TMI Tax Updates - e-Newsletter
January 22, 2018

Case Laws in this Newsletter:

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

Articles

• The Puzzle in Health Care Sector finally solved!
• 25th MEETING OF GST COUNCIL – RECOMMENDATIONS IN CHANGE IN RATE OF TAX, AND EXEMPTION
• Key outcomes of 25th GST Council meeting – Rejigs rates on 82 items & gears up for simple return filing

News

• Goods and Services Tax (Compensation to States) Amendment Act, 2017

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• Defaulter of Income Tax TDS arrested and sent to jail by ​the ​Tis Hazari Court

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• Insolvency and Bankruptcy Code (Amendment) Act, 2018

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• India: Financial Sector Assessment Program 2017-Detailed Assessment Reports (DARs)

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Notifications

Companies Law

• F. No. A-35013/01/2017-Ad.III-MCA - S.O. 336(E) - dated 16-1-2018 - Co. Law
  Central Government appoints Shri Amardeep Singh Bhatia, IAS (NL : 93) as Director in the Serious Fraud Investigation Office, on lateral shift basis, with effect from the 08th January, 2018 (A/N) to 25th March, 2020

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DGFT

• 45/2015-2020 - dated 19-1-2018 - FTP
  Export Policy of Onions- Imposition of Minimum Export Price (MEP)

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GST - States

• FA-3-86/2017-1-V-(161) - dated 29-12-2017 - Madhya Pradesh SGST
  Extend the Time period for furnishing the details in FORM GSTR-1.

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• FA-3-76/2017-1-V-(163) - dated 29-12-2017 - Madhya Pradesh SGST
  The Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2017.

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• FA-3-33/2017-1-V-(162) - dated 29-12-2017 - Madhya Pradesh SGST
  Waiver the late fee payable in FORM GSTR-4.

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• FA-3-91/2017-1-V-(159) - dated 21-12-2017 - Madhya Pradesh SGST
  The Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2017

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• FA-3-78/2017-1-V-(158) - dated 5-12-2017 - Madhya Pradesh SGST
  Constitutes the Madhya Pradesh Authority, for Advance Ruling

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• FA-3-86/2017-1-V-(153) - dated 15-11-2017 - Madhya Pradesh SGST
  Recommendations of the Council, notifies the registered persons having aggregate turnover of up to 1.5 crore rupees in the preceding financial year or the current financial year.

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• FA-3-85/2017-1-V-(150) - dated 15-11-2017 - Madhya Pradesh SGST
  Waiver the amount of late fee payable furnish the return in FORM GSTR-3B.

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• FA-3-84/2017-1-V-(152) - dated 15-11-2017 - Madhya Pradesh SGST
  Electronic Commerce Operator Who is required to collect tax at source under section 52.

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• FA-3-83/2017-1-V-(154) - dated 15-11-2017 - Madhya Pradesh SGST
  The Madhya Pradesh Goods and Services Tax Rules, 2017.

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• FA-3-82/2017-1-V-(155) - dated 15-11-2017 - Madhya Pradesh SGST
  Last date for filling of return in FORM GSTR-3B.

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• FA-3-68/2017-1-V-(151) - dated 15-11-2017 - Madhya Pradesh SGST
  Notifies the registered person who did not opt for the composition levy under section 10.

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• FA-3-81/2017-1-V-(144) - dated 14-11-2017 - Madhya Pradesh SGST
  Recommendations of the Council, hereby exempts the goods amount calculated at the rate of 2.5 per cent.,

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• FA-3-37/2017-1-V-(149)    - dated 14-11-2017 - Madhya Pradesh SGST
  Amendments in this department's notification No. FA3-37/2017/1/FIVE(65) dated the 30th June, 2017,

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• FA-3-36/2017-1-V-(146) - dated 14-11-2017 - Madhya Pradesh SGST
  Amendments in this department's Notification No. FA-3-36/2017/1/FIVE (66) dated the 30th June, 2017.

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• FA-3-35/2017-1-V-(148) - dated 14-11-2017 - Madhya Pradesh SGST
  Amendments in the Notification No. FA-3-35/2017-1-V-(63), dated 30.06.2017

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• FA-3-32/2017-1-V-(145) - dated 14-11-2017 - Madhya Pradesh SGST
  Amendments in the Notification No. FA-3-32-2017-1-V(41) dated 29.06.2017.

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• A-3-42/2017-1-V-(147) - dated 14-11-2017 - Madhya Pradesh SGST
  Amendments in this department's Notification No. FA-3-42/2017/1/V/(53) dated 30.06.2017.

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• 01/2018-State Tax - dated 1-1-2018 - Maharashtra SGST
  Amendment in the Notification No.8/2017-(ST) to prescribe effective rate of tax under composition scheme for manufacturers and other suppliers.

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• 44/2017-State Tax (Rate) - dated 14-11-2017 - Maharashtra SGST
  Amendments in the Government Notification of the Finance Department, No. MGST-1017/C.R. 103(4)/Taxation.-1 [No.5/2017-State Tax (Rate)], dated the 29th June 2017.

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• 43/2017-State Tax (Rate) - dated 14-11-2017 - Maharashtra SGST
  Amendment in the Notification of the Government Notification of the Finance Department No. MGST-1017/C.R.103(3)/Taxation-1 [No.4/2017-State Tax (Rate)], dated the 29th June 2017.

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• 42/2017-State Tax (Rate) - dated 14-11-2017 - Maharashtra SGST
  Amendments in the Notification of the Government of Maharashtra in the Finance Department No. MGST. 1017/C.R. 103(1)/Taxation-1 [No. 2/2017- State Tax (Rate)], dated the 29th June 2017.

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• 41/2017-State Tax (Rate) - dated 14-11-2017 - Maharashtra SGST
  Amendments in the Notification of the Government in the Finance Department, No. MGST.1017/C.R.104 (a)/Taxation.-1 [No.1/2017- State Tax (Rate)], dated the 29th June 2017

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• G.O. (Ms) No. 190 - dated 30-12-2017 - Tamil Nadu SGST
  Amendment in Notification No. II(2)/CTR/532(d-1)/2017 dated 29/06/2017

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• G.O. (Ms) No. 187 - dated 29-12-2017 - Tamil Nadu SGST
  Goods and Services Tax - TN GST Rules, 2017- Provisions relating to E-Way Bill - coming into force - Notification - issued

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• G.O. (Ms) No. 186 - dated 29-12-2017 - Tamil Nadu SGST
  Goods and Services Tax - TN GST Act,2017 - Failure to furnish the return in FORM GSTR-4 - Waiver of late fee payable under section 47 - Notification - issued

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• G.O. (Ms) No. 185 - dated 29-12-2017 - Tamil Nadu SGST
  Goods and Services Tax - TN GST Rules, 2017 - Return filing procedure for registered persons having aggregate turnover of upto 1.5 crore rupees - Notification - issued

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• G.O. (Ms) No. 171 - dated 17-11-2017 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Constitution of the Tamil Nadu Appellate Authority for Advance Ruling - Notification - Issued

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• G.O. (Ms) No. 169 - dated 15-11-2017 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Extension of time limit for filing of FORM GSTR-4 - Amendment to Notification issued by the Commissioner of State Tax - Notification - Issued.

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• G.O. (Ms) No. 168 - dated 15-11-2017 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Payment of tax at the time of issuance of invoice - Notification - Issued.

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• G.O. (Ms) No. 167 - dated 15-11-2017 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Exemption from obtaining registration for supplies made through electronic commerce operator - Notification - Issued

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• G.O. (Ms) No. 166 - dated 15-11-2017 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Waiver of late fee payable under section 47 - Notification - Issued

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• G.O. (Ms) No. 165 - dated 15-11-2017 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Rules, 2017 - Return filing procedure for registered persons having aggregate turnover of upto 1.5 crores rupees - Notification - Issued

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• G.O. (Ms) No. 163 - dated 14-11-2017 - Tamil Nadu SGST
  Goods and Services Tax - TN GST Act, 2017 - Services exempt from State Tax - Amendments - Notification - Issued

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• G.O. (Ms) No. 162 - dated 14-11-2017 - Tamil Nadu SGST
  Goods and Services Tax - TN GST Act, 2017 - Rate of State Tax on services - Amendments - Notification - Issued

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• G.O. (Ms) No. 161 - dated 14-11-2017 - Tamil Nadu SGST
  Goods and Services Tax - TN GST Act, 2017 - State Tax on specified goods supplied to specified institutions - Amendments - Notification - Issued

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• G.O. (Ms) No. 160 - dated 14-11-2017 - Tamil Nadu SGST
  Goods and Service Tax - TN GST Act, 2017 - Supplies of goods in respect of which no refund of unutilised Input Tax Credit shall be allowed - Amendments - Notification - Issued

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• G.O. (Ms) No. 159 - dated 14-11-2017 - Tamil Nadu SGST
  Goods and Service Tax - TN GST Act, 2017 - Reverse charge on certain specified supply of goods - Amendments - Notification - Issued

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• G.O. (Ms) No. 158 - dated 14-11-2017 - Tamil Nadu SGST
  Goods and Services Tax - TN GST Act, 2017 - Goods Exempt from State Tax - Amendments - Notification - Issued

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• G.O. (Ms) No. 157 - dated 14-11-2017 - Tamil Nadu SGST
  GST - Tamil Nadu Goods and Services Tax Act, 2017 - Rates of the State tax on goods - Amendments - Notification - Issued

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Income Tax

• 03/2018 - dated 18-1-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies Central Registry for Securitization Asset Reconstruction and Security Interest of India , a body set up under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, in respect of the specified income arising to the body

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• 02/2018 - dated 18-1-2018 - IT
  Seeks to amend Notification No. S.O. 3129(E), dated the 26th September, 2017

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• 01/2018 - dated 18-1-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘West Bengal Electricity Regulatory Commission’, Kolkata, a commission constituted by the Government of West Bengal, in respect of the specified income arising to that commission

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Circulars / Instructions / Orders

GST - States

• 09/2017-MGST - dated 15-11-2017
  Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 of the Maharashtra Goods and Services Tax Rules, 2017.
• 10/2017-MGST - dated 15-11-2017
  Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Maharashtra Goods and Services Tax Rules, 2017
• 08/2017-MGST - dated 28-10-2017
  Extension of time limit for submitting declaration in FORM GST TRAN-1 under rule 120A of Maharashtra Goods and Services Tax Rules, 2017.

