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TMI Tax Updates - e-Newsletter March 5, 2018 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Highlights / Catch Notes GST: Clarifications regarding GST in respect of certain services - CGST - Circular Visit to Get Source Income Tax: Exclusion of Sales inflation figure from the assessee’s income - Special Auditor’s Report relied upon - Merely because the assessee’s income was audited by the chartered accountants in regular process, there cannot be unqualified acceptance of the audited figures - HC Visit to Get Source Income Tax: Allowable busniss expenses - Diversion of income - Though the amount has been received by the assessee, the same is collected on behalf of the joint venture - It is the settled law that the accounting entries are not determinative of the actual nature of the transaction; it is the substance that prevails. - AT Visit to Get Source Income Tax: Addition u/s 69A - there is no doubt with regard to recording of repayment of loan in the books of account and the source of such fund. - What the Assessing Officer has doubted to disallow the repayment is the genuineness of unsecured loans received by the assessee in the earlier assessment years - No additions - AT Visit to Get Source Income Tax: Disallowance on account of expenses incurred through sub-contractors - bogus expenditure - these companies are merely paper companies, having complied with proper paper work, but not possessing necessary expertise to render technical services to the assessee - Even if TDS was deducted, expenditure cannot be allowed. - AT Visit to Get Source Income Tax: Levy of penalty u/s 271(1)(c) - Merely because the assessee-company did not challenge the addition before Ld. CIT(A), is no ground to levy penalty against the assessee-company - AT Visit to Get Source Income Tax: Allowability of Medical expenses for staff / Director - keeping the principal of “commercial expediency” the assessee incurred the expenditure on his hospitalisation and surgery - claim of expenditure allowed - AT Visit to Get Source Income Tax: Disallowance u/s 80IB - There is no bar or prohibition in section 80IB on sale (slumpsale) of eligible undertaking to another assessee and the benefit attached with eligible undertaking cannot be denied to another assessee - mere change of ownership would not affect the claim of deductions. - AT Visit to Get Source Income Tax: Penalty levied u/s 271(1)(c) - AO has levied the penalty without waiting for the outcome of the orders of the appellate authorities - the issue needs to be reexamined by the AO in the light of provisions of section 275(1A) - AT Visit to Get Source Income Tax: Nature of interest expenditure - AO and CIT(A) were right in treating the activity carried out by the assessee as investment activity and accordingly finance charges is not deductable under section 36(1)(iii). - AT Visit to Get Source Income Tax: Levy of penalty - disclosure made u/s 132(4) at the time of search on undisclosed stock - the excess stock does fall under the definition of ‘undisclosed income’ and consequently penalty u/s 271AAB of the Act is leviable for the same - AT Visit to Get Source Income Tax: Levy of penalty - deduction u/s 80IB - Since the revenue had denied deduction thereon in earlier years, it was denied for the year under appeal also - This has nothing to do with the search proceedings so as to fall within the ambit of undisclosed income and consequential levy of penalty u/s 271AAB of the Act.- AT Visit to Get Source Income Tax: Unexplained cash credit u/s 68 - share application money - AO is directed to make further enquiries by issuing necessary summons to the shell companies - The assessing officer should also make reference to the action taken by the Finance Ministry in this regard, as to whether names of these companies appear in the list of such struck off companies. - AT Visit to Get Source Income Tax: Addition u/s 69A - there is no doubt with regard to recording of repayment of loan in the books of account and the source of such fund. What the Assessing Officer has doubted to disallow the repayment is the genuineness of unsecured loans received by the assessee in the earlier assessment years - no additions - AT Visit to Get Source Customs: Exchange Rates Notification No.18/2018-Custom(NT) dated 01.03.2018 - Notification Visit to Get Source Customs: Seeks to amend notification No. 50/2017 Customs dated 30.06.2017 - Increase in Rate of Duty on certain items including Chana and Edible Oil - Notification Visit to Get Source Customs: Seeks to increase BCD tariff rate on Chickpeas, [Tariff item 0713 20 0] from 40% to 60% by invoking section 8A (1) of the Customs Tariff Act, 1975 - Notification Visit to Get Source Customs: Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver - Notification Visit to Get Source Customs: Classification of goods - Network Switches - switch was only useable in the local area network - classifiable under CTH 8471.80 or CTH 8517.50 - Onus is on the Department to prove that the classification claimed by the assessee is incorrect - to be classified under CTH 8471.80 - AT Visit to Get Source Corporate Law: Compounding of alleged offence for violation of Sections 96 and 99 of the Companies Act, 2013 - these contraventions are not attracting punishment of imprisonment and imprisonment with fine. It is a is statutory violation in technical nature attracting penalty of fine simplicitor - Compounding allowed - Tri Visit to Get Source Service Tax: Business Auxiliary Services - export of services or not - Marketing operations done by an assessee in India cannot be said to be at behest of any Indian customers - the services were held to be as having been delivered and/or used outside India and thus being export of services. - AT Visit to Get Source Service Tax: Refund of service tax - input services used for export of goods - the assessee cannot be burdened unduly with the condition to establish that service provider was registered under ‘Port Services’ and were authorized by the port. - AT Visit to Get Source Central Excise: Valuation - tooling/patterns - supplied free of cost to the appellant - the amortized value of such tooling must be added in the assessable value of the automobile parts manufactured and sold by the appellant to their customer - AT Visit to Get Source Central Excise: Classification of goods - Rovan Poshak Tail - Rooh-e-Gulab Sharbat - it is not a cosmetic and toiletry preparation but is an Ayurvedic Medicine for curative and preventive therapy - classified both items under Tariff Item 3004 9011, as medicaments - area based exemption allowed - AT Visit to Get Source Central Excise: Interpretation of Statute - Pan Masala Packing Machines [PMPM] (Capacity Determination and Collection of Duty) Rules, 2008 - when a new RSP is introduced the fourth proviso to Rule 9 of the said rules would apply and that any other interpretation would make the said proviso redundant or otiose, which is not permissible by law. - AT Visit to Get Source VAT: Demand of Interest on account of the alleged delayed payment - once the petitioner has been permitted to pay the arrears in instalments, the demand with regard to levy of interest is unsustainable - HC Visit to Get Source Articles Struggle for Refund of IGST paid for the goods exported out of India IS LICENSE LEASING A PROPERTY Notifications Companies Law F. No. 1/19/2013-CL-V-Part - dated 27-2-2018 - Co. Law Companies (Accounts) Amendment Rules, 2018 Customs 29/2018 - dated 1-3-2018 - Cus Seeks to amend notification No. 50/2017 Customs dated 30.06.2017 - Increase in Rate of Duty on certain items including Chana and Edible Oil 28/2018 - dated 1-3-2018 - Cus Seeks to increase BCD tariff rate on Chickpeas, [Tariff item 0713 20 0] from 40% to 60% by invoking section 8A (1) of the Customs Tariff Act, 1975 18/2018 - dated 1-3-2018 - Cus (NT) Exchange Rates Notification No.18/2018-Custom(NT) dated 01.03.2018 17/2018-CUSTOMS (N.T.) - dated 28-2-2018 - Cus (NT) Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver GST - States F.12(56)FD/Tax/2017-Pt.-II-173 - dated 25-1-2018 - Rajasthan SGST Notification to exempt the State tax on intra-state supplies of certain goods. F.12(56)FD/Tax/2017-Pt.-II-172 - dated 25-1-2018 - Rajasthan SGST Amendment in Notification No. F.12(56)FD/Tax/2017-Pt.-I-41 dated 29-06-2017 regarding schedule of exempted goods under section 11(1) of Rajasthan Goods and Services Tax Act, 2017. F.12(56)FD/Tax/2017-Pt.-II-171 - dated 25-1-2018 - Rajasthan SGST Amendment in the Notification No. F.12(56)FD/Tax/2017-Pt.-I-40 dated 29-06-2017 regarding rate schedule under section 9(1) of Rajasthan Goods and Services Tax Act, 2017. F.12(56)FD/Tax/2017-Pt.-II-170 - dated 25-1-2018 - Rajasthan SGST Notification to exempt share of Central Government of Profit Petroleum from State tax. F.12(56)FD/Tax/2017-Pt.-II-169 - dated 25-1-2018 - Rajasthan SGST Notification to provide special procedure with respect to payment of tax by registered person supplying service by way of construction against transfer of development right and vice versa. F.12(56)FD/Tax/2017-Pt.-II-168 - dated 25-1-2018 - Rajasthan SGST Amendment in the Notification No. F.12(56)FD/Tax/2017-Pt-I-51 dated 29-6-17 to specify services supplied by any Government/local authority to be taxed under Reverse Charge Mechanism. F.12(56)FD/Tax/2017-Pt.-II-167 - dated 25-1-2018 - Rajasthan SGST Amendment in the Notification No. F.12(56)FD/Tax/2017-Pt.-I-50 dated 29-06-2017 regarding the exemptions on supply of services under Rajasthan Goods and Services Tax Act, 2017. F.12(56)FD/Tax/2017-Pt.-II-166 - dated 25-1-2018 - Rajasthan SGST Amendment in the Notification No. F.12(56)FD/Tax/2017-Pt.-I-49 dated 29-06-2017 regarding rate of tax for supply of services under Rajasthan Goods and Services Tax Act, 2017. F.12(46)FD/Tax/2017-Pt.-IV-163 - dated 23-1-2018 - Rajasthan SGST Supersession of notification number F.12(46)FD/Tax/2017-32 dated 22-06-2017 for notifying e-way bill website F.12(46)FD/Tax/2017-Pt.