TMI Tax Updates - e-Newsletter
September 11, 2017

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• GST:

  Recommendations made by the GST Council in the 21st meeting at Hyderabad on 9th September, 2017
  Visit to Get Source

  ---

• Income Tax:

  Nature of expenditure - expenditure incurred in protecting the land from the acquisition - Land was held as stock-in-trade of the Assessee - the expenditure incurred by the Assessee on account of contribution to the Shelter Fund should be allowed as business expenditure - HC
  Visit to Get Source

  ---

• Income Tax:

  Claim of unabsorbed business loss, depreciation of amalgamated company - Order passed by BIFR u/s 32(2) of SICA r.w.s.72A(2)(ii) of IT Act - ITAT did not commit an error in confirming the disallowance of depreciation amounting in excess of the amount allowed by the BIFR - HC
  Visit to Get Source

  ---

• Income Tax:

  The income which has been computed by the AO after making certain additions/disallowances has to be taken as eligible for deduction under section 80P(2)(a)(i) if it complies the conditions stipulated therein.
  Visit to Get Source

  ---

• Service Tax:

  Penalty u/s 77 - non-filing of returns - there is no demand for service tax on the appellant, despite the fact that he had obtained service tax registration certificate from the Department and was discharging the service tax liability up to March, 2007 - No penalty
  Visit to Get Source

  ---

• Central Excise:

  Collection of duty / tax during survey or search - all concerned in CBEC are advised to strictly follow the legal provisions and instructions/directions issued from time to time by the Board and not to deviate from the laid down procedure.
  Visit to Get Source

  ---

• Central Excise:

  Recovery of duty u/s 11D - sugar incentive scheme - appellant had collected the amount of ₹ 85/- per quintal, however, had deposited ₹ 52/- per quintal with the Central Government - Section 11-D of the Central Excise and Salt Act, 1944, which was introduced later in point of time, the said provision will prevail over the provisions of the Essential Commodities Act, 1955 - HC
  Visit to Get Source

  ---

Articles

• PART-II Open Letter to the Honourable Prime Minster of India My Experience with GSTN-  Workable suggestion to Make GSTN a success
• INTERIM RESOLUTION PROFESSIONAL
• How to resolve errors made in GSTR 3B?

Notifications

• GST - States

• FA-3-59/2017-1-V-(99) - dated 5-9-2017 - Madhya Pradesh SGST
  From GSTR-3B for the month of July,2017 by the due date.

  ---

• FA-3-57/2017-1-V-(97) - dated 30-8-2017 - Madhya Pradesh SGST
  The Madhya Pradesh Goods and Service Tax (Amendment) Rule, 2017

  ---

• FA-3-33/2017-1-V-(95) - dated 23-8-2017 - Madhya Pradesh SGST
  Amendment in the Notification No. F.A-3-33-2017-1-V (42) dated the 29th June, 2017 - Notification relating to Tractors Parts.

  ---

• FA-3-47/2017-1-V-(93) - dated 22-8-2017 - Madhya Pradesh SGST
  Amendments in the Notification No. FA-3-47-2017-1-V (59), dated the 30th June, 2017

  ---

• FA-3-43/2017-1-V-(91) - dated 22-8-2017 - Madhya Pradesh SGST
  amendments in the Notification No. FA-3-43-2017-1-V (55), dated the 30th June 2017 - relating to electronic commerce operator.

  ---

• FA-3-42/2017-1-V-(92) - dated 22-8-2017 - Madhya Pradesh SGST
  Amendments in the Notification No. FA-3-42-2017-1-V (53), dated the 30th June 2017

  ---

• FA-3-40/2017-1-V-(94) - dated 22-8-2017 - Madhya Pradesh SGST
  Amendments in the notification No. F-A-3-40-2017-1-V(89), dated 17th August, 2017

  ---

• FA-3-32/2017-1-V-(90) - dated 22-8-2017 - Madhya Pradesh SGST
  Amendments in the Notification No. FA-3-32-2017/1/V/(41) dated the 29th June, 2017

  ---

• JC(HQ)-1/GST/2017/Noti/18/ADM-8 - dated 21-8-2017 - Maharashtra SGST
  Amendments in the Notification No. 23/2017 State Tax, dated the 18th August 2017.

  ---

• SEZ

• S.O. 2976(E) - dated 4-9-2017 - SEZ
  Central Government notifies an additional area of 64.4823 hectares at Village-Matoda, Sari and Chachanvadi Vasna on National Highway 8-A, Taluk-Sanand District- Ahmedabad , in the State of Gujarat

  ---

News

• Recommendations made by the GST Council in the 21st meeting at Hyderabad on 9th September, 2017

  ---

• GST Council meet begins in Hyderabad

  ---

• CONCEPT & STATUS (Updated as on 01st September 2017)

  ---

Case Laws:

• Income Tax

• 2017 (9) TMI 490
  Claim of unabsorbed business loss, depreciation of amalgamated company - Order passed by BIFR u/s 32(2) of SICA r.w.s.72A(2)(ii) of IT Act - as per the order of BIFR, assessee eligible to carry forward business loss & unabsorbed depreciation of amalgamating company maximum of ₹ 75 lakhs - AO disallowed depreciation claim of ₹ 27,09,294/- for AY 1992-93 Tribunal hold provision u/s 72A of the IT Act shall override the provisions u/s 32(2) and 43(6) of the SICA Act. - Held That:- ITAT did not commit an error in confirming the disallowance of depreciation amounting to ₹ 27,09,294/­ in respect of the assets of M/s. Modern Stramit (I) Ltd., a Company amalgamated with the appellant-­Company, in terms of the order dated 6-­5-­1992 passed by BIFR. - Decided against the assessee.

  ---

• 2017 (9) TMI 489
  Nature of expenditure - expenditure incurred in protecting the land from the acquisition - Land was held as stock-in-trade of the Assessee - revenue or capital expenditure - Held That:- the fact that the Assessee is holding land in question as stock in trade is not in dispute. The expenditure incurred by it for protecting the land from acquisition in the circumstances should be held to be revenue expenditure. - the Court finds no error committed by the ITAT in coming to the conclusion that the expenditure incurred by the Assessee on account of contribution to the Shelter Fund should be allowed as business expenditure. - Decided in favor of assessee.

  ---

• 2017 (9) TMI 488
  Levy of penalty u/s 271(1)(c) - income surrendered during Survey - receipt of cash by way of donations - Held That:- Tribunal is of view that penalty u/c 271(1)(c) is imposed only when there is concealment of income and furnishing inaccurate particulars of income.But in present case assessee has filed full particulars of income in return u/s 139 and within time and also paid tax. - Decision of the Supreme Court in the case of CIT Ahmedabad Vs. Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT] followed, wherein it has been held that if no information given in the return was found to be incorrect or inaccurate and the full particulars are disclosed, the assessee cannot be held guilty for the purposes of most punishment under Section 271(1)(c) of the Act. - Decided in favor of assessee.

  ---

• 2017 (9) TMI 487
  Reassessment u/s 147 - Business of export of Back Office and computer software - claimed deduction u/s 10B - AO disallowing 100% dedcution u/s 10B stating that assessee had not fulfilled the requirement of being a 100% export oriented undertaking - Held That:- the assessee's claim of deduction under section 10B of the Act was examined minutely by the Assessing Officer. The assessee pointed out that it enjoyed certification under STPI. If the Assessing Officer was of the opinion that such certification was inadequate and did not substitute for the requirement of approval by the Board appointed by the Government of India, under the Industries (Development and Regulation) Act, 1961, it was always open for the Assessing Officer to examine this issue further or to reject the assessee's claim in its entirety. He however, accepted the claim accepting the assessee's certification as sufficient compliance with the statutory requirements. There was no failure on part of the assessee to disclose necessary facts. Reassessment order set aside - Decided in favor of assessee.

  ---

• 2017 (9) TMI 486
  Payment for technical knowhow - nature of expenditure - revenue expenditure under Section 37(1) or capital expenditure under Section 35AB - Held that:- The acquisition of technical knowhow is by way of license for manufacture of the raw material required for the parent business of steel production. The raw material produced is required to be used for the finished product of which the main business of manufacture of steel is undertaken by the respondent. In our view, this aspect has been dealt with by the Division Bench of the Gujarat High Court in the decision in case of Commissioner of Income Tax vrs. Suhrid Giegy Ltd., reported in (1995 (12) TMI 25 - GUJARAT High Court) It is apparent that all factors taken into consideration clearly indicate that it is a revenue expenditure and we do not find any error is committed by the Tribunal in holding that it is covered by Section 37(1) of the Income Tax Act. The substantial questions of law are answered accordingly. The appeals are, therefore, dismissed.