Customs

• 11/2018 - dated 19-1-2018
  Subject: Removal of goods from a Customs Station-instructions regarding affixation of one-time-lock, movement of ISO Tank Container from Customs Station to Warehouse under Customs Punch Seal
• 10/2018 - dated 18-1-2018
  Sub : Discontinuation of Printing of EP copy of the Shipping Bill –reg.
• 02/2018 - dated 16-1-2018
  Sub: Formation of Export Promotion Cells in Mangalore Customs Commissionerate
• 05/2018 - dated 9-1-2018
  SUB : Clarification on Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 - reg.
• 03/2018 - dated 2-1-2018
  Subject: Amendment in import policy condition of pepper classified under Chapter 09 of ITC (HS), 2017—Schedule-1 (Import Policy)
• 161/2017 - dated 29-12-2017
  Sub: Procedure for self sealing and e-sealing of containerized cargo at factory/approved warehouse premises prescribed vide the Public Notice No 147/2017 dated 16.11.2017- reg.

Highlights / Catch Notes

Income Tax

• Applications seeking exemption u/s 80G(5)(vi) - at the time of granting approval under Section 80G, what is to be examined is the object of the trust and so far as the aspect of income is concerned, same can be very well examined by the AO at the time of framing assessment. - The 80G(5) subsists the 12AA so far as examination of charitable nature of objectives is concerns. - AT
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• Treatment given to the rental income - assessee was not the owner of the premises - The objects of the company must also be kept in view to interpret the activities - Thus no hesitation to treat the rental income received by the assessee in the instant case as business income. - AT
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• Disallowance of advance given to employees being written–off - Except furnishing the name of some persons with amounts written against their names no other details or supporting evidence have been produced by the assessee to demonstrate advancement of money to the concerned persons. No supporting bills / vouchers have been produced - additions confirmed - AT
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• The payments received by the Applicant for rendering lighting and searchlight services to OCCG, would be taxable in India, under the provisions of the Income tax Act 1961. - AAR
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• The gains arising from the alienation of shares of Bock GmbH, on account of its acquisition by GEA Refrigeration Technologies GmbH, the Applicant, shall not be taxable in India - No TDS liability u/s 195 - AAR
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• Income taxability in India - even if for the sake of argument, it is assumed that MFPM has a business connection in India, it cannot be said that the income is deemed to accrue or arise in India as per Section 9(1)(i) of the Act, as no part of the income earned by MFPM from sale of equipment in India is attributable to the operations carried out in India - AAR
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• Deduction u/s 54 eligibility - Applicant was entitled to the benefit provided by section 54, on account of his investment in a residential house in London, out of the capital gains arisen in India - prior to the prospective amendment made w.e.f 01.04.2015 by the Finance Act, 2014. - AAR
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Customs

• SUB : Clarification on Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 - reg. - Trade Notice
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• Sub : Discontinuation of Printing of EP copy of the Shipping Bill –reg. - Trade Notice
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• Subject: Removal of goods from a Customs Station-instructions regarding affixation of one-time-lock, movement of ISO Tank Container from Customs Station to Warehouse under Customs Punch Seal - Trade Notice
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• Applicable Rate of Duty - date of presentation of Bill of Entry - the importer had filed all the relevant particulars on 07.11.2017 itself, it was on account of the system related fault, the bill of entry got generated on 08.11.2017 - in the light of Section 15 of the Customs Act, 1962, the rate of duty applicable to the import in question will be the one that obtained on 07.11.2017 - HC
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• Revocation of CHA License - Since the charge of negligence and nonadherence to the Regulations insofar as failure to fulfill and discharge the responsibilities has been proved, the penalty of revocation of license for a period of five years is justified - HC
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DGFT

• Export Policy of Onions- Imposition of Minimum Export Price (MEP) - Notification
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Corporate Law

• Provision relating to Nidhis and its application, etc. - a declaration of mutual benefit societies and with Nidhi companies - Section 406 of the Companies Act, 2013
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• Fee for filing, etc. - Amendments to bring more clarity with respect to late filings of documents under sections 89, 92, 117, 121, 137 and 157 and defaults in filings, consequences, etc. - Section 403 of the Companies Act, 2013
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• Application of sections 34 to 36 and Chapter XX - closure of the place of business of a foreign company in India - limited application - Section 391 of the Companies act, 2013
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• Application of Act to foreign companies - amendments to bring clarity with respect to applicability of provisions of the Act to foreign companies - Section 379 of the Companies Act, 2013
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• Obligations of companies registering under this Part - Upon registration as a company under this Part a limited liability partnership incorporated under the Limited Liability Partnership Act, 2008 shall be deemed to have been dissolved under that Act without any further act or deed - Section 374 of the Companies Act, 2013
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• Allows conversions into companies from partnership firms, etc. with two or more members provided that in case of less than seven members the conversion would be into a private company - Section 366 of the Companies Act, 2013
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• Valuation by registered valuers - registered valuer shall not undertake valuation of any asset in which he has direct or indirect interest three years before appointment as valuer or three years after valuation of assets - Section 247 of the Companies Act, 2013
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• Purchase of minority shareholding - Clarification amendment - for the words, "transferor company", the words "company whose shares are being transferred" substituted - Section 236 of the Companies Act, 2013
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• Copy of inspectors report shall be made available only to members, creditors or any other person whose interest is likely to be affected - Section 223 of the Companies Act, 2013
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• Central Government may appoint inspectors for determining true persons who have or had beneficial interest in shares of a company or who are or have been beneficial owners or significant beneficial owner of the company - Section 216 of the Companies Act, 2013
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• Central Government or company to fix limit with regard to remuneration - the words "Central Government" omitted - Section 200 of the Companies Act, 2013
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• Calculation of profits - requirement of not giving credit for profits on sale of shares or debentures for calculation of profit shall not apply to investment companies - Section 198 of the Companies Act, 2013
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• Responsibility of Auditor to make a statement as to whether the remuneration paid by the company to its directors is in accordance with the provisions of this section, whether remuneration paid to any director is in excess of the limit laid down under this section and give such other details as may be prescribed - Section 197(16) the Companies Act, 2013
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• Payment of managerial remuneration in excess of prescribed limits - requirement of obtaining approval of Central Government done away with, subject to special resolution and other conditions - Section 197 the Companies Act, 2013
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• Appointment of managing director, whole-time director or manager - a person who has attained the age of seventy years - special resolution even if not passed, votes cast in favour of the motion exceed the votes, if any, cast against the motion, Central Govt. may approve the appointment - Section 196 the Companies Act, 2013
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Indian Laws

• Defaulter of Income Tax TDS arrested and sent to jail by ​the ​Tis Hazari Court
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• Arbitration - Once it is established that the party was justified in terminating the contract on account of fundamental breach thereof, then the said innocent party is entitled to claim damages for the entire contract, i.e. for the part which is performed and also for the part of the contract which it was prevented from performing - SC
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IBC

• On a query as to why the Petitioner chose not to approach the NCLT, the response was that the Petitioner wanted to be governed by the repealed Act, i.e., SICA and not in accordance with the Code as provided for under Section 4(b). Such a submission lacks any legal basis and is liable to be rejected. - HC
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Central Excise

• Valuation - the appellant has acted as a job worker - the mischief of Rule 10A of the Valuation Rules becomes applicable - the goods are required to the valued on the basis of the price at which the principal manufacturer sells such goods from their depot - AT
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VAT

• Recovery of dues of the Company from the Directors - Petitioners cannot be held automatically responsible for outstanding dues unless the responsibility of the director was fixed after lifting the veil. Further, the company is not under liquidation. - HC
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• Rate of tax on mobile charger - The charger is admittedly neither classified nor priced separately on the package. It is also not invoiced separately. The MRP is of the composite package - Revenue therefore cannot be permitted to split the value of the commodities contained therein and tax them separately. - HC
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Case Laws:

• GST

• 2018 (1) TMI 950
  Seizure of goods - discrepancy in the quantity - also, penalty imposed on the ground that the goods, started their journey one week after the date of the invoice - Held that: - discrepancy as regards quantity has been resolved and it is accepted to the department that the quantity of goods as disclosed in the documents is the same as found on physical verification - also, reason for which penalty imposed, prima facie cannot be the ground to seize the goods or to impose penalty. Subject to the petitioner furnishing security equal to the value of the goods and tax payable, in the form of indemnity bond, the vehicle along with goods shall be released in favour of the petitioner forthwith - petition allowed.

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• 2018 (1) TMI 949
  Seizure of imported goods - penalty - seizure on the ground that the E-Way Bill was not found accompanying the goods though admittedly, the goods were being imported against regular Tax Invoice - Held that: - it does appear that the E-Way Bill had been downloaded and produced though with some delay but before conclusion of the penalty proceedings - there is no allegation of evasion of tax liability established either from the reading of the show cause notice or the seizure order or the penalty order the consequential penalty imposed appear to have been occasioned upon a mere technical breach and not on account of any intention to evade tax - penalty and seizure order could not sustain - petition allowed.

