TMI Tax Updates - e-Newsletter
July 25, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Highlights / Catch Notes

• GST:

  Classification of services - Outdoor catering services or restaurant service? - It is clear that the applicant cannot claim that they are running a canteen in SEZ. - their service would be in the nature of outdoor catering service. - The undertaking of additional responsibility of services of distribution of food by the applicant would in no way impact the classification or taxability of the services being provided by the applicant.
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• GST:

  Classification of goods - rate of GST - dielectric transformer fluid - The products are not vegetable fats and vegetable oils per se - The products do not remain mere vegetable fat or mere vegetable oil - axable @ 6% each of CGST and SGST (i.e IGST @ 12%)
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• GST:

  Profiteering - refund of excess amount of GST paid - The allegation of profiteering made by the Applicant against the Respondent as well as the Supplier is not established - the application is not maintainable and is dismissed.
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• GST:

  Nature of supply - Exam Support Services - The activity involved in the exam support service as proposed at schedule-I part-A and B of the proposed agreement constitute a composite supply - taxable @18% as education support service.
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• Income Tax:

  Since the return filed before the date of search did not attain finality, return filed u/s 153A of the Act has to be treated as having been filed for the first time and claim of deduction has to be considered only and only on the basis of income computed for filing return u/s 153A
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• Income Tax:

  Transfer pricing - selection of comparable - Every difference which is likely to affect the comparability analysis has to be taken note of and suitable adjustment has to be made to bring the comparables on par with the assessee for comparing of their operating margin
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• Income Tax:

  After deleted the additions in the hands of assessee, CIT(A) proceeded further in directing the AO to make the additions in the hands of some other persons and such directions are beyond the powers vested upon the CIT(A) u/s 251 of the Act.
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• Income Tax:

  TDS u/s 194A - assessee had received Form 15G/15H - Not sending these Forms Specifically to CIT, TDS is a mere technical breach. Therefore, the Ld. CIT(A) has rightly held that assessee was not required to deduct TDS on interest so paid.
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• Income Tax:

  Exemption u/s 11 - addition on account of hostel surplus fee received by the assessee - ‘providing hostel to the students/staff working for the society is incidental to achieve the object of providing education, namely the object of the society’ - exemption cannot be denied.
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• Income Tax:

  Claim of exemption u/s 11/12 - sponsorship contract with Samsung India Electronics Pvt. Ltd - there was no material which may suggest that the assessee association was conducting its affairs solely on commercial lines with the motive to earn profit - proviso to section 2(15) not applicable - exemption allowed.
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• Income Tax:

  Revision u/s 263 - It is no doubt the duty of the CIT to record why revision is warranted; however, the ITAT’s jurisdiction is not to rewrite the AO’s order and improve upon it, in a manner of speaking - Decided in favor of revenue.
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• Service Tax:

  Services provided by banks for collection of telephone bills, insurance premium on behalf of the client companies have to be considered as cash management service and cannot be considered under the category of business auxiliary services.
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• Service Tax:

  Extended period of limitation - when the Department sought details of commission received by the appellant from the M/s ICICI HFC Ltd, the assessee failed to respond to the letter of the Department and even summons issued to them - this conduct amounts to willful and deliberate and withholding and of suppression facts - invocation of extended period is justified.
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• Service Tax:

  Car Parking Charges are admittedly towards provision of open car parking place within the residential complex - the provision of parking place within the residential complex is very much included within the definition of residential complex and the same will be liable to payment of service tax under the said category
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• Central Excise:

  CENVAT Credit - whether the appellant could have taken the Cenvat credit of service tax paid on the services which were also utilised by their unit number-II? - since the entire exercise is revenue neutral, credit allowed.
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Articles

• THE FUGITIVE ECONOMIC OFFENDERS ORDINANCE, 2018

Notifications

• Income Tax

• 33/2018 - dated 20-7-2018 - IT
  Income-tax (8th Amendment) Rules, 2018

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Circulars / Instructions / Orders

• DGFT - Policy Circular No. 11/2015-20 - dated 23-7-2018
  Grant of Deemed Export Benefits for supplies to the projects funded by Organizations such as JICA etc. under para 8.2(d) of the Foreign Trade Policy, 2009-14.
• Customs - Circular No. 23/2018-Customs - dated 23-7-2018
  Procedure to be followed by nominated agencies importing gold/ silver/ platinum under the scheme for ‘Export Against Supply by Nominated Agencies’-reg.

News

• Gujarat’s economic growth impressive but GST remains a challenge – Finance Commission

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• ITPO Builds Hostel for Blind School in New Delhi

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• Measures to Recover Loan Amount from NPAs

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• Indian Money in Swiss Bank

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• Identification of Benami Properties

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• One market place for Public Sector Bank loans

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• Steps for Curbing the Black Money stashed abroad Lead Positive Results

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• Cash in ATMs

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• Creating Income Generating Activities and Employment under Mudra Yojana

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• Consolidation of Regional Rural Banks (RRBs)

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• Report of Committee on Resolution of Stressed Assets suggests a Five-Pronged Approach for Stressed Assets Resolution by the Banking Industry

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• Profit, losses, GNPAs of Public Sector Banks

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• Split of position of Chairperson and Managing Directors in listed companies

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• Financial Creditors have realized claims of approximately ₹ 47,426.75 crore in 26 cases

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• Auction for Sale (Re-issue) of Government Stocks

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• Over 550 startups mentored for incubation and funding support

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• Visakhapatnam-Chennai Industrial Corridor

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• First Meeting of India-Bangladesh Joint Committee on Border Haats Held in Agartala

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Case Laws:

• GST

• 2018 (7) TMI 1488
  Release of detained goods - Section 129 of the CGST Act, as also the KSGST Act - Held that:- Division Bench of this Court, under similar circumstances in the case of THE COMMERCIAL TAX OFFICER AND THE INTELLIGENCE INSPECTOR VERSUS MADHU. M.B. [2017 (9) TMI 1044 - KERALA HIGH COURT] permitted the release of the goods detained and also directed expeditious completion of the adjudication. The competent authority is directed to complete the adjudication under Section 129 of the CGST Act, within a week from the date of production of a copy of the judgment - petition disposed off.

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• 2018 (7) TMI 1490
  Profiteering - refund of excess amount of GST paid - contravention of the provisions of Section 171 of the CGST Act, 2017. Held that:- It is apparent that the base price of the Supplier was ₹ 11,993.75/- and on the cum tax price a discount of ₹ 500/- was offered. It is also revealed that the Almirah was supplied to the Applicant by the Supplier vide invoice dated 29.11.2017 in which the base price was again shown as ₹ 11,993.87/- and GST of ₹ 2158/- was charged @ 18%, as the same had been reduced by the Govt, of India on 14.11.2017 from 28% to 18%. Therefore, it is clear that the Supplier had charged correct rates of GST which were prevalent at the time of placing of the order and the supply of the Almirah through the above two invoices, therefore, no illegality had been done by the Supplier while executing the order placed by the Applicant. The Supplier has not resorted to profiteering by increasing his base price or appropriated the excess amount of tax charged from the Applicant and hence the allegation of violation of the provisions of Section 171 of the above Act is not established - It is also apparent that the Respondent was not the Supplier/manufacturer of the Almirah and was only an agent who had offered his platform to the Supplier to sell the Almirah by charging commission, and was also not responsible for collection or refund of GST and hence he cannot be held accountable for contravention of Section 171 of the CGST Act, 2017. Denial of discount of ₹ 500/- which was offered by the Supplier to the Applicant at the time of placing of the order on 4.11.2017 and which was withdrawn by him at the time of supply of the Almirah on 29.11.2017 - Held that:- The withdrawal of discount does not amount to profiteering as the same was offered from his profit margin by the Supplier and does not form part of the base price and therefore, also the Supplier cannot be held guilty under Section 171 of the Act. The allegation of profiteering made by the Applicant against the Respondent as well as the Supplier is not established - the application is not maintainable and is dismissed.

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• 2018 (7) TMI 1489
  Failure to upload FORM GST TRAN-1 within the stipulated time - case of petitioner is that though he attempted to upload it within the time, he failed because of some system error - input tax credit - migration to GST - Circular No.39/13/2018-GST, dated 03.04.2018 - Held that:- Not only the petitioner but also many other people faced this technical glitch and approached this Court. Both the learned counsel submit that this Court on earlier occasions permitted the petitioners to apply to the Nodal Officer for the issue resolution - the petitioner may apply to the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner’s uploading FORM GST TRAN-1, without reference to the time-frame. Petition allowed.

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• 2018 (7) TMI 1486
  Levy of GST - slump sale - stock which is part of slump sale - Held that:- The Applicant requested to permit them to withdraw the application filed for advance ruling vide their letter dated 17.04.2018, even prior to personal hearing - The application filed by the Applicant for advance ruling is dismissed as withdrawn.

