TMI Tax Updates - e-Newsletter
August 11, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Switching between the composition scheme and normal scheme of payment of tax - When opted for the Composition scheme, ITC on Capital Goods need to be reversed upto 5 years, there is no limit on inputs held in stock - But when opted out from the composition scheme, credit cannot be availing on inputs and capital goods which are more than 1 years old.
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GST:
Switching from normal payment of tax composition scheme - Whether the assessee is liable to reverse Input Tax Credit (ITC) on inputs or capital goods held in stock? How to calculate reversal of ITC in such case?
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GST:
Switching from composition scheme to normal scheme of payment of tax - Whether the assessee is eligible to avail Input Tax Credit (ITC) on inputs or capital goods held in stock?
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Income Tax:
Revision u/s 264 - petitioner and his grandmother are co-owners of property sold - joint ownership - seeking the petitioner's income in respect of the transaction pertaining to the said property, be determined in accordance with the decision of the High Court in the petitioner's grandmother's case - AO directed to re-do the assessment - HC
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Income Tax:
Provisional attachment of bank account u/s 281B - search and seizure activity - even after expiry of period in excess of seven months, department did not take any action - attachment order vacated - HC
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Income Tax:
Addition towards deemed dividend u/s 2(22)(e) - payment made to assessee company - the deemed dividend is taxable in the hands of the registered share holder but not in the hands of the deemed shareholders.
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Income Tax:
Applicability of Article 8 vis-a-vis Article 24 of DTAA - DTAA between India and Singapore - shipping income - Article 24 only envisages territorial and jurisdictional rights for taxing the income and India has no jurisdiction for any taxing right which are governed by Article 8. There is no stipulation about exemption under Article 8 of the shipping income
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Customs:
Anti-dumping duty on "Opal Glassware", originating in or exported from China PR and UAE imposed
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Customs:
Continuation of pre-GST rates of Rebate of State Levies (RoSL) for transition period of three months i.e. 1.7.2017 to 30.9.2017 for Export of Garments and textile made-up articles - Circular
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Corporate Law:
Articles are internal regulations of a Company. It is a subordinate document to the Memorandum of Association. If companies were unable to alter their memorandum or Articles of Association to give effect to their desire changes, the corporate enterprise is likely to get frustrated and the purpose and object for which the company was formed would get defeated. - HC
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State GST:
Levy of VAT or GST on Supply of goods / works contract - where work was started before 1.7.2017 or contract was entered into prior to 1.7.2017 - Time of supply - A Clarification
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Service Tax:
Refund - Since the payment of service tax during the said period was not under protest, the Appellant was unable to take advantage of the second proviso under Section 11B (1) of the CE Act which states that the limitation of one year will not apply where any duty and interest has been paid under protest. - HC
TMI Short Notes
Articles
Notifications
Central Excise-
24/2017 - dated
9-8-2017
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CE (NT)
Seeks to specify return ER-2 under rule 23 (3) of Central Excise Rules, 2017 and rule 11 (3) of CENVAT Credit rules, 2017 in supersession of Notification No. 24/2008-CE (NT)
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23/2017 - dated
9-8-2017
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CE (NT)
Seeks to specify return forms ER-1 & ER-3 under rule 12 of Central Excise Rules, 2017 and rule 11 (5) of CENVAT Credit Rules, 2017 in supersession of Notification No. 16/2011-CE (NT)
GST - States-
ERTS (T) 65/2017/Pt/009 - dated
28-7-2017
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Meghalaya SGST
Corrigendum - Notification No. ERTS (T) 65/2017/16, dated 29.6.2017
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ERTS (T) 65/2017/Pt/008 - dated
28-7-2017
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Meghalaya SGST
Corrigendum - Notification No. ERTS (T) 65/2017/11, dated 29.6.2017
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ERTS (T) 65/2017/Pt/007 - dated
28-7-2017
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Meghalaya SGST
Corrigendum - Notification No. ERTS (T) 65/2017/2, dated 29.6.2017
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ERTS (T) 65/2017/Pt/006 - dated
28-7-2017
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Meghalaya SGST
Corrigendum - Notification No. ERTS (T) 65/2017/1, dated 29.6.2017
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J.21011/1/2014-TAX-Loose - dated
29-6-2017
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Mizoram SGST
The Mizoram Goods and Services Tax Rules, 2017.
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FIN/REV-3/GST/1/08 (Pt-1) - dated
1-8-2017
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Nagaland SGST
The Nagaland Goods and Services Tax (Fourth Amendment) Rules, 2017.
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FIN/REV-3/GST/1/08 (Pt-1)/380 - dated
17-7-2017
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Nagaland SGST
Corrigendum - Notification No. F.NO. FlN/REV-3/GST/1/08 (Pt-I) “D” dated the 30th June, 2017.
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FIN/REV-3/GST/1/08 (Pt-1) - dated
17-7-2017
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Nagaland SGST
Corrigendum - Notification No. F.NO.FIN/REV-3/GST/1/08(Pt-1) “E” dated the 30th June, 2017.
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12250/CT., Pol-41/1/2017 - dated
8-8-2017
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Orissa SGST
Filing of return (GSTR-3B)
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S.R.O. No. 344/2017 - dated
27-7-2017
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Orissa SGST
Amendment in the Notification No. 19829-FIN-CT1-TAX-0022-2017, dated the 29th June, 2017
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S.R.O. No. 343/2017 - dated
27-7-2017
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Orissa SGST
Amendments, in the Notification No. 19833-FIN-CT1-TAX-0022-2017, dated the 29th June, 2017
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F.No. 3251/CTD/GST/2017 - dated
8-8-2017
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Puducherry SGST
Proper officer relating to provisions other than Registration and Composition under the Puducherry Goods and Services Tax Act, 2017
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F. No. 3240/CTD/GST/2017 - dated
8-8-2017
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Puducherry SGST
Filing of Return in Form GSTR-3B for July & August
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G.O.Ms. No. 26/CT/2017-18 - dated
31-7-2017
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Puducherry SGST
Appointment of Officers
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G.O.Ms. No. 20/CT/2017-18 - dated
31-7-2017
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Puducherry SGST
Notifies the following modes of verification.
