Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
January 31, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Application for registration u/s 12AA - with regard to the condition that the assessee should apply its income only in India, such a condition is existing only u/s 11 and the AO is required to consider the application of income while allowing the exemption u/s 11 - registration cannot be denied - AT
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Co-operative bank is also a banking company; not liable to pay tax on NPA interest on accrual basis in view of RBI norms relating to income recognition and assets classification. - AT
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Credit of TDS - it may not always be possible all the time to co-relate a specific amount of TDS with a specific amount of income earned - The claim of the assessee is allowed in as much as it is held that the assessee would be entitled to credit of the entire TDS offered as income by the assessee in his return of income. - AT
FEMA
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Contravention of section 3 FEMA - A statement made under oath has to be taken as true, unless there is contra evidence to dispel that presumption. Mere retraction of a statement made under oath cannot help the appellant to get relief from the consequences of violations of an act. - AT
Service Tax
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Attachment of immovable property - recovery of service tax was not done - the personal property of a sole proprietor or partners shall not be attached, and personal property means any movable property or immovable property, which is in personal use of the sole proprietor or partner. - HC
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Liability of service tax - consideration received due to termination of the arrangement - by terminating the arrangement, the appellants are adversely put to certain business loss. The consideration has been paid for such loss. No identifiable service could be attributed for such payment during the material time - tax liability cannot sustain. - AT
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Manpower recruitment and supply agency service - deputation of employees - the definition is wide and would include any such activity where it is carried out either directly or indirectly supplying recruitment or manpower temporarily or otherwise - such conditions are not satisfied - activity not taxable - AT
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CENVAT credit while availing the benefit of Abatement notification - The N/N. 1/2006-ST does not say that assessee cannot avail any credit at all. The condition is that the abatement would be available only if input service credit is not availed on input services used for providing such services specified in column 2 of the notification - AT
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Reverse Charge Mechanism (RCM) - services of Underwriters received from outside India - ADS offering is not applicable for sale in India, but only to other select jurisdictions like the United States of America, Canada, Japan etc. - the impugned services availed of by the appellant not having been performed partly or wholly in India - Services are not taxable - AT
Central Excise
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CENVAT credit - input service - it is meant to enhance the sale of the manufactured goods of the Respondent through attracting customers by providing financial option to the respective customers and for the said purposes, they had approached the financial companies since they do not have such in-house finance facility - AT
Case Laws:
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GST
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2018 (1) TMI 1245
Extension of time period for filing of GST Tran-1 - petitioner has alleged in the petition that despite making several efforts on the last date for filing of the application, the electronic system of the respondent no.2 did not respond, as a result of which the petitioner is likely to suffer loss of the credit that it is entitled to by passage of time - Held that: - the respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the application of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner - decided in favor of petitioner.
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Income Tax
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2018 (1) TMI 1244
Eligibility to deduction u/s. 80P(2)(a)(i) - whether assessee society is covered u/s. 80P(4) r.w.s. 2(24)(viia) being income from providing credit facilities carried on by a co-operative society with its members? - ITAT allowed the deduction - Held that:- The Tribunal has concurred with the view adopted by the Commissioner (Appeals). The above view of the Tribunal is fortified by a decision of this court in the case of CIT-II v. Surat Vankar Sahakari Sangh Limited, (2014 (2) TMI 76 - GUJARAT HIGH COURT), wherein the court has repelled the contention of the revenue that section 80P(4) would exclude not only the cooperative banks other than those fulfilling description contained therein but also credit societies, which are not cooperative banks. In the facts of the said case, the assessee was a credit cooperative society and not a cooperative bank. The court held that the exclusion clause of sub-section (4) of section 80P would, therefore, not apply. The above decision would be squarely applicable to the facts of the present case. - Decided against revenue
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2018 (1) TMI 1243
Penalty u/s 271(1)(c) - deemed dividend addition u/s 2(22)(e) - ITAT deleted penalty - Held that:- In the light of the finding recorded by the Commissioner (Appeals), it is apparent that no inaccurate particulars of income have been furnished by the assessee so as to attract the provisions of section 271(1)(c) of the Act. Moreover, both the Commissioner (Appeals) as well as the Tribunal were of the view that since section 2(22)(e) of the Act creates a legal fiction whereby loans/advances received by the assessee are deemed as taxable income in the hands of the assessee in certain circumstances as specified therein, and when such facts have been available with the Assessing Officer there would be no question of concealment of any particulars of any fact per se. - Decided against revenue
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2018 (1) TMI 1242
Disallowance of sales promotion expenditures - ITAT held this expenditure fell in the revenue stream rather than the capital stream - Held that:- This Court is of the opinion that the concurrent findings on the question urged, are justified. As to the nature of advertising expenditure, the pointed decision of the Court in Commissioner of Income Tax vs. Salora International (2008 (8) TMI 138 - DELHI HIGH COURT) was decisive. The advertence to Empire Jute’s case (1980 (5) TMI 1 - SUPREME Court), is not apt in the circumstances of the case. The Court further re-collects that later decision in Alembic Chemical Works Co. Ltd vs. CIT, (1989 (3) TMI 5 - SUPREME Court) has cautioned the administrative authorities and the Courts from applying hitherto bright line test to expenditure resulting in a capital advantage based upon traditional notions. No substantial question of law
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2018 (1) TMI 1241
Penalty u/s 271(1)(c) - undisclosed sale of flats - AO pointed out the discrepancy in the sales disclosed by the assessee and the sales as per AIR information the assessee surrendered the said income - Held that:- There is no dispute on the point that the assessee surrendered this income when the AO brought to the notice of the assessee about the discrepancy in the sales declares by the assessee which is not matching with the details as per AIR information. AO though stated in the assessment order that the penalty proceeding have been initiated separately however, the grounds on which the penalty proceeding have been initiated are required to be stated in the show cause notice issued u/s 274 r.w.s. 271(1)(c). As find that the Assessing Officer has neither specified a particular ground or default of the assessee nor deleted the irrelevant ground or default of the assessee as mentioned in the show cause notice issued u/s 274 dated 30.08.2013. Thus the notice issued u/s 274 r.w.s. 271(1)(c) of the Act dated 30.08.2013 is not valid and the same is quashed - Decided in favour of assessee
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2018 (1) TMI 1240
Penalty u/s 271(1)(c) - Claim of the assessee as to making salary to its family members and management of the society was also disallowed and depreciation claimed by the assessee having been paid to M/s. Dev Packaging has also been disallowed - Held that:- As in assessee’s own case [2018 (1) TMI 18 - ITAT DELHI] for AY 2010-11 passed in the quantum proceedings from which penalty proceedings have been emanated vide which issue as to addition of ₹ 7,82,465/- on account of honorarium and addition of surplus of ₹ 2,04,757/- have been set aside to the file of AO to decide afresh after providing an opportunity of being heard. However, the coordinate Bench of the Tribunal in the aforesaid order (supra) deleted the addition of ₹ 4,54,300/- on account of salary paid u/s 13(3); addition of ₹ 1,64,715/- on account of depreciation and ₹ 51,000/- on account of interest on loan and advances. Penalty levied by the AO and affirmed by the ld. CIT (A) is not sustainable, hence penalty levied by the AO and affirmed by the CIT (A) is ordered to be deleted and AO to pass afresh order consequent upon the decision on the issues which have been set aside to him for deciding afresh. Consequently, the appeal stands allowed.
