TMI Tax Updates - e-Newsletter
January 9, 2018

Case Laws in this Newsletter:

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

Articles

1. ISSUE OF SHARES ON PRIVATE PLACEMENT

   By: DR.MARIAPPAN GOVINDARAJAN

2. Weekly update on latest Notifications/Circulars issued by the Government of India

   By: Bimal jain

3. FORM GSTR-3B v/s FORM GSTR-1

   By: GST Cornor

News

1. GST FLYERS - Updated as on 1st January, 2018

2. Govt extends deadline for linking Aadhaar with saving schemes

3. RBI Reference Rate for US $

4. The Central Government notifies the Companies (Amendment) Act, 2017

5. Govt open to proposals to further cleanse pol funding: Jaitley

6. Why Electoral Bonds are Necessary

Notifications

GST - States

1. F-10-92/2017/CT/V (166)-44/2017-State Tax (Rate) - dated 14-11-2017 - Chhattisgarh SGST

Seeks to amend notification no. 52017- Central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding restriction

2. F-10-92/2017/CT/V (165)-43/2017-State Tax (Rate) - dated 14-11-2017 - Chhattisgarh SGST

seeks to amend notification no. 42017-State tax(rate) dated 28.06.2017 to give effect to gst council decision regarding reverse charges.

3. F-10-92/2017/CT/V (164)-42/2017-State Tax (Rate) - dated 14-11-2017 - Chhattisgarh SGST

Amendments in the Notification No. 2/2017- State Tax (Rate), No. F-10- 43/2017/CT/V (70) dated 28th June, 2017

4. 41/2017-State Tax (Rate) - dated 14-11-2017 - Chhattisgarh SGST

Amendments in the Notification No. 1/2017- State Tax (Rate), No. F-10- 43/2017/CT/V (69) dated the 28th June, 2017

5. F-10-88/2017/CT/V (156)-50/2017-State Tax - dated 26-10-2017 - Chhattisgarh SGST

Waiver the late fee payable FORM GSTR-3B.

6. F-10-87/2017/CT/V (155)-49/2017-State Tax - dated 18-10-2017 - Chhattisgarh SGST

Government Notifies Evidences which are required to be produced by the supplier of deemed export supplies for claiming refund.

7. F-10-87/2017/CT/V (154)-47/2017-State Tax - dated 18-10-2017 - Chhattisgarh SGST

The Chhattisgarh Goods and Services Tax (Ninth Amendment) Rules, 2017.

8. F-10-87/2017/CT/V (153)-48/2017-State Tax - dated 18-10-2017 - Chhattisgarh SGST

Supply of goods by a registered person against Advance Authorisation.

9. F-10-82/2017/CT/V (148)-33/2017-State Tax (Rate) - dated 13-10-2017 - Chhattisgarh SGST

Amendments in the Notification No. 13/2017-State Tax (Rate) notification No. F-10-43/2017/CT/V (81), dated the 28th June, 2017.

10. F-10-82/2017/CT/V (147)-32/2017-State Tax (Rate) - dated 13-10-2017 - Chhattisgarh SGST

Amendments in the Notification No. 12/2017-State Tax (Rate) notification No. F-10-43/2017/CT/V (80), dated the 28th June, 2017.

11. F-10-82/2017/CT/V (146)-31/2017-State Tax (Rate) - dated 13-10-2017 - Chhattisgarh SGST

Amendments in the Notification No. 11/2011-State Tax (Rate) notification No. F-10-43/2017/CT/V (79), dated the 28th June, 2017.

12. F-10-81/2017/CT/V (145)-45/2017-state Tax - dated 13-10-2017 - Chhattisgarh SGST

The Chhattisgarh Goods and Services Tax (Eighth Amendment) Rules, 2017.

13. F-10-81/2017/CT/V (144)-40/2017-State Tax - dated 13-10-2017 - Chhattisgarh SGST

Aggregate turnover in the preceding financial year did not exceed one crore and fifty lakh rupees opt for the composition levy.

14. F-10-81/2017/CT/V (143)-39/2017-State Tax - dated 13-10-2017 - Chhattisgarh SGST

Appointed the "proper officers".

15. F-10-81/2017/CT/V (142)-38/2017-State Tax - dated 13-10-2017 - Chhattisgarh SGST

Amendments in the Notification No. 32/2017-State Tax, No. F-10-73/2017/CT/V (123) dated the 15th September, 2017.

16. F-10-81/2017/CT/V (141)-38/2017-State Tax (Rate) - dated 13-10-2017 - Chhattisgarh SGST

Amendment in the Notification No.8/2017- State Tax (Rate), No. F-10-43/2017/CT/V (76) dated the 28th June, 2017.

17. 38/1/2017-Fin(R&C)(36) - dated 1-1-2018 - Goa SGST

The Goa Goods and Services Tax (Thirteenth Amendment) Rules, 2017.

18. CCT/26-2/2017-18/4124 - dated 29-11-2017 - Goa SGST

Assigns the functions to be performed under this Act by a proper officer.

Income Tax

19. F. No. 500/101/2016 -FT&TR–V - S.O. 93(E) - dated 4-1-2018 - IT

Agreement between the Government of the Republic of India and the Government of the Federative Republic of Brazil for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes

Indian Laws

20. G.S.R 09(E) - dated 3-1-2018 - Indian Law

Objections or Suggestions on the Gas Cylinder (Amendment) Rules, 2018

Circulars / Instructions / Orders

GST - States

1. 01/2017-State Tax - dated 13-10-2017

THE CHHATTISGARH GOODS AND SERVICES TAX (REMOVAL OF DIFFICULTIES) ORDER, 2017.

Highlights / Catch Notes

Income Tax

• Amendment to Section 200A(1) is prospective; AO can't impose late fees for TDS filed before June 1, 2015.

  Case-Laws - AT : Charging of late filing fees levied u/s 234E by passing the order u/s 200A - the amendment to section 200A(1) is prospective in nature and therefore the AO, while processing the TDS statements/returns in the present appeal for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. - AT
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• Court Rules Forced Survey Statements u/s 133A Insufficient for Additions Without Corroborative Evidence.

  Case-Laws - AT : Additions on the basis of forced statements made during survey action u/s. 133A - addition on account of alleged discrepancies in the books - no addition could be made - AT
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• Equal Profit Allocation for EOU and Non-EOU Units Deemed Fair u/s 10B for Similar Processing Work.

  Case-Laws - AT : Exemption u/s 10B - apportionment of expenditure between EOU and non EOU - the processing is done by both the units, and the processing work done by the non EOU unit, by no stretch of logic, is less than the processing work done by the EOU unit - allocation of equal profits to EOU and non EOU unit on an equal basis is quite fair and reasonable. - AT
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• Discrepancy in Commission Receipt vs. Form 26AS Leads to Confirmed Additions Due to Lack of Explanation.

  Case-Laws - AT : Addition on account of difference between commission receipt declared by the assessee and as per Form 26AS - assessee has miserably failed to provide a satisfactory explanation with regard to difference in commission declared by the assessee and commission receipt as per Form 26AS - additions confirmed - AT
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• Non-compete fee from 2007 agreement classified as 'Capital receipt,' exempt from tax u/s 28(va) of Income Tax Act.

  Case-Laws - AT : The non-compete fee received by the assessee pursuant to the agreement dated 25.07.2007, which therein refrained him from practising the profession as a chartered accountant for a period of 5 years, is a ‘Capital receipt’, which however, in the backdrop of our aforesaid observations would not be exigible to tax under Sec. 28(va) of the ‘Act’. - AT
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• Unexplained Investments Not Added to Income Without Cross-Examination or Independent Evidence u/r 69.

  Case-Laws - AT : Unexplained investment - addition made on the basis of statements of third parties - no addition can be sustained on the basis of such oral admission of interested party without providing opportunity of cross examination and not supported by independent evidence. - AT
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Case Laws:

• Income Tax

• 2018 (1) TMI 338
  Grant of stay - staying the recovery of huge amount as prayed is made out - Held that:- Where gross violations of the law and injustices are perpetrated or are about to be perpetrated, it is the bounden duty of the Court to intervene and give appropriate interim relief. In cases where denial of interim relief may lead to public mischief, grave irreparable private injury or shake a citizen’s faith in the impartiality of public administration, a Court may well be justified in granting interim relief against public authority. But since the law presumes that public authorities function properly and bonafide with due regard to the public interest, a court must be circumspect in granting interim orders of far reaching dimensions or orders causing administrative, burdensome inconvenience or orders preventing collection of public revenue for no better reason than that the parties have come to the Court alleging prejudice, inconvenience or harm and that a prima-facie case has been shown. There can be and there are no hard and false rules. But prudence, discretion and circumspection are called for. There are several other vital considerations apart from the existence of a prima-facie case. There is the question of balance of convenience. There is the question of irreparable injury. There is the question of the public interest. There are many such factors worthy of consideration. In the case in hand, appeal is pending against the assessment order and earlier the assessment was made at Indore, it cannot be said that the order is without jurisdiction.