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F.No.17(131)ACCT/GST/2017/2309 - dated
8-8-2017
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Rajasthan SGST
Date of filing of GSTR-3B
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529/2017 - dated
29-6-2017
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Uttarakhand SGST
Provisions for UN organisations, Foreign diplomatic missions and diplomatic agents
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528/2017 - dated
29-6-2017
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Uttarakhand SGST
No refund of unutilised input tax credit shall be allowed in case of supply of services specified
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527/2017 - dated
29-6-2017
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Uttarakhand SGST
Activities or Transactions by public authorities shall be treated neither as a supply of goods nor supply of service
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526/2017 - dated
29-6-2017
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Uttarakhand SGST
Provisions of reverse charge on supply of services
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524/2017 - dated
29-6-2017
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Uttarakhand SGST
Regarding Rate of Interest per annum for different purposes
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523/2017 - dated
29-6-2017
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Uttarakhand SGST
Classes of Officers in Uttarakhand GST Act,2017
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522/2017 - dated
29-6-2017
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Uttarakhand SGST
Exempt intra-state supplies received by a registered person from a non- registered person, provided that the amount shall not exceed 5,000/- in a day
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521/2017 - dated
29-6-2017
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Uttarakhand SGST
List of goods in respect of which no refund of unutilised input tax credit shall be allowed
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520/2017 - dated
29-6-2017
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Uttarakhand SGST
Regarding provisions of refund to CSD
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (8) TMI 422
Exercise of jurisdiction by Principal CIT u/s 263 - proof of adequate enquiries - Assessee having claimed tax credit on account of deemed dividend taxable in Oman - Held that:- Revenue had consistently permitted the Assessee to avail tax credit on the deemed dividend during AYs 2006-07 to 2009-10. The ITAT after going through the entire record came to the following conclusion that “in respect of the current assessment year i.e. AY 2010-11 which is the subject matter of revision and appeal before us the Assessing Officer has adopted the same view in consonance with the view adopted in the past years and for which detailed queries and inquiries were raised and conducted by the Assessing Officer.” ITAT perused the queries raised by the AO and the reply given thereto by the Assessee, in respect of the dividend income received from OMIFCO. Therefore, the contention of the Revenue that no adequate enquiries in respect of the above issue were made was held to be ‘completely misplaced’. As regards the issue concerning the capitalization of interest, the Court finds again that the ITAT took note of the fact that detailed enquires were made by the AO in regard to the major additions to the fixed assets, capital work in progress, the manner in which the depreciation was claimed and the details of both secured as well as unsecured loans. The audited financial statements of the Assessee were also compiled, for the earlier AYs including the AY in question, and placed before the AO. The ITAT also took note of the Significant Accounting Policies in the Auditor’s Report and the synopsis filed before the AO. No substantial question of law arises for consideration from the impugned order of the ITAT.
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2017 (8) TMI 421
Benefit of exemption under Section 11 - proof of charitable activity - Held that:- Both the CIT (A) as well as the ITAT have returned concurrent factual findings to the effect that notwithstanding the amount earned through publication or sale of books as noted above, the essential activity of the Assessee remained charitable in nature, viz., imparting education and relief to poor. The Court is not persuaded to hold that the above concurrent factual findings suffer from any perversity requiring interference by this Court. - Decided against revenue
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2017 (8) TMI 420
Revision u/s 264 - petitioner and his grandmother are co-owners of property sold - joint ownership - petitioner filed an application under Section 264 of the Act requesting that the petitioner's income in respect of the aforesaid transaction pertaining to the said property, be determined in accordance with the decision of the High Court in the petitioner's grandmother's case. Held that:- when the petitioner's assessment was completed on 31.03.1981 based on the decision rendered by the Tribunal in the petitioner's grandmother's case, the respondents themselves should have revised the petitioner's assessment in tune with the said order. Having not done so, the Department cannot reject the petition filed by the petitioner under Section 264 of the Act. Thus, for all the practical purposes, the limitation in filing the petition had to be reckoned only after the judgment in the Tax Cases. The Assessing Officer had given effect to the order passed by the Division Bench dated 21.02.2001 and if that date is reckoned, there is no inordinate delay for the 1st respondent to reject the petition filed by the petitioner under Section 264 of the Act. As decided in case of Commissioner of Income Tax Vs S.Muthukarupan [2006 (9) TMI 140 - MADRAS High Court] wherein, the Court held that if during the same assessment year the same quantity of wealth in possession of one co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax. - AO directed to re-do the assessment.
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2017 (8) TMI 419
Provisional attachment of bank account u/s 281B - search and seizure activity - even after expiry of period in excess of seven months, department did not take any action - Held that:- since the pre-conditions for invoking Section 281B of the Act of 1961 are absent in the present case, the impugned notices are set aside. Significantly, the petitioner is enjoying an interim order since April 5, 2017. In spite of such interim order, the department has chosen not to initiate the assessment proceedings. The impugned order is set aside.
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2017 (8) TMI 418
Liability to collect tax at source u/s 206C(1C) - octroi collected by the agent appointed by the assessee - Held that:- Section 206C(1C) of the Act obliges every person who grants a contract/lease transferring his right to collect toll to also collect tax at source as specified at serial No.2 of the Table to Section 206C(1C) of the Act. However, Section 206C(1C) of the Act cannot be extended to oblige the Corporation to collect tax at source from its agent in respect of octroi collected. Section 206C(1C) only obliges a person to collect tax from its agents/licensee who collects a toll on its behalf. The obligation to collect tax under Section 206C(1C) of the Act cannot be extended to collection of octroi. The legislature when it brought in section 206C(1C) of the Act has not authorised the collection of tax at source in respect of octroi. It specifically restricted its obligation to only three categories namely parking, toll plaza, mining and quarrying. It is not open to the Revenue to extend the ambit and scope of section to also include contracts, license or lease for collection of items other then toll, parking fees and for mining and quarrying. Therefore, there is no legislative mandate to collect tax at source or the octroi collected under Section 206C(1C) of the Act. No fault can be found with the impugned order of the Tribunal. - Decided in favour of assessee and against Revenue.
