Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 15, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
TMI SMS
Articles
News
Notifications
Companies Law
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F. No. 17/62/2015-CL-V-Vol-I - dated
11-10-2018
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Co. Law
Regarding amendments in Schedule III to the Companies Act, 2013
GST - States
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20/2018-STATE TAX (RATE) - dated
26-7-2018
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Manipur SGST
Amendment in Notification No. 5/2017-State Tax (Rate), dated the 28th June, 2017
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19/2018-STATE TAX (RATE) - dated
26-7-2018
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Manipur SGST
Amendment in Notification No. 2/2017 - State Tax (Rate), dated the 28th June, 2017
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18/2018-STATE TAX (RATE) - dated
26-7-2018
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Manipur SGST
Amendment in Notification No. 1/2017- State Tax (Rate), dated the 28th June, 2017
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17/2018-STATE TAX (RATE) - dated
26-7-2018
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Manipur SGST
Amendment in Notification No.11/2017-State Tax (Rate), Dated 28-6-2017
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16/2018-STATE TAX (RATE) - dated
26-7-2018
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Manipur SGST
Amendment in Notification No. 14/2017-State Tax (Rate), dated the 28th June, 2017
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15/2018-STATE TAX (RATE) - dated
26-7-2018
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Manipur SGST
Amendment in Notification No. 13/2017 - State Tax (Rate), dated the 28th June, 2017
Highlights / Catch Notes
GST
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Classification of supply - Lab Manual comprising bulk of instructional /educational printed material - ‘Lab Manual’ is primarily a printed book in the major part with a smaller, yet not insignificant part dedicated to providing blank space to the students to do his/her written exercises - classified under GST Tariff heading 4901 as printed books which currently carry a Nil rate of tax.
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Whether free tickets given as “Complimentary Tickets” falls within the definition of supply under CGST Act, 2017 and thus, whether the applicant is required to pay GST on such free tickets? - Held Yes - agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act would be treated as supply of service for the purposes of CGST Act, 2017
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Input tax credit - Establishing, maintaining and furnishing guest houses including landscaping by way of gardening or otherwise is neither a perquisite nor a statutory obligation. It is purely for providing accommodation service to guests including employees on tour - Credit of such input services are as such blocked, not allowed.
Income Tax
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Revision u/s 263 - income originally determined by the Assessing Officer at Nil remained the same even after giving effect to the order passed in revision - he shortcomings noticed by the ld. CIT in assessment order, which in his opinion made the order erroneous, are tax neutral - order of revision quashed.
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Addition towards interest on advances to partners - interest free advances given to partners - Disallowance of interest for diversion of funds - Additions confirmed.
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Nature of rental income - the ‘nature’ of the income which had been rental earning from the house property will not change just because it has been received by the company formed with the object of carrying out business as builder and developer.
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Claim of business expenditure u/s 37(1) - concept of Revenue Recognition - assessee had not set up the business during the relevant previous year - advertisement & business promotion expenses - expenses to the extent it relates to corporate brand identity exercise and logo design should be allowed as revenue deduction
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Levy of penalty u/s 271(l)(c) - bogus purchase made from hawala dealers - mere disallowance of purchases on adhoc basis does not tantamount to willful furnishing inaccurate particulars of income within the meaning of section 271(1)(c) of the Income-tax Act, 1961. - No penalty
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TDS u/s 192 - Addition u/s 17(2(v) - income from salary - perquisite - expenditure incurred for medical treatment of an employee incurred outside India - Both the reasons cited by the AO for holding the appellant liable for TDS are not relevant.
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Deduction u/s 80GGA - contribution made to Population and Social Development - It is not in dispute that the assessee not having business income would be eligible for deduction u/s 80GGA of the Act in respect of contributions made to eligible organizations
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TDS liability u/s 195 - payments made to the non-residents / father of the non-resident - The entire payment was made to the resident Indian who is also the father of the non residents. The revenue did not establish that the payment has gone to the non residents - No TDS liability.
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Levy of penalty u/s 271(1)(c) - the purchases made by the assessee to some extent are non-genuine, and therefore profit element involved in such purchases deserves to be assessed as income of the assessee - No Penalty.
Customs
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Denial of facility of exemption from payment of customs levy for the goods imported solely for the purpose of fulfilling export obligations - The petitioner is the beneficiary of an advance license - since the benefit of exemption in fact existed at that point of time, exemption to be allowed subject to verification.
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Tribunals constituted under the SARFAESI Act, 2002, is competent to decide all questions of law and fact
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Refund of Terminal Excise Duty - deemed exports - FTP - DGFT has rejected the petitioner’s claim on the ground that the benefit of refund is available to it under the provisions of Central Excise Act and Rules - Order of DGFT quashed - refund allowed with interest.
Corporate Law
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Suspicious transfers - Illegal transfer of shares - This is the vital column and the said column is blank. Further there is no signature of witness on the said SH-4 form. The column for Name and Address of the witness who confirms that the transferor has signed before him in SH-4 is also blank. Further the columns meant for mentioning Distinctive Nos, Corresponding Certificates Nos is also blank. It goes on to prove that the transferor has not signed the SH-4, Securities Transfer Form, which is mandatory for transferring the shares.
Service Tax
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The panthal and shamiana services availed by the appellant is essential for promotion of banking and financial services. The said services are utilized by the appellant to inform the public that a new branch has been started in the said place - credit allowed
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Refund of service tax paid - Chit Fund Foreman Service - refund claimed as no service tax was chargeable - There has been a delay of more than two years - refund cannot be allowed.
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CENVAT Credit - credit availed on the basis of photocopy of invoices - Since the appellants have already furnished the original invoices at the time of filing the refund claim, it cannot be expected of the appellants to produce the same in these proceedings before the authorities
Central Excise
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Valuation - the appellant has claimed the handling charges of 1% of the value as part of the transportation cost. Therefore, it is not includible in the assessable value
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CENVAT Credit - input services - hiring of male nurse for providing medical services inside the factory premises - credit allowed.
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Excess amount collected ‘in the name of Central Excise duty’ - A plain reading of section 11D makes it evidently clear that no period of limitation has been prescribed under this particular section - demand not barred by limitation of time.
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CENVAT Credit - denial on the ground that the credit was availed by the assessee after the prescribed period (of six months) - since the period of 6 months was replaced by one year, credit availed within one year stand allowed.
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Suo moto credit taken on excess credit debited by appellant - the allegation by the department is erroneous for the reason that for the second time, the appellants have taken the credit only because they had made a wrong book entry at the initial stage. This does not amount to availing credit for second time.
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Refund - whether the appellants are eligible for adjusting the excess paid duty towards the short paid as well as whether they are eligible for refund of the excess amount after such adjustment? - Held Yes
Case Laws:
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GST
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2018 (10) TMI 748
Input tax credit - scope of blocked credit - various goods and services used for maintenance of applicant’s township, guesthouse, hospital, horticulture in its ordinary course of business - section 17(5) of CGST Act. Whether the applicant is entitled to take input credit of tax paid on various goods and services used for maintenance of applicants’s township, quest houses hospitals and horticulture for paying output tax? Held that:- Some of the services are exclusively in relation to the residential colony, some are in relation to the plant, some are in relation to the guest house and transit house, some are for use in residential colony as well as in the plant while some of the services like urban plantation, provision of drinking water at picnic spot, raising of seedling, and general plantation are neither for the plant nor for the residential colony. The applicant might be doing those activities while discharging some obligation but such activities are not for or in relation to the core business. Some other activities like contract for running a pharmacy outlet simply for dispensing medicine and other allied product free of charge. This is a clear case of supply without consideration mainly to the employees of the applicant. Still some other services like maintaining the power grid is predominantly for use in the plant and maintaining the solid waste treatment plant seems to be for treating the solid waste of the plant. The services are varied in nature and intended for partly business use (to the extent intended for the plant, plant area or plant building) and partly non business use (to the extent intended for use outside the applicant area). Some of the services ere for use in the residential colony while some other are for use in the hospital and guest houses. Undeniably the applicant is providing services to its employees by way of residential accommodation in the colony, temporary accommodation in the guest houses and is dispensing health services to its employees and others. The services which are being availed clearly in relation to the residential colony shall not qualify for input tax credit. On the other hand services received partly in relation to the residential colony and partly in relation to the plant, proportionate ITC to the extent relatable to the plant are available whereas services availed in relation to the residential colony shall not qualify for input tax credit in terms of Sub-section 2 of Section 17. Establishment of hospitals and maintenance thereof may be for discharging the statutory obligation under the ESI Act by the employer, but dispensing medical service to the employees and others is a supply of service by the employer (the applicant in this case). Such service being nil rated will fall under exempt supplies. Consequently, the inputs and input services received by the applicant for dispensing the exempt service will not qualify for input tax credit in terms of Section 17 (2) of the OGST/CGST Act. Establishing, maintaining and furnishing guest houses including landscaping by way of gardening or otherwise is neither a perquisite nor a statutory obligation. It is purely for providing accommodation service to guests including employees on tour. This is in fact a business requirement to maintain such facilities and accordingly the applicant is entitled to input tax credit of the tax paid on inward supply of input and input services for maintenance of the guest house, transit house, and training hostels, but excluding the food and beverages provided in such establishments. Credit of such input services are as such blocked in clause b of Sub section 5 of section 17 of the OGST and CGST Act - credit not allowed.
