TMI Tax Updates - e-Newsletter
May 2, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Highlights / Catch Notes
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GST:
GST Revenue collection in the month of April 2018 exceeds ₹ 1 Lakh Crore
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Income Tax:
Deduction of direct expenditure from Income tax under the head Income From Other Sources - However, the interest and remuneration paid to partners is not covered u/s 57(iii) and the AO has rightly disallowed the same - AT
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Income Tax:
Annual letting value (“ALV”) of the property brought to tax - notional income - levy of income-tax in this case shall not be on the premise whether the assessee carries on business as landlord, but on the basis of ownership, as such, the authorities below have rightly held that the ALV of this building has to be brought to tax. - AT
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Income Tax:
Disallowing the capital loss resulting out of sale of shares of MBPPL - the sale of shares in the value of ₹.10/- as low as a price at ₹.0.10 per share is nothing but a transaction to avoid taxation of capital gain. - AT
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Customs:
Import of crude palm oil - allegation that beta-carotene content in the crude palm oil is below the prescribed level - The conformity of impugned goods with crude palm oil as per the prescribed parameters at the time of import is not in question - benefit of exemption allowed - AT
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Customs:
Penalty u/s 114(i) on CHA - filing shipping bills in respect of prohibited goods - separate penalties on partners or authorised signatories are not warranted, when penalties have been imposed on the appellant partnership/proprietor firms - AT
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Customs:
Imported cargo containing Chloride content - goods are not in consonance with the purity standards laid down under FSS Act, 2006. Inasmuch as clearance of the same can cause health hazards to the people of India, the authorities below have rightly denied the clearance of the same and have allowed re-export. - AT
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Customs:
Jurisdiction of Joint Director of Foreign Trade to adjudicate SCN - cancellation of licence u/s 9(4) of the Foreign Trade (Development and Regulation) Act, 1992 - DFCE scrips - The powers under sub-section (4) of Section 9 thus, concurrently vest in the Director General as well as the Officer authorized by him. - HC
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IBC:
Financial creditor versus Operational creditor - different treatment - right to be in the Committee of Creditors (COC) - The rationale of giving a particular treatment to a financial creditor in the process of insolvency of a company under the Code of 2016 cannot be said to offend any provisions of the Constitution of India - HC
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IBC:
Corporate Insolvency Resolution Process - Unpaid applicant workmen, who have provided services to the corporate debtor, including those who are in employment clearly come within the purview of 'Operational creditor'. - Tri
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Service Tax:
Refund/rebate claim - it is clear that the appellants have accepted the rejection of the cash refund/ rebate of the service tax paid on the input services used in the export of goods and took re-credit of the said amount in their books of accounts, hence the present appeals are infructuous - AT
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Central Excise:
Refund of unutilized CENVAT credit - suspension of manufacturing operations - there was no manufacture in the light of the closure of the company, Rule-5 of the Cenvat Credit Rules would not be available for the purpose of rejecting the claim for refund - HC
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Central Excise:
Area Based Exemption - failure to submit declaration / certificate at the time of installation - If the department has continuously allowed the area based exemption presumably the said formalities were completed. For its own fault, the Department cannot take the advantage. - AT
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Central Excise:
Manufacture - production and sale of packaged drinking water - The process undertaken by the appellant to make the product fit for market to the consumers is squarely covered by the said Chapter Note and the process is deemed to be manufacture for the purpose of levy. - AT
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Central Excise:
Classification of goods - Kimam - under the eight digit tariff regime, “preparations containing chewing tobacco” are covered under tariff sub-heading 2403 99 20 - the impugned goods are thus classifiable under sub-heading 2403 99 20. - AT
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VAT:
Majority order of the Tribunal - It is axiomatic that if at the time of pronouncement all the members of the Bench are not available, on account of any of them having demitted office, the Bench as constituted and the Bench that heard the matter does not exist and cannot, therefore, pronounce the judgment. - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (5) TMI 76
Withdrawal of seizure order - Section 129(1) of the U.P.GST Act - penalty notice under Section 129(3) of the Act - no cause of action survives to the petitioner and the petition is rendered infructuous - petition dismissed.
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2018 (5) TMI 75
Seizure of goods with vehicle - stock transfer - sole ground for seizing the goods and vehicle is taken by the respondent no. 3 that the E-Way Bills -01 relating to the petitioner, the vehicle numbers are hand written whereas E-Way Bill -01 was not used in respect of other goods which is allegedly not related to the petitioner - Held that: - We find no irregularity at the hands of the petitioner or the transport company and in such peculiar circumstances the petitioner has no option but to mention the details of the subsequent vehicle by hand - the tax has been charged while issuing the stock transfer invoices at the prescribed rate - respondent are directed to release the goods with vehicle - petition allowed.
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Income Tax
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2018 (5) TMI 65
Deduction u/s 80HHC - profits retained for export business - Interpretation of the provisions contained in Section 80HHC - manner of computation of deduction under section 80HHC - Whether supporting manufacturer who receives export incentives in the form of duty draw back (DDB), Duty Entitlement Pass Book (DEPB) etc., is entitled for deduction under Section 80HHC of the IT Act at par with the direct exporter? - Held that:- As Explanation (baa) of Section 80HHC specifically reduces deduction of 90% of the amount referable to Section 28 (iiia) to (iiie) of the IT Act, hence, we are of the view that these decisions require re-consideration by a larger Bench since this issue has larger implication in terms of monetary benefits for both the parties. After giving our thoughtful consideration, the following substantial question of law of general importance arises for re-consideration by this Court: “Whether in the light of peculiar facts and circumstances of the instant case, supporting manufacturer who receives export incentives in the form of duty draw back (DDB), Duty Entitlement Pass Book (DEPB) etc. is entitled for deduction under Section 80HHC of the Income Tax Act, 1961?” Accordingly, we refer this batch of appeals to the larger Bench.
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2018 (5) TMI 64
Deemed international transaction - sale of the STP unit of the Appellant at Bangalore - Global Transfer Agreement not considered - Held that:- Global Transfer Agreement though produced before the DRP had not been considered by the DRP while disposing off the Appellant's application from the draft assessment order. Thus, in the above fact, the action of the Tribunal in restoring the issue to the DRP to consider the Appellant's claim in the context of examination of the Global Transfer Agreement cannot be said to be perverse or unwarranted. Thus, it appears that the Tribubal desired the benefit of DRP's view on the issues before deciding it in appeal. All the issues including the issue of jurisdiction is left open for consideration by the DRP. Needless to state, the DRP would independently apply its mind to the facts of the case and take a decision thereon.
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2018 (5) TMI 63
Re-opening proceedings u/s. 148 - Validity of reason to believe - change of opinion - tax the profit of sale of a flat and 2 car parking in 'Tanhee Heights' as long term capital gains - Held that:- We note that during the regular assessment proceedings leading to the assessment order dated 12th September, 1996 under Section 143(3) of the Act, the respondent-assessee had furnished all information in respect of the issue of capital gains by letters during assessment proceedings. Assessing Officer had applied his mind to the facts and the law while passing the order of regular assessment. The decision in the case of Beena K. Jain (1993 (11) TMI 7 - BOMBAY High Court) being relied upon by the appellant in support of the re-opening notice was available at the time when the regular assessment order dated 12th September, 1996 under Section 143 of the Act was passed. Therefore, it would not be fair to presume that the Assessing Officer was ignorant of the decision rendered by this Court. Moreover, as the impugned order of the Tribunal itself records that the reasons recorded in support of the impugned notice was merely on the basis of borrowed satisfaction of the audit party. This also makes the impugned notice bad. - Decided in favour of assessee.
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2018 (5) TMI 62
Penalty under Section 271E - maintainability of the present appeal filed on the basis of CBDT Circular No.21/2015, dated 10.12.2015 - monetary limit - Held that:- In view of the CBDT Circular No.21/2015, the stake of revenue to the extent of amount of penalty under Section 271E of the Act for the Assessment Year 2008-09 is below ₹ 20,00,000/- namely, the reduced amount of penalty as imposed by the learned Commissioner of Income Tax (Appeals) only to the extent of ₹ 7,59,443/-, therefore, the present appeal is not maintainable and the present appeal is therefore dismissed as not maintainable in view of the above said CBDT Circular No.21/2015.
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2018 (5) TMI 61
Disallowance u/s 40(a)(ia) towards software usage charges paid by the assessee - Held that:- In the present case the payment for royalty charges was made under consent terms before the Hon’ble Delhi High Court on which no TDS was deducted. It is true that explanation 4 to 6 were inserted to section 9 by the Finance Act, 2012 with retrospective effect from 01.06.1976 but at the same time there is merit in the submissions of the Ld. A.R. that as on the date of payment the assessee could not have foreseen the amendment which was to take place in the subsequent year making the deduction of TDS from software applicable from the retrospective effect. We are of the considered view that the Ld. CIT(A) has correctly allowed the appeal of the assessee and accordingly we uphold the same by dismissing the ground Nos.1 & 2. Addition on the basis of AIR information - Held that:- In this case TDS has been deducted by the customer on the provisions created in the books of accounts whereas the assessee invoiced and recorded the sale in the next financial year. We observe that the CIT(A) has taken a very balanced and correct view of the matter and also recorded the finding of the fact that there is no escapement of tax as the income stands offered to tax in the next financial year when the assessee invoiced the customer and it is irrelevant that the customer has deducted TDS on the provisions created in the books of accounts. We affirm the order of Ld. CIT(A) by dismissing the ground raised by the Revenue.