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• 2018 (7) TMI 1495
  Composite supply of services - nature of supply - rate of tax - Exam Support Services - place of supply - conducting of exams - applicant is a subsidiary of the British Council which is the U.K.'s International Organisation for cultural relations and educational opportunities. International English Language Testing System - Applicant has agreed to provide ‘Exam Support Services’ and Student Facilitation Services to BCUK. Whether alt the activities involved in the exam support services constitute a mixed supply or a composite supply? What will be rate of GST applicable on these exam support services? What is the place of supply of these exam support services rendered by the Applicant BCKU? Held that:- A perusal of the pan-A, B & C of schedule-I appended to the copy of proposed agreement submitted on record, reveals the type of services as mentioned in part-B and part-C or the schedule-I are the services which are proposed to the provided by the applicant - Under part-C of schedule-I to the agreement it is specified that the Applicant will also provide student facilitation services. Since the above services are for conducting the IELTS exams and are so bundled with each other that these can not have an independent existence and therefore these are composite supply of services. Since the principle supply is of the service of conducting exams it is rightly classifiable under service code 999299 group 99929 and heading 9992 as education support service and therefore taxable @ of 18% (9% CGST and 9% HGST) vide sr. 30 of N/N. 11/2017 Central Tax (Rate) dated 28.06.2017 and corresponding State N/N. 46/ST-2 Dt. 30.06.2017. Ruling:- The activity involved in the exam support service as proposed at schedule-I part-A and B of the proposed agreement constitute a composite supply. Since the principle supply is conducting of IELTS exam it is covered under Service Code 999299 Group 99929 and Heading 9992 as education support service and therefore taxable @ of 18% (9% CGST and 9% HGST) vide sr. no. 30 of notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 and corresponding State notification no. 46/ST-2 Dt. 30.06.2017.

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• 2018 (7) TMI 1494
  Taxability - packing to be considered as unit container or not? - Frozen Meat sold in packaged form - rate of tax - inter-state supplies of goods. What is the classification when frozen meat is sold in packaged form and its HSN code? - What is the rate of tax on frozen meat sold by the company? Held that:- The items mentioned in tariff heading 0204 or 0207 [other than fresh or chilled] would be exigible to tax @ 5% if these are put up in a 'unit container' and bears a brand name or bears a brand name on which actionable claim or enforceable right in court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily], subject to conditions as in the annexure I to the said notification - In exercise of the powers conferred by sub-section (1) of section 6 of the Integrated Goods and Service Tax Act, 2017 the Central Government via N/N. 44/2017 Integrated Tax (rate) New Delhi dated 14.11.2017 has exempted, Inter-State supplies of goods, from the whole of the integrated tax leviable thereon. In the present case, the packing of the frozen carcasses done by them is only a medium of delivery and since these are not in pre-determined units, these packing cannot be termed as 'Unit Containers' - the packaging of frozen sheep/goat carcasses for delivery in primary LDPE bags further packed in secondary HDPE bags of non-standardised quantity done by the applicant cannot be regarded as 'Unit Container' since it is not standardised to hold a uniform predetermined quantity - Neither the packaging is uniform or standardised nor the packages are designed to hold a predetermined quantity. Ruling:- The whole (sheep/goat) animal carcass in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE bags having mention of varying actual total weight of the carcasses packed in each such HDPE bags and supplied to Army shall not qualify as product put up in 'Unit Container'. The product fall under exemption list as per entry no. 10 of notification No. 2/2017-lntegrated tax (Rate) dated 20 June 2017 upto 14th November 2017 and thereafter as per entry No. 9 of Notification No. 44/2017-Integrated Tax (Rate) dated November 2017.

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• 2018 (7) TMI 1493
  Classification of goods - rate of GST - MIDEL eN 1204 - MIDEL eN 1275 - What is the correct Harmonized System of Nomenclature (HSN) code and the applicable GST rate for our products MIDEL eN 1204 (rapeseed oil based dielectric transformer fluid) and MIDEL eN 1275 (soya oil based dielectric transformer fluid) in terms of Notification No. 1/2017-Central Tax (Rate) dated 28 June 2017? Held that:- The products are not vegetable fats and vegetable oils per se - The products do not remain mere vegetable fat or mere vegetable oil. The impugned products are a distinct product which is known in the market as a dielectric transformer fluid - The products also contain additives, the information about which has also not been shared with this Authority. But the manufacturing process of these ingredients and the addition of additives leads to a distinct product being formed. There are no doubts that entry 88 and 90 of Schedule I of the Notification No. 1/2017-Central / State Tax (Rate) would not cover the impugned products - The impugned products are not covered by any entry of the Schedule in the Notification No. 2/2017- Central / State Tax (Rate) for goods exempted from GST. It is only the question of entry 90 or any other entry of the Notification No. 1/2017- Central / State Tax (Rate) which would cover the impugned products. Ruling:- The product would fall in schedule entry 27 of Schedule II of the Notification No. 1/2017-Central /State Tax (Rate) under Tariff Heading 1518 and thereby taxable @ 6% each of Central Goods and Services Tax and Maharashtra Goods and Services Tax.

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• 2018 (7) TMI 1492
  Classification of services - Outdoor catering services or not? - company is engaged in the business of supply, by way of and as a part of and in any other manner whatsoever of goods, being food and any other article for human consumption or drink. The company (Merit Hospitality) has entered into a contract for supply of food to the employees of the company say 'A' Ltd. - Merit Hospitality has to supply the food at 'A' Ltd.'s premises. The distribution of the food is directly done by the staff of 'A' Ltd. The menu and the material specifications are mentioned in the contract and also the rate for various items are pre-determined between Merit Hospitality and the company - the billing is done by Merit Hospitality directly to the company on monthly basis and payment is received from the company to Merit Hospitality directly - Whether the activity be called as canteen activity and the applicable rate of 5% be charged on our bills? - Held that:- Under this Notification after amendments uptill now GST @ 5% is chargeable in case of services by a restaurant, eating joint including mess and canteen - with the progress of time and civilization and further increasing demands and expectations from restaurants by customers and also the restaurants with intent to further grow their businesses have started providing "take away" or even "home delivery" services to customers as per their instant order out of the items that are there in the menu of the restaurants. However a special feature to be noted is that in such cases there is no pre-entered agreement or contract between the restaurant or customers except for the expectations which the customer has as per reputation about food and services of the restaurant - the services being provided by the applicant would not fall under restaurant service. The applicant himself has stated that they are registered as outdoor caterers under the GST Act and that the company is engaged in the business of supply, by way of and as a part of and in any other manner whatsoever of goods, being food and any other article for human consumption or drink - the service being provided by the company would clearly fall under Group 99633 - Food, edible preparations, alcoholic and non-alcoholic beverages serving services and further under service code 996337 - Other Contract Food Services which are in the nature of outdoor caterer services and would be taxable under Serial No. 7 Heading 9963 (v) @ 18% under GST as applicable. Natural bundling of services or not? - In addition to supply of food on the request of the client Merit Hospitality Services Pvt. Ltd. also undertake the services of distribution of food for which Merit Hospitality raises separate bill charging 18% GST/SGST - Can both the activities put together i.e. supply and distribution of food to the employees of 'A' ltd as canteen services and applicable rate of 5% be charged on our bills? - Held that:- The undertaking of additional responsibility of services of distribution of food by the applicant would in no way impact the classification or taxability of the services being provided by the applicant. The employees of 'A' Ltd. have formed "Employees Co-op. Society " which is registered under The Societies Registration Act. The Employees Co-op. Society is running a canteen for the employees of 'A' Ltd. The contract of supply of food of Merit Hospitality is now with "Employees Co-op. Society " and not with "A " Ltd. - can it still be claimed that Merit Hospitality is running a canteen and the applicable rate of 5% be charged on our bills? - Held that:- The Employees Cooperative Society running the canteen themselves would in no way impact the catering transaction with the applicant - the essence of transaction between the applicant and the Employees Cooperative Society is not changing - Now instead of the company A Ltd., the outdoor catering services are being provided to the Employees Cooperative Society which would be taxable @ 18% only. The Merit Hospitality has entered into a contract with a company called say "B" Ltd. "B" Ltd. is having its unit in SEZ area ( Special Export Zone). The supply of food is done by Merit Hospitality to the employees of "B " Ltd. and payment for the same is made by the employees of "B " Ltd. directly to Merit Hospitality - Can Merit Hospitality claim that since the food is supplied directly to SEZ area hence no GST is applicable? - Held that:- The benefit of zero rated supply would be allowed to a domestic unit only if supply of goods or services to a SEZ unit or developer is only in respect of authorized operations as mentioned in the Letter of Approval of the Development Commissioner as per Section 15(9) of the SEZ Act - In the case details provided by the applicant in Case IV, it is not forthcoming whether 'B Ltd' is an authorized unit in SEZ as per Section 15 (9) of the SEZ Act and as to what are the authorized operations of 'B Ltd' in SEZ and whether supply of food to B Ltd or its employees is covered under authorized operations as allowed/approved by the Development Commissioner. If it is not covered under authorized operations then this supply of food by the applicant to SEZ employees would not be eligible for the benefit of zero rated supply. Can Merit Hospitality claim that it is running a canteen in SEZ area hence no GST is applicable? - Held that:- It is clear that the applicant cannot claim that they are running a canteen in SEZ. Rather their service would be in the nature of outdoor catering service. Can Merit Hospitality claim that it is running a restaurant in SEZ area and hence applicable GST rate is 5% only? - Held that:- The applicant cannot claim that they are running a restaurant in SEZ. Rather their service would fall under outdoor catering service.

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• 2018 (7) TMI 1491
  Levy of GST - Collecting agent for insurance companies - Whether collections made by the applicant under Manipal Arogya Suraksha Scheme from public on behalf of the insurance companies are liable to levy of tax considering the fact that the same are made merely as a collecting agent and the applicant is not engaged in provision of services? Held that:- The Applicant requested to permit them to withdraw the application filed for advance ruling vide their letter dated 19.02.2018 - The application filed by the Applicant for advance ruling is dismissed as withdrawn.