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2017 (8) TMI 417
Addition of lease transaction as operating lease - capital recovery of the assets to lease income - leasing Rolling Stocks assets by the assessee to the Ministry of Railways - CIT-(A) held that lease transaction as finance lease - Held that:- Ld. CIT-(A) following the direction of the ITAT in earlier years, correctly accepted the lease transaction of the assessee as ‘finance lease’ transaction and restored the matter to the Assessing Officer for verification of facts of lease charges. Hon’ble Delhi High Court in the case of the assessee for assessment year 2001-02 (2014 (6) TMI 224 - DELHI HIGH COURT) considered the lease transaction as finance lease. Also lease equalization charges should not be disallowed. - Decided in favour of assessee. Disallowance u/s 14A under the normal provisions of the Act - Held that:- Once the Assessing Officer recorded the dissatisfaction and invoked section 14A(2) of the Act, he is duty-bound to compute the disallowance in terms of Rule 8D of the Rules. In the case of Gujarat Narmda Valley Fertilisers Company Limited (2014 (3) TMI 847 - GUJARAT HIGH COURT) the issue was that interest free funds available with the assessee were much larger as compared to the investment in mutual funds and shares and therefore, the Assessing Officer was held wrong in disallowing interest expenditure under section 14A of the Act. Before us, the Ld. counsel of the assessee has not brought on record any facts which could establish that the ratio of the Hon’ble High Court would apply in the case. In view of above facts and circumstances, we do not find any infirmity in the order of the Ld. CIT-(A) on the issue in dispute and accordingly, the ground of the appeal of assessee is dismissed. MAT - calculating the book profit under section 115JB of the Act, disallowance related to exempt income cannot be made following section 14A read with Rule 8D - Held that:- We find that the issue has been decided recently by the special bench of the Tribunal in the case of Vireet Investment (2017 (6) TMI 1124 - ITAT DELHI) in assessment year 2008-09, wherein it is held that computation under clause (f) of Explanation-1 to section 115 JB(2) of the Act is to be made without resorting to the computation as contemplated under section 14A read with rule 8D of the rules. Thus, respectfully following the above decision of the special bench of Tribunal, we set aside the decision of the Ld. CIT-(A) and delete the disallowance. - Decided in favour of assessee Disallowance of prior period expenses - Held that:- CIT-(A) has already allowed substantial relief holding that expenses on Salary, Leave Travel concession etc. related to employees on deputation, were crystallized in the year under consideration. We find that the remaining expenses are in respect of the arrear of salary and service tax. We find that payment of service tax is allowed on the paid basis in terms of section 43B of the Act. Thus, only expense left is a arrear of salary amounting ₹ 7,89,000/-. The Ld. counsel claimed that the said expense was crystallized during the year under consideration similar to other expenses on salary which have been allowed by the Ld. CIT-(A) and against which, the Revenue has not filed any appeal. Before us, the Revenue did not bring on record any evidence to controvert the arguments of the ld. counsel. See case of Excel Industries Ltd.,[2013 (10) TMI 324 - SUPREME COURT ] - Decided in favour of assessee Addition under section 115JB for provision of leave travel assistance and addition for provision of gratuity - Held that:- The assessee has claimed that provision have been made on the actuarial valuation, however we find that no documentary evidence in support of the claim has either been made before the lower authorities or before us. In absence of any such documentary evidence furnished, the claim of the assessee that same are ascertained liability cannot be accepted. In the decision of Rotork Controls India Pvt. Ltd. Vs. CIT [2009 (5) TMI 16 - SUPREME COURT OF INDIA] as relied upon by the assessee, the provision made for warranty claim on the basis of past experience, was held to be allowable under section 37(1) of the Act. Thus, the said decision is not relevant in the instant case. - Decided against assessee.
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2017 (8) TMI 416
Income arising from onshore services - Permanent Establishment - global profit accruing from the offshore supplies to PE in India - Composite contract - Attribution of profit - purposes of supply of BTG equipments as well as supervision of erection/installation, commissioning and performance testing at the project site in India - Held that:- Assessee having entered into a Composite contract which is relatable to the operations carried out in India and partly to outside India a proportionate part of income which is so relatable to the operations carried out in India has to be charged to tax. The extension of taxability of profits of PE by including profits directly or indirectly attributable, is akin to the provisions of Article 7(1)(b ) and 7(1)(c) of the UN MC which provides that in addition to the ‘profits attributable to the permanent establishment’ the taxability of PE profits will also extend to ‘(b) sales in that other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or (c) other business activities carried on in that other State of the same or similar kind as those effected through that permanent establishment’. The connotations of ‘profits indirectly attributable to permanent establishment’ will extend to these two categories. These categories clearly incorporate a force of attraction rule. The basic philosophy underlying the force of attraction rule is that when an enterprise sets up a permanent establishment in another country, it brings itself within the fiscal jurisdiction of that another country to such a degree that such another country can properly tax all profits that the enterprise derives from that country whether the transactions are routed and performed through the PE or not. The provisions of Article 7(1) of India China DTAA, include same results as sought to be achieved by article 7(1)(c) of UN MC. As to the scope of this provision, one may find guidance from the UN MC Commentary in this regard. The connotations of ‘profits indirectly attributable to permanent establishment’ do indeed extend to incorporation of the force of attraction rule being embedded in article 7(1). In addition to taxability of income in respect of services rendered by the PE in India, any income in respect of the services rendered to an Indian project, which is similar to the services rendered by the permanent establishment, is also to be taxed in India in the hands of the assessee, irrespective of the fact whether, such services are rendered through the permanent establishment, or directly by the general enterprise. There cannot be any professional services rendered in India which are not, at least indirectly, attributable to carrying out professional work in India. This indirect attribution, in view of the specific provisions of India-China tax treaty, is enough to bring the income from such services within ambit of taxability in India. The basic philosophy underlying the force of attraction rule is that when an enterprise sets up a permanent establishment in another country, it brings itself within the fiscal jurisdiction of that another country to such a degree that such another country can properly tax all profits that the enterprise derives from that country whether the transactions are routed and performed through the PE or not. In effect, profits relating to services rendered by assessee, whether rendered in India or outside India, in respect of Indian projects are taxable in India, and are attributable to the supervisory PE of assessee in India, as they are effectively connected with each other. Ld.Counsel has not submitted any justification to adopt the segmental profits. He has also not demonstrated any illegality in the computation adopted by Ld.AO. It is observed that Ld.AO has followed the global profitability based upon the ruling of Rolls Roys (2010 (3) TMI 1157 - ITAT DELHI) and attributed 25% of global profit accruing from the offshore supplies to PE in India - Decided against assessee. Levy of Interest u/s 234B - Held that:- The undisputed fact in the present case remained that the tax on entire income received by assessee was required to be deducted, at appropriate rates by the respective payers under section 195. Had the payer made the deduction of tax at the appropriate rate, the net tax payable by the assessee would have been Nil. Thus, there was no liability to pay advance tax by the assessee. High Court of Delhi in the case of Jacabs Civil Incorporated/ Mitsubishi Corporation reported in [2010 (8) TMI 37 - DELHI HIGH COURT] on identical issue deleted the interest charged u/s 234 B - Decided in favour of assessee.
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2017 (8) TMI 415
Penalty u/s. 271(1)(c)(1)(c) - AO had reduced WIP on account of excess labour charges debited to WIP in respect of Ishwar Dayal Chavda(IDC) - Held that:- There is no need for any authority to state that assessment proceedings and penalty proceedings are independent and separate and that quantum addition should not always lead to levy of concealment penalty. While invoking the provisions of section 271(1)(c)of the Act, the AO has to consider the explanation filed by the assessee, during the penalty proceedings. In the instant case, the assessee had filed additional evidence before the FAA during the quantum proceedings. The confirmation letter of IDC and the other documents available in the paper book clearly indicate that the claim made by the assessee could not be termed a malafide claim. It is also noteworthy that the assessee had deducted TDS on labour charges and same were not found to be bogus or non-genuine. AO has not challenged the method of accounting followed by the assessee i.e. the project completion method. Thus we are of the opinion that the claim made by the assessee was bonafide and legal claim and disallowance of the same should not be visited by penal provisions. Therefore, reversing the order of the FAA we decide the effective ground of appeal in favour of the assessee.
