TMI Tax Updates - e-Newsletter
May 17, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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GST:
Levy of GST - composite contracts - The applicant supplies works contract service, of which freight and transportation is merely a component and not a separate and independent identity, and GST is to be paid at 18% on the entire value of the composite supply, including supply of materials, freight and transportation, erection, commissioning etc. - AAR
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GST:
Works Contract - transaction of setting up and operation of a solar photovoltaic plant is in the nature of a "works contract" - cannot be bifurcated for levy of GST @ 5% on goods and @ 18% on services - AAR
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Income Tax:
Addition to income - since the construction of the relevant house was not a part of the business of the assessee, Section 43A of the Act would not apply to the apparent gain made by the assessee as a consequence of the foreign exchange fluctuation - no additions - HC
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Income Tax:
Recovery of house tax - only because of having the exemption from payment of income tax being the charitable trust under Section 12-A of the Income Tax, the petitioner is not entitled to get the exemption from payment of house tax. - HC
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Income Tax:
An assessment proceeding which is pending in appeal before the appellate authority should be deemed to be ‘assessment proceedings pending before the assessing officer’ within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11 of the Act. - AT
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Income Tax:
Disallowance of relocation expenses - The shifting of office is not regular phenomena of the business activity of the assessee and these one time expenses are towards creating a new office - the expenditure are of enduring nature - not to be allowed as revenue expenditure - AT
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Income Tax:
Addition u/s 68 - gift received from the HUF - the legislative intent is very clear that an HUF is not to be taken as a donor in case of an individual recipient. Assessee’s former plea of having received a valid gift from his HUF is therefore declined. - AT
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Customs:
Renewal of CHA License - the actions taken under the CBLR, 2013 will be without prejudice to the action that may be taken under Customs Act, 1962, thereby making it explicit that the proceedings under the Act as well as the Regulation are distinct and separate. - AT
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Customs:
Benefit of DFIA Licenses (Duty Free Import Authorisation) - Melamine cannot be used as such, in leather processing as Syntan leading us to the inescapable conclusion that the benefit allowable under DFIA licence to Syntan cannot be extended to Melamine - AT
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Indian Laws:
Noida Customs Commissionerate is organising an 'Orientation Programme' on Authorised Economic Operator (AEO) scheme with Sh. S K Sinha Commissioner of customs ( Export) Delhi as speaker on 18.05.2018 at 10.30 a.m. at Stellar Gymkhana R-1,Knowledge Park-II, Greater Noida U.P. All stakeholders in International trade are invited to attend the same.
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Service Tax:
Excess utilisation of CENVAT credit beyond the limit of 20% - Utilisation of CENVAT credit in excess of 20% could be a procedural infraction but definitely not an evasion of tax which is the requirement for imposition of equivalent amount of penalty. - AT
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Service Tax:
Refund of service tax - period of limitation - in the present case, the limitation as held by the Bombay High Court would start from the day when the circular was issued clarifying that the appellants are not liable to pay service tax. - AT
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Service Tax:
Reverse charge - Online information data base access and/or retrieval service - In the absence of any acceptable evidence that the assessee had access to data of others on the common server for which consideration was made over on which they are liable to tax under section 66A of Finance Act, 1994, the charging of tax on the respondent would not be correct in law. - AT
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Central Excise:
Valuation - Distinction between "Normal Value" and "Transaction Value" - The observations made in paragraph 84 in the case of Acer India to the effect that ‘transaction value’ defined in Section 4(3)(d) of the Act would be subject to the charging provisions contained in Section 3 of the Act will have viewed in the context of a situation where an addition of the value of a non-dutiable item was sought to be made to the value of a dutiable item for the purpose of determination of the transaction value of the composite item. This is the limited context in which the subservience of Section 4(3)(d) to Section 3 of the Act was expressed and has to be understood. If so understood, we do not see how the views expressed in paragraph 84 of Acer India Ltd. (supra) can be read to be in conflict with the decision of Bombay Tyre International Ltd. (1983 (10) TMI 51 - SUPREME COURT OF INDIA). - SC
TMI Short Notes
Notifications
Circulars / Instructions / Orders
News
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CBDT directs IT dept to hold grievance redressal fortnight in June
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Cabinet approves Corpus for Micro Irrigation Fund with NABARD under Pradhan Mantri Krishi Sinchayee Yojana
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Cabinet approves enhancement of budget for implementation of Network for Spectrum for Defence Services
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Suresh Prabhu launches Intellectual Property mascot – IP Nani
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Clarification on Import of Sugar from Pakistan
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Cabinet approves development of Trunk Infrastructure Components for Integrated Multi Modal Logistics Hub known as "Freight Village" at Nangal Chaudhary in Haryana under Delhi Mumbai Industrial Corridor Project
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Cabinet approves signing and ratification of Agreement between India and Brunei Darussalam for the Exchange of Information and Assistance in Collection with respect to Taxes
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RBI Reference Rate for US $
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CIPAM-DIPP organizes a conference on National IPR Policy
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India’s Foreign Trade: April 2018
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Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified
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Time for a dedicated think tank for the North Eastern Region (NER) at the Central Government level;
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Atal Pension Yojana subscribers base crosses 1 crore mark on completion of 3 years of launch of the Scheme
Case Laws:
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GST
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2018 (5) TMI 964
Levy of GST - Works contract / composite contracts - inclusion of freight in the value of supply - activity of supply of materials and allied services for erection of towers, testing and commissioning of transmission lines and setting up sub-stations collectively called the Tower Package. - The applicant raises separate freight bills on the contractee as per the rate schedule - applicant raises separate freight bills on the contractee as per the rate schedule annexed to the Second Contract - Section 97 (2)(a) & (e) of the CGST / WBGST Act, 2017 - whether applicant is liable to pay tax on such freight bills? Held that: - It is immediately apparent that the First Contract cannot be executed independent of the Second Contract. There cannot be any ‘supply of goods’ without a place of supply. As the goods to be supplied under the First Contract involve movement and/or installation at the site, the place of supply shall be the location of the goods at the time when movement of the goods terminates for delivery to the recipient, or moved to the site for assembly or installation - Composite nature of the contract is clear from the clause that defines satisfactory performance of the First Contract (supply of goods) as the time when the goods so supplied are installed and finally commissioned in terms of the Second Contract - The price components of both the First and the Second Contracts, including that for transportation, in-transit insurance etc are to be clubbed together to arrive at the value of the composite supply of works contract service as discussed above, and taxed at 18% in terms of Serial no. 3 (ii) of Notification No. 11/2017 – Central Tax (Rate) dated 28/06/2017 (1135 – FT dated 28/06/2017 under the State Tax). Ruling: - The applicant supplies works contract service, of which freight and transportation is merely a component and not a separate and independent identity, and GST is to be paid at 18% on the entire value of the composite supply, including supply of materials, freight and transportation, erection, commissioning etc.
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2018 (5) TMI 963
Works Contract - Separate taxability for goods and services - rate of tax - Concessional rate of duty - classification of future contract - Whether in case of separate contracts for supply of goods and services for a solar power plant, there would be separate taxability of goods as 'solar power generating system' at 5% and services at 18%? - Held that: - works contracts u/s 2(119) being deemed to be a supply of services, the impugned agreements represent transactions of the nature of a supply of service - The agreements tendered in support of this question reveal that the impugned transaction of setting up and operation of a solar photovoltaic plant is in the nature of a works contract in terms of clause (119) of section 2 of the GST Act. Schedule II [Activities to be treated as supply of goods or supply of services] treats works contracts u/s 2(119) as supply of 'services' - depending upon the nature of supply, intra-State or inter-State, the rate of tax would be governed by the entry no.3(ii) of the Notification No.8/2017-Integrated Tax (Rate) under the Integrated Goods and Services Tax Act, 2017 (IGST Act) or the Notification no. 11/2017 - Central Tax / State Tax (Rate) under the CGST Act and MGST Acts. The rate of tax would be 18% under the IGST Act and 9% each under the CGST Act and the MGST Act, aggregating to 18% of CGST and MGST. Whether parts supplied on standalone basis (when supplied without PV modules)would also be eligible to concessional rate of 5% as parts of solar power generation system? - applicant argues that since the concessional rate of 5% [as clarified to be under Notification no. 1/2017-Integrated Tax (Rate)] is provided to renewable energy products and parts thereof, the same should be applicable to all suppliers providing such products - Held that: - sr. no.234 of Schedule I of Notification No.1/2017 - Integrated Tax (Rate) under the Integrated Goods and Services Tax Act, 2017 (IGST Act) which states is under the notification prescribing the tax rate on 'goods' - We have to observe that the facts of the transactions have to be seen in terms of what the sub-contracting agreement says, what has been supplied, whether the item supplied is a part. Such and many other questions have to be answered. No details have been brought before us. If the transaction is a supply of goods then the applicable Schedules (exempt or taxable) would have to be seen - In the absence of any documents before us, we would not be able to deal with this question in the present proceedings. Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors? - Held that: - If the transaction is a supply of goods then the applicable Schedules (exempt or taxable) would have to be seen. No details have been brought before us. Further, the question would have to be posed by the supplier who would be the sub-contractor - In the absence of any documents before us, we would not be able to deal with this question in the present proceedings. Ruling: - Depending upon the nature of supply, intra-State or inter-State, the rate of tax would be governed by the entry no.3(ii) of the Notification No.8/2017-lntegrated Tax (Rate) under the Integrated Goods and Services Tax Act, 2017 (IGST Act) or the Notification no.11/2017 -Central Tax/State Tax (Rate) under the CGST Act and MGST Acts. The rate of tax would be 18% under the IGST Act and 9% each under the CGST Act and the MGST Act, aggregating to 18% of CGST and MGST.
