Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 10, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
GST
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53/2018 - dated
9-10-2018
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CGST
Central Goods and Services Tax (Eleventh Amendment) Rules, 2018.
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15/2018 - dated
8-10-2018
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UTGST
Central Government notifies the Constitution of the Appellate Authority for Advance Ruling in the Union territories
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14/2018 - dated
8-10-2018
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UTGST
Central Government notifies the Constitution of the Authority for Advance Ruling in the Union territories
GST - States
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S.O. No.76-49/2018-State Tax - dated
4-10-2018
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Jharkhand SGST
The Jharkhand Goods and Services Tax (Tenth Amendment) Rules, 2018.
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S.O. No. 74-47/2018-State Tax - dated
4-10-2018
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Jharkhand SGST
Amendments in the Notification number 34/2018 – State Tax dated the 21st August, 2018-S.O. 60.
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S.O. No. 73-46/2018-State Tax - dated
4-10-2018
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Jharkhand SGST
Amendments in the Notification No. S.O. No. 87, dated the 05th October, 2017 (State Tax) and Notification number 16/2018 – State Tax dated the 30th March, 2018 - S.O.28.
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S.O. No. 72-45/2018-State Tax - dated
4-10-2018
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Jharkhand SGST
Amendments in the Notification No. S.O. No. 61, dated the 18th August, 2017 (State Tax) and S.O. No. 131, dated the 14th November, 2017 (State Tax).
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S.O. No. 71-39/2018-State Tax - dated
4-10-2018
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Jharkhand SGST
The Jharkhand Goods and Services Tax (Eighth Amendment) Rules, 2018.
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23/2018 - dated
20-9-2018
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Karnataka SGST
Purpose of clarifying the scope and applicability of the Government of Karnataka Notification (12/2017) No. FD 48 CSL 2017, dated the 29th June, 2017.
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20/2018 - dated
20-9-2018
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Karnataka SGST
Seeks to notify the rate of tax collection at source (TCS) to be collected by every electronic commerce operator for intra-State taxable supplies.
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(01-U/2018) No. KGST.CR.01/2017-18 - dated
18-9-2018
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Karnataka SGST
Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117(1A) Of the Karnataka Goods and Service Tax Rules, 2017 in certain Cases
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Order No. 04/2018-MGST - dated
27-9-2018
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Maharashtra SGST
Extension of time limit for submitting declaration in FORM GST TRAN-1 under rule 117(1A) of the Maharashtra Goods and Services Tax Rules, 2017 in certain cases.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Jurisdiction of Central and State tax administrations under GST - Both the Central and State tax administrations shall have the power to take intelligence-based enforcement action in respect of the entire value chain
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Classification of goods - Stainless Steel Chilly Cutter - The product Chilly Cutter made of Stainless Steel is classifiable under Heading 8210 00 00 and not under Heading 7323.
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Levy of GST - hospitality services - The applicant is liable to pay GST on the services from their hotel located in non-processing zone of Dahez Special Economic Zone to the clients located outside the territory of Special Economic Zone under the provisions of Section 5(1) of Integrated Goods and Service Tax Act, 2017.
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Classification of supply - Levy of GST - printing of various items - The supply of Aadhaar Cards are classifiable under heading 9989 of GST Tariff and attracts GST @ 12%
Income Tax
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Undue delay in granting the refund - The petitioner cannot claim any further interest or compensation over and above the statutory interest prescribed u/s 244A - having regard to long delay, the CIT shall pay cost of ₹ 1,00,000/= [rupees one lakh] to the petitioner.
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Interest free advances - Disallowance of part interest paid on unsecured loans - Merely because non-interest-bearing advances were given to third parties, would not justify a finding that the test of “commercial expediency” was not satisfied.
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Rental income from mobile towers - the income received by the assessee from the cellular operators/mobile companies is on account of letting out space on the terrace for installation and operation of antennas and nothing else. - Thus the rental income received by the assessee from such letting–out has to be treated as income from house property.
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Exemption u/s 11 - receipt of sponsorship income from India and abroad - commercial receipts - there is there is no proper justification for denying the exemption and the Proviso of section 2(15) is not attracted in this case
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Exemption u/s 11 - alleged violation of certain provisions of Section 13 - Excess salary paid to the trustee - revenue has failed to place on record any comparative chart or any other corroborative evidence to establish that the aforesaid payment was excessive or unreasonable, in any manner.
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Disallowance on account of excess claim of managerial remuneration u/s 40A - Even though the appellant company may be deemed as Public Limited Company under the Companies Act, 1956 and had made default under that Act, it could not be the sole reason for making disallowance of managerial remuneration for computing the taxable income of the assessee
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Assessment u/s 153A r.w.s. 143(3) - Demand based on search conducted by the Central Excise Department and contained in show cause notice (SCN) issued by them - Revenue could not produce any incriminating material found during the course of search under section 132 of the Act on the assessee’s group of cases - All the assessments orders quashed.
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Provision for warranty - assessee derived advantage by deferring its income to the extent of excess warranty provision to subsequent years. Therefore, such excess provision cannot be allowed as a deduction. Therefore the provision made for warranty cannot be said to be reliable.
Customs
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It would not be justified allowing exporters to avail IGST refund after initially claiming the benefit of higher drawback. There is no justification for re-opening the issue at this stage.
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Valuation of imported goods - in the case of invoices of un-bifurcated C&F amount as well, the FOB value of the goods is very much ascertainable. No question arises for enhancing the airfreight to the extent of 20% thereof, for these invoices also.
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Clandestine removal of imported goods - Imported fabric was not utilized for the manufacture of readymade garments, which had to be exported - the statements of the Director recorded by the raiding party were in terms of Section 108 of the Customs Act, which was admissible in evidence - Demand sustained.
State GST
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Guidelines for Deductions and Payments of TDS by the DDOs Of State Government Authorities under GST.
Indian Laws
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Dishonor of cheque due to insufficiency of funds - "Karta Dharta" of the company - Vicarious Liability there is no reason to disbelieve the basic averment to the effect that the persons who have been arrayed as accused, are responsible/ in charge of the day-to-day business of the Company.
Service Tax
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Construction services - after 1.6.2007, demand in respect of composite contracts would fall under works contract service only - the demand of service tax under commercial or industrial construction service (residential complex) cannot sustain after the period 1.6.2007.
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Demand of service beyond the scope of SCN - though the show cause notice raises the demand under commercial or industrial construction service, the Commissioner has confirmed the demand under works contract service - the confirmation of service tax being beyond the demand and allegations raised in the show cause notice, the same cannot sustain.
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Rental income - Joint ownership - clubbing of clearances - SSI Exemption - it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the service tax on the total rent be collected from one of the co-owners.
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Construction service - appellant have constructed individual row houses and not a residential complex having 12 or more units/ flats. Under such circumstances, there is no case of construction of residential complex as defined under the statute.
Central Excise
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CENVAT Credit on retained amount - credit of service tax paid on input services - certain percentage of the stipulated payment was withheld by the respondent on account of the performance guarantee - Restriction under rule 4(7) not applicable - Credit allowed.
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CENVAT Credit - The appellant is entitled to take cenvat credit on the supplementary invoices in question - further, there is no element of fraud and suppression on the part of the appellant. The issue herein is recurring in nature. - Credit allowed
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Refund of excise duty extra paid - test of unjust enrichment - they are certainly entitled for refund of excess paid by them on the discount amounts returned by them to the dealers in the form of credit notes.
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Method of Valuation - Transaction value or MRP based valuation - The department has stretched the provisions of law unnecessarily to include small quantities of ball bearings cleared on retail sale under the provisions of section 4A without substantiating such claim with some concrete evidences
Case Laws:
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GST
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2018 (10) TMI 450
Classification of goods - Stainless Steel Chilly Cutter - Product Chilly Cutter made of Stainless Steel, whether classifiable under HSN 7323 or otherwise? Held that:- The product Chilly Cutter of the applicant weighs 210 grams i.e. less than 10 kgs. It consists of crank handle to rotate the cutter (cutting blade of Stainless Steel). Thus, the product Chilly Cutter of the applicant is mechanical appliance, having mechanical features described in the Explanatory Notes. The product Chilly Cutter of the applicant is hand operated, non-electric mechanical appliance. As per the Explanatory Notes, ‘Vegetable or fruit slicers, cutters and peelers, including potato chippers’ are specifically covered under Heading 82.10 - the product S.S. Chilly Cutter supplied by the applicant is classifiable under Heading 8210 00 00. Heading 7323 covers ‘Table, Kitchen or other household articles and parts thereof, of iron or steel; iron or steel wool; pot scourers and scouring or polishing pads, gloves and the like, of iron or steel’ - The Explanatory Notes for Heading 73.23 of Harmonised System of Nomenclature further provides that ‘this heading excludes, inter-alia, Household articles having the character of tools, e.g., shovels of all kinds; corkscrews; cheese craters, etc.; larding needles; can openers; nut-crackers; bottle openers; curling irons, pressing irons; fire-tongs; egg whisks; waffling irons; coffee-mills, pepper-mills; mincers; juice extractors, vegetable pressers, vegetable mashers (Chapter 82)’. As the product Chilly Cutter supplied by the applicant is found to be specifically covered under Heading 82.10, the same is not classifiable under Heading 73.23 in view of Explanatory Notes for heading 73.23 as well as Section Note 2 of Section XV of the Customs Tariff Act, 1975. Ruling:- The product Chilly Cutter made of Stainless Steel, supplied by M/s. Meera Metals is classifiable under Heading 8210 00 00 and not under Heading 7323.
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2018 (10) TMI 449
Levy of GST - hospitality services - The hotel being located in non-processing zone of Dahez Special Economic Zone whether liable to pay GST on all the services provided by it to the clients located in SEZ which inter-alia included supply of services by way of providing accommodation services, supplying food and beverages and supplying services ancillary to providing accommodation services? Under extreme circumstances, if the hotel is required to provide accommodation services to a visitor other than a visitor located in SEZ, whether GST is required to be paid? Held that:- The provisions of Section 7 and Section 8 of IGST Act, 2017 read with the definition of SEZ developer given at Section 2(20) of IGST Act, mandate that all the supply of goods or services made by or to SEZ Co-developer would be considered as interstate supply and the levy of IGST is attracted at the applicable rate. But the IGST law allows the benefit of zero rating to supplies made to an SEZ unit. As per Section 16(1) of IGST Act 'zero rated supply' means any of the following supply of goods or services or both namely (a) export of goods or services or both ; or (b) supply of goods or services or both to a SEZ developer or SEZ Unit. Section 2(m)(iii) of SEZ Act, 2005 defines export means supplying goods, or providing services, from one unit to another unit or developer, in the same or different special economic zone. A combined reading of Section 16(1) of IGST Act and Section 2(m)(iii) of SEZ Act indicate that supply of services made by the applicant to other units or developers of SEZ would be zero rated supply. Rendering of services from SEZ to DTA does not qualify as Zero rated supply in terms of Section 16 of IGST Act, 2017. Therefore, SEZ Unit/developer making interstate supply to DTA would be liable to pay IGST under IGST Act. Therefore, supply of services by the SEZ unit or Developer from SEZ to DTA would be covered under the normal course of supply. Accordingly the applicant will be liable to pay GST at the prescribed rates for supplies made to the clients located outside the territory of SEZ. Ruling:- The supplies made by M/s. Sapthagiri Hospitality Private Limited, 17-18, Sapthagiri Complex, Opp. The Gateway Hotel, Near Akota Garden, Akota, Vadodara-390 002, a SEZ Co-developer, from their hotel located in non-processing zone of Dahez Special Economic Zone to the clients located in Special Economic Zone for authorized operations will be treated as zero rated supplies under the provisions of Section 16(1) of Integrated Goods and Service Tax Act, 2017 read with Section 2(m) of SEZ Act, 2005. The applicant is liable to pay GST on the services from their hotel located in non-processing zone of Dahez Special Economic Zone to the clients located outside the territory of Special Economic Zone under the provisions of Section 5(1) of Integrated Goods and Service Tax Act, 2017.
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2018 (10) TMI 448
Maintainability of Advance ruling application - Section 97(2) of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 - Whether DPT shall continue to pay GST on disputed claim? - How is it possible for DPT to claim refund for GST paid out of pocket, if the matter / dispute concluded in favour of party / lease holder, considering the fact that it may conclude after period of 2 or more years? Held that:- The issues raised by the applicant do not fall in the category of Section 97(2) of the Acts. Whether the applicant shall continue to pay GST on disputed claims do not require determination of any issue enumerated under Section 97(2) of the Acts. Further, the issue of refund claim in case of conclusion o dispute after more than 2 years, is also not covered by Section 97(2) of the Acts. This authority has been constituted in exercise of the powers conferred by section 96 of the Gujarat Goods and Services Tax Act, 2017, which Act extends to the whole of the state of Gujarat. This authority is a creature of statute and has to function within the legal boundary mandated by the Act. As the issue of ‘refund claim’ and ‘whether the applicant shall continue to pay GST on disputed claims’ are not covered by Section 97(2) of the Acts, this authority is helpless to answer the question raised in the application, as it is lacking jurisdiction to decide the issues. The jurisdiction of this authority does not extend to the questions on determination of these issues. The application for Advance Ruling of M/s. Kandla Port Trust (Deendayal Port Trust) is rejected, under sub-section (2) of section 98 of the CGST Act, 2017 and the GGST Act, 2017.