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• 2018 (1) TMI 948
  Difficulty in filing e-return - problem in the portal - waiver of penalty - Held that: - taking note of the fact that the penalty fee has been waived for three months i.e. July, August and September 2017 and since the portal has been activated, no further orders are required in this writ petition - petition disposed off.

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• Income Tax

• 2018 (1) TMI 947
  Deduction u/s 54 eligibility - investment outside India - Applicant, being a resident of UK, having sold his share of residential property in New Delhi to the extent of reinvestment in acquiring a residential property abroad i.e. in U.K. - prior to the prospective amendment made w.e.f 01.04.2015 by the Finance Act, 2014. - Held that:- We respectfully follow the decision of the Gujarat High Court in Leena Jugalkishore Shah [2016 (12) TMI 351 - GUJARAT HIGH COURT] rule that the Applicant was entitled to the benefit provided by section 54, on account of his investment in a residential house in London, out of the capital gains arisen in India. Valuation/computation of the cost of acquisition in the hands of the Applicant - determining the method for computing Long term capital gains - property was held by the applicant’s father - Held that:- The period of holding will be determined from the period from which property was held by the applicant’s father. Further the applicant will be allowed the benefit of indexation to the fair market value of the asset on 01.04.1981 and the cost of improvement incurred by the applicant. However, the Assessing Officer would verify the correctness of the valuation furnished by the Applicant with his application, as also all material figures required for computing the taxable capital gains in the hands of the Applicant.

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• 2018 (1) TMI 946
  Income taxability in India - income from the off shore supply of equipment - Income deemed to accrue or arise in India - Permanent Establishment in India - India - France DTAA - Withholding of tax u/s 195 - Held that:- Since all parts of the transaction in question i.e. the transfer of property in goods as well as the payment, were carried out outside the Indian soil, the transaction could not be taxed in India. Also, there exists a difference between the existence of a business connection and the income accruing or arising out of such business connection. Thus, in the present case, even if for the sake of argument, it is assumed that MFPM has a business connection in India, it cannot be said that the income is deemed to accrue or arise in India as per Section 9(1)(i) of the Act, as no part of the income earned by MFPM from sale of equipment in India is attributable to the operations carried out in India. The Protocol to the India-France DTAA further supports the position that no portion of the income relating to off-shore supply of equipment is taxable in India even if MFPM establishes any kind of PE in India. With regard to Revenue’s contention that it was an agreement between two closely associated companies, it is submitted that merely for this reason it cannot be concluded that it is for the purpose of avoidance of taxes on the basis of conjectures and surmises without any documentary evidences. Further, the Revenue has erroneously opined that the clarification received from MFPM, dated 14 December 2012, should be rejected on the grounds that the same was issued by two closely associated companies for the purpose of avoidance of taxes. This is not warranted. As payment made by the Applicant to MFPM for the offshore supply of equipment, there shall be no liability to withhold tax under section 195 of the Act, from such payment. Income derived from the discharging of its obligations by MFPM as provision of services of supervision in India at the factory site where the plant has been set up - Held that:- While examining provisions of section 9, we gave reasons why the income from off shore supply could not be brought to tax in India. By the same reasoning under this provision, we have to hold that income derived from the discharging of its obligations by MFPM, namely provision of services of supervision in India at the factory site where the plant has been set up, is chargeable to tax in India as the income arising therefrom can be said to have arisen or accrued in India. There is a direct and real nexus between the terms of the contract, the activities of supervision undertaken at the site, and hence the income earned in India through the provision of the services and would be covered by section 9, as a business connection clearly exists between these supervisory services and the business of MFPM of assisting in setting up of manufacturing units in the field of bus and truck tyres. A service PE is also formed since the MFPM is carrying on its supervisory activities through its personnel at the fixed place,that is the factory premises, and this income can be fastened to this PE. Hence, the payments made by the applicant to MFPM’s 33 supervisory staff and engineers, amounting to ₹ 9.95 crore, would be chargeable to tax in India, and would also attract the provisions of section 195 of the Act. In respect of payment made by the Applicant to MFPM for the offshore supply of equipment, there shall be no liability to withhold tax under section 195 of the Act, from such payment.

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• 2018 (1) TMI 945
  Income chargeable to tax in India - income derived by the shareholders of Bock GmbH from the sale of shares of Bock GmbH, Germany - India-Germany DTAA - Bock GmbH, Germany holds 100% share capital of Bock India Private Limited - liability to TDS u/s 195 - Held that:- Applicant’s income cannot be brought to tax in India under the provisions of the Income tax Act 1961, as Bock GmbH derives its value substantially from its other companies situated in Germany, China, England, Czech Republic, Singapore, Malaysia, Thailand and Australia etc., whereas its value of assets in Bock India is a mere 5.40%, far lower than the requirement of 50%. Hence, it fails the test of deriving value substantially from the Indian company, as is also conceded by the Revenue, on the available facts. A similar matter under similar provisions of the DTAA, was decided in the case of Sanofi Pasteur Holding SA (2013 (2) TMI 589 - HIGH COURT OF ANDHRA PRADESH) wherein shares of a French company which held 80% shares in an Indian company were transferred to another French company. It was held that the gain arising from such transfer was taxable in France and not in India. Hence, in spite of a possible contrarian argument, in cases of indirect transfer, the decision in the case Sanofi Pasteur, cited above, stands as of date and has to be respectfully followed. We come to the conclusion, therefore, that the gains arising from the alienation of shares of Bock GmbH, on account of its acquisition by GEA Refrigeration Technologies GmbH, the Applicant, shall not be taxable in India. TDS u/s 195 - As per section 195(1), briefly, any person responsible for paying to a non-resident interest or any other sum chargeable under the provisions of the Act shall deduct tax at the time of such credit or remittance. Thus, the liability to deduct arises only if the sum so paid was chargeable to tax. This view was upheld in GE Technology Centre P. Ltd. v. CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA ] that in cases where income is not chargeable to tax under the Act, as per expressions used in section 195 itself, there will be no obligation to withhold tax. - Decided in favour of assessee

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• 2018 (1) TMI 944
  Taxability in India - payments received/to be received by the Applicant for rendering, lighting and searchlight services to the Organizing Committee, Commonwealth Games 2010, Delhi - India-Belgium Tax Treaty - Held that:- Taking a restricted view of the term, it cannot be said that the Applicant had made available technical knowledge, experience, skill, know-how or processes, which enable the development and transfer of a technical plan or technical design, and which enable the person acquiring the services to apply the technology contained therein. The services were not made available to Delhi 2010, in a manner that it acquired the knowhow or the ability to use it, or that the service rendered enabled or empowered it to carry out the task in future all by itself. Make available connotes that it should result in transmitting the technical knowledge such that the recipient could derive an enduring benefit and utilise the same in future on his own without the aid and assistance of the provider. In this case Delhi 2010 only utilised the services for its events during the Common Wealth Games, and the consideration was paid for the same. Hence, we have to agree that the consideration received by the Applicant for the technical services rendered could not be considered to be in the nature of fees for technical services as referred to in the India Belgium DTAC and the Protocol thereto, as read with the DTAC between India and the Portuguese Republic, which would have otherwise been taxable under Article 12 and Article 7, as the Applicant has a PE in India. Since it has been held that the Applicant has a PE in India, within the meaning of paragraph 1 of Article 5 of the DTAC between India and Belgium, and further that the same was not in the nature of Royalty or Fees for included services, the consideration received by the Applicant for rendering lighting and searchlight services to Delhi 2010, can only be held to be taxable in India as Business Profits, as per the provisions of Article 7, as also under section 9(1)(i) of the Income tax Act 1961, having accrued and arisen from its business connection and source in India. Question number 1: Yes. The payments received by the Applicant for rendering lighting and searchlight services to OCCG, would be taxable in India, under the provisions of the Income tax Act 1961. Question number 2: Yes. The payments received by the Applicant for rendering lighting and searchlight services to the OCCG, earned through its PE in India, would be taxable as Business Profits under Article 7 of the India Belgium DTAC

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• 2018 (1) TMI 943
  Section 73 applicability - assessee deemed to be carrying on speculation business - Held that:- The deeming provision is that any part of the business of a company consisting in the purchase and sale of shares of other companies, for the purposes of that section, the company would be deemed to be carrying on a speculation business to the extent to which the business consists of the purchase and sale of such shares, exceptions provided. The Assessing Officer has applied one of the exceptions, as covering the assessee. The CIT(A) and Tribunal have concurrently found the assessee to be accordingly excepted out of the application of the explanation. The assessee thus not deemed to be carrying on speculation business, loss incurred by it would be a business loss and the assessee entitled to set off the same against its income from other sources under section 71. That being our view, we accept the submissions of Mr. Khaitan in distinguishing the cases cited on behalf of the Revenue as not applicable to this case. Calculation of interest under section 234B - direction by CIT-A to give credit for tax from 6th August, 2008 being the 120th day from the date of last authorization for search as provided in the second proviso in subsection (1) of section 132B. The Tribunal upheld such findings and direction and we have no reason to interfere. No substantial question of law.

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• 2018 (1) TMI 942
  Reopening of assessment - reasons to believe - Held that:- Findings of the Assessing Officer must be honest and cogent, based upon some material available on record, to support the prima facie finding and not predicated on mere assumption and guess work. A complaint or information may merit examination and consideration, but every complaint does not merit reopening or proceeding under sections 147/148 of the Act. The Assessing Officer must examine and ascertain whether or not allegation made are mere guess work, surmise and rumour, or has some basis to make it the basis for detailed final determination. AO has merely observed and recorded that the objections raised by the assessee were untenable and wrong, without elucidating and dealing with the contentions and issues raised in the objection letter dated 10th June, 2015. The Assessing Officer has not applied his mind to the assertions and contentions raised by the petitioner and the core issue to be examined and considered. We set aside the order dated 11th September, 2015 with a direction of remand to the Assessing Officer to pass a fresh order after hearing the petitioner or its authorised representative, without being influenced by the earlier order dated 11th September,2015 or by this order. We have not formed any firm opinion on merits.

