TMI Tax Updates - e-Newsletter
August 21, 2018

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• GST:

  Warehouse services - claim of benefit of exemption - agricultural produce or not - Whether the supply of warehouse services used for packing & storage of tea, was/is exempted from GST - Held No. - the activity of M/s. Unilever of processing of raw tea leaves into tea results in emergence of a new product having distinct name i.e. Tea, which has distinct name, character and use - It does not remain as agriculture produce.
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• GST:

  Branding of goods - Whether mention of name of the Appellant on the goods, as required by FSSAI regulations and Legal Metrology Rules, amounts to brand name or not? - Claim of exemption from GST - The use or words ‘VALUE’, ‘CHOICE’ or ‘ SUPERIOR’ on the proposed packing, without altering the surrounding environment to take advantage of brand ‘MORE’, would be construed as ‘brand name’ for the purpose of Exemption Notification.
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• GST:

  Classification of the supply - supply of UPS along with the battery - Mixed supply or not - naturally bundled goods - The storage battery has multiple uses and can be put to different uses and when supplied separately with static converter (UPS) it cannot be considered as a composite supply or a naturally bundled supply.
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• GST:

  RTI - GSTN Network - Keeping in view the supervisory powers of the Commission u/s 25(4) of the RTI Act, 2005, the Commission advises the Respondent to suo motu disclose the information sought by the Complainant in compliance with Section-4 of the RTI Act, 2005 to ensure transparency, objectivity and accountability in the functioning of the Public Authority.
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• Income Tax:

  Where an assessee makes an application seeking immunity u/s 270AA, it shall not preclude such assessee from contesting the same issue in any earlier assessment year.
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• Income Tax:

  Deduction u/s 80P(2)(a)(i) and 80P(2)(d) - appellant is a Co-Operative Bank or not - Creation of Co-operative Society under the co-operative societies Act is doubtful. Thus the claim of deduction under section 80P cannot be allowed.
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• Income Tax:

  Deduction u/s 36(1)(viia) or u/s 36(1)(viii) - creation of special reserve fund - the assessee has tried to equate the apportionment of profit against an expenditure for provision for bad and doubtful debts which in our view is not possible.
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• Income Tax:

  Assessment u/s 153A pursuant to search - completed assessment - Additions u/s 68 - unexplained unsecured loan - the assessment cannot embrace any fresh disallowance otherwise than that supported by any incriminating material found during the course of search.
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• Income Tax:

  Addition su/s 69B - undisclosed income - if the assessee has in his possession TDS certificates and the corresponding income against the TDS so deducted has been offered for taxation, there should not be any addition
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• Income Tax:

  Denial of exemption u/s 11 - taxing the entire receipts of the assessee trust in place of net receipts. - assessee which obtained registration u/s. 12AA of the Act during the pendency of appeal was entitled for exemption u/s 11 of the Act.
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• Income Tax:

  Revision u/s 263 - Exemption u/s 10(23FB) - income earned out of investments made in Venture Capital Undertakings (VCU) - the assessee is bound to succeed both on the issue of exercise of jurisdiction under section 263 of the Act as well as on the merits of allowability of exemption under section 10(23FB) of the Act.
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• Income Tax:

  Additions u/s 68 - unexplained unsecured loans - CIT(A) had rightly deleted the addition towards loans received from the companies in the same group
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• Customs:

  Classification of imported goods - touch star finger print devices - When the item is prima facie classifiable under two headings in terms of Rule 3(c) of General Rules of Interpretation of Import Tariff, the goods should be classified under the heading which occurs last in numerical orders among those which equally merits consideration.
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• Customs:

  Refund denied on the ground that on the date of filing of bill of entry i.e. 21.01.2013 the rate of customs duty was enhanced from 4% to 6% - since the Notification was published and offered for sale on 04.02.2013, the same will be effective from that date only
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• Indian Laws:

  Insolvency and Bankruptcy Code (Second Amendment) Act, 2018
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• Service Tax:

  Commercial Training & Coaching Services - sale of study material by the appellant on behalf of the companies, the product of whom were sold by the appellant - appellant is liable to pay service tax on the payment of sale of study material.
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• Service Tax:

  Classification of services - Job-work - The job work carried out by the appellant cannot be treated as supply of manpower and hence, the same is not taxable under the head Manpower Recruitment and Supply Agency Service
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• Service Tax:

  Whether the service tax attributed to TDS deducted by the service tax recipient is refundable to the service provider? - Held No - TDS even if deductible by the service recipient, it is available to the service provider for adjustment against their tax liability.
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• Service Tax:

  Classification of services - post construction, completion and finishing services are specifically included in the definition of ‘Commercial or Industrial Construction Service’ as the activity undertaken by respondents appears to be before the completion of the complex or buildings.
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• Central Excise:

  CENVAT Credit - duty paying documents - demand based on audit conducted by the departmental audit team - it was not open to the department to go beyond the proposition in the Audit Note.
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Articles

• FORFEITURE OF GRATUITY ON DISMISSAL FROM SERVICE
• Settled legal position -pending appeals on covered matters must be withdrawn by revenue to save time of Courts, public money and avoid un-necessary harassment of tax payers. Settled legal position must be followed and rectification as per settled legal position must be made to avoid un-necessary and lingering of litigation and to expedite justice as per law.
• Notified sections of Companies (Amendment) Act, 2017 up to August 15, 2017

Notifications

• GST - States

• FIN/REV-3/GST/1/08 (Pt-1)/222 - dated 26-7-2018 - Nagaland SGST
  Seeks to prescribe concessional CGST rate on specified handicraft items.

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• FIN/REV-3/GST/1/08 (Pt-1)/221 - dated 26-7-2018 - Nagaland SGST
  Amendments in the Notification of the Government of Nagaland, Finance Department (Revenue Branch) F.NO.FIN/REV-3/GST/1/08 (Pt-1) “H” the 30th June, 2017.

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• FIN/REV-3/GST/1/08 (Pt-1)/220 - dated 26-7-2018 - Nagaland SGST
  Amendments in the Notification of the Government of Nagaland, Finance Department (Revenue Branch) F.NO.FIN/REV-3/GST/1/08 (Pt-1) “E”, dated the 30th June, 2017.

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• FIN/REV-3/GST/1/08 (Pt-1)/219 - dated 26-7-2018 - Nagaland SGST
  Amendments in the Notification of the Government of Nagaland, Finance Department (Revenue Branch) F.NO.FIN/REV-3/GST/1/08 (Pt-1) “D” the 30th June, 2017.

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• FIN/REV-3/GST/1/08 (Pt-1)/218 - dated 26-7-2018 - Nagaland SGST
  Seeks to insert explanation in an item in notification No."F.NO.FIN/REV3/GST/1/(Pt-1) “N” dated 30th June,2017"

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• FIN/REV-3/GST/1/08 (Pt-1)/217 - dated 26-7-2018 - Nagaland SGST
  Amendments in the Notification of the Government of Nagaland, Finance Department (Revenue Branch) F.NO.FIN/REV-3/GST/1/08 (Pt-1) “Q” dated the 30th June, 2017.

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• FIN/REV-3/GST/1/08 (Pt-1)/216 - dated 26-7-2018 - Nagaland SGST
  Amendments in the Notification of the Government of Nagaland, Finance (Revenue Branch) F.NO.FIN/REV-3/GST/1/08 (Pt-1) “P” dated the 30th June, 2017.

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• FIN/REV-3/GST/1/08 (Pt-1)/215 - dated 26-7-2018 - Nagaland SGST
  Amendments in the Notification of the Government of Nagaland, Finance Department (Revenue Branch) F.NO.FIN/REV-3/GST/1/08 (Pt-1) “O” dated the 30th June, 2017.

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• FIN/REV-3/GST/1/08 (Pt-1)/214 - dated 26-7-2018 - Nagaland SGST
  Amendments in the Notification of the Government of Nagaland, Finance Department (Revenue Branch) F.NO.FIN[REV-3/GST/1/08 “N” dated the 30th June, 2017.

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• 26518–FIN-CT1-TAX-0043/2017 - dated 10-8-2018 - Orissa SGST
  Prescribing the due dates for quarterly furnishing of Form GSTR-1 for those taxpayers with aggregate turnover up to ₹ 1.5 crore for the period from July,2018 to March, 2019.

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• 11872/CT.,/Pol-41/1/2017-Policy - dated 10-8-2018 - Orissa SGST
  Extension of time for payment of tax for discharging tax liability as per form GSTR-3B.

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• S.O. 112/P.A.5/2017/S.11/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.71/P.A.5/2017/S.11/2017, dated 01st November, 2017.

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• S.O. 111/P.A.5/2017/Ss.10,12,14 and 148/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O. 83/P.A.5/2017/Ss.10,12,14 and 148/2017, dated 01st November, 2017.

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• S.O. 110/P.A.5/2017/S.6/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.76/P.A.5/2017/S.6/2017, dated 01st November, 2017.

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• S.O. 109/P.A.5/2017/S.23/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.80/P.A.5/2017/S.23/2017, dated 01st November, 2017.

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• S.O. 108/P.A.5/2017/S.54/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.82/P.A.5/2017/S.54/2017, dated 02nd November, 2017.

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• S.O. 107/P.A.5/2017/S.23/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.57/P.A.5/2017/S.23/2017, dated 03rd October, 2017.

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• S.O. 106/P.G.S.T.R./2017/R.96A/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.55/P.G.S.T.R./2017/R.96A/2017, dated 25th September, 2017.

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• S.O. 104/P.A.5/2017/S.11/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.88/P.A.5/2017/S.11/2017, dated 14th November, 2017.

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• S.O. 103/P.A.5/2017/S.11/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.84/P.A.5/2017/S.11/2017, dated 01st November, 2017.

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• S.O. 102/P.A.5/2017/S.9/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.72/P.A.5/2017/S.9/2017, dated 01st November, 2017.

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• S.O. 101/P.A.5/2017/S.9/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.70/P.A.5/2017/S.9/2017, dated 01st November, 2017.

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• S.O. 100/P.A.5/2017/S.11/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.69/P.A.5/2017/S.11/2017, dated 01st November, 2017.

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• S.O. 099/P.A.5/2017/S.9/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.68/P.A.5/2017/S.9/2017, dated 01st November, 2017.

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• S.O. 098/P.A.5/2017/S.9/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.75/P.A.5/2017/S.9/2017, dated 01st November, 2017.

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• S.O. 097/P.A.5/2017/S.11/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.74/P.A.5/2017/S.11/2017, dated 01st November, 2017.

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• S.O. 096/P.A.5/2017/Ss.9,11,15 and 16/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.73/P.A.5/2017/Ss.9, 11, 15 and 16/2017, dated 01st November, 2017.

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• S.O. 095/P.A.5/2017/S.54/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.67/P.A.5/2017/S.54/2017, dated 27th October, 2017.

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• S.O. 094/P.A.5/2017/S.11/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.66/P.A.5/2017/S.11/2017, dated 27th October, 2017.

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• S.O. 093/P.A.5/2017/S.9/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No. S.O.65/P.A.5/2017/S.9/2017, dated 27th October, 2017.

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• S.O. 092/P.A.5/2017/S.11/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.61/P.A.5/2017/S.11/2017, dated 03rd October, 2017.

