TMI Tax Updates - e-Newsletter
April 9, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Highlights / Catch Notes
Income Tax
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Procedure for registration and submission of Statement of Reportable Account as per section 285BA of Income-tax Act, 1961 read with Rule 114G of Income-tax Rules, 1962 - Notification
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Procedure for registration and submission of statement of financial transactions (SFT) as per section 285BA of Income-tax Act, 1961 read with Rule 114E of Income-tax Rules, 1962 - Notification
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Procedure for submission of Form No. 60 by any person who does not have a Permanent Account Number and who enters into any transaction specified in Rule 114B of the Income-tax Rules, 1962
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Reopening of assessment - validity of reasons to believe - reassessment can be initiated even when the information is obtained from the record of the original assessment, investigation of the material of the record or facts disclosed thereby from an inquiry or research into facts or law - The information need not be from external source - AT
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Addition u/s 40A(2)(b) - assessee made payments of commission to his two sons - disallowance of entire expenditure as excessive and unreasonable - AO did not apply his mind to make out the applicability of provisions of section 40A(ia) of the Act properly. - AT
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Assessing Officer, instead of complying with the provisions of section 153C, proceeded with the reassessment under section 147/148 which is not applicable to search cases. Therefore, the impugned assessment order passed u/s 143(3), r.w.s. 147 of the Income tax Act, 1961 is illegal, arbitrary and without any jurisdiction - AT
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Exemption u/s 54 - LTCG - Merely because assessee had availed house building loan from bank for purchasing a new residential unit, that cannot act as a disqualification for claim of exemption u/s 54 when the primary conditions imposed in Sec. 54 of the Act were satisfied. - AT
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Deduction u/s 80IE - there is absolutely no case made out by the ld AO for shifting of profits from trading activity to manufacturing activity of the assessee - AT
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Addition of net profit on the basis of comparative cases - Though there was no scrutiny proceeding u/s 143(3) of the Act in earlier years but the history of the assessee becomes very important once the profit has to be determined on estimated basis - AT
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Nature of receipt under the head ‘fees for technical services’ (FTS)/Royalty - India-UK DTAA - The job of the assessee ends upon the production of the program content and the broadcasting is carried out by some other entity to which license was given by the BCCI. - the question of transfer of all or any right does not arise in the facts and circumstances of the instant case - No royalty income - AT
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Disallowance of business expenses as Corporate Social Responsibility (CSR) expenses - The expenses to section 37 (1) was inserted w.e.f. 1st April, 2015 and cannot be construed as to disadvantage to the assessee in the period prior to this amendment. - AT
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Nature of interest expenditure - revenue or capital - plant and machineries have been “put to use” during the year under consideration. Therefore, the expense incurred by assessee on account of LC charges and interest charges should be treated as revenue in nature - AT
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It would be unfair and unjust to charge interest on the assessee u/s 234B of the Act, merely because, the seized cash was given credit on a later date by the ld. AO. It would be just and fair to conclude that the assessee could not be fastened with interest liability for the delayed adjustment of seized cash by the ld. AO. - AT
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Deduction u/s 80P - Assessing Officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view - AT
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TDS u/s 194A - assessee Co-operative bank paying interest has been paid to its members and other Co-operative societies - prior to the date of introduction of amendment from 01.06.2015, there was no liability to deduct tax at source - AT
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TDS u/s 195 - Disallowance u/s 40(a)(ia) - reimbursement of expenses - receiving the amounts and arranging for provisional services connected with the Event - assessee had no privity of contract with the service provider - no TDS liability - HC
Customs
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Definitive anti-dumping duty imposed on the imports of " Phosphorus Pentoxide" originating in or exported from China PR
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Classification of imported goods - Steam Generator - The equipment cannot be considered as spray guns for industrial use - classification of the products is ordered under 8516.79 - AT
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Benefit of N/N. 21/2002 Cus - Transmission apparatus incorporating reception apparatus - The fact that these Populated PCBs, along with the mechanical part can be subsequently assembled easily to form the complete equipment cannot be the reason for denying the benefit of Notification mentioned for Populated PCBs - AT
FEMA
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Investment by Foreign Portfolio Investors (FPI) in Government Securities - Medium Term Framework – Review - Circular
Indian Laws
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Cheque bounced - validity of cheque - Merely because a cheque book with printed date “___/____/200___” is used after 01.01.2010 would not invalidate the cheque or become a suspicious circumstance in itself. - HC
IBC
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Corporate Insolvency Resolution Process - non-payment of mobilization advance - there is a plausible dispute between the parties which can be agitated as well, by the parties before the Civil Court and not before this Tribunal as the provisions of IBC,2016 contemplate the insolvency of the Corporate Debtor - Tri
Notifications
Central Excise-
20/2018 - dated
6-4-2018
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CE
Seeks to rescind notification nos. 7/2018-Central excise and 8/2018-Central excise, both dated 2nd February 2018 all dated 06.04.2018
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19/2018 - dated
6-4-2018
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CE
Seeks to amend notification Nos.11/2017-Central excise dated 30th June, 2017, 10/2018-Central excise 11/2018-Central excise, 12/2018-Central excise and 13/2018-Central excise, all dated 2nd February 2018
Customs-
19/2018 - dated
6-4-2018
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ADD
Seeks to impose definitive anti-dumping duty on the imports of " Phosphorus Pentoxide" originating in or exported from China PR
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18/2018 - dated
6-4-2018
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ADD
Seeks to rescind the notification No. No. 8/2017 Customs (ADD) dated 15th March, 2017
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42/2018 - dated
6-4-2018
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Cus
Seeks to rescind notification nos. 7/2018-Customs, 8/2018-Customs, 19/2018-Customs and 20/2018-Customs all dated 2nd February 2018
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41/2018 - dated
6-4-2018
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Cus
Seeks to amend notification Nos.11/2018-Customs, 12/2018-Customs, 13/2018-Customs and 21/2018-Customs, all dated 2nd February 2018
GST - States-
38/1/2017-Fin(R&C)(10/2018-Rate)/695 - dated
28-3-2018
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Goa SGST
Amendment in the Government Notification No. 38/1/2017-Fin(R&C)(8/2017-Rate), dated the 30th June, 2017 and Notification No. 38/1/2017-Fin(R&C)(38/2017-Rate)/3589, dated the 24th October, 2017.
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38/1/2017-Fin (R&C)(55) - dated
28-3-2018
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Goa SGST
Appoints the 1st day of April, 2018, as the date from which the provisions of sub-rules (ii) [other than clause (7)], (iii), (iv), (v), (vi) and (vii) of rule 2 of notification No. 38/1/2017-Fin(R&C)(50), dated the 21st March, 2018,
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38/1/2017-Fin (R&C)(54) - dated
28-3-2018
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Goa SGST
The Goa Goods and Services Tax (Third Amendment) Rules, 2018.
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12-4/78-EXN-Tax - dated
28-3-2018
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Himachal Pradesh SGST
No e-way bill shall be required for intra-state movement of goods within the state of Himachal Pradesh
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Va Kar/GST/12/2017-290 - dated
30-1-2018
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Jharkhand SGST
Corrigendum - Notification No S.O-74 (State Tax), Dated- 07.09.2017
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Va Kar/GST/12/2017-289 - dated
30-1-2018
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Jharkhand SGST
Corrigendum - Notification No S.O-04 (State Tax), Dated- 03.01.2018
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FA-3-08/2018-1-V-(41) - dated
28-3-2018
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Madhya Pradesh SGST
No e-way bill will be required to be generated for the movement of all goods of any value which commences and terminates within the area of Madhya Pradesh.
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5066/CT., Pol-41/1/2017 - dated
28-3-2018
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Orissa SGST
Extension of time line For Submission of TRAN-2
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06-Rc.046/2018/Taxation/A1 - dated
28-3-2018
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Tamil Nadu SGST
No e-way bill is required to be generated, for the intra-state movement within the State of Tamil Nadu.
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G.O. Ms. No. 42 - dated
23-3-2018
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Tamil Nadu SGST
Amendment in the Notification No.II(2)/CTR/532(d-11)/2017, dated 29th June, 2017 and Notification No.II(2)/CTR/858(a-12)/2017, dated 13th October, 2017
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G.O. Ms. No. 41 - dated
23-3-2018
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Tamil Nadu SGST
Appoints the 1st day of April, 2018, as the date from which the provisions of sub-rules (ii) [other than clause (7)], (iii), (iv), (v), (vi) and (vii) of rule 2 of the Notification No. SRO A-12(a)/2018, dated the 7th March, 2018.
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G.O. Ms. No. 40 - dated
23-3-2018
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Tamil Nadu SGST
The Tamil Nadu Goods and Services Tax (Third Amendment) Rules, 2018.
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02-Rc.046/2018/Taxation/A1 - dated
23-3-2018
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Tamil Nadu SGST
Last date for filling of return in FORM GSTR-3B.
Income Tax-
04/2018 - dated
5-4-2018
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IT
Procedure for registration and submission of Statement of Reportable Account as per section 285BA of Income-tax Act, 1961 read with Rule 114G of Income-tax Rules, 1962
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03/2018 - dated
5-4-2018
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IT
Procedure for registration and submission of statement of financial transactions (SFT) as per section 285BA of Income-tax Act, 1961 read with Rule 114E of Income-tax Rules, 1962
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02/2018 - dated
5-4-2018
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IT
Procedure for registration and submission of Form No. 61 as per Rule 114D of Income-tax Rules, 1962.
