Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 24, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
Articles
News
Notifications
Customs
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09/2018 - dated
23-1-2018
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Cus (NT)
Grant of Presidential Award of Appreciation Certificate to the officers of Customs & Central Excise on the eve of Republic Day, 2018
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8/2018 - dated
22-1-2018
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Cus (NT)
Amendment in notification No. 89/2017-Cus(NT) dated 21.09.2017 relating to AIRs of Duty Drawback.
GST
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10/2018 - dated
23-1-2018
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CGST
Amending notification No. 39/2017-Central Tax dated 13.10.2017 for cross-empowerment of State tax officers for processing and grant of refund.
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09/2018 - dated
23-1-2018
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CGST
Notifying common GST portal and e-way bill website.
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08/2018 - dated
23-1-2018
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CGST
Extension of date for filing the return in FORM GSTR-6
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07/2018 - dated
23-1-2018
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CGST
Reduction of late fee in case of delayed filing of FORM GSTR-6
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06/2018 - dated
23-1-2018
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CGST
Reduction of late fee in case of delayed filing of FORM GSTR-5A
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05/2018 - dated
23-1-2018
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CGST
Reduction of late fee in case of delayed filing of FORM GSTR-5
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04/2018 - dated
23-1-2018
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CGST
Reduction / Waiver of late fee in case of delayed filing of FORM GSTR-1
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03/2018 - dated
23-1-2018
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CGST
Central Goods and Services Tax (Amendment) Rules, 2018
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01/2018 - dated
23-1-2018
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IGST
Amendment of notification No. 11/2017-Integrated Tax dated 13.10.2017 for cross-empowerment of State tax officers for processing and grant of refund.
GST - States
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S.O.100/P.A.5/2017/S.9/2017 - dated
1-12-2017
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Punjab SGST
Amendment in Notification No. S.O.28 /P.A.5/ 2017/S.9/2017, dated the 30th June, 2017
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S.O.097/P.A.5/2017/S.9/2017 - dated
29-11-2017
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Punjab SGST
Amendment in Notification No. S.O.35/P.A.5/S.9/2017,dated the 30th June, 2017
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S.O.095/P.A.5/2017/S.9/2017 - dated
29-11-2017
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Punjab SGST
Amendment in Notification No. S.O.21/P.A.5/2017/S.9/ 2017 dated the 30th June 2017
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S.O.094/P.A.5/2017/S.11/2017 - dated
29-11-2017
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Punjab SGST
Amendment in Notification No. S.O.37/P.A.5/2017/S.11/2017, dated the 30th June 2017
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S.O.093/P.A.5/2017/S.148/2017 - dated
28-11-2017
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Punjab SGST
Registered person who did not opt for composition levy
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S.O.092/P.A.5/2017/S.23/2017 - dated
28-11-2017
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Punjab SGST
Exempt suppliers of services through E-Commerce platform from obtaining compulsory registration
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S.O.091/P.A.5/2017/S.128/2017 - dated
28-11-2017
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Punjab SGST
Waiving off late fee (sec 47) for the month of October
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S.O.088/P.A.5/2017/S.11/2017 - dated
14-11-2017
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Punjab SGST
Exempts the intra-State supply of taxable goods amount calculated at the rate of 0.05 per cent
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S.O.087/PGSTR/2017/R.89/2017 - dated
14-11-2017
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Punjab SGST
Evidences required to be produced by the supplier of deemed export supplies for claiming refund
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S.O.086/P.A.5/2017/S.147/2017 - dated
14-11-2017
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Punjab SGST
Supply of goods by a registered person against Advance Authorisation
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S.O.085/P.A.5/2017/Ss. 47 and 128/2017 - dated
6-11-2017
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Punjab SGST
Waiver the late fee payable FORM GSTR-3B
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S.O.082/P.A.5/2017/S.54/2017 - dated
2-11-2017
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Punjab SGST
Supersession Notification No. S.O. 55/P.G.S.T.R./2017/R.96A/2017, dated the 25thSeptember, 2017
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S.O.084/P.A.5/2017/S.11/2017 - dated
1-11-2017
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Punjab SGST
Amendment in Notification S.O. No. 32/P.A.5/2017/S.11/2017, dated the 30th June, 2017
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S.O.083/P.A.5/2017/Ss.10, 12, 14 and 148/2017 - dated
1-11-2017
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Punjab SGST
Regarding furnishing of returns by the dealer who has not opted for composition (sec 12, sec 14 and chapter 9
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S.O.081/P.A.5/2017/Ss. 39 and 168/2017 - dated
1-11-2017
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Punjab SGST
Extends the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6
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S.O.080/P.A.5/2017/S.23/2017 - dated
1-11-2017
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Punjab SGST
Amendment in Notification No. S.O. 57/P.A.5/ 2017/S.23/2017 dated the 3rd October, 2017
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S.O.079/P.A.5/2017/S.168/2017 - dated
1-11-2017
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Punjab SGST
Extends the time limit for making a declaration, in FORM GST ITC-01
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S.O.078/P.A.5/2017/Ss.39 and 168/2017 - dated
1-11-2017
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Punjab SGST
Extends the time limit for furnishing the return in FORM GSTR-5A for the month of July, 2017, August, 2017, September, 2017
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S.O.077/P.A.5/2017/Ss. 39 and 168/2017 - dated
1-11-2017
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Punjab SGST
Extends the time limit for furnishing the return by a composition supplier, in FORM GSTR-4
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S.O.076/P.A.5/2017/S.6/2017 - dated
1-11-2017
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Punjab SGST
Appointed proper officers for the purpose of sanction of refund of section 54 or section 55
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Validity of settlement commission order - It is no doubt true that Section 245 was inserted into the provisions of the Income Tax Act for an early resolution of complicated tax disputes, where the assessee gets relief, more particularly from penalty and prosecution. However, to be entitled for such a remedy, the conduct of the assessee is primordial. - HC
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Taxability of notional interest - Sahara India was acting as assessee’s agent for collection of subscriptions under the Scheme - No notional interest could be charged in the hands of the assessee due to delayed remittance of collection made by its agent, Sahara India. - AT
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Receipts of the assessee through their “Golden Key Scheme” - system of accounting - mercantile system of accounting should have been followed instead of the cash system of accounting. - AT
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Assessment u/s 153A - addition u/s 68 - s there were no incriminating material found in search for assessment year under appeal - Invocation of section 153A by the A.O. for assessment year under appeal was without any legal basis - AT
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Allowance of deduction u/s 80E - So long as the loan has been taken in the name of the assessee, even if he happens to be co-applicant and co-borrower, and so long as payment of interest is made by the assessee, we don’t see any specific bar in terms of section 80E which can disallow such claim of the assessee - AT
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Assessment u/s 153A - addition u/s 68 - in search assessments, the addition cannot be made without the incriminating material in completed assessments. - AT