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• 2018 (1) TMI 337
  Penalty u/s 271(1)(c) - claim for deduction under Section 54 - Held that:- The appellant has admittedly made a claim in its return of income which is prohibited under the Act. The claim for deduction under Section 54 of the Act could only be made by individuals or HUF, while the appellant is admittedly a company incorporated under the Companies Act, 1956. Thus this was not a case, where a claim made was debatable or claim being made in the absence of any prohibition to make such a claim under the Act. In the aforesaid cases, one could possibly infer that the claim was made under the bonafide interpretation of the law. In the present facts, this is admittedly not so. In the present facts, the appellant has furnished inaccurate particulars of income by claiming a deduction which is prohibited in case of assessee. Thus the penalty under Section 271 (1) (c) of the Act is imposable upon the appellant. - Decided against assessee.

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• 2018 (1) TMI 336
  Eligibility for deduction under Section 10A - existence of unit at Dehradun - Held that:- There is a unit at Malad which has developed basic engine and there is another unit at Dehradun, STPI, where the PC Suit Software Chip was developed and exported. Consequently, in the face of the above accepted position, the submissions of the revenue that there is no unit at Dehradun is unsustainable. So far as the second contention of the Revenue viz. Dehradun Unit is a mere extension of Malad, Mumbai Unit is concerned, we find that the Tribunal has rendered a finding of fact that the basic engine facility was developed at Mumbai. Thereafter this basic engine was taken to the Dehradun Unit and developed into a separate, intelligent and superior software known as PC Suit Software. This development of the software was done admittedly at Dehradun as the Tribunal itself records undisputed position that only basic engine was developed at Mumbai and the PC Suit Software which is a distinct software was developed at STPI, Dehradun. This software was exported and benefit of Section 10A of the Act is claimed in respect of the Dehradun unit which has developed the software and exported it. Therefore it is clear that a separate activity was performed at Dehradun Unit at STPI. The Tribunal records the fact that separate activity was performed at Dehradun Unit at STPI and it is a distinct activity from the manufacture of basic engine which was done at Mumbai. This is essentially a finding of fact of the Tribunal and not shown to be perverse warranting our interference. Third party tools were employed by the Respondent – Assessee, it would lose the benefit under Section 10A of the Act. No such such bar under Section 10A of the Act on user of the third party tools has been shown to us. This is different from outsourcing the entire work of developing the software to third parties. This is even not the case of the Revenue. In any event the impugned order records the STPI park itself makes Internet sites available for free and such sites would become a part of the product development. These sites are in nature of digital library where the units in the STPI are permitted to have free access to the Internet, digital libraries and other computer peripherals. These facilities available at the Dehradun STPI were used by the Respondent – Assessee so as to develop the PC Suit Software Chip. Therefore, this finding of the Tribunal is essentially a finding of the fact and not shown to be perverse. The finding recorded by the impugned order of the Tribunal are essentially findings of fact which are not shown to be perverse and / or arbitrary. It must be pointed out that it is not the case of the Revenue before us that any particular provision of Section 10A has been violated and / or breached by the Respondent. - Decided against revenue

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• 2018 (1) TMI 335
  Unexplained cash credit u/s 68 - Held that:- The claim of the assessee of having received an advance of Rs. 8,00,000/- against property from M/s. Tysom Agencies Pvt. Ltd. was duly supported by a letter issued by the said party confirming the payment of advance to the assessee. Similarly the claim of the assessee of having withdrawn cash from his other bank accounts maintained with Bank of Maharashtra and Axis Bank was also supported by the copies of relevant bank statements filed by the assessee. It is observed that the Ld. CIT(A) however did not accept this explanation of the assessee which was duly supported by the relevant documentary evidence on the basis of certain infirmities and discrepancies pointed out by him. Assessee has prepared and furnished a tabular chart before the Tribunal offering the explanation of the assessee in respect of each and every objection raised by the Ld. CIT(A) and a perusal of the same shows that the explanation offered by the assessee is sufficient to meet all the objections raised by the Ld. CIT(A) while rejecting the explanation offered by the assessee as regards the source of cash deposits made in his bank account with Axis Bank. Keeping in view the entire material placed on record before the Tribunal, find that the source of cash deposits found to be made in his bank account with Axis Bank aggregating to Rs. 12,12,000/- is property explained by the assessee on evidence and there is no justification on the part of the authorities below to treat the same as unexplained cash credit under section 68 - Decided in favour of assessee.

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• 2018 (1) TMI 334
  Charging of late filing fees levied u/s 234E by passing the order u/s 200A - scope of amendment to section 200A(1) - Held that:- Identical issue has been adjudicated by this Bench of the ITAT in the case of M/s Samikaran Learning Pvt. Ltd. Vs TDS Officer, Laxmi Nagar, Delhi [2017 (11) TMI 671 - ITAT DELHI] held that as following the referred decision in the case of Gajanan Constructions and others [2016 (10) TMI 92 - ITAT PUNE] we hold that the amendment to section 200A(1) is prospective in nature and therefore the AO, while processing the TDS statements/returns in the present appeal for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Therefore the intimations issued by the AO under section 200A of the Act in this appeal are unsustainable and the demand raised by way of charging of the fees under section 234E of the Act not being valid is deleted. AO is not empowered to charge fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015 - Decided in favour of assessee

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• 2018 (1) TMI 333
  Additions on the basis of forced statements made during survey action u/s. 133A - addition on account of alleged discrepancies in the books - addition on the basis of loose paper - unaccounted expenditure - cash transactions - retracted statements - Held that:- CIT-A has rightly appreciated the stand of the assessee in deleting the additions as the revenue has no cogent incriminating materiel with it to justify the addition of Rs. 1.2 crores apart from the forced confessional statement which is involuntary in nature. The loose document impounded being page no 175 during survey operations is held by us to be dumb document which is alleged by the assessee to have been prepared at the time of survey itself at the behest of survey team to justify surrender of concealed income. The said statement as well material on record keeping in view the entire factual spectrum of the case does not inspire confidence to justify the additions as was made by the AO and in our considered view the learned CIT(A) has rightly appreciated the entire factual matrix of the case and deleted the additions vide his appellate order. In the instant case, if we eschew the said retracted forced confession from record, then we are afraid there are no incriminating material on record to justify additions as was made by the AO which learned CIT(A) has rightly appreciated in deleting the additions vide his appellate orders. The Revenue in the instant case has not even bothered to cross examine the partner of the assessee post retraction of his statement. The retraction has been made by the assessee within 10 days of the aforesaid alleged forced statement and writ petition has also been filed with Hon ble Bombay High Court. There are several letters written by the assessee to various authorities within Income Tax Department including CBDT alleging that the statement was obtained forcibly by survey team . These correspondences/writ petition sans absence of cogent incriminating material on record to prejudice the assessee speak loudly and points to one and only one irresistible conclusion that Revenue has obtained forced confession from the assessee to surrender income of Rs. 1.20 crores and we have no hesitation in confirming the well reasoned order of the Ld. CIT-A which we affim/sustain. - Decided against revenue