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• 2018 (1) TMI 941
  Liability for payment of interest under Section 234B - salary income earned by the petitioner outside India - miscellaneous petition before the Settlement Commission contending that there was a mistake apparent on the face of the record as the petitioner is not liable for payment of interest - Held that:- Section 234(A) of the Act provides for payment of interest for defaults in furnishing return of income, Section 234(B) for defaults in payment of advance tax and Section 234 (C) for deferment of advance tax and all the three Sections create liability on the assessee to pay interest for the default committed by him in the circumstances mentioned in the said Section. It was further held that under Section 234(B) which imposes interest is compensatory in nature and not as a penalty. When duty is cast upon the payer to pay the tax at source, on failure, no interest can be imposed on the payee/assessee. Income Tax Settlement Commission proceeds to confirm the demand of interest under Section 234(B) of the Act, which has been held to be not sustainable in the aforementioned decisions. Therefore, the levy of interest is held to be not sustainable and accordingly the question arising for consideration is answered in favour of the petitioner/assessee and against the revenue. Writ Petition is allowed and the impugned order dated 06.07.2009 is set aside and it is held that the petitioner is not liable for payment of interest under Section 234(B) of the Act, in respect of the salary income earned by the petitioner outside India.

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• 2018 (1) TMI 940
  Disallowance of bad debt - Held that:- When, on the basis of similar evidence the first appellate authority has allowed assessee’s claim for the assessment year 2009–10, we fail to understand why it was not allowed for the impugned assessment year. Further, when the Assessing Officer has not offered any adverse comment with regard to claim of bad debt in the remand report, what further rejoinder was expected from the assessee. As it appears, the first appellate authority without properly applying his mind to the evidences brought on record has sustained the disallowance. Therefore, we are of the opinion that no disallowance is required to be made. Accordingly, we delete the addition made by the Assessing Officer - Decided in favour of assessee. Disallowance of advance given to employees being written–off - Held that:- Disallowance of advance given to employees being written–off was primarily made in the absence of supporting details and evidence. For this very reason, similar disallowance was made in assessment year 2009–10, which has been accepted by the assessee. In the impugned assessment year also, the factual position is no different. Except furnishing the name of some persons with amounts written against their names no other details or supporting evidence have been produced by the assessee to demonstrate advancement of money to the concerned persons. No supporting bills / vouchers have been produced either before the Departmental Authorities or before us. No reason to interfere with the order of the learned Commissioner (Appeals) on this issue. - Decided against assessee. Delayed payment of employee’s contribution to P.F. - payment was not made within the due date as provided under Explanation–2 to section 36(1)(va) - Held that:- There is no dispute to the fact that such payments were made before the due date of filing of return of income for the impugned assessment year. That being the case, following the decision of the Hon'ble Jurisdictional High Court in Hindustan Organics Ltd. v/s CIT, [2014 (7) TMI 477 - BOMBAY HIGH COURT] we allow assessee’s claim of deduction Allowance of warranty expenditure claimed - contention of the assessee before us that the disputed amount claimed as deduction in the impugned assessment year has been offered as income in the subsequent assessment year i.e., assessment year 2011–12 - Held that:- We direct the Assessing Officer to allow assessee’s claim of deduction of provisions made for warranty expenses in the impugned assessment year subject to verification of the fact that the amount in question was offered as income in assessment year 2011–12. This ground is considered to be allowed for statistical purposes. Allowance of expenditure on consumables - Held that:- The expenditure incurred by the assessee is in respect of a material which is in the nature of consumable. This fact is very much evident from the discussion of the first appellate authority while dealing with identical issue in assessee’s own case for assessment year 2009–10, acopy of which was placed before us. The Assessing Officer without properly verifying the facts has disallowed assessee’s claim. - Decided in favour of assessee.

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• 2018 (1) TMI 939
  Working capital adjustment - adjustment on account of receivables - Held that:- Though in the instant assessment year, the working capital adjustment has already been allowed to the assessee, but in the order of the Ld. TPO, it is not clear at what point of time the receivables, inventory and payables are compared for computing working capital adjustment. Their level should be compared on average throughout the year. Further, it is also not evident from the order of the Ld. TPO what appropriate interest rate has been used for computing working capital adjustment. We feel it appropriate to restore the issue to the matter of the Ld. Assessing Officer/TPO for analysing the working capital adjustment given by the Ld. TPO and decide the issue in the light of the direction given by the Tribunal

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• 2018 (1) TMI 938
  Disallowance of business loss - trading of currency derivatives on recognized exchange - treating the same as speculation in nature - Held that:- As decided in IVF Advertisers Pvt. [2015 (5) TMI 706 - ITAT MUMBA] allowing the appeal, that derivatives include foreign currency. Call options or put options were transactions of derivative markets and could not be termed speculative in nature. Therefore, the loss claimed by the assessee on account of foreign currency futures was allowable. Addition being ROC fees were increased in share capital - Held that:- It is not clear from the record as to whether increase in share capital was for enhancing the working capital or for some fixed capital investment. The AO has also not considered the alternative arguments of assessee with regard to deduction u/s.35D. In the interest of justice, restore this ground for file of AO for deciding afresh as per law. Disallowance u/s.14A - Held that:- No disallowance can be made when there is no exempt income. See Cheminvest Limited vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT]

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• 2018 (1) TMI 937
  Estimation of rent made by the AO - annual rental value of the said flat u/s. 23 - Held that:- It cannot be denied that there is no relationship whatsoever between the Licensor and the Licensee, viz. the Induslnd Bank in the present case, nor is there any finding that there are any suspicious circumstances or any fraud or collusion surrounding the Leave & License arrangement entered into by the appellant. That being so, the case of Tip Top Typographies cited by the appellant's representative as well as of Moni Kumar Subba, and the ratio thereof cited approvingly by the Hon'ble High Court in the appellant's own case, covers the facts of the appellant's case. On the facts of the present case, the conditions precedent to resort to enquiry or adoption of the prevailing rateable value are absent. In view of the same, and in considered opinion, the rent actually received by the appellant shall be taken to be the actual rent for tax purposes. - Decided against revenue.

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• 2018 (1) TMI 936
  Section 41(1) addition of cessation of liability - Held that:- There is not dispute that the AO had invoked Section 41(1) of the Act on the ground that the relevant limitation period expired much earlier than the impugned assessment year. It has come on record that hon’ble jurisdictional high court’s judgment in case of Bhogilal Ramjibhai Atara (2014 (2) TMI 794 - GUJARAT HIGH COURT) has held in identical circumstances that the said sole reason does not ipso facto attract Section 41(1). We therefore see no reason to concur with learned Departmental Representative’s vehement contention in seeking to revive the impugned addition. The Revenue’s first substantive ground fails accordingly. Allowance of factory repairing expenses - revenue or capital expenses - Held that:- We find that the Assessing Officer had invoked Section 30 explanation to disallow the impugned expenditure after concluding that the relevant repairs involving plastering, flooring, structuring etc. amounted to capital expenditure. Learned Departmental Representative fails to dispute that the CIT(A) has followed his identical finding in said earlier assessment year concluding that the impugned expenditure is in the nature of routine wear and tear associated with use of old factory building. We therefore adopt consistency in the impugned assessment year as well to confirm the CIT(A)’s findings under challenge qua this second issue. Unutilized CENVAT credit addition u/s 145A - Held that:- CIT(A) has followed his findings in assessment year 2010-11 deleting an identical addition on the ground that it is mainly revenue neutral case stating that unutilized CENVAT credit cannot be subject matter of addition under Section 145A of the Act being tax neutral.

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• 2018 (1) TMI 935
  Rectification of mistake - coordinate bench deciding the matter ex-parte qua the assessee - Held that:- In the facts and circumstances of the case and based on material available on record, the notices scheduling the date of hearing have been duly served on the assessee. Where the assessee chooses to remain silent by way of either not attending to the proceedings or authorizing any person to attend the proceedings on his behalf, the Tribunal cannot be expected to wait for eternity before it decides to take up the matter especially in light of huge pendency of cases. No doubt the assessee has a right to be heard but the same is not an absolute right and it comes with added responsibilities in terms of timely attending to the proceedings as so fixed by the Tribunal. Where inspite of number of opportunities being granted to him, the assessee failed to appear and represent its case, we don’t think the Coordinate Bench has erred in deciding the matter ex- parte qua the assessee. In any case, the Coordinate Bench has heard the ld DR and also taken into consideration the decision of the AO and the ld CIT(A) and thereafter, has decided the matter. The decision of the Coordinate Bench was rendered on merit of the case and nothing has been brought on record which shows any mistake which is apparent from the record.