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01/2018 - dated
5-4-2018
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IT
Procedure for submission of Form No. 60 by any person who does not have a Permanent Account Number and who enters into any transaction specified in Rule 114B of the Income-tax Rules, 1962
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (4) TMI 348
Release of detained goods - Section 129 of the Central Goods and Services Tax Act - Held that: - identical matter has been disposed of by a Division Bench of this Court in The Commercial Tax Officer And The Intelligence Inspector Versus Madhu. M.B. [2017 (9) TMI 1044 - KERALA HIGH COURT], directing expeditious completion of the adjudication of the matter and permitting release of the goods detained pending adjudication, in terms of Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017 - the competent authority is directed to complete the adjudication provided for u/s 129 of the statutes - petition disposed off.
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2018 (4) TMI 347
Seizure of goods - UPGST Act - It is the contention of the petitioner that he has not violated any provision of the UPGST Act - Held that: - subject to deposit of security other than cash or bank guarantee or in the alternative indemnity bond, equal to the value of tax and penalty, to the satisfaction of seizing authority, the goods of the petitioner along with the vehicle bearing registration number PB23T- 4366 may be released forthwith - petition disposed off.
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2018 (4) TMI 346
Security deposit - Release of detained goods - the goods not being accompanied by a valid document as contemplated under the CGST and SGST Act and Rules - Held that: - it is apparent that there is no intention to evade payment of tax - on finding that the transportation of the goods was not accompanied by the valid documents as contemplated under the CGST/SGST Act and Rules, the writ petition is disposed off by directing the 1st respondent to release the goods and the vehicle to the petitioner, on the petitioner furnishing a bank guarantee for the amount demanded - petition disposed off.
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2018 (4) TMI 345
Release of goods with vehicle - stock transfer - the transportation of the goods was not accompanied by a valid copy of the stock transfer invoice/delivery chalan that ought to have accompanied the goods as per the provisions of Rule 55 of the CGST Rules - Held that: - there is no dispute with regard to the genuineness of the invoice, a copy of which accompanied the transportation of the goods - there need not be a detention of the goods for the purposes of determining the liability of the petitioner to penalty - petition disposed off.
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2018 (4) TMI 344
Detention of goods - consignment of goods that was being transported was not accompanied by the necessary declaration in Form KER I, which was mandated for supplies effected in the State - Held that: - identical matter has been disposed of by a Division Bench of this Court in The Commercial Tax Officer And The Intelligence Inspector Versus Madhu. M.B. [2017 (9) TMI 1044 - KERALA HIGH COURT], directing expeditious completion of the adjudication of the matter and permitting release of the goods detained pending adjudication, in terms of Rule 140(1) of the Kerala Goods and Services Tax Rules, 2017 - petition disposed off.
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2018 (4) TMI 278
Clearance of the raw material imported under the Advance Authorizations (‘AAs’) - Petitioner was compelled to pay the IGST - Held that: - To facilitate the communication and implementation of the order, the Central Board of Excise and Customs (‘CBEC’) is impleaded as the Respondent No.4. A copy of this order along with the earlier order dated 11th September, 2017 [2017 (9) TMI 674 - DELHI HIGH COURT] will be delivered to the CBEC forthwith for further communication by the CBEC to all the Commissionerates with the clear direction that the order dated 11th September 2017 of this Court should be complied with - application disposed off.
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Income Tax
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2018 (4) TMI 343
TDS u/s 195 - Disallowance u/s 40(a)(ia) - reimbursement of expenses - receiving the amounts and arranging for provisional services connected with the Event - Held that:- The Court is of the opinion that the findings of fact in this regard are conclusive. The lower Appellate Authorities, after considering the submissions, clearly held that the record would indicate that the assessee had no privity of contract with the service provider. Having regard to the overall circumstances, the Court is of the opinion that no substantial question of law arises in this regard. Undisclosed income by way of bogus credits - Held that:- AO conducted a first level inquiry by issuing notices under Section 133(6) of the Act but stopped further inquiry. After obtaining the PAN particulars, bank account details and other particulars relating to the identity of the creditors, the AO did not further exert himself to obtain any information or documents from the concerned banks. In these circumstances, the lower Appellate Authorities correctly inferred that the assessee had discharged the initial burden of establishing the identity of the creditors, the genuineness of the transactions and the credit worthiness of the third party. No substantial question of law
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2018 (4) TMI 342
Revision u/s 263 - whether an amount of 25% of the royalty should be treated as capital expenditure and, therefore, disallowed? - Held that:- We see no reason to accept the contention that the Principal Commissioner has made up his mind and will not take a view in favour of the assessee even if he is required to do so. The language of the show cause notice was relied upon in support of this apprehension. Indeed, some of the observations would indicate the same.That is only a manner in which it has been put. We have no doubt that if the petitioner’s contention is otherwise found to be correct the Principal Commissioner will drop the proceedings. In fact, in that event, he would be bound to do so. The contention that it was wrongly observed that it was admitted by the assessee during the course of assessment proceedings that the facts of the assessee’s case and the facts of the said judgment are identical can also be raised in the proceedings relating to the show cause notice. To leave no room for grievance, it is clarified that if a jurisdictional issue does in fact arise the petitioner can always challenge even the order on the show cause notice by filing a separate writ petition.
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2018 (4) TMI 341
Reopening of assessment - Disallowance of deduction u/s 54B - Held that:- The ground on which the reassessment was conducted appears to be the Revenue’s audit objections. In this regard, the CIT(A) and the Tribunal, in our opinion, followed the settled law in holding that it amounted to formulation of a fresh opinion based upon the same material because the assessee could not be said to have withheld any material information in the returns. Furthermore, on the other issue, i.e. merits, the Court is of the opinion that concurrent findings having been rendered, this Court refrains from interference with these orders.
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2018 (4) TMI 340
TDS u/s 194A - assessee Co-operative bank paying interest has been paid to its members and other Co-operative societies - scope of amendment w.e.f. 1.6.2015 - CBDT Circular No.9/2002, dated 11.09.2002. - Held that:- The year under appeal is assessment year 2014-15 i.e. prior to the date of introduction of amendment from 01.06.2015 and under the old provisions of section 194A(3)(v) of the Act, the assessee Co-operative bank was not obliged to deduct tax on the income of members and Co-operative societies. Applying the ratio laid down in Saraswat Co-operative Bank Ltd. Vs. (1) ITO & (2) Union of India (2017 (3) TMI 741 - BOMBAY HIGH COURT), we hold that the assessee had not defaulted in not deducting tax at source out of such payments made to its members / Co-operative societies. Thus, there was no liability to deduct tax at source and the assessee cannot be said to have violated the provisions of section 194A(1) of the Act. - Decided in favour of assessee
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2018 (4) TMI 339
Deduction u/s 80P - assessees were doing the business of banking and therefore in view of the insertion of the provisions of section 80P(4) of the Income-tax Act, the assessees were not entitled to the deduction u/s 80P - Held that:- The undisputed facts are that the assessees in these cases are primary agricultural credit societies, registered as such under the Kerala Co-operative Societies Act. In the case of Chirakkal Service Co-operative Bank Limited & Ors. (2016 (4) TMI 826 - KERALA HIGH COURT) had categorically held that when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) of the Income-tax Act. Assessing Officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Co-operative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. - Decided in favour of assessee.
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2018 (4) TMI 338
Seized cash eligible to be given credit before charging interest u/s 234A and 234B - Held that:- The income tax department was in possession of the seized cash of ₹ 66,80,000/- from 23.04.2011 onwards for adjustment towards existing liability of the assessee. Hence, the tax payable by the assessee on the returned income is eligible for appropriation from the seized cash. Once the same is appropriated, there will be no resultant tax liability. Hence, there could be no charging of interest u/s 234A of the Act. Accordingly, we direct the ld. AO to delete the charging of interest u/s 234A of the Act. The interest u/s 234B is chargeable from the first day of the assessment year i.e. from 01.04.2011 onwards. Hence, we hold that the interest u/s 234B of the Act would be eligible to be charged on the assessee for the month of April, 2011 only i.e. for one month on the tax finally assessed by the ld. AO. When the seized cash of ₹ 66,80,000/- is in the possession of the income tax department from 23.04.2011 onwards, it would be unfair and unjust to charge interest on the assessee u/s 234B of the Act, merely because, the seized cash was given credit on a later date by the ld. AO. It would be just and fair to conclude that the assessee could not be fastened with interest liability for the delayed adjustment of seized cash by the ld. AO. Hence, we direct the ld. AO to charge interest u/s 234B of the Act on the tax payable on the assessed income for one month only i.e. for April, 2011. With regard to interest u/s 234C of the Act it is levied for deferment of payment of advance tax for the period of 01.04.2010 to 31.03.2011. In the instant case, since, the cash was seized after the expiry of the previous year i.e. after 31.03.2011, the assessee cannot claim non-chargeability of interest u/s 234C on that account. Hence, interest u/s 234C of the Act is leviable in this case.
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2018 (4) TMI 337
Assessment u/s 153C - Held that:- As per the provisions of section 153C A.O. required to issue the notice only on the basis of money, bullion, jewellery, other article or thing seized or requisitioned belonged to or any books of accounts or documents seized or requisitioned pertains to or pertain to the assessee. Invoking provisions of section 153C of the Act without having incriminating material is bad in law and accordingly we set aside the orders of the lower authorities and allow the appeal of the assessee.