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• 2018 (1) TMI 332
  Addition u/s 68 - Held that:- A.O. did not bring any evidence on record that the investments made by the investor companies were actually emanated from the coffers of the assessee company so as to enable it to be treated as undisclosed income of the assessee. The A.O. cannot ask the assessee to prove source of the source. Therefore, the facts and circumstances clearly proved that assessee discharged initial onus to prove identity of the investor companies, their creditworthiness and genuineness of the transaction in the matter. The Ld. CIT(A) on proper appreciation of evidence before him, correctly deleted the addition. No interference is called for in the matter. The Ld. CIT(A) correctly deleted the addition of Rs. 3.35 crores under section 68 of the I.T. Act. The decisions relied upon by the Ld. D.R. would not support the case of the Revenue in view of the fact that no enquiry have been taken by A.O. in this case to dispute the documentary evidences filed by the assessee. The departmental appeal has no merit and is accordingly dismissed. Assessment u/s 143(3)/153A - Held that:- Delhi High Court in the case of BDR Builders & Developers Pvt. Ltd. [2017 (8) TMI 42 - DELHI HIGH COURT] held that when assessee company ceases to exist from appointed date, was not liable for assessment under section 153A of the I.T. Act. The assessment under section 153A is void abinitio. The Hon’ble Delhi High Court similarly in the case of Maruti Suzuki Ltd. [2017 (9) TMI 387 - DELHI HIGH COURT] held that assessment order in the name of amalgamating company is not a procedural irregularity. Assessment order in the name of non- existing amalgamating company untenable. Considering the facts and circumstances of the case and in the light of judgment of the Hon’ble Delhi High Court dated 19th January, 2011, we are of the view that assessment framed against the assessee under section 143(3)/153A is bad in law and void abinitio. Resultantly, we set aside the orders of the authorities below and quash the assessment order. In the result, ground No.1 of cross objection of assessee is allowed. Disallowance under section 14A read with Rule 8D - Held that:- The working given by the assessee has not been disputed and further no satisfaction as required under section 14A have been recorded by the A.O. that assessee did incur any expenditure to earn exempt income. The Hon’ble Punjab & Haryana High Court in the case of Metalman Auto Ltd. [2011 (2) TMI 330 - PUNJAB AND HARYANA HIGH COURT] held that no expenses incurred for earning exempt income Section 14A do not apply. Onus is on the A.O. to record satisfaction that interest bearing funds used for investment to earn tax free income. In the present case, the A.O. did not deal with contention of assessee in assessment order and did not record any satisfaction that assessee did not incur any expenditure to earn exempt income. The Ld. CIT(A), therefore, correctly allowed part relief of assessee on this ground. Deemed dividend under section 2(22)(e) - Held that:- No interference is called for in the matter. The A.O. in the assessment order itself has recorded that in the original assessment completed under section 143(3), addition of Rs. 2.70 crore under section 2(22)(e) have been made but assessee did not provide any information, therefore, same addition was repeated in assessment year under appeal. Since, this similar addition has been deleted by the Ld. CIT(A) against the original assessment order, therefore, there were no justification to make addition in proceeding under section 153A of the I.T. Act against the assessee. The departmental appeal has no merit and the same is dismissed.

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• 2018 (1) TMI 331
  Levy of late filing fees u/s 234E in the course of processing under section 200A - Held that:- We find that the issue in appeal is covered by larger number of decisions, including several decisions of Ahmedabad benches of this tribunal in favour of the assessee. These decisions categorically hold that the amendment brought about in section 200A with effect from 1st June 2015 and by virtue of Finance Act, 2015 is prospective in effect and it cannot apply to the period prior to 1st June 2015. These appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. We uphold the grievance of the assessee and delete the impugned levy of late filing fee u/s 234E - Decided in favour of assessee

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• 2018 (1) TMI 330
  Unexplained cash credit u/s 68 - Held that:- The assessee had filed its income of return declaring the taxable income Rs. 2,53,39,948/- which fact is verifiable from the assessment order itself. The assessee company has share capital to the tune of Rs. 41.09 lacs and reserves and surpluses excluding share premium received during this year to the extent of Rs. 2,91,00,000/-. The assessee had turnover of Rs. 51.90 crores. These facts and figures depict that assessee is an existing profit making company and therefore, issuance of shares at a premium is justified. All the 3 ingredients required to be established u/s. 68 are established. We further find that the case laws cited by the Ld. DR are distinguishable to the facts of the present case and therefore are not applicable at this juncture. Therefore, the addition made by the AO treating the share capital and share premium as unexplained cash credit u/s 68 of the IT Act was not justified, hence, the same was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on this issue and reject the ground no. 1 raised by the Revenue. Disallowance of interest u/s. 36(1)(iii) - Held that:- The copy of the bank statement of Axis Bank is filed at page 75 and 76 of the paper book. The above facts prove that prior to 16.07.2008 there were no interest bearing funds taken by the assessee except vehicle loans taken in earlier years. This goes to establish that if any investment or advance was made prior to that date, the same was given out of from the assessee's own funds or out of non interest bearing funds, except the amount of Rs. 5 lacs given to Mr. Mahadev Prasad this amount of loan was given to him on 21.7.2008 and it was given out of interest bearing funds, hence, proportionate interest for eight months @ 12% was rightly considered for disallowance which amounts to Rs. 41,750/-. Keeping all we are of the considered view that the proportionate disallowance of interest on the loans and advances comes to Rs. 41,750/- only u/s. 36(1)(iii) hence, the proportionate disallowance of interest charged u/s. 36(1)((iii) was rightly deleted to the extent of Rs. 69,07,310/- and Rs. 41,750/- was rightly confirmed, which does not need any interference on our part, therefore, we uphold the action of the Ld. CIT(A) on this issue and reject the ground no. 2 raised by the Revenue.

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• 2018 (1) TMI 329
  Disallowance u/s. 40(a)(i) - Held that:- We hold that the proviso to section 40(a)(i)is not having retrospective effect and is not applicable for the year under appeal, that there was no default on behalf of the assessee in deducting or paying the tax as per the provisions prevalent at that point of time. As far as cases relied upon by the DR is concerned, we would like to mention that they lay down general principles, they do not deal with the issue on hand. Words “or” as well as “and’ can have two different meanings. But, do decide the matter before us, the case of Puthuthotam Estates (1980 (1) TMI 34 - MADRAS High Court) cited by the DR is of no help. Considering these facts, we decide ground no. 1 against the AO. Claim of expenses - determine the arms length price (ALP) of the professional fees paid to BOS - Held that:- We find that the assessee had entered in to two separate contracts, that one contract was about fees to be received by it, that the other one was about expenses to be incurred, that the AO mixed those two contracts that he had not doubted the incurring of expenditure, that he was of the opinion that expenditure was to be allowed in the next assessment year, that TPO had not found any defect in the method of determining the ALP of the international transaction(IT) entered in to by the assessee, that mark up of 11. 79% has not be doubted by him. It appears that the TPO, while passing order u/s. 92 took over the role of the AO. As per the provisions of the Act the only role assigned to the TPO is to find out as to whether the IT is at arm’s length or not. He is not supposed to take decision about accounting policy to be followed by the assessee, nor he should comment upon as how to compute income if an assessee follows a particular method of accounting. In the case before us, the assessee is following project completion method and showing the income from the project accordingly. Expenditure incurred by it have to considered for arriving at the taxable income of the year under appeal. There in nothing on record to negate the finding of fact given by the FAA that income corresponding to the Pre-FID expenditure was offered for taxation. So, in our opinion, there is no need to interfere with his order. Confirming the same, we decide second ground of appeal

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• 2018 (1) TMI 328
  Reopening of assessment - case reopened on the basis of independent information in the form of enquiry report of Investigation Wing - bogus payment - Held that:- From the reasons recorded, we do not find anywhere that these reasons were recorded on the basis of enquiry report of Investigation Wing suggesting that the payment to M/s Maruti Papers Ltd. was bogus. Though in the assessment order, AO has mentioned the enquiry report of Investigation Wing, Meerut (UP) for making additions, but it has not been made basis for reopening of the assessment and the assessment has been reopened merely on account of the difference of the amount recorded in the books of accounts of the assessee as well as in books of accounts of the M/s Maruti Papers Ltd. only. The assessee in its books of accounts recorded arranger fee of Rs. 68,99,954/- whereas M/s. Maruti Papers Ltd. credited an amount of Rs. 68,47,500/-. According to AO this amount of Rs. 52,454 (Rs.68,99,954 - Rs. 68,47,500) has been debited in excess by the assessee. The assessee explained before us that this difference was due to change in accounting of service tax. According to him, the assessee followed inclusive method in respect of the service tax, whereas M/s. Maruti Paper Ltd followed exclusive method of service tax and therefore, said party has not shown amount of service tax in the profit & loss account. CIT(DR) could not controvert this fact that said information was already available with the Assessing Officer. In our opinion, when the information was already available before the Assessing Officer in respect of arranger fee paid to M/s Maruti Papers Ltd., reopening the assessment on the basis of the same information certainly amount to change of opinion. We may like to emphasize here that in the reasons recorded there is no mention of any additional information received in respect of M/s Maruti Paper Ltd. - Decided against revenue