  ---

• 2017 (9) TMI 485
  Disallallowance of expenditure u/s 14A - Assessee failed to prove that the investments was made out of interest free funds only - AO disallowed interest expense on basis substantial borrowings taken for investments - CIT(A) confirmed deicison of AO - Formula for calculating interest to be disallowed for the purpose of section 14A given under clause(ii) of subrule( 2) of Rule 8D- Held that:- Amount of interest expenditure would be the interest paid by the assessee on the borrowings minus the taxable interest earned during the FY for purpose of disallowance u/s14A.- Decided in favor of assessee.

  ---

• 2017 (9) TMI 484
  Levy of penalty u/s 271(1)(c) - deduction u/s 80HHB - profits derived from business of execution of foreign projects - Held That:- mere making of a claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding the income of Assessee. - assessee is not guilty of deliberate furnishing of inaccurate particulars / concealment of income and is not liable to be mulcted with penalty under Section 271(1)(c) of IT Act.- Decided in favor of assessee.

  ---

• 2017 (9) TMI 483
  Reopening of assessment on the basis of complaint - seeking quashing of notice u/s 148 - - Erstwhile auditor of SHPL addressing false and malicious communications about petitioners for several years - reasons to believe - Held That:- Indeed, the reasons to believe appear to be a mere reproduction of the complaint itself. The Revenue failed to show the nexus between the material, if any, and the formation of belief. Importantly, the disposal of the objections did not address any of the issues raised by the Petitioner. As per report of District Valuation Officer (DVO) no construction or renovation is incurred. - CIT(A) allowed appeal of assessee. Here again, the purpose of providing a forum to the Petitioners to object to the reopening of the assessment and dealing the objections by a reasoned order, has been rendered meaningless by the AO. In all three matters, the fact of the proceedings having been initiated at the instance of Respondent No. 2 who himself is facing disciplinary proceedings, has not been addressed. - Writ petition are allowed. - Notice quashed - Decided in favor of assessee.

  ---

• 2017 (9) TMI 482
  Stay of collection of taxes - Held That:- It would be appropriate to secure the principal amount of the claim of the Department without the necessity of recourse to any coercive measures to the extent possible. - The order of collection of tax for the assessment years 2010-2013 will remain stayed unconditionally for the period of two weeks from date. - the order of collection of tax for the assessment years 2010-2013 will remain stayed unconditionally for the period of two weeks from date. In the event, the petitioner deposit a sum of ₹ 5 crores 10 lakhs with the Revenue Authorities within the period of two weeks from date, the stay will continue until disposal of the appeal pending before the Tribunal. The Tribunal is requested to take up the appeal as expeditiously as possible. The Tribunal is also requested not to grant any unnecessary adjournment to any of the parties to the appeal.

  ---

• 2017 (9) TMI 481
  Disallowing deduction u/s 80IB - Manufacturing activity or not - converting raw 24 carat gold into 22 carat gold ornaments - Held That:- the essential character has clearly undergone a change and this is the determinative factor. Gold in the raw form cannot be classified as jewellery or as an ornament .Therefore benefit claimed u/s 80IB cannot be denied. - ITAT is correct in allowing the same. - Decided in favor of assessee and against revenue.

  ---

• 2017 (9) TMI 480
  Block assessment - Reliance upon the self incriminating statement during the Search u/s 132 - Held that:- The Tribunal by the impugned order dated 28th November, 2003, on bare reading of Section 132(4) of the Act, dismissed the Revenue's appeal by upholding that the statement/letter dated 15th January, 1998 was not made during the course of search but much after the search was completed on 4th December, 1997. Consequently, it held that the letter dated 15th January, 1998 would not have evidentiary value of a statement under Section 132(4) of the Act. Thus, dismissed the Revenue's appeal. - Order of tribunal sustained - Decided against the revenue. Block assessment - earlier assessee filed a declaration under the Voluntary Disclosure of Income Scheme, 1997 (VDIS-1997) declaring an undisclosed income ₹ 1.20 crores- Assessee did not deposit tax required to be deposited before the 31st March, 1998, resulting in the rejection of declaration under the VDIS-1997 - filed return of income under Chapter XIV-B of the Act declaring undisclosed income for the Block Period at ₹ 55 lakhs - AO rejected books of accounts and on the basis of the declaration made under the VDIS 1997 sought to tax the Assessee - Held That:- Tribunal has reighly dismissed the Revenue's appeal inter-alia holding that under the provisions of Chapter XIV(B) of the Act, the undisclosed income for the Block Period has to be completed on the basis of material found in the course of the search. This declaration made by the respondent - Assessee under the VDIS scheme is not material discovered during the course of search as it was made after the search. Therefore, the same can not form the basis of assessment under Chapter XIV(B) of the Act. - Decision of this Court in CIT v. Vinod Danchand Ghodawat [2000 (6) TMI 13 - BOMBAY High Court] followed. - Decided against the revenue.

  ---

• 2017 (9) TMI 479
  Determination of Capital Gains - Company under liquidation - The grievance is that the learned Judge has held that the Company Court cannot determine the liabilities under the Income Tax Act. The learned Judge for instance observed that the said satisfaction of the statutory liability would arise once the proceedings before the competent authority are determined and the Company Court cannot take upon itself the role of the competent authorities under a statute to establish a liability which has its genesis in the process initiated by the another authority. Held That:- The views are by no means conclusive. They are only tentative and rightly so as the order is passed only at the interim stage. The proceedings before the Company Court and before the authorities are pending. They may proceed. The issue whether the findings in the assessment proceedings bind the Company Court or the Official Liquidator or not can be decided subsequently. If the answer is in the negative the assessment order as finally determined would bind the Official Liquidator. If not the Company Court or the Official Liquidator, as the case may be, may go into the issue. If the Company is for any reason not wound up the parties would be left to their remedies in accordance with law.proceedings. All the appeals are accordingly disposed of. All the contentions of the parties including as to whether it is open to the Company Court/Liquidator to question the findings of the authorities under the Income Tax Act are kept open.

  ---

• 2017 (9) TMI 478
  Taxability of Fees for Technical Services (FTS)/Royalty - Indian - Netherland DTAA - applicability of Article 12 of the tax treaty - income accrued to the assessee from India - consultancy fees received - services rendered outside India - Held that:- No taxable income was received by the assessee during the year under appeal. It is a fact that services were rendered outside India to a nonresident i. e. ZMPC and that same were utilised in manufacturing the cranes outside India i. e. in China. In the circumstances consultancy fees received by the assessee from the Chinese entity for rendering services outside India cannot be deemed to accrue or arise in India, as per the provisions of section 5 read with section 9 of the Act. Consequently the same would not be taxable in India. India has signed the DD AA with the Netherlands and taxability of consultancy services had to be examined first as per the provisions of the tax treaty. In the case under consideration the AO, without referring to the treaty, had applied the provisions of the Act. In our opinion, the stand of the AO/FAA cannot be endorsed, as the provisions of tax-treaties have to be given preference over the provisions of the Act. The consultancy was rendered outside India and even if same has to be taxed it would be chargeable to tax in that country and not in India. The AO/FAA has failed to prove that services rendered by the assessee to ZMPC were in the nature of Royalty. Nothing has been brought on record to prove that the assessee had made available any technical knowledge, experience, skill to Indian company. We also agree with the argument of the AR that in the case under appeal, consultancy fees were rendered to a person who was nonresident i. e. to ZMPC. As per the provisions of Article 12 of the treaty, FTS arising in India and paid to a tax-resident of the Netherlands can be taxed in India. In the case under appeal the payment was paid to a Chinese company. Considering the above, we are of the opinion that consultancy fees received by the assessee from ZMPC cannot be held to be FTS and that same is not chargeable to tax in India. So, reversing the order of the FAA we decide the effective ground of appeal in favour of the assessee.

  ---

• 2017 (9) TMI 477
  Reopening of assessment - change of opinion - entitled to benefit of the provisions of section 11 - Held that:- The assessee had renewed certain earlier fixed deposit and same had no connection with the compensation received on sale of plot of land. After considering the above submissions of the assessee and after deliberating upon the documents furnished by it, the AO had passed scrutiny assessment. He had formed an informed opinion that it was entitled to benefit of the provisions of section 11 of the Act and that it had made investment on sale of one kind of assets in other assets within the stipulated time and in prescribed manner. Later on, he issued a notice u/s. 148 of the Act and has reappraised the same facts and has reached on a different conclusion. In our opinion, it is a clear case of change of opinion. Not only this, there is no failure on part of the assessee to disclose fully and truly the material facts for the year under appeal, as it had filed all the details of the impugned transaction. Considering the peculiar facts and circumstances of the case, we are of the opinion that there was no failure on part of the assessee to disclose fully and truly the material facts, so, the reassessment proceedings, initiated by the AO in its case under appeal, are not valid. Reversing the order of the FAA, we decide the first effective ground of appeal in favour of the assessee. Reassessment proceedings were invalid, so, we are not deciding the other issues raised by the assessee. - Decided in favour of the assessee.

