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TMI Tax Updates - e-Newsletter
January 15, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
PMLA
Service Tax
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Penalty u/s 271(1)(c) - even if it is assumed that concealment of the income was invented by the Assessing Officer from the details that are furnished by the assessee, that does not amount to a disclosure made by the assessee nor does it absolve the assessee from the concealment of income or furnishing of inaccurate particulars of income.- Levy of penalty confirmed - HC
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Disallowances as the overloading charges u/s 37 -whether this is nothing but a penalty as per provision of section 73 of the Indian Railway Act, 1989 - these payments were not in the nature of penalty for infringement of law and were purely in the nature of compensatory charges - expenses allowed - AT
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Exemption u/s 11 - an assessment proceeding which is pending in appeal before the first appellate authority should be deemed to be assessment proceedings pending before the assessing officer within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11 of the Act. - AT
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Revision u/s 263 - Endless enquiry is not possible and it is for the learned Assessing Officer to decide when to end the enquiry. The learned CIT cannot transgress the jurisdiction under Section 263 of I.T. Act, 1961 by mentioning that no proper enquiry was made. - AT
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Penalty imposed u/s 272A(2)(c) - Since there is no reasonable cause furnished by the assessee as mentioned u/s 273 of the IT Act for non furnishing of information sought by the ITO(intelligence) u/s 133(6) of the Act it is of the view that the order imposing penalty cannot be quashed. - AT
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Reopening of assessment - It was clear that A.O. recorded incorrect and non-existing reasons for reopening of the assessment. Therefore, on the face of it, the reopening of the assessment is void and bad in law. - AT
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Initiation of proceeding under Section 153A - the concluded assessment by operation of law on expiry of time limit for issuing notice under Section 143(2), cannot be reopened. - AT
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Capital gain computation - AO has invoked section 50C merely relying on the SRO value for the purpose of stamp duty - sale of assets by the bank through action due to default in paying debts - The sale was distress sale - AO cannot invoke section 50C - AT
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Deemed dividend addition u/s 2(22)(e) - Clause (ii) of section 2(22) provides that the term dividend shall not include any advance or loan made to a shareholder by a company in the ordinary course of business where the lending of money is substantial part of the business of the company - AT
Customs
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Refund claim - the respondents are bound to honor the redemption letter and effect the refund. The respondents cannot call upon the petitioner to prove when the bank guarantee was encashed. It is for the Department to verify their records and come to a conclusion. - HC
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EPCG Scheme - valuation - appellants are trying to solvage something out of a lost case. When the goods were found not to be eligible for concession under EPCG scheme, having found to be old and used, the appellants took a plea that, that being so, the value should be accordingly reduced. We find such submission as untenable - AT
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Classification of imported goods - bulk Reishi Gano Powder - bulk Ganocelium Powder - The impugned order has erred in classifying the product as Ayurvedic medicine and it should have been correctly classified as food supplement as pleaded by the Revenue - AT
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Penalty u/s 112(b)(ii) of the CA, 1962 - in view of the fact that the differential duty along with interest was paid before initiation of the show cause proceedings and such amount was appropriated into the Government account in the adjudication order, penalties cannot be imposed - AT
Indian Laws
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Clause (b) of Subsection 1 of Section 7 of Bombay Stamp Act, 1958 is intended to ensure that no one evades the stamp duty payable on an instrument under the said Act by executing and stamping the original in another State where a lesser stamp duty is payable and thereafter, bring a copy thereof within the State for doing something on the basis of the rights and liabilities created by it. The legislative intent is to ensure that there is no evasion of duty on such instruments. The provision is to levy only a differential duty. There is no double taxation. - HC
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There is no provision contained in the SEZ Act, which grants exclusivity to any person, which otherwise would encourage monopolistic and restrictive trade practices, or which would run counter to and frustrate the very purpose and object of promoting competitive markets in the matter of petroleum, petroleum products and natural gas, as contained in the PNGRB Act. - HC
Service Tax
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Construction of Complex Service - residential complex for use by the staff of M/s Aditya Cement - the staff quarters meant for use by the Income Tax Department for their employees is clearly covered by the explanation “personal use” - AT
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BAS - services rendered by the foreign based vendors - onsite services performed outside India - reverse charge - It is clear that the destination has to be decided on the basis of the place of consumption, not the place of performance of service - As such, the appellants are liable to pay service tax on the services, which they received from various vendors located outside India. - AT
VAT
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Input tax Credit - Constitutional validity of Section 9 (2) (g) of the Delhi Value Added Tax, 2004 - Articles 14 and 19 (1) (g) of the Constitution of India - failure to deposit VAT collected from its buyers, which included SCT - SC refused to interfere in the matter - SLP dismissed with the liberty to approach the HC on merit
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Classification of goods - NEBULA Jewellery Watch - whether fall under Entry 13(ii) of Schedule-II to the Value Added Tax Act or under Entry 87 of Second Schedule to the Act? - SC dismissed the SLP
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Concessional rate of tax - non-issuance of Form 'C' on the ground that assessee is not taxable - Once a certificate has been issued by the competent authority, it was impermissible for the authorities to withhold issuance of certificate in Form 'C'. - HC
Case Laws:
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Income Tax
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2018 (1) TMI 609
Addition u/s 14A - Held that:- What is not in dispute in the present case is that after the CIT(A) granted limited relief and reduced the quantum of the disallowance, the assessee was satisfied. It did not prefer either an appeal or a cross-objection within the time stipulated in this regard. This, in the opinion of the Court, meant that the issue of applicability of Section 14A attained finality. The appellant / assessee, in the light of CIT v. Holcim India (P) Ltd. (2014 (9) TMI 434 - DELHI HIGH COURT), however, woke up and chose to approach the ITAT, the appeals pending before it by the Revenue. The appeals were preferred in 2011, by the Revenue. The CIT(A) had made the order on 27.10.2010. In the circumstances, the belated cross-objections – by over four years, in the opinion of the Court, meant that the appellants were seeking to rake up stale issues for which they had accepted the finality as regards their tax liability. No question of law arises.
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2018 (1) TMI 608
Retrospective amendment to Sections 28 and 80 HHC and the validity of CBDT Circular dated 17.1.2006 (no. 2 of 2006) made in the light of the amendments questioned - Held that:- Supreme Court in ‘Commissioner of Income-tax vs. Avani Exports’ (2015 (4) TMI 193 - SUPREME COURT), which affirmed the declaration and held that the retrospectivity ascribed to the amendments, was unconstitutional. Consequently, the amendments became, in effect, prospective in nature. This Court notices that in the meanwhile, a Division Bench of this Court in ‘Pawan Kumar Jain vs. Union of India’ (2014 (8) TMI 32 - DELHI HIGH COURT) had also concluded that the amendment could not be treated as retrospective and directed further relief. In the light of these developments, the Court is of the opinion that the provisions are to be treated as prospective and not retrospective; the reliefs in these proceedings are therefore, to be granted. Writ petitions are allowed in terms of the declaration of law in Avani Exports; any demands made or benefits sought to be curtailed or withdrawn, are declared as illegal.
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2018 (1) TMI 607
Addition u/s 68 - AO took note of the statement made by the individual styled as Director, disowning the investment made in the assessee company by M/s. Creative Financial Services Pvt. Ltd. - Held that:- This Court is of the opinion that the lone circumstance of a Director disowning the document per se could not have constituted a fresh material to reject the documentary evidence. In this case, the existence of the company as an income tax assessee, and that it had furnished audited accounts is not in dispute. Furthermore, its bank details too were furnished to the AO. If the AO were to conduct his task diligently, he ought to have at least sought the material by way of bank statements etc. to discern whether in fact the amounts were infused into the share holder’s account in cash at any point of time or that the amount of ₹ 1.3 crores – in the case of M/s. Creative Financial Services Pvt. Ltd and ₹ 3.7 crores in the case of other share applicants were such as to be beyond their means. In the absence of any such enquiry, the Court is of the opinion that the findings holding that the assessee had not discharged the onus placed upon it by law cannot be considered unreasonable. No question of law arises.
