TMI Tax Updates - e-Newsletter
March 26, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
Difficulties in filing of GST Tran-1 and other returns - HC directed the revenue to accept returns provisionally either by way of opening the portal or manually.
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GST:
E-way Rules - scope of the expressions ‘transported by railways’, ‘transportation of goods by railways’, ‘transport of goods by rail’ and ‘movement of goods by rail’ - New Explanation inserted to Chapter XVI of the CGST Rules, 2017
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GST:
Anti-Profiteering - scope of Interested Party - Explanations to Chapter XV of the CGST Rules, 2017 as amended.
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GST:
Anti-Profiteering - Decision to be taken by the majority - Rule 134 of the CGST Rules, 2017 as amended.
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GST:
Anti-Profiteering - Order of the Authority - Rule 133 of the CGST Rules, 2017 as amended.
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GST:
Anti-Profiteering - Initiation and conduct of proceedings - Rule 129 of the CGST Rules, 2017 as amended
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GST:
Anti-Profiteering - Duties of the Authority - Rule 127 of the CGST Rules, 2017 as amended.
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GST:
Anti-Profiteering - Secretary to the Authority - Rule 125 of the CGST Rules, 2017 as amended
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GST:
Anti-Profiteering - Appointment, salary, allowances and other terms and conditions of service of the Chairman and Members of the Authority - Rule 124 of the CGST Rules, 2017 as amended
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GST:
Conditions and restrictions in respect of inputs and capital goods sent to the job worker - Rule 45 of CGST Rules, 2017 as amended
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GST:
After introduction of GST, increasing trend in the number of companies’ registrations, industrial activity has accelerated and growth in sales for corporates has also seen a remarkable increase
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Income Tax:
Existence of PE in India - tribunal found it difficult to agree with the authorities below that through the expatriate employees the assessee has been conducting the business of assessee in India - AT
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Income Tax:
Exemption available u/s 11(1)(a) - the word applied need not necessarily imply spent. Even if the income is irretrievably earmarked and allocated for the charitable or religious purposes or purposes it may be under section 11 (1)(a) of the Act. - AT
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Income Tax:
Penalty u/s 271D for violation of provisions of section 269SS - Even if it is assumed that the assessing officer has issued a notice u/s 271D on the date of assessment order, i.e., on 31-12-2008, the same would become time barred by 30-06-2009, i.e., within six months from the end of the month in which action for imposition of penalty is initiated - AT
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Income Tax:
Assessment passed by AO u/s 143(3) - denial of principle of natural justice - AO has not discussed the show cause filed by the petitioners and the relevant documents which they had brought on record in their defence, including the valuation report - AO directed to re-adjudicate the matter - HC
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Income Tax:
Computation of profit - sale of asset after conversion from capital asset to stock-in-trade - Apply the provisions of Section 45(2) of the Act and compute the capital gains upto to the date of conversion into stock in trade, and thereafter on actual sale of the land i.e. the difference between the value of sale and stock in trade to be considered as business income. - HC
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Income Tax:
Reopening of assessment - bogus payment - The non-disclosure germane to the facts herein was that the six dealers were bogus and there was in the regular assessment, no such question raised or enquiry conducted - reassessment confirmed - HC
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Income Tax:
Validity of assessment u/s 143(3) r.w.s. 144C - draft assessment order passed by the Assessing Officer was complete assessment order which is not envisaged under section 143(3) r.w.s. 144C - the draft assessment order passed in the case is invalid in law - AT
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Income Tax:
Liability to deduct tax u/s 195 - FTS - The purchase of drawings & designs by the assessee from ATCA Singapore did not qualify as “fees for technical services” within Article 12(4) of the tax treaty between India & Singapore - No TDS liability - AT
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Customs:
Exemption to specified goods imported on procured by EOU's, STP Units, EHTP units etc. for specified purposes - Exemption from IGST extended till 1.10.2018
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Customs:
Basic Customs duty reduced from 10% to 5% on import of Opencell(15.6” and above) of LCD/LED TV panels
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Customs:
Refund of IGST on Export—Extension of date in SB005 alternate mechanism cases & clarifications in other cases - Circular
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Customs:
Import of vehicle - Violation of condition for import of Hybrid car - The appellant is a bona fide buyer of the car from an independent dealer of the car - it cannot be said that due to any violation occurred at the time of clearance of the goods, they have been unduly benefitted - However, since there is a violation of the FTP and since the goods were available, it has been confiscated - AT
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Customs:
Order of prohibition under Regulation 23 of the Customs Brokers Licensing Regulation - Since there is no violation of principles of natural justice, the petitioner should exhaust the alternative remedy by way of an Appeal under Section 129 A(1)(a) of the Customs Act. - HC
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Customs:
Anti-Dumping Duty - ‘vitamin C’ - N/N. 159/2003-Cus - There is no evidence of any test report that indicates the imported goods to be ‘vitamin C’ or ‘ascorbic acid’ - there is no justification for applicability of anti-dumping duty levied on a particular product to other goods that may contain the said goods - AT
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FEMA:
Maintainability of Appeal under Section 19 of FEMA Act - the conditions for filing Appeal has not been satisfied as no “penalty” has been imposed in the absence of “an order”. As the provisions laid down in Section 19(1) of the Act have not been fulfilled, the appeal filed by the appellant is pre-mature and hence non- maintainable. - AT
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Corporate Law:
Companies (Incorporation) Second Amendment Rules, 2018 - An application for reservation of name shall be made through the web service available at www.mca.gov.in by using form RUN (Reserve Unique Name) along with fee
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Indian Laws:
Arbitral award - The scope of interference with the Arbitral Award under Section 34 of the Act is limited. The impugned award can be interfered only on the grounds as set out in Section 34 of the Act. - HC
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IBC:
Initiation of Corporate Insolvency Resolution Process - exintence of eligible debt - cancellation of allotment of shop - failure to handover the possession of shop - construction has not been commenced - Neither the present claim can be termed as a financial debt nor do the applicants come within the meaning of financial creditor - Tri
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IBC:
Corporate insolvency process - Committee of Creditor (CoC) - The RP as well as CoC at present is equally responsible for safeguarding the interest and assets of a corporate debtor under the insolvency resolution process and would take as much caution in order to see any applicants or the applicants related or connected persons falls with in the purview of Section 29A - Tri
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Service Tax:
Advertising Agency Service - the appellant undertakes the activity of painting of different brands of tea in the walls of houses - the amount of rent should not form part of gross value under Section 67 of the Finance Act, 1994 for computation of the service tax liability - AT
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Central Excise:
CENVAT credit - duty paying invoices - invoices issued by the supplier a non-existent firm - the appellant is a bona fide purchaser of the goods in question has taken all precautions like invoices having full details, made payment through account payee cheque and entered the same in their statutory records - credit cannot be denied - AT
Articles
Notifications
Companies Law-
F. No. 1/13/2013 CL-V, part-I, Vol.II - dated
23-3-2018
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Co. Law
Companies (Incorporation) Second Amendment Rules, 2018
Customs-
16/2018 - dated
23-3-2018
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ADD
Seeks to notify provisional assessment for imports of '˜Jute Products' namely, Jute Yarn/Twine (multiple folded/cabled and single), Hessian fabric, and Jute sacking bags exported by M/s. Natural Jute Mill [Bangladesh] and M/s Kreation Global, LLC,USA [Bangladesh]
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33/2018 - dated
23-3-2018
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Cus
Seeks to Amend notification No 52/2003- Customs dated 31.03.2003 for extending exemption from IGST and compensation cess to EOUs on imports till 01.10.2018
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32/2018 - dated
23-3-2018
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Cus
Seeks to further amend notification No. 50/2017-Customs so as to reduce BCD from 10% to 5% on Opencell(15.6” and above) of LCD/LED TV panels
GST - States-
F.12(46)FD/Tax/2017-Pt.-IV-203 - dated
7-3-2018
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Rajasthan SGST
Rescinding notification no. F.12(46)FD/Tax/2017-Pt-IV-161 dated 23.01.2018 related to reduction in late fee in case of delayed filing of FORM GSTR-5A.
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F.12(46)FD/Tax/2017-Pt.-III-202 - dated
7-3-2018
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Rajasthan SGST
The Rajasthan Goods and Services Tax (Second Amendment) Rules, 2018
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G.O. Ms. No. 35 - dated
7-3-2018
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Tamil Nadu SGST
Rescinds the Commercial Taxes and Registration Department Notification No.II(2)/CTR/79(h-3)/2018, dated the 23rd January, 2018.
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G.O. Ms. No. 34 - dated
7-3-2018
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Tamil Nadu SGST
The Tamil Nadu Goods and Services Tax (Second Amendment) Rules, 2018.
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F.1-11(91)-TAX/GST/2018(Part) - dated
21-3-2018
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Tripura SGST
The Tripura State Goods and Services Tax (Second Amendment) Rules, 2018
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KA.NI.-2-415/XI-9(57)/17 - dated
14-3-2018
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Uttar Pradesh SGST
AMEMDMENT IN SCHEDULE SR 8(A)
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KA. NI-2-405/XI-9(47)/17 - dated
12-3-2018
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Uttar Pradesh SGST
Amendment in the KA. NI-2-842/XI-9(47)/17-U.P. Act-I-2017-Order-(09)-2017 dated 30th June
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282-F.T.-13/2018-State Tax - dated
7-3-2018
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West Bengal SGST
Rescinding notification No. 120-F.T. dated 24.01.2018, which reduced late fees on late filing of FORM GSTR-5A
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281-F.T.-12/2018-State Tax - dated
7-3-2018
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West Bengal SGST
The West Bengal Goods and Services Tax (Second Amendment) Rules, 2018.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (3) TMI 1268
Filing of GST Tran-1 and other returns - Returns filed by the electronic mode are not generated on the website of the Department, and thus were not accepted - reliance was placed in the case of Padmavati Enterprise, Abicor and Binzel Technoweld Pvt. Ltd. Versus The Union of India & Another [2018 (3) TMI 539 - BOMBAY HIGH COURT] - returns to be accepted provisionally - issue notice.
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2018 (3) TMI 1265
Credit under new GST regime - proviso to sub-section (1) of section 140 of the Gujarat Goods and Service Tax - restriction of credit of VAT already taken - Held that: - the provision deprives a dealer to his vasted right and thus, the statute acts retrospectively and also imposed an unreasonable restriction - Notice returnable on 19.04.2018.
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Income Tax
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2018 (3) TMI 1215
Application seeking nil tax deduction certificate u/s 197 - Held that:- We find that the impugned order dated 18th December, 2017 has been passed without due application of mind. This is evident from the fact that, the petitioner's claim for nil tax deduction under Section 197 is based on it being assessed to nil tax under Section 11 of the Act and not under Section 10(23C) of the Act. Inspite of this aforesaid fact being specifically pointed out by the petitioner in its reply dated 20th November 2017 to the show cause notice, the impugned order makes no reference to the aforesaid submission and proceeds to confirm the notice dated 13th November, 2017. In the above view, the impugned order dated 18th December, 2017 is quashed and set aside.
As the petitioner states that, a large amount of their receipts on which tax is deducted are received as interest on the deposits from banks. In the absence of Certificate being available before 31st March, 2018 a large quantum of amount would be deducted as tax at source by the banks. This in turn would create difficulties to the petitioner in expending 85% of its total income for the Assessment Year 2018-19. Assessing Officer is directed to dispose of the petitioner's application dated 17th October, 2017 as expeditiously as possible and in any case on/or before 28th March, 2018.
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2018 (3) TMI 1207
Penalty u/s 271(1)(c) - Non specification of charge - validity of notice - Held that:- Notice does not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. Further the penalty order reads that the penalty was levied for furnishing of inaccurate particulars of income which amounts to concealment thereof, thereby making an omnibus allegation.
In view of the submission on behalf of the assessee that the notice which confers jurisdiction on the revenue to levy penalty under section 271(1)(c) of the Act and the settled preparation of law on this aspect we’re of the considered opinion that the penalty cannot be sustained. We accordingly crash the penalty proceedings and direct the Ld. AO to delete the penalty. - Decided in favour of assessee.
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2018 (3) TMI 1206
Status of the expatriate employees working with the SIEL and the nature of functions they are performing - Existence of PE in India - whether they are actually the employees of the assessee and placed with the subsidiary to run the business of the assessee, or they are assessee’s employees who are seconded to SIEL and the SIEL is the economic employer who exercises full control over them? - Held that:- There is no doubt that there is seemless information exchange between the employees of the assessee and the expat employees. The statements show that such information exchange relates to the models/designs to the liking of the Indian consumers, plans and strategies relating to the sale of the products, detailed stock/logistical status, the market strategies both the mid and long terms etc.
As rightly argued by the Ld. AR that none of the statement would go to show that the any activity of the global business management (GBM) has ever been conducted in India or that the market survey that is conducted in India, as spoken by the expatriate employees has nothing to do with the business of the Indian subsidiary and it is solely for the benefit of the assessee.