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Levy of penalty u/s. 271(1)(c) - It is a mere claim of exemption which is allowed in the normal computation, but not allowable u/s. 115JB and there cannot be any penalty for a wrong claim. - AT
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Existence of PE - the employees have worked for an aggregate period of 156 solar days (on all projects taken together), meaning thereby, the period of working is less than 9 months - there is no PE for it in India - the impugned receipt is not taxable in India - AT
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TPA - ALP determination - assessee has to submit the segmental results based on the absorption of overhead on capacity utilization and idle capacity. This is imperative that assessee allocates manufacturing overhead, administrative overhead and other fixed overheads on the basis of capacity utilization. - AT
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Justification of payment of commission - parties related to directors - the finding of the ITAT that the commission agents of the assessee had rendered services to the assessee so as to justify payment is correct - HC
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Deemed dividend u/s 2(22)(e) - payments effected by the Subsidiary Company and received by the Assessee, were as part of the regular business transactions - it could not have been treated as 'loan' or 'advances', so as to make the disputed amounts as “deemed dividend”, as defined under Section 2(22)(e). - HC
Customs
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Amendment in notification No. 89/2017-Cus(NT) dated 21.09.2017 relating to AIRs of Duty Drawback. - Notification
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Proceedings against CHA - Export of prohibited goods - forfeiture of security deposit - time limitation - In the instant case, neither the license was suspended nor revoked. So, the time limit is not applicable. - AT
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Classification of imported goods - resistor blower - assessee has rightly claimed classification under heading 85334090 as “other variable resistors under the main heading electrical resistors” - AT
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Jurisdiction - Seizure of goods - unflavoured supari - mis-declaration/mis-classification of goods - whether the Officers of the D.R.I., especially, in the rank of the Senior Intelligence Officer can act against the Advance Ruling issued by the Advance Ruling Authority? - Held No - HC
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Valuation - royalty/license fees - includibility - the payment made by the respondent for the right to distribute or resell the imported goods should not be added to the price paid or payable for such goods, if such payments are not a condition of the sale for export - AT
Central Excise
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CENVAT credit - distribution of credit through ISD to different unit - When the respondent has taken ISD registration, we find no reason to deny the credit availed on such ISD invoices, though the services have been consumed in other unit of the respondent - AT
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CENVAT credit - Rule 6(4) of the CCR, 2004 - whether the goods which are so cleared for export are to be considered as exempted goods or dutiable goods? - the appellant will be entitled to the Cenvat Credit on the capital goods used partially for export even thiugh domestic clearances are exempted. - AT
Case Laws:
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Income Tax
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2018 (1) TMI 1048
Validity of settlement commission order - as per assessee proper appreciation of the documents filed by the assessee was not done by the Settlement Commission - Held that:- Application is at the stage of admission and the petitioner should satisfy the Settlement Commission that there has been full and true disclosure. At that stage of the matter, the Settlement Commission cannot be expected to or cannot be compelled to utilize the machinery available with it or to invoke Rule 9 or Section 245C of the Act. It is for the Settlement Commission to regulate its business. The manner in which the Settlement Commission proceeded cannot be stated to be either arbitrary or unreasonable. The Court cannot dictate the procedure that the Settlement Commission has to follow at the stage of Section 245D(1) of the Act unless there is a palpable error or violation of any procedures under the Act. It is no doubt true that Section 245 was inserted into the provisions of the Income Tax Act for an early resolution of complicated tax disputes, where the assessee gets relief, more particularly from penalty and prosecution. However, to be entitled for such a remedy, the conduct of the assessee is primordial. In my considered view, the conduct of the assessee as pointed out by the Tribunal definitely leads to the irresistible conclusion that there has been no full or true disclosure. Petition dismissed.
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2018 (1) TMI 1047
Justification of payment of commission - parties related to directors - correctness of the finding of the ITAT that the commission agents of the assessee had rendered services to the assessee so as to justify payment - CIT had affirmed the additions made by the AO by merely recording that exact nature of services rendered and the volume of orders procured etc. were not elucidated. - Held that:- Reasoning given by the ITAT and the factual matrix being contrary to the reasoning given by the AO and the CIT(A), we do not think that the impugned order can be treated as perverse. While considering the question of perversity of a finding of fact, the test applicable is rather strict. The finding should be such which is arrived at without any material, or upon a view of the facts which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to that determination. This test and benchmark is to be satisfied. It is not possible to hold so in the present case, and interfere. We are not required to reappraise the facts as an appellate court and decide whether we could have arrived at a different factual finding and conclusion. No question of law - Decided in favour of assessee
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2018 (1) TMI 1046
Sustainability of deduction u/s 80Q - Held that:- Since there was no appeal against the earlier years, the Revenue cannot deny the claim of the Assessee. In this view of the matter, we find force in the contention of the learned representative of the Assessee that for all the earlier years prior to assessment year 1995-96, similar method was followed by the Assessee and which had been accepted by the Assessing Officer himself or on direction by the first appellate authority and hence Revenue could not have changed its method of allowing deduction under Section 80Q of the Act for the assessment year 1995-96, in view of the decisions cited supra. Hence, finding force in the contention of the learned representative of the Assessee in the facts and circumstances of the case, we are rejecting this ground of appeal of the Revenue, i.e.regarding deduction under Section 80Q Deemed dividend u/s 2(22)(e) - when a transaction amounts to a 'loan' so as to come within the purview of “dividend” eligible for deduction under Section 2(22)(e) - Held that:- The amounts under the disputed heads were being received by the Assessee from its Subsidiary Company only as part of regular business transactions, which was being accounted properly. The change in circumstance, as to the distribution of dailies/publications in the Gulf, causing the same to be transported through the Agent directly from Trivandrum to the Gulf, [instead of forwarding the same to Bombay, where the registered office of the Subsidiary Company is situated and then to have it transported from Mumbai to the Gulf, for distribution in the Gulf ] was resulted because of the starting of direct flights from Trivandrum to Gulf, as pointed out by the Assessee. Advance deposits were also effected by the Subsidiary Company and payments were being effected directly by the Assessee to the clearing and forwarding agent of the Subsidiary Company at Trivandrum, as per their instructions, which were being properly accounted - payments effected by the Subsidiary Company and received by the Assessee, were as part of the regular business transactions and applying the law laid down in the judicial precedents cited above, it could not have been treated as 'loan' or 'advances', so as to make the disputed amounts as “deemed dividend”, as defined under Section 2(22)(e). There is absolutely no basis for the challenge raised by the Revenue, with reference to the deduction under Section 80Q of the Act and the assessment, taking it as a “deemed dividend” under Section 2(22)(e) of the Act. The common question involved in the above cases is answered accordingly. Calculating deduction u/s 80IA - whether 'interest' received from the Bank could be treated as business income? - Commissioner of Income Tax (Appeals) directed AO to re-compute the deduction under Section 80IA by computing the deduction from the profits of the eligible units of the Assessee Company - Held that:- Since the issue with reference to Section 80IA has been remanded by the Commissioner , which view has been upheld by the Tribunal and since we find that no tenable ground has been raised to interfere with the same, we do not find any merit in this appeal as well.
