TMI Tax Updates - e-Newsletter
June 22, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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GST:
GST - CBIC modifies the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances, as clarified in GST Circular dated 13.04.2018
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Income Tax:
When the genuineness of the transaction has not been doubted by the lower authorities as also the importance of urgency of raising cash loan, the penalty u/s 271D & 271E ought not to have been levied
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Income Tax:
If the brought forward losses and unabsorbed depreciation are directly relatable to the Transferred Company, the same has to be carried forward in the hands of the Resultant Company as per section 72A(4)(a).
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Income Tax:
Addition u/s.68 - gift - When however, large amounts are stated to have been gifted, that too by a person having no blood relation with the assessee, the question of genuineness of the gifts would require closer scrutiny - Tribunal has made superficial observations and mechanically accepted the genuineness of the gifts.
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Income Tax:
Penalty proceedings u/s 271(1)(c) - The assessee herein is a technical person and may not necessarily know the complicated tax laws - assessee acting on legal advice, readily came forward and offered the capital gains without resorting to litigation - onus of bonafide is broadly discharged - No penalty.
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Income Tax:
Approval u/s. 80G(5) - entitlement to benefit of exemption u/s. 11 - fulfillment of terms of section 80G(5C)(iv) by depositing 1 crore of rupees in Prime Minister's National Relief Fund - assessee having made the credit entry in favour of educational institution had not retained any control over the monies and thus funds were made available to the institution by the Trust. Assessee could claim benefit of exemption u/s. 11 of the Act.
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Income Tax:
Loss on sale of debentures - assessee has sold a capital asset which has resulted in a capital loss thus as per the provisions of section 71 the loss suffered on the sale of capital asset has to be set off against the income chargeable to tax under other heads of income.
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Income Tax:
Claim for Depreciation on crimping of yarn - manufacturing activity - activity of texturizing and twisting of yarn amounts to manufacturing or article or thing distinct from the original
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Income Tax:
Levy of penalty u/s 271(1)(c) - failure to take stamp duty value of property u/s 50C being land and building for sale - From a clear distinction between sale consideration actually received and deemed to have been received in terms of subsection [1] of Section 50C application of subsection [1] of Section 50C therefore cannot automatically give rise to penalty proceedings.
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Income Tax:
Penalty u/s 271(1)(C) - Disallowance of interest expenditure and letter of credit charges - difference of opinion between the AO as well as the assessee that the money that been utilized for the purpose of acquisition of the assets have been capitalized till the assets have been put to use - it cannot be said that assessee has furnished inaccurate particulars of its income
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Income Tax:
Validity of assessment order - non-existent entity (Liquidated company) - There is no information, whether the assessee complied with various provisions of the Act related to responsibility of company in- liquidation or discontinuity of business. - the assessment order should not be nullified.
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Income Tax:
Set off of loss - speculation loss or not - loss (on account of sale of derivatives) would be allowed to be set off against income arising out of proper business because derivatives were treated differently within meaning of Explanation to section 73(4) and not at par with the shares
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Income Tax:
Revision u/s 263 - Provisions u/s 263 of the Act becomes redundant, if it is not invoked in such type of cases like the present one where the assessee pleads before the Pr. CIT that there were certain inadvertent clerical error of purchase and sale including quantitative details.
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Customs:
Import of tobacco products - health warnings - Cigarettes and other Tobacco products (Packaging and Labelling), Second Amendment Rules, 2018-reg.
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Customs:
Effective rates of customs duty and IGST for goods imported into India. - Notification as amended from time to time.
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Customs:
Suspension of CHA License - The role disclaimed by the appellant for questioning the suspension, if ruled upon at this stage, would render redundant the process under regulation 20 of Customs Brokers Licensing Regulations, 2013.
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DGFT:
Conditions of Issuance of DFIA for each port removed - Now exporters can file single DFIA application for exports made from any EDI port - However, separate applications for export made from each non-EDI port is to be filed.
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DGFT:
Export to Maldives during 2018-19 - Potatoes, Onions, Rice, Wheat Flour, Sugar, Dal and Eggs - Export of the above items shall be exempted from any existing or future restriction/ prohibition during the period 2018-19 to the Republic of Maldives
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Corporate Law:
The Effects of Changes in Foreign Exchange Rates - Disposal of a Non-integral Foreign Operation - AS-11 of the Companies (Accounting Standard) Rules, 2006 as amended.
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Corporate Law:
Mandatory requirement of conducting business through postal ballot - Sub-Rule (16) of Rule 22 of the Companies (Management and Administration) Rules, 2014 as amended.
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Corporate Law:
Notice of the meeting - Explanation with regard to holding of EGM omitted - Rule 18 of the Companies (Management and Administration) Rules, 2014
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Corporate Law:
Preservation of register of members etc. and annual return - Requirement of advance filing of special resolution omitted - See Rule 15 of the Companies (Management and Administration) Rules, 2014 as amended.
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Corporate Law:
Return of changes in shareholding position of promoters and top ten shareholders - Omission of Rule 13 of the Companies (Management and Administration) Rules, 2014 w.e.f. 13.6.2018
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Corporate Law:
"Significant beneficial owner" means an individual holding ultimate beneficial interest of not less than ten per cent., but whose name is not entered in the register of members of a company as the holder of such shares - See Rule 2 for Detailed definition with explanations.
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Corporate Law:
New Rules - Companies (Significant Beneficial Owners) Rules, 2018 came into force w.e.f. 13.6.2018
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Corporate Law:
Committee to advise on valuation matters - Presidents of the ICAI, ICSI, ICAI (cost accountant) included as ex-officio members - Rule 19 of the Companies (Registered Valuers and Valuation) Rules, 2017 as amended
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Corporate Law:
Investigation of ownership of company - New Clause - determination that, who have or had beneficial interest in shares of a company or who are or have been beneficial owners or significant beneficial owner of a company. - Amendments to Section 215 of the Companies Act, 2013 came into force w.e.f. 13.6.2018
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Corporate Law:
Annual general meeting - AGM of an unlisted company may be held at any place in India, subject to consent of all the members - Amendments to Section 96 of the Companies Act, 2013 came into force w.e.f. 13.6.2018
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Corporate Law:
Place of keeping and inspection of registers, returns, etc. - Amendments to Section 94 of the Companies Act, 2013 came into force w.e.f. 13.6.2018
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Corporate Law:
Register of significant beneficial owners in a company - Section 90 of the Companies Act, 2013, as substituted, came into force w.e.f. 13.6.2018
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Service Tax:
GTA Service - The document issued by District Supply Officer conveying the goods transported cannot be construed as a consignment note to render the Appellant to be a ‘goods transport agency.’
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Service Tax:
Rejection of Voluntary Compliance Entitlement Scheme (VCES) Declaration - first there is no service of any inquiry letter to the appellants, secondly the information sought for by the department is of roving nature, the VCES declaration filed by the appellant is acceptable.
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Service Tax:
The appellant has discharged his duty liability belatedly; consequently the appellant is required to pay interest for the said delay. The provision of section 75 of Finance Act, 1994 are unambiguous that the assessee is obliged to remit interest on delayed payment of tax.
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Service Tax:
Classification of Services - Site formation and clearing services or mining services? - Water sprinkling is an activity that is required to prevent the dispersal of dust not just at the mines but in the surrounding area. - demand set aside.
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Service Tax:
Refund claim - Rule 5 of Cenvat Credit Rules, 2004 - works contract service were not used for construction or execution of works contract of building or civil structure or for laying foundation or making structure for support of capital goods but it is used in maintenance related work which is clear from the invoice therefore works contract service is also not excluded in the present case - refund allowed.
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Service Tax:
Business Auxiliary Services - implementation of Wide Area Network (WAN) - the procurement of service for ETTSA cannot be brought within the levy of service tax under BAS - the levy of service tax on the activity of setting up of WAN, which has been outsourced to HSCL is not justifiable
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Central Excise:
Penalty - duty paid before issuance of SCN - Mere depositing the amount does not amount to payment of duty. Payment of duty would arise when the liability is accepted. This would have an important element of avoiding litigation.
Articles
Notifications
Customs-
49/2018 - dated
20-6-2018
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Cus
Seeks to further amend notification No. 50/2017-customs dated 30th June 2017, to prescribe effective rate of duty on specified goods
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48/2018 - dated
20-6-2018
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Cus
Seeks to increase the tariff rate on goods in chapters 7, 8, 28, 38, 72 and 73 in the First Schedule to the Customs tariff Act, 1975
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55/2018 - dated
21-6-2018
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Cus (NT)
Exchange Rates Notification No.55/2018-Custom(NT) dated 21.06.2018
DGFT-
13/2015-2020 - dated
20-6-2018
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FTP
Amendment in Foreign Trade Policy 2015-20
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12/2015-2020 - dated
20-6-2018
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FTP
Supply of essential commodities to the Republic of Maldives during 2018-19
GST - States-
G.O.Ms.No. 292 - dated
6-6-2018
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Andhra Pradesh SGST
Levy & collection of tax - reverse charge on certain specified supplies of goods.
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G.O.Ms.No. 290 - dated
5-6-2018
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Andhra Pradesh SGST
Waiver Of Late Fee For Failure To Furnish Return In Form Gstr-3b
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008/2018-GST - dated
19-5-2018
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Assam SGST
Amendment in notification of Government of Assam issued by Commissioner of State Tax. Assam vide No.CT/GST-14/2017/97 dated the 26th March, 2018
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S.O. 186 - dated
13-6-2018
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Bihar SGST
Bihar Goods and Services Tax (Fifth Amendment) Rules, 2018.
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S.O. 185 - dated
13-6-2018
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Bihar SGST
Notified Goods To Be Disposed Of By Proper Officer After Its Seizure.
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S.O. 184 - dated
28-5-2018
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Bihar SGST
Notified Authority For Conducting Examination Of Gst Practitioners.
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11/2018-State Tax (Rate) [S.O. 184] - dated
28-5-2018
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Bihar SGST
Levy And Collection Of Tax - Amendment In Notification No.4/2017-State Tax (Rate), Dated 29th June, 2017
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F 10-31/2018/CT/V (46) - dated
19-6-2018
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Chhattisgarh SGST
Notifies that:- No e-way bill shall be required to be generated for intrastate movement of goods in the State of Chhattisgarh.
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27/2018-STATE TAX - dated
13-6-2018
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Gujarat SGST
Notified Goods To Be Disposed Of By Proper Officer After Its Seizure
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26/2018-STATE TAX - dated
13-6-2018
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Gujarat SGST
Gujarat Goods and Services Tax (Fifth Amendment) Rules, 2018.
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58/GST-2 - dated
15-6-2018
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Haryana SGST
Notified to specify goods which may be disposed off by the proper officer after its seizure under section 67(8) of HGST Act,2017
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12-4/78-EXN-TAX-17408 - dated
31-5-2018
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Himachal Pradesh SGST
E-Way Bill Applicable From June 1, 2018 For Intra-State Movement Of Goods Within The State Of Himachal Pradesh - Rescission
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NO.KA.NI.2-806/XI-9(42)/17 - dated
15-5-2018
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Uttar Pradesh SGST
Notification Regarding UTTAR PRADESH GST (SIXTEENTH AMENDMENT) RULES, 2018
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NO.KA.NI.-2-666/XI-9(42)/17 - dated
19-4-2018
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Uttar Pradesh SGST
Waiver Of Late Fee Payable By Any Registered Person For Failure To Furnish Return In Form Gstr-5a By Due Date.
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NO.KA.NI.-2-540/XI-9(42)/17 - dated
5-4-2018
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Uttar Pradesh SGST
Notification Uttar Pradesh Gst (Fifteenth Amendment) Rules, 2018.
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NO.KA.NI.-2-518/XI-9(47)/17 - dated
3-4-2018
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Uttar Pradesh SGST
Exemption To Intra-State Supplies Of Goods Or Services Or Both Received By A Registered Person From An Unregistered Person.
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27/2018-State Tax - dated
13-6-2018
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West Bengal SGST
Notifying perishable or hazardous goods that may be disposed of after seizure under section 67(8) of the WBGST Act, 2017
VAT - Delhi-
F. No. /Zone-VI/W-72/2018-19/85-89 - dated
18-6-2018
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DVAT
Notified for general information that Declaration Forms “C” are declared to be obsolete and invalid for all purposes with effect from the date of issue of declaration Forms “C”
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2018 (6) TMI 1059
Seizure Order - penalty - It is submitted that vide order dated 24.4.2018 the writ petition was allowed and the seizure order dated 16.4.2018 passed under Section 129(1) of the Act and the consequential penalty notice dated 16.4.2018 issued under Section 129(3) of the Act were quashed and thus there was no justification to impose condition of furnishing of the indemnity bond to the extent of proposed tax and penalty for release of the goods and vehicle, which was seized. Held that:- It appears that the said part of the order has been incorporated inadvertently. Accordingly, the necessary correction is carried out by deleting the words "upon furnishing of the Indemnity Bond to the extent of proposed tax and penalty" - Correction application allowed.
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Income Tax
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2018 (6) TMI 1058
Additions made u/s 68 - assessee has not been able to prove source along with genuineness and creditworthiness of the stated entity - Held that:- Assessee has filed all relevant details along with assessment records of the said entity explaining source of the loans to the above entity’s balance sheet indicating sufficient reserves, surplus and share premium as followed by repayment in succeeding assessment year. Learned Departmental Representative fails to rebut CIT (A)’s conclusion that the assessee has been having regular loan transactions with the said entity - reliance is placed on DEPUTY COMMISSIONER OF INCOME-TAX VERSUS ROHINI BUILDERS. [2001 (3) TMI 9 - GUJARAT HIGH COURT] upholding tribunal’s conclusion deleting Section 68 addition - hence the addition is deleted - Decided in favor of assessee. Claim for Depreciation on crimping of yarn - manufacturing activity - Held that:- As in the case of COMMISSIONER OF INCOME-TAX VERSUS EMPTEE POLY-YARN P. LTD. [2008 (2) TMI 313 - BOMBAY HIGH COURT] examined this very question and came to the conclusion that the activity of texturizing and twisting of yarn amounts to manufacturing or article or thing distinct from the original - because in impugned process original commodity loses its identify - thus such activity is held to be manufacturing activity - Decided in favor of assessee.