-IV-162 - dated 23-1-2018 - Rajasthan SGST Notification regarding reduction of late fee in case of delayed filing of FORM GSTR-6. F.12(46)FD/Tax/2017-Pt.-IV-161 - dated 23-1-2018 - Rajasthan SGST Notification regarding reduction of late fee in case of delayed filing of FORM GSTR-5A F.12(46)FD/Tax/2017-Pt.-IV-160 - dated 23-1-2018 - Rajasthan SGST Notification regarding reduction of late fee in case of delayed filing of FORM GSTR-5. F.12(46)FD/Tax/2017-Pt.-IV-159 - dated 23-1-2018 - Rajasthan SGST Notification regarding reduction of late fee in case of delayed filing of FORM GSTR-1. F.12(46)FD/Tax/2017-Pt.-IV-158 - dated 23-1-2018 - Rajasthan SGST Rajasthan Goods and Services Tax (Amendment) Rules, 2018 F.12(46)FD/Tax/2017-Pt.-III-157 - dated 1-1-2018 - Rajasthan SGST Amendment in the Notification No F.12(56)FD/Tax/2017-58 dated 30/06/2017 regarding rate of composition levy (Notification 01/2018 State Tax). F.12(46)FD/Tax/2017-Pt.-III-155 - dated 29-12-2017 - Rajasthan SGST Rajasthan Goods and Services (Fourteenth Amendment) Rules 2017. F.12(46)FD/Tax/2017-Pt.-III-154 - dated 29-12-2017 - Rajasthan SGST Notifying the date from which E-Way Bill Rules shall come into force. F.12(46)FD/Tax/2017-Pt.-III-153 - dated 29-12-2017 - Rajasthan SGST Notification regarding partial waiver of late fee payable for failure to furnish the return in FORM GSTR - 4. F.12(46)FD/Tax/2017-Pt.-III-152 - dated 29-12-2017 - Rajasthan SGST Notification regarding extension of due dates for quarterly furnishing of FORM GSTR - 1 for taxpayers with aggregate turnover of Rs. upto 1.5 crore. F.12(60)FD/Tax/2017-149 - dated 22-12-2017 - Rajasthan SGST Regarding Constitution of the Rajasthan Appellate Authority for Advance Ruling. F.12(46)FD/Tax/2017-Pt.-IV-147 - dated 21-12-2017 - Rajasthan SGST The Rajasthan Goods and Services Tax (Thirteenth Amendment) Rules, 2017 F.12(46)FD/Tax/2017-Pt.-IV-145 - dated 18-12-2017 - Rajasthan SGST Notification under section 68 of RGST Act, 2017 read with Rule 138 of RGST Rules, 2017 regarding e-way Bill. 2/2018 - dated 29-1-2018 - Telangana SGST Extension of Time limit for filing FORM GSTR-6 01/2018 - dated 29-1-2018 - Telangana SGST Amendment in Notification No. 17/2017- State Tax, dated the 22nd September, 2017 43/2017 - dated 5-1-2018 - Telangana SGST Extension of Time limit for filing GSTR-5A for the months of July, 2017 41/2017 - dated 5-1-2018 - Telangana SGST Extends the time limit for making a declaration, in FORM GST ITC-01 40/2017 - dated 5-1-2018 - Telangana SGST Extension of time limit for filing FORM GST CMP-03 44/2017 - dated 30-12-2017 - Telangana SGST Extension of time limit for filing FORM GSTR-1 – Regarding 42/2017 - dated 22-12-2017 - Telangana SGST Extension of time limit for furnishing FORM GSTR-5 39/2017 - dated 10-12-2017 - Telangana SGST Extends the period for submitting the declaration in FORM GST TRAN-1 till 27th December, 2017 Circulars / Instructions / Orders GST - States - CCT’s Ref No. A(1)/170/2017 - dated 6-2-2018 Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger – Regarding GST - States - 01/2018 - dated 9-1-2018 Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger- Reg. GST - States - F.12(111)FD/Tax/2017-151 - dated 27-12-2017 Circular regarding manual filing and processing of refund for zero rated supplies GST - States - F.12(60)FD/Tax/2017-150 - dated 22-12-2017 Appointment of member of Rajasthan Authority for Advance Ruling. GST - 34/8/2018 - dated 1-3-2018 Clarifications regarding GST in respect of certain services News Two arrested for alleged GST fraud Cabinet approves Fugitive Economic Offenders Bill, 2018 - Offences worth ₹ 100 crore or more under the Bill - Property of Fugitive Economic Offenders to be attached Cabinet approves Establishment of National Financial Reporting Authority CBDT achieves important milestone of 200 APAs RBI Reference Rate for US $ Economy on the right track to accelerate; says EAC-PM Chairman Cabinet approves doubling of Government guarantee from ₹ 9,500 crore to ₹ 19,000 crore for procurements of pulses and oilseeds at MSP under Price Support Scheme by NAFED Cabinet approves continuation of Prime Minister's Employment Generation Programme (PMEGP) beyond 12th Plan for three years from 2017-18 to 2019-20 Cabinet approves MoU between India and Vietnam on Economic and Trade Cooperation Cabinet approves Action Plan for Champion Sectors in Services Finance Ministry: Robust growth in manufacturing and significant acceleration in construction mark a turnaround in the country’s economic growth momentum; Heralding an improvement in the investment climate, real gross fixed capital formation is estimated to grow at a robust 7.6 percent for 2017-18, accelerating from 6.9 percent in Q2 2017-18 to 12 percent in Q3 2017-18 Cabinet approves Agreement between India and Jordan on Cooperation and Mutual Administrative Assistance in Customs Matters Case Laws: Income Tax 2018 (3) TMI 56 Accrual of income - interest on inter corporate deposits - Decision of HC [2010 (11) TMI 88 - Delhi High Court] challenged - Held that:- the consideration of the question has been given a full and meaningful reasoning and we agree with the same. - SC dismissed the revenue appeals. HC has held that, The assessee-company being NBFC is governed by the provisions of the RBI Act. In such a case, interest income cannot be said to have accrued to the assessee having regard to the provisions of section 45Q of the RBI Act and Prudential Norms issued by the RBI in exercise of its statutory powers. As per these norms, the ICD had become NPA and on such NPA where the interest was not received and possibility of recovery was almost nil, it could not be treated to have been accrued in favour of the assessee. 2018 (3) TMI 55 Revision u/s 263 - violation of principles of natural justice - Held that:- Since the affidavit was produced by the petitioner, the petitioner should furnish the address of V.K.Berlia to the respondent, enabling the respondent to send notice to the said V.K.Berlia for examination. The impugned order dated 30.03.2006 is liable to be set aside. Accordingly, the same is set aside. The matter is remitted back to the respondent for fresh consideration. The respondent is directed to furnish all copies of the documents that were seized from M/s.Wavin India Limited and relied upon by the Assessing Officer in the assessment order dated 31.03.1992 to the assessee within a period of two weeks from the date of receipt of a copy of this order. The petitioner is directed to furnish the address of V.K.Berlia to the respondent within two weeks from the date of receipt of a copy of this order, enabling the respondent to send notice to the said V.K.Berlia for his examination. It is also open to the petitioner to file their objections/reply, after perusing the copies of the documents to be furnished by the respondent within two weeks from the date of receipt of the copies of the documents. 2018 (3) TMI 54 Revision u/s 263 - assessee had sold bare shell building, which was not a permissible activity and the benefit of Section 80IAB could not be granted towards such sale/transfer - Held that:- This Court has considered the submissions of the parties. The question as to whether sale of bare shell building is per se a deductable activity falling within Section 80IAB has, in the opinion of the Court, not been adequately considered or addressed. The Central Government’s clarifications were issued to the assessee, at its request. The AO must have analysed the provisions of the Act, especially, the notifications governing the setting-up of the SEZs and the permissible activities in such zones with their investors (Section 80IAB) and the circumstances of the case, i.e. the agreement entered into with the co-developer, the conditions of lease etc., had to be analysed in detail. Clearly, the AO did not conduct that detailed enquiry. Furthermore, in the absence of a detailed analysis of the factual narration with respect to the transactions and the documents, having regard to the provisions of the SEZ Act and the purpose for which SEZs are set-up, to ensure that such areas develop in a sustained and consistent manner, with assured infrastructure support on a continuous basis by developers, the CIT(A)’s opinion that the assessment order was erroneous in law and prejudicial to the interest of the Revenue was justified. As a result, it is held that the ITAT erred in interfering with the order of the CIT(A). Consequently, the impugned order needs to be set aside. The order of the CIT(A) under Section 263 is, therefore, upheld. - Decided against assessee ITAT held that sale of assets and buildings to the co-developer could have been treated as capital gain and not business income - Held that:- ITAT’s decision merely reproduced the CIT(A)’s judgment and has not analysed independently, in either of the AYs, the applicability of Section 80IAB towards the deductions claimed in the light of the transactions reported and the documents disclosed. Furthermore, those facts have also to be analysed in the light of the provisions of SEZ Act, 2005, which the ITAT has not independently done. For these reasons, the impugned orders of the ITAT are set-aside and are remitted for fresh consideration 2018 (3) TMI 53 Interest payable for the belated payment in terms of Section 201(1A) - Held that:- Admittedly, the petitioner has paid only ₹ 3 lakhs and defaulted in payment of monthly instalments. Therefore, the indulgence shown by the Department vide its communication dated 31.3.2017 does not, any longer, appear to enure to the benefit of the petitioner. As rightly pointed out by the learned Senior Standing Counsel appearing for the respondent, teachers would become liable for payment of interest under Section 234A, B and C, which should also be fastened on the petitioner. There is no error in the impugned communication dated 01.1.2018, which is one more opportunity granted to the petitioner. The Department has rightly initiated prosecution and it appears that the petitioner has challenged the same on certain technical grounds by filing, which have been entertained, an order of interim stay has been granted and the personal appearance of the directors has been dispensed with. Thus, considering the facts and circumstances of the case, no indulgence can be granted to the petitioner and the impugned communication does not call for interference. 