TMI Tax Updates - e-Newsletter
October 11, 2018

Case Laws in this Newsletter:

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

Articles

1. ROI- due date in case of partner of firm liable to tax audit S.139 – words ‘ a partner’ need to be substituted in place of ‘a working partner’ in provisions , meanwhile a circular is desirable

   By: DEVKUMAR KOTHARI

2. SPECIAL ECONOMIC ZONE (AMENDMENT) RULES, 2018 – AN OVERVIEW

   By: DR.MARIAPPAN GOVINDARAJAN

3. Fssai Registration Online

   By: kanika khare

News

1. Examination for Confirmation of Enrollment of GST Practitioners; Last date of registration now extended up to 15th October 2018

2. NITI Aayog Organises Workshop on Best Practices in International Arbitration

3. Competition Commission of India amends the Combination Regulations vide notification dated 9th October 2018

4. Cabinet approves closure of Biecco Lawrie Limited

Notifications

Customs

1. 51/2018 - dated 9-10-2018 - ADD

seeks to amend the notification No. 23/2103 dated the 10th October, 2013 to extend the levy of anti-dumping duty on the imports of " Ductile Iron Pipes " originating in or exported from China PR..

GST

2. 54/2018 - dated 9-10-2018 - CGST

Central Goods and Services Tax (Twelfth Amendment) Rules, 2018

Income Tax

3. 62/2018 - dated 8-10-2018 - IT

U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Karnataka State Unorganised Workers Social Security Board’, Bengaluru, a board constituted by the Government of Karnataka, in respect of the specified income arising to that board

4. 61/2018 - dated 8-10-2018 - IT

U/s 10(46) of the Income-tax Act, 1961 Central Government notifies , “Hyderabad Metropolitan Water Supply and Sewerage Board”, Hyderabad, a board constituted by Government of Andhra Pradesh in respect of the specified incomes arising to that board

Law of Competition

5. F. No. CCI/CD/Amend/Comb.Regl./2018 - dated 9-10-2018 - Competition Law

Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2018

Highlights / Catch Notes

GST

• Rule 96(10) CGST Rules 2017: Streamlined Refund Process for Integrated Tax on Exported Goods and Services.

  Act-Rules : Refund of integrated tax paid on goods or services exported out of India - Rule 96(10) of the Central Goods and Services Tax Rules, 2017 as amended.
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• Rule 89(4B) CGST Rules: Claim Refunds on Unutilized Input Tax Credit for Zero-Rated Supplies Without Tax Payment.

  Act-Rules : Refund of unutilised input tax credit on account of zero rated supplies without payment of tax - Rule 89(4B) of the Central Goods and Services Tax Rules, 2017 as amended.
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• Vehicle Dealers Can Claim Input Tax Credit on Demo Cars as Capital Goods Under GST Rules.

  Case-Laws - AAR : Input tax paid by a vehicle dealer on the purchase of motor car used for demonstration purpose of the customer can be availed as input tax credit on capital goods and set off against output tax payable under GST.
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• Computers and Laptops Not Eligible as Inputs for Transitional ITC u/s 140(3) of KSGST Act.

  Case-Laws - AAR : Input tax credit - migration to GST regime - transitional provisions - Whether computers, laptops etc. used by the applicant for providing output service would qualify as inputs for the purpose of availing transitional ITC under Section 140(3) of KSGST Act? - Held No
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• Hospital Pharmacy: In-Patient Medicine Supply Not Taxable Under GST, Out-Patient Supply Subject to Taxation.

  Case-Laws - AAR : Levy of GST - The supply of medicines and allied items provided by the hospital through the pharmacy to the in-patients is part of composite supply of health care treatment and hence not separately taxable - The supply of medicines and allied items provided by the hospital through the pharmacy to the out-patients is taxable.
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• Company Faces Charges for Overcharging Customers on Maggi, Violating Section 122(1)(i) of CGST Act 2017.

  Case-Laws - NAPA : Profiteering - Benefit of reduction in the rate of tax - Maggi - realized more price from them than he was entitled to collect and had also compelled them to pay more GST than that they were required to pay by issuing incorrect tax invoices and hence he has committed offence under section 122 (1) (i) of the CGST Act, 2017
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Income Tax

• Sawai Man Singh's Successors Assert HUF Property Claim Post-Death, Examining Tax Implications Under Lineal Primogeniture.

  Case-Laws - HC : Status of the erstwhile ruler - treatment of property in the hands of successors - late Sawai Man Singh, the ruler, was filing the return in his individual capacity - rule of lineal primogeniture - there was no legal impediment for the legal representatives of the assessee to claim that the succession was of the HUF, upon the death of Sawai Man Singh.
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• Court Addresses Delay in Processing Centralized Tax Returns; Directs Compliance for Timely Income Computation and Refunds.

  Case-Laws - HC : Claim of refund - Delay in processing of centralized returns - AO expressed difficulty in computation of Income - Petition disposed of with direction.
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• Taxpayer's Appeal to Be Restored Despite Initial Dismissal Due to Non-Deposit of Admitted Tax u/s 249(4)(a.

  Case-Laws - AT : Validity of order passed by CIT(A) on merit - Filing of an appeal without depositing admitted tax u/s 249(4)(a) - The appeal re-filed by the assessee before the CIT(A) thus requires to be restored and revived as a regular appeal for adjudication on all aspects as raised
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• Section 50C: Valuation Officer Holds Superior Expertise Over Assessing Officer in Capital Gain Property Valuation.

  Case-Laws - AT : Capital gain computation - Valuation u/s 50C - a valuation officer is an expert of the subject for such valuation and is certainly in a better position than the Assessing Officer to determine the valuation.
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• Penalty for Late TDS Returns Filing u/s 272A(2)(k) Removed Due to E-Filing Transition Challenges.

  Case-Laws - AT : Penalty u/s 272A(2)(k) - delay in filing of quarterly TDS returns in form no. 24Q beyond time prescribed by statute - reasonable cause for the delay - inconvenience in initial stage of switchover from manual to e-filing system of TDS returns - Penalty deleted.
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• Income Classification Changes Without Incriminating Evidence Are Unsustainable u/s 153A Proceedings.

  Case-Laws - AT : Re-alignment of head of income - routine adjustments in the nature of change of head of income of reported income without any nexus to incriminating material found, if any, as a result of search operations are not sustainable in the eyes of law in Section 153A proceedings
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• Section 68: Income Tax Addition Invalid if Directors or Shareholders Don't Appear Before Assessing Officer.

  Case-Laws - AT : Addition u/s 68 - Simply because the directors/shareholders did not present themselves before the Assessing Officer, an addition u/s 68 cannot be made.
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• Profits from Indian operations not taxable as business profits due to lack of Permanent Establishment under Article 7.

  Case-Laws - AT : Income accrued in India - though the assessee had business connection, it did not have any fixed place PE or agency place PE in India, and, in the absence of any PE in India, the profits, if any, attributable to India’s operation could not be assessed as business profits under Article 7 of the Treaty.
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• Section 271(1)(c) Penalty Not Applicable for Bona Fide Depreciation Claims on Professional Equipment Use.

  Case-Laws - AT : Levy of penalty u/s 271(1)(c) - where higher depreciation was wrongly claimed under bona fide belief in respect of nature of equipment and its professional use, no penalty would be leviable.
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• Penalty u/s 271(1)(c) Imposed for Not Deducting TDS on Interest Payments; Classified as Civil Liability.

  Case-Laws - AT : Penalty u/s 271(l)(c) - TDS not been deducted on the interest payments - bonafide mistake - The penalty under the provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability
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• Software Installation and Support Payments Not Taxed as Royalty or FTS in India; No TDS u/s 195 Required.

  Case-Laws - AT : TDS u/s 195 - The payment for services of installation of software, support, services, subscription and warranty is also not liable for tax in India either as royalty or FTS and therefore the assessee is not required to deduct tax at source on the same.
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• Agricultural Land Sale: Are Proceeds Business Income or Capital Gains? Division Doesn't Equal Commercial Exploitation.

  Case-Laws - AT : Sale of agriculture land after plotting - Business income or capital gains - Due to the large size of the land, it was divided and sub-divided and sold to the interested customers. These facts do not exclusively suggest that the entire exercise was to exploit the land commercially in the nature of adventure which is akin to the business.
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Customs

• Reimbursement of Central Sales Tax for 100% EOUs: Procedure in Appendix 14II Must Align with Foreign Trade Policy.

  Case-Laws - HC : 100% EOU - reimbursement of central sales tax - Appendix 14II aimed to lay down the procedure for claiming the benefit. In any case, such procedure could not have restricted the benefit by excluding the purchases from certain source which exclusion did not flow from the Foreign Trade policy itself.
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• Customs Authorities Clarify: Chinese Inscriptions on Garlic Bags Don't Prove Chinese Origin of Imports from Nepal.

  Case-Laws - AT : Import of Garlic from Nepal - Merely the bags contained some inscriptions in Chinese language which have also not been deciphered by the Customs, the said fact cannot itself go to establish that the Garlic stuffed in such bags were of Chinese Origin
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Corporate Law

• Litigants can't take contradictory stances in the same case; consistent positions are required on identical facts.

  Case-Laws - SC : A litigant can take different stands at different times but cannot take contradictory stands in the same case. A party cannot be permitted to approbate and reprobate on the same facts and take inconsistent shifting stands.
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Service Tax

• Service Tax on Jointly Owned Property: Each Co-Owner Must Pay Individually, Not Through One Co-Owner's Registration.

  Case-Laws - AT : Renting of immovable property - Joint ownership - clubbing of clearances - 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.
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• Appellant's Role Not a C&F Agent: No Custody or Transport of Coal, Affecting Service Tax Applicability.

  Case-Laws - AT : Nature of activity - At no stage custody of the coal is taken by the appellant or transportation of the coal, as forwarders, is arranged by the appellant. - the services rendered by the appellant would not qualify as C&F Agent
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• Service for Government Media Center Not a Business Exhibition Service Under Tax Law.

  Case-Laws - AT : Classification of services - providing of space along with some amenities by the appellant to another department of Government of India for setting up of media centre - the service does not amount to holding of a business exhibition service.
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Central Excise

• Appellants to be notified of erroneous refunds within Section 11A time limit under Central Excise Act for recovery.

  Case-Laws - AT : Recovery of Refund already paid - time limitation - where Commissioner (Appeals) is of the opinion that any amount has been erroneously refunded, appellant should be given notice within the time limit specified in Section 11A of the Central Excise Act.
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VAT

• Flawed Decision-Making in VAT and Sales Tax Cases Due to Oversight of Relevant Factors at Prima Facie Stage.

  Case-Laws - HC : Non-consideration of the decision (even prima facie, at the stage of stay) is an order without giving any reason, resulting in a flaw in the decision making process.
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Case Laws:

• GST

• 2018 (10) TMI 514
  Input Tax Credit - Demo cars - Whether input tax credit on the motor car purchased for demonstration purpose of the customer can be availed as credit on capital goods and set off against output tax payable under GST in the case of a motor car dealer? Held that:- The capital goods which are used in the course or furtherance of business, is entitled for input tax credit. As the impugned purchase of demo car is in furtherance of business, the applicant is eligible for input tax credit. Furthermore, this activity does not come under the negative clause, as after a limited period of use as demo car, the vehicles are sold at the written down book value. The availability of input tax credit shall be subject to the provisions of Section 18(6) of the GST Act. In the case of supply of capital goods on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods determined as value of taxable supply, whichever is higher. Ruling:- Input tax paid by a vehicle dealer on the purchase of motor car used for demonstration purpose of the customer can be availed as input tax credit on capital goods and set off against output tax payable under GST.