We therefore find that the activities spoken by the expatriate employees in their statements are in the nature of reporting required in the course of discharge of the functions of the subsidiary company towards the holding company, and such activities do not constitute a PE under Article 5(4)(d), (e) and (f) of the DTAA.
What the expat employees are doing is only the discharge of the functions of subsidiary towards the holding company, which is for the benefit of the business of the subsidiary to make the GBM understand the priorities and preferences of the Indian customers by providing India specific information to GBM’s which in turn then carry out research and development to develop India specific products. By no stretch of imagination could it be said that it is in furtherance of the business of the assessee de hors the business of the subsidiary.
In the absence of proof as to any management activity of the assessee being conducted in India or that it is established that the decisions relating to the products to be manufactured, pricing in the domestic markets, or the decisions relating to the launch of such products in India is taken by the assessee, we find it difficult to agree with the authorities below that through the expatriate employees the assessee has been conducting the business of assessee in India - no evidence that is placed on record by the assessing officer to show that by way of business through these expatriate and seconded employees, the assessee derived any business income in India.
There is neither any business conducted by the assessee in India through the expatriated employees nor any income is derived by them though the activities of the employees. Consequently we hold that there is no fixed place PE of the assessee constituted through the expatriated employees. Issue is, therefore, answered in favour of the assessee.
Addition of 10% estimated income of total remuneration cost of expatriate employees seconded to SIEL In India - Held that:- In view of our finding that there is no business activity that is conducted by the assessee through the expatriate employees, the question of estimated income does not arise.
Levy of interest u/s 234B and 234A - Held that:- As held in the preceding paragraphs that there is no business activity that is conducted by the assessee through the expatriate employees, the question of estimated income does not arise and consequently the liability of the assessee to deduct TDS or interest liability under section 234 A and B does not arise. This issue is, therefore, answered in favour of the assessee in all the assessment years, and against the revenue
Short credit of taxes - Held that:- In respect of the assessment year 2011-12, it is submitted on behalf of the assessee that a sum of ₹ 18,15,99,203/-was withheld by the SIEL and it is lying to their credit. It is further submitted that the Ld. AO allowed credit of taxes only to the extent of ₹ 17, 79, 07, 391/-, thereby there is an offence of short credit of taxes to a tune of ₹ 36, 91, 812/-. Assessee is aggrieved by this alliance of short credit. We direct the Ld. AO to grant credit of the TDS to the assessee if they fulfilled the requisite conditions of possessing a valid certificate as per the Act.
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2018 (3) TMI 1205
Penalty u/s 271D for violation of provisions of section 269SS - notice barred by limitation - Held that:- There is no material on record to show that the assessing officer has issued any notice u/s 271D of the Act. Even if it is assumed that the assessing officer has issued a notice u/s 271D on the date of assessment order, i.e., on 31-12-2008, the same would become time barred by 30-06-2009, i.e., within six months from the end of the month in which action for imposition of penalty is initiated, for the reason that the penalty proceedings u/s 271D of the Act cannot be considered to be an action initiated during the course of assessment proceedings.
The penalty order passed by Addl. Commissioner of Income tax on 30-03-2010 is barred by limitation. - Decided in favour of assessee.
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2018 (3) TMI 1214
Determine the Arms Length Price (ALP) of the trading goods exported to Associated Enterprises (AE) - Tribunal was correct in law in holding that the two segments viz: manufacturing and trading are comparable - Held that:- Both the CIT(A) and the Tribunal, on facts, had found that the margins derived on export of parts to AE, are not comparable with the margins derived from sales made in the domestic market. This is primarily because the margin derived in the domestic market is on account of sales of finished goods to the extent of 97%. Besides, on facts, it was found that not only the parts and finished goods are not comparable, but the class of customers to whom they sold are also different. This resulted in difference as found on FAR analysis. The above concurrent finding of fact is not shown to be perverse in any manner. No substantial question of law.
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2018 (3) TMI 1204
Addition on account of mutation of land - Held that:- These payments are in the nature of land revenue charges of lands, which prima facie appears to be related to agricultural land. If these expenses are incurred related to agricultural land, then, in our opinion, such land revenue charges paid are not in any manner incurred wholly and exclusively for the purpose of the business, as income from agricultural activity is exempted from Income-tax. The letters issued by the land revenue authorities demanding land revenue, have been written in “Bengali” language & script and no English translation has been filed, thus, we are not able to decide with certainty whether the land in respect of which payment has been made, is agricultural land. The Ld. CIT(A) has also not discussed these documents in his order before arriving at conclusion that these expenses are revenue in nature. In such circumstances, we feel it appropriate to restore this issue to the file of the Assessing Officer for deciding afresh.
Allowability of software expenses - nature of expenditure - Held that:- In the instant case, we find that the issue before us is in respect of the custom duty of SAP software purchased by the assessee. No details have either been provided by the lower authorities or by the assessee as how the expenditure incurred on purchase of SAP has been dealt by the Assessing Officer. Further, there are no facts available on record as in which fields of the business activity, the said SAP software has been used by the assessee. For determining, whether the expenditure incurred on the software is capital expenditure of revenue expenditure in view of the decision in the case of Asahi India Safety Glass Limited (2011 (11) TMI 2 - DELHI HIGH COURT ), above facts are crucial and in absence of which, the issue cannot be decided judiciously. Thus restore the issue to the file of the Assessing Officer for deciding afresh in accordance with law.
Addition u/s 14A - Held that:- By no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure “incurred by the assessee in relation to the tax exempt income”. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. See Joint Investment Pvt. Limited Vs CIT [2015 (3) TMI 155 - DELHI HIGH COURT ]
Claim of refund of dividend distribution tax paid by the company amalgamated with the assessee - Held that:- If the Assessing Officer had not adjudicated the issue, the CIT(A) should have directed him to dispose off the application of the assessee. Though the issue in dispute is not part of the income assessment of the assessee, however, in the interest of natural justice, we direct the Assessing Officer to dispose off the application of the assessee dated 18/04/2012, seeking a refund of excess payment of dividend distribution tax, in accordance with law. Accordingly, ground No. 1 of the assessee is allowed for statistical purposes.
Not allowing credit of dividend distribution tax paid - Held that:- This issue of credit of the dividend distribution tax paid by M/s Greenfield Commercial Private Limited has been raised first time before us and no facts are available on record. We are of the opinion that if the tax has been paid by the assessee than it is eligible for getting credit of the tax paid in accordance with law and the Revenue cannot hold the amount in unjust manner with it. Though the issue is not emanating from the impugned order, in the interest of justice, we direct the Assessing Officer to consider the request of the assessee for allowing credit of the dividend distribution tax paid by M/s Greenfield Commercial Private Limited, in accordance with law.
Amount paid to “DLF Golf Club” towards membership as refundable security - allowable business expenditure - Held that:- The amount of security deposit has been admitted by the assessee as refundable, which in our opinion cannot be allowed as revenue expenditure, accordingly, we uphold the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground of appeal of the assessee.
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2018 (3) TMI 1203
Penal provisions u/s 272A(2)(k) - delay in filing of the statement of tax-deducted at source within the prescribed time limit - Held that:- Taxes have been paid in time and the technological system was new in those years i.e. FY 2009-10, we are inclined to hold that the assessee has shown bona-fide cause and in the circumstances we are of the considered view that penalty is not exigible on the assessee and we hereby order for the deletion of the penalty of ₹ 99,200/- levied by the AO for all the four quarters of financial year 2009-10.
We hold that the assessee has shown bonafide cause as is contemplated u/s 273B of the 1961 Act and under the factual matrix of the case the penalty of ₹ 99,200/- levied u/s 272A(2)(k) is hereby ordered to be deleted. The assessee succeeds in this appeal.
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2018 (3) TMI 1202
Penalty u/s 271(1)(c) - whether the charge is of concealment of particulars of income or furnishing of inaccurate particulars of income? - non specification of charge - Held that:- the show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. - Decided in favour of assessee.
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2018 (3) TMI 1201
Eligibility to deduction u/s. 80IB(10)- Held that:- Assessee is eligible for claiming benefit of deduction u/s. 80IB(10) in respect of building (except building H4) of residential project "Harsh Paradise‟. The DR has not been able to controvert the findings of Tribunal in earlier assessment years above. Accordingly, ground Nos. 1 and 2 raised in appeal by Revenue are dismissed and the findings of Commissioner of Income Tax (Appeals) in holding assessee eligible for deduction u/s. 80IB(10) are upheld.
Benefit of deduction u/s. 80IB(10) in respect of Flat Nos. 702 to 704 in Building H3 and Flat Nos. 302 and 303 in Building H1 - combined v/s single units - area exceeding prescribed limits - Held that:- In the instant case, as has been pointed earlier, the PMC had issued completion certificate in respect of flats in question as an independent unit. It is evident from the records that the possessions of the flats were given separately to the respective owners. Thus, all the flats were i.e. Flat Nos. 302 and 303 in Building H1 and Flat Nos. 702 to 704 in Building H3 were made separate residential units by the assessee. Thus appeal filled by revenue dismissed.
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2018 (3) TMI 1200
Non-grant of opportunity by AO to the assessee during the assessment proceedings prior to invoking section 50C - Held that:- The assessee’s case, we are afraid to say, is wholly misconceived, and the argument/s advanced before us, misplaced. No violation of either the principle of natural justice, i.e., audi alterm partem, or of the procedure laid down by the law, by the AO, and which is precisely what the impugned order holds. Sec.50C is applicable, in the circumstance defined in sec. 50C(1), i.e., where, as in the present case, there is transfer a of capital asset, being land or building or both, at a consideration lower than the stamp value, i.e., the value of the capital asset transferred under the Stamp Act, so that, for the purposes of sec.48, stamp value shall be deemed to be the full value of the consideration received or arising as a result of the said transfer.
It is for the assessee to exercise the right for seeking reference under and in terms of sec. 50C(2), and no presumption as to prejudice (i.e., the fair market value being lower that the stamp value) being caused in the absence of any such claim (per the return of income or during the assessment proceedings) would lie. No such claim stands preferred even in the appellate proceedings. The difference itself is nominal, and which in fact would work both ways, so that, if anything, the inference would be of the stamp value being reasonable. Irrespective of the quantum of difference (or in ratio), we may add, being deemed consideration, it would, unless challenged, hold. True, valuation is the matter of estimation, but the same is on scientific basis and, besides, has been accorded statutory recognition u/s. 50C(1) and, further, could be challenged (for its correctness) both under the Stamp Act as well as, where not disputed there-under, before the VO, adhering to the principles of equity and fair procedure. The assessee’s case is wholly without merit.
Disallowance of the claim for expenditure toward earning commission income - Held that:- The assessee’s claim remains wholly unsubstantiated. In fact, the basis of a claim for expenditure is to be of incurring it wholly and exclusively for the purposes to the assessee’s business. Basing the claim for expenditure on the basis of income earned by the assessee is itself erroneous in-as-much as incurring expenditure does not automatically yield income, much less in a defined sum, so that the two variables are, particularly in terms of quantum, fairly independent. No basis for the claim, or even specification of the expenditure stated to be incurred, as well as the circumstances for incurring the same, has been made. Under the circumstances, taking a lenient view of the matter, and noting that the assessee may have incurred expenditure on travel, as claimed by the ld. AR before us, we restrict the allowance of the expenditure to ₹ 18,000, i.e., at the 1,500/- per month, and confirm the disallowance of the balance - Decided partly in favour of assessee.
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2018 (3) TMI 1199
TPA - assessee had treated CPM as most appropriated method, whereas TPO applied TNMM for benchmarking the IT's - Held that:- In the case under consideration, we do not find any reasoned and justifiable finding has been given by the TPO for not following CPM. But, it is also true that the assessee had not followed all the steps as required by the provisions of Rule 10B(c)of the Rules. It is said that the object and purpose of TP adjustment is to ensure that the controlled taxpayers are given tax parity with uncontrolled taxpayers by determining their true taxable income. Costs or expenses incurred for services provided or in respect of property transferred, when made subject matter of the ALP by applying the CPM, cannot be again factored or included as a part of interconnected international transaction and subjected to the ALP, once it has been considered as per sub rule (c)(i). It is found that the TPO has not given due attention to the functional profiles of the assessee as well as of the AE/non-AE's.
We find that the TPO had clubbed sales to the SAARC countries for arriving at the net profit to cost ratio. But, in our opinion, transactions with AE should not have been compared with the SAARC countries’ transactions. In short, the departmental authorities as well as the assessee had not followed the proper method to benchmark the IT's entered in to, during the year under consideration, by the assessee. Being the first year of TP adjustment, it was natural.
Matter needs further verification of facts and application of the provisions of law which are very clear as on today. The confusion or ambiguity about applying the method or procedure is over and orders or higher judicial authorities are available as to how to apply CPM. Therefore, we are restoring back the matter to the file of the TPO/AO for fresh adjudication.
Writing off under the head capital advances - Held that:- The basic analogy for allowing write-off is to consider the real nature of the transaction. The advances were made for the running of business. The expenditure was not incurred for a new project, neither it was totally disconnected with the business activities carried out by the assessee. The disputed amount was advanced for tractor divison of the assessee in the normal coursr of business. - Decided in favour of the assessee.
