TMI Tax Updates - e-Newsletter
April 10, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Highlights / Catch Notes
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Income Tax:
Eligibility for deduction u/s 54F - LTCG - the assessee in the instant case had purchased two flats in different locations. One at Warriam Road and the other at Layam Road. Therefore, these two flats cannot be converted to a single residential unit. - AT
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Income Tax:
Disallowance of provision of anticipated loss - construction & erection contracts - anticipated loss was a highly budgeted cost in excess of the budgeted revenue on the project - FAA has not analysed the AS-7 properly and has applied it in a biased way -not in a fair manner - claim of expenses allowed - AT
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Income Tax:
Transfer pricing adjustment - transaction between a head office in a foreign country and its branch office in India - principle of mutuality - it is axiomatic that income of the Japanese assessee, as is relatable to the operations carried out in India through its Branch office, is chargeable to tax in India not only under the Act but also under the DTAA. - AT
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Income Tax:
Receipts from domain name registration - whether should be charged to tax as royalty as per the provisions of section 9(1)(vi) read with section 115A of the Act? - The rendering of services for domain registration is rendering of services in connection with the use of an intangible property which is similar to trademark. Therefore, the charges received by the assessee for services rendered in respect of domain name is royalty within the meaning of Clause (vi) read with Clause (iii) of Explanation 2 to Section 9(1) of Income-tax Act. - AT
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Income Tax:
Expenditure allowable u/s. 57 - rental income from sub leased the property taxed under the head income from other sources - claim of depreciation and corporate expenses etc. - expanses cannot be allowed in the absence of direct nexus - AT
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Income Tax:
Long term capital loss - The transactions carried by assessee are valid in law, cannot be treated as non-est merely on the basis of some economic detriment or it may be prejudicial to the interest of revenue. Further, if the period co-existed or permitted the assessee to set off her capital loss against the capital gain earned, would itself not give rise to the presumption that the transaction was in the nature of colourable device - AT
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Income Tax:
Addition towards share application money u/s 68 - share application money - bogus shareholders - ROC has struck off the names of two companies for the reason that those two companies have not filed their annual accounts for few years - Tribunal dismissed the revenue appeal.
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Income Tax:
Merely because the car is in the name of director the usage of car for the purpose of business cannot be ruled out. However, the fact remains that when the AO has specifically asked for production of log book, the assessee failed to furnish log book to prove the use of vehicle for the purpose of business. - AT
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Customs:
Clarification regarding classification of Solar Panel/ModuIe equipped with Elements regarding. - Order-Instruction
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DGFT:
Export Policy of Edible Oils-Removal of prohibition on export of all varieties of Edible Oils, except Mustard Oil, till further orders - regarding - Notification
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Central Excise:
Refund of unutilized CENVAT credit - if an assessee has CENVAT credit balance without any duty on which to apply it, such assessee is an ultimate consumer to the extent that duty or tax has been paid upto the preceding stage and there no scope for setting off of such credit - refund not allowed - AT
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VAT:
Demand of interest - additional demand of tax due to denial of ITC where credit notes issued by the party - The law does not envisage assessee to predict final assessment and expecting to pay tax on that basis to avoid the liability to pay interest - demand of interest and recovery thereof is unsustainable in law - HC
Articles
Notifications
DGFT-
01/2015-2020 - dated
6-4-2018
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FTP
Export Policy of Edible Oils-Removal of prohibition on export of all varieties of Edible Oils, except Mustard Oil, till further orders - regarding
FEMA-
FEMA.389/2018 - dated
20-3-2018
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FEMA
Foreign Exchange Management (Cross Border Merger) Regulations, 2018
GST - States-
No. F.3(67)/Fin (Rev-I)/2017-18/DS-VI/161 - dated
28-3-2018
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Delhi SGST
Lt. Governor of the National Capital Territory of Delhi, appoint the officers for discharging of statutory duties
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15/2018 - dated
28-3-2018
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Delhi SGST
Notifies the date from which E-Way Bill Rules shall come into force
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10/2018-State Tax (Rate) - dated
28-3-2018
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Delhi SGST
Seeks to exempt payment of tax under section 9(4) of the DGST Act, 2017 till 30.06.2018
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No. F.IV/Misc/HR/GST/27/2015-16/Partfile/2777-2784 - dated
15-3-2018
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Delhi SGST
Authorization of officers under Section 70 of DGST Act, 2017
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No. F.IV/Misc/HR/GST/27/2015-16/Partfile/2661-2668 - dated
13-3-2018
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Delhi SGST
Authorization of officers under Section 67(11) of DGST Act. 2017
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05-Rc.046/2018/Taxation/A1 - dated
28-3-2018
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Tamil Nadu SGST
Extends the time limit for furnishing the statement in FORM GST TRAN-2
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04-Rc.046/2018/Taxation/A1 - dated
28-3-2018
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Tamil Nadu SGST
Extends the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6.
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03-Rc.046/2018/Taxation/A1 - dated
28-3-2018
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Tamil Nadu SGST
Last date for filing of return in FORM GSTR-1
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01-Rc.046/2018/Taxation/A1 - dated
23-1-2018
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Tamil Nadu SGST
Extends the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6.
Income Tax-
17/2018 - dated
6-4-2018
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IT
Income-tax (Third Amendment) Rules, 2018
SEZ-
S.O. 1217(E) - dated
14-3-2018
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SEZ
Central Government de-notifies an area of 48.5715 hectares at Ponnada, Mulapeta, Ramanakkapeta Villages in Kakinada, East Godavari District, in the State of Andhra Pradesh
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (4) TMI 369
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 368
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 366
Detention of goods with conveyance - Section 129 of the CGST and SGST Acts - discrepancy of the documents - the crew of the vehicle interchanged the documents of the goods to be delivered to the first petitioner and to the distributor at Ottappalam - Held that: - The grievance voiced by the first petitioner is one to be raised before the adjudicating authority under Section 129 of the CGST and SGST Acts - petition is disposed of directing the second respondent to complete the proceedings initiated in terms of Ext.P1 notice against the first petitioner - petition disposed off.
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Income Tax
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2018 (4) TMI 408
Charge of interest u/s 234B - ITAT holding the provisions of Sec. 115JC at par with the provisions of Sec. 115JA and 115JB in respect of liability of payment of advance tax prescribed u/s 208 charging of interest u/s 234B - Held that:- The appellant has retained the amount which is supposed to be paid under Section 115JC which has not been paid. In that view of the matter, the proviso of Section 234B has been rightly invoked by the AO and confirmed by the CIT(A) and the Tribunal. No substantial question of law arises.