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2018 (1) TMI 606
Claim of depreciation by assessee trust - ITAT allowed the claim - Held that:- The facts of the case are that the respondent-assessee is engaged in imparting education and educational activities and is currently educational institute by the name of Mahatma Jyoti Rao Phule. The respondent-assessee was granted education vide order dated 8.8.2014 with effect from 26.3.2014. Hence, the assessee claimed exemption u/s 10, 11 & 12 of the Act. However, the AO in re-assessment proceedings disallowed the claim of assessee’s exemption u/s 11 and consequential issues related to tax on account of disallowance of benefit u/s 12AA and further deleted the claim of depreciation. We have gone through the judgment of CIT(A) & ITAT. We are in complete agreement with the view taken by the Tribunal. No substantial questions of law arises.
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2018 (1) TMI 605
Reopening of assessment - Allowability of deduction u/s.80-IA(4) - Held that:- This Court is satisfied that there was no material on record before the Assessing Authority indicating any failure on the part of the assessee to truly and fully disclose the relevant material before the original Assessing Authority while passing the original assessment order u/S.143(3) of the Act on 28.03.2013 and the Assessing Authority had discussed all the relevant facts and evidence and had rightly allowed, albeit partly, the deduction u/S.80-IA(4) of the Act to the assessee and there was no jurisdiction that the Respondent-Assessing Authority to invoke Section 147/148 of the Act for reassessment for the A.Y. 2010-11 in the present case.
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2018 (1) TMI 604
TDS u/s 194C - payments to the distributors for carrying out the work of exhibitor without deducting tax at source - addition u/s 40(a)(ia) - Held that:- In a similar matter, in the assessee’s own case, for the assessment years 2002-03, 2003-04, and 2004-05, the Tribunal had held that the exhibition of film in the theatre is not an activity expressly covered by the Explanation. The Tribunal was of the view that anything which is not expressly covered under the category of work cannot be regarded as “work” by extended meaning of work as described in section 194C of the Act, also confirmed by HC [2015 (2) TMI 638 - GUJARAT HIGH COURT]- Decided in favour of assessee
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2018 (1) TMI 603
Penalty u/s 271(1)(c) - proof of concealment or furnishing of inaccurate particulars of income - Held that:- The sum total of the reasoning of the Tribunal is that since the details were available on the material filed by the assessee before the Assessing Officer, the assessee cannot be said to have furnished inaccurate particulars of his income or concealed any part of his income. If the concealment or furnishing of inaccurate particulars of income is an act committed by the assessee at the time of filing the return, the liability of the assessee or the culpability of the assessee is his conduct at the time when he filed the return. In such a case, even if it is assumed that concealment of the income was invented by the Assessing Officer from the details that are furnished by the assessee, that does not amount to a disclosure made by the assessee nor does it absolve the assessee from the concealment of income or furnishing of inaccurate particulars of income. Obviously therefore, the reasoning of the Tribunal is patently illegal. Therefore, we set aside the orders passed by the Tribunal and restore the order passed by the Assessing Officer. - Decided against assessee
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2018 (1) TMI 602
Entitlement to deduction u/s 80P(2) in respect of interest received on deposits with Sub-Treasuries - whether interest received on investments with sub-treasury is liable to be assessed under the head ‘income from other sources’ or ‘income from business’ - Held that:- In view of the judgment of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Coop Ltd (2015 (2) TMI 995 - KARNATAKA HIGH COURT) and Cochin Bench of the Tribunal in the case of Service Coop Bank Ltd.,(2016 (7) TMI 1405 - ITAT COCHIN), we are of the view that the assessee is entitled to the benefit of deduction u/s 80P(2) of the income-tax Act, with regard to interest received on deposits made by the assessee with sub treasury amounting to ₹ 3,30,866 for assessment year 2007-2008. - Decided in favour of assessee.
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2018 (1) TMI 601
Prior period expenses allowability - Held that:- Prior period expenses are to be allowed as deduction in the year under consideration and accordingly, we dismiss the appeal of the revenue. See Hindustan Shipyard Ltd., Visakhapatnam and others Versus Addl. CIT Range-3, Visakhapatnam and others [2011 (2) TMI 1536 - ITAT VISAKHAPATNAM].
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2018 (1) TMI 600
Disallowance made u/s 14A r.w.r. 8D(2)(ii) and Rule 8D (2) (iii) - Held that:- Under sub-clause (iii), what is disallowed is ½ percentage of the numerator B in rule 8D(2)(ii). Again this is to be calculated in the same line as mentioned earlier in respect of Numerator B in rule 8D(2)(ii). Therefore, not all investments become the subject-matter of consideration when computing disallowance u/s 14A r.w.r 8D. The disallowance u/s 14A r.w.r. 8D is to be in consideration to the income which does not form part of the total income and this can be done only by taking into consideration the investment which has given rise to this income which does not form part of the total income. So far the disallowance under Rule 8D(2)(ii) is considered, the assessee company has proved that it has sufficient funds to invest in shares and securities, therefore, no disallowance is warranted. Therefore, we are of the view that disallowance u/s 14A r.w.r. 8D(2)(ii) should not be made in the case of the assessee under consideration because the assessee had its own funds to invest in shares and securities and some of the investments were made by the assessee in subsidiary companies for strategies purpose. Hence, we confirm the order passed by the ld CIT(A), so far the disallowance under Rule 8D (2) (ii) is concerned. For disallowance under Rule 8D(2)(iii), the assessee had suo-moto disallowed ₹ 1,05,100/-, however, we note that in order to compute the disallowance under Rule 8D (2) (iii), only dividend bearing securities should be considered. Therefore, we direct the AO to compute disallowance after taking consideration the investment which was given rise to the exempt income, that is, dividend bearing shares and securities, as per the method suggested in the judgment of REI Agro ltd. vs. DCIT reported in [2013 (9) TMI 156 - ITAT KOLKATA] and the disallowance so computed should be reduced by ₹ 1,05,100/-, the suo moto amount disallowed by the assessee. - Decided partly in favour of revenue
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2018 (1) TMI 599
Undisclosed income of the assessee - search u/s 132 - transactions recorded in the loose sheets - burden with regard to the ownership of the documents mentioned in Annexure GVS/3 & GVS/4 - Held that:- Merely relying on the statement of the assessee’s son, the A.O. cannot make addition in the hands of the assessee without bringing any tangible evidence. Once the assessee furnished the details of the transactions, the name and address of the person, the burden of the assessee stands discharged and shifts to the revenue and the revenue has to discharge its burden making necessary enquiries. In this case, even though assessee has discharged the burden, the A.O. has not discharged its burden. Therefore, we hold that the A.O. has not made out a case for making addition in the hands of the assessee and the transactions recorded in the Annexure GVS/3 & GVS/4 do not related to the assessee and related to Smt. S. Venkata Ratnam and the addition if any required to be made in her hands but not in the hands of the assessee. Accordingly, the additions made on the basis of Annexure GVS/3 & GVS/4 stands deleted. With regard to the additions made in respect of the seized material marked as Annexure GVS/1, the assessee’s son in question No.4 has stated that the copies of the relevant documents in page Nos.18 to 22 represents the money lending transaction done by his father. This fact was neither disputed by the assessee nor disputed by his son. In the subsequent replies filed before the A.O., the assessee has not disputed the contents of the loose sheets numbered in GVS/1, GVS/18 to 22. In the loose sheets found and seized during the course of search in GVS/1, there was a principal amount as well as the interest recorded which not was disputed by the assessee and did not explain. Therefore, we hold that the amounts recorded in the loose sheets in GVS/1 from page Nos.18 to 22 are related to the money lending transactions of the assessee as stated by the assessee’s son in his statement dated 18.3.2009. Accordingly, we uphold the additions for the assessment years 2005-06 to 2006-07 accordingly - decided partly in favour of assessee
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2018 (1) TMI 598
Estimation of income @ 12.5% on construction contracts and 8% on sale of plots clear of depreciation and all other expenses - Held that:- From the perusal of the assessment order, it is observed that the A.O. did not reject the books of accounts before resorting for estimation of income. In the absence of any evidence brought on record to hold that the expenditure claimed by the assessee is unreasonably high and quantification of unverifiable nature of expenditure and fresh facts to resort higher estimation of income, we do not see any reason to interfere with the order of the Ld. CIT(A) and we hold that the Ld. CIT(A) has rightly applied the estimation of income @ 8% on contract receipts and 5% on sale of plots. Accordingly, the order of the Ld. CIT(A) is upheld and the revenue’s appeal on these grounds are dismissed. Interest income under the head Other sources - nature of income - Held that:- We hold that the interest income received on deposits required to be assessed under the business income but not as separate source of income. Hence, we uphold the order of the Ld. CIT(A) and dismiss the appeal of the revenue on this ground. See CIT Vs. LOK holdings [2008 (1) TMI 365 - BOMBAY HIGH COURT] and Eveready Industries Limited Vs. CIT and Anr (2009 (12) TMI 226 - CALCUTTA HIGH COURT).