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2018 (4) TMI 336
Depreciation on plant and machinery not put to use - Held that:- AO has not pointed out any defect in the submission of the assessee in his remand report. Merely non filling up the relevant column of tax audit report i.e. put to use, cannot be the basis for making the disallowance of depreciation amount. Similarly all other evinces produced during the proceedings before the lower authorities cannot be disregarded without pointing out any defect. Thus, we cannot ignore the details as furnished by the assessee before Authorities Below during the appellate proceedings. - Decided against revenue Addition on account of interest expense attributable to the acquisition of plant and machinery - Held that:- As we have already held that plant and machineries have been “put to use” during the year under consideration. Therefore, the expense incurred by assessee on account of LC charges and interest charges should be treated as revenue in nature. In the light of above reasoning, we hold that the order of the Ld. CIT(A) is correct and in accordance with law and no interference is called for. We hold accordingly. Addition on account of loss in transit - amount of sale was not realized, therefore, the same was written off as bad debt but under the wrong head “loss in transit” - Held that:- In the claim made by assessee was within the provision of law as specified u/s.36(1)(vii) r.w.s. 36(2) of the Act. Thus, merely claiming the deduction under the wrong head i.e. “loss in transit” would not disentitled the assessee from claiming the benefit of the bad debt. It was also observed that copy of ledger was duly provided to AO at the time of assessment proceedings and in this regard, Ld. DR has not brought anything contrary to the finding of Ld. CIT(A). Thus, we have no alternative except to confirm the order of Ld. CIT(A). - Decided against revenue
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2018 (4) TMI 335
Disallowance of business expenses as Corporate Social Responsibility (CSR) expenses - scope of amendment - Held that:- The expenses to section 37 (1) was inserted w.e.f. 1st April, 2015 and cannot be construed as to disadvantage to the assessee in the period prior to this amendment. - Decided in favour of assessee Addition u/s 14A - Held that:- CIT(A) has given a clear finding that investments were made in earlier years out of the funds provided by the Govt. Of India. The Revenue has not furnished any material suggesting that the investment was out of borrowed funds. This ground of Revenue’s appeal is dismissed.
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2018 (4) TMI 334
Penalty u/s 271(1)(c) - defective notice - Held that:- The show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed, thus penalty to be deleted. - Decided in favour of assessee.
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2018 (4) TMI 333
TDS u/s 194H or 194J - tds on discount offered to pre-paid distributors - Held that:- As decided in assessee's own case assessee [2013 (1) TMI 516 - ITAT AHMADABAD] is not liable to deduct tax u/s.194H and 194J. Therefore, assessee is not in default for such TDS. On the principle of consistency and respectfully following the order of co-ordinate bench and in our considered opinion ld. CIT(A) has passed a detailed and reasoned order. - Decided in favour of assessee.
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2018 (4) TMI 332
Reopening of assessment - addition of unexplained deposits in the bank account in the hands of the sons and daughter-in-law - capital gain on sale of land - sharing of the sale consideration among all the legal heirs of late Shri Bhawara @ Bhura - cost of acquisition determination - Held that:- We find that the relinquishment deed was executed as per their family arrangement and mutual understanding so that the family of the daughters of late Shri Bhawara @ Bhura and Smt. Dhapu Devi Meena would not claim the amount in future and therefore, the sole purpose of executing relinquishment deed was to avoid the future dispute/litigation in respect of the share in the land. Thus, the relinquishment deed made it possible to share and distribute the sale consideration among the mother and sons excluding the daughters. Since, one of the sons expired therefore, the wife of the son is representing as legal heirs of the appeal. Accordingly, all sons and mother have shared the sale consideration received on transfer of the land in question and the deposit in bank account of the assessees is from amount received being represented as sale consideration. Hence, we find that the non acceptance of the explanation of source as well as the sharing of the sale consideration by these assessee by the authorities below is not proper and justified. Accordingly, in view of the above facts and circumstances of the case we admit the additional amount raised by the assessee. These 7 assessee mother, sons and daughter-in-law have shared the sale consideration in equal share therefore, the matter requires afresh consideration for assessing the capital gain in equal shares in the hands of the 7 assessee out of which 5 assessee are before us. Accordingly, we set aside these matters to the record of the Assessing Officer for fresh adjudication of the same by consideration the capital gain in the hands of these assessee in equal shares as well as considering the other claims of the assessee as per law. The other issues in these appeals are also accordingly stand set aside to the record of the AO. Since, the AO is required to consider the cost of acquisition as per fair market value as on 01.04.1981 therefore all other claim of index cost and other deductions are also required to be considered by the AO. - Decided in favour of assessee for statistical purposes.
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2018 (4) TMI 331
Nature of receipt under the head ‘fees for technical services’ (FTS)/Royalty - India-UK DTAA - income accrued in India - Held that:- As decided in assessee's own case [2015 (9) TMI 16 - ITAT MUMBAI] BCCI becomes the owner of the program content produced by the assessee. The job of the assessee ends upon the production of the program content and the broadcasting is carried out by some other entity to which license was given by the BCCI. Hence, in our view, the question of transfer of all or any right does not arise in the facts and circumstances of the instant case. Hence, we are of the view that the payment received by the assessee cannot be considered as “royalty‟ in terms of the India-UK DTAA. Though, it is not necessary to examine about the applicability of provisions of sec. 9(1)(vi) of the Act, yet the facts discussed above would show that the payment received by the assessee cannot fall within the purview of sec. 9(1)(vi) of the Act also.
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2018 (4) TMI 330
Estimation of profit without rejecting the books of account u/s 145(3) - Addition of net profit on the basis of comparative cases - ignoring the profit declared by it in its books of account - Held that:- the history of the assessee becomes very important once the profit has to be determined on estimated basis. - Though there was no scrutiny proceeding u/s 143(3) of the Act in earlier years but for that the assessee cannot be held responsible as it is not under his control. Once the assessee furnished his return of income then assessee has no role in the selection of the same under scrutiny proceedings. Thus, coming to profit declared by the assessee in earlier year cannot be brushed aside for estimating the profit of the current year until and unless, there are changes in the facts and circumstances. Addition towards income account of bulk agency ticket - On question by the AO the assessee submitted that the bulk agency bonus was distributed among the sellers handling the prize winning tickets. However, the assessee failed to substantiate the claim made by him on the basis of documentary evidence. - Held that:- The additional documents filed by the assessee are explaining the dispute which is already available on record. Therefore, we hold that the additional documents filed by assessee are necessary for disposal of dispute in hand. Therefore, we admit the same and restore the issue back to the file of AO for fresh adjudication in accordance with law and after considering the fresh evidence filed by assessee. Thus, the ground of assessee is allowed for statistical purpose in terms of above direction.
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2018 (4) TMI 329
Revision u/s 263 - Addition u/s 68 - addition towards share application money - Held that:- It is not in dispute that the entire transactions of share application money were the subject matter of verification in the re-assessment proceedings by the ld AO, wherein the shareholders had duly responded to notice u/s 133(6) by confirming the fact of making investments in the assessee company. The shareholders had also duly furnished their income tax assessment particulars. Pursuant to directions of the ld CIT u/s 263 of the Act, AO was mandated to make direct verifications about the genuineness of the transactions and creditworthiness of the shareholders by making necessary specific enquiries as listed out supra. CIT had specifically directed the ld AO to make enquiries directly from the shareholders and not through the assessee. Hence non-appearance of the assessee or its directors before the ld AO intentionally or unintentionally does not make any relevance here. AO admittedly did not resort to make enquiries in the manner stated by the ld CIT u/s 263 of the Act in spite of the fact that all the necessary details were very much available before him. CIT had directed the ld AO to investigate into multiple layers of the investment in shares made by respective shareholders and identify the ultimate person holding controlling interest including the change in shareholding, directorship etc and then take the entire matter to its logical conclusion to bring out the facts on record. From the perusal of the assessment order, we find that this has not been done by the ld AO. Remand the matter back to the file of the ld AO for de novo assessment and to decide the matter as mandated by the ld CIT in section 263 order, after giving sufficient opportunity of being heard to the assessee.