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2018 (4) TMI 407
Undisclosed cash receipt - addition based upon documents seized during the course of search - Held that:- During and after the search, assessee states that these receipts are of extra or additional work done by him to certain purchaser of flats. These receipts have to be taxed in the hands of assessee by Revenue then total receipts cannot be added to the total income. Only profit margin has to be taxed. Therefore, we are of the view that entire amount cannot be added to the income of the assessee considering the statement of the assessee u/s 132(4) of the Act. It is also pertinent to note that the assessee has declared income of ₹ 10 lacs in A.Y. 2009-10 and ₹ 20 lacs in A.Y.2010-11 in respect of such receipt which is also assessed by the AO, therefore, the addition made by the AO and partly confirmed by the ld. CIT(A) is deleted. - Decided in favour of assessee
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2018 (4) TMI 406
Allowing compensation paid to sister concern - whether merely making payments which are recorded in the books does not prove the genuineness of the transaction being for the purpose of business ? - Held that:- It found that, receipt of amount of compensation was reflected in the Profit & Loss Account of the sister concern. Besides, the particulars of the transaction which formed the basis of the compensation having been produced before the lower authorities. It also found that the sister concern had offered the aforesaid amount of ₹ 7.57 lakhs for tax. Consequently, it allowed the Appeal of the respondent, assessee by holding that the payment of compensation/brokerage was made for the purpose of business. - Decided in favour of assessee Appeal admitted on the substantial question of law at Sr. no.2 - Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in allowing the addition made by the Assessing Officer of Short Term Capital Gain and treating it as speculative transaction without appreciating the fact that it was not the nature of transaction but the existence of transaction which needed to be proved?
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2018 (4) TMI 405
Order on stay under Section 220(6) - Held that:- Stay under Section 220(6) of the Act is always subject to variation in case of change in facts and/or in law. In this case, the reliance by the Revenue on the order dated 21st June, 2017 for Assessment Year 2012-13, in the context of the hearing already being concluded for the subject Assessment Years is not justified. Moreover, the issue does not seem to be concluded. The very fact that the Commissioner of Income-Tax (Appeals) has heard the petitioners in respect of the appeals for the assessment years and has still not taken a final decision, would itself prima-facie indicate that the Commissioner of Income-Tax (Appeals) is considering whether or not to follow the order dated 21st June, 2017 passed in respect of the Assessment Year 2012-13 by him on which the Revenue places reliance for justifying the impugned order dated 16th March, 2018. Petition is allowed and the impugned order dated 16th March, 2018 of the Commissioner of Income-Tax is quashed and set aside
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2018 (4) TMI 404
TPA - comparable selection criteria - Held that:- Assessee is rendering Information Technology Enabled Services ('ITES') to its Associated Enterprise (AE), thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2018 (4) TMI 403
Addition u/s 68 - assessee could not produce satisfactory material to establish the identity of the share applicants or the genuineness of the transaction as well as their creditworthiness - ITAT confirmed CIT's order deleting the addition - Held that:- When the assessee has brought on record all the documents necessary to establish the creditworthiness of the creditors and genuineness of the transaction and the AO has not preferred to file any comment, we find no scope to interfere into the findings returned by ld. CIT(A). Moreover, perusal of the assessment order also goes to prove that the AO has not even preferred to summon the parties to make compete enquiry so as to establish the creditworthiness of the creditors and genuineness of the transactions. - Decided in favour of assessee.
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2018 (4) TMI 402
Recovery proceedings - auction by the Revenue of the attached properties for non-payment of tax - Held that:- After the petition was argued for some time, Revenue, on instructions, states that the auction of the attached properties scheduled for tomorrow i.e. 14th March, 2018 would be cancelled. On instructions, he further states that steps for auction of the attached properties would be taken by the respondent Revenue only after the petitioners' appeal under Rule 86 Schedule II of the Act is disposed of by the Principal Commissioner of Income Tax. Revenue, on instructions, states that the Principal Commissioner of Income Tax will hear the petitioners on its appeal dated 8th March, 2018 filed under Rule 86 Schedule II to the Act at 11.00 a.m. on 15th March, 2018. Mr. Sridharan, learned Senior Counsel for the petitioners, on instructions, states that the petitioners would attend the hearing either by themselves or through their authorized representatives and make their submissions in support of the appeal. Petitioners seeks to withdraw this petition.
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2018 (4) TMI 401
Assessment u/s 153A - capital gain addition - Held that:- This Court was of the opinion that the decision in Commissioner of Income Tax v. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] concludes the issue as no incriminating material relating to the assessee was found. This Court further holds that the analysis of the ITAT in the circumstances, appears to be correct firstly for the reason that the previous assessments had adverted to the genuineness of the transactions vis-a-vis Nageshwar Investments in the course of a scrutiny assessment and that too when the assessee had suffered the additions. Secondly, the Appellate Commissioner and ITAT had granted relief against which the Revenue appealed to the High Court under Section 260A of the Act and that was rejected, in 2011 - Decided in favour of assessee.
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2018 (4) TMI 400
Disallowance on account of pollution control fees paid for a period of three years - nature of expenditure - revenue or capital expenditure - Held that:- Even though the expenditure of ₹ 30,000/- in question incurred by the assessee for getting pollution control certificate for three years had an enduring benefit, the same by its very nature was revenue. Therefore, find merit in the arguments of the learned counsel for the assessee that the said expenditure having been incurred in the revenue field and not in the capital, is allowable as deduction. The disallowance to be deleted. Disallowance of share transaction expenses - claim of the assessee for deduction on account of share transaction expenses is deserved to be considered by the A.O. under the head capital gains and the A.O. may accordingly be directed to consider the same on merit - Held that:- Direct the A.O. to consider the claim of the assessee for deduction on account of share transaction expenses alternatively under the head capital gain on merit. Ground No. 2 of the assessee’s appeal is accordingly treated as allowed. Addition on account of non-payment of provident fund dues - Held that:- As contended that the entire provident fund collected during the year under consideration upto February, 2002 was fully paid by the assessee and only the provident fund collected during the March was outstanding as on 31.03.2002 which was also paid in time on 08.04.2002. Also that this factual position can be verified by the A.O. from the documentary evidence available with the assessee-company and matter may be sent back to the A.O. for such verification. Thus find merit in this contention of the learned counsel for the assessee and since the learned DR has not raised any objection in this regard, restore this issue to the file of the A.O. for deciding the same afresh. Disallowance of cultivation expenses - Held that:- This matter requires verification by the A.O. keeping in view that there is a specific observation recorded by the A.O. in the assessment order that no such documentary evidence was produced by the assessee to show that the expenditure in question on cultivation was incurred for the existing plantation and not for any extension. I find merit in this contention of the learned DR. This issue is accordingly restored to the file of the A.O. for deciding the same afresh. Not treating 40% of its interest income as income from the business of cultivation and manufacture of tea under Rule 8 of Income Tax Rules, 1963 - Held that:- Although the learned counsel for the assessee has made an attempt to contend some of the deposits on which the interest income in question had been earned by the assessee were made for the purpose of business, find merit in the contention of the learned DR that interest income received by the assessee on deposits cannot be held to be eligible for the benefit of Rule 8 as the same was not the result of integrated activity of cultivation and manufacture of tea carried on by the assessee-company. Therefore, find no merit in Ground raised by the assessee in this appeal and dismiss the same. Addition u/s 14A - Held that:- It would be fair and reasonable to restrict the said disallowance to 5% of the dividend income earned by the assessee
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2018 (4) TMI 399
Eligibility for deduction u/s 54F - LTCG - exemption as restricted to investment in 'a residential house' - two flats converted to a single residential unit - Held that:- Prior to the amendment, there are various judicial pronouncements which have held the exemption u/s 54 / 54F was to be allowed in respect of investments in two adjacent or contiguous units converted into one residential house by having common passage / stair-case, common kitchen, etc. intended to be used as single house for the residence of the family. Undisputedly, the assessee in the instant case had purchased two flats in different locations. One at Warriam Road and the other at Layam Road. Therefore, these two flats cannot be converted to a single residential unit. On identical facts, the Special Bench of the Tribunal in the case of ITO v. Ms.Sushila M.Jhaveri [2007 (4) TMI 289 - ITAT BOMBAY-I] after considering the judicial pronouncements on the issue, have decided the matter against the assessee.
