TMI Tax Updates - e-Newsletter
December 19, 2018
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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GST:
Classification of goods - Rates of GST - Unleavened Flatbreads - Leavened Flatbreads - Corn Chips, Corn Taco and Corn Taco Strips - Pancakes - Pizza Base - Certain goods are eligible for exemption - Other are liable to GST @5% or 18% as the case may be.
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GST:
Levy of GST - Reimbursement of salary on behalf of foreign entity - pure agent - The applicant will not be liable to pay GST on Salary amount received from RMS and disbursed to the Crew.
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GST:
Levy of GST - The applicant shall charge GST on the consultancy services rendered to Municipal Corporation of Grater Mumbai (MCGM) for an upcoming project of establishment & development of textile museum in Mumbai.
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GST:
Services by way of conducting religious ceremonies by hiring various Pundits / Brahmins for the welfare of the people through its own website - GST on commission which the Applicant receives from pundits/website users or on the booking value received from website users. - Applicant is Electronic commerce operator - Liable to GST
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Income Tax:
Deduction claimed u/s 54 - LTCG - since the purchase of new property/flat is in the name of assessee’s wife and adult daughter and not in assessee’s own name, the assessee is not eligible to claim deduction u/s 54
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Income Tax:
Addition towards service tax liability by invoking the provisions of section 43B - ST was payable on cash basis - No material is available to show that the liability of ST was incurred before the end of the relevant previous year under the service tax law - additions deleted.
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Income Tax:
Disallowance u/s 14A - There is direct and proximate nexus between the exempted income, which the investments shall genearate and the expenditures directly or indirectly involved in earning the said income
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Income Tax:
Since the reassessment order itself is bad in law, therefore, the same cannot be revised u/s 263. Only valid re-assessment order can be revised u/s 263.
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Income Tax:
Charitable activity within the scope of section 2(15) - exemption u/s 11 - activity of preservation of environment - the activities of the assessee are charitable in nature.
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Income Tax:
Addition under the head capital gain - whether the assessee has incurred the cost of improvement as discussed above on the building partly owned by him? - Addition of unexplained cash credit u/s 68 - There is a contradictory statement of the assessee before the authorities below and before us - Additions confirmed.
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Income Tax:
Disallowance u/s.40A(2)(b) - excess benefit, beyond reasonableness, to the member having substantial interest - provisions of section 40(A)2(b) are not applicable to co-operative society.
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Income Tax:
Claim of deduction u/s 80IC - claim of deduction u/s 80IC to the assessee cannot be denied simply because such a claim was not made in the return field u/s 139 (1) albeit was made in the revised return u/s 139(5) filed within the stipulated time provided in the said section
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Income Tax:
Where the taxes deposited before filing the return of income were more than the taxes finally determined on regular assessment, the interest u/s 234A is held not leviable
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Income Tax:
Benami transaction - The authority has purely gone on the premise that cash is transferred from one person to another, with an object to defeat demonetization. This is insufficient to establish a “benami” transaction - The transaction where cash is paid to person in lieu of a future promise cannot be a “benami” transaction as there is no lending of name.
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Customs:
Classification of imported goods - compound optical microscopes or not - The classification of the impugned goods under heading no 90118000 of First Schedule to the Customs Tariff Act, 1975 fails
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Customs:
Penalty u/s 112(a) of the Customs Act, 1962 - allegation that Chartered Accountant (CA) has abetted the fraud - CA issued the Export Performance Certificate and Solvency Certificate - no role was played by him in so far as the imports and illegal diversion of the imported goods to local market are concerned. - No penalty.
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Service Tax:
Valuation of transfer of Goodwill- The demand raised is based on the Transfer of Business Agreement (425.25 crores) from which the value for transfer of goodwill is derived by the department on the basis of trademark license agreement - There is no domestic sale of good will annually - such a valuation for the goodwill is also without any logic or basis.
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Service Tax:
Refund claim - export of services - Whatever credit has been permitted to be taken, the same are permitted to be utilized and when the same is not possible, there is provision for grant of refund or rebate. Without questioning the credit taken, the eligibility to rebate cannot be questioned.
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Service Tax:
Reversal of CENVAT Credit - Since these returns have been filed not by the due date but after the delay of one to two years, appellant had deliberately being suppressing their tax liability and evading the payment of tax - Demand confirmed invoking extended period of limitation with interest and penalty.
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Service Tax:
Extended period of limitation - There has been a plethora of judgments holding that existing confusion cannot be attributed as an act of having intention to evade the duty - the demand beyond the normal period of limitation is held to be barred by time.
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Service Tax:
The party granted media rights represents the BCCI, and is designated in terms of the agreement as “Official Broadcaster” - the services as provided by the Appellants to the M/s MSM, Singapore and M/s WSG are squarely covered by the definition of franchise services
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Service Tax:
Valuation - benefit of abatement under N/N. 1/2006-ST - the value of the items supplied by the customers to the service provider on FOC basis is not includable in the taxable value of the service
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Central Excise:
Classification of goods - rice bucket elevator - rice conveyor - according to the department these goods are classifiable under heading No. 8428, as “other lifting, handling, loading or unloading machinery - merit classification on the items in question under chapter heading No. 8437 as “machinery used in Milling Industry”.
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Central Excise:
Levy of penalty under Rule 25 - 100% EOU - The goods which were there in stock were manufactured for the purpose of export under the contract which establish the fact that goods were not meant to be removed clandestinely with intent to evade duty. - No penalty.
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Central Excise:
CENVAT Credit of the inputs lying in their stock - If a condition under rule 4 specifically disallows cenvat credit on a particular goods or service, the cenvat credit cannot be allowed under rule 3 of the Cenvat Credit Rules, 2004.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (12) TMI 891
Seeking Adjournment before AAR - Short period fixed for personal hearing - Classification of goods - Mahua De-oiled Cake - De-oiled Rice Bran - Input Tax Credit - purchase of Mahua Oil Cake/Rice Bran Oil cake used in the manufacturer of solvent extracted oil - Held that:- Rejection of the adjournment sought for the first date fixed by the Appellate Authority, that too when the Appellate Authority itself could not convene or could not hear the matter for the first 60 days of the period contemplated under Section 101 (2) of the Act, appears wholly harsh and unreasonable on the part of the Appellate Authority to have refused the short adjournment sought, and to have proceeded to decide the appeal itself on merits. The frequency and length of the sitting/s may be facts known only to the concerned authorities depending on the number of pending applications/appeals and availbility of the members on certain dates. Communication of the date of hearing at short notice, without any prior indication of the same may often result in parties seeking adjounment for that reason itself. Therefore, a procedure providing for a prior indication of likely date of listing would be enough to put the applicants/appellants to notice in that regard, keeping in mind the spirit of the Act desiring speedy disposal of such matters. In cases of repeated adjournments being sought, it may remain open to the concerned authority to impose appropriate costs while rejecting any adjournment application, in appropriate case, for just circumstances. Petition disposed off.
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2018 (12) TMI 890
Release of goods - contention of petitioner is that despite the fact that the petitioner has deposited the entire amount of proposed tax and penalty in accordance with Section 129(1)(a) of the U.P. GST Act, 2017 still the goods are not being released - Held that:- The respondent no. 4 has no authority in law to dictate respondent no. 3 in such a manner. Issuance of such direction by respondent no. 4 is blatantly illegal and without any authority of law. The Custom Department has not passed any order of detention/confiscation of the said goods under the Customs Act. The respondents directed to release the goods and vehicle in favour of the petitioner forthwith and report about the compliance within three days on affidavit.
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2018 (12) TMI 889
Extension of time limit for filing FORM GST TRAN-1 - input tax credit - Held that:- The first respondent has already forwarded a letter of the petitioner dated 25.04.2018 to the Nodal Officer and the same is still pending with the GSTN. It is further stated that the time granted was upto 31.03.2019 to file Form GST TRAN-1. The Nodal Officer, in consultation with the GSTN shall take note of the grievance expressed by the petitioner/assessee and forward the same to the Grievance Committee, which in turn, shall take appropriate decision in the matter as expeditiously as possible - petition disposed off.
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2018 (12) TMI 895
Services by way of conducting religious ceremonies by hiring various Pundits / Brahmins for the welfare of the people through its own website - GST on commission which the Applicant receives from pundits/website users or on the booking value received from website users. - registration u/s 22/24 of CGST Act, 2017 - Exemption under Sr. No. 13 of Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017 - Held that:- Entry No.13 (heading-9963) covers the services by a person by way of “Conduct of any religious ceremony”. Thus it would cover services provided by a person who is conducting the religious ceremony - In terms, as per the GST law, applicant is acting as an “Intermediately” person. The applicant is taking booking of services online on his own web site from the customers and intimates the names of pundits/ Brahmins who would perform the job to the customers also on online. For that purpose he is charging to the customers as per the models submitted - the Applicant is not covered under the scope of exemption notification entry No .13. In the present case Punditji's are the person who are actually performing the services like puja, abhishek to the customers and therefore they are eligible for exemption from GST for their supply of services - Hence the applicant is not covered under the entry No. 13 of exemption notification No. 14/2017-Central Tax (Rate) dated 28th June 2017 and therefore his services are not exempt. Hence it is not applicable to the Applicant. Registration u/s 22/24 of CGST Act, 2017 - Held that:- The applicant is in state of Maharashtra and is doing the business from this state and therefore, Applicant would be liable to get registered considering the provisions of law and nature of business activity. We find that applicant is providing the services and doing the activities through electronic network of owns website - applicant is covered under section 2 (44) and 2(45) of CGST/MGST ACT as a “Electronic commerce” and “Electronic commerce operator”. As per the definitions as above, applicant is squarely covered under the “Electronic commerce operator Considering the section 24-and the categories of persons mentioned therein, shall be required to be registered under this Act, the category No (x) is related to “every electronic commerce operator;” - the applicant is covered under Electronic commerce operator and shall be required to be registered under this Act without fulfilling of threshold limit. So that he is liable to get registration under the GST ACT. If the Applicant is liable to pay GST, then on what value GST liability needs to be discharged, whether on the commission which the Applicant receives from pundits/website users or on the booking value received from website users? - Held that:- Consideration is first received by him on online as a whole and thereafter major part of it, is given to Pundits who are having an agreement with the applicant to provide their services as and when it is requisitioned but they are not the applicant's employees but are providing their services independently. The actual basic services like puja, abheshek etc are performed by the pundits or Brahmins which are exempted by nature of notification issued under GST ACT. The commission portion is received to the applicant out of total consideration received online from the service recipient. As per the provisions of law the commission is the supply of service and it would be the value on which he would be liable for GST and thus the Applicant would be liable to pay GST on the value of commission received from website users not for on total amount received. Ruling:- The exemption under Sr. No. 13 of Notification No. 12/2017 - Central Tax (Rate) dated 28th June 2017 is not applicable to the Applicant. Applicant is liable to get registered under section 22/24 of CGST Act, 2017 - As per the provisions of section 24 of CGST/MGST ACT, the applicant, is covered under “Electronic commerce operator Hence, he is liable to get registered. The Applicant is liable to pay GST on the on the value of commission received from website users/ Pundits , not for on total amount received.
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2018 (12) TMI 894
Levy of GST - consultancy services rendered to Municipal Corporation of Greater Mumbai (MCGM) for an upcoming project of establishment & development of textile museum in Mumbai - functions entrusted to a municipality under Article 243 W - pure services - whether the consultancy services as per details above would be exempt under N/N. 12/2017-Central Tax (Rate) dated 28.06.2018? Held that:- The applicant in their ARA have stated that Establishment and Development of a museum and recreation ground is not considered as a function entrusted to a Municipality under Article 243 of the Constitution. Since Establishment and Development of a museum and recreation ground is not a function listed in in the 12th Schedule to be read with Article 243 of the Constitution, the applicant has stated that in their view JJ is required to charge GST on consultancy services rendered to MCGM for the above project work, under GST laws. The applicant has not provided the copies of contract, entered into by them with MCGM which would in detail give the exact nature of activities being done by them and which would be very crucial in deciding whether the services being provided by the applicant are in the nature of Pure Services or Works Contract Services. The services being provided by the applicant to MCGM are in the nature of Works Contract Services and therefore they would in no way be eligible for exemption under Sr. No. 3 of Notification No. 12/2017-CT (Rate) dated 28.06.2018, in respect of pure services. Ruling:- The applicant shall charge GST on the consultancy services rendered to Municipal Corporation of Grater Mumbai (MCGM) for an upcoming project of establishment & development of textile museum in Mumbai.
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2018 (12) TMI 893
Levy of GST - Reimbursement of salary on behalf of foreign entity - pure agent or not - Held that:- The applicant is a Crew Recruitment and Placement Agency, and are involved in selecting and recruiting shipping personnel on behalf of their principal/ client who is a Foreign Ship Owner and for which they are charging Administration fees and paying GST on such Administration charges so received. The Salary of Crews of RMS will be deposited in the account of the applicant in one go and the same will be transferred from the applicant’s account directly to the bank accounts of the Crews, by the bank, on the directions of the applicant - the entire amount received by the applicant from RMS towards salary of crews is disbursed as such. Hence with respect to this transaction it is crystal clear that the applicant is acting as a pure agent of RMS. The applicant will be acting as a pure agent of RMS in as much as the entire amount received by them as Crews’ Salary will be disbursed to the Crew and no amounts from the said receipt will be used by the applicant for his own interest. In fact, for performing as a pure agent they will also be receiving compensation separately in the form of fixed fees to be charged as service charges. The applicant will not be liable to pay GST on Salary amount received from RMS and disbursed to the Crew. Ruling:- GST is not applicable on Reimbursement of salary on behalf of foreign entity.