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• 2018 (1) TMI 327
  Entitlement for depreciation relating to its leased assets - Held that:- Learned Departmental Representative fails to dispute all the intervening developments during the pendency of instant lis. We therefore adopt consistency to affirm CIT(A)’s findings under challenge in both these assessment years holding the assessee entitled for depreciation relating to its leased assets. The relevant issue is adjudicated in assessee’s favour accordingly. Carry forward MAT credit of earlier years - It is clear from the above extracted lower appellate findings that the CIT(A) has directed the Assessing Officer to grant MAT credit to the assessee subject to factual verification of earlier years’ records. We do not see any injustice or prejudice caused to the Revenue more particularly in view of the fact that both parties have been litigating in preceding assessment year as well (supra) qua various issues. We therefore affirm CIT(A)’s findings under challenge qua the instant latter issue as well.- Decided against revenue

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• 2018 (1) TMI 326
  Disallowance of exemption u/s.80G - Held that:- The assessee has paid an amount of 2.81 lakhs towards donations and Rs. 2.43.958 towards subscription to different concerns as mentioned in para 21 of this order. The major amounts are paid to Government institutions headed by Government officials like District Magistrate and other Government officials where the assessee company has major active business operations. As regards the subscriptions, the details furnished by the assessee are in the nature of annual membership, etc. The Tribunal in the assessment years 1999-2000, 2000-2001, 2001- 02 and 2002-03 has directed the Assessing Officer to allow such expenditure where the assessee has been able to establish relation over the expenditure of the assessee company. As regards to donation which are eligible for deduction u/s. 80G, the Assessing Officer shall allow the same on submission of the evidence of exemption u/s.80G. But in the present year under consideration, the ld A.R. submitted that there is no such donation which is eligible for deduction u/s.80G. We considering the facts and submissions, set aside the orders of lower authorities and direct the Assessing Officer to allow deduction of Rs. 5.25 lakhs made under the head “donation and subscription” and allow this ground of appeal of the assessee. Addition on account of claim of 15% on loss on sale/discard of assets - CIT(A) directed the Assessing Officer to verify the correctness of assessee’s claim and given effect if any, as the issue is linked with the assessment year 1995-96 to 2008-09 - Held that:- We find no infirmity in the order of the CIT(A) as he has only directed the Assessing Officer to verify the correctness of assessee’s claim and give effect, if any. Hence, we dismiss this ground of the assessee. Short credit of TDS - Held that:- We do not find any flaw in the order of the CIT(A) as he has observed that the credit of TDS should have been allowed to the assessee on the basis of original TDS certificates submitted. Hence, we confirm the order of the CIT(A) on this issue. Depreciation on lease hold rights of coal bearing land u/s.32(1)(ii) being an intangible asset - Held that:- We find force in the submission of ld D.R. that the depreciation is not allowable u/s.32(1)(iii) of the Act in respect of intangible assets, which is supported by judicial pronouncements cited above. In view of above, we dismiss these grounds filed by the assessee.

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• 2018 (1) TMI 325
  TPA - rejection/non-inclusion of certain companies as comparable which were otherwise functionally similar, on the ground that they follow accounting year other than financial year - Held that:- As decided in CIT-II Vs Mckinsey Knowledge Centre India Pvt. Ltd. [2015 (3) TMI 1226 - DELHI HIGH COURT] the revenue submits that comparable was correctly rejected by TPO because the company had different financial year ending on December, 2006, whereas Assessee’s financial year ended on March, 2006. There is nothing shown to the court that supports the revenue’s argument that the ITAT fell into error in holding that if a comparable is following different financial year then the same cannot be included in the list of comparables selected for benchmarking the international transaction. Therefore, the ITAT has held that if the comparable is functionally same as that of tested party then same cannot be rejected merely on the ground that data for entire financial year is not available. If from the available data on record, the results for financial year can reasonably be extrapolated then the comparable cannot be excluded solely on the ground that the comparables have different financial year endings.”. Thus resorted this issue back to the file of the TPO/AO with the direction to include the aforesaid comparable, if from the available data on record, the results for financial year can reasonably be extrapolated. Inclusion of amount pertaining to ESOPs twice in the operating cost base of the assessee - Held that:- . In the present case, it appears that the directions given by the ld. DRP has not been appreciated by the TPO in right perspective. It also appears that the TPO without appreciating the documentary evidences furnished by the assessee made this addition in the cost base taken by him. We, therefore, by considering the totality of the facts, set aside this issue back to the file of the TPO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Treatment of the foreign exchange fluctuation gain/loss as a non-operating item while computing the operating margin of the assessee and of the comparables companies - Held that:- Hon’ble Supreme Court in the case of CIT Vs Woodward Governor India P. Ltd. (2009 (4) TMI 4 - SUPREME COURT) held that Loss suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance-sheet is an item of expenditure under Section 37(1).

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• 2018 (1) TMI 324
  Eligibility for exemption u/s 10(10B) - ex gratia amount received by the employer, at the point of time of leaving the employment - treated as compensation at the time of retrenchment ? - Held that:- Right now we are dealing with an employee who is giving up his source of livelihood under the threat of dislocation, and the hyper technical interpretations based on technicalities about the wordings in the settlement deed, signed by him under these compelling circumstances, is being taken as the understanding about assessee s actual conduct; that is too pedantic an approach and it cannot meet our approval. Let us also not forget that while taking calls on these issues, which deal with employees in the lower rung of hierarchy, we must not be too pedantic or hyper technical in approach. We have to be pragmatic in approach and we must give full effect to the true intent of the public welfare provisions. To us, the arrangement in question is nothing but a termination of employment with the offer of compensation. Viewed thus, the payment in question cannot be anything but a retrenchment compensation. The conditions of section 10(10B), so far as eligibility for exemption is concerned, is satisfied. That, however, is not the end of the matter. As regards the amount eligible for exemption under section 10(10B), it is specifically provided in the aforesaid section that the amount eligible for exemption will be the least of (i) actual amount received by the assessee; (ii) the amount specified by Central Government i.e. Rs. 5,00,000; and (iii) an amount calculated in accordance with the provisions of clause (b) of Section 25F of the Industrial Disputes Act, 1947 i.e. 15 day s average pay for every completed years of services or part thereof in excess of 6 months. One of the important restrictions on the amount eligible for exemption under section 10(10B) is that it should not exceed fifteen days average pay for every completed years of services or part thereof in excess of six months This aspect of the matter has not been examined at all. We, therefore, uphold the claim in principle but remit the matter to the file of the AO for examination of the quantification part in the light of the above observation. With these directions, the appeal is allowed in principle but remitted to the file of the Assessing Officer for limited verification as above.

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• 2018 (1) TMI 323
  Exemption u/s 10B - apportionment of expenditure between EOU and non EOU - Held that:- We find that this issue is covered, in favour of the assessee, by decisions of the coordinate benches, in assessee’s own case, for several assessment years. We have also noted that separate year end financial statements for the EOU are also placed before us and no specific defects, except for the inter unit transfer price, are pointed out in the same. In view of these discussions, as also bearing in mind entirety of the case, we are unable to see any legally sustainable merits in the grievance of the revenue. Denial of 10B exemption in respect of Benzarone Pure and BFX-P i.e. De Acid - “the process involved is only purification of product into final product” and that it involves only removal of some impurities, in effect the process did not lead to manufacture of a new product - Held that:- We find that the controversy is by now well settled inasmuch as Hon’ble Supreme Court has held, in the case of ITO Vs Arihant Tiles & Marbles Pvt Ltd [2009 (12) TMI 1 - SUPREME COURT] that even conversion of marble blocks by sawing them into slabs and tiles and polishing amounts to ‘manufacture or production of article or thing’. In the present case, the products as inputs and as outputs were different for all practical purposes of their use and application. On the similar lines is earlier judgment of Hon’ble Supreme Court in the case of India Cine Agencies Vs CIT [2008 (11) TMI 15 - SUPREME COURT] wherein conversion of jumbo rolls of photographic films into small flats and rolls in desired size was held to be production and manufacture. The objection of the CIT(A) is thus not really sustainable on facts and in law. Even a purification process, or removal of impurities, as along as the end product has different usage, value and applications does amount to a new product coming into existence. Transfer price of product from non EOU to EOU unit - Held that:- The price at which the work in progress has to be transferred from non EOU unit to EOU unit must not only be reasonable but fair and equitable as well. In case non EOU has a legitimate right over more than 10% of profits, as indeed is our opinion, such a right cannot be brushed aside by saying that after all 10% is enough. The question before us is not of what will be reasonable profit in the hand of non EOU unit generally, but of what is reasonable and fair share of profit that should be allocated to the non EOU unit. The profits are to allocated to both the units in a fair and reasonable manner. Let us look at the facts of this case. The overall margin is 28.34%, the processing is done by both the units, and the processing work done by the non EOU unit, by no stretch of logic, is less than the processing work done by the EOU unit. In the light of these facts, in our considered view, allocation of equal profits to EOU and non EOU unit on an equal basis is quite fair and reasonable. We decline to interfere in the well reasoned findings of the CIT(A). We approve his action on this point. The order of the CIT(A) is thus modified only in respect of exclusion of profits in respect of two products- i.e. Benzarone Pure and Di Acid. We direct that the profits in respect of these products will also be eligible for benefit under section 10B. Except for this modification, the order of the CIT(A) stands confirmed.

