TMI Tax Updates - e-Newsletter
August 31, 2018

Case Laws in this Newsletter:

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

TMI SMS

• MAT - share of profit from AOP/Joint Venture shall be excluded for the computation of book profit U/s 115JB - amendment is retrospective

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• Mere apprehension that a third party has not declared true income, cannot justify disclosure of Income Tax Returns in larger public interest

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• Permitting the students to use the factory premises for their research work is not taxable as commercial training or coaching service

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News

1. Extension of Date- Framing of Income Tax rules relating to Significant Economic Presence as per Section 9(1)(i) of the Income Tax Act,1961, Comments and suggestions

2. Launch of National Mission on GeM

3. 6TH RCEP Ministerial Meeting begins in Singapore

4. CCI decides another Lesser Penalty case in respect of cartelisation in Indian Zinc-Carbon Dry Cell Batteries Market

5. Government of India and ADB Sign $346 Million Loan to Improve State Highways in Karnataka

6. Centre to provide all necessary assistance to flood ravaged Kerala; Insurance Companies instructed to expedite claim settlements of flood victims; Demand for enhancing Kerala’s borrowing limit to be looked into says MoS Finance P. Radhakrishnan

7. Shri Arun Jaitley inaugurates new office building of CCI

8. Annual Review of MPLADS Program

9. Government of India and ADB Sign $375 Million Loan to Improve Irrigation Efficiency in Madhya Pradesh

Notifications

Customs

1. 16/2018-Customs (N.T./CAA/DRI) - dated 29-8-2018 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI

DGFT

2. 32/2015-2020 - dated 30-8-2018 - FTP

Amendment in the import policy of Peas under Chapter 7 of the ITC (HS) 2017, Schedule -1 (Import Policy)

GST - States

3. G.O.Ms.No. 441 - dated 21-8-2018 - Andhra Pradesh SGST

Amendments to the Notification issued vide G.O.Ms.No.259, Revenue (Commercial Taxes-II) Department, dated.29th June, 2017.

4. G.O.Ms.No. 393 - dated 23-7-2018 - Andhra Pradesh SGST

The Andhra Pradesh Goods and Services Tax (Twentieth Amendment) Rules, 2018.

5. G.O.Ms.No. 391 - dated 23-7-2018 - Andhra Pradesh SGST

The Andhra Pradesh Goods and Services Tax (Nineteenth Amendment) Rules, 2018.

6. 25/2018-State Tax - dated 6-7-2018 - Arunachal Pradesh SGST

Arunachal Pradesh Goods and Services Tax (Seventh Amendment) Rules, 2018.

7. CT/GST-14/2017/141-13/2018-GST - dated 21-8-2018 - Assam SGST

Seeks to extend the due date for filing of FORM GSTR-3B for the month of July,2018.

Circulars / Instructions / Orders

GST - States

1. 16/2018-GST - dated 20-8-2018

Taxability of services provided by Industrial Training Institutes (ITI)

2. 15/2018-GST - dated 20-8-2018

Classification of fertilizers supplied for use in the manufacture of other fertilizers at 5% GST rate.

3. 14/2018-GST - dated 20-8-2018

Clarification regarding applicability of GST on the petroleum gases retained for the manufacture of petrochemical and chemical products.

4. 13/2018-GST - dated 20-8-2018

Clarification regarding applicability of GST on various goods and services.

5. 12/2018-GST - dated 9-8-2018

Liability, submission of return , registration eligibility to make interstate sale/purchase and transfer of goods against Form-C and Form-F,etc.

FEMA

6. 05 - dated 29-8-2018

Rupee Drawing Arrangement – Remittance to the Chief Minister’s Distress Relief Fund- Kerala

DGFT

7. Trade Notice 29/2015-2020 - dated 30-8-2018

Director General of Foreign Trade (DGFT) as the Authenticating Officer on behalf of the President of India in all Notifications published in the Gazette of India Extraordinary Part-II, Section - 3, Sub-Section (ii)

8. Trade Notice No. 28/2018-19 - dated 29-8-2018

New E.Com module for SEIS, ANF 3B to be available from 20.09.2018 for application

9. 32/2015-20 - dated 29-8-2018

Regarding intimation to Regional Authorities about Block-wise fulfilment of EO under the EPCG Scheme

10. 31/2015-20 - dated 29-8-2018

Regarding shifting of Capital Goods imported under the EPCG Scheme

11. Policy Circular No. 12/2015-2020 - dated 28-8-2018

Policy Circular 5(2013)/2009-14 dated 14.08.2013 regarding norms for Spices under Advance Authorization- validity thereof

12. TRADE NOTICE No. 27/2018-19 - dated 28-8-2018

Acceptance of new format for IEC- regarding

13. TRADE NOTICE No. 26/2018 - dated 27-8-2018

Status of applications for Import /Non-SCOMET Export/ SCOMET Export Licenses - reg.

Customs

14. 28/2018 - dated 30-8-2018

Forwarding of samples for testing to the Outside Laboratories- reg.

15. Instruction No. 13/2018 - dated 29-8-2018

Sharing of cases booked by Customs field formations under the Information Sharing Protocol with CEIB - regarding

Highlights / Catch Notes

GST

• PVC Floor Mat GST Classification at 18% Confirmed by AAR; Split into 9% CGST and 9% SGST.

  Case-Laws - AAAR : Classification of goods - rate of GST - The PVC floor Mat would fall in the Customs Tariff heading 3918 and applicable rate of GST would be 18% (9% each of CGST and SGST) - the order of AAR upheld.
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Income Tax

• School Expenses for FACT School Allowable u/ss 37(1) & 40A(10), Essential for Employee Welfare and Business Operation.

  Case-Laws - AT : Disallowance of school expenses - contribution for the running of the FACT School - an expenditure for the smooth functioning of the business of the assessee and an expenditure wholly and exclusively for the welfare of the employees of the assessee and thus, allowable under section 37(1) as well as section 40A(10) of the Act.
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• Taxpayer's Share Sale Profits Reclassified as Business Income Due to Trading Intent, Not Investment Gains.

  Case-Laws - AT : Profit earned on sale of shares - frequency and volume of purchase and sale of shares shows, intention of assessee was to generate income through trade, rather than invest in them. - CIT (A) is not correct in considering income generated from sale of these shares as “capital gain” instead of “income from business”.
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• Joint Venture Income Excluded from Book Profit Calculation u/s 115JB; Amendment Deemed Retrospective.

  Case-Laws - AT : MAT - adjustment made in the book profit computed U/s 115JB in respect of share of the assessee in the income of the joint venture - whether the share of profit from AOP/Joint Venture shall be excluded for the computation of book profit U/s 115JB? - Held Yes - The amendment is retrospective in nature.
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• Vacancy Allowance Reduces Taxable Value for Vacant House Properties: Key Point in Annual Value Determination.

  Case-Laws - AT : Annual value determination - Estimating the value of the house property - assessee should be granted vacancy allowance.
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• No TDS Liability on Warehousing and Collection Charges u/s 194C as Reimbursements Aren't Income.

  Case-Laws - AT : TDS u/s 194C - non deduction of tax at source (TDS) on warehousing & collection charges - there is no element of ‘income’ in these transactions, it is just reimbursement of expenses incurred by the agent for and on behalf of assessee - No TDS liability.
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• Estimating Property Value: Include Income from Leasing and Maintenance Services as Business Income for Tax Purposes.

  Case-Laws - AT : Estimation of the annual value of the property - The income of the assessee both from leasing the space as well as providing maintenance services had to be considered only under the head income from business.
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• Officer's Rejection of Declared Rent for Property Tax u/s 22 Deemed Unjustified.

  Case-Laws - AT : Estimation of the annual value of the property - No justification for the action of the Assessing Officer in disregarding the actual rent declared by the assessee for the purpose of arriving at the annual value of the property to be taxed u/s 22 of the Act.
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Customs

• Customs Circular: New Procedure for Sending Samples to External Labs for Testing to Ensure Compliance and Efficiency.

  Circulars : Forwarding of samples for testing to the Outside Laboratories- reg.
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• Developers to Cover Customs Staff Costs at ICDs, CFSs, ACCs, and EPZs for Additional Posts as Service Fees.

  Case-Laws - HC : Additional posts are created/sanctioned for the ICDs/CFSs/ACCs/EPZ for which the developer undertakes to bear the cost of the staff posted. The payment is in the nature of fee for the services rendered - They are therefore bound to bear the cost of the customs staff, posted for the ICDs/CFSs/ACCs/EPZs.
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• Revenue Cannot Recover Customs Duty on Confiscated Goods with Redemption if Not Demanded in Show Cause Notice.

  Case-Laws - HC : Scope of SCN - recovery of Customs Duty - Whether the revenue is entitled to recover the customs duty u/s 125(2) of the Customs Act on the goods which are confiscated under Section 111(d) and allowed redemption u/s 125(1), even when no specific demand is made in the show cause notice? - Held No
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• Customs House Agent Not Liable for Importer Background Checks; Prohibition Lifted for Chennai Customs Operations.

  Case-Laws - AT : Prohibition of appellant-CHA to transact the business under Chennai Customs jurisdiction - Detention of Consignment - The CHA is not an inspector to weigh the genuineness of the transaction - appellant cannot be saddled with the obligation that they have not verified the antecedents of the importer namely M/s. J.J. Enterprises.
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Indian Laws

• Deadline Extended for Input on Significant Economic Presence Rules u/s 9(1)(i) of Income Tax Act 1961.

  News : Extension of Date - Framing of Income Tax rules relating to Significant Economic Presence as per Section 9(1)(i) of the Income Tax Act,1961, Comments and suggestions
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• RTI Act Denies Access to Third Party Income Tax Returns; Suspicions of Underreporting Do Not Justify Disclosure.

  Case-Laws - HC : Information denied under RTI Act - Mere apprehension that a third party has declared income, which is lower than the true income, cannot justify disclosure of Income Tax Returns in larger public interest.
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Service Tax

• Students Using Factory Premises for Research Not Considered 'Commercial Training or Coaching' for Service Tax Purposes.

  Case-Laws - AT : Nature of service - permitting the students to use the factory premises for their research work as a part of their academic curriculum will not make the receipt of the appellant as consideration for services rendered under the category of ‘commercial training or coaching’.
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• Appeal Reinstated for Re-Adjudication After Payment of 10% Pre-Deposit of Penalty for Merit Consideration.

  Case-Laws - AT : In case of non-payment of pre-deposit, appeal should not have been admitted or else rejected but dismissal of appeal without consideration of its merit requires re-adjudication since predeposit of 10% of penalty amount has already been paid at this end.
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Central Excise

• Service tax on office package insurance policies qualifies for CENVAT credit, as it covers furniture and office equipment.

  Case-Laws - AT : CENVAT Credit - service tax paid in respect of insurance policies - The argument of the revenue that the office package policy has no connection with the manufacturing activity cannot be accepted for the simple reason that such insurance coverage is only for the furniture and other office equipments which is covered in a package scheme.
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• CENVAT Credit Entitlement Upheld: Rule 7 Allows Non-Mandatory ISD Registration for Multi-Unit Input Service Distribution.

  Case-Laws - AT : CENVAT credit - input services - case of Revenue is that since the respondents have more than one unit, they ought to have taken ISD registration and distributed the credit - Rule 7 of CCR, 2004 as it stood during the relevant period uses the word “may” and not “shall” - credit cannot be denied.
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VAT

• Input Tax Credit Available for Windmill Purchase in Manufacturing u/s 19(3) of Tamil Nadu VAT Act.

  Case-Laws - HC : Input tax credit - purchase of wind mill - when the erection of wind mill for the purpose of generating power in the manufacturing process shall be construed as capital goods, Input Tax Credit shall be made available to the assessee as per Section 19(3) of the TNVAT Act.
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Case Laws:

• GST

• 2018 (8) TMI 1650
  Classification of goods - rate of GST - floor mats / (floor coverings) made of (PVC textiles) PVC, known as PVC Carpet Mats or Floor coverings or Textile floor covering made up of PVC - appellant had proposed the classification of the product under chapter 5705 and being covered under entry no 146 of schedule II of the notification no 1/2017-CT(rate) and 1/2017-ST (rate) and attracting tax at the rate of 12% in total - AAR classified the product under chapter heading 3918 and rejected the classification of the appellant under chapter 5705 - Challenge to Advance Ruling decision. Whether the goods in question are classifiable under Tariff Item 3918 as held by AAR, or 5705 as claimed by the Appellant? Held that:- On perusal of the sample produced, it is found that it is in the form of a plastic web on exposed surface and with a sheet-like backing of plastic. The manufacturing process, as submitted in writing by the appellant, reveals that the said product is manufactured in two stages. In Stage One, a web of PVC is formed in roll form. In Stage Two, this web is impregnated with a lamination of PVC. These facts are not disputed. There also no dispute that the product is made of 100% plastic. To avoid classification disputes under the GST regime, the Customs Tariff has been adopted for descriptive classification of goods under GST. Further, in case of any doubt, and for the exact classification of any goods, reference needs inevitably to be made to the Section and Chapter Notes provided therein, as has been done in this case by both the appellants and the Maharashtra AAR. It is seen that Chapter 57 of the HSN falls under Section Xl of the Customs Tariff. Section Note 1(h) of Section Xl, relied upon by the AAR, excludes interalia non-wovens impregnated/coated with plastics. In their written submissions the appellant has claimed the said goods to be Non-woven and impregnated/coated (as per their manufacturing process). Thus in view of Note 1(h) of Section Xl, the said goods are apparently excluded outright from this section. If the said goods are excluded from the section Xl, their classification under any Chapter under the Section would also be ruled out - The exposed surface of the article does not contain fabric or fibres, filaments or yarns, but is a web of PVC made from a moulding process in which T-shaped monofilaments result in the intermediate process. It is not the case of the appellants that that they manufactured the non-woven product (PVC web) by use of monofilament yarns. There are no identifiable fibres, filaments or yarns in the exposed surface of their product and the web like structure made from 100% PVC therefore does not qualify for the textile materials as specified in Note 1 to Chapter 57. The appellant is already a manufacturer of the said goods and classifying the same under Chapter 39 in the pre-GST era. The appellant has not brought on record any change in the composition, nature or manufacturing process of the said goods from the pre-GST era to now which has compelled them to approach AAR for classification. The only change noticed and which was discussed during hearing also, is the higher rate of GST under HSN 3918 than under HSN 5705. But the rate of duty/tax cannot be a criterion for deciding the classification of any product. The PVC Mats manufactured by the appellant, a sample of which was produced before us, are specifically covered under HSN 3918 as Floor Coverings of PVC in terms of Rule 1 of the Rules of Interpretation of Customs Tariff read with Note 1(h) to Section Xl and Note 1 to Chapter 57. Ruling:- The PVC floor Mat would fall in the Customs Tariff heading 3918 and applicable rate of GST would be 18% (9% each of CGST and SGST) - the order of AAR upheld.