2018 (3) TMI 52 Exclusion of Sales inflation figure from the assessee’s income - Special Auditor’s Report relied upon - Held that:- Merely because the assessee’s income was audited by the chartered accountants in regular process, there cannot be unqualified acceptance of the audited figures. But the nature of deletion directed for the residual period, in our opinion was not proper without scrutiny. There is no material from which the Tribunal could reach the conclusion that the sums directed to be deleted were not disputed by the assessing officer or that the sums represented the correct figures. We answer both the questions in favour of the revenue to the above extent and set aside the impugned decision. Having regard to the reasons given by the assessing officer in the two assessment orders for rejecting the claim of the assessee for deduction for the residual period, i.e. the period not covered by special audit, we are of opinion that a further exercise ought to be carried out by the assessing officer to ascertain the quantum of inflated income for the residual period which could qualify for deduction and remand the matter to him. We have already referred to the assessing officer’s order pertaining to the second block assessment which we have examined for adjudicating this appeal. This order has been annexed to an application taken out by the assessee, registered as G.A.No.1581 of 2016. This application has been framed as an application for production of additional evidence at the appellate stage. We are satisfied that the order of the assessing officer for the second block period annexed to the application was necessary for the purpose of pronouncing this judgment 2018 (3) TMI 51 Penalties levied u/s 271(1)(c) - prosecution u/s 276C - concealment of income - Held that:- The basis for initiating proceedings under the Income-tax laws by imposing penalty and on the criminal side by lodging criminal complaint is the same. ITAT has taken into account all the facts and circumstances of the case, plea and explanation furnished by the petitioner and the case of the Department, whereupon it has been held that the petitioner did not conceal the income. The cause for initiating criminal proceedings was alleged concealment of income and consequent order of penalty. The cause itself stands eliminated and dislodged vide judgment of the ITAT. In such circumstances, the consequences (criminal complaint) cannot be allowed to survive. The Department has accepted that income had not been concealed, therefore, there is no occasion or logic either in law or in facts to prosecute the petitioner at the instance of the Income-tax Department for the alleged concealment of income for evading Income-tax. ITAT has set aside the order of penalty and held that the petitioner had not concealed her income, under the Income-tax laws. The impugned complaint has been filed also under Income-tax laws. It would be an exercise in futility to allow prosecution of the petitioner, because in the face of the Income-tax Appellate Tribunal judgment dated May 29, 2009 the petitioner would be entitled to acquittal at a later stage in trial proceedings. Therefore, also this petition deserves to be allowed. 2018 (3) TMI 50 Penalty u/s. 271(1)(c) - false claim of deduction u/s. 80IC - Held that:- The assessee has been able to demonstrate that although claim for deduction u/s. 80IC as lodged by the assessee with the revenue was not tenable but the assessee made a bona-fide claim as the loan license issued by Licesning authority was held in the name of the assessee to manufacture pharma products at Vaibhav’s unit at Baddi, HP, manufacturing was done under assessee’s supervision and control to utilise the spare capacity of Vaibhav unit at Baddi, HP under contract manufacturing agreement, raw material and packing material was supplied by the assessee to Vaibhav and even sale orders were issued by it. Ultimately it was also proposed to merge the said sister/associated concern namely M/s Vaibhav with assessee under a scheme of merger approved by Hon’ble Bombay High Court w.e.f. 01-01-2006 which falls within the impugned assessment year, which date of merger was later advanced to 01-04-2006. It is also demonstrated by the assessee that Vaibhav unit at Baddi, HP was entitled for deduction u/s 80IC. Thus, it is a case where legal claim was raised by the assessee as to deduction u/s 80IC w.r.t. manufacturing done by the assessee at Vaibhav’s unit at Baddi, HP which ultimately did not found favour with the Revenue and the issue is squarely covered by decision in the case of Reliance Petroproducts Private Limited (2010 (3) TMI 80 - SUPREME COURT) wherein it is held that just making of legal claim which does not found favour with Revenue will not make the taxpayer automatically liable for penalty. - Decided against revenue. 2018 (3) TMI 49 Penalty u/s 271(1)(c) - eligibility of notice u/s 274 - non specify which limb of Section 271 (1)(c) of the Act, the penalty proceedings had been initiated - Held that:- It is evident from the notice u/s 274 r.w.s. 271 of the Act dated 28.03.2013 for the impugned year that the Assessing Officer has not specifically specified as to under which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated by him, i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Hon’ble High Court of Karnataka in the case of CIT vs. Manjunatha Cotton & Ginning Factory, (2013 (7) TMI 620 - KARNATAKA HIGH COURT) has held that notice un/s 274 should specifically state the grounds mentioned in Section 271(l)(c), i.e., whether it is for concealment of income or for furnishing of inaccurate particulars of income. Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law.- Decided in favour of assessee. 2018 (3) TMI 48 Registration u/s 12AA cancelled - proof of charitable activities - Held that:- Establishing of a diagnostic center was in the knowledge of the department. Impliedly intimation was given to it. The department did not change status of the assessee continuously for more than 20 years. It has accepted the status of the assessee as charitable institution. There is no change in the facts and circumstances of the assessee-trust through these twenty years which can authorise the ld.Commissioner to call for details and brand activities of the assessee as non-genuine or not in accordance with objects of the assessee. We are of the view that order of the ld.Commissioner is not sustainable. It is set aside. Registration granted to the assessee under section 12A is restored. 2018 (3) TMI 47 Assessment u/s 153A - addition of undisclosed income - absence of any incriminating material found during the course of search - Held that:- CIT(A) specifically asked the remand report of the AO on the aforesaid contention of the assessee. In response, the AO in his remand report dated 16.03.2016 admitted that though no documents were found/seized nor there was any admission by the assessee during the course of search but the addition was made as the assessee failed to establish the identity, creditworthiness and genuineness of the share capital/premium. From the above observation of the AO, it is crystal clear that no incriminating material was found during the course of search relating to the impugned addition. See CIT Vs Kabul Chawala (2015 (9) TMI 80 - DELHI HIGH COURT) - Decided in favour of assessee. 2018 (3) TMI 46 Disallowance u/s 80IB - change of ownership - assessee does not fulfill the conditions laid down u/s 80IB - CIT-A deleted the addition - AO denied the deduction u/s 80IB holding that the benefit is not available in case of slump sale and that provisions of section 80IB does not permit the deduction unless transfer of undertaking pursuant to the scheme of amalgamation or demerger - mere change of ownership - Held that:- AO has not disputed about the manufacturing or produce product of any article or things not being any article or things specified in XI Schedule or operate one or more Cold-Storage or plant in any part of India. Further, there is no dispute that industrial undertaking manufactures or produce articles or things undertaking employed 10 or more workers in a manufacturing process carried out with the aid of power, or employed 20 or more workers in manufacturing process carried on without the aid of power. The AO has not disputed anyone of two negative terms. Even otherwise, the assessee has placed on record the sufficient evidence to substantiate the requirement of fulfilment of condition laid down under section 80IB consisting of evidence related with the challan of Provident Fund of more than 21 employees with the undertaking during the relevant period. Moreover, there is no dispute that the industrial undertaking is situated in industrial backward state. There is no bar or prohibition in section 80IB on sale (slumpsale) of eligible undertaking to another assessee and the benefit attached with eligible undertaking cannot be denied to another assessee. There are only two negative terms prescribed under sub-section (2) of section 80IB, which we have referred above. No hesitation in accepting the submissions of assessee that he benefits of section 80IB are travelled (Transferred) with the undertaking and the fact of change of ownership does not affect the deduction. Sub-section (1) & (2) of section 80IB categorically refers to the business carried out by industrial undertaking. Thus, mere change of ownership would not affect the claim of deductions. With the above factual and legal discussion, we confirmed the order of ld. CIT(A) and dismissed the appeal of Revenue. 