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2018 (12) TMI 892
Classification of goods - Rates of GST - Unleavened Flatbreads - Leavened Flatbreads - Corn Chips, Corn Taco and Corn Taco Strips - Pancakes - Pizza Base - Applicability of entry No.99A of Schedule to the Notification No. 1/2017 - IGST Act dated 28/06/2017. Whether Unleavened Flatbreads treated as ‘Khakra, plain chapatti or roti under Entry No. 99A of Schedule or as ‘bread’ as mentioned under Entry No. 97 or as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis or under any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit? - Held that:- The food product paratha as is available in hotels and restaurants is plain, folded or stuffed. By applying the common parlance test we understand paratha as different and distinct food commodity from roti, chapatti etc. The product before us is examined from this view point. The product is plain like a chapatti and unstuffed like Gobhi paratha, Laccha paratha. To us, this is nothing but a plain chapatti and paratha is a misnomer for this food product supplied by the applicant. As such we do not find any difficulty in classifying the product as plain chapatti covered by entry 99A of notification no. of 34/2017 - all the products contain similar/ same ingredients, manufacturing process and all the products are used as staple food item in meal we find no difficulty to arrive at a conclusion that the products are covered by entry no. 99A of notification no. 34/2017. Whether Leavened Flatbreads be treated as ‘as ‘bread’ as mentioned under Entry No. 97 or as Pizza Bread as mentioned under Entry No. 99 of Schedule or as Malt extract, food preparations of flour, groats, meal, starch or malt extract or under any other schedule? - Held that:- As per Webster dictionary the term bread has been defined as a usually baked and leavened food made of a mixture whose basic constituent is flour or meal - Pita is a yeast leavened round flatbread baked from wheat flour, sometimes with a pocket. From the ingredients and the manufacturing chart, we find that applicant uses similar/ same ingredients and same manufacturing process as that of bread - As there is no difference in the conventional bread and pita bread with respect to ingredients and manufacturing process, it is held that Pitta bread would squarely fall under entry 97 of the exemption notification. Whether Corn Chips, Corn Taco and Corn Taco Strips be treated as ‘wafer’ under Entry No. 16 of Schedule III of Rate Notifications or as Malt extract, food preparations of flour, groats, meal, starch or malt extract not containing coca or containing less than 40% by weight of coca calculated on a totally defatted basis or under any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit? - Held that:- The term wafer has not been defined under the Act or notification. However, we understand wafer as chips used as a snack. In fact the terms wafers and chips are often used interchangeably. Further from the facts submitted by the applicant that the end consumer fry the chip products which make them crispy similar to the product such as wafers. The Corn chips, Corn taco and corn taco chips are variants of chips eaten as a snack - the term wafers would include impugned products. And therefore these products would be classifiable under chapter 1905 3290 and liable to tax at @ 9% each under CGST and SGST Act. Whether Pancakes supplied be treated as All Goods i.e. Waffles and wafers other than coated with chocolate or containing chocolate; biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread) as mentioned under Entry No. 16 of Schedule III of Rate Notifications or classified any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit? - Held that:- The pancakes are manufactured by using ingredients like wheat flour, water, sugar, salt, milk, syrup, oil etc. Similarly we find that cake is an item soft sweet food made from a mixture of flour, fat, eggs, sugar, and other ingredients, baked and sometimes iced and decorated - Cake is mentioned under the chapter heading 1905 of customs and tariff Act 1975. The product cake is mentioned in the entry 16 under the head of “All Goods “i.e. waffles and wafers other than coated with chocolate or containing chocolate, biscuits; Pastries and cakes (other than pizza bread, khakhra, plain chapatti or roti, Waffles and wafers coated with chocolate or containing chocolate, papad, bread] - the impugned the product “Pancakes” is covered under the chapter heading 19059010 under the entry 16 of schedule Ill of GST ACT and liable to tax at appropriate rate. Whether Pizza Base supplied be treated as ‘Pizza Bread’ as mentioned under Entry No. 99 of Schedule / of Rate Notifications or under any other Schedule Entry as per Rate Notification or Exemption Notification as your good office thinks fit? - Held that:- The products are manufactured by the Applicant i.e. pizza base using various ingredients including flour, water, sugar, salt, baking powder, yeast, oil etc. After raw material intake, the ingredients go through various processes including mixing, proofing, dough dividing, baking and cooling. As per entry number 99 of Schedule I to the Central Rate Notifications, the product description is ‘pizza bread’ - The Pizza base is required for manufacture of Pizza. It is not used for any other purpose. The manufacturing process and ingredients are different than bread, chapatti or Roti. It would not be covered under Entry 97 of Rate Notification or Exemption Notification - the impugned product Pizza base IS covered under entry 99 of schedule I of GST Act and would be liable to tax rate at appropriate rate. Ruling:- The Unleavened Flatbreads products such as plain chapatti, Tortilla, Tortilla Wraps, roti, Roti rolls , Wraps, Paratha and Paratha wraps are covered under Entry No. 99 A of Schedule 1 and they would be liable to tax @ 5% (2.5 % each for CGST and MGST and 5 % for IGST). The product Leavened Flatbreads stated in application such as Naan, Kulcha and Chalupa are not covered by the expression ‘bread’ as mentioned under Entry No. 97 of Exemption Notifications but they would be covered under residual entry 453 of schedule Ill of GST ACT and they would be liable for taxes @ 18 %( 9% CGST and 9% MGST ). However Pita Bread is covered by the expression ‘bread’ as mentioned under Entry No. 97 of Exemption Notifications. The products like Corn Chips, Corn Taco and Corn , Taco Strips would be treated as ‘wafer’ under Entry No. 16 of Schedule III of Rate Notifications and it would be liable for taxes @ 18 9% CGST and 9% MGST The product Pancakes supplied by the applicant would be treated as All Goods as mentioned under Entry No. 16 of Schedule III of Rate Notifications and it would be liable for taxes @ 18% (9% CGST and 9% MGST ). The product, Pizza Base supplied by the applicant would be treated as ‘Pizza Bread as mentioned under Entry No. 99 of Schedule / of Rate Notifications and it would be liable for taxes @ 18% (9% CGST and 9% MGST ).
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Income Tax
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2018 (12) TMI 918
Addition under the head capital gain - whether the assessee has incurred the cost of improvement as discussed above on the building partly owned by him? - initial onus to substantiate claim - Held that:- Claim of the assessee was not substantiated before the authorities below by supporting evidence. Moreover, one of the party namely Dilip K. Mistry did not appear in response to the notice issued under section 131 of the Act. Similarly, the other party namely Gautam P. Suthar Prop of Riddi Siddi Furniture conceded that he had provided the bills to the assessee on request owing a very old association with the assessee. From the above, it is clear that the assessee failed to discharge his onus by documentary evidence in support of his claim. The map filed by the assessee showing the construction of 2 rooms on the 1st floor on the building was the proposed layout. The proposed layout does not prove that the assessee has constructed two rooms on the 1st floor of the building. There was no other document filed by the assessee evidencing that the assessee has constructed two rooms on the 1st floor of the building. There is no mentioned in the valuation report of the registered valuer about the two rooms on the 1st floor of the building viz a viz wall fencing. The registered valuer has valued the property taking the entire land and the building constructed thereon for the entire built-up area of the building as on 1st April 1981. As such the valuer has not reduced the built up area in respect to the impugned two rooms to determine actual built up area of the property as on 1-4-1981. Accordingly, no separate deduction on account of the cost of improvement for constructing two rooms and wall fencing can be given to the assessee in the given facts and circumstances. - decided against assessee. Addition of unexplained cash credit u/s 68 - Held that:- The assessee in the present case has just explained the source of the cash deposited in the bank but failed to substantiate the same by documentary evidence. The onus lies on the assessee to explain the source of the cash deposited in the bank from documentary evidence which assessee failed. There was no dispute regarding the sale consideration of the immovable property. The assessee has also not challenged the sale consideration of the property either before the AO or the learned CIT (A). The assessee 1st time before us has taken a plea that the cash deposited represents the part of the sale proceeds of the immovable property. There is a contradictory statement of the assessee before the authorities below and before us. Therefore, we conclude that there is no merit in the argument raised by the learned counsel for the assessee. - Decided against assessee.
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2018 (12) TMI 917
Application for registration u/s 12AA denied - proof of charitable activity - the assessee trust has been notified under the Hindu Religious Institutions and Endowments Act, 1997; as also the Executive Officer is appointed thereunder - assessee has not been provided adequate and reasonable opportunity - Held that:- As relying on Kokkada Shree Southadka Mahaganapthi Temple Vs. CIT(E) [2016 (10) TMI 350 - ITAT HYDERABAD] the first reason given by the CIT(E) for rejecting the assessee’s application for registration by saying that the trust is a Temple administered by the Endowment Department of the Government of Karnataka is incorrect and the same is rejected, being devoid of any merit. After the assessee filed its application for registration u/s 12AA of the Act, on 07.11.2016, the office of the CIT(E) awoke to the existence of the assessee’s application after more than 5 months later by issue of letter dated 28.04.2017 calling for details from the assessee, based in a mofussil area far away from Bangalore to file details by 15.05.2017. The assessee was afforded this one opportunity only and the CIT(E), after no apparent action for more than 5 months from the date of the assessee’s application for registration u/s 12AA dated 07.11.2016; in less than a month proceeded to call for details, examine them and reject the assessee’s application ex-parte vide order dated 22.05.2017 - apparent reason for this hurried disposal of the assessee’s application by CIT(E) with undue haste was because as per section 12AA(2) of the Act, order for grant or rejection of registration was to be passed before the expiry of 6 months from the end of the month in which the application for registration was received; i.e., in the case on hand the CIT(E) was bound to pass the order on or before 31.05.2017. The proviso to section 12AA(1) of the Act clearly provides that no order under sub clause (ii) of clause (b) of section 12AA(1) shall be passed unless the applicant has been given reasonable opportunity of being heard. The facts as emanate from the record in the impugned order clearly shows that the assessee in the case on hand was not afforded reasonable opportunity of being heard - thus set aside the impugned order and restore the matter of the assessee – trust’s application for registration back to the file of the CIT(E) for fresh examination - decided in favour of assessee for statistical purposes.
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2018 (12) TMI 916
Revision u/s 263 - directions to AO to determine the expenses relatable to exempt income u/s 14A and disallowance of such expenses while computing the book profit under section 115JB - Held that:- the Special bench in the case of Vireet Investments (P. ) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] has finally taken the view that the view beneficial to the assessee is to be taken while deciding the issue in term of the decision of Hon’ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME COURT]. In view of the above given facts and circumstances of the case, we are of the view that the AO has considered the issue during the original assessment proceedings and form a view permissible under law that no disallowance relatable to exempt income can be made under section 14A read with Rule 8D of the Rules while computing the book profit under section 115JB of the Act. We find that this issue is squarely covered in favour of assessee and against Revenue by the decision of Special Bench of this ITAT Delhi in the case of Vireet Investments (P. ) Ltd. (supra) and considering the facts in entirety, we quash the revision proceedings as the assessment order is neither erroneous nor prejudicial to the interest of the Revenue. Accordingly, we quash the revision order - decided in favour of assessee.
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2018 (12) TMI 915
Charitable activity - exemption u/s 11 - whether activities of the assessee did not fall within the definition of preservation of environment as it was inserted in section 2(15) with effect from 01/04/2009 - Held that:- As regards the contention of Revenue that activities of the assessee do not fall within the definition of preservation of environment, we find that learned CIT(A), after relying on the decision of Hon'ble I.T.A.T., as upheld by Hon'ble Supreme Court, has held that the activities of the assessee are charitable in nature. Whether the assessee was granted 12A registration for preservation, supervision and development of forest and not for the exploitation of forest produce? - Held that:- Once the activities of appellant are held to be in the nature of "Preservation of environment" therefore these activities are held to be Charitable in Nature and the same cannot be categorized partly as charitable and partly as non-charitable as they are covered within the objects for which it was incorporated and is functioning on those lines. Addition on account of prior period expenses - Held that:- There being no change in rate of taxes, the amount incurred under the said head has to be allowed in the AY under consideration as the said expenses were determined and crystallized during the AY under consideration. Accordingly, the disallowance made by the AO under the head Prior Period expenses is hereby deleted. The said expenses are allowed for the reason that these expenses were determined and crystallized only during the AY under consideration. - Decided against revenue
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2018 (12) TMI 884
Rejection of books of accounts - non-production of accounts - Held that:- Plea advanced on behalf of the assessee for defending non-production of accounts, as made before the authorities below, to our mind does not hold good. It is notable that the AO has demanded the production of accounts right from beginning of proceedings. Sufficient opportunities were given to the assessee and the assessee also appeared on some of the dates and filed part reply. No such fact of missing of accounts was unfolded by the assessee at any of the dates except the last date of hearing. Besides, the finding of Ld. CIT(A) as mentioned in his order “AO had also not pointed out any particular defect or discrepancy in the accounts books maintained by the assessee”, in our considered opinion, would have no locus standi once the assessee did not produce any books of accounts before the AO. Ld. CIT(A) is, therefore, not justified to accept the plea of the assessee regarding wrong rejection of books of accounts. - decided in favour of Revenue.