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2017 (8) TMI 414
Non reconciliation of various items of income - difference between cumulative income as per TDS certificate and cumulative income offered to tax - Held that:- The assessee had filed reconciliation in that matter,that same was not analysed properly by the AO/FAA,that there is no evidence on record that un-reconciled amount is more than ₹ 5.13 lakhs for the year under appeal.The AO has not given any finding about the balance amount.In these circumstances,we hold that the matter needs further verification and investigation.So,in the interest of justice,we are remitting back the matter to the file of the AO for fresh adjudication.He is directed to afford a reasonable opportunity of hearing to the assessee.First effective Ground of appeal(GOA- 2&3)is decided in favour of the assessee,in part. Credit notes issued to Reach Global Services Ltd (RGSL),an Associated Enterprise (AE) of the assessee - Held that:- The assessee had filed copy of ledger accounts of RGSL considering credit note and final invoice vide letter dtd. 07/12/2011,copy of invoices,copy of credit note dtd. 6/04/2009 issued for ₹ 2,49,73,220/- and confirmation of accounts from RGSL for year under appeal. From the statement it is clear that RGSL had included the credit note of USD $5,53,232 in its books of account and working of final fees receivable from RGSL (Rs.13, 45, 69,123/-). We find that all the above facts were not analysed properly by the AO/ FAA during the assessment/appellate proceedings.Therefore,in the interest of justice,we are restoring back the issue to the file of the AO for fresh adjudication.He is directed to decide the issue after affording reasonable opportunity of hearing to the assessee.
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2017 (8) TMI 413
Disallowance under section 14A - Held that:- The assessee had suo motu made a disallowance of ₹ 16.58 lakhs,while calculating the expenditure incurred towards earning exempt income,that it had made disallowance under the head interest expenditure(Rs. 2.28 lakhs) salary cost in relation to employees engaged(Rs. 12.60 lakhs) and miscellaneous expenses for employees(Rs. 1.70 lakhs),that the AO had not given any reason as to how and why the disallowance made by the assessee was not satisfactory.Because of this reason alone disallowance made can be deleted. AO had increased the miscellaneous expenses to the tune of ₹ 62.72 lakhs without given any reason or justification. In our opinion, any disallowance, including the disallowance under section 14A,has to be reason based and it cannot be left to the whims and fancies of the AO. In the case under consideration the FAA has also not passed any reasoned the order. He has mechanically confirmed the order of the AO referring to the judgment in Godrej Boyce Manufacturing Company Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT). He has also not given any reason as to why the calculation submitted by the assessee was not acceptable. Therefore,reversing his order,we decide the first effective ground of appeal in favour of the assessee. TP adjustment on account of interest received from the AE - Held that:- We find that the assessee had advanced loan to its AE in US Dollar,that it had charged interest @ 6%-7.5% per annum,that the LIBOR rate as on last date of 2008 was 2.49%, that the AE of the assessee had taken loan from a third party namely ANB and Amro Bank Ltd.,that the bank had charged LIBOR +200 bps,that the assessee had benchmarked the transaction accordingly,that in the subsequent AY.(AY 2012-13),the AO himself had made no adjustment on account of interest rate transaction even though the facts and circumstances were identical to the facts to the year under appeal. We also find that in the cases,relied upon by the assessee,the Tribunal has taken a consistent view that LIBOR+ 200bps or 300bps interest rate has to be considered arm’s length rate of interest.In the case under consideration after adding 300 bps the rate would come to 5.49 %,whereas the assessee has charged 6%/7.5% interest from its AE thus, there was no justification for the FAA to uphold the order of the TPO/AO who had charged interest @14.39%. Therefore,reversing the order of the FAA,we decide third Ground of appeal in favour of the assessee . TP Adjustment of guarantee commission - Held that:- We find that the assessee had given guarantee in respect of bank loans in case of two of its AE.s, that it had also given guarantee in respect of performance guarantee for two other AE.s,that it had charged the commisssion @1.5% on the basis of quotations obtained from ICICI bank,that the TPO/AO took the rate at 3% and made adjustment at ₹ 2.70 croress. We find that the TPO, while determining the ALP for the AY.2012-13 the TPO had approved the rate of 1.5% for the financial guarantee, that for performance guarantee he did not make any adjustment. There is nothing on record to prove that facts for year under consideration and the facts for AY.2012-13 were different.Thus, the TPO himself has accepted that the benchmarking done by the assessee was based on reliable data and was at arm’s length.Therefore,we are of the opinion that there was no justification for making TP adjustment with regard to guarantee commission. Thus following the judgment of Everest Kanto Cylinders Ltd.(2015 (5) TMI 395 - BOMBAY HIGH COURT), we decide third effective Ground of appeal (GOA-4) in favour of the assessee .
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2017 (8) TMI 412
Penalty proceedings u/s 271(1)(c) - furnishing of inaccurate particulars of income - additional income offered during the course of survey - satisfaction of the authority that there is a concealment - Held that:- We noticed that in the assessment order u/s 143(3), the AO has not indicated any discrepancy in the book entry nor observed any hint of income being concealed or assessee furnished inaccurate particulars. AO has accepted the return of income filed by the assessee. Since AO accepted the return of income filed by the assessee and computed the assessment u/s 143(3) and not found any discrepancy in the details filed by the assessee, now the AO cannot bring any issues in the penalty proceedings after accepting financial statements and return of income filed by the assessee. The assessee neither concealed any particulars of income nor furnished inaccurate particulars in the return of income filed , which was duly accepted and assessment was completed. Hence, penalty cannot be levied in this case. In Manjunatha Cotton & Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT) observed that the condition precedent for levying the penalty is the satisfaction of the authority that there is a concealment of the particulars of the income or inaccurate particulars are furnished to avoid payment of tax. Where the assessee offers an explanation and substantiate the explanation, the question of imposing penalty would not arise. Even in cases where he fails to substantiate the explanation but if he proves that the explanation offered is a bonafide one and all the facts relating to the same and material to the computation of his total income has been disclosed by him, then, in law, a discretion is vested with the authority not to impose penalty. If the assessee offers explanation but fails to substantiate the same, but if he proves that explanation offered is bonafide but is not Sufficient to substantiate the explanation and discloses all material for the computation of his total income, the question of imposing penalty would not arise. Issue of improper show cause notice - Held that:- Notice issued by Assessing Officer u/s 274 read with section 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. Therefore, on this aspect also, the penalty order does not withstand. Assessee appeal allowed.
