TMI Tax Updates - e-Newsletter
January 9, 2017

Case Laws in this Newsletter:

Income Tax Customs FEMA Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Refund - the deposit was against the show cause notice which was set aside by the HC - provisions of unjust-enrichment are not applicable

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• CENVAT credit - goods were imported under SFIS, CVD paid through debit in Duty Credit Scrip issued by DGFT and not in cash - Credit allowed

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Articles

1. Taxability of supply of services in certain cases - TRANSITIONAL PROVISIONS

   By: Pradeep Jain

2. REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES

   By: DR.MARIAPPAN GOVINDARAJAN

3. “IS IT POSSIBLE TO MAKE THE INDIA AS BEGGAR FREE COUNTRY?”

   By: krishna murthy

4. Bad Debts- manner of writing off

   By: DEVKUMAR KOTHARI

News

1. Step by Step Guide for GST Enrolment for existing Central Excise / Service Tax Assessees

2. Migration of existing Central Excise/Service Tax Assessees to GST

3. Budget session of Parliament to begin from Jan 31

4. First Advance Estimates of National Income, 2016-17

5. GDP to grow slower at 7.1% in FY17; note ban not factored in

6. I-T probes ₹ 300 cr shady bullion sale, black money deposits

Notifications

Income Tax

1. 2/2017 - dated 6-1-2017 - IT

Income–tax (1st Amendment) Rules, 2017

SEZ

2. G.S.R. 12(E) - dated 3-1-2017 - SEZ

Special Economic Zones (Amendment) Rules, 2017

Highlights / Catch Notes

Income Tax

• Taxpayer Can Claim Deduction u/s 80P(2) Despite Late Income Tax Return Filing.

  Case-Laws - AT : The belated filing of return of income by the assessee does not disentitle it from the benefit of deduction u/s 80P(2) of the Act. - AT
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• Section 263 Revision: No Error in Assessment Order on TDS Non-Deduction for Bandwidth Charges, Section 194J Disputed.

  Case-Laws - AT : Revision u/s 263 - non deduction of TDS - opinion of the departmental authorities on applicability of section 194J to payment of bandwidth charges are also different - the assessment order cannot be held to be erroneous and prejudicial to the interests of revenue - AT
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Customs

• Exporter's Refund Claim Approved: Unjust Enrichment Not Applicable Under Advance Licence Scheme, No Financial Loss for Exporter.

  Case-Laws - AT : Rejection of refund claim - Advance Licence scheme - unjust enrichment - the Government does not want the exporter to suffer by exporting the goods. In view thereof, we find that there is no question of unjust enrichment arises. - AT
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• Court Rules in Favor of Exporters: No Evidence of Overvaluation in Men's Shirt Exports to USA for Duty Drawback Claim.

  Case-Laws - AT : Overvaluation of export of Woven Powerloom Men's Shirt readymade garments under claim of duty drawback - No material placed on record by the Revenue to suspect export price of the appellants and also the export is to non sensitive country i.e. USA - AT
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• Courier License Revoked for Employee Violations; No Further Punishment for Company as Acts Were Independent.

  Case-Laws - AT : Revocation of Courier licence - the named employees of the appellant courier have committed gross violations on their own accord to satisfy their own greed without knowledge of the appellant courier - there is no reasonable justification to subject the appellant to any further punishment by extending benefit of doubt - AT
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Service Tax

• State Electricity Company Exempt from Tax for Inspection, Testing, and Connection Services Provided to Customers.

  Case-Laws - AT : Whether the appellant M/s Maharashtra State Electricity Distribution Co. Ltd. is liable to be taxed for the services rendered by them to their client in respect of inspection of site material and testing of transformer, stage wise supervision over the line erection and electricity connection, scrutiny of feasibility of customers requirement? - Held NO - AT
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• Reverse Charge Mechanism Complicates Tax Process for 100% Export Oriented Units Exporting Services.

  Case-Laws - AT : 100% EOU - export of services - reverse charge mechanism - Utilization of services which are patently in relation to goods/services that have already been exported, it goes against the grain of procedural simplicity to collect the tax by deeming fiction merely for refunding it subsequently. - AT
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• Service Tax on Time-Slot Payments for Foreign Broadcasts: Matter Remanded for Further Review.

  Case-Laws - AT : Whether the payment received for allotment of time-slots to music companies by the assessee as fillers in programmes broadcast from outside the country is liable to service tax in the hands of the appellant as provider of ‘broadcasting agency service? - There is a lack of precise conclusion on this submission in the impugned order. - matter remanded back - AT
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• Refund Claim Denied: CENVAT Credit u/r 5 Rejected; Overseas Branch Services Excluded from Export Turnover.

  Case-Laws - AT : Rejection of refund claim - denial of CENVAT credit - Rule 5 of Cenvat Credit Rules, 2002 - the value of service provided by the overseas branch office of the appellant to the foreign base service recipient is neither includible in the export turnover nor in total turnover of the appellant. - AT
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Central Excise

• Deposit Nullified by Delhi High Court Not Considered Duty; Unjust Enrichment Principles Inapplicable.

  Case-Laws - AT : Refund - Unjust enrichment - the deposit was against the show cause notice which was set aside by Hon’ble High Court of Delhi - the said amount never became duty and therefore the provisions of unjust-enrichment are not applicable - AT
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• EOU's Potassium Permanganate Import Complies with Regulations; No Allegations of Misuse in Proceedings.

  Case-Laws - AT : 100% EOU - import and use of potassium permanganate - There is no allegation of misuse of material imported and subjected to the present proceedings. The application for issue of certificate has also not been denied. - AT
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• Appellant Denied SSI Exemption for Tractor-Trailers Due to Clearance Clubbing and Use of Third-Party Brand Name.

  Case-Laws - AT : SSI exemption - clubbing of clearances - use of brand name of others - The appellant claims to be a job-worker for the second unit M/s Hem Agro Industries (trader) in addition to manufacturing tractor-trailors on its own account - benefit of exemption not allowed - demand confirmed - AT
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• Appellant Denied Credit for Failing to Prove Product Was Used as Manufacturing Intermediary.

  Case-Laws - SC : Where the appellant could not give any satisfactory evidence to show that the product in respect of which duty was paid was used as an intermediary product for the manufacture of the final product, credit cannot be allowed - SC
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• Appellant Must Pay Interest for Delayed Duty Payment on Captive Consumption Valuation Finalized After Year-End via Cost Method.

  Case-Laws - AT : Interest - delay in payment of differential duty - captive consumption - valuation finalized after the year end on cost construction method - Since no sale is involved question of issuance of supplementary invoice does not arise - the interest is correctly payable by the appellant on the delayed payment of duty - AT
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• CENVAT Credit Approved for SFIS Imports: Basic Customs Duty, Additional Duty, and Cess Paid with Duty Credit Scrip.

  Case-Laws - AT : CENVAT credit - subject goods were imported under ‘SFIS’, and Basic Customs Duty, Additional Duty of Customs and cess were paid through debit in Duty Credit Scrip/Certificate issued by DGFT and not in cash - Credit of CVD allowed - AT
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• Appellant Denied SSI Exemption for Using Unregistered Brand of Rolling Industries Pvt. Ltd. per Central Excise Rules.