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2018 (1) TMI 1239
Disallowance of provision/write off of advances - assessee made the advance for purchase of machinery and lease advance, which became irrecoverable - Held that:- As the advance paid for the purpose of expansion, will fall within the ambit of section 37 of the Act. With regard to the argument of the ld. DR that expenditure must be expended in the same year to get the deduction as observed by the AO, in our considered view, it is for the expansion of the business and incurred during the earlier years, as and when the assessee realises that this cannot be recovered, this can be written off in the year in which it is determined that it cannot be recovered. This right can be exercised by the assessee with the proper documentation on record. Therefore, the contention of ld. DR/AO on this aspect is not acceptable. Therefore, we are inclined to allow the ground raised by the assessee. Disallowance made towards amount paid to APGENCO for upgradation, operation and maintenance of fly ash extraction - AR has submitted that assessee has made the investment in order to get the benefit of procuring the fly Ash at a concessional rate - Held that:- When the Bench asked to substantiate the submission, ld. AR brought on record the various purchase statements, which are part of record. In order to verify the claim of the assessee and for proper justice, we are inclined to refer this matter back to file of AO with limited purpose to verify the submission of the assessee, whether assessee has procured the fly ash on concession, which supports the investment decision. In case, it is found that assessee has purchased the fly ash at concessional rate ( less by ₹ 40/- per tonne) then the AO may allow the claim of the assessee, otherwise, addition may be sustained. Therefore, ground raised by revenue is allowed for statistical purposes.
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2018 (1) TMI 1238
Penalty levied u/s 271(1)(c) OR u/s 271AAA - notice is not issued in the proforma - Held that:- We have perused the notice u/s 271(1)(c) of the Act and find that the notice is not issued in the proforma, but is issued both for concealment as well as furnishing of inaccurate particulars of income. We find that the AO was satisfied about the existence of both the ingredients and therefore, there is no need to strike off any portion of the notice. Therefore, the assessee’s appeals for the A.Ys 2007-08 & 2008-09 are without any merits and are thus dismissed. The copy of the notice u/s 271AAA has not been produced before us, whereas the assessee has filed the copy of the notice u/s 271(1)(c) of the Act for the A.Y 2009-10 as well. As rightly pointed out by the learned Counsel for the assessee, the AO has to issue a notice for penalty u/s 271AAA separately and cannot suo moto treat convert the notice issued u/s 271(1)(c) to a penalty notice u/s 271AAA. Therefore, we admit the additional ground, which is a legal ground and allow the same. The penalty order for A.Y 2009- 10 is accordingly set aside and the other grounds of appeal on the merits of the penalty order are not adjudicated.
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2018 (1) TMI 1237
Disallowing the deduction claimed u/s 54F - assessee has not invested the long term capital gains in purchase or construction of a new residential house within the period specified - Held that:- The assessee has filed the return of income on 25.7.2014 i.e. after issuance of the legal notice dt. 5.4.2014 to the vendor calling upon him to execute the registered sale deed in favour of the assessee by clearing the bank loan and receiving the balance sale consideration of ₹ 3.4 crores. Therefore, as far as the assessee is concerned, he was aware of the bank loan and also the default committed by the vendor in repaying the loan. Thus, the property was not without an encumbrance as on the date of filing of the return and there was no certainty of the transaction going through. In a case where the sale is not concluded or the agreement of sale is not certain to be honoured, the assessee could not have claimed to have purchased the residential property within one year before or within two years after the sale of the original asset or to have constructed the property within three years after the sale of the property for the purposes of claiming the deduction u/s 54F(4) of the Act. Thus, the disallowance of assessee’s claim u/s 54F is confirmed and the assessee’s grounds on this issue are rejected. Unexplained cash deposits - addition u/s 68 - Held that:- From the details filed by the assessee, it is seen that the assessee had agricultural income and also income from other sources and house property from the A.Ys 2012-13 to 2014-15 sufficient to explain the sources for the deposit of ₹ 6.00 lakhs. Therefore, the source for the deposit of ₹ 6.00 lakhs is accepted. However, as regards the source for the deposit of ₹ 20.00 lakhs, being the amount claimed to be withdrawn for purchase of property in the earlier year and re-deposited the same after the period of one year due to the transaction not materializing, is not acceptable. Therefore, the addition of ₹ 20.00 lakhs is confirmed. - Decided partly in favour of assessee
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2018 (1) TMI 1236
Application for registration u/s 12AA rejected - proof of charitable activities - Held that:- Admittedly the assessee is an institution carrying on educational activities and therefore, it is a charitable institution. Though it has started its activities in the year 1998, it has filed the application for registration u/s 12AA of the Act only on 27.09.2012. As gone through the approvals of the Educational Officers and we find that in the subject portion referred to the proceedings, the name of the assessee is mentioned as “Ken-Crest High School”, whereas in the body of the letter, the name is referred to as “Ken-Crest Global High School”, Karimnagar. Further, in the proceedings dated 17.12.2011, in the subject portion itself, the school is referred to as Ken-Crest International School. Therefore, there is no difference in the schools, which have been approved and the schools run by the assessee. Further, the CCIT, Hyderabad-3, vide order dated 27.09.2013, has granted the assessee; the registration u/s 10(23)(C)(vi) which goes to prove that the Revenue is satisfied about the assessee carrying on the activities exclusively for educational purposes which is a charitable activity. Therefore, the assessee is eligible for registration u/s 12AA and the reasons mentioned by the DIT (E) are not sustainable. As regards the condition that the assessee should apply its income only in India, we find that such a condition is existing only u/s 11 and the AO is required to consider the application of income while allowing the exemption u/s 11 of the Act. Therefore, the rejection of the application for rejection on the said ground also is not sustainable. - Decided in favour of assessee
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2018 (1) TMI 1235
Eligibility to claim exemption u/s 35(1)(ii) - order of CBDT having no authority to grant approval - Held that:- It is clear from the record there was no approval for the assessee to claim exemption u/s 35(1)(ii) of the Act as on the date of assessment and grounds raised are liable to be dismissed. No force in the submissions of the Ld.AR in respect of the CBDT has no power to decide the application seeking approval u/s 35(1)(ii) of the Act. Admittedly, it is noticed that for the A.Y under consideration, there was no approval for getting exemption u/s. 35(1)(ii) as on the date of assessment to claim exemption. Therefore, in our opinion, the CIT-A rightly exercised his jurisdiction in confirming the order of AO in rejecting the claim of the assessee. Therefore, grounds raised by the assessee in the appeal are dismissed.
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2018 (1) TMI 1234
Deemed dividend addition u/s 2(22)(e) - commercial advances - Held that:- There is no dispute with the fact that assessee has allowed his personal properties as collateral in order to facilitate the company to get the loan from the Andhra bank. The company has given a loan in order to purchase an office building by way of resolution. At the same time, the assessee claims that even otherwise, the company has given loan as a compensation for allowing the personal properties to utilize as collateral securities. Therefore, this transaction will not fall within the ambit of section 2(22)(e). We are inclined to allow the contention of the assessee and accordingly treat the above advances as commercial advances, which are outside the provisions of section 2(22)(e).- Decided in favour of assessee. Addition u/s 68 - Held that:- There is identity of the creditors, creditworthiness and genuineness of the transaction is proved. Only contention submitted by department is that assessee could not bring on record the persons to whom the agricultural produce were sold. It is not brought on record that these produce were sold in regulated market or to middlemen. It is immaterial at this stage as the family members have already confirmed that these lands were used to cultivate the cotton seeds and they confirm that these were genuine, in the absence of any findings from the AO that these are not genuine transactions, we have no option but to consider the affidavits as genuine. - Decided in favour of assessee.