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2018 (10) TMI 447
Levy of IGST - Supply of services - services like Pilotage, Berthing, Cargo Handling, Warehousing etc. in relation to import and export of goods at Port of Kandla - whether IGST is applicable to port related services provided to out of the state registered dealer or CGST and SGST would apply? Held that:- The place of supply of services of the applicant is required to be determined in order to determine whether IGST would be applicable or CGST and SGST would be applicable on port related services being provided by the applicant. Thus, the entire issue is intrinsically related to determination of ‘place of supply’ of service by the applicant - The applicant has filed application for advance ruling wherein provisions of Sections 5, 7 and 12 of the IGST Act, 2017 have been referred. Thus, the applicant is well aware that the issue is related to ‘place of supply’. This authority has been constituted in exercise of the powers conferred by section 96 of the Gujarat Goods and Services Tax Act, 2017, which Act extends to the whole of the state of Gujarat. This authority is a creature of statute and has to function within the legal boundary mandated by the Act. As the ‘place of supply’ is not covered by Section 97(2) of the Acts, this authority is helpless to answer the question raised in the application, as it is lacking jurisdiction to decide the issues. The jurisdiction of this authority does not extend to the questions on determination of ‘place of supply’. The application for Advance Ruling of M/s. Kandla Port Trust (Deendayal Port Trust) is rejected, under sub-section (2) of section 98 of the CGST Act, 2017 and the GGST Act, 2017.
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2018 (10) TMI 446
Liability to deduct TDS - Whether Deendayal Port Trust is liable to deduct TDS under section 51 of CGST Act, 2017 from the date of effective of the section 51? Held that:- The issue raised by the applicant do not fall in the category of Section 97(2) of the Acts. Whether the applicant is liable to deduct TDS under section 51 of the CGST Act, 2017 and the GGST Act, 2017 is not covered by Section 97(2) of the Acts - This authority has been constituted in exercise of the powers conferred by section 96 of the Gujarat Goods and Services Tax Act, 2017, which Act extends to the whole of the state of Gujarat. This authority is a creature of statute and has to function within the legal boundary mandated by the Act. As the issue ‘whether the applicant is liable to deduct TDS under Section 51 of the CGST Act, 2017 and the GGST Act, 2017’ is not covered by Section 97(2) of the Acts, this authority is helpless to answer the question raised in the application, as it is lacking jurisdiction to decide the issue. The jurisdiction of this authority does not extend to the questions on determination of this issue. The application for Advance Ruling of M/s. Kandla Port Trust (Deendayal Port Trust) is rejected, under sub-section (2) of section 98 of the CGST Act, 2017 and the GGST Act, 2017.
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2018 (10) TMI 445
Classification of supply - Levy of GST - Supply of service - exempted supply or not? - printing of various items - Whether, in the facts and circumstances as explained in Annexure II, supply of service of: (i) Printing of Pre examination items like question papers, OMR sheets (Optical Mark Reading), Answer booklets for conducting of an examination by the educational boards be treated as exempted supply of service by virtue of the notifications cited supra in Annexure I?; (ii) Printing of Post examination items like marks card, grade card, certificates to educational boards (up to higher secondary) after scanning of OMR Sheets and processing of data in relation to conduct of an examination be treated as exempted supply of service by virtue of the notifications cited supra in Annexure I?; (iii) Scanning and processing of results of examinations be treated as exempted supply of service by virtue of the notifications cited supra in Annexure I? - Held that:- Exemption from payment of GST in respect of certain supplies of Services has been provided under Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No.02/2018-Central Tax ( Rate) dated 25.01.2018 - the services provided to educational institutions for conducting of examinations are eligible for exemption under entry No.66 of Notification No. 12/2017- Central Tax (Rate) dt. 28.6.2017. What would be the classification and the GST rate, for the supply of services in the nature of printing of cheque books in the below mentioned two situations where the physical inputs of paper belongs to (i) the customer banks; (ii) the applicant? - Held that:- In this case, assessees are undertaking two types of supplies. (i) In respect of paper supplied by the banks, they print the cheque format of respective banks and (ii) physical inputs including paper and ink would be borne by the company and the cheques after printing as per the bank s specifications, would be supplied to them. In both the cases, the unit prints the cheque and then supplies the cheque book to the bank after completion of the printing work - In respect of the situation, where the paper is being supplied by the banks, and the applicants are undertaking job work of printing the cheque and converting them as cheque books, the predominant supply in the instant case is supply of service. As the services by way of any treatment or process on goods belonging to another person, in relation to- printing of all goods falling under chapter 48 or 49, which attract CGST @ 2.5% or Nil are covered under sub-item ( c) of item (ii) at Serial No.26 of the Notification No.11/2017-Central Tax ( Rate) dated 28.06.2017 as amended, and the cheques, loose or in book form being an exempted supply in terms of S.No. 118 to the Notification No. 02/2017- Central Tax (Rate) dated 28.06.2017, the supply of service by the applicant attracts GST @ 5% ( 2.5% CGST + 2.5% SGST). In respect of supply of cheque books where the printing paper and inks are being borne by the applicants, the impugned goods merit classification under Tariff heading 4907 as goods and they are an exempted supply in terms of Serial No 118 to the Notification No.02/2017-Central Tax (Rate) dated 28.06.2017. Hence, cheques or cheque books would not attract any GST and are an exempted supply in terms of the Notification. Whether, in the facts and circumstances as explained in Annexure II, what would bethe classification and the GST rate for, printing and supply of Aadhaar cards on paper to the Unique Identification Authority of India (UIDAI)? - Held that:- The services can be considered as composite service in terms of section 2(30) of CGST/TGST Act, 2017. These services cannot be considered as mixed supply as each service is dependent on one another and all the supplies are provided in conjunction. Despatching of aadhaar card will not be complete unless it is printed, laminated and franked by the applicant. Likewise all the services are interdependent on one another. Hence it cannot be considered as mixed supply in terms of section 2(74) of CGST/TGST Act, 2017. In the entire gamut of things being undertaken by the applicant, it appears that, it is an activity of predominant nature of supply of service rather than supply of goods - Accordingly, it appears that, the services rendered by the applicant merits as supply of service and accordingly falls under serial no.27 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as amended and the rate of tax applicable is 12% ( 6% CGST + 6% SGST). What would be the classification and the GST rate, for printing and sale of Polyvinyl chloride (PVC) Cards for various customers? - Held that:- In terms of GST Circular No.11/11/2017-GSTdated 20.10.2017, it is clarified that, supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc. printed with logo, design, name, address or other contents supplied by the recipient of such printed goods, are composite supplies and the question, whether such supplies constitute supply of goods or services would be determined on the basis of what constitutes the principal supply - Principal supply has been defined in Section 2(90) of the Central Goods and Services Tax Act as supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. In the instant case since the PVC cards are belonging to the applicant, predominant supply is that of goods and the supply of printing of the content supplied by the recipient of supply is ancillary to the principal supply of goods and therefore such supply would be classified as supply of goods falling under chapter 3920 of the Customs Tariff as made applicable to GST Tariff, hence it attracts 18% GST ( 9%CGST+9%SGST) as per Sl.No.106 of Schedule III of Notification No.1/2017-Central Tax (Rate) dated 28th June, 2017. Ruling:- The supply of service to educational institutions for conducting of examinations are eligible for exemption under entry No.66 of Notification No. 12/2017- Central Tax (Rate) dt. 28.6.2017. The supply of Printing of cheque books (where the paper is being supplied by the banks) are classifiable under heading 9988 and attracts GST @ 5% (2.5% CGST + 2.5% SGST). The supply of cheque books(where the printing paper and inks are being borne by the applicants) are classifiable under heading 4907 of GST Tariff as goods and would not attract any GST as they are exempted supply in terms of Serial No 118 to the Notification No.02/2017-Central Tax (Rate) dated 28.06.2017. The supply of Aadhaar Cards are classifiable under heading 9989 of GST Tariff and attracts GST @ 12% ( 6% CGST + 6% SGST) in terms of S.No.27 of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as amended. The printing and supply of Polyvinyl chloride cards (PVC) are classifiable under heading 3920 of GST Tariff and attracts 18% GST (9%CGST + 9%SGST) in terms of S.No.106 of Schedule III of Notification No.1/2017Central Tax (Rate) dated 28th June, 2017.
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Income Tax
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2018 (10) TMI 443
Penalty levied u/s 271G r.w.s 274 - when the assessee deliberately avoided the production of T.P. documentation as required u/s 92D - Held that:- Special Leave Petition is dismissed.
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2018 (10) TMI 442
Reopening of the assessment u/s 148 - validity of reason to believe - Held that:- Every non disclosure of material facts will not or cannot be a justifiable reason for reopening sustainable under judicial scrutiny. Such non disclosure of a material fact must be of such nature that, but for such non disclosure, the income, relatable to such material fact, would not have escaped assessment. In other words, it should lead to an irrebuttable conclusion that by the conduct of the assessee, either by providing wrong or incorrect particulars or by not providing the full and correct particulars, he should have made the Assessing Officer not to bring a particular income to tax, which is otherwise liable to be taxed. If this test is applied to the present case, the Revenue has to fail. It is settled law that mere change of opinion on the existing material cannot be a ground for reopening the assessment in the absence of any new material that had come to the possession of the Assessing Officer. In this case, there is no tangible material available before the Assessing Officer to reopen the assessment and on the other hand, it was purely out of his change of opinion on the material already existed. - Decided in favour of assessee.
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2018 (10) TMI 441
Undue delay in granting the refund - Credit to the refund due to the petitioner and the interest u/s 244A (1) and 244 (1A) - additional compensation due to the petitioner - Held that:- As and when applicable, newly inserted subsection [1A] of Section 244A provides for additional interest. The statutory provisions thus govern the situations where the interest on delayed refund would be paid as also the rate on which such interest is to be calculated. There cannot be any further direction for payment of interest over and above such statutory prescriptions. This is not a case where the principal refund is granted at one point of time, withholding the interest and the Revenue thereafter, having frozen the liability of interest seeks to avoid making any further payment of compensation on the amount of interest which remained unpaid for a long period of time. The petition is disposed of with the following observations and directions :- [i] The petitioner would not be entitled to additional interest under subsection [1A] of Section 244A of the Act during the entire period after passing of the appellate order, but would be entitled to such additional interest after introduction of the relevant statutory provisions w.e.f 1st June 2016 in terms of the observations made in this judgment. [ii] The petitioner cannot claim any further interest or compensation over and above the statutory interest prescribed. However, looking to long delay which has clearly remained explained in giving effect to the appellate order, the respondent shall pay cost of ₹ 1,00,000/= [rupees one lakh] to the petitioner. [iii] It is expected that the concerned Assessing Officers would pass necessary orders giving effect to the appellate or revisional orders in case of petitioner and other group entities as expeditiously as possible. We expect that the Revenue would not drive the petitioner to unnecessary litigation in this respect.
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2018 (10) TMI 440
Disallowance u/s 36(1)(iii) - interest free advances to sister concerns - "commercial expediency"for granting such advances - Held that:- The expression "commercial expediency" is again of wide import and includes such expenditure incurred for the purpose of business. Therefore, once it is established that there was a nexus between expenditure and purpose of business, which need not be the business of the assessee, deduction under Section 36(1)(iii) must be allowed. Revenue cannot assume the role and occupy armchair of a businessman to decide whether expenditure was reasonable. The Revenue cannot look at the matter from its own standpoint, but that of a businessman. Money borrowed, even when advanced to a sister concern for some business purpose, would qualify for deduction of interest. However, if the money borrowed is utilized by the assessee for personal benefit and not for business purpose, interest paid on that amount would not satisfy the test of commercial expediency. There is another glaring error by the Assessing Officer. Instead of disallowing interest paid on the borrowed fund, the Assessing Officer made an addition of ₹ 1,50,04,133/- by notionally computing interest @18% p.a. on ₹ 8,33,56,295/- i.e. the interest free advances given by the respondentassessee to the sister concerns. This is clearly impermissible and contrary to law. The Commissioner of Income Tax (Appeals) referring to the 'nexus principle' approved in S.A. Builders (2006 (12) TMI 82 - SUPREME COURT) held that once link between the expenditure given by way of loans and the purpose of the business was established, Revenue cannot justifiably assume the role of the assessee to decide how much was reasonable expenditure having regard to the circumstances of the case. - decided in favour of assessee.