Addition of provision for doubtful debts u/s. 115JB - Held that:- AR fairly considered that the issue had to be decided against the assessee, because of the retrospective amendment to the section. Accordingly, we dismiss ground of assessee.
Addition of provision for warranty u/s. 115JB - MAT - Held that:- As found that in the AY. 1989-90, the AO had considered provision for warranty as an and admissible expenditure on the ground that such provisions was in the nature of contingent lability, that in the subsequent assessment years he considered the enhanced portion of warranty provisions as this allowable expenditure, that the Tribunal has reverse the order of the departmental authorities, while deciding the appeal for the AY. s 1989-90 to 1991-92, that the Tribunal had held that provision for warranty was not contingent lability, that the FAA, while deciding the appeal for the AY. 1997-98, had allowed the claim made by the assessee in respect of provisions for warranties. If we consider the principles laid down in the case of Rotork Controls India Pvt. Ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA), then it becomes clear that the assessee had followed a scientific method and had considered the historical data to arrive at the correct book profit, as per the provisions of section 115 JB of the Act. - Decided in favour of assessee
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2018 (3) TMI 1213
Notice u/s 226(3) validity - Petitioner states that the impugned notices have been issued in respect of appeals pending before tribunal - Held that:- Revenue, on instructions of the Assessing Officer Mr. Nakul Agarwal, DCIT TDS 2(2), states that they would immediately withdraw the impugned notices dated 16.3.2018 addressed to the Petitioner's bankers. Further on instructions of the Assessing Officer, Mr. Suresh Kumar states that no proceedings for recovery of the demand of ₹ 57.06 Crores would be initiated by the Revenue till such time as stay granted by the Tribunal is in operation. Statement accepted.
The Petitioner seeks to withdraw the above Petition.
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2018 (3) TMI 1198
TPA - ALP determination - comparable adjustment - Held that:- Assessee is providing back office services relating to creation and maintenance of database of prospective employers and candidates who have sent their resumes to HSII in accordance with the preset criteria developed by HSII and including into search palace, thus companies functionally dissimilar with that of assessee need to be deselected from final-list.
Exclusion of telecommunication expenses from the total turnover in order to calculate deduction u/s 10A - Held that:- When it is not in dispute that for the purpose of section 10A, the term “total turnover” is to be interpreted by computing the entire export turnover as well as domestic turnover and in case, expenses are to be excluded from export turnover, the same are to be excluded from the total turnover also for the purpose of computing the deduction u/s 10A of the Act. So, we are of the considered view that ld. CIT (A) has rightly directed the AO to exclude the telecommunication expenses amounting to ₹ 9,15,422/- from total turnover for the purpose of calculating the deduction u/s 10A of the Act.
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2018 (3) TMI 1197
Addition on account of valuation of closing stock - applicability of Accounting Standard - undervaluation of closing stock - Coal India Limited, which is a Government of India enterprise holding 100% shares of the assessee company and similar shareholding in other subsidiarie - Held that:- We found that the holding company, Coal India Limited is also following same method of valuation for his inventories as discussed in their Annual report and similar method of accretion/deccretion of stock is dealt in the profit and loss account, which is also not disputed and available in the public domain. Ld A.R. also emphasised that similar additions were made by the assessee upto assessment year 2013-14 and for subsequent assessment years, there is no addition in the assessment as the book value mine-wise was more than valuation as a group.
We considering the overall circumstances and uniform accounting policy issued by Coal India Limited and the submission of ld A.R. alongwith documentary evidence and the undisputed fact that the assessee company is a 100% subsidiary of Coal India Limited and similar accounting policy is adopted by the other subsidiaries, are of the opinion that the method of valuation has to be test checked by the Assessing Officer so that this uniform Accounting Policy applicable to the assessee as a subsidiary company. The policy of valuation of mines independently and has been accepted by the parent company i.e. Coal India Limited and independently reflects in financial statements. The change in valuation policy is for realisation of values and the assessee being Government Enterprises, the accounts are audited by the Statutory Auditors and Comptroller and Auditor General of India. We are of the substantive view that the lower authorities have to verify the uniform Accounting Policy adopted by other subsidiaries, which are in the similar line of business as per Coal India Ltd letter dated 31.3.2010 (supra). Accordingly, we remit this disputed issue to the file of the Assessing Officer for reconsideration.
Change in valuation of closing stock and overburden removal adjustment debit/credit - Held that:- Valuation of closing stock has been changed due to Uniform Accounting Policy of Coal India Limited. We found that a reference made by the Assessing Officer on the audited accounts that Reduction in value of stock is due to overall adjustment is as per the Uniform Accounting Policy adopted by the Coal India Limited. Ld A.R. demonstrated before us with a copy of letter of Uniform Accounting Committee recommendation and supported with paper book. Accordingly, we consider it appropriate to restrict our view on the method of valuation of closing stock mine-wise and the valuation of closing stock of coal are interconnected and since we have discussed on the applicability of the provisions, facts and reasons for valuation of stock centre on the first disputed issue. Hence, this issue for the assessment years 2010-11 to 2014-15 is restored to the file of the Assessing officer for fresh adjudication.
Interest paid to foreign institution through CIL - Held that:- As perused the audit report at page 10.0 (a) at page 99-100 where these facts were explained that the assessee company has not identified the customers to whom the refund is to be made and, therefore, the finalisation of liability to refund the same is yet to be done. We are of the opinion that this vital fact needs to be verified and examined as explained by ld A.R. that from assessment year 2012-13 this interest claim was allowed. Accordingly, in the interest of justice, we remit this issue to the file of the Assessing Officer who shall verify the different payments of interest made to World bank as covered by the letter of Govt. of India vide letter dated 26.3.1998 and direct the Assessing Officer to verify the payment of interest in the hands of the recipients are offered to tax.
Lease hold rights are not eligible for depreciation u/s.32(1)(ii) of the Act considering it as intangible rights and, accordingly, dismiss the ground of appeal of the assessee.
Disallowance of Prospecting & Boring expenses separately claimed fin computation of income- disallowance ofsum charged to P&L appearing in schedule-12 - Decided against assessee
Write off/written back - Held that:- No error in the order of the CIT(A) as he has simply directed the Assessing Officer to calculate the write off/write back on the basis of guidelines given in the impugned order. Hence, this ground of appeal of the assessee is dismissed.
Development expenditure allowability - Held that:- CIT(A) has directed the Assessing Officer to follow the direction of the Tribunal referred to supra regarding segregation of expenses under the head “development expenditure”. Hence, we see no error in the order of the CIT(A), which is hereby confirmed and ground of appeal of the assessee is dismissed.
Short credit of TDS - Held that:- The assessee should not have any grievance as to the allowance of short deduction of TDS since the CIT(A) has directed to allow credit of TDS on verification. Hence, this ground of appeal of the assessee is dismissed for the assessment year 2010-11 and 2011-12.
Addition on account of difference between interest income as per accounts and as per 26AS - Held that:- we find that the amount of Gross interest reflected in Form 26AS as on 13.01.2015 is ₹ 1181.54 crores u/s. 194A and ₹ 0.65 crore u/s. 193, totaling to ₹ 1182.19 crores which is much lower than the amount of interest income shown by the assessee. From the above, it is clearly established that there is difference in the 26AS and income shown by the assessee. Moreover, the assessee is correctly accounting its income and expenditure on accrual basis irrespective of amount reflected in 26AS. In view of above, we remit the matter to the file of the Assessing officer to verify the amount shown by the assessee and reflected in 26AS statement. If the contention of the assessee is found to be correct, the Assessing Officer is directed to allow the claim of the assessee
Addition made due to change in accounting method for repair job- Held that:- We find force in the submission of ld A.R. that due to change in accounting method, the profit has been reduced and the expenditure is only for repair jobs but same could not be substantiated and, accordingly, we restore the issue to the file of the Assessing Officer and the Assessing Officer shall examine the case and pass the order on merits. This ground of appeal of the assessee for assessment year 2011-12 is allowed for statistical purposes.
Not allowing the correct depreciation after considering the sale of assets as per block assets concept and depreciation thereon - Held that:- The assessee company has shown the gain on sale of assets as profit for accounting purpose. As per section 32 of the Act the gain on sale of assets is not taxable if the remaining assets are more than that and, the depreciation should be allowed thereon. Therefore, we remit this issue to the file of the Assessing Officer allow the correct depreciation by reducing the value of block of assets by sale value.
Allowability of "other expenditure" - Held that:- The expenditure is appearing under note 25 of “welfare expenses”. Ld A.R. submitted that the assessee has sufficient materials to justify the expenditure. Accordingly, we consider it appropriate to remit this issue to the file of the Assessing Officer for verification and allow this ground of appeal of the assessee for statistical purposes.
Addition made towards VRS - Held that:- CIT(A) correctly deleted the addition observing that the claim of the assessee is in conformity with section 35DAA which relates to amortization of expenditure incurred under VRS.
Community development expenses allowed
Addition towards compensation of land - Held that:- Since the amount has been paid for the purpose of business operation, the CIT(A) has rightly deleted the addition.
Addition towards environment/ecology/improvement expenses - Held that:- . We find that the expenditure incurred are in respect of tree plantation, other environmental expenses, environmental monitoring cost of air, water and noise and dust mitigating equipment, etc, which is necessitated in the areas where coal mines are situated as per the guidelines of Corporate Social Responsibility. Hence, we find no error in the order of the CIT(A) as the expenditures are audited by the auditors and reflected in the balance sheet of the assessee
Addition towards social facilities expenses - Held that:- CIT(A) has deleted the addition made by the Assessing Officer that in order sheet, it has been mentioned that the required details have been furnished by the assessee before the Assessing officer. Hence, it cannot be said that the details as called for have not been furnished. We also find that the in subsequent years identical claim of the assessee has been allowed by the revenue. Hence, we do not find any reason to interfere with the order of the CIT(A)
Loss on sale of discarded assets - Held that:- CIT(A) on perusal of Annual reports & account of the assessee for the financial year 2009-2010, observed that the assessee has shown profit on sale of assets of ₹ 1589.25 lakhs under the head “other income” as per Schedule-4 to P&L account and claimed as loss on sale/discarded assets of ₹ 33.11 lakhs. Therefore, the CIT(A) deleted the addition. Before us, Ld D.R. could not point out any specific mistake in the order of the CIT(A)
Addition towards prospecting and boring expenses deleted
Allowability of CMPDIL expenses to be allowed
Addition towards cost of exploration and development expenditure - Held that:- CIT(A) refers to section 35E(1) of the Act and relying on the judicial decisions observed that in the case of winning of minerals, exploration is an essential pre-activity. Expenses incurred towards exploratory and prospecting activities are normally of capital expenditure but amortization thereof over a period of ten years has specially been provided for and same will be allowed in equal instalments over a period of 10 years against the profit arising from the commercial exploitation of any mine. Hence, the CIT(A) directed to work out the amortisation of qualifying expenditure as per section 35E(1) of the Act. This finding of fact was not controverted by ld D.R. during the course of hearing
Overburden removal expenditure to be allowed
Disallowance of the claim of additional depreciation on the ground that the assessee is not engaged in the business of manufacturing or production of any article or thing - Held that:- Since the coal is coming under the purview of mining ore and is treated as production, following the decision of the Hon’ble Supreme Court in the case of Sesa Goa (2004 (11) TMI 14 - SUPREME Court ), we hold that the CIT(A) is fully justified in deleting the addition for the assessment years 2010-11 and 2011-12.
Addition towards employee’s remuneration - Held that:- the liability towards performance related pay and superannuation benefits has accrued and crystallised during the year under consideration, which is evident from the Office Memorandum dated 2/7.5.2009 issued by Coal India Limited, the holding company of the assessee. Based on the said Office Memorandum and also relying on judicial decisions, the CIT(A) correctly deleted the addition.
Contribution to rehabilitation fund to be allowed.
Prior period expenses allowability - Held that:- The term ‘prior period items’ means material charges or credits which arise in the previous year as a result of errors or omissions in the preparation of financial statements of one or more previous years and also further clarification that the charge or credit arising on the outcome of a contigency, which at the time of occurrence could not be estimated accurately shall not constitute the correction of an error but a change in the estimate and such an item shall not be treated as a prior period item.
Training expenses to be allowed.
Expenditure on renovation of railway siding - Held that:- We find that ld D.R. could not point out any specific error in the order of the CIT(A) or place any positive material on record that the amount spent on repair of railway tracks are not allowable expenditure.
Disallowance u/s.14A - Held that:- AO has not given any reason for calculating the disallowance. The assessee submitted that there were no borrowings except very old for specific purposes. The CIT(A) in the order has also stated that the Assessing Officer has not verified whether the differential amount of the asset has come from any borrowing by the assessee or it is simply the investment from the reserve & surplus. We are of the substantive view and deem it proper to restore the issue back to the file of the Assessing Officer to verify whether the assessee has borrowed money or surplus from reserve & surplus amount and redecide the issue afresh
Disallowance towards reclamation of land and Mines closure expenditure - Held that:- The assessee company has made a fresh provision for expenditure towards mines closure plan and has reversed the earlier provision booked under the head reclamation of land. Hence, in view of the guidelines, the assessee has deposited in the Escrow Account the provision. We find no good reason could be given by ld D.R. pointing out the requirement to interfere with the order of the CIT(A), which is in the spirt of guidelines issued by Ministry of Coal, Government of India. We, therefore, do not find any merit in this ground of appeal of the Revenue.