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2018 (6) TMI 1057
Disallowance of loss on sale of debentures - guinity of claim - set off of loss - Held that:- Court delivered its judgement in case of Deepak Nitrite Ltd. vs. CIT [2008 (5) TMI 233 - GUJARAT HIGH COURT] in the cross references filed by the assessee and the department against the Tribunal's judgement where court said that it is open to Tribunal to decide the ground of appeal raised by the Revenue and determine, whether the loss in question was a genuine transaction or not - thus pursuant to such decision Tribunal passed a fresh order holding that the commercial rationale of the transaction, when viewed in totality, cannot be adjudged to be unjustified. The transactions are real and true and do not violate any provisions of law. They cannot be said to be artificial, counterfeit, feigned or a contrivance - since assessee has sold a capital asset which has resulted in a capital loss of ₹ 24,43,750/ - thus as per the provisions of section 71 the loss suffered on the sale of capital asset has to be set off against the income chargeable to tax under other heads of income. There cannot be any escape from giving this effect to the transactions entered into by the assessee - thus the loss is allowed - Decided against the revenue.
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2018 (6) TMI 1056
Validity of reassessment proceedings u/s 148 - addition u/s.68 being the disallowance of claim of gift - Assessment of undisclosed income as a result of search - Held that:- In the present case, some of the gifts were held to be genuine. Allowing the Assessing Officer to examine the same issue in the regular assessment and as in the present case, leaving the possibility of coming to conclusion that the gifts were not genuine, would give rise to two conflicting opinions of the authority of the same rank, and as in the present case, at times by the same officer. This is not a classical case where an assessment previously framed without scrutiny is sought to be reopened, nor it is the case where original assessment was after scrutiny, in which, the Assessing Officer had examined certain issues, expressed his opinion which is the subject matter of reopening bringing the principle of change of opinion. There is yet another supplementary reason why the Revenue, in any case, cannot succeed. If the Revenue's proposition is that the assessee had received on-money through sale of land, which was introduced in the assessees' accounts through non-genuine gifts, the Revenue having attempted to tax the onmoney receipts, could not have taxed the gifts again with the aid of section 68 of the Act. In the present case, we are prepared to proceed on the basis that the assessee had established the identity of the donor and his or her creditworthiness. When however, large amounts are stated to have been gifted, that too by a person having no blood relation with the assessee, the question of genuineness of the gifts would require closer scrutiny. If the assessee does not point out any special occasion for a lavish gift being received from such a source, the burden to establish the genuineness of the gift cannot be lightly taken to have been discharged - the nature of gift and its genuineness would call for case wise scrutiny and the answer would depend on range of facts and attendant circumstances. No single formula of rigid application can be laid down. We are compelled to make these observations because in rather peculiar and somewhat perplexing set of facts, in our opinion, the Tribunal has made superficial observations and mechanically accepted the genuineness of the gifts. It was not open for the Assessing Officer to examine the question of genuineness of the gifts in regular assessment for which he has resorted to reopening of assessments - We express no conclusive opinion on the question of genuineness of the gifts perse.
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2018 (6) TMI 1055
Levy of penalty u/s 271(1)(c) - failure to take stamp duty value of property u/s 50C being land and building for sale - assessee ought to have offered capital gain tax on the basis of valuation adopted by the Stamp Valuation authorities - Held that:- As is well settled, capital gain can be levied on actual sale consideration and not on fair market value. Subsection [1] of Section 50C of the Act makes a deviation in this principle and introduces a concept of deemed consideration for the purpose of Section 48 of the Act. There is thus a clear distinction between sale consideration actually received and deemed to have been received in terms of subsection [1] of Section 50C of the Act. Application of subsection [1] of Section 50C therefore cannot automatically give rise to penalty proceedings. In the present case, the assessee had in fact at one stage disputed such valuation by pointing out inter alia that the property was facing certain restrictions from the forest department, and that therefore, the valuation prescribed by the stamp valuation authority could not be automatically adopted. In the facts of the case, we do not find any reason to interfere with judgment of the Tribunal. This is so since the assessee had, as noted above, initially disputed the stamp valuation. However, once the assessee gave up the challenge, revised the return and offered additional deemed income to tax. The judgment of Orissa High Court in the case of Commissioner of Incometax, Orissa v. Ganpatrai Gajanand [1976 (7) TMI 33 - ORISSA HIGH COURT] was rendered in the background of Section 68 of the Act which contains vastly different provisions; as compared to Section 50C of the Act.- Decided in favour of assessee.
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2018 (6) TMI 1054
Approval u/s. 80G(5) - entitlement to benefit of exemption u/s. 11 - Whether the assessee Trust had fulfilled the terms of section 80G(5C)(iv) by depositing 1 crore of rupees in Prime Minister's National Relief Fund on 31.12.2004 - whether the amount was not applied for the earthquake relief - Held that:- The principal requirement of section 80G(5C) is the donations made to the Trust are applied for providing relief to the earthquake victims of Gujarat before 31.03.2004. The legislature has advisedly used the expression “applied” and “not actually spent” - relying upon the judgement in case of commissioner of Income Tax vs. Thanti Trust [1996 (3) TMI 10 - SUPREME COURT] Supreme Court approved the judgement of the High Court in which it was held that the assessee having made the credit entry in favour of educational institution had not retained any control over the monies and thus funds were made available to the institution by the Trust. The Supreme Court therefore held that the assessee could claim benefit of exemption u/s. 11 of the Act. The record would suggest that the assessee having committed to spend total of ₹ 3.19 crores for construction of the school buildings ended up paying ₹ 1 crore short to the contractor for the reasons which are neither clear nor very important for us. Had the assessee retained such amount, a serious question of its taxability would have arisen. However, the assessee almost, as soon as it becomes clear that the amount is not to be actually paid, transferred the same to the Prime Minister's National Relief Fund - this was done on 31.12.204 as against the prescribed deadline of 31.03.2004 contained in section 80G(5C) - It was not possible for the assessee to foresee and transfer any part of such amount in the Prime Minister's National Relief Fund. In such a situation, the deadline on 31.03.2004 contained in section 80G(5C)(iv) must be held to be directory and not mandatory. Hence Tribunal committed an error in holding that sum of ₹ 1 crore was not applied for earthquake relief before 31.03.2004 and in view of the fact that such sum remained unspent after 31.03.2004 was also transferred by the assessee to the Prime Minister's National Relief Fund though after 31.03.2004, the adverse consequence of section 12(3) would not apply - Decided in favor of assessee.
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2018 (6) TMI 1053
Carry-forward losses or unabsorbed depreciation of the Demerged Company to resultant company - Whether the brought forward losses & unabsorbed depreciation can be related to transferred undertaking due to demerger in absence of separate accounts u/s 72A(4)(b) - AO rejected the claim on the ground that the assessee had not maintained separate accounts - Tribunal remanded the issue back to the Assessing Officer - Held that:- Tribunal is correct in commenting that if the brought forward losses and unabsorbed depreciation are directly relatable to the Transferred Company, the same has to be carried forward in the hands of the Resultant Company as per section 72A(4)(a) - Tribunal noted that the statutory provision do not command that in order to avail the benefit of clause (a), separate books of accounts must be maintained. The Tribunal therefore required the AO to examine the explanation of the assessee on merits - Tribunal has not given any such declaration that in case of the assessee, the brought forward losses and unabsorbed depreciation are directly relatable to the Transferred Company, but has merely required the AO to examine such a question in light of the evidence on record - we see no error in the view of the Tribunal - appeal is dismissed.
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2018 (6) TMI 1052
Revision u/s 263 - Whether the order of AO is erroneous nor prejudicial to the interest of the revenue? - Held that:- The scope of the Commissioner's power of revision u/s 263 would be applicable, when the AO conducts no inquiry or improper inquiries or does not apply his mind to the legal issues arising out of the material on record - and if the AO has conducted proper inquiries and come to legal conclusions which are plausible, the Commissioner would not be justified in invoking revisional jurisdiction directing further inquiries or taking a different view AO had examined two issues - with respect to introduction of the capital, the assessee had pointed out that he was an NRI for over two years and he had made foreign remittances over a period of time. With respect to the unsecured loan of ₹ 3.87 crores received from his brother also, the assessee had provided necessary details which were called upon by the AO - thus for the inquiries carried out by the AO and the detailed answers given by the assessee - hence AO have carried out such detailed inquiries - thus it was not open for the Commissioner to thereafter reopen the issues on mere apprehension and surmises - Without any material without any basis, the CIT could not have remanded the proceedings to the AO to carry out further inquiries in order to ascertain whether the remittances were genuine or were in the nature of hawala transactions - His principle thrust was to the effect that assessee did not produce the precise bank details of the foreign remittances even before him. There is nothing on the record to suggest that he called upon the assessee to do so and the assessee failed or refused to do so - thus we find no error in the view of the Tribunal reversing view of the Commissioner - Decided in favor of assessee.
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2018 (6) TMI 1051
Addition made on account of bogus purchases - GP determination - books of accounts have not been rejected - Held that:- assessee had shown gross profit of 17.74% on the goods so purchased. The gross profit shown in respect of such alleged bogus purchases vis-ŕ-vis other purchases were same. Thus when the assessee himself has declared GP of 17.74% and the GP declined in respect of alleged bogus purchases was not lower than the normal GP, there is no justification for making further addition of 12.5%. However, keeping in view the totality of facts and circumstances of the case vis-ŕ-vis observation of the AO we direct the AO to restrict the addition to the extent of 2% of such alleged bogus purchases.
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2018 (6) TMI 1050
Penalty proceedings u/s 271(1)(c) - income by way of short term capital gain not included in the return of income but offered for taxation in the course of scrutiny proceedings - departure with the satisfaction formed in the assessment proceedings - Held that:- The assessee herein is a technical person and may not necessarily know the complicated tax laws. A perusal of land sale agreement suggests that the land was in the nature of agricultural land the gain on sale of which, under the popular belief, is not taxable. On objective consideration, it was found that such agricultural land was also required to undergo agricultural operations, which was missing in the present case. In these circumstances, the assessee acting on legal advice, readily came forward and offered the capital gains without resorting to litigation. On weighing the circumstances, we are of the view that the onus of bonafide therefore, in our view, is broadly discharged. The ‘satisfaction’ in the course of the assessment was formed for alleged ‘furnishing of inaccurate particulars of income’. The penalty notice does not specify the nature of default and thus suffers from vice of ambiguity. The AO, however, in departure with the satisfaction formed in the assessment proceedings, went on to impose penalty on a different ground i.e. concealment of particulars of income. Ostensibly, the original basis of initiation of penalty has been altered in a significant way - no penalty imposed - Decided in favour of assessee.
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2018 (6) TMI 1049
Addition relating to waiver of loan - Held that:- It is the case of the assessee that it has presumed that the loan has been waived by UTI Bank, whereas the reply given by the UTI Bank to the AO during the course of remand proceeding revealed that the loan has not been waived. Hence, the assessee has reinstated the loan in the books of account during the financial year relevant to A.Y. 2016-17. Since the basic facts relating to the issue have undergone a change, we are of the view that this issue requires to be set aside to the file of the AO for examining it afresh. Disallowance of depreciation - Held that:- Since the AO had computed short term capital gain under Section 50 of the Act, the AO disallowed depreciation claimed by the assessee. Since we have restored the issue relating to waiver of loan to the file of the AO, this issue, being consequential in nature, is also restored to the file of the AO. Consequently the order passed by the CIT(A) on this issue is set aside. Addition made under Section 41(1) - Held that:- Non-compliance of notice cannot lead to the inference that the liability is no longer payable. Nothing was brought on record by the AO to prove that the above said liabilities are no longer payable. Accordingly we are of the view that that the AO was not justified in assessing the above said amount under Section 41(1) of the Act. Accordingly we set aside the order passed by the learned CIT(A) on this issue and direct the AO to delete the addition made under Section 41(1)
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2018 (6) TMI 1048
Revision u/s 263 - addition u/s 68 - undisclosed share capital/ share premium - Held that:- Simply because there is an adverse inquiry report in the case of M/s. Prosperity Mercantile Pvt. Ltd. that it is some kind of shell company managed by some entry providers through their companies, that by itself will not implicate assessee, unless the assessee is found to have taken some kind of accommodation entry from this company. Till such adverse material is found from or inquiry, no reason to hold that such a share capital premium received by the assessee company is to be treated as bogus. If something adverse is found qua the assessee in the proceedings in the case of M/s. Prosperity Mercantile Pvt. Ltd., then department is free to rope in assessee under the provisions of Act. But as of now, it cannot be held that assessment order accepting the share capital/ share premium is prejudicial to the interest of revenue - No addition u/s 68 could be warranted in the case of the assessee in facts and circumstances of the case. Impugned order u/s 263 setting aside the assessment order is cancelled on this issue. On the issue of WIP being nil, nowhere the Ld. PCIT has discussed why the order of the AO is erroneous in so far as it is prejudicial to the interest of revenue. In fact there is no adverse finding or comment by him as why the WIP as shown by the assessee at nil is not correct or requires further inquiry or verification. To set-aside the assessment on this issue he has to demonstrate that order of the AO is erroneous or prejudicial. No reason for setting aside this matter to the AO and accordingly, on this issue also the order of the Ld. PCIT is cancelled. - Decided in favour of assessee.
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2018 (6) TMI 1047
Addition representing cash deposited in the Bank account of the assessee maintained with Yes Bank Ltd. - Held that:- The payment transaction is also evidenced from a copy of the assessee’s bank account with Yes Bank Ltd., which is available on record. The genuineness of this Agreement has not been doubted by the AO in remand proceedings. This shows that the assessee received cash of ₹ 2,00,000/- from Sri Bhupinder Singh and returned the same with damages of ₹ 50,000/- again through his bank account. Both the transactions are recorded in the same bank account. Thus, it is palpable that the source of deposit of ₹ 2,00,000/- in the bank account of the assessee is properly explained. As such, no addition is warranted on this score. The same is directed to be deleted. Agreement for purchase of a plot cancelled - Held that:- only a receipt of ₹ 6,00,000/-, which was deposited by the assessee in his bank account but the payment by the assessee to Sri Harjeet Singh for a sum of ₹ 6,60,000/- was also through the same bank account. Both the transactions of receipt and payment of cash are evidenced from a copy of the bank statement placed on record. As such, as satisfied that the assessee has successfully explained the source of deposit of ₹ 6,00,000/-, for which no addition is warranted Enhancement in respect of two loans raised - Held that:- CIT(A) has made enhancement of ₹ 6,60,000/- in respect of two loans raised from Sri Iqbal Singh and Sri Harjeet Singh, which were not the subject matter of assessment proceedings. There is no whisper, much less any discussion in the assessment order on these two loan transactions. Respectfully following the ratio decidendi flowing from the Full bench judgment SARDARI LAL & CO [2001 (9) TMI 1130 - DELHI HIGH COURT] hold no enhancement could have been made in respect of such two loans.