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2018 (4) TMI 398
Genuine transaction of sale of jewellery - addition made on account of accommodation entry - Held that:- The issue involved in the present case is that sale of jewelry shown by the assessee to the jeweler is alleged to be an accommodation entry and there is no real sale. This allegation is based on the facts gathered by the investigation wing where the jeweler has confessed the same. Hence we also direct the assessee to produce jeweler, in person, along with the (i) books of accounts of jeweler (ii) treatment of sale of jewelry by the assessee in books of jeweler (iii) the impact in the assessment order of the jewelers of this sale whether the jeweler has accepted it as real sale or merely an accommodation entry (iv) Any other details regarding the purchase of jewelry from assessee The assessee is directed to produce jeweler with these details before the ld AO within three months from the date of receipt of this order. AO may examine the jeweler with respect to his books of accounts as well as the earlier allegation of accommodation entry provided by the jeweler and then examine the issue afresh and decide the issue of genuineness of sales of jewelry. If the assessee fails to produce the jeweler along with necessary details as directed, ld AO may decide the issue on merit as per facts available on record.
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2018 (4) TMI 397
Penalty u/s 271(1)(c) - non specification of charge - defective of notice- Held that:- The show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. - Decided in favour of assessee.
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2018 (4) TMI 396
Disallowance of provision of anticipated loss - construction & erection contracts - anticipated loss was a highly budgeted cost in excess of the budgeted revenue on the project - Held that:- FAA has not analysed the AS-7 properly and has applied it in a biased way -not in a fair manner. There is no need to cite any judicial authority to state that AS are applicable to the Act and have to be followed while determining the tax liability of a corporate-assesseee. AS-7 recognises theory of anticipated loss and the assessee had made a claim about it. FAA/AO have not doubted about genuineness of the expenditure. The FAA held that it should be allowed in next year and the expenditure claimed by the assessee in the immediate succeeding year should not be allowed. Thus, in his opinion, the issue was only year of allowability and not the genuineness of the expenditure itself. Ground no. 2 is decided in favour of the assessee. Disallowance made about expenditure incurred for purchasing software - AO and the FAA held that payment made by the assessee for purchasing software was royalty, that it had not deducted tax at source for such payment - Held that:- We find that the assessee had purchased copyrighted software. In our opinion, payments made on account of copyrighted software is not payment of royalty. Therefore same is not chargeable to tax in India. We would like to refer to the case of Infrasoft Ltd. (2013 (11) TMI 1382 - DELHI HIGH COURT) as held the right to make a backup copy purely as a temporary protection against loss, destruction or damage does not amount to acquiring a copyright in the software - What has been transferred is not copyright or the right to use copyright but a limited right to use the copyrighted material and does not give rise to any royalty income - The consideration received on grant of licences for use of software is not royalty within the meaning of Article 12(3) of the Double Taxation Avoidance Agreement between India and the United States of America – Decided against Revenue.
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2018 (4) TMI 395
Penalty levied u/s.271(1)(c) - Disallowance of deduction u/s 80HHC - Disallowance of weighted deduction u/s.35(2AB) - disallowance of prior period expenses - Arms Length Price of International Transaction - Disallowance of claim u/s. 80G - Held that:- Supreme Court of India in the matter of CIT vs. Reliance Petroproducts Pvt. Ltd.,(2010 (3) TMI 80 - SUPREME COURT), wherein it has been held that merely because the assessee has claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature. In this matter some of the claim was not accepted by the department and disallowance were made. In our considered opinion, respectfully following the above said judgment penalty cannot be levied in such cases. Therefore, penalty is directed to be deleted.
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2018 (4) TMI 394
Addition on account of transfer pricing adjustment in the international transaction of ‘Provision of marketing support services’ - comparability analysis - transaction between a head office in a foreign country and its branch office in India - principle of mutuality - Held that:- If transactions between the foreign head office and the Indian branch office are not at ALP, it is certainly going to affect the income of the non-resident assessee chargeable to tax in India, which definitely requires the determination of the ALP of such transactions. Thus, the view canvassed by the ld. AR that since the Indian branch office is a part of the Japanese enterprise and, hence there can be no applicability of transfer pricing provisions, is devoid of merits and the same is hereby repelled. India branch office admittedly constitutes the permanent establishment of the assessee in India in terms of Article 5 of the DTAA. Thus it is axiomatic that income of the Japanese assessee, as is relatable to the operations carried out in India through its Branch office, is chargeable to tax in India not only under the Act but also under the DTAA. There can be no embargo on the determination of ALP of the services of brand promotion, rendered by the Indian branch by incurring AMP expenses. This additional ground raised by the assessee also stands dismissed. AMP expenses - International transaction or not - Held that:- it would be in the fitness of things if the impugned order on this issue is set aside and the matter is restored to the file of TPO/AO for a fresh determination of the question as to whether there exists an international transaction of AMP expenses. If the existence of such an international transaction is not proved, the matter will end there and then, calling for no transfer pricing addition. If, on the other hand, the international transaction is found to be existing, then the TPO will determine the ALP of such an international transaction in the light of the relevant judgments after allowing a reasonable opportunity of being heard to the assessee. - matter remanded back.
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2018 (4) TMI 393
Revision u/s 263 - addition of various expenses - Held that:- Assessing Officer has taken into consideration the material before him and after due application of law and of facts and then reached at the conclusion to conclude the assessment U/s 143(3) of the Act. It was not a case where Assessing Officer completed the assessment without conducting necessary and proper enquiries. The issue raised by the ld. Pr.CIT has been considered by the Assessing Officer at the time of assessment and the assessee has submitted evidences and details in support of its claim made in P&L account. Therefore, in our considered view, the order passed by the Assessing Officer U/s 143(3) of the Act on 24/3/2014 was not an erroneous order, which could be said to be prejudicial to the interest of the revenue - Decided in favour of assessee.