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• 2018 (1) TMI 934
  Addition u/s 14A(2) r.w. Rule 8D(i) - Held that:- Keeping in view the judgment of the Hon’ble High Court of Bombay in the case of Commissioner of Income-tax vs. HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT), the A.O prior to arriving at the aforesaid conclusion, ought to have verified the availability of the owned funds with the assessee. We thus restore the issue pertaining to disallowance made by the A.O under Sec. 14A(2) r.w Rule 8D(2)(ii) to the file of the A.O for fresh adjudication. The A.O is directed to readjudicate the issue as regards the disallowance under Sec. 14A r.w Rule 8D(2)(ii) keeping in view the judgment of the Hon‟ble High Court of Bombay in the case of HDFC Bank Ltd. (supra). The Ground of appeal No. 1(ii)(b) & (c) are allowed for statistical purposes. Disallowance of the demat charges u/s 14A(2) r.w Rule 8D(2)(i) - Held that:- We find that though the assessee had assailed before us the validity of the disallowance of the demat charges of ₹ 93,692/- made by the A.O, but however, a perusal of the order of the CIT(A) reveals that the assessee on the contrary had agreed before him that the same were the direct expenses incurred in relation to its exempt income. We thus are of the considered view that in the backdrop of the aforesaid concession of the assessee, the grievance of the assessee as regards the sustaining of the disallowance by the CIT(A) does not survive. - Decided against assessee. Restoring the disallowance u/s 14A(2) r.w. Rule 8D(2)(iii) to the file of the A.O for fresh adjudication - Held that:- Held that:- CIT(A) keeping in view the claim of the assessee that the administrative expenses to the extent of ₹ 13,53,850/- were not incurred in relation to earning of exempt income, and no expense was incurred for earning of the exempt income, had thus rightly directed the A.O to make necessary verifications as regards the said claim of the assessee and readjudicate the disallowance under Sec. 14A r.w Rule 8D(2)(iii). We are of the considered view that no infirmity emerges from the aforesaid observations of the CIT(A). We thus finding no reason to dislodge the view arrived at by the CIT(A), therefore, uphold the same. - Decided against revenue

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• 2018 (1) TMI 933
  Treatment given to the rental income - Authorities below have treated these receipts as ‘income from other sources’ only on the premise that the assessee was not the owner of the premises and the case relating to its ownership stood lost at the lower judicial level - Held that:- This reason assigned by the ld. Authorities below to treat the rental income as income from other sources, in our considered opinion, is not tenable in view of the decision of Hon’ble Supreme Court in the case of Chennai Properties & Investments Ltd. vs. CIT (2015 (5) TMI 46 - SUPREME COURT) stating deciding factor is not the ownership of land or leases but the nature of the activity of the assessee and the nature of the operations in relation to them. The objects of the company must also be kept in view to interpret the activities.” Thus no hesitation to treat the rental income received by the assessee in the instant case as business income. Bogus transactions - Held that:- As on perusal of assessee’s account in the books of Vendor (PB-88), we find that no payments have been made by the assessee upto 31.03.2001 and the assessee was not able to establish any subsequent payment to the said party before the authorities below. We, therefore, endorse the view of the authorities below regarding no activities of purchase and sales during the year and transactions of purchase and sale shown, as sham. This however, would not affect the business of assessee regarding receipt of rentals as noted above. Administrative expenses disallowance - AO has allowed such expenditure only to the extent of 10% to earn the income from other sources - Held that:- Disallowance made by the ld. Authorities below to the extent of 90% of the expenditure claimed by the assessee is somewhat excessive. It is worthwhile to note that in order to keep the company alive, the assessee is required to make certain necessary overhead expenses also apart from earning the income, as there is nothing on record to establish that the assessee company was closed once for all. We feel it appropriate to allow 50% of the total administrative expenditure of ₹ 4,38,636/- claimed by the assessee. Disallowance of interest on account of loans taken from PNB - addition u/s 36 - Held that:- The interest shown to have been paid by assessee on this loan, which was advanced by the assessee to third party, in our opinion, has rightly been held as not allowable to the assessee for the reason that the purpose of advancing loan to third party after raising it from the bank, does not stand established from the account of the assessee, as no interest received on such loan from the third party, has been credited by the assessee in his books from F.Y. 1997-98 to 31.03.2001. The purpose of earning interest income, therefore, stood defeated and therefore, the interest paid by the assessee to the PNB claimed as deduction, is not admissible u/s. 36(1)(iii) of the IT Act. We, therefore, sustain the addition Allowance of 1/10th of deferred Revenue expenditure claimed by the assessee in the profit and loss account towards vacation of property - Held that:- We find that there is no provision in the IT Act to allow such deferred Revenue Expenditure u/s. 35D(1) & (2) of the IT Act. It is neither the revenue expenditure nor an expenditure incurred wholly and exclusively for the purpose of business during the year. This issue is, therefore, decided against the assessee and in favour of the Revenue. Accordingly, this ground of assessee is dismissed.

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• 2018 (1) TMI 932
  Carry forward and adjustment of unabsorbed depreciation after the lapse of 8 (eight) assessment years - Held that:- Once Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation got carried forward to next A.Y.2002-03 and became a part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. See assessee's own case [2016 (1) TMI 1346 - ITAT MUMBAI] and General Motors India P. Ltd. Vs. DCIT [2012 (8) TMI 714 - GUJARAT HIGH COURT] - Decided in favour of assessee. Addition u/s 14A - AR contended that the investments made in joint ventures were strategic in nature and had to be excluded while arriving at the disallowance u/s 14A - Held that:- As correctly noted by CIT(A), the assessee failed the refute the findings of Tax Auditor in this regard and could not demonstrate that it did not incur any direct expenditure to make the investments. Therefore, the issue, in our opinion, remains inconclusive and requires reconsideration by Ld. AO. Hence, the matter is remitted back to Ld. AO to re-appreciate the factual matrix with a direction to assessee to justify his stand forthwith, failing which the Ld. AO shall be at liberty to decide the same as per law on the basis of material available on record. This ground stands allowed for statistical purposes. Claim of Loan Processing Fees - Held that:- Undisputedly, the sale of investments was chargeable under the head ‘Capital Gains’. In such a scenario, we find that the reliance of Ld. AR on various case laws could not help assessee since the fact of those cases reveals that the loan was utilized for the purpose of capital expansion of assessee’s business and the purpose of the same was capital expenditure. This vital fact is missing in the present case.A lso not evident from material on record that the assessee did not claim the balance deferred revenue expenditure in subsequent years on proportionate basis. Therefore, this matter is also remanded back to the Ld. AO for re-appreciation of the factual matrix. Adjustment of disallowance u/s 14A in computation of book profit u/s 115JB - Held that:- Adjustment of disallowance u/s 14A was not required to be made in Book Profits for the purpose of Section 115JB. The ground of assessee’s appeal stands allowed to that extent. See ACIT Vs. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI]

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• 2018 (1) TMI 931
  TPA - comparable selection criteria - Held that:- We find that the assessee is engaged in the business of providing non binding advisory services, that it has used TNMM to determine the ALP of the IT's, entered into by it with its AE. s., that PLI shown by it was OP/OC, that profit margin of the IT. s. for the year under consideration, on the basis of data of three AY's, was 15. 03%, thus companies functionally dissimilar with that of assessee need to be deselected from final list.

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• 2018 (1) TMI 930
  Commission paid to overseas agent - assessee was unable to prove the need for commission @25% paid to M/s.Khadlaj Perfumes LLC, whereas commission incurred with other parties was @0.5% to 5.85% - addition u/s 153A - Held that:- No addition can be made in respect of assessments which have become final if no incriminating material is found during search or during 153A proceedings. See CIT Vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]

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• 2018 (1) TMI 929
  Applications seeking exemption u/s 80G(5)(vi) - substantial portion of the amount received by the Trust is incurred on the construction of the temple for which a significantly high construction cost is reflected in the balance sheet - Held that:- It is admitted fact that the assessee are granted registration u/s 12AA. It is well settled position of law that at the time of granting approval under Section 80G, what is to be examined is the object of the trust and so far as the aspect of income is concerned, same can be very well examined by the AO at the time of framing assessment. In the cases of the assessee trust and society, the objectives have already been examined by the CIT(E) while granting registration u/s 12AA. The 80G(5) subsists the 12AA so far as examination of charitable nature of objectives is concerns. Thus, both on facts and in law the assesses’ case are squarely covered by ‘CIT vs. Puja Shri Jalrambapa and Matushri Virbaima Charitable Trust’ (2014 (11) TMI 1165 - GUJARAT HIGH COURT). Respectfully following the Hon’ble Gujarat High Court in the case of ‘CIT vs. Puja Shri Jalrambapa and MatushriVirbaima Charitable Trust (Supra), we, find the grievance of the assessee society and trust justified and therefore, direct the CIT(E) to grant approval u/s 80G(5)(vi). - Decided in favour of assessee.

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• 2018 (1) TMI 928
  Disallowance of license fee u/s 37(1) - CIT- A upholding the order of the learned AO that the annual revenue share based license fee payable by the Appellant to Department of Telecom (DoT) qualifies as a capital expenditure being consideration for obtaining the telecom license and hence is amortisable u/s 35ABB - Held that:- AO/CIT (A) have erred in disallowing the amount being the capital expenditure amortized u/s 35ABB incurred for obtaining telecommunication licence from the DoT. So, the amount being revenue expenditure is ordered to be deleted. See CIT vs. Bharti Hexacom Ltd. [2013 (12) TMI 1115 - DELHI HIGH COURT] Disallowance of claim for loss on account of diminution in value of investment in OFCD in ADIL - Held that:- Hon’ble Supreme Court in S.A. Builders Ltd. vs. CIT, Chandigarh – ( 2006 (12) TMI 82 - SUPREME COURT) held that, “even when the expenditure has not been incurred under any legal obligation yet is allowable to be as business expenditure if it was incurred on ground of commercial expediency.” So, in this case, investment in the OFCD by the assessee company in its subsidiary to utilize the license of ADIL for telecom is certainly a commercial expediency and is allowable u/s 37 of the Act as contended in the alternative. So, ground no.2 is determined in favour of the assessee company. Addition of guarantee payment - Held that:- Assessee company gave corporate guarantee facilities availed by the ADIL, its subsidiary, in favour of the DoT, and it is also not in dispute that ADIL suffered heavy losses exceeding share capital and consequently, the DoT terminated the licence of ADIL for Rajasthan and Haryana for 11 months and invoked the guarantee following which the bank has made a payment of ₹ 28,36,26,000/- and consequently, the assessee company has provided said amount to the bank which the bank provided to the DoT. The ratio of the judgment of Hon’ble Supreme Court in the case of CIT vs. Amalgamation (P.) Ltd. (1976 (3) TMI 31 - MADRAS High Court) is that, “loss incurred by the assessee on account of furnishing of guarantees to its subsidiary company is a business loss and as allowable business expenses.” We are of the considered view that the amount of ₹ 28,36,26,000/- is an allowable expenditure. So, ground no.3 is determined in favour of the assessee company. Amount being the waiver of the amount received on capital amount as income chargeable to tax in the year of waiver - Held that:- As copy of agreement to prove the receipt of the amount from Swisscom or the waiver of the liability by Swisscom has not been brought on record by the assessee company to work out the exact nature of consideration for which amount in question was received from the Swisscom. Let the assessee company produce copy of settlement deed entered into between the Swisscom and the assessee company in order to decide the nature of the consideration for which the amount in question was received. Consequently, this issue is set aside to the file of AO to decide afresh

