TMI Tax Updates - e-Newsletter
September 12, 2017
Case Laws in this Newsletter:
Income Tax
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
-
GST:
GST Council Decisions - GST on goods and services - Rates, Exemptions, Reverse Charge, Procedural aspects etc.
-
Income Tax:
Capital gain computation - Sale consideration should be restricted to stamp duty valuation as against the Fair Market value determined by the DVO - transfer price for the purpose of capital gain can not be higher than the FMA u/s 50C of the Act.
-
Income Tax:
TDS u/s 195 - the opinion that payment by the assessee to ASL for procuring and distributing copyrighted software on principal to principal basis could not be treated as payment towards royalty.ASL was not having a PE in India - No TDS liability
-
Income Tax:
Exemption u/s 11 - the activities of the Assessee Society, though both religious and charitable, were not exclusively meant for one particular religious community. It was, therefore, rightly not denied exemption u/s 11 - HC
-
Income Tax:
Revision u/s 263 - entitlement to claim depreciation u/s 32 - That basic exercise of determining to what extent the depreciation was claimed in excess has not been undertaken by the PCIT. - revision order is invalid and set aside - HC
-
Income Tax:
Rental income derived from unsold flats which are shown as stock-in-trade in the books of the assessee would be assessed under the head “Income From House Property” and not under the head of “Profits and Gains from Business and Profession”.
-
Income Tax:
Penalty u/s 272(A)(2)(c) - compliance was made after a delay of 498 days from the date prescribed in the notice U/s 133(6) to the Branch of PNB abnk - there was only one notice issued, therefore, the penalty can be levied only for noncompliance of the notice once and penalty cannot be levied for the information sought under different codes by the same notice
-
Service Tax:
CENVAT credit - Capital goods - providing sale of space for advertisement services - credit on Capital goods is available even if they are removed outside from the premises of the Appellant for providing output service.
-
Central Excise:
Classification of goods - process oil / speciality oil - the extracts received from M/s.MRL are blended to form process oil, which is a new product, emerging with different viscosity suitable for its ultimate use in the tyre industry. - goods classified correctly under CTH 2707.90.
-
Central Excise:
CENVAT credit - capital goods - The entire allegation of revenue is based on flow back of money to ATV. The said allegation is misconceived in as much as admittedly the 4 cranes in questions were leased by IDBI Bank and the ownership of the same vests with IDBI bank only. - demand set aside
Articles
Notifications
GST - States-
MGST. 1017/C.R.146/ Taxation-1 - dated
7-9-2017
-
Maharashtra SGST
Constitution of the State Level Screening Committee for Anit-profiteering.
-
26/2017-State Tax - dated
7-9-2017
-
Maharashtra SGST
Waiver of late fee for all the Registered persons who have not filed GSTR-3B within due date for the month of July 2017.
-
27/2017-State Tax - dated
5-9-2017
-
Maharashtra SGST
Extension of due date for submission of GSTR-1, GSTR-2 and GSTR-3 for the month of July and August 2017.
-
25/2017-State Tax - dated
30-8-2017
-
Maharashtra SGST
The Maharashtra Goods and Services Tax (6th Amendment) Rules, 2017
-
23/2017-State Tax (Rate) - dated
22-8-2017
-
Maharashtra SGST
Amendment to Notification No. 17-2017-State Tax(Rate) to make Electronic Commerce Operator responsible for payment of SGST.
-
22/2017-State Tax (Rate) - dated
22-8-2017
-
Maharashtra SGST
Amendment to Notification No. 13-2017-State Tax (Rate) to amend RCM provisions for GTA and to insert explanation for LLP.
-
21/2017-State Tax (Rate) - dated
22-8-2017
-
Maharashtra SGST
Amendment to Notification No. 12-2017- State Tax (Rate) to exempt services provided by Fair Price Shops to Government.
-
20/2017-State Tax (Rate) - dated
22-8-2017
-
Maharashtra SGST
Amendment to Notification No. 11-2017 - State Tax (Rate) to reduce SGST rate on specified supplies.
-
ERTS (T) 65/2017/043 - dated
7-8-2017
-
Meghalaya SGST
Corrigendum - Notification No. ERTS (T) 65/2017/2, dated 29.6.2017
-
ERTS (T) 65/2017/042 - dated
7-8-2017
-
Meghalaya SGST
Corrigendum - Notification No. ERTS (T) 65/2017/1, dated 29.6.2017
-
ERTS (T) 65/2017/041 - dated
7-8-2017
-
Meghalaya SGST
Corrigendum - Notification No. ERTS (T) 65/2017/15, dated 29.6.2017,
-
ERTS (T) 65/2017/040 - dated
7-8-2017
-
Meghalaya SGST
Corrigendum - Notification No. ERTS (T) 65/2017/12, dated 29.6.2017
-
J.21011/1/2017-TAX/Vol-II - dated
14-8-2017
-
Mizoram SGST
The Mizoram Goods and Services Tax (Fourth Amendment) Rules, 2017.
-
J.21011/1/2017-TAX/Vol-II(ii) - dated
19-7-2017
-
Mizoram SGST
Councils, hereby fixes the rate of interest per annum.
-
J.21011/1/2017-TAX/Vol-II - dated
19-7-2017
-
Mizoram SGST
Appoints the 1st day of July, 2017 provisions of sections 6 to 9, 11 to 21, 31 to 41, 42 except the proviso to sub-section (9) of section 42, 43 except the proviso to sub-section (9) of section 43, 44 to 50, 53 to 138, 140 to 145, 147 to 163, 165 to 174 of the said Act, shall come into force.
-
J.21011/1/2017-TAX/Part-II - dated
10-7-2017
-
Mizoram SGST
Council, hereby notifies the Mizoram goods and Services Tax (Amendment) Rules, 2017 with effect from 22nd June, 2017.
-
J.21011/1/2017-TAX/Part-I - dated
10-7-2017
-
Mizoram SGST
The Mizoram Goods and Services Tax (Second Amendment) Rules, 2017
-
FIN/REV-3/GST/1/08 (Pt-1)/424 - dated
17-8-2017
-
Nagaland SGST
Category of registered persons not eligible for refund.
-
05/2017 - dated
17-8-2017
-
Nagaland SGST
Last date for furnishing of return in FORM GSTR-3B
-
04/2017 - dated
8-8-2017
-
Nagaland SGST
Date for filing of G5TR-3B.
-
03/2017 - dated
8-8-2017
-
Nagaland SGST
Time period for filing of details of inward supplies in FORM GSTR-2
-
02/2017 - dated
8-8-2017
-
Nagaland SGST
Time period for filing of details of outward supplies in FORM GSTR-1.