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• 2018 (1) TMI 322
  Assessment u/s 153C - no satisfaction recorded in the case of the searched person - Held that:- In the present case, it is undisputed that there is not satisfaction recorded in the case of the searched person, i.e., Shri Subhash Deshmukh that the incriminating materials seized belong to the assessee. The ld. Departmental Representative has also not disputed this proposition. Hence, though the satisfaction is there in the case of assessee, i.e., there is no such satisfaction in the case of searched person that the incriminating material belongs to the assessee. In this situation, the assessment order has been held to be invalid - Decided in favour of assessee.

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• 2018 (1) TMI 321
  Addition on account of difference between commission receipt declared by the assessee and as per Form 26AS - Held that:- The assessee has not submitted any evidence, which could reconcile the difference between the commission received as per Form 26AS at Rs. 7,67,404/- as against commission declared by the assessee in its P&L account of Rs. 5,63,670/-. The payer of commission is a group concern and director is common. The onus is on the assessee to explain the discrepancy. The assessee cannot get away simply stating that the Assessing Officer of payer and payee is same. Since the assessee has failed to discharge the primary onus with regard to explain the difference in the receipts of the commission, the Bench find no merit in the contention of the ld. AR of the assessee. The assessee has miserably failed to provide a satisfactory explanation with regard to difference in commission declared by the assessee and commission receipt as per Form 26AS. Hence this ground of assessee’s appeal stands dismissed. Disallowance of expenses - Held that:- The Bench is of the view that this issue needs a fresh look at the level of the Assessing Officer wherein the assessee shall be at liberty to produce the persons to whom the salary was paid as the ld AR claimed that these persons are still working with the assessee company. Accordingly, this issue is restored back to the file of the Assessing Officer. This appeal is partly allowed for statistical purposes.

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• 2018 (1) TMI 320
  Reopening of assessment - discount on shares allotted by the assessee to its employees under the ESOP scheme out of its share capital disallowed - Held that:- We find that the A.O while framing the assessment had specifically observed that the claim of the assessee towards entitlement of discounted premium on ESOP’s as an expenditure under sec. 37(1) was though found to be in accordance with the principle laid down by the ‘Special Bench’ of the Tribunal in the case of Biocon Ltd. (2013 (8) TMI 629 - ITAT BANGALORE), however, as the order of the ‘Special Bench’ of the Tribunal had not been accepted by the department and had been assailed before the Hon’ble High Court of Karnataka, therefore, the claim of the assessee as regards allowability of discounts on ESOP’s could not be accepted. We are unable to persuade ourselves to subscribe to the aforesaid view of the A.O that the order of the ‘Special Bench’ of the Tribunal was not to be followed for the reason that an appeal had been filed by the department against the said order before the Hon’ble High Court of Karnataka. We find that it is not the case of the department that either the order of the ‘Special Bench’ of the Tribunal in the case of Biocon Ltd. (supra) had been set aside or the operation of the same had been stayed by the Hon’ble High Court. We are unable to comprehend that as to how the A.O despite conceding that the claim of the assessee as regards allowability of the discount of ESOP’s was in accordance with the principle laid down by the ‘Special Bench’ of the Tribunal in the case of Biocon Ltd. (supra), could still decline to adjudicate the issue under consideration in terms with the order of the ‘Special Bench’. - Decided against revenue

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• 2018 (1) TMI 319
  Non-compete fee - nature of receipt - revenue or capital receipt - Held that:- Insertion of the term ‘or profession’ in the statutory provision, viz. Sec. 28(va)(a) makes its abundantly clear beyond any scope of doubt that prior to AY: 2017-18 the applicability of Sec. 28 (va)(a) was restricted only in context of amounts which were received or receivable by way of non compete fees in relation to any business, and was not applicable where such sum was received or receivable under an agreement for not carrying out any activity in relation to a profession. We have given a thoughtful consideration to the issue before us, and are of the considered view that the CIT(A) had rightly observed that the provision of Sec. 28(va)(a) were not applicable to the amount of Rs. 40.50 crore which was received by the assessee by way of non-compete fees from PWC and others, in terms of the agreement dated 25.07.2007 for not practising the profession of a Chartered Accountant for a period of 5 years. The non-compete fee received by the assessee pursuant to the agreement dated 25.07.2007, which therein refrained him from practising the profession as a chartered accountant for a period of 5 years, is a ‘Capital receipt’, which however, in the backdrop of our aforesaid observations would not be exigible to tax under Sec. 28(va) of the ‘Act’. That as we have held that the non-compete fee of Rs. 40.50 crore received by the assessee is a ‘Capital receipt’, therefore, the issue raised before us as to whether the same was rightly held by the CIT(A) as chargeable to tax as LTCG, thus, does not survive. Addition under Section 14A r.w.r. 8D - Held that:- In the present case it can safely be concluded that the A.O had failed to arrive at a satisfaction that having regard to the accounts of the assessee, as placed before him, it was not possible for him generate the requisite satisfaction with regard to the correctness of the claim of the assessee that no expenditure had been incurred by him in respect of the exempt income. We therefore in the backdrop of our aforesaid observations are thus unable to persuade ourselves to uphold the disallowance of Rs. 7,60,656/- made by the A.O under Section 14A r.w.r. 8D, which thereafter had been sustained by the CIT(A). We thus set aside the order of the CIT(A) on the issue under consideration and delete the addition

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• 2018 (1) TMI 318
  Unexplained investment - addition made on the basis of statements of third parties and documents found from the possession of third parties unless copies are supplied and opportunity for cross examination is allowed to the assessee - Held that:- In this case the persons who gave statements were interested persons as they were found in possession of unaccounted investment and by giving such statement they have explained such unaccounted investment and also claimed benefit u/s 54 of the Act on the amount so admitted. No incriminating document were found at the business premises of the assessee company or residence of the directors of the assessee. The assessee had not been provided any incriminating documents which could suggest that any on-money was paid. It is important to note that the Jain Brothers have explained their unaccounted investment by making such statement and also claimed benefit u/s 54 of the Act for such amount. In our considered view no addition can be sustained on the basis of such oral admission of interested party without providing opportunity of cross examination and not supported by independent evidence. The provisions of Transfer of Property Act also does not permit admission of oral evidence in contradiction to the written and registered documents. Hence, in these peculiar facts and circumstances of the case, the purchases consideration declared in respect of the Plot No. D-112A and D-112B, Power House Road, Bani Park, Jaipur admeasuring 500 sq. yards each at Rs. 1.00 crore (@ Rs. 20,000 x500 sq yard) each cannot be rejected. As regards the purchase of Plot (admeasuring 1000 Sq. Yards) No. D-112, Power House Road, Bani Park by the assessee from M/s. Rawat Construction Pvt.Ld, Jaipur for Rs. 1.14 crores, it is noted that the Plot No. D-112 as per registered sale deed was at Rs. 11,400/- per sq. yard. The AO noted that the market value of the plot should exactly be the same as of the above Plots No. D-112A & D-112B i.e. Rs. 7.00 crores. According to the AO, the size of the both the plots No. D-112A & D-112B (500+500 sq.yards) are similar to Plot No. D-112, Power House Road, Banipark, Jaipur. Hence, the AO took the value of the same at Rs. 70,000/-per sq. yard instead of Rs. 11,400/- per sq. yard as shown in the registered sale deed. In respect of purchase of Plot No D-112 from M/s. Rawat Construction Pvt Ltd. it is noted at page 24 of the ld. CIT(A)’s order wherein the ld. CIT(A) admitted that no evidence suggesting on money payment with regard to property at Plot No.D-112 Purchased from M/s. Rawat Construction Pvt. Ltd has been found during the course of search operation conducted. It is also noted that no incriminating documents were found from the assessee and the authorities below have not examined the directors of the assessee company to this effect. It is noted that the assessee had purchased the plot admeasuring 1000 sq. yards for Rs. 1.14 crores which appears to be on lower side in comparison of purchase price of adjacent Plots No. D-112A and D-112-B, Power House Bani Park, Jaipur @ Rs. 20,000/- per sq. yard in the same year. In view of this , the cost of the same is to be estimated at Rs. 20,000/- per sq yard. Accordingly, the AO is directed to work out the addition as indicated above. Thus Ground No. 2 (a) & (c) of the assessee are partly allowed.