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• 2018 (8) TMI 1649
  Unable to upload FORM GST TRAN-1 within the stipulated time - availability of Input tax credit - Held that:- The Ext.P2 is the circular issued by the Government of India for setting up an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal. - the petitioner may apply to the additional seventh respondent, 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 disposed off.

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• Income Tax

• 2018 (8) TMI 1648
  Gross profit estimation - estimation of profit at 7.17% - assessment was made based on the statement given by the assessee that the amount did not represent the sale of jewelery to the said Mr.Perumal, but was a commission earned for arranging for sale of jewelery from third parties - substantial question of law - Held that:- As perused the reasons assigned by the Assessing Officer in the assessment order dated 29.1.1999 and do agree with the conclusion arrived at by the Assessing Officer that it would be highly improper and imprudent on the part of the assessee firm, who themselves are manufacturers and sellers of gold jewelry to engage in arranging for sale of gold jewelery manufactured by third parties for a commission of about 3%. Thus, going by the statement given by the assessee, the Assessing Officer estimated the profit at 7.17% as was declared by the assessee in respect of sales effected by them. The CIT (A) does not interfere with the finding recorded by the Assessing Officer on this aspect, but only reduced the percentage of gross profit. In fact, the reason assigned by the CIT (A) stating that there was no extra rent, salary, traveling, interest payment for the unaccounted sales, was not borne out by any material and appears to be the personal view of the CIT (A), which could not have been the basis for reversing the decision of the Assessing Officer. Thus, in our considered view, the Tribunal rightly restored the order passed by the Assessing Officer - decided against assessee

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• 2018 (8) TMI 1647
  Claim of depreciation on Foreign Exchange Fluctuation - Held that:- Question no.1 has already been decided against the revenue by way of a judgement in the case of CIT v. Woodward Governor India (P) Ltd. [2009 (4) TMI 4 - SUPREME COURT]. Relief under Section 35D(2)(C)(iv) - no such claim was made by the assessee before the Assessing Officer during the assessment proceedings in as much as the expenses claimed were not incurred in connection with the installation of Plant and Machinery or construction of the infrastructure of the Company ? - Held that:- The question no.2 has also been decided against the revenue by way of several judgements all over India including the case of Autolite India Ltd. v. CIT [2003 (7) TMI 53 - RAJASTHAN HIGH COURT] in which it has been categorically held that the expenses incurred on issue of public subscription of shares or of debentures of the company, any payment made against commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus would be eligible for benefit of Section 35D Capitalization of expenses incurred on advertisement, salary and wages, travelling and conveyance and staff welfare expenses - Held that:- There are concurrent judgements of the CIT as well as that of the Tribunal that any amounts expended by an assessee, which are pre-operative in nature and are in fact made prior to coming in or the existence of the business itself would no doubt be a capital expenditure and, therefore, both the CIT as well as the Tribunal have allowed the assessee to capitalise the expenses made prior to the existence or the formation of the Company and have allowed depreciation on them as capital expenses and rightly so on facts there is no doubt that these amounts, which were expended by the assessee were prior to the setting up of the business and prior to the date when the business ran or started making profits. - decided in favour of assessee

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• 2018 (8) TMI 1646
  Addition u/s 14A - interest expenditure incurred for earning of tax free income deserves to be disallowed - Held that:- There is no justification or supporting evidence in favour of the calculation of Rs. 8, 44, 577/-. From the submission of the assessee it reveals that it was a sum of Rs. 84, 577/- which has been in principle accepted by the CIT(A). Therefore, we allow this ground of appeal partly and confirm addition to the extent of Rs. 84, 577/-. Appeal of the assessee is accordingly partly allowed. Penalty u/s 271(1)(c) - disallowance of interest out of capitalization and disallowance of interest relating to earning of exempt income - Held that:- In earlier part of this order, we have considered quantum appeal of the assessee, wherein we have upheld interest expenses of Rs. 21, 94, 475/- out of Rs. 42, 77, 609/- and Rs. 84, 577/- out of Rs. 26, 83, 618. It will suggest that quantum on which it could be alleged that taxes evaded has been reduced substantially. If we go by the logic of the AO in the impugned order, then penalty would reduce substantially whereas the assessee has already accepted penalty amount of Rs. 24, 14, 500/- by not challenging the order of the ld. CIT(A) in penalty appeal levied in the first round. Considering the stand of the assessee that it has accepted penalty imposed under section 271(1)(c) of the Act, we are of the view that there should not be any second penalty on the same addition. We allow this appeal of the assessee and delete penalty

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• 2018 (8) TMI 1645
  Computation of income u/s 44B - Service tax collected by the assessee and paid to the government account having no profit element to be included in the gross receipts from operation of ships for computation of income u/s 44B - Held that:- Respectfully following the aforesaid orders of the tribunal in assessee’s own case for AY 2010-11 which has elaborately discussed the issue in length, we allow the appeal of the assessee by holding that the service tax collected by the assessee and paid to the government account having no profit element, cannot be included in the gross receipts from operation of ships for computation of income u/s 44B of the 1961 Act. Merely because the Revenue has filed an appeal before the Hon’ble Bombay High Court is not sufficient for us to taken a different view as no judgment of the Hon’ble High Court/ Hon’ble Apex Court holding in favour of Revenue has been brought on record by learned DR. This issue is accordingly decided in favour of the assessee.

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• 2018 (8) TMI 1644
  Disallowance on account of members security deposit - according to the AO is membership fees collected from its members and is to be treated as income for the relevant year - Held that:- We find that on this issue we do not require any extra efforts to examine the case of the assessee in order to come to the conclusion that money received from the members are in the nature of loan, which are to be refunded to the members back after 25 years, and not in the nature of income as observed by the AO. The Tribunal in the assessee’s own case, for earlier years on similar issue has allowed claim of the assessee, which was affirmed by the Hon’ble jurisdictional High Court in further appeal[2016 (12) TMI 1559 - GUJARAT HIGH COURT]. Therefore, this issue is almost settled.- Decided in favour of assessee

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• 2018 (8) TMI 1643
  Diminution in value of GOI Fertiliser Bonds - Held that:- We direct the AO to delete the addition made on account of diminution in value of GOI fertiliser bonds. Disallowance of school expenses - Held that:- The expenditure met by the assessee was wholly and exclusively for the welfare of its employees and also for carrying on business of the assessee company more efficiently by having a contended labour force. It was neither a donation covered under section 40A(9) nor a capital in nature not covered by section 37(1) of the Act. Hence, the Tribunal was justified in allowing the above expenditure towards contribution for the running of the FACT School, as an expenditure for the smooth functioning of the business of the assessee and an expenditure wholly and exclusively for the welfare of the employees of the assessee and thus, allowable under section 37(1) as well as section 40A(10) of the Act.

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• 2018 (8) TMI 1642
  Rectification of mistake - Application of Section 153(2A) - assessee is aggrieved as "there is no case for the Revenue, if Section 153(2A) of the Act is applied, orders passed by the AO, pursuant to the setting aside order of the Tribunal, were within time limit" - Held that:- What we find is that argument taken by the assessee all along was that the applicable Section was Section 153(2A) and not Section 153(3)(ii) of the Act. Ld. Commissioner of Income Tax (Appeals) had accepted this contention. As per the ld. Commissioner of Income Tax (Appeals), the Section that ought have been applied was Section 153(2A) of the Act and not Section 153(3)(ii) of the Act. Observation of the Tribunal is clear in that order of AO, if it was passed within the limit specified in Section 153(2A) of the Act, will be valid. If ld. Assessing Officer takes a view that the order, if construed as passed u/s.153(2A) of the Act, is within the time limit mentioned therein based on the available records, in our opinion he cannot be faulted. In the circumstances, we do not find any mistake in the order of the Tribunal, much less any mistake which is glaring and apparent on the face of the record. - Decided against assessee

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• 2018 (8) TMI 1641
  Apparent mistake rectifiable under section 254(2) - Held that:- It is to be remembered that an oversight of a fact cannot constitute an apparent mistake rectifiable under section 254 (2) of the Act. Similarly, failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion, is not an error apparent on the record, although it may be an error of judgment. The mere fact that the Tribunal has not allowed a deduction/claim/rebate,even if the conclusion is wrong, will be no ground for moving an application under section 254(2) of the Act. Further, in the garb of an application for rectification, the assessee cannot be permitted to reopen and reargue the whole matter, which is beyond the scope of section 254 (2) of the Act. Failed to file the paper book and other documents during the course of hearing, before the Bench, is not a mistake apparent from record, therefore, we dismiss the miscellaneous application filed by the assessee. Miscellaneous Application of the assessee is dismissed.

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• 2018 (8) TMI 1640
  Application of rectification of mistake u/s 254(2) - Penalty u/s.271D or 271E - acceptance of loan and its repayment in cash so as to attract the provisions of Sec.269SS and 269T - rectification of mistake as tampering of the impounded records find - Held that:- Admittedly, when the appeal was heard by the Tribunal no allegation of tampering of records was ever put forth on behalf of the revenue. When the appeal was heard by the Tribunal on 4.12.2014, there was already correspondence regarding tampering of records but still nothing was brought to the notice of the Tribunal when the appeal was heard. As rightly pointed out by the learned counsel for the Assessee, the MA does not disclose as to when the tampering was discovered and as to why the allegations regarding tampering were not brought to the notice of the Tribunal when the appeals were heard by the Tribunal. Besides the above, the position as on today is that there is no material to show that there was in fact tampering of impounded material and therefore the conclusion of the CIT(A) that there was no acceptance of loans in cash or repayment of loans in cash in the case of the Assessee violating the provisions of Sec.269SS & 269T of the Act holds good. No evidence to show as to who was responsible for tampering of the records. In this scenario, it is difficult to proceed on the assumption that the findings of the CIT(A) that there was no acceptance of loans in cash or repayment of loans in cash in the case of the Assessee violating the provisions of Sec.269SS & 269T of the Act emanating from the impounded documents is incorrect. We also agree with the submission of the learned counsel for the Assessee that in the garb of a miscellaneous application u/s.254(2) of the Act, one cannot seek review of the order of the Tribunal. The Tribunal does not have powers to review its own orders u/s.254(2) of the Act and the power u/s.254(2) of the Act is only to rectify mistakes apparent on the face of the record. MA dismissed.

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• 2018 (8) TMI 1639
  Disallowance made towards leave encashment u/s 43B(f) - Held that:- We find that though the Hon’ble Calcutta High Court in the case of Exide Industries Ltd vs Union of India reported in [2007 (6) TMI 175 - CALCUTTA HIGH COURT] had struck down the provisions of section 43B(f) of the Act as unconstitutional, the revenue had carried the matter further to the Hon’ble Supreme Court [2008 (9) TMI 921 - SUPREME COURT]. Hon’ble Supreme Court had not stayed the judgement of the Calcutta High Court during Leave proceedings. But the Hon’ble Supreme Court had only passed an interim order on the impugned issue. Hence we deem it fit and appropriate , in the interest of justice and fair play, to remand this issue to the file of the ld AO to pass orders based on the outcome of the main appeal on merits by the Hon’ble Supreme Court as stated supra. Accordingly the ground no. 1 raised by the assessee in this regard is allowed for statistical purposes Disallowance made u/s 14A read with Rule 8D of the Rules both under normal provisions of the Act as well as u/s 115JB - Held that:- Co-ordinate Bench of this Tribunal in the case of REI Agro Ltd. [2013 (9) TMI 156 - ITAT KOLKATA] had held that only those investments which had yielded dividend income to the assessee are to be considered for the purpose of computing disallowance under third limb of Rule 8D(2) of the Rules. Accordingly, we direct the ld. AO to re-compute the disallowance in the light of above mentioned decision of this Tribunal for the purpose of normal computation of income under the Act. Disallowance u/s 14A read with Rule 8D of the Rule while computing the book profits u/s 115JB we find that this issue has been decided by the Hon’ble Special Bench of Delhi Tribunal in ACIT vs. Vireet Investment Pvt. Ltd [2017 (6) TMI 1124 - ITAT DELHI] held that the computation under clause (f) explanation (1) to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D - in the present case assessee had not furnished the workings and the basis of arriving on the disallowance figure of Rs. 24,000/- u/s 14A before us. Hence AO is directed to examine the accounts of the assessee and the workings for Rs. 24,000/- disallowed u/s 14A by the assessee and decide the issue afresh in accordance with law. Disallowance of remaining portion of 50% of additional depreciation u/s 32(1)(iia) of the Act on plant and machinery put to use for a period of less than 180 days during the financial year 2008-09 relevant to assessment year 2009-10 - Held that:- We find that this issue is no longer res integra in view of the decision of Hon’ble Madras High Court in the case of CIT vs. Shri T. P. Textiles Pvt. Ltd. [2017 (3) TMI 739 - MADRAS HIGH COURT] as held he manner in which the Revenue chose to interpret the provision, as it stood prior to its amendment would lead to discrimination, in respect of plant and machinery, which was used for less than 180 days, as against that, which was used for 180 days or more - upon a plain reading of the unamended provision, it could not be said that the Assessee could not claim balance depreciation in the A. Y. , which follows the A. Y. , in which, the machinery had been bought and used, albeit, for less than 180 days. - decided in favour of assessee