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• 2018 (10) TMI 513
  Input tax credit - migration to GST regime - transitional provisions - Whether computers, laptops etc. used by the applicant for providing output service would qualify as inputs for the purpose of availing transitional ITC under Section 140(3) of KSGST Act? - If the goods are physically available as closing stock as on 30th June, 2017, can the applicant avail ITC for the VAT paid? Held that:- The applicant being a service provider had no tax liability under VAT regime. As per the proviso to Sub-Section (2) of Section 140 of the GST Act, a registered person shall not be allowed to take credit unless such credit was admissible as input tax credit under the existing law and is also admissible as input tax credit under GST Act - As per Section 2(59) of GST Act, input means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. The computers, laptops etc. were used by the applicant for providing output service are capital assets. These capital goods are ineligible to claim input tax credit under VAT Laws - The applicant being a service provider, is not eligible to avail input tax credit on computers and laptops held during transition period. The proviso to Sub-Section (2) of Section 140 of the GST Act, is specific to the point that input tax credit not admissible as under the existing law is ineligible to claim input tax credit under GST Act. Section 140(2) of the Act covers transitional credit claim on capital goods by a dealer registered in earlier law. Ruling:- The computers, laptops etc. used by the applicant for providing output service would not qualify as inputs for the purpose of availing transitional ITC under Section 140(2) /140(3) of the KSGST Act. The goods, even though physically available as closing stock as on 30th June 2017, ITC is not eligible for the VAT paid.

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• 2018 (10) TMI 512
  Rate of Tax - Classification of goods - Tile Adhesive and Joint Filler - whether classified under HSN 3214 or under HSN 3824? Held that:- HSN 3214 includes non-refractory surfacing preparations, whereas HSN 3824 consist of products of natural mixtures. The product is manufactured by mixing natural products like silica sand, dolomite powder, cement and chemicals. The firm has obtained mining lease license from Mining Geology Department for manufacturing value addition products like tile adhesive, joint filler etc from silica sand. The product is manufactured by mixing natural products like Silica Sand and Dolomite powder with cement and chemicals and would, therefore, come under the classification prepared binder . Ruling:- The tile adhesive and joint filler manufactured by mixing natural products like silica sand, dolomite powder, cement and chemicals come under the category of prepared binder specified under HSN 3824 which is taxable @18% GST.

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• 2018 (10) TMI 511
  Levy of GST - supply of medicines and allied items through the pharmacy - Composite supply - health care services by a clinical establishment - exemption under N/N. 12/2017-CT (Rate) dated 28.06.2017 - Held that:- Health care services provided by a clinical establishment, an authorized medical practitioner or para medics are exempted vide Sl.No.74 of Notification No. 12/2017-CT (Rate) dated 28.06.2017. The word clinical establishment means a hospital, nursing home, clinic, sanatorium or any other institution by whatever name called, that offers services or facilities requiring diagnostics or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases. In case of inpatient as well as out patient, medicines are dispensed based on prescriptions. Hence there is no privilege for the hospitals that are dispensing medicine to outpatients. Therefore pharmacy run by hospital dispensing medicine to outpatient or bye standers or others can be treated as individual supply of medicine and not covered under the ambit of health care services. Hence such supply of medicines and allied goods are taxable. Vide clarifications issued based on the approval of 25th GST Council Meeting held on 18-01-2018 [F.No.354/17/2018-TRU Dt.12-02-2018), it was clarified that food supplied to the inpatients as advised by the doctor/nutritionist is a part of composite supply of health care and not separately taxable. Other supplies of food by hospital to patients not admitted are taxable. The same principle is applicable in the case of dispensing of medicines also. Ruling:- The supply of medicines and allied items provided by the hospital through the pharmacy to the in-patients is part of composite supply of health care treatment and hence not separately taxable. The supply of medicines and allied items provided by the hospital through the pharmacy to the out-patients is taxable.

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• 2018 (10) TMI 510
  Profiteering - Benefit of reduction in the rate of tax - Maggi - reduction of rate of tax from 18% to 12% - increase in the base price of the product - benefit of the reduction of GST rate not passed, as base price increased - violation of the provisions of Section 171 of the CGST Act, 2017 - quantum of profiteering. Whether the benefit of reduction in the rate of tax on the above product had been passed on by the Respondent to the Applicant or not? Held that:- The base price of the product was Rs. 3.96/- per pack before 15.11.2017 which was increased to Rs. 4.17/- per pack by the Respondent after the rate of tax on the product was reduced from 18% to 12% vide Notification dated 14.11.2017 and the product was sold to the recipients @ Rs. 4.67/- per pack. The Respondent was required to sell the product @ Rs. 4.43/- per pack due to reduction in the tax rate and hence he has resorted to profiteering of Rs. 0.24/- per pack. Therefore, there is no doubt that the benefit of reduction in the GST rate was not passed on to the recipients by way of commensurate reduction in the price charged by the Respondent which amounts to violation of the provisions of Section 171 of the above Act. It is also apparent from the facts of the case that the Respondent had no legal sanction to increase the base price of the product on his own and what was required of him was that he should have only reduced the MRP of the product by taking in to accout the effect of the reduction in the rate of tax. The Respondent was further required to fix the MRP keeping in view the provisions of the Legal Metrology (Packaged Commodities) Rules, 2011 which prescribe the methodology of fixining the MRP keeping in view the rounding off the price. Respondent has contended that he had passed on the benefit in respect of the product by way of reducing the MRP of the 70 Gms. products - Held that:- The Respondent has no such liberty to arbitrarily decide in respect of which products he would pass on the benefit and in respect of which products he would not pass such benefit. As per the provisions of Section 171 of the Act the benefit has to be passed on to each recipient and the same can not be selectively granted or denied. It is also clear that the Maggi Noodle pack of 35 Gms. is distinct from a 70 Gms. pack and both the packs may be bought by the different recipients/customers and hence the benefit accruing to one customer can not be given or denied to another nor can the benefit given to one set of customers arbitrarily enhanced and set off against the another. No such adjustments are permissible under the Act. Quantum of profiteering - Held that:- The quantum of profiteering is determined as Rs. 90,778/- including the profiteering of Rs. 2,253/- made by the Respondent from the Applicant No. 1. Accordingly, the Respondent is directed to reduce the price of the product commensurate to the reduction in the rate of tax. He is also directed to refund an amount of Rs. 2,253/- to the Applicant No. 1 alongwith interest @ 18% P. A. from the date form which the above amount was collected by the Respondent from him. Contravention of the provisions of Section 171 (1) of the CGST Act, 2017 - Held that:- The Respondent had denied benefit of the reduction in GST rate to the consumers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus realized more price from them than he was entitled to collect and had also compelled them to pay more GST than that they were required to pay by issuing incorrect tax invoices and hence he has committed offence under section 122 (1) (i) of the CGST Act, 2017 and therefore, he is liable for imposition of penalty. Application disposed off.

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• Income Tax

• 2018 (10) TMI 509
  Revision u/s 263 - apportionment of expenses against exempted income under Section 14A r.w.r.8D - Held that:- Special Leave Petition is dismissed both on the ground of delay as well as on merits. Pending applications, if any, stand disposed of.

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• 2018 (10) TMI 508
  Deduction u/s 80IB [10] - assessee developer of the Housing Project - AO disallowed the claim mainly on the ground that the assessee was not the owner of the land and the approval of the project was not in the name of the assessee - Held that:- As decided in assessee's own case [2018 (9) TMI 1181 - GUJARAT HIGH COURT] held that the assessee had undertaken the development of housing project at their own risk and cost. The owner of the land had accepted the full price of the land. He was therefore not concerned with the successor or failure of the housing project. Reference was made to the definition of term “transfer” under section 2(47)and held that merely because the land was held by the original owner when the housing development project was executed, would not be detrimental to the assessee's claim of deduction under section 80IB(10) - Decided against revenue

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• 2018 (10) TMI 507
  Status of the erstwhile ruler - treatment of property in the hands of successors - late Sawai Man Singh, the ruler, was filing the return in his individual capacity - rule of lineal primogeniture - individual or joint family status - whether Sawai Man Singh filed his income tax returns in his capacity as sole and exclusive owner of impartible properties, or he did so, for and on behalf of his joint family? - theory of ownership - Individual or HUF Held that:- There is no material on record to show that the Kachwaha clans (which the Jaipur royal house belonged to) was governed by the rule of lineal primogeniture, where the eldest male member of the family became the exclusive owner of all properties which were impartible. Nor was such special custom proved in relation to the Jaipur royal house. What could be and was established was that succession to the gaddi (the throne) was by lineal primogeniture. Consistent with the law declared by the Privy Council and the principles of those decisions, applied by the Supreme Court in several judgments, the only conclusion that could be drawn therefore, was that though succession to the gaddi was through lineal primogeniture at a time when the monarchy was absolute – which meant that such practice overlaid the right of other members to claim a share in the HUF, upon accession of the princely state of Jaipur, only those properties and privileges which the late Sawai Man Singh retained to himself, were saved. No custom of law, of the kind visualized by Section 5 of the Hindu Succession Act, in relation to lineal primogeniture or impartible properties in relation to these assets were saved. All else became subject to laws of the country. Thus, the late Maharaja had to and did file tax returns, declaring his wealth and income, in accordance with the laws of the land. He was governed by the ordinary rules of inheritance applicable to members of HUF. From the materials on record, in these appeals, there is nothing to suggest that the succession to the estate of the ruler-or his family (other than succession to the gaddi) was governed by the principle of primogeniture. In these circumstances, the law on the subject is clear: sans evidence of a preexistent custom with respect to primogeniture (as the overarching rule of succession, to the exclusion of all heirs) the general law of succession, i.e. the rules applicable to HUF, would apply. Regardless of what an assessee claims, if the correct position deducible from primary facts is otherwise, the AO has to adopt that correct position. Merely because the late assessee (Sawai Man Singh) repeatedly claimed individual status while filing his returns, the correct legal status was as an individual and not HUF. Therefore, in the opinion of this court, there was no legal impediment for the legal representatives of the assessee to claim that the succession was of the HUF, upon the death of Sawai Man Singh. - Decided against revenue

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• 2018 (10) TMI 506
  Claim of refund - Delay in processing of centralized returns - AO expressed difficulty in computation of Income - Prima facie adjustments u/s 143 - time barring - Held that:- Prima facie, we see some substance in this complaint of Mr. Pardiwala. We do not think that the draft assessment can be delayed and in the manner stated before us. We direct that even the draft assessment for the assessment year 2015-2016 shall be completed by 30th November, 2018. Let the further steps thereafter be taken in accordance with law. The communication, copy of which is at Annexure-A makes interesting reading with regard to assessment year 2016- 2017. It is solemnly stated that the return for this assessment year has been processed but it is pushed to what is stated as and styled as the Centralized Processing Center. That is stated to be forwarded for computation. If computation such a difficult, if not an important task, why it cannot be performed by this Assessing Officer, is not clarified to us at all. It is evident that, after it is pushed to this center, from the center's communication, copy of which is handed over by Mr. Mohanty dated 7th August, 2018, it is apparent that this center has done nothing in relation to this computation. The said letter dated 7th August, 2018 is taken on record and marked “X” for identification. It may be lying with it and who knows for how long. It would continue with it until such time as the law permits holding up of the further proceedings or till the last date.

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• 2018 (10) TMI 505
  Disallowance u/s 36(1)(iii) - interest incurred for the purpose of making investments in subsidiary companies - Held that:- The Tribunal correctly affirmed findings of the Commissioner of Income Tax (Appeals) deleting addition made by the Assessing Officer as being contrary to law and in particular Section 36(1)(iii) of the Act. The Tribunal observed that investment in subsidiaries/ joint venture companies was one of the main objects of the respondent-assessee and hence expenditure in the nature of interest incurred for the purpose of making investments cannot be disallowed under Section 36(1)(iii) of the Act. Apart from the incongruities in the reasoning and calculations made by the Assessing Officer referred to in the order of the Commissioner of Income Tax (Appeals), which have been accepted by the Tribunal, the issue raised is covered against the Revenue by the decision of the Supreme Court in S.A. Builders Limited versus Commissioner of Income Tax and Another, (2006 (12) TMI 82 - SUPREME COURT) - decided against revenue

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• 2018 (10) TMI 504
  Extended due date for filing of Income Tax Return of Tax Audit Cases from 30.9.2018 to 31.10.2018 - Held that:- Shri Mathur has placed before us an order passed by the Under Secretary to the Government of India under Section 119 of the Income Tax Act, 1961 whereby the due date has already been extended by this order till 15th October, 2018. In view of the above, it appears that the matter has become infructuous as it has lost its efficacy. Accordingly, the writ petition is dismissed as infructuous.