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2018 (1) TMI 1045
Addition u/s 68 - Held that:- The cheque numbers have been mentioned in the said affidavits. The dates of cheques mentioned in all affidavits are 23rd August, 2006 and cheques had been drawn on Vijaya Bank, Borivali branch. The last digit of cheque numbers is 1 and that is how a finding has been recorded that cheque books issued to all the 23 persons were of the same series and first leaf was used by all of them for allegedly making payment of the subscription. The findings of fact of the Appellate Tribunal are completely borne out from the record. As stated earlier, neither before the CIT (A) nor before the Appellate Tribunal, the appellant offered to procure presence of those 23 persons. Therefore, there is finding of fact recorded by the Appellate Tribunal confirming the observation of the Assessing Officer that the appellant - assessee had failed to establish the creditworthiness of the subscribers and even genuineness of the transactions. - Decided against assessee
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2018 (1) TMI 1044
TPA - ALP determination - comparable selection criteria - whether the quantum of turnover of non-AE i.e. uncontrolled transactions with total turnover has to be considered for treating as comparables? - non-adoption of internal TNMM - Held that:- Profitability of the organization will have an impact when there is huge underutilization of the capacity. There has to be an adjustment internally within the organization by allocating overhead to the segments, for which, capacity was utilized and for idle capacity. Otherwise, there has to be an adjustment of idle capacity when compared with outside comparables. In the given case, assessee has not properly maintained allocation of overheads, even though, assessee has relied on the services of Cost Accountant, who has allocated the overheads only to the segments, in which, turnovers were recorded and failed to allocate for the idle capacity. Therefore, in our considered view, assessee has to submit the segmental results based on the absorption of overhead on capacity utilization and idle capacity. This is imperative that assessee allocates manufacturing overhead, administrative overhead and other fixed overheads on the basis of capacity utilization. As advisable for the assessee to submit segment-wise report i.e. export to AE, export to non-AE, domestic sales to non-AE and idle capacity. Considering the above factual matrix, we direct the TPO/AO to consider the above revised segmental profit and loss reports of the assessee and arrive of the ALP adjustment by considering non-AE transactions as one of the comparable in determining ALP by following TNMM method afresh - remit this file back to the file of TPO/AO for determining the ALP afresh. - Decided in favour of assessee for statistical purposes.
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2018 (1) TMI 1043
Assessment of fees received by the assessee from its Indian AE as business income - existence of PE in India - Held that:- The assessee has given working of mandays of employees provided by the assessee to M/z Booz India at page 53 of the paper book. As per the said working the employees have worked for an aggregate period of 156 solar days (on all projects taken together), meaning thereby, the period of working is less than 9 months. There is merit in the contentions of the assessee that there is no PE for it in India, in which case, the impugned receipt is not taxable in India. Accordingly, we set aside the orders passed by the tax authorities and direct the AO to delete the addition made by him. - Decided in favour of assessee
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2018 (1) TMI 1042
Disallowance of the depreciation claimed on intangibles being excessive - Held that:- Assessee company is engaged in providing transactional support services to its parent company. In January, 2013 the assessee has purchased intangible assets like trademarks, brand, goodwill, technical know-how, etc. from Cosme group based in Goa. With the purchase of intangible assets, the assessee has entered into manufacturing, marketing and distribution of branded pharmaceutical products in India and some other countries. The cost of the assets acquired in January, 2013 was amounting to ₹ 481,87,28,153. Assessee claimed depreciation, but it was not allowed by the AO on the ground that valuation report was not furnished, whereas this claim of depreciation was allowed by the AO in the succeeding year i.e., AY 2014-15. We are of the view that once the AO has allowed the claim in the succeeding year, the same should also have been examined in the impugned assessment year. Set aside the order of the AO and restore the matter to the AO to examine the claim of depreciation in the light of valuation report furnished by the assessee, after affording opportunity of being heard to it. TPA - comparable selection criteria - assessee has sought exclusion of 8 comparables on the ground of turnover filter and functional dissimilarity - Held that:- The issue of functional dissimilarity was not properly examined by the TPO.We therefore set aside the assessment order and restore the issue to the AO/TPO to re-examine the issue in the light of assessee’s contentions with respect to exclusion of 8 comparables
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2018 (1) TMI 1041
Non deduction of tds - invoking provisions of Section 40(a)(ia) - additions made under the heads wages and salary, site preparation, shuttering material, machinery maintenance, sanitary and plumbing material, cartage inwards, freight cartage and transport expenses - CIT-A allowed the claim - Held that: -CIT(A) has rightly deleted the addition in dispute, because the details given by the assessee in the voluminous paper book along with other evidence make it crystal clear that in most of the cases, TDS Provisions were not applicable. Therefore, we do not find any infirmity in the well reasoned order passed by the Ld. CIT(A) on the issue in dispute and hence, we uphold the finding of the ld. CIT(A) on this issue and accordingly, reject the grounds raised by the Revenue.
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2018 (1) TMI 1040
Levy of penalty u/s. 271(1)(c) - Long Term Capital Gain exemption from computation under Section 115JB - mere making of a claim - Held that:- Assessee was on the bonafide impression that Long Term Capital Gain was also exempt from computation under Section 115JB as well, as there is no dispute that the Long Term Capital Gain was exempt from levy of income tax under the normal provisions, thus there can be a bonafide mistake. Moreover, as seen from the penalty order, AO himself stated that assessee has made a wrong claim. Making a claim which is not allowable under the provisions of the Act does not attract the provisions of penalty u/s. 271(1)(c), as it cannot be considered as either ‘concealment of income’ or ‘furnishing of inaccurate particulars’. See CIT Vs Reliance Petroproducts Limited (2010 (3) TMI 80 - SUPREME COURT) It is a mere claim of exemption which is allowed in the normal computation, but not allowable u/s. 115JB and there cannot be any penalty for a wrong claim. In view of that, we are of the opinion that the provisions of Section 271(1)(c) are not attracted. Accordingly, we cancel the penalty. - Decided in favour of assessee.
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2018 (1) TMI 1039
Rejecting the Books of Accounts u/s. 145(2) - addition by estimating the Gross Profit - contention of the assessee is that it is maintaining the Books of Accounts mostly in the electronic form - Held that:- Simply because the books were not produced in physical Form the same cannot be rejected especially when the books were audited and the assessee is a limited company. Therefore, taking the totality of facts and circumstances into consideration, we are of the considered view that this issue is to be restored to the file of the Assessing Officer and the assessee should be given one more opportunity to produce the Books of Accounts before the Assessing Officer to substantiate its claim for the loss incurred during the current Assessment Year. Thus we set-aside this issue to the file of the Assessing Officer who shall examine afresh in accordance with the law after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purpose. Disallowing finance expenses - Held that:- all the charges appears to have been paid towards regular Bank Charges, Interest, Overdue Interest on PEC LC, Bank LC charges etc., and it appears that none of these charges relates to any interest on borrowals. In such circumstances there should not have been any disallowance by the Assessing Officer. Therefore, we are of the view that the Assessing Officer shall examine this issue with reference to the submissions made by the Ld. Counsel for the assessee and therefore we set-aside this issue to the file of the Assessing Officer for adjudicating this issue in accordance with the law after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purpose. Investment made in land as unexplained investment u/s. 69 - Held that:- In the case on hand the Assessing Officer without examining the Books of Accounts properly and without giving a finding that the transactions occurred outside the Books of Accounts invoked provisions of section 69C of the Act. We also find that the transaction happened in the Financial Year 2007-2008 relevant to the Assessment Year 2008-09 as the sale agreement entered into is in the Financial Year 2007-08 and in such circumstances, whether the addition can be made in the Assessment Year 2009-10 is also not examined by the Assessing Officer. The contention of the assessee is that, assessee company owes money to Shri G. Eswara Rao who is the Father-in-Law of one of the Directors and Shri G. Eswar Rao sold certain shares to the vendors and this resulted in transferring the lands in the name of the assessee company for discharging the liability of Shri G. Eswara Rao by the company in its Books of Accounts. This aspect has not been examined by the Assessing Officer or by the Ld.CIT(A)- we are of the considered opinion that this issue is to be examined afresh by the Assessing Officer This ground is allowed for statistical purpose.