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2018 (1) TMI 597
Disallowances as the overloading charges u/s 37 -whether this is nothing but a penalty as per provision of section 73 of the Indian Railway Act, 1989 - stand of the assessee was that these payments were not in the nature of penalty for infringement of law and were purely in the nature of compensatory charges and therefore cannot be disallowed under Explanation to section 37(1) - Held that:- The expenses were not allowed as deduction. We are of the view that in the facts and circumstances of the present case the claim of the assessee for deduction was rightly allowed by CIT(A). We therefore uphold the order of CIT(A) and dismiss ground no.1 raised by the revenue. Assessee as an employer withheld the provident fund contribution payable by its employees from their salaries payable, as their share of contribution to Provident Fund (PF) and Employees State Insurance (ESI) - whether the order of the CIT(A) is erroneous because it relied on the sec.43B(b) of the Act whereas the present issue is involved with Sec.36(1)(va) read with 2(24)(x) ? - Held that:- Employees’ contribution to PF paid on or before the due date of filing the return of income u/s 139(1) of the Act should be allowed as deduction. SEE CIT vs Vijayshree Ltd. [2011 (9) TMI 30 - CALCUTTA HIGH COURT] Additions u/s 14A - Held that:- In the light of the uncontroverted factual details with regard to availability of own funds the disallowance of interest expenses in terms of Rule 8D(2)(ii) of the Rules was rightly deleted by CIT(A). As far as disallowance under Rule 8D(2)(iii) of the Rules is concerned, the CIT(A) has followed the decision of the Tribunal in the case of REI Agro Ltd. (2013 (9) TMI 156 - ITAT KOLKATA) and has directed the AO to exclude the investments which did not yield tax free income, while working out the average value of investment. We find no grounds to interfere with the order of CIT(A).
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2018 (1) TMI 596
Validity of assessment made u/s 153C - estimation of income in respect of the flats sold on the basis of the statements recorded from the flat buyers Mr. V.V.S. Venugopal and others u/s 131 - Held that:- As per the provisions of section 153C of the Act, it is mandatory to have the satisfaction of the A.O. that money, bullion, jewellery or other valuable article or thing or any books of accounts, documents seized or requisitioned pertains to or relates to the assessee, which means that unless there is an incriminating material belonging to the assessee is found, the action u/s 153C of the Act is not permissible. In the assessee’s case there was no incriminating material found and seized from the premises of the group cases. Therefore, we hold that the notice issued u/s 153C of the Act is not sustainable and accordingly quashed. This view is upheld in the case of CIT Vs. Sinhagad Technical Education Society (2017 (8) TMI 1298 - SUPREME COURT OF INDIA). Thus we hold that the notice issued u/s 153C of the Act is unsustainable and accordingly quashed. - Decided in favour of assessee
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2018 (1) TMI 595
Exemption u/s 11 - Benefit of registration u/s. 12AA denied - AO completed the assessment u/s. 144 by denying exemption for non production of copy of registration from the prescribed authority - Held that:- Going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the first appellate authority should be deemed to be assessment proceedings pending before the assessing officer within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11 of the Act. CIT-A was justified in directing the AO to give the benefit of registration u/s. 12AA of the Act to the assessee for the A.Y under consideration. Accordingly, we uphold the impugned order of the CIT-A. However, it is pertinent to note that the assessment was completed u/section 144 of the Act and it is needless to mention that it is open to the AO to make assessment afresh in accordance with law. The grounds raised by the revenue are dismissed.
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2018 (1) TMI 594
Revision u/s 263 - Held that:- It is observed that the assessee brought to the notice of the CIT that in respect of group concern M/s Sujana Metal Products, similar depreciation claim was allowed by the AO when the CIT set aside the issue to him for examination, but, in the given case, the CIT ignored the submissions of the assessee. In the present case, the learned Assessing Officer after duly considering the explanation and information filed in response to the notice issued u/s. 143(2) of the Act, on being satisfied with such explanation chose not to make any further enquiry. Endless enquiry is not possible and it is for the learned Assessing Officer to decide when to end the enquiry. The learned CIT cannot transgress the jurisdiction under Section 263 of I.T. Act, 1961 by mentioning that no proper enquiry was made. Thus we quash the order passed by the CIT u/s 263 of the Act, considering the fact that CIT has not brought on record the findings to substantiate that the order passed by AO is erroneous and also it is prejudicial to the interests of revenue. Mere set-aside without proper findings by him will be illegal and without proper jurisdiction. Therefore, we restore the order of AO passed u/s 143(3) of the Act - Decided in favour of assessee.
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2018 (1) TMI 593
Estimating the income after rejecting the books of account - enhancement of the G.P. - Held that:- CIT(A) accepted the turnover declared by the assessee by holding that the Assessing Officer has failed to bring on record any adverse material to justify the quantification of undisclosed turnover. However, he reduced the G.P. estimation from 8.5% to 8% on the declared turnover. The facts on record shows that this estimate of G.P. @ 8% was not based on any specific defects noted by the Assessing Officer or by the ld. CIT(A) in the expenses claimed in the P&L account. Once CIT(A) has accepted the declared turnover of the assessee in absence of any specific defects and without specifying any defects in the books of account in estimating the G.P. @ 8% is also not justified. Keeping in view the various decisions relying upon by the ld AR, the Bench is of the view that the assessee was maintaining books of account, which were duly vouched. No specific defect has been pointed out by any of the authorities below. In absence of any contrary material on record to the declared gross profit on the declared turnover, the enhancement of the G.P. is unjustified. Therefore, the addition sustained by the ld. CIT(A) is deleted. Addition U/s 68 - Held that:- After considering the relevant documents submitted by the assessee, the Bench is of the view that the assessee was able to discharge the onus as casted upon by Section 68 of the Act for establishing the identity, creditworthiness and genuineness of transactions. It is also a fact that the assessee has received the amount by cheque from Shri Suresh Chand. Shri Suresh Chand has also explained the source of source from where the amount was received by him in his bank account on the maturity of FDR maintained with Dholpur Urban Cooperative Bank Ltd. against which he got banker’s cheque which was deposited in his account and the same was source of ₹ 10 lacs given by him to assessee. Considering all these facts and circumstances, the addition to the extent of ₹ 10.00 lacs is deleted. No pleadings were made for the balance addition U/s 68 of the Act of ₹ 27,500/-, therefore, addition to that extent is confirmed.