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2018 (5) TMI 60
Disallowance u/s 40A(3) - Held that:- Having regard to the details of the payments made in cash, we find that some of the payments are to the employees of the assessee company. We find that any payment made by a company to its employees for incurring expenditure on its behalf for business of the company, cannot be disallowed u/s 40A(3) of the Act. Therefore, we deem it fit and proper to remit the issue to the file of the AO for verification of the above contention of the assessee and on verification if it is found that the payments are to the employees for meeting the expenditure of the assessee company, the AO shall not make any disallowance u/s 40A(3) to such an extent. Disallowance u/s 40a(ia) - Held that:- Hon'ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township (2015 (9) TMI 79 - DELHI HIGH COURT) has considered the applicability of the second proviso to section 40a(ia) and has held to be declaratory and curative and to have retrospective effect from 1.4.2005. The assessment order before us is the A.Y 2008-09. In view of the above provision and since the assessee has not been treated as an “assessee in default” u/s 201(1) of the Act, we hold that no disallowance u/s 40a(ia) can be made. Disallowance u/s 43B of the payments made towards APGST, VAT, ESI, Professional Tax Payable - Held that:- The amounts disallowed by the AO are the statutory provisions made by the assessee. The assessee’s contention that these amounts have not been debited to the P&L A/c needs verification. Therefore, we deem it fit and proper to remit this issue to the file of the AO for verification of the assessee’s claim and if the assessee has not debited the same to the P&L A/c, then no disallowance should be made u/s 43B of the Act. This ground of appeal is treated as allowed for statistical purposes.
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2018 (5) TMI 59
Penalty u/s 271(1)(c) - disallowance under the head ‘Impairment of assets’ and short fall of the bank guarantee - non specification of charge - Held that:- When the assessee has not been specifically made aware of the charges leveled against him as to whether there is a concealment of income or furnishing of inaccurate particulars of income on his part, the penalty u/s 271(1)(c) of the Act is not sustainable. A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. See Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT) - Decided in favour of assessee
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2018 (5) TMI 58
Disallowance u/s 14A r.w.s. 8D - Held that:- In terms of section 14A(2) before invoking Rule 8D of the Rules, the Assessing Officer is required to dissatisfied with a claim of the assessee and then only he can resort to compute the disallowance according to the method prescribed. CIT(A) has examined the claim of use of own funds of the assessee in investments and concluded that no disallowance could be made under rule 8D(2)(i) of the Rules in absence of utilisation of borrowed funds for investment. In our opinion, the CIT(A) had duly verified that no borrowed funds have been utilised for investment in shares yielding exempt income and Ld. DR could not point out any error in the verification and finding of fact recorded by the Ld. CIT(A). In view of the above, no disallowance could be made for expenditure directly relatable to the investment in terms of Rule 8D(2)(i) of the Rules. The exempt income is only ₹ 3,30,091/- and, therefore, the disallowance under section 14A of the Act, is restricted to the extent of ₹ 3,30,091/-. Accordingly, the ground of the appeal of the Revenue is partly allowed. Protective addition - Capital addition - Held that:- CIT(A) has recorded that addition made on this issue in assessment year 2006-07 has been upheld by the 1st appellate authority and the assessee has deposited the relevant taxes during financial year 2008-09 and 2009-10. CIT(A) has concluded that the capital gain has been assessed in assessment year 2006-07 in accordance with the provisions of section 45 of the Act. In our opinion, the order of the Ld. CIT(A) on the issue-in-dispute is well reasoned and we do not find any infirmity in the same. Accordingly, the ground No. 2 of the appeal of the Revenue is dismissed.
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2018 (5) TMI 57
Disallowance u/ s 14A r.w.r. 8D - Held that:- AO has failed to point out the defect in the computation made by the assessee to make suo motu disallowance of ₹ 10,86,161/-. So, when the AO has not brought on record any cogent reasons to reject the suo motu disallowance made by the assessee, further disallowance made by the AO is merely on the basis of surmises by giving mechanical interpretation to the provisions contained u/s 14A read with Rule 8D - Disallowance u/s 14A cannot exceed the amount of exempt income as has been held in CIT vs. Holcim India Pvt. Ltd. (2014 (9) TMI 434 - DELHI HIGH COURT) so we are of the considered view that the CIT (A) has rightly deleted the disallowance made by the AO u/s 14A. - Decided in favour of assessee. Disallowance on account of CSR expenses - Held that:- Hon’ble Karnataka High Court in case cited as CIT & Anr. Vs. Infosys Technologies Ltd. [2013 (7) TMI 451 - KARNATAKA HIGH COURT] allowed the expenditure incurred by Infosys Technologies Ltd. on account of CSR by installing traffic signal near the establishment to ease the traffic congestion u/s 37(1) of the Act by holding that such expenses can be held to be expanded wholly and exclusively for the purpose of business u/s 37(1) of the Act. Addition u/s 145A - Held that:- Hon’ble Supreme Court in CIT vs. Hindustan Zinc Ltd. [2007 (5) TMI 195 - SUPREME Court] and CIT vs. Loknete Balasaheb Desai SSK Ltd. (2011 (6) TMI 48 - BOMBAY HIGH COURT), we are of the considered view that the ld. CIT (A) has rightly deleted the addition u/s 145A of the Act made by the AO as the central excise duty on the stock lying in the goddown is not to be incurred unless the stock is removed. So, we find no illegality or perversity in the findings returned by the dl. CIT (A). Ground no.3 is determined against the Revenue. Addition of expenses on account of sales-tax written off made u/s 37(1) - Held that:- CIT (A) by following the decision rendered by the Sales-tax Tribunal as well as Hon’ble Allahabad High Court in assessee’s own case held that transfer of goods from Sahibabad, UP to Murthal, Haryana, was in the nature of central sale and as such liable to pay Central Sales-tax and is not a penalty for violation of Sales-tax Act as has been held by the AO. Moreover, items/goods transferred by the assessee from Sahibabad, UP to Murthal, Haryana were not semi-finished goods rather it were final and finished products. So, we find no illegality or perversity in the impugned order passed by ld. CIT (A), hence ground no.4 is determined against the Revenue.
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2018 (5) TMI 56
Assessment u/s 153C - documents belonging to the assessee or the assumption of jurisdiction by the AO - Held that:- As rightly pointed out by the learned CIT(A) Exhibit A11 is the letter written by M/s Gee Ispat P. Ltd. and was returned by the assessee by putting their signature and seal in confirmation of the accounts, as such it belongs to Gee Ispat and not the assessee. So also the list of shareholders contained in Exhibit A1 and index sheet in Exhibit A8 cannot be said to belong to the assessee inasmuch as besides assessee there are so many names and it cannot be said that these documents belong to them. It would lead to some absurd conclusions or consequences to say that when a person maintains a list of their shareholders, such document belongs to or pertains to such shareholders also. We find no reason to disturb these findings of the learned CIT(A). We are of the considered opinion that the findings of the learned CIT(A) on the aspect of the documents belonging to the assessee or the assumption of jurisdiction by the AO cannot be said to be either perverse or require any interference at the end of this Tribunal. We accordingly while upholding the same, find the grounds of appeal as devoid of merits. - Decided against revenue.
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2018 (5) TMI 55
Addition u/s 69 - Held that:- CIT(A) directed the A.O. to treat the entire deposits as her business turnover and directed the A.O. to estimate the profit @ 8% on the deposits. If the conclusion of the Ld. CIT(A) with regard to the acceptance of the source of funds is wrong, it is the duty of the Assessing Officer to either file an appeal or to file cross-objection or appeal by way of a petition under Rule 27 of the ITAT Rules. But in the instant case, no such action was taken at any stage of the proceedings which implies that the Revenue has accepted the conclusion of the Ld. CIT(A) i.e., the source of funds was referable to the monies pooled from the customers in the form of advances received and sales effected in the business. In such event, the addition cannot be made u/s 69 of the Act. Powers of the Ld. CIT(A) in disposing of the first appeal - CIT(A) directed the A.O. to treat the entire deposits as her business turnover and directed the A.O. to estimate the profit @ 8% on the deposits - Held that:- While computing the total business income of the assessee, the Assessing Officer estimated the sales at an enhanced figure and applied a higher rate of Gross Profit. According to Hon’ble High Court the only matter dealt with by the Assessing Officer, in the assessment order, was the estimation of profits of the assessee whereas the AAC expressed doubts about the capacity of the assessee to raise finances for the purchase of goods and to show a huge turnover in the very first year of his business and thus, the enquiry was altogether on a new source of income which, according to the Court, is not permissible under law. It is not in dispute that this information was furnished for the first time and never produced before the Assessing Officer. There is a live link between the statement of the assessee and the turnover declared by the assessee since the turnover of the assessee otherwise was much less which was in fact commented upon by the Assessing Officer in his remand report by stating that sales were shown only to the tune of ₹ 17,13,202/- and it is not possible to claim that she has received advances of huge amounts of cash during the Financial Year 2007-2008 to the tune of ₹ 46,32,200/-. The assessee’s reply on the other hand was that it was only advances received from the parties and sales were made against such advances. There is a live link between the statement of the assessee and the turnover declared by the assessee since the turnover of the assessee otherwise was much less which was in fact commented upon by the Assessing Officer in his remand report by stating that sales were shown only to the tune of ₹ 17,13,202/- and it is not possible to claim that she has received advances of huge amounts of cash during the Financial Year 2007-2008 to the tune of ₹ 46,32,200/-. The assessee’s reply on the other hand was that it was only advances received from the parties and sales were made against such advances. Since the view taken by the Ld. CIT(A) is in consonance with the claim of the assessee that she has received business advances and therefore, it cannot be said that there is a new source of income but only the source which was contended by the assessee since it was claimed as advances received in the course of her business and sales made therein. No infirmity in the order passed by the Ld. CIT(A). - Decided in favour of assessee
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2018 (5) TMI 54
Reopening of assessment - validity of notice u/s. 148 - AO did not dispose of objections before passing the order of reassessment - Held that:- Assessee has challenged the action of AO in not disposing off objections of the assessee which is mandated by the Hon'ble Supreme Court decision in the case of GKN Driveshafts (India) Ltd. [2002 (11) TMI 7 - SUPREME Court] We are of the considered view that AO is under a mandate to dispose of such objections before proceeding with the assessment by passing a speaking order, which has not been done by him, therefore, the reassessment under section 147 cannot be sustained and hence, we quash the reassessment order - Decided in favour of assessee.