Addition towards CSR expenses - Held that:- Corporate Social Responsibility (CSR) is a concept which suggests that it is the responsibility of the corporations operating within society to contribute towards economic, social and environmental development that creates positive impact on society at large. Although there is no fixed definition, however the concept revolves around that fact the corporations need to focus beyond earning just profits. It was also submitted before us ld A.R. of the assessee in the subsequent assessment years, no such addition has been made by the Revenue.
Disallowance towards grants to School and Institution to be allowed.
Disallowance towards Central Excise duty - assessee could not produce any evidence of actual payment of Central Excise duty for the month of march, 2011 - Held that:- As the assessee submitted the details of excise duty of ₹ 7776.03 lakhs upto June, 2011. The CIT(A) observed that the assessee has paid the amount more than the provision created for this purpose. Therefore, he deleted the addition made by the Assessing Officer. The above findings of the CIT(A) was not controverted by ld D.R. and, therefore, we are inclined to uphold the order of the CIT(A).
Disallowance towards repair expenses of plant and machinery - no documentary evidence - Held that:- CIT(A) deleted the addition treating the claim of expenditure as revenue expenditure following the decision in the case of Sarvana Spg. Mills Pvt Ltd.(2007 (8) TMI 16 - SUPREME COURT OF INDIA ) and Vishal Paper Industries, (2013 (1) TMI 653 - PUNJAB AND HARYANA HIGH COURT ). No contrary decision was placed on record by the revenue.
Addition towards perk tax - Held that:- We find that the amount towards Perk Tax is not claimed as an expenditure, rather it is reflected in balance sheet under the broad head “loans & advance”. Since there was no claim by the assessee, there is no reason to disallow the same by the Assessing officer. The CIT(A) has rightly deleted the addition
Addition being difference in valuation of closing stock as on 31.3.2012 and opening stock as on 1.4.2013 being not satisfied with the explanation given by the assessee - Held that:- The assessee's explanation is that the concerned development mines in question was converted to revenue mines and, therefore, the cost of coal was transferred to opening stock as on 1.4.2013. The stock of coal represents the normal raising cost of the coal which was not charged to the P&L account during the FY 2012-13 and after conversion of mines from Development to Revenue, the same was charged to P&L account in the FY 2013-14 by bringing the opening stock under P&L account as the sale proceeds of the same stock was credited to the P&L account in the place of Development expenses. The assessee pleads that this is an established accounting policy being followed by the assessee which will be evident from Note-33 of Significant Accounting Policies' wherein at clause 3.4 the accounting policy relating to Development mines is given. The contention of the assessee appears to be correct
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2018 (3) TMI 1212
Appeal admitted on question (ii)
Whether in the facts and circumstances of the case and in law, was the Tribunal correct in holding that the sales made to its associate enterprises has to be benchmarked on the basis of the average price of a number of transaction and not with regard to the price of each individual transaction for arriving at the Arm's Length Price(ALP)?
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2018 (3) TMI 1196
Validity of assessment u/s 143(3) r.w.s. 144C - Final assessment order without issuing draft assessment order under section 144C - draft assessment order passed in the case along with issue of demand notice - reference was made to the Transfer Pricing Officer (TPO) under section 92CA(1) - Held that:- The requirement of the Act is that in the draft assessment order proposed, additions are to be made and show cause notice is to be issued to the assessee either accepting the same or file objections before the DRP. However, in the facts of the present case, there was no proposal for making addition but the final assessment order was passed though the Assessing Officer calls it a draft assessment order and also observed that the assessee was at liberty to file objections before the DRP or accept the same, but along with the said order, he also issued demand notice and also initiated penalty proceedings.
The issue arising before us is identical to the issue before Tribunal in DCIT Vs. M/s. Rehau Polymers Pvt. Ltd. (2017 (8) TMI 1294 - ITAT PUNE) and assessee’s own case. Hence, the draft assessment order passed by the Assessing Officer was complete assessment order which is not envisaged under section 143(3) r.w.s. 144C of the Act. Accordingly, we hold that the draft assessment order passed in the case is invalid in law. In view of our deciding the jurisdictional issue in favour of assessee
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2018 (3) TMI 1195
Liability to deduct tax u/s 195 - disallowance of ‘drawing expenses’ in respect of purchase of drawings from ACTA International PTE Ltd, Singapore - Held that:- The purchase of drawings & designs by the assessee from ATCA Singapore did not qualify as “fees for technical services” within Article 12(4) of the tax treaty between India & Singapore because no facts are brought on record by the Revenue that as a consequence of supply of project specific designs, there was transfer of any technology. In that view of the matter the payment of ₹ 1,11,19,501/- was not chargeable to tax in India and hence the assessee did not have any obligation to deduct tax at source. The disallowance under Section 40(a)(i) was therefore not warranted. Accordingly the disallowance being amount paid to ATCA Singapore is hereby deleted. Ground No. 1 of the assessee’s appeal is allowed.
Payments made to PD Dubai, we find that the assessee had purchased the drawings from an individual, Mr. PredagEror who was resident of UAE. In these circumstances we agree with the Ld. AR of the assessee that the relevant applicable Articlefor ascertaining the taxability of the payment was Article 14 and not Article 22 of the DTAA between India & UAE.
From plain reading of Article 14, we find that the right to tax the income from professional activities by the resident of Dubai vested with the Contracting State of the payee, i.e. UAE alone and not the Source Country i.e. India. It therefore follows that in the present case the sum of ₹ 63,07,123/- paid for procurement of drawings to PD, Dubai was taxable in UAE alone. Since the payment in question was not liable to tax in India, there is no question of making any disallowance under Section 40(a)(i) of the Act. CIT(A)’s action of deleting the disallowance upheld
Disallowance of payment of Director’s remuneration - whether where the terms of appointment was not expressly approved by the Central Government as per the provisions of Companies Act, 1956, is the remuneration paid to Managing Director allowable as deduction? - Held that:- The appellant company has made all endeavors for approval from the Ministry of Corporate Affairs and the managing director in question has been continued as the managing director from year 2004 onwards and his remuneration has been allowed as deduction from then continuously. In the year 2007 the managing director was appointed for five years of which two years from 2007 to 2009 was in fact approved by the Ministry of Corporate Affairs. When the assessee company took up the matter with the Ministry they in turn asked for certain documents to be furnished which was duly complied with the assessee company. Thereafter without refusing or approving the appointment of the managing director the Ministry did not respond at all and mean while the managing director Mr. S.K.Todi continued to discharge his services as per the appointment and has drawn salary, which needs to be allowed. Thus we are inclined to allow remuneration drawn by the assessee and allow this ground of appeal preferred by the assessee.
Allowance of expenditure on account of advertisement was business expenditure - Held that:- The assessee company was developing a residential township project in East Kolkata. The flats and bungalows being developed were marketed primarily to non-resident Indians. The 1stBilat Bangla Utsav organized in London, was meant to cater to the non-resident Bengali diaspora residing there. The assessee had therefore sponsored the aforesaid programme with a view to advertise and obtain publicity for its residential project in United Kingdom. Having regard to these facts, we find that the assessee had sufficiently discharged its onus to prove that the sponsorship expenses of ₹ 2,00,000/- paid to Bilat Bangla Utsav was incurred in the course of and for the purposes of its business. The order of the Ld. CIT(A) deleting the disallowance of advertisement expenses to the extent of ₹ 2,00,000/- is therefore upheld.
Allowability of expenditure on account of load testing machine as revenue expenditure - Held that:- For carrying out the load bearing capacity tests the equipment was embedded in the pile shaft and concrete poured in the test pile was allowed to be cured for 14 days. Once equipment was ready for testing, the machine was internally pressurized through instrumentation cables for conducting the load test. The machine in question was sacrificial in nature because once equipment was submerged in the concrete pile; it could not be retrieved. Having regard to these peculiar facts, we are of the considered view that the payment made by the assessee for purchasing load bearing equipment for conducting test regarding load bearing capacity of the piles was constructing was in the nature of revenue expenditure and therefore formed part of the land development cost.
Disallowance made u/s 40(a)(ia) - payment of tax on tax on TDS was made but due to inadvertent error as wrong assessment year was quoted on challans - Held that:- As the assessee had duly deducted and paid the taxes on expenses of ₹ 8,15,20,814/- and therefore no disallowance was warranted under Section 40(a)(ia) of the Act as there was no violation as contemplated in the said provision. The action of the Ld. CIT(A) deleting the disallowance is therefore upheld.
Disallowance of expenses under the advertisement - Held that:- The assessee had provided impeachable evidence before the Ld. AO to substantiate the incurrence of the advertisement expenses. We agree with the finding of the Ld. CIT(A) that the fact that the payee had denied having any transaction with the assessee did raise doubt on the genuineness of the transaction but that statement alone could not be sufficient to treat the expenses as bogus, particularly in the light of the specific evidence substantiating the incurrence of expenditure furnished by the assessee. In such case, the duty was cast on the Ld. AO to make further enquiries in the matter which we find was not carried out by the Ld. AO either in the course of assessment or in the remand proceedings. Thus expenditure allowed.
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2018 (3) TMI 1211
Reopening of assessment - bogus payment - Held that:- AO considered the expenditure of payments made to suppliers and a dis-allowance was made to the extent of 20%, wherein money transaction was made other than by way of cheque or draft. Explanation of the assessee that the suppliers did not have access to banking facility was specifically declined noting the address of the suppliers furnished by the assessee. No further enquiry made, which is evident from the assessment order. The re-assessment was on the basis of the report of the I.T.O., Tirupur pointing out that six dealers to whom payments were said to have been made are bogus. The opinion formed for the purpose of dis-allowance to the extent of 20% was on incorrect facts and, hence, there is no infirmity in the re-assessment proceedings.
There is definitely acquisition of fresh information, specific in nature and reliable in character relating to the concluded assessment in the present case. The Income Tax Officer having jurisdiction over the area in which certain dealers to whom the assessee had made payments, were situated, had made enquiries and found that they were non-existent. This information of bogus dealers as supplied by the ITO having jurisdiction over the disclosed address of the dealers, was relied on by the AO of the assessee to initiate reassessment.
Non-disclosure of fully and truly of material facts required for assessment, it has to be noticed that the dealer had supplied the details of persons who were non-existent, in the returns filed. The dealer had claimed purchases from the said non-existent persons as also entered in the books of accounts payments made to them, which were also cash payments. Non-disclosure in the return, as also in the books of accounts, is insofar as the dealers having been shown as existing registered dealers to whom payments were made by the assessee in the course of their business. The non-disclosure germane to the facts herein was that the six dealers were bogus and there was in the regular assessment, no such question raised or enquiry conducted. - Decided in favour of the Revenue
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2018 (3) TMI 1194
Profit from sale of agricultural land - According to the AO this agricultural land is within 8 Km limit of the local limits of the municipality and, therefore, it will not be treated as capital asset - CIT(A) deleting the addition of short term capital gain - Held that:- We find that the Revenue now before us could not controvert the finding of the learned CIT(A) as held since the above issue is squarely covered in favour of the appellant by various judicial pronouncements it is held that the distance of 8 Km has to be measured through nearest approach road method. Since evidences have already been submitted by the appellant before the Ld.AO to establish that the property in question is situated beyond 8 Kms. from the city municipal limits as measured by approach road method, and since no contrary evidence has been brought on record, it is held that the said agricultural land is not a capital asset as it is situated beyond 8 Km from the Nagpur city corporation limit - Decided against revenue.
Deemed rent u/s 23(4) in relation to two houses - ALV determination - Held that:- We find that the Assessing Officer has rightly assessed the ALV of the other two house properties and now before us, learned counsel for the assessee could not controvert the observations of the Assessing Officer because it is as per provisions of Section 23(4) of the Act. Accordingly, we uphold the addition and reverse the findings of the learned CIT(A). This issue of Revenue’s appeal is allowed.