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• S.O. 091/P.A.5/2017/S.11/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.60/P.A.5/2017/S.11/2017, dated 03rd October, 2017.

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• S.O. 090/P.A.5/2017/Ss.9,11,15 and 16/2018 - dated 12-7-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No.S.O.59/P.A.5/2017/Ss.9, 11, 15 and 16/2017, dated 03rd October, 2017.

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• G.S.R.46/P.A.5/2017/S.164/Amd.(16)/2018 - dated 12-7-2018 - Punjab SGST
  The Punjab Goods and Service Tax (Eighth Amendment) Rules, 2018.

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• Corrigendum - S.O.62/P.A.5/2017/S.168/2017 - dated 12-7-2018 - Punjab SGST
  CORRIGENDUM - Notification No. S.O.62/P.A.5/2017/S.168/2017, dated the 03rd October, 2017, S.O.77/P.A.5/2017/Ss.39 and 168/2017, dated the 01st November, 2017, S.O.78/P.A.5/2017/Ss.39 and 168/2017, dated the 01st November, 2017, S.O.79/P.A.5/2017/S.168/2017, dated the 01st November, 2017, and Notification No. S.O.81/P.A.5/2017/Ss.39 and 168/2017, dated the 01st November, 2017.

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• S.O.79/P.A.5/2017/S.9/2018 - dated 19-6-2018 - Punjab SGST
  Amendment in the Government of Punjab, Department of Excise and Taxation, Notification No. S.O.28/P.A.5/2017/S.9/2017, dated the 30th June, 2017.

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Circulars / Instructions / Orders

• Income Tax - 05/2018 - dated 16-8-2018
  Clarification on the immunity provided u/s 270AA of the Income-tax Act, 1961
• Customs - PUBLIC NOTICE NO. 10/2018 - dated 18-8-2018
  Public Notice no. 10/2018 issued by Office of the Chief Commissioner, Central Tax, Central Excise & Customs, Thiruvananthapuram Zone regarding procedure for duty free clearance of materials imported for the purpose of relief and rehabilitation of people affected by flood in Kerala.

News

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

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• MoveHack, NITI Aayog’s global mobility hackathon, receives strong interest

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• No ATM to be replenished with cash after 9 pm from next year

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• Government invites comments of Stakeholders and General Public on Proposed Amendments to Income-tax Rules,1962 by 4th September, 2018

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Case Laws:

• GST

• 2018 (8) TMI 1073
  Warehouse services - claim of benefit of exemption - agricultural produce or not - Serial No.54 of Notification No.12/2017 Central Tax (Rate) - Whether the supply of warehouse services used for packing & storage of tea, was/is exempted vide Serial No 54(e) of Notification No. 12/2017- Central tax (rate) or otherwise? - Held that:- Even if we assume that in the beginning they are bringing raw tea leaves or may be semi processed tea leaves which they have not clearly specified to the godown, they are under taking further processing and manufacturing of the same as per processes given above and are finally storing manufactured tea as per details given by them self above which finally culminates into packing of Lipton Pure and Simple 100s tea bags. This activity of M/s. Unilever of processing of raw tea leaves into tea results in emergence of a new product having distinct name i.e. Tea, which has distinct name, character and use i.e. Lipton Pure and Simple 100s Tea bags. As such the impugned activity is a 'manufacture' as defined in clause (72) of section 2 of the GST Act - The final product considering various processes undertaken by M/s. Unilever cannot be considered as Agricultural Produce. The assessees who are in the business of blending and processing of tea and export thereof, in 100% EOUs are manufacturer/ producer of the tea for the purpose of claiming exemption u/s. 10B of the Act. Further, assessees who are in the business of blending and processing of tea in respect of undertakings in free trade zones are manufacturer/producer of tea for the purpose of claiming exemption u/s. 10A of the Act. The goods being stored in the applicant's godown are not agricultural produce as per definition given in Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017 and the same is reiterated by Board Circular No. 16/16/2017-GST issued under F No. 354/173/2017-TRU dated 15.11.2017. Ruling:- Exemption provided in serial no. 54 to Notification No, 12/2017 Central Tax (Rate) is not applicable to the activity carried by the company.

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• 2018 (8) TMI 1072
  Branding of goods - Whether mention of name of the Appellant on the goods, as required by FSSAI regulations and Legal Metrology Rules, amounts to brand name or not? - Whether use of general words like ‘Choice’, ‘Value’ or ‘Superior’ on the goods to be sold in ‘More stores would render the said goods as branded or not? - N/N. 02/2017-Central Tax (Rate) dt. 28 June 2017. Held that:- The practice of branding is thought to have begun with the ancient Egyptians who were known to have engaged in livestock branding as early as 2700 BCE. Branding was used to differentiate one person’s cattle from another’s by means of a distinctive symbol burned into the animal’s skin with a hot branding iron. If a person stole any of the cattle, anyone else who saw the symbol could deduce the actual owner. Over time, the practice of branding objects extended to a broader range of packaging and goods offered for sale. In modern times the term has been extended to mean a strategic personality for a product or company, so that ‘brand’ now suggests the values and promises that a consumer may perceive and buy into - Branding is a set of marketing and communication methods that help to distinguish a company or products from competitors, aiming to create a lasting impression in the minds of customers. The key components that form a brand’s toolbox include a brand’s identity, brand communication (such as by logos and trademarks), brand awareness, brand loyalty, and various branding (brand management) strategies. Many companies believe that there is often little to differentiate between several types of products in the 21st century, and therefore branding is one of a few remaining forms of product differentiation. There is no bar on the name of the manufacturer to be a brand name as long as it is used in relation to such specified goods for the purpose of indicating a connection in the course of trade between such specified goods and the person using such name. So, the real test here is the connection between the specified goods on which such a name is being used and the person using such name in the course of trade. In the instant case, the goods in question are being sold under the brand ‘More’ in exclusive ‘More Stores’ and also bearing the registered logo of ‘Aditya Birla Retail’. Therefore, there are two brand names attached to the said goods at present. Alternatively, the consumers identify these goods by ‘More’ brands and also as those manufactured by Aditya Birla Group company - There is one more logo on the goods which bears ‘Aditya Birla Retail’, the registered trade mark of the Group company, used by the Appellant under licence agreement. Thus the goods are being identified by consumers/customers by names ‘More’ and ‘Aditya Birla Retail’. As confirmed by the Appellant, huge investment and time is involved in establishing the brands by way of consistent advertising and marketing to register in the minds of consumers/customers. There is accordingly a lot of value attached to such brands which hire some part of Customer’s mind to differentiate the goods from rival manufacturers/brands. Whether the Appellant is opting not to take advantage of brand names ‘More’ and ‘Aditya Birla Retail”? - Held that:- Merely mention of manufacturer’s name on the product as required under different statutes may not necessarily result in consideration of that product as branded. But if the name of manufacturer mentioned on the product, even as per statutory requirements, clearly establishes a link with the manufacturer and the product, then it surely amounts to be a brand name, as brand name includes any name as per explanation provided under the exemption notification. Though there is no laid down criterion in this regard, but the surrounding environment needs to be scrutinized as to whether the name of manufacturer on the product can result in consideration of brand or not - in the instant case that the answer is in affirmative. It is clear that even by removing their brand names ‘More’ and ‘Aditya Birla Retail’ from packaging of the said goods, the Appellant still enjoys the advantage attached to the said two brand names and thus the benefit of exemption cannot be extended to them. The mention of name ‘Aditya Birla Retail Limited’ on the packages, as manufacturer of the said goods clearly indicates the connection between the said goods and Aditya Birla Group in the course of trade as they are already having a registered brand in the name of ‘Aditya Birla Retail’ which was being displayed on the said goods till now - there is direct connection between the said goods and the brand ‘More’ and the manufacturer Aditya Birla Retail Ltd., thus the use of name of manufacturer on packages can be considered as brand name. Merely by removing their registered brand name logos viz. ‘MORE’ and ‘Aditya Birla Retail’ from the packaging of some of their products and keeping the surrounding environment intact to take advantage of the said brands not render such goods unbranded and the benefits of exemption notification from GST would not be available to such goods - Also, the use of words like ‘ CHOICE’, ‘VALUE’ or ‘SUPERIOR’ on the proposed packing, which are already in use with the brand ‘More’ on the present packing, would amount to branding of goods as the goods can be identified with the brand ‘More’ by the use of these words. Ruling:- The use or words ‘VALUE’, ‘CHOICE’ or ‘ SUPERIOR’ on the proposed packing, without altering the surrounding environment to take advantage of brand ‘MORE’, would be construed as ‘brand name’ for the purpose of Exemption Notification.

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• 2018 (8) TMI 1071
  Classification of the supply - supply of UPS along with the battery - Mixed supply or not - naturally bundled goods - Challenge to advance ruling - Held that:- There is no denying of the fact that an in-built battery of static converter (UPS) is part and parcel of the uninterrupted power supply system and is covered under Tariff Head 8504 and intra-State supply thereof attracts tax under CST Act as per rate applicable to goods enumerated under Schedule III of Tax-Rate Notification(s), vide serial No. 375, but the situation changes when storage battery or electric accumulator is supplied separately irrespective of whether under a single contract or a separate contract. The storage battery has multiple uses and can be put to different uses and when supplied separately with static converter (UPS) it cannot be considered as a composite supply or a naturally bundled supply - there is no infirmity in the Ruling rendered by the West Bengal Authority for Advance Ruling. Appeal dismissed.

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• 2018 (8) TMI 1070
  RTI - GSTN Network - Information regarding the name of the officers with designations who were responsible for making the voluntary disclosure u/s 4 of the RTI Act, 2005 from 01.09.2009, till the date of providing information - It was articulated by the Respondent that they had observed the provisions of Section 4 of the RTI Act, 2005 and that necessary disclosures were made on their website - Held that:- The Commission observed that a voluntary disclosure of all information that ought to be displayed in the public domain should be the rule and members of public who having to seek information should be an exception. An open government, which is the cherished objective of the RTI Act, can be realised only if all public offices comply with proactive disclosure norms. Section 4(2) of the RTI Act mandates every public authority to provide as much information suo-motu to the public at regular intervals through various means of communications, including the Internet, so that the public need not resort to the use of RTI Act. Keeping in view the supervisory powers of the Commission u/s 25(4) of the RTI Act, 2005, the Commission advises the Respondent to suo motu disclose the information sought by the Complainant in compliance with Section-4 of the RTI Act, 2005 to ensure transparency, objectivity and accountability in the functioning of the Public Authority. Thus, it is evident that a sketchy information as available on its website had been furnished by the Respondent. However, it is appalling to learn that an important, significant and critical area concerning the implementation of GST Network still required streamlining and consolidation which needs to be attended to forthwith in the larger public interest. Appeal disposed off.

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• Income Tax

• 2018 (8) TMI 1069
  Reopening of assessment - reasons to believe - jurisdictional requirement for reopening of the assessment SLP dismissed.

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• 2018 (8) TMI 1068
  Addition on account of amount received by the assessee towards settlement compensation - revenue or capital receipt. SLP dismissed.

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• 2018 (8) TMI 1067
  Capitalization of Interest income on FDR's - thereby reducing the cost of fixed assets - taxability of interest as income from other sources u/s 56 Leave granted.