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2018 (4) TMI 328
Revision u/s 263 - proper enquiry with regard to loss claimed by assessee in future & option was not carried out by the AO - Held that:- CIT in his impugned order has duly admitted the fact that necessary documents explaining the loss in future & option were available on record. Yet the Ld. Pr. CIT was of the view that proper enquiry has not been made during the assessment proceedings The assessment was framed after necessary verification. We also note that Ld. Pr. CIT himself was also not clear about the error which is causing prejudice to the interest of Revenue. We further observe that provision of Section 263 of the Act does not give any power whatsoever to the Ld. CIT to remit the issue to the file of AO without finding that the order of AO is erroneous in so far as prejudicial to the interest of revenue. Therefore, the impugned order passed by Ld. Pr. CIT u/s 263 of the Act is not sustainable - Decided in favour of assessee
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2018 (4) TMI 327
Deduction u/s 80IE - maintenance of separate accounts - assessee stated that separate books of accounts were maintained and while preparing the audited balance sheet, both the accounts were merged. - CIT-A determining the net profit at 12% for manufacturing unit - Held that:- AO, without any basis, had held that the profits of the manufacturing activity would have to be determined only at 12% of sales. This has got no rationale supported by proper workings. In addition to this, the ld AO further stated that the differential profit figure of ₹ 41,44,392/- needs to be added back to the trading profit of the assessee, without any basis. There is absolutely no connection between the trading activity and manufacturing activity of the assessee. Lot of common administrative expenses were in fact debited only in the manufacturing account as could be evident from the independent profit and loss account summarized supra, without making apportionment of common expenses between trading and manufacturing activity. If the same is done, then the assessee would be entitled for higher deduction u/s 80IE in view of increased profits in manufacturing activity. In this scenario, we hold that there is absolutely no basis for the conclusion of the AO that the differential profits figure of ₹ 41,44,392/- represents trading profit of the assessee. We hold that there is absolutely no case made out by the ld AO for shifting of profits from trading activity to manufacturing activity of the assessee and hence we have no hesitation in directing the ld AO to delete the addition of ₹ 41,44,392/- made in the assessment. - Decided in favour of assessee
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2018 (4) TMI 326
Accrual of income - Addition on account of retention money - Held that:- As decided in assessee's own case for previous AY held thatamount of retention money did not accrue to assessee as income till the performance of the contract is fulfilled and accepted by contractee. - Decided against revenue G.P. determination - unfinished contracts - method of accounting - Held that:- We find that assessee was following PCM for the incomplete projects for the last so many assessment years, that the AO had never objected to the method of accounting, that while rejecting the method applied by the assessee, the AO had not mentioned the reasons as to why the method could not be applied for the year under consideration. It is true that principle of res judicata does not apply to the Incometax proceedings, but it is also equally true that rule of consistency applies to Income-tax proceedings. If there was no change in the facts and circumstances of the case, then he was not justified in disturbing the book results of the assessee. The FAA has given categorical finding of fact that the books of assessee were maintained as per the mandate of AS-7.- Decided against revenue Addition of outstanding creditors - survey action u/s 133 - one of the Directors offered ₹ 30, 00, 000/- (approximately)for taxation on account of old creditors - Held that:- The addition should be based on some evidence. In the case under consideration, the assessee had clearly mentioned the additional income offered was based on some estimate. During the survey proceedings, the Director of the company could not refer to the regular books of accounts. After reconciling the financials the exact amount of the disputed creditors was shown in the return of income. Therefore, in our opinion, the FAA was not justified in confirming the addition of ₹ 2. 78 lakhs especially when the statements recorded during the survey proceedings talked of estimated income only. - Decided in assessee’s favour. Disallowance of interest paid to the custom authorities - Held that:- We find that the identical issue i. e. use of machinery outside the state of Maharashtra and levy of penalty had travelled up to Settlement Commission and the Hon’ble Bombay High Court. The Commission deleted the penalty and the Hon’ble Court held that the interest paid by the assessee was of compensatory nature i. e. it is not penal nature. We are of the opinion that after the order of the Commission and the judgment of the Hon’ble Court there is no justification for holding that the interest was penal interest and that the expenditure claimed by the assessee should not be allowed. Reversing the order of the FAA we decide the issue in favour of the assessee.
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2018 (4) TMI 325
Exemption u/s. 54 - LTCG - assessee had availed house building loan from bank for purchasing a new residential unit - Held that:- Section 54 of the Act provides that the assessee has to purchase a house property for the purpose of his own residence within the period of one year on or after the date on which the transfer of property took place or assessee should have constructed a house property within a period of 2 years after the date of transfer. - It is clear from the AO’s order that the assessee sold his residential units during the financial year 2009-10 and purchased a new residential flat, got its possession on 17-06-2010 and it is well within time prescribed in the Act involving section 54 and thereby the assessee is entitled to claim exemption u/s. 54 - Merely because assessee had availed house building loan of ₹ 82.50 lacs from bank for purchasing a new residential unit, that cannot act as a disqualification for claim of exemption u/s 54 when the primary conditions imposed in Sec. 54 of the Act were satisfied. - Decided in favour of assessee
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2018 (4) TMI 324
Deduction u/s 10A - CIT(A) rejecting the assessee’s claim as the assessee failed to demonstrate any evidence of manufacturing of any computer software / program / customized electronic data / project or services of similar nature and further, the services rendered as aforesaid do not reveal production of any computer software or related services of similar nature - Held that:- Manufacture of computer software or program was not an essential condition rather the CBDT notification covered wide spectrum of notified services which were eligible for deduction u/s 10A. We find that Ld. CIT(A) has not appreciated the claim of the assessee vis-à-vis aforesaid CBDT instructions. It is also noted that other years have been reopened by the revenue to deny the said deduction to the assessee. Therefore, keeping in view these multiple factors, we deem it fit to restore the matter back to the file of Ld. CIT(A) for re-appreciation of assessee’s claim and readjudicate the same as per law with a direction to assessee to substantiate his claim.
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2018 (4) TMI 323
Disallowance of Repairs and Maintenance, Sales promotion, travelling expenses, Conveyance Expenses and Other Expenses - Held that:- As gone through the schedule 11 and noted that there is no such expenses as other expensed noted by AO amounting to ₹ 251.96 lakhs. Hence, on this amount no disallowance can be attributed. As regards to these expenses i.e. repair and maintenance, sales permission, travelling conveyance and motor car expenses and postage and telephone expenses the AO has disallowed 10% of the expenses. We are of the view that a reasonable disallowance should be made on account of personal element because 10% is on higher side. Accordingly, we direct the AO to make a reasonable disallowance of 5%. Addition u/s 69C - Held that:- We find that the Assessee has obtained this loan of ₹ 4 crores from GIC Housing Finance Ltd. and GIC Ltd., each containing ₹ 2 crores. We find that the CIT(A) has already deleted the addition but subject to verification of record by the AO. Now, before us the learned Counsel stated that the AO has not given any appeal effect to the order of the CIT(A). We direct the AO to give appeal effect to the order of CIT(A) and after verification of records compute the income accordingly. As regards to the interest towards loans, as contended by the learned Counsel for the assessee that this interest has never been claimed and for which bifurcation was filed before us at page 12 of the assessee’s paper book. The learned Counsel also pointed out from the accounts that no such claim of deduction was made and it is only capitalized in the loan account. It seems that the claim of the assessee seems to be correct but let the AO verify the same from records, whether the assessee has made any claim of deduction in respect to this interest of ₹ 190.14 lakhs. The AO will decide after verification
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2018 (4) TMI 322
Denial of deduction u/s 80P(2)(d) - Held that:- The assessee has claimed deduction u/s 80P(2)(d) which provides for deduction in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society. This deduction is available only if the income or dividends are derived by the assessee from cooperative society. A perusal of the impugned order reveals that the assessee has derived income from various Banks, cooperative or otherwise, and not from any co-operative Society. Extending the same logic and finding clear-cut distinction between ‘cooperative society’ and ‘cooperative bank’, we hold that the assessee was not entitled for deduction u/s 80P(2)(d). This ground of assessee’s appeal stands dismissed. Alternative claim of the assessee u/s 80P(2)(a)(i) which provides for deduction with respect to profits and gains of business attributable to carrying on the business of banking or providing credit facilities to its members - we find that this issue would require examination of certain financial aspects and Ld. first appellate authority has not examined the claim of the assessee u/s 80P(2)(a)(i). Therefore, without delving much deeper, we deem it fit to restore the matter back to the file of Ld. CIT(A) for adjudication thereof. This ground of assessee’s appeal stands allowed for statistical purposes.
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2018 (4) TMI 321
Reopening on assessment u/s 147 - Assessment u/s 153C - Held that:- As relying on Koteswara Rao Vs. DCIT (Central Circle), Visakhapatnam [2015 (12) TMI 1280 - ITAT VISAKHAPATNAM] Assessing Officer, has no jurisdiction to issue notice u/s 148 of the Act to reopen the assessments in respect of those six assessment years immediately preceding the assessment year in which search is conducted or requisition is made. The period under consideration falls within the exclusive domain of section 153A. In the instant case, since the assessment is made consequent to search in another case, the Assessing Officer is bound to issue notice u/s 153C and thereafter proceed to assess or reassess total income under section 153A of the Act. The Assessing Officer, instead of complying with the provisions of section 153C, proceeded with the reassessment under section 147/148 which is not applicable to search cases. Therefore, the impugned assessment order passed u/s 143(3), r.w.s. 147 of the Income tax Act, 1961 is illegal, arbitrary and without any jurisdiction - Decided in favour of assessee.
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2018 (4) TMI 320
Annual rental value as per fair market rate - Annual Let out Value - Held that:- In this case, it is observed from the assessment order that the municipal assessment was done for this building in the year 2008. Though certain repair works are carried out by the assessee, such as external painting, etc. it is for the assessee to establish that building is not ready for occupation after the municipal assessment was completed. Having done the municipal assessment, we are unable to agree with the contention of the assessee that the building was not ready for occupation. It is for the assessee to bring the evidence to prove that the building was not ready for occupation. With regard to the determination of fair market rent, as per the detailed discussion made in this order with regard to the plot No.242, we hold that the A.O. cannot adopt the fair market value without allowing the cross examination of the owners or tenants by the assessee. The assessee submitted that the building was not let out and not ready for occupation. We direct the A.O. to adopt the fair market value determined by the municipal authorities (GHMS) as the fair rental value and assess the same for income tax purpose.