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• 2018 (7) TMI 1487
  Withdrawal of advance ruling application - Held that:- The application for Advance Ruling dated 04.10.2017 of M/s. Inox Leisure Ltd. is disposed of as withdrawn.

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• Income Tax

• 2018 (7) TMI 1485
  Revision u/s 263 - incurring of trading loss - as per CIT-A AO has failed to make any enquiry as regards the huge duty drawback claimed by the assessee and the modus operandi of the assessee - Held that:- In this Court’s opinion, all findings and reasoning are clearly indefensible; they amount to putting a gloss over the AO’s glaring omissions. Repeated decisions have emphasized that the AO should – at least as regards what appears from the record, and what are issues inquired into, during scrutiny assessment, indicate the briefest of reasons, accepting or rejecting any argument. In this case, the mere fact that out of 80 debtors, particulars of 22 were furnished and that PAN particulars of most of them were not provided (for AY, cannot lead to the conclusion that the doubting of genuineness of those transactions was unwarranted, under Section 263) This Court’s opinion, the ITAT’s approach was entirely faulty; it overlooked that the explanation, if any, why interest deduction was necessary, given that it had advanced substantial amounts on interest free basis was not reflected in the AO’s order. Likewise, on the issue of purchases, the lack of any factual foundation and why despite verification only 37 out of 111 parties came forward, the expenses could be allowed, is absent. For the other years, the reasoning why 22 parties could have been taken into account, for a vast majority of others (58) is absent, for AY 2011-12. ITAT’s findings amount to supplying reasons in respect of the AO’s order, on aspects, which are not expressly reflected in the assessment order. It is no doubt the duty of the CIT to record why revision is warranted; however, the ITAT’s jurisdiction is not to rewrite the AO’s order and improve upon it, in a manner of speaking. Clearly, the orders of the ITAT cannot be sustained. They are set aside. Question of law is answered in favour of the Revenue and against the assessee

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• 2018 (7) TMI 1482
  Penalty levied under sec. 271(1)(c) - addition being other interest income and as FDR interest - Held that:- We note that the penalty imposed under section 271 (1) (c ) of the Act, in respect of other interest income of ₹ 56, 81, 911/-, which has been deleted by the ld CIT(A), as the said amount was duly disclosed in the financial statement by the assessee. There was a claim by the assessee that said interest income of ₹ 56, 81, 911/- was eligible for deduction under section 80IB of the Act, and the assessee had disclosed the fact of earning said interest in the financial statements. We note that the assessee has disclosed the particulars of his income in the financial statements and has made full disclosure, in respect of other interest income of ₹ 56, 81, 911/- hence, there is neither "concealment of income" nor "furnishing inaccurate particulars of income". We note that mere making of this claim cannot lead to penalty automatically. Therefore, ld. CIT(A) has rightly deleted the penalty U/s 271 (1) (c) We note that the assessee, vide letter dated 19/03/2014, had explained to AO that the interest income of ₹ 37, 71, 024/- reflected in 26AS statement, was received from M/s. Bau Developer P. Ltd, and had been offered for taxation by the assessee, in the Assessment Year 2012-13. We note that the date of booking of the transaction in respect of M/s. Bau Developer P. Ltd is on 01. 08. 2011 (vide pb 11), which falls in assessment year 2012-13, therefore, the assessee has offered interest income of ₹ 37, 71, 024/-for taxation in the Assessment Year 2012-13. Since the assessee has offered the said income for taxation in the A. Y. 2012-13, hence there is no concealment We note that since the penalty notice issued to the assessee dated 20. 04. 2013 did not spell out as to which default the assessee has committed for which penalty u/s. 271(1)(c) of the Act has been initiated, therefore, respectfully following the Hon’ble Karnataka High Court’s order in Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we cancel the penalty imposed by the AO which has been erroneously confirmed by the ld. CIT(A), partly. Therefore, the appeal of the Revenue is dismissed and cross objections raised by the assessee are allowed.

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• 2018 (7) TMI 1481
  Non compliance with CIT-A's Revision order u/s 263 - CIT-A directing the Assessing Officer to conduct a thorough enquiry to examine the genuineness and creditworthiness of the assessee’s share application/premium - Held that:- Neither of the lower authorities in assessment as well as in the appellate proceedings has complied with the CIT’s section 263 directions (supra). It emerges that the Assessing Officer had sent section 131 process to the assessee’s investor entities. He thereafter made the impugned addition without going through the corresponding particulars of the said investors on his own quoting the assessee’s and said investors’ failure in substantiating their respective claims in support of the impugned share application/premium. We observe that a coordinate bench of this tribunal in M/s. Sukanya Merchandise Pvt. Ltd. Vs ITO in this backdrop of facts [2017 (12) TMI 1547 - ITAT KOLKATA] restores the very issue of genuineness and creditworthiness of share application/premium on account of lower authorities failure in ensuring compliance of CIT’s identical section 263 Learned Departmental Representative fails to rebut the above factual position as well as corresponding similar legal developments herein above. We therefore restore the instant lis as well back to the Assessing Officer for fresh adjudication as per law after affording adequate opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes.

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• 2018 (7) TMI 1480
  Addition u/s 68 - CIT-A adding share application/premium money of ₹ 31.69 crores to be both genuine and creditworthy - Held that:- We find considerable merit in the Revenue’s instant argument. It has come on record that the above investor entities had meagre incomes mainly from share transfers only from one account to another, no business activity or fixed assets, their common directors had failed to file any response to Assessing Officer’s repeated notices, as well as the fact that the assessee’s bank account had seen corresponding deposits followed by frequent withdrawals in the relevant accounting period(supra). CIT(A) has failed to consider all these relevant facts whilst accepting the assessee’s contentions going by only documentary evidence on record without applying human probabilities test hereinabove We therefore conclude that the CIT(A)’s findings do not deserve to be concurred with par se on merits qua genuineness and creditworthiness aspect. oming to the CIT(A)’s finding that such kind of a share premium is not taxable as revenue receipt, as per hon’ble apex court’s decision in Vodafone case (2012 (1) TMI 52 - SUPREME COURT OF INDIA) we are of the view that there is no dispute about the said settled legal position. The question that is involved in this appeal is altogether on a different footing. The assessee has failed to prove the genuineness and creditworthiness of its share premium in view of the above overwhelming circumstances raising serious doubts in view of multiple factual aspects hereinabove. We therefore are of the opinion that the hon’ble apex court’s decision would apply only if the assessee satisfies all the relevant parameters of identity, source, genuineness and creditworthiness of the amounts received from investor entities only and not in isolation. The CIT(A)’s findings are therefore contrary to section 250(6) of the Act - thus we leave it open for the Assessing Officer to examine the entire issue once again - Revenue’s appeals allowed for statistical purposes.

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• 2018 (7) TMI 1479
  Reopening of assessment - Held that:- Reasons have been recorded by the Assessing Officer as shows prima-facie there is an escapement of income and we hold that reopening of assessment is justified in this case. Accordingly, this ground of appeal raised by the assessee is dismissed. Value of property as per section 50C - AO has invoked the provisions of section 50C by considering the market value mentioned in the sale deed - Held that:- When the assessee has disputed the market value of the property by producing the certificate issued by the Registration Authority, the Assessing Officer ought to have been referred the matter to the DVO as per sub-clause (2) to section 50C. The Assessing Officer as well as CIT(A) failed to consider the issue in a perspective manner. In our opinion, the Assessing Officer ought to have been referred the matter to the DVO to ascertain the correct value of the property. We set aside the order passed by the ld.CIT(A) on this issue and remand the issue back to the file of the Assessing Officer, who in turn refer the matter to the DVO to ascertain the correct value of the property and decide the issue denovo in accordance with law. Accordingly, this ground of appeal raised by the assessee is allowed for statistical purpose.

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• 2018 (7) TMI 1460
  Validity of assessment u/s 153C - documents stated to have been recovered during the search which did not belong to the Assessee therefore, could not form the basis for initiating proceedings against the Assessee under Section 153C - Held that:- SLP dismissed.

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• 2018 (7) TMI 1459
  Rejecting books of accounts of the assessee - assessee has adapted the “Project Completion Method” for purpose of accounting of its income from building development activity - Held that:- Since the tax effect involved in this matter is below the limit fixed in the Circular No.3/2018 dated 11th July, 2008, we are not inclined to interfere with the impugned order passed by the High Court.

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• 2018 (7) TMI 1458
  Deduction under section 80IB - A, B, C, D and E buildings are constructed on a plot admeasuring 2.36 acres and if 2.36 acres of land is proportionately divided between five buildings, the land pertaining to the “E” building would be less than one acre and, hence, deduction under section 80IB( 10) cannot be allowed - Does the respondent assessee satisfy the condition (b) of Section 80IB(10) of the Act which requires the project claiming the deduction to be on size of a plot of land which has a minimum area of one acre? - Held that:- SLP dismissed.

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• 2018 (7) TMI 1457
  Bogus purchases - liability outstanding against purchases which were not genuine but bogus - Held that:- SLP dismissed.

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• 2018 (7) TMI 1456
  Reopening of assessment - Addition of bogus purchases and export sales under Section 68 - reopening on the basis of a report of the Directorate of Revenue Intelligence (‘DRI’) - Held that:- SLP dismissed.

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• 2018 (7) TMI 1455
  Addition u/s 68 - whether the ITAT was justified in confirming the order of the Commissioner of Income Tax (Appeals) which deleted the addition u/s 68 only on the ground that the payments to the creditors have been made by the Assessee in the subsequent years - The fact remains that the explanation offered by the Assessee regarding repayment to the creditors in subsequent years was accepted by the Revenue - Held that:- SLP dismissed.