  ---

• 2017 (9) TMI 476
  Reopening of assessment - payment of on money to the seller - cogent reasons to believe - non application of independent mind by AO - addition on bases of suspicion - Held that:- In the absence of any evidence or material on record as to how the assessee is connected with the alleged seller, it is difficult to believe that assessee paid any on money to the seller. It therefore, appears that the A.O. without applying his mind to the information provided to him reopened the assessment merely on suspicion. Ld. CIT(A) on proper appreciation of material on record, correctly quashed the reopening of the assessment in the matter. It may also be noted here that no evidence has been brought on record as to whether assessee had paid any on money to the seller. The seized paper have not been found and recovered from the possession of the assessee. These are computerised sheets and have not been signed by the assessee. The seized papers were not in the name of the assessee. Therefore, how these are admissible against the assessee in evidence has not been explained by the Revenue department. The Ld. CIT(A) therefore, correctly held that even addition on merit is wholly unjustified. - Decided in favour of assessee.

  ---

• 2017 (9) TMI 475
  Levy of penalty under section 271(1)(c) - wrongly deducted tax on service tax - higher TDS is shown in 26AS - whether gross receipts as per 26AS which refers to TDS claim, can be made the basis for an addition - Held that:- The assessee filed reply before A.O. at the penalty stage explaining that his contractee M/s. Pioneer Urban Land & Infrastructure Ltd., had erroneously deducted TDS on the gross billing amount including service tax on the total amount of ₹ 9,65,75,290. The reconciliation and details of the same are filed which shows the billing amount of ₹ 9,65,75,290, work done at ₹ 9,27,53,831, service tax was of ₹ 38,21,460 and the total comes to ₹ 9,65,75,290, on which, TDS @ 2% has been deducted in a sum of ₹ 19,31,506 and after other deductions, the net amount comes to ₹ 8,61,43,082. It, therefore, clearly proved that assessee filed reply before A.O. at the penalty stage supported by the reconciliation certificate. The assessee, thus, has been able to explained that his contractee M/s. Pioneer Urban Land & Infrastructure Ltd., had erroneously deducted TDS on the gross billing amount including service tax. This was the reason, when higher TDS is shown in 26AS and the A.O. had taken item of service tax to the higher receipts. Thus, the assessee has explained the above difference in the receipts as per the details submitted before A.O./CIT(A) and the details noted in 26AS. The assessee also explained that since service tax is not income of the assessee, which is also not disputed by the Ld. D.R, therefore, it would not form part of total receipts of the assessee and has to be given treatment separately in the Balance Sheet. It is well settled law that quantum and penalty proceedings are independent and distinct proceedings. Even if the addition is agreed by the assessee, if the assessee is able to explain the addition, then, penalty may not be leviable in the facts and circumstances of the case. The above facts clearly indicate that the explanation of assessee at the penalty stage was factually correct based on the material on record and assessee successfully explained the addition so made which is the basis for levy of the penalty. Since the difference is reconciled at the penalty stage and claim of assessee have not been doubted or rejected, therefore, Ld. CIT(A) was not justified in confirming the levy of penalty merely because assessee conceded for addition of the amount in question. - Decided in favour of assessee.

  ---

• 2017 (9) TMI 474
  MAT computation - Addition on account of provisions for gratuity and provisions of leave encashment made u/s 115JB to the book profit - Held that:- CIT(A) has deleted the above addition because of the reason that the provision of leave encashment as well as the provision of the gratuity are meant on the actuarial valuation as per the accounting standard 15 of Ministry of Corporate Affairs and both the liabilities are ascertained liability and therefore they cannot be stated to be an understated liability. In view of this we do not find any infirmity in the order of the Ld. CIT(A) in deleting the about disallowance. Adjustment on account of accumulated losses on account of profit of sick industrial company - Held that:- Clause (vii) of explanation 1 of section hundred and 15 JB of the income tax act provides that the amount of profits of sick industrial company for the assessment year commencing on and from the assessment year relevant to the previous year in which the said company has become sick industrial company under subsection (1) of section 17 of the sick industrial companies (special provisions) act, 1985 and ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses was required to be reduced from the profit under section hundred and 115JB of the Act. Therefore, apparently, if the assessee’s net worth has become positive during the year then assessee is eligible for the deduction of the profits of sick industrial companies which Ld. CIT(A) is granted. However, the Ld. CIT(A) has noted that there are certain errors in noting of the figures of the profit, net worth of the assessee company. Therefore, in the interest of Justice we set aside the issue to the file of AO to verify the figures that when the net worth of the company has become positive and accordingly, if it has become so during the year, then grant the deduction of the above amount. Set aside issue to the file of the AO with a direction to verify the computation of net worth.

  ---

• 2017 (9) TMI 473
  Determining any unexplained jewellery in the hands of the appellant - circular no. 1916 - non-granting of relief as per CBDT Circular in respect of the jewellery belonging to the married female - Held that:- CIT (A) has not given any reason for denying the benefit/set off to the extent of 250 gms in case of Aditi Mishra and Aanchal Mishra (minor grand-daughters) and partly allowing the benefit to the extent of 250 gms to Smt. Roshni Mishra. We find that the case of the assessee is covered by the CBDT Circular No. 1916 dated 11.05.1994 whereby the CBDT had issued guidelines stating that “ In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms per married lady, 250 gms per unmarried lady and 100 gms per male member of the family need not be seized.” Therefore, following the above guidelines and also judgment of Hon’ble Jurisdictional High Court in the case of Satya Narain Patni (2014 (5) TMI 1002 - RAJASTHAN HIGH COURT) we direct the AO to allow gold jewellery weighing 250 gms [(500gms – 250 gms allowed by CIT (A)] in the hands of Roshni Mishra (daughter-in-law), 250 gms. each in the hands of Aditi Mishra and Aanchal Mishra (minor grand-daughter) - Decided in favour of assessee. Disallowance of interest expense - Held that:- The assessee was having sufficient own funds as reflected in the capital account of the assessee as on 31.03.2008 so as to make investment for purchase of shares of other companies and generate exempt income. See CIT vs. Vijay Solvex Ltd.[2014 (12) TMI 1191 - RAJASTHAN HIGH COURT]- Decided in favour of assessee.

  ---

• 2017 (9) TMI 472
  Deduction u/s 80P on the enhanced profit - “gross total income” - Held that:- The income which has been computed by the AO after making certain additions/disallowances has to be taken as eligible for deduction under section 80P(2)(a)(i) if it complies the conditions stipulated therein. Somewhat similar issue has been decided in the case of M/s. S.B. Builders & Developers vs. Income Tax Officer[2010 (5) TMI 686 - ITAT MUMBAI] wherein decided similar issue in the context of deduction under section 80IB(10) in respect of profits derived from the undertaking developing and building housing project. In the assessment order, the AO made disallowances under section 40(a)(ia) and enhanced the profit of the said undertaking; but he allowed deduction under section 80IB(10) only with reference to the profit shown in the return of income. The Tribunal, after considering the Supreme Court’s judgement in Cambay Electric Supply Industrial Co. Ltd. vs. CIT (1978 (4) TMI 1 - SUPREME Court) has held that profit “derived” for the purposes of section 80- IB(10) would mean profit as computed in the manner laid down in the Act, i.e. as per the provisions of Section 30 to 43D. - Decided against revenue

  ---

• 2017 (9) TMI 471
  AO disallaowed expenses u/14A incurred for earning exempt income- CIT(A) upheld decision of AO - Aggreived assessee filed appeal against order of CIT(A) - Held that:- Tribunal is of the opinion that disallowance made by the Ld. AO u/s 14A , without recording satisfaction that the claim of the assessee is incorrect about not incurring any expenditure for earning exempt income,no disallowance can be made.Following the decision of the Hon’ble Delhi High Court wherein it is held that the satisfaction of the assessing officer in terms of section 14A(2) of the act is mandatory. - Decided in favor of assessee.