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Income Tax
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2018 (5) TMI 962
Entitlement to relief u/s 54 - Long term capital gain earned in pursuance of transfer of the residential property and used for purchase of a new asset/residential house - Held that:- A right in respect of the capital asset, viz. the property in question had been transferred by the appellants in favour of the vendee/transferee on 27th December, 2002. The sale deed could not be executed for the reason that the appellants had been prevented from dealing with the residential house by an order of a competent court, which they could not have violated. In view of the aforestated peculiar facts of the case and looking at the definition of the term ‘transfer” as defined under Section 2(47) of the Act, benefit of exemption u/s 54 allowed.
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2018 (5) TMI 961
Addition to income - Benefit of the foreign exchange fluctuation on account of the purchase of an imported lift - Assessee asserted that since the elevator was not used for the purpose of its business and no deduction or depreciation or the like had been claimed in respect thereof - Held that:- The appellate Tribunal held in this case that since the construction of the relevant house was not a part of the business of the assessee, Section 43A of the Act would not apply to the apparent gain made by the assessee as a consequence of the foreign exchange fluctuation. On a plain reading of Section 43A of the Act and the fact that the assessee had not claimed any deduction or depreciation on account of the lift or other construction material, it cannot be said that the appellate Tribunal committed any error or that there is any significant question of law that needs to be looked into.
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2018 (5) TMI 960
Penalty u/s 271(1)(c) - non specification of charge - Held that:- The penalty levied under Section 271(1)(c) of the Act of 1961 is not sustainable in law, as no specific charge was levied in penalty show-cause notices. Considering the fact that the ground mentioned in show-cause notice would not satisfy the requirement of law, as notice was not specific, we are of the view that the learned Tribunal has rightly relying on the decision of CIT V/s. Manjunatha Cotton Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT) and CIT V/s. SSA'S Emerald Meadows (2016 (8) TMI 1145 - SUPREME COURT) rightly allowed the appeal of the assessee and set aside the order of penalty - Decided in favour of assessee
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2018 (5) TMI 959
Recovery of house tax - Petitioner-institution being a charitable organization as exempted from payment of house tax - Held that:- No substance in the submissions of the learned counsel for the petitioner nor the counsel for the petitioner produced any material to support his contention that only because of having the exemption from payment of income tax being the charitable trust under Section 12-A of the Income Tax, the petitioner is entitled to get the exemption from payment of house tax. The petitioner has failed to satisfy the query of the Court with regard to the assessment proceedings related to house tax of the properties of the petitioner-hospital. He has only placed the copy of the recovery notice issued by the Chief Assessment Officer, Nagar Nigam, Jhansi (Annexure-6) which clearly indicates that the annual assessment of the petitioner-hospital is of ₹ 71,94,950/- and the house tax is chargeable at the rate of 10% and there are dues to the tune of ₹ 1,07,92,425/- on which the interest is calculated to the tune of ₹ 12,95,091/-. The current year tax is assessed being 10% of the annual assessment of the property which comes to ₹ 7,19,495/- and the outstanding dues are shown to the tune of ₹ 1,15,11,920/-. The actual outstanding amount is calculated at ₹ 1,28,07,011/-. The Court has enquired from the counsel for the petitioner about the assessment of the property and the assessment orders. - Appeal dismissed.
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2018 (5) TMI 958
Addition towards income from undisclosed sources - cash withdrawals - Held that:- D.R could not bring any cogent and positive material on record to controvert the findings of the CIT(A) that there were adequate cash withdrawals to explain the subsequent deposits in the bank. Therefore, we find no good reason to interfere with the orders of the CIT(A). Hence, the grounds of appeal the revenue for both the assessment years are dismissed.- Decided in favour of assessee.
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2018 (5) TMI 957
Disallowance u/s 14A r.w.r.8D - computation of claim - Held that:- Lower authorities having ignored the computation of disallowance u/s 14A of the Act given by the assessee, and having proceeded to invoke that provision of Rule 8D(2) for arriving at the disallowance figure u/s 14A of the Act, cannot again make further addition of ₹ 65,537/- (i.e. working given by the assessee). At any stretch of imagination the said specified items cannot be construed as direct expenses incurred for earning dividend income as stated by the ld. CIT(A). Hence we direct the ld. AO to delete the disallowance u/s 14A of the Act to the tune of ₹ 65,537/- made in the first limb of Rule 8D(2) of the rules. With regard to the disallowance made under the third limb of Rule 8D, we direct the ld. AO to consider only those investments that had yielded dividend income in consonance with the decision rendered by this Tribunal in the case of REI Agro Ltd reported in 2013 (9) TMI 156 - ITAT KOLKATA. Accordingly the grounds raised by the assessee for A.Y.2008- 09 are allowed for statistical purposes. Deduction u/s 10A - apportionment of common expenses - Held that:- Business of PBC Software (10A unit) is also carried on in the same business premises where other business are carried on. Hence we hold that the ld. CIT(A) had rightly apportioned the common expenses by identifying certain specific expenses thereon and had apportioned the same to 10A unit which in turn had resulted in corresponding reduction in the claim of deduction u/s 10A of the Act. We find no infirmity in the order of the ld. CIT(A) in this regard.
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2018 (5) TMI 956
Treat the long term as well as short term capital gain as such and not as business income as per CIT-A - Held that:- The assessee is maintaining two portfolios i.e. investment as well as trading. In the investment portfolio the shares are held as investments whereas in the trading portfolio the shares and securities are held as stock in trade. The assessee has duly classified the same in the shares into investment portfolio and trading segment. The assessee has used her own funds and no funds were used for the purpose of investments. Therefore, looking to the facts and circumstances of the case in totality, we do not find any defect or infirmity in the order of Ld. CIT(A). Addition u/s 14A - Held that:- It was not possible to make any income without expenses thereby ignoring the facts that the expenses claimed by the assessee in the P & L account are only to the extent of ₹ 2,24,354/-. Therefore, the arguments of the Ld. A.R. that disallowance cannot exceed actual expenses claimed by the assessee appear to be correct. Keeping in view the nature of business and facts of the case, we are of the view that disallowance of expenses attributable to earning of exempt income has to be based upon the quantum of expenses incurred by the assessee. We, therefore, deem it fit and reasonable to direct a disallowance @ 20% of total expenses i.e. ₹ 2,24,354/- as expenses attributable to earning of exempt income under Rule 81D(2)(iii) of the Rules.
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2018 (5) TMI 955
Addition on account of unexplained cash credit - Held that:- Findings of the A.O. may not be appropriate to reject the explanation of assessee particularly when the lender has confirmed the transaction with the assessee directly to the A.O. in response to the notice under section 133(6) of the I.T. Act. These facts, therefore, shows that one more opportunity could be given to the assessee to produce the creditor before A.O. for examination. We, accordingly, set aside the orders of the authorities below and restore the matter in issue to the file of A.O. with a direction to redecide the issue on merits in accordance with law. - Decided partly in favour of assessee for statistical purposes.
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2018 (5) TMI 954
Assessment u/s 144 - addition of contract receipts - CIT-A reduced the net profit rate from 12% to 8% as against 2.21% shown by the assessee applying the provisions of section 44AD - Held that:- Explanation(b)(ii) (as applicable) to section 44AD defines ‘eligible business’, as a business whose total turnover or gross receipts in the previous year do not exceed an amount of ₹ 40 lakhs. The assessee’s gross receipts from the eligible business in the concerned previous year were of ₹ 8,43,16,720/-, i.e., much above the cap prescribed by section 44AD. Thus, the provisions of section 44AD of the Act are not applicable and they have been erroneously applied by the ld. CIT(A). Books of account were rejected. Therefore, the past history of the assessee is the best guide in determining the rate to be applied. As per the assessee’s past history (impugned order pages 8 to 9), in A.Y. 2010-11, the rate of 4.17% was applied. In A.Y. 2009- 10, the rate applied was 3.67%. In A.Y. 2008-09, the rate assessed was 4.63%. So, as per this past history of the assessee, the average rate comes to 4.16%, which is directed to be applied, as against that of 2.21% shown by the assessee. Unexplained introduction of capital - Held that:- The intangible addition made to the book profits during an assessment proceedings is as much a part of the assessee’s real income, as that disclosed in the books of account. That being so, the assessee can very well avail the benefit of such addition for explaining the source of cash credits u/s 68 of the IT Act, i.e., unexplained introduction of capital in the present case. In view of the above, accepting the assessee’s alternative plea, the addition of ₹ 6 lakhs is ordered to be telescoped against the trading addition of ₹ 1,01,18,006/-. Addition u/s 43B - the amount was shown as payable, there was no evidence of actual payment thereof - CIT(A) has confirmed the addition - Held that:- The matter, as rightly contended, is covered in favour of the assessee by the order in ‘CIT vs. Banwari Lal Banshidhar’ (1997 (5) TMI 37 - ALLAHABAD High Court), wherein, it has been held that when G.P. rate is applied, that would take care of everything. This addition is, hence, deleted.
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2018 (5) TMI 953
Denial of adjustment of abnormal cost on account of rent and other maintenance expenditure relating to unutilized capacity held for domestic business - Held that:- The facts in assessment year 2008-09 are identical and a perusal of the directions of the Hon’ble DRP also shows that even the Hon’ble DRP has accepted that approximately 25% of the premises of the assessee were lying vacant/idle during the year under consideration. Accordingly, on identical facts, it is our considered opinion that requisite adjustment should be allowed to the assessee on this issue. Accordingly, we restore this matter to the file of the Assessing Officer/TPO with a direction to work out the requisite adjustment for the idle capacity in respect of rent and related charges after giving assessee proper opportunity. Thus, this ground stands allowed for statistical purposes. Adjustment in respect of royalty - Held that:- As considered the assessee’s application for admission of additional evidence which has been filed under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 and looking to the facts and circumstances, it is our considered opinion that this Addendum to the agreement goes to the very root of the matter and it will suitably assist the lower authorities to reach a logical conclusion on the issue. Since the lower authorities did not have the benefit of examining this document, the matter has to be necessarily restored to the file of the Assessing Officer/TPO for deciding the issue of royalty afresh after duly considering this agreement and after giving due opportunity to the assessee to present its case.