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2018 (4) TMI 392
Reopening of assessment u/s 147 - addition u/s 68 - Held that:- AO was not vested with blanket powers and debarred from making fishing and roving inquiries. Further, observed that a fresh notice u/s 148 with respect to new items would be required, which is missing in the present case. AO was not right in assuming jurisdiction with respect to independent and unconnected items without any tangible material or information suggesting escapement of income which was the basic requirement of Section 147. Hence, impugned additions u/s 68 could not survive. - Decided in favour of assessee
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2018 (4) TMI 391
Disallowance u/s. 14A - Held that:- Case of HDFC Bank Ltd. v. DCIT reported in (2016 (3) TMI 755 - BOMBAY HIGH COURT) will apply and presumption will apply that assessee has invested its own funds in making of the investment in Mutual Funds and there is no finding recorded by authorities below that interest bearing funds were specifically used for making investments in Mutual Funds and no direct nexus between interest bearing funds with the investments made in Mutual Funds are brought on record. Thus, the addition to the tune of ₹ 3,53,455/- as was made under rule 8D2(ii) r.w.s. 14A stood deleted but so far as disallowance under rule 8D 2(iii) r.w.s. 14A of the 1961 Act to the tune of ₹ 5,77,419/- being @0.5% of the average investments as was made by the AO which was later upheld by learned CIT(A) stood confirmed as we find no justification for the deletion of the same and we have no hesitation in confirming the addition to the tune of ₹ 5,77,419/- to the income of the assessee u/s 14A r.w.r. 8D(2)(iii) . The assessee gets part relief. Deduction u/s. 10B with respect to its 100% EOU should be allowed even on income from interest and miscellaneous income - Held that:- We are of the considered view that the AO has not examined the direct nexus between the interest income as well miscellaneous income and export income derived by the assessee from eligible industrial undertaking of the assessee on which deduction u/s 10B is available which requires examination of the facts, hence keeping in view ratio of decision in the case of India Comnet International v. ITO reported in (2012 (9) TMI 372 - SUPREME COURT), the matter is set aside to the file of the AO for examination/verification of direct nexus between income from interest as well miscellaneous income and income derived from exports business by 100% export oriented eligible undertaking of the assessee to see whether the said income can fall within the ambit of being derived from export business of the eligible industrial undertaking being 100% EOU. Depreciation of eligible unit which stood adjusted against other business income from non eligible in the earlier years can not now be adjusted on notional basis against the income of eligible unit for the impugned assessment year while computing deduction u/s 80IA. See CIT v. Hercules Hoists Ltd. [2017 (6) TMI 1125 - BOMBAY HIGH COURT]
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2018 (4) TMI 390
Receipts from domain name registration - whether should be charged to tax as royalty as per the provisions of section 9(1)(vi) read with section 115A of the Act? - Held that:- Hon’ble Apex Court in the case of Satyam Infoway Ltd. (2004 (5) TMI 529 - SUPREME COURT OF INDIA) has held that the domain name is a valuable commercial right and it has all the characteristics of a trademark and accordingly, it was held that the domain names are subject to legal norms applicable to trademark. The rendering of services for domain registration is rendering of services in connection with the use of an intangible property which is similar to trademark. Therefore, the charges received by the assessee for services rendered in respect of domain name is royalty within the meaning of Clause (vi) read with Clause (iii) of Explanation 2 to Section 9(1) of Income-tax Act. In view of the above, we uphold the orders of the lower authorities on this point and reject ground of the assessee’s appeal.
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2018 (4) TMI 389
Expenditure allowable u/s. 57 - rental income from sub leased the property taxed under the head income from other sources - claim of depreciation and corporate expenses etc. - Held that:- A.O. has discussed the applicability of this sub section associated with section 57 of the Act. The AO has given the finding that the expenses claimed have no direct nexus with the earning of the service charges. Such expenses have laid out or expended wholly and exclusively for the purpose of making or earning service charges. The AO has rightly concluded the allowable expenses on proportionate basis. The appellant company has not brought any specific evidence or arguments, which, forces to interfere with the conclusion of the AO. It is, therefore, held that the A.O. is justified in allowing only those expenditure which are allowable u/s.57 of the Act. Appeal filed by the appellant company on this issue is dismissed u/s 250 r.w.s. 251 of the Act and the order of the AO is upheld.
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2018 (4) TMI 388
Reopening of assessment - non–deduction of tax at source on payment made towards inter–connect and access cost - Held that:- Undisputedly, action under section 147 of the Act in case of the assessee has been initiated before expiry of four years from the end of the relevant assessment year, therefore, the proviso to section 147 is not applicable. That being the case, the burden is on the assessee to demonstrate through cogent evidence that while completing the original assessment, the Assessing Officer has formed an opinion on the issue of non–deduction of tax at source on payment made towards inter–connect and access cost. Nothing has been brought before us by the assessee to demonstrate this fact. That being the case, the contention of the assessee that the re–assessment proceeding under section 147 has been initiated on a mere change of opinion cannot be accepted. Therefore, upholding the validity of initiation of proceedings, we dismiss this ground TDS u/s 194J - Disallowance u/s 40(a)(ia) - Held that:- Inter–connect usage charges are not in the nature of fees for technical services, hence, the provisions of section 194J would not be applicable. In view of the aforesaid decision of the Co–ordinate Bench in assessee’s own case there is no obligation / liability on the assessee to deduct tax at source on payment of inter–connect usage charges. Consequently, no disallowance under section 40(a)(ia) can be made for non–deduction of tax at source. Therefore, we hereby delete the disallowance Disallowance of depreciation - similar disallowance has been made by the Assessing Officer in the rectification order passed under section 154 - Held that:- Commissioner (Appeals), after considering the aforesaid submissions of the assessee has directed the Assessing Officer to verify the claim of the assessee and delete the disallowance in case it is found that similar disallowance has been made in the rectification order. We do not find any infirmity in the order of the learned Commissioner (Appeals) on this issue. When the only relief claimed by the assessee before the learned Commissioner (Appeals) is on the ground of double disallowance of depreciation and the learned Commissioner (Appeals) has addressed the grievance of the assessee by issuing necessary directions to the Assessing Officer to delete the disallowance in case of double disallowance, there is no need to interfere
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2018 (4) TMI 387
Disallowance of u/s 14A - Held that:- The said order is in connection with the A.Y. 2007-08 in which there was no application of the provision u/s 14A r.w. Rule 8D of the Act. In the said order the disallowance was made on the reasonable basis. In the instant case, the disallowance was to the tune of ₹ 605122/- u/s 14A of the Act. The interest disallowance was to the tune of ₹ 381674/- Therefore, in the said circumstances, after the deducting the interest expenditure to the tune of ₹ 381674/-,we upheld the expenditure to incur the exempt income to the tune of ₹ 223448/- i.e., 605122/- -381674/-. Accordingly, we allowed the claim of the assessee partly. Addition of unutilized MODVAT credit - Held that:- The unutilized MODVAT credit is not the income in view of the provision u/s 145A. However, the assessee took the relevant plea that if the said amount has been treated as the income then the same be adjusted in the opening stock of subsequent year. Delhi high court in case of CIT v/s Mahavir aluminum Ltd [2007 (11) TMI 41 - HIGH COURT OF DELHI] interpreted the Law in this regard. CBDT circular N.772 Dt 23.12.1998 also clarify the object of insertion of section 145A. Anyhow, both the plea seems to justifiable but the unutilized MODVAT credit of ₹ 5,37,826/- is not the income of the assessee, therefore, the same is not liable to be added as income of the assessee. Accordingly, we delete the said addition and decide this issue in favour of the assessee against the revenue. Disallowance of Professional Fees - Held that:- No other document has been placed on record in support of this contention. Since, the company is related company and no working of any kind was given to the assessee company for the investment in 7 companies nor produced before us. The assessee entered into F&O transactions by making purchase only on 18.06.2007 and making sale on 20.10.2007, 23.10.2007 & 25.10.2007.The transaction was carried out only on 10-11 different dates which are few transactions. The assessee paid of ₹ 22,94,400/- which was considered as unreasonable. The assessee nowhere submitted about the reasonableness of the fees and comparable fees with other chart by unrelated parties hence, the Professional Fees seems to be rightly disallowed by the AO and confirmed by the CIT(A). - Decided in favour of revenue.
