TMI Tax Updates - e-Newsletter
April 7, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Disallowance of telephone expenses and motor car expenses at the rate of 10% on adhoc basis - t there are a no. of luxury vehicles which are used by the partners of the firm - the act of the AO to estimate personal use of the vehicle @ 10% cannot be treated as excessive - AT
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Income Tax:
TDS u/s 195 - The responsibility of deducting tax at source from the remittances of the commission to the foreign agent would arise only when such commission is taxable in India in the hands of the recipient. The income of the recipient in the form of commission received from assessee was not chargeable to tax in India. - AT
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Income Tax:
Levy of penalty u/s 271B - failure to get the accounts audited and furnished the audit report before the specified due date - Statutory auditors appointed by the CA&G - without completing the statutory audit, the tax audit could not have been completed - there exist a reasonable cause for the delay in completion and submission of the tax audit report u/s 44AB - no penalty - AT
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Income Tax:
TDS u/s 194C - tds on water charges paid - there is no markup in procuring and supplying water by the assessee to his clients and, therefore, the contention put forth by the assessee that the water charges paid was never claimed by the assessee as a deduction in the profit and loss account and, therefore, the same cannot be subject matter of addition u/s 40a(ia) has to be accepted - AT
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Income Tax:
Disallowance of foreign travelling expenses of Directors - Assessee may have started a new line of business, but the particular visit of London does not appear to be for the purpose of business sans any supporting evidence like, any kind of correspondence, agreement, exchange of mails, etc. Mere stating that the directors have met one doctor and that to be one name has been given will not suffice. - AT
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Income Tax:
Exploration/ prospecting/extraction of mineral oil - income arising on account of royalty/FTS, letting out of equipment etc. was to be taxed u/s 44BB - Income on account of provision of equipment and services earned by the assessee company shall be taxable as per the provisions of Section 44BB of the Act. - AT
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Customs:
Ban on import of Oxytocin; Stepping up vigilance mechanism to check smuggling of Oxytocin - Order-Instruction
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IBC:
Corporate Insolvency Resolution Process - This Company Petition is dismissed by holding that the dispute has already been in pre-existence in between the Petitioner and Corporate Debtor even before section 8 notice was issued by the Petitioner - Tri
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IBC:
Suspension of some right against the Corporate Debtor under Section 14 shall not be construed as a right to the Corporate Debtor to take out the assets lying with others solely on the ground that property is shown in the books of the Corporate Debtor. Right of suspension will not become right of taking delivery of the property from other parties. - Tri
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Wealth-tax:
Wealth Tax - The mere fact that there is land and building owned by the company and it is not used for the purposes of business is sufficient to hold that these assets to be taken into account under Section 40(3) of the Act for the purposes of wealth tax under the Wealth Tax Act. - Challenge to Section 40(3) of the Act is not sustainable. - HC
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Service Tax:
Valuation - Pre-disposed mind itself is sufficient to hold that the decision-making process is erred as the author of the order already directed the petitioner to include transportation of goods charges way back in the year 2010 itself - HC
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Central Excise:
The motor vehicles manufactured by the appellants do not fall in the category of dumpers designed for off-highway use under 8704 10. They are classifiable, as claimed by the appellant under 8704 2390 as tipper trucks likewise the classification of chassis also will fall under 87060042 and not under 87060043 as claimed by the Department. - AT
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Central Excise:
Classification of goods - “Scent‟ - manufacture of “Jayanti Jarda brand Chewing Tobacco” - the product in question is chewing tobacco and classifiable under Heading 24039910 of the Tariff. - AT
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Central Excise:
CENVAT credit - input service - outward freight - place of removal - when the goods are sent on FOR basis up to the buyer's premises and all the conditions in Circular No,97/8/2007 dt 23/08/2007 are satisfied, then the assessee is entitled to take CENVAT credit of service tax paid on GTA service - AT
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Central Excise:
Classification of goods - Dhathri Hair Oil - The original authority has classified the same under the Cosmetic Category but the Commissioner (Appeals) has given the benefit being Ayurveda based hair oil - - Tribunal dismissed the revenue appeal
Articles
Notifications
GST - States-
S.O. 164 - dated
3-4-2018
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Bihar SGST
Notifies the specified persons as the class of persons who shall make an application for refund of tax paid by it on inward supplies of goods or services or both.
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S.O. 163 - dated
3-4-2018
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Bihar SGST
Extend the time limit for furnishing the details or return details of outward supply of goods or services or both in FORM GSTR-1 -the registered persons having aggregate turnover of up to 1.5 crore rupees.
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38/1/2017-Fin(R&C)(53) - dated
3-4-2018
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Goa SGST
Re-constitutes the Goa Authority for Advance Ruling.
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38/1/2017-Fin(R&C)(52) - dated
3-4-2018
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Goa SGST
Re-constitutes the State Level Screening Committee consisting.
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CCT/26-2/2017-18/33/6132 - dated
29-3-2018
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Goa SGST
Extends the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6.
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CCT/26-2/2017-18/32/6131 - dated
29-3-2018
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Goa SGST
Last date for filing of return in FORM GSTR-1.
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CCT/26-2/2017-18/31/6130 - dated
29-3-2018
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Goa SGST
No E-way Bill may be generated in respect of intra-State movement of any goods.
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CCT/26-2/2017-18/12/6129 - dated
29-3-2018
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Goa SGST
Extension of date for submitting the statement in FORM GST TRAN-2 under Rule 117(4)(b)(iii) of the Goa Goods and Service Tax Rules, 2017.
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6377/CSTUK/GST-Vidhi/2017-18 - dated
28-3-2018
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Uttarakhand SGST
Extension of date for submitting the statement in FORM GST TRAN-2 under rule 117(4)(b)(iii) of the Uttarakhand Goods and Service Tax Rules. 2017.
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6376/CSTUK/GST-Vidhi/2017-18 - dated
28-3-2018
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Uttarakhand SGST
Non-requirement of e-way bill for intra-state movement of goods in the state.
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289/2018/4(120)/XXVII(8)/2018/CT-15 - dated
28-3-2018
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Uttarakhand SGST
Appointing 1st day of April, 2018 -from which the Provosions at serial no. 3 [other than sub-rule (7) of Rule 138], serial no. 4, serial no. 5 , serial no. 6, serial no.7 and serial no. 8 of Notification no. 282 dated 24/03/18 shall come into Force.
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288/2018/4(120)/XXVII(8)/2018/CT-14 - dated
28-3-2018
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Uttarakhand SGST
The Uttarakhand Goods and Services Tax (Third Amendment) Rules, 2018
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287/2018/4(120)/XXVII(8)/2018/CTR-10 - dated
28-3-2018
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Uttarakhand SGST
Amendment in Notification no. 522 dated 29/06/17 ,amended vide notification no. 979 dated 23/11/17- For the figures ,letters and words "31st day of March ,2018", the figures, letters and words "30th day of June , 2018"shall be substituted.
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282/2018/4(120)/XXVII(8)/2018/CT-12 - dated
24-3-2018
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Uttarakhand SGST
The Uttarakhand Goods and Services Tax (Second Amendment) Rules, 2018
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06/2018-C.T./GST-19/2018-State Tax - dated
28-3-2018
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West Bengal SGST
Extension of date for filing the return in FORM GSTR-6.
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05/2018-C.T./GST-18/2018-State Tax - dated
28-3-2018
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West Bengal SGST
Seeks to extend the due dates for the furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (4) TMI 271
Submission of revised returns - circular No.14/2017 - Held that: - writ petition disposed off directing the respondent to take up and pass appropriate orders on Exts.P3 and P4 applications, in the light of the circular aforesaid.
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2018 (4) TMI 270
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 269
Jurisdiction - post enactment of the Central Goods and Services Tax Act, 2017 as well as the omission of Entry 92C from List-I of the Seventh Schedule of the Constitution - whether the respondent have jurisdiction to enter into an enquiry in respect of the subject matter of the notice and as such the impugned notice was wholly without jurisdiction? - Held that: - this Court is of the prima facie opinion that the impugned notice dated 23.10.2017 is without jurisdiction - further proceeding in the impugned notice stayed.
