TMI Tax Updates - e-Newsletter
October 23, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy FEMA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

TMI SMS

• Levy of GST - charges received on account of washed away / cancelled contracts for supply of goods - Forward Contracts - AAR clarifies

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• Deduction u/s 10AA - as per SEZ Rules 2006 services includes trading if it relates to the import of the goods for the purposes of re-export

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• Deduction u/s 80IA - delay of 31 days in the filing ITR - deduction cannot be claimed without fulfilling the conditions laid down u/s 80AC

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Articles

1. LEVY OF GST ON LOTTERY

   By: DR.MARIAPPAN GOVINDARAJAN

2. Whether ITC for FY 2017-18 can be availed only till October 20, 2018

   By: Bimal jain

News

1. Extension of due date to 25th October, 2018 for furnishing return in the FORM GSTR-3B for the month of September, 2018

2. Auction for Sale (Re-issue) of Government Stocks

3. REPORT OF INSOLVENCY LAW COMMITTEE ON CROSS BORDER INSOLVENCY

4. Insolvency Law Committee submits its 2nd Report on Cross Border Insolvency

5. CBDT releases Direct Tax Statistics

6. 4th Edition of NITI Lecture Series to be held on 22nd October, 2018

Notifications

GST - States

1. EXN-F(10)-28/2018 - dated 12-10-2018 - Himachal Pradesh SGST

CORRIGENDUM - Notification No. number EXN-F(10)-28/2018 dated 29.09.2018

2. PA/ETC/2018/172 - dated 7-9-2018 - Punjab SGST

Supersession Notification No. 53/2017-Central Tax, dated the 28th October, 2017

3. F. 2 (36) Vidhi/2/2018 - dated 4-10-2018 - Rajasthan SGST

Rajasthan Goods and Services Tax (Amendment) Act, 2018

4. 1506-F.T. - dated 12-10-2018 - West Bengal SGST

West Bengal Goods and Services Tax (Twelfth Amendment) Rules, 2018

5. 1505-F.T. - dated 12-10-2018 - West Bengal SGST

West Bengal Goods and Services Tax (Eleventh Amendment) Rules, 2018

Circulars / Instructions / Orders

IBC

1. IBBI/RV/019/2018 - dated 17-10-2018

Valuation under the Insolvency and Bankruptcy Code, 2016

Customs

2. 63/2018 - dated 31-8-2018

Pilot Implementation of Paperless Processing under SWIFT-Uploading of Supporting Documents (eSANCHIT) in Exports - Reg.

Highlights / Catch Notes

GST

• Goods Detained Over Invalid E-Way Bill; Release Possible with Bond After Part-B Upload Fails to Correct Issue.

  Case-Laws - HC : Detained of goods - invalid e-way bill - subsequent uploading of the Part-B would not efface the defect as pointed out by the Detaining Officer - Goods to be released on furnishing of bond.
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• Partners' Share Activity Classified as Service Supply Under CGST and TGST Act, 2017.

  Case-Laws - AAR : Supply or not? - The activity undertaken with respect to the share belonging to the partners (as described in the “Statement of relevant facts” of the subject Application) is a supply of service under the CGST/TGST Act, 2017.
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• GST Exemption on Charges for Cold Storage of Fresh Poultry Eggs from Animal Rearing or Poultry Farming.

  Case-Laws - AAR : Levy of GST - cold storage services for poultry eggs - The charges received by the applicant for providing service of storing of “fresh eggs” in shell on which no further processing is done, which are produce of rearing of animals/poultry farming, are exempted from payment of GST
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• Advance Payment for Villa Sale Taxed at 12% Under GST Act Before Completion Certificate Issuance.

  Case-Laws - AAR : Liability of tax - The applicant has received advance towards sale of villa prior to issuance of completion certificate. Hence, the same is taxable under GST Act @ 12%.
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• Pollution Under Control Certificates for vehicles taxed under residual entry, not SAC 9991, with 18% GST rate.

  Case-Laws - AAR : Levy of GST - services of Pollution Testing of Vehicles - The Activity of issuance of Pollution Under Control Certificate for vehicles is not covered under SAC 9991 and is covered under Residual Entry and hence, should be taxed @ 18% GST.
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• GST Applicability on Washed Away or Cancelled Contracts: Taxable or Not? Insights on Forward Contract Obligations.