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2018 (4) TMI 386
Addition of bogus purchase - Held that:- It is a case of bogus purchase in which the addition was made on account of information received from the Sales Tax Department, Maharashtra Government. Subsequently, the notices were given to the parties u/s 133(6) of the Act which were not served. The notice was given to the assessee who failed to prove the genuineness of the transaction. Anyhow sale is not disputed and books of account are not rejected. The matter was controversy has been adjudicated by Hon’ble Gujarat High Court in the case of Simit P Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) in which the profit ratio @ 12.5% was taken into consideration on the basis of the GP of the assessee. Addition of purchases - Held that:- The assessee has placed reliance upon the copy of bill of the Ajay stone. The assessee also placed reliance upon the copy of bills of M/s. Top Brick and Sand suppliers. The assessing officer is hereby directed to examine this fact in the light of the evidence adduced by the assessee by giving an opportunity of being heard to the assessee. Needless to say that if this addition has already been added the assessment year of 2009-10 then the same is not liable to be the part of the total amount to the tune of ₹ 57,96,338/-. The said addition would be double addition. The said amount after verification would be liable to be excluded from the amount of ₹ 57,96,338/- for the purpose of deciding the profit ratio @ 12.5% which has been adjudicated at the time of adjudication upon the issue no. 1 to 4. Accordingly, this issue is decided in favour of the assessee against the revenue.
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2018 (4) TMI 385
Adjustment u/s 145A - impact on the taxable profit while including excise duty, MODVAT credit and sales tax in the valuation of stock, purchases and sales as per the provisions of section 145A - Held that:- As the provisions of section 145A have been inserted w.e.f. 01.04.1999 that section 145A is applicable for and from AY 1999-2000. As held in Cartini India Ltd. v. ACIT (2007 (2) TMI 192 - BOMBAY High Court), as per the new provisions of section 145A, the unutilized Modvat Credit had to be included in the closing stock of raw material and Work-In-Progress, whereas the excise duty paid on unsold finished goods had to be included in the inventory of finished goods. We direct the AO to allow the above claim of the assessee as per the above decisions after examining that adjustment should be made in such a manner that no double deduction is claimed for the same expenditure. Thus the 1st ground of appeal is allowed. Disallowance being the commission paid - Held that:- Without knowing the exact nature of the services rendered by those parties, it is not possible for us to decide the commission payable by the assesses company was legitimate expenditure permitted by law, and therefore, to be allowed. If such details are not coming such payments made in respect of contracts awarded by Public Sector Companies we have to be held as expenses were incurred against public policy, and therefore, not entitled to be deducted in the light of the proviso to Section 37 - Decided against assessee Rejection of claim for deduction of provision made in the books of account towards liability on account of arrears wages payable to workmen under the wage settlement agreement - Held that:- The assessee file a chart submitting that the said deduction has been allowed in subsequent year. Therefore, there is merit in the order of the AO disallowing which has been subsequently confirmed by the Ld. CIT(A). Upholding the said order, we dismiss the 3rd ground of appeal. Disallowance of provision made to meet expenditure in connection with Y2K compliance - Held that:- In the instant case, the assessee has made a provision of ₹ 2,00,00,000/- in connection with Y2K compliance which would arise not in the financial year 1998-99 but in the financial year 1999-00. Thus following the ratio laid down in Indian Molasses Co. (Pr.) Ltd. (1959 (5) TMI 5 - SUPREME Court), we uphold the disallowance made by the AO. Thus the 6th ground of appeal is dismissed. Expenditure incurred by the assessee on computer software is revenue in nature. Addition u/s 14A - Held that:- Since the total own funds in the instant case is more than investment in tax-free bonds and shares and mutual funds, thus addition to be deleted.
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2018 (4) TMI 384
Initiating the reassessment proceedings u/s.147 - default to take steps under section 143(3) - 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. We find the Coordinate Bench of the Tribunal in the case of Mr. Khan Afzalhussain Mohd. Saie (2018 (4) TMI 314 - ITAT PUNE) has restricted the addition to 10% of such alleged bogus purchases. Considering the same, we direct the Assessing Officer to make addition in the hands of assessee by adopting GP rate at 10% of bogus purchases declared by the assessee
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2018 (4) TMI 383
Addition on account of transfer pricing adjustment - transactions with the non-AEs - Provision of software development services - Held that:- As the entire exercise under Chapter-X of the Act is confined to computing total income of the assessee from international transactions having regard to the arm’s length price, there is no scope for computing income from non-international transactions also having regard to the ALP. Since the TPO has computed the transfer pricing adjustment qua all the transactions carried out by the assessee with reference to the base of ‘Total costs’, also inclusive of costs relevant for transactions with non-AEs, we cannot countenance such a point of view. Hon’ble Delhi High Court in CIT VS. Keihin Panalfa Ltd. (2016 (5) TMI 203 - DELHI HIGH COURT), in which it has been held that the transfer pricing adjustment can be made only with reference to the international transactions and not the transactions with the non-associated enterprises. Transfer pricing adjustment cannot be made with reference to the non-AE transactions, but, the same has to be confined only to the international transactions. Since the TPO/AO has proposed/made the addition on the basis of transactions even with non- AEs, we set aside the impugned order and send the matter back to the file of the AO/TPO for deciding the issue afresh as per law after allowing a reasonable opportunity of hearing to the assessee. In deciding the issue afresh, it will be open to the TPO/assessee to depart from the earlier stand and take into consideration later developments in law having bearing on the issue, wherever applicable
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2018 (4) TMI 382
Disallowance of long term capital loss - addition of loss on sale of shares held by the assessee since 1991 by treating the such share transaction as sham transaction - disallow the set off of Long Term Capital loss on sales of shares against the Longterm Capital Gain - Held that:- We are convinced that the shares were sold by assessee at the fair market value. In our view the transactions being genuine, merely because the assessee has claimed set-off of capital loss against the capital gain earned during the same period, cannot be said to be a colourable device or method adopted by assessee to avoid the tax. The transactions of sale of share were genuine and transacted at a proper valuation. The lower authority has not disputed the genuinity of transaction. The transactions carried by assessee are valid in law, cannot be treated as non-est merely on the basis of some economic detriment or it may be prejudicial to the interest of revenue. Further, if the period co-existed or permitted the assessee to set off her capital loss against the capital gain earned, would itself not give rise to the presumption that the transaction was in the nature of colourable device. We notice that the assessee has taken indexed case of acquisition of share at ₹ 30,40,400/-. AO has not examined the same and accordingly direct him to verify the computation given by the assessee and allow set off of correct amount of Long Term Capital Loss against Long Term Capital Gain. - Decided in favour of assessee.