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2018 (4) TMI 319
Revision u/s 263 - AO should have examined valuation of work in progress of the assessee in a particular manner to include part of the indirect expenditure, which are attributable to the particular projects - lack of inquiry or inadequate inquiry - Held that:- The assessee has only stated that in assessment year 2009 – 10 the issue is pending before the coordinate bench where the issue involved is the valuation of the closing stock of work in progress. Even that does not show that the assessing officer has applied is mind on to determine the cost of the work in progress according to the earlier history of the case of the assessee. Therefore, according to us there is no Inquiry made by the Ld. assessing officer about the valuation of the closing stock of work in progress. Therefore, according to us the case of the assessee falls under the category of lack of Inquiry and not even the case of inadequate Inquiry. In the present case the AO has not examined the valuation of the work in progress with respect to the components of the value of the stock, according to us that enquiry has not been made by the Ld. assessing officer which are diligent assessing officer should have made more specifically when the identical issue is litigated by the revenue. In view of this we do not find any infirmity in the order of the Ld. CIT in assuming jurisdiction under section 263 of the income tax act and holding that the order passed by the Ld. assessing officer is erroneous and prejudicial to the interest of the revenue. Accordingly, both the grounds of appeal filed by the assessee are dismissed.
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2018 (4) TMI 318
Disallowance of expenditure for not carrying out any business activity during the year - Held that:- Respectfully following the decision of the Hon’ble apex court in Vikram Cotton Mills case (1987 (12) TMI 1 - SUPREME Court), we find that merely because there was a temporary lull in the business for some period, it cannot be said that the assessee abandoned the business requiring them to reset up it again. The assessee’s claim of expenditure incurred during the period of temporary suspension of business has to be allowed. However, the quantum of expenditure needs to be verified at the end of the AO. For this purpose of verification of the quantum, we set aside the issue to the file of the AO with a direction that after verification and if the claim is found to be genuine, the AO will allow the same. - Decided against revenue
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2018 (4) TMI 317
Rejection of registration u/s 12AA - proof of charitable activities - business activity - Held that:- Inter-Connected Stock Exchange Investors Protection Fund (2013 (10) TMI 1134 - ITAT MUMBAI) in which it has been specifically held that the where main object of the assessee Trust was to protect investor by way of creating a fund and fund created by the assessee was a public charitable fund having been set up to advance an object of general public utility, the assessee was entitled to grant registration u/s 12AA of the Act. See MCX Stock Exchange Investor Protection Fund Currency Derivatives Segment Trust Vs. DIT [2014 (1) TMI 1839 - ITAT MUMBAI] The applicant fund is a public charitable fund, set up to advance an object of 6552/13NCDEX 3 general public utility, and has been wrongly denied registration as one by the Revenue and is not liable to be considered as business activity which nowhere fall within the perview of the provision u/s 2(15) of the Act. The claim of the assessee is not liable to be declined on the ground of the registration u/s 10(23EC) of the Act. At the time of registration of the Trust, the claim of the assessee is not liable to be declined in view of the provision of Section 13 of the Act. We are of the view that the claim of the assessee for the registration u/s 12A of the Act has wrongly been rejected by the Director of Income-tax (Exemption). - Decided in favour of assessee.
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2018 (4) TMI 316
Default u/s 201/ 201(1A) - assessee in default - non deduction of tds - whether order passed beyond the time limit allowed u/s 201(3) - Held that:- Order passed under section 201(1) and 201(1A) having been passed after expiry of two years from the financial year wherein the TDS statements were filed by the assessee under section 200 of the Act, is barred by limitation, hence, has to be declared as null and void. - Decided in favour of assessee.
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2018 (4) TMI 315
Addition u/s 40A(2)(b) - assessee made payments of commission to his two sons - disallowance of entire expenditure as excessive and unreasonable - Held that:- AO is under obligation to bring comparable cases or gather data from the open market, if any. We find the Assessing Officer failed to discharge his onus in this regard. From that point of view, addition made by the Assessing Officer is premature. Under these provisions, the 100% of the payments cannot be considered as excessive or unreasonable. Coming to the applicability of the provisions of section 40A(ia), we are of the opinion that there was no conclusive findings of the Authorities below in this regard. Therefore, in our view, the Assessing Officer did not apply his mind to make out the applicability of provisions of section 40A(ia) of the Act properly. - Decided in favour of assessee.
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2018 (4) TMI 314
Initiating the reassessment proceedings u/s.147 - default to take steps under section 143(3) - non service of notice - Estimating the Gross Profit on alleged bogus purchases @25% - Held that:- As decided in ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [2007 (5) TMI 197 - SUPREME Court] so long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) - Decided in favour of revenue. Bogus purchases - Held that:- The assessee in the first year i.e. assessment year 2009-10 has maintained quantitative details. In other words, it has the evidence of purchasing goods and its sales. In such circumstances, at best, higher gross profit rate can be applied. Following our decision in earlier orders, we hold that GP rate of 10% over and above GP declared by the assessee in its books of account, be applied to work out the additional income in the hands of assessee.
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2018 (4) TMI 313
Reopening of assessment - validity of reasons to believe - Held that:- We find that notice u/s 148 of the Act was issued before the expiry of 4 years from the end of relevant A.Y. and the reason for reopening related was the issue of additional royalty privilege fees and there was no finding of the Ld. AO on this issue in the regular assessment completed u/s 143(3) of the Act. We, therefore, find no merit in the grounds raised by the assessee in view of the facts and circumstances of the case wall as in view of Hon'ble Apex Court judgment in the case Kalyanji Mobji & Co. vs. CIT (1975 (12) TMI 2 - SUPREME Court) wherein observed that “reassessment can be initiated even when the information is obtained from the record of the original assessment, investigation of the material of the record or facts disclosed thereby from an inquiry or research into facts or law. The information need not be from external source." - Decided against assessee. Disallowance of ex-gratia payment provided for labourers - Held that:- Respectfully following the judgment of Hon'ble Apex court in the case of SA Builders Ltd. (2006 (12) TMI 82 - SUPREME COURT) and in view of the facts and circumstances of the case, discussed in the preceding para are of the considered view that the alleged expenditure of exgratia payment in the shape of Anugrah Rashi/Protsahan Rashi to labourers working in the mines held on lease by the assessee are allowable as business expenditure and both the lower authorities erred in disallowing the same. In the result the issue of disallowance ex-gratia payment is allowed in favour of the assessee Disallowance of privilege fee - provision in in the nature of additional royalty i.e. tax payable to the state government for mining or it is a privilege fee - Held that:- From the perusal of records, we find that the alleged provision was made as per government order No.F19-95/2004/12/2 dated 13.10.2004 issued by the State Government by the Ministry of Mines and Minerals. The copy of alleged order is not placed on record. Even though the assessee has paid the amount equivalent to the royalty paid on the sand and has also deposited ₹ 15 crores through challans in the government treasury, but still its actual nature is not discernable from the records placed before us. The fact needs to be inquired by the AO duly assisted by the assessee as well as information to be taken from the Madhya Pradesh State Government( Mines and Minerals Department) duly, referring to the notification as discussed above and then to decide accordingly. In case the alleged amount is in the nature of tax duty or cess (by whatever name called under any law for the time being enforce) then the alleged disallowance needs to be sustained and if found otherwise then the claim of assessee should be allowed. - Allow this issue in favour of assessee for statistical purposes and remit it to the file of Ld. AO to make necessary verification
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2018 (4) TMI 312
Unexplained cash deposits in bank account - Held that:- We find force in the arguments advanced by Ld. AR for the assessee that entire cash deposit cannot be treated as undisclosed income of the assessee without giving the benefit to the drawing of cash made by the assessee during the year. Moreover the AO should have also verified the amount withdrawn through credit card and its repayment during the year. In case the assessee is able to establish the nexus between the cash deposited and the amount withdrawn during the year then the benefit for the same should be extended to the assessee. Thus, we are of the considered view the entire amount of cash deposit cannot be treated the income of assessee without adjusting the amount of withdrawals from the said bank accounts. Similarly the benefit of the money withdrawn through the credit card should also be given to the assessee if he is able to establish the nexus between them. It was also observed that Ld. CIT(A) has given the finding that personal expense were also incurred by assessee through credit card but no details of such expense was brought on record. But this aspect also needs to be considered. Therefore, we are inclined remit the matter back to the file of AO for fresh adjudication - Decided in favour of assessee for statistical purposes. Penalty u/s 271(1)(c) - Held that:- Addition has been made by the AO on account of unexplained money and cessation of liability on basis of lack of evidence. Though the assessee’s explanation in respect of the credit card transactions and cessation of liability in the absence of sufficient proof was not accepted, that would not mean that the assessee made any deliberate attempt towards concealment of particulars of income. Mere sustaining of addition on the basis of entries in the credit card account would not warrant a conclusion that the assessee had concealed certain particulars of income. It was lack of sufficient evidence for which the addition was sustained in part. We are of the considered opinion that this is not a fit case for levy of penalty u/s 271(1)(c) of the Act, we therefore, set aside the order of Ld. CIT(A) and direct the Assessing Officer to delete the penalty. - Decided in favour of assessee