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2018 (12) TMI 914
Validity of proceedings initiated u/s 153A - proof of incriminating martial found in search - Held that:- As relying on PR. COMMISSIONER OF INCOME TAX CENTRAL-2, NEW DELHI VERSUS SUBHASH KHATTAR [2017 (7) TMI 1091 - DELHI HIGH COURT]The entire case against the Assessee was based on what was found during the search of the premises of the Aerence Group. It is thus apparent on the face of it, that the notice to the Assessee under Section 153A of the Act was misconceived since the so-called incriminating material was not found during the search of the Assessee's premises. The Revenue could have proceeded against the Assessee on the basis of the documents discovered under any other provision of law, but certainly, not under Section 153A. This goes to the root of the matter. - Decided in favour of assessee.
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2018 (12) TMI 913
Reopening of assessment - unexplained source of deposits made in the bank account - ex parte assessment order - non-application of mind and without examination of the correctness of the facts in respect of the alleged escaped income - non filling of return of income by assessee - Held that:- Here the assessee have neither filed any return of income under section 139(1) nor in response to notice under section 148, then the assessee could not raise any objection before the AO against the notice under section 148 of the Act and consequently the said objection cannot be raised before the appellate authority. Hence, we decline to admit the additional ground raised by the assessee. The same is rejected. For unexplained source of deposits made in the bank account - admission of additional evidence - Once the assessee are agriculturists and holding a substantial amount of land in their personal names as well as in the names of the family members, then the entire deposit made in the bank account cannot be treated as taxable income of the assessees. The assessees filed the additional evidence in the shape of revenue record showing the land holding in the names of the assessees as well as their family members. The land holding of the assessees are more than 16 hectares in case of the father and about 6 hectares in case of son. Therefore, we find that though the assessees did not produce these evidences before the A.O, however, once the evidences produced by the assessee is the official record which can be independently verified, then the same is required to be verified and considered for the purpose of explaining the source of deposits made in the bank account - remit the matter to the record of the AO for conducting a proper enquiry - appeals of the assessee are allowed for statistical purposes.
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2018 (12) TMI 912
Revision u/s 263 - Reopening of assessment u/s 147 - Held that:- The assessee could be permitted to challenge the validity of the Order passed under section 263 on the ground that the assessment order was non-est.” Since the reassessment order itself is bad in law, therefore, Learned Counsel for the Assessee, rightly contended that the same cannot be revised under section 263. Only valid re-assessment order can be revised under section 263. On this ground itself the proceedings under section 263 of the I.T. Act are bad in law and liable to be quashed. We, accordingly, set aside the Order of Pr. CIT passed under section 263 and quash the same. The remaining plea of the assessee are not required to be adjudicated. However, we may briefly note that A.O. examined entire seized material at the time of recording reasons and re-assessment stage. The assessee produced sufficient evidences at the re-assessment proceedings to prove the identity of the creditors, their creditworthiness and genuineness of the transaction. The A.O. also made direct enquiry by issuing summons under section 133(6) of the I.T. Act to the Investors who have also replied directly to the A.O. Therefore, A.O. rightly accepted the credits as genuine. In view of the above finding, there is no need to give a finding in detail on merits. In view of the above, we allow the appeal of assessee. Reopening of assessment - non independent application of mind - Held that:- A.O. on the basis of the information and material received from Investigation Wing has recorded reasons for reopening of the assessment which was ultimately found to be incorrect and non-existent. It is well settled law that when no new material other than examined by the A.O originally found on record for the purpose of initiating the re-assessment proceedings, the proceedings under section 148 would be invalid and bad in law. We rely upon decision of Delhi High Court in the case of Atul Kumar Swamy [2014 (3) TMI 759 - DELHI HIGH COURT]. The Hon’ble Delhi High Court in the case of SNG Developers Ltd.[2017 (7) TMI 575 - DELHI HIGH COURT] held that when A.O. initiated the re-assessment proceedings without application of mind, such proceedings would be invalid. A.O. in the present case has failed to verify the information received from Investigation Wing. Therefore, it is non-application of mind on the part of the A.O. to record correct facts in the reasons for reopening of the assessment. In such circumstances, the re-assessment order could not be treated as valid and in accordance with law. Since re-assessment proceedings are invalid and bad in law, therefore, such proceedings could not be revised under section 263 of the I.T. Act. We set aside the order passed by the Ld. Pr. CIT under section 263 of the I.T. Act and quash the same. - Appeal of the Assessee is allowed.
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2018 (12) TMI 911
Disallowance u/s 14A - investment made in securities when no direct or indirect expenditure in relation to investment in securities has been claimed or debited - Held that:- Eligible reasons to arrive at the satisfaction for disallowance u/s 14A of the Act, r/w Rule 8D of the Rules, that there are expenses relatable to the earning of exempt income by the assessee. Since, the assessee has invested its money for such investment of shares, which is capable to generate income which does not or shall not form part of total income of the assessee and indirect cost in the form of administrative expenditures etc. is involved in this process. There is direct and proximate nexus between the exempted income, which the investments shall genearate and the expenditures directly or indirectly involved in earning the said income…. In view of these facts and circumstances, the requirements under Rule 8D(1) of I.T. Rules read with Section 14A(2) and Section 14A(3) are fulfilled and accordingly disallowance made by the AO in accordance with under Rule 8D(2) of I.T. Rules, 1962 read with Section 14A of I.T. Act, is held to be consistent with law under these facts and circumstances -disallowance made by the AO under Rule 8D of I.T. Rules read with Section 14A of I.T. Act, and confirmed by the Ld. CIT(A), are hereby upheld.- decided against assessee.
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2018 (12) TMI 910
Allocation of sale consideration - co-owner's right and interest in the units - assessee has shown less income on sale of units allotted which are at lower floors compared to sale consideration of upper floors - assessee having rights of 14% in total project - Held that:- As per Deed of Declaration dated 02/02/2008, the share of each co-owner in each unit is pre-decided mutually and agreed by all and same will determine profitability on sale of such units. The very basis adopted by the AO is without any basis and also not practical. One co-owner may be willing to sell the unit at available price whereas the other would be willing to hold on to get a better price and that is dependent on the risk appetite of the seller and their financial stability to negotiate the deal. This could result into conflicts between the co-owners. To avoid the same and to have ease in sale of units and its procedures on sale, all co-owners decided mutually to allocate units within themselves in such a manner that each would receive their proportion of share in the total build up area and have complete authority to decide the sale of units allocated to them, the price and the time etc. As find from the facts of the case that assessee had sold unit no.2 and 4 for a total sale consideration of ₹ 4,50,00,000/- and ₹ 4,05,00,000/- respectively during the financial year 2008-09 i.e. relevant to assessment year 2009-10. The assessment for assessment year 2009-10 was completed and the returned income of the assessee has been accepted by the department. Hence, we delete the addition made by AO and confirmed by CIT(A). This issue of assessee’s appeal is allowed. AO directing the AO to make addition of 14% share in the unsold units in the income of the assessee in the year in which such unit is actually sold - Held that:- Confirming the action of the AO in directing the AO to make addition of 14% share in the unsold units in the income of the assessee in the year in which such unit is actually sold.
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2018 (12) TMI 909
Rectification of mistake - Addition towards service tax liability by invoking the provisions of section 43B - scope of rectification of mistake order - Held that:- No material has been brought on record to show that ₹ 9,60,672/- as service tax expenditure was claimed by the assessee. Thus, disallowance u/s.43B can be made only of an amount which was a sum payable. The relevant law under the service tax was payable on cash basis. No material is available to show that the liability of ₹ 9,60,672/- as service tax was incurred before the end of the relevant previous year under the service tax law. Thus addition by invoking the provisions of section 43B in a proceeding u/s.154 of the Act is impermissible. TDS u/s 194C - Addition on account of job work charges by invoking the provisions of section 40(a)(ia) of the Act in a proceedings which was initiated u/s.154 - Held that:- A perusal of provisions of section 194C shows that a person is liable to deduct ITDS when a contract for work is of an amount more than ₹ 30,000/- or where payment for work is made to a person more than ₹ 75,000/- during the financial year. The Assessing Officer has brought no material on record to show that either of the above condition was satisfied in the instant case. Therefore, it is not open to AO in a proceedings u/s.154 to hold that the assesse was obliged to deduct ITDS on job work and consequently, the disallowance made u/s.40(a)(ia) of the Act it outside the jurisdiction of section 154 of the Act - Decided in favour of assessee.
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2018 (12) TMI 908
Denial of deduction claimed u/s 54 - purchase of new property/flat is in the name of assessee’s wife and adult daughter and not in assessee’s own name - Held that:- Hon'ble Bombay High Court in the case of Prakash [2008 (9) TMI 234 - BOMBAY HIGH COURT] had an occasion to interpret the provisions of Section 54/54F and held that for claiming deduction under the aforesaid provisions the new house property must be owned by the assessee and/or having legal title over the same. Therefore, if the new house property in respect of which the assessee has claimed deduction under section 54/54F of the Act is not purchased in the name of the assessee, no deduction under the said provisions can be claimed. Thus in the present case since the purchase of new property/flat is in the name of assessee’s wife and adult daughter and not in assessee’s own name, the assessee is not eligible to claim deduction under section 54 of the Act - decided against assessee.
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2018 (12) TMI 907
Reopening of assessment - unexplained cash deposits in the savings bank account - reliance of AIR information - reasons to believe V/S reasons to suspect - Held that:- The reasons recorded did not make out a case that the assessee was engaged in some business and the income from such a business had not been returned by the assessee. In the case at hand also, the reasons recorded do not contain any such recital. The Tribunal held that the factum per se, of deposits in the bank account of the assessee could not be made the basis for holding the view that income had escaped assessment, over-looking that the sources of the deposits need not necessarily be the income of the assessee; and that as such, the reasons recorded were not sufficient to believe escapement of income rather, they were reasons to suspect escapement of income, which was not enough for issuance of a notice u/s 148. See BIR BAHADUR SINGH SIJWALI VERSUS ITO [2015 (2) TMI 60 - ITAT DELHI] Finding merit in the grievance raised by the assessee, the reasons recorded by the AO for issuance of notice u/s 148 of the Act are held to be invalid, being reasons not sufficient to form belief of escapement of income, based on vague information. All proceedings pursuant thereto, including notice issued under Section 148 of the I.T. Act, the assessment order and the impugned order are thus annulled and cancelled. No other issue survives for adjudication, nor was anything else argued. - Decided in favour of assessee.
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2018 (12) TMI 886
Rectification of mistake - Deemed dividend addition u/s 2(22)(e) - grounds which according to the revenue were not considered is with regard to the remand report submitted by the Assessing Officer - Held that:- The attempt of the revenue is to re-canvas the points which were raised by them before the Tribunal and in the event if the the revenue is of the opinion that the points raised by them were not properly considered, then the remedy is to file an appeal. On a perusal of the order passed by the Tribunal dated 11.09.2009, more particularly, in paragraph 6, we find that the report filed was noticed by the Tribunal. Thus, we are of the considered view that there is no rectifiable mistake pointed out by the revenue before the Tribunal to exercise its jurisdiction under Sub-section (2) of Section 254 of the Act. Hence, we find that there is no error in the finding of the Tribunal and accordingly, the appeal fails and dismissed. Consequently, the substantial questions of law were answered against the revenue.
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2018 (12) TMI 906
Disallowance u/s.40A(2)(b) - assessment of co-operative society - excess benefit, beyond reasonableness, to the member having substantial interest - Held that:- No disallowance under that section can be made in the assessment of co-operative society. The Hon’ble Bombay High Court also in the case of CIT vs Manjara Shetkari Sahakari Sakhar Karkhana Ltd. [2007 (8) TMI 260 - BOMBAY HIGH COURT] has held that "the section 40A(2) does not apply to the co-operative society, hence no disallowance under that section can be made in the assessment of the Cooperative society". Further it is also noticed that assessee has explained that an individual shareholder cannot have beneficial interest of more than 0.05% in the shares of the co-operative society. It is also noticed that authorized capital in the case of assessee was ₹ 5 Cr. and an individual member cannot subscribe more than 25,000/- worth of shares, without approval from the Government. These facts were not disputed/disproved by the AO. We are of the view that the provisions of section 40(A)2(b) are not applicable to co-operative society. Therefore, we are inclined with the decision of CIT(A), that the provision of section 40(A)2(b) of the Act, were not applicable to the case of the assessee, therefore we do not find any merits in the appeal of the revenue and the same is dismissed. - Decided against revenue.