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2018 (6) TMI 1046
Validity of assessment order - non-existent entity (Liquidated company) - The contention of the assessee is that company was wound up on 24/05/2013, whereas the assessment under section 143(3) read with section 144C(13) of the Act has been completed on the said company on 30/01/2017, thus, the assessment has been completed on a non-existence entity, which is illegal and void - Held that:- In case of discontinuance of the business, the assessee is required to inform to the Assessing Officer and also in case of the liquidation, the liquidator of the company is required to give notice to the Assessing Officer, who is entitled to assess the income of the company. In the instant case, there is no such information available on record, whether the Assessing Officer was informed about the discontinuance of the business or the liquidation process of the company. Though the Ld. counsel submitted that the Assessing Officer was informed about the dissolution of the company but no such information has been provided by the Ld. counsel of the assessee before us that the information was provided as per the requirements of the Act. The issue of validity of making assessment on non-existence entity has been decided by the Hon’ble Delhi High Court in the case of Spice Infotainment Limited Vs. CIT, [2011 (8) TMI 544 - DELHI HIGH COURT], wherein it is held that the assessment in the name of the company which has been amalgamated with another company and stands dissolved, is null and void - however, this is the case of succession of entity and not of winding up of the entity, and is not applicable to the facts of the present case. In the instant case, the compliance of the assessment proceeding before the Assessing Officer has been made from time to time by the persons authorized in this behalf and proceedings have not been challenged due to lack of jurisdiction. According to the available records, the validity of the jurisdiction has been challenged for first time before the Ld. DRP. In view of the above circumstances, the assessment order should not be nullified. There is no information, whether the assessee complied with various provisions of the Act related to responsibility of company in- liquidation or discontinuity of business. In the circumstances, it is appropriate to set aside the assessment passed and restore the matter to the file of the AO/TPO.
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2018 (6) TMI 1045
Revision u/s 263 - erroneous and prejudicial order to the interest of the revenue - Held that:- as per CIT(A) there was difference in sale/purchase price of Gold - assessee admitted that there is clerical mistake in the details filed regarding sale and purchase of the gold during the month of March which was overlooked by the AO - thus AO failed to make any enquiry regarding the purchase and sale including quantitative details of the gold bars, therefore, it is a case of no enquiry by the Assessing Officer for which the Pr. CIT has rightly invoked the provisions u/s 263. Provisions u/s 263 of the Act becomes redundant, if it is not invoked in such type of cases like the present one where the assessee pleads before the Pr. CIT that there were certain inadvertent clerical error of purchase and sale including quantitative details This itself shows that there is absolute non-application of mind and no enquiry conducted by the Assessing Officer at all - hence the Assessment order has become both erroneous as well as prejudicial to the interest of revenue for which Pr. CIT was justified in invoking the provision of Section 263 - Decided against the assessee.
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2018 (6) TMI 1044
Validity of reopening of the assessments u/s 147 for AY 2004-05 - validity of reason to believe - Held that:- Validity of the reassessment proceedings shall be determined with reference to reasons recorded. The assessee declared all the particulars and details in the original return of income; the AO was satisfied with the same and accepted u/s 143(1) - AO reached the belief that there was escapement of income ‘on going through the return of income’ filed by the assessee after he accepted the return u/s 143(1) without scrutiny, and nothing more. Thus, no tangible material was available with the AO, except details already mentioned in the original return of income - this is nothing but a review of earlier proceedings by the AO which is not permissible under law. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the AO subsequent to the issue of intimation. Therefore, the reopening of the assessment is wholly invalid and bad in law - thus relying upon decision of the Delhi High Court in the case of CIT vs. Orient Craft Ltd. [2013 (1) TMI 177 - DELHI HIGH COURT] - Decided in favor of assessee. Validity of reopening of the assessments u/s 147 for AY 2005-06 - Held that:- The reasons recorded for reopening of the assessment, the AO has not mentioned the necessary ingredients for reopening of the assessment because AO has not mentioned in the reasons that he has reason to believe that income chargeable to tax as escaped assessment - thus the reopening of the assessment is invalid and bad in law - thus following reasons of decision for AY 2004-05, we set aside the order of the authorities below and quash the reopening of the assessment u/s 147/148 - Decided in favor of assessee.
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2018 (6) TMI 1043
Penalty u/s 271(1)(c) - inadvertent mistake by accountant as long term capital loss has been reduced and short term capital loss has been inflated - rectification made in revision of return - bonafide inadvertent error - Held that:- Assessee admitted the fact of committing the said mistake by his accountant and immediately rectified the same and which was accepted by the AO u/s. 147 re-assessment proceedings - in the case of Price Waterhouse Coopers Pvt. Ltd Vs. CIT [2012 (9) TMI 775 - SUPREME COURT] held that an inadvertent and bona fide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars and that can be described as human error - thus it was human error, but does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income - CIT-A was not justified in confirming the penalty imposed by the AO u/s 271(1)(c) and is cancelled - Decided in favor of assessee.
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2018 (6) TMI 1042
Disallowance of deduction u/s 80P(2) - interest earned on investment made with sub-treasuries, various scheduled banks - Held that:- Assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act 1969 - assessee do not posses any banking license from the Reserve Bank of India and is not exclusively carrying on any banking facility; but it is carrying on business of lending money to its members and therefore is covered u/s 80P(2) - thus relying on the judgement in case of TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITED VERSUS THE INCOME TAX OFFICER, WARD-1, TUMKUR [2015 (2) TMI 995 - KARNATAKA HIGH COURT] we are of the view that the assessee is entitled to the benefit of deduction u/s 80P(2) with regard to interest received on deposits made by the assessee with sub treasury and Trivandrum District Co-operative Bank for Asst. Year 2014-2015 - Decided in favor of assessee.
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2018 (6) TMI 1041
Benefit of deduction u/s 80P(2) - assessee are primary agricultural credit societies registered under the Kerala Co-operative Societies Act, 1969 - Held that:- We find that an identical issue was considered in the case of ITO v. The Chengala Service Co-operative Bank Limited [2018 (4) TMI 339 - ITAT COCHIN] held that when a primary agricultural credit Society is registered as such under the Kerala Co-operative Societies Act, 1969, such society is entitled to the benefit of deduction u/s 80P(2) of the Income-tax Act. - Decided in favour of assessee.
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2018 (6) TMI 1040
Claim of depreciation to assessee trust - assets cost of which were treated as application of income - assessee is a trust registered u/s.12A(a) - Held that:- We are of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in holding that assessee was eligible to claim depreciation on assets, cost which was claimed as application of income. We do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals). See CIT vs. Rajasthan and Gujarati Charitable Foundation Poona [2017 (12) TMI 1067 - SUPREME COURT] - Decided in favour of assessee.
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2018 (6) TMI 1039
TPA - comparable selection of Genesys International Corporation Ltd. (Genesys) - Held that:- Assessee is only engaged in providing back office IT enabled services to its AE and is also engaged in rendering transaction processing services, internet, consulting and voice based customer care services and, therefore, on functional dissimilarity Genesys cannot be cannot be taken as a comparable to the assessee company. Genesys is engaged in doing pioneering research in the area of image intelligence and recognition, mobile mapping as well as LIDAR whereas the assessee is not involved in any research and development activity and, therefore, this company cannot be considered a comparable on this account also Disallowance u/s 14A - Held that:- It is not clear as to whether the AO has considered only the investment which yielded the exempt income or the entire investment made by the assessee while computing the disallowance. It has also been submitted that the assessee had incurred an expenditure by way of interest on loan taken from M/s Orix Auto Infrastructure Services Limited which was specifically taken for the purpose of financing the vehicles and, therefore, the disallowance with respect to this interest under Rule 8D(2)(ii) could not be invoked - thus this issue needs to be adjudicated afresh by the AO/TPO Addition of disallowance u/s 14A while computing the book profit u/s 115JB - This issue is covered in favour of the assessee by the judgment of the Hon’ble Delhi High Court in the case of Pr. CIT vs. Bhushan Steel Ltd. (2015 (9) TMI 1424 - DELHI HIGH COURT) wherein it was held that disallowance u/s 14A r/w Rule 8D cannot be added while computing book profits u/s 115JB of the Act.
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2018 (6) TMI 1038
Entitlement for deduction u/s 10B - assessee company is engaged in the business of providing business process outsourcing services onsite/offshore - Held that:- We noticed that the Tribunal has consistently held that the assessee is eligible for deduction under Section 10B of the Act. The same view has been expressed by the Coordinate Bench in assessee’s own case relating to A.Y. 2010-11 Claim under Section 10B on interest income and miscellaneous income - Held that:- As relying on assessee's own case we hold that the assessee is eligible for deduction 10B of the Act in respect of interest income earned from bank deposits and also miscellaneous income relating to sundry balance written back. Accordingly we uphold the order passed by the CIT(A) on this issue. Eligibility of the assessee to claim deduction under Section 10AA of the Act in respect of interest income from FDI and sundry balances written back to be allowed MAT computation - computation of book profit under Section 115JB - AO refused to deduct the profit arising from Unit located in SEZ from the net profit for the purpose of computing book profit under Section 115JB - Held that:- the profit arising from the Unit located in SEZ is liable to be excluded as per provisions of Section 115JB(6) of the Act. He also submitted that an identical issue was considered by the Coordinate Bench in A.Y. 2010-11 and the same was decided in favour of the assessee by following the decision rendered by another Coordinate Bench in the case of Genesys International Corporation Ltd. (2016 (1) TMI 77 - ITAT MUMBAI) - we uphold the order passed by the learned CIT(A) in holding that the profit arising from Unit located in SEZ is eligible to be excluded for the purpose of computing book profit under Section 115JB as per sub-section (6) of sec. 115JB. Disallowance of belated payment of employees contribution of PF and ESIC - amounts paid beyond the due date prescribed in the respective Acts. Held that:- As the assessee has however, paid the amount before the due date prescribed for filing the return of income. Accordingly, following the decision rendered by the by the Hon'ble Bombay High Court in the case of CIT vs. Hindustan Organic Chemicals Ltd. [2014 (7) TMI 477 - BOMBAY HIGH COURT] disallowance be deleted. - Revenue appeal dismissed.
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2018 (6) TMI 1037
Disallowance of advertisement expenditure considering as fringe benefit - chargeability to tax as fringe benefit - Held that:- Assessee has given a detailed break-up which shows that expenditure are not chargeable to tax of fringe benefit - most of the expenditure are advertisements, banners, newspapers, printed materials etc. on which FBT is not chargeable - ssessee has himself stated that conference charges have already been considered in return of FBT including dealers’ conference expenses - also scholarship was also offered for taxation - Fringe Benefit Tax is not leviable on channel placement charges paid to cable operators by T.V. Channel Companies - thus we hold that addition upheld by the learned CIT (Appeals) deserves to be deleted - Decided in favor of assessee. Disallowance of 20% of expenditure considering as fringe benefit towards provision of transport facilities to employees for commuting between the office and residence - Held that:- Copy of the agreement with M/s. Varun Voyages are claimed by the Revenue authorities that it does not only include the transportation of the staff, but to other members also - assessee has not furnished the complete information with respect to the payment - assessee has not shown how ₹ 40 lakhs paid to M/s. Varun Voyages are utilized - no evidences such as log book or any other material are produced to show that whole amount has been spent on transportation expenses of staff only. The assessee failed concurrently at lower authorities to submit that detail - thus in absence of any details forth-coming from assessee, we do not have any option but to make a fair estimate - hence we hold that 50% of the expenditure of ₹ 40 lakhs may be considered as tours and travel expenditure and 20% thereof may be retained as the fringe benefit in the hands of the assessee - thus appeal of assessee is partly allowed.
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2018 (6) TMI 1036
Penalty proceedings u/s 271(1)(C) - disallowance u/s 14A r.w.r. 8D(2)(ii) - Held that:- Assessee company has not received any dividend income from these companies which is exempt and therefore there is no application of section 14A - thus when the addition itself is improper, there cannot be any penalty for furnishing inaccurate particulars on such disallowance - Decided in favor of assessee. Disallowance of interest expenditure and letter of credit charges - assessee could not show that borrowings with respect to the assets purchased by the assessee have been capitalized to the cost of assets of till those assets put to use during the year or not - Held that:- On reading of the reasons for making a disallowance it is apparent that there is a difference of opinion between the AO as well as the assessee that the money that been utilized for the purpose of acquisition of the assets have been capitalized till the assets have been put to use - assessee has stated that to that, extent assessee had enough reserves and surpluses available and therefore there is no reason for making any addition to the cost of assets purchased by the assessee - thus it cannot be said that assessee has furnished inaccurate particulars of its income - hence we find no infirmity in the order of the CIT(A) in deleting the penalty levied by AO - Decided in favor of assessee.