  Case-Laws - AAR : Levy of GST - charges received on account of washed away / cancelled contracts for supply of goods - Forward Contracts - agreeing to the obligation to refrain from an act, agreeing to the obligation to tolerate an act or a situation, or agreeing to the obligation to do an act - Taxable in one situation and not taxable in other situations.
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• Applicant Eligible for Full Input Tax Credit on Taxable Services in Road Construction Under CGST Act Section 16(1.

  Case-Laws - AAR : Input Tax Credit - The applicant is rendering taxable services during the construction of roads which is liable to tax; hence they are entitled to claim full ITC under the provisions of section 16(1) of the CGST Act. 2017.
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Income Tax

• Assessee Must Deduct Tax at Source on Premiums to Non-Resident Reinsurers u/s 40(a)(i) of Income Tax Act.

  Case-Laws - AT : Additions u/s 40(a)(i) for non deduction of TDS - The assessee has to necessarily deduct tax on the premium paid to non-resident re-insurance company for reinsurance.
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• Section 56(2)(vii)(b)(ii) Income Tax Act: No application to property transactions completed in the preceding year.

  Case-Laws - AT : Addition made u/s 56(2)(vii)(b)(ii) on account of purchase of immovable property - inadequate consideration - Once the transaction of purchase of property in question is completed in the preceding year then the provisions of Section 56(2)(vii)(b) of the Act cannot be invoked on such transaction
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• Assessee Can Offset Speculation Loss Against Delivery-Based Profit u/s 73 of Income Tax Act.

  Case-Laws - AT : Set off of speculation loss against the profit earned by the assessee from delivery based transactions - the assessee would be entitled to set off this speculation loss from the said profit as per section 73 as rightly claimed by it.
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• Appellant Claims High Court Overlooked Income Declaration Scheme 2016 Clauses; Repeated Filings Misuse Court Process.

  Case-Laws - HC : Benefit of Income Declaration Scheme, 2016 - contention of the appellant is that certain clauses of the scheme had not been taken into consideration by the single member bench of the HC - The filing of cases repeatedly on the same cause of action amounts to gross misuse of the process of the Court.
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• Section 10AA Tax Deductions Apply to Trading Activities Involving Import for Re-export, Per Rule 76 of SEZ Rules 2006.

  Case-Laws - AT : Deduction u/s 10AA - trading activity - the term service for the purpose of Section 10AA, deriving its meaning from Rule 76 of the SEZ Rules 2006 includes trading activities if it relates to the import of the goods for the purposes of re-export.
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• Loan Funds Misused: High-Interest Loans Transferred to Group Concerns at Lower Rates, Section 36(1)(iii) Addition Confirmed.

  Case-Laws - AT : Disallowance u/s 36(1)(iii) - assessee raised loan funds at high rate of interest but transferred to a sister concern or group concern at lower rate of interest or no interest without any business purpose - addition confirmed.
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• No Penalty Imposed u/s 271AAA for Assessee Who Surrendered Income Without Specific Query on Income Source.

  Case-Laws - AT : Penalty levied u/s 271AAA - the assessee in the instant case has surrendered additional income and paid the taxes due thereon and no specific query was raised by the search party at the time of search to substantiate the manner of earning such income - No penalty.
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• Taxpayer Denied Deduction Due to 31-Day Late Filing; Compliance with Section 80AC Required for Section 80IA Benefits.

  Case-Laws - AT : Deduction u/s 80IA - delay of 31 days in the filing of the return of income - the benefit U/s 80IA of the Act cannot be claimed without fulfilling the conditions laid down in Section 80AC of the Act.
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• Unexplained Gifts: No Extra Income Added Without Incriminating Material Found in Section 153A Search Assessment.

  Case-Laws - AT : Assessment u/s 153A - Unexplained gifts - The assessment originally made is unabated and once, there is no incriminating material found during the course of search in relation to the income added as undisclosed income, no addition can be made.
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• Section 56(2)(viib) Examined: No Additions for Share Application Money in Family Arrangement, Corporate Veil Intact.

  Case-Laws - AT : Additions u/s 56(2)(viib) - income from other sources - lifting of corporate veil - receipt of share application money - amount received from one shareholder - benefit passed on to other shareholder - transactions involving family arrangement - No additions
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• No TDS required u/s 192 if no perquisites paid; assessee company not in default for non-deduction.

  Case-Laws - AT : TDS u/s 192 - provision for expenses - when there is no actual payment of these perquisites being part of salary, then the liability to deduct tax at source u/s 192 does not arise - assessee company is not in default
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• Factory Shed Sale Exempt u/s 54F: Long-Term Asset Status Overrides Short-Term Gain Classification.