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2018 (10) TMI 439
Interest free advances - Disallowance of part interest paid on unsecured loans - assessee had advanced loans to third parties on which no interest was charged and received - advancement of loan on “business expediency” - Held that:- Tribunal was of the correct view that the respondent-assessee had paid interest on capital borrowed for business purpose and in the absence of any allegation and finding that the respondent-assessee had diverted unsecured loans for non-business purpose no disallowance could be made. As per Section 36(1)(iii) of the Act interest paid for capital borrowed for purpose of business has to be allowed as a deduction. Purpose of business need not be the business of the assessee, for deduction under Section 36(1)(iii) of the Act to be allowed. Further, Revenue cannot assume the role and occupy armchair of a businessman to decide whether expenditure was reasonable. The Revenue cannot look at the matter from its own standpoint, but opinion and decision of a businessman on “business expediency” matters. Money borrowed even when advanced to a subsidiary for some business purpose would qualify for deduction of interest. In the context of the present case the unsecured loans were not used for personal purpose. Merely because non-interest-bearing advances were given to third parties, would not justify a finding that the test of “commercial expediency” was not satisfied. Interest free advances were preferred to the parties connected with the business of the respondent/assessee. Money taken on loan was not diverted for non business purpose - decided in favour of assessee
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2018 (10) TMI 438
Application for approval u/s 12AA denied - proof of charitable activities - CIT (E) held that if the objects of the applicant are for the benefit of a limited group of person then it is not a charitable organization. Held that:- Upon perusal of the objects incorporated in the order it cannot be said that any error has been committed by the learned I.T.A.T. in allowing the appeal filed by the respondent/assessee because it is evident from the objects that few objects are meant for the benefit of the members and their establishment but at the same time the benefits also extends to other associations, women, children, old persons, education and social health and other objects in the interests of public at large.
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2018 (10) TMI 437
Rental income from mobile towers - income from house property or income from other sources - Disallowance of deduction claimed towards repairs and maintenance u/s 24 - AO concluded that the income received from the mobile companies towards installation of mobile towers / antenna is to be treated as income from other sources - CIT(Appeals) held that the income received by the assessee is in the nature of compensation for providing services and facility to cellular operators - Held that:- The assessee has let–out some space on the terrace of the building to the cellular operators for installing and operating the mobile towers / antenna for the purpose of providing mobile telecom services. The terrace of the building cannot be considered as distinct and separate but certainly is a part of the house property. Therefore, letting–out space on the terrace of the house property for installation and operation of mobile tower / antenna certainly amounts to letting–out a part of the house property itself. That being the case, the observation of the Assessing Officer that the terrace cannot be considered as house property is unacceptable. CIT(Appeals)'s reference that the rental income received by the assessee is in the nature of compensation for providing services and facility to cellular operators, it is relevant to observe, the Departmental Authorities have failed to bring on record any material to demonstrate that in addition to letting–out space on the terrace for installation and operation of antenna the assessee has provided any other service or facilities to the cellular operators. Thus, from the material on record, it is evident that the income received by the assessee from the cellular operators/mobile companies is on account of letting out space on the terrace for installation and operation of antennas and nothing else. Thus the rental income received by the assessee from such letting–out has to be treated as income from house property. - Decided in favour of assessee.
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2018 (10) TMI 436
Benefit of section 11 & 12 denied - receipt of sponsorship income from India and abroad - commercial receipts - AO observed that assessee is hit by proviso to section 2(15) - assessee is neither registered under FCRA nor permission been taken from RBI for receiving foreign funds into the Society under FEMA - Held that:- As in India Trade Promotion Organisation vs. DGIT [2015 (1) TMI 928 - DELHI HIGH COURT] held that mere receipt of fee or charge cannot be said that the assessee is involved in any trade, commerce or business. The assessee is a charitable society and is involved in providing the medical facilities and spread the awareness to the public at large and is fall in the last category i.e. "advancement of any other object of general public utility". However, on perusing the material on record, there is there is no proper justification for denying the exemption and the Proviso of section 2(15) is not attracted in this case - CIT(A) has rightly directed the AO to allow the exemption u/s 11(1) of the Act with all the consequential benefits vide order dated 15/9/2015, which does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the Revenue. Non deduction of TDS - assessee has paid as honorarium to the doctors coming from abroad and its cannot be considered as an application of income in India for charitable purposes - Held that:- We find that assessee is not running any hospital towards which this expense has been incurred. The assessee just conducted a seminar for the benefit of its parent body i.e. Escorts Hospital, which is a private company. The expense has been incurred outside India and therefore, it is a violation of Section 11(1)(c) and the above transaction is covered under the FEMA Act, for which the approval of the RBI is essential. Since assessee is remitting funds outside India and claiming its as application of income, which is violation of section 11(1)(C), hence, the amount of ₹ 9,76,031/- was rightly disallowed by the AO and accordingly, assessment was rightly completed at income of ₹ 10,10,88,303/- vide order dated 26.3.2013. Case law of DIT(E) vs. National Association of Software and Services Companies [2012 (5) TMI 204 - DELHI HIGH COURT]is directly applicable on the present issue in which the Hon’ble Court has laid down the law that “the State did not like to forgo the revenue in favour of charity outside the country’ held income applied outside India cannot be considered as application of income of the trust in India for charitable purposes - Decided in favour of revenue.
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2018 (10) TMI 435
Estimation of income - @ 11% on total sales OR @12.5% on sales - separate addition of unaccounted sales or suppressed receipts - whether the CIT(A) is right in including the total turnover instead of separate addition? - Held that:- The assessee has not maintained the books of accounts and did not produce the books of accounts before the AO. Though the assessee had admitted the income of ₹ 1.00 during the survey, the revenue did not establish with relevant material that the income admitted by the assessee was additional income over and above the normal profits with evidence. Though the turnover as per Profit and loss account was ₹ 12,61,34,334/- , the assessee increased the turnover with a sum of ₹ 99,65,600/- to compensate the deficiencies of survey and filed the return of income. Otherwise the return would have resulted in lesser income to that extent. Neither the revenue nor the assessee could place the material relating to the expenditure claimed with regard to the unaccounted receipts. The revenue did not bring any material to establish that there was no expenditure incurred by the assessee relating to the unaccounted receipts. In the absence of the books of accounts it is unascertainable whether the assessee had booked the entire expenditure relating to accounted and unaccounted receipts. In the absence of any specific material with regard to the expenditure relating to unaccounted receipts, we hold that it is judicious to estimate the income on total receipts inclusive of unaccounted sales instead of making separate addition. The returned income of ₹ 1,00,93,430/- was after admission of additional income of ₹ 99,65,600/-, but not the original income as per Profit & Loss account found during the course of survey. Therefore, we hold the Ld.CIT(A) has rightly deleted the separate addition. For estimation of income @12.5% and scaled down @11% byCIT-A - Held that:- In this case no books of accounts were produced and the evidences were found in the premises of the assessee showing the unaccounted sales. The assessee could not prove the expenditure incurred with relevant books and the vouchers. Therefore, we hold that the estimation of income @11% is reasonable and decline to interfere with the order of the Ld.CIT(A) Penalty levied u/s 271D - Unaccounted cash - survey proceedings - whether cash received was towards the share capital or the loan as accepted due to immediate financial requirements thus there is reasonable cause for accepting the loan - Held that:- The sums received by the assessee was the loan but not towards common project or syndicate. No tangible evidence has been furnished by the assessee in the form of bank account or the project reports and the promotion of common business venture in respect of the amounts received by the assessee during the year under consideration. Therefore, we hold that the said sums were nothing but the loans accepted by the assessee otherwise than in cash. Even the Ld.CIT(A) also did not accept the theory of share capital which was not controverted by the assessee. Therefore, we have no hesitation to hold that the sum of ₹ 68,48,000/- was nothing but a loan accepted by the assessee in contravention to the provisions of section 269SS of the Act and attracts the penalty u/s 271 of the Act. Sum received towards sale of flats - Held that:- In the instant case, during the financial year 2007-08, the assessee had received a sum of ₹ 68,48,000/- which are held to be loans but not the share capital or the capital contribution. Therefore, we hold that the Ld.CIT(A) erred in deleting the penalty of ₹ 37,45,000/- representing the sale of flats to the assessee and we are unable to accept the contention of the Ld.CIT(A) and accordingly we set aside the order of the Ld.CIT(A) and confirm the penalty levied by the Addl.CIT. In respect of the loan taken from Sri TSVG Naga Prasad it was mentioned on the face of in receipt in page No.51 that the amount was received for construction of the flat or house. The same fact was recorded in the sale deed. Therefore, we do not find any infirmity in the Ld.CIT(A) order and the same is upheld. Addition u/s 68 - Held that:- There is no doubt that the loan of ₹ 17,76,000/- related to the earlier year, but not related to the year under consideration. The AO made the addition u/s 68 of the Act and as per the provisions of section 68 of the Act, the credits made during the year under consideration for which the source is not explained required to be brought to tax. Since the credit is related to the earlier assessment year, there is no case for making the addition in the year under consideration. Accordingly, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed.
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2018 (10) TMI 434
Deduction u/s 80HH and 80I denied - adoption of assessed income of ₹ 1,99,80,660/- by the Assessing Officer as per assessment order dated 30.3.94 - Held that:- Whatever addition have been made in the original assessment order would not survive as the original assessment order has become non-est after passing the Order under section 263 of the I.T. Act. The A.O. in pursuance to the Order under section 263 of the I.T. Act, passed the impugned order under section 143(3)/263 dated 31.03.1997. Therefore, whatever addition was made in the original assessment order cannot be repeated/adopted in the impugned order. Therefore, addition of ₹ 1,99,80,657/- as per original assessment order taken in computation of the impugned order is wholly unjustified and is liable to be deleted and set aside CIT(A) after elaborate discussion on the issue of deduction under section 80HH and 80I has allowed such claim of assessee-company. The assessee-company, therefore, rightly contended that it had commenced its business activities prior to 01.04.1990 and as such in assessment year under appeal on making above additions, assessee-company would be having positive income and as such assessee-company would be entitled for claiming deduction under section 80HH/80I on such addition even if it may be presumed that such addition could be made or adopted as per original assessment order in the present impugned order. Therefore, considering the totality of the facts and circumstances of the case and the reasons above, we are of the view that addition of ₹ 1,99,80,657/- is unjustified. - Decided in favour of assessee Addition on account of inflated purchases - no inquiry made from the concerned parties or on the documentary evidences filed by assessee-company - Held that:- A.O. merely made part addition of ₹ 42.83 lakhs for inflated purchases. Meaning thereby, A.O. accepted the existence of M/s. Trans-Asia Packaging Ltd., and substantial genuine purchases made by assessee-company from this party. The sole reason given by the A.O. was that purchases have been made through various parties originated from M/s. V.T.R. Container (P) Ltd., However, it appears that no inquiry have been made from any of the intermediary party for making the sales to the assessee-company. The A.O. forgot to note that when he taxed the income on sales, he should believe that sales could not be made without any purchases. Since the A.O. did not dispute the existence of M/s. Trans-Asia Packaging Ltd., and that substantial purchases have been made from this party have not been disputed by the A.O, therefore, on account of no inquiry made from the concerned parties or on the documentary evidences filed by assessee-company, no addition could be made against the assessee-company.- Decided in favour of assessee
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2018 (10) TMI 433
Penalty imposed u/s 271(1)(c) - details furnished by the assessee in his return are found to be incorrect or erroneous or false - whether assessee voluntarily agreed to surrender the tax on value of depreciation wrongly taken on land and the this mistake was never intentional? - Held that:- We find that assessee is a professional and senior lady Gyne Doctor and filed income tax return at ₹ 10,58,44,690/- for assessment year 2010-11. The accounts were audited and Form 3CD was filed by the Chartered Accountant and income tax return were filed on the advice of the Chartered Accountant. The bonafide/inadvertent error on claiming depreciation on composite value of building purchased for medical profession as no bifurcation of land and building was available. On the advice of Chartered Accountant and Auditor, the assessee carried out bifurcation cost of land and cost of building and surrendered excess depreciation claimed at ₹ 10,86,880/- on land with and paid tax thereon. The assessee voluntarily agreed to surrender the tax on value of depreciation wrongly taken on land and the this mistake was never intentional. The assessee has voluntarily bifurcated the value of land and building and surrendered the values of depreciation on land and the act of the assessee under the bonafide belief. Assessee had furnished all the particulars in return filed and never concealed the particulars of income nor submitted false information. We also note that depreciation on full value was allowed in AY 2008-09 u/s. 143(1) and further depreciation was allowed on full value in AY 2009-10 u/s 143(3). As during the assessment proceedings for AY 2010-11 u/s. 143(3) assessee was asked to segregate the value of land and building and accordingly, the assessee segregated the value of land based upon circle rate. The assessee has neither concealed the income nor furnished inaccurate particulars of income and there are no findings of the AO and the CIT (Appeals) that the details furnished by the assessee in his return are found to be incorrect or erroneous or false. Under these circumstances, in our view the penalty in dispute is totally unwarranted and deserve to be deleted. Accordingly, we delete the penalty u/s. 271(1)(c) - Decided in favour of assessee.