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2018 (1) TMI 592
Disallowance of depreciation on electrical equipments - Held that:- AO has erred in not granting depreciation at 15% by not considering the electrical installation as plant & machinery. - Decided in favour of assessee Disallowance of unapproved gratuity - Held that:- Disallowance u/s.40A(7) of the IT Act cannot be made on the ground of absence of approval of gratuity fund as the deduction was not claimed on account of any provision. Disallowance of interest expenses and finance charges - Held that:- Aappellant had demonstrated the utilization of borrowed funds by way of producing the relevant extract of Bank Statement and AO has failed to appreciate that disallowance of interest expenses cannot be made even though fund are utilized for business purposes. So far as utilization of reserve and surplus is concerned. The AO failed in calculating that appellant had utilized reserve and surplus and AO has failed to appreciate that it goes to prudence of the appellant company to utilize the reserve and surplus. AO has no right to suggest as to how the funds, reserves and surplus, share capital etc. should be utilized. It is the company who decides the time of utilization of reserve and surplus funds. During the year under consideration appellant has taken fresh loans from (i) Ranjit Sen, (ii) Aditya Sen, (iii) Supriya Sen, (iv) Suparna Sen, (v) R. R. Gopal. All other balances are opening balances. Thus without prejudice to the above and in the alternative, the appellant stated that the proposition that when advance have been made in the past for which no disallowance has been made in the year of advance, there could be no disallowance in the subsequent year and now it is settled by the decision in case of Shridev Enterprise [1991 (1) TMI 52 - KARNATAKA High Court] and CIT vs. Sushma Kapoor [2009 (10) TMI 56 - DELHI HIGH COURT]. Unexplained/unsecured loan - Held that:- The amount of ₹ 20,00,000/- is an opening balance which is being carried forward for F.Y.2007-08 and there is no new amount has been taken during the year under consideration and an addition u/s.68 is not legal and assessee cited a judgment CIT vs. Usha Stud Agricultural Famrs Ltd. (2008 (3) TMI 91 - DELHI HIGH COURT) in the appeal, it has been held that no addition u/s.68 with respect to opening balance. In our considered opinion, in such circumstances this ground of appeal cannot sustain. Addition toward the late payment of employees contribution to PF and ESIC - Held that:- The issue is squarely covered against the assessee by Hon’ble jurisdictional High Court’s judgment in the case of CIT vs. Gujarat State Road Transport Corporation (2014 (1) TMI 502 - GUJARAT HIGH COURT), wherein it is categorically held that in the case of delayed deposit of employees contribution to PF, the same will not be deductable in computing income under section 28 of the Act.The law so laid down by the Hon’ble jurisdictional High Court is binding on us. The mere fact that an appeal against the said decision is pending before the Hon’ble Supreme Court does not dilute binding nature of this judicial precedent. - Decided against assessee.
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2018 (1) TMI 591
Penalty imposed u/s 272A(2)(c) - no valid reason for not furnishing the information called for u/s 133(6) - Held that:- On identical facts the Cochin Bench of the Tribunal in the cases of Kakoor Service Co-operative Bank Ltd. (2018 (1) TMI 548 - ITAT COCHIN) had held that the penalty imposed u/s 272A(2)(c) of the Act is valid. The assessee has not offered any valid reason for not furnishing the information called for u/s 133(6) of the Act. Many of the notices issued by the ITO (Intelligence) were never responded to by the assessee. In many instances the Assessing Officer has mentioned that when they had approached, the assessee Society, for seeking information u/s 133(6) of the Act there was total lack of co-operation on the part of the assessee society as well as threat (reference order imposing penalty u/s 272A(2)(c). Since there is no reasonable cause furnished by the assessee as mentioned u/s 273 of the IT Act for non furnishing of information sought by the ITO(intelligence) u/s 133(6) of the Act it is of the view that the order imposing penalty cannot be quashed. - Decided against assessee
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2018 (1) TMI 590
Entitled to the benefit of deduction u/s 80P(2) - Held that:- In the instant case, the assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record. The Hon’ble High Court in The Chirakkal Service Co-Operative Bank Ltd. [2016 (4) TMI 826 - KERALA HIGH COURT] had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, we hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act. Therefore, we see no reason to interfere with the order of the CIT(A) and we uphold the same. It is ordered accordingly. Interest received on FD - whether it is to be assessed as ‘income from other sources’ or ‘income from business’- Held that:- The Cochin Bench of the Tribunal in the case of The Kizhathadiyoor Service Co-operative Bank v. ITO [2016 (7) TMI 1405 - ITAT COCHIN] had held that the investment in treasury / bank and earning interest on the same is part of banking activity and the said income is eligible for deduction u/s 80P
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2018 (1) TMI 589
Penalty u/s 271C - non deduction of tds u/s 194J on the amount paid by the assessee to HWML was for the managerial services rendered by the said party - Held that:- Assessee is held to be not liable for deduction of tax at source under section 194J of the Act from the payments made to HWML by the Tribunal in assessee's own case [2018 (1) TMI 549 - ITAT KOLKATA]. The Tribunal thus has upheld the appellate order passed by the Ld. CIT(A) cancelling the demand raised by the A.O. against the assessee under section 201(1)/201(1A) of the Act for all the three years under and consequently the penalties imposed for the said three years under section 271C are liable to be cancelled as agreed given by the learned DR at the time of hearing. We, therefore, uphold the impugned order of the Ld. CIT(A) cancelling the penalties imposed by the A.O. under section 271C of the Act for all the three years under consideration and dismiss these appeals of the revenue.
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2018 (1) TMI 588
Reopening of assessment - incorrect and non-existing reasons for reopening - Held that:- It is an admitted fact that reopening of the assessment was made in this case because as per information received from CIT (Central), Kolkata through CBI that assessee received accommodation entry from M/s. Basant Marketing (P) Ltd., for a sum of ₹ 2,07,85,000 in assessment year under appeal. The assessee denied to have received any such accommodation entry in assessment year under appeal which was also confirmed by the concerned party. The contention of the assessee has been accepted by the A.O. Copy of the reasons are also filed on record. It was, therefore, clear that A.O. recorded incorrect and non-existing reasons for reopening of the assessment. Therefore, on the face of it, the reopening of the assessment is void and bad in law. The case of the assessee is squarely covered by the decision of the Hon’ble Punjab & Haryana High Court in the case of Atlas Cycle Industries (1989 (4) TMI 48 - PUNJAB AND HARYANA High Court) - Decided in favour of assessee.
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2018 (1) TMI 587
Unexplained cash found during search - Held that:- CIT(A) gave a categorical finding that “the assessee did not claim in the original assessment proceedings that the cash available is out of exchange of old currency if any. This argument is brought forward now and there is no evidence furnished to substantiate this new claim even during the assessment proceeding or appellate proceedings. If the claim of the assessee is correct then the money in serial numbered notes should have come from a single source the details of which the assessee is not in a position to furnish. Therefore, the argument of the assessee is treated to be only an afterthought for which there is no cogent evidence available.”. Even before us, the AR of the assessee failed to substantiate the claim of the assessee by way of corroborative evidence and, hence, we find no infirmity in the order of the CIT(A) in confirming the addition made by the AO. Accordingly, we uphold the order of the CIT(A) and dismiss the grounds raised by the assessee
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2018 (1) TMI 586
Addition u/s 14A r.w.s. Rule 8D - investment in subsidiary company from which the dividend income was earned - Held that:- No disallowance of interest expense claimed by the assessee can be made under the provision of Section 14A of the Act r.w.r 8D of IT Rules. Now coming to the disallowance made by the AO in respect of administrative expense we note that the investment which have given rise to the dividend income during the year can only be considered for the purpose of disallowance under Rule 8D(2)(iii) of IT Rules. In holding so we find guidance & support from the order of Coordinate Bench of this Tribunal in the case of REI Agro Ltd. v. Dy. CIT [2013 (9) TMI 156 - ITAT KOLKATA]wherein it was held that the disallowance as per Rule 8D shall be made by taking into consideration only those shares, which have yielded dividend income in the year under consideration. Therefore we direct the AO to make the disallowance under rule 8D after considering the investments which have yielded the dividend income during the year. We also find that the assessee has made investment in subsidiary company from which the dividend income was earned by it during the year. In this regard, we observed that the assessee has made strategic investment in its subsidiary company to control the interest in the company and not with the object to earn dividend income. The dividend income is merely incidental from the subsidiary company. Therefore no disallowance of whatsoever can be made in respect of dividend income earned from the subsidiary company. In holding so, we find support and guidance from the order of the Hon’ble Tribunal in the case of Electrosteel Casting Limited Vs. DCIT [2017 (2) TMI 685 - ITAT KOLKATA] wherein it was held that no disallowance shall be made against the dividend income if it arises from the strategic investment.Thus, the strategic investments need to be excluded for the purpose of the disallowance under section 14A read with rule 8D The investments made in the non-subsidiary company which have yielded dividend income can only be considered for the purpose of the disallowance under section 14A r.w.r. 8D(2)(iii) of Income Tax Rules 1962. Thus the appeal filed by Revenue is partly allowed. Accordingly, AO is directed.