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• 2018 (7) TMI 1454
  Claim of deduction under section 35(2AB) - research and development facility set up by the assessee was approved by the prescribed authority and necessary approval was granted in the prescribed format - Held that:- Special Leave Petition is dismissed leaving the question of law open. Pending applications, if any, stand disposed of.

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• 2018 (7) TMI 1453
  Capital gain computation - Value of sale consideration - Held that:- Special Leave Petition is dismissed on the ground of low tax effect.

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• 2018 (7) TMI 1478
  Claim of exemption u/s 11/12 denied - whether the assessee is a ‘charitable organization’ and proviso to section 2(15) do not apply? - whether the sponsorship contract with Samsung India Electronics Pvt. Ltd constitutes carrying on of any activity in the nature of trade, commerce or business? - Held that:- The advancement of any object of benefit to the public or a section of the public as distinguished from individual and group of individuals would be a charitable purpose. An object of public utility need not be an object in which the whole of the public is interested. It is sufficient if well defined section of the public benefits by the objects which means that the expression “object of general public utility” is not restricted to objects beneficial to the whole mankind. An object beneficial to a section of the public is an object of general public utility After considering all and also drawing support from the speech of the Finance Minister and subsequent clarification issued by the CBDT within the framework of amended provisions of section 2(15) of the Act, in our considered opinion, there was no material which may suggest that the assessee association was conducting its affairs solely on commercial lines with the motive to earn profit. There is also no material which could suggest that the assessee association has deviated from its objects which it has been pursuing since past many decades. In our humble opinion and understanding of law, proviso to section 2(15) of the Act is not applicable to the facts of the case and the assessee-association deserves benefit u/s 11/12 of the Act. No reason to interfere with the findings of the first appellate authority. Ground No. 1 is accordingly dismissed. Allowance of depreciation - Held that:- This issue is now well settled in favour of the assessee and against the Revenue as relying on the case of Rajasthan and Gujarat Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT] as held that even though the expenditure incurred for acquisition of capital assets was treated as application of income for charitable purposes u/s 11A(1) of the Act, yet depreciation would be allowed on assets so purchased. Ground No. 2 is, accordingly, dismissed.

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• 2018 (7) TMI 1477
  Exemption u/s 11 - addition on account of hostel surplus fee received by the assessee by treating the same as business income u/s 11(4)/11(4A) - Held that:- Addition on account of hostel surplus fee received by the assessee by treating the same as business income u/s 11(4)/11(4A) as decided in KARNATAKA LINGAYAT EDUCATION SOCIETY [2015 (5) TMI 260 - KARNATAKA HIGH COURT] in favour of the assessee held that ‘providing hostel to the students/staff working for the society is incidental to achieve the object of providing education, namely the object of the society’ Deprecation claim of assessee trust - Held that:- As relying on COMMISSIONER OF INCOME TAX -III, PUNE VERSUS RAJASTHAN AND GUJARATI CHARITABLE FOUNDATION POONA [2017 (12) TMI 1067 - SUPREME COURT] AO/CIT have erred in making/affirming additions on account of depreciation claimed by the assessee, hence ordered to be deleted. In view of what has been discussed above, present appeal filed by the assessee is allowed.

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• 2018 (7) TMI 1476
  Disallowance u/s.36(1)(iii) - advancing of loans - Disallowing part of the interest expenses based on matching principle - Held that:- Assessee has been considered as an investment company and making investments was part of its business. Hon’ble Jurisdictional High Court also in the case of CIT vs. Shriram Investments (Firm)[2014 (11) TMI 55 - MADRAS HIGH COURT] also held that deduction u/s.36(1) (iii) of the Act had to be allowed in respect of interest paid, if capital was borrowed for the purpose of business or profession. As already mentioned by us, there is no finding by any of the lower authorities that disparity between interest receipts and payments arose on account of charging of lower rate of interest on loans advanced when compared to interest paid on loans received. In the circumstances, we are of the opinion that ld. Assessing Officer was not justified in making a disallowance for the difference between interest received and interest paid by the assessee. - Decided in favour of assessee

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• 2018 (7) TMI 1475
  Transfer pricing addition - Marketing and after-sales support services characterized by the assessee as ‘Service fee received’ - determination of comparable companies - Held that:- The assessee rendered marketing support services for its AE in connection with sale of tobacco products in India, Nepal, Bangladesh and Afghanisthan,thus companies functionally dissimilar with that of assessee need to be deselected from final list. Disallowance u/s 40(a)(i) - Held that:- Adverting to the facts of the instant case, we find that the DRP has not considered the assessee’s claim for non-deduction of tax at source in the light of the respective Double Taxation Avoidance Agreements (DTAA). It is further observed that the assessee did not adduce necessary Agreements with the payees before the Assessing Officer. Since the orders of the authorities below are silent on these vital aspects having bearing on the application of section 40(a), respectfully following the precedent, we set aside the impugned order and remit the matter to the file of AO for deciding it afresh as per law, after allowing a reasonable opportunity of being heard to the assessee.

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• 2018 (7) TMI 1452
  Capital gain on transfer of converted shares - partnership firm - contention of Assessees that share were converted into stock in trade thus no capital gain - Held that:- SLP dismissed.

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• 2018 (7) TMI 1451
  Purchases of rice bran as bogus - ITAT was justified in accepting the purchases to be genuine and not bogus is a matter of fact only - Held that:- SLP dismissed.

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• 2018 (7) TMI 1474
  Addition u/s 69C - method for determination of addition u/s 69C towards bogus purchases - Held that:- Considering the facts and circumstances of the case and also consistent with the view taken by the co-ordinate bench in number of cases, we deem it appropriate to direct the AO to estimate 12.5% net profit on alleged bogus purchases including 2% net profit already estimated by the AO. Accordingly, we direct the AO to delete addition made towards peak amount of bogus purchases and direct him to estimate 12.5% net profit on total alleged bogus purchases.

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• 2018 (7) TMI 1473
  TDS u/s 194A - deductors had allowed substantial amount of interest to Primary Agricultural Societies and other Societies/Institution during the Financial Year 2012-13 and subsequent years who did not make TDS on such payments - assessee failed to furnish the documentary evidence in respect of submission of Form 15G/15H to concern CIT - provisions of Section 194A(3)(v) which applies to Co-operative Society - Held that:- This issue is covered by the Tribunal’s decision in assessee’s own case for Assessment Year 2012-13 wherein held , it is evident that the assessee had received Form 15G/15H from all the persons to whom the interest was paid and the assessee had also sent these Forms to the Income Tax Department. Not sending these Forms Specifically to CIT, TDS is a mere technical breach. Therefore, the Ld. CIT(A) has rightly held that assessee was not required to deduct TDS on interest so paid, hence, the demand raised by the AO was accordingly deleted, which does not need any interference on our part - decided in favour of the assessee.

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• 2018 (7) TMI 1472
  Penalty u/s 271(1)(c) - legality of notice - treating the sale of boundary walls (referred as ‘Building’) as a short term capital asset and consequently held the said building as depreciable asset u/s 50 - time barring penalty order - Held that:- As can be seen that the original assessment order was passed on 27.11.2008 and the penalty was initiated in the same order itself. But since the earlier Assessment was quashed by the Tribunal on 27.04.2012, the fresh Assessment Order was passed on 03.06.2013. Thereafter the penalty order which is challenged before us is passed on 28.10.2013. Thus, the penalty order is within the parameters prescribed by the provisions of the Income Tax Act, 1961, more specifically that of Section 275(1)(a) of the Income Tax Act. Thus, Additional Ground No. (i) is dismissed. Absence of specific charge pointing out in the notice - Held that:- t is pertinent to note here that the penalty order is based on furnishing of inaccurate particulars but the notice is not specifying exactly on which limb the penalty u/s 271(1)(c) has been initiated. From the notice dated 30.06.2013 produced by the Ld. AR during the hearing, it can be seen that the Assessing Officer was not sure under which limb of provisions of Section 271 of the Income Tax Act, 1961, the assessee is liable for penalty. See CIT Vs. SSA’s Emerald Meadows [2016 (8) TMI 1145 - SUPREME COURT]- Decided in favour of assessee.