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2018 (5) TMI 53
Unexplained cash credit u/s. 68 addition - Held that:- Assessee could not controvert the findings of the Commissioner of Income Tax (Appeals). The only submission by ld.AR is that the difference is on account of discounts received from suppliers. Merely on bald assertions the addition cannot be deleted. Accordingly, ground No. 1 raised in appeal by assessee is dismissed. Additional ground to reduce the amount of discount offered by assessee in subsequent assessment years from taxable income - Held that:- The addition of the discount in the assessment year under appeal would result in double taxation of the same amount. We find merit in the submissions made by ld. AR of the assessee. However, this ground requires verification of facts. Accordingly, we deem it appropriate to remit the additional ground raised by assessee in appeal to the file of Assessing Officer for verification of the facts. If the assessee has offered discounts in the subsequent assessment years, the same may be reduced from taxable income of the respective assessment years, in accordance with law. Accordingly, additional ground raised by assessee is allowed for statistical purposes. Disallowance u/s. 40(a)(ia) - assessee has furnished Form-15G belatedly - Held that:- We find that Pune Bench of Tribunal in the case of Smt. Anandidevi Gairola Vs. Commissioner of Income Tax (Appeals) (2013 (9) TMI 1214 - ITAT PUNE) has allowed the claim of assessee where Form-15G were furnished beyond the time specified under the Act. Thus disallowance is directed to be deleted. Disallowance u/s. 40A(2)(b) - Held that:- The assessee is conducting its business from various places. The assessee has a shop near Kolhapur Municipal Corporation and three go-downs at Market Yard. The above said persons are helping the assessee in managing affairs of business efficiently. In so far as reasonability of expenditure is concerned, assessee stated at Bar that all the three ladies are graduate. Taking into consideration entirety of facts, we are of considered view that salary of ₹ 83,200/- p.a. for each of the ladies, appears to be reasonable. AO before making disallowance of 40% has not made any enquiries to find out the salary paid for conducting similar work. The Assessing Officer made ad-hoc disallowance and the CIT (Appeals) upheld the same in a mechanical manner. Disallowance u/s.40A(2)(b) is not warranted. Ad-hoc disallowance - Held that:- The assessee has claimed total expenditure of ₹ 1,05,552/- on account of vehicle maintenance, repairs etc. AO made ad-hoc disallowance of ₹ 15,000/- as the expenses were supported by self made vouchers and on the premise that there is an element of personal expenditure. The disallowance of lump sum amount of ₹ 15,000/- in the facts of the case appears to be reasonable and justified. We are, therefore, not inclined to interfere with the findings of AO/ CIT (Appeals). - Decided against assessee.
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2018 (5) TMI 52
Reopening of assessment - assessee's share on retirement from the partnership firm - value of property by the value determined by the DVO - valuation report by the DVO suggesting higher value of the property - Held that:- The transaction under question is not a transfer of immovable property per se. It is only transfer of interest in the partnership firm. In such a case the value of interest in partnership firm which have been agreed upon by partners through a deed cannot be very re-determined or rewritten. There is no evidence that extra money has passed hands between the partners for the transfer of interest in the partnership firm. CIT(A) has dealt in great detail the reasons for such a difference between the value adopted by the DVO and value adopted by the Stamp Duty Authorities vis-à-vis annual consideration sale at a later date vide para 7 of his order. The detailed finding given by the CIT(A) are as per material on record. We support the conclusion that the material gain determined by the AO by substitute value of property by the value determined by the DVO was not sustainable in law. The finding so recorded has not been controverted by learned DR by bringing any positive material on record. Accordingly, we do not find any justifiable reason for interfering in the order of CIT(A) for deleting the addition so made. With regard to reopening of assessment, we found that there was a valuation report by the DVO suggesting higher value of the property. Under these facts and circumstances, the AO has correctly concluded that there is a reason to believe that there is an escapement of income. Accordingly, we do not find any infirmity in the order of CIT(A) for upholding the reopening of assessment.
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2018 (5) TMI 51
TDS u/s 194C - Non deduction of TDS - Additions under the heads ‘labour charges’, ‘installation charges’ & ‘hire charges’ - contention of the ld.AR is that if another opportunity is given to assessee to submit all the details relating to payments made to said firms and companies and to find out as to whether the payees (firms/companies) considered respective amounts in their accounts and also offered to tax thereon in their respective returns of income in terms of 2nd proviso to section 40(a)(ia) - Held that:- We find force in the submissions of the ld.AR and we find support from the decision of the Hon’ble High Court of Delhi in the case of CIT Vs. Ansal Landmark Township (P) Ltd. (2015 (9) TMI 79 - DELHI HIGH COURT) in remanding the matter to the AO for the said purpose. The insertion of the second proviso to Section 40(a) (ia) of the Act and its conclusion that the said proviso is declaratory and curative and has retrospective effect from 1st April 2005, merits acceptance.Respectfully following the above, we deem it fit and proper to remand the matter to the file of the AO. Addition on account of contractual receipts shown in the P & L account of assessee - Held that:- According to assessee, there were discrepancies between the amount payable and amount receivable from Mechanical Division, Govt. of W.B & TDS certificates issued. The AO & CIT-A did not consider the submissions of assessee in their right perspective. We find that there was difference of turnover as per TDS Statement and Profit & Loss A/c, which requires verification by the AO. Therefore, taking into consideration the facts of the case and the submissions of ld.AR and issue involved in the appeal, we deem it fit and proper to remand the matter to the file of the AO for verification. The assessee has to clarify the difference found by the AO by proper explanation along with evidence in respect of TDS, turnover and total receipts of assessee.
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2018 (5) TMI 50
Addition u/s. 14 r.w.r 8D - Held that:- As relying on case REI Agro [2013 (12) TMI 1517 - CALCUTTA HIGH COURT] we direct the AO to recompute the disallowance afresh taking into consideration the investments, which yielded the dividend income for the purpose of section 14A of the Act. Thus, ground no. 1 raised by the assessee is allowed for statistical purpose. Addition of shuttering expenses - Held that:- CIT-A was not correct in confirming the impugned additions made on account of steel shuttering materials 1/3 written off and wood shuttering materials 1/3 written off. The same is directed to be deleted. Addition on account of difference between income as per ITR and as per books of account of assessee - Held hat:- We find from the order of CIT-A that the assessee pleaded that this very sum of ₹ 6,09,193/- has been offered to tax in the next assessment year by him. AR fairly pleaded let this sum be taxed in the A.Y under appeal and consequently, a direction be given to AO to reduce a sum of ₹ 6,09,193/- from the income of next assessment year i.e. A.Y 2011-12 in order to avoid double taxation. We find force in this argument of AR. Ground no. 3 is dismissed subject to direction to AO that a sum of ₹ 6,09,193/- shall be reduced from the income of assessee in next assessment year i.e. A.Y 2011-12.
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2018 (5) TMI 49
Taxability of Outside India revenues in India - consideration received by the assessee, a foreign company, against an “offshore supplies” made by it from outside India taxability in India - how much of the income can be attributed to the Permanent Establishment from such business of supplies? - income from offshore supplies as attributed to its alleged PE - Held that:- AO did not bring on record any evidence or material in support of the contention that the office at Mumbai had any role to play in respect of offshore supplies made and, as such, such income could be attributed to such supplies being the profit which has been carried through the business from such alleged PE, and on the other hand the assessee claims to have placed on record its annual accounts, in support of the contention that the office at Mumbai had absolutely no role to play in respect of offshore supplies made and as such no income could be attributed to such supplies being the profit which has been carried through the business from such alleged PE but not properly considered by the authorities below In view of the observations of in assessee’s own case for the assessment year 2007-08 and also the decision in Carborandum Co. vs. CIT [1977 (4) TMI 2 - SUPREME Court] and National Petroleum Construction Company [2016 (2) TMI 47 - DELHI HIGH COURT], we are of the considered opinion that no income from offshore supplies could be attributed to its alleged PE in Mumbai. - Decided in favour of assessee
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2018 (5) TMI 48
Addition of amount credited in the suspense account - unexplained / bogus transaction - assessee is a cooperative bank and the transactions appearing in the suspense account neither debited to the profit & loss account nor claimed as expenditure - Held that:- As at the end of the year, there was an amount outstanding to the extent of ₹ 2,33,47,196/- which remained un-reconciled by the assessee. At the time of remand report also, the assessee could not reconcile the difference. The explanation offered by the assessee is general in nature for all the heads of suspense account but not furnished the specific details. The outstanding in the suspense account required to be reconciled as at the end of the year and furnish the necessary details before the A.O. Therefore, we are of the considered view that the assessee is bound to submit transaction wise details with nature of transactions name of the creditor, date of transaction, amount paid or adjusted, etc before the A.O. Therefore, we are of the opinion that the issue should be remitted back to the file of the A.O. to examine the suspense account in detail and decide the issue afresh on merits. The assessee is required to submit the complete details with regard to the transactions under each head of suspense account with name, date of entry, date of adjustment, etc. Accordingly, we set aside the orders of the lower authorities and remit the matter back to the file of the A.O.- Decided in favour of revenue for statistical purposes.
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2018 (5) TMI 47
Head of income - income from leasing of rice mill comprising of building and machinery - assessment of income under the head “income from other sources” against the admission of income by the assessee under the head “business income” - Held that:- In the instant case, the assessee owns a rice mill and let out the rice mill to another rice mill and receiving the rental income without carrying on any business activity or rendering any services incidental to carrying on the rice mill. Therefore, referring to in the case of M/s. Sultan Brothers Pvt. Ltd. (1963 (12) TMI 4 - SUPREME Court) relied upon by the lower authorities are squarely applicable and the lower authorities have rightly assessed the income under the head ‘income from other sources’. - Decided against assessee. Denial of depreciation and set off of unabsorbed depreciation - Held that:- Since the unabsorbed depreciation partakes the character of current year depreciation, we hold that the A.O. cannot deny the set off of unabsorbed depreciation against the income from other sources. Accordingly, we direct the A.O. to allow the unabsorbed depreciation from the rental income of the rice mill. The assessee’s appeal on this ground with regard to depreciation is allowed. Deduction in respect of interest paid to bank, interest paid to others, interest paid to partners, establishment charges, electricity development charges and remuneration to partners disallowed - Held that:- Section 57(iii) of the Act allows the expenditure incurred for earning the income. This issue is also considered in the case of Pujya Sujatha Agro Farms Pvt. Ltd. [2010 (11) TMI 694 - ITAT VISAKHAPATNAM] and directed the A.O. to allow the expenses incurred for earning the income. Therefore, we hold that the assessee is entitled for the allowance of expenditure, accordingly we direct the A.O. to allow the expenses incurred for earning the income as well as the interest incurred in establishing, repairing and renovating the rice mill. This ground of appeal of the assessee is allowed. However, the interest and remuneration paid to partners is not covered u/s 57(iii) and the AO has rightly disallowed the same. Thus we confirm the disallowance to the extent of interest and remuneration paid to the partners and direct the AO allow the remaining expenditure including the interest paid to others.