SEZ-
S.O. 2964(E) - dated
5-9-2017
-
SEZ
Central Government notifies an additional area of 18.55.92 hectares at Village Vilayat and Vorasamni in Taluka Vagra, District Bharuch, in the State of Gujarat
Circulars / Instructions / Orders
News
Case Laws:
-
Income Tax
-
2017 (9) TMI 532
Exemption u/s 11 - religious purpose / charitable purpose - AO / CIT(A) observed that the Assessee was not using its funds for public benefit but rather for the benefit of specified persons under Section 13(3) - Held That:- The CIT (A) had proceeded on the basis that although the Assessee Society was for both religious and charitable purposes, since it was for the benefit of only one religious community the provision of Section 13 (1) (b) would apply to deny it exemption under Section 11 of the Act. The above conclusion was legally flawed. It was contrary to the decision of the Supreme Court in Dawoodi Bohra Jamat [2014 (3) TMI 652 - SUPREME COURT] which held that even where the trust or society has both religious and charitable objects, "it needs to be examined whether such religious-charitable activity carried on by the trust only benefits a certain particular religious community or class or serves across the communities and for society at large". In that case it was factually found that "the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community" and, therefore Section 13 (1) (b) was not attracted. In the present case too, the factual finding of the ITAT is likewise. It has been found that the activities of the Assessee Society, though both religious and charitable, were not exclusively meant for one particular religious community. It was, therefore, rightly not denied exemption under Section 11 of the Act. - Decided against the revenue.
-
2017 (9) TMI 531
Disallowance under section 14A - computing book profit of a company under section 115JB - Held that:- If there are interest free funds available to an assessee sufficient to meet its investments and at the same time the assessee has raised a loan it can be presumed that the investments were from interest free funds available, and, accordingly, no disallowance under section 14A in respect of interest payment can be made in such a situation. S A Builders Limited Vs. Commissioner of Income Tax (Appeals) [2006 (12) TMI 82 - SUPREME COURT] MAT - No disallowance under section 14A of the Act can be projected while computing a company's booked profit under section 115JB of the Act.
-
2017 (9) TMI 530
Initiation of assessments under section 153A - proof of incriminating material was found during the search - Held that:- There is nothing on record to suggest that the observations of the Tribunal that no incriminating material was found during the search with the aid of which the additions could have been made was inaccurate. In that view of the matter as held by this Court and the Delhi High Court, the Tribunal was correct in quashing the assessments under section 153A(1) of the Act. In that view of the matter, we see no reason to interfere. The second subsidiary observation and conclusion of the matter with respect to the pendency of the assessment in terms of second proviso to subsection (1) of section 153A, we need not comment.
-
2017 (9) TMI 529
Revision u/s 263 - entitlement to claim depreciation u/s 32 - whether order of the AO is erroneous and prejudicial to the interests of the Revenue? - The case of the Revenue is that the assets were developed under the BOT scheme and the Assessee was not eligible to claim depreciation as it was not the owner of the assets. - Held that:- In the context of the present case if, as urged by the Revenue, the Assessee has wrongly claimed depreciation on assets like land and building, it was incumbent upon the PCIT to undertake an inquiry as regards which of the assets were purchased and installed by the Assessee out of its own funds during the AY in question and, which were those assets that were handed over to it by the DMRC. That basic exercise of determining to what extent the depreciation was claimed in excess has not been undertaken by the PCIT. Mr. Asheesh Jain then volunteered that the PCIT had exercised the second option available to him under Section 263 (1) of the Act by sending the entire matter back to the AO for a fresh assessment. That option, in the considered view of the Court, can be exercised only after the PCIT undertakes an inquiry himself in the manner indicated hereinbefore. That is missing in the present case. Therefore, the Court is of the view that the ITAT was not in error in setting aside the impugned order of the PCIT under Section 263 of the Act. - Decided against revenue
-
2017 (9) TMI 528
Undisclosed bank account - unexplained cash credit - Set off of such income against loss suffered by her in the share trading business - no return was filed to claim such set off - no revised return - Held that:- Neither in the return filed for the relevant assessment year 2009-10 nor in the earlier assessments, the assessee had disclosed a bank account in which there were multiple transactions. In fact, the assesssee had made cash deposits of more than ₹ 20 lakhs and also claimed to have traded in shares by sale and purchase of shares through such account despite which no mention was made in the return filed for the current year and in the earlier years. There was thus clear attempt on the part of the assessee to withhold her bank account and the transactions recorded therein. The assessee had offered no explanation about non disclosure of the bank account in the return filed for the current year and in the earlier years. In this very account, the Assessing Officer noted that the assessee had made cash deposits of more than ₹ 20 lakhs and the explanation offered by the assessee was found to be unacceptable. The cash gifts of ₹ 17 lakhs and odd was not backed by any supporting documents of the donors. The Assessing Officer and the higher authorities thus committed no error in holding that the assessee had made unexplained cash credit of ₹ 20,04,571/- in the said undisclosed bank account. Set off of such income against loss suffered by her in the share trading business - Held that:- The assessee had not filed any return claiming such loss with supporting documents of her trading into shares, her receipts and outgoings and the resultant loss. Without filing revised return the assessee could not have claimed assessment of such business activity. This is not a case like the case in Shilpa Dyeing (2015 (7) TMI 691 - GUJARAT HIGH COURT) where the business loss was assessed by the Assessing Officer which was to be set off against the undisclosed income later on unearthed during the course of assessment. It is also not a case where the assessee in appellate proceedings unlike in the case of Mitesh Impex (2014 (4) TMI 484 - GUJARAT HIGH COURT ) where the assessee on the basis of materials already on record was raising a question of law at the appellate stage. - Decided against the assessee.
-
2017 (9) TMI 527
Refusal for approval under Section 80G - registration under Section 12A is still valid - date of filing of Application in form 10G - Held that:- The Tribunal, in examining the legality and validity of the order of the Commissioner, particularly in the factual background, correctly held that the Authority cannot refuse the approval under Section 80G as admittedly in the preceding years on the same activities and objects, approval under Section 80G was granted and the registration under Section 12A is still valid. It is in such circumstances and when the application was filed on 2nd November, 2011, but only partial compliance was made later on, it cannot be said that the date of making such compliance is the date of the Application. Every single compliance relating to the procedure was made and when the Revenue did not dispute that the registration under Section 12A is valid, that prior to the instant application the certificate under Section 80G was granted, then all the more, we do not think that the Tribunal's order raises any substantial question of law.
-
2017 (9) TMI 526
Disallowance of claim of deduction under section 80HHC of DEPB profit - Held that:- We find that this issue is clearly covered by the decision of Hon’ble Bombay High Court in the case of CIT vs Kalpataru Colours and Chemicals (2010 (6) TMI 63 - BOMBAY HIGH COUR) and also followed by Mumbai Tribunal [2013 (8) TMI 1049 - ITAT MUMBAI] whereby Tribunal has directed the AO to recompute the deduction under section 80HHC of the Act in respect of DEPB profit in the light of judgement of Hon’ble Supreme Court in the case of M/s Topman Exports (2012 (2) TMI 100 - SUPREME COURT OF INDIA ) As the issue is covered, we also directed the AO to recompute the deduction in respect of DEPB profit and accordingly, the assessee’s appeal is allowed
-
2017 (9) TMI 525
Rental income earned from the property held as stock in trade - income from ‘House Property’ OR “Business & Profession’ - Held that:- By following the rule of consistency for the assessment year 2009-10 & 2010-11, the Ld. CIT(A) in the present assessment year i.e. 2011- 12 has rightly directed the AO to treat the income as house property and allow the deduction for payment of house tax, which does not need any interference on our part. Even otherwise, we further note that the Hon’ble High Court of Delhi in the case of New Delhi Hotels Ltd. vs. ACIT [2013 (5) TMI 632 - DELHI HIGH COURT] has held that rental income derived from unsold flats which are shown as stock-in-trade in the books of the assessee would be assessed under the head “Income From House Property” and not under the head of “Profits and Gains from Business and Profession”. We further note that the Hon’ble High Court of Delhi had similarly held in the case of CIT vs. Discovery Estates Pvt. Ltd. (2013 (3) TMI 124 - DELHI HIGH COURT).