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2018 (1) TMI 1233
Entitled to exemption u/s 11 - Held that:- Tribunal at Agra in the case of Shri Amol Chand Varshney Sewa Sansthan reported in (2013 (6) TMI 218 - ITAT AGRA) exemption u/s 11 cannot be denied on mere presumption. In the case on hand also, the AO has not brought out on record that the related concern has benefited during the relevant financial year. Another factor which needs consideration is that the construction agreement is alleged to have been executed on 15.03.2008 and the advance has been given on 31.03.2008 and the said advance has been returned over a period of two years thereafter and no disallowance or an addition has been made in the subsequent A.Ys towards the interest free advance. All these transactions have been carried out before the date of survey i.e. on 25.10.2008. Therefore, it cannot be said that this contention of the assessee is an afterthought. In view of these reasons, we agree with the findings of the CIT (A) that the assessee cannot be denied the exemption u/s 11 of the Act for the relevant A.Y. Exemption u/s 11 has been denied is the payment of salary to Shri T.V. Pranay Kumar - Held that:- assessee had filed the proof that Mr. T.V. Pranay Kumar is registered as an Advocate and that he has rendered services to the Society in legal proceedings before the Hon'ble High Court of Andhra Pradesh and before the Civil Courts at Secunderabad. We find that the CIT (A) has also observed that the AO has not disputed the reasonableness of the payment to Mr.T.V. Pranay Kumar or that it was in pursuance of the objects of the Society Trust. In the absence of any evidence to the contrary, we do not see any reason to interfere with the order of the CIT (A). Ground No.7 is accordingly rejected. In this view of the matter, we hold that the assessee cannot be denied the exemption u/s 11 of the Act for the relevant A.Y. Applicability of provisions of section 40(a)(ia) - Held that:- IT (A) has accepted the contention of the assessee without any verification as to whether the said expenditure has been claimed by the assessee in the income and expenditure a/c. As rightly pointed out by the learned Counsel for the assessee and also held by the CIT (A), when the assessee is being assessed as a charitable institution, the provisions of section 40(a)(ia) of the Act are not applicable. In view of our finding above, that the assessee is entitled to the exemption u/s 11 of the Act, we do not see any reason to interfere with the order of the CIT (A) on this issue. Estimation of tuition fee received by the assessee on the basis of number of students studying in the school of the assessee - Held that:- CIT(A) has correctly deleted the addition by observing that the Special Auditor has not pointed out any discrepancy in fee receipts and also that the AO has not accounted for concession fee in respect of children of teaching and non-teaching staff.
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2018 (1) TMI 1232
Addition made on account of interest income on NPAs - Determination of tax liability - whether the assessee is a non-scheduled co-operative bank and the provisions of section 43D are not applicable to the assessee? - Held that:- As relying on case Pr. Commissioner of Income Tax vs. Shri Mahila Sewa Sahakari Bank Ltd [2016 (8) TMI 377 - GUJARAT HIGH COURT] we dismiss the appeal of the department as Co-operative bank is also a banking company; not liable to pay tax on NPA interest on accrual basis in view of RBI norms relating to income recognition and assets classification. - Decided against revenue
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2018 (1) TMI 1231
Disallowance u/s 14A r.w.r. 8D - rectification of mistake - power of rectification under Section 254(2) - Held that:- As in the case of Pr. CIT vs. Nirma Credit & Capital (P.) Ltd. [2017 (9) TMI 485 - GUJARAT HIGH COURT] has decided the construction of Section 14A, subsequent to the decision of the Tribunal, but it has interpreted that expression “amount of expenditure by way of interest” would be construed as net interest expenditure for making disallowance under Section 14A read with Rule 8D of the Income-tax Rules. A perusal of the record would indicate that this aspect was not considered by the Tribunal. The assessee has net interest income and therefore, there would not have been any disallowance under Section 14A. To our mind, it is an apparent mistake committed by the Tribunal which deserves to be rectified. Therefore, we recall the order of the Tribunal
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2018 (1) TMI 1230
Revision u/s 263 - capital gains tax liability on sale of land - Held that:- A perusal of the show cause notice clearly shows that the Principal CIT has not appreciated the facts of the case in true perspective. As mentioned elsewhere, the agreement to sell was entered on 27.03.2007 and the possession was given on 04.05.2007. Therefore, it is incorrect to say that the capital gains tax liability arose in A.Y. 2012-13 when the same was in A.Y. 2008-09 as per the relevant provisions of the IT Act. Therefore, it cannot be said that the assessment order framed u/s. 143(3) is erroneous and prejudicial to the interest of the revenue. It is incorrect to say that the assessee has received a consideration of ₹ 5.63 crores. The conveyance deed dated 25.07.2011 perused by the Principal CIT was tri-partite deed comprising of seller [assessee], confirming party [R.Y. Infrastructure Pvt. Ltd.] and Shantigram Estate Private Ltd. [assignee of R.Y. Infrastructure Pvt. Ltd. and ultimate buyer]. An understanding was reached between R.Y. Infrastructure Pvt. Ltd. and Shantigram Estate Private Ltd. to transfer such beneficial ownership rights in favour of latter which were acquired by R.Y. Infrastructure Pvt. Ltd. from the assessee by agreement to sell. The assessee had already received the sale consideration of ₹ 28.41 lacs when she entered into agreement to sell with R.Y. Infrastructure Pvt. Ltd. and handed over the quite possession in its favour. All these facts were considered by the A.O. and being satisfied with the transaction qua the relevant provisions of the Act, the assessment order was framed u/s. 143(3) - Assessment order is neither erroneous nor prejudicial to the interest of the revenue. We, therefore, set aside the impugned order passed by the Principal CIT u/s. 263 and restore that of the A.O. passed u/s. 143(3) of the Act. - Decided in favour of assessee.
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2018 (1) TMI 1229
Disallowance u/s 40(a)(ia) - non deduction of tds on interest paid to NBFCs - Held that:- The second proviso to section 40(a)(ia) of the Act would be effective retrospective as it was undisputedly inserted to removable the hardship faced by the assesses. Hence, we set aside this issue to the record of the Assessing Officer for limited purpose to verify the fact that the interest income received by these NBFCs have been included in the return of income and offered to tax and then decide this issue in light of above observation. Disallowance u/s 40A(2)(a) - Held that:- We find that when there is no actual out go from the assessee to its subsidiary but the assessee has allowed discount to the subsidiary on sale made to the subsidiary. Therefore, even if the said discount was not allowed to the other parties and it is allowed to the related parties, in the absence of any provisions u/s 40A(2)(a) or u/s 37, the same cannot be disallowed. It is pertinent to note that the transaction may be falling under the category of domestic transfer pricing however, when the said provision is not applicable for the year under consideration and the AO has not applied the same then, it cannot be disallowed. Thus when the trade disallowance is not an expenditure paid or payable as per the provisions of section 40A(2)(a) then the same cannot be disallowed for want of any prohibitory provision in the Income Tax Act. Disallowance of registrar of company fees and foreign travelling expenditure - Held that:- In the absence of the specific purpose of the foreign trip of the Executive Manager, the expenditure incurred on the foreign trip of the Executive Manger cannot be considered as an expenditure incurred wholly and exclusively for the business of the assessee. Thus upheld by the ld. CIT(A) in respect of the foreign trip expenses of the wife of the executive manager is justified and proper. As regards disallowance of ROC fees we find that the expenditure was incurred by the assessee for increasing the authorized share capital and therefore, the authorities below have rightly considered the said expenditure as capital in nature. The assessee has failed to show that how the said expenditure is revenue in nature when the same is incurred for increase of authorized capital except the contention that it would be used for working capital. Difference in the interest on FDRs as per 26AS and the interest income recognized by the assessee in the books of accounts - Held that:- We do not agree with the contention of the assessee simply on the reason that when the correct amount of income is available as per Form 26AS then, the income of the assessee is required to be assessed on correct figures and facts instead of estimated figures accounted by the assessee. Further, when the corresponding TDS credit is available to the assessee for the year under consideration against the income reported in 26AS then the said credit cannot be allowed against less income declared by the assessee on this account. Accordingly, we do not find any error or illegality in the impugned orders of the authorities below qua this issue. Disallowance u/s 40(a)(ia) - disallowance of claim in respect of other NBFCs who have filed their return of income belatedly - Held that:- CIT(A) has not disputed the fact that all the three NBFCs has filed their return of income within a time period allowed u/s 139 and particularly u/s 139(4) of the Act. The first proviso to section 201(1) specifically requires the furnishing of return of income u/s 139 without specifying any sub-section, therefore, the time limit provided under any of the sub-section of section 139 will be considered for the purpose of allowing the benefit as per the first proviso. Once, the return of income were filed by the recipient, as per the provisions of section 139 specifically under sub-section (4) then having accepted the applicability of the second proviso to section 40(a)(ia) respective effect no disallowance is called for in respect of the interest paid to the NBFCs. Accordingly, we delete this issue in favour of the assessee and delete the disallowance made by the AO.