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2018 (5) TMI 46
Entitlement to higher claim of depreciation on the Uppers, dumpers, trailers used in his business used for transportation business - Held that:- As decided in assessee's own case [2017 (12) TMI 1478 - ITAT VISAKHAPATNAM] Transportation business carried out by the assessee by using Trailers, Dumpers & Motor Lorries is not an incidental to the business of the assessee. Out of the gross receipts of ₹ 55,75,16,582/-, the assessee received ₹ 22,99,64,332/-. The ld. Departmental Representative failed to produce any material to show that the above finding given by the ld. CIT(A) is not correct. Therefore, by considering the facts and circumstances of the case, we are of the opinion that there is no infirmity in the order passed by the ld. CIT(A). - Decided against revenue
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2018 (5) TMI 45
Annual letting value (“ALV”) of the property brought to tax - Determination of the rental income - whether the authorities below are justified in bringing the notional income to tax under the head “income from house property” instead of returning a finding that any income from such building has to be assessed as business income and in the absence of any real income from the building, nothing has to be brought to tax? - Held that:- The facts and contentions advance in the case of Ansal Housing Finance and Leasing Co. Ltd. [2012 (11) TMI 323 - DELHI HIGH COURT] are almost identical to the facts and contentions involved in this matter. Hence, while respectfully following the same, we hold that the levy of income-tax in this case shall not be on the premise whether the assessee carries on business as landlord, but on the basis of ownership, as such, the authorities below have rightly held that the ALV of this building has to be brought to tax. Quantification of ALV - Held that:- It is incumbent upon the revenue to ascertain the standard rent as per the relevant rent control legislation and to take the fair rent or the standard rent, whichever is lower, as the ALV of the building. In the case in hand, such and exercise does not seem to have been undertaken by the AO and also the grievance of the assessee is that the source of taking non relevant to the fair rent or the report of the inspector are revealed so that the assessee could have had an opportunity to ask the authorities for determination of the correct ALV. Thus while affirming the action of the authorities below in bringing the ALV of the premises at 9, Tolstoy Marg, Connaught Place, New Delhi to tax, we deem it just and proper to set aside the issue relating to the determination of the correct and proper ALV in the light of the decision of the Hon’ble jurisdictional High Court in the case of Moni Kr. Subba (2011 (3) TMI 497 - DELHI HIGH COURT ).
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2018 (5) TMI 44
Taxing of capital gains - indexed cost of acquisition - Held that:- We find that the entire sale consideration has been considered as capital gains and no indexation benefit has been considered while working out the capital gains. The mode and manner of computing capital gains is given in Section 48 of the Act. The 2nd proviso to Section 48 provides that where long term capital gains arise from the transfer of a long term capital asset, the cost of acquisition of the asset has to be read as “indexed cost of acquisition”. Indexed cost of acquisition has been defined in Clause-(iii) of the Explanation to Section 48 as an amount which bears to the cost of acquisition the same proportion as the cost inflation index for the year in which the asset is transferred beard to the cost inflation index for the first year in which the asset was held by the Assessee or for the year beginning on the 1st day of April, 1981, whichever is later. It is not the case of the Revenue that the asset sold by the Assessee is not a long term capital asset and the gains arising thereto are not long term capital gains. We are of the view that the capital gains have to be computed after considering the indexed cost of acquisition, which has not been done in the present case. At this juncture, it would be relevant to refer to CBDT Circular No.14 (XL-35) dated 11/04/1955 which states that the Officers of the Department must not take advantage of the ignorance of an Assessee as to his rights & it is one of their duties to assist a tax-payer in every way particularly in the matter of claiming and securing relief. It is also a settled law that the Circulars issued by CBDT are binding on the Department. We are of the view that in the interest of justice, the matter needs to be remanded to the file of Assessing Officer to work out the capital gains in accordance with law. We, therefore, without deciding the issue on merits, restore the issue back to the file of Assessing Officer and direct him to decide the issue afresh in accordance with law.
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2018 (5) TMI 43
Validity of assessment order u/s 144 - Held that:- AO has passed assessment order u/s 144 of the Act. We do not find any infirmity in the order of the Assessing Officer passed u/s 144 of the Act because of the reason that at each and every stage assessee has failed to submit the requisite details. Therefore, on the perusal of the order itself it is apparent that because of non cooperation by the assessee the Assessing Officer did not have any alternative but to pass an order u/s 144 of the Act. - Decided against assessee Notice u/s 143 (2) not served on the assessee during the prescribed time - Held that:- The order sheet and record on 07.10.2010 in response to notice u/s 143 (2) issued on 28.09.2010 Sh. Naresh remained present. Therefore, according to him assessee complied with the first notice on 07.10.2010 therefore it cannot be said that notice were not served to the assessee in time. In view of the above facts we do not find any merit of the ground No. 3 of the appeal of the assessee. Addition on account of gross receipts and works contract taxes - Held that:- Undoubtedly it may also be on account of turnover not shown by the assessee. Further merely there is a difference between the gross turnover as per books of accounts and gross receipts as per Form No. 26AS the addition cannot be made. In fact such the difference would be the first trigger point for making further enquiries. In the present case the assessee has not made any attempt to reconcile the difference. Furthermore no reconciliation shown to us by the assessee also. Further the arguments of the assessee cannot be ignored that there are certain unmatched entries in form no 26AS. In view of this we set aside this ground of appeal back to the file of the Ld. Assessing Officer with a specific direction to the assessee to produce the confirmed ledger accounts of the assessee from the books of accounts of its principal to show that there is no difference in the payment shown by the principal to the assessee with gross receipts shown by the assessee in its books of accounts. The assessee must also produce the detailed reconciliation between gross receipts as per books of accounts and gross receipt as per Form No. 26AS. Addition on account of Work Contractor Tax - Held that:- Argument of the Ld. AR and annual accounts of the assessee gives different picture. As it is not clear that how liabilities are shown in the books of accounts as payable when the AR of the assessee is denying that Works Contract Tax is at all payable by the assessee. Even in the tax audit report also the tax auditor has also shown the VAT liability as outstanding u/s 43B. We set aside the ground No. 5 of the appeal to the file of the AO with the direction to the assessee to produce the complete reconciliation of the Work Contractor Tax payable shown in the books of accounts as well as the VAT returns filed by the assessee
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2018 (5) TMI 42
Validity of the reopening - Held that:- The reassessment framed by the AO u/s 143(3)/147 of the Act, in the present case, on the basis of the notice issued u/s 143(2) of the Act dated 12.10.2011 i.e. prior to the furnishing of return of income on 27.10.2011 in response to notice u/s 148 of the Act, was not valid. Accordingly, the same is quashed. - Decided in favour of assessee.
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2018 (5) TMI 41
Validity of ex-parte order - Held that:- In the present case, it is noticed that the authorized representative of the assessee sought adjournment since his mother got burnt and was hospitalized but the ld. Pr. CIT passed the impugned order ex-parte in haste. It is well settled law that nobody should be condemned unheard as per the maxim “audi alteram partem”. We, therefore, considering the totality of the facts of the present case, deem it appropriate to set aside this case back to the file of the ld. Pr. CIT(C) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
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2018 (5) TMI 40
Disallowance u/s. 14A r.w. Rule 8D - inclusion of dividend yielding investments - Held that:- In view of the decision of the Special Bench in the case of ACIT v. Vireet Investments Private Limited (2017 (6) TMI 1124 - ITAT DELHI), we direct the Assessing Officer to recompute the disallowance under Rule 8D2(iii) keeping in view the decision of the Special Bench wherein it has been held that only dividend yielding investments shall be considered for the purpose of computing the disallowance under Rule 8D2(iii). This ground is partly allowed. Interest income received by the assessee - assessed as business income or income from other sources -Held that:- Having money lending licence is not a precondition for having business income from money lending activity. Merely because there is no money lending licence, interest income cannot be treated as income from other sources. Nothing much would turn on that fact in deciding this issue. Following the principle of consistency, 1 hold that interest received by the appellant on loans and advances given to various persons is business income. The fact that there was no mention of money lending activity as business in Form 3CD also cannot be a ground to hold otherwise when interest income was assessed as business income in the past.
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2018 (5) TMI 39
Disallowance on depreciation on leased transactions - CIT(A) held that the depreciations claim over the assets which were purchased from third parties by the assessee company and entered into sale and lease back agreement with different parties are eligible to claim depreciation and directed AO to verify each such claim and by satisfaction that the supplier and lessee should not be one at the same time. Held that:- In our considered view this direction of the Ld.CIT(A) will not serve any purpose as the Assessing officer in this case though set-aside to him twice to examine the transaction in detail he miserably failed to examine the transactions and therefore there is no point again directing the Assessing Officer to examine the transactions or part of the transactions for the purpose of allowing the claim of the assessee. Therefore, to that extent the observations of the Ld.CIT(A) are reversed and we confirm the order of the Ld. CIT(A) in holding that assessee is eligible to claim depreciation from sale and lease back assets in respect of the transactions other than Nath Pulp & Paper Mills Ltd. To put an end to the litigation in this case as the matter is very old and relates to the A.Ys. 1996-97, we sustain the order of the CIT(A) partly as indicated above and the claim of the assessee is directed to be allowed as per the observations of the Ld.CIT(A) without any further verification by the Assessing Officer.