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2018 (10) TMI 432
Reopening of assessment - action u/s. 153A - Held that:- In the absence of any incriminating material, returned income was accepted vide assessment order u/s. 153A dtd. 29/12/2010. But because of the search in case of Mr. Modi and Annexure -1 found therein, the addition was made in the present case. The entire basis for making the additions to the assessable income of the Assessee was a single document i.e., Annexure A-1. The attempt at making additions on the basis of Annexure A-1, without any further investigation on the above lines, is bound to be rendered unsustainable in law. In the present case, no reason was assigned by the Assessing Officer or any fresh material was taken into account by the Assessing Officer for reopening the assessment u/s 147. The said action of the Revenue was challenged before the Hon’ble High Court and the Hon’ble High Court has given a finding of dismissing the appeal of the Revenue therein. The finding of the Hon’ble High Court is applicable in the present case and therefore, the action u/s 147 itself is not maintainable and is quashed. Thus, appeal of the Revenue is dismissed and cross objection of the assessee is allowed.
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2018 (10) TMI 431
Addition u/s 68 - addition on “Suspicious transactions” - sale profit of shares - Held that:- As decided in the case of Navneet Agarwal,-vs- ITO, Ward-35(3), Kolkata [2018 (8) TMI 509 - ITAT KOLKATA] AO has not brought on record any evidence to prove that the transactions entered by the assessee which are otherwise supported by proper third party documents are collusive transactions. We are bound to consider and rely on the evidence produced by the assessee in support of its claim and base our decision on such evidence and not on suspicion or preponderance of probabilities. No material was brought on record by the AO to controvert the evidence furnished by the assessee. Under these circumstances, we accept the evidence filed by the assessee and allow the claim that the income in question is a bonafide Long Term Capital Gain arising from the sale of shares and hence exempt from income tax. - Decided in favour of assessee.
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2018 (10) TMI 430
Refusing the registration u/s 12AA - powers of the Commissioner in rejecting the registration - CIT (Exemption) holding that the society is existing for the purpose of profit of office bearers and not for charitable purposes - Assessee trust did not produce the books of account, bills and vouchers etc. for verification of the ld. CIT for which the ld. CIT held that the assessee society is not carrying out any charitable activities - Held that:- We find identical issue had come up before the Tribunal in the case of Bhartiya Kisan Sangh Sewa Niketan (2017 (8) TMI 1065 - ITAT DELHI ) Tribunal allowed the claim of registration by holding that at this stage on granting registration uls 12A the ld. CIT is required to see the objects of the society and not required to examine the application of income which will have to be undertaken by the Assessing Officer on a year to year basis after the assessee files the return of income claiming exemption u/s 11 of the 1. T. Act. The application submitted by the respondent was in consonance with the procedural requirement prescribed in this regard. From the trust deed which who filed before the CIT the objects of ,he trust coald be ascertained. From perusal of cl. (3) of the trust deed we find that the objects of the trust are charitable in nature and are in tune with s. 2 (15) of the Act and therefore, the Tribunal rightly opined that the order of the CIT rejecting the application under s.12A was unjustified. See COMMISSIONER OF INCOME TAX VERSUS D.P.R. CHARITABLE TRUST [2011 (8) TMI 1136 - MADHYA PRADESH HIGH COURT] - Decided in favour of assessee.
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2018 (10) TMI 429
Claim u/s 35(2AB)(1) denied - assessee failed to produce original copies of duly approved Form 3CK, 3CL and 3CM, from the Department of Scientific & Industrial Research (DSIR) - Held that:- The facts in the case of M/s. Texmaco Rail & Engineering (2017 (9) TMI 958 - ITAT KOLKATA) is different from the facts of case on hand for the reason, that the M/s Texmaco Rail & Engineering had produced copies of certificate of registration from 1st April, 2010 to 31st March, 2019, issued by DSIR. It had also filed copies of details of approval prescribed in Form 3CM for the subsequent Financial Year 2015-16. In the case on hand, certificate of registration for the impugned Assessment Year has not been produced by the assessee. Thus, this case-law does not apply. - Decided against assessee.
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2018 (10) TMI 428
Long Term Capital Gains on purchase and sale of the shares - AO added the entire sale proceeds of the shares as income and rejected the claim of exemption made u/s 10(38) - Held that:- CIT(A) has in his order relied upon “circumstantial evidence” and “human probabilities” to uphold the findings of the AO. He also relied on the so called “rules of suspicious transaction”. No direct material was found to controvert the evidence filed by the assessee, in support of the genuineness of the transactions. In other words, the overwhelming evidence filed by the assessee remains unchallenged and uncontroverted. The entire conclusions drawn by the revenue authorities, are based on a common report of the Director of Investigation, Kolkata, which was general in nature and not specific to any assessee. The assessee was not confronted with any statement or material alleged to be the basis of the report of the Investigation Wing of the department and which were the basis on which conclusion were drawn against the assessee. Copy of the report was also not given. Under the circumstances, Tribunal has consistently held that decision in all such cases should be based on evidence and not on generalisation, human probabilities, suspicion, conjectures and surmises. - Decided in favour of assessee.
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2018 (10) TMI 427
Deduction u/s 10A / 10AA against interest income - Held that:- We find that the issue stood squarely covered in assessee s favor by the order of this Tribunal for earlier AYs [2016 (3) TMI 1285 - ITAT MUMBAI] and [2016 (2) TMI 1156 - ITAT MUMBAI]wherein allowed assessee s claim of deduction under section 10A - Decided in favour of assessee Set-off of losses before computing deduction under Section 10A / 10AA - Held that:- Hon ble Supreme Court in bunch of appeals titled as CIT Vs. Yokogawa India Limited [2016 (12) TMI 881 - SUPREME COURT] wherein the issue has been decided in favor of the assessee as held though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. - Decided in favour of assessee Addition u/s 36(1)(va) r.w.s. 2(24)(x) - assessee delayed the deposit of employee s contribution [ESIC] - Held that:- CIT(A) correctly deleted the same by observing that the said amounts were deposited before due date of filing of return of income and therefore, allowable to assessee in terms of judgment of Hon ble Bombay High Court rendered in CIT Vs. Hindustan Organics Chemicals Limited [2014 (7) TMI 477 - BOMBAY HIGH COURT] and also in CIT Vs. Ghatge Patil Transporters Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT]. - decided in favour of assessee.
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2018 (10) TMI 426
Denial of exemption u/s 11 - alleged violation of certain provisions of Section 13 - Excess salary paid to the trustee - rule of consistency - Held that:- Nothing on record suggest that there was any change in the activities being carried out by the assessee. The copies of scrutiny Assessment orders for AYs 2010-11 & 2011-12 as placed on record vouch for the fact that the assessee has been granted deduction u/s 11 by Ld. AO and its claim has not been doubted by the revenue. The perusal of the table reveal that the assessee is regular in making salary payments to the Trustee right from AY 2005-06 onwards, which has not been doubted by the revenue until impugned AY. The aforesaid Trustee was exclusively working for the Trust which is evident from copy of her Income Tax Return for the impugned AY as placed on record wherein we find that her major source of income is Salary income from the Assessee Trust. A brief profile of Ruchira Gupta reveal that she is stated to have worked with United Nations in various capacities in 12 countries for over ten years. She was on the board of coalition against trafficking in women and the advisory councils of Polaris Project, Vital Voices, Ricky Martin Foundation, Asia Society, Nomi Network, the coalition against trafficking in women and cents for relief. The primary objective of the all these forums matches with some of the objectives of the Assessee Trust. The aforesaid Trustee had rich experience of over 25 years which was in line with the objectives of the Assessee Trust. As against the above credentials, the revenue has failed to place on record any comparative chart or any other corroborative evidence to establish that the aforesaid payment was excessive or unreasonable, in any manner. This being the case, the payment of salary as aforesaid, in our opinion, could not be a ground to deny the deduction to the assessee. Motor Car funded out of assessee Trust has been registered in assessee’s name and the same is alleged to be under the control of the Trustee - Held that:- We find that the said car was purchased in the year 2010-11 and this is the third year since purchase of the car. The revenue, except for mere allegations, is unable to point out as to how the said car was under personal use of the Trustee particularly when she had no other source of income. This being the case, the same, in our opinion, could also not be a ground for denial of deduction to the assessee. Rental payments of ₹ 60,000/- per month stated to be paid by the assessee to use office premises - Held that:- We find that the aforesaid payments are being made by the assessee pursuant to sub-lease agreement dated 01/04/2010 and the payment is in accordance with the terms of the agreement. The assessee has made the said payment in earlier AYs also, which has been accepted by the revenue. Keeping in view all these factors, we concur with the stand of Ld. AR that the same could not be a ground to deny the deduction of the assessee. Denial of deduction u/s 11 for alleged violations of Section 13 was not justified - Decided in favour of assessee. Amounts written-off in the books of accounts but not treated as application of Trust Income by the revenue - Held that:- Keeping in view the submissions made by Ld. AR, the claim of the assessee is, prima-facie, allowable subject to the verification of the stated assertions made by Ld. AR. Therefore, the write-off of donations as well as fixed assets shall be treated as application of funds subject to verification of the facts as narrated by Ld. AR before us. The Ld. AO is directed to allow the claim after due verification. This ground stands allowed for statistical purposes. Difference in grants amount as reflected by the assessee in Receipts & Payments Account and Income & Expenditure Account - Held that:- A perusal of the financial statements for impugned AY as placed on record reveal that the assessee has expanded an amount of ₹ 387.71 Lacs as including write-off of fixed assets & donations aggregating to ₹ 44.73 Lacs. Since we have already allowed assessee’s claim with respect to amounts written-off as stated in para 6.2, we find that the application of funds translates into application rate of more than 85% of total grants of ₹ 411.99 Lacs. Therefore, the assessee has fulfilled the conditions of Section 11(2) and eligible to claim the full deduction - Decided in favour of assessee.
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2018 (10) TMI 425
Disallowance on account of excess claim of managerial remuneration - Held that:- As decide in assessee's own case the RBI Act, the Companies Act and the Income Tax Act operate altogether in different fields and the question whether the assessee is entitled to particular deduction or not, will depend upon the provision of law relating thereto and not the way, in which entries are made in the books of accounts. AO therefore was not bound under the Income Tax Act, 1961 to hold the alleged non-compliance of the ^provisions of Section 4(7) read with Section 198 of the Companies Act, 1956, as the sole ground for making disallowance of expenditure relating to managerial remuneration for computing the income of the appellant under the head profit and gains from business or profession' under the Income Tax Act, 1961, without citing the relevant provisions of the Act under which such disallowance was made. As held by me, the appellant did not commit any default u/s 43B, 40A(3), 40A(2)(b) and 40(a)(ia) and no adverse observation in respect to the various conditions prescribed u/s 37(1) were made by the Ld. AO, nor. Even though in my view the appellant company may be deemed as Public Limited Company under the Companies Act, 1956 and had made default under that Act, within the meaning of Section 198(1) read with Section 309, it could not be the sole reason for making disallowance of managerial remuneration for computing the taxable income of the appellant under the Income Tax Act, 1961. In view of the above, the addition made by the Ld. AO is deleted. - Decided in favour of assessee Addition on account of inflation of loss - Held that:- The Hon'ble Jurisdictional High Court in the case of CIT vs. M/s Triveni Engineering Industries Ltd.[2010 (11) TMI 90 - DELHI HIGH COURT] has time and again upheld that if the rates of taxation are uniform, it does not make a difference if a portion of income is taxed in either of the years as such exercise becomes revenue neutral. In appellant's case, the position is even in the favour of the appellant if such exercise of bifurcation of income is made. In considered view, there is no need of doing such exercise and the results shown by the appellant should be treated as perfectly in order. AO's action in making the addition is not justified and the same is directed to be deleted.- Decided in favour of assessee
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2018 (10) TMI 424
Depreciation on certain items characterized as “computers” (viz. UPS, LAN/WAN equipment, catalyst switches, network equipments, etc.) - reduction from 60% to 15%, by treating the same as Plant and Machinery and thus, disallowing depreciation - Held that:- The equipment forms integral part of the computer systems and the assessee is entitled to the claim of depreciation at 60% by treating the peripherals as part of block of computers. Depreciation at 25% on Goodwill acquired from purchase of networks business disallowed - Held that:- The additional claims taken before us were already submitted before the Assessing Officer vide submissions dated 04.10.2012, therefore, we are inclined to admit the claims. We remand back this issue to the file of the Assessing Officer for adjudication. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. TPA - Comparable selection criteria - Held that:- Companies functinal dissimilar with that of assessee need to be deselected from final list.