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2018 (10) TMI 747
Levy of GST - Supply or not? - free tickets given as “Complimentary Tickets” - input tax credit - Circular No. 47/21/2018-GST dated 8th June 2018 - CGST Act, 2017. The applicant has withdrawn his Advance Ruling application while indicating that his case is similar to the case of an Original Equipment Manufacturer (OEM) which has been discussed by the said circular as not constituting a supply, and the ‘concerned officer’ has reached a conclusion diametrically opposite that the activity of the applicant of supplying complementary tickets free of charge would amount to supply. Therefore, allowing for withdrawal of the present application in terms of the applicant, without discussing the case on merits would not be in public interest. Hence, circumstances call for discussion on merits rather than allowing withdrawal, especially when both interested parties to the Advanced Ruling application hold contrary views. Whether free tickets given as “Complimentary Tickets” falls within the definition of supply under CGST Act, 2017 and thus, whether the applicant is required to pay GST on such free tickets? Whether the applicant is eligible to claim Input Tax Credit in respect of complimentary tickets? Held that:- While, the said Circular dated 8.6.2018 clarifies the case of an OEM where he is providing Dies and Moulds owned by him free of cost to a component manufacturer, who further uses these to make components for the OEM and supply such components back, this situation cannot be compared to the situation of handing out complementary tickets for viewing Cricket matches by any stretch of imagination - In the present case, there is no owned property of the applicant being given to the receiver for the purpose of being used for value addition and in making of inputs which are received by the applicant, Therefore, the case of the applicant is differentiated from the case of the OEM which is the basis of Circular, and hence the contention of the applicant that the questions posed by him in the present Advance Ruling application stand answered by the said Circular does not hold any force. Perusal of the definition of the word ‘consideration’ shows that it is an inclusive definition and covers not only payments made in money terms or otherwise as mentioned in section 2(31)(a) but also the monetary value of any act of forbearance in respect of supply of services, whether by the recipient (in this case the complimentary ticket receiver) or by any other person (which in this case would also include the applicant) in terms of Section 2(31)(b) - In the present case when the applicant issues a ‘complimentary ticket’ to any person, the applicant is certainly displaying an act of forbearance by tolerating persons who are receiving the services provided by the applicant without paying any money, which other persons not receiving such complimentary tickets’ would have to pay for. The monetary value of this Act of forbearance would naturally be pegged to the amount of money charged from other persons not receiving the ‘complementary tickets’ for availing the same services - The complementary ticket given by the applicant to various persons would certainly be covered by the term ‘token’ and ‘voucher’ which are both defined relatedly in the Oxford English Dictionary. The contention of the applicant that since complementary ticket recipient does not make any payment to the applicant. it can be said that supply of tickets is without any consideration and is accordingly not covered under Section 7(1) (a) of the CGST Act. 2017, would not stand the test of legal interpretation of Section 7 of the CGST Act, 2017 and would thus be fallacious - the activity of the applicant in issuing complementary tickets to persons is covered under each limb of para 5(e) of Schedule II of the CGST Act, 2017. Therefore, by this measure too, the activity of the applicant of providing complementary tickets free of charge to some persons for enjoying cricket matches would also be covered under the scope of supply as per section 7(1)(d). The activity of the applicant of providing complementary tickets free of charge to some persons would be considered supply of service as per provisions of both Section 7(1)(a) and 7(1)(d) and would therefore be leviable to tax as per provisions of Section 9 of the CGST Act, 2017 and the parallel Section 9 in the Punjab Act, 2017. Input tax credit - Held that:- Since the activity of providing the complementary tickets would amount to supply under provisions of CGST Act and parallel provisions of Punjab GST Act, 2017 and would be leviable to tax under section 9 of the said Acts. the question of whether Input Tax Credit would be available on inputs going into such complementary tickets would be answerable in affirmative. The question of proportional availment of ITC comes into play only when part of the final goods or services are taxable and part of them are exempt. In the present case since all tickets supplied by the applicant including complementary tickets would be taxable, the applicant would clearly be eligible for claim of Input Tax Credit as per the provisions of Section 16 of the CGST Act,2017. Thus, the applicant would not be eligible to take credit on the tax leviable on supply of complementary tickets by him, but would be eligible to avail credit of input and input service going into provision of supply of the impugned complementary tickets. Ruling:- The activity of the applicant of providing complementary tickets free of charge to some persons would be considered supply of service as per provisions of both Section 7(1)(a) and 7(1)(d) and would therefore be leviable to tax as per provisions of Section 9 of the CGST Act, 2017 and the parallel Section 9 in the Punjab GST Act, 2017. Since all tickets supplied by the applicant including complementary tickets would be taxable, the applicant would clearly be eligible for claim of Input Tax Credit as per the provisions of Section 16 of the CGST Act, 2017.
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2018 (10) TMI 746
Classification of supply - Lab Manual comprising bulk of instructional /educational printed material - whether printing is merely incidental to the primary use or not? Whether ‘Lab manual’ written by authors as prescribed by Educational Boards and which also contains, apart from chapter wise printed material and printed question and answers, some blank sheets / papers for exercise by students, would be classified under GST Tariff heading 4901 as ‘Printed Books’ which carries Nil rate of tax or would it be classified under the GST tariff heading 4820 which attracts tax @ of 12% (CGST + SGST) under the description ‘ Laboratory Notebooks’? Held that:- ‘Lab Manual’ is primarily a printed book in the major part with a smaller, yet not insignificant part dedicated to providing blank space to the students to do his/her written exercises. It is seen that this issue has been discussed in CBEC Circulars no- 1052/01/2017-cx dated 23.02.2017 and No. 1057/06/2017-cx dated 07.07.2017. As per Circular dated 07.07.2017, in case of Printed workbooks, where printing is not merely incidental to the primary use of the goods, it has been held such goods classified under printed workbooks fall in chapter 49, in contrast to cases where printing is incidental to the primary use i.e writing in which cases the goods have been held classified under the chapter heading 4820. In the present case, perusal of sample lab manual supplied by the applicant, clearly shows that printing is not merely incidental to the primary use, but actually forms a major part of the book and fulfills the primary objective of imparting knowledge to the student. Rather writing becomes the incidental part in the case on hand as the blank pages providing space to the students to write form a lesser part of the Lab manual and enables the students to write in the context of what they have learnt in the major printed instructional material of the book. The Lab Manuals being published by the applicant are rightly classifiable under the GST Tariff heading 4901 as ‘printed books’ and would consequently carry Nil rate of tax which is presently applicable to the said heading. Ruling:- The Lab Manual being published by the applicant which comprises of a bulk of instructional /educational printed material as per syllabus of educational board and which also contains some blank pages for the students to practice or write, would be classified under GST Tariff heading 4901 as printed books which currently carry a Nil rate of tax.
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2018 (10) TMI 745
Input tax credit - input services - cost of civil works incurred under Extension project - Mechanical Works - Electrical Works - Applicant submits that input tax credit in relation to ‘Mechanical Works’ and ‘Electrical Works should be admissible as such costs pertain to construction of plant and machinery. Whether on facts and circumstances of the case, the input tax credit of tax paid on costs proposed to be incurred in relation to Mechanical Works’ and ‘Electrical Works’ under the Extension Project can be treated as ‘admissible under the Central Goods and Services Tax Act, 2017? Held that:- Most of the services were held to be admissible. The credit on following services denied: Structural work, external finishing work, internal finishing work, M and E related civil work - M and E related civil works - Plumbing - Gardening water supply system - dismantling work - Fire protection work - sprinkler works - Extinguishers - fire documentation - relocation work - process waste water supply system (pipelines outside factory premises and civil work even inside factory) - works related to civil construction - demolition work. Ruling:- CENVAT credit on most services allowed except those mentioned above.
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2018 (10) TMI 744
Unable to upload FORM GST TRAN-1 - input tax credit - transitional provisions - migration to GST regime - form could not be uploaded for some system error - Held that:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the application of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner.
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2018 (10) TMI 743
Unable to upload FORM GST TRAN-1 - input tax credit - transitional provisions - migration to GST regime - Though credit of VAT is being shown on GST Portal, the credit is not being reflected in his account - Government issued a Circular No.39/13/2018-GST dated 3.4.2018 to approach the Redressal Committee concerned for redressal of issues relating to filing of Form TRAN-01. It has been stated that certain assessees have already approached the Nodal Officer or the Redressal Committee concerned by submitting their respective representations but the same have not been adjudicated and no decision has been taken thereupon so far. Held that:- Petition disposed off by granting liberty to the petitioner to file a detailed and comprehensive representation raising all the pleas, as raised in the present writ petition before the Nodal Officer within a period of five days from the date of receipt of certified copy of the order.
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2018 (10) TMI 742
Unable to upload FORM GST TRAN-1 - input tax credit - transitional provisions - migration to GST regime - form could not be uploaded for some system error - Held that:- Petition disposed off permitting the petitioner to prefer an application before the additional seventh respondent, the Nodal Officer appointed to resolve the issues in the nature of one raised by the petitioner.