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2018 (1) TMI 585
Initiation of proceeding under Section 153A - absence of any material found during the course of search operation - Held that:- Once the time limit for issuing notice under Section 143(2) of the Act expired, on the basis of return filed earlier, the assessment proceeding is terminated and it cannot be said that it was pending on the date of search. In this case, the assessment proceeding was terminated by operation of law since the time limit for issuing notice under Section 143(2) expired. Therefore, the concluded assessment by operation of law on expiry of time limit for issuing notice under Section 143(2), cannot be reopened. Hence, this Tribunal is of the considered opinion that in the absence of any material found during the course of search operation, there cannot be any assessment for the block period under Section 153A of the Act. Hence, the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer. - Decided in favour of assessee
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2018 (1) TMI 584
Proceedings under 153A - G.P. determination - enhancement of GP rate - Settlement Commission empowered to reopen the completed proceedings- Held that:- No doubt that the assessment proceeding relevant to the Ass. Year 2004 related to the assessee was completed and not specifically reopened by the Settlement Commission by giving any reason, however, according to Sec.245E, before 1st Day of June, 2007, the Settlement Commission was fully empowered to reopen the completed proceedings, as in the instant case the assessment proceeding was completed only on 18.12.2006 which is clearly before the 1st day of June, 2007 and therefore could by subjected to the power of the settlement commission. We are of the considered view, although no specific reasons have been given and the proceeding relevant to assessment year 2004-05 was not reopened, however, the same was taken into consideration by the settlement commission and order dated 26.09.2013 was passed, which was supplemented by the order dated 07.03.2014 covering the assessment order under appeal qua A.Y. 2004-05 and while giving effect to the said order passed by the Settlement Commission, the Ld. DCIT has already passed an order u/s 153A r.w.Sec.245D (iv) of the I.T. Act 1961, therefore, we are of the considered opinion, keeping in view of the mandates of the Sec.245-C, 245E and 245-I and in order to end the litigation, impugned order under challenge passed by the Ld. CIT(A) is liable to be set aside .
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2018 (1) TMI 583
Reopening of assessment - no compliance on the part of the assessee to the notices issued by him fixing the said appeals for hearing from time to time - Held that:- Non-compliance on the part of the assessee during the course of appellate proceedings before the ld. CIT(Appeals) was for the reasons beyond the control of the assessee and one more opportunity can justifiably be given to the assessee in the interest of justice to put forth its case on merit before the ld. CIT(Appeals). Accordingly set aside the impugned orders passed by the ld. CIT(Appeals) exparte and remit the matter back to him for disposing of the appeals of the assessee afresh on merit after giving one more opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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2018 (1) TMI 582
Capital gain computation - AO has invoked section 50C merely relying on the SRO value for the purpose of stamp duty - sale of assets by the bank through action due to default in paying debts - Held that:- The sale was distress sale - AO cannot adopt the sale consideration at ₹ 21,88,97,000/- and invoke section 50C. See CIT Vs. Shr. Chandra Narain Chaudhri [2013 (9) TMI 646 - ALLAHABAD HIGH COURT] . Accordingly, we deem it fit to dismiss the grounds raised by the revenue.
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2018 (1) TMI 581
Reopening of assessment - addition of 6% of the bogus purchases - Held that:- After making detailed enquiries the AO reached to the conclusion that out of the total purchases 87.5% of the alleged purchases are genuine whereas purchase to the tune of 12.5% was bogus. Accordingly he added only 12.5% of such alleged bogus purchases. After considering various judicial pronouncements the CIT(A) has further restricted the addition to the extent of 6%. The CIT(A) has relied on various judicial pronouncements as well has taken into account the margin earned by the assessee, vat rate of 4%, etc. Thus no infirmity in the order of the CIT(A) in so far as he has considered all aspects and accordingly further reduced the addition to 6%.- Decided against assessee.
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2018 (1) TMI 580
Bogus purchase - failure to discharge the onus of proving the purchase of material as genuine - Held that:- The assessee has been continuously declaring the net profit in the range of 1.71 per cent. to 4.65 per cent. and the disallowance made by the Assessing Officer if accepted would increase the net profit to the tune of 25.15 per cent. which is very abnormal. The contention of the authorised representative that the suppliers of these goods have no permanent place for carrying on the business can be accepted. There were no defects in the books of account of the assessee has been pointed out by the Assessing Officer. It cannot also be said that after purchasing bitumen to the tune of ₹ 2.30 crores in the work can be executed by using the building material to the tune of ₹ 1.07 crores only as equivalent building material is also required to utilise the bitumen. Moreover the assessee has done major part of the work for the Government departments and the authenticity of the work done has been confirmed by the Government departments. In the case of CIT v. Leader Valves P. Ltd. [2006 (2) TMI 126 - PUNJAB AND HARYANA High Court] wherein held that if the purchase were treated as bogus it would be impossible to manufacture the goods shown to have been manufactured by it. This is applicable in the case of the assessee also as the disallowance will lead to net profit of 25 per cent. and also the fact that the work executed by the assessee has been certified by the Government agencies. The quantitative details of Bitument has been clearly mentioned along with correspondent utilization of mitti, sand and crusher stone. In the case of ITO v. Liyakat Ali Mohd. Sadik [2003 (9) TMI 326 - ITAT JODHPUR] wherein it was held that when purchases are made from unregistered dealers and are supported by bills and vouchers no addition can be warranted in the absence of rejection of books of account. Thus the action of the learned Commissioner of Income-tax (Appeals) deleting the addition is hereby confirmed. - Decided in favour of assessee.
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2018 (1) TMI 579
Addition u/s 36(1)(iii) for non-capitalisation of interest on advance given for land purchased and for non-capitalisation of interest on opening capital work-in-progress - sufficient interest-free funds for advancing for purchase for land and also for construction - Held that:- As far as the legal and factual position as considered by the Commissioner of Income-tax (Appeals), we find there is no infirmity pointed out by the Revenue on record. The fact that to the extent relief has been granted, the conclusion has been drawn on the basis of facts that the purchase and construction was from the interest-free funds available to the assessee which finding of fact we note remains unassailed on record. Arguments to the contrary advanced by the learned senior Departmental representative are found to be exfacie contrary to facts on record. The facts on record that entire interest expenditure on term loan from Allahabad Bank has duly been capitalised is an accepted fact which remains unassailed and has constantly been argued even before the Assessing Officer - Decided against revenue
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2018 (1) TMI 578
Deemed dividend addition u/s 2(22)(e) - whether the lending company, being a NBFC duly registered with RBI, has its substantial part of business as lending activity, so as to be outside the ambit of provisions of section 2(22)(e) - Held that:- It is well settled that the provisions of section 2(22)(e) of the Act are deeming provisions and they need to be strictly construed. In interpreting a statutory fiction, effect needs to be given to the language used in its plain and simple form. Save and except the words and expressions used in the statute, nothing more is to be inferred. Clause (ii) of section 2(22) provides that the term dividend shall not include any advance or loan made to a shareholder by a company in the ordinary course of business where the lending of money is substantial part of the business of the company. We find that this issue has been dealt at length on facts and figures by the ld CITA and we are not inclined to interfere with the said findings, more so, when the ld DR was not able to controvert the findings of the ld CITA. We also find that the ld CITA had granted relief to the assessee by placing reliance on the co-ordinate bench decision of this tribunal in Tanuj Holdings Pvt Ltd (2016 (2) TMI 426 - ITAT KOLKATA) and by relying on the decision of the Hon’ble Bombay High Court in the case of Parle Plastics Ltd [2010 (9) TMI 726 - BOMBAY HIGH COURT]. Hence we do not find any justifiable reason to interfere with the order of the ld CITA. Accordingly, the grounds raised by the revenue are dismissed.
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Customs
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2018 (1) TMI 577
Appellate order dated 10.09.2015 not acted upon - Release of Gold seized - Baggage Rules - Held that: - The Department cannot keep the effect of the appellate order in abeyance for an indefinite period. In absence of any stay against implementation of such appellate order, the same should be implemented within a reasonable period - More than two years have passed since the appellate authority passed such order. By safeguarding the interest of the Department, we propose to direct release of the gold - petition allowed.