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Income Tax
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2018 (4) TMI 268
Penalty u/s 271(1)(c) - provision for retrofitment charges in anticipation of expenditure - Held that:- It has been observed by the authorities below that assesssee had clearly mentioned about the retrofitment expenses in profit and loss accounts for the year ended 31.3.2007 and the provisions for retrofitment expenses under the head, 'current liabilities' in the balance sheet as on 31.3.2007 The explanation furnished by the assessee does not lead to reasonable and positive inference that the assessee's case is false. The assessee was able to show that there was dispute between assessee and M/s Atul Auto Ltd. one of the customers of the assessee. The assessee has created provision for retrofitment charges in anticipation of expenditure and upon the suit being withdrawn, the assessee had offered the amount in the immediately succeeding year i.e. assessment year 2008-09. All these facts would show that the observations of the Assessing Officer that the assessee concealed the fact is not justified. - Decided in favour of assessee
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2018 (4) TMI 267
Expenditure towards the rental expenses - Revision u/s 263 - Tribunal treating lease rentals as capital expenditure - appellant has entered into a lease deed on Lease, Rehabilitate, Operate and Transfer basis (LROT) for a period of 30 years - Held that:- Tribunal failed to appreciate the factual matrix of the case in a right perspective. Indeed, it is not in dispute that the appellant has entered into a lease deed with Raibag Sahakari Sakkare Karkhane on LROT basis for a period of 30 years. It is also pointed out by the learned counsel for the assessee that the lessor has no power to alienate the property during the lease period. The machinery and other equipments installed during the modernization or expansion of the sugar factory has to be handed over to the lessee in the working conditions. The Tribunal while arriving at a decision has failed to appreciate the terms and conditions of the lease deed. On the other hand, proceeded to consider the same as a sale deed which prima facie appears to be a wrong approach. This Court finds it appropriate to set aside the impugned order and remand the matter to the Tribunal for fresh consideration. Hence, without expressing any opinion on the substantial questions of law raised by the assessee, impugned order is set aside. The matter is remanded to the Tribunal for fresh consideration.
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2018 (4) TMI 266
Penalty u/s 271(1)(c) - deduction u/s 80IB disallowed - Held that:- In view of the explanation added, it cannot be said that the onus lies on the Revenue to establish mens rea in cases of concealment and/or short payment of tax. There is an onus on the Assessee. Whether the Assessee has been able to discharge the onus would depend on the facts and circumstances of the case. In the instant case, the learned Tribunal, in effect, arrived at a clear finding that imposition of penalty was not justified having regard to the facts and circumstances of the case. No substantial question of law that warrants interference.
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2018 (4) TMI 265
Reopening of assessment - knowledge of the reasons to assessee for reopening the assessment - Held that:- (i) The first respondent shall consider the request of the petitioner for furnishing the reasons for reopening the assessment for the year 2002-03 within a period of 15 days from the date of receipt of a copy of this order. (ii) On furnishing of such reasons for reopening, the petitioner is directed to file their objections/reply, within 30 days thereafter, after which, the first respondent shall consider and redo the assessment by following the mandate laid down in GKN Driveshafts (India) Ltd. [2002 (11) TMI 7 - SUPREME Court] (iii) It is made clear that neither party shall take advantage of the fact that the writ petition has been pending from 2008 onwards till date. It is needless to state that it is open to the assessee to raise all the grounds while submitting their objections to the reasons for reopening the assessment on being furnished by the Assessing Officer.
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2018 (4) TMI 264
Penalty u/s. 271(1)(c) - non specification of charge - defective notice - Held that:- We find that the notice dt. 23-02-2015 issued u/s. 274 r.w.s 271 of the Act does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. - Decided in favour of assessee.
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2018 (4) TMI 263
Treating to rental Income - Income from House property or Business Income - Held that:- The issue is covered in favour of assessee and the Tribunal’s order for AY 2005-06 had attend the finality because the assessee has not preferred an appeal before the Hon’ble High Court. As the issue is covered, we confirm the orders of the lower authorities treating the rental receipts as income from house property. Accordingly, this common issue of assessee’s appeals is dismissed. Disallowance of depreciation on the above issue, which has been decided against the assessee by treating the rental receipts as income from house property, this being a consequential issue, the same is dismissed. Disallowance of maintenance expenses - AO has disallowed the expenses because the assessee’s income is assessed as income from house property - Held that:- We find that this issue has not been adjudicated by CIT(A) despite specific ground raised before him. However, this issue needs to go back to AO for the simple reason that it is to be verified whether these expenses are claimed by assessee net of the rental receipts or these are inclusive in the gross receipts. In case these are inclusive of gross receipts, the AO has to take ALV of the property excluding these expenses. For re-deciding this issue, the matter is set aside to the file of the AO Addition of difference amount of closing stock valuation considering inclusive method of Modvat under section 145A - Held that:- The amount of Modvat credit was irreversible credit offered to manufacturers upon purchase of duty paid raw materials and that would not amount to income. See CIT vs Diamond Dye Chem Ltd. [2017 (7) TMI 616 - BOMBAY HIGH COURT]
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2018 (4) TMI 262
Disallowance u/s 14A of the Act r.w.r. 8D(2)(iii) - Contention of the AR was that the assessee earned dividend from two companies which yielded exempt income of ₹ 53,20,226/- and the average investment connected thereto is ₹ 2,10,48,250/- but, not ₹ 12,81,95,222/- as determined by the AO - Held that:- In the present case, the AO found that the assessee earned dividend of ₹ 53,20,226/- and has taken average value of investments as appeared in the balance sheet, which, according to ld. AR is wrong in pursuance of the decision of this Tribunal in the case of REI Agro Ltd [2013 (5) TMI 582 - ITAT KOLKATA]. We find force in the arguments of ld. AR and no infirmity in the order of CIT(A). Ground no.2 raised by the revenue is dismissed.
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2018 (4) TMI 261
Disallowance on interest claimed on total outstanding loan u/s 24(b) - Held that:- The assessee availed loan from its holding company which was repaid from the loan initially availed from State Bank of Mysore and again the assessee availed additional loan from State Bank of Mysore after restructuring the existing loan that was initially taken and the outstanding stood at ₹ 20 crore and whether interest paid on such outstanding is covered by provisions of Section 24(b) of the Act. The Coordinate Bench in assessee’s own case [2015 (12) TMI 359 - ITAT KOLKATA] held that subsequent loan availed by the assessee to repay his original loan is very much covered to claim deduction u/s 24(b) of the Act. We note that the CIT(A) by placing reliance on the decision of the Coordinate Bench in the assessee’s own case deleted the addition by the AO. - Decided against revenue
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2018 (4) TMI 260
Disallowance of foreign traveling expenses - Held that:- We require the assessee’s Counsel to explain what type of business conducted by assessee in relation to the visits of Shri Shiv Hari Agarwal to Singapore and Siddarth and Sandhini to Singapore but he could not explain. He only stated that just to explore the market. He could not submit any evidence of the same. In such circumstances, we are of the view that these foreign travelling expenses to Singapore by Shri Shiv Hari Agarwal and Siddarth and Sandhini is not in connection with the business of the assessee and assessee has no business connection with these countries at all. We confirm the order of CIT(A) confirming the disallowance of foreign travelling expenses. Issue of assessee’s appeal is dismissed. Disallowance of telephone expenses and motor car expenses at the rate of 10% on adhoc basis - Held that:- Estimation of the AO for 10% use of such communication devices for personal & non-use purposes, cannot be termed as excessive. Apart-from that from the details of the vehicles. We find that there are a no. of luxury vehicles which are used by the partners of the firm. The appellant has not brought on record details of personal vehicles in the names of the partners whose expenses are not debited by the firm during the year under consideration. Such details, the act of the AO to estimate personal use of the vehicle @ 10% cannot be treated as excessive. - Decided against assessee.