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2018 (6) TMI 1035
Treatment of future & options trading’s derivative losses of assessee Company as speculation loss under section 73 - nature of loss - conflicting views - diversified decisions - Held that:-Even when the decision of Hon’ble non-jurisdictional High Courts are in conflict with each other, the only objective criteria which followed by us is to take a view favorable to the assessee. Hon’ble Calcutta High Court’s decision in the case of Asian Financial Services Ltd to be followed [2016 (3) TMI 685 - CALCUTTA HIGH COURT] wherein decided that the loss incurred on account of derivatives would be deemed business loss under proviso to section 43(5) and not speculation loss and, accordingly Explanation to section 73 could not be applied - the “loss (on account of sale of derivatives) would be allowed to be set off against income arising out of proper business because derivatives were treated differently within meaning of Explanation to section 73(4) and not at par with the shares” - Decided in favour of assessee
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2018 (6) TMI 1034
Rectification of mistake - adjustment made under Section 115JB in respect of provision for doubtful debts - debatable issue - Held that:- In the case of CIT v. Indian Petrochemicals Corpn. Ltd. [2016 (9) TMI 110 - GUJARAT HIGH COURT] rejected the Revenue’s appeal involving a question of adding back provision for doubtful debts in terms of section 115JB, holding that if provision is obliterated from accounts, it would amount to write-off and such actual write-off would not hit by clause(i) of Explanation 1 to section 115JB of the Act. Thus the assessee should succeed on merits - the issue as to whether the provision for doubtful debts debited to Profit and Loss Account and reduced from debtors account at the end of the year tantamount to write-off of debt is highly debatable and this can only be arrived after a long drawn process of reasoning and it is not an obvious and patent mistake apparent on record. Hence, we direct the Assessing Officer to delete the adjustment made under Clause (i) of Explanation 1 to Section 115JB in respect of provision for doubtful debts computed while passing the order u/s. 154 of the Act. - Decided in favour of assessee.
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2018 (6) TMI 1033
Capital gain on transfer of tenancy rights - Applicability of provisions of section 55(2)(b) - cost of acquisition - entitled for exemption u/s. 54F - investment made u/s. 54EC - Held that:- As find that this aspect of the matter has been considered by the Ld.CIT(A) with reference to the submissions and the facts of the assessee’s case and relevant case laws and held that the case of the assessee is falling under section 52(2)(b) of the Act. The Ld.CIT(A) following the decision of the Coordinate Bench of the Mumbai Tribunal in the case of Meher R. Surti v. ITO [2015 (4) TMI 52 - ITAT MUMBAI] held that assessee’s claim for adopting fair market value as on 01.04.1981 to compute the cost of acquisition is proper - no infirmity in the order of the Ld.CIT(A) in holding that the assessee is entitled for exemption u/s. 54F We find from Assessment Order that the assessee made submissions before the Assessing Officer that they have invested ₹.40,00,000/- for acquiring tenancy rights in the property by agreement dated 18.01.2012 and therefore entitled for exemption u/s. 54F of the Act. This agreement was neither produced before us nor any proof of investment was furnished either before the Ld.CIT(A) or before us. Therefore, though in principle we agree with the view taken by the Ld.CIT(A) that the assessee is entitled for exemption u/s. 54F for the limited purpose of verification of the fact that the assessee acquired tenancy rights in the above referred property has to be examined with reference to the agreement and proper proof.
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2018 (6) TMI 1032
Penalty u/s 271(1)(c) - unexplained investment - Held that:- As assessee has furnished documents in support of the source of fund of ₹ 1,45,000/-. According to the authorities below this can be insufficient to prove the claim of the assessee but the fact cannot be termed as ‘concealment of income’ as neither the authorities below came to a finding that the evidence adduced is false. Taking into consideration of the entire facts of the case, find that the penalty imposed by the authorities below is harsh and improper indeed without consideration of the conduct of the assessee of making genuine attempts to prove the source of investment of ₹ 1,45,000/- as financed from personal savings including pin amount over a period of time. It also appears that while the total investment is an amount of ₹ 56,26,300/-, the amount in question of ₹ 1,45,000/- is a very negligible one and since the assessee has filed her return for a long time, it can be well presumed that this amount has been shown as an income of the assessee in the earlier assessment years - no mens rea of evasion of tax which is sine qua non for imposition of penalty. The explanation offered by the assessee seems to be bonafide - Decided in favour of assessee.
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2018 (6) TMI 1031
Imposition of penalty u/s 271D & 271E - Violation of provisions u/s 269-SS and 269-T on account of cash transactions - Held that:- Bonafide and/or genuineness of the transactions have not been question by the lower authorities while imposing penalty u/s 271D & 271E - Identity of the parties has also been well established by the assessee which was accepted by the authorities below - cash book reflects the cash flow in regard to the said amount of ₹ 1,00,000/- it was borrowed from the father of the assessee and repaid subsequently - thus there was no finding that the assessee intended to evade tax - reliance is made in case of ANANT HIMATSINGKA VERSUS ADDL. COMMISSIONER OF INCOME-TAX, KOLKATA [2011 (11) TMI 796 - ITAT KOLKATA] - hence we find that when the genuineness of the transaction has not been doubted by the lower authorities as also the importance of urgency of raising cash loan, the penalty u/s 271D & 271E ought not to have been levied - Penalty levied u/s.271D & 271E deleted - Decided in favor of assessee.
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2018 (6) TMI 1030
Additions u/s 68 being cash deposits in the bank accounts - non maintaining of books of accounts - Held that:- The undisputed fact is that the assessee had made it very clear in the returns of income that she is not maintaining books of account and yet the Assessing Officer proceeded to make assessment by invoking provisions of section 68 of the Act. It is correct that since no books of account are maintained in the ordinary course of business of the assessee, no such addition u/s 68 of the Act is tenable. The Hon'ble jurisdictional High Court of Delhi in the case of Ms. Mayawati [2011 (8) TMI 12 - DELHI HIGH COURT] has decided similar issue in favour of the assessee and we are governed by the Hon'ble jurisdictional High Court of Delhi. Accordingly, respectfully following the same, we allow the additional ground of appeal so raised by the assessee and direct the Assessing Officer to delete the additions so made u/s 68 of the Act in the respective assessment years which are under appeal before us. - Decided in favor of assessee.
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2018 (6) TMI 1029
Addition on account of commission - assessee paid commission to the agents in the post-paid segment of its business - Held that- The assessee furnished necessary details and also Form no.16As in respect of major payments - DRP deleted the addition by relying on the order passed for the A.Ys. 2000-01 to 2008-09 in the case of sister concern of the assessee. The Revenue assailed the said order passed by the first appellate authority before the Tribunal. In DCIT vs. Vodafone Mobile Services Ltd. (2015 (12) TMI 1761 - ITAT DELHI) the Tribunal has upheld the deletion of addition. - decided in favour of assessee Addition on account of Royalty WPC expenses - AO treated such amount as a capital expenditure incurred to get the right to use spectrum and hence covered it under section 35ABB - Held that:- When we advert to the nature of royalty paid by the assessee, it clearly emerges that the same is in the nature of spectrum charges paid to Government of India as a percentage of revenue on regular basis. This payment is not meant for obtaining a licence to use spectrum, but for the actual use of it on regular basis. It is in the nature of a revenue expenditure eligible for deduction. It cannot be construed as a capital expenditure and thus goes out of the ken of section 35ABB. As relying case of the assessee’s sister concern, namely, Vodafone Mobile Services Ltd as relying on COMMISSIONER OF INCOME-TAX VERSUS FASCEL LTD. [2008 (12) TMI 743 - DELHI HIGH COURT] we uphold the impugned order in deleting the disallowance. - decided in favour of assessee Addition on account of Advertisement expenses - nature of expenditure - Held that:- This issue is no more res integra in view of the judgment of the Hon’ble Delhi High Court in CIT vs. Citi Financial Consumer Finance Ltd. [2011 (3) TMI 622 - DELHI HIGH COURT] in which advertisement expenditure has been treated as revenue. Deduction towards frauds committed by its customers - allowable expenditure u/s 37(1) - Held that:- Deduction towards frauds is not on account of embezzlement by employees, but, for the loss incurred due to frauds committed by the assessee’s customers who did not make payments for the bills raised on them by the assessee. This loss, being incidental to carrying on business, cannot be treated as an item of non-revenue nature. We, therefore, uphold the impugned order in deleting the disallowance. This ground is dismissed. Amortization of revenue-based licence fee - Held that:- As in CIT vs. Bharti Hexacon Ltd.[2015 (2) TMI 874 - CESTAT NEW DELHI] considered the instant issue in an elaborate manner and held that "the licence fee paid or payable for the period up to 31st July, 1999, i.e., the date set out in the 1999 Policy should be treated as capital in nature and the balance amount payable on or after the said date should be treated as revenue.” Since the amount of ₹ 205.38 crore incurred by the assessee as licence fee @ 8%/6% on adjusted gross revenue is in relation to the period after 31st July, 1999 and is not in the nature of entry fee, such amount is to be allowed as deduction in entirety in the year of incurring without invoking the provisions of section 35ABB of the Act. As the AO has made an addition of ₹ 154.54 crore on this score, we order for its deletion as the same is of the revenue nature. As clarified that if certain sums claimed by the assessee as revenue in the preceding or succeeding years got capitalised by the AO u/s 35ABB, then, the proportionate amount from such capitalisation should not be allowed as deduction in the later years since the full amount of such licence fee pertaining to the year under consideration is being separately allowed. AO will verify the calculations in this regard and ensure that no double deduction is allowed in the current or earlier or later years in this regard. Disallowance of depreciation claimed on fixed assets on account of Asset restoration cost (ARC) obligation - Held that:- There is absolutely no doubt on the interpretation of clause 10 of the agreement that the assessee will be obliged to incur cost at the time of determination of the agreement only if damage is caused in the course of removal of cables, antennas or other equipments and not otherwise. Damage to the premises, if any, arising on the removal of cables, antennas and other equipments, etc., can be ascertained only at the time of termination of the agreement and not at the time of entering into the agreement. Further, no obligation will be incurred if no loss is caused to the premises at the time of removal of cables etc. As such, we are of the considered opinion that the addition of ₹ 5.10 crore has been rightly made. This ground is not allowed. Disallowance of interest on capital work-in-progress - assessee has a common pool of funds - assessee argued that investment in CWIP was made out of own interest free funds - Held that:- Even though the shareholders’ fund is more than the investment in CWIP, but no detail of secured loan is available. In the absence of such specific information, it is difficult to decide the issue at our end. The impugned order is set aside to this extent and the AO is directed to decide this issue afresh in consonance with our foregoing observations. It is made clear that if there is some direct borrowing for investing in CWIP, then interest paid on such borrowing has to be disallowed. If, on the other hand, there is no specific borrowing, the financing of CWIP has to be treated as out of interest-free shareholders’ fund. In such a scenario, no disallowance of interest can be made as the interest-free shareholders’ fund would be higher than the amount of investment in CWIP. TDS u/s 194J - addition u/s 40(a)(ia on account of 'Roaming charges’ - why such payment be not considered as ‘fees for technical services’ under section 9(1)(vii)? - Held that:- Referring to case of Kotak Securities Ltd. [2016 (3) TMI 1026 - SUPREME COURT] as eventually held that the roaming processes between the participating companies cannot be termed as technical services and, hence, no deduction of tax at source is required - the payment of roaming charges by the assessee to other domestic players for use of their respective networks does not amount to payment of fees for technical services within the meaning of section 9(1)(vii) of the Act and, hence, no deduction of tax was required u/s 194J. Ex consequenti, no disallowance u/s 40(a)(ia) is called for. We, therefore, order to delete the disallowance. TDS u/s 194H - Disallowance u/s 40(a)(ia) on account of discount extended to pre-paid distributors - Held that:- There is a judgment of the Hon’ble Rajasthan High Court in the assessee’s own case [2017 (7) TMI 1076 - RAJASTHAN HIGH COURT] holding that the provisions of section 194H are not attracted on the part of total commission disallowed by the AO u/s 40(a)(ia). Whereas, in the context of the assessee and to the extent of the amount on which the Rajasthan High Court has held that no deduction of tax at source is warranted, the judgment of the Hon’ble Delhi High Court in Idea Cellular Ltd. [2010 (2) TMI 24 - DELHI HIGH COURT] is in rem, but the judgment of the Hon’ble Rajasthan High Court is in personam. Once the Hon’ble Rajasthan High Court has erased the liability of the assessee by holding that the provisions of section 194H are not attracted on a part of the amount under consideration, in our considered opinion, such part of commission cannot be construed as a sum ‘on which tax is deductible at source under Chapter XVII-B’, so as to bring it within the sweep of section 40(a)(ia) of the Act, calling for any disallowance - remaining amount of commission, on which the liability u/s 201(1) has not been set aside, would be governed by the judgment of the Hon’ble jurisdictional High Court in the case of Idea Cellular Ltd. (supra) and the disallowance would be mandated. - Decided party in favour of assessee Penalty paid to Department of Telecommunications (DoT) - allowable business deduction u/s 37(1) - Held that:- Referring to relevant provisions of the Indian Telegraphs Act, 1885 and find that anomalies and irregularities in CIF and CAF are not covered under any of the specific provisions of the Indian Telegraphs Act. Rather, such penalties were imposed for non-compliance with the contractual obligations under the Licence agreement. As the payment by the assessee is not for an offence, nor is it prohibited by law, the same being failure to comply with the contractual obligations, cannot fall within the domain of Explanation 1 to section 37(1) of the Act.Addition deleted Disallowance of deduction u/s 80IA on certain items of income - Held that:- To the extent the FDRs were obtained to serve as a margin money for availing credit facilities from the bank, we find that the link of such interest income with the eligible business stands established and the resultant interest income assumes the character of `Business income’. Income earned from such FDRs qualifies for deduction u/s 80-IA of the Act. Since details of interest income of ₹ 3.70 crore are not available on record, we set aside the impugned order on this score and remit the matter to the file of the AO with a direction to allow deduction u/s 80IA. The remaining amount of interest income having no link with the business of telecommunications, which is simply on parking of surplus funds in FDRs, will remain `Income from other sources’ and hence ineligible for deduction u/s 80IA. `Miscellaneous income’ - same are received during the course of business of telecommunication. Even though these are not derived from the eligible business, but, they are in the nature of profits and gains of eligible business. The same, in our considered opinion, qualify for deduction u/s 80IA `Cell site sharing’ revenue -there is a direct link of such income with the eligible business of providing telecommunication services. The ld. DR likened such hire charges to the earning of rental income from letting out property and contended that the same cannot be considered as profits and gains of business of telecommunications. In our view, this analogy drawn by the ld. DR is not correct - ince the underlying assets in the situation under consideration are cell towers, which are in the nature of tools of the assessee’s business, income from their commercial exploitation, in our opinion becomes `business income’ qualifying for deduction in contradistinction to income from simple hiring of property retaining the character of `Income from house property’. It is, therefore, directed to be considered as eligible for deduction u/s 80IA of the Act. Revenue from Indefeasible right to use (IRU) since we have held that the income from cell site sharing is eligible for deduction u/s 80IA, as the sequitur, revenue from IRU is also eligible for the deduction. Addition u/s 68 - Held that:- the claim of the assessee of having received such amounts from Distributors has not been corroborated before the AO and hence the same cannot be accepted. The ld. AR contended that the necessary details are available for production and one more opportunity be granted to it. Considering the totality of the facts and circumstances of the instant case, we are of the considered opinion that it would be in the fitness of things if the impugned order on this score is set aside and the matter is restored to the file of the AO for a fresh decision. Disallowance of brand royalty - Held that:- beyond doubt that brand names of Essar and Vodafone have in fact been used by the assessee, which deciphers that the international transaction entered in to by the assessee with its AEs was genuine and bona fide. As per the ratio decidendi of Cushman & Wakefield India (P.) Ltd.[2014 (5) TMI 897 - DELHI HIGH COURT] the TPO was required to simply determine the ALP of the international transaction, unconcerned with the fact, if any benefit accrued to the assessee and thereafter, it was for the AO to decide the deductibility of this amount u/s 37(1) of the Act. As the TPO in the instant case initially determined Nil ALP by holding that no benefit accrued to the assessee etc. and the AO made the addition without examining the applicability of section 37(1) of the Act, we find the actions of the AO/TPO running in contradiction with the ratio laid down in Cushman & Wakefield (supra) - send the matter to the file of AO/TPO for deciding it in conformity with the above discussion Transfer pricing adjustment of Advertising, Marketing and Promotion (AMP) expenses - Held that:- There is not even a single order in which the selling expenses have been directed to be included in the overall AMP expenses. Simply because the Department has not accepted the judgments of the Hon'ble jurisdictional High Court and SLPs have been admitted, the binding nature of such judgments is not mitigated in any manner. Unless the Hon'ble Supreme Court reverses the judgment of a High Court, the same holds the field and remains binding on all the authorities working under its jurisdiction. It is, therefore, directed that selling expenses should be excluded from the overall purview of the AMP expenses for the benchmarking exercise, if necessity arises. Non-granting of full credit in respect of TDS and non-granting of Minimum Alternate Tax (MAT) credit - Held that:- AO is directed to verify the assessee’s claim in this regard and allow the necessary credit, if available.