  ---

• 2017 (9) TMI 470
  Deduction u/s. 80P(2)(a)(i) and u/s 80P(2)(d) - dividend received by the assessee from its share holdings in other co-operative societies - Held that:- Since the facts whether the assessee has different categories of members; first resident members or ordinary members and second nominal members and whether the assessee is getting the deposits from nominal members and advancing loan to the resident members/ordinary members are not on record and has not been examined by this Tribunal in the assessment year 2012-13 whether the fact that the assessee is engaged in the activity of granting loan to general public has also not been examined by the authorities below we, therefore, in the interest of justice and fair play to both the parties, restore this issue to the file of the Assessing Officer by setting aside the order of the CIT(A) with the direction that the Assessing Officer shall examine this issue and decide afresh in view of the observation of Hon'ble Supreme Court made in the case of The Citizen Co-operative Society Limited vs. ACIT, Circle-9(1), Hyderabad (2017 (8) TMI 536 - SUPREME COURT ) In respect of claim of deduction under section 80P(2)(d) on dividend income received from the co-operative society is concerned, in our opinion this issue will depend upon the outcome of the first issue. If the assessee is entitled to deduction under section 80P(2)(a)(i) the assessee will also be entitled for deduction under section 80P(2)(d). Since the issue is consequential to the issue involved about the claim of the assessee under section 80P(2)(a)(i), therefore, the order of the CIT(A) is also set aside on this issue and this also is restored to the file of the AO with the direction that the AO shall redecide this issue. Appeal filed by the Revenue is allowed for statistical purposes.

  ---

• 2017 (9) TMI 469
  Exemption under section 10(10CC) - determining that payment of tax, payable on salaries of the employees by employer is to be excluded from the income of the employees - whether “tax paid by the employer” is a perquisite “not provided by way of a monetary payment”? - Held that:- Section 10(10CC) provides an exemption from multiple grossing-up of tax paid by the employer whereby the same is added only once to the income of the employees and the “tax-on-tax” being a non-monetary perquisite is treated as exempt as per section 10(10CC). This issue had already been decided in favour of the assessee by the decision of the Special Bench of Delhi Tribunal in the case of RBF Rig Corporation (2007 (11) TMI 334 - ITAT DELHI-F). The issue stands covered in favour of the assessee by in the case of Sedco Forex International Drilling Inc. & Others (2012 (8) TMI 426 - Uttarkhand High Court) as held payment of tax on account of salaries of the employees not by way of monetary payment to the employees concerned, but for or on their account to the Department and the same being one of the perquisites included in Section 17(2), such payment was to be excluded from the income of the employees. Merely because SLP of the department is pending before the Hon’ble Supreme Court is no ground to take a contrary view against the assessee

  ---

• 2017 (9) TMI 468
  Gains from transactions in shares - capital gain or business receipt - treat the income of the appellant shown under the head Short Term Capital Gain as 'Income from Business & Profession' - Held that:- Intent of the legislature is abundantly clear from the perusal of the explanatory notes and as such there is no case to treat the income of the assessee shown under the head Short Term Capital Gains as ‘Income from Business & Profession.’ We further find that as per Explanatory Statement issued with Union Budget of 2004 in respect of Finance, (2) Bill, 2004, by which STT was levied on the sale and purchase of shares and securities carried out through Stock Exchange. The intent of the legislature in this regard is abundantly clear from the perusal of Explanatory Note referred to above and as such there is no case to treat the income of the appellant shown under the head Short Term Capital Gain as 'Income from Business & Profession', hence, we uphold the decision of the Ld. CIT(A) and dismiss the ground no. 1 raised by the Revenue. Allowing business loss - AO was of the view that assessment proceedings are not an opportunity to make additional / fresh/ revised claim for any benefit/ deduction, which was not there in the original return - Held that:- Fact of these case are identical with the case of CIT Vs. Bharat Alluminium Co. Ltd., [2007 (5) TMI 228 - DELHI HIGH COURT] wherein the Hon'ble Jurisdictional Delhi High Court has held that the revised computation of income could be accepted even after the time limit to file revised as prescribed under section 139(5) of the Act. The judgment of Apex Court in Goetze India Ltd. [2006 (3) TMI 75 - SUPREME Court] relied by the Assessing Officer is on totally different facts therefore, applying the same to the case of the assessee, would not be correct In view of the above, the Assessing Officer's decision in rejecting the claim of the assessee for set off of loss is incorrect - Decided against revenue

  ---

• 2017 (9) TMI 467
  Receipt of security deposit - business income or capital gain - nature on income - Held that:- In order to hold that an activity is in the nature of an adventure, there must be positive materials to prove that the assessee intended to trade in such an activity. Moreover, the expression “adventure in the nature of trade' appearing in the definition of 'business' postulates the existence of certain elements in the adventure which in law would invest it with the character of trade or business. In this regard, it is observed that the A.O. has erred in the present case in taxing the receipt of Security Deposit as an income in the realm of “Adventure in the nature of trade” because there has to be at first a transaction in the nature of purchase or sale resulting in a gain or profit. On the contrary, there has been no such transaction/ and thus there is no gain or profit. In the absence of these two important ingredients it cannot be said that there has been taxable income. Thus we are of the considered view that Ld. CIT(A) has rightly deleted the addition on account of impugned receipt of security deposit as income of the assessee as Adventure in the nature of trade, which does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on the issue in dispute and reject the ground in dispute raised by the Revenue.

  ---

• 2017 (9) TMI 466
  Levy of penalty under section 271(1)(b) - non compliance to notice under section 143(2)/142(1) - Held that:- It appears that assessee has disclosed the reasonable cause for failure to comply with the statutory notice and on the same reasoning, the Ld. CIT(A), cancelled the penalty under section 271(1)(b) of the I.T. Act for two years in both the appeals. Therefore, following the rule of consistency, the Ld. CIT(A) should have cancel the penalty in this year as well. We, accordingly, set aside the orders of the Ld. CIT(A) and cancel the penalty. Accordingly, the grounds of the assessee are allowed.

  ---

• 2017 (9) TMI 465
  Reopening of assessment - payments in cash in contravention to section 40A(3) - AO initiated proceedings u/s 148 to verify certain cash transactions and its disallowability u/s 40A(3) but made the addition made u/s 68 by treating the creditors as unexplained - Held that:- On perusal of the reassessment order passed under 147 read with section 143(3) of the Act, it is noted that in AY 2008-09, no disallowance has been made u/s section 40A(3) which form the basis for reopening of the assessment. The AO has however, brought to tax unexplained cash creditors amounting to ₹ 10 lacs which has apparently come to his notice during the course of reassessment proceedings. In AY 2009-10, again similar position exist wherein no disallowance has been made u/s section 40A(3) which form the basis for reopening of the assessment. The AO has however, brought to tax unexplained cash creditors amounting to ₹ 10 lacs and expenses worth ₹ 1.05 lacs have been disallowed towards various expenses which apparently come to his notice during the course of reassessment proceedings. Thus the very foundation of the proceedings u/s 147 are vitiated and accordingly, we are setting aside the order passed by the AO u/s 147 for both the years under consideration. - Decided in favour of assessee.

  ---

• 2017 (9) TMI 464
  Validity of reference made by the AO to the DVO - Long term capital gain for transfer of share in development rights of land - rights already been transferred on 11-11-1999 and valuation of DVO adopting fair market value as on 01-04-1981 - Held that:- As in assessee’s own case for AY 2004-05 [2017 (1) TMI 730 - ITAT MUMBAI] wherein identical issue was considered following case of CIT vs. Puja Prints (2014 (1) TMI 764 - BOMBAY HIGH COURT) wherein the facts are exactly similar and reference so made by the AO was held to be invalid for the assessment year falling prior to the amendment so brought in by Finance Act 2012. Undisputedly, relevant assessment year under consideration is assessment year 2004-05, which is prior to the amendment brought in Section 55A(a) by Finance Act 2012 w.e.f. 01/07/2012. Thus we do not find any merit for the reference so made by the AO to the DVO, when the value offered by assessee was more than the value determined by the AO in respect of assessment year falling prior to introduction of amendment brought in Section 55A(a) by Finance Act 2012 w.e.f. 1/7/2012. - Decided in favour of assessee.

  ---

• 2017 (9) TMI 463
  Validity of the proceedings u/s 153A - Income u/s 2(24) - derived benefit in terms of section 2(24)(iv) - benefit obtained by purchase of unquoted shares at face value under a business re-arrangement between the family members and approved by the Hon'ble Delhi High Court with the fact that the shares could not be sold to outsiders - Held that:- It is not the case of the department that any material disclosing the issue of transfer of shares was withheld from the assessment and was found and seized during the course of search. It is also not the case of the department that any other incriminating material which could point out to such transfer of shares was unearthed during the course of search and was subsequently relied upon by completing the assessment u/s 153A. No whisper of any incriminating material having been found and relied upon by the department relating to these additions on account of perceived benefits u/s 2(24)(iv) - Decided in favour of assessee.