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• 2018 (7) TMI 1471
  Reopening of assessment - Addition u/s 2(22)(e) - jurisdiction of the ld. CIT(A) u/s 251 - Held that:- The subject matter of appeal before the CIT(A) was in respect of the appellant and was confined to the additions made u/s 2(22)(e) of the Act in the hands of the appellant. Once the CIT(A) was convinced that the additions made by the AO are not justified in the hands of the assessee and once he has deleted the additions from the hands of the assessee, the matter should have ended there. But, ironically, the CIT(A) proceeded further in directing the AO to make the additions in the hands of some other persons and such directions are beyond the powers vested upon the CIT(A) u/s 251 of the Act. Such directions are uncalled for and deserve to be expunged from the findings of the CIT(A). Drawing support from the ratio laid down by the Hon’ble Supreme Court in the case of ITO Vs. Murlidhar Bhagwan Das [1964 (1) TMI 5 - SUPREME COURT] we direct the AO to read the order of the first appellate authority without direction to take action u/s 147/148 of the Act. DR reliance upon the provisions of section 150(1) is misplaced in as much as section 150(1) of the Act contains the provisions for cases where assessment is in pursuance of an order of appeal etc. This section does not permit the first appellate authority to pass orders on issues which were never the subject matter of appeal before him. - Decided in favour of assessee

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• 2018 (7) TMI 1470
  Capital gains computation - as per valuation of stamp duty as of November 2010 when the sale agreement of agricultural land was executed between the parties OR the rate prevailing at the time of registration of the sale deed on 21.06.2011 - Held that:- CIT(A) directed the AO to compute the capital gains on the sale of agricultural land as per valuation of stamp duty prevailing in November 2010 when the total consideration has been received by the assessee by way of cheques. The capital gains were directed to be calculated by the AO on such valuation as on November 2010 or total consideration received/receivable by the assessee, whichever is higher. Taking into consideration the entire facts of the matter, the provision of law and the judgment passed by the Co-ordinate Bench in DHARAMSHIBHAI SONANI VERSUS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE – 9, SURAT [2016 (9) TMI 1259 - ITAT AHMEDABAD] we uphold the order passed by the Ld. CIT(A) and dismiss the ground of appeal preferred by the Revenue. Deduction claimed by the assessee u/s.54 - assessee has not filed this claim for exemption in the original return of income - CIT(A) opined that the said claim of the assessee though has not been in the original return of income, the same cannot be denied if the assessee is entitled for the same. He thus, directs the AO to verify the claim of the assessee in terms of the provisions of section 54B of the Act and to allow the same if the assessee satisfies the requirement under the said provisions of law - Held that:- The approach taken by the Ld. CIT(A) in dealing with the claim u/s.54B of the assessee is just and proper, without any ambiguity, whatsoever, and we thus find no reason to interfere with the order passed by the CIT(A). The same is hereby upheld. To meet the ends of justice, we further add that the AO should give a reasonable opportunity of hearing to the assessee while considering the claim of under s.54B of the Act taking into consideration of the entire evidences already available on record as well as other documentary evidence which the assessee may choose to file in support of the claim on this issue. The ground of the appeal preferred by the Revenue is hereby dismissed.

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• 2018 (7) TMI 1469
  Disallowance u/s 14A - Held that:- This issue is covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in the case of Cheminvest Ltd vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT) wherein it has been held that if there is no dividend income (which is exempt from tax) earned during the relevant period, no disallowance u/s 14A can be made - Decided in favour of assessee Disallowance of preliminary expenses written off u/s 35D - Held that:- It is not in dispute that in the preceding assessment year, very expenditure stand accepted. The issue is squarely covered against the revenue in light of the decision of the Hon’ble Supreme Court in the case of Shasun Chemicals & Drugs Ltd vs. Commissioner of Income TaxII, Chennai reported in (2016 (9) TMI 1199 - SUPREME COURT OF INDIA) wherein the issue was with respect to claim under Section 35D and it was found that expenses claimed by the assessee for first two assessments years were allowed by the Assessing Officer, the Assessing Officer in the subsequent assessment year could not have disallowed the same. Under the circumstances, no error has been committed by the learned Tribunal in deleting the disallowance - Decided in favour of assessee

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• 2018 (7) TMI 1468
  TPA - non-recalculation of the operating cost of the assessee company as per the directions of the Hon'ble DRP issued on 29.9.2015 to keep the deferred revenue expenditure and finance cost out of the computation of margin - Held that:- We find that though the DRP has given a direction, the AO has not calculated the margin in accordance with the directions of the DRP. We therefore, remand this issue to the file of the AO with a direction to re-compute the operating cost of the assessee in accordance with the directions of the DRP. Ground No.3.a is accordingly treated as allowed for statistical purposes. comparable selection criteria - Held that:- We find that the DRP has retained Persistent Systems & Solutions Ltd, Persistent Systems Ltd and Sasken Communication Technologies Ltd as comparables and the average ratio of the employee cost to sales of these three companies is 58% as against the employee cost of the assessee at 76% and the difference is 18%. This difference is not negligible to be ignored. Every difference which is likely to affect the comparability analysis has to be taken note of and suitable adjustment has to be made to bring the comparables on par with the assessee for comparing of their operating margin. In view of the same, we deem it fit and proper to remit this issue also to the file of the AO with a direction to make suitable adjustment to the employee cost of the assessee if there is any underutilization of employees available with the assessee and thereafter re-compute the operating margin of the comparables for arriving at their average margin Disallowance u/s 10A - assessee has not submitted the evidences/receipts in support of the claim of deduction u/s 10AA - Held that:- The assessee has drawn our attention to the assessee’s petition filed before the Tribunal seeking admission of the additional evidence being Form No.56F in support of the claim and sought admission of the same. Since these documents goes to the root of the matter, we deem it fit and proper to remand this issue to the file of the AO for verification of the documents and consider the allowability of deduction u/s 10AA of the Act on the basis of such documents.

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• 2018 (7) TMI 1467
  Penalty u/s. 271(1)(c) - non specification of charge - Held that:- The show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. SEE THE COMMISSIONER OF INCOME TAX & OTHS. VERSUS M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS., M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee

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• 2018 (7) TMI 1466
  Application for approval of appellant u/s 80G rejected - Held that:- The society was directed to produce necessary documents before the Ld. CIT(A) by the order of the Tribunal within the reasonable time. It is uncontroverted fact that the assessee society itself sought adjournment for filing of the necessary documents. The ld. CIT has, thus, passed the impugned order on 29.1.2018 and , in our considered view that the ld. CIT has disposed of the issue of granting registration u/s 80G within the reasonable time. Thus, this ground of the assessee’s appeal is dismissed Once the ld. CIT is satisfied about registration u/s 12A, then the rejection of registration u/s 80G is not justified? - Held that:- It is evident that the ld. CIT(E) in the absence of the details related to other chapters of society, declined to grant registration under section 80G of the Act. We are of the view that ld. CIT(E) ought to have made enquiries from the Jurisdictional Assessing Authority, where other chapters of society are registered and assessed. We, therefore, direct the assessee to furnish complete details of other chapters of Society and its financial and administrative relations with such chapters. Hence, we set aside the impugned order and restore the issue of registration u/s 80G to the file of ld. CIT(E) for decision afresh. It is also clarified that the issue is setaside on the submissions of the Ld. Counsel for the assessee that the other chapters of the society are independent entities and the assessee has nothing to do with their financial affairs. The ld. CIT(E) would make enquiry for the limited purpose with regard to the administrative and financial relation of the assessee with other chapters.

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• 2018 (7) TMI 1484
  Denial of Principles of natural justice - fixing of average rate of royalty payment - exhausting the efficacious alternative remedy provided under the statute - Held that:- Institutional functions and exhausting the appeal remedies by the aggrieved persons, are to be enforced in all circumstances and writ proceedings can be entertained only on exceptional circumstances. Rule is to prefer an appeal and entertaining a writ is only an exception. This being the legal principles to be followed, this Court cannot entertain the writ petitions in a routine manner by waiving the remedy of appeal provided under the statute. The writ petitioner has not established that there is a violation of principles of natural justice nor there is an error apparent on record. No exceptional circumstances have been established in the present writ petition. If at all, the writ petitioner is aggrieved in respect of the fixing of average rate of royalty payment, then it is left open to them to approach the Disputes Resolution Panel and thereafter, if they are further aggrieved in respect of the fixing of average rate of royalty payment, then they are liberty to approach the ITAT constituted for the purpose of adjudicating the issues. This being the efficacious remedy available under the statute for the writ petitioner, there is no reason to entertain a writ petition under Article 226 of the Constitution of India, so as to adjudicate the merits and the demerits now raised before this Court in the present writ petition in respect of fixing of average rate of royalty payment. Under these circumstances, this Court is of an undoubted opinion that the writ petitioner has not made out any case for the purpose of waiving the efficacious alternate remedy available to the writ petitioner under the provisions of the Act and therefore, this Court is not inclined to entertain the writ petition on merits and adjudicate the issues involved in respect of fixing of average rate of royalty payment.

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• 2018 (7) TMI 1465
  Deduction claimed by the appellant-co-operative society under section 80-P denied - whether interest income earned on fixed deposits with the nationalized bank and co-operative bank would qualify for deduction under section 80P(2)(a)(i), 80P(2)(c) 80P(2)(d)? - Held that:- Direct the AO to exclude the amount of net interest income from the deduction claimed u/s 80P(2)(a)(i) of the Act. Thus the AO will allow the expenses incurred by the assessee in the earning of such interest income not eligible for deduction under section 80P(2)(a)(i) of the Act. Similarly, we also direct the Assessing Officer to allow the deduction to the assessee for the amount of interest earned from the co-operative bank under section 80P(2)(d) of the Act. Similarly, we also further direct the Assessing Officer to allow the deduction to the assessee under section 80P(2)(c) of the Act. Hence, grounds of appeal filed by the assessee are allowed for statistical purposes.