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2018 (12) TMI 904
Disallowing contribution to State Renewal Fund - application of income and not expenditure incurred for business expediency - Held that:- There are no changes in the facts and circumstances of case. Following the decision of the Co-ordinate Bench in assessee’s own case and decision in case of Pr. CIT vs. Rajasthan State Seed Corporation Ltd [2016 (9) TMI 59 - RAJASTHAN HIGH COURT] we upheld the order of the ld. CIT(A). Hence, the ground so taken by the Revenue is dismissed. Allowance of deduction in respect of provision for Mines Closure Expenses - Held that:- Following the decision in assessee’s own case and decision of the Hon’ble Rajasthan High Court in case of Pr. CIT vs. Rajasthan State Seed Corporation Ltd [2016 (9) TMI 59 - RAJASTHAN HIGH COURT] we hereby affirm the order of CIT(A). Hence, the ground so taken by the Revenue is dismissed. Receipt from sale of Carbon Emission Certifications were held as capital in nature - Held that:- Following the decision of the Co-ordinate Bench in assessee’s own case and decision of the Hon’ble Rajasthan High Court in case of Pr. CIT vs. Rajasthan State Seed Corporation Ltd [2016 (9) TMI 59 - RAJASTHAN HIGH COURT] we hereby affirm the order of ld. CIT(A). Hence, the ground so taken by the Revenue is dismissed. Disallowance of rural development expenses - Held that:- In case of Ranbaxy Laboratories Ltd.(supra), where the assessee contributed towards construction of the school hospital, it was held that the hospital constructed by the school was engaged in the providing medical facilities to the school children and other people in the vicinity of the school and the business expediency or commercial expediency might require providing facilities like school, hospital etc. for the employees or their children and accordingly claim was held allowable. We are of the view that where the expenditure has been incurred by the assessee in vicinity of its mining areas and its workers and its employees are also benefited by incurrence of such expenditure, the assessee has established the necessary nexus of such expenditure for the purpose of smooth running of its business operation and such expenditure should be held as allowable deduction. In the result, we delete the addition made by the Assessing Officer under the head of Rural Development Expenses and ground so taken by the assessee is allowed. Disallowance of amortization of mining land - Held that:- Rights which are given to the assessee are of commerce rights which are akin to license for mining. In that view of the matter, the contention of the assessee regarding depreciation u/s 32(ii) is required to be accepted. AO is directed to allow depreciation under 32(1)(ii). The ground of assessee is thus allowed with said directions. Allowability of Leave encashment expenditure - Held that:- The assessee took a policy from LIC named as “Rajasthan State Mines & Minerals Limited – Employee Group Leave Encashment Scheme. The payment of leave encashment is a contractual liability, a charge on assessee's profit. To ensure timely payment of leave encashment to its employees, the scheme is devised by the LIC, which works out the leave encashment liability and fixation of premium as per valuation report. The liability is thus ascertained and crystallized on a scientific method by the LIC. Thus, the assessee's payment of ₹ 29.39 Crores during the year towards the same is within the framework of the leave encashment scheme and in our considered view, the same is an allowable business deduction and the AO is directed to allow the said claim of the assessee even though the same has not been made in the return of income but during the assessment proceedings and all the necessary facts are on record. In the result, assessee’s ground of appeal is allowed. Chargeability of interest u/s 234A - return filed on or before the date prescribed u/s 139(1) - Held that:- AO while working out the interest under section 234A amounting to ₹ 32,10,470 has not given credit of self-assessment tax paid by the assessee amounting to ₹ 17,00,00,000. Apparently, the reason for the same could be that the online functionality to determine the interest liability in the IT system of the department still doesn’t allow credit for self-assessment tax while working out the interest u/s 234A inspite of the CBDT Circular No. 2/2015 dated 10-2-2015 which clearly allows such credit. To our mind, the matter is squarely covered by the decision of the Hon’ble Supreme Court in favour of the assessee. In such a scenario, where the taxes deposited before filing the return of income were more than the taxes finally determined on regular assessment, the interest under section 234A is held not leviable. We therefore set-aside the matter to the file of the AO for limited purposes of verification of the tax deposit figures before filing of the return of income so submitted by the ld AR and where the same is found to be in order, allow the necessary relief to the assessee.
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2018 (12) TMI 903
Rectification of mistake - ITAT has not remitted the issue to the file of the Assessing Officer after admitting the additional evidence - reconsideration/reapplication of the order of the ITAT in the garb of rectifications of mistake apparent from the record - Held that:- The power of rectification under section 254(2) of the Income-tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake which is apparent from the record, and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may conceivably be two opinions, as has been shown in the present case. Failure by the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. Thus we find that the issue pointed out by the assessee does not fall under the realm of mistake apparent from the record liable to be rectified u/s. 254(2) - It is settled law that reappreciation/ re-adjudication is not permissible in the garb of the rectification of mistake in the order of the Tribunal. - Decided against assessee.
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2018 (12) TMI 902
Disallowance u/s 36(l)(iii) - assessee has given interest free advances to its sister concern which is for non business purposes - proof of Commercial expediency - Held that:- Commercial expediency of the said advance had been adequately established by the assessee. The facts relating to the impugned transaction have not been controverted by the Revenue. That Shivaks Impex Ltd. was a step down subsidiary of the assessee company, has not been disputed by the Revenue. The fact that the assessee, its subsidiary and Shivaks Impex Ltd. were all in the same line of business has also not been disputed by the Revenue. It is also not disputed that the advance made has been utilized for the purpose of making purchases. It is evident that had the said advance not been made it would have seriously affected the business of Shivaks Impex Ltd., which in turn would have affected the assessee also since the value of its investment in its subsidiary would have been affected on account of the poor results shown by Shivaks Impex Ltd. - no disallowance u/s 36(1)(iii) could have been made on account of the availability of sufficient own funds and on account of the advances having been made for business purpose ,no disallowance of interest pertaining to funds utilized for making the same was warranted - decided in favour of assessee. Disallowance u/s 14A - CIT(A) deleted the disallowance made on finding that no exempt income had been earned by the assessee from the impugned investments made - Held that:- Rule 8D cannot be read in a manner, which takes it beyond the scope and content of the main provision, which is, Section 14 A of the Act. The is clearly relatable to the earning of actual income and not notional or anticipated income. The submission of the Department to the effect that s.14A would be attracted even to exempt income 'includable' in total income would entail the assessment of notional income, assumed to be exempt in the future, in the present assessment year. The computation of total income in terms of s.5 of the Act is on real income and there is no sanction in law for the assessment of admittedly notional income, particularly in the context of effecting a disallowance in connection therewith. - decided in favour of assessee.
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2018 (12) TMI 901
Disallowance of expenditure towards air conditioning and other expenses, lift facilities, common securities, fire fighting system, water charges, electricity and other personal cost - Held that:- Notably, in assessment year 2003–04, against income of ₹ 62,25,957 towards air conditioning and other charges, the assessee had claimed property maintenance expenses of ₹ 82,54,091. While examining the allowability of the aforesaid expenditure claimed by the assessee, in pursuance to the directions of the Tribunal, AO having found such expenditure to be directly relatable to the income earned from air conditioning and other charges has allowed them fully. This is evident from the copy of the assessment order passed for A.Y. 2003–04 as submitted in the paper book. On a perusal of the details of expenditure claimed in the impugned assessment year as well as in assessment year 2003–04, find them to be of identical nature. No reason for disallowing a part of the expenditure claimed by the assessee. Accordingly, the disallowance made by the Assessing Officer and sustained by the learned Commissioner (Appeals) is deleted. - Decided in favour of assessee.
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2018 (12) TMI 885
Charitable activity - Benefit of exemption u/s 11 - violation of the provisions of Section 13 - Held that:- From a reading of the assessment order, the CIT's order and Tribunal's order it appears that the AO while exercising its power under Section 13 (1)(c) has deleted the amount for which there was a clear violation and a finding that the bus had not been used by the trust but rather had been used by the trustee for his own family business. The Tribunal has upheld the order of AO and the CIT and has deleted the exemption in respect of the amount sought towards the bus expenses. No other amount has been added or deleted. The Hon'ble Apex Court in a recent judgement in the case of Alexander George vs. Commissioner of Income-Tax [2015 (8) TMI 519 - SUPREME COURT] has also held that where the amount is very small normally an appeal should not be entertained. No question of law.
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2018 (12) TMI 900
Reopening of assessment - unexplained cash found deposited in two savings bank account of the assessee - Held that:- The explanations furnished by the assessee regarding the source of the same to the authorities below and even before us, which we find, stands accepted by authorities below - Regarding the above facts there is no dispute. Therefore the balance remaining unexplained is ₹ 1,90,000/- , in SBI, Haripur (18,50,000-16,60,000) and ₹ 1,50,000/- in SBOP, Patlikuhal, totaling in all to ₹ 3,40,000/-. Before us the assessee has attributed the source of this cash to its income returned of ₹ 1,37,110/- and agricultural income of ₹ 1,80,000/-. As for plea of the of the assessee for the credit to be given for his income returned of ₹ 1,37,110/-, we find merit in the same. It is not disputed that the assessee has returned the said income to tax. The Ld.DR has not rebutted the aforesaid contention of the assessee that credit be given of the income returned by it for the cash found deposited - No reason for not giving any credit of the same for the cash found deposited in the bank of the assessee. Attributing the cash deposited to agricultural income returned for tax - Held that:- Revenue has treated the said income as income from undisclosed sources, rejecting the assessees contention that it was his agricultural income. But the said fact ,we hold, makes no difference so far as source of cash deposit in bank is concerned. Having accepted the fact that the assessee had earned income of ₹ 1,80,000/-, albeit from undisclosed sources, the same can be safely attributed as the source of cash deposited in the bank of the assessee - therefore, we direct that credit for the cash deposited in the bank be given for the income returned by the assessee of ₹ 1,37,110/- the agricultural income of ₹ 1,80,000/- returned by the assessee. Treating the agricultural income returned by the assessee as income from undisclosed sources - Contention for the assessee is that since it had established the ownership of land, the agricultural income earned therefrom was his income - Held that:- We find that the CIT(A) has given a categorical finding that the said income cannot be treated as his agricultural income since the ownership of land by the assessee was not established and also because in any case agricultural income therefrom from sale of fruit crops of ₹ 9,20,000/- had already been claimed as the income of the father, which was claimed by the assessee as a source of cash found deposited in the bank of the assessee. Assessee has not addressed the issue of income from the said land having already been claimed by the assessee and accepted by the Revenue, as belonging to the father of the assessee. Nothing has been brought before us to show that the agricultural income returned by the assessee of ₹ 1,80,000/- was over and above the income of ₹ 9,20,000/- attributed to the same piece of land in the hands of the father of the assessee. In the absence of the same we see no reason for accepting the contention of the assessee that it had earned agricultural income - Decided against assessee.
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2018 (12) TMI 899
Claim of deduction u/s 80IC - claim for initial year - mandation for claim for deduction to be made in the return of income filed u/s 139(1) in terms of section 80AC - claim is now being made in the revised return - Held that:- The purpose of revised return u/s 139(5) is to ensure that any admission of omission or any wrong statement has to be voluntarily within the specified time limit. Further it is not a case of the AO that the requisite condition of filing of audit report in form 10CCB has not been filed during the course of the assessment proceedings. Whence, in the initial assessment years, i.e., A.Y.s 2009-10, 2010-11 and 2011-12 the claim of deduction u/s 80IC has been found to be otherwise allowable to the assessee and this being the 4th year of the claim based on same set of facts, then it cannot be held that the claim made by the revised return is not voluntarily and omission to make such claim in the original return of income was not bonafide. Even otherwise also, if one goes by the principle laid down in the case of Goetz India Ltd.[2006 (3) TMI 75 - SUPREME COURT] if the claim has not been made before the AO by way of revised return then same can be made before the appellate authorities. Thus claim of deduction u/s 80IC to the assessee cannot be denied simply because such a claim was not made in the return field u/s 139 (1) albeit was made in the revised return u/s 139(5) filed within the stipulated time provided in the said section - decided in favour of assessee.
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2018 (12) TMI 898
Addition towards suppressed sales - estimation of profit - assessee has offered income on estimated basis - Held that:- The total turnover from each project was shown in the revised return and the same was accepted by the Assessing Officer in his remand report - the assessee estimated income @ 8% of the total turnover, including the turnover which was not routed through the books of account - once the A.O. estimates the income, separate addition on the suppressed turnover is not maintainable and at best the suppressed turnover has to be taken into consideration for the purpose of estimating the profit. No contrary decision was placed on record by the Revenue. Under these circumstances, we are of the view that the CIT(A) was justified in holding that the separate addition towards suppressed sales is not maintainable. Applicability of provisions of section 197A(IA) - TDS on interest - disallowance u/s 40(a)(ia) - non furnishing of details to indicate that the assessee has forwarded Form 15G to the CIT - Held that:- It is mandatory on the part of the assessee to furnish the details to the Commissioner, though not within the stipulated time but atleast before the completion of assessment of the assessee. In the instant case, no details were furnished to indicate that the assessee has forwarded Form 15G to the CIT. Under these circumstances, we are of the view that the assessee committed an error in making the payment without deducting the tax at source and consequently the provisions of section 40(a)(ia) are applicable. The case of the assessee is that in the case of estimate of income after rejecting the book results, there cannot be any independent disallowance u/s 40(a)(ia). This issue was discussed in K VENKATARAJU VERSUS ADDL COMMISSIONER OF INCOME TAX [2013 (11) TMI 409 - ITAT VISAKHAPATNAM] observed that a disallowance is a technical disallowance and more precisely deferment of allowance, which is linked with the compliance of TDS provisions and hence even if the business income is estimated disallowance can be made u/s 40(a)(ia) independently. A.O. has correctly applied the provisions of section 40(a)(ia). However, if the assessee is able to prove that the declaration in Form 15G was submitted before the CIT before completion of assessment for the year under consideration, the A.O. may reconsider the issue in accordance with law. - decided against assessee.