  ---

• 2017 (9) TMI 462
  Reopening of assessment - Disallowance of depreciation on product development expenditure and technical know how fees - reason to believe - Held that:- We find that the assessee has given all the particulars of “product development expenses” and also reconciliation of capitalization of fixed assets before the Assessing Officer during the course of the original assessment proceedings which included the ‘product development’ expenditure also. This fact is clearly borne out from the letter dated 15.12.2006 filed before the Assessing Officer in response to the notice/query raised by the Assessing Officer. All the particulars and details of capitalization and claim of depreciation were also shown in the audited balance sheet filed along with the return of income. Once the assessee has made full and true disclosures of material fact, then the onus cast upon the assessee stands discharged and it is upon the Assessing Officer to draw proper legal and factual inference. Assessing Officer has neither ascribed any failure on the part of the assessee to disclose fully and truly all material facts nor has brought anything on record to show that product development expenses under the law can never be treated as an asset or a capital expenditure on which depreciation is allowable. In absence of such finding, we are unable to hold that in terms of proviso to section 147, the Assessing Officer has no jurisdiction to reopen the case beyond the period of four years from the end of the relevant assessment years, where assessment has been finalized under section 143(3). Thus, the reopening of the assessment on the aforesaid “reasons” is clearly bad in law and accordingly, impugned assessment order is quashed. - Decided in favour of assessee.

  ---

• 2017 (9) TMI 461
  Reopening of assessment - overdue interest and audit fees - proof of adequate inquiry - no opinion v/s change of opinion - Held that:- No opinion had been formed in the original assessment order regarding these two issues. Hence, there is no change of opinion involved in the subsequent reopening of assessment. Thus, the peal of the appellant that there was full application of mind by the AO on these issued in the original assessment proceedings is not at all borne out by the record, and is therefore not acceptable. Thus, there is no reason to interfere in the reopening of the case We find that the Ld. CIT(A) has given finding on fact that assessee has not written off such NPA and interest thereon as bad debt during the year under consideration this finding on fact is not controverted by the Ld. Counsel for the assessee. Ld. Counsel submitted that this is allowable u/s 37 of the Act. In our view, the contentions of the assessee is misplaced the Section 37 relates to the any expenditure not being expenditure of the nature described in Section 30 to 36 since the interest is part of that would be covered u/s 36(1)(vii) of the Act. Further, the plea of the assessee is that this has been allowed in the earlier years in our view rule of consistency would apply where the assessee has been following the particular accounting policy and the revenue has been accepted the same but the issue of allowability or disallowability of expenses would certainly depend upon the provision of the Act. Therefore, this ground of assessee’s appeal is dismissed. - Appeal of assessee dismissed.

  ---

• 2017 (9) TMI 460
  Disallowance of bad debts u/s 36 - Held that:- The assessee company received interest and offered same for taxation. He urged that it was a genuine business transaction and cannot be treated as a colourable device to avoid tax liability. We have given our thoughtful consideration to the fact of the present case, if we accept this contention of the assessee it would lay a wrong precedence. In every case the assessee would advance money to its sister concern and after some help in winding up of sister concern by waiving of the debt. A good debt cannot be allowed to be given colour of bad debt. Therefore, we do not see any reason to disturb the finding of the lower authorities. The ground of the assessee’s appeal is dismissed.

  ---

• 2017 (9) TMI 459
  Assessment completed u/s 153A - proof of incriminating paper found as a result of search - Held that:- Sec. 153A is indeed an extremely potent power which enables the Revenue to reopen at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It is only if during the course of search under Section 132 incriminating material justifying the reopening of the assessments for six previous is found that the invocation of Section 153A qua each of the assessment years would be justified. If no incriminating materials were found during the course of search in respect of an issue, then no additions in respect of any issue can be made to the assessment u/s 153A and 153C. In the present case, it is not the case of revenue that the assessment has been framed on the basis of incriminating material found during the course of search. The Hon’ble Jurisdictional High Court in the case of Jai Steel (India) vs. ACIT [2013 (6) TMI 161 - RAJASTHAN HIGH COURT] as relied by the assessee and also held that for the completed assessment, same can be tinkered only based on the incriminating material found during the course of search or requisition of documents. Therefore, the assessment in the case, where the assessment has been completed or not pending on the date of search. The Assessing Officer can frame assessment only on the basis of the incriminating material gathered during the course of search. The Revenue has not placed any material on record suggesting that the impugned assessment was framed on the basis of incriminating material. - Decided in favour of assessee.

  ---

• Customs

• 2017 (9) TMI 442
  Penalty - smuggling of goods - case of appellant is that he is a Coolie and/or a Coolie Sardar, his role is limited to the loading of the goods and there is no material available on the record that the appellant had any knowledge of the smuggled nature of the goods - Held that: - the D.R.I. officers during investigation found that the appellant and the other person Shri Subhas Bansal were using the names of other companies for the purpose of smuggling of the goods. The appellant and Shri Subhas Bansal opened the Bank accounts in the name of other companies for illegal transactions - The appellant and the other person used the dummy companies M/s.S.B.Impex, M/s.Amber Impex and M/s.R.Traders for the smuggling activities. Hence, the imposition of penalties is justified - the imposition of penalty on the appellants is upheld subject to the reduction in the quantum of penalty to ₹ 10,00,000/- and ₹ 50,000/- on Shri B.K.Goyal and Shri Vijay Prakash Singh respectively - decided partly in favor of appellant.

  ---

• 2017 (9) TMI 441
  Jurisdiction - power of DRI to issue SCN - Held that: - the notice issued by the DRI who was not a competent authority as per the ratio laid down in the case of Mangali Impex Ltd. Vs. UOI [2016 (5) TMI 225 - DELHI HIGH COURT] - In this connection, we note that similar issues have been dealt with in various cases by the Tribunal recently. It is held that the matters have to be remanded back to the original authority for a decision - appeal allowed by way of remand.

  ---

• 2017 (9) TMI 440
  Jurisdiction - power of SIB to issue SCN - Held that: - the notice issued by the DRI who was not a competent authority as per the ratio laid down in the case of Mangali Impex Ltd. Vs. UOI [2016 (5) TMI 225 - DELHI HIGH COURT] - In this connection, we note that similar issues have been dealt with in various cases by the Tribunal recently. It is held that the matters have to be remanded back to the original authority for a decision - appeal allowed by way of remand.

  ---

• 2017 (9) TMI 439
  Confiscation - undeclared third country origin goods listed in part A-1 & C of the Inventory valued at ₹ 34,39,445/- were brought into India in contravention of the provisions of N/N. 9/96-CUS(NT) dated 22.01.96 issued under Section of the Customs Act read with Section 3 of Foreign Trade (Development & Regulation) Act, 1992 - knitted garments declared in the Bill of Entry valued at ₹ 2,13,522/- used for concealment of the smuggled TCO goods were liable to confiscation at the same were used for concealing the TCO goods, that the undeclared Nepalese garments, personal effects and miscellaneous goods (listed in part A2, D & E of the inventory) used for concealment of the smuggled TCO goods were liable to confiscation under Section 111(d), (l) & (m) read with Section 119 of the Customs Act, 1962 - case of Revenue is that it appears that the appellants have been trying to make various place by way of cover-up and/or afterthought. Held that: - there is no conclusive finding as to the garments seized being of third country origin. So far, the goods being undeclared in the Bill of Entry being admitted in Nepalese Jackets its value at ₹ 33,000/- the declared garments valued at ₹ 32,74,945/- at the Annexure-A1 to Panchnama and I hold that the confiscation is bad and set aside the same along with redemption fine - So far the handicrafts goods at Annexure-B to the inventory admittedly there is no evidence of such goods being of third country origin and there are also the declared goods as per the Bill of Entry valued at ₹ 2,13,522/- and accordingly the confiscation set aside. So far, the undeclared goods being personal effects valued at ₹ 4700/- admittedly belonging to R.C. Sharma is concerned, the confiscation set aside in view of the admission by the said R.C. Sharma being an employee of the Government of India and the facts stated by him have not been found to be untrue and further the goods were of very small value and admittedly personal effects. So far, the goods at Annexure-E to the Panchnama being undeclared handicrafts value at ₹ 1,45,200/- is concerned. these goods are liable to confiscation but the appellant-exporter, Smt. Kamla Shreshta of M/s Pramila Handicrafts is entitled to redemption, on payment of redemption fine ₹ 25,000/-. So far, the two trucks are concerned, there is no finding save and except presumptions that the owners of the said trucks and its staff being drivers and cleaners were knowingly transporting any contraband goods. In this view of the matter, confiscation and redemption fine set aside. So far, the penalty imposed u/s 112 of the Act is concerned, considering the overall facts and circumstances and my findings hereinabove, the penalty imposed on Smt. Kamla Shreshta reduced from ₹ 25,000/- to ₹ 15,000/-, on Shri D.D. Pant from ₹ 30,000/- to ₹ 5,000/-. Further reduce the penalty on Shri Hari Kumar Thakuri from ₹ 20,000/- to ₹ 5000/- - So far the other appellants and/or parties are concerned, the penalties imposed on them fully set aside. Appeal allowed - decided partly in favor of appellant.