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• 2018 (8) TMI 1638
  Non prosecuting the assessment - prevention from furnishing the evidences in the assessment and at First Appellate stages - admission of additional evidence - Held that:- As perused the affidavit filed by the Managing Director of the company explaining the circumstances under which the assessee could not pursue the matters before the lower authorities and other documents, evidences produced before us which prevented the assessee to appear and adduce the evidences before the lower authorities. In the said affidavit dated 12. 12. 2017 executed by Mr. Navid Mohammed Ali Shaikh Director of the company it is averred and deposed that his father Mr. Mohammed Ali Abu Bakar Shaikh was detained in Judicial custody at Arthur road Jail for allegedly involved in a criminal conspiracy. It was deposed that his father was arrested on 21. 09. 2010 and was acquitted by Hon'ble Special Judge of Greater Mumbai on 20. 03. 2015 and thereafter was released from prison on 01. 06. 2015. In this affidavit it is also averred that fresh additional evidences are being placed on record and prayer was made for admission of these additional evidences under Rule 29 of Income-tax Rules, 1963 and prayer is made for admission of these additional evidences. The assessee is also enclosing Paper Book, Judgement of the Trial Court in the case of his father dated 20. 03. 2015 acquitting him from the charges which were framed by the State against his father. We find that there is a plausible explanation given by the assessee for not prosecuting the assessment as well as the First Appellate proceedings. In the circumstances, in the interest of justice we are of the view that all the issues in appeal should be restored to the file of the Assessing Officer for denovo adjudication. Additional evidences produced before us should be considered by the Assessing Officer and decide all the issues afresh - Appeal of the assessee is allowed for statistical purpose.

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• 2018 (8) TMI 1637
  Addition on account of notional expenditure incurred to earn the exempt income by invoking Section 14A read with Rule 8D - Held that:-The Tribunal for A.Y. 2011-12 held on being dissatisfied with the assessee’s computation of disallowance, embarked on his own computation under rule 8D(2)(iii) at Rs. 5,89,98,005/-. The assessee has not disputed any part of the calculation of such disallowance. This computation of disallowance, having been made in terms of rule 8D(2)(iii), is held to have rightly made. The assessment order making disallowance of Rs. 5.89 crore u/s 14A under the normal provisions of the Act is upheld pro tanto Dispute of computation raised by assessee by filing rectification application which yet have to be decided - Held that:- We are remanding back this issue to the file of the Assessing Officer and directing the Assessing Officer to decide the rectification application filed by the assessee u/s. 154 within the reasonable time. Needless to say the assessee be given opportunity of hearing by followings principles of natural justice. Ground No. 1.3 is partly allowed for statistical purpose.

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• 2018 (8) TMI 1636
  Profit earned on sale of shares - short term capital gain or business income - nature of income - frequency in transaction - Held that:- Assessee has purchased and sold scrips multiple times, on various dates alleged to have been held as investment within small duration. The magnitude of purchases on each date has been very large in respect of all these shares. Thus in our considered opinion frequency and volume of purchase and sale of shares shows, intention of assessee was to generate income through trade, rather than invest in them. Thus we do not agree with view of Ld. CIT (A) in considering income generated from sale of these shares as “capital gain” instead of “income from business”. - decided in favour of revenue Disallowance under section 14A - Held that:- Admittedly, assessee has not computed any disallowance under section 14 A towards earning of exempt income. We therefore direct Ld. AO to recompute the disallowance under section 14 A (1) read with Rule 8D, on the basis of the decision of Hon’ble Supreme Court in the case of Maxopp investments Ltd vs CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA]

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• 2018 (8) TMI 1635
  Levy of penalty u/s.271E - return of advance from customers - bonafide belief - Held that:- In view the provisions of section 273B of the Act, we find that the belief of the assessee that return of advance from customers is not prohibited by section 269T was a bonafide belief. Therefore, the levy of penalty u/s.271E cannot be sustained. Hence, we delete the same an allow the appeal of the assessee.

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• 2018 (8) TMI 1634
  Addition on account of employees contribution to ESI & PF - Held that:- This issue is covered by the decision of the Hon’ble Jurisdictional High Court in the case of CIT Vs SBBJ (2014 (5) TMI 222 - RAJASTHAN HIGH COURT). An identical issue was considered and decided by this Tribunal in assessee’s own case for the A.Y. 2009-10, 2010-11 and 2012-13 as held where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income u/s 139(1), cannot be disallowed u/s 43B or u/s 36(1)(va) of the IT Act – Decided against Revenue. Disallowance made U/s 14A r.w.r. 8D - Held that:- When no dividend was received by the assessee during the year under consideration and also no fresh investment was made during the year then no expenditure has been incurred by the assessee during the year under consideration except the interest expenditure if any for the purpose of investment. Since the investment in the sister concerns are old one, therefore, an identical issue was considered and decided by this Tribunal in assessee’s own case for the earlier assessment years including the A.Y. 2012-13 and when the disallowance made by the Assessing Officer in the earlier year has been deleted by this Tribunal and the decision of this Tribunal has been confirmed by the Hon’ble Jurisdictional High Court then in absence of any fresh investment or dividend received by the assessee during the year under consideration, no disallowance to be made - Decided against Revenue. MAT - adjustment made in the book profit computed U/s 115JB of the Act in respect of share of the assessee in the income of the joint venture - whether the share of profit from AOP/Joint Venture shall be excluded for the computation of book profit U/s 115JB? - CIT-A holding that clause (iic) inserted in Explanation 1 to sec. 115JB by Finance Act, 2015 is remedial and curative in nature - Held that:- Once the share in the joint venture which is treated as share in the association of persons is not hit by the second proviso to Section 86 then the same is akin the share from the partnership firm. Thus to bring it to the parity of share in partnership firm, the amendment in Section 115JB of the Act vide Finance Act, 2015 was brought by inserting clause (iic) w.e.f. 1/4/2016. Therefore, the purpose and intention to bring the amendment is to remove the mischief or hardship of the assessee on MAT in respect of the income being share in the association of persons or body of individuals which is otherwise not subject to income tax in accordance with the provisions of Section 86 of the Act. The amendment was brought to remove the hardship and bring the parity of the income being share in the association of persons or body of individuals, which is otherwise not liable to tax as per the provisions of Section 86 of the Act, the same shall have retrospective application. In absence of any contrary precedent brought to our notice and to maintain the rule of consistency, we follow the decision of Mumbai Benches of the Tribunal in the case of M/s Goldgerg Finance Pvt. Ltd. Vs ACIT [2017 (2) TMI 643 - ITAT MUMBAI]. Accordingly, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Hence, this ground of revenue’s appeal stands dismissed.

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• 2018 (8) TMI 1633
  Rectification of mistake - Levy of fees U/s 234E - Intimation of the demand notices U/s 200A - Late filing fee under Section 234E - non consideration of earlier decision in case of Mentor India Limited vs. DCIT and others [2016 (12) TMI 1648 - ITAT JAIPUR] - Held that:- As the earlier decision in case of Mentor India Limited vs. DCIT and others (supra) dated 16.12.2016 and hence, non consideration of the decision of the Coordinate Bench is a mistake which is apparent from record which call for rectification U/s 254(2) of the Act. In view of none consideration of the earlier decision passed by the Coordinate Bench dated 16.12.2016, the impugned order passed by the Coordinate Bench dated 17.04.2017 is hereby recalled for considering the earlier decision passed by the Coordinate Bench and the Registry is directed to fix the matter for hearing in due course - miscellaneous application filed by the assessee is allowed

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• 2018 (8) TMI 1632
  Annual value determination - Estimating the value of the property known as “Hicon Property” - ignoring valuation carried out by approved Valuer M/s. Patwardhan & Associates - vacancy allowance eligibility - Held that:- In case the property or part thereof was vacant during the period, the proportion deduction should be allowed from the sum on which the property might reasonably be let out from year to year. We find that it is the plea of the assessee that due to inherent defects, the flat could not be let out. Hence, the flat remained vacant. Hence, the assessee has claimed benefit of section 23(1)(c) which duly permits deduction in this regard. The assessee should be granted vacancy allowance. However, as conceded by the ld. Counsel of the assessee and also accepted in the grounds of appeal, the assessee is agreeable to offer a sum of Rs. 11,83,723/- for taxation in this regard. We accept this proposal and modify the order of the ld. Commissioner of Income Tax (Appeals) accordingly.

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• 2018 (8) TMI 1631
  Reopening of assessment - limitation period - requirement of obtaining sanction U/s 151 - Held that:- From the plain reading of Section 150(1) of the Act, it is clear that it begins with non-obstante clause as far as the limitation provided U/s 149 of the Act and therefore, Section 150(1) has an overriding effect on Section 149 and not over Section 151 - requirement of sanction U/s 151 of the Act is in the nature of check and balance and it is a measure against the misuse of power by the assessing authority for assessment or reassessment based the reasons not found satisfactory by the authorities provided U/s 151 - Accordingly, when the Assessing Officer admittedly issued notice U/s 148 after the four years from the end of the assessment year and without obtaining the sanction U/s 151 then such notice issued U/s 148 is in violation of provisions of Section 151 of the Act and consequently the same is invalid and the entire reassessment proceedings stand vitiated. Hence, we hold that the reopening of the assessee is not valid and the same is quashed. Disallowance of interest paid on unsecured loans - AO disallowed claim on the ground that the loan itself were found to be unexplained and addition was made U/s 68 of the Act in the earlier years and therefore, the claim of interest being consequential to the claim of unsecured loans which was disallowed in the earlier year - Held that:- Since this is a consequential issue to the issue of unsecured loans treated as unexplained cash credit by the Assessing Officer in the earlier year, accordingly, we set aside this issue to the record of the Assessing Officer for quantifying the amount of disallowance of interest if any after considering the addition made U/s 68 of the Act attend finality in the earlier assessment years. Accordingly, this ground of appeal is allowed for statistical purposes only. Addition of contract receipt as unaccounted income - Held that:- As AR of the assessee has now referred to the sale bills in support of his claim, however, we find that after expiry of about 10 years and in absence of books of account as well as other supporting evidence, this fact cannot be verified even from the government offices for want of relevant record preserved by the government offices after expiry of such a long period. Hence, in the facts and circumstances when the assessee did not produce books of account as well as other evidence in support of its claim that this amount of Rs. 7,68,966/- is part of the sales recorded in the books, then we do not find any reason to interfere in the orders of the authorities below qua this issue. Hence, this ground of assessee’s appeal is dismissed Unaccounted income - addition on account of interest income which accrued to the assessee from the debtor but the assessee has not included said amount in the return of income - Held that:- We find that undisputedly the assessee is following mercantile system of accounting and therefore, it is not permitted to follow the cash system of accounting only for a particular income when all other income are recognized by following the mercantile system of account. Hence, in view of the admitted position and as per the audit report the assessee is following mercantile system of accounting and the interest on unsecured loan given by the assessee duly recognized by the debtor and became due to the assessee then the same would be considered as income of the year under consideration. Hence, we do not find any error or illegality in the orders of the authorities below qua this issue. Hence, this ground of assessee’s appeal is dismissed. Addition on account of various expenses - Held that:- There is no dispute that the assessee has not produced books of account as well as supporting vouchers for the expenditure booked in the P&L account. Though, the expenditure debited to the P&L account may not be excessive, however, the assessee is under obligation to establish that the said expenditure was incurred wholly and exclusively for the business of the assessee. In absence of any supporting evidence, there is a clear default on the part of the assessee to prove the case that the entire expenditure was incurred wholly or exclusively for the purpose of business of the assessee. Hence, in the facts and circumstances of the case, when the ld. CIT(A) has already restricted the disallowance to Rs. 50,000/- as against of Rs. 1,00,000/- made by the Assessing Officer, we do not find any reason to interfere in the order of the ld. CIT(A)

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• 2018 (8) TMI 1630
  Additions on account of unsecured loan - Held that:- As considering the fact that the Revenue has been accepting the loan creditors in the earlier years and also in the subsequent years as envisaged by the ld AR, we are of the opinion that the loan creditors have substantiated their sources in affidavits which was not disputed and was accepted by the lower authorities. - Considering the activities of the society, objects and the utilization of the funds of the society, we are of the substantive opinion that the addition in respect of three loan creditors cannot be sustained. - Additions deleted - Thus, the ground of appeal of the assessee is partly allowed.

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• 2018 (8) TMI 1629
  Addition made u/s 153C - Addition on account of unaccounted production of Gutka Pouches - Held that:- As correctly contended, that the additions in the present cases are not based on any incriminating material found during the search. Therefore, respectfully following ‘Kabul Chawla’(2015 (9) TMI 80 - DELHI HIGH COURT) the Cross-objections are accepted and the additions for all the four years are deleted. Addition on account of difference in stock value - Held that:- The request of the assessee is justified. The amount of Rs. 5, 27, 617/- was declared by the assessee in the return of income filed. This comprised of shortfall of Rs. 4, 83, 487/- in raw material, representing the difference in the stock as per the record of the assessee and the stock found during the search, and of Rs. 44, 130/- in the case of finished goods. The assessee is entitled to the benefit of the amount of Rs. 5, 27, 617/-, as declared in the return of income filed, to be allowed against the stock. For the purpose, the matter is remitted to the file of the AO, subject to verification and co-relation.