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2018 (10) TMI 423
Penalty u/s 271(1)(c) - difference in book profits computed during the course of assessment proceedings - MAT computation difference - proof of concealment of income - mistake in the computation made by the assessee u/s 115JB for computing the book profit - DR’s contention is that it was only when the assessee was cornered by issuing notice u/s. 143(2) that the assessee filed the revised computation of book profit - Held that:- The assessee had produced balance sheet and profit & loss account before the AO during the course of assessment proceedings and the income computed in the profit and loss account has been accepted and during the course of assessment proceeding the assessee filed revised computation which has also been accepted by the Ld. AO. Mere differences were in computation of book profit is not a concealment of income particularly when the assessee had filed revised computation of book profit showing correct figure thereof, on which the AO has no objection. It can hardly be said that the assessee filed revised computation only when the ambiguity was pointed out by the AO. Secondly, the ld. CIT(A) in the impugned order has given various reasonable possibilities to commit the mistake by the assessee while computing the book profit in the return of income, which stood corrected by the assessee by filing the revised computation of book profit. The revised computation of book profit so filed by assessee stood accepted by the AO. In such view of matter, various decisions relied by the ld. DR are not applicable to the present case having not been based on parallel facts. Thus we uphold the order of the Ld. CIT(A) and he has rightly deleted the penalty imposed by the AO - decided against revenue
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2018 (10) TMI 422
Disallowance on account of electric repair and maintenance expenses - Revenue v/s capital expenditure - A.O. noted that these items are of enduring nature and cannot be termed as consumables and rather in the nature of capital items and allowed 100% depreciation on it - Held that:- We are of the view that the addition is wholly unjustified. Considering the nature of business of assessee, these expenses are incurred on electrical repair and maintenance, which are in nature and consumable expenses. The assessee has rightly treated the same as revenue expenditure. The A.O. has not pointed-out as to which capital have been generated by the assessee for purchasing tube rods, electrical wires etc. In the absence of any specific finding against the assessee, we set aside the Orders of the authorities below and delete the addition. Addition on account of car running and telephone expenses - Held that:- We are of the view that addition is wholly unjustified. The assessee is a domestic company and as such there may not be any personal expenses incurred by the assessee company on account of car running and telephone expenses. It appears to be an adhoc addition made by the A.O. without pointing out any specific inadmissible expenses incurred by the assessee. In this view of the matter, we set aside the Orders of the authorities below and delete the entire addition. Addition on account of fabrication charges - complete desired details were not submitted - Held that:- In the absence of any specific defect pointed-out in the maintenance of the books of account, there were no justification for the A.O. to disallow the entire amount of fabrication charges. The assessee has given a certificate in the paper book that all the documentary evidences were filed before A.O, which have not been rebutted through any evidence or material on record by the Revenue. CIT(A) also verified the details and the books of account and came to the finding that the assessee has maintained proper books of account and that there are no violation of TDS provisions. CIT(A) on proper appreciation of facts and verification of the record and the books of account produced by the assessee, correctly deleted the addition. Therefore, there is no justification to restore back the matter in issue to the file of the CIT(A) for fresh examination. Addition u/s 68 - Held that:- We are of the view that no interference is called for in the matter. The assessee proved the identity of the investor, its creditworthiness and genuineness of the transaction in the matter. Whatever documentary evidences were filed on record, the A.O. did not make any efforts to summon the Investor and no efforts have been made to verify the documents from the Investor. There is no finding that material disclosed was untrustworthy. No evidence has been brought on record, if investment made by the Investor Company actually emanated from the coffers of the assesseecompany so as to enable the total investments to be treated as undisclosed income of the assessee. - Decided in favour of assessee.
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2018 (10) TMI 421
Penalty levied u/s.271(1)(c) - reopening of assessment - assessee contented that show cause notice was never served on the assessee and therefore penalty order suffers from principles of natural justice and barred by limitation - assessee filed revised return voluntarily - Defective notice - Held that:- valid reason to disturb the finding that the penalty order suffers from principles of natural justice and barred by limitation. The Revenue could not produce any evidence to show that the penalty order was in fact passed on 30.09.2014 and why it could not be served immediately after passing the order and why it took one month to serve the order. The conduct shows that the order was passed beyond limitation period but was dated 30.09.2014. It is not in dispute that the assessee filed revised return voluntarily on 31.10.2011 and this return was regularized by issue of notice u/s. 148 on 25.03.2013. From the reasons recorded for reopening there is no material on record to suggest that there is a concealment of income by the assessee, except the revised return where the assessee himself has offered the additional income. The reasons for reopening clearly specify that the assessee has voluntarily accepted and offered the income for the Assessment year 2006-07 on account of not maintaining the records of closed bank account and this is said to be the reason to believe that the income escaped assessment which in our view is not correct. There is no enquiry at all, there is nothing on record to suggest that the income had escaped assessment and the assessee offered additional income voluntarily and the Department has not detected any concealed income of the assessee. No detection of any concealed income by the assessee and the assessment was reopened u/s.148 is only to regularize the revised return filed by the assessee who offered an additional income - No infirmity in the order passed by the Ld.CIT(A) in deleting the penalty. Non-striking off of irrelevant charge in the notice in initiation penalty proceedings - Held that:- Identical situation has been considered by the Coordinate Bench in Meherjee Cassinath Holdings v. ACIT [2017 (5) TMI 904 - ITAT MUMBAI] said that action of the Assessing Officer in non-striking off relevant clause in the notice shows that the charge being made against the assessee is not firm therefore proceedings suffer from non-compliance with principles of natural justice in as much as the Assessing Officer himself is not sure of the charge and the assessee is not made aware as to which of the two limbs of section u/s. 271(1)(c) of the Act he has to respond. The notice issued by the Assessing Officer u/s. 274 r.w.s. 271(1)(c) of the Act is on account of non-application of mind and therefore on this account itself the penalty imposed u/s.271(1)(c) is liable to be deleted.- decided in favour of assessee.
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2018 (10) TMI 420
Assessment u/s 153A r.w.s. 143(3) - additions made of Gross Profit estimated on alleged unrecorded sales and addition on account of undisclosed initial investment - proof of incriminating material found during the course of search conducted on 10.03.2011 under section 132(1) - assessee is a Private Limited Company engaged in the business of manufacturing and trading of Gutkha and other Perfumatory items - Held that:- The search assessment or assessment under section 153A read with section 143(3) of the Act the scope of enquiry essentially revolves around the search under section 132 of the Act or the requisition made under section 132A as the case may be. In the present case before us, during the course of search in the assessee’s group of cases under section 132 of the Act dated 10.03.2010, the material seized was the same material which was seized by the Central Excise Department in their search on assessee’s group of cases on 18.09.2007. The material seized by the Central Excise Department during the search was contained in a show cause notice dated 18.09.2007, which was the subject matter of investigation by the Income Tax Department by the ADIT(inv)- Thane. These show cause notice of Central Excise Department dated 18.09.2007, which was in the possession of the Department before the date of search conducted under section 132 of the Act on 10.03.2010. It means that nothing new incriminating material was found during the course of search under section 132 of the Act and even now, the learned CIT DR, could not produce any incriminating material found during the course of search under section 132 of the Act on the assessee’s group of cases. Hence, in view of the given facts and the case law relied on the by the learned Counsel of the assessee in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015 (5) TMI 656 - BOMBAY HIGH COURT], we quash the assessment in all the four years and allow the appeal of the assessee.
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2018 (10) TMI 419
TPA - treatment to be given to the provision for bad and doubtful debts for determining the operating margin - Held that:- As Assessee has submitted that if the provision for bad and doubtful debts as reduced from the operating cost for the purpose of computing the operating margin of the assessee-company and arm’s length price of the international transactions of the assessee-company with its Associated Enterprises is determined by applying the average operating profit margin of the comparables as selected by the TPO, the same would fall within the tolerance limit of 5% as compared to the price actually charged by the assessee-company to its AEs for the said international transactions, the benefit of which is being claimed in additional Ground No. 2. We accordingly direct the Assessing Officer/TPO to re-compute the difference between the arm’s length price of the international transactions of the assessee company with its AEs as determined by them and the price charged by the assessee-company by taking its operating margin after excluding the provision for bad and doubtful debts and if the same is found within the tolerance limit of 5%, the Assessing Officer/TPO is directed to delete the addition made on account of transfer pricing adjustment. The additional Ground No. 2 of the assessee’s appeal is accordingly allowed. Disallowance on account of employer’s contribution to P.F. and Pension Fund and employees contribution to P.F. and Pension Fund - Held that:- The same are squarely covered in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of CIT –vs.- Alom’s Extrusions Limited [2009 (11) TMI 27 - SUPREME COURT] and CIT –vs.- Vinay Cement Limited [2007 (3) TMI 346 - SUPREME COURT OF INDIA], wherein it was held that the employer’s/employees contribution towards Provident Fund and Pension Fund paid before the due date of filing of the return of income for the relevant year cannot be disallowed under section 43B, even if it has been paid after the due date as per relevant Acts. Penalty u/s 271(1)(c) - addition on account of transfer pricing adjustment - Held that:- Even the addition made on account of transfer pricing adjustment and disallowance of employees contribution towards Provident Fund, etc. as sustained by the ld. CIT(Appeals) are found to be not sustainable by us while disposing of the quantum appeals as held in the foregoing portion of this order. Consequently the penalty imposed under section 271(1)(c) in respect of the said addition is not sustainable and the impugned order of the ld. CIT(Appeals) cancelling the penalty imposed by the Assessing Officer is liable to be upheld on this ground also
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2018 (10) TMI 418
Exemption u/s 10(23C)(vi) denied - Applicant been filed at the wrong jurisdiction - applicant society having its registered office at Chennai and having got its registration u/s 12AA from the Exemption Office at Chennai, therefore, the present application has been filed at the wrong jurisdiction - Held that:- As per mandate of Form No.56D as well as Rule-2CA, the name and address of registered office of university or other educational institution has to be given, therefore, in the instant case as the school is registered in Punjab and operating at KalaChak Road, Sujanpur, Pathankot which comes under the jurisdiction of CIT(E), Chandigarh. Even the Asseeee since 2011-12 is regularly assessed at Pathankot and therefore according to the notification referred above, the jurisdiction vest with the CIT(E) to grant approval under section 10(23C)(vi) of the act. Hence on the aforesaid analyzation and consideration, we do not have any hesitation to held that the ld. CIT(E), Chandigarh is having jurisdiction to decide the application under consideration filed by the appellant. After getting reply from the Applicant trust, CIT(E) has not given any opportunity to the applicant trust either to establish its case and/or to substantiate the documents relied upon by the Applicant. As reasonable opportunity is mandatory before declining the approval, so on this aspect also, the impugned order is liable to be set aside. We consider it appropriate to remand back the case to the file of ld. CIT(E) to decide afresh within 03 months of this order. Appeal filed by the assessee is allowed for statistical purposes.
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2018 (10) TMI 417
Assessment u/s. 153C - recording of a satisfaction note - documents belong to other person other than the searched person - failure to furnish confirmation from the parties against purchases - allegation of Hawala Purchases - Held that:- Incriminating documents relating to other person should be found during the course of search. If no incriminating documents are found and/or on the basis of seized documents, no additions can be made in the assessment order or if such seized documents are not referred to in the assessment order, such documents will not be incriminating documents. Any notice issued u/s. 153C on the basis of such notice is bad in law. Thus, the mandatory requirement mentioned in the section has not been fulfilled and hence, the notices issued u/s. 153C and consequent assessment order passed on the basis of such notice, no addition can be sustained. So far as, condition no. (iii), is concerned, that the Assessing Officer of searched person should have recorded a satisfaction note that incriminating documents belonging to third person are found; the Assessing Officer, in his capacity as the Assessing Officer of Shri Sudhakar M. Shetty (searched person) has neither issued any satisfaction note nor handed over the documents to himself (in the capacity of Assessing Officer of the other person) by passing a handover note, thus, from this angle also, the assessee is having a good case in its favour, therefore, respectfully, following the aforesaid decisions from Hon’ble various High Courts, including Hon’ble jurisdictional High Court, we decide this issue, from this angle, in favour of the assessee. Recording of requisite satisfaction in the case of a searched party is a sine qua non for assuming jurisdiction for the issue of notice u/s. 153C of the Act even if the Assessing Officer of the searched person and the assessee are same. It is abundantly clear from the records in the case of the searched person that there is no requisite satisfaction granting the Assessing Officer jurisdiction for issuing notice to the assessee u/s. 153C of the I.T. Act. For the purpose of Section 158BD recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the Assessing Officer before he transmits the record to the other Assessing Officer who has jurisdiction over such other person u/s. 158BD also apply to proceedings u/s. 153C for the purposes of assessment of income of other than the searched person. This view has been accepted by CBDT in principle. It is further clarified that even if the Assessing Officer of the searched person and the “other person” is one and the same, then also the Assessing Officer of the searched person is required to record his satisfaction note as has been held by the Courts. Thus, it is clear that the paper seized during the course of search at the residential premises of Shri Sudhakar M. Shetty do not belong to the assessee. Further, the said paper is not incriminating in nature. Lastly, the satisfaction was not recorded by the Assessing Officer of Shri Sudhakar M. Shetty in his capacity as a Assessing Officer of searched person. Hence, the notice issued u/s. 153C is bad in law and thereby passing of assessment orders u/s. 143(3) r.w.s. 153C of the Income tax Act, 1961 are bad ab-initio. Addition on alleged Hawala purchases - Held that:- Copy of the assessment order passed by the Sales tax Authorities were also filed before the Commissioner of Income tax (Appeals). This assessment order does not reveal any Hawala Parties. We also observed that the assessee has discharged its burden of proof; the additions have been made which is contrary to the principle of natural justice. Apart from above, it was also pointed out while arguing the matter on legal issue that during the course of search, no incriminating documents were found and hence, no additions can be made as decided by the Hon’ble Supreme Court in the case of Sinhgad Technical Education Society, (2015 (4) TMI 190 - BOMBAY HIGH COURT). Thus, in view of the foregoing discussion, the addition made on account of alleged Hawala purchases deserves to be deleted. Liability to tax u/s. 45 - partnership firm got converted into a registered company - Held that:- In the present appeal, undisputedly, the partnership firm got converted into a registered company under part (ix) of the Companies Act and thus the properties of the firm statutorily vested in the company, meaning thereby, the property of the firm became the property of the company. There was no distribution of capital asset to the partners or any other persons on registration of a firm a company, consequently, it does not make either party liable to tax u/s. 45. As relying on the decision from Hon’ble Apex Court in the case of Malabar Fisheries Co. Ltd. (1979 (9) TMI 1 - SUPREME COURT) was relied upon holding that when a conversion of a firm into a company takes place under the provisions of company Act, such conversion can be construed only as occasioned by operation of law and hence no controversy can arise on the application of this principle even for the purposes of capital gains under sections 45(4) of the Act. Thus, we find no infirmity in the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal) with respect to non-taxability u/s. 45(1) or 45(4) of the Act. Conversion of partnership firm into a company under chapter IX of the Companies Act, 1956, we are of the considered opinion that provisions of sections 45 r.w.s 112 of the Act is not attracted as the asset and liability of the erstwhile firm vested in the company as a whole and the interest of the partners was not reduced in any way nor any amount was paid separately to the firm or to the partners on account of goodwill or on account of revaluation of assets. Our view find clear support from the decision from Hon’ble jurisdictional High Court in the case of Texspin Engg. Works [2003 (3) TMI 56 - BOMBAY HIGH COURT]. Bogus purchases - Held that:- No separate addition was required to be made on the same transactions in the hands of the assessee as it will amount to double taxation on the same income. It was observed that no material was brought on record by the AO that any cash had exchange hands in the transactions of alleged bogus purchase and misappropriated by the partners. Before this Tribunal, no contrary material was brought on record by the Revenue contradicting the finding of CIT (Appeals), thus, the stand taken by the Ld. First Appellate Authority is affirmed, resulting into dismissal of appeal filed by the Revenue.