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• 2018 (1) TMI 927
  Applicability of sec 50C - DR contends that AO had rightly invoked Section 50C before making the impugned short term capital gains addition - income derived from sale agricultural land - Held that:- We find no merit in the instant argument. It has come on record that the assessee’s share in the land in question is only to the extent of 1/10th. The department itself has assessed the remaining two co-sharers namely Smt. Kalaben N. Patel (8%) and Shri Devang Dineshbhai Shah(10%) to have derived business income from plotting the relevant capital asset in question. There is no distinction on facts pointed out at the Revenue’s behest in assessee’s case vis-à-vis above two remaining co-sharers. This tribunal in case of Jayantibhai C. Patel (2011 (12) TMI 691 - ITAT AHMEDABAD) admittedly holds that income derived from sale agricultural land after its conversion to a non-agricultural parcel amounts to an adventure in the nature of business and trade resulting in business income. It has further come on record that the instant assessee had entered into an MOU(supra) with the developer in question. We affirm CIT(A)’s findings under challenge treating the assessee to have derived business income instead of capital gains. Learned Departmental Representative fails to dispute that the Section 50C of the Act does not apply in the instant case. We therefore see no reason to accept Revenue’s grievance pleaded in the instant appeal.

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• 2018 (1) TMI 926
  Rectification of mistake u/s 154 - addition in respect of payment of compensation for violating the terms and condition of non-solicitation and non-compete agreements - whether payment towards non-solicitation and non-compete agreements is revenue in nature? - Held that:- Powers conferred u/s. 154 on the Assessing Officer are limited only to rectify the patent mistakes. The Assessing Officer cannot use the canon of section 154 to review its decisions. In the instant case the Assessing Officer has exercised his power u/s. 154 not to rectify any mistake but to thrust his changed opinion. This cannot be permitted under the provisions of section 154 of the Act. The Assessing Officer does not have unfettered powers under the section to play with the assessment of assessee. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in rejecting the action of Assessing Officer for making addition. Thus, we concur with the findings of Commissioner of Income Tax (Appeals). Accordingly, the impugned order is upheld and the appeal of Revenue is dismissed.

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• Customs

• 2018 (1) TMI 925
  Power of seizure of goods - provisional release of seized goods - Held that: - when the investigations are underway, we should not interfere. Secondly, these investigations are in relation to certain consignments and which have been dubbed to be not of Sri Lankan origin. The power of investigation and the power to seize the goods upon such investigation and further power to issue a seizure memo is not at all questioned. The goods obviously are lying in the port and incurring and inviting several charges, including detention charges as complained. The investigations are going to take some more time as is revealed in the affidavit because the investigating machinery under the Customs Act would have to route its request to conduct and complete proper investigation through several Ministries of Government of India and which would then authorise the officials either to visit Sri Lanka or to summon more material or documents from Sri Lanka and Indonesia. For that, procedural formalities have to be completed. No useful purpose will be served by allowing the goods to be detained and when samples have already been drawn. Goods to be released on petitioner executing the Bond and Bank Guarantee - petition disposed off.

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• 2018 (1) TMI 924
  Revocation of CHA License - forfeiture of security deposit - main allegation against the appellant was that the appellant has allegedly allowed Mr.Rajesh to use their licence for monetary consideration which violates the provisions of Regulation 12 of the 2004 Regulations - Held that: - an authorised person was allowed to transact business. At the same time, the Commissioner holds that the said Rajesh may not have done complete acts which are to be done and contemplated to be performed by the Customs House Agent, but the appellant allowed him and thus was not vigilant in fulfilling his obligations and discharging his duties as Customs House Agent. The fraudulent acts attributable to Rajesh and the exporters do not in any manner concern the Customs House Agent before us. The extreme penalty of revocation of Customs House Agent License along with forfeiture of security deposit was not justified - The charge of negligence and non-adherence to the Regulation, in the sense of failing to discharge his duties and responsibilities, has been held to be proved - Since the charge of negligence and nonadherence to the Regulations insofar as failure to fulfill and discharge the responsibilities has been proved, the penalty of revocation of license for a period of five years from 28th February 2013 is justified - security deposit is also rightly forfeited. Appeal allowed in part.

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• 2018 (1) TMI 923
  Applicable Rate of Duty - date of presentation of Bill of Entry - what is the date on which the bill of entry in this case was presented by the petitioner under Section 46 of Customs Act, 1962? - Held that: - the proviso to Section 46(1) states that the Principal Commissioner of Customs or Commissioner of Customs may, in cases where it is not feasible to make entry by presenting electronically, allow an entry to be presented in any other manner. As per Section 46(3), A bill of entry under sub-section (1) may be presented at any time after the delivery of the import manifest or import report, as the case may be. In the present case also even though the importer had filed all the relevant particulars on 07.11.2017 itself, it was on account of the system related fault, the bill of entry got generated on 08.11.2017. The approach set out in the aforesaid Instruction No.12/2017-Customs dated 31.08.2017 deserves to be adopted in the present case also. There is a maxim ‘Actus curiae neminem gravabit’. It means that nobody should suffer for the wrong done by a quasi-judicial body. The aforesaid instruction is also an analogous application of the same principle. In the law of contracts also, no party is expected to do an act impossible in itself. Since the Notification No.84 of 2017 was issued only on 08.11.2017, the writ petitioner's case will not be governed by the same - in the light of Section 15 of the Customs Act, 1962, the rate of duty applicable to the import in question will be the one that obtained on 07.11.2017- petition allowed.

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• Corporate Laws

• 2018 (1) TMI 922
  Transfer of shares - due to mismatch of signatures the Bank had refused to transfer those shares and put “Stop mark” - whether this Petition is not maintainable against the State Bank of India being not incorporated as a Company under the provisions of the Companies Act? - Held that:- Respondent No. 5 has stated in the Affidavit in Reply that the shares were lost by him and the claimant Petitioner is not a bona fide person to lodge the claim in SBI records. A question has been raised that if the shares were lost then why a Police Complaint or FIR was not lodged?. Otherwise also, there is no corroborative evidence in support of the alleged claim of loss of shares. In the absence of any substantial proof we are not persuaded by this argument of the Respondent. This Petition is maintainable against the State Bank of India as per the in-depth discussion made hereinabove and that the question of Limitation in respect of the impugned transaction in question is concerned do not apply because the transaction has happened at the period when the Old Companies Act, 1956 was in operation. However, the Petition filed against State Bank of India revolves around the lodging of claim in respect of only 100 shares as per the specifications supra and not in respect of total 200 shares. As a result, our Order is confined to those 100 shares only, details as per supra, which were lodged for transfer in the prescribed record by the State Bank of India. The Petition is therefore, partly allowed

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• Insolvency & Bankruptcy

• 2018 (1) TMI 953
  Constitutional validity of Section 4(b) of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 - grievance of the petitioner is that its scheme, which was pending before BIFR, was at a very advanced stage and was almost on the verge of acceptance, a day prior to the notification of the Repeal Act - Held that:- Once a law is repealed and a new legislation has been put in its place, it is not open for anyone to contend that it should be continued to be governed by the old enactment, except where actions under the existing laws had concluded. The applicability of the repealed legislation is only to the extent as provided in the Savings clause and nothing more. Under the newly enacted Section 4(b) there are only two classes of persons, namely (i) those persons in whose cases schemes were sanctioned and (ii) those persons in whose cases the schemes were pending. In the former, there are two sub-classes namely; - schemes which were required to be implemented, where the NCLT could be approached and - schemes where appeals were yet to be filed by the party aggrieved, where the NCLAT could be approached. In the latter class of cases, there is only one remedy i.e. to approach the NCLAT within a period of 90 days. To this, there could be no quarrel. The broad classification of cases where schemes are sanctioned and not sanctioned is intelligible as both would be governed by the Code including the implementation, supervision and appeals arising therefrom. Thus, there is no discrimination whatsoever. The second proposition that the Petitioner has a ‘legitimate expectation’ does not have any legal basis, inasmuch as the right of the Petitioner to approach the appropriate forum has not been taken away. The Petitioner was provided with the remedy to approach the NCLT within a period of 180 days. In law, there could not be a legitimate expectation to be governed by the repealed enactment when the manifest intention of the Legislature is to completely replace the said enactment with a new insolvency regime. By operation of law, the forum which the Petitioner can approach has been changed and a remedy was thus available to the Petitioner. On a query as to why the Petitioner chose not to approach the NCLT, the response was that the Petitioner wanted to be governed by the repealed Act, i.e., SICA and not in accordance with the Code as provided for under Section 4(b). Such a submission lacks any legal basis and is liable to be rejected. Thus the validity of Section 4(b) is upheld and the writ petition is dismissed.