2018 (3) TMI 45 Unexplained cash credit u/s 68 - share application money - shell companies - non adherence to necessary enquiry - Held that:- The facts and circumstances of the case clearly mandated that where the learned CIT-A was not satisfied with the enquiry made by the assessing officer, he should have himself made the necessary enquiry. It is settled law that powers of learned CIT-A are coterminous with that of the assessing officer. Furthermore honourable apex court has held in the case of Kapoorchand Shrimal [1981 (8) TMI 2 - SUPREME Court] that it is the duty of the appellate authority to correct the errors in the order's of the authorities below. The issue in this case needs to be remitted to the file of the assessing officer. Assessing officer is directed to make further enquiries by issuing necessary summons to the shell companies operated by Shri Praveen Kumar Jain who are said to have contributed share application money in assessee company. This is necessary in view of the background finding of revenue that the share applicant’s companies are bogus companies. Furthermore, thousands of such companies have been struck from the register of companies. The assessing officer should also make reference to the action taken by the Finance Ministry in this regard, as to whether names of these companies appear in the list of such struck off companies. The issue stands remitted to the file of the assessing officer. - Decided in favour of revenue for statistical purposes. 2018 (3) TMI 44 Eligibility to deduction u/s 80IB - profit derived from the activity of manufacture - plea of the Assessee that the process of producing poultry feed involved mechanical, chemical & electrical processes for which the Assessee used sophisticated Plant & Machinery - Held that:- The assessee’s eligible undertaking itself was independently carrying out the complete activity i.e. from mixing, grinding till the pelletisation. The raw materials once consumed could not be reconverted into the same position. Its utility gets changed. The prime raw materials such as maize, soya oil, rice bran, etc. can no more be regarded to be the rice bran, soya oil, maize. We are of the view that the issue in the Revenue’s appeal is squarely covered against the revenue by the decision of the Co-ordinate Bench of this Tribunal in assessee’s own case for the earlier years Interest income exclusion from the profits on which deduction u/s 80IB(5)allowable - Held that:- Interest income and the interest expenses had a direct nexus and therefore netting off interest income against the interest expenses had to be allowed. Since the interest expenses was much more than the interest income no interest income can be excluded from the profits on which deduction u/s 80IB(5) of the Act ought to be allowed. We therefore uphold the order of the Ld. CIT(A) on this issue. We find that this tribunal in assessee’s own case for the Asst Years 2008-09, 2010-11 to 2012-13 vide order dated [2017 (4) TMI 1313 - ITAT KOLKATA] had held in the aforesaid manner. Penalty u/s 271AAB(1)(a) on account of disclosure made u/s 132(4) at the time of search on undisclosed stock - Held that:- There is no escape from the rigor of Sec.271AAB(1) if income of the specified previous year emanates from the material found in the course of search and such income or transaction has not been records in the books of accounts maintained by the Assessee. The legislature has given sanctity to entries made in the Books of accounts maintained in the ordinary course of business on the premise that it is maintained contemporaneously. If there is excess stock physically found than what is recorded in the books of accounts, then Sec.69 of the Act (Unexplained investments not recorded in the books), comes into play. Therefore such income does not have any source as the source is unexplained. It is also undisclosed because it is not recorded in the books of accounts of the Assessee. Hence we have no hesitation in holding that the excess stock in the sum of ₹ 2,73,38,000/- does fall under the definition of ‘undisclosed income’ and consequently penalty u/s 271AAB of the Act is leviable for the same. Accordingly, the grounds raised by the revenue in this regard are allowed. Levy of penalty u/s 271AAB on account of denial of deduction u/s 80IB - Held that:- We find in the facts of the case, that there was absolutely no seizure of any material or documents at the time of search to reach to a different conclusion that assessee is not entitled for deduction u/s 80IB of the Act. Hence the same does not fall within the definition of the expression ‘undisclosed income’ and therefore would be outside the ambit of penalty u/s 271AAB. The assessee has been claiming deduction u/s 80IB of the Act consistently from earlier years. Since the revenue had denied deduction thereon in earlier years, it was denied for the year under appeal also . This has nothing to do with the search proceedings so as to fall within the ambit of undisclosed income and consequential levy of penalty u/s 271AAB of the Act. - Decided against revenue 2018 (3) TMI 43 Disallowance of deduction by the assessee u/s 80IA on rolling stock - Held that:- The above issue is squarely covered in favour of the assessee by the decision of coordinate bench for Assessment Year 2003-04 to 2005-06 [2009 (2) TMI 499 - ITAT DELHI ] Disallowance of extra deprecation claimed by assessee on computer peripherals - Held that:- The above issue has been decided by the Hon'ble jurisdictional High Court in CIT Vs. BSES Yamuna Power Ltd [ 2010 (8) TMI 58 - DELHI HIGH COURT] holding that computer accessories and peripherals are part of the computers and are entitled to depreciation @60%. Disallowance u/s 80IA in respect of income from inland container depots and container freight stations - Held that:- The above issue is squarely covered in favour of the assessee in earlier years in the decision of Hon'ble Delhi High Court in Container Corporation of India Ltd. Versus ACIT[2012 (5) TMI 260 - DELHI HIGH COURT] wherein, it has been held that inland container depots and inland ports i.e. CFS are inland ports within the meaning of section 80IA(4) as eligible infrastructure undertaking for deduction. The ld DR could not show us any change in the facts and circumstances of the case. Disallowance of productivity linked incentive - Held that:- AR has submitted that in AY 2005- 06 the above issue was considered by the ld CIT, wherein, u/s 263 of the Act vide para No. 4 this issue is accepted that productivity linked payments are allowable to the assessee as liability is in present, quantifiable and not contingent. In view of this we allow the ground No. 4 of the appeal of the assessee. Disallowance u/s 40a(ia) - Held that:- It is admittedly the appeal for Assessment Year 2006-07 is pending before us whereas the disallowance was made in AY 2050-06. Undoubtedly, there is an amendment which is held by the Hon'ble Delhi High Court as retrospective in nature. However, we are duty bound to give direction with respect to the year for which the appeal is pending before us. Accordingly we direct the ld AO that if the tax has been deducted and deposited on the above disallowance in this year or has been paid after the due date of filing of the return for Assessment Year 2005-06 the claim may be allowed to that extent in AY 2006-07 2018 (3) TMI 42 Allowable busniss expenses - Diversion of income - payment for services rendered by M/s Vanguard Jewels Ltd - proof of commercial expediency - Held that:- In the present case, the assessee was a lady business person. She has received a huge export order. She sought help and assistance from M/s. Vanguard Jewels Ltd. who had earlier sufficient experience in dealing the export business. The facts of the case clearly indicate that the considerable service was provided by M/s. Vanguard Jewels Ltd. Under these circumstances, the order of the Assessing Officer that no amount was payable is not at all sustainable. Though the amount has been received by the assessee, the same is collected on behalf of the joint venture. There was a subsisting agreement with M/s. Vanguard Jewels Ltd. CIT (Appeals) has found that all the expenditure has been incurred out of the sums received from the consignee and no expenses have incurred by the assessee from her own funds. The mere accounting entry by which the entire receipt has been shown in the credit side and the payment to M/s. Vanguard Jewels Ltd. shown in the debit side cannot alter the substance of the transaction that it is a payment of the joint venture and there is an overriding title of M/s. Vanguard Jewels Ltd. in the said sum. It is the settled law that the accounting entries are not determinative of the actual nature of the transaction; it is the substance that prevails. - Decided in favour of assessee 2018 (3) TMI 41 Addition on shortfall / deficit in cash deposits with the firm - Held that:- The assessee had declared a sum of ₹ 3,14,950 by way of cash under the VDIS pertaining to assessment years 1993-94 to 1996-97. In the absence of the year-wise bifurcation of the declaration under the VDIS, it is not possible to give entire credit of ₹ 3,14,950 to the deficit cash deposit worked out by the Assessing Officer. There had been cash withdrawals by the assessee from the firm on various dates totaling to ₹ 4,00,000. Though the narration for such withdrawals is given as building construction, the entire amount withdrawn on the same day would not have been utilized for the purpose of building construction. The cash withdrawals are on dates which are more or less near to the dates of cash deposits made by the assessee in the firm M/s.Muthoot M.George Financiers. Therefore, taking into account the declaration of VDIS and cash withdrawals by the assessee from the firm, the assessee should be granted credit for a sum of ₹ 2,00,000. - Decided in favour of assessee partly. 