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• 2018 (1) TMI 317
  Reopening of assessment u/s 147 - sanction envisaged by the scheme of section 151 - need for satisfaction of the Joint/Addl. Commissioner of Income-tax - Held that:- All the judicial precedents filed before us fall in the category in which there is nothing on the record to demonstrate, or even suggest, that the Joint/ Additional Commissioner concerned has recorded his satisfaction that, on the reasons recorded by the Assessing Officer, it is a fit case for initiating the reassessment proceedings. We have carefully perused these precedents but we do not find any reference to the finding that in those cases satisfaction of the Joint/Addl. Commissioner of Income-tax, to the effect that, on the reasons recorded by the Assessing Officer, it was a fit case for initiating the reassessment proceedings, was also on record. A decision rendered without taking note of this fact cannot be an authority for the proposition that even when such a satisfaction by the appropriate authority is on record, just because similar satisfaction is expressed by the higher authority is also on record, requirements of section 151 cannot be taken as having been complied with. The binding nature of judicial precedents is only for what they actually decide and not what can be inferred from these judicial precedents. Nothing, therefore, turns on these precedents in the present case. On the contrary, being satisfied that sanction envisaged by the scheme of section 151, i.e. by recording satisfaction on the reasons recorded by the Assessing Officer that it is a fit case for initiating reassessment proceedings, is given by the prescribed authority on the facts of this case, these judicial precedents are not clearly relevant in the present context.

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• 2018 (1) TMI 316
  Revision u/s 263 - Held that:- In the present case it has not been stated that any such other incriminating documents is relied upon by the ld CIT. in the present case no relationship was also established as stated in para No. 23(d) of that decision. Further, as stated in para No. 23(g) of that decision, that the AO did not examine a single director of the assessee company or of the subscribing company, but in the present case directors of the subscribing company were examined and they confirmed the facts. Further, the amount of investment in share by those companies looking to the project of the company was also not found to be a plain lie. There is no allegation in the present case of money laundering also. In that case on the facts, it was held to be a case of “inadequate enquiry as the ld Assessing Officer did not hold requisite investigation except for calling for the records. In the present case, the ld Assessing Officer has made the due enquiry by examining the directors of the subscribing companies. Therefore, in the present case the ld Assessing Officer also examined the persons behind the company who take the decisions, controlled and managed them. On such examination also the fact of confirmation of investment was reiterated. Therefore, in view of the above distinguishing facts, the reliance by the ld DR on the decision of the Hon'ble Calcutta High Court does not in case of Rajmandir Estates Pvt. Ltd Vs. CIT [2016 (5) TMI 801 - CALCUTTA HIGH COURT] help the case of Revenue. For the reasons given herein above we quash the order of the ld CIT passed u/s 263 of the Act on 17.02.2017. - Decided in favour of assessee.

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• Customs

• 2018 (1) TMI 314
  Rectification of mistake - Held that: - the issue was dealt and proper finding was given, therefore there is no error apparent on record in this regard - there is no error apparent on record in this Tribunal's order No.A/9390793924/16/CB dated 18.08.2016 - ROM application dismissed being not maintainable.

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• Corporate Laws

• 2018 (1) TMI 313
  Condonation of delay - Power to extend time to tribunal - Held that:- Under the inherent power provided under Rule 11 read with aforesaid Rule 15 of NCLT Rules, 2016 the Tribunal is clearly empowered to extend period of compliance, although as per the said order the CP has already stood rejected. Acceptance of the requisite certificates by condoning the delay will lead to consideration of the Scheme on merit. Shutting the doors of justice on the face of petitioners without examining the Scheme on merit shall cause great prejudice to the members, creditors and the petitioner companies. Procedural mandate cannot prevail over substantial justice. It is pertinent to note here that the order in question has not been communicated by the registry in time for effecting compliance. Besides the petitioners have placed sufficient, convincing and adequate grounds for condonation of delay. Thus the delay in filing the requisite certificates is condoned .

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• Insolvency & Bankruptcy

• 2018 (1) TMI 315
  Corporate insolvency process - plea taken by the appellants is that the respondent(s) has filed the application under Section 7 of the I & B Code in the capacity of ‘Trustee’ and not as a ‘Financial Creditor - Held that:- On perusal of the record, we find that in Part-I of Form I, it has been mentioned that the respondent is a ‘Financial Creditor’. Its date of incorporation as financial creditor has been shown as 5th October, 2007 with the identification number as financial creditor. It is true that the respondent is a ‘trustee’ but we find that the respondent is also a company registered under the Companies Act, 1956 and come within the definition of ‘Financial Creditor’ as defined under sub-section (7) read with sub-section (8) of Section 5 of the I & B Code. In view of the fact that the respondent has filed the application in the capacity of the ‘Financial Creditor’ and the application is complete, we find no ground to interfere with the impugned order.

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• Service Tax

• 2018 (1) TMI 309
  CENVAT credit - credit availed before registration - penalty - Held that: - immediately after incorporation, the appellant applied for PAN for which the Income Tax department took time to issue PAN to the appellant and without the PAN the appellant could not registered with the department. Therefore, there was no malafide intent of the appellant for non-registration within time - penalty set aside. The issue has also been examined by the Hon’ble Karnataka High Court in the case of mPortal India Wireless Solutions Private Limited [2011 (9) TMI 450 - KARNATAKA HIGH COURT], where it was held that for the period prior to registration the appellant is entitled to avail cenvat credit of input services. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 308
  Refund of excess service tax paid - unjust enrichment - Held that: - the excess amount paid by the appellant is from the own pocket and not recovered separately from the service recipient. In that circumstances, bar of unjust enrichment is not applicable. Time limitation - Held that: - The excess amount paid by the appellant is not service tax as it is not legally payable by the appellant. In that circumstances, the excess amount paid by the appellant does not invoke provision of Section 11B of the Act - the limitation is not applicable. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (1) TMI 307
  Clandestine removal - Whether the Tribunal has erred in setting aside the demand, interest and penalty without giving a categorical and conclusive finding on the veracity of the basis of arriving at suppressed production? - Held that: - The revenue failed to produce any cogent evidence in respect of raw-materials, which was required for production of Starter Motors. Also, the revenue did not allege anywhere that the assessee was buying any unaccounted for copper wire, yolk, bearings, brakes, slot insulators, laminations and commutators, which are also required for the manufacture of starter motors as in the absence of these essential raw-materials, it was thus not possible for the assessee to manufacture their final product with just Armature Assemblies. The department it may be stated here in the present case has not been able to discharge the burden of proof by way of any real evidence of any kind of clandestine removal. It has not even made an attempt to make a search and investigation in the matter. The Tribunal has rightly come to the conclusion that there was no case of clandestine removal - appeal dismissed - decided against Revenue.