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2018 (4) TMI 311
Deduction of expenses u/s 37 - Liquidated damages and provisions for warranty - Held that:- Provision for warranty claimed is decided in favour of the assessee as relying on case of Rotork Controls India (P) Limited vs. CIT reported in (2009 (5) TMI 16 - SUPREME COURT OF INDIA) Total provision for liquidated damages was of ₹ 19,66,51,910/- out of which ₹ 2,04,52,238/- were utilized and credited / written back, the remaining amount of ₹ 17,61,99,672/- was the actual amount of the damages which were accounted for in the profit and loss account. CIT(A) categorically stated that when the payments were actually made, the accounts were adjusted with reference to any remission or waiver that the company may get in respect of damages payable for the late delivery and the same was brought to tax u/s 41 (1) of the Act by crediting the liquidated damages accounts. Therefore, the impugned amount was not only the provision but the actual amount of the liquidated damages pertaining to the period of delay falling within the previous year relating to the assessment year under consideration. The learned CIT(A) categorically stated that the assessee was following this method consistently - Decided against revenue
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2018 (4) TMI 310
Addition on commission or profit from MCX - profit derived from trading through Multi commodity exchange - Held that:- In the present case, it appears that the assessee was not the member of the exchange MCX rather she was acting through Shri. Raman Kumar Grover who was member of Multi Commodity Exchange of India Limited (MCX) and later on he was declared as defaulter. The assessee also furnished a certificate issued by Raman Kumar Grover, copy of which is placed at page no. 49 of the assessee’s paper book in the said letter it is clearly mentioned that the assessee earned commission of ₹ 1,51,357/- and was neither entitled to nor received any other commission or profit from MCX India Limited for the year ended on 31.3.2010. However, the said letter was not available either to the AO or to the learned CIT(A) but it goes to the root of the matter, to resolve the present controversy. We, therefore, deem it appropriate to set aside this issue back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. - Appeal of the assessee is allowed for statistical purposes
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2018 (4) TMI 309
Eligibility to exemption u/s 11 & 12 - funds of the appellant trust were utilized for the personal benefit of trustees of the appellant trust - car used for the purpose of the school education - Held that:- There is no finding to the extent that how the car has been used for the purpose of the school education and the use for the purpose of trust so as to be eligible for exemption u/s 11 of the Income Tax Act, 1961. The same needs to be verified. Therefore, the order of the CIT(A) is set aside and the matter is remanded back to the file of the Assessing Officer for verifying all the relevant materials. Transaction between the appellant trust and M/s Godwin Construction Pvt. Ltd. - AO did not accept the explanation of the assessee mainly on the ground that the transaction between two interrelated parties by way of memorandum cannot be treated as reliable - Held that:- CIT(A) is right in holding that the transactions referred to by the Assessing Officer are between the trust and a company which is engaged in the business of real estate development. There is no bar in the statute that a trust which is claiming exemption u/s 11 cannot have commercial transaction with a company in which the trustees are directors. The only condition in such transaction can be that the transaction should be at appropriate value and no undue benefit accrues to either of the transacting parties. The copy of account of the assessee trust as appearing in the books of the company was filed before the Assessing Officer. Further, there is no finding by the Assessing Officer that the asset claimed to be purchased by the assessee trust was not recorded in the books of trust as on the date of search. Thus, there is no need to interfere with the findings of the CIT(A).
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2018 (4) TMI 308
Penalty u/s 271C - default on the part of assessee in complying with provisions of section 201 (1) and 201 (1A) - non deduction of tds by assessee as an employee of Post and Telegraph Department government statutory organisation - Held that:- Non-deduction of TDS was not deliberate but merely a technical default. We observe that there was a reasonable cause for not deducting TDS. Assessee was ignorant of the TDS provisions under Income Tax Act and it was intimated to him in the subsequent assessment years. Under such circumstances as per 273 B, penalty provisions cannot be considered to be automatic if the assessee has been able to establish a reasonable cause for the said failure. See Commr. Of Income Tax-XVIII, Delhi Versus Bank Of Nova Scotia [2016 (1) TMI 583 - SUPREME COURT] - Decided in favour of assessee
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2018 (4) TMI 307
Addition u/s 40A - sum total of the debit entries that are not carried to the regular books of accounts - entitled to the benefit of set off of the surrendered amount - Held that:- No reason not to agree with the statement of the learned AR on this aspect of law and adjustability of the peak amount and the other amount of ₹ 6,35,000/- from out of the surrendered amount of ₹ 1,65,60,000/- subject to the verification of such amount at the end of the AO. Whether or not the assessee claimed any of the debit entries as allowable expenditure has to be verified by the AO to see whether or not the provisions u/s 40A(3) are applicable so also the AO has to verify from the entries of the ledger A3 & A11 to calculate the peak amount - direct the AO to verify whether any expenditure relatable to the un-carried entries in Annexure 3 & 11 and if there is any such expenditure claimed to calculate the net amount of the credit and debit entries so as to adjust the same from out of the surrendered amount. While making such adjustments, the AO will consider the possibility of adjusting the amount of ₹ 6,35,000/-. We, therefore, allow the grounds of appeal of the assessee for statistical purposes. Set off of the surrendered amount - Held that:- As in the preceding paragraphs, we direct the learned AO to verify whether any expenditure was claimed in respect of the debit entries of Annexure 3 & 11 and then to decide the applicability of Section 40A(3). The observations of the learned CIT(A) would be subject to such finding of the learned AO after verification. We, therefore, do not find any merit in the contention of the revenue that no set off should be allowed in respect of the surrendered amount from out of the amount ultimately found to be taxable. We reject this ground.
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2018 (4) TMI 277
Addition made on account of bogus purchases - Held that:- As relying on M/s. Chhabi Electricals Pvt. Ltd. Vs. DCIT [2017 (6) TMI 514 - ITAT PUNE] Addition is to be restricted by applying GP rate of 10% on the said purchases over and above the GP rate shown by the assessee. Accordingly, appeal filed by the assessee is partly allowed
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Customs
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2018 (4) TMI 306
Encashment of the Bank Guarantee - time limitation - Held that: - this Court is of the opinion that normally such matters would not require any interference by this Court when it was open for the petitioner assessee Company to approach the concerned Tribunal itself with the prayer for interim relief as well soon after the service of the order upon them and there was no justification for it to have waited till the end of the limitation period, but the assessee Company for no valid reason has failed to do so. The present writ petition is disposed of with a direction to the petitioner assessee Company to deposit a sum of ₹ 10 lakhs within a period of one week from today with the Respondent Assessing Authority.
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2018 (4) TMI 305
Benefit of N/N. 21/2002 Cus - Transmission apparatus incorporating reception apparatus - Held that: - There is no dispute that the goods imported and for which the Notification benefit has been claimed, are in the form of Populated PCBs and said to be parts of transmission apparatus incorporating the reception apparatus. Such goods are entitled to the concessional rate of Customs duty at 10% in terms of the Sl. No, 322 (B) of the N/N. 21/2002 - The fact that these Populated PCBs, along with the mechanical part can be subsequently assembled easily to form the complete equipment cannot be the reason for denying the benefit of Notification mentioned for Populated PCBs - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 304
Classification of imported goods - Steam Generator - Department was of the view that the right classification of the product will not be under 8424 as indicated by the appellant but the goods are rightly classifiable under Customs Tariff Heading 8516 79 90 - The approximate weight of the equipment is given as 412 kg and from the nature of use for which the equipment can be used, we are of the view that the same are typical for domestic use. The equipment cannot be considered as spray guns for industrial use - classification of the products is ordered under 8516.79 - appeal dismissed - decided against appellant.
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2018 (4) TMI 303
Benefit of duty free clearance - N/N. 148/1994 dated as amended (Sl. No, 8) - denial of benefit for the reason that the appellant could not satisfy the condition imposed in the notification that the goods should be supplied free of cost by the foreign Government - Held that: - The Certificate issued by the European Union dated 09.11.1999 categorically states the plant and machinery under import is meant for the pilot project being set up by the appellant at Muvattupuzha, Ernakulam, Kerala and further that the equipments were supplied free of cost in terms of the bilateral agreement between the Government of India and European Union - the goods under import by the appellant satisfied the condition specified in the N/N. 148/1994. The goods are entitled to duty free clearance - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2018 (4) TMI 351
Initiation of Corporate Insolvency Resolution Process - existence of operational debt - Held that:- There has been no admission of operational debt by the respondent. In fact, there has been a dispute regarding bills raised and services provided by the applicant. Respondent had raised counter debit notes in 2016. There was existence of dispute much prior to the issuance of notice under Section 8 of the Code. Respondent has raised dispute with sufficient particulars. The amount of claim raised by the applicant clearly falls within the ambit of disputed claim. The claim of dispute suggests the need of elaborate investigation. In the facts it is reiterated that existence of genuine dispute in the present case cannot be ruled out. Section 9(5)(ii)(d) of the Code provides that adjudicating authority shall reject the application if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. This petition fails and the same is rejected.
