TMI Tax Updates - e-Newsletter
August 18, 2017
Case Laws in this Newsletter:
Income Tax
Corporate Laws
Service Tax
Central Excise
Indian Laws
TMI SMS
Highlights / Catch Notes
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GST:
C.B.E. & C. Advisory on Customs related matters on introduction of Goods and Services Tax regime
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Income Tax:
Settlement Commission is authorized to levy interest u/s 234B on additional amount of assessed tax u/s 245D over declared income u/s 245C - HC
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Income Tax:
Taxation in the hands of power of attorney - Even if it is assumed that the assessee has received money and not handed over the same to the land owner such receipt is a liability not an income so far the assessee.
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Income Tax:
The entire profit/loss arising to the assessee on sale of shares has been finally taxed in the hands of the assessee under the head “ capital gains” and consequently in addition/disallowance u/s 94(7) of the Act is liable to be made under the head “capital gains”
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Customs:
Rate of Duty Drawback (AIR) on Articles of jewellery made of gold, Articles of jewellery made of silver and Articles made of silver falling under Chapter 71 reduced.
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Customs:
Exemption / Concessional rate of customs duty / IGST in respect of temporary import of goods (on lease) to be re-exported subject to specified condition - Only specified goods to be used in Specified Works Contract shall be eligible for exemption.
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Service Tax:
Business Auxiliary Services (BAS) - Export of services or not - Overriding commission and incentives - the amount payable as ORC was deducted by the appellant from the proceeds and the balance amount only was remitted to Saudia - benefit of export allowed
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Service Tax:
Event Management Service - pure agent service - The input service and expenses are necessary for providing the service, therefore the same cannot be claimed as reimbursement.
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Service Tax:
Sale of space of time or advertisement service - advertisement on Bus Shelter - the appellant are involved in sale of space for advertisement and are liable to tax
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Central Excise:
CENVAT credit - the service tax paid on servicing of the car as well as for housekeeping service fall in the definition of 'input service' as it is in relation to the business of the company
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Central Excise:
Government allowed export benefit to Bhutan in Indian Currency under Central Excise Law.
Articles
Notifications
Central Excise-
25/2017 - dated
16-8-2017
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CE (NT)
Seeks to amend Notification No. 45/2001-CE (NT) dated 26 June, 2001 - For export of goods to Bhutan, payment for the goods may be received in Indian Rupees
Customs-
72/2017 - dated
16-8-2017
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Cus
Exemption / Concessional rate of customs duty / IGST in respect of temporary import of goods (on lease) to be re-exported subject to specified condition
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81/2017 - dated
17-8-2017
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Cus (NT)
Rate of exchange of conversion of foreign currencies, into Indian currency or vice versa, shall, with effect from 18th August, 2017, for the purpose of the said section, relating to imported and export goods.
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79/2017 - dated
17-8-2017
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Cus (NT)
Amendment in Notification no. 131/2016-Customs (N.T.) dated 31.10.2016 relating to AIRs of Duty Drawback on Gold Jewellery, Silver Jewellery and Silver Articles
GST - States-
G.O.Ms. No. 310 - dated
24-7-2017
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Andhra Pradesh SGST
Corrigendum - G.O.Ms.No.258, Revenue (Commercial Taxes-II) Department, dated the 29th June, 2017.
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F.3(22)/Fin(Rev-I)/2017-18/DS-VI/515 - dated
11-8-2017
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Delhi SGST
Delhi Goods and Services Tax (Fourth Amendment) Rules, 2017
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (8) TMI 571
Assumption of jurisdiction and the scope of the additions u/s 153C - Held that:- In the absence of any incriminating material qua the Assessee, the applicability of the decision of this Court in CIT v. Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) is not in doubt. No substantial question of law - Decided against revenue.
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2017 (8) TMI 570
Income from three properties given on rent - business income or income from house property - Held that:- ITAT has taken note of the fact that income from at least two of the three properties in question had been consistently treated as income from house property and accepted as such by the Revenue. Regarding the income from the third of those properties, although a remand was ordered by the ITAT to the AO for redetermination, the Assessee has chosen not to go in appeal since the amount involved was insignificant. The plea of the Revenue that, even in respect of the other two properties, the order should be remanded to the AO does not find favour with the Court. Unless any material change in the circumstances has occurred from the earlier AYs, where the income from the letting of the premises has been consistently treated as income from house property, there was no occasion for a changed stand on the part of the Revenue. - Decided against revenue.
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2017 (8) TMI 569
Private parties seeking information u/s 138(1)(b) of the Income Tax Act, 1961 about the assessee trust - Disclosure of information respecting assessee - petitioner's grievance appears to be with regard to functioning of a public charitable trust - Held that:- The petitioner has filed an application under Section 138 (b) of the Income Tax Act, dated 21.03.2016. This application is stated to have been sent by sped post and shown to have been received by the office of the third respondent on 22.03.2016 vide postal Acknowledgment card. Thus, considering the limited relief sought for by the petitioner and without going into the allegations made by the petitioner against those private parties, there will be a direction to the competent authority of the third respondent department to consider the petitioner's representation dated 21.03.2016, purported to be an application for information under Section 138 (1) (b) of the Income Tax Act and pass a speaking order on merits and in accordance with law after notice to all concerned including the said Trust and its Trusties within a period of eight weeks from the date of receipt of a copy of this order.