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2018 (6) TMI 1028
Disallowance u/s 40A(2)(b) - purchase of cotton from the sister concern - difference in prices paid as compared to market prices - Held that:- AO rejected assessee's contentions and proceeded to make a lump sum addition of ₹ 2 lakhs on this account. It is also seen that the Assessing Officer has not made the addition in respect of specific bills where he was of the opinion that the prices paid were higher than the prevailing market prices. Thus this disallowance by the Assessing Officer was not backed by any proper examination and was made without considering the contention of the assessee with regard to the difference in the quality of the cotton purchased - Decided in favour of assessee Disallowance of expenses - Held that:- Ad hoc disallowance which has been made without pointing out any specific instances where the vouchers were not found. The addition has been made on the ground of probability of personal use in telephone and vehicle running expenses. However, since no specific instances have been indicated where the assessee was unable to produce the vouchers or submit the details in respect of these expenses, we find that this disallowance also deserves to be deleted. - Decided in favour of assessee
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2018 (6) TMI 1027
Eligibility of deduction u/s.10B - Held that:- The issue of eligibility of deduction u/s.10B has already been decided by the Tribunal in the earlier years, that the Department has challenged the order of the Tribunal before the honorable Bombay High Court, that the honorable court has not decided the issue till date. Respectfully following the order of the Tribunal for the earlier years, we decide the first effective ground of appeal against the AO. Claim of deduction u/s.10B on interest income,exchange loss, and hedging gain - Held that:- FAA has given a finding of fact that sundry credit balance written back represented the sundry creditors related to the export business of the assessee and that the said expenses were considered as part of export business. There is nothing on record to prove that the order of the FAA is factually incorrect. Similarly, it is found that the disputed interest income was earned on fixed deposits pledged with bank or the authorised brokers, that it was a pre-requisite to carry the hedging transaction, that the revenue generated by it from overseas, that hedging transaction were entered into by the assessee as a safeguard against exchange rate fluctuation, that hedging is directly related to export business of the assessee. Applicability of provisions of section 115JB - income relating to SEZ unit - Held that:- As relying on Genesis International Ltd. [2012 (12) TMI 491 - ITAT MUMBAI] and G Jewel Craft [2014 (11) TMI 980 - ITAT MUMBAI] directed the AO to exclude the income relating to SEZ unit, while computing book profit u/s.115JB of the Act. Claim of the assessee of employee’s contribution to PF and ESCI - Held that:- As decided in Hindustan Organics Chemicals Ltd.(2014 (7) TMI 477 - BOMBAY HIGH COURT) and Ghatge Patil Transporters Ltd. (2014 (10) TMI 402 - BOMBAY HIGH COURT) held that employee’s contribution to PF had to allowed as deduction, if it was paid by the employer before the due date of filing of income.
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Customs
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2018 (6) TMI 1026
Penalty u/s 112(a) and 112(b) of the CA 1962 - denial of cross-examination - principles of natural justice denied - Whether the impugned order stands vitiated by breach of principles of natural justice? - Held that:- The petitioner was denied the right of cross-examination by the adjudicating authority without cogent ground. Consequently, the impugned order suffers from the vice of breach of principles of natural justice. Whether provisions of Section 112 of the Customs Act, 1962 allow the adjudicating authority to impose a penalty of an amount of his choice? - Held that:- In view of the first issue being answered in the negative, the impugned order is required to be set aside. In such circumstances, the answer to the second issue becomes academic. Moreover, the second issue is pending for consideration before the Division Bench in the appeal carried from Gopal Saha [2016 (5) TMI 83 - CALCUTTA HIGH COURT] - this issue is therefore not discussed in the present writ petition. Petition disposed off.
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2018 (6) TMI 1025
Classification of imported goods - Vitamin AD/3 500/1000 IU/GM-2 - whether classifiable under Chapter Heading 2309.90 as claimed by the Appellant or classifiable under Chapter Heading 2936.90 as claimed by the Revenue? - Held that:- The goods Vitamin AD/3 500/100 IU/GM-2 imported from Isarel is the product in admixture of Vitamins and other ingredients which is a poultry feeds supplements and contains the ingredients specially added therein - the goods imported by appellant is classifiable under Chapter Heading 2309. On the issue of very same product, this tribunal in the case of Chokhani Pharma Vet V/s CCE, Mumbai [1999 (10) TMI 453 - CEGAT, MUMBAI] held that Rovimix AD3 500/100 which contains vitamins as active ingredients like starch etc. is classifiable under Sub-heading 2309.90 of the Tariff Act, 1975 and heading 23.02 of Central Excise Tariff Act, 1985. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1024
Suspension of CHA License - the suspension in the impugned order is challenged on the ground that the action was not in conformity with timelines prescribed by Central Board of Excise & Customs in circular no. 9/2010- Cus dated 8th April 2010 - Held that:- The licensing authority is vested with the discretion to suspend if warranted. A justifiable challenge to suspension can arise if the time-lines for post-decisional hearing or for order of continuation is not complied with or is not followed by enquiry within the period stipulated in regulation 20 of Customs Brokers Licensing Regulations or if the circumstances are such that urgency of action is not tenable. The appellant has not been able to bring forth a challenge on any of these issues. The alleged role of the broker in the alleged smuggling is the crux of the proceedings against the appellant. The role disclaimed by the appellant for questioning the suspension, if ruled upon at this stage, would render redundant the process under regulation 20 of Customs Brokers Licensing Regulations, 2013. Appeal dismissed - decided against appellant.
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2018 (6) TMI 1023
Valuation of imported goods - copper strips - enhancement of assessable value - The assessing authority places reliance on the price of the base metal published in bulletin of the London Metal Exchange and the consent of the importer to adopt that as the base for re-determination - Held that:- It cannot be lost sight of that the clearance was ordered to be held up on the basis of raw material prices in the said bulletin when the goods under import were manufactured products. The rationale for the comparatively low prices was claimed to lie in the supply contracts to which importers had drawn the attention of the assessing officer who, however, chose to disregard these - The resort to prices of base metal to reject the declared price of manufactured goods, particularly, in the light of an explanation offered and not disputed is not in accordance with section 14 of Customs Act, 1962. Enhancement of value set aside - appeal dismissed - decided against Revenue.
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2018 (6) TMI 1022
Order of Prohibition on CHA - Regulation 23 of CBLR 2013 - it was alleged that custom broker has prima facie not fulfilled their obligation laid down under the regulation 11D, 11E, 11F and 11N of CBLR, 2013 - Principles of Natural Justice - Held that:- The adjudicating authority has passed the order without following the principles of natural justice. Even though explicit provision is not there under the Regulation 23 of CBLR but for taking any such decision it is incumbent upon the authority to follow the principles of natural justice. The adjudicating authority is directed to consider the representation, if any, made by the appellant and thereafter pass a fresh order. In the meantime, the prohibition from working in Mumbai Zone I, II, and III is revoked. Appeal disposed off.
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2018 (6) TMI 1021
Violation of import conditions - import of Medical Equipment namely viz. Gama Camera under N/N. 64/88-Cus dt. 08.01.88 - case of appellant is that they have not intentionally avoided the compliance of condition of N/N. 64/88-Cus for the reason that due to fire in their Gama Centre the Medical Equipments i.e. Gama camera was damaged therefore the condition could not be complied with which was beyond the control of appellant. Held that:- If at all there is any violation of condition of N/N. 64/88, it is not intentional as due to fire gama camera got damaged and thus condition could not be complied with, this is clearly beyond the control of Appellant. As regard redemption fine and Penalty i.e. ₹ 50,000/- & ₹ 5000/- respectively there is no reason to change this position as issue of redemption fine and Penalty was not challenged by the revenue against first adjudication order. Appeal allowed in part.
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2018 (6) TMI 1020
Request for reassessment bill of entry - denial on the ground that the bill of entry assessment was not challenged by the appellant and hence bill of entry cannot be rectified - Held that:- We do not agree with this contention of the Revenue for the reason that if there is no lis between the assessee and the department regarding eligibility of the exemption notification. The only option available is the rectification of bill of entry under Section 154. If the contention of the Revenue is accepted than for each and every error occurred in the bill of entry either by the assessee or by the department, the assessment is required to be challenged then the provision of Section 154 of Customs Act, 1962 will stand redundant which is not the intention of the law. The identical issue has come up before the Hon’ble Bombay Court judgement in the case of Commissioner of Customs (Import) Vs. Indian Farmers Fertilizers Co-Operative Ltd. [2009 (2) TMI 328 - BOMBAY HIGH COURT], where the assessee’s application for recertification of bill of entry was validated. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1019
Penalty u/s 114AA of CA - misdeclaration of import goods - the goods are complete TV units which were imported under the guise of TV panels - Held that:- There is no doubt that the appellant has played a major role in the overall import of the TV sets not only by financing but also keeping a complete correlation. Therefore, he is liable for penalty - but the quantum of penalty is reduced - appeal allowed in part.
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2018 (6) TMI 1018
Demand of duty from the Supplier of the foreign company - Whether in the present case, the supplier can be construed as importer or not? - demand u/s 28 of CA - penalty u/s 114A - Held that:- The appellant is not the importer as firstly, he has not imported the car. Secondly, he has not filed any Bill of Entry. The Bill of Entry was filed by Shri Cyril Anand Fernandez. In this fact, the demand under Section 28 cannot be confirmed against the appellant irrespective of whatever role he has played in the import of the car. It is also a fact on record that the goods have been released to Shri Murli Manohar Pandey who was the owner of the car at the relevant time, on payment of customs duty and redemption fine - the demand cannot be made from the appellant when admittedly the demand was recovered from Shri Murli Manohar Pandey - demand do not sustain. Penalty u/s 114A - Held that:- Since the duty itself is not sustainable under Section 28 upon the appellant, the penalty under Section 114A which is consequent to the confirmation of demand under Section 28, shall not sustain. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1017
Valuation - levy of CVD on the basis of RSP/MRP - leasing of projector - whether the appellant is liable to pay additional duty of Customs in terms of transaction value. In other words, whether the imported Digital Video Projectors and Decoders given on lease to the Theater Owners for using in display of the movie is liable for CVD in terms of section 4A of the Central Excise Act, 1944? - Held that:- Identical issue decided in appellant own case M/S UFO MOVIES INDIA LTD. VERSUS COMMISSIONER OF CUSTOMS (ACC & IMPORTS) , MUMBAI [2018 (4) TMI 923 - CESTAT MUMBAI], where it was held that there is no sale involve, hence the CVD cannot be charged on the basis of RSP/MRP in terms of Section 4A of the Central Excise Act, 1944. The facts are not in dispute nor has it been argued that there is any change in respect of any facts as far as the period involved in the present case vis-a`-vis the facts of earlier year's appeal are concerned - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1016
Benefit of CVD Exemption - Benefit of N/N. 20/2006 under Sl.no. 1 or under Sl.no. 15? - main contention of the department is that para-3 of the notification specifically imposes a restriction that the benefit of the said notification will not be eligible to goods specified under column-3 against Sl.No.1 of the table of the notification - Held that:- The respondents have made it very much clear that they have availed the exemption as applicable to Sl.No. 15 and not as under Sl.No.1 of the notification. SAD exemption is available to the goods covered under Sl.No. 15 of the Notification. This being so, the department cannot deny the exemption of CVD under Notification No. 20/2006 on the ground that the respondent has to avail exemption under Sl.No. 1 only. In the case of HCL Ltd. Vs Collector of Customs, New Delhi [2001 (3) TMI 971 - SUPREME COURT OF INDIA], the Hon'ble Supreme Court has held that where there are two exemption notifications that cover the goods in question, the assessee is entitled to the benefit of that exemption notification which gives the assessee greater relief, regardless of the fact that such notification is general in its terms and the other notification is more specific to the goods - When the respondent is eligible to claim the benefit of exemption under Sl.No. 15 thereby getting double benefit of customs duty exemption and SAD exemption, the same cannot be denied stating that the goods would fall within Sl.No. 1 of the notification No. 20/2006-Cus. dated 01.03.2006 so as to deny the benefit of exemption. Appeal dismissed - decided against Revenue.