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2018 (1) TMI 1228
Credit of TDS - TDS claim disallowed on account of the fact that corresponding income was not offered for taxation in the relevant assessment year - Held that:- The assessee follows cash system on accounting. The provision of sections of Chapter- XVII Collection and recovery of Tax of the Income Tax Act, 1961 are not charging sections. The deduction of Tax at source is merely one of the mode of collection of tax. Therefore it may not always be possible all the time to co-relate a specific amount of TDS with a specific amount of income earned by the assessee in a particular assessment year. The claim of the assessee is allowed in as much as it is held that the assessee would be entitled to credit of the entire TDS offered as income by the assessee in his return of income. See Chander Shekhar Aggarwal vs. Assistant Commissioner of Income-tax, Circle 37(1), New Delhi, [2016 (2) TMI 420 - ITAT DELHI] - Decided in favour of assessee
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2018 (1) TMI 1227
Disallowance of delay in payment of employees' contribution to ESIC & PF - failure to deposit before due date - applicability of section 43B read with section 2(24)(x) - Held that:- he assessee did not deposit the amount of contribution with the PF Department / DSI Department within due date under the PF Act and/or ESI Act - There is no amendment in Section section 36(1)(va) of the Income Tax Act and considering section 36(1)(va) of the Income Tax Act as it stands, with respect to any sum received by the assessee from any of his employees to which the provisions of clause (x) of sub-section (24) of section 2 applies, assessee shall not be entitled to deduction of such amount in computing the income referred to in section 28 if such sum is not credited by the assessee to the employees' account in the relevant fund or funds on or before the due date as per explanation to section 36(1)(va) of the Act - See COMMISSIONER OF INCOME TAX II Versus GUJARAT STATE ROAD TRANSPORT CORPORATION [2014 (1) TMI 502 - GUJARAT HIGH COURT] - Decided against assessee TDS u/s 194J - disallowance u/s.40(a)(ia) - non deduction of tds payment of consulting service made to BSI management System (I) Pvt. Ltd. - Held that:- We are of the opinion that the provision of section 194J of the Act will be applicable. Hence, 20% will be disallowed in the light of proviso sec. 194J and AO is directed to calculate the same. Disallowance of interest as per rule 8D(2)(ii) u/s.14A - Held that:- Since company is having ₹ 559.95 lacs i.e. share capital ₹ 6.00 lacs and Free reserve ₹ 553.95 lacs, whereas investment made in shares and mutual funds put together is ₹ 524.32 lacs, no disallowance is warranted. Addition on account of administrative exp. u/s.14A - Held that:- In the interest of the justice addition of ₹ 50,000/- made on account of administrative expenses u/s.14A.
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2018 (1) TMI 1226
Penalty u/s 271(1)(c) - non recording of reasons to levy penalty - Held that:- In the absence of recording of satisfaction regarding the exact nature of offence, no penalty under section 271(1)(c) can be imposed. In view of the aforesaid, we delete the penalty imposed. - Decided in favour of assessee
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Customs
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2018 (1) TMI 1225
Classification of goods - Track Shoes Collection Hot Rolled of Length 560 mm - whether classified under CTH 84314990 or under CTH 72287011? - Abatement - Benefit of N/N. 21/2002-CUS - Held that: - It has been indicated in the invoice that the shipment of track shoe is being done as per the purchase order. The appellants have not been able to sufficiently rebut these facts given in the invoice. In any case, the goods are not available at the time of the PCA. In the circumstances, the appellant has not been able to satisfactorily counter the allegations made by the department. It has also not been informed whether the department's non-filing of appeal by the department has been done on the basis of merits of the case or on the basis of pecuniary ground as per the National Litigation Policy. Appeal dismissed.
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2018 (1) TMI 1224
Clandestine removal - clearance of Soda Ash - It was alleged that while clearing such duty-free soda ash to various parties, appellant had raised invoices showing that such clearances are made out of duty paid soda ash - Held that: - there is merit in the appellants prayer that the quantity of duty-free imported soda ash that would require differential customs duty to be paid thereon on account of their having been removed from the factory, will then have to be calculated after taking into account all such receipts of soda ash from different sources and total removals to arrive at the net removal from the factory - it is proper to remand the matter back to the adjudicating authority for denovo consideration and to arrive at the net quantity of duty free imported soda ash that may have been removed outside the factory for the limited purpose of calculation of net duty and without liability. Penalty - Held that: - while differential customs duty will definitely accrue in respect of the quantities of duty-free imported soda ash that may have been removed in violation of import conditions, nevertheless, no malafide can be attributed to such clearances - penalties imposed on the appellant under section 114A ibid will not sustain and is therefore set aside. Appeal allowed in part and part matter on remand.
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Corporate Laws
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2018 (1) TMI 1223
Application filed by the appellant u/s 536(2) to validate the sale of the property in its favour by the company in liquidation - Held that:- The preponderance of probability is that VGP was always aware of the fact that the state of health of Neptune has precarious and in order to save the promoter-directors of Neptune from difficulty and, perhaps, to further their interest agreed to enter into the impugned sale transactions. The impugned sale transactions were clearly motivated by the fact that the exposure, if any, of VGP could be secured by giving it the first bite in the assets of Neptune. VGP was a preliquidation creditor and therefore, by this device, cannot be allowed to steal a march over other creditors. The exposure of ARCIL as on 16.11.2010 (which is the date when OL submitted his report) is a sum of ₹ 2,18,23,829/-, and if dues of other statutory and unsecured creditors are included, the debt of Neptune balloons to ₹ 3,36,16,855.38/-.OL is yet to call for claims. There is, therefore, every likelihood that there may be other unsecured creditors whose claims qua Neptune may be outstanding. The impugned sale transaction were not, as held by the learned Single Judge, either carried out to benefit Neptune or, were transactions, which helped Neptune to conduct its day-to- day operations. Therefore, for all these reasons, we are disinclined to interfere with the impugned order. Accordingly, the appeal is dismissed.
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Insolvency & Bankruptcy
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2018 (1) TMI 1249
Corporate insolvency process - existence of debt - Held that:- The onus is on the Operational Creditor under IBC, 2016 to establish that the debt is owed in absolute terms and that it should not or cannot be assailed by the Corporate Debtor in any manner other than being it illusory or moonshine. If it is otherwise than it gives rise to a plausible contention to be put up by the Corporate Debtor and the same cannot be considered as moonshine or illusory. Thus taking into consideration all the above and as the notice of demand dated 26.04.2017 not being supported by proper authorization, as well as the application under Section 9 of IBC, 2016 as filed on behalf of the Operational Creditor not having been filed by persons who are authorized to file as per Board Resolution dated 07.02.2017 and further in view of existence of a plausible dispute between the parties and cannot be decided in a summary manner, this application stands dismissed.