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2018 (12) TMI 897
Levy of penalty u/s 271(1)(c) - investments surrendered after detection of concealment by the Department by way of search u/s 132 - as per AO surrender was covered only in the year of search or the preceding year of which return was due but not filed by the assessee, and the impugned year being neither, the assessee was not entitled to claim immunity of the surrender granted - Held that:- Additional ground raised by the assessee that the order passed u/s 271(1)(C) was invalid and bad in law as also the penalty proceedings initiated vide notice u/s 274 r.w.s 271(1)(C) since no submissions were made in this regard,oral or written,by the assessee nor any copy of the notice issued u/s 274 filed before us pointing out any infirmity in the same,the said additional grounds are dismissed. As for the ground raised challenging the levy of penalty on merits ,since admittedly the facts in the present case are identical to that in the case of Munish Jain [2018 (3) TMI 1676 - ITAT CHANDIGARH] the decision rendered by the ITAT in the said case squarely applies to the present case following which we uphold the levy of penalty u/s 271(1)(c). - Decided against assessee.
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2018 (12) TMI 896
Applicability of provisions of Section 56(2)(vii)(b) - excess of the purchase consideration - income from other sources - market value of the property at village Khera Kalan is less than the circle rate - difference between the purchase cost shown by assessee and as reported by DVO - Held that:- matter requires reconsideration at the level of the A.O. The assessee filed objections before A.O. on 28.12.2016 objecting to the report of the DVO. The assessee also explained before Ld. CIT(A) guidelines of Directorate of the Department which have not been followed by the DVO. Several instances of the lesser cost were furnished which have not been considered by the DVO. The assessee pointed out the defects and deficiencies in the report of the DVO which have not been considered by the A.O. The assessee also furnished reports from two registered valuers who have reported lesser value. These facts, therefore, show that the A.O. instead of referring the objections of the assessee to the DVO, has passed the order within two days of receipt of the objections from the side of the assessee. The course adopted by the A.O. is not permissible and is clearly denial of principles of natural justice as well. - Appeal of assessee is allowed for statistical purposes.
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Benami Property
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2018 (12) TMI 905
Offence under Benami transaction act - Provisional Attachment Order - Cash transferred from one person to another, with an object to defeat demonetization - Held that:- The property was never held by the appellants. The amount received by them have returned/adjusted towards salaries. Even the question of any arrangement in the present case does not arise as the appellants have received only advance salary from the employer under oral contract at the asking of the respondent, the same was immediately returned. The said factual position has not been denied by the respondent. This is also not a case where the person providing the consideration was not traceable or fictitious. The admitted position is that the management/employer was very much traceable, his statement was recorded, the money returned by the appellants was dealt by the department. The existence of the benami transaction has to be proved by the authorities i.e. the person who alleges the transaction (Sitaram Agarwal v. Subrata Chandra [2008 (5) TMI 718 - SUPREME COURT]. The authorities have failed to discharge the burden of proof. The authority has purely gone on the premise that cash is transferred from one person to another, with an object to defeat demonetization. This is insufficient to establish a benami transaction. The transaction where cash is paid to person in lieu of a future promise cannot be a benami transaction as there is no lending of name. There can be no benami transaction if the future benefit is due from the person who is also the holder of property. The impugned order is not sustainable as it punishes the appellants for wanting to defeat the purpose of demonetization, which has no direct nexus with the Act and is beyond the purview of the Act.
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Customs
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2018 (12) TMI 881
Classification of imported goods - compound optical microscopes or not - whether classifiable under heading no. 90189099 of the First Schedule to Customs Tariff Act, 1975 or classifiable under heading no 90118000 of the First Schedule to Customs Tariff Act, 1975? Held that:- There is no doubt that the goods, as presented, includes a microscope. The description of the impugned goods goes beyond to encompass ‘micromanipulator’ along with ‘microscope’ and to be deployed in treatment of infertility, an increasingly prevalent problem in the modern world for various reasons, with ever growing demand for medical intervention as an alternative to resigned acceptance of divinely ordained fate. The problem has repercussions that are not only genealogical but, at a macro level, impacting the productive future strength of the nation - It is, thus, abundantly clear that the goods, as presented, consist of a microscope and a micromanipulator. It is not the case of the customs authorities that the goods, as presented, is only a microscope. Neither is it their case that the microscope can, on its own, perform the tasks necessary for in vitro fertilisation. We have rendered the finding supra that the ‘micromanipulator’ is an essential implement for in vitro fertilisation for which the imported goods are to be utilised. The heading proposed by customs authorities is that of ‘parts and accessories’ under ‘microscope’. The classification of the impugned goods under heading no 90118000 of First Schedule to the Customs Tariff Act, 1975 fails and, in the face of such failure and want of an alternative classification in the show cause notice, the declared classification must be accepted - there is no reason to discard the declared classification as, contrary to the presumption of customs authorities, the impugned goods are instruments used for surgical therapy to overcome a physiological problem in a human body, viz., inability to conceive. It is not a diagnostic instrument that, in the medical field, a microscope is. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 883
Penalty u/s 112(a) of the Customs Act, 1962 - allegation that Chartered Accountant (CA) has abetted the fraud - CA issued the Export Performance Certificate and Solvency Certificate - Duty Exemption Entitlement Certificate - Duty Drawback - the only allegation against the appellant was that as a chartered accountant, he has abated in the fraud committed by the principal importer since he had issued Export Performance Certificate and Solvency Certificate in the name of said M/s. Spectrum Fabrics without verifying the facts. Held that:- The SCN itself, is sufficiently clear. Against the appellant, only allegation was that he had issued certificates without full verification. This in turn, enabled the importer to obtain advance licence. This advance licence was utilized for making duty free import of goods which were in breach of the condition of license diverted into local market. In so far as the appellant-assessee is concerned, his involvement even as per the show cause notice was confined to issuing certificates without full verification. There is no allegation that the assessee was either part of or aware of impeding fraud which the importer intended to perpetrate. Whatever be the fault of assessee in exercising the due diligence in issuing the relevant certificates, even according to the department as emerges from the show cause notice and the order of the Commissioner, no role was played by him in so far as the imports and illegal diversion of the imported goods to local market are concerned. Even accepting the allegations contained in the show cause notice against the assessee and the final findings of the Commissioner in the penalty order, it cannot be stated that the assessee either had done or committed to do any act which would render the goods liable to confiscation under Section 111 of the Act - The Tribunal in the impugned judgment erroneously expanded the findings of the Commissioner by observing that the role prescribed by the adjudicating authority to the assessee was of knowingly being involved in facilitating the importer to commit the fraud. This was neither the allegations contained in the show cause notice nor was the findings of the Commissioner. In fact the allegations and the findings clearly were that the assessee had acted without due care and issued the certificates without full verification. Decided in favor of appellant.
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2018 (12) TMI 882
Reduction of penalty u/s 112(a) of Customs Act - Held that:- The question as proposed in the present facts does not give rise to any substantial question of law. Thus, not entertained - appeal dismissed.
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2018 (12) TMI 880
Penalty u/s 114(iii) and Section 114 AA of the Customs Act, 1962 - export incentive/Duty Entitlement Pass Book Scheme - Draw Back - mis-declaration of goods as of Indian Origin in the export documents - Held that:- The appellant company exported FeSi during the period from 2008-09 and 2011-12 in various consignments and availed export incentive in the form of Duty Entitled Pass Book (DEPB)/Duty Draw Back (DBK). It has also availed, in some cases, incentive under Focus Marketing Scheme (FMS) in addition to DEPB/DBK against the export consignment. It was found that the exported FeSi, against which DEPB and FMS was availed, was procured from Traders/Suppliers from the local market. Taking into consideration of the fact that the DGFT authorities had already imposed penalty upon the appellant, the penalty imposed on the appellant company is not warranted - Regarding imposition of penalty on the appellant no.2, Director of the appellant company the adjudicating authority observed that Shri Chetan Aggarwala was aware of the fact that no export incentive was availed on FeSi of Bhutanese origin and returned the entire amount of the incentive therefore imposition of penalty is not warranted. The impugned order is modified to the extent and the penalty imposed under Section 114(iii) on the appellant company and appellant no.2, Director of the appellant company are set aside - The penalties imposed under Section 114AA on appellant no.2 are also set aside. Appeal disposed off.
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2018 (12) TMI 879
Rectification of Mistake - Held that:- There is no reason to interfere with the Final Order No. FO/75021-75034/2018 dated 10.01.2018 passed by this Tribunal - ROM Application dismissed.
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2018 (12) TMI 878
Provisional assessment - assessments were kept provisional on the ground that the consignment were being imported in mix of different variety of crude oil, and therefore, the appellants were not in a position to submit full information about the price and other costs as such freight and insurance at the time of import - Held that:- The ld. Adjudicating Authority has not considered the specific direction of this Tribunal and acted above the findings of the Tribunal, which he was not competent to do. This itself is in defiance of the order passed by the Tribunal and is a glaring example of non-application of mind and defiance of order from the higher judicial forum. As the case is very old pertaining to the year 1994 to 1996, no purpose would be served by remanding this case once again to the adjudicating authority for fresh consideration - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2018 (12) TMI 888
Corporate Insolvency Resolution Process (CIRP) - liquidation mode - Held that:- Going by the rationale of the Hon'ble Supreme Court in a judgment recently rendered in the matter of Arcelormittal india pvt. Ltd. Vs. satish Kumar Gupta & Ors [2018 (10) TMI 312 - SUPREME COURT OF INDIA] wherein it has been held that in the interest of the Corporate Debtor and other stakeholders, every opportunity should be given for the Resolution of the Corporate Insolvency of a Corporate Debtor and that the liquidation should be a last resort. We find that the sole resolution plan filed by the Board of Directors of the Corporate Debtor, namely, Mr. Mayank Patodia, Mr. Pawan Kumar Patodia & Mr. Prateek Patodia respectively had been considered and rejected by the COC in the meeting held on 08.08.2018 based on the resolution which has been fully extracted as above in paragraph supra. It is also evident that two persons who had initially shown interest by answering to the invitation of resolution plans, however, had subsequently withdrawn from submitting the resolution plans which would have enabled the COC to consider the same and come to a conclusion. As against the claim made by the Creditors including the Financial Creditors, Operational Creditors whether secured or not aggregating to a sum of ₹ 86,16,30,246 the fair value as well as the liquidation value as made available to this Tribunal based on its direction by the Resolution Professional does not even come to l/5th of the amount claimed, taking into consideration, both the fair value and as well as the liquidation value which falls well below the total claims. The resolution of the CoC made on 08.08.2018 to go in for liquidation mode after rejecting the sole Resolution Plan of the directors whose powers stood suspended had not been challenged by any of the parties before this Tribunal and in the circumstances, taking into consideration the provisions of Section 33(1) of IBC, 2016 and in view of the period of CIR process having expired, namely, 270 days period and since no resolution plan has been approved but on the other hand, the CoC has rejected the resolution plan under Section 31 of IBC, 2016 this Tribunal is constrained to pass an order requiring the Corporate Debtor, namely, Ashoka Multiyarn Mills Limited to be Liquidated in the manner as laid down under the provisions of IBC, 2016, more particularly given in Chapter III of IBC, 2016 and also in terms of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. Consequently, the Liquidator named will act as the liquidator for the purpose of carrying forward the liquidation mode and is directed to issue a public announcement as envisaged under the provisions of IBC, 2016
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2018 (12) TMI 887
Corporate Insolvency Resolution Process against the Corporate Debtor - Whether the claim of the Financial Creditors is barred by limitation? - Held that:- An amendment has been made in I&B Code, 2016 based on which Section 238 A, has been inserted by which the provisions of the Limitation Act, 1963 are made applicable to the proceedings under I&B Code, 2016. The said amendment has been brought into force on 06.06.2018, which operates prospectively, because the newly inserted section is a substantive provision of Law. Thus, in the light of the above legai position, the right to apply under Section 7 of I&B Code, 2016 had accrued to the Financial Creditors on 01.12.2016 when the I&B Code was brought into force. Therefore, the Application fìled by the Financial Creditors is held within the period of limitation. Hence, the plea that has been taken by the Corporate Debtor that the Application is barred by limitation, stands rejected. Whether the claim made by the Financial Creditors relates to Financial Debt and thereby being a financial transaction? - Held that:- It is clearly established that the amount that has been advanced by lst and 2nd Financial Creditors to the Corporate Debtor for the space as mentioned above is for consideration for the time value of money and the said transactions have a commercial effect of borrowing. Subsequently, the project could not see the light of the day and the Corporate Debtor has time and again acknowledged the debt by providing Cheques, Promissory Notes and sending e-mail Communications from time to time on the demand raised by the Financial Creditors. Therefore, the debt in question falls within the purview of the definition of “Financial Debt” as defined under Section 5(8) of the I&B Code, 2016. Thus, the issue stands decided in favour of the Financial Creditors and against the Corporate Debtor. Whether the interest charged by the Financial Credits is exorbitant and barred by the Usurious Loans Act, 1918 and the Madras Debtor Protection (Amendment) Act, 1935? - Held that:- If at the time of advancement of the money, the rate of interest was not considered as exorbitant by the Corporate Debtor, subsequently it cannot object to the said rate of interest. It is otherwise clear from the record that the Financial Creditors have not got an adequate security i.e., the space for the money advanced as the project in question stated to have been scraped by the Corporate Debtor. Therefore, the interest charged by the Financial Creditors cannot be said excessive. In the circumstances, the objection of the Corporate Debtor that the Madras Debtor Protection (Amendment) Act, 1935, is barring the charging of exorbitant interest is devoid of merits and stands rejected. This view is also fortifìed by the reasoning that 24% compound interest in modem business exigencies is common and as such, is an accepted arm’s length rate of interest for commercial loans. It is otherwise not the case of the Corporate Debtor that he is in any way willing to pay the outstanding debt on the terms of the lesser rate of interest. Whether the documents placed on record by the Financial Creditors are sufficient in its nature to ascertain the existence of default in the absence of the record of Information Utility and Financial Contract? - Held that:- There cannot be any room for rejection of the computation sheets and other documents flled by the Financial Creditors, and these can be considered as other record or evidence to ascertain the existence of default on the part of the Corporate Debtor in the absence of the record of the Information Utility, as the Information Utility is still at an inception stage and is not capable of providing record pertaining to financial debt as envisaged under Sub-Section (4) of Section 7 of the I&B Code, 2016. In short, the plea of the learned Sr. Counsel for the Corporate Debtor that the documents placed on record are inadmissible in evidence stands rejected. Thus, the issue is decided in favour of the Financial Creditors and against the Corporate Debtor. Whether the Financial Creditors can file the Application under Section 7 of I&B Code, jointly when all of them are not the corporate persons? - Held that:- Financial Creditors has submitted that the interpretation with regard to the entries of Form-I given by the learned Sr. Counsel for the Corporate Debtor is not in consonance with the definition as mentioned above and such interpretation is narrowing the scope of the Application to be filed under Section 7 of the I&B Code, 2016. This Adjudicating Authority finds force in the submissions of the learned Sr. Counsel for the Financial Creditors. The same is also fortified with the ruling given by the Hon’ble Apex Court in Life Insurance Corpn. of India v. Escorts Ltd. [1985 (12) TMI 289 - SUPREME COURT OF INDIA] wherein a similar issue has come up for consideration before their Lordships and after examination it was opined that “the Form cannot control the Act. Therefore, the plea taken by the learned Sr. Counsel for the Corporate Debtor stands rejected. Whether the Application fixed under Section 7 of the I&B Code, is maintainahle under law on the basis of the authorization given by the 2nd to 7th Financial Creditors through Power of Attorney? - Held that:- If a person is duly authorised by the Financial Creditors, even by way of Power of Attorney, is competent to file the Application under Section 7 of I&B Code, 2016. Thus, the submission made by learned Sr. Counsel for the Corporate Debtor stands overruled as the submission made by the learned Sr. Counsel for the Financial Creditors is found plausible, and backed by the ruling of the Hon’ble NCLAT given in Sumeet Ahuja’s case (supra). Whether the Corporate Debtor has borrowed the loan from the Financial Creditors against its Articles of Association, thereby it is ultra vires and does not bind the Corporate Debtor - Held that:- It can safely be concluded that the debt claimed by the Financial Creditors is due and payable, which the Corporate Debtor failed to pay. This Authority is satisfied that there is an existence of default on the part of the Corporate Debtor as is evidenced from the record placed on the file by the Financial Creditors. In view of the facts and circumstances and the legal position stated above, the Application of the Financial Creditors is complete in all respect. CP admitted and the commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed.