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2018 (1) TMI 576
Refund claim - denial on the ground that the petitioner had not fulfilled the export obligations as required to be done in terms of the advance license granted to the petitioner dated 11. 06. 2010 - Held that: - the respondents are bound to honor the redemption letter and effect the refund. The respondents cannot call upon the petitioner to prove when the bank guarantee was encashed. It is for the Department to verify their records and come to a conclusion. - the respondents are directed to refund the sum of ₹ 4,50,000/- to the petitioner within a period of eight weeks - petition allowed.
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2018 (1) TMI 575
Time limitation - Section 128 the Customs Act, 1962 - Held that: - In view of the error is apparent on the face of the record, it is appropriate to direct the Appellate Tribunal to reconsider the matter in the light of Section 85(3A) of Chapter V of the Finance Act, 1994 - matter is remitted to the Appellate Tribunal for reconsideration is accordance with law.
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2018 (1) TMI 574
Maintainability of appeal - Held that: - When by a common order, more than one appeals are disposed of, a single appeal against the order in one of the cases, leaving the order in other cases become final, cannot be maintained - appeal dismissed being not maintainable.
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2018 (1) TMI 573
EPCG Scheme - N/N. 12/2012 CE dated 17.03.2012 - mis-classification of imported goods in order to avail ineligible exemption from payment to additional duty of customs (CVD) in terms of S.No.245 of N/N. 12/2012 CE dated 17.03.2012 - it was also alleged that the goods imported were actually second-hand/old and used machinery and, as such, were not eligible for zero duty EPCG scheme exemption under N/N. 22/2013 CUS dated 18.04.2013 and 16/2015-CUS dated 01.04.2015. Eligibility of the appellant for zero duty EPCG import of the impugned machinery - Held that: - The appellants repeatedly pleaded that as the goods were second-hand/used and old, the adjudicating authority should have revised the value by rejecting the declared transaction value. It would appear that the appellants are trying to solvage something out of a lost case. When the goods were found not to be eligible for concession under EPCG scheme, having found to be old and used, the appellants took a plea that, that being so, the value should be accordingly reduced. We find such submission as untenable - it is strange that the appellants are pressing the adjudicating authority to re-determine the value only as a consequence of the fact revealed during investigation as the imported goods being old and used - the whole assertion of the appellant, in this regard, is a consequential after-thought to limit the damage which occurred due to deliberate mis-declaration on their part. Correct classification - availability of exemption under N/N. 12/2012 CE dated 17.03.2012 (S.No.245) for CV duty - Held that: - after due consideration of the HSN explanatory notes, actual nature of the imported goods and applying the General Interpretation Rules, the original authority has rightly came to the conclusion that the classification of goods declared under heading 8434 is not correct and these were to be classified under various different headings like 8421, 8413, 8419,8418. On careful consideration of the finding, we have no reason to interfere with the same. There is no merit in the claim of the appellant regarding non-adherence of statutory provisions by the original authority before admitting evidences and report of examination. There is no basis for such claim. Redemption fine - penalty - Held that: - The redemption fines were in the range of 20% of the value of goods ordered to be confiscated. We are satisfied that the quantum of redemption fines are reasonable and adequate - the penalties imposed under Section 112(a) and Section 114A were also found to be reasonable and within the parameters laid down in the legal provisions of the Act. Penalties on second appellant - Held that: - Considering that the overall duty involved is more than ₹ 21 crores and the deliberate acts involved in such importation have been established in the investigation, we find no reason to interfere with the quantum of penalties. Appeal dismissed.
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2018 (1) TMI 572
Classification of imported goods - bulk Reishi Gano Powder - bulk Ganocelium Powder - claim of the respondent is to classify the product as Ayurvedic Proprietary Medicine under heading 30039011 claiming the benefit of N/N. 53/2011 (Sl. No. 363). The Revenue did not agree with the same and intended to classify the product as food supplement under CTH 21069099. Whether the decision of Tribunal, Chennai in the case of DXN Manufacturing (India) Pvt. Ltd. [2017 (11) TMI 608 - CESTAT CHENNAI] applies to the present case, where Tribunal held that the product should be classified as miscellaneous food supplement under heading 2108 of the Central Excise Tariff, as it was existing during the relevant time.? Held that: - The impugned order distinguished the decision of the Tribunal, Chennai passed in the first round of litigation. We note that based on the direction of the Apex Court, the Tribunal, Chennai went into the dispute in much more elaborate manner with all the evidences placed before them and we have no reason to differ from the ratio and finding arrived by the Tribunal, Chennai. The impugned order has erred in classifying the product as Ayurvedic medicine and it should have been correctly classified as food supplement as pleaded by the Revenue - appeal allowed - decided in favor of Revenue.
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2018 (1) TMI 571
Benefit of Notification No. 158/95 - exported goods, found defective, imported for repair and subsequently re-exported - Held that: - it is admitted that the goods have been re-exported within one year of re-import into India. The relevant date under N/N. 158/95 has been clarified by the Board vide Circular dated 03.06.97. Accordingly, considering the date of actual clearance of goods on assessment of bill of entry of all the re-exports in the present case happened within one year. Regarding re-exports made after six months of re-import, the appellant did not seek due extension from the Commissioner of Customs - Held that: - the extension of time limit which is otherwise available as part of the terms of the said Notification should be considered as procedural in the present facts of the case. When the matter of export is not in dispute, denial of exemption under N/N. 158/95 only on the ground of non availability of permission extending the time limit is not sustainable. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 570
Penalty u/s 112(b)(ii) of the CA, 1962 - differential amount of CVD paid on being pointed out - Held that: - in view of the fact that the differential duty along with interest was paid before initiation of the show cause proceedings and such amount was appropriated into the Government account in the adjudication order, penalties cannot be imposed in absence of any specific substantiation by the Revenue with regard to the involvement of the appellant in the fraudulent activity - penalty set aside - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 569
Prohibited goods - export of non-Basmati Rice - fulfillment of status of Basmati Rice - Held that: - the presence of other rice grain including red grain is to the extent of 43.85% when viewed in the light of the specifications laid down in Schedule 2 to Basmati Rice (Export) Grading and Marketing Rules, 1975, the same does not confer status of Basmati Rice to the consignment in question following - In view of the Hon’ble Delhi High Court’s decision in the case of Orion Enterprises [2015 (9) TMI 144 - DELHI HIGH COURT], it has to be held that the said specifications are applicable and would convert the consignment into that of a Non-Basmati Rice consignment. Quantum of redemption fine reduced - penalty upheld - separate penalty on Director not justifiable - appeal allowed in part.
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Corporate Laws
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2018 (1) TMI 550
Pursuant to the order dated 05.09.2017, no bids have been received. It appears that there is a problem in the valuation/method of sale as on the last date of hearing this court had reduced the reserve price by 25%. To enable the OL to take steps in this regard, list on 04.04.2018.
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FEMA
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2018 (1) TMI 568
Brother of the present respondent was detained under the provisions COFEPOSA Act - Held that:- No substance in any such ground for the simple reason that the law is well settled as interpreted and decided by the Honourable Supreme Court. The petitioner has also tried to compare several other judgments and Special Act like TADA and NDPS Act to plead and to induce by this Court to believe that it would be difficult to get direct evidence to control grave offence and, therefore, burden of proof rests upon respondents to prove that what is pleaded by the authority is not correct rather than to ask the authority to prove that what is pleaded by them is correct fact. It is difficult to believe such submission. Petitioner has gone to the extent of challenging the impugned order by describing it as a non speaking order when it is pleaded that the Appellate Tribunal has neither considered the issue raised by the petitioner nor discussed the fact of the case. As already recorded herein above and perusal of impugned judgment, makes it very much clear that the factual details are well discussed in such judgment and all issues are properly dealt with and answered by the Appellate Tribunal with reasonings and citations of relevant cases. Therefore, there is no substance in the petition when it is trying to misguide the judicial proceedings.