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• 2018 (1) TMI 952
  Corporate insolvency proceedings - 'existence of dispute' - Held that:- Operational Creditor is a person to whom operational debt is owed and includes any person to whom such debt has been assigned or transferred. The definition of Operational Creditor is not exhaustive but illustrative. It is capable of covering those heads which are not specifically mentioned in the definition. The definition of operational debt postulates that it is a claim in respect of the provision of ‘goods’ or ‘services’ including employment etc. A perusal of Annexure P-4 to P-6 suggests beyond doubt that the work i.e. tour operated by the respondent company fulfils the requirement of word i.e. ‘services’ as defined in Section 5(21) of the Code. Therefore, ‘Operational Creditor’ fulfils and comes under the purview of aforesaid Sections. Corporate Debtor has committed default and the amount of ₹ 20,07,53,000/- has remained unpaid since 15.02.2015. For extinguishing such liability to some extent Corporate Debtor had issued various cheques in favour of ‘Operational Creditor’ which were returned back with the endorsement of ‘insufficient funds’ and at present proceedings under Section 138 of Negotiable Instrument Act are in progress before the learned Metropolitan Magistrate, Mumbai. Suit for recovery of money under Order XXXVII of the Code of Civil Procedure, 1908 is also pending before the Hon’ble High Court of Bombay. Thus, there is default committed on the part of the Corporate Debtor within the meaning of Section 3(12) read with Section 4 and Section 9(1) of the Code, 2016. Operational Creditor has also proposed the name of Interim Insolvency Professional namely Mr. Manoj Kulshrestha, 4th Floor, CS 14, Ansal Plaza, Vaishali (Opp. Dabur), Ghaziabad, UP-201010, who has made declaration in accordance with the provisions of Rule 9 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. This petition is admitted and Mr. Manoj Kulshrestha is appointed as an Interim Resolution Professional.

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• 2018 (1) TMI 951
  Corporate insolvency process - no issue of notice - Held that:- Admittedly, no notice was issued under sub-section (1) of Section 8 of the ‘I&B Code’. In terms with Rule 5, other informations were also not placed before the Adjudicating Authority. The 1st Respondent (‘Operational Creditor’) having failed to provide all the details as required under Form-5 as noticed above, the application under sections 433 and 434 of the Companies Act, 1956 cannot be treated to be an application under section 9 of the ‘I&B Code’ in terms of Rule 5 of Transfer Rules, 2016. For such failure to provide the information, in view of proviso to Rule 5 of the Transfer Rules, the application under Sections 433 and 434 of the Companies Act, 1956 filed by 1st Respondent stands abated. For the reasons aforesaid, while we set aside the impugned order dated 12th October, 2017 passed by the Adjudicating Authority, Chennai also declare that the application preferred by the 1st Respondent under Sections 433 and 434 of the Companies Act, 1956 stood abated.

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• Service Tax

• 2018 (1) TMI 920
  Rectification of Mistake application - grievance was that the adjudication order did not take into account the fact that AAI had discharged all its liabilities towards non-traffic revenue including the rent on Scope Complex which was in terms of the Finance Act, 1994 - Held that: - it is significant that the order dated 8th January 2008, passed by the CST rejecting the rectification application itself notes that AAI had filed a revised return on 26th June, 2006. In any event, this formed part of the assessment record and, therefore, available with the Department. In such circumstances, the CST could not have restricted the examination to the SCN and the reply thereto, but was expected to examine the assessment record. The Court is unable to agree with the contention of learned counsel for the Respondent that it was incumbent on AAI to have drawn the attention of the adjudicating authority to the fact of filing of the revised return on 26th June, 2006. It is expected that the adjudicating authority will examine the entire record of AAI not limited to the documents supplied with the SCN or supplied along with the reply thereto. The rectification application should be decided afresh within a period of eight weeks - petition allowed by wya of remand.

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• 2018 (1) TMI 919
  Recovery of alleged dues pursuant to a contractual work - outstanding dues of service tax - jurisdiction under Article 226 - Held that: - The question has been considered specifically in Hindustan Petroleum Corporation Limited and another Vs. Dolly Das [1999 (4) TMI 615 - SUPREME COURT] wherein Court said that in absence of any constitutional or statutory rights being involved, a writ proceeding would not lie to enforce contractual obligations even if it is sought to be enforced against State or to avoid contractual liability arising thereto. In the absence of any statutory right, Article 226 cannot be availed to claim any money in respect of breach of contract or tort or otherwise. Mandamus sought by petitioner is nothing but grant of a money decree in extraordinary equitable jurisdiction under Article 226 which ought not to have been granted. Petition dismissed with costs.

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• Central Excise

• 2018 (1) TMI 918
  Clandestine removal - excesses of stock - 132 MT of Bloom/Billet - non-accountal of stock in the records - 1158 MT of angles, channels, joist and other goods - Held that: - the quantity of 132 MT is roughly one day’s production and the explanation is that this would have been accounted but for the relevant documents being withdrawn by the officers - non accountal of this quantity of finished goods can be condemned in the light of the explanation offered by the appellant. In any case, goods were found within the factory and consequently, the confiscation of this quantity of finished products is not justified and hence set aside. As regards angles, channels, joist and other goods (totaling to 1158 MT), the explanation offered by the appellant is that they had installed new machineries in the rolling mills and these goods were produced in the trial run during May 2012 - Held that - There is nothing on record to support the argument that such goods were manufactured in trial run and did not meet the necessary specifications - In the present case, this quantity of finished goods have been manufactured but not accounted in the statutory records. Consequently, the goods are liable for confiscation and appellant will be liable for penalty in terms of Rule 25 of the Central Excise Rules. In the result, confiscation is upheld. Keeping in mind the doctrine of equity, fairness and good conscience, the redemption fine and penalty imposed merits reduction - appeal allowed in part.

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• 2018 (1) TMI 917
  Valuation - job-work - Rule 10A of the Central Excise Valuation Rules - Department was of the view that the inputs were manufactured by the appellant on job work basis for M/s Zydus and hence the valuation of the goods for purposes of charging excise duty were to be done in terms of Rule 10A of the Central Excise (Determination of Price of Excisable Goods) Rules, 2000. Held that: - In terms of the agreement, it is evident that the appellant is required to manufacture the goods exclusively for M/s Zydus, and using their specifications as an agent of M/s Zydus, and using the technical knowhow relating to the product which will be supplied by M/s Zydus - It is evident from the above clause of the agreement that the goods are to be manufactured from inputs supplied by the suppliers identified by M/s Zydus which clearly satisfies as the third condition in the Explanation to Rule 10A. Further on perusal of the various clauses of the agreement read together leads to the conclusion that the goods have been manufactured by the appellant as a job worker on behalf of M/s Zydus. Once we conclude that the appellant has acted as a job worker for M/s Zydus the mischief of Rule 10A of the Valuation Rules becomes applicable and the goods are required to the valued on the basis of the price at which the principal manufacturer, M/s Zydus sells such goods from their depot. Appeal dismissed - decided against appellant.

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• 2018 (1) TMI 916
  SSI exemption - clubbing of clearances - dummy units - Held that: - there are inconsistent appreciation of similar set of evidences by the Original Authority - When the confessional statements which were un-retracted were relied upon by the Original Authority, the same has not been found sustainable in respect of some of the noticees only on the ground that certain counter evidences have been produced.. The grievances now placed before us by all the appellants (both Revenue and assessee) are having sufficient force to persuade us to hold that the impugned order as it stands cannot be sustained - the Original Authority has to be directed to examine the whole case afresh in order to arrive at a categorical, consistent finding on the basis of available evidences and the submissions made by all the parties in the dispute. Adequate opportunities shall be provided to the appellants/assessee to submit their side of the case. Revenue’s grievance regarding inconsistent appreciation of factual and legal basis of the allegation in the notice also requires consideration. The case remanded back to the Original Authority who shall examine the evidences afresh for a decision - appeal allowed by way of remand.

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• 2018 (1) TMI 915
  Valuation - includibility of VAT in assessabla value - Revenue was of the view that the VAT liability discharged by utilizing the investment subsidy granted in form 37B cannot be considered as VAT actually paid, for the purpose of Section 4 of the Central Excise Act, 1944 - Held that: - for the initial period the assessees are required to remit the VAT recovered by them at the time of sale of the goods manufactured. A part of such VAT is given back to them in the form of subsidy in Challan 37 B. Such Challans are as good as cash but can be used only for payment of VAT in the subsequent period. In terms of the scheme of the Government of Rajasthan payment of VAT using such Challan are considered legal payments of tax. There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 914
  Clandestine removal - M.S. Ingots - the Revenue’s entire case is based upon the investigations conducted by them in respect of entries made in the balance-sheet - Held that: - It is not disputed on record that income reflected in the balance-sheet stands included by the assessee for payment of Income Tax. Such Income Tax Returns have also been assessed by the Income Tax Department. The said returns have also been audited by their statutory auditor. We would like to observe that Central Excise authorities have no jurisdiction to interfere in the orders passed by Income Tax authorities and to hold that transactions which stand accepted by the Income Tax authorities were not genuine transactions. Virtually no evidence is produced by the Revenue as regards the clandestine manufacture and clearances of appellant s final product. It is well settled law that the allegations of clandestine manufacture and removal are required to be proved by production of sufficient evidence in the shape of production of raw material, the actual manufacture of the goods, transportation of the same or in the shape of identification of the buyers. There is no statement of any persons indicating or admitting that income as reflected by the appellants in balance sheet stands derived from clandestine activities of manufacturer and clearance of their final products. Appeal dismissed - decided against Revenue.