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2018 (1) TMI 1248
Corporate insolvency resolution process - Held that:- The existence of default has been shown from abundant evidence on record. The corporate debtor in the reply is not denying that it is in default of payment to the Bank. The above is the requirement of the aforesaid provisions for enabling the Adjudicating Authority to admit the petition. I find that the application filed by the Financial Creditor in Form No.1 is complete in all respects. Therefore, the instant petition deserves to be admitted.
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2018 (1) TMI 1247
Corporate Insolvency Resolution Process - Held that:- Petitioner herein is a Financial Creditor and a financial debt is owed by the Corporate Debtor as per the provisions of IBC, 2016, the Petition is to be admitted applying the ratio contained therein and the Insolvency process be initiated in relation to the Corporate Debtor in view of the default committed by the Corporate Debtor which is evident from the dishonour of cheques issued and accordingly the Petition stands admitted. Mr. Kanwal Chaudhary is appointed as the Interim Resolution Professional having his address at EA-413, Maya Enclave, New Delhi-110 064 to take over the affairs of the Corporate Debtor as envisaged under the provisions of IBC,2016 and who is duly bound to act in consonance with the provisions of IBC,2016 and other rules and regulations framed thereunder. The moratorium as envisaged under the provisions of Section 14 as extracted hereunder shall follow in relation to the Corporate Debtor and the same is to be declared.
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2018 (1) TMI 1246
Corporate Resolution Process - Corporate Debtor defaulted in making repayment of USD in respect to the external borrowing of USD 15,895,000 and working capital facilities of ₹ 335,50,00,000 availed by Ruchi Infrastructure Limited in the year 2012 - Whether the Power of Attorney given to Pallav Sangal is defective or not? - Held that:- Considering the size of the company, the order passed by the Hon’ble NCLAT is distinguishable from the facts of this case, for there being no objection from the bank’s side and there being no material from the debtor side to disprove that this authorization given in favour of Pankaj Jain is not valid one, we hereby hold that this power of attorney is binding on the creditor bank, therefore, this power of attorney shall be held as valid authorization to proceed against the debtor. Whether pending of appeal over the order dismissing winding up petition against the Corporate Debtor, will have any bearing over adjudication of this case or not? - Held that: -Since no winding up petition is pending before High Court as of now against this corporate debtor, except an appeal on dismissal order, this petition cannot be kept under suspension by looking at a fight this very corporate debtor fighting before Appellate Authority for confirmation of the original order. Whether Reserve Bank of India directives pursuant to the Banking Regulations (Amendment) Act, 2017 has any bearing on adjudication of this case or not? - Held that:- Any circular that is in recommendatory in nature and suggesting IBC proceedings in 12 accounts will not amount to depriving other accounts to be filed before this Adjudicating Authority under IBC provided they fall within the ambit of IBC. Henceforth, we have not found any merit in this argument canvassed by the corporate debtor. Whether Facility Agreements have been inadequately stamped as stated by the Corporate Debtor, if so, whether this petition can be admitted basing on such inadequately stamped Agreement? - Held that:- The corporate debtor counsel has nowhere mentioned how much stamp duty is to be paid, how much is not paid by the Petitioner, his hypothetical argument will not be relevant to decide any case because duty is cast upon the person raising objection. Moreover, facility agreement alone is not the document to prove this case, there is surplus material to prove that debt and default are in existence whereby, this argument is not sufficient enough to deny the claim of Petitioner herein, henceforth, the argument of the corporate debtor is hereby dismissed. Whether formation of Joint Lender Forum will have any bearing over filing of this case or not? - Held that:- Proceedings pending against the corporate debtor will not have any bearing on the cases initiated under IBC, therefore, this plea is hereby dismissed without having any further consideration on this point. Whether the Statement of Account filed by DBS is in compliance with Part V Serial No. 7 of Form No. 1 or not? - Held that:- Though IBC is definitely a new enactment, the subject dealt with by this enactment is not new to us, because in the past it was spread in 2-3 enactments. In view of the same, we are of the view that inconsistency is the benchmark to invoke non-obstante clause of this Code upon other enactments. I must also say that when there is a categoric admission falling under Indian Evidence Act, that admission need not be put to proof as envisaged under Section 58 of Indian Evidence Act. Here, when a specific case has been put to the Corporate Debtor saying that the Corporate Debtor borrowed money and failed to repay the same, this Corporate Debtor has nowhere denied about existence of debt and occurrence of default. We are of the view that the Petitioner herein has furnished all the material to prove the existence of debt and occurrence of default. In view of the same, this Bench hereby admits this Petition
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FEMA
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2018 (1) TMI 1222
Contravention of section 3 FEMA - statement made under oath reliance - Held that:- In harwala transactions, the main aspect is secrecy and stealth. Most of the facts relating to such transactions remain in the knowledge of the persons involved in such transactions. It is difficult for Authorities to unravel every link of such transitions. The burden is on the person to explain; otherwise adverse inference can be drawn based on surrounding facts and circumstances. The appellant is engaged in the money exchange business, real estate brokering and pre-owned car sales. In the case of the appellant, there is a presumption that he has indulged in two transactions and also he was in touch with a person in Dubai as per his own statement though retracted later on. A statement made under oath has to be taken as true, unless there is contra evidence to dispel that presumption. Mere retraction of a statement made under oath cannot help the appellant to get relief from the consequences of violations of an act. Thus the elements of contravention of section 3 FEMA have been established in the present case. As considering the financial condition of the appellant, the penalty amount is reduced to ₹ 2 lac as agreed by the appellant to deposit within eight weeks from today. Let the appeal be dispose of on these terms by modifying the impugned order by reducing the penalty 50% of the penalty imposed only to this extent.
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Service Tax
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2018 (1) TMI 1220
Attachment of immovable property - recovery of service tax was not done - Held that: - It is seen that, notice of demand to the defaulter/third respondent was issued only on 15.10.2012, from which, it is appears that the property was yet to be attached, and it was stated that steps would be taken to realize the amount by attaching the property. However, much prior to the said date, i.e., 20.07.2012, the property has been sold to the petitioner. Therefore, the respondents 1 and 2 could not be proceeded further, pursuant to the notice of demand, dated 15.10.2012. There is a circular issued by Central Board of Excise and Customs (CBEC), bearing No.103/06/2008-ST, dated 01.07.2008, which gives instructions, regarding provisional attachment of property under Section 73 (C) of the Finance Act, 1994, and in paragraph No.2 (ix), it is stated that the personal property of a sole proprietor or partners shall not be attached, and personal property means any movable property or immovable property, which is in personal use of the sole proprietor or partner. Petition allowed - decided in favor of petitioner.
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2018 (1) TMI 1219
Liability of service tax - considerations received from RICO Industries Ltd. - time limitation - Held that: - As the appellant contested the demand on limitation considering the intricacies of the provisions of the agreement and the appellant being not the sole service provider and the full details were captured in the balance sheet and other documents of the appellant, the case for extended period for demand for the consideration received pursuant to the value of participation agreement cannot be sustained. Liability of service tax - consideration received due to termination of the arrangement - Held that: - no identifiable service can be attributed for such consideration. It is rather a termination of arrangement which itself the original authority held as a service. We note that by terminating the arrangement, the appellants are adversely put to certain business loss. The consideration has been paid for such loss. No identifiable service could be attributed for such payment during the material time - tax liability cannot sustain. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1218
CENVAT credit - inputs / capital goods - structural items like MS angles etc. and also various capital goods which are all used for setting up of telecommunication towers in various places - Held that: - the matter is no more res integra as the Hon’ble Bombay High Court in Bharti Airtel Ltd. [2014 (9) TMI 38 - BOMBAY HIGH COURT] as well as Larger Bench decision in Tower Vision India Pvt. Ltd. [2016 (3) TMI 165 - CESTAT NEW DELHI (LB)] held that credit on such inputs / capital goods as claimed by the appellant are not available - credit not allowed. CENVAT credit - various input services - Erection and Construction service - Rent-a-cab service - Outdoor Catering service - Air Travel Agency service - Tour Operator service - Business Auxiliary Service - Authorized Service Station service - Subscription fees etc. - Held that: - the service of erecting of such tower is essentially an input service covered by the main means clause of the definition for input service that is used by a service provider for providing output service - reliance placed in the case of Bharat Sanchar Nigam Ltd. Versus Commissioner of C. Ex., Chandigarh-I [2016 (8) TMI 1284 - CESTAT, CHANDIGARH] - credit allowed. Rent-a-cab services - Outdoor catering services - Air Travel Agent services - tour operator service - denial of credit is not due to non-availability of documents - Held that: - we are not fully satisfied with the details on the basis and the purposes of such credit and accordingly we are in agreement with the lower authorities in denying them in the absence of any contrary evidence produced by the appellant to establish their eligibility for the same. Extended period of limitation - penalty - Held that: - Admittedly, the dispute is one involving legal interpretation and difference of opinion. In such circumstances, it is not tenable to invoke ingredients of Section 73 proviso for confirming the demand for extended period as well as imposing penalties. Appeal allowed in part.