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2018 (5) TMI 952
Disallowance u/s 14A - Held that:- It is a settled position of law that the provisions of section 14A can be applied to quantify the expenses in relation to exempt income. Since the exempt income is Nil, section 14A will not apply. The Rule 8D can be applied only when there is difficulty in finding the expenditure relating to exempt income. The provisions of section 14A and Rule 8D will not apply to the present case. We find that the investments were made purely on account of commercial necessity and as no exempt income was earned from the investment so made, the provisions of Section 14A will not be applicable in the case of assessee. Therefore, as section 14A cannot be invoked without any exempt income, accordingly, we dismiss the grounds raised by the revenue and allow the grounds raised by the assessee in C.O. Non-compete fee payment - not claimed in Return of income - whether payment is not incurred wholly and exclusively for the business of the assesse as there is no commercial expediency in this transaction? - Held that:- In the plethora of cases, the courts have held that CIT(A) and ITAT have power to allow deduction for expenditure to assessee to which it was otherwise entitled even though no claim was made in the return of income. The assessee is entitled to a particular claim, which it missed in the return of income, may claim during appellate proceedings. The assessee should ensure that all necessary evidences are submitted during appellate proceedings and available on record. The case to refer in particular is CIT vs. Pruthvi Brokers & Shareholders P. Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT). In the case under consideration, the assessee has submitted all relevant information on record relevant to claim the non-compete payment and it is not in dispute. The only issue is, it is not claimed in the return of income. Since, CIT(A) has power to allow the claim as per the above decisions of higher courts, it is within the powers of CIT(A) to allow the claim of the assessee. TDS u/s 194H - Payment of commission to Shri P. Ramaraju without deducting TDS - Held that:- This is a genuine expenditure and it should be allowed. This is relating to market development and it cannot be treated as commission payment, hence, provisions of section 194H will not apply. We notice that this payment was made as appreciation of market development and the persons involved are consignment agents,m the assessee has not brought on record to show that how much consignment sales were recorded by such consignment agents and how the special discount was calculated. In the absence of such crucial information and it is fact that a lumpsum payment was made, it could be termed as sales commission or additional incentive awarded to the consignment agents. Either way, it will attract TDS. Therefore, the assessee may treat the expenditure on the basis of accounting followed by it, but, the nature of expenditure cannot change. Therefore, we sustain the disallowance made by the AO. Accordingly, ground raised by the assessee is dismissed.
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2018 (5) TMI 951
Interest on share application money and depreciation of leased assets - Held that:- We direct the AO/TPO to work out and restrict the said adjustment by adopting rate of interest as 6 months’ LIBOR plus 150bps for the delayed receipt of the payment. Lease rental - financial lease or operating lease - Held that:- Lease transaction as that being in the nature as that of a 'Finance lease'. had however declined to allow the claim of the assessee company towards 'depreciation' and 'Interest' and herein direct the AO to verify the amount of loan and the amounts of interest payments made by the assessee company during the year under consideration towards such loans taken for purchase of railway wagons through finance lease method and allow the claim of interest payment accordingly. Still further the A. O is directed to verify the rate and amount of depreciation on the railway wagons to which the assessee company would stand entitled as per Sec. 32(1) and allow depreciation in the hands of the assessee company. Depreciation on Motor Car - Held that:- Assessee was in possession of an asset and was using for its business ownership of such assets should be presumed - that title deeds were not necessary as long as assessee had dominion over the assets - that De facto ownership was to be looked into and nont De jure ownership. See Indian Railway Finance Corporation (2014 (6) TMI 224 - DELHI HIGH COURT). Mysore Minerals (1999 (9) TMI 1 - SUPREME Court) and Gupta Global Exim(P.) Ltd. (2008 (5) TMI 7 - SUPREME COURT).
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2018 (5) TMI 950
Entitlement to claim benefit u/s. 11 - no registration was granted by the income tax department to claim exemption u/s 11 - Held that:- CIT(A) was of the opinion that assessments for all these A.Ys. 2008-09 to 2012-13 are pending with the authorities precisely before CIT(A), thereby, held the first proviso as inserted through Finance Act, 2014 w.e.f. 01.10.2014 is applicable to the present case. We find the issue is identical to facts of case decided by the Cochin Tribunal in the case of SNTP Yogam vs ADIT (E) [2016 (3) TMI 1110 - ITAT COCHIN] which held that the insertion of first proviso to sub-section 2 to section 12A of the Act and effect thereto is retrospective in nature. An assessment proceeding which is pending in appeal before the appellate authority should be deemed to be ‘assessment proceedings pending before the assessing officer’ within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11 of the Act. CIT(A) was of the correct opinion that assessments for all these A.Ys. 2008-09 to 2012-13 are pending with the authorities precisely before CIT(A), thereby, held the first proviso as inserted through Finance Act, 2014 w.e.f. 01.10.2014 is applicable to the present case - Decided in favour of assessee.
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2018 (5) TMI 949
Disallowance u/s 14A - Held that:- We find that the assessee is flooded with own funds which are much higher than the borrowings and the investments made by the assessee. CIT-A had given a categorical finding that the loans borrowed by the assessee were utilized only for business purposes of the assessee and no part of such borrowings were utilized for making investments. This factual finding remain uncontroverted by the revenue before us with reference to the books of accounts. No reason to interfere with the reasoning given for deletion of interest under second limb of Rule 8D(2) of the Rules by the CIT-A. With regard to disallowance of indirect expenses under third limb of Rule 8D(2) of the Rules, the CIT-A had only placed reliance on the co- ordinate bench decision of this tribunal in the case of REI Agro Ltd [2013 (9) TMI 156 - ITAT KOLKATA] wherein it was held that only investments yielding exempt income should be considered for computing disallowance u/s 14A of the Act read with Rule 8D of the Rules. Unexplained Expenditure on the basis of fresh evidences without waiting for the remand report - Held that:- In the instant case, the CIT-A had not merely accepted the version of the assessee. Instead, the ld CITA had thoroughly examined himself the entire reconciliation statements filed by the assessee before the AO which were completely ignored by the AO. We find that the CIT-A had even examined the statements with the supporting evidences that are available in the paper book of the assessee. We are not inclined to accept the grounds of the revenue that the CIT-A had erred in disposing off the appeal without waiting for the remand report. AR drew our attention to the various pages of the paper book that were relied upon by the CIT-A while passing the order on merits. On merits, the submissions made by the assessee before the ld CIT-A, the findings of the CIT-A and the submissions made by the ld AR before us, remain uncontroverted by the revenue before us. Hence we do not find any justifiable reason to interfere with the order of the ld CIT-A in this regard. Accordingly, the Grounds 2 & 3 raised by the revenue are dismissed.
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2018 (5) TMI 948
Penalty u/s 271(1)(c) - assessment u/s 153A - Held that:- We find that the AO has taken cognizance of section 153C of the Act in the case of assessee for the assessment years 2007-08 and 2008-09. The action under section 153C could be taken against the assessee if any material was found during the course of search belonging to the assessee, and in the assessment proceedings of the searched persons, the AO of the searched person is satisfied with material found during the course of search belongs to other person and demonstrate escapement of income. Satisfaction action against other person can be taken in 153C proceedings. While adjudicating this aspect in the quantum appeal of the assessee, the Tribunal recorded a finding that no satisfaction was recorded in this case. In view of above order of the Tribunal quashing the assessment order for the assessment years 2007-08 and 2008-09 impugned addition on which penalty u/s 271(1)(c) gets extinguished. Further sub-clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. Since basis for visiting the assessee with penalty has been extinguished by quashing the assessment order itself by the Tribunal in the appeal of assessee the impugned penalty in the present case has no leg to stand. - Decided against revenue
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2018 (5) TMI 947
Disallowance of business loss - AO/CIT(A) subjecting business income arising from Project Office of the assessee under the O & M contract as fees for technical services - Held that:- We set aside the findings of the CIT(A) and direct the AO to treat the amount received under the O & M agreement as business income under article 7(3) of DTAA between India and Japan. Treatment of payment made to Express Transport Private Limited [ETPL] as contingent liability - Held that:- There is no evidence brought on record to suggest that ETPL has repaid this amount to the assessee. Clause referred by the ld. DR is from agreement made on 18.9.1992 and we are in the month of May 2018 more than 25 years have since elapsed but nothing to the contrary has been proved by the Revenue. Revenue authorities have not made any verification from ETPL to disprove the payments made by the assessee. There are specific provisions in the Act by which any amount recovered by the assessee can be taxed as income in the year of receipt. Therefore, in our understanding of law and the facts, the liability to pay has definitely crystallised during the year under consideration and being ascertained liability incurred in the ordinary course of business, the same has to be allowed. We accordingly set aside the findings of the CIT(A) and direct the AO to delete the addition Taxability of sum received on account of supervision, erection and maintenance of a gas turbine plant for Basin Bridge Power House TNEB Project @ 10% u/s 44BBB - Held that:- As in assessee’s own case for A.Y 1996-97 and 1993-94 and in A.Y 1997-98 and 1998-99 decided issue in favour of assessee as held that in order to determine the total cost of project, each activity has to be evaluated separately and to ensure that all the costs are recouped y the contractor, at times, major ancillary activities are billed separately. But that does not mean that these activities are independent of constructing or erecting the plant. With regard to repairs and maintenance also, the submission of the learned counsel can be accepted that they might have been carried out during construction or trial runs before handing over the project completely in proper shape. Therefore, the CIT(Appeals) was justified in directing the Assessing Officer to determine the income at 10% of the total receipts. Taxability of supervision fees received from M/s Maruti Udyog Ltd. - Held that:- As considered by the Hon'ble Delhi High Court in assessee’s own case for assessment years 1992-93 to 1996-97 [2014 (3) TMI 291 - ITAT DELHI] wherein the Hon'ble High Court has held that supervision fee is taxable under Article 12(2) of the DTAA and concur with the view of the Tribunal that FTs was liable to be taxed at 20% under Article 12(2) of the DTAA. The question was accordingly answered in the negative i.e. in favour of the assessee
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2018 (5) TMI 946
Adjustment u/s 92CA - addition on account of adjustments determined by the TPO and treated as cumulative adjustment - benchmarking - commission earned - Held that:- A perusal of the order of the TPO shows that the TPO has, in fact, reorganized the business of the assessee thereby putting himself in the shoes of the assessee and deciding which expenditure should be incurred by the assessee for doing its business. The DRP fell into same error by affirming the findings of the TPO. In so far as the commission earned is concerned, we find that in the earlier years, the rate of commission was 2% which came down to 1% from 2008. This means that since 2008 and upto 2012, the Revenue has accepted the charging of commission @1%. It is only in this year the Revenue has changed its stand and questioned the rate of commission @ 1% and changed it to 4%. This shows that the TPO has compared the rate of commission charged by the assessee with the rate of commission charged by the assessee to its other AEs. This is clearly barred by the provisions of section 92F(ii) r.w.s. 92 of the Act. What the TPO has done is he has compared controlled transaction with other controlled transaction whereas he should have compared the controlled transaction with other uncontrolled transactions. Action of the Assessing Officer is not as per the provisions of law because section 92F(ii) defines ALP as a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises in uncontrolled conditions. Considering all no merit in the adjustments made by the TPO/DRP. We, therefore, set aside the findings of the DRP and direct the Assessing Officer to delete the addition on account of adjustments determined by the TPO and treated as cumulative adjustment u/s 92CA. Assessee has bench marked the transaction by using the combined transaction approach by applying TNMM as against the approach of TPO in bench marking the transaction separately. The bench marking done by the assessee is correct and the approach of the TPO is not sustainable.