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Income Tax
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2018 (10) TMI 741
Non disbursal of refund amount - delay in refund - Held that:- Petitioner in all these Petitions would submit that the substantive prayers in the Petitions stand granted and the Petitioner would accept the amounts as disbursed under protest and without prejudice to their legal rights and contentions, particularly to claim interest on delayed refund. The Writ Petitions are, therefore, disposed off by keeping open the issue and controversy in relation to interest, if any, payable on such delayed refunds. We hope and trust that all pending refund applications are processed in the order in which they are received by the Respondents. If refunds are generated on account of orders of Higher Forums, Authorities and Courts, then, it is the bounden duty of the Revenue to grant such refund and disburse the amount expeditiously.
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2018 (10) TMI 740
Computation of Capital Gains - sale of property - stamp valuation u/s 50C - relevant date for determination of market value of property - Held that:- There is proof that the assessee has entered into agreement on 09/07/2005 and the documents submitted are found to be genuine. Therefore, in our view, the fair market value for the purpose of section 50C should be the value as existed on the date of agreement of sale. - Decided in favor of assessee.
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2018 (10) TMI 739
Estimation of income - GP ratio - Levy of penalty u/s 271(1)(c) - disallowance of expenses debited towards purchases u/s 40A(3) - Cash payment in excess of ₹ 10000/- - CIT(A) harboured a belief that total purchases made from these three concerns deserves to be treated as bogus and a disallowance is to be made. The ld.counsel for the assessee pointed out to us that if these purchases are being treated as bogus, then almost 40% of the purchases would be wiped out from the total purchases, and if that be so, then how the assessee would achieve the sale target accepted by the AO. Held that:- on the total turnover including the alleged bogus purchases, the assessee has already shown GP at the rate of 14.27%. If we further estimate 5% to 6% more than the GP on the total turnover including the alleged bogus purchase would be more than 20%. This will meet ends of justice. Levy of penalty - Held that:- on the basis of circumstantial evidence, it has been concluded that the purchases made by the assessee to some extent are non-genuine, and therefore profit element involved in such purchases deserves to be assessed as income of the assessee. Respectfully following the judgment of Hon’ble jurisdictional High Court we allow this appeal of the assessee and delete the penalty.
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2018 (10) TMI 738
Reassessment u/s 147 - Capital Gains - Year in which amount is taxable - transfer of property - Joint development agreement - assessee offer his share to the builder against settlement of an amount - the developer completed the construction and was ready to handover the completed 45% share of the landlord in the financial 2009-10 which was seen from the developer's letter dated 22/12/2009 addressed to the land lords (assessee) that mentioned settlement amounts to be paid and stated that the construction of the portion allotted to landlords was complete and requested the landlords to take possession of the completed share (i.e.45%) of the built-up area. Held that:- the actual vacant possession was handed over to the developer only in 2003. Therefore, the actual transfer took place in the year 2003. The provisions of capital gains are attracted in the year 2003. Hence, the stand of the AO to charge the capital gains in the year 2010-11 is not proper. Secondly, the reason for bringing to tax in the year 2010-11 was the letter of the developer to announce that the building is ready for occupation without complying to the ‘JDA’ and approval norms. Even though the same was brought to the notice of the AO, according to us, the reason for reopening the assessment is on faulty ground. - Reassessment quashed - Decided in favor of assessee.
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2018 (10) TMI 737
TDS liability u/s 195 - payments made to the non-residents / father of the non-resident - purchased an immovable property of land - levy of interest u/s 201(1)/201(1A) - Held that:- In the instant case, there was no direct payment made by the assessee to the non-residents. The entire payment was made to the resident Indian who is also the father of the non residents. The revenue did not establish that the payment has gone to the non residents. In the circumstances, we are of the considered opinion that there is no case for invoking the provisions of section 195 of the Act. - Decided in favor of assessee.
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2018 (10) TMI 736
Levy of penalty u/s 158BFA(2) - block assessment - additions towards unexplained cash and unexplained income - Held that:- Penalty under section 158BFA of the Income Tax Act is to be imposed on all together different grounds than the one imposed under section 271(1)(c) for concealment of income or furnishing inaccurate particulars of income. When the AO issues notice under section 158BC of the Act, inviting the assessee to file return of the undisclosed income, he would supply copies of seized material on the basis of which the assessee has to compute true undisclosed income. In other words, material on the basis of which income of an assessee has to be determined for the purpose of block period is common. It is the material collected during the course of search. In these circumstances, the allegations or the charge against an assessee could be why he failed to compute true undisclosed income. The assessee does not deserve to be visited with penalty under section 158BFA in the given circumstances. We allow the appeal of the assessee and delete penalty.
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2018 (10) TMI 735
Addition being the capital gains on the sale of ancestral agricultural land - Whether the impugned ancestral agricultural land sold by the assessee is a capital asset? - Held that:- As referring to the copy of notification issued by the Income Tax Department and mentioning the detail of location of the impugned agriculture land submitted that the alleged land is not a capital asset as provided in Section 2(14) of the Act in view of above referred notification and it falls outside the municipal limit as provided in this notification. Further both the parties have no objection if the issue is set aside to the file of A.O for making necessary verification. We accordingly set aside the issue to the file of Ld.A.O and also direct the assessee to obtain a certificate from local revenue office/patwari about the location of alleged land and further to prove that the same is covered by the notification referred herein above. Quantum of deduction u/s 54B - AO allowed the benefit of exemption u/s 54B for the agriculture land purchased on 2.6.2008 but denied the benefit for the second plot of agriculture land purchased on 18.4.2011which was beyond the period of two years from the date of transfer of original asset - Held that:- We are of the considered opinion that the purchase of land has taken place in two parts. The affidavit signed by Shri Nagulal has been procured by the assessee much after the completion of the assessment proceedings. The assessee is also been unable to prove the source of ₹ 14,00,000/- paid by him in May, 2008 nor any justification has been proved to accept the impugned transaction of transferring of agriculture land after a lapse of 3 years even when the consideration was alleged to have been received by the buyer. No merit in the second issue raised by the assessee in Ground No.2 and accordingly dismiss the same. However our this decision will be merely academic if the assessee succeeds on merits in the first issue before the Ld.A.O as per our direction given herein above.
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2018 (10) TMI 734
Charitable activity - rejecting the application of the appellant trust u/s 12A - evidences furnished by the assessee to prove the genuineness of the activities of the assessee trust - Held that:- We have considered the submissions of both the parties and perused the material available on the record. In the present case it is noticed that learned CIT(E) on the one hand admitted that the assessee filed the documents on 17.10.2014 and 24.10.2017 relating to the case on the other hand he stated that the assessee had not filed the requisite details to establish the genuineness of the activities. It is also an admitted fact that learned CIT(E) dismissed the application of the assessee by passing the exparte order. Keeping in view the principles of natural justice i.e. nobody should be condemned unheared as per the maxim “Audi Alteram Partem”, deem it appropriate to remit this case back to the file of the learned CIT(E) to be decided afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2018 (10) TMI 733
Registration u/s 12A r.w.s 12AA - The application of the assessee has been dismissed by holding that since there is no trust-deed available with the assessee, it is not entitled for grant such registration. - Held that:- The case of the assessee was that it was very old trust and only copy of PTR is available. Now trust deed has been executed, therefore, whether activities of the trust are genuine or not required to be examined afresh. We set aside order of the ld.DIT and restore this issue to his file for adjudication of the application submitted by the assessee in form no.10A for grant of registration under section 12AA of the Income Tax Act, 1961. - Matter remanded back.
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2018 (10) TMI 732
Admission of additional evidences - Additions u/s 68 - share capital and share premium - creditworthiness and genuineness of the transaction. - assessee-company filed documentary evidences of each of the shareholder - Held that:- The delay in filing the additional ground is of no consequence because when appeal is filed within the period of limitation, the additional ground could be raised at any time during the pendency of the appeal before the Tribunal. The decisions relied upon by the Ld. D.R. would not support the case of the Revenue. Considering the totality of the facts and circumstances of the case and above discussion, we admit the additional ground of appeal for the purpose of deciding the matter in issue. Since this issue goes to the root of the matter and authorities below has no occasion to examine the correctness of the additional ground raised by the assessee-company for the first time before the Tribunal, therefore, we are of the view that the additional ground should be set aside to the file of A.O. for deciding the same in accordance with law. Once legal ground is restored to the file of A.O. for adjudication as per Law, therefore, this issue on merit shall also be restored to the file of A.O. for deciding the same afresh after taking decision on the legal issue.
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2018 (10) TMI 731
Claim of depreciation u/s 32 - acquisition of trade mark - disallowance on the ground that the cost of acquisition of trademark has been determined at Nil and consequently depreciation claimed by the assessee at the prescribed rate was disallowed - Held that:- disallowance of depreciation claim by the assessee u/s 32 of the Act qua trademark acquired in FY 2006-07 is not sustainable as the TPO is not to decide the business expediency of any intangible assets purchased by the assessee by sitting on the armchair of a businessman. Moreover, when the decision rendered by the TPO for AY 2007-08 has been set aside by the coordinate Bench of the Tribunal to the TPO, the present assessment order passed by following the said order is also not sustainable. Matter remanded back to the TPO/AO to decide afresh after providing an opportunity of being heard to the assessee
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2018 (10) TMI 730
Deduction u/s 80GGA - contribution made to Population and Social Development - allowability of professional and legal fees as expenditure under the head income from other sources - Held that:- contributions made to Population and Social Development would be eligible for deduction u/s 35AC in respect of business assessees and u/s 80GGA of the Act in respect of non-business assessees - It is not in dispute that the assessee not having business income would be eligible for deduction u/s 80GGA of the Act in respect of contributions made to eligible organizations. - Decided against the revenue. Deduction of expenditure - income from other sources - Held that:- the payment of professional and legal fees were with regard to some disputes pertaining to the properties of the assessee trust, which has got absolutely no bearing on the earning of interest income on deposits. - Claim not allowed - Decided in favor of revenue.