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2018 (10) TMI 416
Deferment of income - Denial of deduction on Provision for warranty - whether the methodology of the assessee-company for computation of provision for warranty is ad hoc and not consonance with parameters laid down by the Hon’ble Supreme Court in the case of Rotork Controls India (P) Ltd. [2009 (5) TMI 16 - SUPREME COURT OF INDIA] or not? - Held that:- In the present case there was no system of reversal of provision created earlier and the percentage of sales adopted for computation of provision for warranty expenditure goes on increasing from year to year, thereby resulting in accumulation of provision for warranty expenditure. In the light of above factual situation, we are of the considered opinion that the assessee derived advantage by deferring its income to the extent of excess warranty provision to subsequent years. Therefore, such excess provision cannot be allowed as a deduction. Therefore, in our considered opinion, the provision made for warranty cannot be said to be reliable. The AO, as confirmed by the ld.CIT(A) had rightly restricted the amount of allowable provision for warranty at the rate of 2.14% of sales. Therefore, we do not find any fallacy in the reasoning of the order of the ld.CIT(A). Accordingly, the grounds of appeal of the assessee are dismissed.
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2018 (10) TMI 415
Taxability of income towards fees for technical services earned by the assessee from Indian concerns on gross basis at 20%, being the rate of tax prescribed u/s 115A - Held that:- The fact of the matter is that the DTAA, under which such Ruling was rendered, has been substituted as discussed supra. In such circumstances, the prescription of section 245S(2) gets attracted, which requires consideration of the arguments of the assessee in the light of the substituted DTAA along with its Protocol to the facts of the instant case. Such new DTAA and the Protocol have not been considered by the Assessing Officer, who has simply gone by the Ruling rendered by the AAR. As such, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this score is set aside and the matter is remitted to the file of Assessing Officer. We order accordingly and direct him to decide the issue afresh by considering the effect of alterations, introduced in the new DTAA of 1998 along with the Protocol, if any, on the Ruling given by the AAR in the assessee’s own case. Discussion of the new DTAA or the Protocol above should not be construed as reflection of our opinion on its applicability or otherwise to the facts of the instant case. The AO should decide its implications independently on merits. The assessee will be allowed a reasonable opportunity of hearing in such fresh proceedings. Allocation of expenses - AO found that some of the expenses made by the assessee were not in accordance with the arm’s length principle - Held that:- It is observed that the assessee booked proportionately more expenses as its share in ECI’s expenses. When the Assessing Officer required the assessee to produce final accounts of ECI for the year, the assessee failed to comply with the same and gave figures only for a period of nine months. Other necessary details as called for were also not fully provided. This led to the allocation of expenses on the basis of turnover. It is, but, natural that in the absence of any worthwhile details furnished by the assessee, the Assessing Officer could have no other rational basis to apportion the expenses. The ld. AR submitted that the assessee has got necessary details which can be produced before the authorities below. Taking a holistic view of the matter, we set aside the impugned order on this score and remit the matter to the file of Assessing Officer for deciding this issue afresh as per law
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2018 (10) TMI 414
Income earned from Indian concerns towards fee for technical services and allocation of expenses - Held that:- We have passed a separate order in respect of the assessment year 2000-01. As the facts and circumstances of the instant appeal are admittedly mutatis mutandis similar to those of the immediately preceding year, we set aside the impugned order and remit the matter to the file of the Assessing Officer for deciding the issue of income earned from Indian concerns towards fee for technical services and allocation of expenses in the light of our order given today for such preceding year. The assessee will be allowed a reasonable opportunity of being heard in such proceedings. Appeal is allowed for statistical purposes.
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Customs
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2018 (10) TMI 413
Validity of subsequent SCN - earlier SCN pending adjudication before the adjudicating authority below i.e. Commissioner (Appeals) - EPCG Scheme - non-fulfillment of export obligation - N/N. 97/2004-Cus dated 17.9.2004 - Held that:- The appeal has been dismissed only for want of said EPCG certificate - the appellant be given an opportunity to put forth the documents as impressed upon today before us before the original adjudicating authority being crucial to the adjudication. Matter remanded to the original adjudicating authority requiring them to consider the documents about fulfillment of the Export Obligation as assailed by the appellant and thereafter to decide the SCN afresh - appeal allowed by way of remand.
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2018 (10) TMI 412
Valuation of imported goods - Cold Rolled Steel Sheet - inclusion of C F value in assessable value - bifurcation of said value in two components i.e. Free on Board (F.O.B.) and Air Freight - proviso to 10 (2) Rule of Customs Valuation Rules - Department formed a view that since the goods have been imported by air, hence, the airfreight amount should have been 20% of FOB value even for those invoices where the C F value does not show any bifurcation, the proviso to Rule 10 (2) of Customs Valuation Rules, has been impressed upon while issuing the impugned show cause notice. Whether the appellant was to discharge the liability on the said C F amount only? Whether the freight irrespective mentioned separately or not, should be considered at the rate of 20% of FOB value while discharging the liability? Held that:- Bare perusal of these provisions makes it clear that the value of imported goods shall be the transaction value of such goods i.e. the price which is actually paid or is payable at the time of import with any other amount as mentioned in the proviso to Section 14 above to be added to the said transaction value. Further perusal of Rule 10(2)(c) (i) it details such costs which have to be included while assessing the cost of transport. Rule 10(2) (c) (iii) makes it clear that such cost has also to include the insurance value of 1.125% of FOB value of the goods. It is an admitted case that the said value has been added by the appellant while computing the cost of transport of imported goods herein. For 36 invoices where there is a clear bifurcation about the amount of air freight involved and that the same has been paid by the supplier and has been included in the C F value paid by the appellant, the amount is absolutely ascertainable. In such case the amount has not to exceed 20% of FOB value. It is admitted case of Department that the freight is at the rate of 10% / 11.11 % i.e. much less than 20%. No question arises for enhancing this value to the extent of 20%, in view of the words shall not exceed 20% of freight on board value of goods . Invoices where there is no bifurcation for air freight but the C F amount - Held that:- It is observed that the amount paid by the appellant while importing the goods is very much ascertainable. It is an admitted fact of the case that vide all these invoices (81 in No.) appellant have imported the same goods i.e. cold rolled steel sheets, that too, during the same period w.e.f. February 2012 to June 2012. The question of change in the FOB value of the goods does not at all arise. Otherwise also the onus was upon the Department to prove the change if any. There is no such evidence - in the case of invoices of un-bifurcated C F amount as well, the FOB value of the goods is very much ascertainable. No question arises for enhancing the airfreight to the extent of 20% thereof, for these invoices also. The appellants have been discharging their liability properly and completely in accordance of the mandate of law. It is Department who took a wrong opinion. No positive act of the appellants could be proved by the Department to establish the alleged intention to evade the duty. Otherwise also when there is no case of short levy, as alleged, no question of intention of evasion at all arises. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 396
Clandestine removal of imported goods - Imported fabric was not utilized for the manufacture of readymade garments, which had to be exported - case of appellant is that demand based solely on the statements of the Director of the Company, which was, later on retracted - time limitation. Held that:- The Director of the Company had categorically stated in his two statements that such goods were sold in the market to one Iqbalbhai. The second of these two statements was recorded nearly eight months after the raid. Partial retraction of this statement came much later. In such statement also, the assessee admitted partial diversion of the goods. The details and whereabouts of Iqbalbhai could not be provided by him - Both the Commissioner (Appeals) and the Tribunal were of the opinion that the statements of the Director recorded by the raiding party were in terms of Section 108 of the Customs Act, which was admissible in evidence. The entire issue is, thus, based on appreciation of the materials on record. No question in this respect arises. Time Limitation - Held that:- This ground also has no merits - When the show cause notice was issued beyond a period of one year from such visit, which is the normal period of limitation, the Tribunal and the High Court held that such notice was time barred - the Department could not establish that there was any suppression of fact/s or fraud on the part of the assessee. Appeal dismissed.
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2018 (10) TMI 386
100% EOU - reimbursement of the Central Sales Tax paid on raw materials and inputs purchased from the units situated in DTA - Duty Drawback - time limitation. Held that:- In case of Asahi Songwon Colours Limited [2017 (7) TMI 512 - GUJARAT HIGH COURT], this Court had examined the correctness of imposition of a condition in the Handbook of Procedures for claim of the benefit by an EOU which was granted under the Foreign Trade Policy. The Court was of the opinion that such condition which did not find place in the policy could not have been introduced in the guise of procedure to be followed for making the claim. Claim of recovery of duty drawback - delay in initiating procedure for recoveries - Held that:- This issue can also be seen in light of gross delay and latches on the part of the Department and the observations made by this Court in the case of Asahi Songwon Colors Limited. While therefore keeping the question of the Department’s stand of non eligibility of duty draw back on oil purchases made from the distributors or dealers of the domestic oil companies and not directly from the depots open, this petition is allowed by setting aside the impugned order.
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FEMA
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2018 (10) TMI 411
Refund to the Petitioners of principal amount along with interest - non adherence to Foreign Exchange Regulation Appellate Board orders - Held that:- We find that our Court had in Abu Moosa [2015 (1) TMI 977 - BOMBAY HIGH COURT] and Prabodh Mehta [2012 (7) TMI 145 - BOMBAY HIGH COURT] had occasion in similar facts, directed refund of the amount received by the Respondents along with interest from the date on which the amounts were deposited with the Respondents till repayment. The Respondents before us refuse to pay interest on the ground that it has not earned any income. Interest is paid as to compensate persons who have been deprived of its amount. Thus in the present facts the Respondents are directed to grant refund aggregating to ₹ 9,50,000/- along with interest thereon @ 6% p.a. from the date of payment / deposit of the Petitioner. The refund should be granted as expeditiously as possible along with interest @ 6% p.a. preferably within a period of 12 weeks from today.
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Service Tax
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2018 (10) TMI 406
Extended period of limitation - Section 73(1) of the Finance Act, 1994 - assessment of Service Tax - Business Auxiliary Services - Held that:- The CESTAT was influenced, as is apparent from the reading of the order, by the prevailing confusion between the nature and content of the two taxable incidents i.e. the definition between business auxiliary services , which insisted from 2003 and business support services , which was a fresh levy introduced w.e.f. 01.05.2006. Concededly, the assessee was filing his assessment returns after 01.05.2006 when business support service was introduced. The mere advertence to the possibility of service tax without any material or evidence or even a finding that such service tax had been collected by the assessee during the past, cannot per se amount to a conclusion that it had practiced fraud or misrepresentation - invocation of extended period not justified. Appeal dismissed - decided against Revenue.