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2017 (8) TMI 411
Accrual of income - Addition on additional consideration as accrued income during the year alongwith accrued interest - scope of the agreement - postponement of revenue - year of assessment - Held that:- In the year under appeal there was order of the Revenue Minister. But,order of the Minister was not one of the conditions of the agreement. The assessee had challenged the valuation adopted by the Revenue authorities and as per the provisions of law the assessee had challenged the valuation. In our opinion, the order of the Revenue Minister cannot be the deciding factor for determining the year of assessment in which disputed amount could be taxed. Therefore,we hold that the FAA was not justified in taxing the additional consideration of ₹ 25 crores in the year under consideration. Reversing his order,we decide the first part of the first ground of appeal in favour of the assessee. As far as interest portion we find that the assessee was consistently following a particular method of accounting and same had not been rejected by the AO. It has shown the interest income in the year of receipt. Here,we would like to mention that the ‘computation of total income’,u/s.5 of the Act has to made of real income and not of any hypothetical income. No real income had accrued to the assessee during the year under appeal under the head ‘interest income’ considering the method of accounting adopted by it.The assessee had offered the entire interest income in AY.2012-13 i.e. the year of actual receipt. Decided in favour of the assessee. Carry-forward and set off of unabsorbed depreciation - Held that:- As decided in case of General Motors India Pvt. Ltd.[2012 (8) TMI 714 - GUJARAT HIGH COURT] unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001, thus once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - Decided in favour of assessee. Addition made under the head payment of municipal taxes - Held that:- It was the duty of the developer to clear the municipal dues and it paid the disputed amount in subsequent year.The assessee had no role in the entire transaction-it had to receive the money from the developer and had to pay to municipal authorities.It is not denied by the department that it was a case of double addition.Considering the peculiar facts and circumstances of the case we are of the opinion that the FAA was not justified in confirming the addition when the assessee had not received the disputed amount during the year under appeal - Decided in favour of assessee.
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2017 (8) TMI 410
Nature of expenditure - revenue or capital - purchase of kitchen exhaust system of assessee’s hotel - Held that:- The use of the Centrifugal Blower & 15 HP Motor is a part and parcel of the kitchen exhaust system. It has been explained that the expenditure has been incurred with the objective of maintaining existing kitchen exhaust system. Therefore, under these facts the expenditure is to be viewed in the nature of repairs and renovation of a pre-existing business and not for acquisition of an independent capital asset. In this view of the matter, we set-aside the order of the CIT(A) and direct the Assessing Officer to allow the said expenditure as revenue expenditure. Thus, on this aspect assessee succeeds.
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2017 (8) TMI 409
Effect of assessment order passed by the AO u/s 144C(13) beyond the period prescribed - Held that:- From the plain provisions of section 144C of the Act, we are of the considered opinion that the proceedings cannot be declared as null and void simply because the AO passed the assessment order beyond the period prescribed there under. In the circumstances, grounds relating to limitation, raised by the assessee-company are dismissed
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2017 (8) TMI 408
Addition towards deemed dividend u/s 2(22)(e) - payment made to assessee company - deemed shareholders - the shareholders of the assessee company are having substantial share holding exceeding 20% in M/s. Maha Maruthi Logistics Private Limited - Held that:- From the plain reading of section 2(22)(e) of the Act, it is evident that the deemed dividend is taxable in the hands of the registered share holder but not in the hands of the deemed shareholders. See G. Indira Krishna Reddy and G.V. Krishna Reddy [2017 (5) TMI 1365 - ITAT HYDERABAD] In the instant case, the assessee is not the shareholder in the payer company M/s. Maha Maruti Logistics Pvt. Limited. Therefore, the decision of Hon’ble ITAT Hyderabad bench and the special bench in the case of Bhowmick Colour Lab Pvt. Ltd. 120 (2008 (11) TMI 273 - ITAT BOMBAY-E ) and the decision in case of CIT Vs. Ankitech P. Ltd. (2011 (5) TMI 325 - DELHI HIGH COURT) are squarely applicable in the assessee’s case. Therefore, we do not find any infirmity in the order of Ld. CIT(A) and the same is upheld. - Decided against revenue
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2017 (8) TMI 407
Determining the income of the assessee - Capital gain - Transfer u/s 2(47) - joint ownership - registration of agreement to sell - section 50C applicability - Held that:- There is no doubt that agreement to sell the plot of land was not registered with the stamp duty authorities. Even the buyer of the plot admitted that registration had not taken place. Secondly,the buyer had not adhered to the payment schedule. It is also a fact that as per the revenue records the assessee and the other co-owners of the owner of the plot of land though the possession of the plot is with the buyer.Considering these peculiar facts and circumstances we are of the opinion that there was no transfer of plot of land as envisaged by the provisions of section 2 (47) of the Act read with section 53A of the Transfer of Property Act. After going through the paper book we find that the AO had made the reference to the valuation officer u/s.142 and not u/s.55A of the Act. Clearly, the reference was not in accordance with the provisions of the law. As far as applicability of section 50C is concerned it is sufficient to say that provision of the said section were not applicable to the facts of the case under consideration - Decided in favour of assessee.
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2017 (8) TMI 406
Applicability of Article 8 vis-a-vis Article 24 of DTAA - DTAA between India and Singapore - shipping income - returns of the voyages u/s. 172(3) - denial of the benefit on the ground that assessee has not substantiated the remittance of money to Singapore in all the voyages Held that:- As in M.T. Maersk Mikage & Ors. Vs. DIT [2016 (9) TMI 19 - GUJARAT HIGH COURT ]clinches the issue in favour of assessee, as the Hon'ble High Court has categorically held that the shipping company is not taxable in Singapore on the basis of remittance, but on accrual basis and therefore, para-1 of Article 24 would not be applicable Whether the provisions of Article 24 will apply when the shipping income is taxed in the other contracting state exclusively by Article 8. - This issue is analysed and considered by the Co-ordinate Bench in the case of APL Co. Pte Ltd., Vs. ADIT(IT)-1(1) [2017 (2) TMI 849 - ITAT MUMBAI], wherein it was held that, Whence India does not have any taxation right on a shipping income of non- resident entity, which is exclusive domain of the resident state, there is no question of any kind of exemption or reduced rate of taxation in the source state. It only envisages territorial and jurisdictional rights for taxing the income and India has no jurisdiction for any taxing right which are governed by Article 8. There is no stipulation about exemption under Article 8 of the shipping income AO/ Ld.CIT(A) was not justified in denying the benefit of Article 8 by invoking the limitation clause of Article 24 of India – Singapore DTAA. The exercise undertaken by the AO and CIT(A) in correlating the remittances and denying the certificate issued by the Government authority of Singapore is not proper and can further hold that they have no jurisdiction to enquire into those matters, once Article 8 is invoked. The shipping income is to be exclusively taxed by the other contracting state once the residence of the ship is established. Since there is no dispute with reference to residence of the ship being that of Singapore, the jurisdiction to tax the remittances specified therein under Article 8 lies exclusively with Singapore. In view of that, the orders of the AO and CIT(A) are set aside and they are directed to allow the benefit of Article 8 to all the voyages involved in all these appeals. - Decided in favor of assessee.