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2018 (1) TMI 1038
Assessment u/s 153A - addition u/s 68 - additions made without the incriminating material - Held that:- As per the information available on record from the assessment order as well as the Ld.CIT(A) order, the addition was not made on the basis of any incriminating material but on the basis of the returns already filed. In this case, the return of income was filed on 31.03.2006 and the time limit for issue of notice u/s 143(2) has already been expired on 31.03.2007. Now it is settled issue that in search assessments, the addition cannot be made without the incriminating material in completed assessments. In the case of the assessee, there is no incriminating material found during the course of search on the issues on which the additions were made. - Decided in favour of assessee
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2018 (1) TMI 1037
Penalty u/s 271(1)(c) - addition u/s 69C - Held that:- In the light of the records placed before us and the orders submitted by Ld.AR in assessee’s case for the year under consideration by this Tribunal as well as by Hon’ble High Court in quantum appeal. [2014 (4) TMI 536 - DELHI HIGH COURT ] Since the addition no longer sustains, penalty appeal cannot survive. - Decided in favour of assessee
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2018 (1) TMI 1036
Assessment under section 153A - Disallowance u/s 40A(3) - Held that:- It is observed that in the assessment under section 153A for the year under consideration Ld.AO should have started the assessment from the last assessed income, instead of starting with the returned income. It is observed that assessing officer in the proceedings under section 153A of the Act again made same disallowance, made by his predecessor in original assessment proceedings, which has been deleted by this Tribunal [2016 (5) TMI 457 - ITAT DELHI] Thus respectfully following the same we delete the addition made by Ld. AO under section 40A (3) of the Act. - Decided in favour of assessee
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2018 (1) TMI 1035
Unexplained cash deposits - proof of actual withdrawal and actual deposits - Held that:- Assessing Officer just disbelieved the cash deposits and cash withdrawal on the basis of surmises and conjectures. Nowhere he doubted the actual withdrawal and actual deposits. He merely held that is an unusual phenomenon to make withdrawal from the bank and deposit into the bank. Learned CIT(A) has recorded complete and detailed findings and after obtaining remand report from the Assessing Officer has allowed relief to the assessee correctly. On perusal of the computation of income filed by the appellant it is seen that besides income from generator maintenance, the appellant was enjoying income from rental of property which was also, in turn, duly supported by agreements and, therefore, any apprehension with reference to having any undisclosed income in the hands of the appellant was misplaced and misconceived and was only on account of wishful thinking of the assessing officer. There is no material or any other evidence on record to show and suggest that the cash might have been utilized by the appellant for any other purposes and merely on surmises and conjectures and suspicion the evidence which has been submitted by the appellant cannot be rejected. - Decided against revenue
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2018 (1) TMI 1034
Addition being commission paid - allowable business expenditure - discharge of initial onus - Held that:- We don’t agree with the contention of the ld AR that the assessee was never asked the name and address of persons to whom the sales were effected during the year. Once a specific show-cause has been issued by the AO, it is incumbent on the assessee to provide all relevant details and documentation in support of his claim of expenditure and that includes, the name and address of persons to whom the sale were effected during the year. In the instant case, even if we were to allow the admittance of additional evidence in form of ledger of Bharat Trading Co. ltd and copy of voucher of commission payment to Pushpa Khandelwal at this stage, the same by itself will not help the assessee in discharging the initial onus cast on it. What is of relevance is the actual rendering of services and facilitation of sales through the efforts of Pusha Khandelwal and the evidence so produced doesn’t inspire any confidence in us in accepting the same in support of assessee’s contention. In the entirety of facts and circumstances, we are unable to accede to the contentions so raised by the ld AR - Decided against assessee Addition on account of donation made - deduction u/s 80G - Held that:- As assessee has made the said donation to Hare Krishna Movement, Jaipur which is registered u/s 80G and the payment has been made through cheque dated 12.09.2008 and receipt thereof submitted during the appellate proceedings. No infirmity in the order of ld. CIT(A) who has considered the relevant facts which have been brought on record by the assessee during the appellate proceedings and deduction u/s 80G was allowed. - Decided against revenue Allowance of deduction u/s 80E - Held that:- On perusal of section 80E, it provides for deduction in respect of interest on loan taken by the assessee from any financial institutions for the purpose of higher education of his relative. There is no bar that the loan cannot be taken in the joint name of the assessee and his relative. So long as the loan has been taken in the name of the assessee, even if he happens to be co-applicant and co-borrower, and so long as payment of interest is made by the assessee, we don’t see any specific bar in terms of section 80E which can disallow such claim of the assessee. Further, there is no finding that Shri Arpit Khandelwal has made a similar claim in his return of income. So long as the payment of interest is effected by the assessee on loan taken by him, he stands eligible for deduction under section 80E of the Act. - Decided against revenue Addition on account of interest - advances to the sister concern - Held that:- Undisputedly, the interest free funds available with the assessee is far in excess of amount advanced to Arpan Infin (P) ltd. Further, there is no nexus between the interest bearing funds and the money so advanced to the said sister concern which has been established by the AO. In view of the same, a presumption will arise in favour of the assessee that the interest free funds have been utilized for advancing such advances to the sister concern. The decision of Hon’ble Bombay and Gujarat High Courts supports the case of the assessee. In view of the same, we donot see any infirmity in the order of the ld CIT(A) and the same is hereby confirmed. - Decided against revenue
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2018 (1) TMI 1033
TPA - AMP expenses compensation - whether AE and the assessee had to share AMP expenses? - Held that:- We find that the TPO had held that assessee should have been compensated by its AE for the AMP expenditure incurred by it. We have gone through the agreements entered in to by the AE's with the assessee, that in the agreements there is no condition about sharing of AMP, that the agreements talks of using best efforts to market and distribute the product or promote the products in a commercially reasonable manner. These terms do not give any indication that the AE and the assessee had to share AMP expenses. Secondly, if the AE was benefited indirectly by the AMP expenditure incurred by the assessee, it cannot be held that it had entered into agreement for sharing AMP expenses. We are also of the opinion that Bright Line Method should not have been applied by the TPO. See Thomas Cook(2016 (7) TMI 318 - ITAT MUMBAI) - Decided in favour of assessee Depreciation on plant and machinery and building - addition on the basis of discontinuity of manufacturing operation of the assessee and also holding that the same have not been used during the year - Held that:- The issue stands covered by the earlier orders of the Tribunal [2017 (6) TMI 334 - ITAT AHMEDABAD] wherein held With the introduction of concept of WDV of block of assets, the depreciation is allowable not on individual items but depending upon date of acquisition and put to use of the asset. Also section 38(2) deals with usage of assets for non-business purposes and does not refer to assets partly used during the year for business purposes. Depreciation is allowable on the plant and machinery, building, furniture and fixture and office