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• 2018 (8) TMI 1628
  Revision u/s 263 - deduction u/s 80IC claim - initial assessment year - erroneous assessment order and prejudicial to the interest of the Revenue - Held that:- The initial year of the assessee for the purposes of deduction u/s 80IC is A.Y. 2010-11. Deduction was actually claimed for the first time in A.Y. 2011-12 and then in A.Y. 2012-13. Such a deduction was allowed by the Revenue albeit without making a regular assessment u/s 143(3). Since the stage for carrying out investigation for ascertaining if the unit was newly set up or reconstructed, was the initial year, in which the assessee’s claim was not disputed, the assessment order for the year under consideration, accepting fulfillment of this eligibility condition, cannot be construed as erroneous. Going by the above interpretation of the provision, the AO was precluded from examining as to whether the assessee set up its new unit or it was a reorganization of the existing unit in the relevant year. The assessment order not discussing the examination of such a condition cannot be termed as erroneous. Once an assessment order cannot be held as erroneous, the CIT cannot exercise revisional power u/s 263, which requires a cumulative satisfaction of the twin conditions, viz., the erroneous assessment order and the same being prejudicial to the interest of the Revenue. We are confronted with a situation in which the assessment year under consideration is the third year of the claim of deduction u/s 80IC of the Act. Having allowed such deduction in the immediately preceding two assessment years, the AO was not supposed to re-examine the eligibility condition of the new unit having been set up in the current year as well. The impugned order setting aside such an assessment order on the ground that the AO did not examine such eligibility condition in the third year, which ought to have been examined in the initial year, cannot be sustained. - decided in favour of assessee.

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• 2018 (8) TMI 1627
  Allowance of interest u/s 24(b) - rental income from house property - nexus between loan taken and purchase of house property - Held that:- AO has declined the claim of the assessee on account of this fact that no purpose has been written in the application while seeking the loan from M/s. India Bulls Financial Service Ltd. however, the AO nowhere examined the other relevant documents. CIT(A) has gone through the each and other aspects of the case and also gone through the loan agreement which speaks about the purpose in which the loan was taken. The loan was found to be taken for purchase of property. Therefore, the deduction u/s 24 of the Act was allowed. The facts are not distinguishable at this stage. Nothing came into notice that the loan was not taken by the assessee for the purpose to purchase the property at Pune. It is only factual issue and according to the facts of the case, the claim of assessee u/s 24 of the Act has been allowed. CIT(A) has passed the order judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is decided in favour of the assessee Disallowance u/s 14A - assessee has argued that the claim of the assessee be restricted to the extent of exempt income - Held that:- In view of the submission made by the assessee and in view of the law settled in case of Joint Investment Private Limited [2015 (3) TMI 155 - DELHI HIGH COURT] we restricted the expenses incurred to earn the exempt income to the extent of dividend income i.e. to the tune of Rs. 1,12,500/-. Accordingly, the issue has decided in favour of the assessee against the revenue.

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• 2018 (8) TMI 1626
  Estimation of gross profit on alleged bogus purchases - CIT-A estimated profit at 12.50% relying on the decision of Simit P Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] - Held that:- Facts in the case of Simit P Seth were entirely different, therefore, reliance placed by CIT(A) on the decision of Simit P Seth for making addition by computing profit at 12.5% is not justified. As genuine purchases are concerned, there is no justification at all for making any addition by estimating extra profit there on to the extent of purchase of Rs. 48.39 Crores. As per the record, the assessee has made purchase of Rs. 48.39 Crores from other than hawala dealers, no further addition is warranted on such purchases. However, purchases to the extent of Rs. 55.09 Crores were made from suppliers who did not pay sales tax. Even though the profit declared by the assessee on such purchases was much more than the profit shown on the genuine purchases, but keeping in view the totality of facts and circumstances of the case and the fact that quantitative statement of purchases and sales so filed by the assessee was not disputed by any of the lower authorities, we deem it fit to restrict the addition to the extent of 2% of alleged bogus purchases amounting to Rs. 55.09 Crores. Thus, we restrict the addition to the extent of Rs. 11.01 lakhs. - Decided partly in favour of assessee.

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• 2018 (8) TMI 1625
  TDS u/s 194C - non deduction of tax at source (TDS) on warehousing & collection charges - addition u/s 40(a)(ia)- reimbursement of expenses - Held that:- Assessee has reimbursed the collection charges and pick up charges to the various transporters, and this fact can be verified from the copies of freight bills and ledger account of warehousing collection charges. The reimbursement of expenses for and on behalf of assessee is not covered under the provisions of section 194C These expenses are not liable to TDS as the term ‘contract’ is absent. These reimbursement of expenses were not made by the assessee towards any services rendered by the agent, but has been made to set off the expenses incurred by the agent on behalf of the assessee. We note that there is no element of ‘income’ in these transactions, it is just reimbursement of expenses incurred by the agent for and on behalf of assessee. Therefore, the assessee was not obliged to deduct tax at source - decided in favour of assessee.

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• 2018 (8) TMI 1624
  Determination of Arm s Length Price - TPA - comparable selection - inclusion of Aegis in the final set of comparables - Held that:- A perusal of the functional profile of the assessee company and on a comparison of the same with the profile of Aegis Logistics Ltd., it is clear that they are different. The assesee is engaged mainly in vessel handling, stevedoring cargo handling, clearing forwarding and other port related activities whereas Aegis Logistics Ltd. is primarily engaged in providing liquid logistics outside the port area, up to the destination through pipelines. Whether the company Malabar should be excluded from the final list of comparables - Held that:- Malabar cannot be taken as a comparable in the final list of comparables for the reasons that the turnover in question is not comparable. The margins of this company is far in excess of the margins of its holding company M/s. Aspinwall Ltd. which is also taken as a comparable by both the assessee as well as the revenue. Hence we direct that this comparable should be excluded from the final list of comparables. The TPO could not have included this company as a comparable, without investigating the reasons for Malabar declaring abnormal profits at 42.33%, as compared to all other comparables including its holding company. - decided in favour of assessee.

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• 2018 (8) TMI 1623
  Undervaluation of closing stock - survey operation u/s 133A(1) - Held that:- We direct the assessee to submit reconciliation statement before the ld AO, showing reconciliation between stock shown in the profit and loss account and stock shown in computer and we also direct the AO to examine the reconciliation and adjudicate the issue in accordance with law, therefore, we allow this issue raised by the assessee for statistical purposes. Addition on account of overstated S/Creditors and Advance from parties in computing the total income of the assessee - Held that:- Sundry debtors consist of Credit balance when advance from customers is received, normally to whom credit sales is made. The nomenclature of debtors is given when the transaction is of sales. Therefore, there are two ledgers of Sundry debtors which is being maintained by the assessee. Sundry Creditors consists of Normal trading in scrap purchase which is a credit purchase. When purchase is through auction, then the assessee makes advances,but the purchases are kept under nomenclature of sundry creditors in accounting package, therefore there are two ledgers of Sundry creditors appearing in assessee's books. We note that A.O. had called for the books of account and other details. As a result of survey the accounts maintained in tally was found showing two ledgers of Sundry debtors indicating advance from customers and credit sales. Similarly,two ledgers of sundry creditors were maintained containing advance payment for purchase and credit purchase. We note that assessee has himself pointed out the difference in the appellate proceedings, stating that if the total debit balance and credit balance is added up, the only difference as appearing in the accounts impounded during Survey and as filed in the return of income is difference in Sundry creditor of Rs. 2,28,193/- and Rs. 2,20,000/- on account of Advance from parties. Therefore, addition made on account of overstated of liability was restricted by ld CIT(A) to the tune of Rs Rs. 4,48,000/- (Rounded off amount) ( Rs. 2,28,193 + Rs. 2,20,000). Before us, the ld Counsel filed paper book to explain the said difference, but we note that said difference, could not be explained properly. So far, this issue is concerned, Ld. Counsel failed to controvert the findings of ld CIT(A). Moreover, during the appellate proceedings, the assessee had himself admitted before the ld CIT(A) about the said difference that these differences would exist.

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• 2018 (8) TMI 1622
  Treatment to rental income - business income or income from house property - intention of the parties while entering into the lease - Held that:- What is to be looked into is intention of the parties while entering into the lease. Admittedly, the agreements entered by the assessee with the lessees were contemporaneous. Objects of the lease was to allow enjoyment of the entire property with all services related to its use as technology centers. The income of the assessee both from leasing the space as well as providing maintenance services had to be considered only under the head income from business. Assessing Officer fell in error in treating such amounts under the head income from house property. Ld. Commissioner of Income Tax (Appeals) fell in error in treating part of such income as income from house property. We are of the opinion that assessee’s income has to be considered only under the head "income from business". - Decided in favour of assessee

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• 2018 (8) TMI 1621
  Disallowance of interest u/s 36(1)(iii) - attributing the interest bearing funds of the assessee to have been used for advancing to the partner without interest by way of surplus withdrawals from capital account - Held that:- If there is direct nexus between the trading receipts deposited in the said account and advance given to the partners, it can be safely presumed that the trading receipts had been used for making the said advances and in such circumstances, it can be safely held that the interest-free funds had been used for making advances to the partners warranting no disallowance of interest under section 36(1)(iii) of the Act. But we find that the facts in this regard need to be examined. Restore the issue to the Assessing Officer with the limited direction to examine the nexus, if any, between the trading receipts of the assessee deposited in the Hindu Co-operative Bank account maintained by the assessee and the amount advanced to the partner and direct that in the circumstances the nexus is found to exist, no disallowance of interest under section 36(1)(iii) of the Act be made to the extent pertaining to the amount so advanced. With this limited direction we restore the issue to the Assessing Officer to readjudicate the same. Decided in favour of assessee for statistical purposes.

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• 2018 (8) TMI 1620
  Estimation of the annual value of the property - Addition under the head ‘Income from House Property’- Held that:- There is no allegation, much less any positive material with the Assessing Officer, to say that the assessee has suppressed the real position by declaring rent from the sister concern @ Rs. 7,500/- per month. On the contrary, what we find is that without arriving at such satisfaction, AO has proceeded to ascertain the going rate of the rentals in the vicinity of assessee’s property. AO has straightaway based his estimation on the rates found on his inquiry without establishing the similarity of the arrangement. As pointed out by the learned representative with regard to the rental arrangement of Galaxy Aviation, the same is incomparable with assessee’s arrangement because of the timing difference. The arrangement of Galaxy Aviation is of the year 2012 whereas assessee’s arrangement is of 2007. No justification for the action of the Assessing Officer in disregarding the actual rent declared by the assessee for the purpose of arriving at the annual value of the property to be taxed u/s 22 of the Act. As a consequence, we set-aside the order of CIT(A) and restore the matter back to the file of the Assessing Officer who shall recompute the income assessable under the head ‘Income from House Property’ in terms of our aforesaid directions. Thus, on this aspect, assessee succeeds. Disallowance of expenses - additional ground - Held that:- Once the income declared from rental income has been assessed under the head ‘Income from House Property’, the income under the head ‘Income from Business’ has to be separately assessed. While assessing the income from business, the entire expenditure claimed have been disallowed, an aspect which was sustained by the CIT(A) also. It is pointed out that though assessee does not have an active business activity, but expenses which are necessary for existence of the company as such are required to be allowed. The said Ground was omitted to be raised at the time of filing of appeal and is now being raised as an Additional Ground of appeal. On the issue of Additional Ground, we deem it fit and proper to direct the Assessing Officer to consider the same on merits and allow such expenses as are permissible and required for maintenance of a corporate entity as such. Thus, on this aspect, assessee succeeds for statistical purposes.

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• 2018 (8) TMI 1619
  Reopening of assessment u/s 147 - Held that:- CIT(A) instead of agreeing with assessee on the grounds and allowing the grounds, in our view has wrongly confirmed the order and dismissed the ground. It is true that this issue has been examined in earlier years and also in the impugned assessment year at the time of original assessment. Not only that, Ld.CIT(A) herself has allowed the grounds of assessee on merits which the Revenue is contesting. Since the very basis for reopening the assessment is based on the information already on record and since this was already examined by the AO in the regular proceedings u/s. 143(3), we are of the opinion that the reopening of assessment is not based on any tangible material but only on the change of opinion on the existing material, for which the AO has no power to do so. The principles laid down by the Hon'ble Supreme Court [2010 (1) TMI 11 - SUPREME COURT OF INDIA] clearly applies to the facts of the case. Therefore, we modify the order of the CIT(A) and allow the grounds of assessee. In a way this issue is also academic since Ld. CIT(A) allowed the assessee contentions on merit. Depreciation on technical know-how and DMFs - Held that:- Assessee's claim of depreciation becomes eligible as it is an intangible asset on which assessee has claimed depreciation on WDV. In view of this, we direct the AO to allow the depreciation as claimed as it is only a consequential claim to the claims in earlier years

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• 2018 (8) TMI 1560
  Applicability of provisions of section 50C - assessee acquired certain rights to purchase the flats - assessee received consideration for sale of such rights and the profit from sale was declared as long term capital gains - whether the Assessing Officer was right in invoking the provision of Section 50C of the Act on ground that the assessee sold flats and therefore market value as determined by Registration authority should be applied? - Held that:- The issue is no more res integra. The ITAT in the case of Income Tax Officer vs. Shri Yasin Moosa Godil [2012 (4) TMI 380 - ITAT, AHMEDABAD] held that the assessee has transferred booking rights and received back the booking advance. Booking advance cannot be equated with the capital asset and therefore section 50C cannot be invoked. Respectfully following the same, hold that Section 50C of the Act does not apply under the facts and circumstances of the case as what was sold was right in property but not land or building. Decided in favour of assessee

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• Customs

• 2018 (8) TMI 1612
  Freezing of Bank Current account - alleged export fraud case - the DRI had called upon UBI to not to permit any debit/withdrawal from the petitioner’s account till further communication - whether the impugned communication is lawful? Held that:- The Customs Act includes provisions regarding search, seizure and arrest. Section 105 of the Customs Act empowers specified officers to search premises provided there is reason to believe that any goods are liable for confiscation or any documents or things which would be useful or relevant to any proceedings under the Customs Act are secreted at such premises. Section 110 of the Customs Act expressly provides for seizure of goods, documents and things where a proper officer has the reason to believe that such goods are liable for confiscation - Plainly, the impugned communication has not been issued in exercise of any of the aforesaid provisions. In S.B. International v. The Assistant Director, Directorate of Revenue Intelligence and Ors. [2018 (2) TMI 588 - DELHI HIGH COURT], this Court had rejected the contention that such orders for freezing the bank accounts could be issued by the DRI under Section 102 of the Code of Criminal Procedure, 1973. This Court is unable to sustain the impugned communication as the same is without the authority of law - Petition allowed.