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2017 (8) TMI 568
Levy of interest chargeable under Section 234B - Settlement Commission charging the interest on the difference of the amount disclosed at the time of making application under Section 245C(1) and the amount determined while passing the order under Section 245D(4) - Held that:- As per subsection (4) of section 245D, after examination of the records and the report of the Commissioner, received under subsection (1), and the report, if any, of the Commissioner received under subsection (3), and after giving an opportunity to the applicant and to the Commissioner to be heard, either in person or through a representative duly authorized in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner under subsection (1) or subsection (3). Subsection (6) of section 245D provides that every order passed under subsection (4) shall provide for the directions of settlement including any demand by way of tax, penalty or interest, the manner in which any such sum due under the settlement shall be paid and all other matters to make the settlement effective. Under the circumstances, when after the amount is determined by passing the order under Section 245D(4) and the amount so determined exceeds the amount disclosed in the Settlement Commission, in that case, the Settlement Commission is authorized to pass an order of interest. As observed hereinabove, the interest under Section 234B is mandatory. In view of the above and for the reasons stated above, challenges to the impugned order/s passed by the learned Settlement Commission insofar as directing to pay the interest under Section 234B while considering applications filed under Section 245C(1) of the IT Act fails and the same deserve to be dismissed and are, accordingly, dismissed.
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2017 (8) TMI 567
Reopening of assessment - time to issue notice under Section 143(2) to complete the regular assessment under Section 143(3) has not expired - Held that:- Merely because no assessment has been made even after filing a return, it will not be open to suggest that no income chargeable to tax has escaped assessment. This covers issue where there is no possibility of making an assessment on the date when the notice under Section 147/148 of the Act is issued. So long as the time to issue notice under Section 143(2) of the Act is available, it cannot be said that no assessment has been made as the possibility of making an assessment is always available. The Assessing Officer is obliged to complete assessment under Section 143(3) of the Act by issuing a notice under Section 143(2) of the Act, if he is of the view that the assessee has understated his income or computed excessive loss or understated his tax to the prejudice of the Revenue. Therefore, we are clear that in view of the provisions of Section 143(1)(i) of the Act is in force at the relevant time, no notice under Section 148 of the Act can be issued, till the period to issue notice under Section 143(2) of the Act has expired. As in Commissioner of Income tax vs. Qatalys Software Technologies Ltd[2008 (7) TMI 240 - MADRAS HIGH COURT] in identical fact situation dismissed the Revenue's appeal by holding that where the period of issuing notice under Section 143(2) of the Act has not expired, then reassessment notice under Section 147/148 of the Act was invalid. - Decided in favour of assessee.
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2017 (8) TMI 566
Disallowance of contribution made to LIC Group Gratuity Scheme - addition u/s 36(1)(va) & 40A(7) - Held that:- The assessee had filed an application seeking approval for Employees Group Gratuity Scheme in the year 1992 and when no action was taken, assessee again filed an application on 4/8/2015 on this application the approval was granted. The Revenue has not placed any material on record demonstrating the reasons for non-granting of approval. It is also not in dispute that, this is the first time when the claim has been disallowed. Under these facts, in view of the judgment of the Hon’ble Jurisdictional High Court in the case of Pr. CIT vs. Rajasthan State Seeds Corporation Ltd. (2016 (9) TMI 59 - RAJASTHAN HIGH COURT). We are of the considered view, that the authorities below were not justified in disallowing the claim of the assessee. Therefore, we direct the Assessing Officer to delete the disallowance made on account of contribution to LIC Group Gratuity Scheme - Decided in favour of assessee.
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2017 (8) TMI 565
Levy of penalty on depreciation disallowed on non-existing assets - Held that:- The disallowance of depreciation on non-existing fixed assets has been deleted by the Coordinate Bench in all the three years under consideration are concerned, the very basis for levy of penalty doesn’t stand. Accordingly, the levy of penalty under section 271(1)(c) is deleted in respect of all the three years under consideration.Decided in favour of assessee. Levy of penalty on depreciation disallowed u/s 32(1)(iii) read with 43 (1) and explanation 10 thereto - Held that:- The observations of the auditor are in relation to noncompliance with the various accounting standards as prescribed by the ICAI which have to be followed while preparing the financial statements. At the same time, the assessee’s explanation is that being a 100% owned undertaking of Rajasthan Government, it is governed by the instructions approved by Government for Rajasthan State Electricity Board's, The Electricity (Supply) Annual Accounts Rules, 1995 and Accounting Instructions which cannot be lost sight off. In our view, these are plausible explanation relating to variation in the accounting policies followed by the assessee company given the nature of business the assessee company is engaged in and related electricity regulations which it must comply with. These are statutory requirements which the assessee company is required to follow while preparing its financial statements. However, the fact remains that there is complete disclosure of all material facts in the financial statements so far as issue relating to determination of actual cost of the assets are concerned. The material facts so disclosed in the financial statements have infact been considered by the AO while recalculating the depreciation claim of the assessee company. Thus respectfully following the decision of the Hon’ble Supreme Court in case of Reliance Petroproducts (2010 (3) TMI 80 - SUPREME COURT) wherein held a mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee, we hereby delete the levy of penalty under section 271(1)(c) in respect of disallowance of depreciation under section 32(1)(iii) read with section 43(1) and explanation 10 thereto in respect of all three years under consideration. - Decided in favour of assessee.