equipment - Decided in favour of assessee Disallowance of payment made to doctors - Held that:- MCI guidelines are applicable to the professionals i. e. Doctors only. They do not and cannot govern the other tax entities like Drug manufacturing or drug distributing Companies or individuals other than the doctors, or HUF's or Firms etc. MCI, as a body can formulate policy for the Doctors. The assessee is not a practicing professional. So, any guidelines issued by it cannot decide the allowability or otherwise of an expenditure under the Act. Income tax Act is a code in itself and business income an assessee has to be assessed and taxed as envisaged by the provisions of the Act. The AO/DRP had not doubted incurring of expenditure. They have heavily relied upon the guidelines issued by the MCI for the doctors. As in the case of MAX Hospital, Pitampura (2014 (1) TMI 1829 - DELHI HIGH COURT) has clearly held that MCI could issue guide lines for the Doctors only and that the MCI in its affidavit admitted that it has ‘no jurisdiction’ to pass any order against the ‘Petitioner hospital’. Ethics Committee of MCI is authorised to pass some order about the infrastructure of any hospital. But, as far as corporate entities are concerned MCI cannot issue any guide lines. Therefore, we are not dealing with the issue as to from which AY. the guide lines would be applicable. We would also like to hold that distribution of free samples cannot be treated as violation of Expl. 1 to section 37(1).- Decided in favour of assessee
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2018 (1) TMI 1032
Assessment u/s 153A - addition u/s 68 - Held that:- A.O. made the addition under section 68 of the I.T. Act only on the basis of facts already on record which has also been considered in original assessment proceedings under section 143(3) of the I.T. Act and claim of assessee has been accepted by the A.O. prior to the search. Therefore, no assessment was pending against the assessee on the date of search. The completed assessments can be interfered with by the A.O. while making assessment under section 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in the course of original assessment. However, the department has failed to produce any material to justify the addition made in assessment under section 153A under section 68 of the I.T. Act. Invocation of section 153A by the A.O. for assessment year under appeal was without any legal basis as there were no incriminating material found in search for assessment year under appeal. The issue is therefore, covered in favour of the assessee by Judgments of the jurisdictional High Court in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] and Meeta Gutgutia (2017 (5) TMI 1224 - DELHI HIGH COURT) - Decided in favour of assessee. Addition u/s 68 - assessee produced sufficient documentary evidence before A.O. to prove the ingredients of Section 68 of the I.T. Act. The A.O. however, did not make any further enquiry on the documents filed by the assessee. The A.O. thus, failed to conduct scrutiny of the documents at assessment stage and merely suspected the transaction between the investor company and the assessee because investor was a foreign entity established in Mauritius. Even the reply received from Mauritius Revenue Authorities proved the identity of the investor, its creditworthiness and genuineness of the transaction. It is not reported if any, cash was found deposited in the account of the investor before making investment in assessee company - as assessee discharged its initial onus to prove the identity of the investor company, its creditworthiness and genuineness of the transaction. The material on record clearly support the explanation of assessee that not only in assessment year under appeal but in earlier years also, M/s. STL made investment in assessee company through banking channel supported by the documentary evidence. The Ld. CIT(A) on proper appreciation of the evidence before him, correctly deleted the addition - Decided in favour of assessee Addition u/s 14A - Held that:- Justification to interfere with the orders of the Ld. CIT(A) in deleting the substantial addition under section 14A because A.O. did not record satisfaction under section 14A of the I.T. Act because assessee pleaded that it did not incur any expenditure to earn exempt income. The A.O. re-stated addition made in the original assessment under section 143(3). As per the order of the Ld. CIT(A), assessee has already suo moto disallowed part amount. It was also found that assessee used its own funds for making investments. The Ld. CIT(A), therefore, correctly deleted the substantial additions Disallowance u/s 37(1) on the penalty under VAT Act - Held that:- Assessee did not make any claim of deduction in the P & L A/c. Therefore, it was correctly deleted by the Ld. CIT(A). We may also note here that both these additions are part of the regular books of account which were already disclosed to the Revenue in the original return of income and A.O. has accepted the same. No assessments were pending prior to the date of search and assessments were already completed. The assessments are therefore, illegal and bad in law under section 153A of the I.T. Act. The additions have already been rightly deleted by the Ld. CIT(A) - Decided in favour of assessee
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2018 (1) TMI 1031
Deduction u/s 80IB(10) denied - non submission of documentary evidence - Held that:- Learned counsel is very fair in the beginning itself in submitting that both the lower authorities have followed their respective orders for assessment years 2005-06 denying a similar claim qua the very residential project. He states that assessee’s appeal for preceding assessment year 2005-06 is pending before this tribunal. As directed the registry to find out necessary details of assessee’s alleged appeal stated to be pending. We are informed that a co-ordinate bench in assessment year 2005-06 had decided assessee’s appeal [2011 (7) TMI 1320 - ITAT AHMEDABAD] remitting the very issue back to the Assessing Officer on 22.07.2011. Case records in both these appeals reveal that AO had already finalized consequential proceedings well before issuing 148 notices in question. There is no other appeal pending in this tribunal as per our records. Therefore uphold the CIT(A)’s findings under challenge denying the Section 80IB(10) deduction in question wherein held despite granting numerous opportunity of being heard to the appellant, he has failed to attend before me to rebut the findings of the AO with documentary evidences. In absence of documentary evidences, the claim of the appellant cannot be allowed. - Decided against assessee
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2018 (1) TMI 1030
Penalty u/s 271(1)(c) - non specification of charge against the assessee - Held that:- The show cause notice issued in the present case u/s 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the assessee which is based on the decisions referred to paragraph-6 of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. - Decided in favour of assessee.
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2018 (1) TMI 1029
Disallowance u/s 14A r.w.r. 8D(2) of the Rules - Held that:- It is the duty of the Ld. AO first to record satisfaction having regard to accounts of the assessee that the claim made by the assessee with regard to non-incurrence of any expenditure for the purpose of earning income, is incorrect with cogent reasons thereon. Without recording such satisfaction, the Ld. AO cannot proceed to make disallowance u/s14A of the Act read with Rule 8D of the Rules. In these facts and circumstances, we hold that no disallowance u/s 14A of the Act could be made in the instant case. Accordingly, ground no. 1 raised by the assessee is allowed. Disallowance made towards leave encashment - Held that:- Hon’ble Calcutta High Court in the case of Exide Industries Ltd vs Union of India reported in (2007 (6) TMI 175 - CALCUTTA High Court) had struck down the provisions of section 43B(f) of the Act. Hon’ble Supreme Court [2008 (9) TMI 921 - SUPREME COURT] had not stayed the judgement of the Calcutta High Court during Leave proceedings. But the Hon’ble Supreme Court had only passed an interim order on the impugned issue. Hence we deem it fit and appropriate , in the interest of justice and fair play, to set aside this issue to the file of the ld AO to pass orders based on the outcome of the main appeal on merits by the Hon’ble Supreme Court as stated supra. Accordingly Ground No. 2 raised by the assessee is allowed for statistical purposes.
