tax by treating the activities undertaken by them as providing of services. In such a scenario, no suppression or malafide can be attributed to them, so as justifiable invoking longer period of limitation - appeal dismissed - decided against Revenue.
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2018 (11) TMI 617
Penalty u/s 11AC of CEA - Malafide intent present of not - appellant deposited entire duty with interest on being pointed out - Held that:- The Tribunal in the case of Indian Institute of Technology (IIT) Vs. CST-II, Mumbai [2015 (11) TMI 1347 - CESTAT MUMBAI] has held that the appellant being a Government of India institute there cannot be any malafide intention for the reason that there is no individual, who can be benefited by taking wrong Cenvat Credit. Inasmuch as the appellant is admittedly a public sector undertaking, and also by appreciating the fact that no evidence stands produced by the Revenue indicating any intent on the part of the assessee, penalty cannot be imposed on appellant - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 616
Rectification of Mistake - in para-2 of the Final order there is typographical error which needs to be corrected - Held that:- THere is error apparent on the face of record in not allowing the SSI exemption benefit - necessary rectification is to be made - ROM application allowed.
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2018 (11) TMI 615
Valuation - demand of differential duty on the ground that the transaction value declared by the appellant on sale of their work-in-progress goods is incorrect as the inventory value shown in the balance sheet was higher - Held that:- In rejecting the transaction value of the goods sold, no alternate method of valuation nor any relevant provision under which the valuation has been carried out is disclosed in the Notice - there is no justification in rejecting the transaction value - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 614
CENVAT credit - inputs purchased from a unit of manufacturer falling in the notified order of Area Based Exemption - N/N. 56/2002 dated 6.9.2004 or N/N. 1/2010-CE dated 06.12.2010 - Rule 12 of CCR 2004 - Time Limitation. Held that:- The provisions of Cenvat Credit Rules provide that the credit of duty paid on the inputs is available to the manufacturer of such duty paid inputs and find a use in the manufacture appellants’ final products. The provisions of Rule 3 of Cenvat Credit Rules, 2004 have no ambiguity on this aspect - once the duty has been paid on the legitimately purchased inputs, the appellants are very much entitled for availing credit of the same and it will not make any difference whether the goods have been procured from a unit which is based in area-based exemption or otherwise. Provisions of Rule 12 of Cenvat Credit Rules, 2004 allow the benefit of Cenvat credit to the down-stream buyers of the inputs inspite of the facts that the manufacturer based in Area Based Exemption Notification will be entitled for a refund of part of duty paid by him on such clearances - Commissioner (Appeals) has wrongly interpreted the provision of Rule 12 of Cenvat Credit Rules, 2004 and Rule 12 does not debar the down-stream buyers of the inputs cleared from the area based exemption from availing the Cenvat credit of the duty which have been paid by them at the time of purchase of such inputs. Time Limitation - Held that:- There is no ground of invoking extended time proviso under Rule 14 of Cenvat Credit Rules, 2004 as necessary ingredients for invoking extended period of demand are not present in their case - demand is barred by limitation. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 613
Valuation - inclusion of subsidy amount under RIPS in assessable value - the amount is paid to the appellant in the form of VAT 37B Challans under the Head of VAT Liability. It is this Challan which the appellant has used in the subsequent period for discharge of subsequent VAT liability - penalty - Held that:- It is an apparently admitted fact that the appellant was paying total VAT charged at applicable rates on sale of goods to the State Exchequer and was filing the VAT returns. The VAT 37B Challans, the appellant was utilising to discharge the output VAT liability for the subsequent period. In the present case, the remission is in the nature of subsidy which the appellant was receiving from the State Government in the form of VAT 37B Challans and not from the buyers of the appellant. The said remission was not only as good as cash but can also not be considered as an additional consideration. Extended period of limitation - Held that:- Discharge of liability by way of VAT 37b Challans has already been held as legally sustainable methodology of discharging tax liability for subsequent period. Department was not entitled to invoke the extended period of limitation - demand could be confined only to the normal period of one year. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 612
Quantum of exemption under N/N. 56/2002-CE - CENVAT Credit availed while availing area based exemption under said notification - Department has alleged that the appellant by showing inflated production have received higher quantum of exemption in form of refund - Applicability of Section 11A of the Central Excise Act, 1944 - assessment of refund claim not challenged - validity of issuance of SCN u/s 11AC - Held that:- The self credit of refund taken by the appellant have been sanctioned by the authorities below, therefore, without challenging the same, the show cause notice cannot be issued to the appellant under Section 11AC of the Act in terms of the decision of the Hon’ble High Court of Gauhati in the case of Jellapore Tea Estate [2011 (3) TMI 11 - GAUHATI HIGH COURT] - SCN not valid. Self credit taken where no duty is payable - Held that:- The said issue has been settled by this Tribunal in the case of Jindal drugs Ltd. [2018 (5) TMI 379 - CESTAT CHANDIGARH (LB)] wherein it has been held that whether the appellant was not liable to pay duty, therefore, the provisions of Section 11-A of the Central Excise Act are not applicable as it is not a case of short payment of duty, non-payment of duty or erroneously refund of duty - SCN issued u/s 11A not sustainable. Denial of CENVAT Credit on the basis of the test report of inputs - Held that:- It is admitted by the Revenue that the appellant has received the inputs and in terms of Rule 3 of the Cenvat Credit Rules, 2004, the asseesse is entitled to take cenvat credit of duty paid on inputs. It is in material whether the inputs are as per test report or not - Credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 611
CENVAT credit of goods brought back in the factory - stock of cigarettes - applicability of Rule 16 of the Central Excise Rules, 2002 - Held that:- Rule 16 is wide enough to cover the case of the Appellants in view of the wordings used in it which inter alia includes “any other reason” for receiving the duty paid goods. The duty paid character of the goods, being not disputed in the present case, Rule 16 is squarely applicable and accordingly the Appellants have rightly taken the CENVAT Credit and utilized the same - appeal allowed - decided in favor of appellant.
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