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2018 (10) TMI 405
Classification of services - Scientific or technical consultancy service or not? - services provided by them to the Government of Andhra Pradesh relating to technology transfer, supervision, implementation and marketing support - demand of service tax alongwith Interest and penalty. Held that:- The agreement is not a composite works contract as it does not involve supply of any materials by the appellant. This is in the nature of providing technical expertise for implementation of the project as well as the management of the project itself. As the title to annexure 3 of the MOU indicates, it involves technology transfer, supervision, implementation and marketing support. The first appellate authority records in Para 15 that the MOU is not pure consulting agreement as it involves duties of an integrator of agricultural technologies and operations and to act as technical, implementing and supervising agency, etc. - the Order-in-Original does not discuss what portion of the services rendered by them are technical and consultancy services and how much tax is leviable thereon. Even in the grounds of appeal, the appellant does not disclose the details of how much of their work pertain to consultancy and how much of it pertain to supervision and management. Having held that the contract is divisible, it was necessary for the lower authorities to discuss what portion of the amount received for the services can be attributed for scientific and technical consultancy services and re-calculate the service tax payable accordingly - it is a fit case to be remanded to the original authority to examine as to how the contract can be divided and how much of that total contract amounts to scientific and technical consultancy work which can be charged to service tax. Matter remitted back to the original authority to reexamine the issue and pass a reasoned order giving the amount received by the appellant which can be attributed to scientific and technical consultancy services (as opposed to amounts for supervision, management, etc.) and the service tax, if any, payable - appeal allowed by way of remand
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2018 (10) TMI 404
Construction services - Construction of residential complex services - Works Contract Service - Composite contracts or Pure Services - it was noticed that the appellant did not pay service tax on the entire construction activities and also that they have paid service tax under the works contract service on the taxable value realized from customers towards builders share of constructed area - period involved in the present case is from October 2004 to March 2009. Held that:- The contracts entered between the appellant and the service recipient is a composite contract which involves both supply of materials as well as rendering of service - The Tribunal in the case of Real Value Promoters Ltd. [2018 (9) TMI 1149 - CESTAT CHENNAI] had occasion to analyse the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service. The Tribunal has held that prior to 1.6.2007, levy of service tax can be under the above categories only for contracts which are purely for services. That after 1.6.2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts. Further, it was held that after 1.6.2007, demand in respect of composite contracts would fall under works contract service only - the demand of service tax under commercial or industrial construction service (residential complex) cannot sustain after the period 1.6.2007. The levy of service tax prior to 1.6.2007 cannot also sustain by application of the decision of the Hon ble Supreme Court in the case of Larsen Toubro Ltd.[2015 (8) TMI 749 - SUPREME COURT]. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 403
Valuation - completion and finishing services/construction services - inclusion of materials consumed in the course of providing the service in assessable value - benefit of abatement under N/N. 1/2006-ST dated 1.3.2006 denied - it is alleged that the appellants bifurcated the value of purchase order into charges for materials and labour charges and they paid service tax only on the labour charges - demand of service tax on the value of materials under the category of commercial or industrial construction service (finished services) - demand under the head Works contract services - Scope of SCN. Demand for the period prior to 1.6.2007 - Held that:- The works contract has come into effect only after 1.6.2007 - The decision in the case of Larsen Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] would apply to the period prior to 1.6.2007 wherein it was held that levy under works contract service prior to 1.6.2007 cannot sustain - demand do not sustain. Demand for the period after 1.6.2007 - Held that:- It is seen that though the show cause notice raises the demand under commercial or industrial construction service, the Commissioner has confirmed the demand under works contract service. The Commissioner has thus travelled beyond the show cause notice and the demand after 1.6.2007, for this reason alone, cannot sustain - the confirmation of service tax being beyond the demand and allegations raised in the show cause notice, the same cannot sustain. The Tribunal in the case of Real Value Promoters and Ors. [2018 (9) TMI 1149 - CESTAT CHENNAI] had occasion to analyse the issue and has held that the demand under commercial or industrial construction service cannot sustain after 1.6.2007. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 402
Construction of commercial or industrial construction service - Workd Contract Service - benefit of Abatement of 67% - pure services or composite contracts - non-discharge of tax appropriately on the construction activities - period involved in the present case is from October 2004 to March 2009 - demand with Interest and penalties. Held that:- The contracts entered between the appellant and the service recipient is a composite contract which involves both supply of materials as well as rendering of service. The Tribunal in the case of Real Value Promoters Ltd. [2018 (9) TMI 1149 - CESTAT CHENNAI] had occasion to analyse the issue regarding demand of service tax under construction of residential complex services, commercial or industrial construction service and construction of complex service. The Tribunal has held that prior to 1.6.2007, levy of service tax can be under the above categories only for contracts which are purely for services. That after 1.6.2007, the above categories would be applicable only if the contracts are purely services and which are not composite contracts - the demand of service tax under commercial or industrial construction service (residential complex) cannot sustain after the period 1.6.2007. The levy of service tax prior to 1.6.2007 cannot also sustain by application of the decision of the Hon’ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 401
Renting of immovable property Service - inherited property - SSI Exemption - Association of persons - Held that:- The demand has been raised on all the co-owners to treat them as association of person and levy service tax on the amount of rent received by them. When the co-owners are treated individually, the amounts undoubtedly fall below the threshold exemption. The Tribunal in the case of Sarojben Khulsanchand & Ors. Vs. Commissioner of Service Tax, Ahmedabad [2017 (5) TMI 240 - CESTAT AHMEDABAD], had considered the similar issue and held that The service Tax Registration of individual assessees for collection of service tax is PAN based, hence, collection of service tax from one of the co-owners, against his individual Registration for the total rent received by all co-owners separately, is neither supported by law nor by laid down procedure. Thus, it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the service tax on the total rent be collected from one of the co-owners. The demand cannot sustain and requires to be set aside - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 400
Renting of immovable property - Joint ownership - clubbing of clearances - SSI Exemption - Department was of the view that since co-owners have an undivided share in the property, all the co-owners have to be treated as an association of person and the rental income has to be combined together - case of appellant is that that the department cannot consider all the four co-owners as an association of person so as to demand service tax by combining the rent by each co-owners. Held that:- When the co-owners are treated individually, the amounts undoubtedly fall below the threshold exemption. The Tribunal in the case of Sarojben Khulsanchand & Ors. Vs. Commissioner of Service Tax, Ahmedabad [2017 (5) TMI 240 - CESTAT AHMEDABAD], had considered the similar issue and held that The service Tax Registration of individual assessees for collection of service tax is PAN based, hence, collection of service tax from one of the co-owners, against his individual Registration for the total rent received by all co-owners separately, is neither supported by law nor by laid down procedure. Thus, it is difficult to accept the proposition advanced by the Revenue that all the co-owners providing the service of renting of immovable property be considered as an association of persons and the service tax on the total rent be collected from one of the co-owners. The demand cannot sustain and requires to be set aside - Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 399
Classification of services - Construction Services - Construction of Commercial and Industrial Buildings or Civil Structures Service - abatement of 67% under Notification No. 1/2006-ST dated 01.03.2006 - Department came to the view that the services provided by the appellant would fall in the category of “Works Contract” service which was a new category of service introduced w.e.f. 01.06.2007 - Extended period of Limitation - Composition Scheme. Extended period of limitation - Held that:- It was the stand of Revenue all throughout that the different elements of work/ service in a composite contract can be vivisected and tax demanded under the different classifications of service like CICS, ECIS, Construction of Complex, etc. This has been the stand of the Revenue as evident from the ruling of the Hon’ble Supreme Court in the case of Larson & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] wherein the Hon’ble Supreme Court has held that whenever there is a case of composite service there was lack of legislative competence on the part of the Revenue, to vivisect and tax the service component prior to coming on the statute of Section 65(105)(zzzza) of the Finance Act - Accordingly, no service tax could be demanded prior to 01.06.2007, where work /service is classifiable under the Works Contract Service. The show cause notice has been issued on 23.10.2013 which is prior to the decision of Hon’ble Supreme Court in the case of Larson & Toubro. Accordingly, there is no deliberate act on the part of the appellant to evade payment of correct service tax, nor there is any suppression, as they were registered with the Service Tax Department, filing ST-3 returns and paying the tax regularly. Classification of service under Work Contract Service instead of CICS - Held that:- Following the precedent decision of the Tribunal in the case of ABL Infrastructure Pvt. Ltd. vs. CCE, Nashik [2015 (2) TMI 801 - CESTAT MUMBAI] wherein the coordinate Bench of this Tribunal held that in case of changed circumstances, where the activity is eligible to classification under Works Contract Service after 01.06.2007, the appellant should be given an opportunity to pay tax under Rule 3 of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 - the appellant is entitled to avail the composite scheme for the normal period of limitation from 01.04.2012 to 30.09.2012 and thereafter. Penalty is waived. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 398
Construction of Residential Complex Service - construction of row houses, where each house/block contains only one unit, for the Government of Chhattisgarh, through Chhattisgarh Housing Board - levy of service tax - Held that:- It is an admitted fact that the appellant have constructed individual row houses and not a residential complex having 12 or more units/ flats. Under such circumstances, there is no case of construction of residential complex as defined under the statute wherein residential complex have been defined as – a building or buildings having 12 or more residential units in each block and also having common facilities like lift, water supply, sanitation, etc. The issue herein is squarely covered by this Tribunal in NCR Builders Pvt. Ltd. Vs. C.C.E. & S.T., Ghaziabad [2016 (11) TMI 1555 - CESTAT ALLAHABAD]. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 397
Business Auxiliary Services - activity of working as distributor/marketing agent of M/s Amway India Enterprises Pvt. Ltd. - commission received in lieu of providing the said services - non-payment of service tax - It appear to Revenue that the appellant is liable to pay service tax on the commission received to the tune of ₹ 67,52,975/- for the extended period 2003-2004 to 2007-2008. Held that:- The issue is no longer res-integra and this Tribunal have in its judgment in the case of Charanjeet Singh Khanuja vs. CST, Indore/Lucknow/Jaipur/Ludhiana [2015 (6) TMI 585 - CESTAT NEW DELHI], where it was held that service tax would be chargeable on the commission received by a Distributor from Amway on the products purchased by his sales group - regarding extended period it was held in the case that When there is scope for doubt in the mind of an assessee on a particular issue, the longer limitation period, under proviso to Section 11 A(1) cannot be invoked. Matter remanded back to the Adjudicating Authority to decide the show cause notice denovo after hearing the appellant, pursuing any reply filed or to be filed alongwith evidences, if any, and pass the reasoned order in accordance with law - appeal allowed by way of remand.
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Central Excise
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2018 (10) TMI 395
Classification of goods - jarda scented tobacco - Chewing Tobacco - whether the Chewing tobacco classifiable under Heading No. 24039910 and jarda scented tobacco under Heading No. 24039930? - Held that:- The issue is not contentious in view of the test report submitted by the CRCL which is the recognised departmental authority for testing the products - The finding of the lower adjudicating authority that it might contain the scent in the product is merely on the basis of presumption and surmise without any facts therein. Reliance placed in the case of M/S TARA CHAND NARESH CHAND VERSUS CCE ST, ALWAR [2018 (4) TMI 221 - CESTAT NEW DELHI], where it was held that The product classified as Chewing Tobacco‟ under Tariff Heading No. 24039910. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 394
CENVAT Credit on retained amount - credit of service tax paid on input services - certain percentage of the stipulated payment was withheld by the respondent on account of the performance guarantee - whether the said retention prohibits the respondent from taking the Cenvat Credit in accordance of Rule 4 (7) of Cenvat Credit as is alleged by the Department? Held that:- Rule 4 (7) of CCR stands amended w.e.f. 1st April, 2011 and after the said amendment taking of Cenvat Credit is not linked with the payment of invoice to the service provider but it is linked with the invoice/bill/challan of input service - Though the grievance of the Department seems that irrespective, the payment was still to be made within 3 months, but I observe that since the respondent had paid the entire Service Tax on which they were liable for taking the credit i.e. on the amount as mentioned in the Bill/invoice, they were entitled to avail credit. It has already been decided by this Tribunal itself in the case of appellant itself COMMISSIONER OF CENTRAL EXCISE & ST, UDAIPUR VERSUS M/S. HINDUSTAN ZINC LTD. [2018 (7) TMI 522 - CESTAT NEW DELHI], wherein the assessee was held entitled to avail the credit of full Service Tax paid irrespective the amount payable to the service provider has been withheld till the service provider has not changed. The circular No.122/03/2010- ST dated 30th April, 2010 further clarifies the situation that the Service Tax paid is allowed as credit. Credit allowed - appeal dismissed - decided against Revenue.
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2018 (10) TMI 393
By-products - Benefit of N/N. 115/75-CE dated 30.4.1975 - Department was of the view that the appellant should have paid duty of excise on clearance of dutiable by-products such as soap stock (gum), sludge, fatty acid oil, spent earth, getting manufactured/generated in the process of manufacturing refined edible oil - Held that:- Tribunal in the case of M/S RICELA HEALTH FOODS LTD., M/S J.V.L. AGRO INDUSTRIAL LTD., M/S KISSAN FATS LIMITED VERSUS CCE, CHANDIGARH, ALLAHABAD, [2018 (2) TMI 1395 - CESTAT NEW DELHI], the Regional Bench of this Tribunal in Allahabad has also extended the benefit of Notification 89/1995-CE on clearances of waste products such as fatty acid oil, sludge, soap stock (gums) and spent earth generated during the manufacture of refined edible oil. Benefit allowed - appeal allowed - decided in favor of appellant
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2018 (10) TMI 392
Extended period of limitation - no suppression of facts - interpretational issue - CENVAT Credit - input services received in the course of acquisition of land (for industrial use). Held that:- There is no allegation of fraud, suppression, or falsification of records. The issue is simply of interpretation - the invocation of the extended period of limitation is bad and the Show Cause Notice is not maintainable on this ground. Appeal is on the issue of limitation.