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2018 (5) TMI 38
Denial of registration u/s 12AA(1) (b) (ii) and U/s 80G(5) (vi) - corpus donation receipt - proof of charitable activities - CIT(Exemption)’s jurisdiction in cancelling registration - Held that:- The question whether the activities of the trust which was formed with the specific intention to carry on certain charitable activities, are actually charitable in nature or not, would not arise for consideration at the stage of grant of registration to the trust u/s 12AA of the Act. Going by the specific words in section 12AA of the Act, what is germane to the issue is only as to the genuineness of the Trust and its activities. We note that there is no such finding in the impugned order of the ld. CIT(Exemption) that activities of the trust were not genuine. Going by the provisions of section 12A and 12AA of the Act, we hold that the grounds raised by the ld. CIT(E) (Registering Authority), explained in para 4 of our order, for rejecting of registration to the assessee trust cannot be sustained and ld. CIT(Exemption) ought to have examined whether activities of the trust are charitable in nature or not. Therefore, we direct the ld. CIT(Exemption) to examine the genuineness of the Trust and its activities and objectives and adjudicate the issue in accordance with law. - Decided in favour of assessee for statistical purpose.
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2018 (5) TMI 37
Deduction of certain expenses claimed by the assessee against the project namely Balaji Galaxy - accrual / crystallization of these expenses in the impugned AY - Held that:- AO has noted that the project was not completed in the impugned AY and the assessee had unsold inventory in the Balance Sheet, which could not be controverted by Ld. AR. As per the submissions of Ld. AR, the provisions for expenses was not a mere provision but a fair estimation of the expenses which had accrued during the impugned AY and therefore, allowable to assessee. AR has also contended that complete working / details thereof was submitted to Ld. CIT(A) during appellate proceedings, which has completely been ignored. Prima facie, we concur with the said submission. Therefore, on factual matrix, we deem it fit to restore the matter back to the file of Ld. CIT(A) to re-appreciate the claim of the assessee and re-adjudicate the same with a direction to the assessee to demonstrate accrual / crystallization of these expenses in the impugned AY.
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2018 (5) TMI 36
Addition made towards long term capital gains - Nature of property sold - Held that:- It is clear that the mortgaged property sold, in discharge of the mortgage created by the assessee himself, belonging to the assessee and the price realized there-form belonged to the assessee and capital gain is very much warranted on the full price [less admissible deduction]. Availing loan itself is consideration and in this case, constructive benefit was very well accrued to the assessee when the loan was availed by MBPPL, which was owned partly by the assessee. Accordingly, we set aside the order of the ld. CIT(A) on this issue and restored that of the Assessing Officer. - Decided against revenue Eligibility to claim cost of improvement for the purpose of computation of long term capital gains - Held that:- To admit any claim of expenditure, the assessee is required to furnish bills/ vouchers. However, the ld. Counsel for the assessee has submitted that due to passage of time, the assessee could not produce the bills/vouchers, etc. for the expenditure incurred towards cost of improvement. While executing the mortgage deed in favour of the bank as collateral security, the assessee should have furnished valuation of the property of land and building, against which the bank has sanctioned loan of ₹.1,75,00,000/- to MBPPL. Accordingly, in the absence of evidence for cost of improvement and the fact that cannot be ignored that without spending monies, the assessee could not have raised the building of 7,745 sq.ft., we direct the Assessing Officer to verify the valuation report as the assessee might have submitted at the time of executing the collateral security in favour of the bank and decide the issue afresh after allowing an opportunity of being heard to the assessee. Thus, the ground raised by the Revenue is allowed for statistical purposes. Disallowing the capital loss resulting out of sale of shares of MBPPL - Held that:- CIT(A) has not accepted the valuation adopted by the assessee. The assessee is one of the directors in M/s. Minbimbangal Productions Pvt. Ltd. along with his wife Smt. Geetha Kailasam. The beneficial owners of shares holding not less than 10% of the voting power during the previous year relevant to the assessment year are Smt. Geetha Kailasam [58.13%], B. Prasanna, [brother 9.27%] and Pushpa Kandasamy, [sister 10.24%]. The company in which the assessee is a director, is a private limited company in which public are not substantially interested. The shareholders are only assessee’s family members and more of a family concern. We find that the shares are not quoted, listed or sold through any authorized stock exchange. Thus, we are also of the same opinion that the sale of shares in the value of ₹.10/- as low as a price at ₹.0.10 per share is nothing but a transaction to avoid taxation of capital gain. In view of the facts and circumstances, the objection raised by the assessee stands dismissed.
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Customs
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2018 (5) TMI 74
Import of crude palm oil - Benefit of exemption under N/N. 21/2002-Cus dated 12th March 2002 - denial on the ground that beta-carotene content in the crude palm oil imported by M/s Radha Vansapati Ltd being below the prescribed to disentitle them from the privilege - Held that: - It is not in dispute that the palm oil under import was in crude form and requires refining, bleaching and deodorizing before release for human consumption. The primary purpose of prescribing a broad range of beta carotene content in the exemption notification is to ensure that it is applicable only to palm oil that is intended to be subjected to value addition in India. The various tests of the samples were effected over a period of four months and there is a consistent decline in the distinguishing content. Furthermore, the first test at Kandla passes muster - No other evidence to establish that the consignment did not, at any stage, comply with threshold requirement is placed on record. The conformity of impugned goods with crude palm oil as per the prescribed parameters at the time of import is not in question - appeal dismissed - decided against Revenue.
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2018 (5) TMI 73
Penalty u/s 114(i) of Customs Act, 1962 on CHA - penalty imposed on the ground that they filed shipping bills in respect of prohibited goods - Held that: - appellant being CHA has filed shipping bills only on the basis of documents provided to them by the exporter. The appellant were not aware about the technical characteristic of product, therefore it cannot be said that appellant have knowingly attempted to clear prohibited goods for export - appellant being CHA having limited role for filing the shipping bill that too on basis of documents provided to them cannot be held guilty for attempting the export of prohibited goods - penalty set aside. Penalty on Shri. Pervez Irani, partner of CHA firm - Held that: - reliance placed in the case of Eagle Impex vs. CC, Kandla [2017 (2) TMI 49 - CESTAT AHMEDABAD], where it was held that separate penalties on partners or authorised signatories are not warranted, when penalties have been imposed on the appellant partnership/proprietor firms - penalty on partner not warranted. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 72
Benefit of N/N. 21/2002-Cus dated 1.3.2002 (Sr. No. 68) - import of 6500 MTs of Coking Coal in Bulk - difference in test reports - Held that: - Once there are contradictions on the test reports, needless to mention that the best course of action sould have been to re-test the sample - In the present case, the appellant has not accepted the test report of the Chemical Examiner and consistently requested the department to re-test the sample to ascertain the parameters again. There is nothing wrong in such request of the appellant seeking the re-test of the sample as it is permissible under law - appeal is allowed by way of remand to the adjudicating authority for re-test of the sample as requested by the appellant.
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2018 (5) TMI 71
Clandestine removal - It is the case of the Revenue that appellant had imported duty free raw material used for manufacturing of goods which were cleared to DTA without payment of duty - Held that: - there was documentary evidences which indicate the clandestine/illegal and illegal clearance of fabrics to DTA and that the appellant has consumed duty free silk which were imported and there mis-use of the exemption - demand upheld - appeal dismissed - decided against appellant.
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2018 (5) TMI 70
Benefit of N/N. 12/2012 - Tagetes seeds F I Marigold : Moon sapphire (Flower seeds for sowing purpose) - whether classified under CTH 1209 99 90 or under CTH - 1209 30 00? - Held that: - Irrespective of the heading or sub-heading of the imported items, the exemption is available for Chapter 12, under the said entry. Availability of exemption under Sl. No. 17 to the seeds imported by the appellant - Held that: - seeds of vegetables and flowers and ornamental plants are apparently eligible for the concessional rate of duty. The plain reading of the entry makes the position clear. Seeds of flowers are eligible for exemption and denial of such exemption is not sustainable - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 69
Valuation of imported goods - old and worn garments from South Korea - Held that: - As per the National Import Data Base (NIDB), it appears that the assessee-appellants have shown the valuation on a lower side. So, the lower authorities have rightly estimated the valuation - there is no reason to interfere with the impugned orders when the assessee-appellants have not disputed the valuation - redemption fine also upheld. Penalty u/s 112 of the Customs Act, 1962 - Held that: - the Commissioner (Appeals) has made it uniform @ 10%, but in the peculiar facts and circumstances of the case, especially when the National Import Data was closely to the import value, the same appears to be on higher side - penalty reduced to 5%. Appeal allowed in part.
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2018 (5) TMI 68
Restriction on clearance of imported item - it was alleged that the imported cargo contains Chloride content more than the maximum permissible limit i.e., 1.39% as against the maximum permissible limit of 0.2% - redemption fine - penalty - Held that: - there is no contrast to the test reports of both the laboratories and a feeble argument that the two test reports do not match and are contrary to each other stands argued - The rating of both test reports establishes that the goods are not in consonance with the purity standards laid down under FSS Act, 2006. Inasmuch as clearance of the same can cause health hazards to the people of India, the authorities below have rightly denied the clearance of the same and have allowed re-export. Whether such re-export on payment of fine and penalty is justifiable or not? - Held that: - the order placed by the assessee was itself in contravention of FSS Act and it cannot be said the goods of inferior quality was sent by the exporter inadvertently. In such a scenario, imposition of redemption fine and penalty is justified - however, the quantum of redemption fine and penalty reduced. Appeal allowed in part.