-
2017 (9) TMI 524
Re-opening of assessment u/s 147 r.w.s. 148 - Held that:- We find from the record that the proceeding u/s 148 of the Act were rightly initiated within the period of 6 years from the end of the assessment year as the income escaping the assessment was of more than ₹ 1 lakh. There is nothing on record to controvert the findings of the ld.CIT(A) on this issue. We, therefore, are inclined to uphold the same. Accordingly, grounds dismissed. Bogus purchases - Held that:- CIT(A) after examining the various records correctly sustained the addition to the tune of GP rate of 12.5% of the total purchases as made by the AO on the basis that the AO did not doubt the corresponding sales thereof. CIT(A) also observed that the assessee might have purchased the material from the grey market and thus made savings of VAT, octroi and other relevant taxes - Decided against assessee. Disallowance of expenses - assessee non produced bills and vouchers - Held that:- We are fully in agreement with the ld.CIT(A) that the assessee has failed to produce necessary bills and vouchers of the said expenses and therefore the FAA has rightly disallowed the said expenses. Accordingly, we uphold the action of the ld.CIT(A) - Decided against assessee Income from other sources - various receipts as appearing in the AIR data on which the TDS have been deducted by the respective parties - Held that:- The assessee has failed to produce the evidences of ₹ 1,64,362/- with regards to various receipts as appearing in AIR on which TDS was also deducted. In our opinion the FAA has rightly directed the AO to verify whether the said income has been declared by the assessee in the return of income and if not assess accordingly. The AO is directed to decide as directed by the FAA. The ground allowed for statistical purposes.
-
2017 (9) TMI 523
Reopening of assessment u/s 147 - disallowance in relation to such long term capital gains and claim of deduction under section 54EC and 54F - change of opinion - Held that:- On perusal of the above reply dated 3.9.2010 of the assessee which is in response to specific queries raised by the AO, it is noted that at point 10, the assessee has stated clearly that Miss Adita Agarwal has invested ₹ 25 Lacs for purchase of house from Ace India Abodes Ltd. Ajmer Road, Jaipur and copy of related evidence for above investment was also submitted before the AO. This is the same transaction in respect of which the deduction under section 54F has been claimed while working out the capital gains. It is thus clear that relevant information and related evidence in support thereof was submitted and taken on record by the AO during the course of original assessment proceedings. Given the fact that the same was submitted in response to the specific query raised by the AO, we are left with no other view but to hold that the same was duly considered by the AO during the course of original assessment proceedings. It is clearly a case of change of opinion by the Assessing officer where he has allowed the deduction under section 54F during the course of original assessment proceedings and on the same pieces of information, he has reinitiated the proceedings by issuance of notice u/s 148 of the Act. Further, we donot see any failure on the part of the assessee to disclose relevant particulars during the course of original assessment proceedings as we have noted above. In the result, the reopening of assessment proceedings u/s 147 is not justified.- Decided in favour of assessee.
-
2017 (9) TMI 522
Rejection of books of the accounts u/s 145(3) - g.p. determination - Held that:- While finalizing the annual accounts, the assessee went ahead and accounted for the said undisclosed income of ₹ 22,60,000 in its profit/loss account. So, even this defect was removed and duly accounted for in the financial statements. During the course of assessment proceedings, the AO took this ground of surrender of undisclosed income as the very basis for rejection of books of accounts. But the fact remains that such defect in the books of accounts by way of not disclosing the investment in construction of godown was cured by passing appropriate entries in the books of accounts finalized subsequently and which was duly offered to tax. Further, there is no other specific defect in the trading results or in the overall determination of business results which has been highlighted by the AO during the course of assessment proceedings. As far as setting off of undisclosed income of ₹ 22,60,000 is concerned against the regular business loss is concerned, the ld CIT(A) has given a finding that such undisclosed income have to be taxed under the head of “business income” and not to be taxed separately, a finding which has been accepted by the Revenue and is not under challenge before us. In light of above, we are of the view that there was no basis with the AO for rejection of books of accounts in the instant case as contemplated under section 145(3) of the Act. Depreciation on the godown building - no evidence of asset being put to use was submitted - Held that:- We prima facie found force in the argument of the ld AR that where rental income has started accruing to the assessee, the same demonstrate that the asset was actually put to use. However, there is no finding of the lower authorities in this regard. We are accordingly setting aside the matter to the file of the AO to examine the above said contention of the ld AR and where the same is found to be in order, allow the depreciation as per law. In the result, the ground is allowed for statistical purposes. Addition u/s 69C - low household withdrawals - Held that:- AO without bringing on record any demonstrable evidence that the assessee has in fact incurred expenditure more that the money which has been withdrawn by the assessee from his bank account. In terms of Section 69C, the initial onus is on the Assessing Officer to prove that the assessee has incurred the expenditure. Once the Assessing Officer discharges the onus, the onus gets shifted on the assessee to offer an explanation about the source of such expenditure. In the instant case, the Assessing Officer, has not discharged the initial onus placed on him. In light of the same, we are setting aside the order of the AO and delete the subject addition.
-
2017 (9) TMI 521
Addition u/s 68 - burden of proof proving the identity, creditworthiness as well as the genuineness of the transactions of receipt of share capital - Held that:- First Appellate Authority, has granted opportunity to the assessee by calling for the remand report from the Assessing Officer. So, in our view ample opportunity was given to the assessee by the revenue authorities to prove its claim. The assessee has not attempted to file any additional evidence before this Bench of the ITAT. Under these circumstances, the question of remanding the matter to the file of the Assessing Officer for giving the assessee fresh opportunity does not arise. Hence this request is rejected. Addition u/s 68 of the Act on the ground that the assessee has not proved the genuineness of the transactions. - Decided against assessee.
-
2017 (9) TMI 520
Purchases from Bogus suppliers - AO reopened the assessment - genuineness of suppliers not proved as no goods are supplied - AO made additions of entire amount u/s 69C - Various documents submitted by assessee like PAN Card , Balance Sheet, Bank St. etc - CIT(A) restricted the addition in respect of only profit earned to extent 12.5% for AY 2009-10, AY 2011-12, AY 2012-13 and in AY 2010-11 the same is restricted to 20% - Various judicial pronouncements relied on by CIT(A), that the purchases were not bogus, but were made from parties other than those mentioned in books of accounts, only the profit element embedded in such purchases could be added to the assessee's income and as such no question of law arose in such estimation.-All appeals are dismissed.
-
2017 (9) TMI 519
Penalty u/s 272(A)(2)(c) - Failure to reply / supply the information sought u/s 133(3) from the Bank - compliance was made after a delay of 498 days from the date prescribed in the notice U/s 133(6) - reasons for delay - Held that:- There was inordinate delay in complying the notice. However, as noticed that there was only one notice was issued by which the information under different codes were sought. We agree with the conclusion drawn by the Income tax authorities regarding non-compliance of notice and not having a reasonable cause for the non-compliance. However, as also noticed that there was only one notice issued, therefore, the penalty can be levied only for noncompliance of the notice once and penalty cannot be levied for the information sought under different codes by the same notice. Therefore, sustain the penalty up to ₹ 49,800/- in all the three appeals and the balance amount is deleted. Appeals of the assessee partly allowed.