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2018 (3) TMI 1193
Disallowance of cessation of loan - written off of loan from OPGC - CIT-A deleted the addition - Held that:- The findings of the CIT(A) indicate that the amount written-off (written back by the assessee in its accounts) represents a part of the loan from OPGC which was taken long back, we find that the facts are not controverted by ld D.R and also the revenue not place cogent material on record to suggest that the deduction or allowance in respect of this amount of ₹ 50,00,000/- was allowed to the assessee in any earlier assessment year or year. CIT(A) has dealt on the issue and after enquiring the materials available on record vis-à-vis explanation of the assessee, we do not see any reason to interfere with the order of the CI(A) and uphold the same. - Decided against revenue
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2018 (3) TMI 1192
Exemption available u/s 11(1)(a) - deduction of 15% for accumulation disallowed - Held that:- Exemption available under section 11(1)(a) i.e. 15% of income is invested and not subject to any condition. There is no bar in law and there is no specific provision in the act which says that such deduction of 15% for accumulation will not be allowed in case of deficit but such 15% accumulation is allowable irrespective of whether 15% of income have been applied or not. Similar is the position in the case of ACIT vs. A.L.N. Rao Charitable Trust (1995 (10) TMI 2 - SUPREME Court) here the meaning of applied in this context means that the income is actually applied for the charitable or religious purposes of the trust but the word applied need not necessarily imply spent. Even if the income is irretrievably earmarked and allocated for the charitable or religious purposes or purposes it may be under section 11 (1)(a) of the Act.
A sum of ₹ 66,24,580/- being 15% of the gross income even though the entire income has been applied on the object of the trust as an application of income and there left no income for accumulation. However, as requested by the learned Sr. DR that the facts are not cleared, the same can be verified by the AO but only verification of figures. Accordingly, we set aside the orders of the lower authorities and allow the appeal of the assessee.
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2018 (3) TMI 1191
Refusing to grant registration u/s.12AA - Trust Deed does not contain "dissolution clause" - Held that:- A perusal of the impugned order of the ld. DIT (Exemptions), however, shows that he has not recorded any adverse comment or dis-satisfaction about the object of the Trust or genuineness of the Trust activities. He has refused to grant the registration u/s 12A of the Act on the ground that its Trust Deed does not contain "dissolution clause". DIT (Exemptions) thus has clearly gone beyond the scope of enquiry contemplated u/s 12A of the Act and has refused to grant the registration u/s 12A of the Act to the assessee Trust on a totally irrelevant ground without pointing out as to how he was not satisfied either about the object of the Trust or the genuineness of its activities.
CIT(E) has not given any finding in his order that either the objects of the assessee company are not charitable or its activities are not genuine, hence, he was not justified in refusing to grant registration u/s.12AA of the Act and approval u/s.80G of the Act to the assessee company. - Decided in favour of assessee.
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2018 (3) TMI 1210
Computation of profit - sale of asset after conversion from capital asset to stock-in-trade - Treatment to sale considerations - capital gain or business income - Held that:- In view of the undisputed facts being similar, and taking note of the decision of the Hon'ble Division Bench of this Court in Commissioner of Income Tax Vs. Essorpe Holding Pvt. Ltd. [2017 (6) TMI 1157 - MADRAS HIGH COURT] wherein held as an assessee converts his capital assets into stock-in-trade and starts dealing in them, the taxable profit on the sale must be determined by deducting from the sale proceeds the market value at the date of their conversion into stock-in-trade and not the original cost of the assessee.
In the impugned order, HC directed the AO to apply the provisions of Section 45(2) of the Act and compute the capital gains upto to the date of conversion into stock in trade, and thereafter on actual sale of the land i.e. the difference between the value of sale and stock in trade to be considered as business income.
Substantial questions of law framed in the instant tax appeal for the assessment year 2009-10, are answered against the Revenue.
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2018 (3) TMI 1190
Addition on account of income from Astrology & Vastu Shastra - Held that:- We find that the relief granted to the assessee by the ld. CIT(A) is based on the criteria that on the identical issue and similar facts & circumstances in the case of the assessee for assessment year 2011-12 the ld. CIT(A) had deleted the addition of ₹ 10 lakhs made by the Assessing Officer. The ld. CIT(A), following the order of the ld. CIT(A) for assessment year 2011-12, has granted relief to the assessee. Since the Department did not challenge the order of the ld. CIT(A) for assessment year 2011-12 and the ld. D.R. has not brought before us any contrary facts to deviate from the findings recorded the ld. CIT(A), we find no infirmity with the findings of the ld. CIT(A).
Addition of income as agricultural income - Held that:- CIT(A) held that agricultural income credited in the capital account as ₹ 10,16,480/- is the correct figure and the mistake in not filing the return of income of ₹ 42,25,400/- was wrongly shown in the relevant column and it is not correct figure. The Assessing Officer, therefore, was directed to take the agricultural income of the assessee at ₹ 10,16,480/-.
Genuineness of the agricultural income shown - Held that:- CIT(A) while arriving at the findings considered that there was a mistake bona-fide in putting correct figure for agricultural income and following various Tribunal orders, this inadvertent bona-fide mistake was rectified by the ld. CIT(A), in which we find no infirmity. Secondly we observe that regarding genuineness of the agricultural income shown on the similar facts and circumstances in the preceding assessment year 2011-12, an addition of ₹ 4,58,100/- made by the Assessing Officer was confirmed and under the similar facts and circumstances. The ld. CIT(A) has maintained status quo and has restricted the addition to that extent, which also in our humble opinion has correctly done. We do not find any infirmity with the findings of the ld. CIT(A).
Unexplained cash deposit in bank account - Held that:- The assessee had produced books of account which is evident even from the assessment order, from which cash deposit in the bank account was verifiable. AO has stated that the source of cash deposit in the bank account was not given, however, assessee has explained that it had come from agriculture income which the Assessing Officer has not believed. The Assessing Officer has also not brought out any specific reason as to why it cannot be accepted as agricultural income. We, therefore, find no infirmity with the findings of the ld. CIT(A) - Revenue appeal dismissed.
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2018 (3) TMI 1189
Addition u/s 14A - Held that:- CIT (A) has mentioned that assessee‘s investments have been made in-group concern for exercising control and management of such concerns and in the relevant assessment year, the assessee has not derived any exempt income. This fact is not disputed by the revenue. Therefore, as there is no exempt income earned by the assessee during the year, respectfully following the decision of the Hon‘ble Delhi High Court in case of Cheminvest versus CIT (2015 (9) TMI 238 - DELHI HIGH COURT) , we do not find any infirmity in the order of the Ld. CIT (A) in deleting the disallowance under section 14 A
Addition u/s 68 - Held that:- As in the present case the assessee has given complete details with respect to the addition of ₹ 22,92,00,000/- and the ld AO has failed to make any inquiry we confirm the finding of the ld CIT(A) in deleting the above addition.
Disallowance of interest with respect to loans - Held that:- As we have confirmed the finding of the ld CIT (A) in deleting the addition u/s 68 of the Act, consequently we also confirm her finding in deleting the disallowance of interest on the above loans.
Addition with respect to loan taken by the assessee company from eight different private companies - Held that:- Addition u/s 68 cannot be made where despite complete information submitted by the assessee company no inquiry have been made by the ld AO. For the similar reasons we confirm the findings of the ld CIT (A) in deleting the above addition of ₹ 15.50 crores.
Addition u/s 68 - Held that:- We find that except the change of the name of the lender, and amount involved there is no change in the facts of the case. As on the similar circumstances, we have confirmed the finding of the ld CIT (A) in deleting the addition made by the ld Assessing Officer u/s 68 of the Income Tax Act where the assessee has provided the complete details but he AO has not carried out any inquiry or investigation. Therefore, for the same reasons we confirm the finding of the ld CIT (A) in deleting the addition of ₹ 30 lacs u/s 68 of the Act with respect to non Kolkata Companies.
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2018 (3) TMI 1209
Assessment passed by AO u/s 143(3) - denial of principle of natural justice - Held that:- As decided in the case of Anil Kumar Versus Presiding Officer, [1985 (5) TMI 252 - SUPREME COURT], wherein it has been held by the Hon’ble Supreme Court that if relevant documents or material pointed out by a delinquent employee in defence of the charges levelled against him in a departmental enquiry are not adverted to by the enquiry officer, they are not discussed and the enquiry officer records a finding without taking note of the documents and the submissions, the finding of the enquiry officer is perverse based on his ipse dixit and in violation to the principles of natural justice.
Based on the aforesaid principle, in these cases also, we find that the Assessing Officer has proceeded to pass the assessment orders on the basis of legal principle, but while doing so, has not discussed the show cause filed by the petitioners and the relevant documents which they had brought on record in their defence, including the valuation report.
That being the position, we see no reason to reject the claim made by the petitioners, on the contrary, we are satisfied that the order passed is in gross violation of the principles of natural justice. - Decided in favour of assessee.
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2018 (3) TMI 1188
Validity of assessment u/s 143(3) r.w.s. 144C - No draft assessment order but final assessment order passed - draft assessment order passed by AO wherein the demand notice was issued along with notice for initiation of penalty proceedings is in fact assessment order passed by the Assessing Officer determining the demand payable - initiation of penalty proceedings u/s 271(1)(c) - Held that:- The issue arising before us is identical to the issue before Tribunal in DCIT Vs. M/s. Rehau Polymers Pvt. Ltd. (2017 (8) TMI 1294 - ITAT PUNE ). Hence, the draft assessment order passed by the Assessing Officer was complete assessment order which is not envisaged under section 143(3) r.w.s. 144C of the Act. Accordingly, we hold that the draft assessment order passed in the case is invalid in law. - Decided in favour of assessee.
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2018 (3) TMI 1208
Bogus purchases - Non considering the statement of Shri Mukesh M Chokshi taken on oath u/s. 132(4) - Held that:- Tribunal observed that the entire assessment was based on the statement of one Mukesh M Chokshi, a copy of which was not supplied to the assessee nor opportunity of cross-examining him was granted. Tribunal also gave independent reasons for overturning the orders of the Revenue authorities. It was noticed that the consideration for purchase of shares was paid by cheque. The shares were transferred in the names of the assessee and thereafter to the demat account of the assessee. It was from such demat account the shares were sold.
The issue is primarily based on appreciation of evidence on record. No question of law arises.
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Customs
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2018 (3) TMI 1264
Time limitation - order of prohibition under Regulation 23 of the Customs Brokers Licensing Regulation - the impugned order has been passed prohibiting the petitioner from working in any Section of the Chennai Customs Station under the jurisdiction of Chennai Customs Zone for the reason that the petitioner had failed to collect the relevant documents from the importer directly and to verify the identity of their client and in view of the same, the petitioner has failed to discharge their obligations as Customs Broker as required under Regulation 11 (a), 11 (d) and 11 (n) of the Customs Brokers Licensing Regulation 2013.
Held that: - Under Regulation 23 of the Customs Brokers Licensing Regulation, the Commissioner of Customs may prohibit any Customs Broker from working in one or more Sections of the Customs Station, if he is satisfied that such Customs Broker has not fulfilled his obligations as laid down under Regulation 11 in relation to work in that Section or Sections.
In the case on hand, the Order of Prohibition was passed against the petitioner under Regulation 23 of the Customs Brokers Licensing Regulation, 2013 and on a perusal of Regulation 23, it is clear that 90 days period prescribed under Regulation 22(1) of the Customs House Agent Licensing Regulations, 2004, does not find a place. That apart, Regulation 23 of the Customs Brokers Licensing Regulation has not been considered by the Division Bench for the reason that the issue in that Appeal was only in respect of Regulation 22(1) of the Customs House Agent Licensing Regulations, 2004 and not with regard to the Regulations under Customs Brokers Licensing Regulation, 2013.
Admittedly, as per the Regulations, the respondent has also given an opportunity of personal hearing to the petitioner after the passing of the impugned order on 14.12.2017. Since there is no violation of principles of natural justice, the petitioner should exhaust the alternative remedy by way of an Appeal under Section 129 A(1)(a) of the Customs Act.
Petition dismissed - decided against petitioner.
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2018 (3) TMI 1263
Classification of imported goods - Nylon Taffeta with PU (Polyurethane) - coating of material could not be ascertained - whether the coating on the fabric can be seen with naked eye or otherwise? - Held that: - Since this issue is also technical and on this particular aspect, no opinion is available either with the Textile Committee or DyCC. It is premature to decide the classification. Therefore, for this purpose, the matter needs to be remanded to the adjudicating authority to obtain an expert opinion from DyCC that whether the coating can be seen with the naked eye or otherwise - appeal allowed by way of remand.
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2018 (3) TMI 1262
EPCG Scheme - import of restricted item - it was alleged that since the CIF value of the marble slabs under import was US $ 38.470 PSM, which is less than US$ 50 PSM the said import is not allowed and the goods are liable for confiscation - Held that: - there is no dispute that the appellant have contravened the provisions of Foreign Trade Policy by which goods valued below US $ 50 falls under the restricted category for which the licence is required for import. Though the appellant have imported goods valued at US $ 38.470 PSM CIF but did not obtain the licence. Accordingly, the goods imported is restricted - confiscation upheld.
Considering the fact that the appellant is the actual user and there is no malafide intention in not obtaining the licence the appellant deserve leniency - the redemption fine and penalty in the impugned order is at higher side which needs to be reduced.
Appeal allowed in part.
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2018 (3) TMI 1261
Violation of actual user condition - Diversion of imported goods in Local Market - goods intended for the purpose of N/N. 150/94 - Confiscation - Held that: - the diversion of goods under the garb of Naval clearance stands accepted by Shri Hemant Shah and Shri Kirit Kamdar in their statements dt. 28.10.97 and 04.11.97 wherein they have categorically stated that the diverted goods were sold in the open market. Further the goods are exempted from duty in terms of N/N. 150/94 - Cus only when the goods are procured by the Government of India or shipped on the order of the department of Govt. of India - None of the conditions of the notification has been followed by the Appellant firms.