  Case-Laws - AT : SSI exemption - The brand name (unregistered) is owned by Rolling Industries Pvt. Ltd. and the present appellant has used the brand name of the other company for clearing the goods manufactured by them. Therefore, the appellant is not eligible for exemption. - AT
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Case Laws:

• Income Tax

• 2017 (1) TMI 458
  Bogus purchases - net profit computation - Held that:- From the record we found that there are certain purchases to the tune of Rs. 1.73 crore in respect of which the goods are received before the date of survey and the accounting is post-survey. Thus, in the inventory of the survey team, such goods are included as they have been considered in physical counting but the same have not been accounted for in the accounts; thus, not included in the purchase figure in the provisional trading and profit and loss account prepared on the date of survey. Further, as seen in 1.2.7(b) that there are some sales in the Pre-survey period for which the purchases are not recorded. Thus, if the said purchases which have been accounted post-survey, there will be no distortion in net profit. With regard to AO’s allegation regarding rates charged by Creative Chain Stores, which is covered u/s.40(2)(b), we found that assessee had exported the goods purchased from Creative Chain Stores at a gross profit ranging from 5 to 7 percent and hence, there can be no question of accommodation entry and reduction of tax liability from the record, we also found that if the purchases of Rs. 1.78 crores in the pre-survey period is recorded as such then the gross profit ratio for the pre-survey and post-survey becomes comparable which further gives credence to the fact that the purchases of Rs. 1.78 crores though recorded in post-survey period were unrecorded on the date of survey. With regard to addition of Rs. 86.82 lacs made by AO by estimating G.P. at 4%, we found that assessee by their letter dated 10th March 2014 filed before AO had furnished the details of sales post survey and also furnished columnar profit and loss account for the pre and post-survey period. The Assessing Officer observed that there is a difference between the sales and other income shown per columnar profit and loss account (Rs 5,72,78,650) and that per the details of sales post survey and required the appellants to reconcile the same. We found that the assessee have reconciled the difference by their letter dated 25th March, 2014. Thus there is no undisclosed sales and hence, the addition on account of gross profit on such undisclosed sales is not tenable and requires to be deleted. Coming to the financial results shown by the assessee during the year under consideration as compared to the earlier and subsequent years, we found that during the year A.Y.2010-11 under consideration, gross profit of assessee is 27% and net profit rata is 11%. However, in the earlier assessment years 2009-10 and 2010-11 gross profit rate was 18% and 17% respectively. In the subsequent assessment year 2012-2013 and 2013-14, gross profit was 20% and 9% respectively. Thus, we found that gross profit shown during the year under consideration is much better than the gross profit rate shown by assessee in all previous and subsequent years. Coming to the net profit rate shown by assessee during the year under consideration, we found that assessee had shown net profit rate at 11%. However, in the earlier assessment years 2009-10 and 2010-11, the net profit rate was 1% in both the years, in the subsequent years 2012-13 and 2013-14, the net profit rate was 2% and (-7%) respectively. Thus, even the net profit rate during year under consideration is much better than the net profit rate shown in earlier and subsequent years. Keeping in view the nature of trade, assessee was involved the net profit rate of 11% and gross profit of 27%, can be considered to be the best rate. In view of these facts, we do not find any merit for the addition made by AO by disallowing purchases and estimating profit on unexplained sales.In the result, Ground No. 1 & 2 raised by the assessee is allowed. Addition made u/s.50C - estimating the stamp duty valuation of an immovable property - Held that:- We found that the said property has been sold by the assessees for Rs. 8,50,000 which has been shown as short-term capital gains. An amendment has been brought in Clause (b) of Section 50C(2) by financial Act 2009 w.e.f.1.10.2009, accordingly to which if assessee has not disputed the value so adopted by stamp valuation authority under sub-section (1) of Section 50C. AO may refer the valuation of capital asset to DVO. In the instant case without making any reference to DVO, the AO has invoked provisions of Section 50C for the assessment year 2011-12 under consideration. In all fairness, we restore the matter back to the file of AO for making reference to the DVO in respect of impugned property and for deciding the issue afresh as per law. We direct accordingly.

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• 2017 (1) TMI 457
  Entitlement to exemption under Section 11 - Held that:- The Assessing Officer (AO) felt that since the assessee was engaged in providing commercial activity, the proviso to Section 2(15) was attracted. The ITAT ruled – on the basis of this Court’s judgments in India Trade Promotion Organization v. DGIT [2015 (1) TMI 928 - DELHI HIGH COURT] and Institution of Chartered Accounts v. DGIT(E) (2013 (7) TMI 205 - DELHI HIGH COURT) that the mere circumstance of collection of such amounts did not result in the assessee losing its essential character of being established for charitable purposes. We are of the opinion that the ITAT’s decision is sound in law and facts. No substantial question of law arises

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• 2017 (1) TMI 456
  Reopening of assessment - addition made by allowing CENVAT Credit - Held that:- We find ourselves in complete agreement with the conclusion arrived at by the CIT(A) on merits. The CIT(A) has observed as noted supra that there is nothing on record to show that Central Excise Department has finally charged the assessee of misutilisation of CENVAT credit as alleged in the SCN. We find that the AO has not supported the allegation made in the SCN by any independent material in corroboration thereto. We also find force in the argument of the assessee that manufacture and sale of the finished goods would naturally involve corresponding purchase of raw-material. It was for the AO to establish that the imported/high seas purchase on which custom duty was paid has not been utilized for manufacture/sale of finished goods. The AO has failed on this count too. The allegation of misutilisation of CENVAT credit is thus bereft of any credible credence. Thus, in the totality of the facts and circumstances of the case, the action of the AO in making additions towards misutilisation of CENVAT credit is devoid of merit. The CIT(A) in our view has rightly reversed the action of AO. Accordingly, we are not inclined to interfere with the order of the CIT(A). - Decided against revenue.

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• 2017 (1) TMI 455
  Disallowance of bogus purchases - Held that:- Admitted facts are that the AO neither in the original proceedings nor during remand proceedings objected to sales made by assessee. In that eventuality it is imperative on our part to hold that there must be purchases. Whether the purchases are from Grey Market or whatever the assessee has made purchases although payments are made to hawala dealers. In that eventuality it is to be seen whether the payments are recorded in the books of account or not. This factum is not denied by Revenue, rather the assessee has proved that the payments are made through accounts payee cheques and purchases are entered in its books of account. Once the assessee is able to prove that the purchases were made only in alternative way, the revenue is to estimate the excess profit at a rate. Here, our difference is that 2% is reasonable or some higher profit is to be estimated. We are of the view that the assessee’s gross profit varies from 5% to 8.77%, but these purchases are from Grey Market and its profit element is little higher and accordingly, we direct the Assessing Officer to make further addition of 3 % of the bogus purchases and accordingly estimate the income. We direct the Assessing Officer accordingly. Preliminary expenses written off u/s 35 D (1) - Held that:- The details regarding the public issue expenses in respect of commission, brokerage, other charges for drafting, typing and printing are not available in the records of the revenue i.e. in the order of the AO or the CIT (A). Hence, we are of the view that none of the authorities below have examined this issue in proper perspective. Accordingly, we restore this issue to the file of the Assessing Officer for fresh examination after calling for details of these expenses and accordingly, decide the same as per law.

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• 2017 (1) TMI 454
  Transfer pricing adjustment - existence of AE - Cost Plus Method (CPM) for determining the ALP - Held that:- We find that the assessee had filed audited accounts for year under appeal along with its return of income, that it had claimed that IT's were entered into with its AE. s, that later on it claimed that Star and DTL were not its AE's, that no documentary evidence was produced before the revenue authorities in support of its claim, that it did not file any confirmation or certificate from the auditors about the incorrectness of the audit report especially about the existence of AE's. Therefore, we are of the opinion that order of the FAA does not suffer from any legal infirmity. Confirming the same, we decide the first ground of appeal against the assessee. With regard to the markup of 23. 45%, we find that the assessee had included only two of the items of the profit and loss account i. e. salary and the rent, that it had not included the other charges for determining the ALP. We are of the opinion that the matter needs further verification on part of the AO. If the assessee had not incurred any expenditure for the alleged three items same should not be considered for mark-up purposes. The issue is restored back to the file of the AO for the limited purposes i. e. to decide as to whether the assessee had claimed expenditure under the head salary and rent only for mark-up purposes. If so, necessary orders may be passed.