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• 2018 (8) TMI 1066
  Reopening of an assessment - reason to belief - The reassessment notice is based on reasons, which the revenue asserts, was recorded on 28 May, 2007. The question is whether the assessee is correct in asserting-as he does in this case, that these reasons were inserted later and did not exist, or were not reflected when the notice was issued. - The losses claimed were in respect of two transactions; sale of shares of M/s Parsec Technology and on account of sale of mutual fund units. - AO observed that transaction was not genuine and was a device to avoid tax, to claim loss that was not warranted. Held that:- These circumstances, in the opinion of the court, show that the reasons had been recorded only after 22.08.2007 and not before. The inescapable inference from the records made available is that but the “reasons to believe” had not been recorded on28.05.2007 i.e. prior to the issue of notice under Section 148 of the Act but were recorded later. Therefore, this court is of the opinion that the official record lends credence- rather proves the petitioner’s allegations that no reasons were recorded prior to the issue of the notice on 28.05.2007. The AO should have recorded some reasons to justify such reassessment notice, before it was issued, given that it is a mandatory requirement under section 148(2) of the Act. In these circumstances, this court hereby directs the Chief Commissioner concerned to cause an inquiry to be conducted as to the involvement of the officials or employee in the manipulation of the record in this case, and take strict disciplinary action, according to the concerned rules and regulations. This inquiry should be in regard to the conduct of the concerned AO posted at the time, who issued the notice under Section 147/148 as well as the officers who filed the affidavits in these proceedings. The investigation and consequential action shall be completed within four months. The impugned reassessment notice and all subsequent orders, made pursuant thereto are hereby quashed. - Decided in favor of assessee.

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• 2018 (8) TMI 1065
  Additions u/s 68 - cash deposits made on different dates in the joint bank account - unexplained cash or not - Nexus with amount withdrawn earlier in different dates - Rejecting the arguments to the assessee, tribunal confirmed the additions - Held that:- The assessee has not filed any explanation about the discrepancy in the cash flow statement. It is not explained when huge cash amount have been withdrawn, why only part amount have been used for construction and if sufficient cash was available to assessee on prior dates, why there is again huge cash withdrawal on subsequent dates without incurring any expenditure on construction. The appellant-assessee had conveniently claimed that entire construction was without any bank transaction or bill, vouchers, etc. This is not plausible. Facts on record are glaring and one-sided. It is obvious that the bills of purchases, payments made to contractor etc. and the accounts relating to construction were held back, as they would have revealed the truth and would not have supported the already weak and tenuous explanation of the appellant-assessee. The reasoning given by the Income Tax Appellate Tribunal is not perverse. It is based and founded on the evidence and material on record. - Additions confirmed - Decided against the assessee.

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• 2018 (8) TMI 1064
  Income from House Property - Additions towards notional interest on security deposit - Determination of Annual letting value (ALV) - assessee has offered interest on security deposits kept with banks is offered to tax as income under other heads - Held that:- In the present facts, it is not the case of the Revenue that fixing of the rent was inflated/ deflated on extraneous consideration. Parties to the Agreement are at Arms Length. Therefore, the Municipal Rateable Value can be taken as a safe guide to determine the fair rent of the property. - In the present facts, the Assessing Officer has not carried out necessary exercise to determine the Municipal Rateable Value of the said property. Thus, he could not have come to the conclusion that the amount received/ receivable by the Assessee under Section 23(1)(b) of the Act is in excess of fair rent. - Decided against the Revenue. Appeal admitted on the substantial question of law at (b) Whether on the facts and in circumstances of the case and in law, the Tribunal was justified in holding that society maintenance charges are to be excluded from ALV u/s. 23(1) (b) without appreciating the fact that the actual rent received/ receivable is independent of such charges and that the only deduction allowable under the Act is per section 24?

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• 2018 (8) TMI 1063
  Deduction u/s 80P(2)(a)(i) and 80P(2)(d) - appellant is a Co-Operative Bank or not - interest income earned by the appellant out of the deposits kept in the in the Banks - all monies belong to the members of the appellant society - Karnataka State has notified Karnataka Co-operative Societies Act, 1959 as well as the Karnataka Souharda Sahakari Act, 1997 and even at present both the Acts are in force simultaneously. Held that:- assessment order was passed in the name of Udaya Souharda Credit Co-operative Society Ltd., whereas no certificate of registration was placed before us in the name of Udaya Souhardha Credit Co-operative Society ltd. Therefore, we are unable to understand how the assessee can claim it to be the co-operative society in the absence of proper registration under the Karnataka Co-operative Societies Act. Creation of Co-operative Society under the co-operative societies Act is doubtful. Thus the claim of deduction under section 80P cannot be allowed. Since all these new points have been raised during the course of hearing before us and according to us all these points goes to the root of the case, we are of the view that proper adjudication of the issues is required by the AO - Matter remanded back.

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• 2018 (8) TMI 1062
  Deduction u/s 36(1)(viia) or u/s 36(1)(viii) - creation of special reserve fund - cooperative society doing the business of banking in the district of Mandsaur - AO observed that the assessee is not entitled to a deduction u/s 36(1)(viii) since the bank has not given the long term finance for development of agriculture. Held that:- Provision of section 36(1)(viia) relates to provision for bad and doubtful debts which, certain category of assessee’s have been referred in the section are allowed to claim the expenditure as in the nature of business as they engaged in to, regular bad debts occur. Specific reserve is not an expenditure but it is an apportionment of the income and statue in order to promote long term finance in various sectors for the benefit of general public of the country gives the benefit of deduction to claim 20% of the available profits to be accumulated under the head special reserve and the claimant is duty bound to use such specific reserves only for the aforesaid purpose for which it has been made and in case of any default the same needs to be brought to tax. From above discussions we are of the view that both the section 36(1)(viia) and 36(1)(viii) of the Act deals with two distinct items namely an expenditure in the name of provision for bad and doubtful debts u/s 36(1)(viia) of the Act and in the nature of income u/s 36(1)(viii) of the Act which is set apart for a specific purpose. In our view both the items expressed in these two sections i.e. 36(1)(viia) and 36(1)(viii) of the Act are different and cannot be equated to each other. The assessee after becaming aware of the fact that it is not eligible for such deduction u/s 36(1)(viii) of the Act, it changed its stand and now is pleading that the set off may be given u/s 36(1)(viia) of the Act relating to provision for bad and doubtful debts giving the reason that it still has unutilized limit of ₹ 9.2 crores. We fail to understand how an item of income can be equated to an item of expenditure. In the instant case the assessee has tried to equate the apportionment of profit against an expenditure for provision for bad and doubtful debts which in our view is not possible. - Decided against the assessee.

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• 2018 (8) TMI 1061
  Reopening of an assessment u/s 147 - Computation of Capital Gains - transfer of property u/s 2(47) - assessee has not offered the capital gains to tax - similar issues in the case of co-owners have been remanded back by the ITAT Held that:- we find that the property under transfer is the same and the assessees’ therein are the co-owners of the property. The Tribunal in paras 9 to 18 has considered the issue at length and has held that the capital gain is taxable in the relevant assessment year. However, with regard to the sale consideration to be adopted, the matter has been set aside to the file of the Assessing Officer. Similarly, computation of cost of acquisition and also the claim of deduction u/s. 54F have also been set aside to the file of the Assessing Officer. Respectfully following the decision of the Co-ordinate Bench in the case of the co-owners under the similar facts and circumstances, we deem it fit and proper to remand this issue also to the file of Assessing Officer with similar directions. - Decided partly in favor of assessee.

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• 2018 (8) TMI 1060
  Disallowance of cost of production of TV serials and programmes - revenue expenditure or capital expenditure - claim of depreciation on Film Software Library at 25% by treating it as an intangible asset. - Held that:- Claim of the assessee allowed - Both the ground are answered against the revenue.

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• 2018 (8) TMI 1059
  Assessment u/s 153A pursuant to search - completed assessment - Additions u/s 68 - unexplained unsecured loan - AO made the addition only on the reason that the assessee could not furnish complete address of the party along with confirmation etc to prove the genuineness of the credits. - Held that:- the assessment year 2007-08 under consideration falls in the category of ‘completed assessments’. It is apparent from the assessment order itself, as has been candidly admitted by the ld. DR as well, that there is no reference to any incriminating material in the assessment order qua the creditor in respect of whom addition was made. In that view of the matter, the assessment cannot embrace any fresh disallowance otherwise than that supported by any incriminating material found during the course of search. - Decided in favor of asssessee.

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• 2018 (8) TMI 1058
  Addition on account of duty credit scrips received but not utilized - Held that:- assessee had not undertaken any import of goods during years under consideration which is an admitted position. In our considered view, income does not accrue until imports are made and raw materials are consumed by assessee. - CIT(A) has rightly deleted the additions - it is observed that assessee had not undertaken any import of goods during years under consideration which is an admitted position. In our considered view, income does not accrue until imports are made and raw materials are consumed by assessee. - Decided against the revenue. Disallowance u/s 14A - suo moto disallowance made by assessee - disallowance regarding exempt income - exclusion of the investments made by tenets group concerns/subsidiary companies which were made to acquire controlling interest or to serve the business interest of assessee. - Held that:- We are therefore inclined to consider the plea of assessee by setting aside the issue back to Ld.AO for re-computation of disallowance under section 14A having regards to the decision of Hon’ble Supreme Court in the case of Maxxop investments Ltd vs CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA]

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• 2018 (8) TMI 1057
  Computation of profit u/s 44BB - inclusion of receipts on account of service tax - scope of total turnover - business of exploration, etc., of mineral oils - Held that:- service tax cannot form part of the gross revenue, for the purpose to computing the profit and gains under Section 44BB - Decided against the revenue.

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• 2018 (8) TMI 1056
  Additions u/s 40(a)(i) - TDS liability u/s 195 on Microsoft license fee payable to Organon NV (AE) - Royalty or fee for technical services - Held that:- Tribunal has gone extensively into the question raised before the Tribunal - Decision of ITAT sustained. - Decided in favor of assessee. Nature of expenditure - various expenses for initiation and setting up of the project - setting up of pharmaceutical factory on Kona land in West Bengal for expansion of its existing business - Held that:- the expenses incurred by the assessee were for the expansion of the already existing unit and it was incidental to the assessee’s business and the expenses were capitalized under work-inprogress - the assessee abandoned the project being non-viable in the year under consideration. The Ld. CIT(A) is right in finding that the expenditure is incidental to the business carried out by the assessee and, therefore, the said expenditure is nothing but loss incidental to the assessee’s business. It is well settled that profits and gains which are liable to be taxed u/s. 28 of the Act are what are understood to be such according to ordinary commercial principle. - Claim of deduction as business expenditure/ loss allowed. - Decided in favor assessee.