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2018 (6) TMI 975
Principles of Natural Justice - the right of cross-examination was denied unlawfully to the petitioners - Held that:- The reason for non-appearance at the appointed time cited is the engagement of the learned Advocate before the High Court. The adjudicating authority ought to have dealt with such a request made on behalf of the petitioners contained in the writing dated October 23, 2017. The impugned order is silent on such aspect. It is not a case where the petitioner is avoiding the proceedings - The petitioners will forfeit the right to cross-examination of the witnesses, in the event of their failure to commence the cross examination at the appointed date and time - petition disposed off.
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Insolvency & Bankruptcy
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2018 (6) TMI 1063
Adjudicating Authority jurisdiction replacing the appellant as resolution professional to liquidator and not appointing him as liquidator - corporate insolvency resolution process - Appointment of resolution professional(distinct from interim resolution professional) - Held that:- Adjudicating Authority is empowered to remove the resolution professional, apart from the Committee of Creditors, but it should be for the reasons and in the manner as provided under the relevant provisions. Resolution Plan was filed by the Corporate Debtor itself which was rejected by the Committee of Creditors (Financial Creditor herein having 100% voting power). However, the Committee of Creditors (Financial Creditor – SBI) have not recommend the name of any other person as the liquidator. The Financial Creditors herein having 100% voting right has accepted that the Resolution Professional (appellant herein) was not assisting the Adjudicating Authority to its satisfaction during hearing. The Resolution Professional (appellant herein) was required to examine the Resolution Plan but had not stated that the plan submitted by him provides for all the requirements as provided under sub-section (2) of Section 30. The Committee of Creditors i.e. Financial Creditor, who has 100% right is also not satisfied with the Resolution Professional and taken plea that they are happy with Mr. T.S.N. Raja, the Liquidator who has been appointed and performing the duty since September, 2017 in accordance with law. Thus we hold that the Adjudicating Authority has jurisdiction to remove the resolution professional if it is not satisfied with its functioning of the resolution professional, which amounts to non-compliance of sub-section (2) of Section 30 of the I & B Code. For the reasons aforesaid no interference is called for - appeal dismissed.
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2018 (6) TMI 1062
Counting the period of ‘corporate insolvency resolution process’ - Held that:- In the present case, we find that after admission of the application the ‘Resolution Professional’ was informed who took over the charge after 30 days of admission. In fact the case was admitted on 16th August, 2017 and on receipt the intimation, he took charge on 14th September, 2017. Having heard the learned counsel for the parties following the decision in “Quinn Logistics India Pvt. Ltd.’ (2018 (6) TMI 904 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI) we direct the Adjudicating Authority to exclude 30 days for the purpose of counting the period of ‘corporate insolvency resolution process’ and thereby allow the ‘Resolution Professional’ to complete the ‘corporate insolvency resolution process’ by 15th June, 2018.
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2018 (6) TMI 1061
Corporate insolvency process - default to pay the amount in terms of the agreement - Held that:- There is a period of default prescribed therein which stipulates that if defaults continues for a period of 90 days, the first party shall discharge his obligation towards the second party by discharging his rights/interest/share in M/s. Mega Soft Infrastructure (P) Ltd. The aforesaid terms of agreement clearly shows that the 1st respondent ‘disbursed’ the amount against ‘the time value of money’ and the ‘corporate debtor’ has defaulted to pay the amount in terms of the agreement. As the appellant submitted that the amount has been repaid but such submission being not based on record cannot be accepted. 1st respondent has enclosed the copies of the cheques to show that a sum of ₹ 1,34,00,988/- were paid in favour of the ‘corporate debtor’. This fact has not been disputed by the ‘corporate debtor’. The case of the appellant being covered by the decision of this Appellate Tribunal in “Nikhil Mehta & sons vs. A.M.R. Infrastructure [2017 (8) TMI 1017 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI]
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2018 (6) TMI 1060
Duty of insolvency resolution professional - corporate insolvency process - Held that:- Duty of insolvency resolution professional is to take over assets that may or may not be in possession of the Corporate Debtor. We accept the submission made above, that does not mean the insolvency resolution professional can remove the tenant though it is open to him to take over the possession of the assets of the Corporate Debtor. If the tenant is not paying the rent, it is also open to the insolvency resolution professional to move before the appropriate forum/court of law. Appeal dismissed.
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Service Tax
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2018 (6) TMI 1015
Maintainability of appeal - Question of fact involved - Penalty u/s 78 of FA, 1994 - service tax paid by service tax recipient belatedly - Held that:- No question of law arises in the present appeal filed by the Appellant as both the Appellate Authorities below have concurrently found as fact, against the Assessee that the Appellant did not pay the service tax in time even though such service tax was collected from the service recipient. Appeal dismissed as without merit - If the Appellant-Assessee feels that any mistake apparent has occurred at the hands of the learned Tribunal by not considering the documents produced by it, it is open to the Appellant-Assessee to take recourse to appropriate legal measures as provided under Section 35C of the Act.
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2018 (6) TMI 1014
Penalty u/s 73(3) of the FA - cum- tax benefits - Mandap Keeper Service - swimming pool service - Held that:- Since the appellant have already deposited the substantial amount towards their service tax liability which has not been disputed by the ld. AR and since now the only issue involved is about the service tax liability qua the Mandap Keeper and swimming pool service therefore, in the interest of justice, the matter remanded to the Adjudicating authority for the limited purpose of reworking the demand, after hearing the appellant, confining to the issue of Mandap keeper and swimming pool service - appeal allowed by way of remand.
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2018 (6) TMI 1013
Business Auxiliary Services - services outsourced by the appellant to HSCL for implementation of Wide Area Network (WAN) for ETTSA - Management, Maintenance and Repair Services - MMR for maintenance of software - non-payment of Service Tax - Held that:- The activity out sourced to HSCL was in the nature of Information Technology Service. The definition of BAS has excluded Information Technology Services, through the above Explanation. Consequently, it is concluded that even if the appellant has procured the service of establishing WAN through the outsourced service provider HSCL, the activity will not be covered within the definition of BAS - also, in the present case the service rendered by the appellant has been rendered to a Government Department which are not engaged in business but in rendering public services. Hence the procurement of service for ETTSA cannot be brought within the levy of service tax under BAS - the levy of service tax on the activity of setting up of WAN, which has been outsourced to HSCL is not justifiable and hence, the demand is set aside. Levy of Service Tax - Management, Maintenance and Repair Services - activities carried out by the appellant for ETTSA - Held that:- The activities which the appellant was required to carry out to for ETTSA included supply of hardware, software, UPS, LAN equipment and also paying the structural cabling and setting up of the WAN network - The maintenance, if at all carried out by the appellant, was done as part of the operation of the computer systems. Hence, such activities will not fall within the Management Maintenance or Repair Service. It appears to us that the activities outlined in the contract would more appropriately be covered within the definition of ‘Business Support Services’ which were included with effect from 1/05/2011, under Section [65/105(104(c)] - demand set aside. MMR for maintenance of software - Held that:- For the period under dispute, it cannot be presumed that the maintenance or software service is covered under the category of MMR. Consequently the demand of service tax on maintenance of software, under the category of MMR is not justified and hence set aside. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1012
Management, Maintenance or Repair Service to Indian Air Force (IAF) - also supply of material alongwith the said services - N/N. 12/2003-ST dt. 20.06.2003 - Held that:- The Appellant is showing the values of raw materials and labour separately in their invoices. They also pay VAT/ Sales Tax as may be applicable on such value of material. In such case there is no reason to demand service tax on 10% profit or profit on which material is sold by them - The issue involved already stands settled in favour of Appellant in case of HINDUSTAN AERONAUTICS LTD. VERSUS COMMR. OF SERVICE TAX, BANGALORE [2009 (9) TMI 163 - CESTAT, BANGALORE], where it was held that there is a clear distinction available between the sales of the materials/parts and the labour charges, we are of the opinion that the impugned order which confirms the demand on the amount of the materials/parts sold and used for rendering of repair and maintenance service is incorrect - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1011
Refund claim - Rule 5 of Cenvat Credit Rules, 2004 - various input services - denial on the ground of nexus - Held that:- The lower authority mainly contended that the above services are not admissible input service for the reason that in the definition the service related to business activities was excluded. Merely due to this reason it cannot be said that all the above services are not input service. To qualify service as input service irrespective whether activities related to business was excluded but as per the main clause of the definition of the service is that any service used for providing out put service is admissible input service. The appellant are exclusively output service provider, to run the entire business for providing output service, all the above services are invariably required therefore all the said services were used for providing output service, accordingly, services are covered under the ambit of input service as defined under 2(l) of Cenvat Credit Rule, 2004 - As regard the works contract service though the works contract service was excluded in relation to construction of building of the output service provider, however in the present case works contract service were not used for construction or execution of works contract of building or civil structure or for laying foundation or making structure for support of capital goods but it is used in maintenance related work which is clear from the invoice therefore works contract service is also not excluded in the present case - refund allowed. Refund for the period April to September, 2012 filed for six months - contravention of condition of N/N. 27/12-CE(N.T.) dated 18- 6-2012 - Held that:- The restriction under notification provided to avoid multiple claims in particular quarters therefore the claim should be filed quarterly basis but if the claim is filed after six months for two quarters there is no violation of any condition. Only condition which bar the refund is refund should be filed within the overall period of one year from the relevant date. If that be so refund is well within the time limit and same should be allowed - refund allowed. Refund claim - denial on the ground that appellant had not shown debit of refund amount in Cenvat account at the time of filing refund claim - non-compliance of of N/N. 27/12-CE(N.T.) dated 18-6-2012 - Held that:- Appellant have subsequently, debited the said amount in their Cenvat account and debit entry also shown in ST-3 returns. In this circumstances it cannot be said that the appellant have not debited the amount. The purpose of debiting amount is that the said amount is being refunded therefore it is not mandatory that amount should be debited immediately at the time of filing refund. The only obligation on the claimant is that that before sanction of refund if the refund amount is debited in the Cenvat account refund should be granted. In the present case even if the reversal is not made the adjudicating authority could have very well directed to the appellant to first reverse the credit and then refund could have been processed. However, in the present case appellant have admittedly debited the amount in their Cenvat account, refund on this count cannot with withheld, the same should be granted - refund allowed. Refund claim - denial on the ground that Cenvat Credit availed against invoices pertains to out of pocket expenses - Held that:- There is no dispute that service provider in relation to service provided, out of pocket expenses which was taken as reimbursement from the appellant. Out of pocket expenses is nothing but part of the gross value of the service provided by service provider therefore there is no difference between the service tax paid on the service bills and out of pocket expenses claimed in separate bill, both are in the nature of service charges and liable to service tax therefore merely because term out of pocket expenses, cenvat credit and consequently refund cannot be denied - refund allowed. Refund claim - denial on the ground that Invoice bearing different address which is not registered with Service Tax department - Held that:- So long invoices are in respect of service which was received and used by the appellant, even though the invoices are addressed to their other premises which is not registered, Cenvat credit cannot be denied - refund allowed. Refund claim - denial on the ground that there is error in OIA whereby refund of an amount of ₹ 2,98,987/- was erroneously rejected twice in the OIO - Held that:- In some of the invoices in the order-in-original, in the list of rejection of refund claim, some invoices were repeated therefore rejection in respect of these invoices was made twice which is an arithmetical error, same needs to be corrected after verifying records - Similar type of error occurred in respect of rejection of refund of ₹ 2,98,987/- for the period April to June, 2013. As per the claim of the appellant this amount was rejected twice in order-in-original this also being matter of fact needs to be verified by the adjudicating authority - matter on remand. Refund claim - denial on the ground that Incorrect formula was applied for computation of an amount - Held that:- As per the definition of net cenvat credit availed is total cenvat credit availed during the period and if there is any utilisation of credit for domestic clearances, the same need not to be deducted, total cenvat credit for the purpose of formula to be taken. Therefore lower authority is absolutely wrong as they have mis-interpreted the term ‘net Cenvat credit availed’, therefore on this count refund could not have been rejected - refund allowed. Refund claim - denial on the ground that Supporting documents not submitted - Held that:- The appellant have submitted documents which the adjudicating authority may verify and decide - matter on remand. Refund claim - In respect of an amount of ₹ 2,27,436/- for the period Oct to Dec, 2012 no reason was given for the difference in between amount of refund in appeal before the Commissioner (Appeals) and amount sanctioned but rejected in OIA - Held that:- This portion of the refund needs relook and to be decided a fresh - matter on remand. Appeals are allowed by way of remand.
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2018 (6) TMI 1010
GTA Service - Appellant is transporting Food grains under a contract which has been awarded by the District Supply Officer (DSO) for transportation of food grains under the Public Distribution Scheme - Held that:- The Appellant has been appointed Food grains Transport contractor for transportation of goods from one place to another. The Appellant is engaged in transportation of food grains under the PDS (Public Distribution Scheme). The goods are transported on direction of District Supply officer and are under his control. There is no consignor and consignee in such case. During the transportation stage, the Appellant does not acquire any lien on the goods which is implicit in the issue of a consignment note. The document issued by District Supply Officer conveying the goods transported cannot be construed as a consignment note to render the Appellant to be a ‘goods transport agency.’ Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1009
Condonation of delay in filing appeal - power of Commissioner (Appeals) to condone delay - Held that:- The appeal filed on 22.07.2013 is beyond the condonation power of Commissioner (Appeals) - The Commissioner (Appeals) has rightly passed the impugned order by rejecting appeal of the Appellant on point of limitation - there is no infirmity in the impugned order as the Commissioner (Appeals) could not have condoned the delay being out of his power - appeal dismissed - decided against appellant.