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PMLA
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2018 (1) TMI 552
Grant of bail - offence under the Prevention of Money Laundering Act, 2002 - petitioner, without approaching the Special Court under the PMLAct, 2002 for grant of bail, has preferred the present petition seeking bail in on the ground that his remand in judicial custody is illegal and without any jurisdiction of the learned Special Court to remand the petitioner any further after the presentation of the prosecution under Section 44 of the PMLA - Held that:- We set aside the judgment and order of the High Court [2017 (9) TMI 852 - DELHI HIGH COURT] inasmuch, as after recording in paras 76 77 that the appellant was remanded for more than 15 days in one go and that a clear/specific endorsement was necessary and without that having been recorded, the remand was illegal, yet the Court went on to state that for the fault of the Court, the prosecution cannot be made to suffer. Another major departure from settled procedure was that the order of remand was permitted to be recorded by the Reader of the Court which would, according to the High Court, only be an irregularity and not an illegality, which is obviously incorrect in law. We are, therefore, of the considered view that, in the interest of justice, this order is set aside and the matter is remanded for hearing afresh by the High Court. All contentions are kept open to both the parties. We request the High Court to decide the matter as expeditiously as possible.
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2018 (1) TMI 551
Constitutional validity of the second proviso to Section 5 (1) of PMLA - Held that:- It is clarified that this Bench will not be examining the merits of the show cause notices or orders of adjudicating authority in the individual cases. That will be dealt with by the respective roster Benches. Orders reserved on the aspects referred to in para 1.Both the parties shall file their respective written notes of arguments, on the above aspect, including the relevant case law, within ten days.
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Service Tax
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2018 (1) TMI 565
Condonation of delay in filing appeal - power to condone the delay than what is prescribed under Section 85(3A) of the Finance Act, 1994 - Held that: - There can be no quarrel about the legal position that when a statute prescribes a outer time limit for the purpose of condonation of delay then the statutory authority exercising jurisdiction under particular statute cannot suo motu extend the period of limitation prescribed in the statute. This being the settled legal position, it may not be necessary for the Court to refer to the various decisions on the point. Firstly, the petitioner Municipality, a local authority who is vested with a constitutional obligation to take care of the citizens residing in its locality and every service done by the Municipality has an element of public interest attached to it and therefore, some latitude can be granted to such a local authority. Secondly, the petitioner Municipality has paid the entire tax as demanded and also complied with the conditional order passed by this Court at the time of entertaining the writ petition by remitting a sum of ₹ 5 lakhs towards penalty. However, the learned Senior Standing Counsel would submit that it is not clear as to whether the petitioner has paid the entire tax. Thus indulgence is being granted to the petitioner to go before the Appellate Authority to contest the appeal petition on merits as the right of appeal is a very valuable right subject to the condition that the petitioner Municipality pays the entire tax and the payment of ₹ 5 lakhs towards penalty can be reckoned as partial compliance of the order passed by the second respondent. If that be so, till the appeal is heard and decided by the first respondent, further amount of penalty shall not be demanded from the petitioner. Matter is remanded to the first respondent for fresh consideration.
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2018 (1) TMI 564
Principles of Natural Justice - Held that: - It will be open for the tribunal to reconsider the matter afresh after considering two decisions relied upon by the assessee and give reasons independently without influenced by the fact that this court has set aside the order on merits to maintain jurisdictional discipline since two decisions are not considered - matter remitted back for fresh consideration.
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2018 (1) TMI 563
Whether it was proper for the Tribunal to dismiss the appeal of the appellant on the ground of delay without considering the fact that the appellant was pursuing remedy before the Appellate authority of the first instance? Held that: - since for about three years the appellant was pursuing relief from the First Appellate authority, that factor ought to have had been considered by the Tribunal while considering the appeal - the appellant’s case on the merit was not heard at the appellate stage because the First Appellate authority also passed its order ex parte. No material was produced before us from the revenue to demonstrate that the First Appellate authority had heard the appeal after issuing notice of the hearing to the appellant. Matter remanded to the First Appellate authority for hearing afresh.
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2018 (1) TMI 562
Commercial or industrial construction service - Works contract service - taxability - Held that: - the contracts for construction executed by the appellant/assessee are of composite nature. These are liable to be taxed only w.e.f. 1.6.2007 under “works contract service” - No tax liability on such contracts will arise for the period prior to 1.6.2007 - The rate to be applied for the relevant period should be examined along with the taxable consideration for re-quantification. Cum duty valuation in terms of Section 67(2) benefit can be extended subject to verification of invoice/contract to the satisfaction of the provisions of Section 67(2). - matter on remand. Repairs and maintenance of roads - Held that: - the period in the present demand is fully covered by the retrospective exemption in terms of the Section 97 of Finance Act, 2012. Accordingly, no tax liability will survive. GTA service - Held that: - no demand has been made to the assessee/appellant on such category. In absence of any demand for this tax liability, we find that the service tax liability confirmed cannot be sustained. Benefit of composition to the appellant post 1.6.2007 - Held that: - Though no specific form for intimation has been prescribed under 2007 Scheme for composition payment of service tax, payment of tax in terms of said provision from the beginning can be construed to be such option - these aspects require verification by the Original Authority along with re-quantification and other issues mentioned above. Penalties - Held that: - the tax liability on composite works contract are subject matter of litigation - no penalty is leviable for such tax liability against the appellant/assessee. Appeal allowed by way of remand.
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2018 (1) TMI 561
Refund claim - time limitation - Section 11B of the Central Excise Act, 1944 - unjust enrichment - Held that: - Since Section 11B ibid mandates that the refund claim has to be filed within the prescribed time limit of one year from the relevant date, such time limit has to be strictly adhered to by the statutory authorities functioning under the Central Excise statute - In this case, the refund claim was lodged within the period prescribed u/s 11B and a part thereof is beyond the period of one year. Thus, the refund application filed within one year from the relevant date should be eligible for refund to the appellant. For granting refund within the provisions of Section 11B, doctrine of unjust enrichment will not have any application, inasmuch as, the appellant had paid the service tax on GTA service under reverse charge mechanism. The refund claim filed by the appellant within one year from the relevant date is maintainable and eligible for refund - appeal allowed in part.
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2018 (1) TMI 560
Demand of service tax - difference between the value shown in the ST-3 returns vis-à-vis TDS certificate - Held that: - the appellant was not able to explain the difference in the value shown in the TDS certificate vis-a-vis the ST-3 returns filed by it before the department. Thus, the demand confirmed against the appellant for short payment of service tax of ₹ 1,23,769/- is proper and justified - that part of service tax demand is barred by limitation of time inasmuch as the show cause notice was issued beyond the normal period of limitation provided under Section 73(1) of the Act. The matter is remanded to the original authority for quantification of the service tax liability along with interest within the normal period of limitation - Appeal allowed in part by way of remand.
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2018 (1) TMI 559
Refund claim - time limitation - Section 11B of the CEA, 1944 - Held that: - the refund application was filed by the appellant and decided by the authorities u/s 11B of the Act, the time limit prescribed therein should be strictly followed in entertaining the refund application - The law is well settled that the adjudicating/appellate authorities being the creature under the statute, are duty bound to obey the provisions of statute contained therein - rejection of refund justified - appeal dismissed - decided against appellant.
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2018 (1) TMI 558
Construction of Complex Service - residential complex for use by the staff of M/s Aditya Cement - scope of “personal use” - Held that: - the assessee-Appellants are directly engaged by the client for building the staff quarters which are for “personal use” - The Tribunal in the case of Khurana Engineering Ltd. Vs CCE, Ahmedabad [2010 (11) TMI 81 - CESTAT, AHMEDABAD] held that the staff quarters meant for use by the Income Tax Department for their employees is clearly covered by the explanation “personal use” - appeal allowed - decided in favor of appellant-assessee.
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2018 (1) TMI 557
Business Auxiliary Service - services rendered by the foreign based vendors - onsite services performed outside India - service rendered to one of their clients in USA - reverse charge mechanism - Held that: - the appellant’s services to the main client, which is not being taxed being exported service is facilitated and supported by various vendors. The same is covered under the tax entry “Business Auxiliary Service” - It is clear that the destination has to be decided on the basis of the place of consumption, not the place of performance of service - As such, the appellants are liable to pay service tax on the services, which they received from various vendors located outside India. Extended period of limitation - Held that: - there is no sustainable reason to uphold the demand for extended period in absence of ingredients like fraud, suppression or willful statement with intention to evade tax. Such elements are missing in the present case - demand only for normal period upheld. Appeal allowed in part.