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2018 (1) TMI 1028
Receipts of the assessee through their “Golden Key Scheme” - system of accounting - Applicability of section 145 - rejection of boos of accounts - alteration of system of accounting by the Ld. CIT(A) from mercantile system to cash - Held that:- There is hardly any doubt about the power, or rather the duty of the Tribunal, to adjudicate an issue raised before it. The adjudication may go either way. But to say that the Tribunal should not adjudicate an issue raised before it, is not right. Since both the sides raised such an issue in their respective appeals, it was required to be adjudicated by the Bench. As such question no. 1 is answered in positive that the Tribunal could adjudicate the issue of alteration of system of accounting from mercantile system to cash. Whether system of accounting to be adopted by the assessee should be cash or mercantile? - Held that:- It can be seen from the Scheme that the subscribers were required to pay full amount of ₹ 2500 in one go and they were to be given NSC worth ₹ 1000 each simultaneously. Prizes were to be distributed to the subscribers throughout the tenure of Scheme of 12 years. Such subscribers, who could not get any prize, were to receive gifts in the form of articles worth ₹ 2500 at the end of the Scheme. Therefore, it is apparent that under the mercantile system of accounting, the entire amount of ₹ 2500 per subscriber for the subscriptions - whether fully or partly paid during the year - accrues as income at the time of subscribing to the scheme. It also entails liability running throughout the period of 12 years in the form of prizes The position which will follow is that from the second year onwards up to 12th year, there will be deduction for expenses without there being any corresponding income. This divulges that if cash system of accounting is followed, it will result in an artificial higher income in the hands of the assessee in the first year, on which it will be liable to pay tax; and in all succeeding years there will be expenses only which will not get adjusted against any income. Following cash system of accounting in the given facts would give distorted position of the income in the first year which, is not correct. Therefore, agree with learned Judicial Member in approving the application of mercantile system of accounting in the given facts. Apart from the ld. AR, even the ld. DR has also supported the order of the ld. JM to the effect that mercantile system of accounting should have been followed instead of the cash system of accounting. It is therefore, held that the mercantile system of accounting should be adopted. Whether the assessee should be allowed deduction in the first year itself on account of Prize money payable in entire 12 years period? - Held that:- it is crystal clear from the opinions rendered by both the Ld. Members that they agreed that under the mercantile system of accounting the assessee should be entitled to prize money for the entire scheme running over 12 years during the first year itself albeit on pro rata basis. It shows that both the Ld. Members were of the same view and there is no difference of opinion between them as regards the deduction for prize money for the entire scheme during the first year of subscription itself on pro rata basis. If mercantile system of accounting is upheld then the question of discounting and application of pro rata in respect of deduction towards prize liability under the Golden Key Scheme should go back to the regular Bench for its decision as learned Accountant Member did not earlier adjudicate on this aspect - Held that:- As both the Id. Members agreed to the grant of deduction of full prize money for the 12 years period in the first year of subscription itself but on pro rata basis. The learned Judicial Member further held that discounting cannot be done and there is no view of the learned Accountant Member on the aspect of discounting. Therefore, it is patent that none of the ld. Members opined to restore the matter to the regular Bench for its decision on the question of discounting and application of pro rata in respect of deduction towards prize money. Once both the ld. Members upheld the deduction of the prize money on pro rata basis, the question proposing restoration to the Division Bench for fresh adjudication, cannot be said to arise from the views expressed by the Id. Members in their respective opinions. This question is therefore, held to be not arising from the orders proposed by learned Members and hence cannot be answered in the capacity of a Third member. Taxability of notional interest - Sahara India was acting as assessee’s agent for collection of subscriptions under the Scheme - Held that:- We cannot concur with the view taken by learned Judicial Member that the invocation of section 211 of the Contract Act amounted to setting up of a new case by the Revenue and would have the effect of enlarging the controversy. The issue of notional interest was very much before the tribunal. The ld. DR simply supported his point of view of charging notional interest on the strength of section 211 of the Contract Act as well. No new case, much less the enlargement of the controversy, was set up by this argument, as has been opined by the ld. JM. In fact, this argument was on the same subject matter, which was there before the tribunal for adjudication On merits, it is noticed that the assessee entered into an Agreement with Sahara India for collecting subscriptions from its Members and remitting the same to the assessee at the end of the each month. There is nothing in the Agreement that if the amount collected is retained beyond a period of 30 days, Sahara India would be liable to pay interest on such amount. There is no actual accrual or receipt of income to the assessee by allowing Sahara India to keep funds beyond the prescribed period of one month from the date of collection. It is not the case of the Assessing Officer that the assessee diverted interest bearing funds to Sahara India without interest for a non-business purpose. Thus No notional interest could be charged in the hands of the assessee due to delayed remittance of collection made by its agent, Sahara India. The Registry of the Tribunal is directed to list this matter before the Division bench for passing an order in accordance with the majority view.
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Customs
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2018 (1) TMI 1027
Jurisdiction - Seizure of goods - unflavoured supari - mis-declaration/mis-classification of goods - whether the Officers of the D.R.I., especially, in the rank of the Senior Intelligence Officer can act against the Advance Ruling issued by the Advance Ruling Authority? Held that: - the primordial requirement before an order of seizure is passed is that, the proper Officer has to have reason to believe that the goods are liable to confiscation - No such reasons are explicit in the impugned seizure memorandum, dated 11.01.2018, except, to rely upon a report stated to have been obtained from M/s. Arecanut Research and Development Foundations, Mangalore, which appears to be a private Organization, and not a accredited Laboratory by the Central Government. Thus, without recording the reasons that the goods are liable for confiscation, the second respondent could not have passed the impugned seizure memorandum. In the instant case, the seizure memorandum of the second respondent only refers to the test report of the Private Organisation and not a Central Laboratory to state that the correct classification of goods is CTH No.08028090. Thus, the finding of the second respondent, though prima facie in nature, is clearly contrary to the order/Ruling passed by the Advance Ruling Authority, dated 31.03.2017 as well as the stand by the Commissioner of Customs, in his reply to the Advance Ruing Authority, dated 25.10.2016. Thus, the impugned seizure memorandum and the detention of the cargo by the respondents is wholly unjustified. Petition allowed.
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2018 (1) TMI 1026
Jurisdiction - seizure of goods - SCN was issued by an officer exercising powers under the Central Excise Act, 1944 - establishing corelation of the confiscated goods to the duty paying documents - Held that: - this was a fairly old Appeal and reaching for hearing before the Tribunal after 13 years. If the Tribunal was of the view that there is an issue for consideration with regard to corelation of the confiscated goods to the duty paying document, namely Bill of Entry or otherwise, but that issue was not framed, nor answered by the order-in-original, then, fairness requires an opportunity to be granted to the appellant. - no useful purpose would be served by keeping this Appeal pending in this Court. After bringing to the notice of the Tribunal the twin aspects of this controversy, namely, on jurisdiction and merits, as also inviting its attention to the apparent inconsistency in its findings and conclusions, we have no alternative but to set aside the order under Appeal. While we proceed to set aside the same at the instance of an assessee, who is equally to blame himself for not being fully ready to argue the case, we think that balance can be struck. We accordingly strike a balance between the rights and equities by directing that, on the appellant/assessee before us paying costs quantified at ₹ 50,000/to the Revenue within a period of four weeks from today, the Appeal of the assessee before the Tribunal to stand revived for a decision afresh on all the points which we have summarized above. Appeal disposed off.
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2018 (1) TMI 1025
Valuation - royalty/license fees - includibility - Rule 10(1)(c ) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - trademark licence fee as a condition of sale of goods that the respondent got from RBSOIL, which RBSOIL got from Luxotica, Itlay. This amount was not being directly paid to Luxotica, Itlay, but being paid to IBSOIL. Held that: - One of the conditions for addition of value under Rule 10(1)(c ) is that payment of licence fee should be “condition of the sale of the imported goods”. This aspect has been examined in great detail by the Original Authority. Relying on the terms of the agreement, it was concluded that the respondent accepted and acquired exclusive distributorship rights for the sale of the imported eyewear products with the express approval of the seller of those goods “Luxottica” subject to the terms and conditions mentioned therein - the payment made by the respondent for the right to distribute or resell the imported goods should not be added to the price paid or payable for such goods, if such payments are not a condition of the sale for export to the country of importation of the said goods - amount not includible. Appeal dismissed - decided against Revenue.