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Service Tax
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2018 (12) TMI 875
Valuation - includibility - inclusion of value of reinforcement steel and cement received free of cost in assessable value - N/N. 1/2006-ST dated 1.3.2006 - Held that:- Explanation (c) to Section 67 only provides for the modes of payments of book adjustments by which the consideration can be discharged by the service recipient to the service provider. It does not expand the meaning of the term “gross amount charged” to enable the department to ignore the contract value or the amount actually charged by the service provider to the service recipient for the service rendered - the value of the items supplied by the customers to the service provider on FOC basis is not includable in the taxable value of the service - demand set aside. Levy of equal penalty - Held that:- The appellants are big players in the field of construction. They cannot claim themselves to be at par with common man with average intelligence as claimed - appellant have not made any case to show the absence of mala fide intention - penalty imposed is restricted to 25% i.e. ₹ 8,19,008/-. Appeal allowed in part.
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2018 (12) TMI 874
Refund of Service tax - Section 11B of Central Excise Act, 1944 - reverse charge mechanism - Held that:- The opinion formed by original adjudicating authority while discarding the income from the nursery plant sale and the interest from bank FDs and NSCs holding the same as non taxable income is opined to be a wrong interpretation. Neither the definition of business entity nor that of turnover creates a distinction between taxable and the non taxable income. The net aggregate thereof has to be taken while calculating the turnover of the business entity. The Commissioner(Appeals) is opined to be correct while holding that the Notification does not uses the word business turnover instead has used the work business entity with turnover . Hence from the plain reading of Notification and understanding of word turnover it is clear that entire proceeds of business entity has to be considered - the findings of Commissioner (Appeals) have a legal as well as genuine basis. The Commissioner (Appeals) has rightly rejected the claim - appeal dismissed - decided against appellant.
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2018 (12) TMI 877
Permission to withdraw the appeal - Held that:- The appeal is dismissed as withdrawn - It shall, however, be open to the petitioner to take recourse to the remedies as may be available to it, in accordance with law.
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2018 (12) TMI 873
Valuation - includibility - whether the transaction charges received by a stock broker alongwith brokerage charges shall be included in the taxable value? Held that:- For the purpose Section 67 of the Act needs to be looked into in accordance whereof the valuation of taxable services for charging service tax in case where provision of service is for a consideration of money, shall be the gross amount charged by the service provider for providing such taxable services. It becomes clear that any amount which is collected not for providing such taxable service, the same cannot form part of that valuation. Irrespective Section 67 has undergone amendment w.e.f. 01.05.2006 but, the interpretation of Section 67 is that the value of taxable service shall be the gross amount charged by the service provider for such service and the valuation of tax service cannot be nothing more or less then the consideration paid as quidproquo for rendering such a service. The fact of the present case is that the appellants as a stock broker were admittedly providing services to the investors/ clients on their own behalf of the stock exchange and the transaction charges in addition to the brokerage charges are collected by the appellant from the clients irrespective of their own behalf or on behalf of the stock exchange - it is only in case the transaction of giving stock broker service is on principal to principal basis that the service is not taxable, in rest of the cases the service is taxable. Similarly, the transaction among if the tax is collected as a pure agent it will not found the part of the gross value required for the assessment else the liability has to be discharged on the amount of transaction value also. Commissioner (Appeals) has appreciated that the appellant is not functioning as a pure agent but since it is an apparent fact that he is simultaneously acting as a pure agent - It was mandate for the authorities below to verify the records to distinguish the cases where the appellant has provided services as pure agent on principal to principal basis from those where the appellant has provided stock brokerage services on its own behalf. Appeal allowed by way of remand.
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2018 (12) TMI 872
Classification of service - Franchise Services or not - ST-3 returns not filed - export of services - extended period of limitation - penalty. Held that:- There is no dispute in respect of the activities undertaken by the Appellant. The role and activities undertaken by the Appellant, in respect of the grant of media rights have been summarized by the Hon’ble Apex Court, in Union of India Vs Board of Control for Cricket in India [2017 (8) TMI 1496 - SUPREME COURT OF INDIA]. The appellants are not only responsible for organizing the cricket matches but also to educate, promote, popularize, inform and entertain the viewers. For the said purpose appellants allow entry into the stadium for viewing the match and also ensure the telecast of the match for the purpose of those who cannot visit the stadium for viewing the said matches. For taking the live telecast of the matches to the home of viewers, Appellant grant media rights to selected party on exclusive basis. The party granted such media rights represents the BCCI, and is designated in terms of the agreement as “Official Broadcaster” - the services as provided by the Appellants to the M/s MSM, Singapore and M/s WSG are squarely covered by the definition of franchise services as defined by the Section 65(47), 65(48) & 65 (105) (zze) of the Finance Act, 1994. The activity of the telecast or broadcast of the IPL matches, has been assigned for a consideration to the licensee, and they have been permitted in terms of the agreement as “official broadcasters of the IPL”. Thus it is quite evident that the appellants have granted representational rights to the licensee, in relation to the telecast/ broadcast of the IPL matches. Since we are holding that the services provided by the appellant in terms of media rights agreement to the licensee to fall within the category of Franchise Services, we do not examine the claim for classification under the category of “Commercial Use or Exploitation of Event.” In our view, the category of “Commercial Use or Exploitation of Event” refers to the services being in relation to the Commercial Use or Exploitation of the Event for one time and is not in relation to grant of representational rights to perform a particular function over period of time. Whether the Services Provided by the Appellant will qualify as Export of Services for the purpose of Export of Service Rules, 2005 as amended from time to time? - Held that:- Service provided by the appellants are provided in India and used in India. The service provided by the appellant is in form of the feed for the live broadcast of match, and not for transfer of media right. The recipient of service carries the said feed to the individual viewers. Transfer of media right is only to exclusively authorize the M/s MSM Singapore or M/s WSG to broadcast the said feed as Official Broadcaster for the IPL. Thus we are not convinced by the argument advanced by the appellant that in para C.8 that location of the person to whom the media rights have been transferred will determine the place where the service has been provided, and since in the present case the person to whom the media rights have been transferred is located in Singapore, the service should be treated as export of service. Since prior to amendments made in Rule 3, with effect from 27.02.2010, the requirement of “providing the services from India for use outside India was mandatory and is not satisfied in the present case, the benefit of Export of Services Rules, 2005 will not be available to the appellants - benefit under Export of Service Rules, 2005 could not have been extended to the appellant, for the period prior to 27.02.2010. For the period after 27.02.2010, the said benefit has been extended to the appellant, to the extent they have shown that the payment against the said services was received in convertible foreign exchange. Time limitation - Held that:- The appellants had not been declaring the income from media right agreement in their ST-3 returns, the appellants have suppressed the same with intention to evade payment of service tax. Thus extended period of limitation as provided for by the proviso to Section 73(1) has been rightly invoked for demanding Service Tax in the notice dated 14.10.2009. Penalty - Held that:- Since we have held that extended period of limitation has been rightly invoked in the present case, the provisions of section 78 will get attracted automatically and hence the penalty as imposed in respect of the Show Cause Notice dated 14.10.2009 has to follow - Penalties under Section 76 and Section 77, are for the reason of contraventions of various provisions and acts of omission to perform the task as required to be performed under the provisions of the act. Such penalties are in nature of Civil Liabilities and do not require any contumacious conduct on the behalf of the defaulter. Penalties imposed under the provisions of Section 76 and 77 of the Finance Act, 1994 upheld. Demand of Interest - Held that:- Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. Appeal allowed in part.
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2018 (12) TMI 871
SEZ Unit - Refund claim - denial on the ground of time limitation - Section 11B of CEA - Principles of natural justice - Held that:- The learned Commissioner has not only violated the principles of natural justice in as much as he has not accorded any opportunity to be heard but also has gone tangentially decide the issue on a set of principles and provisions which are not at all applicable to the facts of the case. The Commissioner (A) is directed to dispose the appeals under relevant provisions of law with reference to N/N. 12/2013 dated 01.07.2013 - appeal allowed by way of remand.
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2018 (12) TMI 876
Demand of service tax - Freight charges - extended period of limitation - penalty - Held that:- The arrangement arrived at between the appellant and its dealers was so as to reduce the payment of service tax obligation of the appellant. This factual finding of the authorities was based on detailed scrutiny of the invoices and documents, in particular, the ledger account maintained by the appellant which shows the amount, which was reduced from the invoice is also accounted as freight reimbursement. It was in these facts that the authorities have held that the freight paid by the dealers was for and on behalf of the appellant. Thus, the appellant would be liable for payment of service tax. Extended period of limitation - Held that:- Once the authorities have found on facts that there was an arrangement arrived at between the parties so as to reduce the payment of service tax, invocation of extended period of limitation cannot be faulted with - extended period rightly invoked. Appeal dismissed - decided against appellant.