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• 2017 (1) TMI 453
  Rejection of claim of exemption u/s 11 on the basis of proviso to section 2(15) - Assessee is carrying on education and training activities - charging of fees - Held that:- As decided in assessee's own case for AY 2010-11 mere charging of fees for carrying activities will not loose the character of charity and in this case, the department has already granted registration treating the activities as charitable but has not declared under which activity whether under education or general public utility. From the assessment order, the assessee has charged fee to various activities like seminars, participation fees of participants shows that assessee had engaged in some sort of lectures/training relating to the objects of the trust i.e. education and training to the bottom line employees in quality and improvement methods. It was not controverted by the department. It was only objected to charging of fees. In our considered view, the assessee has carried on the activities of imparting training to the bottom line employees and there is no element of profit in the said activity as the surplus generated out of the activities is again applied for the charitable activity only. Moreover, the assessee quoted various case laws in support of its claim that they are in the field of education. When analysed closely, all the institutions i.e. Ahmadabad Management Association, ICAI, Peter’s education society, are educating people more on structured manner and acknowledging by issuing proper certificates. In the present case, we are not sure if such activities are being carried on by the assessee. We are not inclined to adjudicate whether they fall into education activities in the absence of relevant material before us. However, assessee is imparting training to the bottom like employees, which may be similar to education. Hence, in our view, the assessee is involved in carrying on of charitable activities and not in any commercial activities as held by the AO. Thus, AO cannot deny the benefit u/s 11 of the Act. - Decided in favour of assessee

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• 2017 (1) TMI 452
  Exemption claimed u/s. 11/12 - denial of claim on the ground that the assessee society is not registered u/s. 12AA for the relevant AY - Held that:- We find that the addition of Rs. 1,58,27,052/- is confirmed by the Ld. CIT(A) solely on the ground that the assessee had not been granted Certificate of Registration u/s. 12A of the I.T. Act, 1961. We find that Ld. CIT(E) vide his order dated 19.8.2016 passed u/s. 154 of the Act has rectified the mistake by stating that the benefit of registration u/s. 12AA now may be read as from “Assessment year 2009-10”. Hence, the assessee is eligible exemption u/s. 11 of the Act from the assessment year 2009-10. The assessee is eligible for registration u/s. 12AA in the present assessment year i.e. AY 2012-13, as a result thereof, also eligible for exemption claimed during the AY 2012-13. Accordingly, the addition in dispute is not sustainable in the eyes of law. Hence, we set aside the orders of the lower authorities and delete the addition in dispute. - Decided in favour of assessee

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• 2017 (1) TMI 451
  Disallowance of claim of deduction u/s 80P by invoking the provisions of section 80A(5) - belated filing of return of income - Held that:- The belated filing of return of income by the assessee does not disentitle it from the benefit of deduction u/s 80P(2) of the Act. Further, the assessee, in the instant case, is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record. The Hon’ble High Court, in the case of Chirakkal Service Co-operative Bank Ltd reported in (2016 (4) TMI 826 - KERALA HIGH COURT), had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act - Decided in favour of assessee

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• 2017 (1) TMI 450
  TDS u/s 194I OR 194C - Short deduction of TDS - TDS on Passenger Service Fees - TDS on PSF and X-Ray charges to MIAL - Held that:- both the sides agreed that the issue raised by the AO in the appeal for the year under consideration is covered against him by the order of the Tribunal(2016 (10) TMI 314 - ITAT MUMBAI). - Decided against the revenue.

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• 2017 (1) TMI 449
  Unapproved payment to the subcontractors/ labour charges - parties to whom the payments were made were not genuine; none of the parties to whom the payments were allegedly made appeared during the assessment - Held that:- CIT(A) while considering this ground concluded that the assessee has produced all relevant details showing the payments made to the contractor in the shape of bills raised for work done, ledger account of these parties, copy of computation of income, ITR returns for AY 2010-11 showing the income received from the assessee, copies of bank statements and confirmation of these parties. Ld. CIT(A) further concluded that merely returned of letter undelivered does not leaves to the conclusion that payments made to these parties are not genuine. The AO has not proved by placing any other evidence that such parties are actually bogus and deleted the disallowances. We have seen that various subcontractor have filed their reply before the AO along with their copy of ledger account, bank statement, ITR return and nature of payment. The AO merely suspected that the line of reply by all parties is similar. Thus, we do not find any infirmity or illegality in the order of ld. CIT(A). - Decided against revenue Disallowance of Motor car expenses to 5% against 20% made by AO - Held that:- Two of the Car owned by assessee are provided to his employee to visit the site on regular basis. The contention of the assessee was not accepted by AO, the AO concluded that no Logbook have been maintained to prove that Car was not used for personal purpose and disallowed 20% of the expenses. Ld. CIT(A) while considering this ground concluded that use of Motorcar always contain some personal element and it is difficult to maintain the record regarding personal use and use for the business purpose and confirmed the only 5% of the disallowance. The ld. DR for the Revenue was unable to convince us as to why the 5% of expenses is not sufficient due to personal element for use of vehicle. Moreover, we have seen that more than half of the amount (Rs. 2,30,311/-) on account of depreciation and Rs. 29,880/- was claimed on account of insurances. Thus, we do not find any reason to interfere with the finding of ld. CIT(A).- Decided against revenue Addition under section 68 - Held that:- The essential ingredients to establish a loan transaction as genuine has been furnished by the assessee by filing evidence which consist of confirmation of creditors, identity of creditors, their PAN Number and even by producing them before the AO, thus the assessee has discharged his primary onus that the books of accounts as unsecured loan actually belong to him and no addition u/s 68 can be made against him. The onus shift upon the AO, if he stated that the claim of assessee is false or bogus claim is made. It was finally concluded that that AO without bringing any evidence on record that unsecured loan are bogus or not genuine has treated the loan taken from the parties as unexplained, which is not justified. We have seen that ld. CIT(A) have examined the identity of the parties which was not disputed by AO, creditworthiness of the persons was examined from their statement recorded by AO and genuinenity of transaction against which the AO has not brought any material on record. Thus, in the peculiarity of the case, we concur with the finding of ld. CIT(A), thus, this ground of appeal is also dismissed.- Decided against revenue

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• 2017 (1) TMI 448
  Non genuine purchases u/s.69C - amount offered to income - double taxation of the same income - Held that:- We have considered rival contentions and found that for the impugned assessment year total purchases from alleged MVAT parties were to the tune of Rs. 2,33,36,015/-. Pursuant to survey action on 27/02/2011, while recording the statement the assessee himself has offered these purchases as his income for A.Y. 2012-13, as he was unable to explain the same at the time of survey. The authorized officer at that time aggregated the purchases made from alleged MVAT parties and took the disclosure of Rs. 20Crs in the AY 2012-13. The assessee has also offered the said sum of Rs. 20Crs as his income for AY 2012-13. A categorical finding has been recorded by CIT(A) to the effect that impugned purchase of Rs. 2,33,36,015/- was offered as income by the assessee in the assessment year 2012-2013. This finding of CIT(A) has not been controverted by learned DR by bringing any positive material on record. Since the assessee bonafidely offered the income of Rs. 20Crs in AY 2012-13 and also paid the due tax along with interest thereon, taxing the same in the impugned year will amount to double taxation of the same income. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the said addition. Addition of 15% of profit element on such purchases - Held that:- From the record, we found that with regard to these purchases, what is to be seen is utilisation of goods purchased which has been proved by assessee by providing all the details. From the record we found that the during year under consideration, assessee had sales of Rs. 1,01,88,39,392/- on which assessee has declared gross profit of Rs. 17,79,05,770/- . Thus, assessee has declared gross profit rate of 17.46%. However, in the assessment year 2009-2010 and 2010-2011, the gross profit rate so declared by assessee was 8.60% and 10.64% respectfully. Thus, it is very much clear that during the year consideration, assessee has declared much better gross profit rate of 17.46% as compared to the earlier years, therefore, making further addition of 15% on such purchase appear to be very unreasonable. Keeping in view the gross profit rate so declared by the assessee during the year under consideration, we upheld the addition of 2% on such purchases in place of 15% as upheld by CIT(A).

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• 2017 (1) TMI 447
  Foreign exchange rate loss on account of outstanding transactions (marked to market) being unsettled forward foreign exchange contracts and loss being exchange rate difference relating to marked to market losses on unsettled forward foreign exchange contracts - assessee is engaged in the business of tiles and sanitary ware and also as a part of business does import of raw material for manufacture of tiles and sanitary wares - Held that:- We have observed that the assessee has entered into forward foreign exchange contracts which have remained unsettled at the year end and loss has occurred on the same due to foreign exchange rate variation as at year end. The revenue has disallowed the same at threshold on the ground that the same is a notional loss . No finding of fact is recorded that the said foreign exchange forward contracts were entered into by the assessee to hedge against its business activity of import of raw material for manufacturing of tiles and sanitary wares and these forward foreign exchange contracts are backed with foreign exchange exposure of the assessee towards foreign currency liability outstanding as at year end towards import payables dues for import of tiles and sanitary wares. In our considered view , the matter needs to be set aside and restored to the file of the AO for denovo determination of the issue on merits after satisfying that the assessee has hedge the underlying exposure in foreign currency towards import of raw material payable outstandings at year end by entering into forward contracts in foreign exchange and as such, the forward contracts entered were for the purpose of the business to hedge against the forex loss and that the assessee has not entered into the forward contracts with an intention to earn any gain due to fluctuation in foreign currency rate but it is necessary for it to enter into such forward contracts to hedge against foreign exchange rate fluctuation i.e. to verify that this is an integral part of the business undertaken by the assessee and incidental to the import business of the assessee as in the absence of such forward contracts, the assessee may sustain huge losses and hence it became essential for the assessee to book such forward contracts as a prudent business practices to safeguard against losses which may be sustained by the assessee towards import obligation in foreign currency outstanding as at year end. Matter restored before the AO for reconsideration.