-
2017 (9) TMI 518
Computational error in AO’s order - rectification - Held that:- Since the returned income reflected by the assessee was ₹ 3,84,06,321/- and the assessee suffered addition aggregating ₹ 50,60,177/- and therefore the determined income should has been ₹ 4,34,66,498/- whereas the same has been taken as ₹ 4,25,38,780/- by Ld. AO and therefore, require rectification. Addition against write-off of advances - Held that:- We are inclined to confirm the same since the assessee could not adduce any material to show that the advances were given in the ordinary course of assessee’s business and the same constitute trading loss for the assessee. Per query from the bench, the assessee could not produce any agreement / documentary evidences to substantiate this fact and therefore, this addition is confirmed and this ground of assessee’s appeal stands dismissed. Addition on account of bad debts written-off - Held that:- After perusal of ledger extract placed in the paper book, we concur with the stand of the Ld. DR that the same reveals no movement in the debtor’s balances since past many years and does not show fulfillment of condition prescribed u/s 36(2)(i). However, the Ld. AR has contended that the income from these debtors was offered to tax in earlier years and the assessee is in possession of necessary evidences to substantiate this fact and therefore, we deem it fit to restore the matter back to the file of Ld. AO to verify this fact and decide as per law after affording adequate opportunity to the assessee, who, in turn, is also directed to substantiate the same with evidences. Resultantly, this ground of assessee’s appeal stands allowed for statistical purposes. Adhoc addition of expenses was on the higher side - Held that:- Upon perusal of the cited Tribunal order, we find that the bench has taken a view that disallowance to the extent of 5% would suffice to meet the end of justice. Therefore, taking the same stand, we restrict the adhoc disallowance to 5% of ₹ 1,04,93,675/- which comes to ₹ 5,24,684/-. Resultantly, the assessee’s ground of appeal stands partly allowed. Disallowance u/s 14A - Held that:- The assessee simply asserted that no expenses were incurred to earn the exempt income without substantiating the same. Therefore, the addition, thereof @0.5% of average investments, in terms of Rule 8D(2)(iii), requires no interference on our part. Resultantly, this ground of assessee’s appeal stands dismissed.
-
2017 (9) TMI 517
Assessment proceedings u/s 153A - Additional income offered for taxation voluntarily in return of income filed u/s 153A - assessee never retracted the statement - assessee claimed that no incriminating material was found during the course of searches - Held that:- End of justice will be met in the instant case if the matter is set aside and restored to the file of the AO for denovo adjudication on merits of this issue wherein one more opportunity is required to be granted to the assessee to furnish details/ evidences before the AO to prove that the said additional amount of ₹ 5,16,485/- voluntarily declared by the assessee in return of income filed in pursuance to notice u/s 153A of the 1961 Act is not income which could be brought to tax within the provisions and mandate of the 1961 Act, and hence we are inclined to set aside and restore the matter back to the file of the A.O. for denovo adjudication of this issue on merits in accordance with law. The assessee is directed to produce evidences showing the breakup of income of ₹ 5,16,485/- which was declared voluntarily as additional income by the assessee in return of income filed u/s 153A of the 1961 Act and to prove that the same do not constitute income of the assessee which could be brought to tax within framework and mandate of the 1961 Act. We have observed that the assessments for assessment year 2007-08 to 2009-10 are all unabated assessments as the assessments were not pending on the date of initiation of search u/s 132 of the 1961 Act and our above decision for assessment year 2006-07 shall apply to appeals for assessment year 2007-08 to 2009-10 mutatis mutandis. We have also observed that the assessment for A.Y. 2010-11 was abated assessment as the assessment was pending on the date of initiation of search u/s 132(1) of the 1961 Act as time limit for issuance of notice u/s 143(2) of the 1961 Act has not expired and the ratio of decision of the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (2015 (5) TMI 656 - BOMBAY HIGH COURT) is not applicable to the assessment year 2010-11 and the AO was required to compute total income of the assessee while framing assessment u/s 153A r.w.s. 143(3) of the 1961 Act whether or not there was any incriminating material found during the course of search u/s 132(1) of the 1961 Act. Thus, all the six appeals of both the assessee’s are allowed for statistical purpose
-
2017 (9) TMI 516
Capital gain computation - Sale consideration should be restricted to stamp duty valuation as against the Fair Market value determined by the DVO - assessee transferred the rights in the property - provisions of section 50C applicability to the transaction of transfer of rights in the immovable properties - Held that:- During the year the assessee transferred the rights in the property to Mr.Jaykumar Dhadda, Mr.Narendra Kumar Dhadda and Mr.Dhanraj Dhadda and sons private limited at cost by transferring the amount of advance to the said persons with the condition that the balance outstanding price was to be met by the transferees. No capital gain was shown in the return of income as the transfer was effected at cost. The AO calculated the short term capital gain on these transfer taking the market price of the said rights according to DVO report by rejecting the without prejudice submission of the ld AR that the capital gain be calculated on the basis of value as per stamp valuation authority as per the provisions of 50C of the Act on the ground that in the present case only rights were transferred and not the land or building. In the appellate proceedings, the ld.CIT(A) partly allowed the appeal of the assessee by direction the AO to calculate capital gains as per the value of stamp valuation authority u/s 50C and not as per DVO valuation. In our opinion, the ld.CIT(A) has taken a correct view by directing the AO to adopt the value u/s 50C of the Act for the purpose of bringing the capital gain to tax as the transfer price for the purpose of capital gain can not be higher than the FMA u/s 50C of the Act. Accordingly, we uphold the same by dismissing the appeal of the revenue. In the result, the appeal of the revenue is dismissed.
-
2017 (9) TMI 515
International transaction within the meaning of section 92B(1) - transactions have been entered by the assessee with the USA branch of Durian - Held that:- There is no denying the fact that Durian is an Indian tax resident, being a company incorporated under the provisions of the Companies Act, 1956 in India. As assessee is also an Indian tax resident, therefore, neither the assessee and nor Durian are nonresident so as to include the transactions between them as ‘international transaction’ for the purposes of Sec. 92B(1) of the Act. Therefore, in our view, the lower authorities erred in applying the provisions of Chapter X with respect to the impugned transactions. Thus, on this aspect, assessee succeeds. Transactions between the Appellant and GWVL - international transaction - Held that:- There is no material led by the Revenue as to how the test prescribed in the said clause (j) of Sec. 92A(2) is satisfied in the present case. Before parting, we may refer to another aspect contained in the assessment order. In the assessment order, the Assessing Officer has referred to the statement of one Ms. Rita Dasgupta recorded in the course of the search to justify that Shri Satish Chawla was deciding the selling and purchase price. The relevant question put to Ms. Rita Dasgupta in the course of the search and her reply has been reproduced by the Assessing Officer. We have perused the same and find that there is no justification to infer that Shri Satish Chawla was deciding the selling and purchase price on behalf of the assessee as well as on behalf of General Woods and Durian. Therefore, in our view, the Assessing Officer misdirected himself in understanding the reply of Ms. Rita Dasgupta in a wrong perspective and coupled with the other factual matrix brought out in the earlier paragraphs, we find no reason to hold that General Woods was an ‘associated enterprise’ of the assessee within the meaning of Sec. 92A of the Act. Therefore, for the said reasons, the lower authorities erred in subjecting the transactions of the assessee with General Woods to the provisions of Chapter X of the Act. Therefore, on the basis of the preliminary issue, which is contained in Grounds of appeal no. 1 & 2, the impugned addition deserves to be deleted. - Decided in favour of assessee.