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2018 (4) TMI 259
Applicability of State PWD rates and deduction for self supervision charges - rate difference in CPWD & State PWD rates - undisclosed investment - Held that:- The assessee is engaged in the construction of residential apartments and is having enough knowledge of construction and is capable of reducing the cost of construction by procuring the materials at reasonable cost and avoid the wastage. While arriving the cost of construction both the DVO and the A.O. did not consider these issues. Similarly, there is a rate difference in CPWD & State PWD rates. The CPWD gives the construction of its works to the private contractors and the private contractors include their profit margin in CPWD works. We direct the A.O. to allow the rate difference of 15% and self supervision charges to the extent of 10% from the cost of construction determined by the DVO and recompute the undisclosed investment year wise. Accordingly the appeal of the assessee on this ground is partly allowed.
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2018 (4) TMI 258
TDS u/s 194C - Disallowance u/s 40(a)(ia) - payment was made to CONCOR, a company which is engaged in the carriage of goods payment was made to CONCOR, a company which is engaged in the carriage of goods - Held that:- The impugned payment does not attract the TDS u/s 194C of the Act and no disallowance is called for u/s 40(a)(ia) of the act. See Ras Polybuild Product Pvt. Ltd. Vs. DCIT [2017 (1) TMI 325 - ITAT HYDERABAD]. Hence the order of the CIT(A) is upheld and the appeal of the revenue is dismissed.
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2018 (4) TMI 257
TDS u/s 195 - Addition u/s 40(a)(i) - Non deduction of tds - commission payment made to non-resident agents & outward freight charges paid to foreign shipping company through agents - Inocme accrued in India - PE in India - Held that:- Admittedly, these payments are on account of commission made to foreign parties and similarly, the outward freight payments also made to foreign shipping companies. Admittedly there is no TDS deducted by the assessee on these payments. On identical facts and circumstances the coordinate bench of ITAT in the case of DCIT vs. Ardeshi B. Cursetjee & Sons Ltd. (2008 (3) TMI 500 - ITAT MUMBAI) held that where the assessee has paid commission to its foreign agents outside India for services rendered outside India and claimed deduction of the same as business expenditure, the case of foreign agent is not covered by the provisions of section 9 and income of the foreign agent will not be taxed in India. The responsibility of deducting tax at source from the remittances of the commission to the foreign agent would arise only when such commission is taxable in India in the hands of the recipient. The income of the recipient in the form of commission received from assessee was not chargeable to tax in India. Therefore in the present case also the lower authorities have wrongly interpreted the provisions of section 40(a)(i) of the Act and also section 195 of the Act. The assessee has submitted copy of letter of nonresidence regarding their tax residence and non-permanent establishment in India that there company is incorporated in New Zealand and Singapore. - Decided in favour of assessee. Addition on account of notional interest chargeable on debit balance of one of the partners of the firm - Held that:- As assessee’s counsel could not satisfied its claim by filing any evidence and could not point out any infirmity in the order of CIT(A). Hence, the same is confirmed and this issue of the appeal of assessee is dismissed.
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2018 (4) TMI 256
Levy of penalty u/s 271B - failure to get the accounts audited and furnished the audit report before the specified due date - reasonable cause for the delay in completing the tax audit and submitting the report of the tax auditor within the specified due date - Held that:- In the present case, the reason for the delay has been stated to be the delay in completing the statutory audit for the earlier years which has resulted in delay in completion of statutory audit for the year under consideration and the resultant delay in completing the tax audit and submitting the report thereof. As submitted that without completing the statutory audit, the tax audit could not have been completed. Statutory auditors are appointed by the Comptroller & Auditor General of India under section 619(2) of the Companies Act, 1956 and they have completed the statutory audit and submitted their audit report dated 27.03.2014. Thereafter, the tax audit has been completed on 15.07.2014 and the revised return was filed on 16.9.2014. The Hon'ble Punjab & Haryana High Court in the case of CIT v. Punjab State Leather Development Corpn. Ltd. [2001 (7) TMI 1275 - PUNJAB AND HARYANA HIGH COURT] has held that delay in completion of statutory audit was a reasonable cause for non-compliance with section 44AB and it was held that the Tribunal was right in cancelling penalty levied under section 271B - in the instant case, where there has been a delay in completion of statutory audit, there exist a reasonable cause for the delay in completion and submission of the tax audit report under section 44AB of the Act. The penalty levied under section 271B is therefore deleted. - Decided in favour of assessee
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2018 (4) TMI 255
Addition u/s 69C - unapproved purchases - Held that:- Whole addition on account of non-proving the bogus purchase u/s 69C of the Act doesn’t seem justifiable because sale is not disputed and books of account has not been rejected. In the instant case, the AO conducted the proper verification of the bogus purchase. Notices were given to the parties and the assessee was given an opportunity of being heard before passing the order but the transaction has not been properly proved. Since no new material has come before us, therefore, we are of the view that the bogus purchase to the tune of ₹ 1.33. crores is not doubtful. It is not required to be seen whether the whole addition is required on the part of the assessee or not u/s 69C. See COMMISSIONER OF INCOME-TAX-I Versus SIMIT P SHETH [2013 (10) TMI 1028 - GUJARAT HIGH COURT] End of justice would be met if, the 12.5% of the gross profit ratio of the bogus purchase is liable to be taken into consideration. See COMMISSIONER OF INCOME-TAX-I Versus SIMIT P SHETH [2013 (10) TMI 1028 - GUJARAT HIGH COURT] - We set aside the finding of the CIT(A) on this issue and restricted the addition of bogus purchase to the extent of 12.5% - Decided partly in favour of assessee.
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2018 (4) TMI 254
Transfer pricing analysis on account of AMP expenses - Held that:- Following the decision rendered by the coordinate Bench of the Tribunal in taxpayer’s own case, we are of the considered view that in view of the ratio of LG Electronics India Pvt. Ltd. (2013 (6) TMI 217 - ITAT DELHI) rendered by the Special Bench of the Tribunal, expenses qua sales which do not lead to brand promotion cannot be brought within the ambit of AMP expenses for the purpose of determining the value of international transactions. So, in these circumstances, we find no illegality or perversity in the findings returned by the ld. CIT (A). So far as question of making alternative disallowance of AMP expenses u/s 37 (1) of the Act by AO and deleted by the ld. CIT (A) is concerned, there is no dispute that the ld. CIT (A) has granted relief by following the decision of Whirlpool of India Limited (supra) rendered by the Hon’ble Delhi High Court because when the allowability of total amount of advertisement and marketing expenditure is concerned under Chapter X in order to make TP adjustment, this issue cannot be examined by making addition u/s 37 of the Act for the same amount. AO, after due verification, is directed to exclude selling expenses to recompute the ALP of the international transaction.