  ---

• Corporate Laws

• 2017 (9) TMI 436
  Winding up petition - whether the secured creditors as well as unsecured creditors who are found to be eligible on verification by Chartered Accountant would be entitled to a total amount of ₹ 3,90,20,035? - Held that:- Mr. Uday Bhatt, learned counsel appearing for respondent no.2 which was formerly represented by Mr. Bhagat has relied upon the affidavit dated 19.08.2017 and has submitted that SBI, respondent no.2 has lodged claim under section 530 in form no.66 for interest upon receipt of the final principal amount of ₹ 13,61,263/and that they have filed a revised claim of ₹ 2,63,08,288/as on 08.02.2013. Mr. Bhatt, learned counsel therefore submitted that the respondent no.2 be given some time for further verification. Official Liquidator states on instruction that no claim under section 530 in form 66 has been filed by respondent no.2 and it has been now raised at the fag end of the hearing of this application. Be that it may be so, as far as the claims of other secured creditors, the same is already verified by the Chartered Accountant which is not in dispute by any secured creditors so also the applicant workers Union and considering the fact that a sum of ₹ 9.70 crores is lying in the funds of the company in liquidation, considering the disbursement to be adhoc, the Official Liquidator is permitted to disburse the amount as set out in table A of the report, total of which amounts to ₹ 3,90,20,035/as per the ratio worked out by the learned Chartered Accountant on the secured creditors furnishing undertaking that in case if lesser amount is found by this Court, the same shall be refunded forthwith. The applicant Union shall also file an undertaking of authorised person of respective units in liquidation in the office of the Official Liquidator that in the event of any excess, duplicate, or wrong payment having been made, the same shall be refunded. The applicant Union shall also provide the bank details of each individual workmen and the Official Liquidator shall disburse the amount to each of the secured as well as unsecured creditors as per the report of the Chartered Accountant as provided in this order in the ratio which is determined by the Chartered Accountant by RTGS and the same shall be subject to further order of this Court. Such exercise shall be undertaken by the Official Liquidator only on receipt of individual undertaking from each secured as well as unsecured creditors including the authorised person of the respective units in liquidation.

  ---

• Insolvency & Bankruptcy

• 2017 (9) TMI 435
  Proceedings under Insolvency & Bankruptcy Code, 2016 - Held that:- Section 5(6) of the Insolvency & Bankruptcy Code, “dispute” includes a suit or arbitration proceeding relating to -(a) the existence of the amount of debt; (b) the quality of goods or service; (c) the breach of a representation or warranty. The fact that the quality of service required to be performed by the applicant under the work order is in dispute is evidenced by the termination of the contract by the respondent. This has consequently given rise to a dispute, inter alia, with regard to withholding of the running account bills, retention monies and with regard to bank guarantee. Section 8(2)(a) of the I.B. Code is ultimately concerned with the existence of a dispute with regard to alleged operational debt, which dispute has been raised by the applicant itself in its said notice under section 21 and in its application filed under sections 9 and 11 of the Arbitration & Conciliation Act, 1996. Therefore, the applicant clearly could not have filed and consequently cannot maintain the said applications. On the above basis, it is clear that the application filed by the Operational Creditor for initiation of Corporate Insolvency process deserves to be dismissed as non-maintainable.

  ---

• PMLA

• 2017 (9) TMI 434
  Offence under sections 3 and 4 of the P.M.L.A. Act - anticipatory bail - unaccounted amount of more than a crore, which was given as a loan by the petitioner to his wife-Ankita Singh, who in turn, had given a loan of Rupees One Crore to her brother Surya Sonal Singh - Held that:- The supplementary complaint has put much reliance on the fact that Income tax Return did not reflect the loan amount. However, the balance sheet, which has been appended to the Income tax Return for the assessment year 2009-2010 does suggest that Ankita Singh had obtained unsecured loan of ₹ 1,22,31.000 from the petitioner and had given as a loan an amount of Rupees One Crore to co-accused-Surya Sonal Singh. The veracity of the balance sheet has sufficiently been substantiated by the information received under the Right to Information Act and the same also finds mention in the order of the adjudicating authority at clause 8.12. The adjudicating authority on proper assessment of the documentary evidence as well as the statement of the accused recorded under section 50 of the Prevention of Money Laundering Act had released the property attached with respect to all the live units. It is also to be noted herein that the petitioner or for that matter other accused Surya Sonal Singh and Ankita Singh were never made accused in the main offence, which was investigated by the C.B.I. Thus, the allegation made in the supplementary complaint seems to have been sufficiently diluted by virtue of the order passed by the adjudicating authority. Petitioner also seems to have fully cooperated in the investigation and his statement was also recorded. The investigation having been completed, supplementary complaint has already been filed by the opposite party. The petitioner is in custody and the main accused persons namely Kamlesh Kumar Singh @ Kamlesh Singh and his wife Madhu Singh have been granted bail by this Court in B.A. No. 2703 of 2012 and B.A. No. 3602 of 2014 respectively. In view of the circumstances, enumerated above, I am inclined to allow this application. Accordingly, the petitioner, named above, is directed to be released on bail, on furnishing bail bond of ₹ 10,000/- (Ten thousand only), with two sureties of the like amount each to the satisfaction of learned Special Judge, C.B.I., Ranchi

  ---

• 2017 (9) TMI 433
  Remanding the accused persons beyond period of fifteen days as mandated by Section 167(2) of the Cr.P.C.- offence under PMLA - Procedure when investigation cannot be completed in twenty four hours - Held that:- Admittedly, since both the petitioners were produced before the learned Special Judge under PMLA for first time on 22nd August, 2017, the total period of custody/remand could not have been allowed beyond 5th September, 2017 when they would be completing fifteen days in custody. Learned ASJ could not have given the police/ED remand for more than fifteen days after the petitioners were produced on 22nd August, 2017. Therefore, the impugned order of the learned Special Judge dated 28th August, 2017, being per se illegal, perverse and whimsical, is set aside to the extent of remanding the accused persons beyond period of fifteen days as mandated by Section 167(2) of the Cr.P.C. The purity of justice must be maintained at all cost. It is not out of place to mention that the Public Prosecutor is the officer of the court and not the persecutor. He is supposed to assist the court in proper perspective. Before forwarding application for extension of remand by 14 days, he should have meticulously examined it to ensure that no violation of Section 167(2) of Cr.P.C. takes place. It is noted that the total period of custody with the police cannot exceed 15 days and at the time of making an application for extension of remand by 14 days, the accused had already been in custody for 6 days meaning thereby that he could not have been sent to police custody for more than 9 days. There was thus no occasion for seeking ED remand for 14 days.

  ---

• Service Tax

• 2017 (9) TMI 458
  Refund of amount collected without authority of law - service tax which was exempt by N/N. 13/2003-ST dt. 20.06.2003 as amended - denial of refund on the ground that refund was filed beyond the statutory time limit of one year prescribed under Section 11B of the CEA, 1944 - Held that: - as a result of this clarification dt. 26.05.2011, the benefit of this exemption notification No. 13/2003 became available to the appellant and the amount collected by the Revenue was therefore without any authority. It is settled position in law that beneficial circular has to be applied retrospectively while oppressive circular has to be applied prospectively. Time limitation - Held that: - there are conflicting decisions of the Division Benches of this Tribunal on whether the statutory time limit under Section 11B of the Central Excise Act, 1944 is applicable to claim for refund of tax which was collected without authority of law - In view of the divergent views of this Tribunal on the same issue, the matter requires reference to the Hon’ble President for constitution of a Larger Bench - matter to the Hon’ble President for constitution of a Larger Bench of this Tribunal to decide the issue Whether in respect of the claim for refund of illegal levy of Service Tax or of Service Tax collected without authority of law, the statutory time limit prescribed in terms of Section 11B of Central Excise Act 1944 will be applicable or not? - matter referred to Larger Bench.

  ---

• 2017 (9) TMI 457
  Business Auxiliary services - whether the assessee M/s Steria India Ltd, are liable to service tax on receipt of Business Auxiliary Service in the nature of procuring orders for them for providing the exempt service of information Technology Software Service during the period January, 2006 to December, 2006? - Held that: - so far the SCN relating to transactions with M/s Xansa PLC (UK) is concerned the SCN is bad as there can be no adjudication for the demand which have already been paid, that is service tax paid - So far the demand with respect to transactions with Xansa USA is concerned, during the relevant period the appellant was not providing any taxable service, as Information Technology Software Service became taxable with effect from 16 May, 2008, upon enactment of Section 65 (53a) in the Finance Act, the appellant is not liable to pay any service tax on the transactions with Xansa USA during the relevant period - appeal dismissed - decided against Revenue.