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• 2018 (1) TMI 913
  CENVAT credit - input services - Club or Association Service - Health and Fitness Service - Held that: - the disputed services were used and utilized by the appellant for accomplishing its business purpose. Since the period involved in this case is prior to March, 2011, benefit of Cenvat Credit under the un-amended definition of input service, should be available to the appellant in respect of the disputed services, inasmuch as, the Phrase i.e. activities relating to business was finding place in the inclusive part of such definition. The appellant had considered the element of service and service tax component thereon in determination of the cost of production and discharged the Central Excise duty liability on removal of the final product - credit to be allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 912
  Interest on delayed refund of unutilized credit - transfer of credit under Rule 57H(3) - scope of section 11B of CEA - whether the provisions of section 11B and 11BB OF Central Excise Act, 1944 are applicable to the proceedings of claim of refund by way of transfer under Rule 57H(3) of Central Excise Rules, 1944 or not? - Held that: - similar issue came up before Hon’ble High Court of Madhya Pradesh in the case of Midland Plastics Ltd. [2006 (4) TMI 157 - HIGH COURT OF JUDICATURE OF MADHYA PRADESH], where it was held that the provisions of Rule 57H and the notification issued thereunder enable refund under the Modvat credit scheme but even in such cases the procedure and limitation for claiming such refund would be governed by the provisions of Section 11B of the Central Excise Act - provisions of section 11B of the Central Excise Act are applicable to the facts of this case. The appellant is entitled to claim interest from the date of filing of refund of set off by way of credit to the Modvat scheme after three years from the date of filing claim of refund of set off by way of transfer to Modvat Credit Scheme under RG-23A till its realisation. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (1) TMI 911
  Taxability - mobile charger - whether a mobile charger when sold as part of a composite package comprising the said article as well as a mobile phone is liable to be taxed separately treating it to be an unclassified item under the provisions of the U.P. VAT Act 2008? Held that: - Admittedly, the mobile phone and charger are sold as part of a composite package. The primary intent of the contract appears to be the sale of the mobile phone and the supply of the charger at best collateral or connected to the sale of the mobile phone. The predominant and paramount intent of the transaction must be recognized to be the sale of the mobile phone. In the case of transactions of the commodity in question, the Court must also bear in mind that a charger can possibly be purchased separately also. However in case it is placed in a single retail package along with the mobile phone, the primary intent is the purchase of the mobile phone. The supply of the charger is clearly only incidental. In any view of the matter, there does not appear to be any separate or distinct intent to sell the charger. The Court is considering the case of a composite package, which bears a singular MRP. The charger is admittedly neither classified nor priced separately on the package. It is also not invoiced separately. The MRP is of the composite package. The respondents therefore cannot be permitted to split the value of the commodities contained therein and tax them separately. This especially when one bears in mind that entry 28 itself correlates the article to the MRP. Revision allowed - decided in favor of assessee.

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• 2018 (1) TMI 910
  Time limitation - primary defence of the Defendant was that the sales tax forms pertained to the year 1991-92 but the suit for recovery was filed only in the year 2001. Hence, the Defendant claimed that the suit was barred by limitation - Held that: - The Trial court specifically notes that the non-giving of the ST-1 forms, which is an admitted position, was a statutory obligation of the Defendant which was discharged by the Plaintiff only in the year 2001. Hence, the suit was well within limitation. Demand of deposit from Sales Tax authorities - It is the case of the Plaintiff that though the payments for purchases were made, the ST-1 forms were not submitted despite repeated requests - Held that: - A perusal of the records reveals that the pleadings and the evidence has been properly appreciated by the learned Trial court. The admissions by the witness of the Defendant, both in the pleadings and in the cross-examination, clearly point to the fact that there was default by the Defendant in depositing the sales tax on the purchases made by him and on handing over of the ST-1 forms. The statutory obligation of the Defendant having been discharged by the Plaintiff, the Plaintiff is entitled to recover the said amount from the Defendant. There is no illegality in the impugned order. The suit has been rightly decreed in the favor of the Plaintiff.

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• 2018 (1) TMI 909
  Deemed assessment - It is the case of the Plaintiff that though the payments for purchases were made, the ST-1 forms were not submitted despite repeated requests - The respondent completed the assessment, by rejecting the objections of the petitioner. Hence, the petitioner is before this Court - maintainability of petition. Held that: - Admittedly, the petitioner has an efficacious alternate remedy, by way of filing Appeal before the Appellate Authority, and it appears that, a portion of the tax has already been remitted by the petitioner for the respective assessment years. Therefore, the petitioner can very avail alternate remedy provided under the TNVAT Act, which is not only an effective remedy, but also efficacious remedy. Writ Petitions are disposed of, by giving liberty to the petitioner to file Appeals before the Appellate Authority, and if the Appeals are filed within a period of 30 days from the date of receipt of copy of this order, the Appellate Authority shall entertain the same, without rejecting it on the ground of limitation.

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• 2018 (1) TMI 908
  Recovery of dues of the Company from the Directors - The case of the petitioners, in a nutshell, is that the directors of the company are not liable and the amount can be recovered only from the assets of the company - Held that: - In the present case, respondent no.2 has not placed on record any material that the petitioners have played any fraud or misrepresentation - The notices, in the present case, have been issued mechanically. Petitioners cannot be held automatically responsible for outstanding dues unless the responsibility of the director was fixed after lifting the veil. Further, the company is not under liquidation. A distinct juristic personality and the properties of a Director cannot be attached for the recovery of the dues of the Company. Petition allowed - decided in favor of petitioner.

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• 2018 (1) TMI 907
  Validity of assessment order - Section 3(4)(b) of the TNVAT Act, 2006 - the petitioner contended that they did not have adequate opportunity to produce the documents namely purchase bills and prayed for one more opportunity to place all the materials before the Assessing Officer - principles of Natural Justice - Held that: - Had the respondent afforded an opportunity of personal hearing to the petitioner, they would have been in a position to explain the factual situation and would have placed legal submissions, which they had raised in their objections - This is the reason why the Hon'ble Division Bench pointed out that even though the Act does not specifically provide for an opportunity of personal hearing, there is no bar for Assessing Officers to call upon the assessees to appear before them, produce documents and explain their case. The matter is remitted back to the respondent for a fresh consideration - petition allowed by way of remand.

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• Indian Laws

• 2018 (1) TMI 921
  Constitution of an Arbitral Tribunal - arbitration proceedings culminated in the Arbitral Award dated June 18, 2004 - works order - contract for installation of Low Tension Load Management Systems (LTLMS) at various locations - it was alleged that the appellant did not supply the list of locations where the contract objects had to be installed - also, the appellant did not renew the LC through which the lease rentals were being paid for the installed objects - termination of contract. Held that: - The appellant prevented respondent No.2 from performing the contract - Respondent No.2 was ready and willing to perform the contract all throughout - termination of contract was valid and justified. A perusal of the award reveals that the Tribunal investigated the conduct of entire transaction between the parties pertaining to the work order, including withholding of DTC locations, allegations and counter allegations by the parties concerning installed objects. The arbitrators did not focus on a particular breach qua particular number of objects/class of objects. Respondent No.2 is right in its submission that the fundamental breach, by its very nature, pervades the entire contract and once acted committed, the contract as a whole stands abrogated. It is on the aforesaid basis that the Arbitral Tribunal has come to the conclusion that the termination of contract by respondent No.2 was in order and valid. The proposition of law that the Arbitral Tribunal is the master of evidence and the findings of fact which are arrived at by the arbitrators on the basis of evidence on record are not to be scrutinised as if the Court was sitting in appeal now stands settled by catena of judgments pronounced by this Court without any exception thereto. Award of Damages - Held that: - the appellant cannot now turn around and raise objection to the award of damages which are measured having regard to the loss suffered by respondent No.2 in terms of lease rent for reasonable period for which it would have been entitled to otherwise - the Arbitral Tribunal, for the purpose of classification, considered a 30% reduction in lease rent to compute damages for installed objects, 50% reduction in lease rent to compute damages for manufactured but uninstalled objects and the bare cost of raw materials for the objects not manufactured. No pendente lite interest was awarded, though the proceedings went on for five and a half years. Thus, the Arbitral Tribunal awarded almost the same amount as was invested by respondent No.2 for the project - The aforesaid being a reasonable and plausible measure adopted by the Arbitral Tribunal for awarding the damages, there is no question of interdicting with the same. Once it is established that the party was justified in terminating the contract on account of fundamental breach thereof, then the said innocent party is entitled to claim damages for the entire contract, i.e. for the part which is performed and also for the part of the contract which it was prevented from performing - We, thus, do not find any infirmity in the manner in which damages are awarded in favour of respondent No.2. Mitigation of damages - Held that: - It becomes apparent that the objects in question were manufactured by respondent No.2 to suit the specific needs of the appellant ad they could not be used otherwise. Therefore, there was no possibility on the part of respondent No.2 to make an endeavour to dispose of the same in order to mitigate the loses. Waiver of liquidated damages - Held that: - effort on the part of the appellant to rely upon the judgment of the learned single Judge of the High Court in the first round is futile as that was set aside by the Division Bench and matter was remitted back to the single Judge of the High Court to decide it afresh - matter on remand. Order on Chamber Summons - Held that: - the amendment sought was highly belated. Arbitration petition filed under Section 34 of the Act was sought to be amended after a delay of eight years. Further, the amendment in the appeal, taking those very grounds on which amendment in the arbitration petition was sought, was sought after a delay of 3½ years. The High Court, thus, rightly rejected these summons and it is not necessary to have any elaborate discussion on these aspects. Appeal dismissed.

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