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• 2018 (10) TMI 503
  Validity of order passed by CIT(A) on merit - Filing of an appeal without depositing admitted tax u/s 249(4)(a) - Restoration of appeal filed second time - non-compliance of the statutory notice - Penalty under s.271(1)(c) - Held that:- Bare reading of Section 249(4)(a) gives an infallible impression that the appeal before the CIT(A) would lie for adjudication on merits only on satisfaction of the mandatory condition towards payment of tax determined as per the income returned. A waiver of such mandatory provision for adjudication of appeal on merits without compliance thereof is totally impermissible. Thus, the jurisdiction could not be conferred on the CIT(A) to adjudicate the appeal on merits even if acquiescenced or estoppel or the bar of res judicata being attracted because the order in such case would lack inherent jurisdiction unless the conditions precedent are fulfilled. The order passed in the first instance in contravention of Section 249(4)(a) of the Act is thus a void order and hence a nullity in the eyes of law. CIT(A) itself, in a similarly placed situation, has taken a favourable view in the penalty proceedings before it. Therefore we are of the view that the appellate order passed by the CIT(A) pursuant to appeal filed by the assessee prior to non-payment of admitted tax is a nonest order and deserves to be quashed. The appeal re-filed by the assessee before the CIT(A) thus requires to be restored and revived as a regular appeal for adjudication on all aspects as raised or sought to be raised before the CIT(A) including condonation of delay. Therefore, we admit the prayer of the assessee for restoration of appeal filed second time for its disposal in accordance with law.

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• 2018 (10) TMI 502
  Scope of rectification of mistake - Agricultural income as disclosed by the partners in returns and Partners in turn disclosed share in HUF income in their individual returns and claimed the same as exempt u/s 10(2)- Held that:- We find that the power of rectification under section 254 can be exercised only when the mistake, which is sought to be rectified, is an obvious patent mistake and apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. We find that the error pointed out by the assessee qua grounds no.1 and 2 are concerned, the Tribunal in the impugned order had detailed discussion from page nos.1 to 5 of the order and came to conclusion to restrict the disallowance to 20% of the purchases made from the partners and relative of the partners. 80% of the purchases made by the assessee have been allowed. Addition on account of suppression in the value of closing stock is concerned, the Tribunal has discussed the issue and noticed well reasoned order of the CIT(A), and thereafter following the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Hindustan Zinc Ltd. [2007 (5) TMI 195 - SUPREME COURT] came to the conclusion that valuation of closing stock adopted by the assessee was purely adhoc method and without any basis. We find that the scope of sub-section (2) is restricted to rectifying any mistake in the order which is apparent from record and does not extend to reviewing of the earlier order. By pointing out the alleged apparent errors, the assessee is trying to review entire order of the Tribunal, which is not permissible in law. Misc. Application of the assessee is dismissed.

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• 2018 (10) TMI 501
  Chargeability of interest tax on interest derived from various sources - Held that:- Additions of Rs. 20 Lakhs is not sustainable in law. Similarly, interest received from another credit institution amounting to Rs. 4.19 Lakhs is also not susceptible to interest tax in view of the exclusion provided under s.5 of the Act for which the CIT(A) has also concurred with the assessee. This leaves us with interest received from Tata Chemicals Ltd. amounting to Rs. 9,83,219/- and from Alpa Marketing Enterprise amounting to Rs. 21,680/-. In view of the concession granted on behalf of the assessee owing to smallness of the amount, we hold the same to be susceptible to the interest tax. Consequently, the assessee gets relief on account interest income derived from investment in debentures and interest income received from other credit institution aggregating to Rs. 24,19,178/- and other additions are not interfered with.

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• 2018 (10) TMI 500
  Capital gain computation - Valuation as per stamp value authorities u/s 50C - AO instead of referring the same to the DVO adopted the circle rate valuation - Held that:- AO had not discussed anything about the valuation report filed by the assessee during the course of assessment proceedings. The representations filed by the trade organization before the then Chief Minister of Delhi about the arbitrary adoption of circle rate by the stamp valuation authority was also ignored by the Assessing Officer and instead of referring the matter to the DVO he made addition being the difference between the circle rate and actual sale consideration. When the assessee submitted various details including two sale instances below the circle rate in the same area, the ld. CIT(A) called for a remand report from the Assessing Officer and the Assessing Officer at that time also did not refer the matter to the DVO. Therefore, under these circumstances, the decision of the Hon’ble Delhi High Court in the case of Jansampark Advertising and Marketing Ltd. (2015 (3) TMI 410 - DELHI HIGH COURT) as relied on by the Revenue in the grounds of appeal will not be applicable to the facts of the present case. We find identical issue had come up before the Tribunal in the case of Aditya Narain Verma (HUF) (2017 (6) TMI 542 - ITAT DELHI) Tribunal after considering the various submissions made by the assessee rejected such request of the Revenue as held Assessing Officer should have referred the valuation of the capital asset to a valuation officer instead of adopting the value taken by the state authority for the purpose of stamp duty. The very purpose of the Legislature behind the provisions laid down under sub section (2) to section 50C is that a valuation officer is an expert of the subject for such valuation and is certainly in a better position than the Assessing Officer to determine the valuation. Thus, non-compliance of the provisions laid down under sub section (2) by the Assessing Officer cannot be held valid and justified - decided against revenue

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• 2018 (10) TMI 499
  Validity of search and the assessment proceedings carried - Held that:- We observe that during the course of search various incriminating documents were found and the alleged connection of the assessee with the SR Group was unearthed by the revenue authorities. In the given facts and circumstances of the case as well as the findings of lower authorities, we find no merit in this common issue raised by both the assessee’s. Appellant assessee is associated with the SR Group, and is the Director in VNS Group of Institutions, Bhopal which is interconnected and having business association with the said Group searched u/s 132. The group is referred to by a common name "SR Group". Thus, the contention of the learned AR that the appellant has no connection with the SR Ferro Alloys Group does not appear to be justified. The A.O for the sake of reference and convenience to a search group has used the term 'SR Ferro Alloys/ SR Group'. The said fact has also been mentioned by the A.O in the assessment order itself. Keeping in view the totality of the facts as discussed above, the order of the A.O. is held as a valid assessment. Unexplained cash deposit - Held that:- Looking to the amount of income disclosed by both the assessee’s and also in the given circumstances of the case, the assessee has been consistently making transactions through its various bank accounts and withdrawing and depositing the cash and also one cannot ignore the possibility of accumulated cash for so many years, we are of the considered view that no addition was called for towards unexplained cash deposit at Rs. 1,28,500/-, Rs. 1,88,939/- and Rs. 1,05,000/- for Assessment Year 2008-09, 2010-11, and 2011-12 in the case of Shri D.K. Swami and similarly no addition was called for in the case of Smt. Preeti Swami at Rs. 63,000/- for Assessment Year 2011-12. We accordingly delete these additions. Addition of Long Term Capital Gain from sale of residential house - issue of exemption u/s 54 - Held that:- If the assessee has not declared the same in the return of income but has made the claim during the assessment proceedings, then the lower authorities should have acted as per the provisions of law and should have examined as to whether the assessee has adhered/complied to the provisions of Section 54 of the Act and if it was so eligible to get the benefit then the same should have been allowed. We therefore set aside this issue of exemption u/s 54 of the Act against the Long Term Capital Gain of Rs. 1,88,939/- to the file of Ld.A.O for afresh adjudication and direct the AO to examine the documents of purchase of residential house to be furnished by the assessee and if found correct then allow the claim u/s 54 of the Act and delete the addition for Long term Capital Gain. Addition of unexplained investment - Reference to Valuation Officer - Held that:- Assessing Officer has merely made the estimation. There is no finding about the value determined by the Stamp Valuation Authorities in the purchase deed i.e. whether the value as per the stamp valuation authority was more than the purchase consideration paid by the assessee. It is also discernable from records that the names and address of the seller have been provided to the Assessing Authority and one of them has even accepted the transaction. Even if for any reason the Ld.A.O could not place hands on the copies of purchase deeds then also it had sufficient powers u/s 55A of the Act which provides for making reference to the Valuation Officer. From perusal of the above section 55A of the Act the Assessing Officer in order to ascertain the fair market value of the asset may refer to the Valuation Officer for valuation of the impugned assets if he is of the opinion that fair market value exceeds the fair market value as claimed by the assessee. However in the instant case A.O has not taken any resort to comply with the provisions of Section 55A of the Act and merely on the basis of surmises applied the estimated prevailing market rate without giving any basis for the same and computed the unexplained investment in the hands of the assessee. We therefore considered view that A.O ought to have referred the matter to the Valuation Officer to value the fair market price of both the impugned assets mentioned herein above in order to decide the issue. Unexplained investment in the purchase of agriculture land at village Funda, District Bhopal - Held that:- Undisclosed investment at Rs. 5,10,000/- was worked out and he accordingly made the addition u/s 69B of the Act. This addition was confirmed by Ld.CIT(A). We also find that the modus operandi of the Ld. A.O of making addition for unaccounted/undisclosed investment in agriculture land is similar to the one made by him in the hands of Shri D.K. Swami towards the unexplained investment in residential houses/flats. In this case also the Ld.A.O has stepped into the shoes of Valuation Officer and has calculated the prevailing market rate which in our view is inconsistent as the Ld.A.O is not an expert in this field and he ought to have made the reference to the Valuation Officer u/s 55A of the Act so as to assess the fair market price. Therefore we direct the Ld.A.O to refer the matter of valuation of impugned agricultural land to the Departmental Valuation Officer. The assessee is also directed to furnish the necessary documents before both the authorities and to provide cooperation in getting the valuation done

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• 2018 (10) TMI 498
  Revision of monetary limits for filing of appeals - maintainability of appeal - Held that:- From Clause 12 & 13 of the above said circular it is clear that these instructions are applicable to the pending appeals also and as per clause 13, there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than Rs. 20,00,000/-. These instructions are operative retrospectively to the pending appeals.