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2018 (10) TMI 729
Additions towards outstanding liabilities - treating the liabilities as bogus - one party did not appear against notice issued u/s 131 - however written statement was submitted before AO - Held that:- Creditors had only stated before the ld AO that they are all small time labourers and workers and do not have that much income left with them. We find that they had deposed correctly that in as much as their income component in the entire services rendered to the assessee would be miniscule but the total transactions carried out through them for and on behalf of the assessee would be more. The assessee had engaged them for rendering of specific services . The assessee cannot be expected to know how those parties render the services i.e either on their own or through outsourced agencies. For the services rendered by those creditors, the assessee would make total payments to them. - Those parties in turn would pay the respective dues to the outsourced agencies such as truck owners and lorry drivers. By this process, the amounts that would be left with those creditors would only be commission income which would be miniscule. The entire modus operandi of these transactions were explained by those parties in the statement given on oath before the ld AO. The fact of these creditors rendering services to the assessee is not denied or disputed by those parties or by the revenue. All these parties except one party had appeared before the ld AO with their respective identity proofs and statement recorded on oath from them. The fact of reimbursement of expenses made by the assessee is not disputed by the revenue before us and hence the corresponding liability thereon cannot be disputed. None of those creditors had denied having rendered services to the assessee. - Additions deleted. - Decided in favor of assessee.
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2018 (10) TMI 728
Non-granting of set off of unabsorbed depreciation loss with the income of the assessee while framing intimation u/s 143(1) - Held that:- We find from the materials available on record that the assessee had also preferred a rectification petition u/s 154 before the AO seeking for the set off of unabsorbed depreciation loss and unabsorbed business loss for the relevant assessment years. The assessee has filed 154 petition on several dates i.e. 21.11.2014, 13.01.2015, 15.04.2016 and 26.04.2018. None of the petitions filed by the assessee were acted upon by the AO. Computation of book profits u/s 115JB - Held that:- The assessee disclosed book profits of ₹ 70,03,340/- and the same was computed by the CPC, Bangalore at ₹ 85,44,650/- without assigning any reason. The assessee has also preferred 154 petition before the ld. AO for the same as the rectification rights to transfer to the jurisdictional Assessing officer on 05.02.2016 as is evident from the e-filing website of Income tax Department. This was also not acted upon by the ld. AO. Remand the issues raised in these two appeals before us to the file of the AO for de novo adjudication in accordance with law. Accordingly, grounds raised in these two appeals of the assessee for assessment years 2012-13 and 2013-14 respectively are allowed for statistical purposes.
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2018 (10) TMI 727
Short deduction of TDS - TDS u/s 194C OR 194I - Held that:- There is no dispute even as per assessee’s stand that it had entered into contract with its principal followed by its sub-contracts with the payee parties. We make it clear that it has not placed on record the said sub-contracts indicating it to have not passed over the corresponding liabilities to the payees concerned. We make it clear that sec. 194C of the Act in assessment year 2007-08 question duly applied in case of sub-contractual payments as well. Coupled with this, there is no evidence much less cogent one on record which could suggest that payees concerned had themselves retained all control and possession of the vehicles, tractors, bulldozer, JCD and other machineries qua sec. 194I issue. Case file makes it clear that the Assessing Officer has passed his consequential order / received on 05.10.2016 reducing the impugned demand from ₹14,03,537/- to ₹6,26,719/- only. We therefore do not see any merit in assessee’s above sole substantive grievance in these peculiar facts and circumstances. - Decided against assessee.
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2018 (10) TMI 726
Rejection of Long Term Capital Gains on purchase and sale of the shares - claim of exemption made u/s 10(38) rejected - AO concluded that the assessee has claimed bogus long term capital gain - Held that:- In a number of cases this bench of the Tribunal has consistently held that decision in all such cases should be based on evidence and not on generalisation, human probabilities, suspicion, conjectures and surmises. We have in all cases deleted such additions. There is no surviving order of SEBI against the assessee or the company, the script of which was purchased and sold by the assessee. Addition to be deleted - Decided in favour of assessee.
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2018 (10) TMI 725
TDS u/s 192 - Addition u/s 17(2(v) - income from salary - perquisite - expenditure incurred for medical treatment of an employee incurred outside India - AO invoked the provisions of section 192 and held that the assessee is liable to deduct TDS @ 30% - Held that:- CIT(A) has deleted the additions on the ground that, Since RBI allows remission of medical expenses of the amount involved in the appellant's case, the AO's case that no permission of RBI existed in the instant case is not correct. As regards employees having gross total income equal to or exceeding 2,00,000/- the exclusion from the exemption as provided in Proviso(vi) to Section.17(2) applies only to travel expenses and not to medical expenses. Both the reasons cited by the AO for holding the appellant liable for TDS are not relevant. The AO, therefore, is not correct to hold that the appellant is liable to deduct TDS u/s.192 from medical expenses. In case the payee Mr. Dugar is not treated as a bonafide employee then the expense paid by the-appellant cannot be termed as perquisite. In that case the liability u/s. 192 cannot be brought upon the appellant. - Order of CIT(A) confirmed - Decided against the Revenue.
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2018 (10) TMI 724
Levy of penalty u/s 271(l)(c) - defective notice - addition towards 25% gross profit on alleged bogus purchase made from hawala dealers - Held that:- although the AO has estimated 25% gross profit on alleged bogus purchases, never made any observations with regard to the incorrectness in details filed by the assessee to prove such purchases. The AO never disbelieved information filed by the assessee, but he proceeded on the basis of information received from sales-tax department to make additions. The AO has made such addition on adhoc basis by estimating gross profit on alleged bogus purchases. From these facts, it is very clear that the AO failed to make a case of deliberate attempt by the assessee to furnish inaccurate particulars of income. Therefore, we are of the considered view that mere disallowance of purchases on adhoc basis does not tantamount to willful furnishing inaccurate particulars of income within the meaning of section 271(1)(c) of the Income-tax Act, 1961. - No penalty - Decided in favor of assessee.
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2018 (10) TMI 723
Levy of penalty u/s. 271(1)(c) - AO has assessed surplus from sale of property at Badlapur under the head ‘Income from business’ as aginst assessee’s admission under the head ‘Income from long term capital gain’ - Held that:- once addition on which penalty was imposed u/s 271(1)(c) has been deleted, then there is no reason to levy penalty for furnishing inaccurate particulars of income - No penalty - Decided against the revenue.
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2018 (10) TMI 722
Administrative Commissioner jurisdiction to pass order u/s 263 as against draft assessment order - Draft assessment already merged with the final assessment order - Held that:- As in assessee’s own case for assessment year 2010-2011 [2017 (1) TMI 1422 - ITAT COCHIN] had held that draft assessment order cannot be revised u/s 263 of the I.T.Act. It is informed that the said order (supra) of the Tribunal in assessee’s own case is pending adjudication before the Hon’ble High Court. We also noticed that the Delhi Bench of the Tribunal in the case of Bausch & Lomb India Pvt.Ltd. v. ACIT [2017 (12) TMI 348 - ITAT DELHI] was of the view that the Administrative Commissioner does not have power to revise the draft assessment order. We hold that the CIT is not justified in invoking his revisionary jurisdiction u/s 263 of the I.T.Act as against the draft assessment order, which in this case already merged with the final assessment order dated 25.01.2017. It is ordered accordingly.
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2018 (10) TMI 721
Claim of business expenditure u/s 37(1) - concept of Revenue Recognition - assessee had not set up the business during the relevant previous year - advertisement & business promotion expenses - Held that:- This would be in the nature of general expenses not attributable to any project and payment to the extent it relates to the aforesaid expenses cannot be capitalised and had to be allowed as revenue expenditure. There is also another agreement for advertising with Ogilvy dated 5.9.2011. This agreement is for specific purpose of advertising of projects and therefore payments made for the said purpose will have to be treated as attributable to specific project and capitalised. The AO is directed to examine the payment of ₹ 15,65,000 and to the extent it relates to corporate brand identity exercise and logo design should be allowed as revenue deduction. The AO will allow opportunity of being heard to the assessee. - Decided partly in favor of assessee. Legal & professional charges - Held that:- the assessee had engaged professionals for carrying out liasoning work in relation to Sarjapur site. Therefore payment made to these two persons are referable to a particular project and therefore these expenses have to be capitalised to the concerned project. - Decided against the assessee.