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2018 (1) TMI 556
Penalties u/s 77 and 78 of FA, 1994 - Valuation - inclusion of salary of the security personnel in the value of the service to be provided by security agents services or not? - Held that: - the issue was the subject matter of litigation before various higher forums. As such, it can be concluded that the issue was not free from the doubt, thus leading to a bonafide belief on the part of the appellant that no service tax is liable to be paid on the same - As soon as the Revenue pointed out the said fact to the appellant, they deposited the service tax alongwith interest - penalty cannot be invoked - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2018 (1) TMI 555
Input tax Credit - Constitutional validity of Section 9 (2) (g) of the Delhi Value Added Tax, 2004 - Articles 14 and 19 (1) (g) of the Constitution of India - failure to deposit VAT collected from its buyers, which included SCT - the decision in the case of On Quest Merchandising India Pvt. Ltd., Suvasini Charitable Trust, Arise India Limited, Vinayak Trexim, K.R. Anand, Aparici Ceramica, Arun Jain (HUF) , Damson Technologies Pvt. Ltd., Solvochem, M/s. Meenu Trading Co., Mahan Polymers Versus Government of NCT of Delhi Ors. Commissioner of Trade Taxes, Delhi And Ors. [2017 (10) TMI 1020 - DELHI HIGH COURT] contested - Held that: - we are not inclined to interfere with the impugned order. The special leave petition is dismissed.
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2018 (1) TMI 554
Classification of goods - NEBULA Jewellery Watch - whether fall under Entry 13(ii) of Schedule-II to the Value Added Tax Act or under Entry 87 of Second Schedule to the Act? - the decision in the case of STATE OF GUJARAT Versus M/s TITAN INDUSTRIES LIMITED [2017 (2) TMI 521 - GUJARAT HIGH COURT] contested, where it was held that NEBULA Watch as NEBULA Jewellery Watch falling under Entry 13(ii) of Schedule II of the Act - Held that: - the decision in the above case upheld - SLP dismissed on grounds of delay as well as on merits.
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2018 (1) TMI 553
Concessional rate of tax - sale or purchase of goods in inter-state trade or commerce - certificate of registration granted in Form 'B' - CST Act, 1956 - A declaration is sought in the writ petition that UPPTCL is entitled to be issued Form 'C' for the financial year 2010-11 to 2016-17, for the purchases to be effected for the contract work specified in Form 'B' at Unnao and Sirathu - An alternative prayer is also made to direct the UPPTCL to pay differential amount of tax, together with interest, in case it is found not entitled to Form 'C'. Held that: - Admittedly, UPPTCL is the registered dealer to whom a certificate has been issued by the competent authority in Form 'B'. Such inter-state sales attract concessional rate of tax as per the description given in the Form. It is an admitted position that registration certificate issued to UPPTCL in Form 'B' subsists and has not been amended or cancelled, in terms of sub-section (4) of section 7 of the Act. In such eventuality, the registered dealer (UPPTCL) is required to provide declaration, dully filled and signed by it to the selling dealer (writ petitioner) containing the prescribed particulars in prescribed form. Such declaration and certificate has to be made in form 'C' appended to the Rules of 1957. In its absence, normal rate of tax would have to be paid by the selling dealer. This would be impermissible once the inter-state sale is covered by sub-section (1) and (3) of section 8 and a certificate is already issued under Form 'B'. Once a certificate has been issued by the competent authority, it was impermissible for the authorities to withhold issuance of certificate in Form 'C'. Denial of Form 'C' to the UPPTCL despite the certificate issued in Form 'B' was wholly unwarranted and illegal yet, it would be appropriate to examine the matter from another aspect before concluding the discussions. The Commercial Tax Authorities have been of the opinion that 'power transmission' is not covered within the express terms of section 8(3)(b) of the Act of 1956. For arriving at such an opinion the provision itself has been taken note of and construed as being limited to 'generation or distribution of electricity' alone. While taking such view the authorities have not examined the expression occurring in the statute itself. The tribunal has committed manifest error of law in upholding denial of Form 'C' to the revisionist, notwithstanding the fact that registration certificate issued in Form 'B' specifies levy of tax at concessional rate in respect of inter-state sale made for power transmission - A direction is also issued to the concerned authorities of the Department of Commercial Tax to issue Form 'C' to the revisionist in respect of items included in Form 'B', which are liable to be taxed under section 8(1) of the Act of 1956. Petition allowed - decided in favor of assessee.
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Indian Laws
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2018 (1) TMI 567
Constitutional validity of section 7 of the Bombay Stamp Act, 1958 - declaration is sought that the provisions of sections 3, 7 and 19 of the said Act to the extent to which the same seek to levy stamp duty on the copies of the instruments executed outside the State of Maharashtra are null and void - Held that:- The deeds were chargeable in the State of Gujarat as the same are executed in the said State. Copies of the same are received in the State of Maharashtra for registering a charge in the office of the Registrar of Companies. The entries in the Schedule VII extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it. If the entry 63 applies to instruments, it will extend to all subsidiary and ancillary matters connected with the said entry. Section 7 of the said Act which deals with copies of the instruments has a direct and substantial connection with the said entry 63. The said entry cannot be given a restricted meaning and interpretation which is contrary to the law laid down by the Apex Court. Liberal construction will have to be put so that it can be of a wide amplitude. The entry 63 will encompasses in itself even copies of instruments. Moreover, clause (b) of Subsection 1 of Section 7 is intended to ensure that no one evades the stamp duty payable on an instrument under the said Act by executing and stamping the original in another State where a lesser stamp duty is payable and thereafter, bring a copy thereof within the State for doing something on the basis of the rights and liabilities created by it. The legislative intent is to ensure that there is no evasion of duty on such instruments. The provision is to levy only a differential duty. There is no double taxation. We, therefore, reject the argument that Section 7 read with Section 19 in so far as the same apply to the copies of the instruments are not constitutionally valid. Hence, the petitions must fail. The writ petitions are accordingly rejected.
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2018 (1) TMI 566
Pipeline laying activity in the Dahej SEZ area for transportation of Natural Gas - Suppression of facts - SEZ Act - PNGRB Act - “infrastructure facility” within the meaning of Section 2(p) of the SEZ Act read with the definition of “infrastructure” under Rule 2(1)(s) of the Special Economic Zones Rules 2006 - Held that: - it is not disputed that the respondent No.2 M/s.OPAL needed an additional supply of gas, which the petitioner had refused to book for transmission through its pipeline laid in the respondent No.3 SEZ, and therefore, the respondent No.1 had agreed to supply the additional quantity of gas to the respondent No.2 by laying 8” dia pipeline by Tap off from the existing M/s.GAIL DUPL. Such necessity of facilities or services of the respondent No.1 M/s.OPAL, which is one of the units set up in the DAL could not be said to be an infrastructure facility necessary or needed for the development of the respondent No.3 DSL, as contemplated in Section 2(p) read with Rule 2(1)(s) of the said Rules - the respondent No.1 and respondent No.2 were not required to take any approval from the Board of Approval under Section 9(d) of the said Act. Much was argued on whether there is any inconsistency between the SEZ Act and PNGRB Act, and whether the SEZ Act has an overriding effect over the PNGRB Act or not. It can not be gainsaid that in view of Section 51 of the SEZ Act, the provisions of the said Act would have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. The expression “for the time being in force” would not only include the existing legislations but would also include future legislations. The facilities or services sought to be provided by the respondent No.1 to the respondent No.2 being not the infrastructure facilities, the Court does not find any inconsistency between the provisions of the said two Acts. The issue whether Clause- 1(g) of Schedule J of the PNGRB Authorisation Regulations, 2008, as amended in 2016, is applicable to the respondent No.1 GAIL or not, also pales into insignificance, in view of the fact that requisite approvals have already been obtained by the respondent Nos.1 and 2 under the SEZ Act for the purpose of laying 8” dia pipeline in question. There is no provision contained in the SEZ Act, which grants exclusivity to any person, which otherwise would encourage monopolistic and restrictive trade practices, or which would run counter to and frustrate the very purpose and object of promoting competitive markets in the matter of petroleum, petroleum products and natural gas, as contained in the PNGRB Act. The petition being devoid of any merits and having been filed suppressing material facts and documents, deserves to be dismissed and is dismissed.
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