-
2017 (9) TMI 514
Addition towards interest paid on borrowed capital - assessee’s main activity is renting out properties - Held that:- On verification of financial statements filed by the assessee for the relevant assessment year, the assessee’s assets represent investment in purchase of property which was substantially financed by loan borrowed from UCO Bank and M/s TCG Urban Infrastructure Holdings Ltd. The assessee’s main source of income is from lease rentals from the said properties. Except letting out of properties, the assessee has not carried out any other business activity. Therefore, the AO was erred in holding that loan borrowed from M/s TCG Urban Infrastructure Holdings Ltd is for the working capital requirements ignoring all evidences which proves that the said loan was borrowed for acquisition of property. Therefore, we are of the considered view that the assessee has proved nexus between purchase of property and borrowed capital and hence rightly eligible for deduction towards interest paid on loan u/s 24(b) of the Income-tax Act, 1961. The CIT(A), after considering relevant provisions has rightly deleted additions made by the AO. We do not find any error in the order of CIT(A). Hence, we uphold the order of CIT(A) on this issue and reject ground raised by the revenue. Determination of Annual Letting Value - AO has determined annual letting value of the property by estimating notional interest on interest free security deposit - Held that:- In this case, on perusal of the facts available on record, we find that the assessee’s actual rent received is more than the standard rent or municipal value of the property. We further observe that in the case of CIT vs J.K. Investors (Bom) Ltd (2000 (6) TMI 9 - BOMBAY High Court) has observed that if the actual rent received by the assessee is more than the fair rent, then the notional interest cannot form part of the actual rent as contemplated in section 23(1)(b) of the Act. In this case, the actual rent received by the assessee is more than the fair rent of the property. The assessee has let out its property for a monthly rent of Ras.50 per sq.ft. Therefore, we are of the considered view that the AO was erred in estimating notional interest on security deposit by following the decision in the case of Fizz Drinks vs DCIT [2003 (5) TMI 213 - ITAT DELHI-D ] which was totally rendered under different set of facts. Hence, considering the facts and circumstances of the case and also following the decision of Hon’ble Bombay High Court in the case of CIT vs J.K. Investors (Bom) Ltd (supra), we are of the view that notional interest on security deposit cannot be included in the actual rent received or receivable from the property, if the actual rent received is more than the fair rent of the property. Addition towards rent accrued but not due - provision made towards rent accrued but not due by following AS-19 issued by ICAI - Held that:- We find force in the arguments of the assessee for the reason that the ALV of the property is rent received or receivable in respect of property let out, but does not include rent accrued but not due. In this case, rent accrued but not due is not accrued to the assessee for the relevant financial year. The assessee has made a provision for proportionate rent of part of the month by following the accounting standard which is due in the next financial year. Therefore, we are of the view that the AO was erred in including rent accrued but not due for the purpose of determination of ALV of the property. The CIT(A), after considering the relevant submissions has rightly deleted additions made by the AO. We do not find any error in the order of CIT(A). Hence, we are inclined to uphold the order of CIT(A) and reject the ground raised by the revenue. Appeal filed by the revenue is dismissed.
-
2017 (9) TMI 513
Penalty proceedings u/s. 271(1)(c) - non deduction of tds u/s 195 - distributing the software to the end users - levy of interest u/s. 201(1A) - Indo-UK DTAA - Held that:- We are of the opinion that definition of term royalty as appearing in the India UK DTAA apply and amendments made by Finance Act, 2012 would have no bearing on the present case. Even the Cir. No. 333 of CBDT states that where a DTAA provides for a particular mode of computation of income, the same should be followed irrespective of the provisions of the Act. In the case before us, the DTAA is providing particular mode of computation for royalty. As per the agreement the assessee did not have any right to generate the license key or make copies of license key or was provided access to source code in the software. The ASL software products were developed and marketed by it were in the nature of shrink-wrap-software-products that are also known as off the shelf software products. The assessee had no role in developing a software, it was just distributing the software to the end users. Therefore, we are of the opinion that payment by the assessee to ASL for procuring and distributing copyrighted software on principal to principal basis could not be treated as payment towards royalty. ASL was not having a PE in India, therefore, the assessee was not liable to deduct tax at source as per the provision of section 195 of the Act, hence, for its failure it cannot be treated as A-I-D u/s. 201. Reversing the order of the FAA we decide effective First effective Ground of appeal. As far as grossing of tax-rate is concerned, we want to state that we have already held that assessee was not liable to deduct tax at source, therefore, the issue of grossing up would not arise. Secondly, even if the taxes were to be paid same were to be paid by ASL. But, we have already held that as it was not having PE in India so ASL was not supposed to pay tax in India. Levy of interest u/s. 201(1A) of the Act. We have already held that the assessee was not liable to deduct tax for the payments made by it. Therefore, there would not be any liability towards payment of interest under section 201(1A).
-
2017 (9) TMI 512
Revision u/s 263 - loan related to WIP was not considered while calculating the short term capital loss - tax neutral exercise - Held that:- Sale consideration in table no 1 is taken at ₹ 4 crores against the cost of net asset(WIP) of ₹ 37,15,08,970/- which was calculated after deducting the payments towards loan of ₹ 32 crores. Whereas in the second table-2, the sale consideration was taken at ₹ 36,00,00,000/- against the cost of net asset of ₹ 69,15,08,970/- which was before payment towards discharge of loan of ₹ 32 crores. In this case, the short term capital loss was worked out to ₹ 32,64,08,970/- It is amply clear from the two tables hereinabove tha the whole exercise as proposed by the Commissioner under proceedings u/s 263 is tax neutral as no tax evasion is caused by the assessee resulting into any prejudicial to the interest of the revenue. In one case, the assessee has not considered the payment towards loan and taken net consideration and capital gain was worked out by taking the net asset after reduction of loan. Whereas in the second case as proposed by the CIT if the gross amount of consideration is taken the corresponding reduction is not made of the loan from the fixed assets and therefore, the net result is same as calculated by the assessee. In view of this facts, we are of the considered opinion that the one of the condition that prejudicial to the interest of revenue is missing in the present case, and therefore proceedings under section 263 is quashed. - Decided in favour of assessee.