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2018 (4) TMI 253
Disallowance u/s.35(2AB) - Held that:- Assessee would be entitled to deduction u/s.35(2AB) in the year under consideration, even thought the registration/recognition is accorded by the DSIR in the subsequent assessment year. See CIT Vs Sandan Vikas India Ltd [2011 (2) TMI 66 - DELHI HIGH COURT] - Decided against revenue Disallowance u/s 14A - Held that:- Interest paid by the assessee was subsequently and assessee was having sufficient interest free fund to cover up the investment earning exempt income. Therefore, we are of the considered opinion that provisions of Section 14A are not attracted. However, as decided by the ld. CIT(A) that salary paid to C.S. Christian, which works out to ₹ 40,713/- is upheld. Therefore, we upheld the decision of the ld. CIT(A) and we are not incline to interfere in the order passed by the ld.CIT(A). Thus, this ground of revenue is dismissed. Disallowance of sales promotion expenses - Held that:- Assessee had purchased gift items and gave as momentous to the customers of the clients; and expenditure incurred was insignificant as the turnover of the appellant is around ₹ 31 crores; majority of the payment were made through credit card and export turnover of the assessee had gone up from ₹ 10.8 crores in the previous year to ₹ 12.54 crores in the current year. Disallowance of Motor Car depreciation - Held that:- It is not disputed that funds for purchases of the car were provided by the assessee company which is also reflected in the accounts of the assessee company. In our opinion, when the car is actually used for the purpose of business of the company depreciation thereon cannot be denied. - Decided against revenue
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2018 (4) TMI 252
Reopening of assessment - proceedings to assess the capital gains in the hands of the assessee, in his individual capacity and not in the hands of the “seller firm” - Held that:- Notice u/s 148 of the Act was issued to the purchaser firm M/s. Hotel Sea Weed on 31.07.2012. Notice was also issued on 31.07.2012u/s 148 to Shri Girish Chandra Rout, who is the respondent before me and a partner of the seller firm The AO had taken the cost of the asset as the WDV in the books of the seller partnership firm. Thus it is clear that the AO, prior to framing assessments on the purchaser firm and prior to framing assessments on the individual assessees, who are respondents in these appeals was fully aware that the asset in question belong to the seller partnership firm and not the individual assessee. It was the WDV of the asset in the Balance Sheet of the Seller Firm that the AO has taken for the purpose of computation of Capital Gains. Thus the argument of the ld. DR that the AO was misled as to whether the asset belonged to the firm or the individual in view of the recitals in the sale deed is devoid of merit. The notices u/s 148 of the Act were wrongly given as the reasons recorded were against the fact that, the asset belong to the firm which were in the knowledge of the A.O. No infirmity in the order of the First Appellate Authority wherein he held that u/s 189 of the Act, the assessments have to be made on the firm only, even if the business of the firm is discontinued. He rightly held that the capital gain in question could be brought to tax u/s 189 of the Act only in the hands of the seller firm with PAN AADFH 9221R. - Decided against revenue.
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2018 (4) TMI 251
TDS u/s 194C - tds on water charges paid - Held that:- Why there is difference between the amount received by the assessee from the clients and the amount paid to M/s Gangothri Water Supply was explained by the ld counsel for the assessee as an excess payment received which the clients did not claim from the assessee. In assessment year 2014-15, there is no such excess and the debit and credit in the water charges account tally. This proves the case of the assessee and there is no markup in procuring and supplying water by the assessee to his clients and, therefore, the contention put forth by the assessee that the water charges paid to M/s Gangothri Water Supply was never claimed by the assessee as a deduction in the profit and loss account and, therefore, the same cannot be subject matter of addition u/s 40a(ia) has to be accepted - Therefore of the view that the addition made in both the assessment years cannot be sustained and the same is directed to be deleted. Section 194C Explanation (iv) which defines ‘work’ for the sec. 194C of the Act specifically excludes supply of a product according to the requirements of the customers by using material purchased from a person other than such customers. Water in the present case was purchased by the assessee not from the customers but from a 3rd party and supplied to its clients. Therefore, the price paid for purchase of water in my view cannot be construed as a payment for payment to a contractor for carrying out any work. - Decided in favour of assessee.
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2018 (4) TMI 250
Exemption u/s 11 disallowed - activities of the appellant authority are not charitable as the registration of the trust is pending - assessee was not granted registration 12A - Held that:- Now the registration u/s 12A has been granted by the ld. CIT(E) vide order dated 15.12.2016 w.e.f. 01.04.2013 therefore, the activity of the assessee has been accepted as charitable in nature. The Hon’ble jurisdictional High Court in case of Urban Improvement Trust, Alwar, Kota and Ajmer (2018 (4) TMI 192 - RAJASTHAN HIGH COURT) the assessee is eligible for the benefit u/s 10(20) of the Income Tax Act being a local authority for the purpose the carrying out the improvement and development functions of the state. Hence, in view of the decision of the Hon’ble Jurisdictional High Court (supra) as well as the registration granted u/s 12AA of the CIT(E). We are of the opinion that the assessee’s income is not taxable in view of the provisions of section 10(20) of the I.T. Act. As regards the disallowance of depreciation it is now settled principle of law that the cost of acquisition of the asset is allowed an application would not be a ground of disallowance of deprecation. Hence, the addition/disallowance made by the AO are deleted. - Decided in favour of assessee.
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2018 (4) TMI 249
Denied exemption u/s. 11 - initiating reassessment proceedings on the basis of non grant of registration (u/s. 12AA) - Held that:- Assessee registered u/s. 12AA of the Act is to be, in view of s. 12A(2), deemed to be so registered for any other year for which the proceedings are pending at any (appellate) stage, provided of course that there is no change in the objects and activities of the entity during the intervening period. AR the assessee’s counsel, has shown us that there has been no change in the objects of the assessee’s society, qua which we are prima facie satisfied, as section 12A(2) cannot be invoked otherwise. No doubt the assessee stands refused approval u/s. 10(23C) and, in fact, twice. However, it is only the refusal (or subsequent cancellation) of registration u/s. 12A, that would attract the rigor of the third proviso to section 12A(2). We, accordingly, setting aside the impugned order/s, restore the assessments back to the file of the AO for consideration of the assessee’s claim for exemption u/s. 11 without being influenced by the grant of registration subsequently, and complete the assessment in accordance with the law. This aspect; the provisions of section 11 & 12 being not applicable in the absence of registration, remain to be examined.
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2018 (4) TMI 248
Rejection of books of accounts - trading addition - ex-parte order passed by the CIT(A) without providing adequate opportunity of being heard to the assessee - Held that:- In the present case, it is an admitted fact that the appeal of the assessee was decided by the CIT(A) ex-parte. He simply mentioned in para 5 of the impugned order that the case was fixed for hearing on 26.02.2016 but there was no response. However, nowhere he mentioned that the notice for hearing on the said date was served upon the assessee. CIT(A) had not accepted this claim of the assessee that it was preparing documents to be filed, for the reason that the assessee had not mentioned in the grounds of appeal that it had not been able to enclose all the necessary documents and needed time to file those documents, he also mentioned that there was no direction given at any point of time by his predecessor to file the written submission or any additional document. CIT(A), it appears that proper opportunity of being heard was not provided and even the documents sought to be filed by the assessee/counsel of the assessee were not permitted to be filed. No notice for enhancement of income was given to the assessee. It is well settled that nobody should be condemned unheard as per the maxim “audi alteram partem”. Remand the matter back to the file of the ld. CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard.
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2018 (4) TMI 247
Mobilization charges received by the assessee - Held that:- Issue covered against the assessee and in favour of the revenue by the judgment of the Hon’ble Apex Court in the case of Sedco Forex International Inc. Vs. CIT & Another reported (2017 (11) TMI 78 - SUPREME COURT) Receipt of mobilization of rigs ‘DDKG1’and ‘DDKG2’ outside Indian territorial waters and included in the gross receipts u/s 44BB Uttarakhand High Court in the case of CIT vs Halliburton Offshore Services Inc. (2007 (9) TMI 230 - UTTARAKHAND HIGH COURT) wherein the Uttarakhand High Court had held that reimbursement of expenses were includible in the gross receipts for purposes of determination of income u/s 44BB of the Act. Interest received on income tax refund taxed by the lower authorities at maximum marginal rate - Held that:- Interest on income tax refund is not to be included in the presumptive income and is to be charged to tax @ 15% as prescribed by Article XI of the Indo US Double Taxation Avoidance Agreement. See Asstt. CIT Versus Clough Engineering Ltd. [2011 (5) TMI 562 - ITAT, DELHI]. Thus, ground is allowed in favour of the assessee.
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2018 (4) TMI 246
Disallowance of foreign travelling expenses of Directors - Held that:- Except for stating that assessee has met one doctor or may be a particular doctors, however the assessee has not brought forward any evidence as to what was the meeting about, or whether any kind of agreement or understanding was entered for getting a referral patient or there was some likelihood of business in future. Even if the new business venture has been failed later on but assessee should have brought some evidence on record to prima facie show that the foreign travelling undertaken by the directors were wholly and exclusively for the business purpose of the company. Here in this case preponderance of probability miserably fails as none of the factors or material indicates that such foreign travel was for the purpose of business. Assessee may have started a new line of business, but the particular visit of London does not appear to be for the purpose of business sans any supporting evidence like, any kind of correspondence, agreement, exchange of mails, etc. Mere stating that the directors have met one doctor and that to be one name has been given will not suffice. - Decided against assessee.