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2018 (10) TMI 391
CENVAT Credit - duty paying invoices - supplementary invoices, raised by M/s. South Eastern Coalfields Ltd., for supply of coal - Held that:- Tribunal in connected matter of South Eastern Coalfield Ltd. vide Final Order No.52723-52726/2017 dated 3.4.2017, taking notice of pendency of similar matter before the Hon’ble Supreme Court in the case of South Eastern Coal Fields Ltd. and ors., disposed of the appeal of the South Eastern Coal Fields Ltd., granting liberty to them to come again in E/51278/2018 4 after having final verdict from the Hon’ble Supreme Court. The appellant is entitled to take cenvat credit on the supplementary invoices in question - further, there is no element of fraud and suppression on the part of the appellant. The issue herein is recurring in nature. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 390
CENVAT Credit - Time Limitation - welding electrodes, bars & rods, chemicals which were mainly used in further fabrication of capital goods in the factory of production - period April, 2004 to October, 2004. Held that:- Larger Bench of the Tribunal in Spenta International vs. CCE [2007 (8) TMI 25 - CESTAT, MUMBAI] whereby this Tribunal held that the relevant date for deciding the credit eligibility, is the date of receipt of capital goods, and not the date of utilisation. Rule 6(4) of Cenvat Credit Rules do not permit cenvat credit on capital goods used exclusively in manufacture of exempted goods. It was held that credit eligibility is to be determined with respect to dutiability of the final product on the date of receipt of capital goods. The show cause notice is bad for invocation of extended period of limitation, suppression of facts etc. - Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 389
CENVAT Credit - inputs - furnace oil & lubricating oil for generation of electricity, which was supplied to their sister units, without any consideration - Held that:- The electricity has been supplied to their own sister units, which was used in the manufacture of excisable goods - the decision in the case of M/S SANGHI INDUSTRIES LTD. VERSUS CCE., RAJKOT [2014 (2) TMI 278 - CESTAT AHMEDABAD], followed, where it was held that the Cenvat Credit in respect of inputs used the generation of electricity wheeled out to other units is eligible Cenvat Credit - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 388
Refund of excise duty extra paid - test of unjust enrichment - excise duty extra paid on the discount amount which is returned by him to his dealers in the form of credit notes - Held that:- This issue has also came up before this Tribunal in the appellant-assessee’s own case for the previous period COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, INDORE VERSUS M/S. BRIDGESTONE INDIA PVT. LTD. [2015 (9) TMI 981 - CESTAT NEW DELHI] wherein the department was in appeal and it has been held on the same issue by this Tribunal that in this particular business model of the appellant assessee, no excise element is being retained by them, that is to say that benefit of reduced price are being passed on to the ultimate customers and therefore, there is no question of unjust enrichment. In the present case, it can be seen that though the appellant assessee has charged the price of ₹ 2953/- inclusive of excise duty from their buyer, further his dealer after receiving the trade/ quantity discount has sold the same product at the reduced rate of ₹ 2,888/- to his customers. Thus it can be seen that the benefit of discount offered to the dealers by the manufacturers assessee has been ultimately been passed on to the ultimate customers. From the financial statement of the assessee also, it can be seen that for financial year 2016-2017 and 2017-2018 wherein under the head of other Current Assets, the appellant assessee had declared cenvat credit receivable. Thus, it can be seen that the appellant has been keeping the provision of such refund in his books of accounts which also proves the transparency in the transaction of the assessee - thus, the burden of duty has not been passed down to the customers by the appellant assessee and same has been borne by the appellant assessee themselves and therefore, they are certainly entitled for refund of excess paid by them on the discount amounts returned by them to the dealers in the form of credit notes. Refund allowed - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 387
Method of Valuation - Transaction value or MRP based valuation - clearing ball bearing to their institutional buyers - sale of manufactured products to various actual users as well as to the retail sellers located in Jaipur and outside. Held that:- The appellant assessee have been clearing ball bearing to their institutional buyers as well as to their retail sellers on payment of duty on the basis of transactional value and not on the basis of MRP value given on the packing of such clearances. It is also the matter of record that the notifications issued time to time under section 4A of the Central Excise Act, 1944 do not cover the ball bearings falling under Chapter 84.82 specifically for adopting Maximum Retail Price for determination of assessable value for payment of Central Excise duty. The department is of the view that bearings are part of automobiles and therefore, the notification namely 11/2006 etc. as amended covers ball bearings for MRP based assessment as being a part of automobiles - We are of the view that the bearings as such, are not part or components of the automobile vehicles though the ball bearings to form a part of other parts of automobile vehicles It has been intention of the legislature ab initio not to consider that ball bearings as parts of automobile vehicles - also, the department has not brought on record any evidence to prove that as appellant assessee has sold any of his consignments of ball bearings to any manufacturer of automobile or any service station of automobiles. The department has stretched the provisions of law unnecessarily to include small quantities of ball bearings cleared on retail sale under the provisions of section 4A without substantiating such claim with some concrete evidences - thus, ball bearings are not included under relevant notifications issued under section 4A of the Central Excise Act, 1944 and therefore, same cannot be considered for assessment on the basis of MRP value. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (10) TMI 444
Invocation of Bank Guarantee during pendency of the appeal - Held that:- he ends of justice would suffice if a direction is issued to the Appellate Authority before whom the appeal under the GST Act is pending to decide the said appeal by 10th of November, 2018 - petition disposed off.
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2018 (10) TMI 385
Interest with reference to Section 24(3) of the TNGST Act - petitioner calculated interest from 02.07.2009 ie. the date on which the revision order was passed while the interest ought to have been paid from the date of original assessment order ie., from 28.11.1997 - petitioner is now ready to pay the balance amount of interest ie., ₹ 48,179/- as claimed by the first respondent - reasonable opportunity as contemplated under Section 8(2) of the Samadhan Act not provided. Held that:- The proviso to Section 8(2) of the Samadhan Act clearly provides that “no order under this Section shall be passed without giving the applicant a reasonable opportunity of showing cause against such refusal” - But, in this case, as rightly stated by the learned counsel for the petitioner, the first respondent has failed to provide a reasonable opportunity to the petitioner before rejecting his application. Considering the fact that it is a beneficial legislation and the application filed by the petitioner by paying 1/3rd amount has already been accepted by the respondents and the impugned order has been passed without giving a reasonable opportunity to the petitioner and now the petitioner is ready to pay the balance interest amount of ₹ 48,179/-, this Court is inclined to set aside the impugned order, dated 26.08.2010 and accordingly, the same is set aside - petitioner is directed to pay the balance interest amount of ₹ 48,179/- within a period of two weeks from the date of receipt of a copy of this order and on receipt of the same, the first respondent is directed to take up the application filed by the petitioner under the Samadhan Act for the assessment year 1995-96 (TNGST) and dispose of the same within a period of four weeks thereafter. Petition allowed.
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2018 (10) TMI 384
Maintainability of appeal - alternative statutory remedy available - Validity of assessments order - TNVAT Act - challenge mainly on the ground that Assessing Officer did not adhere to the directions/observations made by this Court in the earlier round of litigation - Held that:- Availability of an alternate remedy is not always a universal bar for this Court to exercise its extraordinary jurisdiction under Article 226 of The Constitution of India, since the remedy is discretionary. Thus, we are required to examine, in the instant case, as to whether the case would fall under any of the exceptions, which have been carved out, for which purpose, we have to peruse the impugned assessment orders in the present writ petitions for the subject assessment years. On a perusal of the impugned assessment orders in the present writ petitions, we find that the Assessing Officer did not apply his mind before passing the orders - The only reason assigned by the Assessing Officer was that the assessee admitted the discrepancies at the time of inspection before the Inspecting Officers. Time and again, this Court held that the alleged statement recorded before the Inspecting Officers cannot be used against the assessee when the assessment is sought to be reopened and even after the dealer submits their reply/objections to the revision of assessment. If the assessment orders, which were impugned in the present writ petitions, are allowed to stand, then it will tantamount to grant of approval to an illegal order. The assessment orders, which were impugned in the present writ petitions, are clear outcome of total non application of mind and non consideration of the objections filed by the dealer. The orders of assessment made in the present writ petitions have been passed in total violation of the principles of natural justice and that they are in defiance of the fundamental principles of quasi judicial procedure and are out come of total non application of mind - the cases fall within the exceptions carved out by the Hon'ble Supreme Court wherein it has been held that the Court can exercise its discretionary power under Article 226 of The Constitution of India. The matters are remanded to the Assessing Officer to redo the assessments - appeal allowed by way of remand.
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Indian Laws
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2018 (10) TMI 410
Dishonor of Cheque - Section 138 of the Negotiable Instruments Act - judgment of acquittal, recorded by the learned trial Court - appellants/complainants, has concertedly and vigorously contended qua the findings of acquittal, recorded by the learned trial Court standing, not, based on a proper appreciation, by it, of the evidence on record, rather, theirs standing sequelled by gross mis-appreciation, by it, of the material on record - statutory presumption, borne in Section 139, of, the Negotiable Instrument Act. Held that:- This Court holds that the learned trial Court has not appraised the entire evidence on record in a wholesome and harmonious manner and the analysis of the learned trial Court hence suffers from a perversity or absurdity of mis-appreciation and non-appreciation of evidence on record. The impugned judgment is quashed and set aside - appeal allowed.
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2018 (10) TMI 409
Dishonor of Cheque - Section 138 of Negotiable Instruments Act - it is submitted by the Counsel for the respondent that the applicants knew the fact that there is no sufficient amount in the bank account, but still with an intention to cheat the complainant, the cheque in question was issued, and further by making false promise of making the payment, they kept the complainant in dark - Whether the dispute would be predominantly of civil in nature or it also involves the ingredients of criminal intent? Held that:- It is well established principle of law that where the dispute is predominantly of civil in nature, then the same cannot be given the colour of criminal case. This Court is of the considered opinion, that the complaint filed by the complainant, lacks the basic allegation of dishonest intention on the part of the applicants, right from the very inception of the agreement and secondly, even if the entire allegations are accepted, then it would give rise to a civil dispute and the same cannot be allowed to be converted into a criminal case and admittedly, the complainant has already filed a civil suit against the applicants before a Court of competent jurisdiction, which is pending. The criminal complaint filed by the complainant against the applicants is hereby quashed and the applicants are discharged. Application allowed.
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2018 (10) TMI 408
Dishonor of cheque due to insufficiency of funds - Vicarious Liability u/s 138 of NI Act - Whether the averments made in the complaint that the applicants are ''Karta Dharta'' and authorized signatories of the Company, is sufficient to make them vicariously liable for offence under Section 138 of the NI Act or not? Held that:- Although in the present case, the words used ''Karta Dharta'' in paragraph 1 of complaint cannot be said to be happily-worded complaint but if the meaning of words ''Karta Dharta'' is considered, then it would mean that the applicants along with other co-accused persons are managing the day-to-day business of the Company, as general meaning of ''Karta Dharta'' is the person who is enjoying all the powers. Whether the allegations that the persons, who have been arrayed as accused in a complaint under Section 138 of the NI Act, are really responsible for the day-to-day business of the Company or not, cannot be adjudicated by the Trial Court at the time of taking cognizance. The basic averment is necessary and there is no reason to disbelieve the basic averment to the effect that the persons who have been arrayed as accused, are responsible/ in charge of the day-to-day business of the Company. This Court is of the considered opinion that the trial Court after considering the allegations made against the applicants in paragraphs 1 and 2 of the complaint, did not commit any mistake in taking cognizance against the applicants and issuing summons to the applicants. Petition dismissed.
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2018 (10) TMI 407
Clearance of Group1 and II final examination in November, 2017 - mailing of incorrect list to Aurangabad branch, but was not uploaded in any website - dispute relates to the result declared by the respondent-institute. The appellants claim that they had cleared Group I/II as per the result circulated through Whatsapp messages and uploaded on Facebook. However, as per result uploaded on the official website of the respondent-institute and the mark-sheets downloaded by them they had not cleared the respective Groups. Held that:- What is important and clinches the controversy, is the fact that the respondent- Institute had uploaded the correct list on their website at 05:38 p.m. on 17th January, 2018. This uploading on the website of the respondent-Institute was earlier and prior to the point of time viz. the e-mail was sent to the Aurangabad branch. We do not think any right accrues or any benefit can be extended to the appellants as an incorrect list was mailed to the Aurangabad branch. The list e-mailed to the Aurangabad branch was never uploaded on the website of the said branch nor communicated to the appellants or others officially. On learning about the lapse and error, immediate steps were taken and the correct list within a few hours was mailed to the Aurangabad branch at 09:57 p.m. on 17th January, 2018. Aurangabad branch had only thereafter uploaded the result at 12:05 a.m. on 18th January, 2018. The incorrect list mailed earlier to the Aurangabad branch was not uploaded on any official website. We would accept that the respondent- Institute should have been careful and exercised care and caution and do recognise the triumph and pain suffered by the appellants and others, albeit this cannot be a ground to allow the appeal. A mistake and error cannot confer a legal right. Appeal dismissed.
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