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2018 (5) TMI 945
Grant of credit for taxes deducted at source on interest received on FCCB’s - Held that:- As in context of the issue under consideration in the assessee’s own case for A.Y 2010-11 on a similar footing the matter requires to be restored to the file of the A.O, for making necessary verifications as regards the assessee’s claim for grant of credit for taxes deducted at source on interest received on FCCB’s during the year under consideration. Therefore, restore the issue to the file of the A.O with a direction to verify the assessee’s claim in respect of the grant of credit of TDS. The A.O is directed to satisfy himself that the amount of TDS had been deposited into government treasury and that the assessee is the lawful deductee in respect of the said amount. The A.O shall further satisfy himself on the aspect that the gross amount of interest had been considered as the income of the assessee and that no other person has or will claim credit of the said amount of taxes. We hold and direct accordingly. The Ground of appeal No.1 is allowed for statistical purposes. Taxing the total assessed income of the assessee at the rate of 42.23% [i.e tax rate of 40% (plus) 2.5% surcharge and 3% education cess] as against the applicable rate of 10% as per India-Cyprus Double Taxation Avoidance Agreement - Held that:- The consultancy receipts of the assessee, being in the nature of FTS would thus justifiably be brought to tax as per Article 12 of the India-Cyprus tax treaty at the rate of 10% of the gross amount of the consultancy receipts. We thus direct the A.O to subject the fee from consultancy services received by the assessee at the rate of 10% as provided in Article 12 of the India-Cyprus tax treaty. We are further persuaded to be in agreement with the contention of the ld. A.R that the interest income from FCCBs held by the assessee are subject to deduction of tax at source @ 10% as per Sec. 115AC(1)(a) of the Income Tax Act, 1961. We thus in terms of our aforesaid observations direct the A.O to subject the interest income from FCCBs to tax @ 10% as per the provision of Sec. 115AC of the Act. Before parting, we may herein observe that the A.O while bringing the aforesaid amount to tax shall duly consider the claim of the assessee that amount of tax already had been deducted at source on the aforesaid interest income by the issuer company and deposited in the Government treasury. The Ground of appeal is allowed in terms of our aforesaid observations. Levy of interest under Sec. 234B and 234C - Held that:- As the assessee is a non-resident company, therefore, a duty stands cast upon the payer to pay the tax at source, and resultantly no obligation for payment of advance tax was cast upon the assessee. We thus being of the considered view that in the backdrop of the judgment of the Hon’ble High Court of Bombay in the case of NGC Network Asia LLC (2009 (1) TMI 174 - BOMBAY HIGH COURT), no interest under Sec. 234B and 234C could have validly been imposed on the assessee. We thus direct the deletion of the interest imposed. Default in deduction of tax at source on the interest payments on the FCCB’s issued to non-residents - Held that:- As the interest income in the hands of the recipients fell within the sweep of the exclusions carved in Sec. 9(1)(v)(b) and hence was not covered by Sec. 5(2), therefore, there was no occasion on the part of the assessee appellant before them to have deducted tax at source on the said amount. We thus in terms of our aforesaid observations are of the considered view that no infirmity emerges from the order of the DRP, who had directed the A.O to exclude the interest income received by the assessee from the FCCB’s issued by Suzlon Energy Limited, after making necessary verifications. Conversion price of the FCCB’s of Suzlon Energy Limited was not liable to be brought to tax in India - Held that:- We find ourselves to be in agreement with the view taken by the DRP that as the monies were raised by Suzlon Energy Limited outside India, therefore, as per Sec. 9(1)(i) of the Act, the income emanating on the FCCB’s from the sources outside India is not to be deemed to accrue or arise in India. We thus finding no infirmity in the order of the DRP, therefore, uphold its order in context of the issue under consideration. The Grounds of appeal Nos. 1 to 7 raised by the revenue before us are dismissed in terms of our aforesaid observations.
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2018 (5) TMI 944
Long term capital gain - FMV determination - property occupied by tenants - AO referred the matter to the valuation cell for determining the fair market value as on the date of sale - as contented fair market value of the property was not more that the value reflected in the sale deed - Held that:- The property deed itself it is mentioned that it is occupied with tenants and more so it is proved since court cases are going on against them as per Rent Control Act, which is also evident in the order of the ld. CIT(A). CIT(A) has stated that valuation by the DVO is correct whereas that adopted by the authorized valuer is arbitrarily done. No evidence or any material on record, which highlight these facts. The order of the CIT(A) is not at all a speaking order and written submissions put forth by the assessee before him pointing out main three objections are not at all dealt with by the ld. CIT(A) in his order. As examined DVO’s report we find that he has also not dealt with the issue as to why benefit should not be given to the assessee when KDA itself takes away some portion of the property for road widening. The DVO has also not pointed out that property already being occupied by tenants and court cases are going on, what could be the impact of valuation of such property. Whether it could be more than what is stated in the sale deed. These things have not been clearly dealt with by the DVO. DVO has simply applied circle rate available and made report. The Income Tax legislation being a welfare legislation has always tried to protect a bona-fide assessee and here is a case where sale deed value is declared and independent valuation done by the authorized valuer, but we find that the subordinate authorities have not categorically dealt with the submissions of the assessee nor has brought out any material on record to support as to why DVO’s report should be taken into consideration. Set aside the order of the ld. CIT(A) and direct deletion of addition - Decided in favour of assessee.
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2018 (5) TMI 943
Disallowance of relocation expenses - nature of expenditure - revenue or capital - whether expenses incurred in shifting the headquarters of the company to West Bengal are capital expenditure or revenue expenditure? - Held that:- In the case of Jamshedpur Engineering and Machine Manufacturing Company Limited (1985 (4) TMI 39 - PATNA High Court), shifting expenses of the registered office of the company have been held as capital expenditure being of enduring benefit nature. In the instant case also, the expenses are for re-installing Compactors at the new place as well as shifting of old equipments to the new place, which has provided assessee benefit of a centrally located place and, thus, the expenditure of enduring nature. The shifting of office is not regular phenomena of the business activity of the assessee and these one time expenses are towards creating a new office. Accordingly, we do not find any infirmity in finding of the Ld. DRP in upholding the same as capital expenditure and accordingly, we uphold the same. Relocation expenses on employees - Held that:- Expenses in question have been incurred on hotel stay, food charges, laundry charges etc. of two employees during their stay in Mumbai. Further, expenses of ₹ 1,03,316/- have been incurred towards octroi charges of car of the employee, transporting of goods of the employee, brokerage charges for taking new flat on rent etc. Since the expenses are related to relocation process of the office, following the decision of the Hon’ble Patna High Court in the case of Jamshedpur Engineering and Machine Manufacturing Company Limited (supra), the expenses are held to be in the nature of capital, and accordingly, we uphold the decision of the Ld. DRP on the issue in dispute. The ground of the appeal of the assessee is accordingly dismissed. Disallowance u/s 40(a)(ia) - non-deduction of tax at source on communication expenses and advertisement expenses - Held that:- The plea of the assessee of reversal of entry in respect of communication charges has been made first time before the Tribunal and need verification by the Assessing Officer in the light of books of account, financial statements of the assessee for the year under consideration. Similarly, the claim of deduction of tax at source and payment thereof in respect of advertisement expenses also need verification by the Assessing Officer from the TDS returns along with enclosures filed by the assessee to the Income Tax Department. In view of above, we feel it appropriate to restore this issue to the file of the Assessing Officer for verification of the facts and decide in accordance with law. The assessee shall furnish all the necessary documents in support of its claim of reversal of entry in relation to communication expenses and deduction & payment of TDS in relation to advertisement expenses
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2018 (5) TMI 942
Draft assessment order imposing Penalty u/s 271(1)(c) - notice of demand u/s.156 as well as issue of notice u/s.274 r.w.s. 271(1)(c) of the Act at the stage of making draft assessment order as per the provisions of section 144C(1) - Held that:- Normally, such notices are issued at the end of the assessment proceedings and at the time of making assessment order. The fact that demand is raised is evident on the fact of draft assessment order which bears the entry of the demand in the register of Demand Collection and Balance (DCR 02/45, dated 20-2-13). The notice u/s.274 of the Act is found issued for furnishing of inaccurate particulars of income. On law, it is settled legal proposition at the level of High Courts that the assessment orders based on such draft assessment orders not following the mandatory provisions of section 144C of the Act is without jurisdiction and therefore, null and void and not enforceable in law - Decided in favour of assessee.