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2018 (6) TMI 1008
Classification of Services - Site formation and clearing services or mining services? - taxability of the activities prior to 1st June 2007 - Held that:- All activities in relation to mining was brought under levy of service tax with effect from 1st June 2007. Further, there can be no doubt that activities in connection with mining that were specifically taxable prior to that date could not escape the levy merely because of a new service composed of various activities some of which were separately taxable - having been incorporated from a particular date. Site formation and clearance is a necessary pre-requisite for extraction from mines and section 65 (97a) of Finance Act, 1994 is not a restricted definition of this activity. Water sprinkling is an activity that is required to prevent the dispersal of dust not just at the mines but in the surrounding area. It cannot, therefore, be held, as the adjudicating authority has, that this, being essential for mining operation, is to be treated as provision of mining service or site formation and clearance service. The supply of fuel/lubricant has been sought to be taxed in the impugned order for the latter period merely because the supply was to a mining location and for the earlier period by association of site clearance and formation service with the subsequent tax levy. The total income from mining is thus intended to brought within the scope of the levy without considering whether any part of the income is generated from activities that are outside the scope of taxation in section 65 (105) of Finance Act, 1994. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1007
Taxability - Banking and other financial services - consideration received from lessees and hire-purchasers - scope of Operating Lease - benefit of N/N. 4/2006-ST dated 1st March 2006 - Held that:- It is now well settled in law that hire purchase is but a loan: that the hirer obtains goods from a seller and the banking and financial institution finances the purchase of goods with the title firmly resting with the hirer and the institution vested with right to acquire possession of the goods, through judicial intervention, in the event of non-payment of contracted amount. This differs substantially from operating lease. Therefore, the taxability of the service is not in question. There is no doubt that interest earned on loans is not chargeable to service tax; this is the law in section 67 of Finance Act, 1994 and Service Tax (Determination of Value) Rules, 2006. Consequently, any income that is in the nature of interest earned by a bank or financial institution cannot be collected. In computing the value of taxable service mandated by section 67 of Finance Act 1994, the law provides exclusion either by Explanation or by Rules; it is that exclusion that has been claimed by appellant as their statutory right? - Held that:- The consideration for the taxable service rendered by appellant is received as equated monthly instalment which is then assigned by appellant as principal and interest - only processing/management fees can be subjected to tax. Income from financial lease or hire-purchase is taxable under Finance Act, 1994 as lending activity, that income attributable to interest on lending is not to be included in assessable value, that it was only from 1st March 2006 that ten percent of the income described as interest was attributed to inputs other than borrowing and, hence, includible in assessable value of the financial institutions - The recovery of tax on interest for the period prior to 1st March 2006 is without authority of law as there is a presumption of attributing the entire amount to interest in the absence of any mechanism to isolate the processing or management cost even if that were collected in the equated monthly instalment or any determination of such in the notice issued to the appellant. Appeal disposed off.
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2018 (6) TMI 1006
Liability of Interest and penalty - Point of Taxation Rules - whether the tax was paid on time or was delayed with consequential interest liability? - Held that:- Section 65 (105) describes the taxable event but does not provide any clue as to the point at tax liability arises. For the first time, in 2011, rules for determining the point of taxation in various circumstances was notified and would therefore apply to only a portion of present disputed amount. The adjudicating authority has taken note of rule 3 and rule 6 of Point of Taxation Rules, 2011 as originally notified and prior to amendment of 17th March 2012 and, according to him, the receipt of payment is sufficient to determine the point of taxation. There is no doubt that applicant makes a payment along with proposal whether that first premium is encashed immediately, or otherwise, it is placed at the disposal of the appellant and is, indisputably, consideration for the admitted service - In the present dispute the appellant has admittedly paid duty according to their own interpretation of the point at which the tax liability arises. The claim of the appellant is that the service commences with the acceptance of the proposal. While that may be so, the tax liability is required to be computed from the moment the consideration is received even if the contract of insurance specified the commencement of risk from a different date. Both before and after the notification of the Point of Taxation Rules, 2011, it is the date of payment that determines the performance of the service for discharge of tax liability. The appellant has discharged his duty liability belatedly; consequently the appellant is required to pay interest for the said delay. The provision of section 75 of Finance Act, 1994 are unambiguous that the assessee is obliged to remit interest on delayed payment of tax - the interest liability of the appellant stands confirmed. Interest upheld - penalties set aside - appeal allowed in part.
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2018 (6) TMI 1005
Classification of services - production, supply and installation of structural glazing, sliding doors and window to residential buildings - whether classified under the category of 'construction of complex service' or under 'erection commissioning and installation'? - benefit of abatement. Held that:- The conclusion reached by the appellate authority is erroneous. Just because VAT is paid at composite rate, it cannot be said that there is no sale of goods involved. In the instant case, it is seen that the major amount charged by the appellate relates to the value of material - the activity involved, apart from service, supply of goods and it was a composite activity. Since demand has not been raised under correct head, it cannot be sustained. Reliance placed in the case of URC Construction (P) Ltd. [2017 (1) TMI 1363 - CESTAT CHENNAI], where it was held that the entry under Section 65(105)(zzd) is liable to be invoked only for construction simpliciter. Therefore, there is no scope for vivisection to isolate the service component of the contract. Extended period of limitation - Held that:- It is seen that the practice was in complete knowledge of Revenue as the appellants had in their letter dated 2.6.2006 in response to summons dt. 7.11.2005 elaborately described their activities and their views on the issue - extended period of limitation cannot be invoked. Demand cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1004
Time Limitation - Business Auxiliary Services - appellant are working as Direct Selling Agents (DSA) for marketing of auto loan products of HDFC Bank for which the appellant received commission/incentive to the extent of 5% of the loan amount - N/N. 14/2004-ST dated 10.09.2004 - suppression of facts/malafide intent not present - Held that:- There was reasonable confusion about the category of service whether the said service of the appellant falls under "Business Auxiliary Services" or “Business Support Services”. The issue has been dealt by Board in the Circular no. 87/05/2006-ST dated 06.11.2006, wherein it was clarified that the service provided by HDFC Bank is classifiable as "Business Auxiliary Services" and liable to payment of Service Tax - In this undisputed fact it cannot be said that the appellant had any malafide intention or any suppression on their part. The appellant’s entire service provided to HDFC Bank and all the transactions are recorded in Books of account of appellant as well as in the Books of HDFC Bank. The demand was raised on the basis of such recorded transaction in Books of account, therefore it cannot be said that the appellant has suppressed any material fact with intention to evade payment of Service Tax. The identical facts regarding the limitation was involved in the case of Addis Marketing [2016 (11) TMI 19 - CESTAT MUMBAI], wherein this Tribunal has categorically held that the extended period of limitation cannot be invoked. In the present case the period involved is 10.07.2003 to 31.03.2006, whereas the show-cause notice was issued on 08.10.2007 i.e. after stipulated normal period of one year, therefore the entire demand is hit by limitation - demand not sustainable on the ground of time bar - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1003
Renting of Immovable Property Service - reverse charge mechanism - N/N. 6./2005-ST dt.1.3.2006 - Held that:- It can be seen that in each year the total receipt of service charges is less than ₹ 4 lakhs therefore the appellant is clearly eligible for exemption Notification No. 6/2005-ST. As regard the contention of the Revenue that the value of GTA service to be included in the aggregate value. It is clear that for calculating the aggregate value of threshold limit of ₹ 4 lakhs, the value of goods transport agency service for which the person liable of paying the service tax shall not be taken into account. In this position the only value of renting of immoveable property shall be taken into account for the purpose of exemption limit. Therefore appellant is clearly entitled for the exemption N/N. 6/05-ST. Demand not sustainable - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1002
Refund of Service Tax paid - since services were exported, appellant were not required to pay service tax and hence filed refund claim of service tax - refund rejected on the ground that there is no export of service - Held that:- As per the provision for export of service under Rule 3(2)(a) of export of service Rule 2005, the only requirement to qualify services as export of service was the payment of such service is received by the service provider in convertible foreign exchange. Though the report/information on various aspect was prepared in India but the same was provided to GSKTS, Ireland and same was used by GSKTS in Ireland, therefore merely because the information/report were prepared in India it cannot be said that service has not been exported - It has been held in the case of M/S MOUNT KELLETT MANAGEMENT (I) PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I [2015 (8) TMI 685 - CESTAT MUMBAI], that even though the service was performed in India but service recipient is located outside India and convertible foreign exchange was received towards such service, service shall be considered as export of service. Since lower authority have not verified documents properly i.e. debit note and entry of the debit note in the books of accounts, payment received against such debit note. If these informations are recorded in the books of accounts, which have been audited then only on basis of that debit note issued refund cannot be disputed - matter remanded to the adjudicating authority to verify all the facts and thereafter to pass a fresh order - appeal allowed by way of remand.
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2018 (6) TMI 1001
Rejection of Voluntary Compliance Entitlement Scheme (VCES) Declaration - rejection on the ground that vide letter dt. 28.08.2012 addressed to M/s. Marvel Reality inquiry was initiated against all the appellants. Therefore the case does not fall under the VCES Scheme as per Section 106 (2) of Finance Act, 2013 - Whether the letter dt. 28.8.2012 issued to M/s. Marvel Realtors can be considered as initiation of the inquiry contemplated under Section 106 of the Act? Held that:- All the appellants are private limited company and partnership firm in different names. Therefore the letter addressed to the M/s. Marvel Realtors cannot be considered as service of this letter to all the appellants. Even though the letter was issued, on this technical lapse on the part of the Revenue it cannot be said that the inquiry contemplated under Section 160(2) of the Finance Act was initiated. Tribunal in the case of M/s. L.V. Construction & Company [2016 (1) TMI 825 - CESTAT MUMBAI] relying on the Board Circular No.170/5/2013-ST dt. 08.08.2013 held that where the information is sought of roving nature even though communication regarding information quoted Section 14 of the Act. The provisions of Section 106(2)(a) shall not attract. - In the facts of the present case also the information sought is of roving nature for the reason that the similar information was asked from more than one assessee and the same is not specific in relation to any particular assessee. Therefore the facts of the present case is identical facts of the above decision. Considering both the aspect that first there is no service of any inquiry letter to the appellants, secondly the information sought for by the department is of roving nature, the VCES declaration filed by the appellant is acceptable - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 1000
Maintainability of appeal - The present appeal could not be disposed of due to the reason that the same was not listed along with the Appeal No. ST/90153/2014 on 12th January 2018 - Held that:- No separate order is required to be made in the present appeal as the entire issue against the common order-in-original has been disposed of in the case of TOYO ENGINEERING INDIA LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-II [2018 (4) TMI 605 - CESTAT MUMBAI] - the present appeal is also disposed of in terms of the above order.
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2018 (6) TMI 999
Refund claim - relevant date - Rule 5 read with N/N. 27/2012-CE(NT) dated 18.6.2012 - Whether the relevant date should be taken from the date of invoice or date of FIRC or end of the quarter wherein the FIRC is received? - Held that:- The respondents have filed refund claim for each quarter within one year from the end of the quarter. Therefore, the refund is well within the prescribed time limit in terms of Section 11B of the Central Excise Act, 1944 - the issue is no longer res-integra and is decided in the case of Bengaluru ST-I vs. Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE], where it was held that In respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis. Appeal dismissed - decided against Revenue.
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Central Excise
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2018 (6) TMI 998
Annual Capacity based production - The Department’s main grievance appears to be that the communication which the manufacturer challenged was not an order which is appealable and the fixation of annual production capacity was not challenged by him - Whether in the facts and circumstances of the case, the Tribunal was justified in entertaining an appeal against the letter of the Deputy Commissioner dated 27.02.2001 which is not an appealable order under Section 35B of the Central Excise Act? - Whether in the facts and circumstances of the case, is the Tribunal justified in remanding the matter to the Commissioner to refix annual capacity of production despite there being no challenge to the order of refixation of annual production capacity and determination of pro rata duty liability? Held that:- The respondent did not give up challenge for fixation of appropriate annual production capacity. Part of the request was even granted by the Department. When such capacity was refixed by an order dated 8th February 2000, even then the assessee was not satisfied. This was not just the case of delayed approach to the Tribunal. Tax appeal dismissed.
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2018 (6) TMI 997
Rectification of Mistake application - Application for condonation of delay was filed. This application was dismissed by the Tribunal by an order dated 16.09.2005 holding that proper explanation for delay has not been given. This order was passed in absence of the representatives of the company - Held that:- The appellants could have at least brought these facts to the notice of this Court for out of turn hearing. No such attempt was made. After more than a decade now we would be remanding the proceedings before the Tribunal for fresh decision on merits which should have happened in the first instance and in any case, would have been the order passed by the Court if the appellant had been vigilant enough to press the appeal for early hearing - Delay caused in filing appeal before the Tribunal is condoned - appeal to be heard on merits.
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2018 (6) TMI 996
Penalty - duty paid before issuance of SCN - Whether penalty was liable to be imposed on the assessee in case where duty had been deposited by the assessee before issue of show cause notice? - Held that:- Payment of duty before issuance of show cause notice however carries an important connotation of the assessee not contesting the liability. Mere depositing the amount does not amount to payment of duty. Payment of duty would arise when the liability is accepted. This would have an important element of avoiding litigation. In the present case, the assessee opposed the show cause notice proceedings all throughout upto the stage of Tribunal. Even before the Tribunal, the appeal was not confined to penalty but on the order passed by the Adjudicating Authority and confirmed by the Appellate Authority regarding confiscation of goods and confirmation of excise duty demand - This was thus, clearly not a case where the assessee had paid the duty even before issuance of show cause notice. The assessee therefore cannot claim waiver of penalty on this count - penalty upheld. Separate penalty on partners - Held that:- This Court in case of Jai Prakash Motwani, [2009 (1) TMI 501 - GUJARAT HIGH COURT] held that once penalty is imposed on the partnership firm, no separate penalty can be imposed on the partners - penalty on partners set aside. Appeal allowed in part.
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2018 (6) TMI 995
Maintainability of appeal - Question of Fact involved - Benefit of N/N. 40/1995, dated 16.03.1995 - Held that:- When it is the clear and categorical finding of those authorities that the Deputy Chief Chemist has not tested the samples and that he has given his opinion only based on the letter addressed by the Revenue, such factual findings rendered by those authorities which culminated in rejecting the case of the Revenue, do not warrant interference by this Court, more particularly, no question of law is involved in this case, for our consideration. When the applicability of the subject-matter exemption notification to the case of the respondent/assessee has been considered and found in favour of the respondent/assessee by two fact finding authorities, this Court is not inclined to interfere with such factual finding rendered by both the authorities below, as the case as projected by the revenue does not involve any question of law to be decided by this Court. Appeal dismissed.