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2017 (8) TMI 564
Late payment of TDS u/s 201(1A) - Provisions for condone the delay in payment - delay for cause of bank Strike - reasonable cause of delay - Held that:- It is not in dispute that the taxes deducted have been deposited with a delay of one day. It is also not in dispute that on the due date of deposit i.e, 7.8.2009, there was bank strike and an effective bank holiday and no taxes could have been deposited on the said date. In the instant case, the bank was closed on 7.8.2009 on account of bank strike and the taxes have been deposited on 8.8.2009. In our view, circular no. 676 dated 14.1.1994 draws support from section 10 of the General Clauses Act and is equally applicable to deposit of TDS where on the due date of deposit, the bank is closed and the taxes are deposited on the next working day. We are cognisance of the fact that the period under consideration relates to period where internet banking and e-deposit of taxes were not in vogue. In light of above, there is no default on the part of the assessee and interest u/s 201(1)(a) is not leviable in the instant case - Decided in favour of assessee.
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2017 (8) TMI 563
Difference in opening capital balance as per the Balance Sheet found during the course of survey at third party premises and balance sheet submitted during the course of assessment proceedings - survey u/s 133A - Held that:- Merely because there were some discrepencies in the balance sheet, it cannot be said that all the entries in the said balance sheet were wrong. Moreso, when the difference relates to opening capital balance which is brought foreward from the previous year. In our view, what was relevant to examine is the previous year balance sheet and the closing balance in the capital account and how the same is supported by corresponding net assets position. Further, we note that the opening capital is ₹ 39,92,214 as reported in the balance sheet submitted during the assessment proceedings which is higher than the capital of ₹ 18,54,035 as per balance sheet found during the course of survey. Therefore, it is to be examined whether any fresh capital has been brought-in by the assessee in her books of accounts and which has not been reported. We are accordingly setting aside the matter to the file of the ld CIT(A) to examine the same afresh in light of above discussions and as per law. In the result, the ground of the revenue is allowed for statistical purposes. Differential amount between amount shown under the head renovation expenses as per Balance Sheet found during survey and Balance Sheet submitted during the assessment proceedings - Held that:- The subject property is jointly owned by the assessee along with her mother-in law and total expenses of ₹ 54,40,605 have been incurred and 50% thereof have been debited to her mother-in law account. The expenses are supported by bills and vouchers and related payment details. The matter relating to estimation of construction expenses was also referred to the valuation officer and there is no deviation that has been brought on record in terms of expenses incurred and estimated by the valuation officer. In the result, there is no basis for making addition of ₹ 11,56,671 and the ground of revenue is dismissed. Undisclosed investment in construction of house property - Held that:- CIT-A correctly held that estimated addition has been made by the AO on the ground that the payments made to beldar, labour etc. have not been shown by the appellant. It is, however, noted that the matter was referred to the valuation cell of the department. The valuation cell has not found any major discrepancy in the expenses declared by the appellant for construction of the house. Hence, the addition made only on the basis of some nothings on the paper cannot be justified Treating the rental income as income from undisclosed sources - Held that:- The architect report supports the position of the assessee and remains un-rebutted before us. The valuation report didn’t dwell upon the stages of construction as pointed out by the ld CIT(A). No other independent evidence has been brought on record to support the position of the Revenue. The AO apprehension might be correct but the same has to be supported by crediable evidence which is clearly absent in the present case. Moreso, the lease agreement and confirmation from M/s Gravita India ltd is on record to support the lease transaction and there is no adverse finding given by the AO in case of M/s Gravita India ltd. In light of the same, we do not see any infirmity in the order of the ld CIT(A) and the same is hereby confirmed. Hence, the ground of the revenue is dismissed.
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2017 (8) TMI 562
Exemption u/s 10A - reconstruction of the existing unit or new unit - scope of manufacturing - ‘splitting up or reconstruction’ of an existing business for the purpose of section 10A - Assessee is manufacturer and exporter of jewellery - proof of purchases - Held that:- As per the condition of the allotment of plot for establishing the industry at SEZ, Sitapura, Jaipur, the assessee to export the assessee’s products and the unit is to be achieve positive net foreign exchange earner every year. This is evident from terms and conditions No. 6 of RIICO allotment letter, which is placed at page No. 85 of the paper book All the narrations in the bills support the contention of the assessee that the assessee has purchased uncut, unpolished precious and semi precious stones and also unmounted silver and gold jewellery. The assessee has mounted the semi precious and precious stones in the silver and gold jewellery and then polished and made it marketable, then exported the same from the SEZ unit, thus, the revenue’s claim that the assessee was only trading in the goods, is not factually correct. The statements taken by the revenue of two of the suppliers were never confronted to the assessee. No opportunity to cross examine these persons were provided. Further as stated in the above part of the order, the purchase bills of Tulsi Jewellers itself mentioned that the assessee has purchased unmounted, unpolished jewelery. The sales bill also suggest that the assessee has sold cut and polished semi precious stones, gold jewellery setted with diamond and precious stones, silver jewellery beads with diamond and cut and polished semi precious stones. Further there was no carry forward stock from any old firm, the entire input and out coming stock was new, therefore, it cannot be said that this unit was out of the reconstruction of the existing unit. Considering all these factual aspects, the assessee deserves for benefit of Section 10A of the Act. - Decided in favour of assessee.