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2018 (4) TMI 350
Corporate Insolvency Resolution Process - non-payment of mobilization advance - Held that:- Non-payment of advance cannot give rise to a claim under Section 5(21) of IBC,2016 as an Operational Debt will arise only when the Petitioner/Operational Creditor is able to establish that there is a debt due and payable arising out of provision of goods or by rendering of services which is not the case here as the said stage has not according to the Corporate Debtor arisen at all. At best, non-payment of mobilization advance even if there has been full mobilization on the part of the Operational Creditor can give rise to breach of the contract and the amount payable under the said contract as well as the damages can be quantified in a Civil Court and not by this Tribunal. This is particularly so in relation to the work contract. As rightly stated by Ld. Counsel for the Corporate Debtor that there is a plausible dispute between the parties which can be agitated as well, by the parties before the Civil Court and not before this Tribunal as the provisions of IBC,2016 contemplate the insolvency of the Corporate Debtor and the consequences arising thereunder are for the benefit of the entire body of creditors and that no creditor is going to be benefitted and on the other hand the claim of advance and non-payment of the same cannot be considered as an ‘Operational Debt’, this Tribunal is not satisfied with the claim as put forth by the Operational Creditor as beyond the pale of plausible dispute.
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2018 (4) TMI 349
Corporate insolvency proceedings - Held that:- Indian Council of Arbitration cannot proceed during the moratorium period. Set aside the order passed by the Indian Council of Arbitration, declare that the Arbitration Tribunal/ Indian council of Arbitration cannot proceed with the arbitral proceeding pending between the parties. Both the parties are directed not to pursue arbitral proceeding before the Arbitration Tribunal/ Indian Council of Arbitration till final order is passed by the Adjudication Authority on the resolution plan and completion of the moratorium period. However, it will open to both of them to file their respective claim and counter claim, if any, before the Resolution Professional.
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Service Tax
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2018 (4) TMI 301
Refund claim - export of services - Place of Provision Rules - intermediary - case of Revenue is that the appellant has been providing the intermediary service and not the export of service - Held that: - the appellants are not rendering the intermediary service and they are rendering consulting engineering service and BAS and fall in the definition of export of service - After holding that the appellants are not rendering intermediary service, this case needs to be remanded back to the original authority as held by the Commissioner(Appeals) to pass a fresh order after considering all the submissions of the appellant - appeal allowed by way of remand.
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2018 (4) TMI 300
Interest on delayed refund (on already sanctioned amount) - section 11BB of CEA - Held that: - the Hon'ble Apex Court in the case of Ranbaxy Laboratories Ltd. vs. UOI [2011 (10) TMI 16 - Supreme Court of India] has upheld grant of interest in case of late disbursal of refund from the expiry of three months of refund application till refund is granted and not from the date of order of refund - circular No 670/61/2002-CX dt. 01/10/2002 issued by CBEC also clarified that the provisions of Section 11BB of the Central Excise Act gets automatically attracted for any refund sanctioned beyond a period of three months - appellant are entitled to interest - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 299
Refund claim - various input services - denial on account of nexus - Held that: - all the input services on which refund has been denied have been held to be input services by various decisions of the Tribunal and the High Court - refund allowed - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 298
CENVAT credit - trading activity - common inputs utilized for trading as well as manufacturing activity - non-maintenance of separate records - extended period of limitation - Held that: - invoking the longer period is not sustainable because on the same issue earlier show-cause notices are pending decision before the Tribunal - in the case of ECE Industries ltd. [2003 (3) TMI 136 - SUPREME COURT OF INDIA], on an identical issue, the Hon'ble Supreme Court set aside the demand on limitation. Thus, the longer period of limitation is not invocable as the as the appellant was issued show cause notices for the earlier period - entire demand in the present case is barred by limitation - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 297
Rectification of mistake - review - applicant submitted that there is an error apparent on the face of the Final Order passed by the Tribunal because the Tribunal has not considered any of the submissions made by the appellant and proceeded to decide the issue on its own findings - Held that: - the application for rectification of mistake is not maintainable as there is no error apparent on the record which needs to be rectified - the content of the application shows that in the garb of this application, appellant wants to review the whole order for which the Tribunal lacks jurisdiction - ROM Application dismissed.
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2018 (4) TMI 296
Valuation - inclusion of VAT - whether service tax is required to be paid on the entire consideration received by the appellant towards providing the service of retreading which also included the value of the goods used in such service on which the value added tax also has been paid? - Held that: - the issue is squarely covered by the decision in the case of Safety Retreading Co, P, Ltd. Vs, CCE, Salem [2017 (1) TMI 1110 - SUPREME COURT], where it was held that The finding of the appellate Tribunal that it is the entire of the gross value of the service rendered that is liable to service tax, in our considered view, does not lay down the correct proposition of law which, according to us, is that an assessee is liable to pay tax only on the service component which under the State Act has been quantified at 30%. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 295
100% EOU - Business Auxiliary Services - Manufacture - process of converting black tea into decaffeinated tea - whether the decaffeinated tea is distinctly different from the raw-materials i.e. black tea? Held that: - decaffeinated tea contains far lesser amount of caffeine than black tea and the same is packaged, marketed and perceived differently in the market. Consequently, the processes of extracting decaffeinated tea as well as caffeine from black tea amounts to process of manufacture - In the present case, since the entire output of the appellant is getting exported there may not be any requirement to discharge central excise duty. Business Auxiliary Services - Held that: - since the process amounts to manufacture, the same will go out of the purview of the definition of Business Auxiliary Service' under Finance Act 1994 - there can be no demand for service tax on the job charges. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 294
Valuation - inclusion of cost of materials - Maintenance or repair service - Department took the view that the cost of materials also should be included for the purpose of levy of service tax - benefit of N/N. 12/2003-ST dt 26/02/2003 - Held that: - the issue for the earlier period stands settled in favor of the appellants in the case of M/s. Hindustan Aeronautics Limited Versus The Commissioner of Service Tax Bangalore [2013 (12) TMI 799 - CESTAT BANGALORE], where it was held that the benefit is allowable inasmuch as the value of material which has been used in the course of repair has been specifically mentioned and service tax paid already on the value of service. There is no justification In the stand of the Department that service tax is to be paid by including the value of the materials. Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (4) TMI 293
Clandestine manufacture and removal - confiscation - penalty - Held that: - On both occasions, at the first stage, as well as on remand, accepting the contention of the assessee M/s. Southern Press Tools, Coimbatore, the Tribunal has arrived at a categorical finding that there is no manufacturing activity and accordingly, allowed the appeals filed by the dealers - appeal dismissed - decided against Revenue.
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2018 (4) TMI 292
Clandestine removal - corroborative evidences - third party evidences - the entire case of the Revenue is based upon the result of the search conducted at the premises of M/s.New Tech Ispat Pvt. Ltd. and there was no investigation at the appellant’s end except recording of the statement of the Director, which is exculpatory - Held that: - the entire endeavor of the Revenue is based upon the documents recovered from the premises of M/s. New Tech Ispat Pvt. Ltd. read with the statement of their Director and by ignoring the statement of the Director of the present appellant. Tribunal’s decision in the case of Abha Power & Steel P. Ltd. [2018 (1) TMI 365 - CESTAT NEW DELHI] relied upon, wherein under the identical circumstances, the demand of duty made on the basis of the third party’s records were set aside by following the Tribunal’s earlier order in the case of Rudra Ventures Pvt. Ltd. [2016 (3) TMI 1173 - CESTAT CHANDIGARH]. It was held in the said order that in the absence of any investigations conducted at the assessee’s unit and in absence of any corroborative evidence of procurement of raw materials, transportation of the goods, flow back of money, etc., allegations of clandestine removal based on mere assumptions and presumptions are not sustainable. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 291
Clandestine removal - clearance of goods under the fake parallel invoices - customers found non-existent and addresses of customers found to be fake - Held that: - The said factors discharged the initial onus placed upon the Revenue and it is now for the appellant to establish that the goods were not removed under the cover of said invoices. No documentary evidence has been produced by them to show the cancellation of the purchase orders by the customers. In fact their authorised representative has admitted such clearances along with the admission of receipt of goods by the buyers - demand upheld. Demand of duty on the basis of variation and quantity in the invoice and the packing list - Held that: - the demand on the said ground stands confirmed only on the basis of difference in the invoice weight and the packing list weight, without there being any other evidence of clandestine manufacture of excess goods and their clearances - Though, such factory may raise doubt against the appellant but cannot take place of evidence so as to confirm the demand - demand set aside. Demand of ₹ 95,345/- based on alleged excess consumption of aluminium scrap which according to Revenue was transferred from their daily stock account i.e. RG-1 register but not entered in their Form-IV register - Held that: - This fact, by itself, does not lead to the inevitable conclusion of clandestine manufacture and clearance of their final product, in the absence of any other evidence on records - demand set aside. Demand of ₹ 79,392/- based on ageing report alleging the difference between the quantity in ageing report and daily stock account for two days i.e. 22.1.2013 and 29.3.2013 - Held that: - the ageing report is not a statutory document and no evidence of clandestine removal of such quantity brought on record by the department, therefore the demand of ₹ 79,392/- is liable to be set aside. Demand of ₹ 1,20,784/- stands confirmed on the basis of Ledger Purchase-B recovered from the premises of the traders being third party records - Held that: - the demand cannot be sustained on the sole basis of the entries made therein - The law i.e. as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence of any corroborative evidence, is well established - demand set aside. The demand of ₹ 17,994/- stands confirmed on the basis of the shortages detected by the officers during the course of their visit in the appellant ‘s factory - Held that: - Inasmuch as there is no other evidence, such shortages by itself cannot be held to be relatable to the clandestinely removed goods - demand set aside. Penalty - Held that: - the duty of ₹ 2,08,356/- is confirmed against M/s Vimsar Products Pvt. Ltd. and the balance demand is set aside. As regards, penalty the same is upheld to the extent of the demand confirmed. Penalty on other two appellant - Held that: - no separate role stands attributed to the appellants and no positive evidence stands adduced by the Revenue to show their complexity in the matter - penalty on them set aside. Appeal allowed in part.