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• 2018 (7) TMI 1464
  Denial of benefit of sections 11 & 12 - anonymous donations receipts - Held that:- The assessee stated to have maintained a complete list of the names and addresses of its contributors. The ld. CIT(A) does not dispute this. CIT(A), as available from the above-extracted relevant portion of his order, has treated contributions amounting to ₹ 9,53,600/- as anonymous donations, as voter IDs and PANs, etc., concerning the contributors of this amount were not available and the assessee had also not filed proper confirmations. CIT(A) has, while doing so, applied the provisions of section 115BBC of the Act. We are not in agreement with the CIT(A)’s treatment of the amount of ₹ 9,53,600/- as anonymous donations. The assessee had, undisputedly, furnished the list (APB20-21) of the names and addresses of all the contributors, duly complying with the requirements of section 115BBC(3). There is no further requirement in the section. No other particulars have been shown to have been further prescribed. In ‘Sri Girraj Education and Welfare Society vs. ITO’ [2012 (10) TMI 27 - ITAT, AGRA] it has been held that section 115BBC(1) will not apply, if complete names and address of the donors are given. This decision was also relied on by the assessee before the ld. CIT(A). It stands noted at page 7 of the impugned order. It has not been dealt with by the ld. CIT(A). Before this Bench, no decision contrary to this decision has been cited. The grievance of the assessee is accepted as justified - Decided in favour of assessee.

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• 2018 (7) TMI 1463
  Computation of long term capital gains - assessee is a non-resident and resident of USA. Mr.B Chitti Babu is the representative assessee in this case - FMV determination - A.O. adopted the value of SRO as per section 50C(3) of IT act and computed the capital gains as the DVO has valued the property for more value than the value assessed by the SRO - Held that:- DVO has valued the property after considering all the objections raised by the assessee before the DVO and the A.O. and valued the property at higher rate. Since the objections were considered by the technical expert and made the valuation of the property at higher rate no separate deduction is required to be allowed on account of the deficiencies canvassed by the Ld. A.R. Therefore, we hold that the A.O. has rightly adopted the value assessed by the SRO u/s 50C of the Act and accordingly, we uphold the order of the Ld.CIT(A) and dismiss the assessee’s appeal on this ground. Revision of cost of land i.e. Fair Market Value(FMV) as on 01/04/1981 at ₹ 200/- per sq.yd. against FMV as on 1.4.1981 @ ₹ 100/- per sq.yd. as per the guideline value seeked by assessee - Held that:- For arriving the FMV as on 1981 the correct method is guideline value, or the sale value of the lands in the area, or the authentic market information and the value declared by the assessee in her wealth tax return. The assessee has not furnished any information to substantiate that the guideline value was incorrect. The A.O. has adopted the SRO value in the case of the sale consideration as well as for cost of land (FMV) and the decision taken by the A.O. is consistent. In the absence of any evidence to establish that the land rate of the area was at ₹ 200/- as on 01/04/1981 and the market rate was more than ₹ 100/-, we hold that the FMV arrived by the AO is reasonable and do not find any reason to interfere with the order of the CIT(A) and the same is upheld. Computation of short term capital loss in respect of super structures - Held that:- on going through the assessment order, the A.O. has adopted the value of sale consideration as adopted by the SRO. No other evidence produced by the assessee during the appeal hearing to controvert the finding given by the A.O., therefore, we do not find any infirmity in the order of the Ld. CIT(A) and the same is dismissed. Charging of interest u/s 234B & C - assessee is non-resident and resident of US and sold the property to the resident - vendee required to deduct the tax at source as per section 195 - Held that:- As relying on DIRECTOR OF INCOME TAX VERSUS M/S. JACABS CIVIL INCORPORATED / MITSUBISHI CORPORATION [2010 (8) TMI 37 - DELHI HIGH COURT] assessee is not liable for interest u/s 234 of the Act to the extent of TDS to be made from the assessee. Accordingly, we direct the A.O. not to levy the interest u/s 234B of the Act to the extent of tax required to be deducted from the assessee by the purchaser. Accordingly, the appeal of the assessee on this ground is partly allowed.

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• 2018 (7) TMI 1462
  Disallowance under section 40A(3) - Held that:- Two-three contradictory situations viz. if assessee has itself made disallowance of ₹ 1.32 crores whether it is part of total payment of ₹ 2.25 crores or not, and if yes, then how the AO has made disallowance of ₹ 2.25 cores ? He should have only made disallowance of difference of ₹ 2.25 crores minus ₹ 1.32 crores. The second question arise is, whether Shree Sardar Co-op. Sugar Industries has acted as an agent on behalf of the assessee for purchase of sugarcane from farmers. Benefit of clause (e) and (k) of Rule 6DD would be given to the assessee if Shree Sardar Cooperative Sugar Industries has acted as an agent of the assessee and made direct payment to the farmers after receiving from the assessee. No such circumstances have been discussed by the ld.CIT(A) - we deem it appropriate to set aside this issue to the file of the AO for readjudication. The ld.AO shall determine whether Shree Sardar Cooperative Sugar Industries has acted as agent of the assessee for purchase of sugar cane from farmers. If yes, then benefit of Rule 6DD in terms of Hon’ble High Court’s decision be given to the assessee. Similarly, he will examine the issue with regard to the admission of disallowance made by the assessee. After ascertaining the facts on these two aspects, he will decide the issue in accordance with law. Penalty u/s 271(1)(c) - Held that:- The quantification of the penalty is depended upon the addition made to the income of the assessee. In the present case, the assessee has filed appeal before the CIT(A) against quantum addition. Adjudication of quantum addition was pending before the ld.CIT(A) and the penalty proceedings is solely depended upon the ultimate determination of income, therefore, appeal arising out of imposition penalty cannot be decided before adjudication of quantum appeal. On account of this simple procedural irregularity, we set aside the order of the ld.CIT(A) and remit this issue to the file of the AO for fresh adjudication - decided in favour of revenue for statistical purpose.

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• 2018 (7) TMI 1461
  Assessment u/s 153A - Held that:- Referring to extracted provisions of section 153A that pending assessments on the date of search shall get abated. As mentioned elsewhere, since the period of limitation for issuing notice u/s 143(2) of the Act did not expire, the revised return filed on 31.03.2006 did not attain finality and has to be considered as pending assessment which got abated. This means that the return filed pursuant to notice u/s 153A of the Act has to be considered as a fresh return and the assessee is free to return income as per provisions of law and the same has nothing to do with any income returned previously u/s 139 of the Act. This means that the assessee is free to claim any new deduction which he is legally entitled for and compute its taxable income accordingly. To this extent, the action of the lower authorities is unlawful and is accordingly set aside. Deduction u/s 80IC - Exclusion of income received on account of licence fees from the deduction earlier claimed u/s 80IC along with the exclusion of the expenditure claimed on account of foreign exchange fluctuation loss, tours and travelling expenses, deprecation as intangible assets and administrative expenses - Held that:- AO did not allow claim of netting off of sub licence fees because the assessee in its return filed u/s 139 had shown the licence fees received from the two parties mentioned elsewhere on gross basis. AO did not allow the claim of royalty payment to Shri Ashok Chaturvedi since in the profit and loss account filed with the return of income u/s 139 of the Act the assessee had claimed ₹ 2,90,57,352/- which was debited to the profit and loss account. We find that the AO is simply carried away by treating the return filed u/ss 139 and 153A of the Act as separate returns for deciding the claim of the assessee. Since the return filed before the date of search did not attain finality, return filed u/s 153A of the Act has to be treated as having been filed for the first time and claim of deduction has to be considered only and only on the basis of income computed for filing return u/s 153A of the Act. The action of the AO/CIT(A) is not only erroneous but also against the relevant provisions of the law. - Decided in favour of assessee

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• 2018 (7) TMI 1424
  Addition on account of expenses found to be unverifiable during the assessment proceeding - Held that:- AO has made an ad hoc disallowance @ 10% of the various expenses under the head under consideration which was restricted to 8% by the Ld. CIT(A), while considering the upholding of disallowance @ 8% for the Asst. Year: 2011-12, by his predecessor. Even Co-ordinate Bench at Amritsar for the Asst. Year: 2011-12 sustained the similar disallowances @ 8% as restricted by the Ld. CIT(A), which is not in dispute, hence, the ground No.1 stands dismissed. Addition on account of development of road by treating the same as capital expenditure - Held that:- The similar addition was also deleted by the Ld. CIT(A) for the Asst. Year: 2011-12 which was further sustained by the Co-ordinate Bench at Amritsar and therefore, the Ld. CIT(A) while relying upon the order passed by the predecessor for the Asst. Year: 2011-12 as well as while analyzing various case laws, deleted the addition under challenge treating the same as Revenue expenditure. Disallowance u/s 14A - addition in respect of investment of ₹ 3,55,00,000/- in shares holding on the reason that the same is not in a proximity to the business of the assessee company and used the business funds on dividends which is exempt income - Held that:- In the instant case, the assessee company had interest free funds of ₹ 52,84,12,357/- and out of which only ₹ 3,55,00,000/- has been invested in share of group companies which goes to show that the appellant has not invested interest bearing funds, hence on this reason alone, no disallowance can be made in view of the judgment rendered by Jurisdictional High Court in the case of CIT vs. Hero Cycles Limited [2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT ] Addition in terms of provision of Sec.36(1)(va) read with Sec.2(24)(x) - sum not been deposited within the due date as prescribed under the PF Act and the ESI Act - Held that:- Employees contribution towards PF paid by the assessee before due date on filing of return u/s 139(1) of the Act for the Asst. Year under consideration is admissible for deduction . Prior period expenses and on account of leave encashment to be allowed

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• 2018 (7) TMI 1425
  Disallowance u/s 14A - Held that:- Both the Commissioner and the Appellate Tribunal found as a matter of fact that there was no exempt income for the operation of the relevant Rule. In the light of such concurrent findings and, in particular, the Department failing to demonstrate any error therein, no question of law arises in this matter.