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• 2018 (8) TMI 1611
  Preventive detention - Jurisdiction - whether that is a sufficient ground for invoking the extraordinary measure of preventive detention? - COFEPOSA Act. Detention of Mr. Sanjay Agarwal - Held that:- It is apparent to the Court that the Detaining Authority was unclear about the grounds on which it should authorise the detention of Mr. Sanjay Agarwal. This is evident from the reading of para 34 where repeatedly the word or is used to separate out the different grounds. This is suggestive of two things: first, the Detaining Authority was unsure if the facts brought on record constituted one or more of these grounds; and second, there was in fact non-application of mind as simply taking the wording of the Section 3(1) COFEPOSA and repeating it as part of the grounds would not constitute a finding arrived at after an application of mind - This is not an issue of mere vagueness, but of absolute non-application of mind. Detention of Mr. Ajay Agarwal - Held that:- The detention order in respect of Ajay Aggarwal sites past instances but nothing in the present. The absence of any live link with any present instance is nowhere discernible on a reading of the grounds of detention. Further, by not referring to the conditions attached to the grant of anticipatory bail, to simply state that Mr. Ajay Aggarwal would continue to indulge in activities related to smuggling demonstrates a non-application of mind by the Detaining Authority to the facts governing his case. The detention orders dated 1st June 2018 passed in respect of each of the Petitioners, i.e. Mr. Sanjay Agarwal and Mr. Ajay Agarwal, to be unsustainable in law and they are accordingly hereby quashed - petition allowed.

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• 2018 (8) TMI 1610
  Levy and collection of cost recovery charges from Custom Officers/petitooners - prayers are predicated primarily on the plea that custom officers are permanent employees of the Union of India and duties performed by the custom officials at the ICDs/CFSs/ACCs/EPZs being sovereign functions, no charge could be recovered by the Union of India from the petitioners. Held that:- Petitioners as a pre-condition for becoming custodians of the respective ICDs/CFSs/ACCs/EPZs had willingly undertaken to bear the costs of the Customs staff posted at the ICDs/CFSs/ACCs/EPZs. Thus, the payment of cost recovery charges has sanction and authority of law to back the levy and imposition. Further, the cost recovery charges so levied are against expenses incurred by the government for rendering the services at the ICDs/CFSs/ACCs/EPZs - from provisions of the Act and the documents on record, it is established that cost recovery charges are in the nature of “fee” for services rendered by the customs officers at the concerned ICDs/CFSs/ACCs/EPZs. Whether the government can levy the cost recovery charges at the rate of 1.85 times the salary of the customs officers? - Held that:- The actual cost cannot be restricted and confined to salary paid. There are hidden and other expenses involved. It would be unfair and wrong to compute cost by merely adding the wage or salary actually paid to the custom staff deployed. This is not the actual cost incurred and the cost to the government. The cost factor was worked out on the basis of principles under the General Financial Rules. This assertion and contention of the respondents remains undisputed and unchallenged. In view of the Rules 112 and 113 of the General Financial Rules, recoveries of expenditure of the services rendered to both the government and non-government parties are to be classified as receipts and the entire cost shall be recovered from the public or private body so that the net cost to the government is nil. If the revision in cost due to implementation of the 6th Pay Commission was not carried out, then the government would had suffered a net loss and would have tantamounted and resulted in profiting of the private sector at the expense of the government. Cost recovery @ 185% of the total salary of staff actually posted at ICDs/CFSs/ACCs/EPZs of the petitioners was being done as per the Board's instructions issued under F. No.434/12/92/-CUS dated 05.06.1992, Circular Nos.128/95-CUS dated 14.12.1995, 133/95-CUS dated 22.12.1995, 52/97 dated 17.10.1997 and 80/98-CUS dated 20.10.1998. Customs officers may perform statutory or sovereign functions, however, the sovereign is not liable to provide service and permit setting up ICDs/CFSs/ACCs/EPZs. Additional posts are created/sanctioned for the ICDs/CFSs/ACCs/EPZ for which the developer undertakes to bear the cost of the staff posted. The payment is in the nature of fee for the services rendered - They are therefore bound to bear the cost of the customs staff, posted for the ICDs/CFSs/ACCs/EPZs. The payment of cost recovery charges by the custodian of ICDs/CFSs/ACCs/EPZs has the statutory force of law and is within the jurisdiction of the respondents. No case is made out for the grant of the reliefs as prayed for in the writ petitions - petition dismissed.

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• 2018 (8) TMI 1609
  Scope of SCN - recovery of Customs Duty - Whether the revenue is entitled to recover the customs duty under Section 125(2) of the Customs Act on the goods which are confiscated under Section 111(d) and allowed redemption under Section 125(1) of the said Act, even when no specific demand is made in the show cause notice? Held that:- The provision relied upon, i.e. Section 125(2), no doubt, is in mandatory terms and suggests that when the duty is payable by the concerned party or importer, the quantum of the duty, even on a tentative basis should necessarily be spelt out in the show cause notice, which is essential under Section 124 of the Act. The authority could not as is sought to be canvassed, be read in a wide manner as is proposed. The Adjudicating Officer, who issues a show cause notice is in-charge of the goods – seized or otherwise pending clearance. He has the opportunity to tentatively assess the value and also indicate the duty payable - Nevertheless, it broadly outlines the amount meant to be short levy or non levy and the same would have to be spelt out in the notice under Section 124. If that primary obligation, which lies with the State Official is not discharged, it cannot be contended at a later stage that the importer was under an obligation to pay the relevant duty - which was never assessed in the first instance. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1608
  Implementation of order to release the imported goods by assessing the Bills of Entry - waiver of detention charges - Held that:- This Court is convinced that the goods can be directed to be released and the detention certificates can be issued subject to the condition that the interests of the Revenue are safeguarded - The Assistant Commissioner (Legal-II), Chennai Customs has given written instructions vide email dated 12.7.2018 wherein it has been stated that adequate security i.e by executing necessary bond and bank guarantee may be directed to be done for the differential amount of duty involved in these cases. The petitioner is directed to execute a bond in the appropriate form securing the interest of the Revenue and that the release of the goods shall be subject to the outcome of the appeals that may be filed by the Department before the Tribunal - On such execution of the bond, the respondent Department is directed to assess the Bills of Entry within three days thereafter and in terms of the assessment, the duty shall be remitted by the petitioner - On such remittance, the petitioner is permitted to clear the entire cargo within 10 days from the date of remittance and issuance of out of charge clearance. Petition disposed off.

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• 2018 (8) TMI 1607
  Recovery of Customs Duty - Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 - whether the manufacture made at the factory at Bangalore could be taken as due utilisation for the exemption, when and if the factory at Bangalore is not registered under the Rules of 1996? - Held that:- The Tribunals in the various decisions went on the premise that the diversion being intimated to the Department, the Department should have taken proceedings within the limitation period or if the use is found to be for the intended purpose, there could be no proceedings for recovery of duty exempted on import, which is the specific question that has been urged before this Court by the Department - In the present case, the enquiry as to whether the factory at Bangalore has registration under the Rules of 1996 has not been looked into by any of the authorities. In the present case, the diversion was intimated to the Department and permission sought for. Original authority itself finds that the proceedings are beyond the period of limitation. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1606
  Release of Tug on paymnet of redemption fine - Held that:- There is no error apparent on the face of the record in the Misc. Order dated 10.7.2018, which was passed after considering the submissions of both the parties - Since in the present case, the amount involved is more than Rs. 13 crores and the Tribunal vide its Misc. Order dated 7.5.2014 has allowed the early hearing application and the matter was also listed for final hearing on 4.9.2014 but could not be heard finally on account of non-availability of the Bench - application disposed off.

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• 2018 (8) TMI 1605
  Proceedings under CHALR, 2004 - right of Revenue to file an appeal under CHALR - Misdeclaration of export goods - Ketamine hydrochloride - prohibited for export goods - the goods were declared as “SS Grinder” with spare parts - Held that:- In the Tribunal decision in the case of M/s. Falcon India [2018 (3) TMI 650 - CESTAT NEW DELHI], the Delhi Bench of the Tribunal has observed that the Revenue does not enjoy the right to file an appeal under CHALR - The present proceedings have been initiated under CHALR 2004, but the view expressed by the Tribunal is equally applicable. The appeal filed by the Revenue dismissed on the ground that the CHALR does not provide for a right of Revenue to file an appeal.

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• 2018 (8) TMI 1604
  Whether the appellant is eligible for clearance of the imported goods under SHIS scheme as per Customs Notification No.104/2009 dated 11.9.2009? Held that:- The said issue has been elaborately dealt by the Tribunal in the appellant’s own case COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. JSW STEEL LTD. [2015 (10) TMI 2392 - CESTAT CHENNAI], wherein the Tribunal rejected the appeal of the Revenue holding that the importer is eligible for benefit of the above notification under SHIS scheme for the clearance of the imported goods - the appellant is eligible for the benefit of the Notification - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1603
  Prohibition of appellant-CHA to transact the business under Chennai Customs jurisdiction - Detention of Consignment - undeclared item such as acquarium lamp, plastic light clips, fish tank cleaner and trolley bags found in the consignment - the prohibition order is issued for the reason that the importer has not declared the items. Held that:- The CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect to clearance of goods through customs house. It was observed that it would be far too onerous to expect the CHA to inquire into and verify the genuineness of the IEC given to it by a client for each import / export transaction. When such code is mentioned, there is a presumption that an appropriate background check in this regard i.e. KYC etc. would have been done by the customs authorities. Thus, in the present case, IEC was mentioned in the documents. Therefore, appellant cannot be saddled with the obligation that they have not verified the antecedents of the importer namely M/s. J.J. Enterprises. Also, such continuation of the probation order without prescribing a time-limit would be bye passing Regulation 20 with regard to suspension / revocation of the licence. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1602
  Import of Cement - High Seas Sale - Benefit of N/N. 4/2006-CE dated 01.03.2006 - case of Department is that appellants are not eligible for duty exemption since they have not purchased the goods directly from the actual manufacturer - Held that:- Very same issue decided in the case of DIAMOND SHIPPING AGENCIES (P) LTD. [2018 (4) TMI 1191 - CESTAT CHENNAI], where it was held that there is no merit in the impugned orders denying CV duty concession wherever available to the importer-appellants of such conditions - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2018 (8) TMI 1615
  Winding up petition - Held that:- In the present case other than isolated 3-4 emails there is nothing on record to show what work the petitioner has done. I may refer to these emails which have been attached to the rejoinder. There is one email which is dated 19.9.2013 which is sent to the petitioner stating “Dear Sir for your signatures (two copies)” Similarly, there is another email dated 9.5.2013 written by Mr. Rahul Murzaria. There are number of such emails. These do not in any manner prima-facie show that the petitioner was gainfully employed in the period in question, namely, September 2012 to September 2013. What follows is that there is no written contract between the parties to show that the petitioner was employed or engaged as a Consultant for the period in question. Prima-facie, there is no meaningful document available to show any regular work being done by the petitioner. It would be for the petitioner to prove all these aspects in an appropriate Civil Court. The respondents have raised a bonafide dispute. However, in case the petitioner chooses to approach the civil court observations made herein would not in any manner bind the parties in such civil dispute that may be initiated. Petition is accordingly dismissed.

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• 2018 (8) TMI 1614
  Seeking sanction of the Scheme of Revival - main object of the revival scheme is to commence manufacture wooden furniture and allied handicraft articles in the first phase of the business in which the propounders/contributories are said to have experience. It is also proposed to take up manufacturing of machine made woven carpets in the second phase - Held that:- As far as the contention that the scheme has become stale with the passage of time is concerned, in my opinion, the argument appears to be misconceived. The matter has been pending in court. Under the scheme, the entire secured creditors’ dues already stand paid. The Scheme of the respondent Company envisages that on revival it will pay all the dues of the unsecured creditors. Hence, I do not see, how the projection, in case it has become out dated would in any manner effect the revival scheme. It is manifest from the reading of the above that presently there are no secured creditors. The unsecured creditors have unanimously in the meeting held agreed to abide by the scheme. The shareholders in the meeting have also unanimously agreed to abide by the revival scheme. In court two share holders having a share of 3% are objecting pleading essentially that Bharat Kala Kendra Ltd. be treated at par with all other unsecured creditors. There is no impediment to passing of the scheme as proposed. It clears all prescribed parameters. The only issue that survives is the payment of the dues by the respondent Company after revival of Bharat Kala Kendra Pvt. Ltd., if any. In opinion, in view of the order of this court dated 05.07.2011 as also clarified by the Division Bench, these are issues which the OL has to raise in the winding up proceedings pertaining to Bharat Kala Kendra Pvt. Ltd., namely, CP No. 160/1985. The issues regarding the payment of interest, etc. are kept open and passing of the scheme will not in any manner dilute the said contentions that are raised by Mr. Akhilesh Gupta and learned counsel appearing on behalf of Mr. R.N. Gupta. These aspects would be adjudicated upon in the winding up petition which is dealing with Bharat Kala Kendra Pvt. Ltd. The present application is allowed. The revival scheme as proposed is sanctioned. The OL will hand over possession of all the existing properties and assets of the respondent Company and the statutory records, books of accounts, etc. to the proposed management of the respondent Company. The winding up order is recalled.