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2017 (8) TMI 561
Addition on account of penal excise duty debited in P&L account - allowable business expenditure - Held that:- The assessee executed a contractual bond to make good the losses to the government, thus the assessee indemnify the excise duty to the government exchequer. The duty paid is exactly the same as per the rates notified by the government, therefore, the said payment in discharging the contractual obligation to indemnify the excise department for the payment of the excise duty to the government exchequer, cannot be held in penal nature. Therefore, whatever nomenclature given by the Excise Department for the demand notice cannot be held as penalty. In view of these facts and circumstances, we find no merit in the appeal of the revenue. SEE CIT Vs. Hyderabad Allwyn Metal Works Limited (1987 (11) TMI 32 - ANDHRA PRADESH High Court), Prakash Cotton Mills Pvt. Ltd. Vs. CIT (1993 (4) TMI 3 - SUPREME Court) and CIT, Gujarat Vs. Tarun Commercial Mills Co. Ltd. (1976 (4) TMI 35 - GUJARAT High Court). In view of the above facts and circumstances and the case laws, we uphold the order of the ld. CIT(A). - Decided against revenue.
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2017 (8) TMI 560
Levy of penalty u/s 271 (1) (c) - concealment of income or furnishing inaccurate particulars of income - defective notice - Held that:- AO has to give a notice as to whether he proposes to levy a penalty for “concealment of income” or “furnishing inaccurate particulars of income”. He cannot have both the conditions and if it so he has to say so in the notice and record the finding in the penalty order. Hence, we do not see any merit into the argument of the Ld. Departmental Representatives. As in the said notice Ld. AO has not clearly mentioned the limb, on the basis of which, penalty was proposed to be imposed. Ld. AO has simply issued a pre-printed notice without striking off the unnecessary portions of the notice. If the Ld. AO was of the view that the assessee has concealed the income by furnishing inaccurate particulars of income then he should have deleted or not mentioned the other limb for imposition of penalty i.e. concealing the particulars of income. The above act of the Ld. AO clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind. - Decided in favour of assessee.
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2017 (8) TMI 559
Unexplained bank credits -admission of additional evidence - Held that:- Before the ld. CIT(A), the assessee filed additional evidences, which has been rejected by him, therefore, for the interest of justice and equity, I admit the additional evidences filed by the assessee. From perusal of the records, it also transpires that the Assessing Officer gave opportunity to the assessee. However, there is no evidence on record to justify or confirm the fact that assessee was provided adequate and effective hearing with regard to the direction sought and provided. The facts of the case shows that the assessee has not been provided an effective opportunity of being heard with regard to directions issued by the Assessing Officer, which is a mandatory requirement of law. Appeal of the assessee is allowed for statistical purposes only.
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2017 (8) TMI 558
Rejection of books of accounts - suppression of sales - Held that:- The law is well settled, the Assessing Officer is within its power to reject books of accounts, if he finds that from the books so placed before him, true profit cannot be deduced. In the present case, the Assessing Officer in his wisdom finding that the facts are identical in the Assessment Year 2007-08. The assessee has not placed any material suggesting that there is change into facts and circumstances in this year. Therefore, he rejected the books of accounts, on the reasoning of the Assessment Year 2007-08. We do not see any reason to interfere in this finding of the Assessing Officer. However, we find merit into the contention of the assessee that the estimation should not be based merely on the guesswork, it should be based on the material gathered by the Assessing Officer during the Assessment proceedings. In the present case, the Ld. CIT(A) made an adhoc addition of ₹ 5 lacs on the ground for possible suppression of sale. In our view, this finding of the Ld. CIT(A) is not justified. He ought to given specific reasoning for sustaining such addition. In our view, addition cannot be made purely on the basis of conjecture. Therefore, this additional ground of the Cross Objection of the assessee is allowed
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2017 (8) TMI 557
Taxation in the hands of power of attorney - sale consideration of the land belonging to Shri Sultan Meena but taxed in the hands of assessee who is admittedly Power of Attorney holder of Shri Sultan Meena [land owner] - Held that:- Supreme Court in the case of Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004 (8) TMI 688 - Supreme Court Of India] has held that a power of attorney is not an instrument of transfer in regard to any right, title or interest in any immovable property. The power of attorney is a creation of an agency whereby the grantor authorizes the grantee to do acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done and by him. Even if it is assumed that the assessee has received money and not handed over the same to the land owner such receipt is a liability not an income so far the assessee is concerned. Since, the Revenue has not brought any material on record suggesting that this power of attorney was executed in lieu of a consideration. In the absence of such material, purely, on the basis of presumption and suspicion tax liability cannot be fastened on such receipt on the assessee. - Decided in favour of assessee. Receipts earned from brokerage income - “income from other sources” or “business & profession” - Held that:- In both the years the income of the assessee in respect of brokerage is accepted by the Department, we find that AO has not made any inquiry from the persons from whom the assessee had received brokerage/commission. Under these facts, the AO was not justified in rejecting the claim of the assessee of earning brokerage/commission. Therefore, we direct the AO to treat the same as business receipt of the assessee and allow the expenditure made thereon. Hence, we deleted the addition made by the AO by treating the brokerage receipts as income from other sources and disallowing the expenditure incurred thereon. Hence, the net profit declared at ₹ 5,77,816.65 be treated as net profit from business of brokerage. Thus, this ground of assessee’s appeal is also allowed.