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2018 (5) TMI 941
Assessment u/s 153A - Disallowance u/s 14A - Held that:- We find that the A.Y. 2009-10 falls in the category of ‘completed assessments’. It is an admitted position that no incriminating material was found during the course of search concerning the disallowance u/s 14A of the Act. In that view of the matter, the assessment cannot embrace any fresh disallowance otherwise than supported by any incriminating material found during the course of search. In such a situation, the originally determined income has to be repeated in the assessment u/s 153A of the Act. As there is no mention of any disallowance having been made in the original assessment u/s 143(3) of the Act in any of the orders of the authorities below, we hold that the disallowance to be deleted. Disallowance u/s 14A - Held that:- Only where the assessee offers some disallowance u/s 14A with which the Assessing Officer is not satisfied, that he needs to record a proper satisfaction before proceeding to make disallowance u/s 14A. If, on the other hand, the assessee does not offer any disallowance u/s 14A, the requirement of recording satisfaction by the Assessing Officer will be dispensed with. The facts of our case are covered by the mandate in this case inasmuch as the assessee had not offered any disallowance u/s 14A of the Act. In view of the fact that the Assessing Officer properly recorded satisfaction u/s 14A of the Act, despite there being no such requirement as laid down by the Hon'ble Supreme Court in the case of Maxopp Investments Ltd. [2018 (3) TMI 805 - SUPREME COURT OF INDIA], we are convinced that the ld. AR’s contention on this aspect deserves to be jettisoned. We order accordingly. Disallowance u/s 14A gets restricted to the extent of exempt income, even if the provisions of the section are attracted. In view of the above precedents, which are squarely applicable to the facts of the instant case, we limit the disallowance to the extent of exempt income of ₹ 7,72,918/-. The impugned order is modified pro tanto.
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2018 (5) TMI 940
Disallowing the claim of weighted deduction u/s.35(2AB) - approval by prescribed authority - Held that:- We direct the Assessing Officer to grant deduction under section 35(2AB), as, beyond any dispute or controversy, the R&D Unit is approved by the prescribed authority, and as the date of approval, in the light of the above discussions, is not really material for the present purposes. The disallowance thus stands deleted. - Decided in favour of assessee. Disallowing reimbursement of advertisement expense u/s.40(a)(ia) - non deduction of tds - Held that:- Quite clearly, reimbursements of expenses do not require tax deduction at source. The tax deduction liability arises only at the point of time when payment is “for carrying out any work in pursuance of a contract” for the specified purposes. The payment, in the present case, is not for carrying out any work of the specified nature but only a partial reimbursement of such a payment of specified nature. The distinction is subtle and significant. The lower authorities clearly lost sight of the above aspect of the matter, and proceeded to treat reimbursement of expenses as incurring of expenses. Disallowance to be deleted - Decided in favour of assessee.
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2018 (5) TMI 939
Levying penalty u/s 272A(2)(k) - Delay in quarterly TDS statements submission - ‘reasonable cause’ for delay - assessee submitted the reason for delay as migration to new software system - Held that:- Fact of change of software from ‘Genesis’ to ‘CWISS’ Module by the assessee has not been disputed by the revenue in the instant case. It is quite natural that change of software would lead to various teething troubles which need to be addressed and plugged at the initial stage itself, so that the new Module could function smoothly later on. It is well known that migration to a new software would certainly result in lot of issues on accounting, accounting heads, etc which consumes considerable time for addressing the same. The assessee in the instant case had to undergo the same problems from October 2009 onwards which had been duly stated by the senior branch manager of Serampore Branch, vide letter dated 11.11.2011. the assessee was reasonably prevented from filing its quarterly TDS statements for 2nd and 3rd quarters of financial year 2009-10 with delay due to reasons beyond the control of the assessee. We hold that the explanation offered by the assessee would constitute ‘reasonable cause’ within the meaning of section 273B of the Act and hence the assessee would be entitled for immunity from levy of penalty u/s 272A(2)(k) - Decided in favour of assessee.
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2018 (5) TMI 938
Addition u/s 68 - gift in question received from HUF comprising of the three family members only - Held that:- Legislature itself has accepted an HUF to be a donee in clause (ii) of the “relatives” definition. We apply necessary implication principle to conclude in these facts that the legislative intent is very clear that an HUF is not to be taken as a donor in case of an individual recipient. Assessee’s former plea of having received a valid gift from his HUF is therefore declined. Learned counsel at this stage refers to assesse’s alternative plea that the CIT(A) has not adjudicated the latter ground that the amount in question is exempt u/s.10(2) of the Act. We find no merit in the instant alternative plea as well since a gift sum which is not allowable under the relevant specific clause cannot be accepted to be an exempt income u/s.10(2) of the Act. We thus treat instant latter plea to be mainly technical in nature devoid of merit.
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2018 (5) TMI 937
Disallowance of depreciation (normal and additional) pertaining to colour solution machines - Held that:- AO erred in stating that the colour solution machines installed in the dealer’s premises is not in any way connected with the mother/main machines responsible for producing the paints and the colour solution machines are comparable to air conditioner etc. due to their nature of functioning and hence, need to be treated as furniture and fixture is erroneous and baseless as discussed by us above and for the sake of brevity is not repeated again. We also note that the AO in the earlier assessment year and in subsequent assessment year i. e. 2012-13 and 2013-14 has not disputed the allowability of normal and additional depreciation on colour solution machines for the assessment year prior to the subject assessment year and in subsequent assessment years (i. e. AYs 2012-13 and 2013-14) post issuance of direction by Ld. DRP in the subject assessment year. In the aforesaid facts and circumstances of the case, the AO ought to have been consistent in his approach and, therefore, for the reasons stated aforesaid, we do not find any reason to interfere in the order of the Ld. DRP and we confirm the same. This ground of appeal of revenue is dismissed. Disallowance of depreciation (normal and additional on certain assets - Held that:- Remarks given that these are assets which were rightly claimed to be plant and machinery. The Ld. DRP has rightly excluded the aforesaid assets from the list of plant and machinery and reclassified it as furniture and fixture. We do not find any infirmity in the order of the Ld. DRP and, therefore, we confirm the finding of the Ld. DRP. This ground of appeal of revenue is also dismissed. Addition u/s. 14A - Held that:- Admitted factual position that no loan funds were in the books of accounts of the company, there cannot be any question of payment of interest against the loan funds and consequently disallowance of interest expenses in terms of Rule 8D(2)(i) or (ii) of the Rules. Since there is no unallocable interest the DRP has rightly held that no interest expenses can be disallowed.
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2018 (5) TMI 936
Expenses towards marketing sales and promotional kits - Allowable business expenses OR brand building either of the assessee or of the foreign associated enterprise - scope of tpa - Held that:- Marketing sales and promotional kits relate to the distribution of price lists, book and brochures etc. to the customers; marketing-sponsorship relating to promotion/exhibitions etc., free sample cost relating to the distribution of free sample activities of books to prospective customers/colleges/book stores/authors etc.; and free samples cost-free courier and packaging relate to the freight carrier cost for distribution of free sample copies of books. Revenue failed to give any interpretation to these expenses other than the one explained by the learned authorised representative. It is not known how any of these expenses relate to the brand building either of the assessee or of the foreign associated enterprise. All the four expenses as the head suggests relate to the promotion of the sales of the product and not in any way connected to the brand building. Thus the expenses relate to the business of the assessee alone for promotion of the sales of the products i.e. the books and such an expense had nothing to do with the brand promotion of any of them. With this view we are of the considered opinion that the approach of the Transfer Pricing Officer is not in accordance with law laid down in the case of Sony Ericsson Mobile Communications India Pvt. Ltd. (2015 (3) TMI 580 - DELHI HIGH COURT) and cannot be sustained. We, therefore, direct the learned Assessing Officer to delete the same. - Decided in favour of assessee
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2018 (5) TMI 935
Taxability of interest on loans categorised as non-performing assets/sticky loans - addition on accrual basis as contended by the Revenue or on receipt basis as claimed by the assessee - Held that:- The issue involved in the present appeals being identical to that decided by the Income-tax Appellate Tribunal in the case of Ludhiana Central Co- op. Bank Ltd., (2017 (1) TMI 778 - ITAT CHANDIGARH), the decision rendered therein would squarely apply to the present cases, following which we hold that the interest on sticky loans/non-performing assets has to be taxed on receipt basis. We, therefore, uphold the order of the Commissioner of Income-tax (Appeals) and dismiss the ground raised by the Revenue.