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2018 (5) TMI 67
Undervaluation - it was alleged that the petitioner has been indulging in deliberate undervaluation to mislead the Department by way of concealing the facts with loss to the Government - Held that: - the Commission did not undertake any exercise to find out as to whether the plea raised by the petitioner that there was calculation error is correct or not. In fact, sub-section (5) of Section 127 of the Act, empowers the Commission to do so. The Commission did not do such exercise, nor it called for any report from the jurisdictional Commissionerate. If the Commission was of the opinion that for some reason the application cannot be entertained on account of non-cooperation by the assessee, etc., the case should have been sent back to the appropriate officer under Section 127-I of the Act. This was also not done by the Commissioner, rather he admitted the case. Matter requires re-examination - appeal allowed by way of remand.
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2018 (5) TMI 66
Jurisdiction of Joint Director of Foreign Trade to adjudicate SCN - cancellation of licence u/s 9(4) of the Foreign Trade (Development and Regulation) Act, 1992 - Duty Free Credit Entitlement Scheme (DFCE scrips) - imposition of penalty u/s 11(2) of the Act - Held that: - under sub-section (4) of Section 9 of the Act, the Director General or the officer authorized under sub-section (2) would have the power for good and sufficient reasons to suspend, cancel any licence, certificate, scrip or any instrument bestowing financial or fiscal benefits granted under the Act. The powers under sub-section (4) of Section 9 thus, concurrently vest in the Director General as well as the Officer authorized by him. The authorized officer would be exercising powers under the delegated authority. There is no pecuniary limitation in exercising such powers. In terms of section 13, the Joint Director could not have adjudicated the question of penalty where the value of the goods or service or technology covered by the authorization exceeded ₹ 25 crores - This pecuniary limit therefore, would take the present matter out of the purview of the Joint Director. The notice issued was a composite notice. The issue of cancellation of licence and imposition of penalty were closely interlinked. He could not have and, he in fact had not severed the notice into a part which he could adjudicate upon and one which he could not - The Director General of Foreign Trade, therefore, committed no error in quashing the order under Section 16 of the Act under which, the Director General has the power on his own motion or otherwise, call for the records or any proceeding of any decision or order made by any officer subordinate to him and satisfy himself as to the correctness, legality or propriety of such decision or order and make such order as may be deemed fit. Petition dismissed.
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Insolvency & Bankruptcy
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2018 (5) TMI 79
Insolvency resolution Process - financial creditor versus operational creditor - whether undue preference has been given to a financial creditor - It is submitted that, a financial creditor has a right to be in the Committee of Creditors (COC) of a corporate debtor in an insolvency proceeding. An operational creditor, although such creditor may have a claim far in excess than that of the financial creditor, will have no say in the Committee of Creditors. Held that:- Classification amongst similarly situated persons is permissible if the classification is based on reasonable differentia. If the classification is on reasonable differentia it does not offend the principle of equality. Consequently, creditors of a company can be classified, provided the classification is on reasonable differentia. An operational creditor is not ousted in its entirety from coming into the committee of creditors. An operational creditor does not have a voting right in the event it is in the committee of creditors. The Bankruptcy Committee gives a rationale to the financial creditors being treated in a particular way vis-à-vis an operational creditor in an insolvency proceeding with regard to a company. The rationale is a plausible view taken for an expeditious resolution of an insolvency issue of a company. Courts are not required to adjudge a legislation on the basis of possible misuse or the crudities or inequalities that may be perceived to be embedded in a legislation. The rationale of giving a particular treatment to a financial creditor in the process of insolvency of a company under the Code of 2016 cannot be said to offend any provisions of the Constitution of India. Nothing is placed on record that, a different view should be taken on the ground of breach of principles of natural justice in a proceeding under the Code of 2016.
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2018 (5) TMI 78
Maintainability of resolution plan submitted by the applicant on 20.02.2018 - rejection on the ground of delay - Held that: - It is pertinent to mention that after the Corporate Insolvency Resolution Process is triggered then the broad time line of 180 days or extended period of 270 days is fixed by Section 12 of the Code. The term of the Interim Resolution Professional according to Section 16 (5) of the Code ‘shall not exceed thirty days from the date of his appointment. During his tenure of 30 days he is required to make a public announcement in terms of Section 13(l)(b) of the Code immediately after his appointment. A perusal of Section 12 of the Code would show that initial time limit for completion of Corporate Insolvency Resolution Process is 180 days from the date of admission of the application which is extendable to 270 days if the Committee of Creditors by a vote of 75% of voting share passes a resolution to that effect. The provisions of Regulation 39 of CIRP Regulations as stood on 21.09.2017, postulate that a resolution applicant shall endeavour to submit a resolution plan 30 days before the expiry of the maximum period permitted under Section 12 for completion of the C1R Process. It is evident that a resolution applicant could submit its plan 30 days before expiry of the maximum period permitted under Section 12. In the present case, after issuance of public notice in print media on 21.09.2017 the Resolution Professional has not issued any other public notice notifying the criteria which might have been laid down by the Committee of Creditors. If no new public notice notifying the criteria finalized by CoC in terms of amendment is issued, then the original public notice would prevail with regard to the period for receipt of Resolution Plan application. The resolution plan in the present case was submitted on 20.02.2018. The period of 180 days was extended to 270 days on an application filed by the Resolution Professional under Section 12 (2) vide order dated 22.12.2017. The period of 270 days admittedly would be expiring on 22.04,2018. If we apply the aforesaid yardstick then the decision of the CoC in its meeting dated 21.02.2018 would not be sustainable. In the present case the process which has started on 21.09.2017 could not be concluded by 21.02.2018 on account of unnecessary complications created in conducting the process by inviting expression of interests. It is worthwhile to notice that the fashionable phenomena ‘expression of interest’ is resorted to in cases where thousands of applicants are expected to participate. In a case where the number is not likely to exceed more than ten then such process seems to be un-necessary. The object of the Insolvency and Bankruptcy Code is to reorganize and evolve insolvency resolution of, inter alia, Corporate persons in a time bound manner for maximization of the value of assets of such person. The Resolution Professional shall place the unopened sealed cover apparently containing the resolution plan of the Liberty House before the next meeting of the CoC - The period spend on this litigation stands excluded. The whole process may now be concluded before 23.06.2018 - Resolution Plan of the Liberty House shall not be rejected on the ground of delay - application allowed.
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2018 (5) TMI 77
Corporate Insolvency Resolution Process - whether unpaid applicant workmen, who have provided services to the corporate debtor come within the purview of 'Operational creditor'? - Held that:- Application in joint capacity through their duly authorised representative as per the requirement of the format prescribed under the Rules is allowed. Accordingly application under Section 9 by unpaid workmen in a joint capacity is clearly maintainable. Unpaid applicant workmen, who have provided services to the corporate debtor, including those who are in employment clearly come within the purview of 'Operational creditor'. The respondent corporate debtor has specifically admitted the default in making payment of the dues to the applicant workmen. Besides the default/debt clearly exceeds the ceiling of ₹ 1 lakh, as provided in Section 4 of the Code. The corporate debtor has also not raised any dispute in respect of the claims of the applicant workmen. The present application preferred by the workmen operational creditors is complete and there has been clear admission of default by the respondent corporate debtor. The admission by respondent goes to show that the respondent corporate debtor committed default in payment of the dues of workmen even after demand made by the workmen operational creditors. Once the application is complete and in the absence of any resistance from corporate debtor, the application is liable to be admitted. Therefore, on fulfilment of the requirements of Section 9 (5) (i) (a) to (d) of the Code, the present application is admitted.
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2018 (5) TMI 1
Non-compliance with deposit of ₹ 200 crores - Refund claim by home buyers / allottees - Held that: - JAL shall deposit a further sum of ₹ 200 crores in two instalments, as agreed by the Managing Director who is present in Court today. The first instalment of ₹ 100 crores shall be deposited by 15th April 2018 and the second instalment of ₹ 100 crores shall be deposited by 10th May 2018 - Mr. Agrawal, learned amicus curiae shall keep the portal operational. However, the requests of only those persons on the portal who have sought refund, as of today will be considered at this stage No demand towards outstanding or future instalments shall be raised by the developer to the flat buyers who have, as of today, expressed the option to obtain refund. The demands raised by the developer in respect of the home buyers who have already opted for refund till today, shall remain stayed.
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Service Tax
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2018 (5) TMI 35
Penalty u/s 77 (1) (a) of the Finance Act 1994 - non-endorsement of Registration certificate incorporating GTA Service - Held that: - Even though the appellants’ are registered with the Dept. in providing taxable service viz., ‘construction service’ however, the registration certificate has not been endorsed with the GTA services - the applicant paid the entire amount of Service Tax with interest and the proceedings have been concluded under relevant provisions of Finance Act 1994 - penalty not warranted - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 34
Demand of service tax - Business Auxiliary Services - Scientific and Technical Consultancy Services - Online Database Access and Retrieval Service - Management Consultancy Service”. Demand under the head of "Business Auxiliary Services" had been raised in respect of amount paid to the distributors - Held that: - reliance placed in the case of Genom Biotech Pvt. Ltd. Vs. CCE, Nashik [2016 (3) TMI 139 - CESTAT MUMBAI], where it was held that Since the appellant has no requirement of 'advertising agency service' for manufacture and export of goods, the tax demanded in the impugned order is not on the consideration for a service received in India but a tax on the funds transferred in a cross-border transaction. Such a tax is not contemplated in Finance Act, 1994. Therefore, no Service tax can be demanded - no Service Tax can be demanded on the said service. Scientific and Technical Consultancy Services - it is argued that regulatory services obtained for getting service of their product registered/approved by authorities abroad cannot be classifiable under the head of “Scientific and Technical Consultancy Services” - Held that: - the regulatory services are not in the nature of “Scientific and Technical Consultancy Services” and therefore no Service Tax under the said head - reliance placed in the case of Administrative Staff College of India [2008 (8) TMI 194 - CESTAT, BANGALORE] - demand set aside. Online Database Access and Retrieval Service - It has been argued that the said service provider does not provide “online” services and there is no “online” service provider - Held that: - In absence of online database access, no Service Tax can be demanded under the head of “Online Database Access and Retrieval Service” - demand set aside. Management Consultancy Service - It has been argued that under “Management Consultancy Service” only activities in the nature of management of any organisation are covered - Held that: - It is seen that the service provided by technical assistance and consultancy in identifying avenue and product promotion. The said activity falls under the “Management Consultancy Service” - demand upheld. Revenue neutrality - Held that: - The data submitted by them, shows that part of the final product is exempted and therefore the situation is not fully revenue neutral. Penalty u/s 76 and 78 set aside by invoking section 80. Appeal allowed in part.