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• 2017 (1) TMI 446
  Benefits of exemption u/s. 11 denied - Withdrawal of registration granted to the assessee u/s. 12AA - CIT has recorded a finding that the assessee is operating like a commercial tour operator and there is no element of charitable activity involved in the assessee activities - Held that:- As decided in assessee's own case [2016 (12) TMI 1420 - ITAT DELHI] CIT(E) has not brought out any allegation to show that the receipt/income of the assessee's trust was not used for the educational purposes and the same was used for other purposes beyond the objectives of the applicant trust. CIT dismissed application of the assessee for grant of registration under section 12A of the Act by recording incorrect and irrelevant facts and circumstances and the assessee successfully established that it was created for the charitable purposes including education activity and it used its funds for the purpose of educational activities and therefore the applicant trust is eligible for registration under section 12A of the Act. - Decided in favour of assessee Disallowance of expenses on account of valuation of section 40A(3) - Held that:- CIT(A) has observed that the assessee has not filed any submission either before the AO or before the Ld. CIT(A) to explain the reasons for the infringement of section 40A(3), hence, the appeal on this ground was dismissed. In my considered opinion, this ground needs to be examined by the AO afresh, because no document was filed before him. Accordingly, the AO is directed to decide the issue in dispute afresh under the law, after giving adequate opportunity of being heard to the assessee. The Assessee is also directed to produce its submissions, evidences/ documents in support of its claim before the AO.

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• 2017 (1) TMI 445
  Claim of deduction u/s 80IB (10) - denial of claim for want of evidence that the project was completed within this stipulated time limit i.e. 31-03-2013 - Held that:- Before us the learned Counsel for the assessee Shri Percy Pardiwala took us through the completion certificate granted by BMC vide dated 10-09-2007 in respect of this project.The learned counsel further took us through occupation certificate issued by Municipal Corporation of Grater Mumbai vide CE/1154/BPES/AS dated 26-02-2013 and also another approval CE/1154/BPES/AS dated 04-03-2013 this approvals covers full occupation permission for blocks “A”, “B”, “C”, “D” and “E” of building comprising of stilt + 1st to 19th + (part) 20th upper floors and ground floor of this project. As regards to the withdrawal of claim for AY 2012-13, the learned Counsel for the assessee stated that due to wrong impression, the assessee first withdrawn his claim and then revised the same claim before the AO by filing a revised return for AY 2012-2013 dated 03-03-2014 during the pendency of assessment proceedings. The learned counsel for the assessee informed that this claim is pending before CIT (A) for the AY 2012-13. In view of the above facts, the learned Counsel for the assessee stated that the building was completed on 31-03-2013 and not otherwise, as alleged by the CIT (A) in his order. We find from the above facts that the project is completed and occupation in respect of all the blocks that is “A”, “B”, “C”, “D” and “E” are obtain within stipulated time limit of 31-03-2013 and there is no violation of any of the conditions mentioned in the provisions of Section 80IB (10) of the Act. Accordingly we have no hesitation in allowing this claim of assessee - Decided in favour of assessee

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• 2017 (1) TMI 444
  Validity of assessment order passed u/s 143(3) r.w.s 153A - addition to income u/s 14A - Held that:- AO cannot dispute and disturb already completed and finalized assessment by making additions which have no connections or relevance with the seized material. In the present case before us we find that there was no materials found during search by search party with respect to addition made by the AO. The assessment in the present year was complete and finalized on the date of search and therefore addition as made by the AO u/s 14A in respect of expenses relating to the exempt income is without jurisdiction u/s 143(3) read with section 153A and accordingly, the AO is directed to delete the addition. - Decided in favour of assessee

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• 2017 (1) TMI 443
  Registration to the assessee society u/s. 12A(a) denied - educational activity - charitable object - commercial institute or not - making profits - Held that:- We are of the considered view that the present case is squarely covered by Coordinate Bench decision in the case of Shree Balaji Educational Trust vs. CIT [2016 (3) TMI 969 - ITAT DELHI] clearly concurred with the submission of the assessee to the effect that ‘education’ is per se a charitable object. - Decided in favour of assessee

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• 2017 (1) TMI 442
  Eligibility to deduction u/s 80IB - Held that:- As decided in assessee's own case for the assessment year 2009-2010 the time limit of approval on/or after 1st April 2004, will not be applicable in the case of the proviso to section 80-IB( 10). Moreover, in the instant case, the approval which was given on 4th August 2003, was loaded with lot of terms and conditions to be fulfilled before the commencement. It was only after such terms and conditions were fulfilled, the assessee was given the commencement certificate issued after 1st April 2004, i.e., on 17th October 2004 to start the project. In such a case or situation, it cannot be held that the assessee's project is not liable for deduction under section 80- IB, once all other conditions are fulfilled. In this case, one can say that the date of commencement i.e., 17th October 2004, can be taken as the date of approval as it was from this date the approval given by the SRA becomes operative. Thus, the contentions of the learned Departmental Representative cannot be sustained. Revenue has challenged that the date of approval of SRA scheme project is 3rd July 2003, and is not covered by the Notification no.2 of 2011, which was issued to clarify the earlier notification dated 3rd August 2010. Such a ground taken by the Department is wholly misconceived as there is no such scheme dated 3rd July 2003. The said date of 3rd July 2003, is when the assessee has applied before the SRA for its approval of the project. The scheme in which the approval has been granted is DCR no.33 (10), which has been notified by the CBDT. Thus, there is no merit in ground taken by the Revenue - Decided in favour of assessee

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• 2017 (1) TMI 441
  TDS u/s 194C - non-existence of a “formal contractual agreement - relationship of a contractor between the appellant and the small contractor on “oral contracts” - Held that:- The issue is covered in favour of the assessee by the decision of this Tribunal in similar case of M/s Chadda Transport [2016 (3) TMI 1019 - ITAT NAGPUR] since no amount of the freight was unpaid or was payable as on 31-03-2007 we hold that the provisions of section 40(a)(ia) are not attracted and in this view of the matter we are of the opinion that Revenue's appeal is liable to be dismissed. The assessee is a transport contractor. The assessee was awarded contract of transportation to various locations of Ambuja Cement, Manigarh Cement, Maratha Cement etc. The assessee received freight charges from these companies. The contract with these companies shows that the assessee was responsible for transportation of cement from one destination to other. The contractual liability was discharged by transporting cement through assessee's own trucks and also from hired trucks belonging to outside parties. It is clear from the facts on record that the risk and responsibility for carrying out the contract work was solely that of the assessee. There is no material to suggest that there was any contract or sub contract written or oral with the outside truck owners and the assessee. It is in these circumstances that when these outside truck owners do not have any responsibility or liability towards the Ambuja Cement or other principals then in absence of any privity the obligation to deduct the tax at source was not that of the assessee. Since we have already held that the provisions of section 40(a)(ia) were not attracted inasmuch as no amount was payable as on the close of the year as well as in absence of any contracts, there was no obligation on the part of the assessee to deduct the tax at source - Decided in favour of assessee.