-
2017 (9) TMI 511
Assessment of income - correct computation of income - treat 60% of advance membership fee received as income instead of entire advance membership as income treated by AO - Held that:- A reasonable and fair estimate under these circumstances has to be made based on reasonable scientific method keeping in view business matrix and model of the assessee after study of the by-laws, rules and regulations governing the assessees’ club , memorandum and articles of association, terms and conditions for the grant of membership , terms and conditions under which advance membership fee was received by the assessee, conditions for refund of membership fee, empirical experiences and a scientific working , which need to be carried out keeping in view peculiar business model and matrix of the assessee and also with respect of the assessees’ club. We are , therefore, inclined to set aside and restore the matter to the file of the AO for de-novo determination of the issue on merits in accordance with law to work out spread/rollover of advance membership fee collected for a period of 25 years spread over period of time based on reasonable scientific method keeping in view business matrix and model of the assessee worked out after study of the above parameters as cited by us and also of any other relevant parameter having impact and bearing on computation of correct income of the assessee chargeable to tax. Our decision is in consonance with the recent decision of the Hon’ble Supreme Court in the case of Seagram Distilleries Private Limited (now Pernod Ricard India Limited) v. CIT-III,(2016 (7) TMI 1235 - SUPREME COURT). Appeal of Revenue is allowed for statistical purposes
-
Insolvency & Bankruptcy
-
2017 (9) TMI 494
Insolvency & Bankruptcy procedure - default by Corporate-Debtor - Held that:- We are of the view that as per paragraph 7 Part-V of Form No.1 the bank is required to file copies of the Entries in the Banker's Books maintained in accordance with the Bankers Books Evidence Act, 1891 which the 'Financial-Creditor' had furnished but to make the said statements admissible per se necessary certificate was appended on the statements of account furnished with the affidavit dated 19.07.2017 of the Authorised Signatory of the bank as noticed in the order dated 11.07.2017. The requirement of the Paragraph 7 Part-V of Form No. 1 precisely isthat the bank has to file copies of the account statements which should be maintained as per the Bankers Books Evidence Act, 1891 and to attach copies thereof. The same were accordingly attached with the application originally. The 'Corporate-Debtor' being in default in depositing the financial debt was not in fact disputed rather attempt was made for restructuring of the loan by offering to deposit an amount of ₹ 125 lacs which is not permissible as already observed. The 'Financial-Creditor' has proved by overwhelming evidence that default has occurred, which meets the requirement of Section 3(11) & 12 read with Section 7(3)(a) and Section 7(5) of the Code. The 'Corporate-Debtor' in fact has not disputed that it is in default of making repayments. We further find that the application is complete in all respects as the Insolvency Professional, Mr. Navneet Gupta, CA has also been proposed. This petition is admitted and Mr. Navneet Gupta, CA, #1598, Level-I, Sector 22-B, Chandigarh whose name also figures in the latest list of Insolvency Professionals issued by the Insolvency & Bankruptcy Board of India is appointed as an Interim Resolution Professional. In pursuance of Section 13 (2) of Code, we direct that public announcement shall be immediately made by the Interim Resolution Professional with regard to admission of this application under Section 7 of the Code, We also declare moratorium in terms of Section 14 of the Code
-
2017 (9) TMI 493
Proceedings under Insolvency and Bankruptcy Code - Held that:- Since the Corporate Debtor has admitted issuing Purchase Orders and work order, thereafter the petitioner raising invoices and acknowledging Delivery Challans with signature of the Corporate Debtor side, in case if the Corporate Debtor is to prove some of the goods returned, the burden is cast upon this Corporate Debtor to prove that some of the goods have been returned, since this Corporate Debtor has not made any such efforts to prove to the satisfaction of this Bench that some of the goods have been returned, we have not found any merit in the defense first time set up by the Corporate Debtor, hence, we admit this petition . Public announcement of the corporate insolvency resolution process shall be made immediately as specified under section 13 of the Code. This Bench makes a reference to the Insolvency and Bankruptcy Board of India (IBBI) for the recommendation of Insolvency Professional for appointment as Interim Resolution Professional.
-
2017 (9) TMI 492
Insolvency and Bankruptcy process - violated Regulation 3 of CIS Regulations - Debtor Company had launched CIS without registering itself as Collective Investment Management Company (CIMC) - Held that:- On seeing the present petition filed by the Operational Creditor, it seems there was no correspondence between this Creditor and the Corporate Debtor in between 2013 and 2016 except giving a notice in the year 2016 u/s 434 of the Companies Act, 1956. We don't say that Operational Creditor shall remain corresponding with the Corporate Debtor until this proceeding is initiated but if the present case is set against the background of SEBI orders, then an inference could also be drawn that an effort has been made to take out the Company as well as the investment already frozen by SEBI from the claws of SEBI. Of course, we are not proceeding on the premise that since no correspondence from 2013 to 2016 between the petitioner and the corporate debtor, this petition is liable to be dismissed, it can't be so. hen Bench comes to determination that SEBI order holds field on different connotation, then, when this Bench is of the opinion that the subject matter before this Bench modifies the rights and obligations over an asset upon which already SEBI order in action, then to our wisdom, no order could be passed invoking section 238 jurisdictions to nullify SEBI order. Our point is, the case before SEBI is a case involving fraud by the debtor entering into agreements not recognised by law and raised funds for an amount of more than ₹ 7000 crores, thereby this Code has no overriding effect over the order passed by SEBI, hence the jurisdiction under this Code will not come into operation to nullify the order passed by SEBI, henceforth, no order can be passed in this case in conflict to the order come into existence from SEBI to direct the interest of 51,55,516 victims. Petition dismissed. Petitioner entitlement to file this Petition as Creditor - Held that:- Here in the present case, it is designed as collective investment scheme falling under Section 11AA of the SEBI Act but whereas to do such business, no permission has been taken from the SEBI. Therefore even if is to be taken as Operational Creditor, since there is no lawful agreement recognisable by SEBI creating jural relationship in between the petitioner and the company, this relationship between the petitioner and the corporate debtor can't be considered either as relation in between the investor and the company or as relation in between the creditor and debtor, whereby we hereby hold that this Petitioner is not entitled to file this Petition as Creditor before this Bench.
-
FEMA
-
2017 (9) TMI 491
Offence under Foreign Exchange Management Act, 1999 - penalty imposed - reason to believe for default - Held that:- From the perusal of the SCN, it is clear that the, details furnished by the respondent department in the SCN, were vague and sketchy at best, for the appellant to trace back the contentious transaction of DM16000, which happened eight years back with respect to the time when the first letter was sent to the appellant Company by the respondent Department. As during the course of adjudication proceedings, it was observed that out of the seven contentious remittances, two were repetition. Strong inference can be drawn from there, to show that there was a lot of laxity on part of the respondent department to even ascertain, prima facie, the authenticity of the contentious remittances, in relation to which they started the adjudication proceedings. Considerable doubt is thus, cast upon the claims of the respondent with respect to the remittance in question (DM16000) also, as there can be a likelihood situation that the appellant company never made such a remittance as has been claimed by their learned counsel since the time the appellant company established their first communication with the respondent department, in relation to the allegations against them with respect to the then seven contentious remittances. The contention of the respondent that since the appellant company has been able to justify six remittances, then they should have been able to justify the one in question also, is superfluous and without merit. Thus it is evident that the respondent department has failed to establish the violation beyond reasonable doubt, on the account of the appellant. For the reasons abovementioned, the impugned order dated 04.04.2016 is quashed and set aside. The appeal is allowed.
-
Service Tax
-
2017 (9) TMI 510
Classification of services - classified under research services or under Business Consultancy Services? - the decision in the case of M/s BMD Pvt. Ltd. Versus CCE, Jaipur [2016 (12) TMI 1395 - CESTAT NEW DELHI] contested - Held that: - In view of the fact that the order of the High Court is on the basis of the activity actually undertaken and the materials in support thereto which unmistakenly point that such activity is research activity and not consultancy service we are not inclined to interfere - appeal dismissed.