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• 2018 (8) TMI 1055
  Additions u/s 40(a)(ia) for non deduction of tax (TDS) on certain payments - TDS on hire charges - Additions u/s 69B - Held that:- the Amendment has come into effect with retrospective date and as per the amended provision if the payee has included the receipt in its books of account and has offered for taxes then the disallowance on account of non-deduction of TDS will not arise - No addition - Decided against the revenue. Addition su/s 69B - undisclosed income - assessee claimed that information collected u/s 133(6) was not provided to the assessee at the time of assessment proceedings. The information so collected by AO from Patel- KNR (JV) u/s 133(6) of the Act, was supplied at the time of appellate proceedings to the AR of the assessee. - Held that:- assessee, has TDS certificate issued by the concern and corresponding income has been shown. That is, if the assessee has in his possession TDS certificates and the corresponding income against the TDS so deducted has been offered for taxation, there should not be any addition. - Decided against the revenue.

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• 2018 (8) TMI 1054
  Addition u/s 69 - undisclosed investment - cash paid for purchase of new car - proof of source of cash - Held that:- it appears that the small withdrawals made by the assessee were considered by the AO towards household expenses - considering the totality of facts, I am of the view that when the assessee and his wife had withdrew a sum of ₹ 7.72 lacs from the various banks account from 1.4.2013 to 3.11.2013. The said withdrawal was sufficient to explain a payment of ₹ 2.68 lacs for the purchase of the car, particularly when it is not brought on record that the said amount was used elsewhere. - Additions deleted - Decided in favor of assessee.

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• 2018 (8) TMI 1053
  Law tax effect - revenue appeal - CBDT has issued Circular No. 3 of 2018 dated 11.07.2018, vide which it has revised the monetary limit to ₹ 20,00,000/- for not filing the appeal before the Tribunal - Held that:- From Clause 12 & 13 of the above said circular it is clear that these instructions are applicable to the pending appeals also and as per clause 13, there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than ₹ 20,00,000/-. These instructions are operative retrospectively to the pending appeals. - Revenue should not have filed the instant appeal before the Tribunal. - Revenue appeal dismissed.

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• 2018 (8) TMI 1052
  Minimum alternate tax (MAT) - whether the provisions of section 115JB of the Act are applicable to the assessee being a banking company for the Asst Year 2004-05 - Held that:- There has been amendment in section 115JB of the Act with effect from Asst Year 2013-14 which has to be examined independently in the light of the amended provisions with regard to the applicability of book profit tax on the banking companies. We find that the ld CITA had placed reliance on the aforesaid decisions of this tribunal and granted relief to the assessee, against which the revenue cannot have any grievance. - Decided against the Revenue.

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• 2018 (8) TMI 1051
  Rectification of mistake u/s 254(2) - Exemption u/s 54 - long term capital gains (LTCG) - investment in residential property - assessee had actually effected a purchase of a flat of which construction was in progress - Held that:- The date of transfer of the asset giving rise to the capital gains was 15th November, 2012 and the payments made by the assessee to M/s. Aarthik Properties Limited after the said date was 5,00,000/- only. We are therefore of the opinion that lower authorities were justified in restricting the claim u/s.54 of the Act to the amounts paid by the assessee after 15.11.2012. - The Tribunal has analyzed Section 54 of the Act and held that the time period of one year prior to the date of transfer giving rising to the capital gains, was available only for an investment in the nature of purchase of a residential house and not for construction of a residential house. What is rectifiable u/s.254(2) of the Income Tax Act, 1961 is only a glaring and apparent mistake and not one which require long arguments and debates on the issues involved. - Application of rectification rejected - Decided against the assessee.

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• 2018 (8) TMI 1050
  Denial of exemption u/s 11 - CIT(A) observed that assessee was not having registration either under section 12AA of the Act or approval u/s.10(23C)(vi) of the Act and, therefore, the entire receipts has to be taken as income of the assessee - taxing the entire receipts of the assessee trust in place of net receipts. Held that:- it is not in dispute that the objects and activities of the trust or the year under consideration are same as were on 30.3.2015 when registration u/s.12AA was granted to the assessee by the CIT (Exemption) - Further, as held by Ahmedabad Bench in the case of Shri Bhanushali Mitra Mandal (2016 (4) TMI 578 - ITAT AHMEDABAD) that the appeal is the continuation of the assessment proceedings and going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the first proviso to Sub-section (2) of Section 12A. It follows therefrom that the assessee which obtained registration u/s. 12AA of the Act during the pendency of appeal was entitled for exemption u/s 11 of the Act. - Decided in favor of assessee.

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• 2018 (8) TMI 1049
  Deductions while computing the capital gains u/s 48(1) - amount paid to the tenants for obtaining vacant possession of the property belonging to the appellant - expenditure incurred wholly and exclusively in connection with transfer of capital asset - MAT - inclusion of income from capital gains for the purpose of computing book profits u/s 115J (Minimum Alternate Tax) - Held that:- compensation paid by the assessee to two tenants for getting vacant possession of the property is deductible as an expenditure incurred wholly and exclusively in connection with transfer of the property while computing capital gains. - Decided in favor of assessee. MAT - Computation of book profit u/s 115JB - inclusion of capital gains - Held that:- there is no scope for the AO to make adjustments towards book profit u/s 115JB, except as provided under Explanation 1 to section 115JB of the Income-tax Act, 1961.- AO was incorrect in recomputing book profit to make adjustments towards capital gain derived from transfer of property. Hence, we direct the AO to delete adjustments made towards ‘Long term capital gain’ derived from sale of property to the book profit computed u/s 115JB of the Income-tax Act, 1961. - Decided in favor of assessee.

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• 2018 (8) TMI 1048
  Additions u/s 68 for unexplained cash credit - Addition son account of bogus lease rental expenses - sale and lease-back - non- payment of the entire sale proceeds at the time of sale arrangement - Held that:- CIT(A) observed that the assessee has explained all the points raised by the AO quite satisfactorily in its written submission filed in the course of assessment proceeding, however, the AO has not mentioned as to why the explanations of the assessee are not satisfactory, therefore, the CIT(A) deleted both the additions - Order of CIT(A) confirmed - Decided against the revenue. Additions on account of transmission charges. - Additions on account of travelling expenses - Additions on account of Director's remuneration. - Additions for non-deduction of TDS u/s 40(a)(i) - Additions for prior period expenses. - Held that:- CIT(A) has considered the issues and deleted the additions - ld. DR could not bring out any new material/cogent facts to controvert the above observations of the CIT(A). - Decided against the revenue. Disallowance of deduction by invoking 43B - deposit of electricity duty in a designated account - Payment of crystallized liability - declaration under Section 158A(1) of the Act, 1961 to be made by an assessee claiming that identical question of law is pending before the High Court or the Supreme Court. - Held that:- Matter restored before AO to consider based on the final outcome of the assessee’s appeal in identical issue pending before the Hon’ble High Court for the assessment ear 2009-2010 as mentioned in the Form No.8 - Decided partly in favor of assessee.

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• 2018 (8) TMI 1047
  Disallowance u/s 14A r.w.r 8D(2)(iii) - earning of exempted dividend income - rate of depreciation on moulds used in electronics goods - 30% or 15% - Held that:- disallowance of expenditure incurred in relation to an exempt income earned by the assessee u/s 14A of the 1961 Act cannot exceed exempt income earned by the assessee during relevant period. - Decided against the revenue. Higher rate of depreciation on moulds - Hedl that:- in view of the consistency, we are of the opinion that the claim of the assessee should have been accepted by the Assessing Officer as no new facts have been brought on record to justify for different stand taken during the year under consideration - Decided against the revenue.

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• 2018 (8) TMI 1046
  Revision u/s 263 - Exemption u/s 10(23FB) - income earned out of investments made in Venture Capital Undertakings (VCU) - corresponding income is taxable at the hands of the investors / unitholders as per section 115U - AO allowed the benefit of exemption - CIT found the order as erroneous and prejudicial to the interest of Revenue - The learned Principal Commissioner observed, all the schemes executed by the assessee were continuing prior to assessment year 2013–14, hence, would not be covered by the amended provisions of section 10(23FB) of the Act applicable for the assessment year 2013–14. Held that:- Section 10(23FB) of the Act was introduced by Finance Act, 2000, w.e.f. 1st April 2001. The aforesaid provision provides for exemption from tax any income of a Venture Capital Company or Venture Capital Fund from investment in a Venture Capital Undertaking. - Meaning thereby, the income derived by them from venture capital undertaking, though, is exempt in their hand but would be taxable at the hands of the unitholders who have invested in Venture Capital Funds. - Subsequently, the Explanation to section 10(23FB) was amended by Finance Act (No.2), 2004, w.e.f. 1st October 2004, as per which Venture Capital Undertaking would mean a Venture Capital undertaking referred to in the SEBI (Venture Capital Funds) Regulations, 1996 made under the Security Exchange Board of India Act, 1992. Thus, the amendment to Section 10(23FB) of the Act brought by the Finance Act, 2007, made the exemption restrictive. By Finance Act, 2012, another amendment was brought to section 10(23FB) of the Act w.e.f. 1st April 2013, and as per which Venture Capital Fund was defined. Sectoral restriction was removed by the amendment to section 10(23FB) by Finance Act, 2012. A cursory glance of the negative list under the Third Schedule of Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 makes it clear that the Venture Capital Undertakings in which the assessee has made investment are not appearing there. Admittedly, all the Venture Capital Undertakings, wherein, the assessee made investments are doing business in real estate sector. Real estate sector has been removed from the negative list under the third Schedule of Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 w.e.f. 5th April 2004. That being the case, assessee is not ineligible from availing exemption under section 10(23FB) of the Act. A careful analysis of the legislative history of section 10(23FB) r/w section 115U of the Act clearly demonstrates that the intention of the legislature from the very inception of the provision was to allow exemption to a Venture Capital Fund in respect of income derived by it from investments made in Venture Capital Undertaking. For that reason alone, the sectoral restrictions imposed in the definition of Venture Capital Undertaking under section 10(23FB) of the Act was subsequently removed by amendment brought by Finance Act, 2012. Thus, for the aforesaid reasons, the observation of the learned Principal Commissioner that the assessee is not eligible for exemption under section 10(23FB) of the Act is untenable. In any case of the matter, the Assessing Officer in course of assessment proceedings has made thorough enquiry with regard to assessee’s claim of exemption under section 10(23FB) of the Act and has passed a well reasoned order while allowing assessee’s claim of exemption under the said provision. Only because the conclusion of the Assessing Officer is not to the liking of the revisional authority or in the opinion of the revisional authority the assessment order on the disputed issue should have been framed in a manner which could have been acceptable to her, for that reason the revisional authority cannot exercise revisional jurisdiction, that too, on the basis of proposal sent by a subordinate officer. Further, the impugned order passed under section 263 of the Act reveals that, though, the learned Principal Commissioner has revised the assessment order holding it to be erroneous and prejudicial to the interest of revenue, however, she has not specified what loss is caused to the revenue if the income is taxed in the hands of the unitholders. Therefore, the assessee is bound to succeed both on the issue of exercise of jurisdiction under section 263 of the Act as well as on the merits of allowability of exemption under section 10(23FB) of the Act. Decided in favor of assessee.

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• 2018 (8) TMI 1045
  Rejection of application of rectification u/s 154 - Doctrine of merger - ex-parte order was passed by the Assessing Officer (AO) - Held that:- We find that the order passed by the Ld. CIT(A) dated 19.03.2012 against which the rectification application was preferred and ultimately dismissed by the order dated 12.05.2016 merged with the order passed by the Co-ordinate Bench on 10.12.2015 and attained finality. In view of that matter, rectification application of the quantum order dated 19.03.2012 itself has lost its force since the very basis of such application i.e. quantum order dated 19.03.2012 has already been tested and decided in appeal. Consequently, the application before us questioning the validity of rejection of the said rectification application rendered infructuous. Appeal dismissed - Decided against the assessee.