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2018 (12) TMI 870
Adjustment of advance received with the excess available during March, 2006 and March, 2007 - finalization of provisional assessment - Held that:- The scope of provisional assessment and the tax paid in terms of the same is always taken note while passing the final assessment Order. If the duty paid as per provisional assessment is less than the duty payable after final assessment, then the assessee is liable to make good the balance along with interest on the shortfall. The Hon’ble High Court of Karnataka in the case of M/s. Toyota Kirloskar Auto Parts Pvt. Ltd. [2011 (10) TMI 201 - KARNATAKA HIGH COURT], has considered this aspect and after considering the rival contentions and the relevant provisions of law, has held Even though the duty payable under the Act is to be calculated under each head of each case ultimately it is the total duty payable for all the goods which are the subject matter of the provisional assessment and final assessment which is to be taken into consideration. The appellant is correct in its assertion that there was no shortfall and no interest liability since the shortfall of ₹ 47,44,656/- was for 2006-07 - service tax paid subsequently/belatedly attracts interest, which is for the year 2006-07 alone - there was no interest liability for March, 2006 i.e., for 2005-06. Appeal allowed in part.
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2018 (12) TMI 869
Construction of Residential Complex Service - non-payment of service tax - periods from May 2008 to September 2009 and from October 2009 to June 2010 - Held that:- The issue squarely covered by the decision in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2018 (9) TMI 1149 - CESTAT CHENNAI], where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service. For the period after 1.6.2007, service tax liability under category of ‘commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, ‘Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 868
Recovery of Service tax short paid - booking tickets based on Central Reservation System - extended period of limitation - penalty - Held that:- Since part of the demand has already been dropped by the Commissioner and the DR is not in Appeal there is no infirmity in the Order. Period of Appeal has already expired. The Order has attained finality with respect to the demand dropped. It is apparent from record that the demand has already been paid by the appellant in due time at the appropriate rate and the requisite returns have also been regularly filed. All these documents have been provided to the authorities below but still the amount of ₹ 1,11,415/- has been confirmed. Since this is the appellant’s case that those documents, if perused, sufficiently prove that the impugned liability for the period in dispute stands already paid - it is opined that those documents be verified by the adjudicating authorities below itself, however to the said limited aspect of as to whether the documents on record are sufficient to prove the discharge of liability by the appellant for the disputed period that too in due time. Penalty - Held that:- There has been a plethora of judgments holding that existing confusion cannot be attributed as an act of having intention to evade the duty. In the present case, appellant pleads that his duty has already been paid it is only that the authorities below have ignored to the same. Extended period of limitation - proviso of Section 73 of Finance Act, 1944 - Held that:- Department was not entitled to undertake the proviso of Section 73 of Finance Act, 1944 for invoking the extended period of limitation. Hence, the demand beyond the normal period of limitation is held to be barred by time. Appeal allowed by way of remand.
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2018 (12) TMI 867
CENVAT Credit - input services - advertisement of tender - work quarters to AMC work - repair and maintenance of staff quarters at port - guest house of port colony and Mumbai guest house - Held that:- The service of repair and maintenance of staff quarters, guest house at port, the issue is covered by various decision of this Tribunal where the credit on said services are allowed. Advertisement service - Held that:- This being a Government Organization inviting tender is must for allotting any work of service provider, therefore, service is essential and has direct nexus with output service - advertisement of tender is an input service and eligible for Cenvat Credit - credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 866
Transfer of intellectual property right service - transfer of Goodwill - scope of definition under section 65(55b) of Finance Act,1994 - Held that:- The Tribunal in the case of Alstom T D [2018 (2) TMI 148 - CESTAT CHENNAI] had occasion to analyze a similar issue wherein a trademark which was registered / recognized outside India was subject to levy of service tax under IPR service. The Tribunal relied upon various decisions and held that the transfer of such trademark which has not been recognized or registered within India will not fall within the ambit of Intellectual Property Right Service. The transfer of goodwill will not fall within the definition of IPR service as stated in Section 65(55b) of Finance Act, 1994. Valuation and quantification of demand - The demand raised is based on the Transfer of Business Agreement (425.25 crores) from which the value for transfer of goodwill is derived by the department on the basis of trademark license agreement - Held that:- We fail to understand how the department can base this agreement to arrive at the value of goodwill when the fee for use of trademark agreed between parties to be 8.5% of annual domestic sale made by Mobis India Ltd. There is no domestic sale of good will annually - such a valuation derived by the department for the goodwill is also without any logic or basis. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 865
Refund claim - export of services - Rule 5 of the Cenvat Rules read with the provisions of Notification No. 27/2012- CE(NT) dated 18-06-2012 - denial on account of nexus. Held that:- The transaction undertaken by the appellants qualified to be “export of service”, as defined under Rule 6A of the Service Tax Rules, 1994. Since they were not in a position to utilize the accumulated Cenvat Credit, refund claim has been filed in terms of Rule 5 of Cenvat Credit Rules, 2004 read with the provisions of Notification No.27/2012 CE (NT) dated 18.06.2012. Some of the input services do not qualify the definition of input services in terms of Rule 2 (e) of the Cenvat Credit Rules, 2004 - Held that:- Tribunal in various decisions has consistently held that there cannot be two different yardsticks, one for permitting credit and the other for eligibility for granting rebate. Whatever credit has been permitted to be taken, the same are permitted to be utilized and when the same is not possible, there is provision for grant of refund or rebate. Without questioning the credit taken, the eligibility to rebate cannot be questioned. Denial on the ground that the invoices are un-signed - Held that:- It is not in dispute that the payments have been made through Bank Account and this fact is subject to verification - the Adjudicating authority should provide a reasonable opportunity of hearing by observing the principle of natural justice after considering the submissions of the assessee. Appeal allowed by way of remand.
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2018 (12) TMI 864
CENVAT credit - freight for outward transportation of goods from their factory to the buyer’s premises - demand alongwith interest and penalty - Held that:- The issue is no more res-entigra in view of the decision of the Hon’ble Supreme Court of India in the case of Commissioner of Central Excise, Belgaum Vs. Vasavadatta Cement Ltd. [2018 (3) TMI 993 - SUPREME COURT], where it was held that From 01.04.2008, with the aforesaid amendment, the CENVAT credit is available only upto the place of removal whereas as per the amended Rule from the place of removal which has to be upto either the place of depot or the place of customer, as the case may be - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 863
Reversal of CENVAT Credit - Rule 6(3A) of the CENVAT Credit Rules - Held that:- Appellants are providing both taxable and exempted output services. They avail of the CENVAT Credit in respect of various inputs and input services, used by them for providing the output services. Since they are not maintaining the separate accounts in respect of the inputs/ input services consumed by them for providing taxable/ exempted output services they reverse the credit availed by them, as provided for by rule 6(3A) of the CENVAT Credit Rules, 2004. Since Appellants themselves admit to taking the excess credit they at certain points of time and have subsequently adjusted the same, they are required to pay interest during the period they had taken the excess credit. It is quite evident that appellants themselves are also not disputing the facts that they had availed excess credit at times and had also short paid the service tax due. The claim of the appellant that they have reflected the said service tax liability in their ST-3 return and had also paid the same by showing the debit entries in their return from the CENVAT Credit account is nothing but a hollow argument as they had not filed the ST-3 returns by the due date. These returns for the year 2008-09 and 2009-10 as per their own admission have been filed only in the year 2010-11. Since these returns have been filed not by the due date but after the delay of one to two years, appellant had deliberately being suppressing their tax liability and evading the payment of tax. Intention to evade payment of tax which very clear, from the manner they manipulated the ratio for reversal of credit. Demand of Interest - Held that:- Appellants have by not computing the amount of reversal, appropriately have short reversed the credit initially taken by them resulting in excess credit with them. Reversal by way of debit entry in the CENVAT credit account is utilization of the Cenvat Credit taken - interest rightly demanded. Penalty - Held that:- Since appellants have in fact suppressed the facts by not filing the ST-3 return with the intention to evade payment of Service Tax, all the ingredients for invocation of the Section 78 of the Finance Act, 1994 satisfied in the present case - all the ingredients for invoking extended period are available, Section 78 for imposing mandatory penalty is invokable. Appeal allowed in part.
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2018 (12) TMI 862
Rebate of service tax paid - export of goods - N/N. 41/2012-ST dated 29.06.2012 - Held that:- The issue is no more resintegra in view of the various decisions of the Tribunal holding a consistent view - this Bench in the case of Commissioner of Service Tax-II, Kolkata vs. SSK Exports Ltd. & others [2017 (11) TMI 299 - CESTAT KOLKATA], wherein under similar circumstances, Revenue has contended that the refund claim for each shipping bill should be examined on individual basis instead of overall basis - The Tribunal has upheld the order of the Ld. Commissioner (Appeals) wherein it was held that there is no requirement to determine FOB value shipping bill wise, to determine the formula enumerated in Para 1 (c) or in Para 3(i) of the notification and the rebate claim should be allowed in full when the assessee has specified the said condition on overall basis - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 861
Rebate of service tax paid - export of goods - N/N. 41/2012-ST dated 29.06.2012 - Held that:- The issue is no more resintegra in view of the various decisions of the Tribunal holding a consistent view - this Bench in the case of Commissioner of Service Tax-II, Kolkata vs. SSK Exports Ltd. & others [2017 (11) TMI 299 - CESTAT KOLKATA], wherein under similar circumstances, Revenue has contended that the refund claim for each shipping bill should be examined on individual basis instead of overall basis - The Tribunal has upheld the order of the Ld. Commissioner (Appeals) wherein it was held that there is no requirement to determine FOB value shipping bill wise, to determine the formula enumerated in Para 1 (c) or in Para 3(i) of the notification and the rebate claim should be allowed in full when the assessee has specified the said condition on overall basis - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 860
Penalty - Demand alongwith interest and penalty appropriated in the adjudication order - Held that:- There is no material of miss-statement or willful suppression of fact with an intent to evade payment of Service Tax - Further, the appellant has paid the entire amount of demand of ₹ 11,465/- alongwith applicable interest and 25% of the penalty imposed under Section 78, which has been appropriated in the adjudication order - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 858
Non-imposition of penalty and Interest - CENVAT Credit - denial on the ground that the input services on which Cenvat credits have availed do not qualify for the same, under Rule 2 of Cenvat Credit Rules - Held that:- The appellant had been continuously informing the department about their intention of having centralised billing system and also paid the service tax for the various services rendered by them through their branch offices and site offices. The Department has not disputed the payment of such service tax. The ST-3 returns of the relevant period were filed also which clearly mentioned about the availment of the Cenvat credit by the appellant assessee. So in such circumstances, it cannot be alleged that the appellant assessee had any time suppressed the material fact from the department with intention of committing any fraud or suppression of the fact, before the department. There is no question of suppression of fact and the demand, if at all is required to be raised by Revenue, it was to be done within normal period. Interest - Held that:- As the entire demand have been paid by the assessee along with interest as per their own calculation which has been accepted by the adjudicating authority - interest not leviable. Penalty - Held that:- The demand has been raised for the impugned period in year 2007 which is held to be time barred, as there was no suppression on the part of the appellant assessee. As the demand itself is not sustainable, there is no question of payment of interest and imposition of penalty. Appeal allowed - decided in favor of appellant-assessee.
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2018 (12) TMI 857
Utilization of CENVAT Credit - reverse charge mechanism - Management Consultancy Service provided from outside India and received by them in India - Rule 6(5) of the Cenvat Credit Rules, 2004 - Board’s Circular on Service Tax being F.No.137/203/2007-CX-4 dated 01.10.2007. Held that:- The utilization of credit availed under Rule 6(5) of the Rules shall be allowed in full unless used exclusively for providing exempted services. Further, in cases where the assessee is providing both exempted and taxable output services, there is no restrictions provided by Rule 6(5) of the Cenvat Credit Rules, 2004 for utilization of such credit. The issue is no more res-integra as has been observed in the Tribunal’s decision in the case of CCE vs. V.M. Salgaonkar & Bros. Pvt. Ltd. [2008 (2) TMI 90 - CESTAT MUMBAI], where it was held that it is undisputed that credit availed is on the service as mentioned in Rule 6(5), the credit of the entire/whole amount of service tax has to be allowed. Appeal dismissed - decided against Revenue.
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2018 (12) TMI 859
Refund claim - export of services - disallowance of such refund claim under various heads on the ground of lack of nexus/co-relation between the input service and the out-put service - Rule 5 of the Cenvat Rules read with the provisions of Notification No. 27/2012- CE(NT) dated 18-06-2012 - Held that:- In the present case, some of the input services do not qualify the definition of input services in terms of Rule 2 (e) of the Cenvat Credit Rules, 2004. Tribunal in various decisions has consistently held that there cannot be two different yardsticks, one for permitting credit and the other for eligibility for granting rebate. Whatever credit has been permitted to be taken, the same are permitted to be utilized and when the same is not possible, there is provision for grant of refund or rebate. Without questioning the credit taken, the eligibility to rebate cannot be questioned. In some cases, the Cenvat Credit has been disallowed on the ground that the invoices are un-signed, but it is not in dispute that the payments have been made through Bank Account and this fact is subject to verification. Appeal allowed by way of remand.