-
2017 (9) TMI 509
Business Auxiliary Service - Levy of ST on sale of SIM Cards of BSNL - extended period of limitation - Held that: - similar issue decided in the case of M/s. Daya Shankar Kailash Chand Versus CCE& ST, Lucknow [2013 (6) TMI 340 - CESTAT NEW DELHI], where it was held that activity of purchase and sale of SIM card belonging to BSNL where BSNL has discharged the service tax on the full value of the SIM cards, does not amount to providing business auxiliary services and confirmation of demand on the distributors for the second time is not called for - demand set aside - appeal dismissed - decided against Revenue.
-
2017 (9) TMI 508
CENVAT credit - Volvo Tippers and Scania Tippers - Held that: - availment of CENVAT credit of the Central Excise duty paid on the tippers is now settled by the decision of Division Bench of the Tribunal in the case of Ganta Ramanaiah Naidu [2009 (9) TMI 261 - CESTAT, BANGALORE] in the said decision the Bench came to a conclusion the CENVAT credit availed on Central Excise duty paid on tippers is not available. Interest - Held that: - Since the appellant is not eligible to avail CENVAT credit and has reversed the same, and is liable to pay the interest in accordance with the law, the appeal to that extent is rejected. Penalty - Held that: - the penalties which were imposed were set aside holding that these could be a bona fide belief that CENVAT credit Central Excise duty paid is available as tippers were used for rendering output services on which service tax liability is discharged - penalty set aside. Appeal dismissed - decided partly in favor of appellant.
-
2017 (9) TMI 507
Lease Rentals collected by appellant from Theatre owner - Supply of tangible goods for use - case of Revenue is that onetime registration fees collected by the Appellant from the theatre owner is nothing but a part of the consideration for providing the above said taxable service and has to be included in gross amount for providing services and service tax demanded on the same - extended period of limitation - Held that: - there is no suppression of fact on appellant's part. It is also observed that the appellant obtained DDQ (Determination of Disputed Question) dt. 26.6.2008 from Commissioner of Sales Tax, who held that lease rental is liable for VAT. The appellant accordingly was discharging the VAT liability even before the taxability on ‘Supply of Tangible goods for use’. With the above undisputed facts. We are of the clear view that there is no suppression of facts with intent to evade payment of Service Tax on lease rentals on DCE, on the part of the appellant. Therefore we hold that the demand for extended period is clearly time barred - As regard demand of service tax on merit for the normal period, various vital facts and submissions of the Appellant were not properly verified by the Adjudicating Authority, therefore we remand the case relating to lease rentals & registration fees for the normal period with direction to Adjudicating Authority to verify whether the contentions made by the Appellants are correct. CENVAT credit - Capital goods - content delivery services and sale of space for advertisement service - Held that: - there was no contract or agreement between the Theatre owners and the persons whose advertisements were exhibited in cinema theaters. Only the Appellant had an agreement with such persons to exhibit the advertisements. Thus there is no ground to hold that the Appellant were providing any business supports service to Theater owner. The DCE equipment at the most can be said to have been jointly used by the Appellant and the Theater owner to provide the services of Sale of Space for Advertisement. The DCE Equipment being specified Capital goods as defined under Rule 2 (a) and having been used for providing output service are eligible for availment of credit. In terms of Rule 3(1) of Cenvat Credit Rules and proviso to Rule 3 (5) it transpires that the credit is available even if the Capital goods are removed outside the premises of the provider of output service for providing the output service - The appellant paid service tax on service of sale of space for advertisement which was provided through the said DCE. It therefore leaves no doubt that credit on Capital goods is available even if they are removed outside from the premises of the Appellant for providing output service. We are therefore of the view that there is no ground for denial of cenvat credit on Capital goods to the Appellant. Extended period of limitation - Held that: - Adjudicating Authority has admitted that the Appellants have disclosed CENVAT Credit on Capital goods in the return, despite recording this, he has given adverse finding on limitation. Considering the fact that Appellants have been paying VAT from 2006 that too at higher rate than the service tax rate, even before SOTGU Services became taxable service, no malafide can be attributed to invoke extended period for denying cenvat credit - we set aside the demand of Cenvat Credit on Digital Cinema Equipment on merit as well as on limitation. Appeal allowed in part and part matter on remand.
-
2017 (9) TMI 506
SEZ unit - refund of service tax paid - N/N. 12/2013-ST - whether the appellant has the list of approved services of which he is claiming the refund claims or otherwise? - Held that: - the application for the approval of the list of services requires services for use in SEZ operations was filed on 16.08.2012 which was subsequently approved on 22.11.2013 in a meeting held on 19.07.2013 - an identical issue came up before the Tribunal in the case of Trizetto India Private Ltd. [2015 (5) TMI 453 - CESTAT MUMBAI], where it was held that Merely because there was a delay in grant of approval, that cannot take away the right accrued to the appellant for exemption from service tax in respect of the input services - appeal allowed - decided in favor of appellant.
-
2017 (9) TMI 505
CENVAT credit - input services - Custom House Agents service - Sale Commission - Payment Collection from Government Departments - Held that: - reliance placed in the case of COMMISSIONER OF C. EX., RAIPUR Versus BHILAI AUXILIARY INDUSTRIES [2008 (12) TMI 134 - CESTAT NEW DELHI], where it was held that definition of ‘input service’ as given in Rule 2(1) of CCR, 2004, covers, in addition to the services used by a manufacturer whether directly or indirectly in or in relation to manufacture, other service also, including the services used in relation to advertisement or sales promotion - the said services are covered under input services - appeal dismissed - decided against Revenue.
-
Central Excise
-
2017 (9) TMI 504
Refund of unutilised CENVAT credit - export of services - Rule 5 of CCR, 2004 - Held that: - the refund u/r 5 would be available when any input or input service is used in manufacture of any final product or letter of undertaking or use in the intermediate product cleared for export, or used in providing output service which is exported. If this conditions are satisfied, refund of CENVAT would be available subject to other conditions mentioned in the rules - Admittedly, the CENVAT does not relate to any input or input service used in any final product or used in intermediate product cleared for export or used in providing output service which is exported - appeal dismissed - decided against appellant.
-
2017 (9) TMI 503
Penalty u/r 25 of CER, 2002 - default of payment u/r 8(3A) of CER, 2002 - Held that: - Rule 25 prescribes confiscation of goods upon breach of the conditions set out therein and penalty not exceeding the duties on excisable goods in respect of which such contravention is deducted or ₹ 5000/- whichever is greater - In the present case, the Tribunal emphasized on the facts that soon upon being informed about the breach, the assessee had paid the entire duty with interest - penalty set aside - appeal dismissed - decided against Revenue.