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• 2018 (10) TMI 497
  Tonnage Tax Scheme - income as computed at specified rates based on net tonnage of a ship under section 115VG - addition relating to the liquidated damages assessed as separate income other than the core income - Held that:- This Tribunal has decided the identical issue for the assessment year 2009-10 to 2011-12 [2017 (11) TMI 58 - ITAT VISAKHAPATNAM] in assessee’s own case dated 25.10.2017 and upheld the addition made by the AO with regard to the receipt of liquidated damages. Provision for bad and doubtful debts - Held that:- AR did not place any material to support the claim of Provisions for bad and doubtful debts and the provisions written back are related to the core activity of the assessee which was already offered as income in the tonnage tax, but not related to the income other than the tonnage tax scheme. the revenue also failed to establish the same with relevant information. Any reason to interfere with the order of the Ld.CIT(A). Accordingly, we uphold the order of the Ld.CIT(A) and remit the matter back to the file of the AO to verify whether the provisions are created in relation to the core activity transaction or not. If the provisions are related to the income from core activity which was already included in tonnage income in the earlier years the same are required to be excluded from the non-core income. Accordingly, the AO is directed to verify the facts and reconsider the issue on merits after giving opportunity to the assessee Damages from IHC Holland for deficiency in the Dredger supplied - Held that:- For the said deficiencies, the assessee had received the damages from IHC Holland which are directly relatable to the core activity of the assessee. Therefore, required to be assessed as core income. The assessee’s activity is dredging operations. The damages received from the IHC Holland were for compensation of the deficiencies in the dredger. The receipt was neither from dredging activity nor from any other operational activity of shipping of the assessee. The receipts are similar to that of liquidated damages and the receipt should fit into the definition of the shipping activity as specified in section 115VI of the Act r.w.Rule 11R to treat the same as core income. In the instant case, the receipt was neither from the shipping activity nor from the operational activity, therefore, the receipt cannot be held to be from core activity. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee on this issue. Damages as received to compensate the deficiencies for receipt of the dredger supplied with deficiencies - whether the said receipts should be treated as capital receipt or revenue receipt? - Held that:- The CIT(A) has examined this issue in detail and given a finding that the assessee did not furnish any details with relation to the losses suffered by the assessee. The compromise agreement was not filed before the CIT(A) and the assessee did not furnish any information as to alleged repairs undertaken by it for rectifying the deficiencies. During the appeal hearing also for a query from the bench, the AR submitted that the expenditure for repairs was debited to the Profit & Loss account and no details were available with regard to the incurring of expenditure. The assessee did not furnish any break-up of the details with regard to the date of purchase of ship, date of operation of the ship, whether it was purchased after tonnage tax scheme introduced or before the introduction of tonnage tax scheme. In the absence of any details, we are unable to accept the contention of the assessee that the expenditure was capital expenditure. Accordingly, the argument raised by the AR to treat the receipt as a capital receipt is unacceptable. Addition treating the some receipts as receipts not relating to core activity - Recovery towards leased quarters to employees, Staff car recoveries, Fee for right to information, Sale of Tender documents, Rent for hiring of the quarter/office, Late attendance receipt, Recovery of tower rent from Bharti Airtel, Training fee and Financing & Storage charges recoveries - Held that:- imilar issue has come up before this Tribunal in the assessee’s own case with regard to the above nature of receipts including miscellaneous income. This Tribunal held that the income from the above receipts cannot be considered to be connected with the dredging activity. EMD and SD forfeiture - Held that:- Since the receipts of EMD and SD amounts are of the same nature, we hold that the receipts are not connected to dredging activity and cannot be held to be core income for the purpose of tonnage tax scheme. Accordingly, the receipts of EMD and SD are one step away from the dredging activity and would not be eligible for tonnage tax scheme. Therefore, we do not find any reason to interfere with the order of the Ld.CIT(A) and dismiss the appeal of the assessee. Deduction of expenses in respect of incomes considered as not forming part of core activity - Held that:- This Tribunal in the assessee’s own case for the assessment year 2012-13 the assessee did not demonstrate that it had incurred the expenditure separately over and above the expenditure debited to the Profit & Loss Account. No separate books of accounts are maintained for non core income and core income and this issue is squarely covered by the decision of this Tribunal cited supra. Therefore, following the order of this Tribunal, we dismiss the appeal of the assessee on this ground. Receipts on account of sale of scrap, sale of empties, sale of condemned stores and spares and sale of waste oil, sale of assets and exchange difference - AO treated the receipts from the above activity as non core receipts and accordingly brought to tax other than the income from tonnage tax scheme - Held that:- As decided in assessee's own case the receipts by way of sale of scrap, exchange difference, insurance claim are having direct nexus with the dredging activity and such receipts are required to be considered as income from core activity. CIT(A) followed the order of this Tribunal in assessee’s own case for the assessment year 2006-07 to 2008-09 supra. The Ld.CIT(A) also applied the ratio of the decision of Hon’ble Apex Court in the case of Pandian Chemicals Ltd. Vs. CIT [2003 (4) TMI 3 - SUPREME COURT].

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• 2018 (10) TMI 496
  Bogus purchases - assessee could not conclusively substantiate the purchases made - Held that:- There could be no sale without actual purchase of material since the assessee was engaged in contract work. The sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee was in possession of primary purchases documents. The assessee could not conclusively substantiate the purchases made by him and failed to produce any of the party to confirm the transactions. The delivery of the material could not be substantiated and even the quantitative details could not be provided by the assessee. All these factors cast a serious doubt on assessee’s claim. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases. Therefore, we estimate the same @12.5% of alleged bogus purchases of Rs. 65.99 Lacs which comes to Rs. 8.25 Lacs. The balance additions stand deleted. The grounds and the appeal stand partly allowed. Commission Expenditure - assessee claimed the aforesaid expenditure as commission payment to an entity namely Corporate Alliances - Held that:- AR has submitted that the commission has been paid against independent professional services rendered by the said entity to the assessee and the same was not merely in the nature of liasioning services. Our attention has been drawn to the profile of the said entity to submit that it was independent professional entity and was not merely acting as an agent of the assessee. The supporting documents in the shape of invoices, agreement, engagement letter etc. have been placed on record. It is also noted that similar additions made by Ld. AO in AY 2009-10 has been deleted by Ld. first appellate authority, finding substance in assessee’s claim. Therefore finding strength in the arguments of Ld. AR, the issue stand remitted back to the file of Ld. AO for re-adjudication - The ground stand allowed for statistical purposes. Addition u/s 28(iv) - AR has pleaded to admission of additional evidences in terms of Rule 29 of the Income Tax Tribunal Rules, 1963 vide application dated 18/09/2018 - Held that:- These evidences are in the shape of ledger accounts of the four sundry creditors to demonstrate that the liabilities have subsequently been discharged by the assessee by way of bank payments. These evidences, if found authenticated and admissible, would run contrary to the findings of Ld. AO. Therefore, while admitting the same, this issue is also restored to the file of Ld. AO for adjudication in the light of additional evidences submitted before us. The requisite information / explanation /other evidences, in this regard, shall be adduced by the assessee before Ld. AO. - Ground allowed for statistical purposes.

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• 2018 (10) TMI 495
  Condone the delay on technical ground - CIT(A) rejected the appeal filed by the assessee on the ground that there is a delay of 285 days in filing the appeal and the assessee has not explained the delay in filing the appeal with sufficient and reasonable cause - Held that:- There is no change in the facts existed at the time of assessment proceedings and at the time of filing appeal before the CIT(A). The only change in facts is that there are divergent statements by way of affidavits from two Chartered Accountants, one in favour of the assessee and one is against the assessee. Except this the assessee has not brought out any records to prove its bonafide attempts made in filing appeal against the order passed by the AO. Had it been the case of the assessee that it has handed over all papers to the professional for filing the appeal, but the professional who had advised the assessee to not to file the appeal. In the absence of any evidence to prove bonafideness of the assessee, merely on the basis of self serving documents, huge delay in filing appeal cannot be condoned. Therefore, the assessee has failed to make out sufficient and reasonable cause for condonation of delay in filing the appeal filed before the CIT(A). Although, the assessee has relied upon various decision in support of its arguments, the facts remain that the term “sufficient cause” is not explained and hence whether to condone the delay or not is purely depends upon the facts and circumstance of each case. Therefore all the case law relied upon by the assessee are considered to be not applicable to the assessee’s case and accordingly not considered. The assessee has failed to make out sufficient and reasonable case before the CIT(A) for condonation of delay in filing of the appeal by 285 days.

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• 2018 (10) TMI 494
  Penalty u/s 272A(2)(k) - delay in filing of quarterly TDS returns in form no. 24Q beyond time prescribed by statute - reasonable cause for the delay - inconvenience in initial stage of switchover from manual to e-filing system of TDS returns - Held that:- It is undisputed that the income-tax so deducted at source by the assessee on the salaries paid to employees was deposited in time to the credit of Central Government . The statement of income-tax deducted at source i.e. quarterly TDS return in form no. 24Q for all the four quarters of the financial year 2010-11 were filed late beyond time stipulated under law. We are fully aware that Hon’ble High Court’s have upheld the constitutional validity of late fee as prescribed u/s. 234E of the Act for delay in filing of TDS returns as it is a fee paid to Revenue for extra work been done in giving credit to those tax-payers who suffers because of non filing of TDS returns by the deductors in time. We cannot also ignore the fact that it was for the Revenue to have allowed smooth switchover from manual to e-filing system of filing TDS returns. The onus and burden was on revenue to provide necessary infrastructure so that tax-payer did not face any inconvenience in filing e-TDS returns. But as it is emerging from the historical factual matrix, the public at large faced lot of inconvenience in initial stage of switchover from manual to e-filing system of TDS returns due to several glitches. We have also noted the conduct of the assessee for subsequent periods wherein the TDS returns were e-filed in form no. 24Q, 26Q as well 27Q by the assessee mostly in time for financial year 2012-13, 2013-14 and 2014-15 and DR did not controvert the above filing of TDS such returns - Penalty not sustainable in the eyes of law as the assessee has shown a reasonable cause falling within parameters of Section 273B - Decided against revenue.

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• 2018 (10) TMI 493
  Assessment u/s 153A - head of income for the purposes of assessment of gain arising on sale of plot of lands has been changed from ‘capital gains’ offered by the assessee to ‘business income’ assessed by the AO - Held that:- Referring to decision in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT], we are of the view that various additions/disallowances made by the AO are clearly beyond the scope of the authority vested under s. 153A of the Act owing to absence of any incriminat ing material or evidence deduced as a result of search. No reference of such incriminat ing material, if any, is found in the assessment year. We hold that routine adjustments in the nature of change of head of income of reported income without any nexus to incriminating material found, if any, as a result of search operations are not sustainable in the eyes of law in Section 153A proceedings. Hence, the re-alignment of head of income towards gain on sale of land for the purposes of taxability requires to be quashed. Thus, we find merit in the legal ground raised by the assessee. In this view of the matter, we do not intend to adjudicate the merits of the adjustments / re-alignment. Capital gains arising from the sale of Sanavad land under the head of ‘business income’ - Held that:- Due to the large size of the land, it was divided and sub-divided and sold to the interested customers. These facts do not exclusively suggest that the ent ire exercise was to exploit the land commercially in the nature of adventure which is akin to the business. In the light of the decision of the Hon’ble Gujarat High Court in the case of Premji Gopalbhai (1977 (8) TMI 43 - GUJARAT HIGH COURT) and the decision of Ahmedabad Tribunal in the case of Hiteshkumar Ashokkumar Vaswani (2017 (7) TMI 954 - ITAT AHMEDABAD), we find merit in the plea of the assessee for treating the same to be gain arising for capital nature and thus, assessable under the head of ‘capital gains’.

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• 2018 (10) TMI 492
  Disallowance u/s 14A r.w.r. 8D - Held that:- The same basis cannot be adopted in the year under consideration. If we do so, it will result in the enhancement of the disallowance as made by the AO for which the Tribunal has no power. In the case relied upon by the Ld DR, we note that the total disallowance was made by the AO as per Rule 8D for Rs. 17.54 crores. The disallowance confirmed by the Hon’ble ITAT @10% of the total administrative expenditure was within the limit of the disallowance as made by the AO in his assessment order. Therefore, we are reluctant to take any guidance in the given facts and circumstances from the order of Tribunal in the own case of the assessee. Disallowance on account of administrative expenses as per Rule 8D - Held that:- AO has treated the sum disallowed by the assessee for Rs. 2,19,585.00 in the income tax return as direct expenses incurred in relation to dividend income under rule 8D(2)(i) of Income Tax Rule. However the action of the AO is not based on any material suggesting that the amount of Rs. 2,19,585.00 is the direct expenditure incurred by the assessee in relation exempted income as specified under rule 8D(2)(i) of Income Tax Rules. Thus we direct to delete the same. Thus, the ground of appeal of the assessee is partly allowed.