Extended period of limitation - Held that: - This is a clear case of evasion of duty by frauds. However the demands beyond the period of five years are not sustainable.
Confiscation - redemption fine - Held that: - since the goods are not available therefore there is no ground to confiscate the same and therefore no redemption fine can be imposed.
Penalty u/s 112 (a) and u/s 114 (ii) of CA - Held that: - the Appellants have played active role in claiming illegal benefit of exemption by diverting the goods - Also penalty under Section 114 (ii) of the Customs Act is imposable for the violations committed by the Appellants - penalties upheld.
Appeal disposed off.
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2018 (3) TMI 1260
DEEC advance licences - diversion of imported goods - violation of actual user condition - penalties - Held that: - Shri Kamal Agarwal is Executive Director of a shipping agency, though as per his job, he is not supposed to handle the documents particularly related to advance licence. However, from the facts of the case, it is revealed that Shri Kamal Agarwal also conspired in the fraudulent availment of the benefit of advance licence for diversion of the goods in the domestic market. However, considering the overall role of Shri Kamal Agarwal, we find as per his responsibility towards the entire episode is limited. Accordingly he deserves some leniency - the penalty on Shri Kamal Agarwal reduced from ₹ 2,00,000/- to ₹ 1,00,000/-.
As regards the appeal of Shri Harbhajan Singh Sandhu, we observe that he is the person who imported and cleared the goods by using the advance licence and the goods were diverted to domestic market. Therefore, he was directly involved in the fraud of advance licence and was the next gainer of the benefit derived from the said fraud. Therefore, the penalty imposed of ₹ 2,00,000/- on Shri Harbhajan Singh Sandhu is just and proper.
Penalty u/s 114A of CA - Held that: - Once customs duty was confirmed under the proviso to Section 28, the ingredients to invoke Section 114A in relation to the entire duty stands invoked. Therefore, the Commissioner has gravely erred in not imposing the penalty of ₹ 3,47,48,553/- under Section 114A. - penalty enhanced.
Appeal allowed in part.
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2018 (3) TMI 1259
Valuation - includibility - value of the designs and engineering - Rule 9(1)(b)(iv) of the Customs Valuation Rules, 1988 - whether the design and engineering charges paid by the appellant to the foreign supplier of machine are on account of erection, installation and commissioning and whether the same is includible in the assessable value of the imported goods? - Held that: - as regards the issue whether the value of design and engineering is on account of erection, installation and commissioning despite the appellant made detailed submission in the reply and in their additional submission before the adjudicating authority, the adjudicating authority has not considered properly. Therefore, the matter needs to be considered.
As regards the issue that the SCN invoked Rule 9(1)(e) whereas the impugned order confirmed inclusion of value of design and engineering invoking Rule 9(1)(b)(iv), this issue also needs to be considered.
Appeal allowed by way of remand.
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2018 (3) TMI 1258
Import of vehicle - Violation of condition for import of Hybrid car as provided under para 7 of Import Licensing Notes to Chapter 87 of ITC(HS) Classification of Export and Import conditions stated at serial No.2(2c) - confiscation - Held that: - the appellant is not the importer of the goods. They have not done the clearance from the Customs. Therefore, if at all any violation was done, it is by the importer and not by the appellant. The appellant is a bona fide buyer of the car from an independent dealer of the car. They have also paid the appropriate value of the car. Therefore, it cannot be said that due to any violation occurred at the time of clearance of the goods, they have been unduly benefitted.
However, since there is a violation of the FTP and since the goods were available, it has been confiscated - the redemption fine reduced from ₹ 6.25 lakhs to ₹ 4,00,000/-.
Appeal allowed in part.
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2018 (3) TMI 1257
Anti-Dumping Duty - ‘vitamin C’ - N/N. 159/2003-Cus - Held that: - The levy of antidumping duty is undoubtedly applicable to ‘vitamin C’. The chemical name of ‘vitamin C’ is ‘ascorbic acid’. The goods imported by the appellant are not of that nomenclature. There is no evidence of any test report that indicates the imported goods to be ‘vitamin C’ or ‘ascorbic acid’ - there is no justification for applicability of anti-dumping duty levied on a particular product to other goods that may contain the said goods - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1256
Reclassification of imported goods - mono potassium phosphate - proper officer, being of the opinion that though heading no. 2835 generally covered phosphates, save for the exclusions which the imported goods were not, issued notice for reclassification under heading no. 283524 of the First Schedule of Customs Tariff Act, 1975 with consequential recovery of duty - Held that: - the dropping of proceedings by the first appellate authority was a consequence of acceptance of the erroneous submissions of the importer, viz., that the goods are covered by the Fertilizer Control Order, 1985, that the conditions in note 6 of chapter 31 apply to the imports and that the description in that the 3105600 should suffice for classification.
The Tribunal has, in Vardhaman Fertilizes & Seeds Pvt Ltd v. Commissioner of Customs, Pune [2016 (11) TMI 2 - CESTAT MUMBAI] has held that The inclusions of the imported items in the Fertiliser (Control) Order 1985, as amended in 1995, cannot but reinforce the opinion that these are indeed fertilisers as decided by the competent department of the Government of India
Appeal dismissed - decided against Revenue.
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2018 (3) TMI 1255
Restoration of appeal - principles of natural justice - non-availability of RUD as well as nonavailability of contents of test reports - Held that: - it has been categorically recorded in the impugned order that the proprietor of the importer were shown the test reports which found the goods not as declared by the appellant - The first time the appellant raised the non-availability of certain documents and violation of principles of natural justice is only in March 2010 when they filed the reply to the show cause notice. The claim that the statements given by the proprietor in 2008 were not voluntary is not acceptable as such claim is made in 2010.
There is no violation of principles of natural justice - appeal dismissed - decided against appellant.
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2018 (3) TMI 1254
Penalty u/s 114 of CA, 1962 - mis-declaration of goods - restricted item - Held that: - apparently, the appellant can be brought under the category of abettor only. For such allegation, positive evidence of act with knowledge has to be ascertained in the present case. No such evidence is brought out in the present case.
Whatever allegation could be inferred is against violation of CHALR, 2004 and lack of due diligence by the CHA. Such alleged lack of due diligence has been fastened on the appellant as a CHA - such allegation is not legally sustainable. His role as an abettor of improper act or omission has not been evidenced.
Penalty set aside - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2018 (3) TMI 1253
Preference shareholders cannot be called 'creditors' to attend the meeting of the creditors of the company to be held under Section 391 of the Companies Act, 1956 - Held that:- As already held that petitioner cannot be a creditor and it is rather clear that redemption cannot be made except out of profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purposes of the redemption, the petition is not maintainable.
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2018 (3) TMI 1252
Scheme of Demerger - Held that:- As the suggestions made by the Appellant Companies, with regard to the 158 workmen/employees represented by the 1st Objector-Purshottam Mareshwar Vartak take care of all such employees represented by 1st Objector, in whose favour an award or order has been passed by the Court(s) of competent jurisdiction, we approve the draft suggested by the Appellant Companies as quoted at Paragraph 23 above, for incorporating it as part of the Scheme at an appropriate place, in place of the proposed Scheme with a view to safeguard the interest and rights of 158 workmen/employees of Ratnagiri Gas and Power Private Limited.
We set aside the impugned order dated 16th August, 2017 passed by the Tribunal, Principal Bench, New Delhi in Company Petition approve the Scheme with modification as noticed and quoted above and the Long Stop Date stands extended up to 31st March, 2018. It will come into effect from the date as mentioned in the Scheme and shall be given effect from the date of its notification as required to be issued under the law. The Scheme of Demerger stands approved with modification as quoted above. Both the appeals are allowed with aforesaid observations. However, in the facts and circumstances of the case, there shall be no order as to costs.
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Insolvency & Bankruptcy
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2018 (3) TMI 1267
Corporate insolvency process - Committee of Creditor (CoC) - whether the Resolution Professional has to take a decision regarding the Resolution applicants eligibility in considering the resolution plan before submission of the Resolution Plan to the CoC and is bound to communicate his decision as to eligibility of resolution applicants to the objectors who are not strangers but one among the resolution applicants - Held that:- Only that resolution plan meets the requirement as provided under sub section (2) of section 30 of the I&B code shall present to the CoC. Nothing in the reply affidavit to satisfy that the RP has taken a justifiable decision in regards eligibility of the resolution applicants whose plans were submitted to the CoC. What he relied as per the reply affidavit is the affidavit and documents submitted by the resolution applicants. Those documents not at all produced for the perusal of this Bench.
The decision taken by the RP regarding the eligibility of the resolution applicants as per section 29A of the Code is with out considering the objections raised by the applicants in the case in hand. Mere pleading in the reply affidavit that RP has considered all objections raised by the applicants seems to have devoid of any merit. More over the pleading in it indicate that the Ld.RP had no knowledge about the connected persons conviction detailed above in a foreign Court.
Whether the RP is duty bound to inform the decisions in respect of the objections regarding Eligibility of the resolution applicants to the objectors? - Held that:- RP has to record his reasons for taking any decisions he has to take in the process of finding out a resolution applicant, that he has to record all information and evidence he has collected for enabling to take a decision so as to see that a reasonable prudent person to take a view on the appropriateness of his decisions. What is prohibited is only in making any private communication with any of the stake holders. Even if he wishes to make such communication in the interest of finding out a reputable resolution applicant he can with prior permission of the Adjudicating Authority. Here in this case he neither produced any proof in support of his decisions along with the reply affidavit nor able to submit any materials for the perusal of the Bench at the time of hearing the applications.
Information in respect of decision taken by the RP in holding that Tata Steel Ltd, and Vedanta Ltd. is eligible and that what materials he relied upon for holding such a decision is not at all violate Clause 21 of IBBI (I P) Regulation as alleged. In view of the above said it appears to me that Ld. RP is obliged to communicate the decisions, he had taken in holding the eligibility of the disputed resolution applicants overruling the objections of the applicants.
Whether this Adjudicating Authority has to take a decision in respect of the eligibility of the resolution applicants under section 29A of the code - Held that:- Legislative intention behind introduction of section 29A and proviso to section 30 of the Code is with an object to prevent any tainted stakeholders or any stake holders whose related or connected parties or persons is a defaulter or a convict as per the provisions of section 29A and no such stake holders cannot in any way become a resolution applicant for participating in the bidding for stressed assets. The RP as well as CoC at present is equally responsible for safeguarding the interest and assets of a corporate debtor under the insolvency resolution process and would take as much caution in order to see any applicants or the applicants related or connected persons falls with in the purview of Section 29A. not at all an applicant qualified for submission of a resolution plan. That being the statutory duty upon CoC, it appears to me that this Bench cannot pass an order regarding the eligibility of the resolution applicants as it is under consideration of CoC.
Accordingly, these applications are liable to be allowed in part with following directions:-
(i) A copy of the decision taken by the RP in respect of eligibility of resolution applicant Tata Steal Ltd and Vedanta Ltd, as per section 29A, with supporting reasons for taking the decisions is to be given to the applicant with in three days of the date of this order with proper acknowledgement;
(ii) The applicants are allowed to submit its reply or its further objections if any to the decisions taken by the RP to him in person or through by e-mail with in three days of the date of receipt of the copy of the decision as directed above;
(iii) The RP is directed to place all the objections of the applicants with supporting documents before the CoC with a copy of this order for its independent consideration as per proviso to section 30 of the Code.
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2018 (3) TMI 1266
Initiation of Corporate Insolvency Resolution Process - exintence of eligible debt - cancellation of allotment of shop - failure to handover the possession of shop - construction has not been commenced - Held that:- the present claim falls within the purview of contractual liability requiring investigation and not a simplicitor “financial debt”. It is pertinent to note here that Claims of home buyers and claims arising out of complex financial instruments preferred before IRP under the Regulations are treated as different category claims, distinct and separate from claims of financial and operational creditors. Such home buyers and contractual claimants on suo moto cancellation of their respective contracts cannot come within purview of financial creditor.
Neither the present claim can be termed as a financial debt nor do the applicants come within the meaning of financial creditor. Accordingly, the present application filed under Section 7 of the Code stands dismissed as not maintainable.
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FEMA
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2018 (3) TMI 1250
Maintainability of Appeal under Section 19 of FEMA Act - Held that:- Provisos to Section 19(1) of the Act, an appeal can be maintained/heard only when the issue of pre-deposit of penalty has been examined/addressed.
In the instant case, the conditions for filing Appeal has not been satisfied as no “penalty” has been imposed in the absence of “an order”. As the provisions laid down in Section 19(1) of the Act have not been fulfilled, the appeal filed by the appellant is pre-mature and hence non- maintainable.
As stated earlier, the instant appeal has been filed by the appellant against “record of personal hearing” held on 15.11.2017 in the office of the Special Director of Enforcement, Mumbai.