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• 2017 (1) TMI 440
  Revision u/s 263 - assessee has not deducted tax at source on payment of bandwidth charges/leaseline charges and computer maintenance charges TDS 194J - AO failed to apply the provisions of section 40(a)(ia) - Held that:- Respectfully following the decision in case of Estel Communications P. Ltd. (2008 (3) TMI 327 - DELHI HIGH COURT) we hold that payment made towards bandwidth/leaseline charges not being in the nature of royalty, provisions of section 194J would not be applicable. Therefore, no disallowance u/s 40(a)(ia) can be made. As can be seen, view expressed by different high courts as well as ITAT on the issue are divergent. While, in majority of the decisions a view favourable to assessee has been taken, in the decision of Hon’ble Madras High Court a view against assessee has been taken. Thus, it is apparent that, more than one view is possible on the issue. That being the case, the view taken by AO while allowing expenditure claimed being one of the possible view supported by judicial pronoucements, provisions of section 263 cannot be invoked on the pretext that assessment order is erroneous and prejudicial to the interests of revenue. The impugned assessment year proceedings u/s 201 were also initiated against assessee for non-deduction of TDS u/s 194J on payment of bandwidth charges and ultimately orders were passed by raising demand u/s 201(1) and 201(1A). When assessee preferred appeal against the said order, ld. CIT(A) decided the issue in favour of assessee by holding that assessee is engaged in trading of bandwidth, hence, the provisions of section 194J are not applicable. It was brought to our notice by ld. AR, this order of ld. CIT(A) has been accepted by the department as no further appeal was filed. This contention of ld. AR remained uncontroverted. Thus, as can be seen from the aforesaid facts, opinion of the departmental authorities on applicability of section 194J to payment of bandwidth charges are also different. Therefore, the assessment order cannot be held to be erroneous and prejudicial to the interests of revenue on such a debatable issue - Decided in favour of assessee

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• 2017 (1) TMI 439
  Deduction u/s.80P allowance - assessee is a Co-operative Society - Held that:- As decided in assessee's own case referring to the letter of the CBDT bearing No. F. No. 133/06/2007-TPL dated 09.05.2008 addressed to the Delhi Urban T&C Society Ltd., stating that for the purposes of subsection 4 of section 80P, 'cooperative bank' shall have the same meaning as assigned to it in part V of the Banking Regulation Act 1949, according to which 'cooperative banks' means a State Co-operative Bank, a Central Co- operative Bank and Primary Co-operative Bank. Though the said clarification is given by the CBDT in connection with some other assessee, the crux of the matter pertains to the clarification of 'co-operative bank' for the purpose of subsection 4 of section 80P. It is observed that the said clarification has also been relied by the Tribunal in many cases. Therefore, 'cooperative banks' mentioned in the said subsection indicates only the State, Central and Primary Co-operative Banks only. The assessee is not a co-operative bank for the purposes of section 80P(4) of the Act. CIT(A) is justified in directing the AO to allow the deduction claimed by the assessee u/s 80P of the Act on the reason that the assessee, a cooperative credit society is not a bank for the purposes of section 80P(4) of the Act - Decided in favour of assessee

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• Customs

• 2017 (1) TMI 410
  Duty drawback - overvaluation of export of Woven Powerloom Men's Shirt readymade garments - FOB price as declared by appellant - Held that: - Any price other than the sale price can be resorted only in a case where the export price has been proved to be a wrong price based on certain evidence. In the present case, as regard the declared export price i.e. Rs. 530.42. There is also not a whisper that any money laundering is involved due to alleged over valuation of the export goods - It is also observed that since the export in the present case is regulated under a policy wherein a export quota is fixed for USA under which the entire detail of the export has to be disclosed to the concerned authority for obtaining the quota. For this reason also the declared price of the export cannot be doubted. Board's Circular No. 74/2009-Cus. dt. 7.9.2009 clarifies that the market enquiry is not proper in routine and the same can be resorted only where the enquiry yield money multiples of the PMV - In the present case, even the cost price arrived by the adjudicating authority is not substantially low, therefore the market enquiry was also not warranted. No material placed on record by the Revenue to suspect export price of the appellants and also the export is to non sensitive country i.e. USA. Therefore as per the guidelines Circular dt. 7.12.2001 there was no reason to suspect the declared export price of the appellants. The FOB price declared by the appellants are correct - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 409
  Duty demanded on waste & rejects cleared in the DTA & on inputs used in mfg. of those waste - the decision in the case of COMMISSIONER OF C. EX., SURAT-Il Versus SPECIAL PROJECT FINANCE (I) P. LTD [2008 (1) TMI 152 - CESTAT, AHMEDABAD] contested - Held that: - reliance placed in the judgment in the case of M/s. Virlon Textile Mills Ltd. v. Commissioner of Central Excise, Bombay [2007 (4) TMI 6 - SUPREME COURT OF INDIA], and appeal dismissed - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 408
  Bail - Anticipatory bail - the case of SANGIT KRISHNA KUMAR AGRAWAL Versus UNION OF INDIA [2007 (2) TMI 230 - BOMBAY HIGH COURT] referred - Held that: - This Court, while entertaining the special leave petition and while granting leave in the matter, did not grant any interim relief to the appellant - no justification found to entertain the present appeal - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 407
  Quantum of redemption fine - against the profit margin of Rs. 25.02 lakhs redemption fine imposed only to the tune of Rs. 4 lakhs - is the quantum of fine is very low or is the quantum justified? - Held that: - the Commissioner has admitted that there is a margin of profit available to the importer is Rs. 25.02 lakhs and also held that the same should be wiped out, accordingly he imposed the penalty of Rs. 21 lakhs and redemption fine of Rs. 4 lakhs. I observed from the grounds of appeal that the Revenue has not questioned the penalty of Rs. 21 lakhs imposed by the Commissioner. Therefore the Commissioner has given a proper justification for imposing Rs. 4 lakhs redemption fine as well as the penalty of Rs. 21 lakhs - fine justified - appeal disposed off - decided against Revenue.

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• 2017 (1) TMI 406
  Valuation - Transaction value - the decision in the case of THERMON HEAT TRACERS LTD. Versus COMMISSIONER OF CUSTOMS, MUMBAI [2006 (2) TMI 315 - CESTAT, MUMBAI] contested - Held that: - the issue involved in these appeals is squarely covered by the judgment of this Court in the case of Commissioner of Customs, Ahmedabad v. Essar Steel Limited [2015 (4) TMI 486 - SUPREME COURT] - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 405
  Imposition of penalty u/s 114 (i) of Customs Act, 1962 - smuggling - Held that: - The role of a customs house agent in relation to export commences with the filing of the shipping bill and is completed when the consignment is handed over to the agent of the carrier. In the absence of an allegation, or a finding, that the substitution occurred during this window, responsibility cannot be fastened on the agent - Penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 404
  Revocation of Courier licence - imposition of further punishment on courier company - Held that: - The appellant has denied any knowledge of the alleged conspiracy and offence committed by certain persons, which included some employees of the appellant. This lack of knowledge is not in dispute. The appellant courier ought to have been more cautious and vigilant. There was systemic failure / lax administration of Courier to contain fraud, there was involvement / complicity of its employee of foreign counter part, and certain employees committed gross illegalities. However, we find that it is not the case of the department that the appellant courier company itself was actively involved in any violation by taking help of its employees with intent to evade any duty or prohibition or for any personal gains. We find that there is no dispute on the fact that the named employees of the appellant courier have committed gross violations on their own accord to satisfy their own greed without knowledge of the appellant courier. We do not find any reasonable justification to subject the appellant to any further punishment by extending benefit of doubt - The Courier Registration of the Appellant stands restored with security deposit forthwith with consequential relief - appeal allowed - decided partly in favor of appellant.

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• 2017 (1) TMI 403
  Rejection of refund claim - Advance Licence scheme - unjust enrichment - whether the Appellants are entitled to refund of the provisional amount deposited towards duty and interest under the four different challans? - Held that: - the exempt material was not sold in the local market and were used in the manufacture of exported goods and the question of passing the incidence does not arise. The Government of India refunds/rebates that duty paid either on the raw material or on the finished goods exported by the exporter. The Government of India, as a matter of policy, allows the return of the duty paid on the raw material used in the manufacture of export product. This clearly indicates that the Government does not want the exporter to suffer by exporting the goods. In view thereof, we find that there is no question of unjust enrichment arises. The certificate of the Chartered Accountant produced by the Appellants and the Balance Sheet of the Appellants produced on the record for the period 1997-2009 with corresponding ledger accounts, clearly show that the amount shown by the Appellants as deposit in their books of account - there is no question of passing of incidence to any other person arises. Appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 402
  Duty Entitlement Pass Book (DEPB) scheme - transfer of licences - Held that: - decision in the case of Commissioner of Customs, Amritsar v. Ajay Kumar & Co. [2009 (5) TMI 20 - SUPREME COURT] referred - appeal dismissed - decided against appellant.