2018 (3) TMI 40 Penalty levied u/s 271(1)(c) - Nature of interest expenditure - disallowance of finance charges on the ground that the expenditure incurred under the head “Finance Charges” is not incurred wholly and exclusively for the purpose of business of the assessee - Held that:- No merits in the arguments of the assessee for the reason that the activity carried out by the assessee i.e. investment in shares of Anand Group of Companies for holding controlling interest cannot be considered as main business activity of the assessee in the nature of trade or commerce. The assessee itself has admitted that it is in the activity of investment in group companies for acquiring controlling interest and such investment has been treated as long term investment in its financial statements. The statutory auditors of the company have reported that the company is not engaged in carrying on any business or as part of its business activity of acquisition of shares except making long term investments - AO and CIT(A) were right in treating the activity carried out by the assessee as investment activity and accordingly finance charges is not deductable under section 36(1)(iii). Also the assessee has made an alternate plea in as much as finance charge incurred shall be deductable u/s 57(iii) as its dividend income is taxable under the head “Income from other sources”, the facts remain that the assessee has failed to furnish any details in respect of investments which earned income and investments which do not earn dividend income for the year under consideration. The assessee itself had admitted that all its investments are not earned dividend income. CIT(A), after considering relevant facts, has directed the AO to allow finance charges on proportionate basis in respect of investments which earned dividend income after verifying the facts. CIT(A) has given factual finding, after considering the relevant facts of the case. We do not find any error or infirmity in the order of the Ld. CIT(A), hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject grounds raised by the Revenue as well as the assessee. For Penalty u/s 271(1)(c) an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of assessment as revised by giving effect to such order of the appellate authorities. The proviso provided further stated that no order of imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty shall be passed unless the assessee has been heard or has been given a reasonable opportunity of being heard and after the expiry of six months from the end of the year of which the order of the appellate authority has been received by the Commissioner. In this case, the AO has levied the penalty without waiting for the outcome of the orders of the appellate authorities. Therefore, we are of the considered view that the issue needs to be reexamined by the AO in the light of provisions of section 275(1A) of the Act. Hence, we set aside the issue to the file of the AO and direct him to reconsider the issue 2018 (3) TMI 39 Addition u/s 69A - assessee got its money routed in the form of unsecured loans and after repayment to parties, the money was transferred / withdrawn to the assessee - CIT-A deleted the addition - Held that:- A reading of section 69A of the Act makes it clear, addition can only be made when the assessee is found to be in possession of money bullion jewellery, etc., not recorded in his books of account. It is not the case of the Department that the loan repayment made during the year was either not recorded in the books of account or the source of fund utilised in repaying the loan is doubtful. The addition under section 69A cannot be made. Therefore, the decision of the learned Commissioner (Appeals) has to be sustained. In the facts of the present case, there is no doubt with regard to recording of repayment of loan in the books of account and the source of such fund. What the Assessing Officer has doubted to disallow the repayment is the genuineness of unsecured loans received by the assessee in the earlier assessment years. - Decided against revenue 2018 (3) TMI 38 Calculation of LTCG - Adoption of correct value as per sale deed- Held that:- AO has not brought any other material that the assessee has in fact or actually has received the more or excess sale consideration than sale price mentioned in the sale deed. He has only relied upon the value of Stamp authority which has been taken the same for stamp Duty purpose. The AO has not tried to get the actual price if in case of any doubt. Hence,addition made by the AO is liable to be deleted. - Decided in favour of assessee. 2018 (3) TMI 37 Disallowance on account of expenses incurred through sub-contractors - bogus expenditure - proof of actual rendering of services by these parties to the assessee - Held that:- The assessee had not proved the actual rendering of services by these parties to the assessee by way of rendering the foundation services. Admittedly, all these six alleged sub-contractors were only trading in shares and investment companies. The assessee was not able to prove with cogent material as to whether these companies possess necessary expertise and infrastructure to render the foundation services to the assessee. More importantly these services were alleged to have been rendered in Shillong whereas, these parties are located in Kolkata. From the perusal of their balance sheet, it is evident that they do not have any branch in Shillong or any other infrastructure to render foundation services/specialized services to the assessee. All the six companies had similar types of income and similarly types of expenses reflected in their profit and loss account. None of the companies have sufficient fixed assets to prove the existence of necessary infrastructure for rendering such technical services. From the aforesaid facts, it is made very clear that these parties had merely acted as a conduit to reduce the profits of the assessee company and show meager income in their returns and claim refund of TDS. We are satisfied in the instant case, that these companies are merely paper companies, having complied with proper paper work, but not possessing necessary expertise to render technical services to the assessee - Decided against assessee. 2018 (3) TMI 36 Levy of penalty u/s 271(1)(c) - non- deduction of TDS on interest paid to Banks and NBFCs - Held that:- Merely because the assessee-company had claimed deduction of expenditure without deducting TDS on interest payment which was not accepted by the Revenue, by itself, would not attract the levy of penalty. Mere disallowance of interest for non-deduction of TDS by itself may not be a ground to levy of penalty against the assessee-company. A.O. in the assessment order has initiated the penalty proceedings for furnishing inaccurate particulars of income. In the penalty order, the A.O. levied the penalty for concealment of income within the meaning of Explanation-1 to Section 271(1)(c). The A.O. did not initiate the penalty proceedings for concealment of income. Explanation-1 to Section 271(1)(c) would apply in the case of concealment of income and not in the case of furnishing of inaccurate particulars of income. Therefore, there is a contradictory findings given by the A.O. in the assessment order as well as in the penalty order. Merely because the assessee-company did not challenge the addition before Ld. CIT(A), is no ground to levy penalty against the assessee-company because it is well settled law that assessment and penalty proceedings are distinct and independent proceedings. It is not automatic in each and every case to levy penalty, if addition is sustained on merits. - Decided in favour of assessee. 2018 (3) TMI 35 Disallowance u/s 14A - Held that:- There is no exempt income credited in the P&L a/c during the year under consideration and therefore, no disallowance u/s 14A of the Act was warranted. It is also seen that the assessee company has shareholders funds as on 31.03.2011 to the tune of ₹ 46.81 crores whereas investment in the shares of subsidiary companies is only 15.07 crores. As such the shareholders funds are substantially in excess of amount invested and the logical inference from the same could only be that the impugned investments have been made out of self generated funds and not interest bearing resources. - Decided in favour of assessee. Disallowance of telephone expenses on personal usage - Held that:- We are in agreement with the contentions of the assessee on the issue as this is the case of a Private Ltd. company wherein the normal personal usage of expenses and the consequent disallowance is legally not permissible. There has not been any logical basis for the AO to hold the view that 30% of the impugned expenses pertain to personal usage. Therefore, disallowance made was rightly directed to be deleted by the Ld. CIT(A), which does not need any interference on our part, therefore, we uphold the well reasoned order passed by the Ld. CIT(A) - Decided against revenue 2018 (3) TMI 34 Allowability of Medical expenses for staff - commercial dependency - Held that:- In the present case Mr. Anand Sagar, a famous film director is looking after the TV serial direction produced by the assessee company. Thus the well being of such a personality is of utmost important for the business of the assessee company. In the circumstances, keeping the principal of “commercial expediency” the assessee incurred the expenditure on his hospitalisation and surgery and thus such expenditure incurred by the assessee company was for the purpose of the business of the assessee and in true sense of “commercial expediency” and thus the same is correctly claimed as expenditure u/s 37(1) and be allowed fully. No merit for disallowance of the medical expenditure incurred on reimbursement to the Director. - Decided in favour of assessee. 