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2017 (8) TMI 405
Disallowance of interest made u/s 14A applying Rule 8D(2)(ii) - Held that:- it is quite evident that the Share Capital and Reserve & Surplus available with the assessee company at the beginning of the year as well as at the close of the year under consideration are enough to cover the investments in question and, therefore, following the ratio of the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities and Power Ltd.(2009 (1) TMI 4 - BOMBAY HIGH COURT) it gives rise to a presumption that such investments have come out of interest free-funds. The said proposition is equally applicable in the context of section 14A of the Act, therefore, in the above background, we have no hesitation to delete the disallowance of interest made by the Assessing Officer under section 14A of the Act. Disallowance of administrative expenses - recorded satisfaction about incorrectness of assessee’s claim - Held that:- In the absence of the recording of the necessary satisfaction, in our view, it was wrong on the part of the Assessing Officer to determine the disallowance under section 14A by applying Rule 8D(2)(iii) of the Rules. Adoption being the expenditure relatable to the earning of the impugned dividend income - Held that:- The assessee explained that the dividend receipt from Mutual Funds was merely by way of dividend reinvestment plan in terms of which dividend is reinvested automatically and no effort is required for collecting such dividend. The assessee has also explained the basis of arriving at the aforesaid expenditure, being a percentage of remuneration paid to the employees looking after the activity of the Mutual Fund investments. Considering the entirety of facts and circumstances, especially the fact that the explanation furnished by the assessee has been completely brushedaside, we find no reason to uphold the action of the Assessing Officer in applying Rule 8D(2)(iii) of the Rules in order to compute the disallowance envisaged under section 14A of the Act. Therefore, we set-aside the order of the CIT(A) on this aspect also and direct the Assessing Officer to retain the suo-motu disallowance of ₹ 70,276/- made by the assessee and delete the balance. Depreciation in respect of Badminton court - Held that:- It was a common point between the parties that in the earlier years, similar issue has been decided by the Tribunal in favour of the assessee and such decisions continue to hold the field as the same have not been altered by any higher authority. Addition u/s 40A - payment made by the assessee to cover the deficit of a school run at village Mankahari, Satna - Held that:- It was a common point between the parties that similar payment has been held to be an allowable deduction in the earlier year for assessment year 2005-06. Following the aforesaid precedent, and since the facts and circumstances remain the same, we direct the Assessing Officer to allow the claim of the assessee. Depreciation on UPS - @15% treating it as a part of Plant & Machinery OR @60% as part of computer - Hel that:- In assessment year 2005-06, the upheld the claim of the assessee for depreciation @60%. Following such precedent, which continues to hold the field, we uphold the claim of the assessee for depreciation on UPS @ 60%. Thus, assessee succeeds on this aspect. Exchange fluctuation loss - claim disallowed on the ground that loss on account of restatement of foreign currency could not be allowed as revenue expenditure - Held that:- The issue has been decided in favour of the assessee following the decision of the Hon'ble Supreme Court in the case of Woodward Governor India P. Ltd.(2009 (4) TMI 4 - SUPREME COURT) as held the loss on account of exchange rate fluctuation was allowable as a revenue expenditure. In view of the aforesaid precedent, the decision of the CIT(A) is affirmed and Revenue fails on this aspect. Claim of depreciation restricted - Held that:- Assessing Officer reworked the written down value of the assets assuming that the depreciation for assessment years 2000-01 and 2001-02 stood allowed, though in actuality such a claim was neither made and nor allowed by the Assessing Officer in those years. As a result, the depreciation claimed by the assessee stood reduced. The CIT(A) has since negated the action of the Assessing Officer and restored the claim of the assessee for depreciation. The decision of the CIT(A) is based on the decision of his predecessor CIT(A) in the case of the assessee for 2006-07. The decision of the CIT(A) for assessment year 2006-07 wherein the decision for assessment year 2005-06 has been followed. The precedents so noted continue to hold the field and, therefore, we find no reason to interfere with the decision of the CIT(A) on this aspect. Thus, on this aspect also Revenue fails.
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2017 (8) TMI 404
Validity of Reopening of assessment - assessment in the name of a non-existent concern - Held that:- Neither at the time of issuance of the notice under section 148 of the Act and nor at the time of finalization of the impugned assessment on 21/3/2012 and 29/11/2012 respectively, the concern, M/s. Maharashtra Elektrosmelt Limited was in existence. Therefore, not only the impugned assessment proceedings have been finalized in the name of a non-existent concern but the same were initiated also in the name of a non-existent concern. - Decided in favour of assessee.
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2017 (8) TMI 403
Disallowance of the cost of acquisition/cost of improvement - amount paid to the sister in law of the appellant as per the decree of the court - Held that:- When the assessee was to step into the shoes of her vendor, Ajit Vohra for all intents and purposes she could not have acquired a better title than Ajit Vohra had, the cost of acquisition of the property in question is required to be taken accordingly. So, merely deciding the issue on the basis of recital in the sale deed that property in question is free from all encumbrances, is incorrect interpretation of the legal proposition. In these circumstances, we are of the considered view that the Assessing Officer/Commissioner of Income-tax (Appeals) have erred on facts and in law disallowing the claim of the assessee that the amount of ₹ 1,20,00,000 belonged to the sister-in-law of the assessee, namely, Sheetal Girdhar for the purpose of computing the long-term capital gain. Identical issue has already been decided in the case titled as ITO v. Taj Services P. Ltd. [2011 (9) TMI 1140 - ITAT MUMBAI] wherein it was decided that "where compensation paid to a party for surrendering its pre- existing rights in property in question was inextricably connected with transfer of property as one of the conditions for sale of such property, such compensation was deductible from the sale consideration." - Decided in favour of assessee Exemption under section 54 - investment from the sale proceeds of the property - joint ownership - Held that:- From the amended provision of section 54 which came into effect from April 1, 2015 held roll over relief under section 54(1) is available if the investment is made in "one residential house" situated in India and earlier the expression used was "a residential house". The amended provisions contained under section 54(1) of the Act have been interpreted in favour of the assessee in the case of CIT v. Khoobchand M. Makhija [2013 (12) TMI 1525 - KARNATAKA HIGH COURT ], Thus we are of the considered view that the assessee is entitled for exemption under section 54(1) of the Act qua two residential houses i.e. built up plot No. 59, Block-A, Sector-52, Noida, jointly in the name of Smt. Rama Vohra, Sh. Ajit Vohra and Sh. Punit Vohra of ₹ 86,70,991 and Flat No. 407, Tower-2, Sector-9, Vaishali Extn., Ghaziabad of ₹ 52,87,200. So, grounds determined in favour of the assessee. Exemption qua vacant residential plot purchased for the purpose of constructing a residential house - disallowance made on the ground that the assessee has failed to produce any evidence of his intention to construct a house on a plot of land - Held that:- In the given circumstances, when it is not in dispute that the assessee has invested the capital gain in a residential plot purchased for the purpose of constructing of a residential house but has not constructed the residential house, the decision rendered by co-ordinate Bench in the case of Prasad Nimmagadda (2013 (5) TMI 74 - ITAT Hyderabad ) is applicable to the facts of this case. So, the Assessing Officer is directed to allow the exemption claimed by the assessee for the year under assessment and the Assessing Officer is further directed to verify whether the assessee has offered the capital gain for taxation at the end of the period of three years from the date of transfer of the original assets and in case the assessee's claim found to be incorrect then the Assessing Officer is to bring the capital gain to tax in the said years. - Decided in favour of assessee.