As would be observed from the above, appeals have been filed at various stages during the course of Adjudication proceedings praying this Tribunal to pass certain directions to the Adjudicating Authority. Even the instant appeal has not been filed against an “order” of the Adjudicating Authority. The provisions of Section 19 of FEMA entitles the appellant to prefer an appeal only once the “order” is passed and not against hearings conducted by Adjudicating Authority in adjudication proceedings.
The contention of the appellant that Section 19(6) empowers the Tribunal to suo moto examine the “legality, propriety or correctness of any order” made by the Adjudicating Authority is not restricted and limited to the final order and that the words “any order” in Section 19(6) and “an order in Section 19(1) has to be given the same meaning is misconceived and misleading. This could not have been the intent of the legislature as every notice issued by Adjudicating Authority or hearing/enquiry conducted by Adjudicating Authority in the process of adjudication so as to enable him to pass an “order” could become a subject matter of appeal.
In the instant case, the conditions for filing Appeal has not been satisfied as no “penalty” has been imposed in the absence of “an order”. As the provisions laid down in Section 19(1) of the Act have not been fulfilled, the appeal filed by the appellant is pre-mature and hence non- maintainable.
It would not be prudent for this Tribunal to entertain the appeal against the “record of personal hearing” in the office of Adjudicating Authority during the course of Adjudication proceedings. Needles to reiterate, it would also not be prudent for this Tribunal to advice/direct/instruct the Adjudicating Authority to follow a specific or particular course of action in adjudication proceedings as the same would amount to interference in the functioning of the Adjudicating Authority.
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2018 (3) TMI 1251
Public authority excluded from the purview of Right to Information Act - Held that:- Section 24(1) of the Act expressly excludes intelligence and security organizations specified in the Second Schedule of the Act from the purview of the Act. Admittedly, the Directorate of Enforcement is included in the Second Schedule to the Act and, thus, cannot be called upon to disclose information under the provisions of the Act. The only exception carved out from the exclusionary clause of Section 24(1) of the Act relates to information pertaining to allegations of corruption and human rights violation. Undisputedly, the information sought for by the petitioner cannot be categorized as such information.
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Service Tax
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2018 (3) TMI 1248
CENVAT credit - insurance of deposits - input services - duty paying documents - denial on the ground that insurance of deposits is not an input service for them and they have not produced the relevant documents in terms of Rule 9 (2) of Cenvat Credit Rules, 2004 - Held that: - taking insurance to protect interest of the bank being integrally connected with the business of banking, Cenvat credit of service tax paid claimed is allowable - credit allowed.
Non-production of relevant documents showing name, address, registration number of the service provider - Held that: - said documents have been produced by the appellant before the authorities below but they have not been considered - these are proper documents against which the appellant has taken the cenvat credit which are found to be correct.
Appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1247
Time Limitation - grievance of the Revenue is that there is a case for suppression of material facts on the part of the respondent and impugned order should not have dropped the proceedings on limitation - Held that: - The impugned order held that seeing the accounts maintained and the nature of contracts and the correspondent with the Revenue by the respondent, there is no scope for invoking extended period - appeal dismissed - decided against Revenue.
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2018 (3) TMI 1246
Valuation - includibility - the cost towards PF. ESI and salary in the gross value - extended period of limitation - penalty - Held that: - the issue with regard to payment of Service Tax on the salary including PF and ESI of the personnel were held to be taxable by the Tribunal in the case of the appellant itself Patron Detective & Security Services Versus C.C.E., Jaipur [2014 (1) TMI 1835 - CESTAT, NEW DELHI], where the Tribunal has dismissed the appeals filed by the appellant, holding that it is liable to pay Service Tax on the salary PF and ESI paid to its personnel for providing the security service.
Since the present show cause notices were issued on 15/09/2008 and 21/08/2009, in respect of the period 2002-2007 and 2007 to 2008 respectively, A part of the adjudged demand is barred by limitation of time, having not been issued within stipulated time frame of one year from the relevant date.
Penalty - Held that: - the issue with regard to inculdibilty of the cost towards PF, ESI and salary in the gross value was highly contentious and there were divergent view by the Judicial forums - the provisions of Section 80 ibid in the case can be invoked for non-imposition of penalty under Section 76, 77 and 78 ibid - penalty set aside.
Appeal allowed in part.
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2018 (3) TMI 1245
Works contract service - rendition of works contract service pertaining to construction of residential complexes on the petitioner’s own property, developed by it for the purpose of sale to third party/ prospective purchasers, from whom the appellant collected advances - Held that: - development and construction of one’s own property would not constitute a taxable service prior to 1.7.2010 as per section 65 (105) (zzzh) of the Finance Act - reliance placed in the case of Maharashtra Chamber of Housing Industry vs. Union of India [2012 (1) TMI 98 - BOMBAY HIGH COURT] - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1244
CENVAT credit subsequently reversed - Since they were claiming the duty draw back of export of cotton fabric, the department was of the view that the appellant was liable to pay interest on such Cenvat credit from the period such credit was taken till the date on which such credit was reversed - Held that: - the decision of Apex Court in the case of Union of India vs. M/s. Ind-Swift Laboratories Ltd. [2011 (2) TMI 6 - Supreme Court], relied upon in which the Hon’ble Supreme Court has held that the interest is liable to be paid even if such credit is reversed without utilization - there is no justification for demand of interest - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1243
Business Auxiliary services - amount booked under the head “other miscellaneous income” - Department alleged that such income is received on account of various services provided by the assessee - Held that: - the argument raised by the assessee that miscellaneous income is not on account of any rendering of service but on account of sale of miscellaneous articles has been supported by the submission of Certificate issued by Chartered Accountant. But from the observations of adjudicating authority it appears that such detailed break-up of the various items under miscellaneous income as well as certificate issued by Chartered Accountant service does not seem to have been considered by the adjudicating authority.
The matter remanded to the adjudicating authority for consideration of full documents and to give detailed finding and reasoning for his conclusion - appeal allowed by way of remand.
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2018 (3) TMI 1242
Manpower Recruitment and Supply Agency Services - the parent company, M/s SIC, supplied manpower from abroad to the assessee-Appellants in India - Held that: - an identical issue has come up for consideration before the Tribunal in the case of Airbus Group India Pvt. Ltd. vs CST, Delhi [2016 (7) TMI 1209 - CESTAT NEW DELHI], where it was held that the reimbursement amount paid by the appellant to the foreign companies is relating to the cost of salaries and wages of the employees working under the appellant - appeal allowed - decided in favor of assessee-Appellants.
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2018 (3) TMI 1241
Advertising Agency Service - the appellant undertakes the activity of painting of different brands of tea in the walls of houses, belonging to different persons. For undertaking such activities, the appellant collects certain amount from the clients and paid the same to the house owners - The department entertained the view that the charges received by the appellant should be considered as gross value for the purpose of computation of the service tax liability under the taxable category of advertising agency service - Held that: - the amount of rent actually collected by the appellant from its client were paid to the house owners and the appellant never gained anything out of such rent amount received from the client. Thus, the amount of rent should not form part of gross value under Section 67 of the Finance Act, 1994 for computation of the service tax liability - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1240
Whether appellant, being a registered service provider under the category of Cargo Handling Service, needs to be taxed for an amount received by them under Port service or otherwise?
Held that: - there is nothing on record to indicate that the respondent herein were registered with Port authorities for rendering port services. In the absence of any such evidence, it has to be considered that the respondent has correctly discharged the service tax liability under Cargo Handling Service - appeal dismissed - decided against Revenue.
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Central Excise
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2018 (3) TMI 1239
Writ of Certiorarified mandamus to call for the records comprising communication dated 26.02.2018 - case of petitioner is that since the petitioner was not provided with the Order in Original dated 23.03.2016 so far, the petitioner is not in a position to file an Appeal as against the said order - Held that: - the petitioner shall give a representation to the 1st respondent seeking for a copy of the Order in Original dated 23.03.2016 today itself and on receipt of the same, the 1st respondent shall furnish the copy of the Order in Original on or before 20.03.2018 - petition disposed off.
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2018 (3) TMI 1237
Clandestine removal - SSI exemption - crossing of threshold exemption limit - Held that: - when department has established that appellant is engaged in the activity of clandestine removal of goods, the burdencast on the appellant to prove that they were not engaged in the activity of clandestine removal of goods and they have to brought on record supportive evidence like certificate from the principal manufacturer or certificate from the buyer who has returned the goods. The appellant has failed to prove with documentary evidence that the demand is not sustainable on account of clandestine removal of goods - demand upheld.
Considering the fact that the main appellant has paid duty along with interest and 25% penalty, therefore, penalty on the main appellant is restricted to 25% of the duty demand - Further, penalty on the Director is on higher side, therefore, penalty on the Director, namely Shri Pawan Goyal reduced to ₹ 40,000/-.
Appeal allowed in part.
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2018 (3) TMI 1236
Refund of interest - interest paid for the intervening period - Compounded Levy Scheme - Held that: - As the appellant was not required to pay duty, therefore, demand of interest for the intervening period does not arise - whatever interest paid by the appellant during the intervening period is to be refunded to the appellant - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1235
CENVAT credit - duty paying invoices - invoices issued by the supplier viz. M/s Dewas Conductors, a non-existent firm - Held that: - during the period when the goods were received by the appellant, the supplier was registered dealer of the Central Excise department. Therefore, it cannot be said that the supplier was non-existent during the relevant time - Moreover, the appellant is a bona fide purchaser of the goods in question has taken all precautions like invoices having full details, made payment through account payee cheque and entered the same in their statutory records - credit cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1234
Clandestine removal - whether all the invoices issued showing the clearance of parts are for the removal of finished goods or some part of finished goods and the remaining parts as such? - Held that: - there is no dispute that the respondent was indulging in clandestine removal of finished goods under the guise of parts as such - since the department had no evidence except the 10 invoices and the partner of the respondent firm has given the statement, there is no reason to demand the duty on the entire clearances of the parts treating the same as clearances of finished goods - appeal dismissed - decided against Revenue.
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2018 (3) TMI 1238
Compounded levy scheme - filter khaini of various brands - Department is of the view that the appellants should pay the duty on compounded levy scheme but the Commissioner has accepted the duty as per the ER-1 under section 4 A of the Central Excise Act, 1944 - Held that: - In the instant case, the respondent has paid the duty as per section 4A and that was accepted by the Commissioner without any objection - Identical issue which has came up before the Tribunal in the case of CCE, Chandigarh vs. Tej Ram Dharam Paul [2013 (8) TMI 607 - CESTAT NEW DELHI], where the Tribunal observed that when duty is paid, there is no ground to interfere in the impugned order - appeal dismissed - decided against Revenue.
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2018 (3) TMI 1233
Liability of duty - Henna Powder - Held that: - identical issue decided in the case of M/s. Baboolal Brijbhushan vs. CCE, Jodhpur [2018 (3) TMI 1186 - CESTAT, NEW DELHI], where it was held that the Ministry of Finance issue N/N. 11/2017-CE(NT) dated 24.04.2017 under Section 11C of the Central Excise Act, 1944 exempting Henna Powder and Paste falling under Chapter 33 for the period 01.01.2007 to 01.03.2013 - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1232
Refund of duty - duty was not required to have been paid as the clearance of excisable goods was covered for full exemption under N/N. 108/95-CE dated 28.08.1995 - Held that: - the appellant did produce certificate from the Competent Authority through the buyer of the goods, which will make them eligible for exemption under N/N. 108/1995-CE. However, the said certificate was not submitted before clearance of the goods - on this ground alone, the exemption otherwise available, cannot be denied to the appellant.
The appellant is eligible for refund subject to verification of the payment made, by the Original Authority - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1231
Area Based Exemption - N/N. 50/2003-CE dated 10.06.2003 - whether or not the Appellants did give the required intimation as stipulated under Proviso (i) of Notification No. 50/2003-CE dated 10.06.2003? - denial also on the ground that the Appellants had failed to commence commercial production on or before 31.03.2010 - Held that: - the intimation dated 25.03.2010 was acknowledged by the jurisdictional Officer on 29.03.2010. The said intimation clearly mentions the intention of the Appellants to start commercial production in the last week of March, 2010 along with full details of address, products to be manufactured, raw-material to be used, and possible date of commercial production - the said intimation has clearly satisfied the conditions mentioned in Proviso (i) of the said Notification.
Commencement of production on or before 31.03.2010 - Held that: - the findings are based on presumption and inference, and not rebutting the evidences listed above categorically either for their accuracy or by way of counter evidence - Revenue did not at all conduct any further verification with the buyers of the goods and also regarding the capacity of the Appellants to manufacture such goods - the Officer did visit the premises on 10.04.2010, but no contradictory evidence was brought on record.