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2018 (4) TMI 381
Validity of assessment - non-service of jurisdictional notice u/s 143(2) within the period of limitation by the A.O. having jurisdiction over the case - Held that:- Even for earlier and subsequent years, the assessee filed return of income at Delhi. The assessment in the present case has been framed by ITO, Ward-13(1), New Delhi, having jurisdiction over the case of the assessee. The ITO, Ward-1(1), Faridabad issued notice under section 143(2) on 23rd October, 2007, who was having no jurisdiction over the case of the assessee. The ITO at Delhi issued notice under section 143(2) on 28th July, 2008 which was beyond the period prescribed under the Law. It is, therefore, clear that the A.O. having jurisdiction over the case of the assessee did not issue notice under section 143(2) upon the assessee within the period of limitation provided under the Act. Therefore, the first notice issued by ITO, Ward-1(1), Faridabad, having no jurisdiction over the case of the assessee would not be valid and would not get any jurisdiction over the case of the assessee. The contention of the Ld. D.R. has no merit that ITO, Ward-1(1), Faridabad was empowered to issue notice as per PAN or it was issued as per Computerized System of the Department because it is against the provisions of Law. The entire assessment proceedings are vitiated because of nonservice of jurisdictional notice under section 143(2) within the period of limitation by the A.O. having jurisdiction over the case of the assessee. - Decided against revenue
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2018 (4) TMI 380
Addition towards share application money u/s 68 - share application money - bogus shareholders - ROC has struck off the names of two companies for the reason that those two companies have not filed their annual accounts for few years - Held that:- once the assessee has furnished names and addresses alongwith PAN of subscribers, then the AO is free to reopen the assessment of subscribers in accordance with law, but the share application money cannot be regarded as undisclosed income of the assessee. AO cannot question issue of shares at a premium and also cannot bring to tax such share premium within the provisions of section 68 of the Act, before insertion of Proviso to section 68 by the Finance Act, 2012 w.e.f. 1-04- 2013 The assessee has proved identity, genuineness of transaction and creditworthiness of the parties insofar as 3 share applicants are concerned. The CIT(A), after considering relevant facts has rightly deleted addition made by the AO. We do not find any error in the order of the CIT(A); hence, we are inclined to uphold the findings of the CIT(A) and dismiss the appeal filed by the revenue.
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2018 (4) TMI 379
Addition u/s 68 - Held that:- There exists material to implicate the assessee in a collusive arrangement with person who are self-confessed accommodation entry providers. In the present case, there is no such material to implicate the assessee and as such this judgment nowhere supports the case of the Revenue. In view of the above facts and our findings, we hold that the assessee has fully discharged its onus under Section 68 and accordingly direct the AO to delete the addition.
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2018 (4) TMI 378
Rental income - nature of income - Income from business or profession OR Income from house property - Held that:- Following the ratio in the case of Rayala Corporation Pvt. Ltd. vs. ACIT ( 2016 (8) TMI 522 - SUPREME COURT), we are of the considered view that if the main activity of the assessee is of letting out properties and derive rental income without any other business activity, then such rental income should be considered under the head “Income from business or profession” but not under the head “Income from house property”. Therefore, we direct the AO to assess rental income under the head “Income from business or profession” as claimed by the assessee. Disallowance being entire amount of remuneration paid to the directors of the company - Held that:- No merits in the arguments of the AO for the reason that the allowability of expenses has to be considered in the light of the nature of business of the assessee and its relevance. Since we have already directed the AO to consider rental income under the head “Income from business”, the AO is directed to consider expenses incurred by the assessee against such income. In this case, the assessee has paid remuneration to directors and also furnished evidences for payment of remuneration for services rendered by the directors to the company. Therefore, we are of the view that the AO was incorrect in disallowing remuneration paid to directors by holding that the expenses were not wholly and exclusively incurred for business and also which is excessive and unreasonable. Hence, we direct the AO to allow expenses claimed by the assessee against business receipts. Motor car expenses and depreciation on motor car - proof of busniss use - Held that:- Merely because the car is in the name of director the usage of car for the purpose of business cannot be ruled out. However, the fact remains that when the AO has specifically asked for production of log book, the assessee failed to furnish log book to prove the use of vehicle for the purpose of business. Therefore, we are of the view that the issue needs to be examined by the AO in the light of the claim of the assessee that the motor car has been used for the business purpose. If the assessee substantiates its claim with necessary evidences and also by producing the log book to prove that car is used for business purpose, then the AO is directed to allow motor car expenses including depreciation on motor car.
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Customs
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2018 (4) TMI 360
Valuation of imported goods - fashion apparel - related person in terms of Rule 2(2) of the Customs Valuation Rules, 2007 - includibility - Annual franchisee fee - institutional advertising and promotional campaign charges - advertising expenditure. Payment of Franchisee fee equal to @ 5% of the value of net purchases - Held that: - such franchisee fee is being paid by the appellant as a condition for the sale of goods by the foreign supplier. Such franchisee fee will be includible in the assessable value in terms of Rule 10 (1) (c) of the Customs Valuation Rules - demand upheld. Loading @ 2% towards share of institutional advertising and promotional campaign - Held that: - the appellant is required to remit an amount @ 2% and unless such amounts are paid, they will not be entitled to import goods from the foreign principal - such payments come within 10(1) (e), since such payments are being made as a condition of sale of the of the imported goods - demand upheld. Loading @ 3% of the value of purchase - Held that: - Such expenditure is incurred after import of the goods. Even though, the appellant is required to incur such expenditure as per the agreement with the foreign principal, it cannot be said that such expenditure has been incurred to satisfy the obligation of the foreign principal - the condition specified in Rule 10 (1) (e) is not satisfied - there is no justification to load the invoice value to this extent. Appeal allowed in part.
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2018 (4) TMI 357
Restoration of appeal - principles of Natural Justice - ex-parte order - service of notice - mention of wrong address - Held that: - it is apparent on record that the hearing notice was not sent to Advocate on record by Registry of this Tribunal. The address of the applicant was also changed therefore the hearing notice was neither delivered to applicant nor to the Advocate, accordingly ex-parte order was passed. In these circumstances, we are of the view that ex-parte order was passed by this Tribunal needs to be restored - appeal restored.
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2018 (4) TMI 356
Restoration of appeal - Principles of Natural Justice - ex-parte order was passed by this Tribunal - assessee's address was wrongly mentioned - Held that: - right from filling of appeal by the Revenue till disposal of the appeal, the applicant's address for the communication was wrongly mentioned by the Revenue, therefore applicant could not receive any notice regarding filing of appeal by the Revenue as well as hearing of appeal, accordingly ex-parte order was passed. It is the Revenue who furnished wrong address in it's Appeal filed before this Tribunal and not the applicant - the ex-parte order was passed by this Tribunal rendered injustice with the applicant. Appeal restored in its original number.
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Service Tax
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2018 (4) TMI 376
Extended period of Limitation - Held that: - whether the demand is wholly sustainable or it is time barred, given the language of Section 11A(1)of the Central Excise Act, 1944, the matter is sent back to the Tribunal - appeal allowed.
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2018 (4) TMI 359
Time Limitation - relevant time - export of service - Section 11B of Central Excise Act, 1944 - Held that: - Since the Larger Bench has clarified the position with regard to the relevant date for computing the period of one year, by following the ratio of the Larger Bench in the case of CCE&CST, Bangalore Vs. Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE], I am of the considered all needs to be remanded back to the original authority to dispose of the refund claims as per the decision of the Larger Bench - appeals disposed off by way of remand.