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2018 (10) TMI 720
Disallowance of speculation loss - loss arising from exchange traded currency derivatives - Held that:- CIT(A) rightly held that the assessee executed currency transactions in derivative segment on the platform of recognized stock exchange which is in the realm of ‘eligible transaction’ and covered by the exceptions provided to Section 43(5)(d) of the Act. In view of the provisions of Section 43(5)(d) of the Act read with Section 2 of Securities Contracts (Regulation) Act, 1956, such derivative transactions of the nature of currency futures are to be excluded from the ambit of the speculative transactions. Consequently, the loss arising from exchange traded currency derivatives has been rightly regarded as normal business loss by the CIT(A). We do not find any infirmity in the order of the CIT(A). - Decided against revenue.
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2018 (10) TMI 719
Nature of rental income - income from House Property or Business Income - taxability of receipt on transfer of tenancy as income from other sources - taxability of transfer of revisionary rights as long term capital gain - Application of section 50 on transfer of revisionary rights - Held that:- the ‘nature’ of the income which had been rental earning from the house property will not change just because it has been received by the company formed with the object of carrying out business as builder and developer. From the records, we also noticed that the nature of the receipts was rental income even to the previous owners and was taxable accordingly under the head ‘Income from the house property’. - Decided against the assessee. Transfer of tenancy rights - Held that:- since the assessee is in the business of builder and developer, therefore, the amount received on transfer of tenancy rights cannot be taxed as ‘Business income’. The AO had already allowed the related expenses on account of legal & professional fees and the balance amount of ₹ 2,53,888/- was taxed under the head "Income from other sources" - Decided against the assessee. Transfer of revisionary rights - Held that:- the assessee company has assigned by and Large all its rights over the said two flats to those persons, so much so, that at one place it was mentioned that, 'This purchaser would be entitled to sale I transfer and assign the said premises subject to a right of first refusal available to the purchaser as separately recorded'. - the language used in such deed is nothing but to camouflage the real nature of transaction. Even from the records, it is evident that assessee had sold its right, title and interest in the said property, therefore it was rightly taxed under the head ‘capital gain’. - Decided against the assessee.
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2018 (10) TMI 718
Best Judgement assessment u/s 144 - unexplained cash deposit - unsecured loans - Admission of additional evidences - Held that:- there have been number of occasions wherein the hearing have been scheduled by the Assessing Officer, however, there has been no compliance on the part of the assessee and the Assessing Officer has proceeded and passed the order u/s 144 of the Act. Assessing Officer has not objected to the admission to the additional evidences and has in fact gone ahead and examined those additional evidences and found the transaction undertaken by the assessee verifiable. In such circumstances whether the Revenue has not objected to the admission of the additional evidences, it would have been better had ld. CIT(A) given his finding on merit rather than rejecting the additional evidences on technicality. Matter remanded back to CIT(A)
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2018 (10) TMI 717
Revision u/s 263 - addition towards interest on advances to partners - advances given to partners - The assessee did not admit any interest / profit from these investments but paid the interest on partners capital accounts promptly - Held that:- Payment of interest to the partners as at the end of the year and not collecting the interest from the partners on the amounts advanced to them for diversion of funds for non business purposes would distort the profits of the firm and as rightly observed the Ld.CIT(A) it is lopsided and does not reflect the true and correct picture of the profits of the firm. The assessee could not establish the business interest or availability of interest free funds to give advances to the partners in the guise of investment. Therefore, we consider it is fair and just to disallow the proportionate interest on the amounts advanced to the partners. Disallowance of interest for diversion of funds - Held that:- Though the assessee stated that the assessee is following the cash system of accounting and would admit the income as and when it is received, the assessee has not proved with any evidence that the assessee has made any efforts to collect the advances along with interest till date. No attempt has been made by the assessee to collect the interest on advances given to debtor till date. This attitude clearly shows that the assessee has intentionally diverted interest bearing funds for non business purposes and has no intention to collect the interest to suppress the profits. Ld.CIT(A) has rightly confirmed the disallowance of interest for non-business purposes and enhanced the interest from 12% to 18%, since the assessee has borrowed loans for interest rate of 18%. Decided against the assessee.
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2018 (10) TMI 716
Revision u/s 263 - AO denied exemption under Section 10(20) - total income was determined at Nil by observing that the loss could not be carried forward for set off against the income of the later years on the premise that the loss return filed by the assessee was not within the time prescribed under Section 139(1) - Held that:- In the original assessment, the AO determined total income at Nil and did not allow carry forward of loss computed at ₹ 382.09 crore. It is a matter of record that pursuant to the revisionary order, the Assessing Officer again took up the assessment under Section 143(3)/147 read with section 263 of the Act and passed a fresh assessment order on 27.12.2017 determining the total income at Rs. Nil and did not allow carry forward of loss of ₹ 455.99 crore. This shows that the income originally determined by the Assessing Officer at Nil remained the same even after giving effect to the order passed in revision. Thus, we are confronted with a situation in which the original assessment as well as the assessment giving effect to the impugned order, remain at Nil income, and in both the situations, there is no carry forward of loss. In other words, the shortcomings noticed by the ld. CIT in assessment order, which in his opinion made the order erroneous, are tax neutral. In the circumstances as are instantly obtaining, variation in the amount of loss, without allowing any carry forward to subsequent year(s) for set off, is in no way prejudicial to the interest of the Revenue. Since the original assessment order in the instant case satisfies, at the most, the first condition under Section 263 of the Act, being erroneous from the stand point of the ld. CIT, it fails to satisfy the second condition of being, prejudicial to the interest of the Revenue. The exercise of revisionary power gets vitiated because of cumulative non-fulfilment of the statutory conditions stipulated in the provision - decided in favour of assessee.
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2018 (10) TMI 715
TDS liability u/s 195 - Additions u/s 40(a)(ia) - payment made to overseas entity towards fees for technical services - Held that:- in the case of the assessee for the relevant assessment years 2010-11 & 2011-12 payment made towards commission to foreign agents for marketing, procurement of orders and systematic market research, provisions of Section 195 of the Act will not be applicable and consequently provisions of Section 40(a)(ia) of the Act cannot be invoked. - Decided in favor of assessee.
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2018 (10) TMI 714
Additions u/s 40(a)(ia) - TDS liability u/s 194C - assessee has not furnished the particulars of all payees/contractors in the prescribed form to the prescribed authority in time - Held that:- requisite return in the prescribed form was ultimately filed albeit belatedly, the assessee could not have deducted TDS on receipt of specific information from the payees/contractors. Therefore, in the absence of any liability to deduct tax at source under section 194C of the Act, provisions of section 40(a)(ia) of the Act does not get triggered. - Decided in favor of assessee.
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Customs
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2018 (10) TMI 711
Refund of Terminal Excise Duty - deemed exports - FTP - DGFT has rejected the petitioner s claim on the ground that the benefit of refund is available to it under the provisions of Central Excise Act and Rules - Held that:- The refund of TED claim in this case pertains to export and transaction prior to 15.03.2013. The crucial clarificatory circular was issued on that day. Two applications made in respect of sales to the EOUs (Vimal Agro Products Pvt. Ltd. and TATA Coffee Ltd.) covered various periods prior to 15.03.2013. This aspect is of significance and appears to have completely lost sight off. The DGFT as well as Central Excise Authorities have not principally denied that the supplies were made to EOUs (Vimal Agro Products Pvt. Ltd. and TATA Coffee Ltd.). In these circumstances, the question is what constitutes the entitlement of such unit that supplied the goods to Export Oriented Units. In the event, there is no dispute as it appears to be having regard to the pleadings that the supplies were made to EOU/EHTP/STP/BTP (categorically spelt out in 8.2). Benefit of deemed export under para 8.3 i.e. advance authorization [clause (a)], deemed export drawback [clause (b)] or exemption from TED in case of supplies made against International Competitive Bidding (ICB) or in other case of refund of TED. Clause (c) accrues to the concerned party i.e. supplier to EOU/STP. In this case, the petitioner s primary claim is that it is the supplier to such EOUs and that such supplies were made before 15.03.2013. This clear aspect has been completely overlooked and lost sight off by the respondent DGFT, which appears to initially reject the claim on the ground that the benefit the petitioners seeks entitlement of, was inadmissible because Central Excise benefit could be claimed. The petitioner s claim has to succeed - petition allowed.
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2018 (10) TMI 710
Maintainability of application before DRT - Demand of possession of the secured assets from the borrower/petitioner - default in repayment of loan - Section 13(4)(a) of SARFAESI Act, 2002 - violation of principles of natural justice - customs duty exemption against Export Promotion Capital Goods (EPCG) License - It is the contention of the petitioner that the 1st respondent does not come with the secured creditors under Section 2(zd), there is no security agreement under Section 2(zb), there is no secured debt under Section 2(ze) and there is no security interest under Section 2(zf) and therefore, the proceedings under SARFAESI Act could not be initiated. Held that:- All these contentions can be taken when an application under Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. Time and again, the Hon'ble Supreme Court as well as this Court has held that when there is an effective and alternative remedy, ordinarily writ jurisdiction should not be invoked and on the facts and circumstances of this case, we do not find that there is any extraordinary / exceptional circumstances, invoking the jurisdiction of this Court under Article 226 of the Constitution of India. In Satyawati Tondon's case, [2010 (7) TMI 829 - SUPREME COURT] the Hon'ble Supreme Court has held that the tribunals constituted under the SARFAESI Act, 2002, is competent to decide all questions of law and fact - Grounds raised in this instant writ petition, can always be urged before the tribunal. Petition dismissed.