  ---

• 2017 (9) TMI 456
  Penalty u/s 77 - non-filing of returns - whether the appellant is required to be penalized under Section 77 of the Finance Act, 1994 for non-filing of ST-3 returns for the period April, 2007 to September, 2011 or otherwise? - Held that: - the appellant had not filed the returns during the period in question; had informed by the department on 08.02.2008, under a bonafide impression that his activity amounts to manufacturing. Section 70 mandates every person liable to pay the service tax for furnishing of returns to the Department return in such manner and in such a frequency; also provides for the submission of the returns belatedly on payment of late fee. The mandate of Section 70(1) states that this section will come into play when an assessee is liable to pay service tax - In the case in hand, it is seen from the records that the appellant has bonafide belief not paid the service tax and informed department on 08.02.2008, expressing that he is not liable to pay the service tax - there is no demand for service tax on the appellant, despite the fact that he had obtained service tax registration certificate from the Department and was discharging the service tax liability up to March, 2007. Penalties of non-filing of the returns are not sustainable - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 455
  Validity of SCN - case of appellant is that the impugned order is bad and unsustainable, as there is no bifurcations of the demand given in the SCN and also no bifurcations is there in the impugned Order-in-Original - Held that: - the SCN is vague and unsustainable, as it fails to give the breakup under the different heads of service, allegedly provided by the appellant - also, the SCN is self contradictory, as in para-5 of the SCN, detailed breakup is given of the services provided by the appellant and/or the business activities, whereas in the later part of the show cause notice, it is alleged that appellant have failed to provide proper details and/or invoices etc - there is no case of disobedience of any summons or notices or any information sought by the Department - SCN is bad and unsustainable - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 454
  Voluntary Compliance Entitlement Scheme (VCES) - VCES declaration filed by the appellant is liable to be rejected as they have not made full and true declaration - Held that: - the SCN alleges that appellant had suppressed the value of the services rendered by them under the category of Renting of Immovable Property Services and Restaurant Services. The adjudicating authority in paragraph No. 20 and paragraph No. 23 has categorically recorded, how there is suppression value of the services rendered by the appellant had taken place, which is accepted as appellant has filed VCES declaration, though rejected by authority - it is noticed from the grounds of appeal appellant is not contesting the same by adducing any evidence to support his case and only tried to counter the findings by stating that they had filed VCES declaration - VCES declaration rightly rejected - appeal dismissed - decided against appellant.

  ---

• Central Excise

• 2017 (9) TMI 453
  Recovery of duty u/s 11D - sugar incentive scheme - revenue contended that, appellant had collected the amount of ₹ 85/- per quintal, however, had deposited ₹ 52/- per quintal with the Central Government - Interpretation of Statute - It is the case of the appellant that the said sugar incentive scheme was commenced by the Government of India in terms of provisions of section 3 of the Essential Commodities Act, 1955 with an object to encourage indigenous sugar production and to achieve the target envisaged, whereby the said incentives under the said scheme was partly based on higher percentage of free sale sugar quota and partly on excise duty concession/exemptions pursuant to the provisions of section 5-A of the said Act read with Rule 8(2) of the Central Excise Rules, 1944 by issuance of notifications dated 27th April, 1983 to enable the new sugar factories to repay the advances and loans out of the additional funds generated out the benefits of those sugar incentive scheme - Whether the Tribunal committed error while interpreting and construing the provisions of Section 11-D of C.E.A., 1944, while ignoring the interpretation and construction of provisions of Section 5-A of C.E.A., 1944, granting exemption from duty of excise to the Appellant / Assessee which is required to be construed liberally while upholding the impugned order passed by the respondent Authority? Held that: - It is not in dispute that when the Government of India, Ministry of Food and Civil Supplies, had issued the said incentive scheme on 4th November, 1987 for new sugar factories and expansion projects, Section 11-D of the Central Excise and Salt Act, 1944 was not introduced by the Central Government. The Constitutional validity of Section 11-D of the Central Excise and Salt Act, 1944 has been already upheld by the Supreme Court. It is held that the incentive scheme is nothing but the executive instructions of the Ministry of Food and Civil Supplies and thus it could not override the provisions of Section 11-D of the Central Excise and Salt Act, 1944, enacted by the Parliament - The learned Collector of Central Excise and Customs has rendered a finding that it was established that the excess amount was recovered and retained by all the assessees including the appellant herein representing the duty of excise as an incentive under the incentive scheme dated 4th November, 1987 illegally and thus the appellant was liable to pay the said amount as demanded in the show cause notices issued by the authority. A perusal of the appeal memo filed by the appellant in this appeal indicates that no ground is raised by the appellant contending that though the appellant had produced the relevant documents to show that the appellant had not retained any amount out of the amount recovered as duty from its customers including the rebate, the Collector of Central Excise and Customs as well as the said Tribunal have not considered such documents. In our view, the Collector of Central Excise and Customs has, after granting sufficient opportunity to the appellant, dealt with all the issues and fact as well as law and has rightly upheld the demand raised in the show cause notices issued by the authority. Insofar as the submission of the learned counsel for the appellant that there was no opportunity to engage an Advocate was granted by the learned Collector of Central Excise and Customs is concerned, this submission of the learned counsel is ex-facie contrary to the averments made in paragraph no.8 of the appeal memo filed by the appellant before the said Tribunal, in which it has been admitted that the said Collector of Central Excise and Customs had heard the appellant through their Advocate in those six show cause notices. A perusal of the order passed by the learned Collector of Central Excise and Customs and more particularly paragraph no.4 of the said order also clearly records that a personal hearing was given to the appellant through its Advocate Shri K.P. Joshi. The appellant did not file any proceedings for enforcement of the said incentive scheme before any Court of law. Be that as it may, in our view, the learned Collector of Central Excise and Customs has rightly held that no such incentive scheme, which was in the nature of executive instructions had in any event was subject to further notification to be issued by the Government could be given effect to while considering the provisions of Section 11-D of the Central Excise and Customs Act - even otherwise in view of the non obstante clause provided in Section 11-D of the Central Excise and Salt Act, 1944, which was introduced later in point of time, the said provision will prevail over the provisions of the Essential Commodities Act, 1955, having similar non obstante provision in Section 6. Appeal dismissed - decided in favor of Revenue.

  ---

• 2017 (9) TMI 452
  Scope of SCN - Whether the Customs Excise & Service Tax Appellate Tribunal, New Delhi was right in taking a contrary view in two identical cases covered by same show cause notice? - Held that: - the language of notice in the case of Commissioner of Central Excise, Kanpur Vs. Sarada Steel Industries Pvt. Limited [2010 (7) TMI 596 - CESTAT, NEW DELHI] and that of respondent is same. Therefore Tribunal was not justified in taking a view otherwise than what has already been taken in Commissioner of Central Excise, Kanpur Vs. Sarada Steel Industries Pvt. Limited, without referring matter to larger Bench - issue decided in favor of appellant and against Assessee. Whether Rule 25 of the Central Excise Rules 2002 is self contained as the same is already subject to provisions of Section 11 AC of the Central Excise Act, 1944? - Held that: - it is subject to provision of Section 11AC of Act, 1944, mere non- mention of Section in a particular order or notice by itself will not render the same bad, if otherwise all ingredients are satisfied - matter remanded to Tribunal to restore the appeal. Appeal allowed - decided partly in favor of Revenue and part matter on remand.

  ---

• 2017 (9) TMI 451
  CENVAT credit - revenue argued that the appellants are not involved in the manufacturing activities - Held that: - it is a fact that the appellants have availed Cenvat Credit and paid the Central Excise duty and exported goods and also claimed rebate on the exported goods. Revenue has not challenged the payment of duty on the exported goods and also not challenged sanction of rebate claims sanctioned to the appellants. In these circumstances, the decision of the Tribunal in the case of Hino Motors Sales India Pvt. Ltd. [2013 (8) TMI 844 - CESTAT MUMBAI] becomes relevant, where it was held that The Cenvat Credit availed cannot be demanded in spite of the fact that the activity undertaken by the appellant does not amount to manufacture. In the present case there is no dispute that the duty on the final product has been paid by the appellants by utilizing the Cenvat credit being demanded and department has not disputed payment of duty on vehicles, the Cenvat credit availed cannot be demanded in spite of the fact that the activity undertaken by the appellant does not amount to manufacture. Appeal dismissed - decided against Revenue.