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Central Excise
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2018 (4) TMI 375
Maintainability of appeal - Jurisdiction - High Court - whether in relation to Union Territory of Daman & Diu and Dadra & Nagar Haveli, the jurisdiction would be of High Court of Bombay? - Held that: - The entire cause of action has arisen within the territorial limits of the Bombay High Court - it is this Court alone which can be approached by the Revenue or it is the West Zonal Bench of CESTAT at Mumbai alone, which would be able to deal with the appeal remanded to CESTAT. Appeal allowed.
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2018 (4) TMI 363
Clandestine removal - the transporter has transported number of consignments of the appellant for which no sales invoices were issued - case of appellant is that the same is solely based upon the records of the transporters without there being any corroborative evidence - Held that: - there are number of decisions laying down that the findings of clandestine removal cannot be upheld on the basis of the documents recovered from third party premises - reliance placed in the case of Raipur Forging Pvt. Ltd. [2016 (2) TMI 763 - CESTAT NEW DELHI]. 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. The entire case of the Revenue is based upon the shortages detected at the time of visit of the officers, without there being any other evidence, there is no reason to uphold the same. Demand of ₹ 73,179/- based upon the photocopies of two invoices - Held that: - The names of the buyers were available with the Revenue but neither any investigation was conducted at their end or at the end of the raw materials supplier - inculpatory statement by itself is not sufficient without the matters having been further investigated - demand set aside. Demand of ₹ 61,199/- in respect of service tax payable by the appellant on the GTA services, so received by them - Held that: - the service tax paid by the appellant on reverse charge basis, in respect of GTA services was availed to them as credit, thus leading to revenue neutral situation - demand not sustainable. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 362
Clandestine removal - shortage of goods - confiscation of Indian currencies - penalties - Held that: - the entire case of the Revenue is based upon the shortages detected at the time of visit of the officers. There is no other evidence to show clandestine removal of the said goods. It is well settled law that the shortages by itself do not lead to inevitable conclusion of their clandestine removal - impugned order set aside. The appellants have been able to establish, beyond doubt, the legal possession of the said Indian currency, in which case, the same cannot be held to be the sale proceeds of clandestinely removed goods - Inasmuch as the Revenue has not produced any evidence contrary to the evidence produced by Ahujas showing the legal possession of the Indian currency, confiscation not justified. Appeal dismissed - decided against Revenue.
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2018 (4) TMI 361
Clandestine removal - the demand of duty against the respondent were primarily based upon the loading advice, test certificates (Joint Analysis Report) as also certain loose records and the documents recovered from their factory - input-output ratio - Held that: - on being questioned as to whether further investigations were carried out by the Revenue to show the procurement of the raw materials, the actual manufacture of the good and their clearances from the factory and as to whether the identity of the buyers, was found and investigations made at their end, ld. DR has not been able to draw the attention to any of such evidences. It is an established law that the clandestine removal charges are required to be upheld by referring to the tangible and positive evidences and the same cannot be arrived at on the basis of assumptions and presumptions or doubts. Appeal dismissed - decided against Revenue.
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2018 (4) TMI 358
Extension of stay - case of appellant is that their appeal has not come up for disposal for no fault of theirs - Held that: - reliance placed in the case of M/S. Venketeshwara Filaments Pvt. Ltd & Ors. Vs. C.C.E. & S.T., Vapi [2014 (12) TMI 227 - CESTAT AHMEDABAD], where it was held that stay order passed by this Tribunal, if it is in force beyond 7.8.2014, it would continue till the disposal of the appeals and there is no need for filing any further applications for extension orders granting stay either fully or partially. As the stay in the present case was in force beyond 07.08.2014, the same would continue till the disposal of the appeal. The application for extension of stay is disposed of.
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2018 (4) TMI 355
Demand of Interest - whether the Appellant is liable to pay interest u/r 14 in case where the Appellant have availed cenvat credit before making full payment of value, as indicated in the invoice / bill/ challan etc. issued by the service provider? - Held that: - the Appellant have, though paid part of the service charges at a later stage, but the amount of service tax was paid at the first instance along with the part payment made at the time of receipt of invoice. Once the service tax amount was fully paid, the same is available for cenvat credit to the Appellant. As per Board's circular No. 122/03/2010-ST dt 30.4.2010, once the service-tax payment was made, the assessee is eligible to avail the credit. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 354
Clandestine removal - shortage of goods - case of appellant is that that they had sought cross-examination of all the persons which has not been granted to them - principles of Natural Justice - Held that: - the allegation of clandestine removal was not merely based upon the statement of Shri Vishal Gupta or the excise clerk, Shri Ankush Patil or the transporter, but were made on the basis of seized records and parallel invoices for which no proper explanation could be offered by the said persons. In such view of the fact, the denial of cross examination has not led to any denial of natural justice to the Appellant. The shortages of the finished goods and the inputs recorded clearly point out to the fact that the Appellant was removing the goods clandestinely - Since the records relied upon by the Revenue show transportation of goods, in that situation, it is obvious that clearances were made in the names of fictitious persons. It is absolutely clear that the Appellant resorted to manipulative tactics on clearance of goods. From the modus operandi and confession made by other appellant, it is clear that all other appellants were knowingly indulged in the act of clandestine removal of goods, hence the charge of abating the evasion of duty is established against them - appeal dismissed - decided against appellant.
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2018 (4) TMI 353
CENVAT/MODVAT Credit - machines transferred to appellant - time limitation - section 11 A of the CEA 1944 - Held that: - the said goods had been transferred on 8th July, 2007 whereas show cause notice was issued on 3rd August, 2012 which is in absence of any allegation that the enumerated elements for invoking the extended period - demand barred by limitation - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 352
Refund of unutilized CENVAT credit - rejection on the ground that there is no specific provisions in CENVAT Credit Rules, 2004 for processing such claim and that rule 5 of CCR 2004 is a privilege that can be resorted to in relation to goods that are exported - Held that: - if an assessee has CENVAT credit balance without any duty on which to apply it, such assessee is an ultimate consumer to the extent that duty or tax has been paid upto the preceding stage and there no scope for setting off of such credit - just as the ultimate consumer, as commonly understood, is. It is clear that legislative intent did not envisage the monetisation of CENVAT credit in the event of impossibility of utilisation. CENVAT Credit Rules, 2004 is not an exemption scheme but a contrivance to ensure that the incidence of duty or tax is borne by the ultimate purchaser of goods or service in a chain. It is seen that the appellant is not before the Tribunal with a valid claim of the tax/ liability having been collected from its supplier without authority of law. Neither the Central Excise Act, 1944 nor the CENVAT Credit Rules, 2004 envisages a refund of credit in the absence of such a ground. Refund not allowed - appeal dismissed - decided against appellant.