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• 2018 (7) TMI 1483
  Claim for waiver or reduction of interest charged u/s 234B rejected - power of CBDT to waive the interest - Held that:- As seen from Exhibit-P3 impugned order, the claim of the petitioner for reduction of interest was not considered on merits for the simple reason that according to Chief Commissioner of Income Tax, the petitioner's case is not referable to any of the categories referred in Exhibit P4 notification, dated 26/6/2006, issued by the Central Board of Direct Taxes. Having adverted to the notification, this Court is of the view that the petitioner could not remit tax within time on account of Exhibit-P2 order passed by the BIFR. It is to be noted that the petitioner remitted tax immediately after the direction was lifted. Category (d) referred in Exhibit P4 notification clearly refers to the case that “where an assessee fails to file a return of income due to unavoidable circumstances”. If that be so, this Court is of the view that the petitioner's case falls squarely within category (d). It is for the Chief Commissioner of Income Tax to decide whether full waiver in interest or reduction in interest can be granted to the petitioner. However, certainly, the petitioner's case would fall within category (d). Therefore, the impugned order is set aside for paving way for reconsideration of the matter by the Chief Commissioner of Income Tax.

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• Customs

• 2018 (7) TMI 1449
  Additional Duty of Customs (ADC) - N/N. 29/2004-CE dated 09-07-2004 - Held that:- There is no merit in the present appeal - Admission is refused and the civil appeal is, accordingly, dismissed.

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• 2018 (7) TMI 1448
  Confiscation - import of stainless steel drums - Held that:- There is no merit in the appeal - Admission is refused and the civil appeal is, accordingly, dismissed.

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• Corporate Laws

• 2018 (7) TMI 1450
  Violation of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 - petitioner although held more than 5% shares in a listed company, Himalaya Granites Ltd., he had failed to make the disclosure as required under Regulation 13(3) read with 13(5) of the PIT Regulations - Eligible grounds for adjudging under Chapter VIA of the Act - Held that:- This Court is of the view that the noting made by the Whole Time Member cannot be read as an expression of his opinion that there are grounds for adjudging under Chapter VIA of the Act, which is a pre condition for appointment of an Adjudicating officer. The contention that the Whole Time Member was required to give reasons and pass an order is unmerited. There is no such requirement under the Rules. Further, an opinion to be formed is also not a judicial or quasi judicial order, which would require the Whole Time Member to articulate his reasons in detail. However, he as a delegate of the Board is required to examine the allegations made and independently form and express an opinion that there are grounds for adjudging under Chapter VIA of the Act. The Board has to form an independent opinion that there are grounds for adjudging under Chapter VIA of the Act. It is not necessary for the Board to elaborate its opinion or to provide reasons for the same. However, the least that is required for the Board is to state in unequivocal terms that in its opinion, there are grounds for adjudging under Chapter VIA of the Act before proceeding to appoint an Adjudicating Officer. It is necessary that the record clearly bears out that there is an application of mind on the part of the Board. The power to appoint an Adjudicating Officer has been delegated to the Whole Time Member. Therefore, it was necessary for him to have formed such opinion before proceeding further. In the present case, the Whole Time Member has not even made an endorsement that he is of an opinion that there are grounds for adjudging under Chapter VIA of the Act and, therefore, the question of inferring that he had formed such an opinion does not arise. In view of the above, the proceedings initiated against the petitioner are set aside. The impugned notice is also set aside. However, it is clarified that the Board/Whole Time Member may examine the file and if the Board is of the view that there are grounds for adjudging under Chapter VIA of the Act, an Adjudicating Officer may be appointed for holding an inquiry and pass an order in terms of the Rules.

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• Service Tax

• 2018 (7) TMI 1445
  Refund claim of service tax paid erroneously - refund was rejected on the ground of Time Limitation - Section 11B of the Central Excise Act - the appellant has prayed that the time limit under Section 11B will not be applicable since the tax has been paid by mistake when there was no tax liability - unjust enrichment. Held that:- The Larger Bench of the Tribunal in the case of Veer Overseas [2018 (4) TMI 910 - CESTAT CHANDIGARH] has been held that the time limits prescribed under Section 11B will govern all refund claims of Service Tax - refund rightly denied. Unjust enrichment - Held that:- Perusal of some of the sample tickets/ booking confirmations indicates that no Service Tax has been recovered along with fare. This fact has also been categorically certified by the Chartered Accountant after perusal of the books of accounts of the appellant for the relevant period - rejection of refund on this ground not tenable. Appeal allowed in part.

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• 2018 (7) TMI 1444
  Classification of Services - Construction of Complex Services or not? - Department noticed that the appellant was not paying service tax on certain amounts recovered by them from their customers towards ‘Car Parking charges’ and demanded tax under the head Construction of Complex Services. Held that:- Car Parking Charges are admittedly towards provision of open car parking place within the residential complex - the provision of parking place within the residential complex is very much included within the definition of residential complex and the same will be liable to payment of service tax under the said category - demand upheld - appeal dismissed - decided against appellant.

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• 2018 (7) TMI 1443
  Waiver of penalties - non-payment of service tax under the head renting of immovable property service - issue was under dispute during relevant time - Held that:- The liability for payment of service tax under the category of renting of immovable property service was the subject matter of several disputes and it came to be settled only with the decision of Hon’ble Delhi High Court in the case of Home Solution Retail India Ltd. vs. Union of India [2009 (4) TMI 14 - DELHI HIGH COURT]. Subsequent to the said decision, the retrospective amendment in the Finance Act, 2010 was carried out and the definition of the service was amended retrospectively w.e.f. 01/06/2007 - Since the liability to pay service tax itself was under challenge, the sustaining the penalties against the appellant could not be proper - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1442
  Advertisement services - sale of space for hoarding in public places - Revenue was of the view that service tax is liable to be paid by the appellant on the amount so received under the category of “sale of space or time for advertisement services”, which was included in the statute book w.e.f. 01.05.2006 - Held that:- During the period on or after 01.05.2006, the appellant did not receive any consideration even though the service was to be provided for the period when the levy was in existence. Section 67 of the Finance Act, 1994 (as it stood) at the relevant time that service provided or to be provided is taxable from the time the value of the consideration for the same is received - In the present case the consideration has been received on 21.04.2006 when there was no levy in existence and since no consideration has been received after 01.05.2006 - the levy of service tax cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1441
  Business Auxiliary Service - appellant is engaged in providing D.S.A. Service to M/s ICICI HFC Ltd. for promotion of their loans and received Commission - Held that:- The issue stands settled against the assessee on merit. In the case of Brij Motors Pvt. Ltd. V/s Commissioner [2011 (11) TMI 410 - CESTAT, NEW DELHI] the Tribunal held that for the loan taken by the customers, if the assessee is getting some commission from bank, the same amounts to promotion and marketing of services provided by the client and is liable for payment of Service Tax under the category of ‘Business Auxiliary Service’ - demand upheld. Time Limitation - Held that:- The appellant has not been cooperating with the Department even during the investigation. The service tax under Business Auxiliary Service included the activities covered in the present dispute w.e.f. 10.09.2004 but it is noticed that the appellant has not taken registration and has failed to pay Service Tax and file the statutory returns. Even when the Department sought details of commission received by the appellant from the M/s ICICI HFC Ltd, the assessee failed to respond to the letter of the Department and even summons issued to them - this conduct amounts to willful and deliberate and withholding and of suppression facts - invocation of extended period is justified. Appeal dismissed - decided against appellant.

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• 2018 (7) TMI 1440
  Renting of immovable property Service - appellant has rented their premises for use of Axis Bank and were receiving rent for the same - benefit of N/N. 6/2005 dated 01.03.2005 as amended - Held that:- This Notification exempts the payments of Service Tax in respect of taxable service upto the initial aggregate value of ₹ 8 Lakhs (for the period 2007-08) - Since the renting became taxable service only w.e.f. 01.06.2007, the rent received by the appellant in the year 2006-07 cannot be considered as receipt of consideration for taxable service - even if such amount received is more than ₹ 4.00 Lakhs / 8.00 Lakhs in 2006-07, the benefit of N/N. 6/2005 for the period 2007-08 cannot be denied to the appellant. Penalty - Held that:- The service of renting of immovable property was introduced w.e.f. 01.06.2007 and the demand for service tax is for the period immediately after the introduction of such service - penalty waived by invoking section 80. The demand for Service Tax is restricted to the amount already paid by the appellant alongwith interest - penalty set aside - Appeal allowed in part.

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• 2018 (7) TMI 1439
  Business Auxiliary Services or not - amounts received as commission from various agencies for the sale of mutual funds - collection of telephone bills for BSNL - receipt and remittance of money from abroad as an agent of Western Union - sale of Government of India bonds - period July 2003 to June 2006 - demand of service tax under the head Business Auxiliary Services. Commission on sale of mutual funds - period involved is July 2003 to 09.07.2004 - Held that:- Identical issue came up before the Tribunal in the case of P.N. Vijay Financial services (P) Ltd. [2008 (9) TMI 72 - CESTAT, NEW DELHI] wherein the Bench held that sale and purchase of mutual funds is covered under notification No. 13/2003-ST and hence any commission received for such activity, no tax is payable - demand set aside. Commission received on collection of telephone bills - period involved is July 2003 to 09.09.2004 - Held that:- Hon’ble Supreme Court in the case of Federal Bank Limited [2016 (3) TMI 354 - SUPREME COURT] has categorically held that services provided by banks for collection of telephone bills, insurance premium on behalf of the client companies have to be considered as cash management service and cannot be considered under the category of business auxiliary services - demand set aside. Amount of commission received on money transfer - period from July 2003 to 09.09.2004 - Held that:- The ratio of Apex Court in the case of Federal Bank Limited [2016 (3) TMI 354 - SUPREME COURT] would squarely cover the issues in favor of the respondent, where it was held that when cash management services stood excluded from the purview of service tax at the hands of the Bank until 31.05.2007, the authorities cannot levy service tax on an activity which is essentially cash management service, by taking aid of other general charging heads, such as business auxiliary service - demand set aside. Commission received on sale of Government of India bonds - period involved is from July 2003 to June 2006 - Held that:- Identical issue came up before the Tribunal in the case of HDFC Bank Ltd [2014 (1) TMI 1611 - CESTAT MUMBAI] wherein the Tribunal held that sale of RBI bonds and receipt of brokerage being the transaction of government securities, there is no service tax liability - demand set aside. Appeal dismissed - decided against Revenue.