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2018 (6) TMI 994
SSI Exemption - use of brand name of others - N/N. 8/2003-CE dt. 01.03.2003 - The case of the Revenue is that as the assessee is using the brand name of third party, therefore the appellant is not entitled to the benefit of SSI exemption N/N. 8/2003-CE dt. 01.03.2003 - benefit of Circular 71/71/94-CX dt. 27.10.1994 availed - Extended period of limitation - Held that:- If the assessee is manufacturing the goods bearing the name of the brand of the customer and the said goods has been used by the customer further manufacturing and cleared the goods on payment of duty, in that circumstance, the benefit of SSI exemption notification cannot be denied. Extended period of limitation - Held that:- As there was a dispute during the impugned period for availability of benefit of SSI exemption Notification to the appellant, in these circumstances, extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 993
Time Limitation - Valuation - Zafrani Zarda Flavoured Chewing Tobacco - whether Valuation to be done on the basis of Section 4A of CEA or Secion 4 of CEA? - Held that:- The case made out against the appellant was only when the N/N. 2/2006-CE (N.T.) dated 01.03.2006 was issued. However, the appellant have been manufacturing the same goods right from 2005 onwards and they had declared the product under tariff heading number 24039910 as chewing tobacco and under the same heading and description they have been declaring through out, even after the issuance of N/N. 2/2006-CE (N.T.). Therefore, it clearly shows that since the appellant have maintained the claim under tariff heading no. 24039910 even prior to the disputed period, the bonafide is clearly established. It can be conveniently understood that the appellant’s product is the ‘Zarda Scented Tobacco’. With this disclosure of the information, no suppression of fact can be alleged against the appellant. The demand is clearly time barred - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 992
CENVAT Credit - inputs used in the manufacture of exempted final products as well as dutiable final products - non-maintenance of separate records - Rule 6 (3) of Cenvat Credit Rules, 2004 - demand of an amount of 10% equal to the value of exempted goods cleared by the appellants - Whether the provisions of Rule 6(3) of Cenvat Credit Rules, 2004 are invokable or not? - Held that:- It is recorded in the show cause notice itself that they have availed proportionate Cenvat credit calculated in the manner which appear is not legal or proper which means that the appellants are maintaining separate records for inputs used in the manufacture of dutiable as well as exempted final goods - As, it is fact on record that the appellants are maintaining separate records for inputs used in the manufacture of dutiable as well as exempted final goods. In that circumstance, the provisions of Rule 6(3) are not invokable in the present cases. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 991
Condonation of delay in filing appeal - the appeal has been filed after 104 days of receipt of the impugned order by the appellant - power of Commissioner (A) to condone delay beyond 30 days - Section 14(2) of the Limitation Act - Held that:- The issue is no more res integra and has been settled by the catena of judgments in favor of the assessee - reliance placed in the case of SONIA OVERSEAS PVT. LTD. VERSUS UNION OF INDIA [2014 (9) TMI 975 - PUNJAB AND HARYANA HIGH COURT], where it was held that Section 14 of the 1963 Act is applicable to the proceedings under the 1962 Act in respect of an appeal provided under Section 128 and the time spent in the High Court in the abortive attempt to invoke its jurisdiction under Articles 226/227 of the Constitution will have to be excluded. Case remanded back to the Commissioner (A) to decide the same on merits, after following the principles of Natural Justice.
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2018 (6) TMI 990
Maintainability of appeal - Non-compliance with pre-deposit - Section 35F of the Central Excise Act, 1944 - Held that:- The dismissal of the appeal by the Commissioner (A) for non-compliance of Section 35F is not sustainable in law in view of the fact that the appellant has made a pre-deposit of ₹ 84,549/- being 7.5% of the amount confirmed in the Order-in-Original - case remanded back to the Commissioner (A) to decide the appeals on merits.
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2018 (6) TMI 989
Rectification of mistake application - maintainability of ROM Application - Revenue argues that in view of the circular dated 18.12.2015, the issue involving refund is not covered under the original litigation policy circular dated 17.8.2011. Therefore, he submits that the order be recalled and the matter be heard again - Held that:- In view of the circular dated 4.4.2018, even refund matters are included in the scope of litigation policy circular dated 17.8.2011. Therefore, the order is passed in accordance with law. Hence the ROM is not maintainable - ROM application dismissed being not maintainable.
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2018 (6) TMI 988
Liability of Interest - Section 11AB of Central Excise Act, 1944 - The duty liability is not in dispute and respondent had discharged that between February 2008 and June 2008 before issue of show cause notice in November 2008 - Held that:- Assessee does not deny duty liability and has paid the dues well before issue of notice. They also made it clear that the erstwhile practice had the approval of Joint Director (Cost); a subsequent enlightenment cannot lay blame at the door of the assessee - That revenue neutrality does not accord the right to escape taxes is not in doubt; however, with taxes liability having been discharged, it can certainly support a plea of want of intent to evade. All that occurred is that this neutrality has been cited to demonstrate the indifference to the different modes of assessment. Intent to evade duty is not a fruit of indifference but of active obfuscation. Appeal dismissed - decided against Revenue.
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2018 (6) TMI 987
Rectification of Mistake Application - It has been argued the appellants had given evidence that the said credit was not utilised by them but still the demand of interest was upheld. It has been argued the evidence given by the appellant was sufficient to establish that the credit was not utilised. Held that:- The words “The appeal is dismissed” appearing in para 4 are deleted and paragraph 5 and 6 is inserted after para 4. ROM application allowed in part.
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2018 (6) TMI 986
Rectification of Mistake application - Held that:- This Tribunal in para 5 in its order dated 29.12.2017 stated that duty and interest is sustainable. However, on perusal of record, we find that firstly there was no interest proposed in the show-cause notice nor it is demanded in the adjudication order - in para 5, the last line starting from "In view of the above order, the merit of the case was decided against the appellant, therefore demand of duty and interest thereon is sustainable" is rectified and read as "In view of the above order, the merit of the case was decided against the appellant, therefore demand of duty is sustainable". Penalty u/r 173Q of CER - Held that:- The bona fide belief cannot be entertained by the applicant - Since this Tribunal has given a detailed finding, it cannot be amount to an apparent error on record. Therefore, no case is made out for rectification of mistake with regard to penalty sustained under Rule 173Q. As regards mention of Section 173Q in para 6 of the order, we find that this is an apparent error on record. Therefore, 'Section 173Q' may be read as 'Rule 173Q of the Central Excise Rules, 1944'. ROM application disposed off.
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2018 (6) TMI 985
Valuation - physician sample - MRP Based valuation or not? - Held that:- The assessable value of physician sample which are manufactured on job work basis for others who may be distributing the same free of cost, has to be done on the basis of value arrived at in terms of decision of Hon’ble Apex Court in the case of Ujagar Prints [1989 (1) TMI 124 - SUPREME COURT OF INDIA], where it was held that demand cannot be raised on the basis of MRP on such medicine - Demand on the basis of MRP cannot be sustained - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 984
Rectification of Mistake application - Held that:- There is a mistake in the preamble of the order in mentioning the order number. Accordingly, in the preamble, the appeal arising out of "Order-in-Appeal No. AV(119)/95/2013 dated 25.4.2013 passed by the Commissioner of Customs & Central Excise (Appeals), Aurangabad" is corrected and may be read as "Order-in-original No. 34/CEX/COMMR/2013 dated 18.10.2013 passed by the Commissioner of Customs & Central Excise, Aurangabad" - ROM application allowed.
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2018 (6) TMI 983
Time limitation - Classification of goods - Bottom Oil - The case of the department is that subject goods-Bottom Oil is correctly classifiable under Chapter heading 2710 whereas the claim of the respondent is that it is classifiable under Chapter heading 2709, which attracted Nil rate of duty - Held that:- The appellant right from the stage of making application for registration i.e. on 14.7.2006, declared the inputs manufacturing process and final product including the bottom oil. Therefore, the entire process of manufacturing of bottom oil, the facts thereof were in the domain of the department. The appellant have been filing the ER-1 monthly returns wherein the bottom oil was declared to be classified under Chapter heading 2709 under Nil rate of duty. Therefore, all the details for issuing the show-cause notice were available with the Revenue. If Revenue was of the opinion that the classification was wrongly declared, it should have been issued well within the normal period of one year - demand is clearly time barred. Since the demand is time barred, the other issue on merit are not addressed. Appeal dismissed.
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2018 (6) TMI 982
Utilization of CENVAT credit - Credit maintained at another unit - Demand was raised on the ground that as regards the excise duty on the removal of goods from Ambernath factory, the cenvat credit maintained at Andheri corporate office under a common pool cannot be utilized - Held that:- There is no dispute on the fact that the common pool of credit was being maintained at the corporate office of the appellant, which includes the credit on input service related to the Ambernath factory also. Therefore, the utilization of the said credit for payment of excise duty on the goods cleared from Ambernath factory cannot be disputed as the credit was belonging to the factory. The correct procedure which could have been adopted by the appellant was that they should have distributed the input service credit to their factory by issuing invoices. In such cases, the factory could have availed the said credit and utilized for payment of excise duty. This is only a procedural lapse. However, there is no wrong utilization of the credit. Appeal allowed - decided in favor of appellant.
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2018 (6) TMI 981
Waiver of penalty - the penalty imposed by the adjudicating authority was set aside on the ground that the case involved technical issue of interpretation of the provision of Section 4A or Section 4 of the Central Excise Act, 1944 - Held that:- Since in the present case transaction value is available therefore the value is correctly determined under Section 4(1)(a). The respondent sold their goods to their buyers on transaction value therefore, pro-rata basis cannot be applied accordingly the demand raised by Revenue does not sustain. The issue has been considered by the Tribunal in the case of Commissioner of Central Excise, Goa v. Cosme Remedies Ltd. [2016 (4) TMI 323 - CESTAT MUMBAI], where it was held that Since there is a transaction value available at which the goods are sold by' the assessee to the distributors, and the same has not been challenged, the same should be assessable value under Section 4(1)(a) of the Central Excise Act. The demand does not sustain - appeal dismissed - decided against Revenue.
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2018 (6) TMI 980
CENVAT credit - structural steel viz. MS angles, beams, plates, channels etc. - usage of the items for the period prior to 7.7.2009 - Held that:- The Revenue being aggrieved by the order-in-original, filed appeal before the Commissioner (Appeals) who, completely ignoring the direction given by the Tribunal, has gone on different aspect and set aside the order-in-original on the ground that the steel items were used for repair and maintenance of the existing capital goods - Even if it is assumed that the steel items were used for repair and maintenance, but the fact remains that it was used for fabrication of structurals for capital goods. Therefore, whether it is newly made structurals or even for repair, credit is admissible - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 979
Waiver of penalty u/s 11AC - application of wrong notification - Held that:- This is not a case where the appellant has cleared the goods clandestinely. However, they were clearing the goods on payment of duty applying the wrong notification at the same time they were availing the CENVAT credit. Therefore, the notification which they claimed was not admissible to them - there is no suppression on the part of the appellant. The ingredients for imposing penalty under Section 11AC was wrongly invoked - Section 11AC is not applicable hence the penalty imposed under Section 11AC is set aside - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 978
Benefit of N/N. 6/2002-CE Sr. No. 196A - denial on the ground that the pipes are used for transportation of treated water from one storage point to another storage point, which is not covered under the ambit of the notification - Held that:- Tribunal in the case of IVRCL Infrastructures & Projects Ltd. [2008 (12) TMI 198 - CESTAT, BANGALORE], has been held that Notification is available for supply of water from one storage point to another - appeal allowed - decided in favor of appellant.
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2018 (6) TMI 977
100% EOU - removal of certain quantity of Poly Wool waste and All Wool waste to Domestic Tariff Area (DTA) in terms of para 9.9(a) of EXIM Policy, 1997-2002 - the lower authorities have sought to apply provisions of paragraph 9.9(b) of the Policy to the clearance of polywool waste and all wool waste - Held that:- Tribunal in the case of Nahar Industrial Enterprises Ltd. [2003 (2) TMI 97 - CEGAT, NEW DELHI] has held that the Board's Circular No. 30/99-Cus., dated 25-5-99 cannot be made the basis for demanding duty from the Appellants after including the value of waste for the purpose of computing 50% limit of the FOB value for the purpose of sale to DTA. The impugned order relies on the amendment made in Policy on 1.4.2001 to confirm the demand and penalty - there is no merit in the impugned order - appeal allowed - decided in favor od appellant.
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CST, VAT & Sales Tax
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2018 (6) TMI 976
Validity of Assessment Orders - maintainability of petition - statutory remedy of appeal - the input tax credits availed by the petitioner were reversed, apart from levying penalty under Section 27(4)(ii) of the Act - whether the Writ Petitions have to be entertained, permitting the petitioner to bye-pass the statutory remedy available under the Act? - Held that:- The settled legal position is that under normal circumstances, a party should not be permitted to bye-pass the statutory remedy available under the Act. This is more so when a case arises out of a taxation statute. No doubt, there are exceptions to this Rule and the Hon'ble Supreme Court has carved out these exceptions and under what circumstances a party can be permitted to bye-pass the statutory remedy available under an enactment and these exceptions cannot be stated to be fully exhaustive, but are broad parameters laying down circumstances under which the Court can exercise its extraordinary jurisdiction under Article 226 of the Constitution of India. Some of such exceptions being total lack of jurisdiction, violation of principles of natural justice, an order devoid of reasons, an order which suffers from perversity and unreasonableness, an order passed by an incompetent authority etc. The reason assigned by the learned counsel for the petitioner to bye-pass the appellate remedy available under the Act is not convincing. Unless and until the petitioner is able to factually establish that they had, infact carried on business in a particular premises from a particular date and shifted from the premises to an another premises, the question of applying the legal principles in various decisions relied on by the petitioner, does not arise. The burden of proof lies on the petitioner to establish that they had been functioning at a particular location, which is the registered place and shifted to a different venue from 05.11.2014 and thereafter, shifted to another venue on 20.07.2015. This Court cannot dorn the role of an Assessing Officer or the Appellate Authority and peruse the statement of accounts, details of sales turnover and to examine the conduct of the assessee. This Court is not inclined to entertain the Writ Petitions on the ground that the petitioner has an effective alternate remedy under the Act - petition dismissed being not maintainable.
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