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Central Excise
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2018 (12) TMI 856
CENVAT Credit of the inputs lying in their stock - SSI benefit availed - credit availed after crossing of threshold limit of SSI Exemption - applicability of Rule 3 (2) of Cenvat Credit Rules, 2004 and Rule 4 (1) of CCR 2004 - Held that:- Both these Rules cannot be applied simultaneously - Rule 3 (2) prescribes the eligibility to avail cenvat credit as soon as the unit crosses threshold limit and rule 4 (1) prescribes particular condition for the availment of that credit. If a condition under rule 4 specifically disallows cenvat credit on a particular goods or service, the cenvat credit cannot be allowed under rule 3 of the Cenvat Credit Rules, 2004. Though the appellant has taken a plea that Rule 3 (2) of CCR, 2004 has been provided with the sole intention of law that the goods which have become dutiable after the exemption seized to exist, then naturally to avoid cascading effect of duty suffered on inputs involved on such goods, such benefit of cenvat credit is to be given to the manufacturer and any provision of law putting a limitation thereto shall not be applicable simultaneously to this provision. The appellate authority has rightly denied the availment of cenvat credit to the appellant for such of its stock. The invoices were beyond a period of six months of appellant crossing the threshold limit of SSI exemption - appeal dismissed - decided against appellant.
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2018 (12) TMI 855
Levy of penalty under Rule 25 - 100% EOU - clandestine removal - Dimethy phosphonate - penalty - Held that:- The Noticee is doing only contract research and manufacturing service (CRAMS) wherein they manufacture fluorine molecules through R&D for the customers. The said fluorine molecules is used in specialized advanced pharmaceuticals by the client (like Pflizer, vertex, Noverts Gilead etc in USA) i.e. used into the manufacturing of their Active Pharmaceuticals ingredients (API) which they were developing at their end to get it parented and which they would launch in next 3.8 years time for the trade. Thus, Noticee manufactures the goods under contract which will be used by the clients for their R&D purpose. Thus, goods manufactured by the Noticee is manufactured under contract and are special purpose goods and thus are of no use to other customers - as per the contract Noticee cannot share the chemistry developed/manufactured/sell these product developed to any other customer. Therefore, there is no possibility of clandestine removal. The goods which were there in stock were manufactured for the purpose of export under the contract which establish the fact that goods were not meant to be removed clandestinely with intent to evade duty. Therefore, the charges of suppressing with intent to clear the same clandestinely are not sustainable. There is otherwise no evidence on record to prove any intention of clandestine clearance. Above all there is no evidence on record to prove any intention of clandestine clearance - penalty set aside. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 854
Classification of goods - rice bucket elevator - rice conveyor - the appellants were classifying these goods under heading No. 8437 as machinery used in Milling Industry where the tariff rate is nil - according to the department these goods are classifiable under heading No. 8428, as other lifting, handling, loading or unloading machinery - whether the impugned goods are classifiable under CETH 8428 or under CETH 8437 of CETA? Held that:- An identical issue decided in the case of Alpsco Graintech Pvt Ltd Ors vs. CCE ST-Chandigarh [2018 (12) TMI 478 - CESTAT CHANDIGARH], where this Tribunal has examined the issue and held on merit classification on the items in question under chapter heading No. 8437 of Central Excise Tariff Act, 1985. The conveyors and elevators specifically manufactured as the part of rice milling machinery alongwith other machinery of rice by the appellant merit classification under chapter heading No. 8437 of CETA, 1985 - demand of duty against the appellant alongwith interest is not sustainable - penalty not imposable. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 845
CENVAT/MODVAT Credit - inputs/capital goods - bought-out components - Department took the view that as the bought-out components are not used or intended for use in the manufacture but merely exported in the same form in which they were procured, the appellants would not be entitled to avail credit on the same. Held that:- In view of the changed definitions and provisions of law during the period of dispute in these appeals, appellant are very much eligible to avail CENVAT credit of duty paid in respect of the input / goods which have been bought out by the appellants and have been removed / cleared as such from their factory in various consignments for export under bond for eventual purposes of setting up of sugar plant in Indonesia. Hon‘ble Supreme Court‘s decisions in the appellant‘s own case for earlier period in M/S. KCP LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [2013 (9) TMI 98 - SUPREME COURT] need not be applied to the subsequent periods covered by these 12 appeals, not only on account of aforesaid change of definition of inputs/capital goods as also on account of subsequent decisions of the Hon‘ble Supreme Court. Hon‘ble Supreme Court in their subsequent judgment in Thermax Babcock & Wilcox Ltd. [2015 (5) TMI 631 - SUPREME COURT], has been followed by the Tribunal in Thermax Ltd. Vs. Commissioner of Central Excise, Pune [2016 (7) TMI 797 - CESTAT MUMBAI] wherein it has been held that bought out items used in erection of boilers at customer‘s site are inputs and cannot be distinguished from inputs used in manufacture of components within the factory, as both have gone into manufacture of final product. CENVAT credit availed on the impugned bought out goods / inputs, with interest, and also imposing penalties under various provisions of law, cannot be sustained and require to be set aside - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 853
Demand of Interest - Distribution of credit of service tax paid - reverse charge mechanism - input service distribution - Rule 7A of the Cenvat Credit Rules - Held that:- The appellant had taken credit but not utilized the same and reversed the same prior to the issuance of the show cause notice. The Adjudicating Authority following the Board’s Circular dated 03.09.2009 observed that interest is payable even when credit has not been utilized. Larger Bench of the Tribunal in the case of J.K.Tyre & Industries Ltd. v. Asst. Commr. of C.Ex., Mysore [2016 (11) TMI 911 - CESTAT BANGALORE] held that wrong availment of Cenvat Credit, interest is not payable, if reversed before utilization - the demand of interest on unutilised Cenvat Credit, cannot be sustained - penalty sustained as was imposed for contravention of the Rules. CENVAT Credit - GTA Services - Held that:- The issue is no more resintegra in view of the recent decision of the Hon’ble Supreme Court in the case of Commissioner of Central Excise, Belgaum vs. Vasavadatta Cements Ltd. [2018 (3) TMI 993 - SUPREME COURT], where it was held that It has to be from the place of removal upto a certain point. Therefore, tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot or the customer, has to be allowed. The demand of cenvat credit is set aside - The demand of interest is also set aside - penalty imposed under Rule 15(3) of the Cenvat Credit Rules, 2004 is upheld. Appeal allowed in part.
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2018 (12) TMI 852
Classification of goods - rice bucket elevator - rice conveyor - whether classified under heading No. 8437 as “machinery used in Milling Industry” where the tariff rate is nil or are classified under heading No. 8428, as “other lifting, handling, loading or unloading machinery (for example Lifts, escalators, conveyors, Teleferice)? Held that:- An identical issue came up before this Tribunal in the case of Alpsco Graintech Pvt Ltd & Ors vs. CCE & ST-Chandigarh [2018 (12) TMI 478 - CESTAT CHANDIGARH], where it was held that the entire machinery is classifiable under heading 8437 which is for machinery used in milling industry and it is not disputed that these elevators and conveyors being manufactured by the appellants were not used for milling industry. The conveyors and elevators specifically manufactured as the part of rice milling machinery alongwith other machinery of rice by the appellants merit classification under chapter heading No. 8437 of CETA, 1985. The demand of duty against the appellant alongwith interest is not sustainable - penalty also set aside - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 851
Clearances to various Institutional consumers or industrial consumers - concessional rate of duty - N/N. 04/2006-CE dated 01.03.2006 (Serial No. 1C) - Held that:- Issue decided in appellant own case M/S AMBUJA CEMENT LIMITED, SAURASHTRA CEMENT LIMITED, GUJARAT SIDHEE CEMENT LIMITED VERSUS C.C.E. & S.T. BHAVNAGAR [2018 (12) TMI 487 - CESTAT AHMEDABAD], where it was held that Identical issue adjudication has come up before the Tribunal in the case of Diamond Cement vs Commr. of Central Excise [2017 (1) TMI 1476 - CESTAT NEW DELHI], where it was held that the sale to the individual without any intermediary person is entitled for concessional rate of duty - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 850
Clandestine removal - Wire Rods alleged to have been removed by the Appellant clandestinely, were manufactured out of Aluminium Ingots received by it from principal manufacturer for conversion on job work basis under N/N. 214/86-CE dated 25.03.1996. Held that:- There is nothing on record to suggest that the Appellant clandestinely sold the value added Aluminium / Alloy Wire Rod manufactured from out of Aluminium Ingots o 99.7% purity to any other outside party. There is no allegation of the presence of any other Conductor manufacturer in the vicinity, to whom the Appellant could possibly sell such a huge quantities of Wire Rods without payment of duty. The SCN does not place on record any evidence of unaccounted procurement of Aluminium Ingots / other inputs by the Appellant and the source from which the Appellant could procure such unaccounted for Ingots/inputs for use in the clandestine manufacture of Wire Rods. There is no reference of any buyer who might have purchased the allegedly clandestinely removed Wire Rods by the Appellant. There is nothing on record to show unaccounted for receipt of sale proceeds by the Appellant from any source and there is nothing on record to corroborate clandestine manufacture of such huge quantity (493.404 MT) of Aluminium Wire Rods by the Appellant. Taking into account the burning loss and generation of dross approximately at 2%, the Appellant had only 1.5 MT of carried over stock of Ingot/ Scrap as on 01.04.2003. It is also a matter of record that the Appellant did not purchase any Ingot / Scrap on its own account between April to July 2003. With only 1.5 MT of carried over stock of its own purchases of Aluminium / Scrap as on 01.04.2003, the Appellant could not have manufactured 493.404 MT of Wire Rods alleged to have been removed without payment of duty, particularly in the absence of any evidence whatsoever of record to even remotely indicate that the Appellant purchased Aluminium Ingot / Scrap from any Source other than those duly reflect4d in its statutory / private records. The finding of the Ld. Commissioner that the allegedly clandestinely removed 493.404 MT of Wire Rods were not the job-worked goods, is manifestly without any substance. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 849
SSI Exemption - use of brand name - affixation of stickers/ labels containing brand name - brand name owned by sister concern or not - manufacturing activities undertaken at the Lake View Road premises or not - time limitation. Held that:- It is clear that only such marks would constitute Brand Names/Trade Marks which are used for indicating or so as to indicate a connection in the course of trade between the goods on which exemption is sought and some other person using such name or mark. The manner of use of such Brand Name/Trade Name as also the intention of the supposed user are, therefore, essential factors to be kept in mind - There is no denying that the appellant No.1 had neither intended to use ‘SEN & PANDIT’ as its Brand Name nor was the said expression capable of indicating any connection in the course of trade between the appellant No.1’s products and M/s SPPEL. The mischief of using a Brand Name defined in the relevant SSI Exemption notifications is not attracted in the facts and circumstances of the present case - decided in favor of appellant. Registration of the Brand Name ‘SEN & PANDIT’ - Revenue’s entire case is based on the premise that M/s SPPEL was the owner of the Brand Name used by the appellant No. 1 - Held that:- The very fact that M/s SPPEL had applied for an altogether different set of Brand Names/ Trade Marks has been ignored while passing the impugned Order. The lower authority seems to have been misled while concluding that M/s SPPEL was the owner of Brand Name i.e. ‘SEN & PANDIT’. If that be the case then we must hold that the Learned Commissioner’s observation is devoid of substance - The allegations in the first Show Cause Notice, as confirmed in the Order-in-Original, fall flat when one bears in mind the correct factual position - it cannot be countenanced that simply by virtue of having applied for registration, M/s SPPEL had become the legal owner of the purported Brand Name ‘SEN & PANDIT’. It had not been shown that M/s SPPEL had the exclusive right to use the afore-mentioned expression to the exclusion of others, much less the appellant no. 1 - decided in favour of the appellants and against the Revenue. Whether the appellant No. 1 had undertaken manufacturing activities at the Lake View Road premises? - Held that:- The Adjudicating Authority has not conclusively established that the post-sale activities, repairing works, quality control, affixation of sticker amounted to ‘manufacture’ within the meaning of Section 2(f) of the Act, the confirmation of demand of Central Excise duty of ₹ 24,21,120/- is held as unsustainable in law and set aside. Issue no. 3 is, thus, answered in favour of the appellants. Extended period of limitation - Held that:- It is not necessary to go into this issue. Penalty also could not be visited. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 848
Refund/Abatement claim - closure of factory for a period of 15 days - Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008 - Held that:- It is seen from the Adjudication Order that the production was running from 07.01.2015 to 15.01.2015 (9 days) and no other production was made on and from 01.01.2015 to 06.01.2015 and again from 16.01.2015 to 31.01.2015 in the month of January, 2015 i.e. for 22 (in Ex. Appeal No.75145/2016) for which the abatement was claimed. Appeal dismissed - decided against Revenue.
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2018 (12) TMI 847
CENVAT Credit - input services - services received by them from the various transporters towards outward transportation of excisable goods from the appellant’s factory to the buyer’s premises (carriage outwards) - period 2006-2007 and 2007-2008 - Held that:- The present issue is no more res-integra and is decided in favour of the appellant in view of the decision of the Hon’ble Supreme Court in the case of Commr. of Customs, Central Excise & S.Tax, Guntur Vs. Andhra Sugars Ltd. [2018 (2) TMI 285 - SUPREME COURT OF INDIA], where it was held that Once it is accepted that place of removal is the factory premises of the assessee, outward transportation ‘from the said place’ would clearly amount to input service. Credit allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (12) TMI 846
Penalty - initiation of recovery proceedings - Section 55 of the KVAT Act - Held that:- There is no valid reason why this Court should entertain this writ petition disregarding the petitioner's alternative remedy, which also seems to be efficacious. Petition disposed off leaving it open for the petitioner to approach the appellate authority.
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