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2018 (5) TMI 934
Penalty u/s 271(1)(C) - non specification of charge - non-striking off of the relevant portions of standard show-cause notice - Held that:- Show-cause notice dated 11/07/2014 reveals that Ld. AO has not specified the exact charge / limb viz. concealment of income or furnishing of inaccurate particulars of income for which the penalty was being initiated. The revenue could not controvert the said fact by showing any other penalty notice u/s 274 read with Section 271(1)(c). Finally, a perusal of the penalty order reveals that the penalty has been levied by observing that the assessee has filed inaccurate particulars of income. A perusal of the above facts shows that the Ld. AO has applied both the limbs simultaneously i.e. concealment of income or furnishing of inaccurate particulars for which the penalty was being initiated against the assessee. The Hon’ble Supreme Court in the judgment titled as Dilip N.Shroff Vs. JCIT (2007 (5) TMI 198 - SUPREME Court) has observed that the concealment of income and furnishing of inaccurate particulars of income are different and carry different connotations. The Hon’ble Court further held that non-striking off of the relevant portions of standard show-cause notice reflects non-application of mind by AO and hence vitiates the penalty. - Decided in favour of assessee
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2018 (5) TMI 933
Addition on account of less receipts disclosed representing to TDS claimed - Held that:- FAA has rightly deleted the addition and odds made by the Assessing Officer because these receipts cannot be held as undisclosed receipts by the appellant, as it represents the service charged on the receipts which do not form part of the profit and loss account of the assessee and the same has been shown it as a balance sheet items. The assessee has provided reconciliation statement of service tax liability and it has been reconciled with Form No. 26AS. The assessee has also submitted service tax return before the CIT(A) on which due service tax has been paid to the Government. Therefore, there is no under reporting in the profit and loss account of the assessee of ₹ 9.98 crores and odds. Addition on account of license fee connectivity charges and coordination charges paid to US based company - Held that:- CIT(A) has held that as the facts for AY 2011-12 are similar to the facts of AY 2008-09 and AY 2010-11, therefore, he held that his findings in the order passed for AY 2008- 09 would stand equally applicable here and accordingly, in view of the same, the impugned payment on account of license fee and data management service charges for use of the 'Vision Plus' software was rightly held as revenue in nature and allowable u/s 37. We further note that the factual finding of the CIT(A) on the issue in dispute also could not be controverted by the department during the proceedings before us and we, therefore, find no reason to interfere with the findings of the Ld. CIT(A) on this issue as well and while upholding the same
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Customs
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2018 (5) TMI 930
Maintainability of petition - alternative remedy of appeal - import of polyester spun yarn - it was found as white spun yarn and was wholly composed of polyester - rejection of declared value - Levy of penalty and redemption fine - Held that: - the petitioner has an alternative remedy of appeal against the impugned order. The narration of facts clearly shows that certain factual matrix is required to be established for which the first appellate authority would be proper forum instead of invoking writ jurisdiction of this Court under Article 226 of the Constitution of India at the first instance. The Apex Court in Commissioner of Income Tax and others vs. Chhabil Dass Agarwal, [2013 (8) TMI 458 - SUPREME COURT], considered the question of entertaining writ petition where alternative statutory remedy was available and held that it is within the discretion of the High Court to grant relief under Article 226 despite the existence of an alternative remedy. However, the High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordinary jurisdiction under Article 226. The writ petition is disposed of by relegating the petitioner to alternative remedy of appeal against the impugned order.
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2018 (5) TMI 929
Renewal of CHA License - rejection of renewal on the ground that penalties were imposed u/s 114 of the Customs Act - Held that: - the renewal of the Custom Broker Licence cannot be refused only for the reason that the appellant has been penalised u/s 114 - Regulation 18 (proviso) makes it abundantly clear that the actions taken under the CBLR, 2013 will be without prejudice to the action that may be taken under Customs Act, 1962, thereby making it explicit that the proceedings under the Act as well as the Regulation are distinct and separate. The licencing authority is directed to consider the renewal of the customs broker licence subject to fulfilment of the necessary formalities - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 928
Benefit of DFIA Licenses (Duty Free Import Authorisation) - import of certain chemicals described as Melamine - It is the claim of the appellant that the item Syntan refers to synthetic tanning agent and will cover the goods imported since the said goods are capable of being used as synthetic tanning agent - whether the goods imported and described as Melamine will be covered by the description SYNTAN appearing in the DFIA licences? Held that: - The goods imported have been declared as Melamine but the DFIA licences produced for clearance of such goods cover the items Syntan - From the opinion of the CLRI, it is evident that Melamine cannot be used as such, in leather processing as Syntan leading us to the inescapable conclusion that the benefit allowable under DFIA licence to Syntan cannot be extended to Melamine, which is imported by the appellant. The appellant has relied on the ratio of the Tribunal s decision in the case of Dimple Overseas [2002 (3) TMI 636 - CEGAT, MUMBAI] - the benefit of the said Tribunal s decision cannot be extended to the imports in the present case, since that decision was delivered in the context of Value Based Advance Licence issued under the then N/N. 203/92, whereas in the present case, we are dealing with the DFIA licence and the terms of issue of both licenses are entirely different. Appeal dismissed - decided against appellant.
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2018 (5) TMI 927
Smuggling - Gold - case of appellant is that Revenue has miserably failed to prove that the said gold articles were given by Shri Sriramdasu Rosa Prasad Rao to Raparthi Durga Rao - Held that: - Shri Raparthi Durga Rao has specifically in his statement recorded that he was given ₹ 4,500/- for booking the flight tickets and was promised Rs l0,000/- for delivering the contraband goods in Visakhapatnam outside the Airport and he also identified Shri Raparthi Durga Rao as to the person who had given the gold to him travelling in the same flight - In the absence of any retraction of the statement, any defence put forth by the learned counsel will not carry their any further - appeal dismissed - decided against appellant.
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2018 (5) TMI 926
Rectification of mistake application - the amounts of demurrage charges and HSSC are wrongly mentioned - Held that: - there is a typographical error in the Final Order dated 30.8.2017, the amounts of demurrage charges and HSSC are wrongly mentioned - the mistakes are rectified - ROM application allowed.
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Corporate Laws
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2018 (5) TMI 931
Satyam Scam - Penalty for insider trading - Prohibition of Insider Trading Regulations, 1992 - appellant was roped in by the Whole Time Member of the SEBI as well as the Appellate Tribunal as he happened to be an executive director of SCSL from 1993 upto 31.8.2000 and a non-executive director from 1.9.2000 to 23.1.2003. He also happens to be the “co-brother” of B. Ramalinga Raju as the two of them have married two sisters - Held that:- We are of the view that from the mere fact that the appellant promoted two joint venture companies, one of which ultimately merged with SCSL, and the fact that he was a co-brother of B. Ramalinga Raju, without more, cannot be stated to be foundational facts from which an inference of reasonably being expected to be in the knowledge of confidential information can be formed. The fact that the appellant was to be continued as a director till replacement again does not take us anywhere. Shri Viswanathan has shown us that two other independent non-executive directors were appointed in his place on and from 23.1.2003. What is clear is that the appellant devoted all his energies to the businesses he was running, on and after resigning as an executive director of SCSL, as a result of which the salary he was being paid by SCSL was discontinued. Having regard to the findings contained in the minority judgment and the aforestated discussion, we are clearly of the opinion that this view is correct both in law and on facts and deserves our acceptance. Therefore, this appeal is allowed and the majority judgment of the Appellate Tribunal is set aside. The appellant company does not have persons who are relatives of persons mentioned in sub-clauses (vi), (vii) and (viii) – under these sub-clauses, a person is deemed to be a connected person if such person is a relative of persons in clauses (i) to (v); or is a banker of the company; or is a relative of a connected person. Since none of these clauses are attracted, it is obvious that Section 2(h)(ix) would also, as a matter of law, not be attracted in the facts of this case. In this view of the matter, this appeal also stands allowed. Consequently, the majority judgment of the Appellate Tribunal judgment is set aside. Appellant was neither a director nor a promoter of SCSL. The shares that were owned by this appellant in SCSL were sold by him from 5.2.2001 to 18.11.2004 - Held that:- While it is true that adjudication proceedings and criminal proceedings are separate proceedings, the relevance of the Special Court’s judgment is only for the purpose of showing that the second part of the definition of an “insider” is made out in the appellant’s case, for, if the appellant, along with his brothers, was party to the fraud practiced on the public, it is obvious that he was reasonably expected to have access to UPSI in respect of the securities of SCSL. This appellant’s case, therefore, stands apart from the other family members of B. Ramalinga Raju, in that the SFIO’s report as well as the aforesaid judgment clearly and unmistakably point to his complicity, unlike that of the other family members, in the fraud committed from 2001 onwards. This being the case, though for different reasons, we uphold the majority judgment of the Appellate Tribunal and dismiss this appeal.
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Insolvency & Bankruptcy
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2018 (5) TMI 932
Initiating the corporate insolvency process against the respondent-corporate debtor - existence of eligible default - Held that:- The dates on which the default occurred are given in Column 2 of Part-IV of the application and are taken as the period of one year from the date of the respective Receipt-cum-Acceptance Letter and which date is also shown as maturity date of agreement therein. The amounts shown as Projected Values are stated to be not paid and total to ₹ 12,32,000 (the individual amounts in default of the three applicants are above ₹1.00 lac). The factum of non-payment is accepted by the respondent in the reply submitted by Diary No.985 dated 02.04.2018. We are satisfied that default has occurred and the application under Section 7(2) is complete. We also find that the proposed Interim Resolution Professional Shri Deepak Gupta has filed Form 2 dated 18.01.2018 (Annexure A-12 of the application) certifying that there are no disciplinary proceedings pending against him with the Board or Indian Institute of Insolvency Professionals of ICAI. Therefore, we are satisfied that the conditions prescribed by Section 7(5)(a) of the Code are satisfied and the petition deserves to be admitted. The petition is, therefore, admitted and the moratorium is declared accordingly.