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Customs
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2017 (8) TMI 396
Refund of unutilised CENVAT credit - deemed exports - Held that: - the input service credit attributable to such IUT, where the deemed exports are to be treated at par with physical exports - refund allowed - appeal dismissed - decided against Revenue.
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2017 (8) TMI 395
Refund claim - unjust enrichment - finalization of provisional assessments - Held that: - the present case is no more res integra and has been settled by the Hon'ble High Court of Karnataka in favour of the respondent in the respondent's own case Mangalore Refinery and Petrochemicals Ltd. Versus Commissioner of Customs, Mangalore [2015 (5) TMI 768 - KARNATAKA HIGH COURT], wherein the Hon'ble High Court of Karnataka has held that unjust enrichment shall not be applicable when the provisional assessment of Bills of Entry was done prior to 13.7.2006 - In the present case, finalisation of the impugned Bills of Entry was done prior to amendment to Section 18 i.e., prior to 13.7.2006 - appeal dismissed - decided against Revenue.
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2017 (8) TMI 394
Intermediate product - untrimmed sheets and circles of Copper and Brass - benefit of N/N. 67/95 dated 16.03.1995 - whether untrimmed sheets/circles of Brass manufactured by the appellant are leviable to Central Excise Duty as it is an intermediate product arising in the course of manufacture of trimmed sheets/circles of Brass and waste Scrap of Brass attracting Nil rate duty being captively consumed and whether the same affects livability of duty on the said untrimmed Brass sheets? Held that: - the Hon’ble Supreme Court of India in the case of Commissioner of Central Excise, Jaipur v/s M/s Mewar Bartan Nirman Udyog [2008 (9) TMI 33 - SUPREME COURT] has held that copper and brass are two different identifiable commodities. Therefore, the grounds raised by Revenue are not sustainable - benefit of notification allowed - appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (8) TMI 391
Amendment of the Memorandum of Association of the company - increasing authorized capital of the Company - Act to override memorandum, articles etc. - trial court stayed the amendment - Held that:- articles are internal regulations of a Company. It is a subordinate document to the Memorandum of Association. If companies were unable to alter their memorandum or Articles of Association to give effect to their desire changes, the corporate enterprise is likely to get frustrated and the purpose and object for which the company was formed would get defeated. In the present facts of the case, the Board of Directors had amended the Memorandum of Association and Articles of Association by simple majority but in an EOGM of the company called on 23/3/2017 passed a special resolution for amending the Articles of Association. In accordance with the provisions of Section 13(6) of the Act of 2013, after amendment of Memorandum of Association, the company had filed an application with the Registrar of Companies for recording alterations of its memorandum. Accordingly, the Registrar of Companies had registered the same. In accordance with the increased share capital, new shares were distributed. It was argued that shares were even offered to the plaintiff but he declined to accept the same. The Articles of Association were amended in accordance with the provisions of Section 14 of the Act of 2013. We, therefore, find that there was reasonable and statutory compliance of the provisions of law. Alternation to the memorandum allowed.
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2017 (8) TMI 389
Change of company status from public to private company - matter pertaining to probate of Will pending before the Hon'ble High Court - "scheme of consolidation of shares" seeked - Held that:- Objectors have not been in a position to explain as to how the interest of the company would be prejudiced if the application of the company is allowed for conversion of its status to private limited. The Objectors could not offer reasons to show that the application for conversion is being made with a view to contravene or to avoid the compliance with any of the provisions of the Companies Act, 2013. The only issue that has been raised by the First and the Third Objectors is that against the "scheme of consolidation of shares" a suit has been filed and a matter pertaining to probate of Will pending before the Hon'ble High Court of Madras is not a sufficient ground to reject the present application of the company. The objections raised by the objectors are devoid of merits and therefore, stand rejected. o fulfil the requirements under law, the Board of Directors has convened a meeting on 26.05.2016 wherein the Board decided for conversion of the applicant company from public to private and sought to convene an EoGM. The EoGM has been convened and conducted on 20.06.2016. Eleven out of 15 shareholders have participated. Out of the eleven shareholders, ten have consented and one dissented. The resolutions have been passed by the majority of 95.5% by resolving that the status of the company may be changed from public to private and also to bring alteration in the Articles of Association in order to align the same with the provisions of the Companies Act, 2013.The list of creditors is made available for inspection at the registered office of the applicant company and individual notices have been served on all the creditors. The benefits which have been shown for conversion of public to private company are available which show that the conversion from public to private would enable the company to take decision and action swiftly without waiting for regulatory compliance. It would also facilitate quick and efficient decision making within the organisation. It would further benefit ensuring greater control over the operations and functioning of the petitioner company by its shareholders and its Board of Directors would be in a position to avail the privileges and exemptions granted to private companies under the Companies Act, 2013. Petition allowed. Allow the company petition by permitting the conversion desired.
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Insolvency & Bankruptcy
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2017 (8) TMI 390
Corporate insolvency procedure - Insolvency and Bankruptcy code - iniquity of corporate debtor claim - Held that:- The claim made by the Corporate Debtor is not genuine. As perused the documents placed on the file including the bank statement and the affidavit in compliance to Section 9(3)(b) and (c) of the I&B Code, 2016. In the affidavit the Operational Creditor stated that the objections/dispute raised by the Corporate Debtor is not a valid and genuine dispute and the Corporate Debtor is falsely objecting to the same in order to evade the liability to pay the outstanding debt. Therefore, having been satisfied that all the requirements under law have been fulfilled, we are inclined to admit the Petition and order the commencement of the Corporate Insolvency Resolution Process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. The Operational Creditor did not propose the name for appointment of Interim Insolvency Professional. Therefore, we direct the Registry to make a reference to the IBBI for recommending the name an Interim Insolvency Professional within 10 days of the reference. However, we declare the moratorium which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process, for the purposes referred to in Section 14 of the I&B Code, 2016. The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14 shall not apply to such transactions, as notified by the Central Government. On receiving the recommendation of the IBBI, the Registry is directed to place the matter before this Bench for appointing the Interim Insolvency Professional as recommended by the IBBI.
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Service Tax
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2017 (8) TMI 402
Refund claim - time limitation - Section 11B of the Central Excise Act, 1944 - Held that: - The Appellant does not dispute that it is liable to pay service tax for the services rendered by it. In such a situation, it is abundantly clear that the Appellant has to seek refund of service tax, paid in excess, in terms of and within the limitation period stipulated under Section 11B of that CE Act i.e. before the expiry of one year from the relevant date. The expression ‘relevant date’ has been defined in clause (f) of Explanation (B) to Section 11B of the CE Act as “the date of payment of duty”. Since the payment of service tax during the said period was not under protest, the Appellant was unable to take advantage of the second proviso under Section 11B (1) of the CE Act which states that the limitation of one year will not apply where any duty and interest has been paid under protest. Appeal dismissed - decided against appellant-assessee.