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2018 (5) TMI 33
Refund/rebate claim - service tax paid on input services used in the exported goods - rejection on the ground of limitation - N/N. 41/12-ST dated 29.06.2012 - Held that: - it is clear that the appellants have accepted the rejection of the cash refund/ rebate of the service tax paid on the input services used in the export of goods and took re-credit of the said amount in their books of accounts, hence the present appeals are infructuous - appeal dismissed.
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2018 (5) TMI 32
Liability of Interest and penalty - short paid amount paid on being pointed out - Held that: - On re-consideration of the records by the Audit, the differential service tax amount was required to be paid and which have been paid immediately after being pointed out by the audit - invoking Section 78 alleging suppression, misdeclaration etc, is unsustainable. Interest - Held that: - since the service tax during the relevant period has not been paid by the appellant, therefore, interest under the appropriate provision is attracted - liability of interest upheld. Appeal allowed in part.
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2018 (5) TMI 31
Refund claim of service tax reversed earlier - rejection on the ground of limitation - Held that: - the appellant had reversed the credit on 26.12.2013. However, within one after year from the date of reversal of credit, instead of taking re-credit in their books of accounts, they filed refund claim on 06.08.2014. In view of the definition of ‘relevant date’ contained in Section 11B of Central Excise Act, 1944, the date of reversal of credit be considered as the commencing point in computing the period of limitation under the said Provision - In the result, the refund claim of Cenvat credit filed on 05.08.2014 cannot be construed as beyond the limitation prescribed under Section 11B of Central Excise Act, 1944. To consider the eligibility of refund on merit, the matter is remanded to the adjudicating authority - appeal allowed by way of remand.
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2018 (5) TMI 30
CENVAT credit - ‘Outdoor Catering Service’ (Canteen Service) provided to the employees pursuant to the provisions of the Building and other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 - Held that: - the Division Bench of this Tribunal in the case of Reliance Industries Ltd [2016 (8) TMI 123 - CESTAT MUMBAI] considered admissibility of Cenvat Credit of ‘Outdoor Catering Service’, after amendment to the definition of input service with effect from 1.4.2011 and held that the credit is admissible if the ‘Outdoor Catering Service’ is not meant to be used for personal use. In the present case, the appellant has categorically submitted that the ‘Canteen Services’ has been provided to the employees in pursuance to the aforesaid Building and other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 and not for personal use. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 29
CENVAT credit of service tax paid by other unit - the appellant did not have centralised Registration nor permission from the Dept - whether the appellant Bhachau Steel unit is entitled to Cenvat Credit of Service Tax paid on GTA service by their Khambhalia unit? - Held that: - the issue is covered by the judgment of the Hon’ble Gujarat High Court in the case of CCE vs Daishon Ltd [2016 (2) TMI 183 - GUJARAT HIGH COURT], where it was held that when it was found that full records were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, in our opinion, rightly did not disentitle the assessee from the entire Cenvat credit availed for payment of duty - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 28
Refund claim of interest - Held that: - the appellants has not contested the Service Tax liability which has been discharged by them before the Govt. Authorities, though he might have been directed to pay the tax liability by the authorities. In absence of any contest to the tax liability, the question of seeking interest on the said the tax liability does not arises In the absence of any refund claims for the service tax liability and dispute thereof, the question of paying interest paid under Sec. 75 of the Finance Act, 1994 does not arise. Appeal dismissed - decided against appellant.
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2018 (5) TMI 27
Pre-deposit - Section 35F of Central Excise Act, 1944 - stay on realization of amount of pre-deposit as calculated by Revenue - Held that: - The stand of Revenue does not appear to be logical since total enforceable demand of tax is the basis for calculation of the percentage towards pre-deposit - application for stay of realization of balance demand is allowed - application allowed.
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2018 (5) TMI 26
Stay order of impugned order - jurisdiction of ld. Commissioner (Appeals) in rejection of VCES application - time limitation - Circular dated 8-8-2013 - Held that: - the ld. Commissioner (Appeals) has not exceeded jurisdiction conferred in law on him but decided the issue on the basis of internal circular issued by the Board to implement the provision of VCES, 2013 declared under the Finance Act, 2013 - Revenue’s stay application being devoid of merit is accordingly dismissed.
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Central Excise
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2018 (5) TMI 25
Refund of unutilized CENVAT credit - suspension of manufacturing operations - Whether on facts and in the circumstances of the case, the Tribunal is justified in allowing the appeal of respondent holding that the judgment of this Court in the case of Union of India vs. Slovak India Trading Co. Pvt. Ltd.[2006 (7) TMI 9 - KARNATAKA HIGH COURT], would apply to the facts and circumstances? - Held that: - the Division Bench of this Court in the said case held that in view of the fact that there was no manufacture in the light of the closure of the company, Rule-5 of the Cenvat Credit Rules would not be available for the purpose of rejecting the claim for refund - the Tribunal was justified in allowing the appeal of the respondent - appeal dismissed - decided against Revenue.
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2018 (5) TMI 24
CENVAT credit - sales commission paid to the commission Agents - denial on account of nexus - Held that: - the sales commission is directly attributable to sales of the products. Any activity which amounts to sale of the products is deemed to be sales promotion activity in the normal trade parlance. The commission is paid on sales of the products/services with an intention to boost the sale of the company. In view of the same, the sales commission has a direct nexus with the sales which in turn is related to the manufacture of the products. The commission paid on sales becomes part of sales promotion resulting in increased manufacturing activity - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 23
Clandestine removal - textile auxiliary chemicals - Though it was claimed that it was the Bhilwara unit which was engaged in the manufacture micro emulsion concentrate (MECT) that was sent to the appellant at Ahmedabad for dilution by adding water before supply in market, it was alleged by central excise authorities that it was the appellant who had engaged in manufacture of goods that were liable to duty. Held that: - The process of manufacture of textile auxiliary chemical requires addition of emulsifier which serves as an active agent with the base material and the resultant products are distinguishable from the input in name, quality, character and use. Consequently, the process carried out by the appellant is undoubtedly manufacture within the meaning of section 2(f) of Central Excise Act, 1944. The significance of computation of clearances based on the paper slips cannot be washed away. Mere assertion of non-dutiability is not a substitute for evidence. No submission was made during the course of hearing except inadequacy of evidence and absence of facility to carry out any activity other than blending with water. The appellant is, accordingly, liable to duties of excise on the product cleared by them which was admittedly not discharged - demand upheld. Appeal dismissed - decided against appellant.
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2018 (5) TMI 22
Liability of interest - inadmissible CENVAT credit - whether the appellant are required to pay interest of ₹ 3,51,442/-for availing inadmissible CENVAT credit during the period July 2011 to August 2015? - Held that: - applicability of interest on availment of credit not admissible is required to be paid prior to 17.03.2012 in view of the judgement of this Tribunal in Atul Ltd. & Ors. case [2017 (4) TMI 217 - CESTAT AHMEDABAD]. Post amendment to Rule 14 by virtue of N/N. 12/2012-CE (N.T) dated 17.03.2012, interest is required to be paid on inadmissible credit if availed and utilized - refund of interest on the credit reversed after 17.03.2012, is admissible to appellant. Matter remanded to compute the interest amount for the period after 17.03.2012
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2018 (5) TMI 21
CENVAT credit - Bank Processing Charges - Insurance Policy relating to group insurance taken for the factory staff - Held that: - the appellant has availed credit on the basis of the document of Bank of India dt.28.03.2013 wherein the value of services rendered and also the service tax paid by the Bank has been mentioned - credit allowed. Group Insurance Policy - Held that: - the issue is covered by the judgement of Hon’ble Karnataka High Court in Micro Labs Ltd’s case [2011 (6) TMI 115 - KARNATAKA HIGH COURT], where it was held that Group Insurance Health Policy taken of the assessee is a service which would constitute an activity relating to business which is specifically included in the input service definition - credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 20
CENVAT credit - repair and maintenance service at their factory premises after 1.4.2011 - Held that: - Tribunal has already held that service tax paid on construction service used in the repair and maintenance work is admissible to credit even after 1.4.2011 in the case of M/s Ion Exchange (I) Ltd. vs. C.C.E., Surat II [2017 (12) TMI 151 - CESTAT AHMEDABAD] - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 19
Whether the extended period of limitation could be applicable for recovery of the cenvat credit of ₹ 5,16,913/- for availing inadmissible credit on Education Cess and Secondary & Higher Education Cess during the period October 2012 to July 2013? Held that: - even though the entire credit was reversed by them on 31.08.2013, the demand notice was issued on 22.12.2016 involving extended period - the demand is issued invoking extended period of limitation, therefore, the same cannot be sustainable - appeal allowed on limitation.
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2018 (5) TMI 18
Reversal of CENVAT credit - inputs which were cleared without reversal of the Cenvat Credit - penalties - case of appellant is that they had produced documents/records before the lower authorities evidencing that Cenvat Credit was not availed on trading goods and the said plea was not verified despite specific request - Held that: - All the claims of the appellant has been very cursorily brushed aside by the Adjudicating Authority in Para No 23.2. and 23.3. The First Appellate Authority has also not considered the grounds of appeal raised before him - the appellants have been claiming before the lower authorities that Annexures 1 to 7 to the SCN have not been properly given to them and they need access to the original Annexures to the SCN to rework out the factual position / consequential the plea of the appellants for various other claims of as to the duty liability was incorrectly worked out also needs to be considered. The Adjudicating Authority should reconsider the issue afresh after following the principles of natural justice and also on the law settled on the point of examination / cross examination by various judgements - appeal allowed by way of remand.