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2018 (4) TMI 245
Penalty u/s 271(1)(c) - non specification of charge - whether for concealment of particulars of income or for furnishing of inaccurate particulars of income? - Held that:- Assessing Officer is required to specify which limb of Section 271 (1)(c) of the Act, the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. From the perusal of the notice u/s.274 r.w.s. 271 in the present appeal, it is very much obvious that the AO has not specified the same. The notice in fact is in standard pro forma without the irrelevant clauses therein being struck off. This indicates non application of mind on the part of the AO while issuing the penalty notice. Penalty proceedings initiated by the Assessing Officer are bad in law and accordingly the penalty so initiated is directed to be deleted and the order of the learned CIT (A) is set aside. - Decided in favour of assessee.
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2018 (4) TMI 244
Disallowing the notional loss on account of foreign exchange fluctuation claimed - Held that:- This issue was no longer res judicata and the Hon'ble Delhi High Court had held in the case of M/s Woodward Governor India (P) Ltd (2007 (4) TMI 118 - DELHI HIGH COURT) that increase in liability due to foreign exchange fluctuation as per the exchange rate prevailing on the last date of financial year was allowable as a deduction and was not notional and contingent. - Decided against revenue
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2018 (4) TMI 243
Addition of unsecured interest free loans and advances against projects/properties - Held that:- As decided in assess's own case the assessee company had received much more interest free trade advances/unsecured loans as comparison to interest free trade advances given. Assessee company has not given any interest free trade advances to any parties out of borrowed funds. Thus there is no nexus between borrowed funds and trade advances given to parties. Therefore, there is no question of disallowance of interest/addition on account of notional interest income on trade advances. - Decided in favour of assessee
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2018 (4) TMI 242
Penalty u/s 271(1)(c) - assessee’s name appeared in the list of beneficiaries of the alleged bogus accommodation entries provided by Shri Aseem Kumar Gupta - Held that:- Burden is on the assessee to rebut the presumption of concealment as contained in Explanation 1 to section 271(1)(c) of the Act by cogent and reliable evidence. In the facts of the present case, we are afraid that the assessee has failed to discharge the initial onus cast upon it by cogent or reliable evidence and has simply mentioned that the amount was being surrendered as a voluntary disclosure to buy peace and avoid litigation. We are of the considered opinion that the assessee, in the present case, cannot escape the rigours of penalty as it has failed to offer any explanation and has also failed to lead any cogent or reliable evidence. See MAK Data (P) Ltd. vs CIT [2013 (11) TMI 14 - SUPREME COURT]- Decided against assessee.
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2018 (4) TMI 241
Imposition of penalty imposed u/s 271(1)(c) - concealment of particulars of income or for furnishing of inaccurate particulars of income - non specification of charge - Held that:- AO is required to specify which limb of Section 271 (1)(c) the penalty proceedings had been initiated, i.e., whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. From the perusal of the notices, in the case of both the assessee, issued u/s 274 r.w.s. 271 of the Act, it is clear that the AO has not specified as to under which limb of the section the penalty was imposable. The notices, in fact, are in the standard pro forma wherein the irrelevant clauses have not been struck off. This indicates non application of mind on the part of the AO while issuing the penalty notices. The penalty proceedings initiated by the Assessing Officer are bad in law and deserve to be deleted. Accordingly, the impugned orders are set aside and the AO is directed to delete the penalty in both the cases. - Decided in favour of the assessee
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2018 (4) TMI 240
Addition qua equipment rental, service charges and sale of consumables and services rendered by assessee in connection with exploration/ prospecting/extraction of mineral oil - income arising on account of royalty/FTS, letting out of equipment etc. was to be taxed u/s 44BB - Held that:- Income on account of provision of equipment and services earned by the assessee company shall be taxable as per the provisions of Section 44BB of the Act. Gross receipts as per provision of Section 44BB - Service-tax does not form part of the gross receipts for computation u/s 44BB of the Act. See CIT vs Mitchell Drilling International P. Ltd. [2015 (10) TMI 259 - DELHI HIGH COURT] Chargeability of interest u/s 234B - Held that:- Hon’ble Delhi High Court in the case of DIT vs GE Packaged Power Inc [2015 (1) TMI 1168 - DELHI HIGH COURT] held that interest u/s 234B was not chargeable in the case of a non-resident whose entire income was subject to tax deduction at source u/s 195 of the Act. In view of this binding precedent, we hold this issue also in favour of the assessee.
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Customs
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2018 (4) TMI 239
Maintainability of petition - alternative remedy of appeal - validity of second SCN for the same order in original - Held that: - There cannot be two parallel proceedings assailing the correctness of the very same order-in-original, dated 23/9/2016. One before the Tribunal, by way of appeal, and another, by way of writ petitions, which may give rise to conflicting decisions - also, there is alternative remedy. Appeal dismissed being not maintainable.
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2018 (4) TMI 238
Validity of examination order of goods - N/N. 26/2015-2020 dated 01.09.2017 - the problem expressed by the importer/petitioner is that the cargo contains children toys and there are several varieties of children toys and if sample is drawn from each of the category of toys then it will be an expensive affair and totally unviable - Held that: - respondent/department is permitted to draw representative samples, which shall not exceed 15% of each variety of the cargo, which has been imported - the respondents shall draw representative samples of one(1) piece per variety - petition disposed off.
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2018 (4) TMI 237
Absolute Confiscation - penalty u/s 112 of CA - smuggling - Gold bar biscuits - Held that: - it is a fact that no document has been produced by both the appellants to prove that the said gold were procured with licit documents and that proper customs duty was paid on it - since the appellants have failed to justify the licit procurement of the gold bars, consequently, the seized gold cannot be considered as a bona fide baggage. Absolute confiscation upheld - quantum of penalty reduced - appeal allowed in part.
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2018 (4) TMI 236
100% EOU - import of capital goods as well as raw material - non-fulfillment of export obligation - Held that: - In the instant case, the capital goods were installed in the factory and were used primarily for the export of the goods - duty not leviable on capital goods - duty on raw material upheld. Appeal allowed in part.
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2018 (4) TMI 235
Restoration of petition - stay and waiver of pre-deposit - Held that: - Karnataka high Court in the case of McDowell and Company Ltd. [2005 (4) TMI 77 - HIGH COURT OF KARNATAKA AT BANGALORE] has held that the the jurisdiction of the Tribunal to review / modify its earlier stay order Tribunal after having exercised jurisdiction for the purposes of passing an order for waiver of predeposit under proviso to Section 35F of Central Excise Act, 1944 cannot modify that order subsequently like an appellate authority, nor can keep tinkering with such order as and when applications for modification of the order are filed - ROM application being devoid of merit is set aside.
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2018 (4) TMI 210
Penalty - illegal export - Whether the appellant can be visited with penalty under section 114 of the Customs Act, 1962, on the stated cause (in the show cause notice) that the illegal export was attempted in the name of M/s. Archana Exports of which the appellant was the CEO? Held that: - as per Section 114 of the Customs Act, 1962, that any person who, in relation to any goods, does not or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, shall be liable to a penalty as detailed therein. It is found that the intelligence had been gathered by the authorities concerned that by mis-declaration, the prohibited goods are being attempted to be exported through Chennai to Malayasia and it was found that they contained the prohibited goods i.e., red sander woods logs instead of the declared goods and thereby, it is found that the Section 113(i) of the Customs Act, 1962 come into operation - the appellant, being the chief executive officer of the company, who had arranged the export and enroute, the prohibited goods are found to be loaded in the place of the declared cargo and attempted to be exported abroad by way of mis-declaration and when it is further noted that the appellant is unable to give the correct particulars of the middle men, who had approached and interacted within as regards the export in question, it is seen that as rightly determined by the authorities concerned, the appellant cannot be declared to be an innocent person, particularly when it is noted that he had acted with the middle men without verifying their credentials etc. The appellant is liable to penal action under section 114 of the Customs Act 1962 - appeal dismissed - decided against appellant.