-
2017 (9) TMI 502
Classification of goods - "process oil / speciality oil" cleared by the appellant - appellants classified the said goods under Heading 2710.50 during the material time and cleared the same on payment of duty. The Revenue entertained a view that the said product would merit classification under heading 2707.90 - whether or not the appellants are engaged in an activity which will amount to "manufacture" of a new excisable product in terms of Section 2 (f) of the Central Excise Act, 1944? - Held that: - It is not necessary that to categorise a process as manufacturing process that there should be necessarily a chemical change. Blending or compounding one mineral oil with another mineral oil can certainly result in a new product known in the market for specific use - In the present case, the product is known specifically in the tyre industry and it is a speciality oil known differently than the raw material which is nothing but furfural extracts - the processes undertaking by the appellant satisfy the criteria for "manufacture" attracting excise duty. Classification of goods - circular dt. 13.2.1989 - Held that: - The appellant's claim that Heading 2713 is not applicable to the impugned goods as the product is not oils obtained of distillation of high temperature coal tar, we note that said tariff heading covers similar products in which weight of aromatic constituents exceeds that of non-aromatic constituents. We are in agreement with the reasons elaborated in the circular dt. 13.2.1989 of the Board and note that appellant did not bring out by way any technical literature/support to contest the said finding. Accordingly, we uphold the classification adopted by the lower authorities - goods classified correctly under CTH 2707.90. Time limitation - Held that: - there can be no question of suppression, wilful misstatement etc. for invoking extended period of limitation for demand. In any case, no such allegation or evidence was recorded in the SCNs - the original authority should re-quantify the duty liability after consideration of the demands which are issued within normal period - matter on remand. Interest on differential duty - Held that: - Board vide master circular dated 10.3.2017 also states that the interest needs to be demanded and recovered following due process of demand and adjudication. As such interest liability without due notice and adjudication is not sustainable. Regarding the claim of appellant for MODVAT credit on inputs, the present proceedings are for only differential duty and hence this aspect is not for consideration. Appeal dismissed - decided against appellant.
-
2017 (9) TMI 501
CENVAT credit - input services - Since the issue regarding the availability of Cenvat Credit on the said service was not taken up before the original adjudicating authority, the Revenue has contended that it is not open to take up the said issue before the appellate forums - Held that: - a SCN was issued on the ground that the said disputed services are not input service. The appellants have not addressed the said issue before the original adjudicating authority. However, it does not preclude them to raising the issue before the appellate forum. In their reply to the original adjudicating authority, the appellants have not specifically conceded that the credit is not admissible to them - matter needs to be remanded to the original adjudicating authority to examine the issue on merits - appeal allowed by way of remand.
-
2017 (9) TMI 500
Penalty u/s 14 & 15(1) of CER, 2004 - reversal of CENVAT credit - rendering of taxable as well as exempt services - N/N. 82/84 CE dated 31.03.1984 - Held that: - similar issue decided in the case of DHARAMSI MORARJI CHEMICAL CO. LTD. Versus COMMR. OF C. EX., RAIGAD [2010 (3) TMI 561 - CESTAT MUMBAI], where the very same rule 6 of Cenvat Credit Rules was invoked, where the Bench has held that the provisions of Rules are not attracted in case in hand where CT-3 certificate has been issued - credit allowed - appeal allowed - decided in favor of appellant.
-
2017 (9) TMI 499
CENVAT credit - duty paying invoices - fake invoices - no movement of goods took place - Held that: - the issue is squarely covered by the said ruling of High Court of Allahabad in the case of Commissioner of Central Excise, Customs & Service Tax Versus Juhi Alloys [2014 (1) TMI 1475 - ALLAHABAD HIGH COURT], where the assessee was found to have duly acted with all reasonable diligence in its dealings with the first stage dealer, and credit was allowed. The transactions in respect of inputs in dispute were reflected in the books of account and therefore, the above stated ruling of Hon'ble High Court of Allahabad is squarely applicable in the present case - appeal allowed - decided in favor of appellant.
-
2017 (9) TMI 498
CENVAT credit - whether sou moto reversal of CENVAT credit amounts to non-availment of CENVAT credit? - Held that: - the Hon’ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. Versus Collector of Central Excise, Nagpur [1995 (12) TMI 72 - SUPREME COURT OF INDIA], has ruled that if Cenvat credit is availed and the same is reversed before utilization of the same then it will amount as if Cenvat credit was not availed - Cenvat credit was reversed on 01/03/2011 and therefore, the said Cenvat credit of ₹ 31,31,991/- was not availed by the respondent as on 02/03/2011 - appeal dismissed - decided against Revenue.
-
2017 (9) TMI 497
CENVAT credit - 4 Cranes along with parts of handling equipments installed in 1996, which were released by IDBI bank - time limitation - Section 11A of Central Excise Act, 1944 - the demand has been raised by the Department after four and half years after receiving the intimation under Rule 57 T - fraudulent invoices - suppression of facts - Held that: - it is settled law that for availing Modvat credit, there are two prerequisites. The first, being acquisition of capital assets on payment of duty along with proper duty paying document and secondly the receipt of the particular capital goods in the factory of production - at the time of inspection, revenue found the presence of the 4 EOT cranes in the factory of respondents M/s ATV and also found the relevant invoices issued by the supplier namely M/s VEL. Further, the cranes were inspected and finalised by IDBI Bank Ltd. and in such case of bank finance as per the facts on record, the cranes were inspected by the authorized representative of the bank, prior to purchase and also after purchase and the receipt in the factory of the respondent M/s ATV and only on such conformation the bank could release the amount of finance to the supplier. The entire allegation of revenue is based on flow back of money to ATV. The said allegation is misconceived in as much as admittedly the 4 cranes in questions were leased by IDBI Bank and the ownership of the same vests with IDBI bank only. There is no finding that the bank have been involved in fraud in collusion with the company M/s ATV and its Directors/Managers. Further, the allegations are vague in absence of enquiry made against M/s VEL and no collusion with intent to defraud, established by the revenue. The whole allegation of the revenue is presumptive and hypothetical. M/s IDBI Bank has collected rental, interest, compensatory finance charges, costs and differences and other dues from respondent M/s ATV under the Lease Agreement, which has not been disbelieved by the Department. The Order-in-Original is bad and rightly set aside by the learned Commissioner (Appeals) on the finding that denial of cross examination, including examination of the persons, whose statements are relied upon by revenue in the course of adjudication proceedings, is violation of the provisions of Section 9D of the Act and as such the findings in the Order-in-Original are vitiated - there being no fraud established, the invocation of extended period of limitation is also untenable and the show cause notice is unsustainable. Appeal dismissed - decided against Revenue.
-
2017 (9) TMI 496
Job-work - goods sent to job-worker for processing and received back - case of Revenue is that Central Excise duty should have been paid by them before the goods were sent for job work - Held that: - it is an admitted fact that the goods on which Central Excise duty amounting to ₹ 48,07,703/- was demanded were the goods on which appropriate Central Excise duty was paid before clearance from the factory after being received from the job workers - through the said SCN dated 25/09/2009 Revenue has raised the demand of Central Excise duty on the goods which have already suffered Central Excise duty. Such type of demand of Central Excise duty on the goods on which Central Excise duty was already paid is not provided for in Central Excise Act, 1944. Therefore, the SCN is not sustainable - appeal allowed - decided in favor of appellant.
-
CST, VAT & Sales Tax
-
2017 (9) TMI 495
Attachment of goods and Bank Accounts - bogus billing activities - Inter-state sales - registrations of five dealers to whom the petitioner had sold the goods claiming it to be interstate sale and paying reduced tax were cancelled abinitio - Held that: - The petitioner’s case that even in case of the dealers whose registrations were cancelled, the petitioner’s goods were subjected to interstate sale and therefore correctly taxed at reduced rate would shortly be tested during such assessment - at this stage it would not be correct to allow the authorities to attach the bank accounts for a possibility of total recovery of ₹ 2.81 crores which would include not only the basic tax but also the interest and penalty at the maximum imposable rate - by allowing the attachment of the goods to continue, the orders attaching the petitioner’s bank accounts are set aside - decided partly in favor of petitioner.
|