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2017 (8) TMI 556
Addition u/s 40(a)(ia) - non deduction of tax at source on interest paid to financial institutions and legal expenses - Held that:- In view of Hon’ble Delhi High Court decision in case of CIT vs. Ansal Land Mark Township Pvt. Ltd (2015 (9) TMI 79 - DELHI HIGH COURT) wherein the second proviso to section 40(a)(ia) has been held to have a retrospective effect, the same will be applicable in the instant case. Accordingly, in case of Reliance Capital Limited, where the assessee contends that it has filed a certificate from Chartered Accountant certifying that the interest paid by the assessee has been included by the recipient of income in their return of income and tax is paid thereon, we set-aside the matter to the file of the AO to verify the said certificate and where the same is found to be in order, allow the necessary relief to the assessee. In respect of payment to other two financial institutions namely Fullerton India Limited and Religare Finvest Limited, we are unable to accede to the various contentions raised by the ld AR. Firstly, there cannot be any presumption regarding inclusion of income and payment of taxes just because the payees are large companies. The assessee has to demonstrate through verifiable evidence that the payees have reported the amount paid in their return and paid taxes thereon. Secondly, the issue regarding no amount outstanding at the end of the year and the same been fully paid during the year and provisions of section 40(a)(ia), the issue is no more res integra in light of case of Palam Gas service [2017 (5) TMI 242 - SUPREME COURT]. Thirdly, the contention regarding the amendment to Section 40(a)(ia) made by FA, 2014 w.e.f. 01.04.2015 which provides that 30% of any payable to a resident shall be disallowed if tax is not deducted at source under Ch. XVIIB as against the 100% presently made, should be read retrospective and apply in the instant case. We have gone through the said provisions and there is nothing in the legislature which suggest the said amendment has to be read retrospectively. Accordingly, disallowance of payments to these two institutions is confirmed. Regarding payment to Guarav Agrawal, the ld AR has contended that this payment is made towards bank processing charges and not a legal expense as evidenced from the ledger account. We set-aside this matter to the file of the AO to examine the same afresh as per law. Addition u/s 40A(3) - Held that:- We are setting aside this matter as well as to the file of the AO to examine the contention of the assessee and decide as per law. The assessee is also directed to cooperate in the proceedings so that the same can be completed in a timely manner. In the result, the ground is allowed for statistical purposes. Allowability of business expenditure - Held that:- It is incumbent upon the assessee to produce relevant documents and books of accounts for necessary verification by the AO and provide the necessary explanation as called for by the AO. The assessee doesn’t cooperate in the assessment proceedings or doesnt provide any explanation and then come in appeal craving for relief. In our view, such practice is required to be discouraged unless the assessee proves his bonafide before us. Having said that in the peculiar fact pattern of the present case, it would be reasonable to hold that regarding depreciation allowance and other expenses under the head bank charges, bank interest and other interest, service tax, insurance expenses, audit fees, the probability of personal element is very low. In light of that, in the interest of justice, it would be reasonable if the disallowance of 5% of total expenses as confirmed by the ld CIT(A) is restricted to expenses other than depreciation allowance, other expenses such as bank charges, bank interest and other interest, service tax, insurance expenses, and audit fees. In the result, this ground is partly allowed.
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2017 (8) TMI 555
Unverifiable expenses - determining appropriate profit chargeable to tax in absence of books of accounts which have been lost in an road accident - trading results not verifiable - Held that:- It is not the case of the Revenue that leasing income of the assessee is not in the nature of business income and all the Revenue’s contention is that the expenses are on a higher side as compared to last year more so on account of leasing out of the theatre for a part of the year. There is no material available on record to determine the running and fixed cost and the cost part to running of theatre and leasing of theatre. Based on material available on record, we find the approach of the ld CIT(A) as reasonable as he has followed the assessee’s past history and instead of disallowing individual expenses, has compared the net profit of the last year will the net profit declared by the assessee and he has estimated net profit at 10% as against 7.34% last year, thus taking into account low operating cost in relation to letting of theatre. In the result, grounds of the Revenue are dismissed.