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• 2018 (10) TMI 491
  Bogus transactions with ten parties - authenticity and genuineness of the agreements - Colourable Device - genuineness of collaboration agreement - Non existing assets - Conversion of fixed assets into stock to avoid tax liability - Held that:- On perusal of the facts narrated by the AO, the whole series of facts go to doubt the transactions. The assessee enters into a collaboration agreement with M/s. Omaxe Ltd on 08.02.2005, as noted above for development of assessee’s land. In this agreement, there were some time limitations for completion of the project. But, before the expiry of the time limitation and completion of the project, the appellant transferred one plot of land to M/s. Supreme Ceramics Pvt. Ltd. on 04.05.2005 and some other plots which the assessee was supposed to receive from Omaxe on completion of the project, to nine other parties. The assessee sold the plot in advance on the basis of collaboration agreement with Omexe, before actually receiving the plots. In such situation, if the collaboration agreement is taken to be correct, then the assessee had no right to transfer the plots to other parties before their development or agreed expiry of the development project undertaken by Omaxe. This fact itself goes to support the objections of the AO on the genuineness of transaction, but the ld. CIT(A) has not considered this aspect of the case properly, particularly when the agreements entered with other parties were neither registered nor were their original copy was placed before the AO. Also as per AO once two of the parties, namely, M/s. Prime Quality Construction and Ram Devi Steels Tikamgarh in response to summons sent to them denied to have made any transaction or execution of any such agreement with the assessee in response to the summons issued by AO to them. CIT(A) has also not considered this vital objection of the AO which has direct bearing on the veracity of assessee’s version. Further we observe that the agreements made with 10 parties do neither contain any specification of developed land nor Khasra Number of agricultural land, which is necessary to mention in the sale agreement. The nature of such agreements, in our opinion, has rightly led the Assessing Officer to doubt the genuineness of the transaction - decided against assessee.

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• 2018 (10) TMI 490
  Addition u/s 68 - person has not appeared in compliance to notice u/s 131 - Held that:- The Hon’ble Supreme Court in the case of Commissioner of Income Tax vs. Orissa Corporation Pvt. Ltd. [1986 (3) TMI 3 - SUPREME COURT] and Commissioner of Income Tax v. Orchid Industries Pvt. Ltd. [2017 (7) TMI 613 - BOMBAY HIGH COURT] have held that an addition cannot be made simply because a person has not appeared in compliance to notice u/s 131 of the Act, when all the other requirements of the notices u/s 133(6) of the Act, has been complied with AO has simply disbelieved the evidence filed by the assessee. He has not conducted any verification, let alone investigation, before coming to the conclusion that the confirmations and evidence filed by the Directors cannot be admitted as evidence. As the share applicants are the Directors of the assessee Company and have confirmed the transactions and have also filed their source of funds for the investment. When statement of final accounts were filed giving sources of funds for making the investment, the Assessing Officer has not given any reason as to why he is not able to accept the same. If at all the creditworthiness of the directors is not proved, then an addition can be made only in their hands and not in the hands of the company as held by the Hon’ble A.P. High Court in the case of Lanco Industries Ltd. (1999 (12) TMI 45 - ANDHRA PRADESH HIGH COURT). No contrary evidence to controvert the evidence produced by the assessee, is brought on record. Simply because the directors/shareholders did not present themselves before the Assessing Officer, an addition u/s 68 cannot be made. - Decided in favour of assessee

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• 2018 (10) TMI 489
  Income accrued in India - business connection in India u/s 9 - Permanent Establishment (PE) in India under Article 5 of the Indo-US Taxation Avoidance Agreement - assessment of business profits - Held that:- As decided in assessee's own case the Tribunal considered the issues at length and reached the conclusions that though the assessee has a business connection in India, it had neither fixed nor the agencies PE in India, as such in the absence of any PE in India, the profits, if any, attributable to Indian operations could not be assessed as business profits under Article 7 of the Treaty. It was also held that the agents engaged by the assessee in this matter are independent agents under Article 5(5) of the Treaty and they do not habitually exercise the authority to conclude the contracts on behalf of the assessee, and, on that premise it was held that there is no agency PE of the assessee in India. The sum and substance of the order of the Co-ordinate Bench of the Tribunal is that though the assessee had business connection, it did not have any fixed place PE or agency place PE in India, and, in the absence of any PE in India, the profits, if any, attributable to India’s operation could not be assessed as business profits under Article 7 of the Treaty. - decided in favour of assessee.

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• 2018 (10) TMI 488
  Stay of demand - TDS u/s 194C - scope of the term "person responsible for paying" u/s 204 - assessee is engaged in the business of providing marketing and support services to Uber B.V. a company incorporated under the laws of Netherlands - tds on payouts/dues to the Driver-Partners - whether assessee is providing only support services and acting as collection and remittance agent and disburses the payment as per the instructions from Uber B.V? - Held that:- During the course of hearing, the assessee submitted that the modus operandi of collecting the payments by the assessee on behalf of the Netherland company which are made by way of debit or credit cards or collecting by the Driver-Partners directly from the customers. It was also stated that there are practical difficulties as it is not possible for the assessee to collect TDS on the cash payments received by the Driver-Partners directly. During the hearing the assessee proved that the facts of the case were not properly and thoroughly examined and verified by the lower authorities. Thus demand raised by the revenue should be stayed subject to deposit of Rs. 20.00 Cr till the disposal of appeal by the tribunal so that the business of the assessee is not adversely impacted. We, therefore, are staying the demand for both the years subject to payment of Rs. 20 crores to be paid in three installments two Rs. 6.5 Cr on 15.10.2018 and 15.11.2018 and Rs. 7.00 Cr on 15.12.2018. The case of the assessee is also listed on an out-of-turn hearing on 11.12.2018. Penalty u/s 271C - Held that:- The assessee has made out a prima facie case in favour of the assessee proving that the outcome of the appeal before ITAT will directly impact the proceedings which are hurriedly being finalized by the authorities below, which may entail huge liability by way of penalty on the assessee. In our opinion, so long as the appeal is pending before the Tribunal, the Revenue authorities should be restrained from passing any order imposing penalty on the assessee u/s 271C and 206AA of the Act however the proceedings may continue

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• 2018 (10) TMI 487
  Penalty u/s 271(1)(c) - furnishing inaccurate particulars of income as well as concealment of income - Provision for doubtful debts - Held that:- In the instant case, the assessee has claimed the deduction which is not eligible as per the provision of section 36(2) of the Act. Thus, we note that the Hon’ble Delhi High Court in the case of Zoom Communication Pvt. Ltd.[2010 (5) TMI 34 - DELHI HIGH COURT] after considering the judgment of Hon’ble Supreme Court in the case of Reliance Petroproduct Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] has decided the issue against the assessee. Penalty confirmed. Disallowance on Foreign Exchange Fluctuation Loss - Held that:- As the quantum addition has been set aside to the AO, we therefore are inclined to set aside the impugned issue of penalty to the file of AO for fresh adjudication in accordance with the provision of the law. Thus the ground of appeal is allowed for statistical purposes. Claim of deduction for the penalty expenses claimed in the income tax return - Held that:- It is fact on record that the penalties are not allowable for the deduction. But the assessee has claimed the deduction for the same despite the fact that these are not allowable for the deduction. Thus we confirm the penalty in view of the judgment of the Hon’ble Delhi High Court in the case of Zoom Communication Pvt. Ltd (Supra) on account of inaccurate particulars of income furnished in the income tax return. Accordingly we hold that the assessee is liable for penalty under Section 271(1)(c) of the Act. Deemed dividend under Section 2(22)(e) - Held that:- As relying on assessee's own case Both parties have given amounts to each other and these are adjustment entries. Considering the current account and number of transactions, and since the Hon’ble High Court has upheld the finding of the Tribunal in earlier years that these are not loans, which could be brought in the ambit of section 2(22)(e) of the Act for the purpose of treating it as deemed dividend. Thus once the quantum addition has been deleted then in our considered view the question of levying the penalty does not arise. Hence, the ground of appeal of the assessee is allowed. Deduction under Section 80(G) - Held that:- As decided in assessee's own case This expenditure was incurred by the assessee in order to perform its corporate social responsibility. Expenditure was given to Municipal Corporation, Surat and Ahmedabad and Surat Diamond Association. According to the assessee there were heavy rains and request came from Municipal Corporation. In order to fulfill the social responsibility, it has given the amounts. On due consideration of the facts, we are of the view that there cannot be any doubt about the genuineness of the payment. The payment was made to Municipal Corporation towards corporate social responsibility. This is an essential expenditure for keeping relationship smooth and the society at large. This expenditure deserves to be allowed to the assessee. No penalty Transfer pricing addition - Held that:- The assessee has fairly demonstrated that the rate charged by it was at a market rate and its transactions were at arm’s length. No adjustment can be made in the rate of interest charged by the assessee from its AE on providing loans in dollar denomination. We note that the quantum addition on interest of loan has been deleted by the Hon’ble ITAT in the own case of the assessee, the penalty under Section 271(1)(C) will not survive. Penalty imposed on account of the adjustment in respect insurance expenses - Held that:- The addition was confirmed on account of allocation of insurance expanses, which was incurred by the AE of the assessee. Thus, the amount of insurance expense claimed by the assessee represents the reimbursement of the expenses to its AE which were duly disclosed in the income tax return. Therefore, we hold that there was no concealment of income or furnishing inaccurate particulars of income. Prior period income - Held that:- As decided in assessee's own case once the assessee has been offering income of prior period as an entity, then its prior period expenditure cannot be disallowed simply by observing that it is not ascertainable whether this expenditure were incurred for earning a particular receipts offered under the head “prior period income”. According to the Tribunal, if an assessee is offering prior period income, then the expenditure which were incurred under different heads and crystalilised in this year ought to be set off against hat income. We hold that once the quantum addition has been deleted then the penalty under Section 271(1)(C) will not survive. Misc. Expenses return - sufficient details were not furnished - Held that:- Penalty on account of ad hoc disallowances cannot be made. Disallowances of depreciation - addition was made on account of rate applied by the assessee for charging the depreciation on the assets. The assessee has charged depreciation at the higher rate than the rate applied by the AO - Held that:- We note that the Hon’ble Courts in such kind of addition has deleted the penalty levied u/s 271(1)(c) of the Act. We find support and guidance from the judgment of Lala Harbhagwan Das & Memorial & Dr. Prem Hospital (P.) Ltd. Vs. CIT [2014 (1) TMI 1129 - ITAT DELHI] wherein held where higher depreciation was wrongly claimed under bona fide belief in respect of nature of equipment and its professional use, no penalty would be leviable. Disallowances u/s. 14A - Held that:- We note that the Hon’ble Supreme Court in the case of Reliance Petro Products Ltd..[2010 (3) TMI 80 - SUPREME COURT] has held that no penalty will be levied in case the addition is made on account of disallowance made u/s 14A of the Act. Disallowance u/s 40(a)(i) - Held that:- AO failed to bring any material on record to justify the administrative expenses required to be incurred for availing services of Dr.Henk. It is totally in the domain of the businessman and the AO cannot dictate terms how much salary and other expenses are necessary for availing the services. This disallowance made by the AO is not sustainable. The ld.CIT(A) ought to have not confirmed disallowance made by the AO. Since no disparity of the facts have been pointed out by the ld.DR on this issue, we following the order of the Tribunal cited supra for the assessment year 2006-07, delete the impugned additions and allow the grounds of appeals of the assessee. No penalty to survive. Disallowance u/s 10B - Held that:- As addition deleted in assessee's own case we hold that once the quantum addition has been deleted then the penalty under Section 271(1)(c) will not survive. - Revenue appeal dismissed.