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• 2018 (1) TMI 306
  Utilization of CENVAT credit - non-compliance of Rule 7 and 9 of the CENVAT Credit Rules, 2004 read with Rule 4A(2) of the Service Tax Rules, 1994 - only objection raised by the revenue in the present appeal appears to be that the procedure required to be followed for transfer of CENVAT credit has been violated and therefore the assessee was not entitled to avail CENVAT credit at the manufacturing unit. Held that: - the CENVAT Rules read with Service Tax Rules do not prescribe or require primary evidence of CENVAT credit arising to be transmitted by the Input Service Distributor /head office to it s manufacturing unit where such credit is to be utilised. Those Rules only require details of such existing CENVAT credit to be transmitted. Obviously, the eventual utilisation would have to be equal to and reconcile with the exact/correct figures of CENVAT credit available with the Input Service Distributor before it s transfer to the manufacturing unit - However, as noted above, there is no allegation of excess claim made by the assessee. Merely because the assessee here had provided the details on it s letter head, it would not entail any further, other or new inquiry mechanism or step to be taken by the revenue to make such reconciliation. It would make no material difference to the revenue. In so far as it is admitted to the revenue that the CENVAT credit that had been transferred to the manufacturing unit had arisen at its head office, mere non-issuance of the invoice bill/challan while transferring that CENVAT credit to another manufacturing unit (of the same assessee) appears to be a purely technical infringement arising from absence of form rather than absence of substance. It is the substance and contents of the documents that was relevant to be disclosed in the interest of revenue and not the form on which such details were required to be furnished. For instance, an invoice if issued is either wanting in necessary details or the details that are filled up are wrong, the assessee would not be entitled to any benefit - no prejudice appears to have been caused to the revenue merely on account of issuance of the letter by the assessee, as has been done in the instant case. Appeal dismissed - decided against Revenue.

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• 2018 (1) TMI 305
  Whether the CESTAT was justified in dismissing the appeal filed by the assessee on default on account of non appearance of the appellant or its counsel? - Held that: - Section 35(C) of the Central Excise Act delineates the power of the Appellate Tribunal. Rule 20 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 provides for dismissal of appeal for default and for restoration of those appeals which are dismissed for default - in the case of Balaji Steel Re-Rolling Mills v. Commissioner of Central Excise and Customs [2014 (11) TMI 531 - SUPREME COURT] it was held that an appeal to which Section 35-C of the Central Excise Act applies cannot be decided by the CESTAT by dismissing it for default. The appeal which has been dismissed through the impugned order is eligible to be restored by setting aside the order of dismissal of the appeal.

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• 2018 (1) TMI 304
  CENVAT credit - credit taken without ISD registration - invoice did not contain any registration number - labor charges - Held that: - The appellants have produced an ISD registration in paper format and the same has been verified by the Superintendent (Registration), who has not denied the existence of such registration. In these circumstances, it cannot be said that the appellants were not registered as ISD - demand of credit set aside. Invoice did not contain any registration number - Held that: - Registration number is given by which it is ensured that the duty indicated to have been paid in the invoice is actually remitted to the government; it cannot be taken lightly. The appellants were at liberty to produce the revised invoice with proper registration but they have not done so - appeal dismissed. Labor charges - Held that: - in absence of sufficient evidence to relate the said service to the manufacturing activity credit cannot be allowed - credit denied. Penalty - Held that: - in respect of service tax credit on labour charges the situation is ambiguous and the appellants could have been in doubt - penalty in so far as it relates to labour charges is set aside. Appeal allowed in part.

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• 2018 (1) TMI 303
  Interest on delayed refund - interest to be paid in net value or otherwise? - Held that: - The appellants would be rightly entitled to the interest on the entire amount of Rs. 2 crore - The adjustment if any of redemption fine and confirmation demand can be done only after calculating and granting interest on the entire value of Rs. 2 crores - appeal allowed.

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• 2018 (1) TMI 302
  Penalties - benefit of reduced penalty - proviso to Section 11AC of the Act - option to pay 25% duty as penalty, if the same is being paid within 30 days from the date of receipt of adjudication order - Held that: - duty alongwith interest has been paid by the appellant even before issuance of SCN - penalty on the main appellant is reduced to 25% of the duty involved, subject to payment by the appellant within 30 days of receipt of this order, failing which the appellant is liable to pay 100% of duty as penalty, in terms of proviso to Section 11AC of the Act. Penalty on Shri Bhavesh P. Bansali u/r 26 of the CER, 2002 - Held that: - As in a partnership firm, if the penalty has been imposed on the main appellant, then no penalty can be imposed on the partner of the firm - Penalty imposed on Shri Bhavesh P. Bhansali is set-aside being a partner of the main appellant. Appeal allowed.

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• 2018 (1) TMI 301
  Redemption fine - penalty - it was alleged that appellant has failed to record their production of 383.138MT finished goods in their daily stock register and the goods found in stock was seized under Section 110 of Customs Act, 1962 - Held that: - as per Section 110 (2) of the Customs Act, 1962, if the seized goods are not released within six months, then for extension of seizure, a show cause notice is required to be issued, failing which the goods are required to be released unconditionally - Admittedly, in this case, no SCN in terms of Section 110(2) of the CA, 1962 has been issued to the appellant therefore, the appellant is entitled to get the seized goods back unconditionally. Redemption fine - Held that: - As the goods were required to be released unconditionally, in that circumstance, although the goods are liable for confiscation but, as the goods are not available nor any condition has been imposed on the appellant for seizure of the goods, no redemption fine can be imposed on the seized goods. Penalty - Held that: - no statement during the course of investigation was recorded and no role of the appellant has been specified in the show cause notice - no penalty can be imposed on the appellant without specifying the role for confiscation of the goods. Appeal allowed.

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• 2018 (1) TMI 300
  Refund of CENVAT credit - extended period of limitation - Held that: - the claim of refund was filed by the assessee and on the amount paid by them for extended period of limitation which was held as not invokable in the facts of this case. In that circumstance, the assessee is entitled for the refund claim for the amount paid for the extended period of limitation which they have paid and the same has been rightly sanctioned to the assessee - as the assessee was not able to utilise the Cenvat credit account as their product become exempted from payment of duty, therefore, ld. Commissioner (Appeal) has rightly sanctioned the refund claim in cash. Interest of delayed refund - Held that: - it is an admitted fact that refund claim filed by the assessee on 05.07.2013 has been allowed to them in their Cenvat account on 12.10.2015, which is more than three months from the date of filing of refund claim - the assessee is entitled to claim interest after three months from the date of filing of refund claims i.e. from 05.07.2013 till its realisation on 12.10.2015. Appeal dismissed - decided against Revenue.

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• 2018 (1) TMI 299
  CENVAT credit - Wrong distribution and utilisation of Cenvat credit by ISD - Held that: - as per the Rule 7, there is no bar for distribution of credit for the period prior to 01.04.2012, hence, I hold that the Cenvat credit cannot be denied. Wrong availment of Cenvat credit of office situated in Mumbai renting services - Held that: - the said office in Mumbai is doing marketing for the appellant and the activity of marketing is directly connected to the activity of manufacturing as without marketing, sale or purchase of input or finished goods cannot take place - for the office for which is on rent and service tax has been paid, the appellant is entitled to avail Cenvat credit. Wrong availment of Cenvat credit of construction, works contract services for repair and maintenance - Held that: - it is a fact on record that these services are for repairs and maintenance of old factory building of the appellant and the inclusive part of rule 2(l) provides Cenvat credit to renovation, repair and maintenance of factory - appellant has correctly availed the Cenvat credit of Rs. 4,00,744/- Wrong availment of Cenvat credit of repair and maintenance services of wind mills situated at a distant place - Held that: - As per rule 2(l) of Cenvat Credit Rules, 2004 the place has not been defined whether outside the factory or otherwise - credit cannot be denied. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 298
  Whether the appellant are required to reverse interest on the Cenvat credit availed by the appellant, during the period April 2008 to July 2011? - Held that: - this issue of recovery of interest on the Cenvat credit availed, but, not utilized had been considered by this Tribunal in the case of CCE & ST, Surat Vs. Atul Limited [2017 (4) TMI 217-CESTAT Ahmedabad], whereunder analysing the principles of law settled by the Hon’ble Supreme Court, this Tribunal came to the conclusion that interest would be leviable on the inadmissible credit even if not utilized - appeal dismissed - decided against appellant.