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CST, VAT & Sales Tax
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2018 (4) TMI 374
Reassessment of tax - Composition Scheme - Liquor - Composition facility (COT) which was granted by the department was cancelled by the Assistant Commissioner of Commercial Taxes on the ground that the petitioner is dealing in liquor either at the principal place of business or branches. Therefore the petitioner is not entitled to avail or opt for Composition Scheme in terms of Section 15(1)(c) of the KVAT Act. Whether the respondent-authorities can re-assess the assessee under VAT Scheme for the tax periods 2014-15, the composition scheme being cancelled with effect from 22.07.2015, directing the assessee to submit returns in VAT 100 with effect from 01.08.2015? Held that: - it is clear that unless the certificate issued under Rule 137 [Composition Certificate] has not been cancelled, the Dealer-Petitioner herein would be entitled to continue with the benefit under Section 15 of the KVAT Act on composition scheme. Indisputably, as narrated above, order of cancellation of composition scheme facility has been passed on 22.07.2015 with immediate effect. It is also made clear that VAT option is enabled to file VAT-100 returns with effect from 1.8.2015. Even in the notice, for cancellation of composition scheme, it was proposed to cancel the COT facility with immediate effect. No reassessment can be made under Section 39[1] of the VAT Act subjecting the petitioner to tax under VAT Scheme. It is not in dispute that the petitioner is filing VAT 100 returns and paying the tax under the VAT Scheme subsequent to cancellation of the composition certificate with effect from 22.07.2015 - the reassessment order impugned herein deserves to be quashed without adverting to the other arguments canvassed. Re-assessment order as well as demand notice quashed - Petition allowed.
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2018 (4) TMI 373
Assessment of turnover under TNGST Act - penalty u/s 12(3)(b) of the Act - Held that: - Section 12(3)(b) of the Act deals with, submission of incorrect or incomplete return and for the purpose of levy of penalty - There is no suppression in the books of accounts and this fact has been categorically stated by the appellate authority, in his order, in which event, the assessee is entitled to invoke explanations (i) and (ii) to Section 12(3)(b) of the Act. Revision petition dismissed.
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2018 (4) TMI 372
Liability of purchase tax - Section 3(4) of the Act - Export sale - Form XVII - Held that: - reliance placed in Tube Investment of India Ltd., v. State of Tamil Nadu [2010 (10) TMI 938 - MADRAS HIGH COURT], where Tribunal allowed the appeal filed by the dealer by stating that export is also a sale as contemplated in the first part of section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 and consequently held that purchase turnover of raw materials by issue of Form XVII declaration availing concessional rate of tax under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 corresponding to the export of manufactured goods could not be assessed to tax under Section 3(4) of the Tamil Nadu General Sales Tax Act, 1959 - appeal dismissed - decided against Revenue.
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2018 (4) TMI 371
Assessment of turnover - penalty u/s 12(3)(b) of the Act - Held that: - Section 12(3)(b) of the Act deals with, submission of incorrect or incomplete return and for the purpose of levy of penalty - There is no suppression in the books of accounts and this fact has been categorically stated by the appellate authority, in his order, in which event, the assessee is entitled to invoke explanations (i) and (ii) to Section 12(3)(b) of the Act - revision dismissed - decided against Revenue.
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2018 (4) TMI 370
Levy of penalty - sale of coffee drinks - it was alleged that the turnover was not reported and tax paid - TNGST Act - Held that: - High Court of Andhra Pradesh at Hyderabad, in New Dwaraka Lunch Home Vs. State of Andhra Pradesh [1993 (2) TMI 282 - ANDHRA PRADESH HIGH COURT] held that On the basis of this material, the Commercial Tax Officer made an estimate of purchases and sales undertaken by the petitioner during the year and consequently, sales tax was levied, after computing the suppressed sales and purchases. These findings are based on relevant evidence and cannot be interfered with. Revision dismissed.
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2018 (4) TMI 367
Validity of Form ‘I’ - case of Revenue is that Form ‘I’ submitted by the respondent before the authorities was not in consonance with the provisions of sub-rule (11) of rule 12 of the rules read with sub-section (8) of section 8 of the Act, Form ‘I’ has not been countersigned by the authority prescribed under the rules and therefore, is not valid - Held that: - it appears that sub-rule (11) of rule 12 of the rules has been amended for the sake of convenience, and the requirement that the document (Form – I) be countersigned by the authority specified by the Central Government authorizing the establishment of unit in the SEZ, has been done away with. Therefore, there is no longer any such requirement under the said sub-rule, nor can such requirement can be read into it. Sub-rule (11) of rule 12 of the rule after its amendment with effect from 7.6.2005, no longer refers to any specific authority as the issuing authority. The revisional authority was therefore, not justified in holding that the requirement of such rule 12(11) of the rules was not complied with and taxing the transaction and the Tribunal was wholly justified in setting aside the order passed by the revisional authority - petition dismissed - decided against Revenue.
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2018 (4) TMI 365
Demand of interest - additional demand of tax due to denial of ITC where credit notes issued by the party - whether the petitioner is liable to pay interest under section 18(4)(a) of the M. P. V. A. T. Act, 2002 for the assessment year 2011-12? - Held that: - the levy of interest is unsustainable in view of the Constitutional Bench decision of the Supreme Court;in the case of J. K. Synthetics Ltd. v. Commercial Taxes Officer [1994 (5) TMI 233 - SUPREME COURT], where it was held that any provision made in a statute for charging or levying interest on delayed payment of tax must be construed as a substantive law and not adjectival law. The provision for levy of interest clearly shows that so long as the assessee pays the tax which according to return is due on the basis of information furnished in the return filed by him, there would be no default on his part to meet the statutory obligation and therefore, it cannot be held that the tax payable by him is not paid to make him liable to pay interest. The law does not envisage assessee to predict final assessment and expecting to pay tax on that basis to avoid the liability to pay interest - demand of interest and recovery thereof is unsustainable in law - Petition allowed - decided in favor of petitioner.
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2018 (4) TMI 364
Validity of the assessment order - Time Limitation - whether the orders of assessment including the one made on 31 March 1997 would be barred by the provisions of limitation as prescribed by Section 21 (5) of the U.P. Trade Tax 1948? - Held that: - “Jurisdiction” as is well recognised is an expression of multiple and varied hues. Essentially and unless the context otherwise suggests or commands a narrow interpretation being conferred on it, would include within its fold all such matters as would touch upon the authority of the Court, tribunal or adjudicatory forum to decide a lis or exercise its powers. In this sense the issue of limitation is also one which is determinative of the jurisdiction conferred upon an authority. It is evident that the period of limitation will have to be necessarily recognised to have commenced from 6 July 1996. Since the order of assessment came to be made evidently after the expiry of the period prescribed under Section 21 (5), the order dated 31 March 1997 as well as all consequential proceedings initiated and drawn up subsequent thereto must necessarily fall and stand set aside. Revision allowed.
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Indian Laws
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2018 (4) TMI 377
Legality and correctness of judgments dated 30.10.2017 - Section 138 Negotiable Instruments Act - Issuance of Cheque as 'security' - Held that: - It has come on record that the respondent was in possession of relevant documents and had offered to produce them if so required. The petitioners did not insist for production of those documents. Adverse inference is to be drawn against the petitioners for not insisting for the production of those documents. Moreover, the petitioners themselves did not produce any document, whatsoever, to show as to how and in what manner the cheques in question were issued in favour of the respondent. The petitioners have admitted about the receipt of legal notice and no response to it was given by them. The findings of the courts below based upon fair appreciation of evidence deserve no intervention and are confirmed - petition disposed off.
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