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Corporate Laws
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2018 (4) TMI 234
Winding up petition - Held that:- Right of the petitioning creditor to obtain payment of the principal amount of ₹ 5,15,31,045/-, together with interest thereon at the rate of 6% per annum from the date of the notice issued u/s 434 of the Act of 1956 till the date of actual payment has attained finality and this Court does not have any scope to deviate from such finding. Admittedly, the company has failed to pay the entire amount as directed by the said order dated March 26, 2015 and as on today ₹ 2,60,40,089 still remains outstanding from the respondent company to the petitioning creditor. For the above grounds, the application of the petitioner succeeds.
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2018 (4) TMI 233
Vacation of office by Directors - Held that:- The appellant did not resign on 21.09.2011 and even if it was so, he never pursued it with the Registrar of Companies or with the company for filing Form 32 with the ROC. On the contrary, after one-and-a half years he furnished fresh resignation letters on 26.02.2013 and thereafter again on 01.04.2013.Even in the subsequent resignation letters the appellant neither raised any grievance with the company nor mentioned about his resignation tendered on September 21, 2011. We, therefore, find that the appellant remained as the Director of the Company from 20.12.2010 to 01.04.2013. Appellant was never called upon to attend any Board meetings of the company - A simple perusal of the provision shows that it applies only to a director who in spite of notice absents himself from three consecutive meetings of the Board of Directors or absents himself from all the meetings of the Board for a continuous period of three months. In the present case, it is the case of the appellant that notice of Board meeting was never served on him. In such a case, question of the appellant remaining absent from the Board meetings does not arise and consequently the question of applying Section 283(1)(g) of the Companies Act, 1956 to the case of the appellant also does not arise. Appeal stands dismissed. Liability of the appellant under the impugned order is restricted to the period from 20.12.2010 to 01.04.2013 with interest jointly and severally with the company and other directors of the company.
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Insolvency & Bankruptcy
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2018 (4) TMI 276
Corporate insolvency process - ‘Resolution Professional' appointment - Held that:- The observations made in the impugned order should not be construed to be misconduct on the part of the Appellant, but as we find that the Adjudicating Authority was not satisfied with the performance of the ‘Resolution Professional’, we hold that the Adjudicating Authority was well within its jurisdiction to engage another person as ‘Resolution Professional’ or ’Liquidator’. Further, the list of ‘Resolution Professionals’ being made available by the ‘Board’ to the Adjudicating Authorities, any person is appointed out of the said list submitted by the ‘Board’, it should be treated to be an appointment of ‘Resolution Professional’/’Liquidator’ on the recommendation of the ‘Board’.
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2018 (4) TMI 275
Corporate Insolvency Resolution Process under Insolvency & Bankruptcy Code - Corporate Debtor having defaulted payment - whether pendency of appeal falls within the ambit of definition of existence of dispute, which has already been held that pendency of the appeal amounts to existence of dispute? - Held that:- On reading and rereading of section 9, it is understood that if any of the compliance not done as envisaged under section 9(5)(ii), it shall invariably be rejected without going any further, but as to admission of the case, the petitioner has filed an affidavit stating that it has not received notice of dispute within 10 days from the date of receipt of section 8 notice. It is also not held so far if reply has not been given intimating preexistence of dispute, the corporate debtor is deprived of placing the material reflecting preexistence of dispute. The only difference is, if reply to section 8 notice is not given, burden lies upon the corporate debtor to prove existence of dispute. Here the corporate debtor as well as the petitioner are in ad idem in respect to pendency of appeal u/s 37 of the Arbitration and Conciliation Act, 1996 This Company Petition is dismissed by holding that the dispute has already been in pre-existence in between the Petitioner and Corporate Debtor even before section 8 notice was issued by the Petitioner
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2018 (4) TMI 274
Right under Insolvency & Bankruptcy Code to get the delivery of the goods lying with the Respondent - ownership rights over the assets lying with the customs authoritieS - Held that:- It is not the case that the Respondent herein proceeding to take some action against the Corporate Debtor for appropriating the proceeds of the goods lying in the warehouse, indeed the Corporate Debtor has come forward through RP to take out the asset from the custody of the Respondent and the Customs Authority. Assuming that Section 14 is applicable even against this Respondent, that can come into force only when the Respondent initiates some action against the Corporate Debtor subsequent to declaration of moratorium. Here in the given case, no action has been initiated by the Respondent against the Corporate Debtor therefore, suspension of some right against the Corporate Debtor under Section 14 shall not be construed as a right to the Corporate Debtor to take out the assets lying with others solely on the ground that property is shown in the books of the Corporate Debtor. Right of suspension will not become right of taking delivery of the property from other parties. Therefore, the applicant herein cannot be said that it has a right under Insolvency & Bankruptcy Code to get the delivery of the goods lying with the Respondent herein henceforth, this Application is hereby dismissed without costs.
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2018 (4) TMI 273
Operational Debt - whether on receiving the principal operational debt amount during the pendency of the Petition before NCLT, the Petitioner can press for the admission of the Petition only in respect of the Interest amount alleged to be outstanding, firstly without revising the claim of Outstanding Debt and secondly when the eligibility of Interest claim is challenged by the Operational Debtor ? Held that:- Principal amount of Debt had admittedly been paid and duly accepted by the Petitioner and the claim of Interest remained unsubstantiated in the absence of cogent evidence, the “Operational Debt” in question remained unascertainable, as a consequence, the Petition under section 9 of The Code is not maintainable.
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2018 (4) TMI 272
Corporate Insolvency Resolution Process - Held that:- There are sufficient and convincing reasons for initiation of liquidation process under Section 33 of the Insolvency and Bankruptcy Code, 2016. By considering the above stated provision u/s 33(1)(2), the present petition and the reasons mentioned therein its present petition deserve to be allowed
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FEMA
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2018 (4) TMI 232
Stay petition - Held that:- This is is an arguable case on merits and hence cannot also be stated to be prima facie in their favour. They are accordingly required to pre-deposit the penalty of ₹ 10 lakhs within a period of four weeks from today failing which the appeal shall be disposed off as per the provisions of FEMA.
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Service Tax
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2018 (4) TMI 230
Valuation - inclusion of transportation charges - Clearing and Forwarding Agency services - Held that: - Pre-disposed mind itself is sufficient to hold that the decision-making process is erred as the author of the order already directed the petitioner to include transportation of goods charges way back in the year 2010 itself - this Court is of the view that the impugned order has to be set aside for reconsideration - petition allowed by way of remand.
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2018 (4) TMI 229
CENVAT credit - trading activity - applicability of Rule 6 of CCR - it appeared that the appellant had utilized excess credit - Held that: - since the trading activity is not an exempted service during the relevant period, rule 6 is applicable to the appellant - The Hon'ble High Court of Madras in the case of Ruchika Global Interlinks [] has considered this issue and has held that trading activity was not amenable to service tax at the relevant period and therefore apportionment as provided in Rule 6(3) (c) of CENVAT Credit Rules, 2004 would get triggered and the High Court has dismissed the appeal of the assessee - demand of duty upheld. Demand of Interest and penalty - Held that: - since the appellant had a bona fide belief that trading is an exempted service even prior to 01/04/201 1 and they had sufficient balance of CENVAT credit during the year 2008-09, they are not liable to pay interest - as far as penalty is concerned, there is no suppression on the part of the appellant and during the relevant time, there were conflicting decisions, penalty also set aside. Appeal allowed in part.