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2017 (8) TMI 538
Scope of revision orders u/s 263 - AO allowing the taking of unabsorbed depreciation to determine WDV of assets of amalgamating Company - Held that:- Where two views are possible and the Assessing Officer has taken one of the two possible views, then it is not open to treat such a view as an order which is erroneous or prejudicial to the interest of the Revenue. Merely because the Commissioner of Income Tax takes a different view to that of the Assessing Officer will not certainly justify exercise of his powers under Section 263 of the Act. In this case, the view taken by the Assessing Officer was in effect following the decision of this Court in Hindustan Petroleum Corporation Ltd. (1990 (7) TMI 44 - BOMBAY High Court). The fact that it dealt with the unamended provisions of law would not in the present facts make the order of the Assessing Officer erroneous. Therefore, reliance upon the decision of this Court in Hindustan Petroleum Corporation Ltd. (supra) cannot be said to be perverse and/or erroneous. Therefore, the exercise of jurisdiction under Section 263 of the Act was not called for - Decided in favour of assessee.
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Corporate Laws
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2017 (8) TMI 540
Penalty imposed by SAT - Held that:- In the appeal(s) filed by the aggrieved person(s) against the order(s) of the Adjudicating Officer, the learned Appellate Tribunal was expected to record its own independent findings and arrive at its own conclusions for holding the respondent liable for the penalty imposed. It seems that the learned Appellate Tribunal has proceeded on the basis that the case of the respondent is same and similar to the case of Kanaiyalal Baldev Patel and Dipak Patel which, evidently, is not. In the aforesaid circumstances, we set aside the order of the learned Appellate Tribunal dated 9th November, 2012 qua the respondent and remand the matter to the learned Appellate Tribunal for a de novo consideration. All contentions of both the sides are left open to be urged before the learned Appellate Tribunal.
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Service Tax
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2017 (8) TMI 554
Business Auxiliary Services - Export of services or not - Overriding commission and incentives - the amount payable as ORC was deducted by the appellant from the proceeds and the balance amount only was remitted to Saudia - whether the service rendered by the appellant can indeed be treated as Export of Services or otherwise? - Held that: - Business Auxiliary Services being taxable in terms of Section 65 (105) (zzb) were thus governed by the conditionalities in Rule 3(3) of the said Export of Service Rules, 2005. The major requirement of a Business Auxiliary Service to be considered as export of service is that such services are provided and used in or in relation to commerce and industry and the recipientof such services are located outside India - Subsequent amendments to the Export of Service Rules also retained the requirement that payment for service provided is received by the service provider in convertible foreign exchange. There is no dispute that the services of the appellant have been contracted by its office of Saudi Arabian Airlines located in Jeddah, Saudi Arabia. It is also clear that scope of these services to be provided by the appellant included soliciting, promoting and selling passenger air transportation for Saudia, assistance in all operations likely to encourage traffic on Saudia's Airlines. Evidently, these activities performed by the appellants are contracted to have beneficial impact on air transportation traffic on Saudi Airlines. Although the appellants have been contracted as Saudias GSA for the territory of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala, appellant as a GSA is authorized to make sales over the services of Saudia and any other carrier with whom Saudia has interline traffic agreements. Soliciting and promoting of passenger air transportation is permitted to be done by the appellant on all lines awarded out by Saudia - Evidently, the commercial services provided by the appellant, inter alia, soliciting, promoting and selling passenger air transportation and cargo and mail transportation for Saudia is very much a Business Auxiliary Service, ordered by Saudi Arabian Airlines, Jeddah, to benefit all such service flowing to Saudias business. Whether retention of the full amount of commission while making remittance to Saudia of all monies due for transportation sold during previous month would fall foul of the requirement in Rule (3) (3) of the Rules that payment for such service is received in convertible foreign exchange? - Held that: - even by retaining the amount of overriding commission while remitting the proceeds to their foreign client, without receiving it subsequently from the client in convertible foreign exchange. The conditionalities of Rule 3 (3) of the Export of Service Rules, 2005 as amended and as was applicable during the different periods involved in these appeals will be deemed to have been satisfied by the appellant. Hence the services rendered by them to the foreign recipient will be nothing but export of Business Auxiliary Services which are exempted from liability to service tax. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 553
Refund of CENVAT credit - re-credit of amount - N/N. 27/12-CE(NT) dated 18.06.2012 - Held that: - for the purpose of refund, the net cenvat credit means the total cenvat credit availed on inputs and input services by the manufacturer or output service provider reduced by the amount reversed in terms of sub-rule 5(c) of Rule 3, during the relevant period - In the facts of the present case, there is no dispute that the credit of ₹ 231,688/- was availed by the appellants during the relevant period April 2013 to June 2013 under the authority of clause (i) of para 2 of notification 27/12-CE(NT). Therefore this amount of ₹ 231,688/- is nothing but the credit availed during the relevant quarter. Therefore, this amount must be taken into total amount of net cenvat credit availed. It is also pertinent to note that the appellant is a 100% EOU, so whatever cenvat credit has been availed on the input service, entire amount is refundable. In this case no one to one correlation is required. As regards the amount of ₹ 12,084/- the appellants have conceded that they are not contesting the same. Therefore rejection of refund claim for ₹ 12,084/- is upheld. Appeal allowed - decided partly in favor of appellant.