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• 2018 (10) TMI 486
  Penalty u/s 271(l)(c) - TDS not been deducted on the interest payments - bonafide mistake - whether interest payment from HP State Agricultural and Rural Development Bank was exempted from the TDS provisions ? - Held that:- We find that HP State Cooperative Agriculture & Rural Development Bank Ltd. is not exempted from deducting the TDS. The assessee has shown the agricultural income even though it is non taxable in the return of income. Similarly the assessee has also shown the interest received on FDR’s from SBI, Nahan, ICICI Bank, Nahan and also Himachal Gramin Bank, Nahan. Hence the plea that the interest on FDR’s have been omitted on a bonafide belief that the interest on FDR’s is not taxable cannot be accepted. The assessee has not disclosed the interest income on these FDRs in his return of income. The contention of the assessee has been that it was a bonafide mistake has been well addressed by the Assessing Officer in para 5 of the penalty order. At the end of para 6 it is clearly mention that the assessee had invested Rs. 40,00,000/- in FDRs and the same was detected by the AO while collecting information u/s 133(6). The Parliament: amended the law by omitting the expression “deliberately” in sub-section (c) which was omitted by Finance Act, 1964. After such omission an explanation was also inserted. After this burden has been shifted to the assessee to prove that he has not concealed the particulars of income and if such explanation is found to be bonafide then penalty cannot be levied but if no explanation is given or the explanation is found to be false then penal consequences will follow. The penalty under the provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution u/s 276C of the Income Tax Act. See Union of India & Others Vs. Dharmendra Textile Processors [2008 (9) TMI 52 - SUPREME COURT] Hence keeping in view the facts and circumstances of the instant case and the judicial pronouncements, wherein the bonafide has not been proved by the assessee and the revenue could bring about a clear case of concealment of income, we hereby decline to interfere with the order of the Ld. CIT(A). - decided against assessee

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• 2018 (10) TMI 485
  TDS u/s 195 - tax liability under section 201(1) and 201(1A) - default for non-deduction of tax at source on computer hardware and software, as well as installation, support services and post-warranty services- assessee remitted to Network Appliance BV, Netherland without deduction of tax - amount was paid without obtaining any certificate from the Assessing Officer under section 195(2) of the Act or the accountant certificate - existence of PE - Held that:- The software has been sold to the assessee as shrink-wrapped software, which is commercially off the shelf software sold in retail, in contract to the specially developed (unique) software written by own or contracted programmers. This fact has not been disputed by the Revenue. Thus, in view of the binding precedence of the jurisdictional High Court in the case of Infrasoft Ltd (2013 (11) TMI 1382 - DELHI HIGH COURT] we hold that sale of the hardware along with the software embedded therein is not taxable in the hands of the non-resident recipient in absence of any permanent Establishment of said non-resident in India. In case of software embedded with the hardware of computers, being contract for supply of the goods which is a copyrighted articles and not a copyright itself and therefore not liable for tax in India either as royalty or fee for technical services. When the payment to the non-resident is not subject to tax in India, there was no requirement for the assessee to obtain clearance certificate from the Assessing Officer or to file accountant certificate as held by the apex court in the case of GE India technology Centre [2010 (9) TMI 7 - SUPREME COURT OF INDIA]. Royalty payment - assessee submitted that payments are not in lieu of use or right to use any copyright in the software and the assessee has been given the right to use the software only - Held that:- We note that in Article 12(6) exceptions to the fee for technical services are mentioned. One of the exception mentioned in 12(6)(a) is that the fee for technical services does not include amount paid for services that are ancillary and subsidiary, as well as inextricably and essentially linked to the sale of the property. The contention of the Assessing Officer is that since the services availed by the assessee are not inextricably and essentially linked with the sale therefore, the assessee not being covered by the said exception, the services should be treated as fee for technical services. This finding of the Assessing Officer is not justified. We are agreed with the submission of the Ld. Counsel that the clauses related to “inextricably link with sale of property” in Article 12(6)(a) are as exceptions to Article 12(5). Since the services are not covered under Article 12(5) either under clause (a) or (b), applicability of Article 12(6) is not required to be examined. Accordingly, we reject the finding of the Ld. Assessing Officer on this issue. Also agreed with the contention of the assessee that support services or warranty services has not made available any technology or know-how to the assessee and therefore payment made for such services does not qualify for FTS under the relevant DTAA. The payment for services of installation, support, services, subscription and warranty is also not liable for tax in India either as royalty or FTS and therefore the assessee is not required to deduct tax at source on the same. - Decided in favour of assessee

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• 2018 (10) TMI 451
  Assessment u/s 153A - head of income for the purposes of assessment of gain arising on sale of plot of lands has been changed from ‘capital gains’ offered by the assessee to ‘business income’ assessed by the AO - whether the Revenue is entitled to interfere with the assessment concluded either under s. 143(1) or under s. 143(3) of the Act and not pending at the time of search in the absence of any incriminating material unearthed as a result of search? - Held that:- Referring to decision of the Hon’ble Delhi High Court rendered in the case Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] we are of the view that various additions/disallowances made by the AO are clearly beyond the scope of the authority vested under s. 153A of the Act owing to absence of any incriminating material or evidence deduced as a result of search. No reference of such incriminating material, if any, is found in the assessment year. We hold that routine adjustments in the nature of change of head of income of reported income without any nexus to incriminating material found, if any, as a result of search operations are not sustainable in the eyes of law in Section 153A proceedings. Hence, the re-alignment of head of income towards gain on sale of land for the purposes of taxability requires to be quashed. Thus, we find merit in the legal ground raised by the assessee. In this view of the matter, we do not intend to adjudicate the merits of the adjustments / re-alignment . Assessing capital gains arising from the sale of Sanavad land under the head of ‘business income’- Held that:- The question is essentially factual in nature and depends on the facts prevalent in a given case. The assessee has advanced justification for taxability under the head ‘capital gains’ on the ground that the assessee being a farmer has acquired agricultural land. However, due to change in the Government policy, the land fell into residential zone where the assessee found it difficult to carry on agricultural activity due to ongoing construction and development. Due to the large size of the land, it was divided and sub-divided and sold to the interested customers. These facts do not exclusively suggest that the entire exercise was to exploit the land commercially in the nature of adventure which is akin to the business. We find merit in the plea of the assessee for treating the same to be gain arising for capital nature and thus, assessable under the head of ‘capital gains’ - Decided in favour of assessee

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• Customs

• 2018 (10) TMI 483
  100% EOU - reimbursement of central sales tax on goods manufactured in India - it was the case of Revenue that EOU would be entitled to reimbursement of CST in respect of only those purchases made from DTA which are used for production of goods meant for export or utilized for export services. The CST paid on raw materials etc purchased from DTA which are used in manufacture of goods sold in DTA would not be eligible for reimbursement of CST - Interpretation of Foreign Trade Policy. Held that:- The Foreign Trade Policy entitled an EOU to reimbursement of CST on its purchases made from DTA units. This provision did not make any distinction between the consumption of the goods purchased from DTA for production of goods meant for export or for domestic clearances. The Foreign Trade Policy was formulated by the Government of India in exercise of powers under section 5 of the Act. Para. 6.11 of the said policy carries the title “Entitlement for supplies from the DTA”. Though this title would prima facie suggest that para. 6.11 concerns the entitlement of an EOU when the goods are supplied from a DTA, however, as is well settled, a title to a statutory provision or for that matter any other document would not necessarily govern the plain language used therein and can, at best, be used for guidance - Clause (b) of para. 6.11 provides that suppliers of precious and semiprecious stones, synthetic stones and processed pearls from DTA to EOU would be eligible for grant of replenishment authorisations at rates and for specified items. Thus these two clauses (a) and (b) specifically dealt with the supplies made by a DTA to an EOU or other similar units such as EHTP,STP, etc. In contrast clause(c) did not use any expression that the same would be confined to a sale by a DTA unit. Clause (c) starts with the expression “In addition, EOU/EHTP/STP/BTP units shall be entitled to the following”. Subcause (i) of clause(c) provides for reimbursement of Central Sales Tax (CST) on goods manufactured in India. Subclause(ii) provides for exemption from payment of Central Excise Duty on goods procured from DTA on goods manufactured in India. The Hand Book of Procedures and in particular Appendix14-I-I contained therein nowhere aims to lay down any policy but prescribes the procedure to be followed for reimbursement of CST. It is undoubtedly true that para 2 of this Appendix restricts the CST reimbursement on purchases made by an EOU from a DTA unit. However, this restriction in our opinion would run counter to the terms of FTP itself and ultra vires the powers of the Director General of Foreign Trade. The title of the Appendix itself provides that it is a procedure to be followed for reimbursement of Central Sales Tax. Para.1 further clarifies that the procedure given in the said annexure shall be applicable for reimbursement of CST. There is little doubt therefore, that Appendix 14II aimed to lay down the procedure for claiming the benefit. In any case, such procedure could not have restricted the benefit by excluding the purchases from certain source which exclusion did not flow from the Foreign Trade policy itself. Petition allowed - decided in favor of petitioner.

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• 2018 (10) TMI 482
  Redemption of goods on payment of redemption fine - Smuggling of Gold - whether the appellant can be put in worse position in an appeal filed by him, when admittedly, the Department did not file an appeal against the order of the Commissioner (Appeals) exercising discretion under Section 125 of the Act and directing return of the gold, on payment of redemption fine of Rs. 15,00,000/-? Held that:- Section 129A of the Act deals with appeals to Appellate Tribunal. In terms of Clause (b) of Sub-section (1) of Section 129A, an appeal is maintainable to the Tribunal against the order passed by the Commissioner (Appeals) under Section 128A of the Act. The appeal before the Tribunal in the instant case was that of the appellant. Subsection (2) of Section 129A gives power to the Department to prefer an appeal. The said provision states that if the Committee of Commissioners of Customs is of the opinion that the order passed by the Commissioner (Appeals) is not legal a proper, they can direct an appeal to be filed. Admittedly, in the instance case, the Chief Commissioner has not issued any direction nor formed an opinion that an appeal has to be filed against that portion of the order passed by the Commissioner (Appeals), allowing redemption of the seized gold - In the instance case, the Department neither exercised their power of filing an appeal under Sub-section (2), nor filed a cross objection on receipt of notice in the appeal filed by the appellant herein before the Tribunal. In such circumstances, could the Tribunal have exercised its powers and while dismissing the appellant's appeal, restore the order passed by the original authority, which stood modified by the order passed by the Commissioner of Customs (Appeals)? The power of the appellate Tribunal is exercisable under Section 129B(1) only against the decision or order appealed against and in doing so, it may pass such orders as it thinks fit affirming, modifying and annulling the decision or order appealed against - Admittedly, the Department did not file an appeal against the order of the Commissioner (Appeals) permitting the redemption of the seized gold. In such circumstances, the Revenue should not be said to be aggrieved by such a direction granting redemption and the Tribunal clearly erred in dismissing the appellant's appeal and restoring the order passed by the original authority. The matter is remanded to the Tribunal for a fresh decision on the appellant's appeal to test as to whether the Commissioner (Appeals) was right in fixing the market value of the gold on the date when he passed the order, when according to the appellant, the market rate prevailing on the date of seizure should be taken into consideration - appeal allowed by way of remand.

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• 2018 (10) TMI 481
  Confiscation of consignment - alleged Mis-declaration of imported goods - import of Garlic from Nepal - Bag containing Chinese inscription - Garlic in question was packed in plastic bags which had some Chinese inscription, Revenue entertained a view that the Garlic in question was of Chinese Origin and inasmuch as any third country origin goods are not allowed to be imported into India through Nepal. Held that:- There is no dispute to the fact that the Garlic in question passed through the Land Customs, Sonauli and was duly assessed by the Customs Officer and cleared after payment of appropriate duty - apart from the fact that the writings on the bags have not been deciphered to find out as to what exactly is the meaning of the same, there is no other evidence on record to show that the Garlic in question was of Chinese Origin. The purchase bills produced by the appellants establish that the Garlic was purchased from Nepalese market. The appellants has further established that they had purchase the bags also from Nepal, which are reusable bags and the Garlic was stuffed in such bags and then imported. Merely the bags contained some inscriptions in Chinese language which have also not been deciphered by the Customs, the said fact cannot itself go to establish that the Garlic stuffed in such bags were of Chinese Origin - Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2018 (10) TMI 484
  Taking contrary stand in the proceedings - Substitution in place of IFCI as a secured creditor - After the claim of the appellant of being a secured creditor was rejected by the Company Judge, and the appellant realised the unsustainability of its claim in the law, it made a complete volte face from its earlier stand and surprisingly, contrary to its own pleadings, now contended that it had never sought the status of a secured creditor under the SARFAESI Act. Held that:- The contention of the appellant that it had never sought substitution as a secured creditor under the SARFAESI Act is additionally belied from the recitals contained in the order dated 07.09.2015. Time and again this court has held that the recitals in the order sheet with regard to what transpired before the High Court are sacrosanct. A litigant can take different stands at different times but cannot take contradictory stands in the same case. A party cannot be permitted to approbate and reprobate on the same facts and take inconsistent shifting stands. Appeal dismissed.