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2018 (1) TMI 1217
Manpower recruitment and supply agency service - appellants in their course of business deputed some of their personnel to their group companies - Held that: - The issue stands decided by the decision by the decision of the Hon’ble High Court of Gujarat in the case of Arvind Mills Ltd. [2014 (4) TMI 132 - GUJARAT HIGH COURT], where it was held that It is true that the definition is wide and would include any such activity where it is carried out either directly or indirectly supplying recruitment or manpower temporarily or otherwise. However, fundamentally recruitment of the agency being a commercial concern engaged in providing any such service to client would have to be satisfied - demand not sustainable - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1216
Business Auxiliary Services - documents processing charges received by the appellant from the buyer of vehicle - Held that: - Since, for providing documentation service, the appellant claims the charges from its customers, the same should not be considered as business auxiliary service, in as much as, there is no involvement of any third party, on whose behalf, the appellant provides service to its customers - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1215
CENVAT credit - input services - rent-a-cab operator service - health club and fitness centre service - internet cafi service - dry cleaning service - Held that: - Rule 6 (5) as it stood during the relevant period states that credit is eligible on the services specified therein, if such services are not used exclusively for exempted services. Even if we consider that prior to 01.05.2011, the output services of short term accommodation services and restaurant services were not taxable services, the appellants were rendering other taxable services like health club and fitness service, internet cafi service etc. Since the services specified in Rule 6 (5) were not used by the appellant exclusively for non-taxable services, the appellants are eligible for the credit. Abatement under N/N. 1/2006-ST - Held that: - The N/N. 1/2006-ST does not say that assessee cannot avail any credit at all. The condition is that the abatement would be available only if input service credit is not availed on input services used for providing such services specified in column 2 of the notification - In the case of Bharat Heavy Electrical Ltd. Vs. CCE, Nagpur [2012 (4) TMI 197 - CESTAT, MUMBAI], the Tribunal had occasion to analyse a similar issue with regard to availability of abatement and held that there is no stipulation in the notification that the option to avail/non-avail CENVAT credit has to be exercised uniformly in respect of all the contracts executed by the assessee. It is for the assessee to choose which formulation he wants to follow in a given contract. Demand set aside - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1214
CENVAT credit - input services - Real Estate Agency Service - Rent-a-Cab Service - Insurance (Mediclaim Policy) Service - appellant case is that the disputed services have been availed by the appellant prior to 1.4.2011 and the invoices were also raised prior to 1.4.2011 whereas the department however has issued SCN for the period after 1.4.2011 also - Held that: - In the Master circular dt. 29.4.2011, the Board has clarified that if the services are availed prior to 1.4.2011 then even if the credit is availed later, the appellant would be eligible for the same - it is deemed fit that the matter be remanded to the original authority who shall consider the question whether appellant has availed the services prior to 1.4.2011 and also to consider the eligibility of master circular - appeal allowed by way of remand.
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2018 (1) TMI 1213
Reverse Charge Mechanism - appellants had availed services of Underwriters - case of Revenue is that Since the services have been received by the appellants and from underwriters located outside India, the appellants are very much liable for tax liability - Held that: - the scope and extent of service tax chargeability on reverse charge basis for different services has been treated differently only in sub-rule (iii) of Rule 3 of the Rules. For Underwriting Services to be taxed at the hands of the person located in India, the services definitely have to be performed fully or partly in India. This is certainly not the case here. In fact, the Underwriting Agreement dated 18-06-2007 makes it clear that the ADS offering is not applicable for sale in India, but only to other select jurisdictions like the United States of America, Canada, Japan etc. - the impugned services availed of by the appellant not having been performed partly or wholly in India, will not bring forth the requirement of taxability on the appellant on reverse charge basis under Rule 66A of the Finance Act, 1994 read with the Taxation of Services (Provided from outside India Received in India) Rules 2006. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1205
Commercial coaching or commercial training services - appellant which is a proprietorship concern has branches in various places in Tamilnadu and is a training centre for communicative English, Personality Enhancement, IELTS and TOEFL - main defence raised by the appellant is that their institute is a vocational training institute - benefit of N/N. 24/2004-ST - Held that: - The exemption N/N. 24/2004-ST is available to the institutes that impart training to enable the trainee to seek employment or self-employment directly after such training or coaching - In Maria Computer Systems Pvt. Ltd.[2017 (1) TMI 37 - CESTAT NEW DELHI], the Tribunal observed that coaching/training imparted for acquiring skills in English language definitely improves better chances to seek employment. The appellant is eligible for the exemption as per the N/N. 24/2004-ST - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (1) TMI 1212
100% EOU - Debonding of unit - Whether the Tribunal is right in according permission for destruction of obsolete goods under Notification No.71/2000-Cus which became effective only from 22.05.2000, to the goods that became obsolete in the past, well before the Notification No.71/2000-Cus came into effect and for which show cause notice was issued on 11.04.2000 for the goods imported and purchased during 1993 and 1995 respectively? - Held that: - In the cases where goods cannot be destroyed within the Zone because of the safety reasons or Municipal Corporation's regulations, the Commissioner may permit destruction outside the zone subject such conditions as may be prescribed by the Commissioner since this is only a procedural requirement and non-substantive in nature. Show cause notice dated 11.04.2000, has resulted in order in original dated 28.12.2001. Having regard to the intention, in issuing the above circulars, and considering the reasons assigned by CESTAT, Madras, in granting permission to destroy the absolete goods, we are of the view that the order impugned before us cannot said to be erroneous. Question whether, it is within the export processing zone or free trade zone, does not arise, for consideration - appeal dismissed.
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2018 (1) TMI 1211
Whether the appeal could have been dismissed on the ground of defective authorization? - rejection on the ground that the authorization does not bears the date below the signatures of one of the members - Held that: - It is not the case of any party that the authorization has not been signed by the said members or that the other member who had not mentioned the date below his/her signatures was not available on 28-6-2010 or that she has not applied her mind before signing it - the non-mentioning of the date below the signatures of one of the members of the committee is not in violation of any statutory rule rather a mere irregularity of a clerical nature which is not fatal to the authorization - appeal allowed - decided in favor of Revenue.