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2018 (4) TMI 228
Utilisation of CENVAT credit - reverse charge - service receiver - case of Revenue is that the CENVAT credit cannot be used for payment of service tax in respect of services where the person liable to pay the tax is the service recipient - sub-rule (4) of Rule 3 of CCR 2004 - Held that: - The wordings used in the Explanation to Rule 3 of CCR 2004, incorporated with effect from 01.07.2012, is 'CANNOT' and is in the nature of mandate and the usage of CENVAT credit for payment of service tax on WCS, MRS etc. as service recipient, is clear violation of Rule 3 of CCR 2004. Appellant, being service recipient cannot utilise the CENVAT credit to make the payment - appeal dismissed - decided against assessee-appellant.
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2018 (4) TMI 227
Penalty - payment of tax with interest before issuance of SCN - non-profit making organization - Held that: - the appellant is a non-profit making organization and they had a bona fide belief that they are not liable to pay service tax as they are a society registered under the Travancore-Cochin Literary Scientific and Charitable Societies Registration Act, 1955 - appellant paid the service tax before the issue of SCN which shows their bona fide - penalty set aside - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 226
CENVAT credit - inputs - tower / tower materials and prefabricated shelters - extended period of limitation - penalties - Held that: - various Benches of the Tribunal have held that the appellants are not entitled to take CENVAT credit on tower / tower materials and prefabricated buildings/shelters as capital goods as well as inputs - demand upheld. Extended period of limitation - penalties - Held that: - the issue in the present appeals was of an interpretation nature i.e. as to the eligibility of CENVAT credit or otherwise on the towers and building - the appellant could have entertained a bona fide belief - extended period of limitation and penalties not warranted. Demand upheld for the normal period - appeal allowed in part.
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Central Excise
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2018 (4) TMI 225
Restoration of appeal - delay in filing of appeal of more than 22 years - power of Tribunal to condone the same - failure to make pre-deposit - Whether, the impugned order is passed in violation of the statutory right of the Appellant to contest the appeal as provided under Central Excise Act 1944? - Held that: - There is no doubt, as is evident from the record that the delay in filing the application for restoration of appeal is about 22 years. The appellant has filed the restoration application as per convenience and after two decades. They were granted sufficient time by the Tribunal in the light of the order of the Supreme Court for extension of time for making the pre-deposit, but they failed to deposit even after a lapse of three years from the date of passing the pre-deposit order dated 19.1.1993. SCN for clandestine manufacture/sale etc. was issued on 25th March, 1988. The Order in Original was passed on 10th July, 1992. Recoveries obviously had to be made, especially once the Order in Original had become final. Mere recoveries or even payment after years cannot result in restoration of the appeals or justify condonation of delay in moving the restoration application. The appellant has been grossly negligent and derelict. Their inaction reflects acceptance and abandonment. The appellants have failed to show good cause and justification - there is no flaw or infirmity in the order of the Tribunal, rejecting the application for condonation of delay in filing the restoration application and accordingly dismissing the application for restoration. ROM application dismissed.
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2018 (4) TMI 224
Clandestine manufacture and removal - sponge iron - shortage of goods - demand based on third party records - Held that: - The Tribunal in the case of C.C.E. & S.T. -Raipur Versus P.D. Industries Pvt. Ltd. [2015 (11) TMI 455 - CESTAT NEW DELHI], observed that the records retrieved from the transporters, being third party’s records, cannot be adopted as the sole ground for upholding the allegations of clandestine removal. As regards the appeal of the assessee, the identical appeals of the other assessees stand remanded by the Tribunal for fresh adjudication. Appeal allowed by way of remand.
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2018 (4) TMI 223
Valuation - Cement - captive consumption - Department was of the view that the duty was required to be paid on such captively consumed goods on the basis of transaction value of cement cleared to independent buyers in terms of Section 4 of the Central Excise Act - Held that: - Rule 8 of the Central Excise Valuation Rules has been amended w.e.f. 1/12/2013. After such amendment the Rule provides for determination of value of captively consumed goods, on the basis of 110 per cent of the cost of production or manufacture of such goods - demand set aside. Demand for the period prior to 1/12/2013 - Held that: - similar issue for period prior to 1/12/2013 has come up before the Tribunal in the case of CCE, Indore V/s Surya Roshni Ltd [2016 (10) TMI 1137 - CESTAT, NEW DELHI] in which Tribunal has held that the treatment for the period prior to amendment to Rule 8 is to be the same as for the treatment after such amendment - demand set aside. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 222
Classification of goods - heavy commercial vehicles for the transport of goods and chassis of motor vehicles - Revenue held that they are not trucks designed for highway use, but were “dumpers” designed for off highway use. Such vehicles were classified, as per Revenue, under 870410 as well as chassis under 87060043. Held that: - an identical issue has come up for consideration before the Tribunal in the assessee-Appellants own case M/s VE Commercial Vehicles Ltd., Nitin Nagda, M/s Man Trucks India Pvt. Limited M/s V.E. Commercial Vehicles Ltd. Versus CCE & ST, Indore [2018 (3) TMI 256 - CESTAT NEW DELHI], where it was held that such vehicles manufactured by the appellant are meant to carry loads and capable of off-loading but the same are not machines exclusively meant for off-road use. The motor vehicles manufactured by the appellants do not fall in the category of dumpers designed for off-highway use under 8704 10. They are classifiable, as claimed by the appellant under 8704 2390 as tipper trucks likewise the classification of chassis also will fall under 87060042 and not under 87060043 as claimed by the Department. Appeal allowed - decided in favor of assessee-appellant.
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2018 (4) TMI 221
Classification of goods - Scent‟ - manufacture of Jayanti Jarda brand Chewing Tobacco - Appellants want to bring the product under the Central Excise Tariff Heading 24039910 which deals with Chewing Tobacco, but the Department wants to bring the same under Heading 24039930 which deals with the Zarda Scented Tobacco - Held that: - relaince placed in the case of M/s. Flakes-N-Flavourz Versus Commissioner of Central Excise, Chandigarh [2014 (9) TMI 664 - CESTAT NEW DELHI (LB)], where it was held that the description of the product is flavour chewing tobacco and it is bought and sold in the market as chewing tobacco, the product in question is chewing tobacco and classifiable under Heading 24039910 of the Tariff. The product classified as Chewing Tobacco‟ under Tariff Heading No. 24039910 - appeal allowed - decided in favor of assessee-appellant.
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2018 (4) TMI 220
Valuation - includibility of VAT in assessable value - Department is of the view that the amount of interest was received from State Government Scheme, 2003 is includible in the assessable of the goods - Held that: - identical issue has come up before the Tribunal in the case of Shree Cement Ltd. vs. CCE, Alwar [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-assessee.
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2018 (4) TMI 219
Valuation - Includability - job-worker - appellant receives certain materials free of cost under delivery challan which they use for the process and clear the goods to L&T on payment of duty - Held that: - the appellants have received raw material from its customers under Rule 57F(4) and Rule 57AC(5)(a)-challans. The customers supplying the raw material have availed the CENVAT credit on such material and supplied the said material free of cost to the appellant for carrying out further processing of the raw material for manufacture of final product. Identical issue decided in the case of Vako Seals Pvt. Ltd. Versus Commissioner of Central Excise, Mumbai [2016 (6) TMI 467 - CESTAT MUMBAI], where it was held that value of machine bodies supplied by the principle manufacturer need not to be added or same should not be levied with excise duty. Appeal allowed - decided in favor of apppellant.
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2018 (4) TMI 218
SSI Exemption - Brand name - articles of jewellery on which certain marks are embossed, which are abbreviations of the names of the jewellers - whether such marks are to be considered as Brand Names/Trade Names , in terms of the Explanation in the N/N. 4/2005 dated 1.3.2005? - Held that: - Since there are contradictory views expressed by two different Division Benches of the Tribunal on the identical issue, we direct the Registry to place the matters before the Hon'ble President for setting up a Larger Bench to decide this issue - matter referred to Larger Bench.