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PMLA
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2018 (5) TMI 925
Provisional attachment order - offence under PMLA - nexus between the alleged crime and the Bank who is mortgagee of the properties in question which were purchased before sanctioning the loan - overriding effect of PMLA - date of acquisition of property - Held that:- It is an admitted fact that the properties herein are mortgaged with the appellant Bank. It is also a fact that the mortgaged properties are not acquired out of any proceeds of crime. It has come on record that the properties mortgaged were acquired prior to the alleged commission of crime. The relevant sale deed of the mortgaged properties are of 2003 so the date of acquisition is much prior to the date of alleged commission of crime in the present case. The only thing was in his mind that section 71 of PMLA has an overriding effect. The provisions of PMLA shall have effect and prevail over provisions of any other Act or its provisions. To this we are not in agreement with the Ld. Adjudicating Authority because of the amendment of 2016 made in SARFAESI Act RDDB Act. The IDBI Bank is the rightful claimants of the said property which are already in its possession under SARFAESI Act. Even recovery certificate has been issued by DRT. That the definition of “proceeds of crime” as per Section 2(u) of the PML Act comprises of the property which is derived or obtained as a result of criminal activity. In the present case, both the properties have been purchased by the Respondent Sh. Arun Suri and have been mortgaged with the IDBI much prior to the date of alleged offence which shows that no proceeds of crime are involved in the acquiring of these properties and hence the same cannot be attached. Adjudicating Authority has failed to consider that the ED has attached the properties without examining the case of the bank. The evidence on record suggests that the properties were acquired by the borrowers much before the alleged date of crime. No money disbursed by the Bank from its loan account, has been invested in acquiring these properties. Furthermore, the Appellant Bank had created charge over the property prior to the date of the crime. The Bank has already filed the suit for recovery and has also taken the action under SARFAESI Act. The Ld. Adjudicating Authority failed to appreciate that depriving the Appellant Bank from its funds/property, without any allegations or involvement of the Bank in the alleged fraud would be legally unjustified. The properties attached cannot be attached under Section 5 of the PML Act because the properties are not purchased from the alleged proceeds of crime. As per the provisions of Section 5(1) (c) the primary requirement for the attachment is that the proceeds of crime are likely to be concealed, transferred or dealt with in any manner. In this case there was absence of such requirement. The said properties are already in the possession of the Appellant Bank under the SARFAESI Act. There is no nexus whatsoever between the alleged crime and the Bank who is mortgagee of the properties in question which were purchased before sanctioning the loan. Thus no case of money-laundering is made out against Bank who has sanctioned the amount which is untainted and pure money. They have priority right to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. Allegation of money laundering prima facie, so far as present appellant & properties involved in this appeal, found to be unsustainable for the purpose of attachment under the PMLA, 2002.
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Service Tax
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2018 (5) TMI 924
Condonation of delay in filing appeal - rejection of VCES Declaration - time limitation - Held that: - The proviso to sub section (1) of Section 35 makes the position crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of 30 day - The Hon’ble Apex Court in the case of Singh Enerprises [2007 (12) TMI 11 - SUPREME COURT OF INDIA], wherein the Court held that since Commissioner had no power of condonation beyond statutory prescribed period. Therefore, the Tribunal and the High Court even under Writ have no power to condone the said delay - appeal dismissed.
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2018 (5) TMI 923
Refund claim - rejection on the grounds that the operations were carried out at different locations and which were not registered in the Centralised registration and also on the ground that invoices issued by the Service Provider were not in the name of appellant - Held that: - the judgment of Hon’ble High Court of Karnataka in the case of mPortal India Wireless Solutions Private Limited vs. CST [2011 (9) TMI 450 - KARNATAKA HIGH COURT], is applicable to the facts of the case where it was held that Registration not compulsory for refund - refund cannot be rejected on this ground. Refund claim - rejection on the ground that the invoices were in the name of Pioneer overseas Corporation - Held that: - the business activity of Pioneer Overseas Corporation has been transferred to appellant by business transfer agreement w.e.f. 01.01.2015 and the reasoning given by the appellant that few vendors could not update their records with new address is an acceptable reason, on the face of the fact that there is no dispute as to the receipt of input services and the export of services from the premises in the name of appellant herein - refund cannot be rejected on this ground. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 922
CENVAT credit - denial on the ground that the duty paying documents were not produced - Held that: - the demands of ineligible credit raised in the show-cause noticed is based upon the returns filed by the appellant - appellant should be given an opportunity to justify that they are eligible to avail CENVAT credit of ₹ 1,67,376/- and ₹ 1,92,614/- based upon various records maintained by them. Since this needs factual verification, the matters are remanded back to the adjudicating authority to reconsider the issue - appeal allowed by way of remand.
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2018 (5) TMI 921
Excess utilisation of CENVAT credit beyond the limit of 20% - Imposition of equivalent penalty u/s 7B - storage and warehousing services - Held that: - appellant on being pointed out has discharged the service tax liability as worked out by the Revenue and had paid the differential amount of ₹ 29,295/- and interest was paid before the adjudication was taken up - the argument of the learned counsel needs to be accepted that there is no reason for them to not to pay the tax; also that they could have entertained a bonafide belief that the amount charged by them could be covered under cargo handling services for which tax liability was discharged - provisions of Section 80 can be invoked in this case and the penalty can be set aside. Excess utilization of CENVAT credit - Held that: - Utilisation of CENVAT credit in 'excess of 20% could be a procedural infraction but definitely not an evasion of tax which is the requirement for imposition of equivalent amount of penalty. If the entire amount of the differential utilisation of CENVAT credit along with interest stands deposited before the adjudication proceedings, the provisions of Section 80 needs to be invoked in this case. Penalties set aside - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 920
Refund of service tax - rejection on the ground of time limitation - the service tax was deposited by the appellant without collecting from the service recipient - Circular No. 108/02/2009 dt. 09/01/2009 - Held that: - the decision of the Bombay High Court in the case of In House Products [2017 (8) TMI 521 - BOMBAY HIGH COURT] is squarely applicable in the present case because the service tax was paid under the wrong belief and then the Board had clarified the same and within four months from the circular, the refund claim was filed which is within the period of one year from the circular. If the refund was claimed beyond one year from the date of circular, then the limitation would have been applicable. The decision of the Punjab & Haryana High court in the case of Sarita Handa Exports (P) Ltd. [2010 (9) TMI 254 - PUNJAB AND HARYANA HIGH COURT] is not applicable in the facts and circumstances of the case because in the present case, the limitation as held by the Bombay High Court would start from the day when the circular was issued clarifying that the appellants are not liable to pay service tax. Since the refund has been rejected on time bar and it is held that the refund is within period of limitation, the case is remanded back to the original authority to reconsider the refund claim of the appellant holding it within limitation and decide the same on merit - appeal allowed by way of remand.
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2018 (5) TMI 919
Renting of immovable property service - property given on lease - Held that: - the matter is sub-justice before the Hon‟ble Supreme Court in the case of Greater Noida Industrial Development Authority vs. Commissioner [2015 (9) TMI 1614 - SUPREME COURT]. Interim stay has been granted by Hon'ble Supreme Court in Greater Noida Industrial Development Authority vs. Commissioner [2015 (4) TMI 1231 - ALLAHABAD HIGH COURT] - liberty is granted to the appellant to come again after having the final verdict from the Hon'ble Supreme Court, but within the prescribed period - appeal disposed off.
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2018 (5) TMI 918
Renting of immovable property service - first appellate authority had held the demand for the period upto 8th May 2010 to be unsustainable in the absence of any justifiable evidence of intent to evade payment of duty by suppressing facts - Held that: - the appellant-assessee was liable to tax with effect from June 2007 when 'renting of immovable property' was made taxable with retrospective effect. Being a retrospective legislation, the assessee-appellant cannot be held to have had any intent to evade tax - the appellant did discharge tax liability as per its own computation. The first appellate authority has given due consideration to all these aspects before coming to conclusion that the liability to tax up to 8th May 2010 does not exist. The contention raised by Revenue and put forth by Learned Authorised Representative do not controvert this finding - decided against Revenue. Penalty - Held that: - there was discharge of tax liability in full before issue of show cause notice - Considering the circumstances in which the legislation was retrospectively made applicable and the pendency of the various disputes in various courts on the same issue, invocation of section 80 justified - penalty set aside. Appeal disposed off - decided in favor of assessee.
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2018 (5) TMI 917
Demand of service tax - erection, commissioning and installation service - business auxiliary services - GTA services - Benefit of abatement under N/N. 1/2006 dated 01/03/2006 - penalty. Held that: - the benefit of N/N. 1/2006 is available to the appellant, but he has not produced any evidence before the lower authorities as well as before the Tribunal to come to a conclusion that abatement as provided in the notification needs to be extended. The evidences which are contemplated in the notification are inputs issued for providing of service. In the absence of any such evidence, the tax liability as fastened by the lower authorities is correct. Penalty - Held that: - the appellant may Have entertained a bonafide belief that they are eligible for the benefit of N/N. 1/2006, could have misconstrued the provisions and hence did not discharge the tax liability - penalty not warranted. Appeal allowed in part.
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2018 (5) TMI 916
Classification of services - Online information data base access and/or retrieval service - Demand pertains to payment to various clients abroad and described as 'communication and system expenses' which was sought to be classified as 'online information data base access and/or retrieval service' taxable under section 65(105)(zh) of Finance Act, 1994 - Held that: - the Tribunal in State Bank of India v. Commissioner of Service Tax [2014 (11) TMI 310 - CESTAT MUMBAI] held that for taxation as provider of ‘online information data base access and/or retrieval service’ refers to data that does not belong to the recipient of service. It was held in the case that mere access to server does not bring the activity within the purview of 'online information data base access and/or retrieval service. In the absence of any acceptable evidence that the assessee had access to data of others on the common server for which consideration was made over on which they are liable to tax under section 66A of Finance Act, 1994, the charging of tax on the respondent would not be correct in law. Appeal dismissed - decided against Revenue.