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• 2018 (1) TMI 297
  Interest on rebate - whether the amount of interest recovered from the appellant erroneously adjusting against the rebate claim, become time bar when claimed by the appellant subsequent to the order in appeal determining the correct amount of interest required to be appropriated against the rebate claims? - Held that: - the amount of Rs. 7,98,463/- was considered to have been appropriated in excess. This wrong appropriation of Rs. 7,98,463/- cannot be considered as a separate refund amount and its claim is barred by limitation when the appellant requested for release of the said amount through their letter dated 26.03.2012 - the amount which was initially claimed as refund if reduced by the adjudicating authority, but later restored by the Appellate Authority, second refund claim need not be filed again in claiming that amount - appeal restored.

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• 2018 (1) TMI 296
  Classification - finalization of provisional assessment - amount due adjusted aganst the rebate claim, as appellant did not appropriate the same - whether appropriation of Rs. 11,03,247/- by the Revenue against the sanctioned rebate is correct or otherwise? - Held that: - There is no dispute of the fact that pursuant to the provisional assessment the appellant was directed to pay the differential duty of Rs. 19,62,547.16/- and the department encashed the bank guarantee of Rs. 8,59,300/-, the outstanding 11,03,247/- which was pending and not paid by the appellant inspite of repeated reminders has been finally appropriated against the rebate claim - the appellant had failed to establish that the amount appropriated is not due to the Revenue - appeal dismissed - decided against appellant.

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• 2018 (1) TMI 295
  CENVAT credit - Department was of the view that the appellants are not entitled to cenvat credit as the goods, falling under Chapter 72, were not inputs and that the appellant unit did not have melting facility or processing such scrap - Held that: - there is no dispute as to the fact that the ‘scrap of alternator’ and ‘scrap of engines’ as indicated in the documents by the seller would in itself be an evidence, that the seller is not able to use the same for manufacturing purpose in his factory premises - the capability of the appellant for repairing, refurbishing these alternators and engines is not doubted, only failure to explain the same is being considered on the presumptive ground they may not have undertaken the activity which would enable them to use the said alternator and engines in the DG sets manufactured and cleared by the appellants. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 294
  CENVAT credit - duty paying documents - documents self created by the respondent or otherwise - Held that: - the department has not disputed receipt of quantity of returned finished goods, and it’s accounting for the quantity in a separate part of Daily Stock account Register - the adjudicating authorities findings regarding non-returning of original invoices in case of return of goods and cenvat credit availed is irregular, is not correct - the First Appellate Authority has taken plausible view on the issue within the framework of the provisions of Rule 9 of the CCR, 2004 and Rule 16 of CER, 2002. Appeal dismissed - decided against Revenue.

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• 2018 (1) TMI 293
  Refund claim - rejection on the grounds that for non-payment of consideration by the buyer, no refund or reimbursement of duty can be done by the Department and also necessary supporting documents for the claims were not submitted by the appellants - Held that: - Coal India Limited revised the price retrospectively from 01/01/2012. When the contract value is accepted as assessable value, the duty payment as per such assessment value only can be considered as liable duty. It is the claim of the appellant that they have paid excess duty over and above the normal applicable assessable value in terms of contract. This aspect has not been dealt with by the lower authorities, in correct prospective - Any duty remitted to the Government in excess of the liability towards such assessable value, is to be considered for refund. Submission of supporting documents - Held that: - These documents are essential for the Department to verify the claim of the appellant. These documents will also help in determining the question of undue enrichment, if any, in the present case. Cases remanded back to the Original Authority for a fresh decision after examining the claims - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2018 (1) TMI 292
  Rate of tax - supplies effected to educational institutions established by the Government - whether taxable under Schedule II Part B at the rate of 5% as per the amended Commodities list under CTD portal? - Held that: - similar issue decided in the case of Consolidated Engineering Services Versus The Commercial Tax Officer [2016 (6) TMI 1273 - MADRAS HIGH COURT], where it was held that the issue is squarely covered by the decision in the case of Technomed Electronics and another Vs. CTO, Thiruvanmiyur Assessment Circle, and another [2009 (1) TMI 821 - MADRAS HIGH COURT], where it was held that the order, dated March 31, 2008 passed by the Commercial Tax Officer, Thiruvanmiyur Assessment Circle, disallowing the concessional rate of tax at five per cent on the sales to educational institutions is set aside. Matter remanded back to the respondent to take note of the decision rendered in the above referred cases and extend the concessional rate of tax to the petitioner by redoing the assessment - Petition allowed by way of remand.

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• 2018 (1) TMI 291
  Works contract - hardware chemicals - rate of tax - Whether the order of the Appellate Assistant Commissioner in allowing the appeal, setting aside the revision made by the Assessing Officer is legally correct or not? - Held that: - Though Mr.K.Venkatesh, learned Government Advocate, made submissions, and sought for reversal of the orders, passed by the Appellate Assistant Commissioner (CT)-I, Chennai, and confirmed by the Tribunal, considering the facts and circumstances of the case, we do not find that the appellant has made out a case, for reversal - Revenue has not produced any contrary decision - Tax Case Revision Petition is dismissed.

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• Indian Laws

• 2018 (1) TMI 312
  Cheque bounced - whether cheque was issued by the respondent or otherwise? - Held that: - Once the signatory of the cheque did not dispute his signature found in the instrument then the presumption under Section 118 of Negotiable Instruments Act will come into play. As already stated the respondent/accused did not deny the signature found in the cheque in question. Therefore, both the Courts below have rightly came to a conclusion that the cheque in question was issued by the respondent/accused for Rs. 4,00,000/-. Issuance of Promissory note - whether promissory note was executed by the revision petitioner/accused? - Held that: - Once the execution of an instrument is established, the presumption under Section 118 of Negotiable Instruments Act is that the said instrument was supported by consideration - it is crystal clear that the cheque in question was issued only towards the partial payment of promissory note debt as rightly contended by the learned counsel for respondent herein. Petition dismissed.

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• 2018 (1) TMI 311
  Cheque bounced - Recovery of money / dues - Section 138 of the Negotiable Instruments Act - In the absence of any privity of contract between the plaintiff and the predecessor of the defendants, or the necessary proof as to the existence of any legally valid debt or liability in favour of the plaintiff, whether the Courts below are correct in decreeing the suit of the plaintiff for recovery of money? - Held that: - the plea of the defendants that there is no proof of valid contract between the plaintiff and deceased B.Ramaiah as to the execution of Ex.A1, when it is found that the defendants have failed to establish that Ex.A1 Panchayat Muchilika, involved in the matter had been obtained by the plaintiff by threat, duress and coercion and when it is further found that the Panchayat Muchilika, Ex.A1 had come to be executed by the parties only in connection with the debt due from B.Ramaiah to the plaintiff, in connection with the business transactions and it is accordingly seen that Courts below have rightly assessed the materials placed on record, both oral and documentary evidence in the correct perspective, factually as well as legally and had rightly come to the conclusion that the Panchayat Muchilika Ex.A1, is a true and valid document and binding on the defendants, as the legal heirs of the deceased B.Ramaiah. The very fact that, one of the cheques had been honoured as put forth by the plaintiff and when the same also is admitted by the defendants' and when till date the defendants have not endeavored to lay any action against the plaintiff for the obtainment of the amount received by the plaintiff under the said cheque also would go to show that inasmuch as the cheques in question were issued by B.Ramaiah for the outstanding amount due from him to the plaintiff, it is seen that no further concrete action had been initiated by the defendants as regards the encashment of the one cheque by the plaintiff. The substantial questions of law formulated in the second appeal are answered against the defendants and in favour of the plaintiff - appeal dismissed.

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• 2018 (1) TMI 310
  Service of notice - Dishonor of cheque - Whether there is proper compliance of the service of the statutory notice as mandated under Section 138 of the Negotiable Instruments Act? - Held that: - it appears that the revision petitioner has not collected the above postal cover from the concerned post office - both the Courts below have categorically held that intimation regarding the Ex.P3, legal notice has been duly served upon the revision petitioner and he failed to collect the same from the concerned Post Office, the same was returned. It is no doubt true that the receipt of the notice has to be proved, but if the notice is refused by the addressee, it may be presumed to have been served. In a case where notice is not claimed even though sent by registered post, with the aid of Section 27 of the General Clauses Act, the drawer of the cheque may be called upon to rebut the presumption which arises in favor of service of notice. However, no rule of universal application can be laid down that in all cases where notice is not served on account of non-availability of the addressee, the court must presume service of notice. There is no material to interfere with the conviction and sentence passed by the Courts below and accordingly, this Criminal Revision Petition is dismissed.

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