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2018 (1) TMI 1024
Maintainability of appeal - order of rejection of cross examination - whether appealable order or not? - Held that: - the order rejecting the cross-examination has been issued in the form of a letter. When the right of the appellant for cross-examination has been taken away by the said decision of the adjudicating authority, merely because the same is issued in the form of a letter and not clothed as an order, it cannot be said that the said letter / decision is not an appealable order - The Hon’ble High Court of Kerala in the case of Abdul Khader Vs. CESTAT, Bangalore [2016 (11) TMI 614 - KERALA HIGH COURT] has categorically held that the order intimating the denial of cross-examination is an appealable order - the denial of cross-examination is unjustified. Rejection of request for supply of documents - Held that: - when the department is not put to notice as to what is the document that the appellant seeks to obtain and only a vague request to furnish the entire chain of correspondence between Customs and Excise authorities is made, such request cannot be entertained or allowed. The respondent adjudicating authority is directed to follow section 138B of the Customs Act and to permit cross-examination of the witnesses - appeal allowed in part by way of remand.
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2018 (1) TMI 1023
Classification of imported goods - resistor blower - Revenue entertained a view that it should be classified under CTH 84159000 as “parts of other air conditioning machine etc”, assessee claimed classification under heading 85334090 as “other variable resistors under the main heading electrical resistors” - Held that: - HSN explains the scope of resistor falling under CTH 8533. The HSN note states that converter consisting of number of resistor with necessary switching arrangement still continue to be classified under 8533. It is also stated that certain resistor may be fitted with number of terminals to be included in the circuit. Switching or terminal arrangement for keeping in required combination of resistor into the circuit are also considered for classification under 8533 only. The present case, Note 2(a) has relevance and the impugned order correctly following the said Section Note alongwith explanation given under HSN to classify the resistor under Chapter 85. Appeal dismissed - decided against Revenue.
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2018 (1) TMI 1022
Revocation of CHA License - forfeiture of security deposit - time limitation - Held that: - the inquiry by the Assistant Commissioner / Deputy Commissioner should be complete and the report should be submitted within a period of 90 days from the date of issue of notice under sub-Regulation (1) - In the present case, the inquiry report was submitted much after 5 months of issue of SCN. It has been consistently held by Hon’ble Delhi High Court as well as Hon’ble Madras High Court that the time prescribed under the Regulation are to be strictly followed. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1021
Proceedings against CHA - Export of prohibited goods - forfeiture of security deposit - time limitation - Held that: - the time limit prescribed in the regulation is applicable regarding the suspension/ revocation of the license. In the instant case, neither the license was suspended nor revoked. So, the time limit is not applicable. In the instant case, only security deposit was forfeited for the offence on the part of the appellant - it is evident that the appellant was well aware that in the plastic bags of 50 Kg, there was prohibited item which was exported by M/s Vision Minerals & Energy without correctly declared and without having any report prior to export the goods. Thus appellant has violated his pious duties prescribed in the manual. The appellant is guilty - the security deposit amount has rightly been confiscated by the authority. Appeal dismissed - decided against Appellant.
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Service Tax
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2018 (1) TMI 1020
Commercial training or coaching centre Services - exemption under N/N. 24/2004-ST - appellant /assessee were conducting courses in International Hotel Management in collaboration with the Thames Valley University, UK - whole demand proceedings resulting in the two impugned orders cover two periods viz. prior and post 2008 - Held that: - for the period prior to 2008, the courses conducted by the appellant in collaboration with the Thames Valley University, UK in international hotel management is covered by exemption N/N. 24/2004. No service tax liability can be fastened on the appellant for this period. Post 2008, the appellants discontinued the course in collaboration with the Thames Valley University, UK. They have started a 3 year course of BA (Hons) in International Hospitality Administration approved by IGNOU, leading to an award of degree by IGNOU, which is, admittedly, a recognized open university under UGC Act - for the period, during which the appellants were conducting courses results in the award of degree by a recognized university, they are not covered by the scope of “Commercial Training or Coaching Centre”. Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1019
Demand of service tax - certain fees/royalty paid by the assessee-Appellants to American Petroleum Institute, USA (API) for grant of certificate to their product, so that they can use their monogram ‘API’ on their final product - reverse charge mechanism - Held that: - Admittedly, the nature of service received by the assessee-Appellants are rightly covered under ‘Intellectual Property Right Service’. This is not seriously contested by the assessee-Appellants also. However, the tax liability confirmed under ‘Technical Testing & Certification Services’ cannot be sustained as the assessee-Appellants paid fees/royalty for use of ‘API’ monogram on their product as a sign of quality. The amount paid also categorised as fees/royalty - we uphold the tax liability on the assessee-Appellants on reverse charge basis on such consideration paid by them to the American Petroleum Institute, USA. The said service is taxable as Intellectual Property Rights (IPR). Time Limitation - Held that: - the first notice was issued on 08.01.2010 on the same activity and the second was issued on 22.11.2012, however, with a different classification - there is no justification invoking the extended period in the second show cause notice. Appeal allowed in part.
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2018 (1) TMI 1018
Whether the appellant's request for re-quantification of tax demand in respect of “Air Travel Agents Services”, in terms of Rule 6(7) of the Service Tax Rules, 1994, is required to be accepted or not? Held that: - The basic requirement is that once exercised, the same is to be applied uniformily in respect of all the transactions in a particular Financial Year. The appellant in the present case are seeking to exercise the said option, to be applied equally and uniformily in respect of the entire transaction. In as much as, they were not paying any Service Tax, the question of exercising the said option did not arise during the relevant period and the appellant’s request for exercising the said option at this point of time, when the tax is being confirmed against them, is proper and justified. The matter needs remand for re-quantification of the assessee’s tax liability by extending them the benefit of Rule 6(7) of the Service Tax Rules, 1994 - appeal allowed by way of remand.
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2018 (1) TMI 1017
Business Auxiliary Services - liability to tax - case of appellant is that no service tax liability would fall upon them, inasmuch as no service activity was undertaken by them and the entire contract was further contracted to M/s Ram Lalloo Civil Construction who might have paid the service tax - Held that: - the said does not stand examined by the lower authorities - Inasmuch as there is no clear finding of the lower authorities on the said issue, it is deemed fit to set aside the impugned order and matter remanded to the Original Adjudicating Authority for examination of the said plea of the appellant - appeal allowed by way of remand.
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2018 (1) TMI 1016
Refund of unutilized CENVAT credit - N/N. 27/2012-CE (NT) dated 18/06/2012 - denial on the ground of premises not registered - Held that: - Hon'ble Karnataka High Court decision in the case of M Portal India Wireless Solutions P. Ltd. Versus Commissioner of Central Excise, Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT], where it has been stated that registration of the premises is not necessary for grant of refund - the Hon'ble Karnataka High Court decision is fully applicable to the disputed issue - appeal dismissed - decided against Revenue.