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• FEMA

• 2017 (1) TMI 398
  Principle of segregation - Detention order - Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 - High Court has come to the conclusion that there were various grounds which formed the basis of the detention order and even if the documents pertaining to one particular ground were not furnished, that ground could be ignored applying the principle of segregation and on remaining grounds the detention order was still sustainable - whether the principle of severability of grounds, which is enshrined in Section 5A of the Act, is not applicable to the case at hand as the detention order was passed on one ground only? - Held that:- Each basic fact would constitute a ground and particulars in support thereof or the details would be subsidiary facts or further particulars of the said basic facts which will be integral part of the grounds . Section 3 of the Act does not use the term grounds . No other provision in the Act defines grounds . Different instances would be treated as different grounds as they constitute basic facts making them essentially factual constituents of the grounds and the further particulars which are given in respect of those instances are the subsidiary details. When we apply the aforesaid test to the facts of this case, we are inclined to agree with the conclusion of the High Court that the order of detention is based on multiple grounds inasmuch as various different acts, which form separate grounds, are mentioned on the basis of which the detaining authority formed the opinion that it was desirable to put the appellant under detention. We, thus, reject the contention of the appellant that, in the instant case, the detention order is based only on one ground. Once it is found that the detention order contains many grounds, even if one of them is to be rejected, principle of segregation contained in Section 5A gets attracted. In the instant case, the documents containing the statement of Pooran Chand Sharma were not given and for this very reason, the High Court rightly held that such a ground cannot be relied upon by the respondents in support of the order. However, that would not mean that if there are other grounds on which the detention order can be sustained, principle of severability would become inapplicable. If this is accepted, it would mean that provisions of Section 5A of the Act cannot be applied at all. While rejecting such a contention, it would be sufficient to point out that constitutional validity of Section 5A of the Act was challenged in this Court and repelled in the case of Attorney General for India Ors. v. Amratlal Prajivandas Ors. (1994 (5) TMI 235 - SUPREME COURT ) after discussing the provisions of Section 5A in the light of Article 22(5) of the Constitution. Therefore, this contention is not available to the appellant.

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• Service Tax

• 2017 (1) TMI 438
  Whether the appellant M/s Maharashtra State Electricity Distribution Co. Ltd. is liable to be taxed for the services rendered by them to their client in respect of inspection of site material and testing of transformer, stage wise supervision over the line erection and electricity connection, scrutiny of feasibility of customers requirement? Held that: - the period is April 2007 to March 2008. There is no dispute that the appellant has rendered services in relation to transmission of electricity and distribution of electricity services to their customers. The Service Tax liability on the services rendered have been exempted by N/N. 45/2010-ST dated 20.07.2010 issued under Section 11C of Central Excise Act, 1944; wherein the Government of India exempted the tax liability on the services which are rendered in relation to transmission and distribution of electricity. In view of Section 11C N/N. 45/2010-ST, demand cannot be made - appeal allowed - decided in favor of assessee.

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• 2017 (1) TMI 437
  100% EOU - export of services - reverse charge mechanism - section 66A of Finance Act - Business Auxiliary Services - expenditure incurred on marketing and promotion of their software package outside India - commission to foreign service providers - are the services obtained by overseas branches of appellant are liable to tax under section 66A of Finance Act, 1994? - Held that: - receipt of service for use in relation in business or commerce which would, in most circumstances, be the key to determine if service was rendered to the recipient. There is no doubt that, on export, the scheme of taxation divests the tax element. Services rendered by foreign provider are subject to tax by the deeming fiction in section 66A of Finance Act, 1994 that recipient is the provider of the service. The objective of taxing such services in relation to domestic activities of a recipient is well within the scheme of levy of service tax. Utilization of services which are patently in relation to goods/services that have already been exported, it goes against the grain of procedural simplicity to collect the tax by deeming fiction merely for refunding it subsequently. From this it would appear that the reference to business or commerce in rule 3(iii) in Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 is restricted to business and commerce in India not to business and commerceoutside India. We find no allegation in the notice or conclusion in the impugned order that service have not been used for business or commerce outside India. The services obtained by overseas branches of appellant are not liable to tax under section 66A of Finance Act, 1994 - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 436
  Whether the payment received for allotment of time-slots to music companies by the assessee as fillers in programmes broadcast from outside the country is liable to service tax in the hands of the appellant as provider of ‘broadcasting agency service? - Scheme of private broadcasting in India - appellant has the option of inserting non-programme material of specified duration in the programme so produced for broadcasting and the time so available is sold to producers of music who resort to these fillers as means of providing a preview of proposed entertainment. Held that: - Only a scrutiny of the contract terms relating to those programmes for which fillers are sold to music companies, and was the subject matter in the proceedings before the adjudicating authority, will attest to the veracity of the claim. If such ascertainment of the nature of commercial engagement between the appellant and the overseas broadcasting agency reveals that of a client, and not that of an agent, and the ascertainment of the nature of the relationship between the appellant and the music companies who supply advertisement fillers in the programme produced by the appellant reveals that of a client, and not that of a fee remission agency, the claim of the appellant to be an independent service provider delinked from the foreign broadcasting service provider would sustain. In the absence of any such findings on the contract or similar evidence, it will be improper for us to come to that conclusion. There is a lack of precise conclusion on this submission in the impugned order. The matter needs to be remanded back to the original authority to take note of the distinction between the appellant as a representative of overseas broadcasting agency and the appellant as a commercial production-house selling slots in programs that are produced on its own account for broadcast through the overseas broadcasting agency and ascertain tax liability subject to the constraints of the show cause notice. Appeal allowed by way of remand.

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• 2017 (1) TMI 435
  Auction of aircraft - earlier auction could not materialize for the reason that the offer price was less than the reserve price - now request made for fresh e-auction - Held that: - request for re-auction and grant further time, which would be delaying the process and the debts of all concerned would go on mounting, we would highly appreciate if before the next date, the authorities, who will now conduct the e-auction, place their valuation report before this court. That be placed in a sealed cover. That should be placed at the hearing of this writ petition and other matters scheduled on 19th January, 2017 - petition allowed - decided partly in favor of petitioner.

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• 2017 (1) TMI 434
  Rejection of refund claim - denial of CENVAT credit - Rule 5 of Cenvat Credit Rules, 2002 - denial on the ground that turn over of the services provided by the appellant branches located in abroad is not qualified for export turnover of the appellant - interpretation of statute - Held that: - as regard the inclusion of turnover of the services provided by the foreign branches of the appellant to the foreign service recipient in export turnover by the appellant and/or in the total turnover, this issue has been decided by this Tribunal in the appellant’s case [2016 (9) TMI 324 - CESTAT MUMBAI], where it was held that the value of service provided by the overseas branch office of the appellant to the foreign base service recipient is neither includible in the export turnover nor in total turnover of the appellant. As regard the issue of denial of Cenvat credit on certain input service on the ground of inadmissible input service, the appellant do not contest the same, I uphold the impugned order limited to the said issue of Cenvat credit. Appeal disposed off - decided partly in favor of appellant.

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• 2017 (1) TMI 433
  Business Auxiliary Services - commission received from banks and financial institutions for promoting the loans on offer from these institutions, sales incentives and referral incentives of insurance companies - Held that: - there was never an intention to evade tax. It was also contended that the total dues had been discharged by 15th March 2016 and the interest liability also been remitted to the revenue of the Central Government - the taxability of the said services under ‘business auxiliary service’ had attained finality only after reference to a Larger Bench indicating the doubts that persisted about leviability - this is a fit case for invoking the provisions of section 80 of the Finance Act, 1994 and set aside the penalties - appeal disposed off - decided partly in favor of assessee.