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• Service Tax

• 2018 (10) TMI 478
  Validity of SCN - case of the petitioner is that the said show cause notice is issued on the basis of Circular No. 151/2/2012-S.T., dated 10.02.2012 issued by the Central Board of Excise and Customs and, therefore, the Authority, which has issued the notice, is bound by the same - principles of natural justice - Held that:- It is required to be noted that even in the show cause notice, it is specifically observed in paragraph No. 4 that noticee is deliberately not co-operating in the investigation process and delaying the matter intentionally - as the show cause notice is yet to be considered by the appropriate authority, we refuse to entertain the present petition, keeping all the defences which may be available to the petitioner open, which would be considered by the appropriate authority in accordance with law and on merit and thereafter pass speaking order - petition disposed off.

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• 2018 (10) TMI 477
  Renting of immovable property service - appellant leased out lands to M/s. NLC Tamilnadu Power Ltd. for setting up for coal based Thermal Power Plant at Tuticorin - Held that:- The Tribunal in the case of New Okhla Industrial Development Authority [2014 (1) TMI 1203 - CESTAT NEW DELHI] has discussed the issue and held that renting of vacant land is not taxable prior to amendment with effect from 01.07.2010 - demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 476
  Renting of immovable property - Co-ownership - Association of persons - inherited property - SSI Exemption - clubbing of clearances - 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 475
  Nature of activity - Trade or service? - appellant engaged in trading of Cement of M/s. Indian Cement Ltd., Hyderabad, a manufacturer of cement under the brand name “Rassi” - It is the case of the appellant that they are selling goods on own account and not on direction of principal and are not rendering either C & F Agent Services or the Services of the consignment agent since they are not undertaking the forwarding activities on behalf of their principals M/s. India Cement Ltd - whether the services provided by the appellant are covered under the category of ‘clearing and forwarding agent service’? Held that:- The issue is no more res-entigra, in view of the decision of the Hon’ble Supreme Court in the case of Coal Handlers Private Ltd. Vs. CCE, Range Kolkata-I [2015 (5) TMI 249 - SUPREME COURT], where it was held that At no stage custody of the coal is taken by the appellant or transportation of the coal, as forwarders, is arranged by the appellant. We are, thus, of the clear opinion that the services rendered by the appellant would not qualify as C&F Agent within the meaning of Section 65(25) of the Act. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 474
  Classification of services - Business Exhibition Service or otherwise - providing of space along with some amenities by the appellant to another department of Government of India for setting up of media centre - whether the appellant is liable to pay service tax under the classification business exhibition service as defined in Section 65(105) (zzo) read with Section 65(19a) of the Finance Act? - Reverse charge mechanism. Held that:- The providing of space along with some amenities by the appellant to another department of Government of India for setting up of media centre for the purpose of dissemination of the sports news and telecasting of sports events of the Commonwealth Games, 2010 does not amount to holding of a business exhibition and/or providing of any service under the provisions of Section 65(105)(zzo) read with Section 65(19a) of the Finance Act - Demand alongwith penalties set aside. The appellant was not required to pay any amount of service tax under the head business exhibition service on the amount received by the appellant for setting up media centre for the Commonwealth Games 2010 - the appellant is also not liable to pay any service tax on reverse charge basis, under the facts and circumstances, as they are not rendering any taxable service. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 473
  GTA Service - vehicles taken on lease were used for transportation of ready mix concrete from the plant to the site - reverse charge mechanism - whether the amounts paid by the appellant for leasing of special purpose vehicles for transportation of ready mix concrete would fall under Goods Transport Agency services or otherwise? Held that:- Identical issue decided in appellant own case M/S. LARSEN & TOUBRO LIMITED VERSUS COMMISSIONER OF ST & CENTRAL EXCISE CHENNAI SOUTH COMMISSIONERATE [2018 (6) TMI 439 - CESTAT CHENNAI], where relying on the Tribunal in the case of Birla Ready Mix Vs. Commissioner of Central Excise [2012 (12) TMI 736 - CESTAT, NEW DELHI], on similar set of facts held that the said activity would not fall within GTA service - demand do not sustain - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 472
  Construction of Complex Service - work in relation to construction of individual houses for Rajasthan Housing Board during the period 2010-11 - non-payment of service tax - Held that:- An identical issue has come up for consideration before the Tribunal in the case of M/s Macro Marvel Projects Ltd. vs Commr. of Service Tax, Chennai [2008 (9) TMI 80 - CESTAT, CHENNAI], where it was held that construction of individual residential units are not subject to levy of service tax - demand set aside - appeal dismissed - decided against Revenue.

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• Central Excise

• 2018 (10) TMI 471
  Scope of Remand - demand based on alleged purchases of Cotton Canvas Bags - Held that:- The petitioners are given liberty to file review petition before the High Court, if so advised - SLP dismissed as withdrawn.

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• 2018 (10) TMI 470
  Abeyance with the SCN - request is made on the ground that in the petitioner's own case an identical issue relating valuation of job work is pending before the Customs, Excise and Service Tax Appellate Tribunal at Chennai. Held that:- The prayer in this petition is rather unusual. There is no averment in the petition to the effect that an application was made to Commissioner of CGST for adjourning the adjudication of the show-cause notice dated 10th October, 2017 and the result of such an application. Therefore, there has been no demand for justice from the Authority under the Act, before seeking a mandatory direction against them. It is entirely for the Commissioner who has to adjudicate upon the show-cause notice dated 10th October, 2017 to decide whether or not to adjourn the adjudication of the show-cause notice till the decision is rendered in what the petitioner states is a similar / identical issue pending before the Tribunal at Chennai to that raised in the show-cause notice. This discretion has to be exercised by the adjudicating Authority taking into account all the facts which arise before him for adjudication in the show-cause notice and in the interest of over all justice. Petition dismissed.

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• 2018 (10) TMI 469
  Recovery of Refund already paid - CENVAT credit - time limitation - section 11B of Central Excise Act, 1944 - the original adjudicating authority sanctioned refund claim in full but subsequently the department reviewed the Order-in-Original under section 35E(2) of Central Excise Act,1944 and directed the Deputy Commissioner to file an appeal against the said Order-in-Original - penalty u/r 13 (1) of CCR 2002 /15(1) of CCR 2004 - demand of interest. Held that:- The issue is no more res-integra as decided by the Tribunal in the case of M/S. GOLDEN PLAST RIGID PVC PIPES VERSUS COMMISSIONER OF CENTRAL EXCISE, TRICHY [2018 (1) TMI 421 - CESTAT CHENNAI], where it was held that The second proviso to section 35A of the Act requires, inter alia, that where Commissioner (Appeals) is of the opinion that any amount has been erroneously refunded, appellant should be given notice within the time limit specified in Section 11A of the Central Excise Act. Refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 468
  Clandestine removal - adjustment of shortages and excesses of different products - Remand Order - Revenue As the main applicant viz. MMTC Ltd. has approached the Hon ble Apex Court, therefore, order of this Tribunal dated 18.2.2017 has merged with the order of the Hon ble Apex Court. Held that:- The factual matter is that the appellant transport fuel from their factory to their warehouse under ARE-3 procedure. The same Pipeline is used to transport four different products. Between any two in different products of SKO transported. Consequently, at the warehouse the product received is partially mixed with SKO. The appellant pay duty at the warehouse on the quantity received at the warehouse. The appellant were discharging Central Excise duty at the warehouses at the material time. It is clear from that the direction was to reconcile excess and shortages against each other and if still there is shortage then the same needs to be charged to duty at highest rate in term of Clause (h) of the circular, after adjusting for permitted losses. The impugned order does not reconcile the excess with shortages before arriving at final shortage and to that extent is in the violation of direction in remand. Appeal allowed by way of remand.

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• 2018 (10) TMI 467
  Clandestine removal - clearance of consignments with an intent to evade duty - Revenue’s view is that the clearance of the goods vide the two invoices are in addition to the goods diverted from Paradip Port. Held that:- It is surprising to note that the allegation of diversion of 2400 MT of Pig Iron has been made by Revenue without any supporting documents. There is nothing on record to indicate that the consignee M/s. MJR Steel Pvt. Ltd. has received total 4800 MT as against 2400 MT covered by the two invoices. Revenue has also not procured any documentary evidence for transport of the enormous quantity of 2400 MT of Pig Iron alleged to have been made in addition to the stock moved through Rail - the credit entry made in the RG-1 on 26/07/2006 for an additional 2400 MT and subsequent debit can at best raise a suspicion. Demand not justified - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 466
  Extended period of limitation - Penalty - recovery of CENVAT Credit - Manufacture of parts of wind power generator - case of appellant is that these chequered steel sheets and aluminium sheets were exempted from payment of duty - N/N. 12/2012-CE - Having admitted its mistake and paying duty without any resistance on the one hand, whether the assessee could challenge the same, indirectly, on the ground of limitation? - Held that:- From the decision of the Hon’ble High Court of Karnataka in the case of Commissioner of Central Excise, Bangalore-I Vs. MTR Foods Ltd. [2012 (10) TMI 165 - KARNATAKA HIGH COURT], the Hon’ble High Court has dismissed the Department appeal filed against the Order of CESTAT where the Bangalore Bench of the Tribunal had without going into the merits of the matter, set aside the impugned Order therein solely on the ground of limitation. Since the assessee has not challenged the legality of the duty demand, it is not necessary to give a finding on the invocation of extended period of limitation. This is because if the plea of the appellant is accepted then that may lead to an anomalous situation where the appellant having paid the duty without challenging the assessment order, would be heard praying to quash the assessment order indirectly on the ground of technicalities. Penalty - Held that:- The appellant had paid the duty before of issuance of Show Cause Notice, it is a fit case to exercise the jurisdiction under Section 80 - Penalty set aside. Appeal allowed in part.

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• 2018 (10) TMI 465
  Penalty u/s 11AC of the Central Excise Act - scrap sold of defective capital goods on which CENVAT credit availed - demand alongwith interest was already paid - Held that:- Admittedly the appellant was not manufacturing the said worn out parts and has simplicitor sold the same as scrap. The said sale of scrap was reflected in their records and was under the commercial invoice. It is well settled law that when the transactions are part of the records maintained by the assessee, no mala fide can be attributed to them to attract the penal provisions. Otherwise also, the interest to the tune of more than Rs. 1 lakh stand deposited by them, which is penal in nature and it cannot be held that non-payment of duty was on account of any mala fide, when the appellant had to pay huge interest amounts. Penalty not warranted - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 464
  CENVAT Credit - input service availed for trading activities as well as export activities - Rule 6(3) of Cenvat Credit Rules - extended period of limitation invoked - Held that:- The impugned order is set aside and matter remanded so as to enable the assessee to reverse the proportionate credit availed in respect of input services utilized for trading purposes - The appellant’s plea that export is not an exempted service and as such there is no requirement for reversal of any credit as also the plea of limitation is kept open for Adjudicating Authority to re-decide - appeal allowed by way of remand.