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2018 (1) TMI 1015
Refund claim - export of services - case of appellant is that business auxiliary service exported by it falls under Rule 3(1) (iii) of the Export of Service Rules, 2005 and accordingly, no service tax was payable on export of such service - denial of refund on the ground that the services provided to the overseas client were used/ consumed within India and as such, services should not be considered as export of service - unjust enrichment - Held that: - The Tribunal, in the case of Blue Star Ltd. [2014 (12) TMI 25 - CESTAT MUMBAI], by relying on the decision in the case of Paul Merchants Ltd [2012 (12) TMI 424 - CESTAT, DELHI (LB)], has held that since the services were provided for the benefit of the overseas service receiver, irrespective of the place of performance of service, the same should be considered as export for the benefit of non-payment of Service Tax under business auxiliary service - refund cannot be denied. Unjust enrichment - Held that: - the appellant under reverse charge mechanism had deposited the service tax into the Government Exchequer and there was no scope on its part to collect such tax from the overseas clients - the doctrine of unjust enrichment is not applicable in this case, for denial of the refund benefit. Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (1) TMI 1014
Valuation - MRP Based Valuation - main allegation raised is that for the goods having same quality and quantity, the appellants have affixed different MRP for the distribution / supply in the same area - The defence taken by the appellant is that different MRP was affixed on the goods supplied in the same area because the supply was made to distinct class of buyers. Held that: - The basic feature of the MRP valuation is to have uniform pricing for the purpose of assessment for same kind of goods of manufacturer. The Central Excise Act, 1944 has adopted these provisions from the SWM Act and (PC) Rules in order to have uniformity in pricing as well as for discharging the duty. If the goods are supplied to institutional buyers and not intended for retail sale, it is not necessary for the appellant to affix the MRP. However, they have affixed MRP and discharged the duty under section 4A. The appellant asserts that they have discharged duty on the higher value of ₹ 70/- even though these regular packs were sometimes supplied to institutional buyers. It is not clear whether such duty has been discharged - The matter requires verification as to whether the appellant has been supplying goods to two distinct classes of consumers and whether duty has been discharged for the clearances. Appeal allowed by way of remand.
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2018 (1) TMI 1013
Liability of interest - CENVAT credit availed wrongly, but not utilized - case of appellant is that since the said credit has not been utilized, therefore, interest for the intervening period is not applicable - whether interest is payable on the erroneous Cenvat credit availed during the period September 2008 to January 2009? - Held that: - There is no dispute of the fact that the appellant had incorrectly availed Cenvat credit of the amount of additional customs duty and countervailing duty forgone while the capital goods are imported under the EPCG Scheme - Tribunal in the case of Atul Ltd. and others [2017 (4) TMI 217 - CESTAT AHMEDABAD] after analyzing the principles of the law laid down in this regard held that erroneous credit availed even if not utilized; interest could be applicable for the normal period of limitation - interest upheld - appeal dismissed - decided against appellant.
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2018 (1) TMI 1012
CENVAT credit - Rule 6(4) of the CCR, 2004 - whether the goods which are so cleared for export are to be considered as exempted goods or dutiable goods? - Held that: - it is settled principle of law that only the goods are exported from the country and not the taxes. The Central Excise law provides for clearance of goods for export either under bond in which case the terminal excise duty is not paid at the time of clearance from the factory but in the terms of the bond the manufacturer is obligated to export the goods and get the bond closed - also, there is no doubt that the goods manufactured have been partially exported and partially cleared to the domestic tariff area. The benefit of Rule 6(6) (v) is required to be extended to the appellant since the goods have in fact been exported - the appellant will be entitled to the Cenvat Credit on the capital goods used partially for export even thiugh domestic clearances are exempted. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1011
Refund of service tax paid - amalgamation of companies - rejection of refund on the ground of time bar - scope of SCN - Held that: - In the SCN there is no whisper as to what is the relevant date considered or the date for determining the claim to be time-bar. The refund sanctioning authority as well as the lower appellate authority have travelled beyond the SCN to conclude that the relevant date is the date of payment of service tax and that sub-clause (ec) of section 11B does not apply - rejection of refund claim is unjustified - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1010
CENVAT credit - distribution of credit through ISD to different unit - case of Department is that credit has been wrongly availed by the respondents on input as services were availed by other units of the respondent - Held that: - When the respondent has taken ISD registration, we find no reason to deny the credit availed on such ISD invoices, though the services have been consumed in other unit of the respondent - reliance placed in the case of COMMISSIONER OF C. EX., BANGALORE-I Versus ECOF INDUSTRIES PVT. LTD. [2011 (2) TMI 1130 - KARNATAKA HIGH COURT], where it was held that Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law - appeal dismissed - decided against Revenue.
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2018 (1) TMI 1009
CENVAT credit - input services - stand of Department is that input services of BAS upon which the appellant paid the sales commission and availed credit of service tax paid need not have any direct nexus with the manufacture of final products - Held that: - The allegation in the SCN is that the appellant is not eligible for credit for the reason that the major part of the goods supplied for which the commission was received is for bought out items and not goods manufactured by appellant. The appellant has not been able to put forth any persuasive argument on this finding of the Commissioner - impugned order upheld - appeal dismissed - decided against appellant.
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2018 (1) TMI 1008
SSI Exemption - use of Brand Name - allegation against the respondent is that they have manufactured pharmaceutical products using the brand name of other persons and therefore the benefit of SSI exemption N/N. 8/2002 is not available to them - request for cross-examination rejected - Held that: - The request for cross-examination was disallowed by the adjudicating authority stating that the statements given by these persons have already been incorporated in the SCN. This reasoning for denial of cross-examination to be highly unjust and against the provisions of law. Section 9D provides for relevancy of statements under certain circumstances. In cases where the evidence is merely statements, denial of cross-examination causes much prejudice to the assessee and will vitiate the proceedings. Appeal dismissed - decided against Revenue.
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2018 (1) TMI 1007
Penalty on Director u/r 26 of CER - clandestine activity by manufacturing unit - Held that: - there is no contest to the issue that the Director of the Company was the involved party in the clandestine activity of the manufacturing unit. As such, penalty upon his is liable to be upheld - appreciating that the penalty on the main assessee stands reduced 25%, the penalty in the present appeal is reduced to ₹ 25,000/-, in case, the appellant deposits the same within a period of 30 days - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1006
Clandestine removal - shortage of stock - case of appellant is that such shortages in this stock were not real and were pseudo inasmuch as it is not possible for the officers to weigh about 3500 M.T. of stock in 10 hours, spent by them in the factory - Held that: - apart from the fact that the Revenue has not enable to substantiate the actual weighment of the material, the entire case of the Revenue is based on only to the shortages detected at the time of visit - Inasmuch as apart from the shortages there is no other evidence produced by the Revenue, there are no merits in the Revenue’s stand - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1005
Refund of Education Cess and Secondary Higher Education Cess - time limitation - whether the refund doing are required to be rejected, in terms of provisions of Section 11B of the CEA or the general limitation period of 3 years as available under the limitation Act has to be followed? - Held that: - the refund claim by an assessee originate on account of the fact that such duty was not required to be paid. If refunds are allowed without adhering to the limitation provided under the said Section, the Section would become infructuous and otiose - It is well settled law that any interpretation, which render a particular provisions of law infructuous, has to be avoided - appeal dismissed - decided against appellant.
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