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Central Excise
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2018 (5) TMI 915
Valuation - Distinction between "Normal Value" and "Transaction Value" - inclusion of packing charges, wear and tear charges, facility charges, service charges, delivery and collection charges, rental charges, repair and testing charges - whether the aforesaid charges realised by the Assessees are liable to be taken into account for determination of value for the purpose of levy of duty in terms of Section 4 of the CEA 1944 as amended with effect from 1st July, 2000? Held that: - The price charged for a manufactured article at the stage when the article enters into the stream of trade in order to determine the value/transaction value for computation of the quantum of excise duty payable does not come into conflict with the essential character or nature of the levy. The measure is the value and value is related to price. The price charged at the stage of clearance, in addition to manufacturing cost and manufacturing profit, can include certain value additions and inclusions which enrich the value of the product to make it suitable for sale or to facilitate such sale. At this stage, impost has nothing to do with the sale. The impost is on manufacture. But it is the value upto the stage of the first sale that is taken as the measure. Doing so does not introduce any inconsistency between the nature and character of the levy and the measure adopted. The amendment to Section 3 by substitution of the words “a duty of excise on all excisable goods” by the words “a duty of excise to be called the Central Value Added Tax (CENVAT) on all excisable goods” is conspicuous. The amendment of Section 3 to the Act not only incorporates the essentials of a changed concept of charging of tax on additions to the value of goods and services at each stage of production but also engrafts in the statute what was judicially held to be permissible additions to the manufacturing cost and manufacturing profit. Regarding decision in the case of Acer India Ltd (2004 (9) TMI 106 - SUPREME COURT OF INDIA). - Held that:- The observations made in paragraph 84 thereof to the effect that ‘transaction value’ defined in Section 4(3)(d) of the Act would be subject to the charging provisions contained in Section 3 of the Act will have viewed in the context of a situation where an addition of the value of a non-dutiable item was sought to be made to the value of a dutiable item for the purpose of determination of the transaction value of the composite item. This is the limited context in which the subservience of Section 4(3)(d) to Section 3 of the Act was expressed and has to be understood. If so understood, we do not see how the views expressed in paragraph 84 of Acer India Ltd. (supra) can be read to be in conflict with the decision of Bombay Tyre International Ltd. (1983 (10) TMI 51 - SUPREME COURT OF INDIA). The measure of the levy contemplated in Section 4 of the Act will not be controlled by the nature of the levy. So long a reasonable nexus is discernible between the measure and the nature of the levy both Section 3 and 4 would operate in their respective fields as indicated above. The view expressed in Bombay Tyre International Ltd.(1983 (10) TMI 51 - SUPREME COURT OF INDIA) is the correct exposition of the law in this regard. Further, we hold that “transaction value” as defined in Section 4(3)(d) brought into force by the Amendment Act, 2000, statutorily engrafts the additions to the ‘normal price’ under the old Section 4 as held to be permissible in Bombay Tyre International Ltd. (1983 (10) TMI 51 - SUPREME COURT OF INDIA) besides giving effect to the changed description of the levy of excise introduced in Section 3 of the Act by the Amendment of 2000. Infact, we are of the view that there is no discernible difference in the statutory concept of ‘transaction value’ and the judicially evolved meaning of ‘normal price’. There is no discernible difference in the statutory concept of ‘transaction value’ and the judicially evolved meaning of ‘normal price’.
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2018 (5) TMI 914
CENVAT credit - input services - sales commission for the sale of party’s manufactured products - Department has been of the view that the sales activity does not pertains to the promotion of the assessee’s product - Held that: - The Central Government vide N/N. 2/2016-CE (ST) dated 03/02/2016 has amended the definition of ‘input services’ under Rule 2 (l) of the CCR - Cenvat credit became available on services of sales commission agents also. Whether the insertion in the definition is clarificatory in nature having retrospective effect or only prospective? - Held that: - This aspect had also been settled by this Tribunal in its judgment in case of Essar Steel India Ltd. vs. CCE & ST, Surat – I [2016 (4) TMI 232 - CESTAT AHMEDABAD], wherein this Tribunal has held that Sometimes, the explanation may be inserted to clarify a doubtful point of law, which would be effectively retrospectively. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 913
Clandestine removal - finished goods and raw material not found entered in the records - Confiscation of finished goods and raw material - Held that: - the law is settled that the raw material cannot be confiscated on the ground of their non-entry in the records, especially when no Modvat credit stand availed in respect of such raw materials. Also, there is nothing on record to suggest that non-entry of the final product in the records was with a malafide intention. In such a scenario, confiscation of the goods or imposition of penalties upon the appellant was neither justified nor warranted - However, it is made clear that the appellant would pay the duty in respect of the said seized goods (if not already paid), at the time of their clearance. Cash recovered from the premises of M/s Naveen Impex - Held that: - there was no allegation in the show cause notice in respect of the Indian currency being the sale proceeds of the smuggled or clandestinely removed items - decided in favor of assessee. Appeal allowed - decided in favor of assessee.
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2018 (5) TMI 912
CENVAT credit - input services used commonly in manufacture of dutiable goods and trading - Rule 6(3)(1) of the CCR 2004 - Held that: - the appellant is a manufacturer and he has cleared some inputs as such by reversing the CENVAT credit taken by them originally on the said input and therefore, activity is covered by Rule 3(5) of CCR - Revenue has also not been able to establish that appellant is a trader and is engaged in trading activities. Reliance placed in appellant own case Kairali Steels and Alloys Pvt. Ltd. Versus Commissioner of Central Excise, Customs and Service Tax, Calicut [2018 (5) TMI 859 - CESTAT BANGALORE], where it was held in favor of assessee. Appeal allowed - decided in favor of assessee.
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2018 (5) TMI 911
CENVAT credit - common inputs - fuel input was used commonly for production of exempted goods and dutiable goods - Rule 6(1) of CCR 2002 - Held that: - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE Versus DALMIA MAGNESITE CORPORATION [2010 (7) TMI 144 - DELHI HIGH COURT], where it was held that Sub-rule (1) shall apply in respect of goods used as "fuel" and on such application, the credit will not be permissible on such quantity of fuel which is used in the manufacture of exempted goods - appeal dismissed - decided against appellant.
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2018 (5) TMI 910
Debonding of part of unit - quantification of the customs duty - whether the second order of the Dy. commissioner amounts to review of the first order? - Held that: - The exact quantification of the amount to be paid would depend on the date of debonding and the quantum of depreciation available at that time. Any assessment of quantification done prior to that date would only be a provisional assessment - the second order of the Dy. commissioner does not amount to review of the first order in so far as the first order was a conditional order and the appellants were entitled to depreciation till the date of debonding - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 909
Benefit of concessional rate of duty - serial no. 91 of N/N. 04/2006-CE dated 01.03.2006 - the Revenue objected the same in as much as serial number 90 attracted ‘Nil rate of duty’ and the appellant should have cleared their goods at ‘Nil rate of duty’ the benefit of CENVAT credit would not have been available to them. Held that: - Revenue cannot deny assessee’s claim to benefit of ‘concessional rate of duty’ if the conditions prescribed for availing such concessional rate stand satisfy by him - the assessee claim to avail serial number 91 of the notification cannot be faulted upon, specially when the condition of the said serial number stand fulfilled and the assessee cannot be compelled to avail serial number 90 of the notification - the decision in the case of Sidhmukh Flexible Packaging (P) Ltd. Vs. Commissioner of Central Excise, Indore [2005 (4) TMI 204 - CESTAT, NEW DELHI] referred. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 906
Duty demand on ingots - penalties on the Directors/partners - Held that: - all the parties have agreed that the cases of the main appellant M/s Kamdhenu Ispat Ltd. (Appeal Nos. E/56039/ & E/55971/2014) have been remanded by the Tribunal vide its order dated 02/04/2018. They also agreed that outcome of the main appeal will affect the present appeals - all the appeals remanded to the Adjudicating Authority to decide the appeals de novo in the light of the decision of the main appeal but by providing the reasonable opportunity to the appellants - appeal allowed by way of remand.
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2018 (5) TMI 905
Clandestine removal - under-valuation - entire case has been made on the basis of the data retrieved from the laptops, CPUs, Pen drives seized from the secret office in Gurgaon - Held that: - Since the entire case is based on the data retrieved by the GEQD, the issue needs to be readjudicated after examining the concerned official of GEQD in a personal hearing in the presence of the assessee or his representative for the purpose of arriving at the proper conclusion on the veracity of the data retrieved - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2018 (5) TMI 908
Levy of sales tax - penalty u/s 12 (5) (ii) of TNGST Act - sale of food and drink - composite charges - Held that: - identical issue decided in the case of K. Damodarasamy Naidu & Bros. Versus State of Tamil Nadu and Another (and other appeals and writ petitions) [1999 (10) TMI 598 - SUPREME COURT OF INDIA], where it was held that the levy of sales tax on the supply of food and drink prior to February 2, 1983, in the State of Maharashtra is bad in law - tax case revision petition dismissed.
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2018 (5) TMI 907
Maintainability of appeal - failure to make pre-deposit - Whether on the facts and circumstances of the case, the Ld. Tribunal was justified in dismissing the appeal of the appellant for failure to make pre deposit of 25% of tax demand without taking into cognizance the factual financial position of the appellant’s company? - Held that: - The financial condition of the appellant was not bad so as to grant it full protection from making compliance of Section 62(5) of the Act - Relying upon the judgment passed by this Court in Punjab State Power Corporation vs. State of Punjab and others, [2016 (2) TMI 245 - PUNJAB AND HARYANA HIGH COURT], it was concluded by the Tribunal that it was neither rarest of the rare case where further protection could be granted. The Tribunal rightly dismissed the appeal filed by the appellant - appeal dismissed.
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