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2018 (10) TMI 709
Benefit of advance license - Denial of facility of exemption from payment of customs levy for the goods imported solely for the purpose of fulfilling export obligations - denied merely on the premise of the introduction of a new levy under the Goods and Service Tax with effect from 01.07.2017 - Held that:- The imports which are the subject matter of the present writ petition were in fact made after the introduction of GST Regime. The petitioner is the beneficiary of an advance license issued on 17.07.2017. At that point of time, the exemption notifications (issued on 29.06.2017) were not in existence. The exemption of IGST, was not in force, on that date; the customs notification (of 29.06.2017) was amended only on 13.10.2017. This Court is of the opinion that since the benefit of exemption in fact existed at that point of time, the most appropriate course would be for the respondent authorities to verify whether as a matter of fact the petitioner in fact fulfilled the export obligations pursuant to the advance license of 18.07.2017 - petition disposed off.
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Corporate Laws
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2018 (10) TMI 713
Winding up seeked - non payment of detention charges - bonafide default - Held that:- On perusing the pleadings and materials on record it appears that the conduct of the company is not bona fide inasmuch as the said company after paying detention charges for a particular period has avoided payment by attempting to shift the liability on the consignee and M/s. M.A. Badani with whom the petitioner had no dealings. The said company has only initiated criminal proceedings against the consignee and M/s. M.A. Badani but, it has not initiated any civil proceedings to recover any money from them though it urges in its letters that the detention charges are payable to the petitioner thereby demanding money from the consignee. The defence of the company with regard to the payment of detention charges for the subsequent period is, therefore, linked with its volition to return the containers to be accepted unconditionally. The petitioner could have accepted the return of the containers had there been no condition appended to it and could still maintain its claim for the balance sum. The petitioner could not do so for the stand taken by the said company. The company has also sought to make out a case that the containers having not taken back the same are occupying space for which the said company is entitled to damages. This contention of the company though does not sound good at the first instance but there appear to be some element for which enquiry is required in this regard which cannot be done by the company Court while adjudicating an winding up proceedings. It may so occur that in the trial the company’s defence may not succeed but this cannot be said at this stage without a trial. The company is, therefore, afforded an opportunity to defend itself upon securing the entire claim for the balance period from 29th November, 2015 till 7th June, 2016 at the rate of 75 US$ per day converted to INR at the prevailing rate as on the date of the judgment. Since the claim between 29th November, 2015 till 7th June,2016 is not barred by limitation as it is still within three years, the petitioner may file a suit within 28th November,2018. The company is given time till 25th November, 2018 to deposit the said sum for the period between 29th November, 2015 to 7th June, 2016.
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2018 (10) TMI 712
Suspicious transfers - Illegal transfer of shares - Direction to the 1st respondent to restore the name of the appellant-Original petitioner in the member register and issue duplicate share certificates and further direct the 1st respondent to also allot the bonus shares, accrued dividend till date and further if any - Illegal transfer of shares - Appellant argued that the undelivered share certificate is already lying with 1st respondent, and hence it is not possible to transfer the alleged share certificate to anyone and/or 6th respondent by 3rd respondent - Held that:- Admittedly the appellant is shareholder of the 1st respondent and holds 6000 equity shares as on 30.6.2015. On the issue that he has not transferred/sold these shares he has drawn our attention to Form No.SH-4, Securities Transfer Form at Page No.445 of the Reply filed by the 1st respondent. On careful scrutiny of the SH-4 form, which is the prescribed form for submitting to the company or its transfer agent for transfer of shares in the name of transferee, we find that the column where the signatures of the transferor is required, the said column is ‘blank’. This is the vital column and the said column is blank. Further there is no signature of witness on the said SH-4 form. The column for Name and Address of the witness who confirms that the transferor has signed before him in SH-4 is also blank. Further the columns meant for mentioning Distinctive Nos, Corresponding Certificates Nos is also blank. It goes on to prove that the transferor has not signed the SH-4, Securities Transfer Form, which is mandatory for transferring the shares. Also observe from the audit report conducted by the auditor, Ernst & Young, that the less stamp duty has been affixed on the share transfer form, as observed by Ernst & Young’ s report, even then the shares have been transferred. This is very serious and also shows the suspicious transaction has been done. We observe that the appellant is a shareholder which means he is the owner of the 1st respondent to some extent. Instead of helping its shareholder, 1st respondent is creating trouble for him and also harassing him. We do not appreciate and expect this type of attitude from 1st respondent. After hearing both the parties at length, we have come to the conclusion that the appellant makes out a case that he has not transferred/sold the shares to anyone, therefore, he has right on his shares and also the bonus shares issued and the dividend declared during the past years. He shall submit indemnity bond to 1st respondent in case later any other claimant proves his title.
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Service Tax
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2018 (10) TMI 706
Principles of Natural Justice - though personal hearing was sought for, no such opportunity of personal hearing was given to the petitioner - demand of service tax including various cess with Interest and penalty - Held that:- The fact remains that before passing the impugned order, the Adjudicating Authority has not given an opportunity of personal hearing. At this juncture, it is useful to refer Section 33A of the Central Excise Act, 1944, which is made applicable to the service tax matters under Section 83 of the Finance Act, 1994 wherein it is contemplated that the Adjudicating Authority shall give an opportunity of being heard for the party in proceedings, if the party so desires. The impugned order, though passed by considering the merits of the matter, cannot be sustained, only on the reason that the same was passed without following the principles of natural justice in its full sense - matter has to be remitted back to the second respondent for passing fresh orders after giving an opportunity of personal hearing to the petitioner - petition allowed by way of remand.
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2018 (10) TMI 705
100% EOU - CENVAT Credit - duty paying invoices - credit availed on the basis of photocopy of invoices - Held that:- Since the appellants have already furnished the original invoices at the time of filing the refund claim, it cannot be expected of the appellants to produce the same in these proceedings before the authorities - credit cannot be denied. Penalties - CENVAT credit - denial on account that appellants have not produced invoices - credit along with interest paid before issuance of SCN - Held that:- The records are not so clear as to the fact of reversal of credit by the appellants - this issue requires to be relooked by the adjudicating authority - Matter on remand. Appeal allowed in part and part matter on remand.
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2018 (10) TMI 704
Refund of service tax paid - Chit Fund Foreman Service - refund claimed as no service tax was chargeable on the services rendered by the foreman in a business of chit fund as held by High Court of Delhi in the case of Delhi Chit Fund Association Vs. U.O.I. [2013 (4) TMI 630 - DELHI HIGH COURT] - rejection of refund claim on the ground of limitation. Held that:- From a conjoint reading of Section 73A and Section 11B, it is clear that as per Section 11B, an application for refund shall be made before the expiry of one year from the relevant date in such form and manner as prescribed and from a reading of the above Sections it is also clear that Section 73A talks of deposit of Revenue into Government account alone whereas Section 11B deals with claim for refund of duty paid, if any - the refund claim made by an assessee, if found in order, has to be entertained only on an application in terms of Section 11B alone and therefore, an assessee claiming refund has to pass through the tests prescribed under Section 11B. A duty would become refundable as a consequence of judgement, etc., implying that such judgement, etc., should only be in the assessee s case and not in any other case. The refund of the same was claimed because of the classification made by the Department, by virtue of which the service involved became a non-taxable entity - A perusal of the Refund Request View dated 03.08.2016 filed by the appellant makes it abundantly clear that the said application for refund was made invoking Section 11B of the Act ibid., and therefore when this provision is invoked, the same applies with full force including the rule of limitation prescribed therein. There has been a delay of more than two years and it only points out that it is clearly an afterthought, to claim the benefit of a judgement that such an application for refund was made; and on perusal of the appeal records, it is found that the assessee has nowhere whispered any reasons as to such an inordinate delay in making its application for refund. Appeal dismissed - decided against appellant.
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2018 (10) TMI 703
Restoration of appeal - appellant made a request for adjournment of the appeal, which was posted on 5.5.2016. However, the Tribunal has taken the matter for disposal and passed the exparte order - Held that:- Since the appellant had diligently prosecuted the matter and had taken steps to request for adjournment of the matter, the final order passed disposing the appeal exparte requires to be recalled. CENVAT Credit - input services - panthal and shamiana services - services availed in the eve of inauguration of their new building / branch - appellant is engaged in banking and financial services - Held that:- The panthal and shamiana services availed by the appellant is essential for promotion of banking and financial services. The said services are utilized by the appellant to inform the public that a new branch has been started in the said place - credit allowed - Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 702
Pre-deposit - 7.5% of confirmed demand of duty in terms of the amended provisions of Section 35F - appeal dismissed on the ground that pre-deposit not made - Held that:- Now at the time of filing appeal before Tribunal the appellant has deposited 10% of the duty, which would also include the requisite 7.5% deposit required to be deposited before Commissioner (Appeals) - matter remanded to Commissioner (Appeals) for decision on merits.