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2018 (5) TMI 17
CENVAT credit - GTA Services - transportation of finished goods from job workers premises to the depot of principal manufacturer - Held that: - Division Bench of this Tribunal in the case of M/s Kohinoor Biscuits Products [2015 (6) TMI 126 - CESTAT NEW DELHI] were considering identical issue of the same principal manufacturer and the job worker and held that the credit cannot be availed of the Service Tax paid on GTA services - credit cannot be allowed - appeal dismissed - decided against appellant.
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2018 (5) TMI 16
CENVAT credit - input services - landscaping services - catering services - event management services - Held that: - Relying upon the judgement of the Tribunal in the case of Castrol India Ltd [2013 (9) TMI 709 - CESTAT AHMEDABAD] where it was held that credit of service tax paid on event management services can be availed - credit allowed. Landscaping services - Held that: - it is seen that there is a specific clause for maintaining green belt in the form of well developed gardens in 50 acres around the Plant. If such a mandatory requirement needs to be fulfilled, the appellant was correct in arguing that expert help was obtained to do the work, on which service tax liability is discharged - credit allowed. Out-door catering services - Held that: - the CENVAT credit availed on such invoices which were issued prior to 01.04.2011 for the services availed prior to 01.04.2011 cannot be denied to the appellant - the services of out-door catering were availed and received by the appellant prior to 01.04.2011, hence, they are eligible for the availment of CENVAT credit of such service tax paid - credit allowed. Appeal allowed - decided in favor of appellant.
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2018 (5) TMI 15
Reclassification of goods - perfumes containing spirit - Held that: - this is a fit case where the matter has to be remanded to the 2nd respondent for fresh consideration since not only in the case of the assessee’s sister concern, their claim has been accepted, but in the assessee’s own case for the subsequent clearances, the stand taken by the assessee has been accepted - petitionallowed by way of remand.
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2018 (5) TMI 14
CENVAT credit - clearance of capital goods - it is claim of appellant that they claimed depreciation at the time of procurement and not CENVAT credit - Held that: - the Appellant had produced evidences duly certified by the statutory auditors indicating that at the time of procurement of capital goods, no cenvat credit was availed - In the absence of availing of Cenvat credit on the said D G Sets, provisions of Rules 3(5A) and 8(b) of Cenvat Credit Rules, 2004 are not attracted - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 13
Clandestine removal - case of assessee is that the manufacture of the said goods have been recorded in the Daily Stock Account (DSA) and transfer of same at M/s Goldcoin Plyplast, is due to shortage of space - Confiscation - penalty - Held that: - It is not in dispute that the appellant vide their letter dt 21.1.2014 has informed the jurisdictional Range of Superintendent, Central Excise, about their intention to store the said 1365 boxes of food containers at the premises of their sister concern at M/s Goldcoin Polyplast. There was no response to the said intimation letter by the Dept. denying the permission/storage of the said finished goods in the premises of M/s Goldscoin Polyplast. Confiscation and penalty not warranted - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 12
CENVAT credit - CVD amount paid against Bill of Entry addressed to Vapi unit - Held that: - non-filing of intimation to the Range Superintendent, on the movement of said goods, would not disentitled them in availing credit on the Bill of Entry, when the entire consignment after processing at their Vapi unit has been sent to the Padra unit for further use - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 11
CENVAT credit - various input services - Air/Rail Travel Agency Service - Banking and Financial Services - Broad Band and Internet Service - Commercial and Industrial Construction Service - Training and Coaching Service - General Insurance Service - Hotel Accommodation Service - Management, Maintenance and Repair service - Security Agency Service - Held that: - the aforementioned services are held to be input service within the meaning and scope of definition of ‘Input Service’ under Rule 2 (l) of CCR, 2004 as held in various judgements - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 10
Area Based Exemption - N/N. 50/2003-C.E., dated 10-6-2003 - Department opined that the declaration was supposed to be submitted at the time of installation of the factory to claim area based exemption. The same was not produced by the appellant - Held that: - Since 2005, the appellant is filing regular return to claim area based exemption as per N/N. 50/2003. The Department never raised any objection and allowed the claim. But suddenly, in the year 2012, the department demanded the documents which was supposed to be given at the time of installation of the factory - If the department has continuously allowed the area based exemption presumably the said formalities were completed. For its own fault, the Department cannot take the advantage. After a gap of so many years, the certificate cannot be demanded by the Department when the department has continuously allowed the area based exemption year to year basis - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 9
Refund of excess duty paid - rejection on the ground of unjust enrichment - Held that: - affidavit issued by the buyer of the goods indicates that they have not paid the excess duty claimed by the appellant in its invoice - the Chartered Accountant has also issued the certificate, certifying that the incidence of duty has not been passed on by the appellant to any other person and the incidence of such amount has been borne by it - the doctrine of unjust enrichment is not applicable - refund allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 8
Manufacture - production and sale of packaged drinking water - Held that: - The natural water is treated with chemicals in different stages and finally water is packed in different size of jars from 200 ml to 20 litres affixed with brand name and then are cleared for market - The process undertaken by the appellant to make the product fit for market to the consumers is squarely covered by the said Chapter Note and the process is deemed to be manufacture for the purpose of levy. Penalty - Held that: - a penalty of ₹ 1,00,000/- (Rupees one lakh only) will meet the ends of justice. Appeal dismissed - decided against appellant.
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2018 (5) TMI 7
Undervaluation - plywood - veneer - block board - short payment of duty - Held that: - it was recorded that to have an enquiry for undervaluation the basic premise that the impugned goods were sold with a price much lesser than similar goods in the market should be established. Without such comparison, the charge of undervaluation cannot be forcefully made - There is no corroboration or even a comparative study to support such allegation even in respect of raw materials. Appeal dismissed - decided against Revenue.
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2018 (5) TMI 6
Classification of goods - Kimam - w.e.f. 1-4-2006 the goods manufactured by the appellant were also notified for assessment on MRP basis under Section 4A. The dispute is with reference to classification w.e.f. 1-4-2006 - Department was of the view that the goods are liable to be classified as ‘preparation containing chewing tobacco under 2403 99 20 - whether the impugned product is classifiable under heading 2403 99 20 as claimed by the department or under 2403 99 60 as claimed by the appellants? Held that: - it can be nobody’s case that if the impugned goods were covered under the expression “preparation containing chewing tobacco” at the time when the Supreme Court said they did, they would not be excludible from the said expression merely because of the passage of time. It is seen that under the eight digit tariff regime, “preparations containing chewing tobacco” are covered under tariff sub-heading 2403 99 20 - the impugned goods are thus classifiable under sub-heading 2403 99 20. Once the impugned goods are held classifiable under sub-heading 2403 99 20, their assessment admittedly has to be in terms of Section 4A ibid and therefore, prima facie, the impugned demand is sustainable on merit. Extended period of limitation - Held that: - since there is nothing on record to substantiate the fact that appellant had suppressed any fact from the Department, the demands will need to be restricted to normal time limit. Penalty - Held that: - There is no justification to impose any penalty, this being a classification dispute. Appeal allowed in part.
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CST, VAT & Sales Tax
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2018 (5) TMI 5
Rate of tax - inter-state sales - exemption of CST on inter state sales - absence of ‘C/D’ declaration forms - Held that: - the Tribunal does not appear to have applied its mind to the distinction between the rate of tax applicable on the inter-state sales made by the Assessee in the absence of furnishing of declaration in C/D forms and the availment of the incentive under the Incentive Scheme announced by the State Government. The incentive available to the Assessee on the basis of eligible investment made by it is different from the rate of tax chargeable in the absence of prescribed declaration forms - The claim of the Assessee-petitioner of the higher tax liability on account of increased rate of tax admitted by them in the absence of declaration forms, deserves to be independently considered by the authorities under the Act including the learned Tribunal under the provisions of the Incentive Scheme for which the Assessee-petitioner held a proper Eligibility Certificate during the relevant Assessment period. Revision petition allowed by way of remand.
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2018 (5) TMI 4
Majority order of the Tribunal - whether the impugned order passed by only four members of the Tribunal is without authority of law? - Held that: - As per Section 57, the Tribunal is to be constituted of three or more odd number of members including the Chairman - When a matter is heard by a Bench of a Court or a Tribunal, the members of the Bench discharge their functions as a composite body functioning together. In the present case, at the time of pronouncement, one of the members ceases to be a member of the Tribunal, the opportunity to do so also ceases. It is axiomatic that if at the time of pronouncement all the members of the Bench are not available, on account of any of them having demitted office, the Bench as constituted and the Bench that heard the matter does not exist and cannot, therefore, pronounce the judgment. The decision may be unanimous or a split decision that will not mean that apart from the majority members other members may not even decide the matter. Appeal allowed.
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2018 (5) TMI 3
Remand of assessment proceedings - allowance of Trade Discount - Held that: - no question of law arises for our consideration out of the order of the said learned Tribunal dated 31.01.2017 and learned Tribunal was justified in remanding the case back to the assessee authority for proper leading of the evidence and proving of the fact of giving the Trade Discount by the assessee during the relevant period, so as to claim the same as a deduction from the taxable turnover - petition dismissed.
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Wealth tax
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2018 (5) TMI 2
Determining the market value of the property under wealth Tax - whether only actual rent received should be taken without including the charges collected separately towards service and maintenance? - whether amenities do not form part of the rent for the purpose of valuing the property under Wealth Tax Act? - Held that:- On a perusal of the materials placed before this Court, we are prima facie satisfied that both the Appellate Authority as well as the ITAT have gone by the orders in the assessee's own case for the earlier AY 1984-1985 and 1985-86, where, the present re-framed substantial questions of law were not the issue in those years. For such reasons, we are convinced that the matter should be remanded to the CWT (A) for fresh consideration on merits and in accordance with law. Tax Case Appeal is allowed, the impugned order is set aside, and the matter is remanded to the CWT (A) for fresh consideration to decide the following two issues along with the facts and circumstances of the case after notice to the assessee:- i) Whether for the purpose of determining the market value of the property under wealth Tax only actual rent received should be taken without including the charges collected separately towards service and maintenance? ii) Whether amenities do not form part of the rent for the purpose of valuing the property under Wealth Tax Act?
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