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• 2018 (8) TMI 1044
  Levy of penalty u/s 271(1)(c) - appellant has voluntarily offered additional income during the course of assessment proceeding - Held that:- Notice issued by AO u/s.274 r.w.s. 271(1)(c) was on standard performa in which inappropriate words and paragraphs were neither struck off nor deleted. - No satisfaction was recorded in the quantum order as to whether AO intends to initiate penalty proceedings for furnishing of inaccurate particulars of income or concealment of income. Thus, the assessing authority was not sure as to whether he had proceeded on the basis that the assessee had either concealed its income or had furnished inaccurate particulars. It is only when the authority invested with the requisite power is satisfied that either of the two events existed in a particular case that proceedings u/s. 271(1)(c) of the Act are initiated. This pre-requisite should invariably be evident from the notice issued u/s. 274 r.w.s. 271 of the Act, which is the jurisdictional notice, for visiting an assessee with the penal provision. No justification in imposing penalty - Levy of penalty deleted - Decided in favor of assessee.

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• 2018 (8) TMI 1043
  Disallowance u/s 36(l)(iii) - Interest paid on loans taken and advances given to Director - Disallowance u/s 14A r.w.r. 8D - Held that:- Consequently, amount given to director of the company has been treated as advance given for shares. Since, the main object of the assessee is to buy and sell shares, whatever advances given for acquisition of shares is in the nature of normal business advances and, therefore, whatever interest paid on such loans cannot be disallowed u/s 36(1)(iii) - once there is a direct nexus between loan and advance given for purchase of shares, then no interest can be disallowed u/s 36(1)(iii) on the ground that the assessee has diverted interest bearing funds for non business purposes. - Decided in favor of assessee. Regarding disallowance u/s 14A - Held that:- Since, we have already deleted addition made by the AO u/s 36(1)(iii), the ground taken by the assessee u/s 14A r. w. r 8D(2)(i) becomes academic in nature and it does not require any adjudication. Hence, the second ground raised by the assessee is dismissed, as infructuous. Decided partly in favor of assessee.

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• 2018 (8) TMI 1042
  Revision u/s 263 - disallowance u/s 14A r.w.r 8D - The PCIT directed the AO to reframe the assessment after apply the Rule 8D of the Rules as non-applying of Rule 8D, the assessment is both erroneous and prejudicial to the interest of the Revenue. - Held that:- this is not a fit case for revision proceedings under section 263 of the Act, as the disallowance made by AO under section 14A of the Act, was after due application of mind to the facts of the case. The AO has conducted enquiry in regard to expenses relatable to exempt income and assessee has filed a complete note before the AO during the course of assessment proceedings and accordingly, the assessment was framed under section 143(3) of the Act. Wherever, there are two possible views and the AO has taken one of the courses permissible, the PCIT cannot exercised his power under section 263 of the Act to differ with a view of the AO even if there has been loss of revenue. - Revision order quashed - Decided in favor of assessee.

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• 2018 (8) TMI 1041
  Additions u/s 69A - promissory notes issued to various persons - undisclosed source of investments - additions based on statement made during survey - Held that:- In the back ground of fact emanating out of the statement given in the survey proceedings as well as for the reason that nowhere during the course of proceedings before lower authorities as well as before us, the assessee has been able to demonstrate with the help of bills issued for credit sales from the shop which could be linked to the promissory notes found during the course of survey - alleged promissory notes are having no connection with the sundry debtors of the assessee and the amounts indicated in the alleged promissory notes are actually the part of the money lending business of the assessee and this business was consistently carried out by the assessee along with the business of retail trade of GC sheets and PVC pipes. Assessee through his written submission has tried to assert the fact that no addition is called for the alleged promissory notes as the debtors at the close of the year can be reconciled to the amount outstanding at the paying of the year, amount received during the year as well as received after the close of financial year 2002-03 but all these details rather than solving the issue and making it more complicated to arrive on a conclusion. Considering the issue, business income, agriculture income, a portion of the addition so made deleted. - Additions for remaining amount confirmed - Decided partly in favor of assessee. Additions u/s 69A - alleged investment in purchases - assessee does not maintain the regular books of accounts and is filing Income Tax return following the provisions of Sec. 44AF of the Income Tax Act since last so many years. - Held that:- Even though the assessee is not maintaining regular books of accounts but he has submitted the figure of closing stock in the statement of financial affairs. - The amount of stock is much more than sales shown by the assessee - This clearly establishes that the assessee was engaged in making sales out of record which was not disclosed in the total turnover shown in the return of income. - Based on reverse calculation, additions confirmed by the CIT(A) sustained - Decided against the assessee.

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• 2018 (8) TMI 1040
  Deduction u/s 80P(2)(a)(i) - The reasons for denying the benefit of deduction was that the assessee was doing the business of banking, and therefore, in view of insertion of provisions of section 80P(4) of the I.T.Act, the assessee was not entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act. - Held that:- the Assessing Officer was not competent and did not possess the jurisdiction to resolve / decide the issue as to whether the assessee was a 'Primary Agricultural Credit Society' or a 'Cooperative bank', within the meaning assigned to it under the provisions of the Banking Regulation Act and to take a contrary view especially in view of the Explanation provided after the clause (ccvi) of section 5 r.w.s Section 56 of the Banking Regulation Act. CIT(A) is justified in directing the A.O. to grant deduction u/s 80P(2)(a)(i) of the I.T.Act. It is ordered accordingly - Decided against the revenue.

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• 2018 (8) TMI 1039
  Additions u/s 68 - unexplained unsecured loans - AO concluded that the said sum is nothing but assessee’s own money conduited under the garb of unsecured loans into its books of accounts - Held that:- assessee had duly repaid the entire loans - the ld CITA had deleted the addition made u/s 68 of the Act in the hands of the assessee and had also safeguarded the interest of the revenue by suggesting the ld AO to inform the assessing officer of the loan creditors at Mumbai for necessary action at their end. The revenue was not able to bring on record any adverse materials / decisions taken in the hands of the lender companies pursuant to such direction of the ld CITA. CIT(A) had rightly deleted the addition towards loans received from the companies in the same group and accordingly the order of the ld CIT(A) does not call for any interference. Accordingly, the grounds raised by the revenue are dismissed. - Decided against the revenue.

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• Customs

• 2018 (8) TMI 1029
  Classification of imported goods - touch star finger print devices - whether classified under CTH 8471 9000 claiming Nil rate of duty of BCD or under Chapter Heading 8543 7099 and charged BCD at 7.5%? - Held that:- The Head 8543 covers electrical machines and apparatus having individual functions not specified or included elsewhere in the chapter. Therefore, the classification of the Finger Print Reader would be more appropriate under this heading. When the item is prima facie classifiable under two headings in terms of Rule 3(c) of General Rules of Interpretation of Import Tariff, the goods should be classified under the heading which occurs last in numerical orders among those which equally merits consideration. Appeal allowed - decided in favor of Revenue.

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• 2018 (8) TMI 1028
  Amendment in Bills of Entry - the bills of entry showed import of Tri Ethyl Aluminium packed in two Alkyl Tainers viz. TC 80-0017 and TC 80-0040 from the supplier M/s. Chemtura Sales Europe, B.V. Netherland - case of respondent/importer is that the above B/E was filed inadvertently and they wanted to re-export the Alkyl Tainers after the same are made empty - Held that:- There is no mala fide intention on the part of the importer who himself move an application under the provisions of Section 149 of the Customs Act for amendment of B/E. Further the original authority had already allowed the amendment of the B/E under the provision of Section 149 of the Customs Act, 1962 and also extended the benefit of exemption N/N. 104/94 Custom dated 16.03.2004. The Commissioner (A) has rightly observed that there is no revenue loss in the present case and it was only a procedural infraction which was corrected by the Additional Commissioner under Section 149 of the Customs Act, 1962. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1027
  Benefit of N/N. 89/2005- Cus dated 04.10.2005 - Denial of benefit for the reason that at the material time of import clearances of the goods, the DEPB/RAs was neither available nor produced - Held that:- There is a basic error in the grounds of the appeal in as much as the Revenue considered the paras of HBP (2004-2009) whereas the period in the present case involved is 2003-2006 - there is no error in the impugned order rather there is a grave error in the grounds of appeal. Hence, the Revenue’s appeal does not survive only on this ground itself. Also, the period of obtaining the DEPB license is not relevant. The only requirement is that at the time of payment of duty, the DEPB scrip should be produced for debit therein. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1026
  Refund of excess duty paid - duty paid under protest - refund denied on the ground that on the date of filing of bill of entry i.e. 21.01.2013 the rate of customs duty was enhanced from 4% to 6% - effective date of N/N. 1/2013-Cus was issued in 21.01.2013 - Held that:- Though the Notification No. 1/2013-Cus was issued in 21.01.2013 but the same was published in the Official Gazette and offered for sale on 04.02.2013. Therefore, as per Section 25(4)(b) of Customs Act, 1962, since the Notification was published and offered for sale on 04.02.2013, the same will be effective from that date only - Accordingly, on the date of filing bill of entry i.e. 21.01.2013, the old rate of 4% shall be applicable. The appellant was not liable to pay 2% excess duty, hence the same is refundable. However adjudicating authority, since rejected the claim mainly on the issue of effective date of notification, all the documents submitted by the appellant were not verified and also the aspect of unjust enrichment, limitation etc. also need to be examined - appeal allowed by way of remand.

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• 2018 (8) TMI 1025
  Release of goods on payment of redemption fine - tug ‘M.V. Shunter’ - Held that:- The appellants submitted that ‘M.V. Shunter’ are not the owner of the tug; it was imported on re-export basis; no foreign exchange was remitted against the other goods and that the applicants now obliged to immediately handover the said tug to the respectful owners - the request of the appellants can be accepted. The respondents are directed to release the tug on payment of redemption fine of ₹ 8,00,000/-; duty liability of ₹ 1,32,13,016/- may be appropriated from the bank guarantee submitted to the appellants; the appellants shall, however, replenish the bank guarantee to that extent in adherence to this Bench Order dated 07.05.2014. Application allowed in part.