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2018 (10) TMI 701
Abatement - N/N. 1/2006-ST - Industrial or Commercial Construction Services - denial of abatement on the ground that the service recipient has provided free of cost material in the shape of cement and iron - Held that:- Inasmuch as that the flats constructed by them were not meant for any commercial activity, but the same were for residential purposes of the employees of M/s.Guleria Chini Mills, the same would get covered by the exclusion clause of the definition of “Construction of Residential Complex” - These issues were raised before the original adjudicating authority, there is no finding on the same. Matter remanded to original adjudicating authority for de novo adjudication - appeal allowed by way of remand.
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2018 (10) TMI 700
Penalty u/s 78 of FA - Service tax alongwith Interest paid and declared in ST-3 returns prior to issue of show cause notice - Held that:- Tribunal in the case of M/s Kanpur Cargo Movers Vs Commissioner of Central Excise & Service Tax, Kanpur [2017 (12) TMI 724 - CESTAT ALLAHABAD] has held that if the service tax liability is paid and declared in ST-3 returns prior to issue of show cause notice then penalty under Section 78 ibid is not imposable - penalty set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (10) TMI 699
Review petitions - error apparent on the face of record - petitioners argued that the appeals preferred by the Commissioner, Customs, Central Excise and Service Tax were dismissed on account of letter dated 5-6.12.2005, which was not in existence at all and the same was withdrawn in the year 2006, itself - Held that:- Whether the respondents were informed or not, the letter dated 5-6.12.2005 was not in existence based upon which the judgment has been delivered. Resultantly, as there is an error apparent on the face of the record, warranting review, the judgment delivered by this Court dated 31.1.2018 is hereby recalled. All these appeals are restored to their original number and be listed before this Court on 26th November, 2018. Review petitions allowed.
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2018 (10) TMI 698
Refund claim - relevant date for limitation for application for refund - Held that:- The claim of the assessee has been allowed on the grounds that the relevant date of consideration for granting the refund in the present case arose on the price reduction by Petroleum and Natural Gas Regulatory Board, which was granted with retrospective effect and, therefore, it was on that date, that was the date for limitation for application for refund would arise - appeal dismissed - decided against Revenue.
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2018 (10) TMI 697
Refund claim/adjustment of excess paid duty against short paid - finalization of provisional assessment - whether the appellants are eligible for adjusting the excess paid duty towards the short paid as well as whether they are eligible for refund of the excess amount after such adjustment? Held that:- In Toyota Kirloskar Auto Parts [2011 (10) TMI 201 - KARNATAKA HIGH COURT] the Hon’ble High Court of Karnataka had occasion to analyse the issue and has held that such adjustment is permissible. Since the issue stands settled in favor of the appellant the order directing to credit the sanctioned refund to the Consumer Welfare Fund is not in accordance in law and requires to be set aside - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 696
CENVAT Credit - Suo moto credit taken on excess credit debited by appellant - denial on the ground that credit availed without any supporting documents as prescribed under CENVAT Credit Rules, 2004 - Held that:- It is clear that the appellants had adjusted higher amount from the CENVAT credit amount towards discharging duty liability for the months of July and November 2012. Later, realizing the mistake, they had taken suo moto credit of the excess CENVAT amount debited by them. The department has denied the suo moto credit alleging that there are no proper documents for availing the credit for the second time - this allegation by the department is erroneous for the reason that for the second time, the appellants have taken the credit only because they had made a wrong book entry at the initial stage. This does not amount to availing credit for second time. The Hon’ble Karnataka High Court in the case of Motorola India Pvt. Ltd. [2006 (7) TMI 223 - HIGH COURT OF KARNATAKA AT BANGALORE] had earlier held that the mistake of debiting the amount in the CENVAT credit can be corrected by the assessee later. The allegations in the show cause notice cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 695
CENVAT Credit - time limitation for raising invoices - reverse charge mechanism - Whether the invoice raised by the service recipients under reverse charge mechanism, against which, the assessee had availed CENVAT Credit on input service, was within the time limit stipulated under the CENVAT Credit Rules, 2004 or not? Held that:- The reasoning given by the first appellate authority namely, that the invoices have been raised beyond the time provided under Rule 4A of the Service Tax Rules is without any justification. As pointed out by the adjudicating authority, the issue relates to the availment of CENVAT Credit beyond the time limit specified in CENVAT Credit Rules and this has been clarified by the Board vide Notification No. 21/2014. Further, there is no dispute that the CENVAT Credit has been availed here in this case in February, 2015 which is within six months period and thereby, satisfying with the CBEC Notification No. 21/2014. Appeal restored.
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2018 (10) TMI 694
CENVAT Credit - denial on the ground that the credit was availed by the assessee after the prescribed period (of six months), being imposed by way of amendment with effect from 01.09.2014 - Held that:- It is an admitted position of law that prior to 01.09.2014, there was no such time limit prescribed under the statute - The said period of limitation has further been amended vide Notification No. 06/2015 with the time of ‘one year’ replacing the time of ‘six months’ and both the Notifications would cover the period of dispute involved in this case, which is September, 2014 to June, 2015 - it is also not the case of Revenue that the credit was availed after more than one year. The Revenue authorities have erred in denying the benefit of CENVAT Credit - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 693
SSI Exemption - under reporting and suppressing their production and clearance - fictitious firm - duplicate invoices - it appeared that under the same invoice numbers goods had been sold to two different sets of buyers, the other set of sale transactions being unaccounted - the goods sold also had not been accounted for in their books of accounts. Held that:- In absence of Enquiry /cross-verification from all the customers who had made payments in the four Bank Accounts, it cannot be presumed that payments made by them were in respect of goods manufactured and cleared by the appellant - Without taking into account and giving any finding on the said invoices recovered during investigation and other material, the finding by the Commissioner regarding the non-existence of M/s Cosmoline Electricals, is without any basis and is accordingly set aside. Whether the appellant had necessary infrastructure to manufacture aluminium wires? - Held that:- The appellant had relied upon the statements of Krishna Singh Rathore, Rajesh Batra to show that they did not possess the necessary machinery and infrastructure to manufacture aluminium products. The department has failed to contradict the said stand of the appellant with any positive evidence to show that the appellant indeed had the infrastructure to manufacture aluminium wires - the finding in the impugned order in this regard is untenable. Cross-examination of statement - Held that:- No reliance can also be placed solely on the uncorroborated statement dated 22.05.1998 of Sh. Brajesh Batra, especially in view of his subsequent statement and cross-examination, to corroborate that the payments received in the Bank Accounts were concerning the goods manufactured by the appellant - Further, Sh. Vinod Kumar and Sh. Shrinath in their statements and cross examination have merely stated that the four Bank Accounts were opened at the behest of Sh. Brajesh Batra and were controlled by him, and that they had no knowledge regarding the source and purpose of the said cheques. Nothing incriminating comes from the said statements. The department has failed to prove the charge of clandestine removal with any credible evidence. Neither was there any seizure of unaccounted raw material/ finished goods from the appellant or any of its buyers, nor has the department gathered any other clinching evidence in the form of clandestine purchase of raw material, excess production details, details of unaccounted dispatch by regular transporters, excess power consumption, etc. - duty demand with penalty set aside. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 692
Excess amount collected in the name of Central Excise duty - section 11D(1) and (1A) of the Central Excise Act, 1944 - case of assessee is that since they are not liable to pay duty on the goods sold by them, the provisions of section 11D of Central Excise Act, 1944 are not applicable in their case for a period prior to 10.5.2008 and also that the excess amount collected by them in the name of Central Excise duty has already been returned back by them to their customers - time limitation. Held that:- It can be seen that section 11D(i) as it existed prior to 10.5.2008 provided that any person who is liable to pay duty under the Central Excise Act or rules, made thereunder need to pay back the excess amount collected by them, thus it appears on plain reading that it primarily covers the producer or manufacturer of excisable goods or the person storing such goods in a warehouse who pays the duty on excisable goods at the time of removal of such goods - contention of the assessee that they are not covered by the provisions of section 11D for a period prior to 10.5.2008, is not acceptable, since the depot of manufacturer assessee who is M/s. Hindustan Petroleum Corpn. Ltd. in this case, is only an extension of the manufacturer and therefore, the provisions of section 11D are very much applicable on the extended arm of the manufacturer assessee, i.e. the depot of such assessee - provisions of section 11D even prior to 10.5.2008 are applicable in case of appellant assessee and they are legally bound to deposit back the excess amount collected by them from their customers in the name of Central Excise duty. Another case of assessee is that they have returned back the excess amount collected in the name of Central Excise duty from their customers and therefore, provisions of section 11D are not relevant to demand the same amount from them - Held that:- A perusal of the credit note makes it clear that a credit of cenvat difference has been given back by them for a period April to June, 2009. But it is not a refund of excess amount collected by them rather for lack of evidence the possibility cannot be ruled out that buyer may have taken the credit of these cenvat difference in their books of accounts and might have used them for further passing the cenvat credit to their customers - it is not a proper return of the excess collected amount which was in the name of Central Excise duty. Time Limitation - Held that:- A plain reading of section 11D makes it evidently clear that no period of limitation has been prescribed under this particular section - in the present case, demand is purely and only under section 11D of the Central Excise Act wherein the law does not provide any period of limitation - demand not barred by limitation of time. Appeal dismissed - decided against appellant.