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2018 (4) TMI 290
CENVAT credit - case of Revenue was that no raw materials were supplied alongwith the invoices - Held that: - Tribunal in the case of Dashmesh Castings Pvt. Ltd. vs. CCE & ST, Chandigarh [2015 (4) TMI 522 - CESTAT NEW DELHI] has observed that the allegation of availment of credit without actually receiving the inputs cannot be upheld without any evidence produced for alternative source of procurement of raw material. It was further observed that receiving and utilization of raw material shown by the assessee, without which production of final product would not have been possible. The evidence produced by the Revenue is not sufficient enough to uphold the charge of nonreceipt of inputs. Appeal dismissed - decided against Revenue.
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2018 (4) TMI 289
Clandestine removal - the entire case of the Revenue is based upon the shortages conducted at the time of visit of the officers - Held that: - Apart from the shortages, there is virtually no other evidence on record to reflect upon the clandestine activities of the appellant - As per the settled law such shortages, by themselves, cannot lead to the fact of clandestine removals so as to justify confirmation of demands - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 288
Demand of differential duty - The department was of the view that deduction from VAT from Transaction Value is admissible only for the amount of tax actually paid or payable - Held that: - In the case of the Schemes under the Rajasthan Government, the subsidy amount is paid in the form of VAT Challan whereas in the case of the Scheme of the MP Government, the same is allowed by way of book adjustment against the VAT payable for the subsequent period. Identical issue decided in the case of Tribunal in the case of Shree Cement Ltd V/s Commissioner [2018 (1) TMI 915 - 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 (4) TMI 287
CENVAT credit - common inputs used for manufacture of dutiable as well as non-dutiable goods - furnace oil - non-maintenance of separate records - Rule 6(1) of CCR 2001, 2002 and 2004 - Held that: - the appellant has no case on merit in view of the judgment of the Hon’ble Gujarat High Court in the case of CCE vs. Deeyakar Aluminium Pvt. Ltd. [2011 (3) TMI 1596 - GUJARAT HIGH COURT], where it was held that CENVAT credit on furnace oil is not admissible. Time limitation - Held that: - the demand for the period from 30.1.2002 to 30.11.2005 is time barred and the same is set aside and the appellant is liable to pay the duty for the period from December 2005 to October 2006 and for the purpose of quantification of duty for the normal period, the case is remanded back to the original authority to re-quantify the demand for the normal period along with interest. Appeal allowed in part by way of remand.
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2018 (4) TMI 286
Time limitation - Benefit of N/N. 8/96 dt. 23/07/1996 - DC Defibrillators - Departmental officers took the view that the goods manufactured by BPL were not eligible for the benefit of exemption notification - Held that: - The issue on merits has been decided against the assessee by the Hon'ble Supreme Court in the case of M/s. BPL. Limited Versus Commissioner of Central Excise, Cochin-Ii Commissionerate [2015 (5) TMI 248 - SUPREME COURT]. But the Apex Court has directed the Tribunal to readjudicate the issue on limitation - The eligibility of the notification itself has been held by the Apex Court as not available to the assessee. The benefit of the notification was a contentious issue. The assessee appears to have declared only the model number of the DC Defibrillators manufactured by them and claimed the benefit of the notification. It cannot be said that the benefit was claimed by suppressing any fact. There is no positive act recorded on the part of the assessee to fraudulently claim the benefit of the notification by willful misstatement - extended period not invokable. The matter is reverted to jurisdictional Commissioner for requantification of demand within the normal time limit.
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2018 (4) TMI 285
CENVAT credit - imported Rectifiers - Department was of the view that the process carried out by the appellant within the factory do not bring about any new product and hence the Rectifiers are to be considered as inputs cleared as such - Rule 3(5) of CCR - Held that: - these tests as well as programming carried out within the factory are in the nature of acceptance testing i.e. to mean that the tests are required to ensure that the goods which are being cleared in the spare parts market satisfied the conditions which are prevailed in India. Without carrying out these tests, the imported Rectifiers are not considered fit for use in the Indian conditions. As seen from the technical write up, of various processes carried out within the factory, we are of the view that the imported Rectifiers cannot be considered as cleared N as such'. These goods are cleared only after carrying out various tests which by themselves may not amount to manufacture but are necessary to complete the manufacturing process of the imported Rectifiers. The processes carried out are in the nature of finishing process which can be considered as ancillary to the manufacture of a finished product - there is no justification for demand of such amount under Rule 3 (5). Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (4) TMI 284
Levy of tax and penalty - sale of idli and dosai maavu (batter) - TNVAT Act - Held that: - without expressing anything on the manner in which the 2nd respondent has passed the impugned order and with a view to ensure that justice is not only done, but it should be seen to be done, the matter is directed to be placed before some other officer of equivalent cadre. Petition allowed.
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2018 (4) TMI 283
Revision of assessment - TNVAT Act - Held that: - Once the objections of the dealer are on record, the Assessing Officer has to independently apply his mind to the objections given and the materials placed by the dealer before him and not to be solely guided by the report of the officials of the Enforcement Wing. The assessment proceedings being quash judicial proceedings, the second respondent should act in such a manner without giving room for any arbitrariness or capriciousness - Petition disposed off.
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2018 (4) TMI 282
Reversal of input tax credit - purchases from registration canceled dealers - Held that: - This Court has been repeatedly holding that the Assessing Officer, being an independent Statutory Authority, should not be solely guided by the report of the officials of the Enforcement Wing, but shall decide the matter on the basis of the objections filed by the assessee. The matter is remitted back to the respondent for a fresh consideration - petition allowed by way of remand.
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2018 (4) TMI 281
Input tax credit credit - registration of various dealers canceled - Held that: - the principal tax dues estimated by the authorities if the transactions of the petitioner with the tainted dealers are found to be nongenuine, would cross ₹ 1 crore. This could be added by interest and penalty which can go upto 150% of the basic tax amount. What we also have on record is that in addition to pointing out to the petitioner that the purchases were made from those dealers whose registrations were cancelled on the ground that they were indulging in bogus billing activities, the petitioner was also given an opportunity to establish, primafacie, the actual movement of goods. There is primafacie material suggesting the petitioner's engagement in bogus billing activities, which if ultimately established, would result into sizeable tax demands - petition dismissed.
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2018 (4) TMI 280
Validity of assessment order - TNVAT Act - whether the percentage of loss of materials (invisible loss) as computed by the respondent is correct? - effect of Section 19(2)(5) of the Act - Held that: - Though on the date when the impugned order was passed, the decision in the case of Interfit Techno Products Ltd. Vs.Principal Secretary/Commissioner of Commercial Taxes, Ezhilagam, Chepauk, Chennai and another [2015 (4) TMI 935 - MADRAS HIGH COURT] was very much available, the impugned order was set aside and the matter was remanded back to submit objections and the assessment was ordered to be re-done. Effect of Section 19(2)(5) of the Act - Held that: - writ appeals have been preferred by the State, against the order in the case of Everest Industries Limited Vs. State of Tamil Nadu And Another, and the appeals are yet to be numbered - mere pendency of such appeals cannot operate as stay of orders in Everest Industries Limited - the assessment requires to be re-done. Petition allowed by way of remand.
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Wealth tax
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2018 (4) TMI 279
Valuation of vacant land at Shaikpet Village - assessee have claimed the property as exempt under section 2(ea) of Wealth Tax Act on the ground that the asset is stock-in-trade - Held that:- On identical facts in the case of Shri Devineni Avinash, the same issue has come up before this Tribunal [2017 (12) TMI 480 - ITAT VISAKHAPATNAM] as held that the impugned asset is not stock-in-trade as claimed by the assessee The asset is not a commercial asset and not exempt u/s 2(ea) of Wealth Tax Act and accordingly we uphold the orders of the CWT(A) and dismiss the appeals of the assessee.
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Indian Laws
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2018 (4) TMI 302
Cheque bounced - validity of cheque - Repayment of loan - Since the defence was that the amount had been repaid, the onus was on Respondent No. 1 to prove by cogent evidence that he had re-paid the loan amount sum to the petitioner and there was no legally recoverable debt when the subject cheques were presented for encashment - complaint under Section 138 of the Negotiable Instruments Act - Held that: - Neither any document nor any independent witness from the bank was produced to show that any amount had been deposited by him in the bank account of the Petitioner or his wife and daughter. On the other hand he admitted in his cross-examination that he used to deposit money for membership of committee which supports the explanation of the petitioner that the amount of ₹ 20,000/- was towards an independent transaction. Further Respondent No. 1 did not even examine his brother who is alleged to have paid ₹ 70,000/- to the petitioner. Respondent No. 1 also could not give the details of the payments made and the respective dates or amounts - No evidence was produced by Respondent No. 1 to show that the subject cheques were issued in the year 2009 – 2010. Respondent No. 1 failed to even show that he had demanded the return of the subject cheques, when he is alleged to have repaid the loan amount. Even the statutory demand notice was not responded to. Merely because a cheque book with printed date “___/____/200___” is used after 01.01.2010 would not invalidate the cheque or become a suspicious circumstance in itself. Clearly the reasoning of the Appellate Court on this count is also perverse and untenable. Petition allowed.
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