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2018 (4) TMI 217
CENVAT credit - duty paying documents - Rule 16 of the Central Excise Rules - Held that: - there is no dispute regarding the goods received back from dealer which were duty paid and the only allegation against the appellant is that the credit notes are not the proper document for claiming CENVAT credit - also, subsequently the appellant has paid the duty at the time of clearance. CENVAT credit is being denied on procedural lapse which is not deniable under law - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 216
Refund of unutilized CENVAT credit - inputs used in the manufacture of agricultural machinery parts have been entirely exported - Held that: - the issue is squarely covered in favour of the appellant by the decision of the Hon'ble High Court of Karnataka in the case of CCE Vs. ANZ International Ltd. [2009 (3) TMI 302 - KARNATAKA HIGH COURT] wherein the Hon'ble High Court has held that an EOU manufacturing exempt goods is entitled to take CENVAT Credit of duty paid on the inputs and can claim refund when such credit is unusable - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 215
CENVAT credit - input service - outward freight - place of removal - Department alleged that since duty was discharged at factory gate point, the fact gate becomes the 'place of removal' and the outward freight which is used for clearance of final products beyond the factory gate did not fall within the purview of definition of input service - Held that: - in the case of Ambuja Cements Ltd. Vs. UOI [2009 (2) TMI 50 - PUNJAB & HARYANA HIGH COURT], the Hon'ble High Court of Punjab & Haryana has held that when the goods are sent on FOR basis up to the buyer's premises and all the conditions in Circular No,97/8/2007 dt 23/08/2007 are satisfied, then the assessee is entitled to take CENVAT credit of service tax paid on GTA service - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 214
Interest on delayed refund - relevant date - CBEC circular No.802/35/2004-CX dt. 08/12/2004 - Held that: - the assessee is entitled to interest which will commence after the expiry of three months after final disposal of the dispute. In the present case, the Tribunal allowed the appeal of the appellant vide its Final Order dt. 09/08/2007, whereas the refund was granted finally to the appellant on 12/02/2013 - for the delay in granting the refund, the appellant is entitled for interest from the date of expiry of three months from the date of the Final Order till the refund was finally granted. Appeal allowed - decided in favor of appellant.
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2018 (4) TMI 213
Classification of goods - Dhathri Hair Oil - The original authority has classified the same under the Cosmetic Category but the Commissioner (Appeals) has given the benefit being Ayurveda based hair oil - Held that: - In the case of Dabur India Ltd, vs. Cc, Jamshedpur [2005 (4) TMI 57 - SUPREME COURT OF INDIA], the Hon'ble Supreme Court has decided the matter in favor of the appellant-assessee and considered the Hair Oil as Ayurvedic product - appeal dismissed - decided against Revenue.
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2018 (4) TMI 212
Penalty - CENVAT credit reversed before issuance of SCN - Held that: - the penalty in this case is not sustainable as the issue relates to interpretation of law and the appellant has not suppressed any material fact from the Department with intention to evade payment of duty and has shown the availment of credit in the relevant returns and CENVAT records maintained by them - penalty set aside - appeal allowed - decided in favor of appellant.
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2018 (4) TMI 211
Valuation - inclusion of dealers margin which was retained by the respondent in respect of sale thorugh COCO - Held that: - while arriving at the assessable value for clearances to COCO, other elements such as sales tax, other local lines and excise duty is deducted from RSP and thus the dealer's margin is already included in the value on which the duty is being paid. The RSP is fixed and to arrive the normal assessable value various deduction are to be granted. It was also found that assessable value of the goods cleared to COCO are higher than the assessable value i.e. normal transaction value in the case of dealers Therefore there is no question of addition or retention of dealer's margin by the appellant. Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2018 (4) TMI 209
Reversal of input tax credit - sale of scrap which is sold to some consideration - Held that: - A reading of the Section 19(9)(i) of the TNVAT Act makes it evident that no input tax credit shall be availed by a registered dealer for purchase of goods, if such goods are not sold because of any theft, loss or destruction, for any reason, including natural calamity, and if the dealer has already availed input tax credit against purchase of such goods, there shall be reversal of tax credit - Reversal of input tax credit has been done by the Original Authority, based on the surprise inspection conducted by the Enforcement Wing officials, that there is difference in the value of purchase and sales of scrap. The dealer had sold utensils and scrap, as first sale and paid tax to the department, after adjusting input credit. Upon analysing the evidence, there is a concurrent finding of fact, in favour of the dealer, which does not warrant reversal on the grounds raised. Revision dismissed - decided against Revenue.
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2018 (4) TMI 208
Liability of Additional Sales Tax - the sale turnover of by the two Principals was less than 10 crores, during the assessment year 2003-2004 - Held that: - Section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970, has been amended, attracting a dealer, including the principal selling or buying goods through agents, crossing the taxable turnover of ₹ 10 crores, liable to pay additional tax. Taxable turnover, as explained in Explanation-I of the abovesaid Section, shall be the aggregate taxable turnover of all his agents relating to the sale or purchase of the goods of such principal within the State - on and from 1.11.2001, the liability under the Tamil Nadu Additional Sales Tax Act stood attracted on a dealer, including the principal selling or buying goods, through agents, crossing the taxable turnover of ₹ 10 crores. Tribunal has weighed the evidence required to be produced by the petitioner, to support his case that on their behalf, additional sales tax has been paid by the principal - Appreciation of evidence by the Tribunal and reasons recorded in the order, cannot be said to be perverse. Revision dismissed - decided against assessee.
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Wealth tax
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2018 (4) TMI 207
Constitutional validity of Section 40(3) of Wealth Tax Act - as submitted that Section 40(3) is unconstitutional as it brings to tax all lands and buildings (to the extent not used for the purposes of the business) owned by a company in which public are not substantially interested, as it has no relation to the object of the Act - Held that:- Section 40(3) of the Act bringing to tax land and building which is not used for business purposes by companies in which public are not substantially interested to tax under the Wealth Tax Act and leaving out those land and buildings which are used for business purposes by companies in which public are not substantially interested from the charge of wealth tax under the Act is a reasonable classification. Therefore, the legislation bringing to tax land and buildings owned by the companies in which public are not substantially interested without any reference to the manner in which such companies came into ownership of the land and buildings is a decision taken by the legislature and cannot be faulted on the touchstone of Article 14 of the Constitution of India Parliament made a reasonable classification between the companies in which public are substantially interested from the companies in which public are not substantially interested. This classification cannot be found fault with because the petitioners want further classification to have been done by the Parliament. The legislature has in its wisdom decided that the executive should not be burdened with finding out the manner in which the land and buildings has been acquired by the company, to bring it to tax. The mere fact that there is land and building owned by the company and it is not used for the purposes of business is sufficient to hold that these assets to be taken into account under Section 40(3) of the Act for the purposes of wealth tax under the Wealth Tax Act. - Challenge to Section 40(3) of the Act is not sustainable. Therefore, the petition is dismissed.
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Indian Laws
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2018 (4) TMI 231
Smuggling - Heroin - Section 50 of The NDPS Act - offence under Sections 8(c) r/w 21(c), 28 and 29 of The Narcotic Drugs and Psychotropic Substances Act, 1985 and Section 135(1)(a)(ii) of The Customs Act. Held that: - The Apex Court has time and again held that once a physical possession of the contraband by the accused has been established, the onus is upon the accused to prove that it was not a conscious possession. Thus, the onus would be upon the accused to rebut the statutory presumption of this fact that the accused was not in the knowledge that this substance was a contraband - The appellant has failed to discharge his burden in the manner known to law. In her statement under Section 313 of Cr.P.C. also no plea has been taken that she was not in conscious possession of the contraband. The respondent has proved its case beyond all reasonable doubts and that the learned trial judge was right in holding that the appellant was guilty of charges and that this court does not find any illegally or irregularity in the same warranting interference at the hands of this court. The quantum of both physical and monetary sentence imposed on the appellant by the learned trial judge appear to be appropriate and thus, the same also do not require any interference at the hands of this court - appeal dismissed - decided against appellant.
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