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• Corporate Laws

• 2018 (8) TMI 1032
  Seeking company to register the transfer of 38, 04, 100 shares in favour of the petitioner bank - dispute about the title of the shares - This transfer was on the basis of an alleged pledge. - Company law board (CLB) dismissed the petition. Held that:- Considering the stand taken by the respondent no. 1 and the respondent no. 2 now, it appears that the impugned reasons not to transfer the share in favour of the appellant are that the respondent no. 2 Petrofils has gone in liquidation and that now there is a serious dispute with respect to whether the shares in question were pledged and put as security or not and that now the suit filed by the appellant herein is pending before the competent Court. Considering Section 111A( 2) of the Act visavis the principle of law laid down by the Hon'ble Supreme Court in the aforesaid decisions the shares of company are fully transferable, until and unless company is able to demonstrate sufficient cause to refuse such a transfer. Sufficient cause is not defined and therefore, has to be read in light of the decision of the Hon'ble Supreme Court referred to herein above. As observed herein above, on the basis of objection raised by the transferor, the same can be said to be “sufficient cause” not to transfer such freely transfer shares. In the present case, it is required to be noted that initially when the company refused to transfer the share in the name of appellant transferee in fact no objection at all were there by the respondent Petrofils. The respondent Petrofils lodged the objection only after the decision of the company not to transfer the shares in favour of the appellant transferee. It is also required to be noted that even thereafter also the respondent no. 1 did not refuse to register / transfer of share in the name of appellant on the ground that there are serious dispute with respect to title / pledge. The CLB in the impugned order rejected the appeal / application submitted by the appellant under Section 111A( 2) of the Act on the ground that the suit filed by the plaintiff is pending and there are serious dispute with respect to pledge and therefore, as such CLB gone beyond the reasons even given by the respondent no. 1 company. In view of the above and for the reasons stated above, impugned order made by the learned Company Law Board dated 26. 5. 2006 on Company Petition No. 37 of 2005 refusing to direct the respondent no. 1 company to register the transfer of shares in the name of appellant cannot be said to be sustained and same deserves to be quashed and set aside. Even the conduct / action on the part of the respondent no. 1 in retaining the original share certificate with it also deserves serious consideration. Learned counsel for the respondent no. 1 is not in a position to point out under which provision of law and how the company can retain the original share certificate assuming that company is justified in refusing to register the transfer of shares. Present appeal is allowed. - consequently respondent no. 1 is hereby directed to transfer the shares in question in favour of the appellant.

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• 2018 (8) TMI 1031
  Allegation of oppression and mismanagement by the appellant - second director became ineligible by operation of law - thereafter, appellant acting in furtherance of her obligations under Section 174(2) of the Companies Act, 2013, appointed 3rd respondent on 12.10.2017 as an Additional Director to ensure the smooth functioning of the 1st respondent who’s board consisted of only one director as the office of 2nd respondent became vacany by operation of law. - NCLT directed that, Status Quo ante 12.10.2017 be restored. All decisions taken subsequent to 12.10.2017 and thereafter are hereby set aside. Held that:- If the disqualification of original petitioner whether it was in fact and in law is yet to be decided, so is the question whether the appellant could or could not have legally appointed Respondent No.3 as Additional Director by sending off an email. The case put up by the appellant is that in view of Section 174 when she was the only director left she could appoint another Additional Director. When the company had only two directors, and shareholding was equally divided between the two groups, prima facie, fairness required consultation with the original petitioner to ask if he would nominate a person of his choice. This does not appear to have been done. We are concerned with the interest of the Company because in the CP No.401(ND)/2017 which has been filed by the appellant after the present petition, NCLT has passed the order dated 15.11.2017 (Annexure A filed with counter affidavit, Diary No.2704) and where it is recorded that it was not in dispute that the business of the company under the Respondent No.2 i.e. the present original petitioner had prospered over the years. Keeping in view this provision, prime consideration for NCLT should have been and which is now our consideration because of this appeal is that the interim order needs to concentrate on regulating the conduct of the company’s affairs on such terms and conditions as are just and equitable. Now when we are disposing this appeal, we find the operative order of the impugned order was not correct as it was in the nature of final orders which could not have been passed at the interim stage. We intend to give directions so as to balance the equities between the parties. The impugned order is quashed and in its place it is directed that the 2nd respondent-original petitioner will continue as director alongwith the appellant. The appointment of Respondent No.3 as Additional Director/Director is stayed. The decisions taken by original Respondent No.2 and 3 subsequent to 12.10.2017 are also stayed till the decision of the company petition. We request NCLT to appoint, during the pendency of the company petition, an independent Director to the company on remuneration similar to other directors who will ensure compliances by the Company with provisions of the Companies Act and Rules.

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• 2018 (8) TMI 1030
  Scheme of Arrangement - De-merger of the company - Objection of scheme sanctioned by the NCLT - Protection of the interest of the appellant - It is claimed by the Appellant that it was entitled to notice as Judgement Creditor and as the notice was not issued to the Appellant, the Scheme suffered for suppressing material fact and thus the NCLT could not have passed the orders as it has been done. NCLT then dealt with the approval accorded by the members and the creditors of the companies to the proposed Scheme and affidavits of Regional Director where no objections had been raised and held that there was no reservation to grant sanction to the Scheme. NCLT thus sanctioned the Scheme under Section 230 to 232 of the new Companies Act of 2013 and has given further directions and passed orders as have been reproduced earlier. Held that:- According to us even if the Appellant continues to raise disputes regarding the question whether or not TDS was rightly deducted or to find fault with the commercial property given by Respondents and the buyers Agreement, we are not entering into those aspects as it appears that the Appellant has again claimed issues as mentioned in Para 8 supra, to be pending before the Hon’ble Arbitral Tribunal. They are not issues for us to settle. Here we find substance in the submissions of the learned counsel for Respondents that even if the claims as calculated by the Appellant are kept in view, and even if the Appellant was allowed to participate in the meeting of creditors, the value of his dues, considering the financial statements of the companies, was not such so as to tilt the outcome of the meetings of secured or unsecured creditors of the Companies. There is substance in the argument for the learned counsel for Respondents that in spite of public notice if the Appellant did not attend the meetings or raise the objections, subsequently, he could not be heard. The Appellant cannot have grievance as the project with which Appellant is concerned continues to remain with EMAAR even if some other projects have been merged with MGF. - For such reasons, we do not find any substance in this appeal. The same is rejected. - Decided against the appellant.

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• Insolvency & Bankruptcy

• 2018 (8) TMI 1038
  Corporate Insolvency Resolution Process - Eligible persons u/s 29A for resolution plan - Related partly or connected party. Held that:- ‘Vedanta Resources PLC’, who is a ‘connected person’ of ‘Vedanta Limited’ is not covered by clause (d) of Section 29A of the ‘I&B Code’ - ‘Vedanta Limited’ is eligible and clause (d) of Section 29A of the ‘I&B Code’ is not attracted in its case. Section 33(1) (a) of the ‘U.K Act’ is not similar nor corresponding to clause (d) of Section 29A of the ‘I&B Code’. - ‘Tata Steel UK’, which is the ‘connected person’ of ‘Tata Steel Limited’, does not attract the disability under Section 29A of the ‘I&B Code’ and for the said reason, we also hold that ‘Tata Steel Limited’ is eligible to file the ‘Resolution Plan’. ‘Resolution Plan’ submitted by ‘Tata Steel Limited’ is fair and equitable to all the Creditors, including the ‘Operational Creditors’, therefore, no interference is called for.

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• 2018 (8) TMI 1037
  Corporate insolvency resolution process - Corporate Debtor - locus standi of the person - personal guaranter - Held that:- Adjudicating Authority is only to satisfy that the default has occurred and that the ‘Corporate Debtor’ is entitled to point out that the default has not been occurred in the sense that the debt is not due. No other person has a right to be heard at the stage admission of the application under Section 7 and 9 of the I&B Code including the ‘shareholders’ or the ‘personal guarantor’ etc.. With regard to a ‘personal guarantor’ of ‘Corporate Debtor’, insolvency resolution or bankruptcy can be filed but before the same Adjudicating Authority (National Company Law Tribunal) where application against ‘Corporate Debtor’ is pending in terms of subsection (2) of Section 60. In such case ‘personal guarantor’ may claim his right of hearing, which is filed against ‘personal guarantor’ and he may also address the Adjudicating Authority, if it is ‘corporate insolvency resolution process’ pending against the ‘Corporate Debtor’. The Adjudicating Authority having failed to notice the aforesaid provision - Now it is only the ‘Corporate Debtor’ is to be heard, who is represented through the Board of Directors and the ‘Financial Creditor’ and no other person such as ‘shareholders’ or the ‘personal guarantor’. However, after the order of admission or rejection is passed, it is always open to the aggrieved person to move in appeal.

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• 2018 (8) TMI 1036
  Corporate Insolvency Resolution Process - Order of Moratorium passed without giving opportunity of hearing to the Corporate Debtor - Held that:- we have no other option but to set aside the impugned order dated 18th May, 2018, However, taking into consideration the fact that the parties are ready to settle the dispute, the case is not remanded to the Adjudicating Authority. - As agreed by the parties, the Respondent will now pay a sum of ₹ 1.5 lakhs (Rupees One lakh five thousand only) to the ‘Interim Resolution Professional’, for the period he has functioned and towards the resolution cost. The appeal is allowed with aforesaid observation.

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• 2018 (8) TMI 1035
  Corporate Insolvency process - Corporate Debtor - Held that:- . Taking into consideration the nature of the case and as a prima facie case has been made that the impugned order was passed out without hearing the ‘Corporate Debtor’ and the parties intended to settle the dispute, we allow the learned Senior Counsel for the Appellant to file petition for substitution, as ordered above, and allow the parties to settle the claims. Post the matter ‘for orders’ on 29th June, 2018.

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• 2018 (8) TMI 1034
  Corporate Insolvency Resolution Process - Ld. Resolution Professional submits that the application is filed under Section 31(1) for approval of the Resolution Plan of GMSPL and that the Resolution Plan submitted for approval meets all the requirements of Section 30(2) of the Code read with Regulations 37 and 38 of IBBI (Insolvency Resolution Process for Corporate Persons) Resolution, 2016 (in short, CIRP regulations). Held that:- none of the objections raised by the applicant is sustainable under law. - The Resolution Plan of GMSPL which is approved by the CoC by more than 89.23% voting share is hereby approved under provisions of section 31(1) of the Insolvency & Bankruptcy Code, 2016, which will be binding on the Corporate Debtor, its employees, members, creditors, coordinators and other stakeholders involved in the Resolution Plan. The revival plan of the company in accordance with approved Resolution Plan shall come into force with immediate effect. - The moratorium order passed under Section 14 of the Code shall cease to have effect.

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• 2018 (8) TMI 1033
  Corporate insolvency resolution - The period of 180 days for the CIR process came to an end on 12.02.2018. - An unenviable situation has been created by the conduct of the Members of the CoC. Despite the fact that the Resolution Professional apprised the CoC that the period of 180 days is to expire on 12.02.2018 and sanction be granted for moving an application before the Adjudicating Authority for extension of the period. The CoC has behaved the way we have recorded in the preceding paras. Held that:- A strange phenomena has developed in so far as the functioning of CoC is concerned. - we direct the Resolution Professional to bring this order to the notice of the CoC so that appropriate steps be taken. A copy of this order be sent to the Insolvency and Bankruptcy Board of India for taking suitable action in respect of the conduct of the Members of CoC in the present matter as well as in the day to day functioning of the Members of CoC generally speaking.

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• PMLA

• 2018 (8) TMI 1024
  A complaint under Section 55 of the Wildlife (Protection) Act, 1972 read with Section 200 Cr.P.C., which is a scheduled offence under Money Laundering Act, was filed against the respondents before the court of metropolitan magistrate, Tis Hazari Courts. - With regard to money laundering, a complaint was filed by the petitioner, which is being tried by Special Judge, Patiala House Courts, under the Money Laundering Act. Held that:- The Complaint Case No.123/1/2013 under Sections 55 of the Wildlife (Protection) Act, 1972 is transferred to the Court of Special Judge, Patiala House Court, under the Money Laundering Act before whom the Complaint Case No.04/2015 titled “B.K. Singh, Assistant Director, Directorate of Enforcement versus Surajpal @ Chacha & Others” under the Money Laundering Act is pending. The said Court shall, on receipt of the case, deal with it from the stage at which it is committed.