The impugned order is neither factually nor legally sustainable - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1230
CENVAT credit - commission agent for promotion of business in export and domestic sale of goods - Held that: - identical issue has come up before the Tribunal in the case of M/s. J K Lakshmi Cement Ltd. & others vs. CCE & ST, Udaipur [2017 (12) TMI 426 - CESTAT NEW DELHI], where it was held that the CBEC vide Circular No.943/4/2011-CX. Dated 29/04/2011 has clarified that Cenvat credit is admissible on the services of the sale of the dutiable goods on commission basis - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1229
Valuation - subsidy - includibility - Department is of the view that the amount of the subsidy received from the M.P. Government is includible in the assessable value of the goods cleared during the period of dispute - Held that: - the identical issue has come up before the Tribunal in the case of M/s. Pioneer Engineer Industries vs. CCE, Indore [2018 (2) TMI 9 - CESTAT NEW DELHI] where it was held that there is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1228
Valuation - manufacture of furniture with ‘Nilkamal’ brand name - Revenue held that the value of branded furniture by the appellant supplied to M/s. Nilkamal Ltd. should be in terms of Rule 10A of Central Excise Valuation Rules, 2000 - Held that: - identical issue has came up before the Tribunal in the case of M/s. Nilkamal Ltd. and others vs. CCE & ST, Raipur [2018 (2) TMI 1305 - CESTAT NEW DELHI] wherein it was observed that the appellant is the manufacturer and not the job worker. So, Rule 10A of the Central Excise Valuation Rules, 2000 is not applicable - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1227
Levy of tax - waste packing material (floor sweeping) - Held that: - issue has came up before the Tribunal in the case of Harinagar Sugar Mills Ltd. vs. CCE [2014 (5) TMI 494 - CESTAT MUMBAI], where it was held that it cannot be said the appellants are manufacturing the said floor sweepings and appellants are not required to pay duty on these floor sweeping being waste - The floor sweeping is incidental and appellant never manufacture it. So there is no question of levy of tax - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1226
Demand of duty - fire in the factory - the department has confirmed the duty on presuming that goods were received by Kahrani unit against the advance license issued in the name of Ghatal unit - Held that: - The fire is not in dispute. The appellant at Kahrani unit received the goods from M/s. Reliance which were used in the manufacture of export goods. Originally, license was issued to present appellant for Ghatal unit and manufacturing activity was done. It is only after fire when the appellant has started production in Kahrani unit in the same area. The license was revalidated in the name of new unit as the DGFT has issued the revalidation letter in favour of new unit. In the new unit transaction entry in the statutory record of export is not denied as per the audit report. When it is so, then we do not find any reason to sustain the impugned order - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1225
Valuation - includibility - sales tax on SED - case of the department is that the element of sales tax which was not payable on SED were charged extra, the same is extra consideration, hence it is includible in the assessable value - Held that: - it is obligation on the appellant to explain that refund appearing in the sales tax return does not pertain to the excess Sales Tax/VAT paid in case of sale of vehicle which was registered as taxi. For this reason the matter needs to be remanded to the adjudicating authority - appeal allowed by way of remand.
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2018 (3) TMI 1224
CENVAT credit - input services - maintenance of garden at the training centre/guest house - renovation of residential accommodation of executives at Kurgaon - Held that: - demand pertains to 2008-09 to 2010-11 during which period the definition of ‘input service’ in rule 2(l) of the Central Excise Rules, 2004 encompassed all activities relating to business qualified by a representative sample of typical services that could be treated as eligible service. That, undoubtedly, does cover maintenance activities at the training centre/guest-house and of the residential accommodation of the executives of the appellant - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1223
Rebate claim - Appropriation against rebate - Held that: - the duty liability arising have been discharged in full by the appellant; there is no scope for recovery of any amount by appropriation of the amounts sanctioned as rebate - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1222
Penalty - credit reversed on being pointed out - Held that: - the appellant had reversed the CENVAT credit well in advance of the issue of notice leading to the impugned proceedings. Furthermore, it is seen that there is no evidence of any suppression or mis-representation that would justify imposition of penalty on the appellants - penalty set aside.
CENVAT credit - diagnostic facility - Held that: - The appellant is unable to establish the justification for contending that the diagnostic facility used by the employees was in connection with or essential to the manufacturing process. In view of this lack of justification, denial of CENVAT credit is upheld.
Appeal allowed in part.
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2018 (3) TMI 1221
CENVAT credit - manufacture of ‘apparatus’ - inputs - denial on the ground that the impugned goods, not being ‘apparatus’, were not liable to duty, that the parts and accessories classifiable under 9022 9090 and, consequently, ineligible for CENVAT credit - Held that: - Without such a re-classification for assessment, dutiability, or otherwise, of the manufactured goods cannot be re-determined and to the extent that duty liability has been discharged in accord with interpretation, learning or wisdom of the appellant, there is no scope for denying the CENVAT credit on the inputs that find use in manufacture - with the discharge of duty liability on goods for which the inputs were put to use, CENVAT Credit Rules, 2004 does not provide for denial of CENVAT credit - appeal allowed - decided in favor of appellant.
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2018 (3) TMI 1187
CENVAT credit - a part of the amount showing in the invoice has been retained by the appellant in terms of contract towards performance guarantee - Rule 4 (7) of CCR 2004 - Held that: - no reversal of credit under Rule 14 can be ordered in such situation - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (3) TMI 1220
Kerosene intended for the manufacture of LAB - Condonation of delay in filing appeal - Held that: - Though it is true that no specific date is mentioned as to when this order came to the knowledge of the Government, that by itself cannot be a ground for holding that they were not entitled to condonation of delay or that the findings given by the MSTT in its order dated 9th September, 2014 either suffer from perversity or any patent illegality. If one takes into consideration the exclusion of the period of 60 days, then, there was only a delay of 9 and đ months in filing the Appeal. Considering that the facts of this case were peculiar and which has not only been recorded in the order but also admitted by RIL and BPCL, we do not think that the discretion exercised by the MSTT in condoning the delay was unjustified.
Competency of the officer on special duty (OSD) to file an appeal on behalf of the State of Maharashtra - Held that: - The Commissioner, being a quasi judicial authority, speaks through his DDQ order passed under Section 52 of the BST Act. This being the case, he is neither a necessary nor a proper party to the appeal. His order is only under scrutiny and examination of the MSTT and beyond that the Commissioner is not required to and nor can he state anything more than what has already been stated by him in his DDQ order - we do not find that the MSTT was at all wrong when it came to the conclusion that it was competent to entertain the appeal filed by the State of Maharashtra through its Principal Secretary (Finance) through Shri Shashank D. Mathane, officer on Special Duty, Finance Department, Government of Maharashtra. We must also note that Article 154 of the Constitution of India clearly stipulates that the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with the Constitution. When one reads Article 154 with the Rules of Business made by the Governor of Maharashtra along with the decision of the Government of Maharashtra to prefer the Appeal, we are left with no doubt that the MSTT was fully justified in entertaining the Appeal filed by the State of Maharashtra - the appeal filed by the State of Maharashtra through the Principal Secretary, Finance Department and which was signed by Shri Shashank D. Mathane (OSD) was competent and correctly entertainable by the MSTT.
The supply of Superior Kerosene [KO (LABFS)] by BPCL to RIL under the Agreement dated 24th August, 1992 itself was not a sale, and therefore, there was no question of there being a “sales return” - Held that: - the first leg of the transaction was clearly a sale of Kerosene, namely KO (LABFS), by the BPCL to RIL - answered in favor of Revenue.
The “return stream” of Kerosene (from RIL to BPCL) is only a “sales return” as contemplated under the provisions of the BST Act and not a sale from RIL to BPCL - Held that: - The word “sale” has been defined in Section 2(28) to mean a Sale of goods made within the State for cash or deferred payment or other valuable consideration, and include any supply by a society or club or an association to it members on payment of a price or of fees or subscription, but does not include a mortgage, hypothecation, charge or pledge, and the words “sell” “buy” and “purchase” with all its grammatical variations and cognate expressions, shall be construed accordingly - the first leg of the transaction namely, supply of Kerosene by BPCL to RIL was held to be a sale and which had attained finality. The only question that had to be decided when the matter was remanded back to the Commissioner of Sales Tax was Question No.2 viz. “whether the return stream i.e. return of Kerosene by RIL to BPCL (sales return Credit note No. 147857 dated May 1, 1992) would be legally allowable as sales return or whether that return will amount to purchase of Kerosene by BPCL from RIL.” To only decide this question, the matter was remanded back to the Commissioner of Sales Tax.
Whether the MSTT ought to have given prospective effect to its judgment as contemplated under section 52(2) of the BST Act? - Held that: - the MSTT was unjustified in not granting the prospective effect to its judgment and order dated 20th January, 2015. Considering the long checkered history of the litigation between the parties, the assessment orders allowed earlier on the basis that the return stream Kerosene was a sales return/goods return and the DDQ order passed in favor of the assessee dated 11th September, 2006, we feel that this was a fit case where the MSTT ought to have exercised its discretion and granted prospective effect to its judgment and order.
Petition allowed in part.
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2018 (3) TMI 1219
Reversal of Input Tax Credit - interstate sale - Form C - penalty u/s 27(3) and 27(4) of the VAT Act - Held that: - the tribunal has held that surgical items purchased from interstate were not the same items purchased locally. Sale statement substantiated that interstate sales without C-Forms were made of corresponding interstate purchases - the claim of respondents is found to be acceptable based on the facts and as a result, we find no inconsistency in the orders of Appellate Deputy Commissioner in deleting the reversal along with penalty - revision dismissed - decided against Revenue.
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2018 (3) TMI 1218
Validity of assessment order - It is the case of the department that an investigation was conducted and as per the report submitted by the Investigation Officer tax invoices does not bear the name of the petitioners - Held that: - Merely for the reason that the petitioner’s name is shown as lessor in the tax invoice, it cannot be out rightly rejected to deny the input tax credit and create huge demands. No finding is given by the Prescribed Authority as to whether the tax invoices are in conformity with the Rules prescribed.
This court would not have interfered with the assessment or re-assessment orders allowing the assessee to circumvent the alternative remedy available under the Act but when the error is apparent on the face of the record or no reasons are assigned by the Authority for arriving at a decision it can be held that it is nothing but violation of the principles of natural justice.
It is imperative that decision making process is subjected to judicial review rather than the decision. In the circumstances, relegating the petitioner to Appellate Forum would not be appropriate in rendering the substantial justice. Hence this court is of the considered view that justice would be sub-served in remanding the matter to the Prescribed Authority setting aside the impugned re-assessment order and demand notices.
The matter is remanded to the Prescribed Authority to re-do the re- assessment by providing an opportunity of hearing to the petitioner in accordance with law in an expedite manner - petition allowed by way of remand.
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2018 (3) TMI 1217
Liability under Section 3(4) of TNGST Act - Form XVII - export sale is neither a local sale nor an inter-state sale, the assessing officer arrived at the value of purchases made against Form XVII which were used in the manufacture of goods exported - Held that: - identical issue decided in the decision of this Court in Tube Investment of India Ltd., v. State of Tamil Nadu [2010 (10) TMI 938 - MADRAS HIGH COURT], where it was held that Section 3(4) of the Act will have no application since situs of the export sales of the petitioners for the purpose of said Section was the State of Tamilnadu and by virtue of the said factual position, the applicability of Section 3(4) stands excluded for the exigibility of tax - revision dismissed - decided against Revenue.
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2018 (3) TMI 1216
Liability under Section 3(4) of TNGST Act - Form XVII - According to the Revenue, it was found that the respondent had purchased goods against Form XVII declarations and used the same, in the manufacture of goods, sold to a place outside the State - Held that: - identical issue decided in the decision of this Court in Tube Investment of India Ltd., v. State of Tamil Nadu [2010 (10) TMI 938 - MADRAS HIGH COURT], where it was held that Section 3(4) of the Act will have no application since situs of the export sales of the petitioners for the purpose of said Section was the State of Tamilnadu and by virtue of the said factual position, the applicability of Section 3(4) stands excluded for the exigibility of tax - revision dismissed - decided against Revenue.
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Indian Laws
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2018 (3) TMI 1249
Arbitral award - reimbursement of Countervailing Duty (CVD) and Special Additional Duty (SAD) imposed on the Tunnel Boring Machines (TBMs) imported by the petitioner - The Arbitral Tribunal held that in terms of Clause 11.1.1(ii) of the General Conditions of Contract (GCC) nothing extra was payable to the petitioner over and above the quoted rates - whether the DMRC was obliged to pay for any item of costs incurred by the petitioner in execution of the Project over and above the contract price?
Held that: - The petitioner is, essentially, claiming a variation in price. The petitioner has founded its claim on the basis that the price variation clause does not adequately compensate the petitioner because the wholesale Price Index (which is used as an indicator for variation in price) does not factor in custom duties on TBM. The claim made by the petitioner appears to be fundamentally flawed because if the claim for compensation is neither founded as a claim of damages nor included in the price variation clause, there would not be no justification for awarding such additional reimbursement to the petitioner.
The scope of interference with the Arbitral Award under Section 34 of the Act is limited. The impugned award can be interfered only on the grounds as set out in Section 34 of the Act. In the present case, the impugned award is neither beyond the jurisdiction of the Arbitral Tribunal nor can be stated to be opposed to the Public Policy of India.
Petition dismissed.
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