2018 (3) TMI 33 Disallowance u/s 14A r.w.s. 8D - Held that:- In the instant case, the assessee had voluntarily disallowed ₹ 21,29,607 by applying all the three limbs of Rule 8D. Hence we are not inclined to get into the availability of own funds as far as applicability of Rule 8D(2)(ii) in the instant case. Revision u/s 263 - Held that:- AO had made elaborate enquiry about the aspect of 14A and had taken a possible view on the same while discussing it elaborately in his assessment order. AO had not made any disallowance of interest u/s 36(1)(iii) which goes to prove that the interest paid other than ₹ 651821/- have been used only for the purpose of business of the assessee and not for the purpose of making investments in shares. When the possible view has been taken by the Ld. AO after taking into consideration facts and circumstances of the case and after raising a specific query with regard to complete details of interest payments vis-à-vis its utilization, and after raising a specific query with regard to disallowance under Rule 8D of the Rules, it cannot be said that the Ld. AO had not applied his mind or had proceeded on incorrect assumption of facts as alleged by the Ld. CIT in his revision order. CIT had passed revision order u/s 263 on the very same issue for assessment years 2011-12 and 2012-13. We find that the Ld. AO had disallowed an additional over and above the amounts disallowed by the assessee voluntarily u/s 14A read with Rule 8D of the Rules under all the three limbs. In both these orders, the Ld. AO had issued detailed questionnaire to the assessee vide 142(1) notice for assessment years 2011-12 and 2012-13 raising specific query in this regard and assessment has been completed after due consideration of the reply received by the assessee and after proper application of mind by the Ld. - Decided in favour of assessee. Customs 2018 (3) TMI 32 Smuggling - Gold bars - seizure of cash and gold bars - confiscation - Held that: - The gold, which was seized as per the stock register on 29.04.2014 is matching as in the closing stock gold weighing 14675.082 gm was available. Thus, the gold weighing 510.220 gm is explained. In the jewellery shop, a cash of ₹ 9,35,900/- is not unusual which is the sale proceeds. Thus, we are of the opinion that the seized gold and cash is not liable to confiscation being duly accounted. The seized cash has nothing to do with the seizure of the gold bars. The seized cash is duly accounted for and cannot be considered as the sale proceeds of the smuggled gold - Regarding seized gold, it was also reflected in the stock register and hence there is no justification to seize the gold. So, the gold of 510.220 gms. valued at ₹ 15,45,966/- released and also the cash of ₹ 9,35,900/- in favour of the owner of M/s Kunal Jewellers. Appeal allowed in part. 2018 (3) TMI 31 Classification of imported goods - Rommelag Bottle Packing Machine - whether classified under CTH 8422 3000 or otherwise? - benefit of N/N. 21/2002 at serial no.237 - Held that: - the issue on classification has been settled by this Tribunal in appellant’s own case, Nirma Ltd. Versus Commissioner of Customs, Mumbai [2018 (2) TMI 1541 - CESTAT MUMBAI]., that for alteration of declared classification the pre-requisite of justification is absolutely necessary - the goods imported are identical to that effected on earlier occasion and that alteration in the classification on similar justification was disapproved by the Tribunal. Valuation - enhancement in value - inclusion of installation and commissioning charges - Held that: - the component has been shown separately in the purchase order. Neither is there anything on record to indicate that there was a condition implicit in sale to justify invoking of rule 10 of Customs Valuation (Determination of Price of Imported Goods) Rules, 2007. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 30 Refund of SAD - Department was of the view that after cutting/sawing the timber logs into various smaller sizes it looses the original character and hence the sale of sawn timbers cannot be considered to be sales as such accordingly refund under the N/N. 102/2007-Cus is inadmissible - Held that: - it becomes difficult to reconcile the invoices issued with the Bills of Entry wise. But, there is no variation in the total quantity imported and sold by the Appellant on which refund of 4% SAD claimed. From the analysis of the evidence on record, the appellant has not sold the goods that were imported by them ‘as such’ in the local market, nor payment of the said 4% SAD is in dispute - denial of refund of 4% SAD under N/N. 102/2007-Cus dated 14.09.2007 only on the ground of mis-match between the invoices, when all other conditions of the said notification is complied with and refund of the said amount has earlier been sanctioned by the adjudicating authority to them after due verification of the records. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 29 Revocation of CHA License - Jurisdiction of Tribunal, when matter is pending before High Court - Held that: - the appellant cannot enjoy two remedies at two different forum. When matter is subjudice before the Hon’ble High Court then against the same point and against the same cause this Tribunal has no jurisdiction - appeal dismissed being not maintainable. 2018 (3) TMI 28 Classification of goods - Network Switches - It claimed that such switch was only useable in the local area network which was rightly classified under CTH 8471.80, but for no reason, department disturbed the classification to bring the same under CTH 8517.50 - Held that: - It is settled principles of law that in classification, the onus is on the Department to prove that the classification claimed by the assessee is incorrect based on evidence and good reason as well as the scope of the tariff entry. Revenue failed to bring out whether the network switches can be otherwise usable to fall under CTH 8517.50 as per scope of the entry depicted at the outset - appeal allowed in part. 2018 (3) TMI 27 Change in classification of goods - Pre-shipment inspection certificate dated 29.02.2008 declaring the description of the goods as scrap was not relied by Customs - Held that: - It is settled principle of law that when Revenue intends to change classification, reason thereof should be brought to record and informed to the assessee to defend its case - Declaration of appellant in respect of description of goods supported by Pre-shipment inspection certificate therefore cannot be baselessly discarded. The import being without any technical examination to discard the claim of classification adjudication fails to stand - appeal allowed - decided in favor of appellant. Corporate Laws 2018 (3) TMI 26 Compounding of alleged offence for violation of Sections 96 and 99 of the Companies Act, 2013 - Held that:- This court possesses necessary jurisdiction to grant permission for compounding of such offence in those cases wherein no punishment of imprisonment or punishment with fine alone. Which is not the case of present petitioner as the contravention of the provision of Sections 96 and 99 of the Companies Act are not attracting punishment of imprisonment and imprisonment with fine. It is a is statutory violation in technical nature attracting penalty of fine simplicitor. The ground made for and submission put forth before us for compounding the alleged offence of contravention of Sections 96 and 99 of the Companies Act, 2013 appears to be reasonable and the court in exercise of its power conferred under section 441 of the Companies Act, 2013 can grant permission for compounding. The present application deserves to be allowed. However, the permission for compounding such offence is granted with such condition, that the petitioner Company shall make payment of fine of ₹ 20,000/- (Rs. Twenty Thousand) and further individual Directors/Applicants shall have to pay fine of Rs. l0000/- (Rs. Ten Thousand). Such amount of fine shall be payable to Central Govt. through the office of the RoC, from the account of petitioner company and or individually by its the then Director, which may be practicable for implementation of this courts direction. The petitioner company make payment of additional fine of ₹ 100 per day for causing delay in convening of its AGM to regularise the delay cause in convening of the AGM for 2016. Insolvency & Bankruptcy 2018 (3) TMI 57 Production of the certificates on completion of the project - Violation of order of ‘Moratorium' - Insolvency Resolution Process - Held that:- Having heard learned counsel for the parties, we are of the opinion that the handing over or showing any document to any party will not amount to violation of order of ‘Moratorium’. In view of such observation, learned counsel for the ‘Resolution Professional’ sought permission to withdraw this appeal. Prayer is allowed. The appeal is dismissed as withdrawn. Service Tax 2018 (3) TMI 25 Validity of SCN - tax liability with interest and penalty paid before issuance of SCN - Held that: - Since the entire tax liability along with interest and penalty has been paid during the investigation and before the SCN, thereafter u/s 73(3) of the FA, the Revenue should not have issued the SCN because the Revenue has not been able to bring on record any evidence to show that there was intention to evade payment of service tax - appeal allowed - decided in favor of appellant. 2018 (3) TMI 24 Non-compliance with pre-deposit - appellant has placed on record the proof of the pre-deposit of the said amount as per the direction of the Commissioner (Appeals) within the time given by him - Held that: - dismissing the appeal for non-compliance of pre-deposit is not sustainable in law as the appellant has in fact complied with the order passed by the Commissioner (Appeals) regarding the pre-deposit - we set aside the impugned order and remand the case back to the Commissioner (Appeals) for deciding the same on merit - appeal allowed by way of remand. 2018 (3) TMI 23 Refund of service tax paid on the services rendered in the SEZ area - rejection on the ground that they were filed beyond the period of limitation as also on the ground that they were not required for authorized operations - Held that: - the delay in fling refund claims before the authorities is 14 96 days from the date of payment of Service Tax - all these refund claims after 1.3.2011 on this date N/N. 17/2011-ST came into existence and superseded N/N. 9/2009-ST. - all these claims are within time limit and the matter has to be remitted back to he Adjudicating Authority to decide the case afresh - appeal allowed by way of remand. 