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• 2018 (8) TMI 1023
  Proceedings under the Prevention of Money Laundering Act, 2002 - Provisional attachment of property - The appellant was not arrayed in the FIR or charge sheeted. She was not involved in schedule offence. No prosecution complaint is pending against her. From the documents placed on record, it is evident that the appellant paid the entire purchase consideration from her personal bank account. She has no family relation whatsoever with any of the respondents named above. Even the purchase consideration part of, directly or indirectly, any transaction(s) with the respondents named above. The appellant has filed confirmation issued by the bankers HSBC confirming the details of the cheques issued in favour of UB Holdings – HDFC Bank Escrow Account and cleared from her account. Held that:- From the entire gamut of the matter, it is evident that the appellant was the claimant in the flat. By making the entire payment, the appellant is become stake-holder as the amount paid by the appellant was not proceed of crime. The appellant is also not involved in the money laundering. The question of link and nexus in the criminal activities directly or indirectly does not arise. As far as the impugned order dated 11.2.2016 is concerned, the said order is not sustainable in law and the facts of the present case. The same is set-aside against the appellant with regard to flat in question. The provisional order is also quashed accordingly by allowing the appeal. However, it is clarified that this tribunal has decided the appeal pertaining to the order passed on the attachment of flat allegedly purchased by the appellant. The finding shall have no bearing with regard to merit of other proceedings pending against the accused parties including extradition proceedings. It is alleged that the flat in question is one of the assets in which the Official Liquidator is appointed, therefore, the appellant, the respondent nos. 3, 5 and 8, unless the final order is passed in her favour, shall not create third party interest directly or indirectly.

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• Service Tax

• 2018 (8) TMI 1021
  Reimbursement of the service tax payable along with the interest - case of Revenue is that since the liability to deposit service tax is on the Petitioner under Section 68 of the Finance Act, 1994 and the price quoted by it was inclusive of all taxes, neither the service tax nor the interest component was liable to be reimbursed. Held that:- It is clear that the intention of the parties, in the present case, was not to pass on the liability of the service tax to the Petitioner. The Petitioner was liable to the extent of the obligations which existed on the Bid date but not beyond that. As service tax was imposed subsequently, the same would be reimbursable. However, the matter does not end here. The fact that for more than 15 years, the Petitioner has not deposited the service tax, but is merely raising a claim for the entire service tax amount and the interest therein, shows that the Petitioner has not complied with the obligation under Section 68 of the Finance Act. Since the entire issue is in the realm of fiction at this point inasmuch as the Petitioner has not deposited the service tax and obviously cannot claim reimbursement of an amount which it has not deposited, no monetary claim is allowable in this matter - petition disposed off.

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• 2018 (8) TMI 1020
  Clearing & Forwarding (C&F) Agent Services - appellant were doing business of consignment agent - whether classified under C&F Agency service or not? - Held that:- Taking into consideration the various clauses as contained in the agreement between the parties, it is held that the appellant falls in the definition of Clearing & Forwarding Agent and therefore they are liable to pay the service tax - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1019
  GTA Services - Exemption/abatement under Notification No.32/2004-ST dt. 03/12/2004 - exemption/abatement was denied to the appellant for the reason that the appellant has not provided the declaration from GTA as observed by the Commissioner(Appeals) - Held that:- The appellant has given the declaration from the GTA for non-availment of CENVAT credits on inputs and input services which is on record and therefore the appellants being service receiver are eligible for CENVAT credit on the service tax paid by them - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1018
  Principles of Natural Justice - CENVAT Credit - input services - Health Insurance/Medical Insurance of Employees - Held that:- Undoubtedly the adjudicating authority has passed a speaking order after following judicial precedents which have not been distinguished by the Commissioner (Appeals) in the impugned order - proper opportunity has not been provided in terms of Natural Justice to the assessee to plead its case which fact has not been disputed by the learned DR and by virtue of this alone, the impugned order becomes a non-speaking order. The matter should be re-examined by the lower appellate authority after giving reasonable opportunity to the appellant - appeal allowed by way of remand.

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• 2018 (8) TMI 1016
  Classification of services - retreading of old tyres used in motor vehicles - whether the services comes under the head Management, Maintenance or Repair Service or not? - Held that:- It will be in the fitness of the things to remand the matter to the appellate authority for the limited purpose of calculating the service tax payable by the respondents while giving due allowance to the cost of materials involved, in the amounts received - Appeal allowed by way of remand.

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• 2018 (8) TMI 1015
  Classification of services - Job-work - M/s. Molex Mafatlal Micron Pvt. Limited would provide raw materials to the appellant and the the job work would be done by them - Case of the department is that since the entire control is of M/s. Molex Mafatlal Micron Pvt. Limited as regards the job work done by the appellant, the activity of appellant is confined to supply of man power and service tax is demanded under the category of Manpower Recruitment and Supply Agency service. Held that:- The appellant has carried out the job work of manufacturing on behalf of the principal under job work arrangements and the payment was also made on the basis of production and not on the basis of number of employees deputed by the appellant. The employees of the appellant were not deputed to the factory of the principal. With these facts, it is held that there is no recruitment or supply of manpower to the principal by the appellant. The job work carried out by the appellant cannot be treated as supply of manpower and hence, the same is not taxable under the head Manpower Recruitment and Supply Agency Service - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1014
  Commercial or industrial construction service - construction work done for Indian Oil Corporation Ltd. for constructing their retail outlet - penalty - Held that:- The appellant was advised by IOCL that the construction of retail outlet was not taxable, because of this reason they have not paid the service tax. Moreover, the assessees have not suppressed the fact as much as the transactions of construction which are declared in their books of accounts. Therefore, the submission of the assessee that they had bonafide belief appears to be reasonable - penalty set aside by invoking section 80. Levy of Service Tax - Service of residential quarters for State Intelligence Bureau and road construction - Held that:- Road construction is clearly excluded from the purview of service tax under the service of industrial or commercial construction - As regard the levy of service tax on residential quarters construction was for State Intelligence Bureau, this construction being for Government and for the residential purpose cannot be treated as Commercial or Industrial construction - demand set aside. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1013
  Valuation of service tax - Clearing and Forwarding Agent services - inclusion of reimbursable expenses for the purposes of calculation of service tax - Held that:- The issue is no longer res integra and stands covered by the judgment of Hon’ble Supreme Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT OF INDIA] wherein it was held by the Apex Court that under Section 67 of the Finance Act 1994 amount which is not calculated for providing taxable service cannot be part of the valuation of service tax and hence Rule 5 of Service Tax Rules 2006 insofar as it provided for inclusion of reimbursable expenses was ultra virus of Section 67 of the Finance Act. The expenses borne by the respondents in the course of rendering of the service and later reimbursed by their principals are not includible for the purposes of calculating the service tax - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1012
  Non-compliance of pre-deposit - stay order - Held that:- Taking note of the amended provisions of Section 35F, the appellant was directed to deposit 7.5% of the confirmed demand within a period of six weeks. It was also observed that in case the appellant does not comply with the said directions, their appeal shall be liable to be dismissed without any further notice. There is no compliance placed on record by the appellant. As such their appeal is required to be dismissed for non-compliance with the provisions of Section 35F of Central Excise Act read with the Stay Order - appeal dismissed.

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• 2018 (8) TMI 1011
  Erection, Commissioning and installation service - appellant had failed to obtain the registration soon after the introduction of levy of service tax on the said service & had not paid the service tax during the period from 10/09/2004 to 15/06/2005 - Held that:- In the present case, the appellants are only engaged in the erection of transmission lines, transformers, circuit breakers and this service was redefined vide DT dt 16/06/2005 but it still does not include erection of transmission line, transformers, circuit breakers. In the present case, the period of dispute is 10/09/2004 to 15/06/2005 whereas erection, commissioning and installation service is leviable to service tax only after 16/06/2005 and therefore the services rendered by the appellant do not fall in the definition of erection, commissioning and installation and consequently, the appellants are not liable to pay the service tax. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 1010
  Whether the service tax attributed to TDS deducted by the service tax recipient is refundable to the service provider? Held that:- The service charge which is billed by the service provider is a gross value in terms of section 67 of the Finance Act, 1994. TDS even if deductible by the service recipient, it is available to the service provider for adjustment against their tax liability - the service tax is chargeable on the gross amount and not on the amount excluding the TDS. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 1009
  Construction of Residential Complexes - joint development of land and building of residential /commercial complexes - It was also alleged that the services rendered by appellants also included maintenance of immovable property service and appellants are also liable to service tax on reverse charge mechanism for the services they have utilized from overseas architects - Whether the construction of residential complex (including the construction of villa is liable for service tax before 1.7.2007? - Whether the maintenance deposit collected is taxable under the maintenance or repair service? - Whether the architect service is liable for service tax under reverse charge mechanism for the period 16.8.2002 to 31.1.2007? Held that:- The appellants were not required to pay any service tax for the construction services before 1.7.2010 and they were also not liable to pay any service tax on the deposits received for management, maintenance or repair services and they are not liable to pay any service tax on reverse charge mechanism basis for the services they have utilized from the overseas architects for the period prior to 18.4.2006 - the appellants are required to pay service tax of ₹ 3,52,102/- on this count for the period 18.4.2006 to 31.1.2007. Refund claim - unjust enrichment - Held that:- The matter needs to go back to the original adjudicating authority to examine the documents that may be submitted by the appellants and to sanction the refund while appropriating the amount of ₹ 3,52,102/- which is held to be payable by the appellants. Appeal allowed by way of remand.

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• 2018 (8) TMI 1008
  Principles of Natural Justice - SCN was not served on the appellant - Held that:- The impugned order has been passed ex parte without affording the opportunity of hearing to the appellant and consequently, the principles of natural justice has been violated - case should be remanded back to the original authority with a direction to pass a fresh de novo order after following the principles of natural justice and after giving an opportunity to the appellant to produce their documents which they intend to rely upon - Appeal allowed by way of remand.

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• 2018 (8) TMI 1007
  Classification of services - transportation of chasis of Commercial Vehicles from the factories of the Tata Motors Ltd. to their Regional sales officers for further sale - whether classified under Business Support Services or otherwise? - Held that:- The services rendered by the appellants are to be classified under ‘BSS’ that too only from 01.05.2006. CENVAT Credit - SHE Cess demanded in excess - Held that:- The issue needs to back to the original adjudicating authority for a proper evaluation of the submissions of the appellant supported by documentary evidence. Penalties - Held that:- Being in the nature of interpretation of statute and appreciation of documentary evidence, Penalties not warranted. Appeal allowed by way of remand.