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• 2017 (1) TMI 432
  Imposition of penalty - reverse charge mechanism - business auxiliary services - Held that: - during the period in question, taxability under “Reverse Charge Mechanism” was being disputed at higher judicial fora and finally settled by the judgment of Hon'ble High Court of Bombay in the case of Indian National Shipowners Association - appellant could have entertained a bonafide belief that Service Tax liability may not arise. This is a fit case for invoking the provisions of Section 80 of the Finance Act, 1994 for setting aside the penalty imposed - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 431
  Reverse charge mechanism - transportation charges - Service Tax liability is fastened on the appellant on the ground that they have paid transportation charges for the year 2006-07 and 2007-08, despite the fact that they being a sugar factory are require to pay Service Tax under reverse charge mechanism - Held that: - an identical issue came up before this Bench in the case of Shri Chhatrapati SSK Ltd. Vs. Commissioner of Central Excise, Pune-III [2016 (9) TMI 736 - CESTAT MUMBAI], where it was held that there will be no Service Tax liability on the appellant sugarcane mills, as they have not received the service from a Goods Transport Agency - Appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 430
  Refund claim - N/N. 41/2007 - ST dated 06.10.2007 - denial on the ground that service tax paid on IHC charges, terminal handling charges, documentation charges, freight charges and testing and analysis services are not covered under port service as the service providers are registered under different category of service and proof of deposition of tax under port service were not produced - Held that: - with regard to the port service,the credit benefit allowed on the taxable services used for export of goods within the port. With regard to the technical testing and analysis service, since there is valid agreement entered into between the appellant and the overseas buyer for issuance of certificate for undertaking the activities, the same are in conformity with the conditions mentioned in the Notification dated 06.10.2007. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (1) TMI 429
  SSI exemption - use of brand name - penalty u/s 173Q of erstwhile Central Excise Rules, 1944 - Held that: - we find the issue is of use of Brand name on the products and the benefits of SSI, was agitated before the higher forums. We are of the view that appellant assessee could have entertained a bonafide belief that they are eligible for SSI benefit. In view of this and as the issue is of interpretation we find that the penalty imposed on appellant is unwarranted. Accordingly, the penalty of Rs. 25,000/- is set aside - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 428
  Recovery of CENVAT credit - traveling expenses incurred by their executive during their travel for sales purpose - security services availed at their Cot Putty Mines located away from the factory - Held that: - the appellants have claimed that the travel expenses and the services relating thereto works for the purpose of sales promotion and therefore are covered in the exclusive part of the definition. The use of services for sales promotion has not been challenged. As a result, credit of Service Tax amounting to Rs. 38,246/- needs to be allowed. As regards Security services received at the Mines are covered by the decision of Hon'ble Apex Court in the case of Vikram Cement [2006 (1) TMI 130 - SUPREME COURT OF INDIA]. In view of the above, the credit of Rs. 76,408/- is also admissible. It is seen that the appellant could have certain bona fide doubt in respect of admissibility of credit on a few of the services like construction of residential colony, colony repairs, colony beautification, repair to road/fountain, fencing wall, maintenance of garden etc. In view of the above, it is felt that the penalties imposed are excessive. Appeal partly allowed - decided partly in favor of appellant.

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• 2017 (1) TMI 427
  Refund - Unjust enrichment - Held that: - the amount sought as refund was deposited as revenue deposit and the deposit was against the show cause notice which was set aside by Hon’ble High Court of Delhi. Therefore, the said amount never became duty and therefore the provisions of unjust-enrichment are not applicable - Further, the deposit was made in 1986 and the provisions related to unjust-enrichment become part of statute in 1991 and the said provisions did not have retrospective effect. Therefore, the question of invoking provisions related to unjust-enrichment to the present case does not arise - appeal rejected - decided against Revenue.

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• 2017 (1) TMI 426
  100% EOU - Absolute confiscation - import and use of potassium permanganate - manufacture of hulled sesame seeds and sortex natural seeds for export - Held that: - appellant uses potassium permanganate for the legitimate purpose of manufacturing and exporting food products. Its use as a disinfectant is not in question though its potential for perverse use may have awakened the Central Government, belatedly, to the need for control on its import and usage. Surely, it is nobody s case that potassium permanganate has no legal use and that it is prohibited for import. In these circumstances, absolute confiscation is not only overkill but also beyond the sanction of law. Appellant has been compliant with the legal requirement once they were made aware of the prescription. There is no allegation of misuse of material imported and subjected to the present proceedings. The application for issue of certificate has also not been denied. Goods allowed to be redeemed on payment of redemption fine - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 425
  Rectification of mistake - Held that: - application for rectification of mistake can be entertained only when there is an error apparent on the face of the records and not to be deduced after detailed submissions on the issue on merits - the order passed by the Tribunal is a reasoned one and has considered all the aspects as argued before the Bench - the application for rectification of mistake is devoid of any merits, inasmuch that revenue wants to rely upon new case laws which were not urged - application of ROM dismissed - decided against applicant.

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• 2017 (1) TMI 424
  Demand of interest for the intervening period - imposition of penalty - compounded levy scheme - short payment of duty on account of increase in rate of compounded levy scheme - Demand of interest on differential duty and penalty - extended period of limitation - Held that: - no verification was sought by the authorities below for payment made by the appellant on 13-3-2000 and 27-3-2000 to find out whether the appellant has paid the differential duty during the said period or not. In that circumstances, it would be in the interest of justice to set aside impugned order and to remand the matter back to the adjudicating authority to decide the issue of limitation as well as to find out the factual position about the payment of differential duty in the March, 2000 itself vide challans dated 13-3-2000 and 27-3-2000 - appeal disposed off - matter on remand.

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• 2017 (1) TMI 423
  CENVAT credit - goods procured from 100% EOU - extended period of limitation - Held that: - The duty has been paid by the respondent and as per Rule 3 of the Cenvat Credit Rules, 2004, the respondent is entitled to take Cenvat credit thereon. Extended period of limitation invoked - there was no mala fide intention to take Cenvat credit by the respondent - appeal barred by limitation. Appeal dismissed - decided against Revenue.

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• 2017 (1) TMI 422
  SSI exemption - clubbing of clearances - use of brand name of others - The appellant claims to be a job-worker for the second unit M/s Hem Agro Industries (trader) in addition to manufacturing tractor-trailors on its own account - Held that: - the two units have been artificially segregated to take advantage of the exemption available to small scale units, no effort has been put in by either of the two, on earlier occasions, and, in these proceedings, by the purported job-worker to establish that M/s Hem Agro Industries has a manufacturing facility where some production activity is undertaken on the tractor-trailors supplied by the appellant. In the absence of any evidence to the contrary and, considering the negligible scope for any further operation on branded tractor-trailors , it would appear that the second unit is merely a trading unit which disentitles them to eligibility for any exemption whatsoever. Use of brand name - Held that: - The claim of the appellant to ownership of the brand Ishan arising from the finding that clearances should be clubbed does not appear to rest on sound foundation. That clearances are to be clubbed is the finding consequent upon the lack of evidence that M/s Hem Agro Industries is devoid of wherewithal to manufacture; hence, the manufactured product of the appellant is entirely attributed to appellant for levy of duty. The ownership of the brand remains with M/s Hemraj Agro Industries irrespective of the finding that the entire manufacturer is effected by the appellant. Invoking of penalty under rule 173Q of Central Excise Rules, 1994 is not a flaw in the impugned order. Appeal rejected - decided against appellant.

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• 2017 (1) TMI 421
  Recovery of short levy on output - output being exempted under N/N. 115/75-CE dated 30th April 1975 - Held that: - Just as no law, instruction or judgement can prevent a tax collector from levying a tax in accordance with law, no law, instruction or judgement can be allowed to impede a tax collector from fulfilling his constitutional obligation to collect only such tax as is authorized by law. In the present situation, the collection of the duty thus far has been without authority of law; lack of procedural wherewithal may prevent rectification of that illegality but a judicial mind should confine that illegality to the past without compounding that illegality for all time to come. Subjecting that decision to review and appeal with the sole purpose of perpetuating that illegality bespeaks impropriety. We find that the impugned order cannot be held to have travelled beyond the notice or has conferred a benefit on an assessee sans a procedure in law. As the duty was not leviable, a demand for further recovery of a duty not leviable is without authority of law and must fail - appeal dismissed - decided against Revenue.

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• 2017 (1) TMI 420
  SSI unit - evasion of duty - misuse of facility afforded by the small scale exemption notification - unaccounted production with clandestine removal thereof - natural justice - Held that: - the test that must be passed requires an assailing that must be sustained for acceptability. In the present disputes, the recast register has not been subject to the test. It is not necessary that there be a register in physical form but it is incumbent that the methodology adopted for arriving at the actual production cannot be disassociated from the adjudication process. It appears to have been so in the present proceedings. It is necessary that this record or computation should be made available to the assessee for ascertainment of its acceptability - matter on remand - appeal allowed by way of remand.