2018 (3) TMI 22 Business Auxiliary Services - Revenue by entertaining a belief that since such services were being provided in India by the appellant, they are liable to service tax under the category of business auxiliary services - Held that: - In the case of Microsoft corporation (India) (P.) Ltd. [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)], the majority decision of the Tribunal held that promotion of a foreign company in India has to be held as export of services inasmuch as services were being provided by the assessee to his principal located abroad. Marketing operations done by an assessee in India cannot be said to be at behest of any Indian customers - the services were held to be as having been delivered and/or used outside India and thus being export of services. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 21 Taxability of services - advertising services - appellant took a stand that all the services being provided by them were not taxable services and as such no tax was being paid on the same - Held that: - there are are general grounds without referring to any distinct services having been provided by appellant, falling under the category of non-taxable services - Inasmuch as the said issue raised by the appellant has not been considered by the Lower Authorities, we deem it fit to set aside impugned order and remand the matter to Original Adjudicating Authority - appeal allowed by way of remand. 2018 (3) TMI 20 Refund of service tax - denial on the ground that the appellant has not produced any evidence to show that the Port Service Providers were authorized by the Port to provide such services, as also on the ground that in some of the cases the service categories were shown to be in than the invoices - Held that: - the issue stands covered by the Tribunal’s decision in the case of SRF Ltd. Versus Commissioner of Central Excise, Jaipur-I [2015 (9) TMI 1281 - CESTAT NEW DELHI] wherein it stands held that description of Port Service given in the Notification No.41/2007 being different from the description of ‘Port Service’ defined in Section 65 of the Finance Act, 1994, cannot be adopted as a ground for denial of refund. Further the assessee cannot be burdened unduly with the condition to establish that service provider was registered under ‘Port Services’ and were authorized by the port. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 19 Classification of services - services of the nature of loading & unloading of goods, breaking & segregation and also transportation of goods by road services - Held that: - the activities carried out by the assessee-Respondents are primarily transportation of goods and loading & unloading etc. which are incidental to the transportation of goods. Such activities cannot be covered within the services of Cargo Handling - appeal dismissed - decided against Revenue. Central Excise 2018 (3) TMI 18 Interpretation of Statute - Pan Masala Packing Machines [PMPM] (Capacity Determination and Collection of Duty) Rules, 2008 - The department was of the view that the duty for the month of July, 2009 would come to ₹ 1,20,00,000/- (Rs. 24,00,000/- x 5) as per Rule 6 (4) readwith Rule 9 of the said Rules, whereas the appellants were of the view that they were required to pay duty of ₹ 85,16,130/- only, on pro-rata basis for the period 10/07/2009 to 31/07/2009, as per the fourth proviso to Rule 9 of the said Rules. Held that: - under the PMPM Rules, the period of assessment is calendar month. It is evident from Rule 5 which provides for determination of capacity on monthly basis and the duty payable per machine is prescribed for each month. Further in several other rules, the reference to determination of duty, abatement of duty is with respect to month. On a conjoint reading of the rules as a whole particularly Rule 9 proviso 4, Rule 8 first proviso, Rule 6 (4), Rule 7, it is evident that the applicable rule in the facts of the present case is Rule 9 which provides for the monthly duty payable on notified goods shall be paid by the 5th day of the same month and an intimation in Form – II shall be filed with the Jurisdictional Authority by 10th of the same month. Division Bench of this Tribunal in Trimurti Fragrances Pvt. Ltd. [2015 (8) TMI 34 - CESTAT NEW DELHI] in the case of claim for abatement for the period of closure of the factory when the appellant paid the proportionate duty for the period factory was in operation and Department contended that appellant should have paid entire duty for the month and only thereafter should have claimed rebate, where the Tribunal has held that when a new RSP is introduced the fourth proviso to Rule 9 of the said rules would apply and that any other interpretation would make the said proviso redundant or otiose, which is not permissible by law. The view taken by Revenue is against the provisions of the PMPM Rules, 2008 readwith Section 3A of the Act - appeal allowed - decided in favor of appellant. 2018 (3) TMI 17 Classification of goods - Rovan Poshak Tail - Rooh-e-Gulab Sharbat - respondent classified both items under Tariff Item 3004 9011, as medicaments and availed the benefit of area based exemption under N/N. 49/2003-CE dated 10/06/2003 - SCN were issued alleging that the “sharbat” is rightly classifiable under CETH 21069011 as food preparations and “tail”, under 3305 9019 as preparations for use on the hair - Held that: - Both the products under dispute have medicinal properties as well as other common place properties. The classification of such items is required to be made in the light of the pronouncement of Hon’ble Supreme Court in the case of Naturalle Health Products (P) Ltd. [2003 (11) TMI 69 - SUPREME COURT OF INDIA] as well as Puma Ayurvedic Herbal (P) Ltd. [2006 (3) TMI 141 - SUPREME COURT OF INDIA]. In respect of the “sharbat” he has recorded that it contains various ingredients such as Gulab Ark, SITA (sugar) & Jal (water) which are mentioned in various Ayurvedic Authoritative Texts as having therapeutic use. It is also mentioned in the containers of sharbat that it is to be had as per the dozes of 50ml in a glass of 250 ml of water or as directed by the physician - in the container for tail there is a clear disclaim to the effect that it is not a cosmetic and toiletry preparation but is an Ayurvedic Medicine for curative and preventive therapy. It is also on record that both the products have approval granted by State Drug Licensing Authority and also the Directorate of Ayurvedic and Unani Services, certifying the products to be Ayurvedic Proprietary Medicine. Appeal dismissed - decided against Revenue. 2018 (3) TMI 16 Rebate claim - N/N. F.4(72)FD/Gr.IV/81-18 dated 06.05.1986 - Department was of the view that the rebate so claimed by the appellant is nothing but a form of exemption from payment of CST/VAT and is includible in the transaction value for payment of Central Excise duty - Held that: - N/N. F.4(72)FD/Gr.IV/81-18 dated 06.05.1986 of the Government of Rajasthan has allowed partial exemption from the tax payable in respect of the goods in the course of the inter-state trade subject to the condition attached to the Notification. Since the eligibility can be determined only after knowing the total quantum of goods sold within the State as well as in the course of inter-state trade in a full accounting year, the benefit of the notification is allowed to the appellant only during the assessment. In the present case, the appellant has claimed that they have paid the CST without the partial exemption at the time of clearance of the goods. But during the assessment of the VAT returns, such VAT paid is taken into account and if the appellant is eligible, the same is adjusted when partial exemption is allowed to the appellant in terms of the VAT Notification dated 06.05.1986. The net result of the assessment for CST is that the CST actually paid is at the partially exempted rate. The benefit of deduction from transaction value will be restricted to the actual CST paid i.e. at the partially exempted rate. Appeal dismissed - decided against appellant. 2018 (3) TMI 15 CENVAT credit - capital goods - M.S. Channels, M.S. Angles, M.S. Beams, M.S. Plates, S.S Plate etc - Held that: - identical issue decided in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit - appeal allowed - decided in favor of appellant. 2018 (3) TMI 14 Valuation - appellants argued that they are actually selling the goods at the factory gate and not clearing the same to their depots - Section 4(1)(a) of the Central Excise Act, 1944 - Held that: - Since the sole defence of the appellant that the goods were not sold at the factory gate is unsubstantiated and was never raised before the original adjudicating authority or before the first appellate authority, the same cannot be allowed to be raised at this stage especially when it is seen from the replies made by the appellant before the lower authorities that they had admitted the goods were sold from the premises of consignment agent - there is no infirmity in the manner in which the value has been arrived at by the lower authorities. Extended period of limitation - Held that: - The appellants are required to assess the value in terms of Central Excise law on the basis of self assessment basis. In case the sales are made through consignment agent, it would not be in the knowledge of the Revenue. It is the duty of the appellant to clearly disclose that no sale is made from the factory but all the sales are made from the premises of the consignment agent - extended period rightly invoked. Appeal dismissed - decided against appellant. 2018 (3) TMI 13 CENVAT credit - credit on Aluminum extruded Profiles availed on the basis of five invoices issued by the Silverline Metals, Bhavnagar, though they have received Aluminum scrap - Held that: - the appellant had received Aluminum Extruded Profiles which is considered by than as Aluminum waste and scrap as consumption in the factory premises is not being disputed - the confirmation of the demand of cenvat credit as ineligibly availed is incorrect and unsustainable. Penalties u/r 26(2) of the CER, 2002 - Held that: - violation if any took place during the period March 2006 to Oct 2006 - provisions of Rule 26(2) can be invoked only after 1.3.2007 for imposing of penalties - penalties set aside. Appeal allowed - decided in favor of appellant. 