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2018 (10) TMI 691
CENVAT Credit - input services - hiring of male nurse for providing medical services inside the factory premises - Housekeeping services - hiring of tractor. Hiring of male nurse - Held that:- The credit availed on such services is eligible - reliance placed in the case of Jaypee Sidhi Cement Plant Vs. Commissioner of Central Excise [2016 (7) TMI 348 - CESTAT NEW DELHI], where it was held that the posting of Doctors and Nursing staff is at the behest of the appellant in order to comply with statutory obligation under the Factories Act, 1948 and Mines Act 1952 and credit is to be allowed - credit allowed. Housekeeping services - Held that:- The housekeeping service, road cleaning service etc. are availed by the appellant for keeping the factory as well as the roads in a clean and hygienic manner as also as a part of the upkeep of the factory premises. The white washing services were also availed for renovation and upkeep - the services would qualify as input services and therefore are eligible for credit - credit allowed. Hiring of tractor for movement of goods from one destination to other - Held that:- The exclusion part in Clause B in the definition of input service does not allow the credit availed on motor vehicles - Since the motor vehicles are not established to be capital goods for the service provider, the credit availed with respect to hiring of tractor is not eligible and disallowance of CENVAT credit upheld. Appeal allowed in part.
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2018 (10) TMI 690
CENVAT Credit - excess availment of credit - liquid gases - procurement of inputs less than the invoiced quantity but availed full CENVAT Credit of duty indicated in the respective invoices - loss due to evaporation - Rule 3 of the CCR, 2004. Held that:- Admittedly, the extent of loss having not been addressed in the statute, the same has been allowed by various courts considering the nature of goods involved - such loss cannot be ruled out and the assessee-appellant herein should also get the benefit of the same. But, at the same time, the argument of appellant that the losses of the kind involved in the present case are normal and the counter-argument of the Revenue that such loss is high, has not been proved with any supporting scientific evidences. This assumes importance when there is no allegation of diversion or man-made loss. For this reason, the matter requires a fresh adjudication, requiring the supporting documents as indicated above to be placed on record. Appeal allowed by way of remand.
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2018 (10) TMI 689
Penalty u/s 11AC of CEA - Goods cleared for captive consumption - duty paid only on the cost of production while as per the provisions of Rule 8 of the Central Excise Valuation Rules, 2000, they were required to pay duty on one hundred and ten per cent of the cost of production - differential duty demand alongwith Interest paid - Held that:- The appellant was admittedly adopting the assessable value as cost of production of the goods, whereas the same were required to be adopted as 110% of the cost. Inasmuch as the goods were being sent to their own sister unit, who were availing Cenvat credit of duty paid by the appellant, this could be a bona fide mistake on their part and cannot be held to be a case of mala fide intention with intent to evade payment of duty - penalty set aside while upholding duty demand - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 688
Valuation - handling charges collected @ 1% of the value as a part of the transaction cost, whether forms part of transaction value or not? - Held that:- The cost of transportation from the place of removal up to the place of delivery of such goods is not includible in the assessable value under Section 4 of the Central Excise Act, 1944 and not chargeable to Central Excise duty under Section 3 of the Act. In the instant case, the appellant has claimed the handling charges of 1% of the value as part of the transportation cost. Therefore, it is not includible in the assessable value - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (10) TMI 687
Calling of records relating to the assessmentorder dated 20.10.2009 - to afford an opportunity to file objections - inter-state sales - delayed payment of tax alongwith Interest - the respondent has proceeded to pass the impugned assessment order on the statement given by the petitioner before the Enforcement officers that the sale bill books related to the years 2003-04 and 2004-05 were lost during the time of celebration of Saraswathi Pooja and were not in possession of the counterfoil of the sale bills raised. Held that:- The respondent cannot proceed solely based on the report of the Enforcement officers and they have to independently apply their mind, but without even looking into the records produced by the petitioner, the respondent came to the conclusion that since the petitioner had deposed before the Enforcement officers that the records were misplaced during the celebration of Saraswathi Pooja, the records now produced by the petitioner are only manipulated records - The said conclusion of the respondent cannot be accepted and the respondent ought to have looked into the records produced by the petitioner and should have afforded opportunity to the petitioner to file their objections and also the personal hearing and only thereafter, the respondent shall render a finding whether the records produced by the petitioner are manipulated or not. The petitioner is directed to file their written objections within a period of two weeks from the date of receipt of a copy of this order and thereafter, therespondent shall consider the same and also provide opportunity of personal hearing to the petitioner - impugned order set aside.
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2018 (10) TMI 686
Demand of Interest under Section 24(3) of the TNGST Act, on or before 19.03.2010 - deletion of condition contained in Clause 3 of the eligibility certificate dated 05.05.1999 regarding sales tax benefit - refund of excess tax collected under protest alongwith penal interest - Held that:- This Court directs the respondents to consider the representation of the petitioner dated 02.04.2010, if not considered earlier, and pass appropriate orders, on merits and in accordance with law, after affording an opportunity of personal hearing to the petitioner, within a period of six weeks from the date of receipt of a copy of this order.
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Wealth tax
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2018 (10) TMI 685
Wealth tax assessment of land - Additions to the wealth of the assessee by refusing to accept the claim of the assessee that the five lands in four villages are exempt assets u/s. 2(ea)(v) of the Wealth Tax Act - CIT(A) has deleted the lands situated at Mysuravaripalle Village - Assessee has claimed that these lands are agricultural lands, even though situated within 8 KMs from the municipal limits but construction on these lands is not permissible as these lands were not converted into urban lands Held that:- Assessee has not brought on record any evidence in support of the above claim, but she prayed before the Assessing Officer that this may be verified with the SRO and appropriate action may be taken by the Assessing Officer. Now, we noticed from the additional evidence submitted by assessee relating to agricultural activities in the lands situated at Mangalam and Venkatramapuram Villages which are issued by village authorities. Since the additional evidence indicates that these lands were agricultural lands and also the certificates are issued by the Sarpanch of the respective village, in our considered view, this should be verified by the Assessing Officer by making a physical verification of the land and by obtaining proper information from the respective Panchayat Board. Since the assessee has not submitted any evidence relating to two lands situated at Avilala Village, therefore, the Assessing Officer is directed to verify these lands in person and make the appropriate addition or deletion to the wealth of the assessee. Therefore, the appeal filed by the assessee is remitted to the file of the Assessing Officer with a direction to give a proper opportunity of being heard to the assessee.
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Indian Laws
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2018 (10) TMI 708
Interest awarded by the Tribunal - international commercial arbitration - Section 37 of the Arbitration & Conciliation Act, 1996- Held that:- The rate of interest awarded must correspond to the currency in which the award is given, and must be in conformity with the laws in force in the lex fori - In the present case, the international commercial arbitration having its seat in India, the rate of interest to be awarded must be in accordance with the Arbitration and Conciliation Act, 1996. The discretion of the arbitrator to award interest must be exercised reasonably. An arbitral tribunal while making an award for Interest must take into consideration a host of factors, such as: (i) the ‘loss of use’ of the principal sum; (ii) the types of sums to which the Interest must apply; (iii) the time period over which interest should be awarded; (iv) the internationally prevailing rates of interest; (v) whether simple or compound rate of interest is to be applied; (vi) whether the rate of interest awarded is commercially prudent from an economic standpoint; (vii) the rates of inflation, (viii) proportionality of the count awarded as Interest to the principal sums awarded - On the one hand, the rate of Interest must be compensatory as it is a form of reparation granted to the award holder; while on the other it must not be punitive, unconscionable or usurious in nature. In the present case, the arbitral tribunal has adopted a dual rate of Interest in the Award. The Award directs payment of Interest @ 9% for 120 days post award; if the amount awarded is not paid within 120 days’, the rate of Interest is scaled up to 15% on the sum awarded - The dual rate of Interest awarded seems to be unjustified. The award of a much higher rate of Interest after 120 days’ is arbitrary, since the Awarddebtor is entitled to challenge the award within a maximum period of 120 days’ as provided by Section 34(3) of the 1996 Act. The imposition of a high rate of interest @ 15% post 120 days is exorbitant, from an economic standpoint, and has no corelation with the prevailing contemporary international rates of Interest. The Awarddebtor cannot be subjected to a penal rate of interest, either during the period when he is entitled to exercise the statutory right to challenge the Award, before a Court of law, or later. Furthermore, the arbitral tribunal has not given any reason for imposing a 15% rate of Interest post 120days. The Interest awarded by the arbitral tribunal is modified - appeal disposed off.
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2018 (10) TMI 707
Handing over all the original documents of accounts of Amrapali Group of Companies from the year 2008-2015 and 2015-2018 of 46 companies - petitioners stated that the orders of this court have not been complied with and as per the e-mails, the documents have not been handed over and only skeletal documents of two companies have been handed over, namely of Amrapali Zodiac and of Amrapali Princely Estates. Held that:- It is not only deliberate non compliance of the order but effort is being made to fritter away the documents in utter violation of the order passed by this Court. No justification could be pointed out by the learned counsel appearing on behalf of the Amrapali Group of Companies for not complying with the orders passed by this Court. Since it is necessary to hand over the documents to the forensic auditors, considering the non-compliance evident on record, we find that there is no other way except to direct the Police to seize all the documents and to handover the documents to the forensic auditors after seizing them from the possession of 46 Companies and their Directors. Application disposed off.
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