  ---

• 2017 (9) TMI 450
  Remission of duty - Rule 21 of CER, 2002 - due to the bursting of outlet valve of Tank No.2 on 08/04/2008 58365.56 Qtls of Molasses was lying in the open surface on sandy soil around the tank - Held that: - Rule 21 of the CER, 2002 provides for remission of duty where the goods have been lost or destroyed by natural causes or by unavoidable accident or are claimed by the manufacture as unfit for consumption or for marketing, at any time before removal - reliance placed in the case of U. P. State Sugar Corporation Ltd. [2012 (6) TMI 758 - CESTAT NEW DELHI] wherein it was held that nobody deliberately would indulge in an exercise which may result in huge loss and that the view while interpreting Rule 21 of the CER, 2002 the authorities are required to be liberal and that the restrictive construction to Rule 21 would make it inoperable and redundant - the present case is fit for remission of duty under Rule 21 of the Central Excise Rules, 2002 - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 449
  Manufacture - After receiving the items in their factory premises at Noida. They were repacking the sets, and putting a sticker of running SI. No., sticker bearing imprint "Manufactured & Marketed by MIT Corporation, Parwanoo" - It appeared to Revenue that the process of testing, labeling/relabeling and repacking etc. of the product amounts to deemed manufacture in terms of Section 2(f) (iii) of Central Excise Act, 1944 - Held that: - there is no evidence that the VCD/DVD players were imported by the respondent MIT Corporation, directly at Noida. There is no evidence that the goods transferred from Parwanoo, to Noida were not manufactured at Parwanoo. The allegation in the show cause notice that some goods were found in testing room where some stickers were not fixed is not sufficient evidence to establish that manufacturing was carried out on the goods seized at Noida, especially when there is contrary report of the investigation carried out at Parwanoo unit. The Department has failed to put forth even a single bill of entry to sustain its claim that there was direct import at Noida. Accordingly, the allegations leveled in the SCN are not proved against the respondents. The evidence on record have been relied upon selectively in view of the statement of Shri Lalwani which is relied upon, who categorically stated that no activity other than inspection is carried out at Noida. It has to be treated as valid evidence in favor of the respondent as evidence in the whole has to be read and not relied on in part, which is suitable to Revenue. Appeal dismissed - decided against Revenue.

  ---

• 2017 (9) TMI 448
  CENVAT credit - capital goods - bars which were used in making pollution control equipments - gone into making of civil foundation - case of appellant is that part of the bars were used for making pollution control equipments and pollution control equipments were qualified to be treated as capital goods, and CENVAT credit is admissible - Held that: - the contention of the appellant is sustainable which relates to that part of the said bars which were used in making pollution control equipments as admissible for availment of Cenvat credit. In so far as the part of the bars which gone into making of civil foundation, the said issued is covered by the ruling of Hon'ble High Court of Madras in the case of Commissioner of Central Excise, Tiruchirapalli Versus India Cements Ltd [2011 (8) TMI 399 - MADRAS HIGH COURT], where it was held that these items are not used for civil construction, but for the construction, which are absolutely necessary for establishing a manufacturing unit for cement - Cenvat credit on that part of the HSD Bars, TMT Bars & MS Bars is also admissible which have gone into making of civil foundation to erect capital goods in the present case. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 447
  CENVAT credit - duty paying invoices - whether CENVAT credits have been rightly denied to the appellant-assessee on the ground that they had taken CENVAT credit on the basis of Xerox copy of the original of the bills of entry, instead of the prescribed document, being the duplicate copy of the bill of entry? - Held that: - the appellant have received the imported raw material in question in their factory of production and also regarding the duty paid character of the same - in view of the fact that the appellant produced the original/duplicate copy and/or importers copy before the adjudicator already. Further, there is no finding that the duplicate copy of bills of entry, so produced were forced or concocted. Thus, for mere venial breach, the substantial benefit of CENVAT credit cannot be denied - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 446
  Confiscation of capital goods - redemption fine - penalty - Rule 15 (2) of CCR, 2004 - it was alleged that appellant had availed excess credit on capital goods - Held that: - the appellant has availed the Cenvat credit third time which they are not supposed to do so, against the capital goods received by them, a fact evidenced once the appellant has reversed the said amount on 31.07.2008, on being pointed out by audit party, hence the reversal of Cenvat credit is rightly upheld - confiscation upheld - redemption fine seems to be on higher side and is reduced to ₹ 2.00 lakhs. As regards the penalty imposed under provisions of Rule 15 (2) of CCR 2004, the said provision may not be applicable in the case in hand - the appellant had no intention to avail this Cenvat credit with intention to evade duty. The existence of intention to evade duty is primary requirement for invoking provisions of rule 15 (2) of CCR, 2004 - penalty set aside. Appeal allowed - decided partly in favor of appellant.

  ---

• 2017 (9) TMI 445
  Refund of unutilsed CENVAT credit - denial on the ground of time limitation and also on the ground that credit was availed for the period in question - Section 11B of Central Excise Act, 1944 - Held that: - The provisions of N/N. 27/2012-CE(NT), dt. 18 06 2012 mandates for filing of one refund claim by the manufacturer of goods within one year from the end of the quarter - An application for refund claim was filed on 30.08.2013 for the exports made by them during the period July to September 2012 and claimed the refund for the balance cenvat credit availed - the refund clam by the appellant is on 30.08.2013 is within the time for the quarter July to September 2012. CENVAT credit - Held that: - there is no provision in Cenvat Credit Rules which indicate that cenvat credit has to be availed during the period when the assessee receive the services nor there is any limitation for availing cenvat credit during the relevant period in question - similar issue decided in the case of K Line Ship Management (India) Pvt. Ltd [2017 (7) TMI 412 - CESTAT MUMBAI], wherein it has been held that unless the assessee is issued a show cause notice for denial of cenvat credit availed under CCR, 2004, refund sanctioned cannot be credited to Cenvat credit during the relevant period in question. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 444
  CENVAT credit - outward transportation of waste chemical - Held that: - From the audit report it is very clear that the audit team had under taken audit of CENVAT credit availed by the appellant in the case in hand means would includes the period wherein disputed CENVAT credit was availed i.e., May, 2010 to July, 2010. There is no audit objection raised on the point of availment of CENVAT credit of tax paid on outward transportation under GTA services - reliance placed in the decision in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE-I Versus MTR FOODS LIMITED [2012 (10) TMI 165 - KARNATAKA HIGH COURT], where it was held that In the returns it is clearly mentioned that they availed credit under the aforesaid rules. The audit partly accepted the same - appeal allowed - decided in favor of appellant.

  ---

• 2017 (9) TMI 443
  Authenticity of records - whether figures available in the record of the supplier of NABB are more authentic as compared to the figures reported in RT-12 returns submitted to the Jurisdictional Range Superintendent? - Held that: - The responsibility of the Jurisdictional Range Superintendent was to assess the goods to Central Excise Duty and issue the assessment memorandum in respect of each RT-12. In those circumstances, it is not sustainable to hold that the appellants under reported the figures in the returns filed before the Range Superintendent and, therefore, the figures of the production available on the record of the supplier of NABB cannot be more authentic than the figures reflected in Statutory record like RG-1 and reported in Statutory returns like RT-12 - Revenue could not produce any evidence of procurement of all the raw materials for manufacture of the alleged quantity, clearance of alleged quantity, transportation of the same and receipt of monetary transactions of the same - appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2017 (9) TMI 438
  Jurisdiction - whether the first respondent being an Enforcement Wing Officer has no jurisdiction to call upon the petitioner to file objections or to produce books of account or to attend the personal hearing and the manner in which the notices have been issued and its tenor will clearly establish that the petitioner has been threatened and coerced to submit to the jurisdiction of the first respondent? - Held that: - the first respondent, being an Enforcement Wing official, cannot usurp the powers of the assessing officer. All that can be done is to prepare a report based on the inspection conducted in the place of business of the petitioner and it can at best give cause of action for issuing a revision notice and upon issuance of the revision notice by the assessing officer and inviting objections from the dealer, the assessing officer has to independently consider the objections and take a decision in the matter uninfluenced by any observations made by the Enforcement Wing official in the D3 proposal. Thus, the notices issued by the first respondent cannot be enforced - the notices issued by the first respondent dated 26.09.2016 are held to be non-est in the eye of law - petition allowed - decided partly in favor of petitioner.

  ---

• 2017 (9) TMI 437
  Jurisdiction - AO - Transfer of case from the second respondent to some other Assessing Officer - petitioner case is that they had not received assessment order - Held that: - there is record to indicate that Mr.Jothi has been regularly receiving copies of the orders on behalf of the petitioner. Faced with this situation, the learned counsel for the petitioner submits that the plea raised by the petitioner that he has not received the assessment order is given up. This stand is taken on record and it is held that the petitioner has received the assessment order. Whether the allegation made against second respondent in paragraph No.8(d) was justified? - Held that: - the petitioner filed an affidavit dated 08.08.2017, withdrawing all those allegations against the second respondent. This affidavit is placed on record and the allegation against the second respondent in paragraph 8(d) stands deleted. In the light of the above, the question of transferring the case from the second respondent does not arise and the prayer sought for in the writ petition is to be rejected. Petition dismissed - prayer sought for to transfer the case is rejected - decided against petitioner.

  ---