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• 2018 (7) TMI 1447
  Grant of Leave - Outdoor Catering Service - Held that:- Leave granted in the special leave petition.

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• 2018 (7) TMI 1446
  Business Auxiliary Services - commission and brokerage received from the broker - Whether, without mentioned specific clause of business auxiliary services as mentioned U/s 65(19), the appellant can be held liable for all the services as mentioned in business auxiliary services for the purpose of service tax? - Held that:- The Tribunal is not justified in holding that commission received from the broker would fall in the category of business auxiliary services and brokerage received on which service tax of ₹ 1,17,822/- is liable - demand cannot be upheld. The order passed in this appeal by the tribunal and any consequential order thereto are quashed and set aside - appeal allowed - decided in favor of assessee.

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• Central Excise

• 2018 (7) TMI 1438
  Review of order - Held that:- There is no merit in the Special Leave Petitions - The Special Leave Petitions are, accordingly, dismissed.

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• 2018 (7) TMI 1429
  CENVAT Credit - whether the appellant could have taken the Cenvat credit of service tax paid on the services which were also utilised by their unit number-II? Held that:- An identical issue was considered by the Tribunal in the case of M/s Dynamic Cables Pvt. Ltd. V/s CGST & CE, Jaipur, [2018 (7) TMI 1336 - CESTAT NEW DELHI] where reference was made to the Tribunal’s decision in the case of Doshion Ltd. V/s CCE, Ahmedabad [2012 (10) TMI 952 - CESTAT AHMEDABAD], where in it was held that distribution of the credit without taking registration as input service distributer cannot be held to be as irregular - Even as per the revenue the credit was available to unit number-II, who has discharged duty in cash during the relevant period. If the credit would have been availed by unit number-II, they could have utilised the same for payment of duty on their final product instead of paying the duty through PLA - As such the entire exercise is revenue neutral thus not resulting in any loss to the Revenue. Credit cannot be denied - the demand is set aside along with setting aside of penalty - appeal allowed - decided in favor of appellant.

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• 2018 (7) TMI 1437
  Condonation of delay - maintainability of appeal - Held that:- The civil appeal(s) is/are dismissed on the ground of delay in terms of the signed order.

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• 2018 (7) TMI 1436
  Area Based Exemption - N/N. 32/99-CE dated 08.07.1999 - Held that:- There is no merit in the present appeals - Admission is refused and the civil appeals are, accordingly, dismissed.

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• 2018 (7) TMI 1435
  Valuation - interconnected undertakings - Held that:- Despite sufficient time granted to the appellant(s) to file Affidavit of Valuation and costs of ₹ 2000/-, the needful has not been done so far - The civil appeals are, accordingly, dismissed on default.

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• 2018 (7) TMI 1434
  Classification of goods - Ready Mix Concrete (RMC) - Held that:- There are no merits in these appeals - Admission is refused and the civil appeals are, accordingly, dismissed.

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• 2018 (7) TMI 1433
  Condonation of delay of 1825 days in filing appeal - Held that:- There is no legal and valid ground for interference - The Special Leave Petition is dismissed.

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• 2018 (7) TMI 1432
  Waiver of pre-deposit - Held that:- There is no merit in the review petition and the same is accordingly dismissed.

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• 2018 (7) TMI 1431
  Review petition - Condonation of delay in filing appeal - Held that:- We have perused the Review Petitions as well as the grounds in support thereof. In our opinion, no case for review of order is made out - the review petitions are dismissed.

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• 2018 (7) TMI 1430
  Area Based Exemption - N/N. 50/2003-CE dated 10.06.2003 - Held that:- There is no merit in the present appeal - appeal is therefore dismissed.

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• CST, VAT & Sales Tax

• 2018 (7) TMI 1428
  Revision of assessment - escaped turnovers - TNVAT Act - Held that:- The defects were found from the details obtained from web report. In the cases of mismatch on the basis of the details obtained from web report, it is incumbent on the Assessing Officer to enquire with the other end dealers and ascertain the correctness of the transaction made by the dealer and the returns filed by him. Without conducting an enquiry, simply, on the basis of the web report, a proposal cannot be sent without application of mind. In the instant case, no such application of mind appears to have been made by the Assessing Officer nor such proposal is made. Further, while passing final orders, objections raised by the dealer should have been considered, discussed and a reasoned order should have been passed. But, in the instant case, none of the settled procedures have been followed. The impugned order does not stand the test of law and accordingly, it is set aside and the matter is remanded back to the respondent for fresh consideration - petition allowed by way of remand.

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• 2018 (7) TMI 1427
  Jurisdiction - arbitrariness in exercise of powers - deviation proposal to his superior officer was rejected, the reasons for such rejection having not disclosed, the respondent stated that he is proceeding to issue the impugned notices - issuance of repeated notices - revision of turnover - suppression of facts or not?. Held that:- This Court has always stressed the point that the Assessing Officer is an independent authority and he cannot be directed to complete the assessment in a particular manner. Thus, if a superior officer directs the Assessing Officer to complete the assessment in the manner he proposes, then the purpose of creating an Assessing Officer and a procedure for assessment would be reduced to a mockery - In the instant case, it is clear that the Assessing Officer has been compelled by his superior officer namely the Joint Commissioner (ST), Enforcement II, Chennai-6. Apart from that, issuing repeated notices and calling upon the petitioner to submit their reply would amount to harassing a dealer and no useful purpose will be served in submitting a reply to the notices dated 18.5.2018, as already the respondent pre-judged the issue because he stated that the deviation proposal sent by him was rejected by his superior officer. The matters are remanded to the respondent for a fresh consideration - appeal allowed in part by way of remand.

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• Indian Laws

• 2018 (7) TMI 1426
  Interpretation of Statute - Article 239AA of the Constitution - Whether the inhabitants or voters of NCT of Delhi remain where they were prior to the special status conferred on the Union Territory or the amended constitutional provision that has transformed Delhi instills Prana into the cells? Held that:- It would be fundamentally inappropriate to assign to the NCT a status similar to other Union territories. Article 239AA(4) is a special provision which was adopted to establish a special constitutional arrangement for the governance of the NCT, albeit within the rubric of Union territories. In interpreting the provisions of Article 239AA, this Court cannot adopt a blinkered view, which ignores legislative and constitutional history. While adopting some of the provisions of the Acts of 1963 and 1966, Parliament in its constituent capacity omitted some of the other provisions of the legislative enactments which preceded the sixty ninth amendment. The relationship between the Council of Ministers and the Administrator of the Union territory evolved as Delhi progressed from a Part C State (before the Seventh Amendment) to a Union Territory governed by legislation - As a Union territory, the position of Delhi has evolved from being administered by an Administrator Under Article 239A following the fourteenth amendment and from governance under the earlier enactments of Parliament to its present-day status as a national capital territory governed by a specific constitutional provision: Article 239AA. The constitutional principle which emerges is that while Delhi presents a special case, quite unlike the other Union territories, the constitutional provisions governing it are an amalgam between national concerns (reflected in control by the Union) and representative democracy (expressed through the mandate of a Council of Ministers which owes collective responsibility to a directly elected legislature). There is no gainsaying the fact that the control by the Union, is also control of the President acting on the aid and advice of the Union Council of Ministers which in turn owes collective responsibility to Parliament. Constitutional statesmanship between the two levels of governance, the Centre and the Union territory, ought to ensure that practical issues are resolved with a sense of political maturity and administrative experience. This Court has to step in only because skirmishes between the two have raised constitutional issues of the proper distribution of executive control over the National Capital Territory. The interpretation of the Constitution has to be purposive taking into consideration the need of time and Constitutional principles. The intent of the Constitution framers, the object and reasons of a Constitutional Amendment always throw light on the Constitutional provisions. For adopting the purposive interpretation of a particular provision the express language employed cannot be given a complete go-bye - The Parliament has power to make laws for NCTD in respect of any of the matters enumerated in State List and Concurrent List. The Legislative Assembly of NCTD has also legislative power with respect to matters enumerated in the State List (except excepted entries) and in the Concurrent List. When the Constitution was enforced, executive power of Union in reference to Part C States with regard to Concurrent List was not excluded. Part C States having been substituted by 7th Constitution Amendment as Union Territories. The word 'State' as occurring in proviso to Article 73 after 7th Constitution Amendment cannot be read as including Union Territory. Reading the word 'Union Territory' within the word 'State' in proviso to Article 73 shall not be in consonance with scheme of Part VIII (Union Territories) of the Constitution. From persons holding high office, it is expected that they shall conduct themselves in faithful discharge of their duties so as to ensure smooth running of administration so that rights of all can be protected.

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