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2017 (8) TMI 401
Levy of tax - chit fund business - sub- clause (V) of Sub-section 12 of Section 65 - Held that: - matter is remanded to the respondent No.1- Additional Commissioner of Service Tax, and the said respondent-Authority shall consider the said legal position and relevant provisions of the Act and pass appropriate orders in accordance with law and decide whether the ‘chit fund business’ is ‘cash management’ or ‘fund management’ or falls in taxable services in other Clauses of Section 65(12) of the Act or not - petition allowed by way of remand.
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2017 (8) TMI 400
Commission - Steamer agent service - it is the case of appellant that they are exclusively appointed by the shipping liner for the services to be rendered and is also paid commission - Held that: - It is seen that the activity of the appellant as a custom house agent is to provide services to importers/exporters and the disputed activity was only a facility arranged by them to their clients. The appellant has no obligation to arrange transport of cargo through a particular shipping liner. Therefore, the amount received cannot fall within the category of commission so as to be subjected to levy of service tax - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 399
Penalty - fees paid for arranging/obtaining ECG loans - payment of tax with interest on being pointed out - Held that: - the appellant has paid the service tax demand along with interest prior to issuance of the show cause notice and also find that there is no sufficient allegations in the show cause notice for suppression of facts with intent to evade payment of service tax. It is an admitted fact that the very issue of taxability in respect of commission paid to foreign banks had been in confusion, which was laid to rest only after the judgment of the Hon’ble High Court of Bombay in the case of Indian National Shipowners Association on 11.12.2008 [2008 (12) TMI 41 - BOMBAY HIGH COURT]. There has been sufficient cause for the appellant in his failure to discharge tax liability and as such the beneficent provisions of section 80 could be very well invoked in this case so as to waive the penalties imposed under section 76 and 78 of the Finance Act - apeal allowed - decided in favor of appellant.
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2017 (8) TMI 398
Levy of service tax - auction proceeds of abandoned goods - time limitation - Held that: - the limitation needs to be counted from the date of the decision of the appellate Tribunal in terms of Section 11B of the Central Excise Act, 1944 made applicable to the Finance Act, 1994 by Section 83 thereof. However, it is seen that the matter before Tribunal related to demand for the period 2004 to 2009 and, therefore, only the said period can be considered for the purpose of refund. Unjust enrichment - Held that: - It is seen that even at the appellate stage, no such certificate has been produced before the Tribunal. In these circumstances, we find that though clause of limitation under Section 11B would not be applicable in respect of the amounts covered by the demand show-cause notice issued to the appellant and dropped subsequently by the Commissioner as well as by the Tribunal, however, in view of the failure of the appellant to establish that they have not passed on burden of any other person, the said amount would have to be transferred to the Consumer Welfare Fund. Appeal disposed off - decided partly in favor of appellant.
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Central Excise
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2017 (8) TMI 397
CENVAT credit - common inputs used in dutiable as well as exempt goods - N/N. 115/75-CE dated 30.04.1975 - Held that: - no common inputs were used for generation of the byproduct /waste. Thus, the embargo created in Rule 6 ibid for reversal of amount equal to 8% / 10% of sale price of the said goods will not be applicable in the facts and circumstances of the case. With regard to Acid Oil, this Tribunal in the case of Morvi Vegetable Products Ltd. [2011 (10) TMI 254 - CESTAT, AHMEDABAD] has held that Acid Oil is not covered by the provisions of Rule 6 ibid, and thus, there is no need to reverse 8% / 10% of the value of such Acid Oil - with regard to D.O. Desilete, the amount in question has already been reversed from the Cenvat Account and appropriate interest amount has also been paid by the appellant, I am of the opinion that the restrictions contained in Rule 6 ibid for payment of amount on the exempted goods will not be applicable in this case. Non-filing of application within the stipulated time limit of 6 months is a procedural lapse and the same cannot be strictly applied to deny the benefit available under the statute. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (8) TMI 393
Refund claim - Held that: - It is directed that in respect of the above mentioned periods, i.e., all the quarters of AYs 2013-14 and 2014-15, the refund amount, together with interest due thereon, shall be directly credited to the account of the Petitioner within two weeks of passing the refund orders - petition allowed.
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2017 (8) TMI 392
Condonation of delay of 730 days in filing appeal - Held that: - the Court is not satisfied that any reasonable explanation has been offered by the Appellant for the inordinate delay of 730 days in filing this appeal - the Appellant did not have a prima facie case in its favour and, in those circumstances, the AT was requiring it to deposit 20% of the demanded tax and interest and 10% of the penalty - appeal dismissed on the groundsof delay as well as on merits - decided against appellant.
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Indian Laws
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2017 (8) TMI 388
Proof of accused as committed an offence - commencement of raid - satisfaction of the court in relation to the existence of constituents of an offence and the facts leading to that offence is a sine qua non for exercise of such jurisdiction - Held that:- We have no doubt to hold that in Call No. 48, the respondent herein was not at all in picture and even in Call No. 51 he was talking to Hemant Gandhi but it is not proved that they were talking about the same raid as they have used certain other cryptic codes as mentioned above which makes the Call highly improbable for connecting the respondent herein in commissioning of the offence. Even otherwise, in Call No. 51, the benefit of doubt must go to the respondent herein where the language of the call is dubious and no logical understanding of the actual conversation can be drawn. Further, in the absence of any details with regard to the amount of ‘six zero’, we are of the view that Call No. 48 categorically brings out that the respondent herein did not have any knowledge of the alleged criminal conspiracy and Call No. 51 is also unable to prove the complicity of the accused in the crime because of its out of the context conversation. In view of the above, we are of the considered opinion that Call Nos. 48 and 51, heavily relied upon by the prosecution, lack object and purpose to prove the complicity of the respondent herein in the crime. Thus vide Call Nos. 48 and 51, the prosecution is not able to prove the guilt of the respondent herein in the alleged raid. There is no material evidence on record in order to bring home the charge of conspiracy against the respondent. There is no direct or circumstantial evidence to prove that the respondent has demanded any illegal gratification and has accepted or obtained any such illegal gratification. Further, the premises that was alleged to be raided was neither a manufacturing unit nor packing or repacking activity was carried out there and hence no case of central excise could have been made out which could grant any jurisdiction to the respondent to do some favour or disfavor in the discharge of his official functions. The High Court was well within its powers while quashing the order framing charge as there was no material on record to connect the respondent with the offence in question. In view of the foregoing discussion, the appeal filed by the CBI is liable to be dismissed and is, accordingly, dismissed
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