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2017 (8) TMI 552
Construction of residential complex - Section 65(30a) of the Act - whether under the admitted fact that they have constructed individual residential flats/units/houses? - whether they are liable to pay service tax under the provisions of Finance Act read with the Rules under the period in dispute 2010-11 and 2014-15? - Held that: - both for the period prior to 01 July, 2012 and subsequent to that date, that construction of residential complex having not more than 12 residential units per building or block prior to 01 July, 2012 and two or more units after 01 July, 2012 is not sought to be taxed under the provisions of the Finance Act/Service Tax provisions. For the levy, it should be registered complex comprising more than 12 units prior to 01 July, 2012 and more than one residential unit in a complex from 01 July, 2012. Admittedly in the present case, the appellant constructed individual residential houses, each block, being a residential unit which is an admitted fact. In any case, it appears that the legislature did not want to tax construction of individual residential units to the levy of service tax. We find that the learned Commissioner have erred in considering the approved plan for construction of more than 12 individual units on a large plot of land as a residential complex which we find is wrong and misconceived. Demand not sustainable - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 551
Sale of space or time for advertisement - activity rendered by the appellant is for display of advertisements in the bus panels in the space available in buses and also by hoardings and railway glow etc - extended period of limitation - Held that: - In the present case, the Metropolitan Transport Corporation (MTC) provides a place in the rear of the busses or inside the buses for display of the advertisement. It is not established that the appellants were engaged in making, preparation, conceptualizing or visualizing of the advertisement - the issue was under much doubt during the relevant time and was highly contentious. For the same reason, the appellants cannot be held to be guilty of suppression of facts - extended period not invoked - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 550
Advertisement Agency Service - job-work - case of appellant is that the activity undertaken by them did not involve any designing, visualizing or conceptualizing in fabricating and erecting sing boards and therefore such activities would not fall under the category Advertisement Agency Service - Held that: - there is no evidence before us to establish that the appellants are involved in any making or preparation of an advertisement such as designing, visualizing, conceptualizing etc. to fall under the definition of Advertisement Agency Service - demand unsustainable. Time limitation - Held that: - The period covered is from October 1999 to September 2004 and the SCN is dated 12-20/4/2005. Major portion of the demand falls beyond the normal period of limitation - we cannot find fault with the appellant who bonafidely believed that they are not liable to pay service tax and had not discharged the same. It is also to be noted that the appellant has given all the required information as and when called for by the department - extended period not invocable. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 549
Event Management Service - pure agent service - The case of the department is that the appellant are collecting additional amount on account of various expenses in the name of reimbursement of certain expenses and claimed the said reimbursement is not liable to service tax - whether reimbursement recovered by the assesee from their clients, which is over and above the service charge is liable to be charged service tax or otherwise? - Held that: - In the case of Sri Bhagavathy Traders [2011 (8) TMI 430 - CESTAT, BANGALORE], the Larger Bench observed that the claim for reimbursement towards rent for premises, telephone charges, stationery charges, etc. amounts to a claim by the service provider that they can render such services in vacuum. What are costs for inputs services and inputs used in rendering services cannot be treated as reimbursable costs. The input service and expenses are necessary for providing the service, therefore the same cannot be claimed as reimbursement. The issue of reimbursement can be decided on case to case basis depending upon the nature of output service and the input service, input and other expenses required for providing the service. Matter remanded to the adjudicating authority for passing a fresh order after affording sufficient opportunities of personal hearing to the appellant - appeal allowed by way of remand.
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2017 (8) TMI 548
Sale of space of time or advertisement service - advertisement on Bus Shelter - The appellants are collecting taxes and license fee in respect of permission granted for putting up advertisement boards on the private properties and not providing such properties for advertisement - Held that: - The very fact that the amounts is collected by virtue of an agreement between the two parties shows that they are not in the nature of tax, but are for the nature of income other than tax. If the amount collected for the activities undertaken in this agreements were tax then no such agreement would have been needed. The Nagpur Municipal Corporation holds the right to advertise and M/s. Green Thumb Innovators Private Limited have bought the right to advertise on the bus stand for a specified period. In the above circumstances, it is apparent that the appellant are involved in sale of space for advertisement and are liable to tax in respect of the bus stand - the demand is sustained except for portion, which relates to the Revenue generated on the alleged sale of space from private properties not owned by the appellant. The demand is sustained except for portion, which relates to the Revenue generated on the alleged sale of space from private properties not owned by the appellant. Penalty - Held that: - the penalty is set aside by invocation of section 80. Appeal allowed - decided partly in favor of appellant.