2018 (3) TMI 12 CENVAT credit - inputs on which credit taken was written off - whether the appellant are required to reverse the credit availed on inputs alleged to have been written off in their books of accounts in accordance with Rule 3(5B) of CCR 2004? - Held that: - there is no evidence to the effect that the inputs whose value had been written down had been removed from the factory. Thus, reducing the value of the raw materials keeping in view the accounting principles and income tax benefit, if any, it cannot be construed that the value of the inputs are written off from the books of account and are not usable resulting into invoking of Rule 3(5B) of CCR 2004 - appeal allowed - decided in favor of appellant. 2018 (3) TMI 11 Refund claim - case of appellant is that they have wrongly paid an amount of 6% of the value of the exempted goods cleared for export - Held that: - the issue is no more res integra and is covered by the decision in the case of Sharp Menthol India Ltd.’s case [2011 (4) TMI 27 - BOMBAY HIGH COURT], where it was held that the assessee was entitled to avail the CENVAT credit of duty paid on menthol used in the manufacture of exempted menthol crystals and utilize the said credit for payment of duty on clearance of peppermint oil either for home consumption or for export - the Appellant is not required to discharge 6% of the value of the exported Ethamotul HCL, which is exempted from duty - appeal allowed - decided in favor of appellant. 2018 (3) TMI 10 Valuation - includibility - tooling/patterns which were first sold to customers of components and the same are used in the manufacture of plastic components - Rule 6 of Central Excise Valuation (Determination of Price Excisable Goods) Rules, 2000 - Held that: - after purchase of tooling by the customers it became the property of the customer and when the same was used by the appellant it was supplied the customer free of cost to the appellant, therefore the amortized value of such tooling must be added in the assessable value of the automobile parts manufactured and sold by the appellant to their customer - matter remanded to re-determine the quantum of demand only on the amortized cost in respect of number of components manufactured and sold to their customer - appeal allowed by way of remand. 2018 (3) TMI 9 Change in classification of goods - unless and until the classification list is finalized, whether the Show Cause Notice can be issued to the appellant to change their classification of goods? Held that: - Admittedly, the appellants were filing classification list which were assessed provisionally, in that circumstances, the show cause notice cannot be issued to the appellant to change the classification of goods, unless and until the classification list is finalized. Therefore, the show cause notices issued to the appellant are premature unless and until their classification list is finalized. SCN bad in law - appeal allowed - decided in favor of appellant. 2018 (3) TMI 8 Refund of unutilized CENVAT credit - appeal not preferred against Revenue - Held that: - As against the order dt 1.10.2012, no appeal has been preferred by the Revenue. The order of the First Appellate Authority dtd 1.10.2012 has attained finality in respect of the litigation entered by the appellant and the amounts lying in balance in the Cenvat account - Further litigation which has been entered into by the lower authorities by going into merits of the case is unwarranted and the Adjudicating Authority should have granted the refund to the appellant following the directions given by the First Appellate Authority in OIA dt 1.10.2012. The impugned order is set aside and the lower authorities to are directed to quantify the amount of refund that needs to be sanctioned and refund the same - appeal allowed - decided in favor of appellant. 2018 (3) TMI 7 CENVAT credit - input services - Revenue was of the view that since the said input services are being used by the appellant for the sale of their own manufactured goods as well as under the trading activities, they are not entitled to the Cenvat Credit relatable to the trading activities - Held that: - Tribunal in the case of Tricity Auto Vs. CCE, Chandigarh-II [2016 (4) TMI 1172 - CESTAT CHANDIGARH], where it was held that common input services used in trading as also manufacturing activities are not required to reverse the credit relatable to the trading activities prior to 01.04.2011 - Inasmuch as the period involved in the present appeal is prior to 01.04.2011, demand set aside - appeal allowed - decided in favor of appellant. 2018 (3) TMI 6 Refund of excess duty paid - denial on the ground that cenvat credit availed on Servo Chainkote by the LPG bottling plants had not been reversed, the CAS-4 certificated submitted by the appellant has not been accepted by the department and that the claims are hit by unjust enrichment and time bar. Held that: - All the relevant materials are now available with respect to costing of the LPG, CAS-4 certificate in respect of the product in question Servo Chainkote and accordingly, the whole exercise for the period needs to be redone and the excess payment so determined is required to be refunded. Matter remanded with direction to the adjudicating authority to rework out the incidence of duty as per the CAS-4 certificate on record, or now available with the appellant for the relevant period - appeal allowed by way of remand. 2018 (3) TMI 5 CENVAT credit - common inputs used in the manufacture of their dutiable final products as well as exempted final products - non-maintenance of separate records - Rule 6(3)(b) of CCR 2002 - Held that: - appellant assessee have cleared under chapter X procedure or on the basis of CT-2 certificates - following the decision in the case of CCE Vs. SRF Ltd [2003 (11) TMI 5 - CESTAT NEW DELHI], where it was held that the clearance under Chapter X or under bond is not the same thing as clearance of goods wholly exempt or goods chargeable to nil rate of duty. Therefore, the provisions of the Rule 57 C are not applicable - appeal allowed - decided in favor of appellant. 2018 (3) TMI 4 Clandestine manufacture and removal - 425 Transformers - demand on the ground that the goods have not been mentioned in the RG-1 register - Held that: - the Revenue in their memo of appeal have not been able to rebutt the findings given by the Lower Authorities - Admittedly, there is no evidence of clandestine removal of the goods; as also that the excess found transformers lying in the factory premises were meant for clandestine removal. In as much as, the transformers were sold to State Organizations and Power Corporation, the clearance of the same in a clandestine manner without payment of duty does not arise. Appeal dismissed - decided against Revenue. CST, VAT & Sales Tax 2018 (3) TMI 3 Demand of Interest on account of the alleged delayed payment - Held that: - once the petitioner has been permitted to pay the arrears in instalments, in compliance of the order, dated 27.08.2004, made in W.P(MD)No.787 of 2004 and in the absence of any challenge made to the said order and thereby it has reached its finality, the impugned demand notice with regard to levy of interest, in the considered opinion of this Court, is unsustainable. This Court, on an independent application of mind to the materials placed, is of the considered view that there is no infirmity or error apparent in the reasons assigned by the learned Judge for allowing the writ petition and finds no merit in the writ appeal - appeal dismissed. 2018 (3) TMI 2 Maintainability of petition - completion of reassessment proceedings - By the impugned Endorsements Annexure-A1 dated 17.01.2018 and Annexure-A2 dated 01.02.2018 respectively, the 3rd Respondent-Deputy Commissioner of Commercial Taxes (Audit & Recovery)-5, Mangalore, has called upon the petitioner to appear before it within a period of seven days thereof and conclude the reassessment proceedings for the aforesaid Four Assessment Years. Held that: - this Court is of the opinion that since the competent Appellate Authority namely, ‘CSTAA’ is seized of the pending appeal of the petitioner-assessee along with the stay application also, on which no interim orders are said to be passed as of now, entertaining the present writ petition at this stage would be premature and the petitioner ought to have approached the said Tribunal itself for grant of appropriate interim orders in the matter and so that the multiplicity of the proceedings on account of the Respondent-Department now seeking to conclude the reassessment proceedings and pass fresh orders in pursuance of the said impugned remand order of the KAT which is under challenge before the CSTAA could be avoided. The writ petition is disposed of with a liberty and direction to the petitioner-company to approach the said ‘CSTAA’ for appropriate orders in the pending appeal. 2018 (3) TMI 1 Jurisdiction - petitioner submitted that the issue involved in these writ petitions is mismatch and such issue is already covered by the decision of this Court in M/s. JKM Graphics Solutions Private Limited Versus The Commercial Tax Officer [2017 (3) TMI 536 - MADRAS HIGH COURT] - Held that: - considering the fact that the Assessing Officer has to re-do the assessment, in view of the above said decision of this Court, this writ petitions are allowed and the impugned orders are set side. Consequently, the matters are remitted back to the Assessing Officer to re-do the assessment commencing from the stage of issuing notice of proposal, after following guidelines/procedures issued by this Court in the above referred order - petition allowed by way of remand.
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