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2018 (1) TMI 1210
Deemed credit - Whether the Appellate Tribunal was right, under the facts and circumstances of the case, in denying the benefit of Deemed Credit in terms of the Government of India’s Order No. TS/36/94/TRU, dated 1-3-1994 to the appellants after their crossing the value of clearances of ₹ 75.00 Lacs under N/N. 1/93-C.E., dated 28-2-1993 as amended? Held that: - the submission of the learned Counsel for the Revenue is devoid of merit and is contrary to the Notification dated 1st March, 1994, issued by the Central Government, in exercise of the powers conferred under the second proviso to Rule 57G(2) of the Central Excise Rules, 1944, directing that the ingots and re-rollable materials of iron or steel purchased from outside and lying in stock on or after the 1st day of April, 1994, with the re-rollers, availing of the exemption under N/N. 1/93-Central Excises, dated the 28th February, 1993, will be deemed to have paid duty and the credit of duty in respect of such ingots and re-rollable materials used without undergoing the process of melting, in the manufacture of goods falling under Chapters 72 and 73 of the Schedule to the Central Excise Tariff Act, 1985, may be allowed at the rate of ₹ 920/- per tonne, without production of documents evidencing the payment of duty. In our view, in view of this Notification dated 1st March, 1994, the appellant was not required to produce the documents evidencing the payment of duty while availing of exemption under the Notification No. 1/93-Central Excises, dated 28th February, 1993. Impugned order set aside - appeal allowed.
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2018 (1) TMI 1209
SSI Exemption - use of brand name of other person - Clandestine removal - parallel invoices - Held that: - M/s. TCL is issuing purchase order for supply of goods namely, Defoamer under the brand name Neelco. Neelco is the brand of M/s. NASCPL. It is also a fact on record that the appellant is not using the said brand name on their products. Moreover, on the invoices also, the said brand name is not found mentioned in the invoices. These facts are not in dispute - However, we find that during the course of investigation, certain goods were found having the brand name of NASCPL. In that circumstance, the appellant cannot absolve their liability of using the brand name of another person, therefore, using the brand name of another person on the said goods found in their factory - similar issue came before the Hon'ble Apex Court in the case of CCE, Ahmedabad vs. Vikshara Trading & Invest Pvt. Limited [2003 (8) TMI 49 - SUPREME COURT OF INDIA] wherein the Hon'ble Apex Court observed that if there was an assignment of trademark in fact of the assessee, the mere fact that the assignment deed is not registered can not alter the position - as the appellant is using the brand name of another person but it was by way of assignment deed. In that circumstances, the appellant is not using the brand name of another person but they are using their own brand name as assigned to them - benefit of SSI exemption N/N. 08/2003-CE dated 01.03.2003 cannot be denied to the appellant. Clandestine removal - parallel invoices - Held that: - The Revenue has not come up with any positive evidence contrary to the explanation given by the appellant. Therefore, the Revenue has failed to come up with positive evidence in support of clandestine removal of goods. As no corroborative evidence has been produced by the Revenue and allegingd that on the strength of parallel invoices the appellant has cleared the goods, then the allegation of clandestine removal is not sustainable when M/s. TCL itself has explained that the explanation given by the appellant at the time of investigation is in terms of purchase agreement and monthly invoices has been raised as per purchase agreement - demand set aside. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1208
CENVAT credit - services provided by the financial company under the category banking and financial services - it was alleged that the services provided by the financial companies in the name of subvention charges /incentive is in the nature of commission, hence, not eligible to credit - Held that: - the object of arrangement itself speaks clearly and loudly that it is meant to enhance the sale of the manufactured goods of the Respondent through attracting customers by providing financial option to the respective customers and for the said purposes, they had approached the financial companies since they do not have such in-house finance facility - this arrangement has been rightly considered by the ld. Commissioner (Appeals) as a sale promotion activity and accordingly eligible input service - appeal dismissed - decided against Revenue.
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2018 (1) TMI 1207
Clandestine removal - excesses of stock - 344.270 MT of M.S.Bars/ TMT Bars and 23.140 MT of M.S.Flats - confiscation - penalties - Held that: - the Department has not subsequently brought out any evidence regarding the method and mode adopted by it for physical stock taking of the subject goods available in the factory of the Appellant Company. Since the Department has solely relied upon the statement of Shri Jay Prakash Chaudhary, to arrive at the conclusion that there was excess availability of impugned goods in the factory, and such statement having been retracted by the said person, the averment made therein cannot be legally sustainable for initiation of proceedings against the appellant for confiscation of the goods and for imposition of penalties. Also, the statement recorded from Shri Jai Prakash Chaudhary on 24.12.2008, was immediately retracted on 26.12.2008, which has not been discussed or addressed in the impugned order. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1206
Validity of second SCN - Extended period of limitation - Held that: - Since the SCN was issued on 5/7/2001 and served on 9/7/2001 on the appellant, the normal period of limitation should commence from 1st July, 2000. Accordingly, the demand for the period April to June, 2000 cannot be confirmed against the appellant - In context with applicability of the extended period of limitation, the Hon’ble Supreme Court in the case of Nizam Sugar Factory [2006 (4) TMI 127 - SUPREME COURT OF INDIA] held that when all relevant facts are in the knowledge of the Department, when the first show cause notice was issued, while issuing subsequent show cause notices, the suppression of facts cannot be alleged again. Interest - penalty - Held that: - interest under Section 11AB of the Act can be imposed only under the circumstances, where short levy or short paid duty is by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made therein - also, the provisions of Section 11AC of the Act is also applicable in case of mis-statement, suppression of facts etc., which are admittedly absent in this case - interest and penalty set aside. Appeal allowed in part and part matter on remand.
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2018 (1) TMI 1204
Clandestine removal - It was alleged that the quantity manufactured were not fully declared in ER-1 returns and the balance quantity was allegedly cleared clandestinely without payment of duty - closure of units - Held that: - it has been claimed that shut down of the production capacity for several days has been duly intimated to the department under acknowledgment. However, if this was true, then the appellant will be entitled to abatement in the Annual Production Capacity for the period for which the factory was closed under due intimation to the department. Since the details of such intimation of closers are not before us, the matter needs to go back to the Adjudicating Authority by way of remand proceedings - appeal allowed by way of remand.
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2018 (1) TMI 1203
CENVAT credit - services received from service provider situated abroad for warehousing and handling of the goods stored outside India - Held that: - the adjudicating authority has categorically recorded that ownership of the goods remains with the appellant herein at the time of availment of the services, which is a stated position, not disputed by the Revenue before the first appellate authority as the first appellate authority has not recorded any findings on this point, but only records that the port of export of the goods is India hence, it is to be considered as the place of removal even though the ownership of the goods has been transferred to buyer. Tribunal in the case of Imperial Auto Industries [2017 (4) TMI 1048 - CESTAT CHANDIGARH] has categorically laid down that the ownership of goods and the property of the goods remain with the seller of the goods till the delivery of goods in acceptable condition to the purchaser at his door step, CENVAT Credit is eligible. Appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1202
CENVAT credit - input services - sponsorship service - whether the appellant can avail the proportionate credit in respect of the sponsorship service, which is received for promotion of brand? - Held that: - during the material period April, 2012 to March, 2014, there is no condition that the input service credit can be distributed on proportionate basis. W.e.f. 1.3.2016 by N/N. 13/2016-CE(NT), the provision was brought according to which, if the service was used commonly by all the units then the credit should be distributed to the ratio of turnover of each unit. The similar provision was not available at the material period. There was no restriction for distributing the credit or availing the credit by one unit alone. The distribution of the service of one unit is permissible prior to the amendment - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1201
Clandestine removal - shortage/excesses of stock - Held that: - there is no allegation that parts on which credit has been taken were removed from the factory. The shortage, if any, has occurred only in the accounting system - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1200
CENVAT credit - inputs removed to sister units - The department was of the view that when the inputs are cleared to their sister units, the appellants are also liable to reverse the service tax paid on input services - Held that: - such removal of inputs from one factory to the sister unit under the excise law by reversing the credit cannot be considered as a trading activity requiring the appellant to reverse the CENVAT credit availed on input services - demand cannot be sustained - appeal allowed - decided in favor of appellant.