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• 2018 (8) TMI 1613
  Scheme of Arrangement - reduction of Share Capital - Held that:- Tribunal referred to Section 66, being the specific provision for rejecting the application under Section 230 as the Scheme and Arrangement related to reduction of share capital. From explanation below Section 230, it will be evident that for passing an order under Section 230 to compromise or make arrangements with the creditors and the members, the provision of Section 66 shall not apply for reduction of share capital. Such order can be passed by the Tribunal under Section 230 of the Act. In view of the aforesaid provisions, we hold that the Tribunal failed to notice the ‘Explanation’ below Section 230, which makes it clear that even for reduction of share capital effected in pursuance of the order of the Tribunal under Section 230, the provision of Section 66 shall not apply. Having held that the Tribunal failed to notice the aforesaid observations, we have no other option but to set aside the order dated 8th December, 2017 passed in CA (CAA)-105(ND)/2017 which is accordingly set aside. The case is remitted to the Tribunal to decide the application under Section 230 in accordance with law after notice and hearing the parties.

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• Insolvency & Bankruptcy

• 2018 (8) TMI 1618
  Corporate Insolvency Resolution Process - existence of dispute’ between the Appellant/Operational Creditor and the Respondent/ Corporate Debtor - disputes existed inter-se the parties even prior to issuance of Demand Notice under Section 8 of I&B Code with respect to deficiency in services rendered - Held that:- The dispute in regard to deficiency of service was raised as early as 18.04.2016. Respondent/ Corporate Debtor claimed to have suffered pecuniary loss in an amount of Rs. 5,69,734/-. Admittedly, demand notice in terms of Section 8(1) of I&B Code was issued by the Appellant/ Operational Creditor on 04.09.2017 demanding payment. The Respondent/ Corporate Debtor issued letter dated 01.09.2017 asking the Appellant/ Operational Creditor to resolve the dispute by way of conciliation proceedings under Arbitration Act. There is no escape from the conclusion that the Respondent/Corporate Debtor had raised dispute much prior to the issuance of demand notice by Appellant/ Operational Creditor under Section 8(1) of I&B Code. The mere fact that the Respondent/ Corporate Debtor had sent its ledger account via. e-mail dated 19.04.2017 in regard to principal amount of dues of the Appellant/Operational Creditor as per the closing balance mentioned in the statement would not in any manner dilute the factum of a pre-existing dispute when the demand notice in terms of Section 8(1) of I&B Code was issued by the Appellant/Operational Creditor. On consideration of the material on record, we are of the considered opinion that the Respondent/ Corporate Debtor has been able to demonstrate that a pre-existing dispute in regard to deficiency of service was in existence when the demand notice under Section 8(1) of I&B Code was issued by the Appellant/ Operational Creditor. The Adjudicating Authority did not err in noticing the same.

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• 2018 (8) TMI 1617
  Resolution Plan approval - meeting the requirements as referred to section 30(2) of I&B Code - Held that:- Description about the resolution applicant proves that the identification of resolution applicant who can take care of the assets of the corporate debtor is reasonable and justifiable. So the stressed assets of the corporate debtor is going to the hand of a safer resolution applicant. An affidavit swearing that the applicant is not disqualified as per the amended section 29A of the I & B Code though seen not annexed by filing supplementary affidavit it has been annexed. The Resolution Professional also certified that the Resolution Applicant is not ineligible to submit a Resolution Plan under Section 29A of the I & B Code. The mandatory disclosure seen enclosed. Workmen dues and employees dues agreed to be paid within 30 days of the date of approval of the Resolution Plan. No infirmity seems to have brought out upon screening of the Resolution Plan and, therefore, the Resolution Plan submitted being meets all the requirement to be satisfied under Section 30(2) of the I & B Code the Adjudicating Authority has no other alternative other than to approve the Resolution Plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan. Accordingly, the Resolution Plan is approved upon the following orders:- (i) The Resolution Plan of Liberty House Group Pte. Ltd., which is approved by the CoC with 99.94% voting percentage, is hereby approved under provisions of Section 31(1) of the Insolvency and Bankruptcy Code, 2016, which will be binding on the Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan. (ii) The revival plan of the company in accordance with the approved Resolution Plan shall come into force with immediate effect. (iii) The moratorium order passed under Section 14 shall cease to have effect. (iv) The Resolution Professional shall forward all records relating to the conduct of the Corporate Insolvency Resolution Process and the Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded on its database. (v) Before parting with, it appears to me that I have to endorse my appreciation to the work rendered by the Resolution Professional, Mr. Sumit Binani for having a successful resolution process so as to find out a stakeholder having international repute to take over the stressed assets of the corporate debtor/ Adhunik Metaliks Limited.

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• 2018 (8) TMI 1616
  Misconduct by Insolvency Professionals - whether an IRP/RP can authorise a firm/company (in which he/she is a partner/director) to raise invoices for his professional fee on his behalf? - Held that:- Mr. Venkatasubramanian had authorised Ernst & Young LLP to raise invoices for his "fees and other out of pocket expenses for work undertaken by him in connection with Corporate Insolvency Resolution Process (CIRP)" in respect of JEKPL Private Limited. Hence, he violated section 5(13) of the Code read with regulation 33 and 34 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 along with the items 1 and 5 of the Code of Conduct specified in the First Schedule to the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. Mr. Venkatasubramanian himself directed for the settlement of the bills so raised by Ernst and Young LLP as being the IRP/RP of JEKPL Private Limited thus contravened item 9 and 25 of the Code of Conduct for Insolvency Professionals. He allowed Ernst and Young LLP to raise invoices for his professional fee, thereby, treating the profession of Insolvency Professionals as employment under an entity. He contravened section 208 of the Code. Order - Mr. Venkatasubramanian has violated sections 5(13) and 208 of the Code read with regulations 33 and 34 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 along with the items 1, 5, 9 and 25 of the Code of Conduct for Insolvency Professionals specified in the First Schedule to the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. Accordingly, the Disciplinary Committee, in exercise of powers conferred under section 220 (2) of the Code read with sub-regulation (7) and (8) of regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, hereby, imposes a monetary penalty of one lakh rupees on Mr. Dinkar T. Venkatasubramanian, Insolvency Professional [Registration number IBBI/IPA-001/IP-P00003/2016-17/10011], IRP/RP in the matter of JEKPL Private Limited. Mr. Venkatasubramanian shall deposit the penalty amount by a crossed demand draft payable in favour of the Insolvency and Bankruptcy Board of India within 30 days of the issue of this order.

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• Service Tax

• 2018 (8) TMI 1598
  Jurisdiction - power of Commissioner to rectify his mistake - Held that:- Sub-section (1) of section 74 of the Finance Act, 1994 empowers the Central Excise Officer who has passed any order under the provisions of this Chapter to rectify any mistake apparent from the record within two years from the date of passing of the order - the Commissioner had the powers of rectification. His belief expressed in the impugned communication dated 29.06.2017 was contrary to the statutory provisions - Commissioner of Central Excise shall dispose of petitioner's application for rectification preferably by 30.06.2018 - petition disposed off.

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• 2018 (8) TMI 1597
  Commercial training or coaching Services - trainees / students who undertook project works in their institution - whether taxable under the category of ‘Commercial Training or Coaching’ services or otherwise? - Held that:- In the present case, permitting the students to use the factory premises for their research work as a part of their academic curriculum will not make the receipt of the appellant as consideration for services rendered under the category of ‘commercial training or coaching’ as the scope of the said service is specific and requires satisfaction of the ingredients contain in Section 65(105(zzc) read with Section 65(26) and Section 65(27). It is not the case of the Department that the appellant is conducting any training programmes for the students and the only case of the Department is that the appellant is permitting the students to visit the plant and to do their own research. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1596
  Maintainability of appeal - failure to meet the statutory requirement of pre-deposit payable under Section 35F of the Central Excise Act, 1994 - Held that:- It is apparently clear that there was difference of opinion concerning service tax liability on which pre-deposit was calculated but having regard to the fact that incidence of tax has been met by the appellant by filing of returns for the said period coupled with payment of late fee in such filing of delayed returns, it can very well be said that predeposit of the required amount was no more a requirement for admitting the appeal by this Tribunal and therefore it has been admitted for hearing - In the instant case, as found from the order of the Commissioner (Appeals), no merit concerning tax liability of the appellant has been discussed and the appeal filed by him was rejected as not maintainable on ground of short-payment of pre-deposit which, in reality was not existing since the entire tax liability was met but might not have been brought to the notice of the Commissioner (Appeals). Since this Appellate Tribunal cannot go beyond the order of the Commissioner (Appeals) to scrutinize the merit of the decision of the adjudicating authority, it is a fit case which necessitate re-adjudication by the Commissioner (Appeals) as under Section 35A (3), he is also empowered to make such further enquiry as may be necessary in order to pass such order as he may think proper and not to confine his views on the merits of the order of the adjudicating authority - The matter is remanded back to him for readjudication - Appeal allowed by way of remand.

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• 2018 (8) TMI 1595
  Maintainability of appeal - appeal was dismissed on the ground of non-payment of predeposit - reverse charge mechanism for manpower supply service and professional consultancy charges remitted to foreign service provider - Held that:- In case of non-payment of pre-deposit, appeal should not have been admitted or else rejected but dismissal of appeal without consideration of its merit requires re-adjudication since predeposit of 10% of penalty amount has already been paid at this end. It is surprising that appellant has not challenged the genuineness of duty liability before the adjudicating authority and promptly met the demand imposed on it that itself would give sufficient indication about the bonafideness of the appellant in discharging tax liability. As found from the record in respect of service availed from foreign agency also, there was short-payment noticed for a particular period and raised tax amount was promptly paid under the reverse charge mechanism. However without scrutinisation of the relevant document no definite opinion can be formed by this Tribunal regarding tax liability, of the appellant, if exist at all, which is a pre-requisite for imposition of penalty since the payment of duty demand may satisfy compliance of executive instructions and may not be in confirmity to Section 265 of the Constitution of India. The matter is remanded back to the Commissioner (Appeals) for disposal of the appeal on merits - appeal allowed by way of remand.

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• 2018 (8) TMI 1594
  Rectification of mistake - Section 86(7) of the Finance Act, 1994 - applicant has submitted that the Tribunal Order has a mistake apparent in the sense that despite the appellant provided sufficient evidence to prove reasonable grounds which barred him to file the appeal in the time, still the order recites about having no evidence in this respect - Held that:- The impugned order was sent to applicant, through registered post, on 5th April, 2011. Otherwise also the evidences as impressed upon by the applicant to have not been considered by the Tribunal in the impugned order also reflect the delay of almost six years. In the given circumstances, the possibility of those letters to have been issued as an intentional strategy to seek condonation cannot be ruled out - there is no apparent error on record as is alleged. Application stands rejected.

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• 2018 (8) TMI 1593
  Rectification of Mistake - error apparent on the face of record or not - review of order not allowed in the garb of rectification - Held that:- There is no error in the face of the record in the Final Order except a typographical error that in para 5 in place of ‘earlier period’ it should be ‘for subsequent period’ - correction of this error will not make any difference as far as outcome of the decision on merit is concerned. In the garb of this application, the Revenue wants to review the whole case on merit which is not permissible under law. ROM application dismissed.

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• 2018 (8) TMI 1592
  Delay in filing appeal - appeal was filed 69 days after the receipt of order-in-original without a delay condonation application - Held that:- It is found that the order-in-original dates 31.03.2017 and the statement of fact indicates that it was served upon the appellant on 23.04.2017 i.e. within 3 weeks of such pronouncement of order-in-original but the Commissioner (Appeals) has extracted Section 85(3A) and proviso appended to it to give his finding that he was not competent to condone the subsequent delay in the absence of an application to that effect. The appeal can be presented within two months from the date of receipt of order-in-original and in the instant case, statement of fact reveal that it was received on 23.04.2017 and the same statement of fact is supposed to be verified by the appellant himself, which is also done in the instant case. The gap between the pronouncement of order-in-original and its communication, going by the date mentioned in the statement of fact is just 23 days. Therefore it cannot be believed to be untrue - in view of the proviso enabling the Commissioner (Appeals) to allow the appeal to be presented after two months but within a further period of one month assigning sufficient reason to his satisfaction, such presentation can be accepted by him before proceeding to hear the case in its totality, which is not done at his end. The appeal is filed within the stipulated period and to the disagreement of the Commissioner, within his condonable period. Hence the same should have been admitted at his end and the issue could have been settled on merit - Appeal is allowed and the matter is remitted back to the Commissioner (Appeals) for hearing the appeal afresh on merit.

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• 2018 (8) TMI 1591
  CENVAT Credit - input services - appellant provided Manpower Recruitment and Supply Agency Service, Management Consultant Service and Business Auxiliary Service - denial of CENVAT credit on account of nexus - Held that:- The very same issue has been decided by this Court, in the assessee’s own case M/s. Talentpro India HR Pvt. Ltd. Versus CST, Chennai [2016 (10) TMI 1221 - CESTAT CHENNAI], where it was held that appellant also says that requirement of maintenance service of the building of the appellant who is a man power recruitment agency, cannot be ruled out - No case is made out by the Revenue with regard to changes in law or facts and circumstances from the period of dispute on hand vis-à-vis the earlier decision of this Tribunal. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1590
  Membership of Clubs or Associations Services - Renting of Immovable Property Service - periods from 01.10.2005 to March 2013 - Held that:- This Bench in M/S. COSMOPOLITAN CLUB VERSUS CCE & ST, MADURAI [2018 (2) TMI 1052 - CESTAT CHENNAI], has held that for the period up to 30.06.2012, there cannot be any service tax liability on the amounts collected by the clubs/associations from its members under various categories of members - there cannot be any demand in respect of Clubs and Association service up to 30.06.2012 - the demand for the period from 01.07.2012 will sustain. Renting of Immovable Property service - Held that:- They very much fall within the taxable category and hence the appellants cannot escape tax liability on these services - demand sustain. Penalty - Held that:- The issue of taxability under Clubs and Association services was mired in litigation and was only lead to rest by the High Court judgments - also in respect of Renting of Immovable Property services, provided by the appellants were under the mistaken assumption that there would be no tax liability on the ground that they had rented their own premises to the Council - intent to evade cannot be alleged on appellants - penalty do not sustain. Appeal allowed in part.