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• 2017 (1) TMI 419
  Curative Petition - Denial of CENVAT Credit - Imposition of penalty - the decision in thecase of [2015 (5) TMI 447 - SUPREME COURT] contested - Held that: - We have gone through the Curative Petition and the relevant documents. In our opinion, no case is made out within the parameters indicated in the decision of this Court in Rupa Ashok Hurra v. Ashok Hurra and Another [2002 (4) TMI 889 - SUPREME COURT] - petition dismissed - decided against petitioner.

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• 2017 (1) TMI 418
  Abatement - the decision in the case of COMMISSIONER OF C. EX., BANGALORE-III Versus WRIGLEY INDIA LTD [2007 (8) TMI 136 - CESTAT, BANGALORE] contested - Held that: - the findings of fact recorded by all the authorities below are against the Department. No question of law arises for our consideration - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 417
  Set off on duty paid on the ‘treated paper’ and ‘treated fabric’ - the decision in the case of BOMBAY BURMAH TRADING CORPORATION LTD. Versus COMMR. OF C. EX., PUNE-I [2008 (5) TMI 637 - CESTAT MUMBAI], contested - Held that: - the appellant could not give any satisfactory evidence to show that the same product in respect of which duty was paid was used as an intermediary product for the manufacture of the final product - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 416
  Interest - delay in payment of differential duty - captive consumption - valuation finalized after the year end on cost construction method - whether the said differential duty paid by the appellant is chargeable to interest under Section 11AB of Central Excise Act, 1944? - Held that: - there is no need of any adjudication proceeding for recovery of interest, the statutory provisions of Section 11AB itself is a provisions for recovery of the interest. The interest is piggy back of the duty, once the duty is admitted, interest cannot be detached from the duty liability. In the present case valuation is under Rule 8 of Valuation Rules 2000, which is only applied in a case where the goods are not sold and the sale value is not available. Since no sale is involved question of issuance of supplementary invoice does not arise - the interest is correctly payable by the appellant on the delayed payment of duty - appeal dismissed - decided against assessee.

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• 2017 (1) TMI 415
  Refund claim - MODVAT credit lying unutilised as on date of intimation of closure in February 2007 - time limitation - failure to furnish documents in original - Held that: - The absence of a provision for refund also implies the absence of a mechanism for processing a refund claim. The safeguards, conditions and limitations that are specified in a mechanism designed for the specifically permitted situation of refunds may not necessarily apply to the situation of a manufacturer who closes the factory of production. It could also well lead to claims by functioning undertakings which would throw the entire scheme into disarray. The Larger Bench has adduced to the lack of statutory provision for grant of refund of credit lying unutilized at the time of closure of a factory. I have referred also to the lack of safeguards, conditions and limitations to handle such eventuality and to which all refund claims are, necessarily, subject. Refund disallowed - appeal dismissed - decided against appellant.

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• 2017 (1) TMI 414
  CENVAT credit of Additional Duties of Customs paid on imported goods - subject goods were imported under ‘SFIS’, and Basic Customs Duty, Additional Duty of Customs and cess were paid through debit in Duty Credit Scrip/Certificate issued by DGFT and not in cash. - Held that: - the fact of payment of Customs Duty, Additional Duty of Customs (CVD) and the cess etc. in respect of the subject goods is not in dispute and there is no dispute that the said import goods have been received by the respondent in their manufacturing unit. Once the subject goods have been received as inputs for manufacturing in the factory premises of the respondent, they would be entitled to the Cenvat credit of the relevant duties paid in case of imported goods as per the provisions of Rules 3 and 4 of the Cenvat Credit Rules, 2004 - credit allowed - appeal rejected - decided against Revenue.

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• 2017 (1) TMI 413
  Reversal of CENVAT credit - Rule 6 (3)(i) of the CENVAT Credit Rules, 2004 - the electricity produced was supplied to UP Power Corpn. Ltd. For the production of the electricity, the baggase, the waste, which is generated during the manufacture of sugar, is further used - Held that: - An identical issue has come up in the case of DSM Sugar Mills Ltd.,[2014 (7) TMI 531 - CESTAT NEW DELHI], where the Tribunal has held that electricity is not an excisable good and hence, in respect of the sale of the electricity to U.P. Power Corporation Ltd., the provisions of Rule 6(3) of the Cenvat Credit Rules would not be applicable - demand not sustainable. CENVAT credit - premium on various insurance policies regarding stock, money, transit, workmen compensation, etc - Held that: - the assessee has purchased the insurance policies for its workers. So, the premium paid is the input service. So, the assessee is entitled for cenvat credit as observed in the impugned order. Appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 412
  Whether unutilized deemed credit lying in balance availed under N/N. 6/2002-CE(NT) dt. 1.3.2002 will be allowed to be utilized for clearance of goods after 1.4.2003 in the light of N/N. 8/2003-C.E.(NT) dt. 1.3.2003 by which provision of deemed credit was withdrawn? - Held that: - the accumulated deemed credit lying on 31.3.2003 were admittedly availed prior that date when the N/N. 6/2002-CE(NT) was in force. Therefore the credit availed under the authority of law. There was no provision either for lapsing the accumulated credit balance as of 31.3.2003 or reversal thereof - in the absence of any provision the credit which was legally availed, cannot be lapsed or to be reversed - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 411
  SSI exemption - use of brand name of others - Held that: - the assessee has incurred heavy expenditure on the publicity by using the brand name of ‘rollin’. The said brand name was used by different companies viz. appellant and M/s A.K. Engineering Pvt. Ltd. The benefit of SSI has already been availed by M/s A.K. Engineering Pvt. Ltd. when it is so then the benefit cannot be extended to the appellant - ‘rollin’ is qualified to be considered as a brand name, though it was not registered. The brand name (unregistered) is owned by Rolling Industries Pvt. Ltd. and the present appellant has used the brand name of the other company for clearing the goods manufactured by them. Therefore, the appellant is not eligible for exemption. Appeal disposed off - decided against appellant-assessee.

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• CST, VAT & Sales Tax

• 2017 (1) TMI 401
  Jurisdiction - reorganisation of Department - whether the 1st respondent is aware of the fact that already for the same assessment years, orders have been passed by the 2nd respondent? - Held that: - The 1st respondent has informed that the files do not disclose the facts nor he was apprised of the same and therefore, unaware about the earlier orders passed by the 2nd respondent. Thus, taking into account all the above facts and circumstances, the impugned orders call for interference. Matter on remand - there will be a direction to the 2nd respondent to transmit the files concerning the petitioner to the 1st respondent and on receipt of the same, the 1st respondent, after making thorough study of the entire proceedings, shall proceed in accordance with law - appeal allowed by way of remand.

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• 2017 (1) TMI 400
  Benefit of amnesty in terms of Section 23B(d) of the Act - manner of computation of amount to be paid in amnesty scheme - whether the amnesty scheme involves payment of 10% of the penalty amount and 10% of the interest on penalty? - interpretation of statute - Held that: - In respect of amnesty scheme available in respect of demands relating to the period 1st April, 2000 to 31st March, 2005, the reduction granted is 90% of the interest on the tax amount and for the amount of penalty and interest thereon - The contention is that the reduction is for 90% of the interest on tax amount and also the entire amount of penalty and interest thereon. If such was the intention of the Legislature, definitely there was no reason to have specifically mentioned it, whereas what the Legislature has done was that after the word tax amount, a comma is inserted and thereafter the words 'and for the amount of penalty and interest thereon' is incorporated, which apparently indicates that the words “reduction of 90%” is on the interest on the tax amount as well as on the amount of penalty and interest thereon. A different view is not possible and therefore I do not think that the petitioner was justified in making such a demand - petition dismissed - decided against petitioner.

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• 2017 (1) TMI 399
  Validity of assessment order - opportunity of being heard - Held that: - the assessment has been completed ex-parte, this Court is inclined to grant an opportunity to the petitioner to go back before the assessing officer, subject to certain conditions - there will be a direction to the petitioner to pay 15% of the disputed tax within three weeks from the date of receipt of a copy of this order - petition allowed by way of remand.

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