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• 2018 (10) TMI 463
  CENVAT Credit - common Cenvatable input services used for dutiable as also exempted activities - various services stands used also for export and trading activities - Rule 6(3) of the Cenvat Credit Rules - Held that:- There is no dispute about the fact that the appellant have reversed the Cenvat credit proportionate to the common input services relatable to dutiable as also exempted services. Such reversal entries do not stand disputed by the authorities below. The confirmation of demand in terms of the provisions of Rule 6(3)(i) is neither justified nor warranted inasmuch as reversal of credit amounts to a situation as if no credit was ever availed by the assessee. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 462
  Rectification of Mistake - recall of final order - Held that:- The Final Order has been passed after consideration of all arguments and materials which were part of the appeal and those submitted during the course of hearing. The Final Order reflex the cumulative effect of the consideration of the entire material. The fact that the impugned order has been sustained includes sustaining the findings of the lower authority in full including reasoning for the imposition of penalty - there is no reason to recall the Final Order - ROM Application dismissed.

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• 2018 (10) TMI 461
  Recovery of rebate granted - fraudulent export under the EPCG scheme/claim of rebate - rebate availed on forged documents and bills of entry - Held that:- This Tribunal in OM PRAKASH MAHESHWARI VERSUS C.C.E. & S.T. -INDORE [2018 (4) TMI 1316 - CESTAT NEW DELHI] had remanded the matter to the concerned Commissionerate to decide the matter denovo by providing reasonable opportunity to the noticees with the liberty to file the fresh evidence. Since, the present appellant is also one of such co-noticee who has not been given the opportunity of hearing at the time of the order of Commissioner, the said is followed and the matter remanded with the similar directions for denovo adjudication - appeal allowed by way of remand.

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• 2018 (10) TMI 460
  Rectification of Mistake - One of the grievances of the appellant is that the complete facts leading to the issue of impugned order and the Final Order has not been recorded by the Tribunal in the Final Order - Held that:- Even though such recording would make the final order more complete, we are of the view that the non-recording of certain facts does not impact the conclusion arrived at in the final order - there is no need to modify the order. In para 3 of the final order it has been mentioned that the appellant changed the classification w.e.f. February, 2006 - Held that:- The said date should be correctly recorded as January, 2009. Hence we order amendment of the wording “February, 2006” appearing in the para 3 to be read as “January, 2009”. It has been submitted that in para 6 of the Final Order, the change in classification from Chapter 39 as recorded gives a wrong impression - Held that:- Necessary modification carried out. It has also been submitted that all the arguments advanced by the appellant against the finding of suppression of fact in the impugned order has not been considered - Held that:- This aspect has been considered and discussed in para 5 of the Final Order. Consequently, we find no reason to modify the order in as much as the argument advanced amounts to review of the order and cannot be considered as rectification of mistake. ROM application allowed in part.

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• 2018 (10) TMI 459
  CENVAT Credit denied - process amounting to Manufacture or not - slitting activity on kraft paper - Department was of the view that the activity of slitting of kraft paper does not amount to manufacture and denied credit - Held that:- It is settled position of law that once the Cenvat credit availed is reversed, even at a later date, it is to be considered as not availed, ab-initio - The Hon’ble Supreme Court has laid down the law in this regard in the case of Chandrapur Magnet Wires (P) Ltd. vs. CCE, Nagpur [1995 (12) TMI 72 - SUPREME COURT OF INDIA]. Since, there is no dispute about the fact that the slit kraft paper has been cleared on payment of duty by debiting the Cenvat credit account, the impugned order merits to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 458
  Rectification of Mistake - case of appellant is that the final order has been passed by the Tribunal overlooking an important document - Held that:- The final order has been passed only after consideration of all arguments and material on record and produced during the course of hearing. Only the cumulative effect of such consideration will have to be mentioned in the order as per the ratio laid down in the case of CIT vs. Karam Thapar [1989 (2) TMI 5 - SUPREME COURT]. The RoM is nothing by an attempt that review of the final order which is not permissible in law. ROM application dismissed.

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• 2018 (10) TMI 457
  Dutiability/marketibility - intermediate products in manufacture for the exempted goods - suppression of facts - Held that:- It is the fact that the plastic jars which are manufactured by them is branded with Suruchi brand and cannot have independent marketability of itself - in various case laws also it is clearly held that it intermediate product do not have the marketability then the same case be subjected to excise duty. As per the case records there does not appear to be a deliberate intention by appellant to suppress any material facts from the Department. They were under the bona fide belief that they do not come under the purview of Central Excise as their turnover is less than the exemption limit as specified under the Notification 8/2003. On account of the marketability, limitation and the limit of small exemption Notification No.8/2003, the appellant is entitled for the benefit as claimed by them, and therefore, the impugned order is not sustainable and being set aside - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 456
  Valuation - job-work - fabrication of body on the chassis supplied by M/s Tata Motors Ltd. - whether the duty liability arises in respect of the job works undertaken by the appellant by fabrication of body on the chassis supplied by M/s Tata Motors Ltd. free of cost? - Held that:- The issue decided in the case of Commercial Engineers and Body Builders Pvt. Limited Versus C.C.E., Bhopal [2016 (11) TMI 1585 - CESTAT NEW DELHI], where the matter is remanded back for consideration afresh - appeal is allowed by way of remand.

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• 2018 (10) TMI 455
  Rectification of Mistake - It was intimated by the ld. Counsel for the applicants that the order dated 22.11.2017 has been challenged before the Hon ble Apex Court by one of the applicant M/s MMTC and the order of this Tribunal has been stayed by the Hon ble Apex Court in Civil Appeal Diary No. 18582/2018. As the main applicant viz. MMTC Ltd. has approached the Hon ble Apex Court, therefore, order of this Tribunal dated 18.2.2017 has merged with the order of the Hon ble Apex Court - ROM Application not entertained. ROM Application dismissed.

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• 2018 (10) TMI 454
  Clearance of pipes to a drinking water project - benefit of N/N. 06/2002-CE dated 01.03.2002 as amended - pipes supplied by the appellant from the water storage to further distribution - Held that:- This Tribunal in the appellant’s own case (supra) has clearly held that pipes which are supplied for water supply project and certified as being required for such project by the Collector of District, exemption under notification 06/2002 is to be extended and the same cannot be denied - Demand set aside. Denial of exemption for the pipes of 470 and 520mm diameter, as being not covered by the certificate issued - Held that:- Adjudicating authority having not recorded any findings or reasoning for denial of exemption to appellant, this particular point needs reconsideration by the adjudicating authority - Matter on remand. Appeal allowed in part and part matter on remand.

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• CST, VAT & Sales Tax

• 2018 (10) TMI 453
  Part payment as a condition for grant of stay - benefit of 'C' form denied on the ground that the Registration of the buyers (person issuing the 'C' form) in Delhi was canceled - grievance of the Petitioner is that the impugned order dated 2nd May, 2018 of the Tribunal, is a nonspeaking order, inasmuch as, it has not considered the decision of the Delhi High Court in Jain Manufacturing (I) Pvt. Ltd., v/s. Commissioner of Value Added Tax [2016 (6) TMI 304 - DELHI HIGH COURT], which according to the Petitioner, covers the entire dispute. Held that:- At the stage of consideration of application for stay and directing the pre-deposit, a detailed order may not be necessary. However, the authorities concerned must deal with the decision relied upon by the parties and give a prima facie, view with regard to the applicability of the decision to the facts of the case. Non-consideration of the decision (even prima facie, at the stage of stay) is an order without giving any reason, resulting in a flaw in the decision making process. The order dated 2nd May, 2018 set aside and the Petitioner's application for stay to the Tribunal is restored, for fresh disposal, in accordance with law.

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• 2018 (10) TMI 452
  Levy of Luxury Tax - renting of rooms in a hotel - levy under sub-section (2A) of Section 4 - petitioner would contend that the Division Bench has wrongly arrived at the conclusion that a club could be charged with luxury tax on the renting of rooms it does at its premises. Held that:- We have to first look at the decision of this Court in Trivandrum Club [2013 (1) TMI 606 - KERALA HIGH COURT]. Therein the Division Bench had specifically noticed the contention raised by the appellant that unless accommodation is provided in the building as part of business against collection of rent, the building cannot be called hotel. The Division Bench found that the definition of hotel under the Act has a wider meaning, especially noticing the Explanation covering even guest houses run by the Government or a Company or a Corporation. What is sought to be taxed is not the renting of rooms for accommodation alone, but also the renting of auditorium, kalyanamandapam or hall and the amenities and services provided therein excepting service of food and beverages. Section 4 understands this distinction and levies and collects tax on the luxury provided in a hotel, house boat, hall, auditorium or kalyanamandapam. Consciously, aware of 'luxury' including renting of rooms as also use of auditoriums and kalyanamandapams and the other amenities and services provided, the inclusive levy is on the renting of hall, auditorium or kalyanamandapam attached to hotels and clubs and renting of rooms attached to a hall, auditorium or kalyanamandapam. The mere inclusion of club in the charging section and its exclusion from the definition of hotel or of luxury cannot at all be found to be significant insofar as the claim of the assessee to exempt them from such levy. Levy under sub-section (2A) of Section 4 - Held that:- The levy under sub-sections (1) and (2A) of Section 4 are quite distinct and different and can both be traced to Entry 62 of List II of Schedule VII of the Constitution of India - The luxury is specifically defined under sub-Section (f) and so is the charge created by Section 4(1). The incidence of tax is the enjoyment of such luxury, by the renting of rooms or halls, etc. The person on whom the levy is imposed is that person who enjoys the luxury the liability to collect being on the hotel, hall, kalyanamandapam or auditorium. The rate is also crystal clear from Section 4(2) and measure is the charge at which such renting of rooms or use of such premises is made and the charge for the other amenities and services provided in the specified premises. As far as Section 2A is concerned, the levy is conceded to by the petitioner. Appeal dismissed.

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• Indian Laws

• 2018 (10) TMI 480
  Quashment of FIR registered against petitioner - offences under Sections 420, 463, 464, 467, 468 and 471 of IPC - interpolation of records - it was alleged that membership is tainted and Samiti has no alive legitimate member. Held that:- Even if the dispute in respect of membership attained finality till the State Government level (although writ petition is still pending) but in the civil dispute, the issues were different. Here the elements of mens rea is involved and the intention to cheat or to receive wrongful gains or act of forgery are to be seen. Both move in different arena and therefore, at this juncture it could not be conclusively mandated that no mens rea is involved, which otherwise, petitioner wants through this writ petition - Petitioner may produce all the documents before the Investigating Officer and may establish his part of truth and thereafter, Investigating Officer would decide on the basis of fact situation and documents available before him. Petitioner certainly has right of fair investigation for which Investigating Officer is duty bound to conduct the fair investigation. However, FIR at this juncture cannot be quashed. Parties are directed to cooperate in the investigation. No case for interference is made out for quashment of FIR - petitions dismissed.

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• 2018 (10) TMI 479
  Dishonor of Cheque - recovery of loan amount - Section 138 of Negotiable Instruments Act - the signature found in the cheque was admitted by the accused - presumption under Section 139 of N.I.Act - Held that:- It is an admitted fact that in 2003 itself, the bank authorities who have lent the loan to the accused company issued a notice under Section 132 of SARFAESI Act for taking symbolic possession. But, as per the case of the complainant, only in the year 2006, the loan of Rs. 25,00,000/- was given to the accused - No doubt, the amount of Rs,25,00,000/- is not a small amount. The accused and complainant did not have any business relationship prior to the present one. Furthermore, the complainant was doing his business in Namakkal District. On the other hand, the accused was running a company in Mumbai. In the said circumstances, it is unbelievable that any prudent person would lend an amount of Rs. 25,00,000/- without obtaining any collateral security. Even assuming that Section 139 of NI Act is in favour of the complainant, it is necessary to analyze the other circumstances also. In the evidence given by PW1 during cross examination, he clearly admitted that he had not received any pro note from the accused - Further, he deposed that he had not verified about the properties which stand in the name of the accused. It is obligatory on the Court to raise the presumption in every where all the factual aspects have been established. In the present case, the facts as shown above clearly reveal that the complainant has miserably failed to prove his case beyond all reasonable doubt - this Court comes to the conclusion that the judgement rendered by the First Appellate Court on the above fact is justified and there is no need to interfere with the findings arrived by the First Appellate Court. Criminal appeal dismissed.

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