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• 2018 (8) TMI 1589
  Classification of services - Man Power Recruitment Agency service or Cargo Handling Services? - services of loading, unloading storage materials, filing of raw materials in bulk tanks/tankers, inventory ,warehousing, storage, transportation etc. to Hindustan Unilever Ltd. in assessee’s factory. Held that:-The elements which are included within the scope of “Cargo Handling Service” are very much present. It is also seen that there is transportation involved in respect of cargo handled. Godown bulk tanker operations are also contracted to the assessee - there is no infirmity with the conclusions arrived at by both the original and the lower appellate authorities that the activities in of the nature of cargo handling service. For the purpose of ascertaining whether the amounts relating to the surviving demand would be in the nature of reimbursable expenses which would be exigible to service tax liability, the matter is being remanded to the adjudicating authority for the limited purpose of ascertaining and reworking of the tax liability. Extended period of limitation - Held that:- It cannot be disputed that the assessees were discharging their tax liability under Man power Recruitment and Supply Agency Service, which was not objected to by the department till the point of audit - demand beyond the normal period of limitation set aside. Appeal allowed by way of remand.

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• 2018 (8) TMI 1588
  Time Limitation - BAS - Sight formation and clearance service - failure to pay service tax - demand of service tax - Held that:- It is seen from the record that the Revenue has already raised for the same period for the services rendered to the same clients, where SCN was dropped on the ground of limitation - there is no infirmity in the view taken by the Commissioner (Appeals) that the demand raised afresh for the same period in a different category of service is hit by time bar - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1587
  Liability of service tax - GTA Services - appellant issuing debit notes and paying freight - Held that:- The appellant has entered into an agreement with the sugarcane growers and for transportation of sugarcanes from the field, as a measure of convenience the appellant arranged trucks for such transportation. The freight was also paid by the appellant. It is also seen from the record that for such consignments the appellant has assumed the role of the GTA and issued the “consignment notes”. In terms of the Notification No. 32/2004-ST, the liability for payment of tax is cast on the person who is paying the freight. Since the appellant is paid the freight, the service tax liability has also been taken over by the appellant. It is seen that the service tax liability has been discharged only in respect of the consignments where the gross amounts charged was beyond the limits specified in the Notification No. 34/2004-ST - the appellant will also be entitled to the benefit of Notification No. 34/2004 wherever the gross amount charged is within the limit specified therein. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1586
  Penalty - the appellant has paid the entire demand of service tax - Commercial or Industrial Construction Service - period April 2007 to July 2008 - Held that:- There is no evidence adduced by the department to establish that the appellants are guilty of suppression of facts with intention to evade payment of tax. Taking these aspects into consideration and the issue being an interpretational one, penalty u/s 78 set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1585
  Courier Agency Service - co-leader - non-payment of service tax - Held that:- When the Board has clarified that the demand in respect of co-loader is not subject to levy of service tax and the adjudicating authority having stated in page-5 that the period of demand on this issue being upto March, 2005, it is necessary to verify as to what is the actual demand in respect of the services relating to co-loader - it is fit to remand the matter to the adjudicating authority who shall reconsider the issue after giving a reasonable opportunity of hearing to the appellant - appeal allowed by way of remand.

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• 2018 (8) TMI 1581
  Maintainability of petition - Jurisdiction - demand of service tax - assessee had shifted from UP to Maharashtra and surrendered the service tax registration at UP - Held that:- Since the questions which are being raised by the petitioner even otherwise relate to dispute with regard to facts which would require taking of evidence. The best course for the petitioner to take recourse to the statutory remedy available to him. For a period of four months from today or till the disposal of Appeal, whichever is earlier, operation of the impugned order dated 19.09.2017 shall remain in abeyance provided petitioners deposit 25% of the disputed amount of excise dues and furnishes security other than cash and bank guarantee in respect of the balance amount - petition disposed off.

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• Central Excise

• 2018 (8) TMI 1584
  Rectification of Mistake - Doctrine of merger - Whether the Tribunal is right in rejecting the rectification application filed by the appellant establishing the legal infirmity that Rule 9B of Central Excise Rules can no longer be pressed into service after amendment to Rule 173-B of Central Excise Rules and show cause notice under Section 11-A of the Act is mandatory and the adjudication order without issue of a notice, is a patent error on the fact of it? Held that:- It appears that it was not brought to the notice of the Hon'ble Division Bench, though the appeal was by the other Assessee. This should have been brought to the notice of the Hon'ble Division Bench, because it is the case of both the Assessees that they are manufacturing the same product - The Hon'ble Division Bench having passed the judgement dated 19.10.2011, the Tribunal would have absolutely no jurisdiction to entertain an application for rectification, because the correctness of the order passed by the Tribunal dated 04.05.2010 has been decided by the Hon'ble Division Bench, though at the instance of the other Assessee and the doctrine of Merger would apply - the Tribunal should have dismissed the application for rectification on the ground that it is not maintainable. Appeal dismissed - decided against assessee.

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• 2018 (8) TMI 1583
  Condonation of delay of 989 days in filing appeal before Tribunal - duty was paid under protest - Classification of Imported goods. Held that:- Sufficiency of cause is certainly a matter to be considered while exercising discretion. At the same time, Courts/Tribunals are bound to consider, as to whether length of delay or reasons assigned, if not accepted, would cause miscarriage of justice. It is deemed fit that the appellant should be given an opportunity, to pursue the appeal before CESTAT, Madras - appeal allowed.

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• 2018 (8) TMI 1582
  MODVAT/CENVAT credit - Rule 57Q of the Central Excise Rules - Held that:- Finding that the items do not qualify as capital goods is not shown to be perverse and as such the conclusion of CESTAT and denial of MODVAT credit in relation thereto cannot be held erroneous or perverse - petition dismissed.

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• 2018 (8) TMI 1580
  Refund claim - as refund claims were sanctioned to the appellants, and without challenging those assessment orders of refund claims sanctioning thereof, can be challenged by way of issuance of show cause notice under Section 11A of the Act or not? Held that:- The said issue is exempted by the Hon'ble High Court of Gauhati in the case of Jellalpur Tea Estate [2011 (3) TMI 11 - GAUHATI HIGH COURT], wherein the Hon'ble High Court has held that Revenue could not take recourse to Section 11A of the Act when it had a statutory remedy available to it to challenge the order dated 29.4.2002 passed by the Assistant Commissioner of Central Excise, Silchar by resorting to the revisional power available under Section 35-E of the Act. The provisions of Section 11A of the Act are not applicable to the facts of this case - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1579
  Benefit of cum duty - benefit of reduced penalty, as provided in the proviso to Section 11AC of the Central Excise Act, 1944 - Held that:- For benefit of cum duty, the said request is reasonable and the appellant has to be given a chance to establish their plea of cum duty. The matter, therefore, requires to be remanded to the Adjudicating Authority for the limited purpose of requantification, taking into consideration the plea of the appellant with regard to cum duty benefit - matter on remand. Penalty - Held that:- The appellant has not been informed that he has option to pay reduced penalty if the duty demand along with interest is paid within one month of the passing of the order in original - this matter also requires reconsideration. Penalty imposed on the Managing Director - Held that:- The Managing Director was also involved in the clearance of paints in the guise of primers - penalty imposed but quantum reduced. Appeal allowed in part - part matter on remand.

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• 2018 (8) TMI 1577
  Restoration of appeal - appeal was dismissed for want of compliance of pre-deposit - Held that:- The appellant having made sufficient predeposit, the appeal has to be restored to the files of the Tribunal - appeal restored. Demand raised for violation of Rule 8(3A) of Central Excise Act, 2002 - whether the appellant is liable to clear the goods using the CENVAT account during the period of default? - Held that:- The issue is under consideration before the Hon’ble Apex Court in the case of Union of India Vs. Indsur Global Ltd. [2014 (11) TMI 1101 - SUPREME COURT]. The Hon’ble Apex Court has stayed the operation of the orders passed by the Hon’ble High Courts of Gujarat and Madras - the matter requires to be remanded to the adjudicating authority, who shall consider the issue afresh on the basis of the outcome of the decision of Hon’ble Supreme Court. Appeal allowed by way of remand.

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• 2018 (8) TMI 1576
  CENVAT Credit - input services - The department has demanded the amount for the reason that the inputs were not utilised fully in the manufacturing process - Held that:- It is seen from records that appellants themselves have recorded loss/shortage of inputs after receipt of the input to the factory. Thus it is clear that the appellants have not used the entire inputs received in the process of manufacture - Further the appellant has not explained heavy losses on materials like acetic acid (24.37%), formic acid (14.26%), calcium chloride (9.5%). Penalty - Held that:- Since the issue being an interpretational one and the appellants having litigated the same upto the Hon’ble High Court, penalty not sustainable and is set aside. Appeal allowed in part.

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• 2018 (8) TMI 1575
  Scope of SCN - Respondent has pointed out that only one appeal had been filed by the department to the Commissioner (Appeals) in respect of M/s.Surya Prakash Foundary (SPF). Only by way of a letter dt. 18.11.2009, the department made a request to add the names of other three respondents - SSI Exemption - dummy units - Held that:- Tribunal in the case of CC (Export), Mumbai Vs Chokhani Silk Mills Pvt. Ltd. [2013 (12) TMI 1298 - CESTAT MUMBAI] in respect of a departmental appeal had held that department could not have added or impleaded the respondents to main appellant, against whom no appeal was filed - primary objection of the respondent on this score will therefore succeed. Another case of respondent is that Revenue in paragraphs H, K, L, M of their grounds of appeal have tried to put forth grounds which were not at all raised in the SCN and hence the appeal on these grounds cannot be entertained - Held that:- Revenue appeals are devoid of merits by putting forth grounds which are beyond the scope of the SCN. Appeal disposed off.

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• 2018 (8) TMI 1574
  Penalty u/s 11AC - supply of excess quantity - Clearance of Bitumen (Asphalt) to contractors who are engaged in executing the road projects - N/N. 108/95 dated 28.8.1995 - case of appellant is that the supply of excess quantity was due to inadvertence - Extended period of limitation was invoked for raising demand - whether there is suppression of facts with intent to evade payment of duty? - Held that:- The equal penalty envisaged in Section 11AC does not automatically get attracted in every case of non-payment or short-payment of duty. To state otherwise, on merely opting to pay the demand confirmation, for the extended period alleged in show cause notice, the penalty under section 11AC would not apply. To attract the heavy penalty envisaged under Section 11AC, the ingredients under the said Section has to be established. Penalty under this Section is for some contumacious conduct or for a deliberate act with intent to evade payment of duty. As the appellant contests the penalty imposed under Section 11AC, it becomes necessary to analyse whether the department has been able to establish the ingredients of Section 11AC - In the present case, the allegation is that the appellant has cleared excess quantity of Bitumen than that has been mentioned in the certificates issued as per Notification 108/1995. They have raised proper invoices showing that Bitumen is cleared as per Notification 108/1995 without collecting duty. The ER1 returns also reflected the excess quantity supplied. The appellants have not concealed the supply of the goods or is there any allegation that they have diverted the goods to any other customers. They have cleared the goods only to the contractors of the road project - There is no deliberate deception by any means of willful suppression, fraud or misrepresentation established on the part of the appellant. It has to be taken note that the appellant is a public sector undertaking - Appreciating the facts as well as evidence, it can be concluded that the department has not established suppression of facts with intent to evade payment of duty as provided under section 11AC of the Act. The penalty imposed under section 11AC is unjustified - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1573
  CENVAT credit - input services - GTA Service - place of removal - Held that:- The definition of input service underwent an amendment from 1.4.2008 where the words “from place of removal” was substituted with “upto place of removal” - the GTA services upto the buyer’s premises would not be eligible after 1.4.2008 - appellant would not be eligible for credit on outward transport upto buyers premises after 1.4.2008. CENVAT credit - inward transportation - time limitation - Held that:- The department has failed to adduce any evidence to establish that the appellants have evaded duty by suppressing facts. Hence, appeal succeeds on limitation - appellant is liable to pay duty for the two months period beyond the normal period. - However, that being an interpretational issue, the penalty in respect of these months cannot sustain. Appeal allowed in part.

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• 2018 (8) TMI 1572
  CENVAT Credit - service tax paid in respect of insurance policies - Held that:- For covering the risk of marine cargo that is shipped from the port, the appellant has to take a separate policy mentioning the vessel number and details etc. These policies in question are only a comprehensive and general policy covering the fire and general risk of the premises of the factory - The argument of the ld. AR that the office package policy has no connection with the manufacturing activity cannot be accepted for the simple reason that such insurance coverage is only for the furniture and other office equipments which is covered in a package scheme. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1571
  Service rendered for construction of their office building - CENVAT Credit or not? - Department was of the view that such credit is not eligible as these services fall under works contract service and is not eligible for credit as per the definition of input service with effect from 1.4.2011 - Held that:- Though the ld. counsel has vehemently argued that the existing building was repaired and modernized, therefore credit is eligible there is no record to show it was a newly constructed building. The document with respect to permission or approval from by the concerned local bodies or other authorities as approving the construction of new building etc. has to be verified. The department though alleges that the appellants have constructed a new building has not been able to throw light into this aspect. Appeal allowed by way of remand.