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• 2018 (8) TMI 1006
  Classification of services - respondents are engaged in construction of doors, windows, partitions, etc., of commercial buildings and residential complexes or units as per the contracts - completion and finishing services in relation to ‘Commercial or Industrial Construction Service’ and ‘Construction of Residential Complex Service’ or otherwise? - Held that:- CBEC vide letter F.No.B1/6/2005-TRU dated 27.7.2005 has clarified that post construction, completion and finishing services are specifically included in the definition of ‘Commercial or Industrial Construction Service’ as the activity undertaken by respondents appears to be before the completion of the complex or buildings. For a final appreciation of the facts of the case and to classify the services rendered by the respondents under appropriate heading and to see the eligibility of abatement claimed by the respondents, it will be fair that the case should go back to the original adjudicating authority who will examine the claim of the respondent afresh in the light of the contracts, agreements, etc., the respondents had with their clients - appeal allowed by way of remand.

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• Central Excise

• 2018 (8) TMI 1005
  CENVAT Credit - duty paying documents - Rule 9(2) of CCR - credit prior to registration of premises - relevant date for issuance of SCN - Scope of SCN - Has the Commissioner traversed beyond the scope of Show Cause Notice? - Only allegations in the SCN was with receipt of non-eligibility of credit on account of availment of credit prior to registration of service centres - Commissioner confirmed the demand on the ground that the stock transfer notes issued by the appellants do not satisfy the requirements of proper documents to take credit Held that:- It is clear that the Learned Commissioner has accepted the contention of the appellants as far as the admissibility of credit availed by them on the inputs available on the date of coming in to effect of the provisions of deemed manufacture. Further, the Learned Commissioner has also observed that there is no time limit prescribed under CENVAT Credit Rules for availment of Credit The authority further proceeded to decide the eligibility on the factors that were not the part of Show Cause Notice. To this extent, the L Commissioner has certainly traversed beyond the scope of the SCN - the impugned order is not maintainable. Whether the appellants are entitled for the credit they have availed? - Held that:- The appellants being a well-established multinational have an elaborate and fool proof method of accounting goods. All the service centres receive parts only from CWH. It is not the case of the Department that parts are dispatched or sold from CWH to places other than service centres or that Service Centres procure parts from other sources. In such a case, it is incomprehensible as to how some parts could not be held to be not correlated to be duty paid. Having dealt the issue from the issue of substantial compliance, having held that the registration itself is a procedural requirement and stock transfer invoice a duty paying document the learned Commissioner could have got the issue examined in totality from CWH and further transfer to various service centres before denying the credit - the issue requires to go to the jurisdictional authority who shall allow the credit on verifying the records at CWH and transfer to various service centres in totality, within 3 months of submission of records and evidence to that effect by the appellants - appeal allowed by way of remand. Whether the appellants’ case is covered under the provisions of Section 11A (2B) of the Central Excise Act, 1944? - Held that:- The audit note in fact has raised some issues relating to irregular availment of CENVAT Credit. The only condition under which the provision of this section could be denied to the appellants was non-payment of duty by reason of fraud collusion suppression of fact, wilful misstatement etc. These ingredients were not established either in the SCN or the impugned order. Moreover, the appellants appear to have submitted that consequent upon the change in legal position, they examined as to whether the activity undertaken by them at the CWH and Service Centres amounted to manufacture; simultaneously, the mammoth task of identifying the activity undertaken in respect of each of the 5-6000 number of parts was taken up and could be completed only by August 2006 - it was not open to the department to go beyond the proposition in the Audit Note. Appeal allowed by way of remand.

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• 2018 (8) TMI 1004
  SSI Exemption - clubbing of clearances - Held that:- In the present case the Commissioner (Appeals) has not given any findings on merit rather the Commissioner has relied upon the earlier Order-in-Original No. 8/2006 dated 05.05.2006 whereby the Commissioner confirmed the demand by holding that M/s. Max Rubber Company has no independent existence - Further the said Order-in-Original No. 8/2006 dated 05.05.2006 on the basis of which the present cases were decided has already been set aside by the Tribunal vide its Final Order Nos. 561 - 563/2010 dated 03.02.2010 and remanded the matter back to the adjudicating authority. Matter remanded back to the Commissioner (Appeals) for de novo adjudication after following the principles of natural justice - appeal allowed by way of remand.

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• 2018 (8) TMI 1003
  Enhancement of penalty u/s 11AC - cross-examination of witnesses - stentering process amounting to manufacture or not? - Held that:- The appellant first time raised the issue regarding examination of the witnesses whose statements were relied upon by the adjudicating authority. Since this issue has not been considered at all by any of the lower authorities, the matter needs to be sent back on this aspect to the adjudicating authority on the issue whether the stentering process is amount to manufacture or otherwise - appeal allowed by way of remand.

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• 2018 (8) TMI 1002
  Annual capacity of production - job-work - demand was set aside on the ground that the assessee is already working under Section 3A of Central Excise Act, 1944 - Held that:- This Bench of the Tribunal in the case of CCE, Bangalore Vs. Vijaya Steels Ltd. [2009 (5) TMI 847 - CESTAT BANGALORE] has dismissed the appeal of the Revenue by relying upon the decision of the Punjab & Haryana High Court in the case of CCE, Chandigarh Vs. Dhiman Iron and Steel Industries [2006 (11) TMI 226 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH], where it was held that a special scheme for levy of excise duty is laid down therein notwithstanding scheme of Section 3 of the Act Annual capacity having been duly determined and the assessee having paid duty according to the said capacity, there is no provision by which a further duty can be demanded on the ground that assessee had done job work, which was nothing else but use of utilization of part of its manufacturing capacity. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 1001
  Penalty u/s 11AC - suppression of facts - goods manufactured by 100% EOU and cleared to DTA - whether the provisions of Customs Act or Central Excise Act for Valuation will apply? - Held that:- The demand was raised invoking the extended period. The ingredient for invoking the extended period as well as for penalty under Section 11AC is same. It is also fact that the appellant have not disclosed that they have not declared to the department that the goods were cleared to the related person, therefore, there is a suppression of fact accordingly, the penalty under Section 11AC is maintainable. Penalty reduced to 25% subject to condition that the amount of duty confirmed, interest and 25% penalty stand paid within one month from the date of receipt of this order - appeal allowed in part.

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• 2018 (8) TMI 1000
  Re-quantification of demand for the normal period after adjusting 8% amount paid by the appellant in terms of Rule 6 of Cenvat Credit Rules, 2004 - Held that:- At the time of passing the de novo order the appellant could not submit the correct data as regard payment of 8%. In this regard they obtained a certificate from the superintendent which is after the passing of the order. Therefore, the Commissioner had no occasion to deal with the said data. The matter should be reconsidered by the Ld. Commissioner by taking into account that certificate issued by the Range Superintendent - appeal allowed by way of remand.

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• 2018 (8) TMI 999
  Solar street lights - Benefit of N/N. 6/2006 - Held that:- Tribunal’s decision in the case of Bharat Electricals v. CCE, Bangalore [2006 (6) TMI 429 - CESTAT, BANGALORE] relied upon, wherein the Tribunal has held that solar street lights are entitled to exemption in terms of the said Notification - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 998
  Whether interest and penalty are required to be paid by the appellants on such Cenvat credit which was reversed before utilization? Held that:- The ruling by Hon’ble Allahabad High Court in the case of Commissioner of Customs & Central Excise, Meerut-II Vs M/s Rana Sugar Ltd. [2010 (3) TMI 412 - ALLAHABAD HIGH COURT] is squarely applicable in the facts of the present case, where it was held that if CENVAT credit is reversed before utilization then there is no need for payment of interest on availment of such Cenvat credit and if the show cause notice is issued after reversal of Cenvat credit then penalty is not to be imposed. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 997
  CENVAT Credit - credit availed on certain Capital goods, which were subsequently found defective - demand alongwith interest and penalty - Held that:- Undisputedly the credit availed by them remained a paper entry and same was not utilized till the date of reversal - Hon’ble Karnataka High Court in the case of Commissioner of Central Excise & Service Tax, LTU, Bangalore vs. Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] has held that in such a scenario, no interest liability would arise against the assessee where the wrongfully taken credit stand reversed without utilization. Penalty - Held that:- There could be a bona fide belief on the part of the assessee not to reverse the credit. Otherwise also the said credit availed by them was not being utilized, thus leading credence to the appellant’s believe that there was no mala fide as they were having sufficient credit balance in their records - penalty set aside. Demand is confirmed but penalty and interest are set aside - appeal allowed in part.

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• CST, VAT & Sales Tax

• 2018 (8) TMI 996
  Classification of goods - colour boxes, insulating tape and certain specified series of products of Dr. Fixit Series used in building activity for water proofing, binding agent & bonding material - Held that:- There is no merit in the present Special Leave Petition - SLP dismissed.

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• 2018 (8) TMI 995
  Entitlement to Interest on refund amount - relevant date for calculation of interest - pre-deposit of amount - Held that:- Pre-deposit sums which the assessee is compelled to pay to seek recourse to an appellate remedy, do not necessarily bear the stamp or character of tax, especially when it succeeds on the particular plea. That being the case, the insistence upon a procedural step, i.e. filing of a form which is purely for the purpose of administrative convenience cannot in any manner fix the period or periods of limitation when the amounts became due on the question of interest. The fact that the amounts were due and payable from the date the appeal was allowed is not in dispute. The postponement of the period from when interest became calculable is incomprehensive and illogical - the petitioner is entitled to interest calculable from the date when its appeal was allowed by this Court by order dated 14.05.2015. Petition allowed.

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• Wealth tax

• 2018 (8) TMI 994
  Valuation of net wealth - unaccounted wealth on account of seized hundis - ITAT reduced the value of seized hundies by 25% while rejecting the appellant's contention that, it should be valued at ₹ 6,20,000/- - Held that:- the value of asset for the purposes of this Act is to be determined strictly in terms of the provisions of this Section and not by any other mode. Rule 14 of Schedule-III of the Wealth Tax Act provides that the value of any asset in its books should be taken as the value for wealth tax purposes. In the case in hand, the Wealth Tax Officer, CWT (Appeals), as well as, the Tribunal has not done the aforesaid exercise, but instead adopted value of such inchoate instruments as found in the proceedings under the Income-Tax Act. In our view, the mode adopted to determine the value of the Bills of Exchange/hundis by the authorities under the Wealth Tax Act, as well as, by the Tribunal was contrary to the provisions of Section 7 of the Wealth-Tax Act. - Decided in favor of assessee.

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• Indian Laws

• 2018 (8) TMI 1022
  Issuance of Cheque in the name of the mother - Section 138 of the Negotiable Instruments Act, 1881 - rebutting of presumption - validity of criminal complaint - Held that:- Ordinarily, the opportunity to rebut the presumption raised by Section 139 of the N.I. Act would be exercised and availed of by the accused at the trial by attempting to discredit the evidence of the complainant or by leading some positive evidence in rebuttal. In the present case, however, even going by the averments in the criminal complaint, it is clear from the word go that there was no liability due to the complainant from the petitioner, i.e., the person who has been summoned as an accused. The complainant had no arrangement with the petitioner. She had not rendered any service to him. It is her sons who were engaged by him and the payment was due on account of professional services rendered by them to the petitioner. The issuance of the cheque in the name of the mother itself is questionable. Be that as it may, since the case presented by the complainant itself shows there being no debt or other liability, the prosecution on the criminal complaint aforesaid against the petitioner is impermissible - Petition allowed.

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