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Central Excise
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2017 (8) TMI 547
CENVAT credit - steel items used for fabrication and installation of air pollution equipment in the manufacturing facility - Held that: - the appellant is entitled to Cenvat credit for the subject steel items used for fabrication and installation of air pollution equipment at their manufacturing premises - reliance placed in the case of Commissioner Of Central Excise, Jaipur Versus M/s Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA], where it was held that the assessee was entitled to avail of modvat credit in respect of the subject items viz. steel plates and M.S. channels used in the fabrication of chimney for the diesel generating set, by treating these items as capital goods in terms of Rule 57Q of the Rules - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 546
Value Based Exemption - intermediate product - N/N. 5/98-CE dated 02.06.98 and N/N. 5/99-CE dated 28.02.99 - The Department was of the view that since the final products were cleared availing full exemption, the plastic sheets emerging as intermediate goods were subject to duty liability @ 24% - Held that: - The plastic sheets (39.20) are specified as finished goods under N/N. 16/97, which grants exemption to such goods to a value of clearance of ₹ 50 Lakhs for home consumption - In the present case, the appellants are not liable to pay duty on the plastic sheets since, they are eligible for exemption even though they are also availing the benefit of value based exemption of SSI unit - Even as per the SCN, the value of clearances of plastic sheets for the disputed period on which duty is demanded is less than ₹ 50 Lakhs. There is no ground for denying the benefit of exemption on plastic sheets under N/N. 16/97 - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 545
Refund claim - disputing the merits of the case which stands concluded - Section 11A(2B) of the Central Excise Act, 1944 - Held that: - irrespective whether the appellant is entitled for CENVAT credit or otherwise since they have opted for immunity under 11A(2B), they cannot dispute the merit of the case by filing refund claim. After payment of duty along with interest by the assessee and filing an intimation claiming settlement of case under 11A(2B). The department has no power to issue SCN and the issue involved stands concluded with the appellants filing of declaration under 11A(2B), therefore the appellants cannot come with a refund claim again disputing the merit of the case which stands concluded - appeal dismissed - decided against appellant.
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2017 (8) TMI 544
CENVAT credit - transportation charges incurred towards the outward transportation of goods to the branch/depot - Held that: - the issue is no more res integra and is settled in favor of the appellant in the case of M/s S.K.S. Ispat & Power Limited Versus CCE & ST, Raipur [2016 (11) TMI 471 - CESTAT NEW DELHI], wherein it has been held that appellants are entitled to CENVAT credit of service tax paid on outward transportation of goods from the factory to the depot/ branches - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 543
CENVAT credit - HR Plates, MS Beams, MS Channels, HR Cut Coils etc used for fabricating the supporting structure - Held that: - as per the certificate issued by the Chartered Engineer that the HR Plates, MS Beams, MS Channels, HR Cut coil were used towards fabrication of gantry and columns for EOT crane as well as towards fabrication of Re-heating furnace. The Division Bench of this Tribunal in the case of M/s. JSW Steel Ltd. [2017 (2) TMI 1071 - CESTAT Bangalore], has held that the cenvat credit is availed on HR Plates and Sheets etc used for setting up of blast furnace and coke over plants - Since the facts are identical except for fabrication of Re-heating furnace in place of fabrication of blast furnace, therefore, by following the ratios of the above decisions, credit is allowed - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 542
CENVAT credit - duty paying invoices - credit denied on the ground that the appellant has not been able to produce the relevant documents which are required as per Rule 9 of CCR - Held that: - the authorities below have denied the cenvat credit on highly technical ground - reliance has been placed in the case of PHILIPS INDIA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, VADODARA [2005 (2) TMI 399 - CESTAT, MUMBAI], where it has been held that the credit can be availed on the basis of photocopy of the courier Bill of Entry after the receipt of the input and its utilization in the manufacturing process is not disputed - this case needs to be remanded back to the original authority for verification of the documents which the appellant may produce in support of his submission - appeal allowed by way of remand.
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2017 (8) TMI 541
CENVAT credit - Telephone Services installed at residence - Car servicing - Housekeeping service - scope of input services - Held that: - in the case of Vishal Pipes Ltd. Vs. CCE, Noida [2015 (5) TMI 1008 - CESTAT NEW DELHI] wherein it has been held by the Tribunal that the Telephone installed at the residence of Managing Director is covered by the definition of ‘input service' as the said Telephone is provided only for the official use and the address of the company is the residence of the Managing Director - the service tax paid on servicing of the car as well as for housekeeping service fall in the definition of 'input service' as it is in relation to the business of the company - appeal allowed - decided in favor of appellant.
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Indian Laws
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2017 (8) TMI 539
Dishonor of cheque - conviction under Section 138 of the Negotiable Instruments Act - failure to discharge the onus to rebut the presumptions against - proof of legally enforceable debt - Held that:- From the complaint and the deposition of the complainant/respondent No.1 the factum of giving of loan stands established. The petitioner did not lead any evidence. On the contrary, in his 313 statement he has taken a plea which is not at all convincing. It appears rather strange that he issued a cheque in the name of the complainant/respondent No.1 for the purposes of benefiting his tenant. Thus, the presumption of a legally enforceable debt could not be rebutted by the petitioner. Both the Courts below rightly held that the petitioner could not rebut the presumption under Section 139 of the Negotiable Instruments Act.There is no reason to interfere with the concurrent judgments of the Courts below. From the records of this revision petition, it appears that the petitioner has deposited ₹ 6 lakhs with the Registrar General of this Court for suspension of the sentence during the pendency of the revision petition. This Court deems it appropriate that the sentence of the petitioner be reduced to the period which he has undergone in custody.The amount of ₹ 6 lakhs which has been deposited by the petitioner shall be released in favour of the complainant/respondent No.1 on the respondent No.1 appearing before the Registrar General after 30 days of passing of this order.
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