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• 2018 (8) TMI 1570
  CENVAT credit - input services - appellant having more than one unit - case of Revenue is that since the respondents have more than one unit, they ought to have taken ISD registration and distributed the credit - Held that:- Undisputedly, the invoices are issued in the name of the respondent company who has availed the entire credit. The allegation raised against the respondent is that they ought to have taken ISD registration and ought to have distributed the credit pro-rata between themselves and the Uppal Unit - Rule 7 of CCR, 2004 as it stood during the relevant period uses the word “may” and not “shall”. The word “shall” was used only in 2016 as argued by the ld. counsel for respondent. Credit allowed - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1569
  CENVAT credit - input services - Garden upkeep services - Interior Decorator service - Renting of immovable property services - Held that:- The appellant is a manufacturer and as per pollution control norms, they are required to maintain certain percentage of green area in their factory premises - credit allowed - appeal allowed. Interior decorator services - Held that:- It is brought out from evidence that the appellant had furnished invoices relating to the services - The appellant had done some minor civil work with respect to workstations used for overseeing manufacturing operations inside the factory - credit on these services allowed. Renting of immovable property services - Held that:- A similar issue was analysed by the Tribunal in the case of Carrier Air conditioning & Refrigeration Ltd. [2016 (4) TMI 103 - CESTAT CHANDIGARH]. The Tribunal observed that the credit availed on the renting of branch offices was eligible - credit allowed. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1568
  Penalty u/s 11AC of CEA - rejected material - cenvat credit on these rejected imported material not reversed - Held that:- It is brought out from the records that immediately on being pointed out by the audit in March 2012, the appellants have reversed the credit alongwith interest and intimated the department vide their letter dt.31/3/2012 - there was no malafide on the part of the appellant and the same was only an inadvertent mistake in reversing the credit - penalty set aside - appeal allowed.

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• 2018 (8) TMI 1567
  CENVAT credit - credit alleged to be on the basis of ineligible documents and on ineligible services - Outdoor catering services. Credit with regard to which documents not provided - Held that:- The ld. Counsel appearing for the appellants submit that in the interest of justice he is ready to furnish all the invoices issued by the service providers for verification. The Ld. AR has no objection if the matter is sent back for verification, to the file of adjudicating authority - The matter is to be considered afresh by the adjudicating authority who shall pass an order after verifying the invoices issued by the service providers. CENVAT Credit - Outdoor catering services - Held that:- The availment of input credit on the outdoor catering services is being extended with the support of interpretations drawn by various Courts with a rider that the employer has to satisfy the test that it has not collected anything in return, from its employees while providing the said service - the appellant is entitled for availment of Cenvat credit but however, it has only to establish that it has provided the impugned service free of cost without charging its employees. Appeal allowed by way of remand.

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• 2018 (8) TMI 1566
  Goods supplied to a Mega Power Project - Benefit of N/N. 21/2002 Cus dated 1/3/2002 - The department was of the view that in the Joint Secretary’s Certificate dt.16/12/2009, the project is mentioned as one for expansion and not for setting up of Mega Power Plant and therefore the requirement under S.No.400 of N/N. 21/2002 – Cus. Dt.1/3/2002 is not satisfied. Whether power project in respect of which supplies were made by the appellants is a standalone project which was newly set up or whether it is an expansion of existing power project? Held that:- It is unequivocally clarified by the Ministry that power project is not a mere expansion of existing power project, but is an independent power project, which is newly setup. Further as per notification 12/2012-Cus. Dt.17/3/2012, the said power project is specified in Entry 53 of the List 32A. The power project is an independent one newly set up and not an expansion of an existing project. The denial of exemption is without any basis, and therefore the duty demand cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1565
  Extended period of limitation - method of valuation - appellants were engaged in manufacture of cotton yarn and also undertaking job work of reeling, rewinding, doubling of cotton yarn received from their sister units/group companies. The appellants were also sending cotton yarn for further processing to these sister/group units on job work basis - Case of Department is that valuation should have been done as per Rule 9 r/w Rule 8 of Central Excise (Valuation) Rules, 2000. Held that:- The entire issue having been mired in litigation till the law was finally settled by the said Supreme Court's judgment, the extended period of limitation invoked in these proceedings cannot sustain - The show cause notices have been issued in 2006 invoking extended period alleging suppression of facts. The impugned order cannot sustain as the demand is hit by limitation - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1564
  Clandestine removal - shortages of raw material - the main edifice of the notice rests on the statement of Shri P. Nallendra Kumar, the authorized signatory of the appellant - Held that:- The entire case has been largely up on the statements of the authorized signatory of the appellant, which was retracted by that person, proximate to the recording of his statements. The case is also built up on statements of only a few suppliers of the impugned raw material, and a few buyers of lead ingots; almost all these persons have retracted their initial statements during cross-examination - Such unfounded and unsubstantiated charges made in the show cause notice have been mechanically upheld by the adjudicating authority without any application of mid and without taking cognizance of the counter arguments made by the appellants by discarding the retractions and statements made by key persons and in cross-examination, and, to top it all, relying upon the statement of a buyer whose cross-examination was refused by him. The case attempted to be built up against the appellants, does not have any legs to stand on. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (8) TMI 1563
  Validity of assessment order - violation of principles of natural justice - case of Revenue is that when the respondent has rejected the applications filed under Section 84 of the TNVAT Act, after affording an opportunity of personal hearing, the petitioner is not entitled to raise the very same issue before this Court. Held that:- It is evident that when the Assessing Officer has called upon the petitioner to produce further documents on 12.02.2018 and again on 15.05.2018, he has not concluded the proceedings. It is also not in dispute that the petitioner furnished certain documents on receipt of such notices. Therefore, the requirement to comply with personal hearing arises only thereafter - In this case, admittedly, no such opportunity was given to the petitioner. In all fairness, the Assessing Officer should have intimated the date of personal hearing. It is not done in this case. It is true that the petitioner, on filing the application under Section 84 of the TNVAT Act, was called upon to appear in person and explain - providing such personal hearing, after passing the orders of assessment, though at the time of hearing the application filed under Section 84 of the TNVAT Act, is like putting the cart before the horse, since such opportunity of personal hearing, as contemplated by the respondent themselves, while issuing the notices of proposal, must have been provided before passing the orders of assessment and not thereafter, as has been done in this case. The matter is remitted back to the Assessing Officer to pass fresh orders of assessment in respect of each assessment year, after affording an opportunity of personal hearing, by indicating the date of such hearing - Appeal allowed by way of remand.

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• 2018 (8) TMI 1562
  Input tax credit - purchase of wind mill - Section 19(3) of the TNVAT Act, 2006 - whether the power generated is utilised for the manufacturing process by the concerned dealer and if it is solely for the purpose of production of yarn in a textile mill, then it should be considered as capital goods? - Held that:- The petitioner has claimed Input Tax Credit to the tune of Rs. 6, 26, 000/- in the year 2007-08 for the capital goods purchased and used by him during the year 2006-07. Since the capital goods, namely, wind mill was purchased and used for the manufacturing of cotton yarn, which is taxable goods, he is entitled to avail Input Tax Credit as per Section 19(3) of the TNVAT Act - The rejection of the claim on the ground that the wind mill does not form an integral part of the industrial premises, in which, the manufacturing is made and that the wind mill is situated at a far-off place, cannot be treated as capital goods in the manufacturing of cotton yarn, is not sustainable. Whether the power generated by the petitioner by erecting the wind mill was completely utilised for the manufacturing process, without there being any commercial exploitation, can be considered as capital goods or not? - Held that:- By ample evidence, the petitioner had proved that he has entered into an agreement with the Power Grid Corporation for transmitting the power and getting supply and then, the relevant column proved that it is not distributed to anybody else on commercial basis. In that event, when the erection of wind mill for the purpose of generating power in the manufacturing process shall be construed as capital goods, Input Tax Credit shall be made available to the assessee as per Section 19(3) of the TNVAT Act. The petitioner is entitled to refund of the amount if paid pursuant to the rejection of his claim by the authorities - petition allowed.

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• 2018 (8) TMI 1561
  Exemption from payment of Entry tax - Whether the revisionist is a manufacturer of Compressed Natural Gas (C.N.G.) and Piped Natural Gas (P.N.G.) in terms of section 2 of the U.P. Tax on Entry of Goods Act 2000 read with section 2(ee) and section 2(e-1) of the U.P. Trade Tax Act 1948 so as to be eligible for the benefit of exemption from payment of entry tax on capital goods or machinery brought into the local area from any place outside that local area for use in manufacturing of the aforesaid C.N.G. and P.N.G., under the Notification dated 18.2.2003 issued under section 4-B of the Act 2000? Held that:- The Tribunal has gravely erred in being persuaded by the definition of ‘Natural Gas’ as contained in the petroleum and Natural Gas Laboratories Board Act 2006, consequently, it has arrived at an erroneous conclusion. The process involved in making C.N.G. and P.N.G. involves its manufacture and the product has a different commercial identify. Even if it did not have a different commercial identity, even then, it would still be a ‘manufacture’ within the meaning of section 2(2) of the Act 2000 read with section 2(e-1) of the Act 1948. The Court also finds that the revisionist has been issued a license under Rule 9 of the Central Excise Rules 2002 made under the Central Excise Act for operating as a manufacturer of excisable goods at “C.N.G. Mother Station etc.”, a copy of which is annexed as Annexure-6 to the writ petition, which also goes to show that he is a manufacturer even as per the definition of the term under the Excise Act and the Rules thereunder, but the Court is not persuaded only by this document, rather, it is persuaded by the reasoning already given - also the observation in the order of the Tribunal that by depositing the entry tax the revisionist had admitted its liability in this regard, is misconceived, especially as there can be no estoppel against law, considering the fact that the Notification dated 18.2.2003 had been issued under section 4- B of the Act 2000 and had the force of law. It is held that the revisionist is a manufacturer of C.N.G. and P.N.G. and consequently it is entitled to the benefit of notification dated 18.2.2003 - revision allowed.

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• Indian Laws

• 2018 (8) TMI 1601
  Information denied under RTI Act - petitioner denied the information on the ground that the information sought for by the petitioner was a third party information and in the nature of personal information and thus, exempt from disclosure under Section 8(1)(j) of the RTI Act - whether the details of profit declared by a third party and its Income tax returns is exempt from disclosure under Section 8(1)(j) of the RTI Act? Held that:- The three principal conditions must be met for the said clause to be applicable: first, that the information sought must qualify as personal information; second, that disclosure of such information should have no relationship to any public activity or interest; and third, that it would cause unwarranted invasion of the privacy of the individual - Even if the aforesaid conditions are met, such information can be disclosed if the CPIO is satisfied that larger public interest justifies the disclosure of such information. In view of the observations made by the Supreme Court in Girish Ramchandra Deshpande [2012 (10) TMI 218 - SUPREME COURT], the question whether Income tax returns are personal information is no longer res integra, where it was held that the petitioner in the instant case has not made a bona fide public interest in seeking information, the disclosure of such information would cause unwarranted invasion of privacy of the individual under Section 8(1)(j) of the RTI Act. Indisputably, the information sought for by the petitioner is personal information. Such information could be disclosed only if the respondent could establish that disclosure of such information was justified by larger public interest. Even if the PIO was satisfied that disclosure of such information was justified, the PIO was required to follow the procedure given under Section 11 of the Act; that is, the PIO was required to give a notice to the concerned employee stating that he intends to disclose the information and invite the person concerned to make submissions on the question whether such information ought to be disclosed. Admittedly, no such notice was issued - Mere apprehension that a third party has declared income, which is lower than the true income, cannot justify disclosure of Income Tax Returns in larger public interest. The impugned order directing the disclosure of personal information cannot be sustained - petition allowed.

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• 2018 (8) TMI 1600
  Vires of of Section 35AA and Section 35AB of the Banking Regulation Act, 1949 - interim stay of the implementation of the impugned circular dated 12.02.2018 - Held that:- I have been unable to persuade myself to find the petitioners entitled to the grant of interim relief bearing in mind factors such as the state of the banking sector, rising status of NPA’s, declining profitability of public sector banks, steady erosion of profits, majority of banks not even meeting the minimum capital requirements, the huge infusion of funds by the Union Government to shore up the banking system as a whole, the experience of RBI of existing schemes not being sufficiently strong to deal with resolution of stressed assets with expediency, all of which appear to have acted as the backdrop in which the impugned directive came to be issued. The amendments to the 1934 and 1949 Acts, the express authorization in favour of the RBI by the Union Government, viewed cumulatively, indicate the intent to sufficiently empower RBI to deal with the subject of stressed assets. In such situations, the Court must necessarily be circumspect and tread with caution keeping the principles of “judicial deference” and “institutional competence” in mind. Ultimately the question of weighing competing economic factors, choice of fiscal measures liable to be adopted must not be interfered with lightly unless established to be palpably arbitrary. The petitioners have failed to establish a case for the grant of interim relief at this stage - Interim relief, at this stage, need not be granted.

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• 2018 (8) TMI 1599
  Offence punishable u/s 138 of NI Act - vicarious liability under Section 141 of the NI Act - Held that:- The requirement to invoke the vicarious liability as stipulated under Section 141 of NI Act, is that the accused other than the company were incharge and responsible for the company - In the light of averments in the complaint, the submissions that they were not responsible or that they were not incharge would be probable defence which can be adjudicated at the time of trial. The complaint herein mentions details attributing sufficient role to the accused. On perusal of the averments in the present complaint, it is found that they were sufficient to issue process against the applicant. Taking into consideration the totality of circumstances, including admission in reply to notice, averments in respective reply filed in revision applications filed before Sessions Court as well as averments in present proceedings and affidavit-in-reply in these matters, no case is made out to exercise inherent powers to quash proceedings which are based on debatable issues. Petition dismissed.

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