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2018 (1) TMI 1199
CENVAT credit - Club or Association Services - Held that: - It is seen from the records that the appellant has produced the invoices in relation to the said services. In spite of such remand, the authorities below have not gone through the documents - The denial of credit on such services prior to the period 2011 is unjustified since there are plethora of decisions which have held that such services are eligible for credit - denial of credit after the period justified - appeal allowed in part.
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2018 (1) TMI 1198
CENVAT credit - input services (related to export of goods) - ACD collection - Terminal handling Charges collection - documentation charges - fumigation charges - credit has been denied merely alleging that the documents are irregular - Held that: - same issue had come up for analysis in the appellant's own case [2016 (10) TMI 1158 - CESTAT CHENNAI], where the Tribunal had observed that the appellant would be eligible for credit if the invoices issued by sub-contractors can be matched and correlated with the invoices issued by the CHA - the matter requires to be remanded to the adjudicating authority who is directed to verify and check whether there is correlation between the invoices issued by the sub-contractor / service provided appointed by the CHA and the consolidated invoices issued by the CHA to the appellant - appeal allowed by way of remand.
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2018 (1) TMI 1197
Classification of goods - Aachi brand Bajji Bonda Mix - Adai Mix - idly chilli powder - The department was of the view that the correct classification of idly chilli powder would fall under 2103 10 / 2103 90 40 and Bajji Bonda Mix and Adai Mix would fall under CSH 2108 99 / 2106 9099 of First Schedule to CETA, 1985 - Held that: - The Tribunal has held that idly chillil powder would merit classification under Chapter 9 and that Bajji Bonda Mix and Adai Mix would not fall under Chapter 9. The appellant in that case had not contested the classification of Bajji Bonda Mix and Adai Mix and had accepted the classification proposed by the department. Presently, the department proposes to classify Bajji Bonda Mix and Adai Mix under Chapter 2108 / 2106. Thus, the allegation in the show cause notice with respect to Bajji Bonda Mix and Adai Mix is whether it would fall under 2108 or 9, whereas the Tribunal in the case of Eastern Condiments Pvt. Ltd. [2015 (6) TMI 1014 - CESTAT CHENNAI] has held them to be under Chapter 2103 9040. Thus, in view of the settled legal position in the case of Eastern Condiments Pvt. Ltd. [2015 (6) TMI 1014 - CESTAT CHENNAI], we do not find any merit in the ground raised by the department in the present appeals. Time Limitation - Held that: - since the issue is of classification, which is an interpretational one, and the respondents cannot be alleged to be guilty of suppression of facts, demand is hit by limitation. Appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2018 (1) TMI 1196
Effect and clarification given by the Advance Ruling Authority - rate of tax - Held that - the effect and clarification given by the Advance Ruling Authority was considered by this Court in assessee's own case M/s. All India Marathon Sports Versus The Assistant Commercial Tax Officer [2017 (8) TMI 625 - MADRAS HIGH COURT], in which, the petitioner challenged the pre-assessment notices for the assessment years 2009-10 and 2010-11 as being barred by limitation as prescribed under the PVAT Act - the only irresistible conclusion to be arrived at is that the order passed by the Appellate Assistant Commissioner in dismissing the petitioner's appeal without considering the matter on merits is incorrect and not legally sustainable. This is sufficient to set aside the impugned order - petition allowed by way of remand.
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2018 (1) TMI 1195
Classification of goods - Rate of tax - bakery shortening - appellant claims that the goods falls under Entry 38 of the Third Schedule of the KVAT Act exigible to tax @ 5% - The clarification sought was in the context of the Department having the opinion that it would not fall under Entry 38, for reason of the product not being covered under the specific Harmonised System of Nomenclature (HSN) Code shown against Entry 38(18) (d): 'Others including vanaspati'. Held that: - Rule (v) of the 'Rules of Interpretation of Schedules' under the KVAT Act, applies in so far as the doctrine of ejusdem generis commends the general words to take the colour of the specific words. The word 'others' under Entry 38(18)(d) has to be understood as including all partly or wholly hydrogenated vegetable oils. But the words 'including vanaspati' cannot be taken as including any preparation of vanaspati. The inclusion of vanaspati, being by way of a specific word following the general word 'others' cannot be understood as enlarging the scope of the entry, but is one restricting the inclusion to 'vanaspati' alone which is a hydrogenated vegetable oil. Though the inclusion of vanaspati does not restrict the more general commodities included in the entry; there cannot be a further expansion or enlargement inferred. Clause (b) of item 3 of the General Rules for the Interpretation of the Schedule under the First Schedule - Import Tariff would be applicable only if the commodity 'cannot be classified by reference to (a)', which is the specific words used in that sub-clause. Clause (a) provides for classification under the heading which gives a specific description which has to be preferred, to headings providing a more general description. HSN heading 1516 provides for inter alia hydrogenated vegetable oils which are not prepared and HSN heading 1517 provides for edible mixture or preparations inter alia of vegetable oils other than edible oils and their fractions under HSN heading 1516. 'Bakery shortening' being a preparation of hydrogenated vegetable oils, it cannot be included under HSN heading 1516 nor under the category 1516.20.91; the HSN code with which is aligned Entry 38(18)(d) of the Third Schedule of the KVAT Act. The products under HSN heading 1517 having not been included in any of the entries, come under the residual entry of S.R.O. No.82/2006. Tribunal has extracted the notification published in the Gazette of India Extraordinary, Public Notice No.07 (RE-2008)/2004-09 dated 22.04.2008 of the Government of India, Ministry of Commerce and Industry, Department of Commerce, which, on a reference to the Indo-Sri Lanka Free Trade Agreement, details the items Vanaspati, Margarine and Bakery Shortening, having been included under the respective HSN Codes of 1516.20, 1517.10 and 1517.90. The order of the Clarification Authority is sustained - appeal dismissed.
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2018 (1) TMI 1194
Concessional Rate of Tax - purchase of machinery spares, Generator spares, Hand lift - The assessing officer rejected the concessional rate of tax by holding that, as per provisions of section 3(5) and entries 3(i) to 3(ix) of English Schedule to the Tamil Nadu General Sales Tax Act, 1959, the assessee was not eligible to purchase machinery spares separately for repairs, reconditioning or replacement - AO observed that, assessee had purchased chemicals, dyes and finishing chemicals and used for converting wet blue to finished leather and since both wet blue and finished leather are one and the same commodity - As per the AO no manufacturing takes place. Held that: - Following the decision in the case of The State of Tamilnadu, rep. by the Joint Commissioner (CT) Versus Habib Leather Manufacturing Co. [2017 (12) TMI 621 - MADRAS HIGH COURT], tax revision dismissed - decided against revenue.
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Indian Laws
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2018 (1) TMI 1221
Applicability of the provisions of the Standards of Weights and Measures Act, 1976, the Standards of Weights and Measures (Enforcement) Act, 1985 and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 - services rendered in the premises of hotels/restaurants - Held that: - it is clear that the position qua “sale” remains exactly the same as that contained in the 1976 Act, which now stands repealed - the learned Single Judge was absolutely correct in his conclusion that despite the constitutional amendment having been passed, the definition of “sale” contained both in the 1976 Act and now in the 2009 Act would go to show that composite indivisible agreements for supply of services and food and drinks would not come within the purview of either enactment, and that this is for the very good reason that the object for both these enactments is something quite different - the object being, as has been pointed out above, to standardize weights and measures for defined goods so that quantities that are supplied are thus mentioned on the package and that MRPs are mentioned so that there is one uniform price at which such goods are sold. Neither the Standards of Weights and Measures Act, 1976 read with the enactment of 1985, or the Legal Metrology Act, 2009, would apply so as to interdict the sale of mineral water in hotels and restaurants at prices which are above the MRP. Appeal allowed.
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