  Case-Laws - AT : Exemption u/s 54F - short term capital gain from sale of depreciable assets u/s 50 - sale of depreciable assets being factory shed is eligible for exemption u/s 54F of the Act as it is long term capital assets as per the provision of Section 2(42A).
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• Assessee Denied Deduction u/s 80P(2) Due to Operations Spanning Multiple Taluks, Violating Clause 80P(4) Criteria.

  Case-Laws - AT : Deduction u/s. 80(P) - area of operation not confined to ‘a taluk' - amended clause 80P(4) - Impact of article "a" used therein - Since the assessee’s area of operation was not confined to a Taluk for the relevant assessment year, it was not entitled to the benefit of deduction u/s. 80P(2)
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• Retrospective Application of Provisos in Sections 40(a)(ia) and 201(1) of Income Tax Act from April 1, 2005.

  Case-Laws - HC : Disallowance of expenses u/s 40(a)(ia) - TDS default u/s 201 - the second proviso to Section 40(a)(ia) and first proviso to Section 201(1) of the Act though inserted by Finance Act, 2012, would be applicable retrospectively w.e.f. 01.04.2005.
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• Assessee Can Claim Deduction u/s 10B Without Subtracting Partner Interest and Remuneration in Income Tax Calculations.

  Case-Laws - AT : Deduction u/s 10B - assessee was very much eligible to work out the quantum of deduction u/s 10B of the Act without reducing the amount of interest on capital and remuneration to the partners
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• Interest from Surplus Funds Not Added to Income, Deducted from Pre-Operative Expenses Instead.

  Case-Laws - AT : Addition on account of interest earned in surplus funds parked with banks - treating it as income from other sources OR to be treated as capital receipt and reduced from the cost of per-operative expenses accordingly - No additions.
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• Choosing the Most Appropriate Method for Arm's Length Price: CUP vs. TNMM in Transfer Pricing, Rule 10B(1)(a)(i.

  Case-Laws - AT : Transfer pricing - determination of ALP - selection of MAM - application of CUP method as against TNMM - AO/TPO directed first apply CUP using some comparable instances following Rule 10B(1)(a)(i) and in the eventuality the TPO comes to the conclusion that the relevant data is not available, he is free to select any appropriate method for fresh determination of ALP after hearing the assessee.
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• TPO Incorrectly Assumes No Expense Allocation to Homebase Segment; Appellant Provided Details, No Additions Made.

  Case-Laws - AT : Transfer pricing - the TPO proceeded on a false premise that the appellant has not allocated any expenses to the homebase segment, whereas, as demonstrated elsewhere, not only the appellant has allocated routine expenses, the details were also furnished before the lower authorities. - No additions.
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• Disallowance of Commission and Incentives Lacks Evidence, Based on Speculation Without Adverse Material by Assessing Officer.

  Case-Laws - AT : Disallowance in respect of Commission and incentive made - There is no adverse material collected by the A.O. There is no allegation of illegal payments, much less evidence. The disallowance was made on mere surmises.
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• Corrigendum Orders Can't Fix Non-Compliance with Section 144-C of Income Tax Act; Section 292B Inapplicable for Revenue Errors.

  Case-Laws - HC : Validity of corrigendum order to to cure the defect / mistake - Non-compliance of the mandatory provisions of Section 144-C - any error or omission or mistake committed by the Revenue at any stage of a proceeding cannot be sought to be cured by taking umbrage u/s 292B.
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• Income from quick share sales, held mainly under a week, classified as business income, not capital gains.

  Case-Laws - HC : Income from sale of shares - In the majority of the transactions the period of holding is even less than one week - not to be treated as an investment, but actuated by motive of sale and purchase so as to earn profit at the earliest occasion - taxable as business income and not as capital gains.
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• Tribunal Lacks Authority to Use Self-Created Formula for Income Estimation, Must Follow Established Legal Procedures.

  Case-Laws - HC : Estimation of income on account of “on-­money” - As the last fact finding authority, the Tribunal was not empowered to apply the formula and which was invented by it.
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Customs

• Court Allows Garnet Export if Petitioner Proves Legal Sourcing of Beach Sand Minerals.

  Case-Laws - HC : Export of Garnet produced from Beach Sand Mineral - allegation of illegal activity of mining - petitioner is at liberty to export his goods, as soon as he is able to satisfy the authorities on the legal source, of the exported minerals.
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FEMA

• Appeals Dismissed for Delay u/s 19 of FEMA Due to Insufficient Cause for Several Years' Delay.

  Case-Laws - AT : Condination of delay as per Section 19 of FEMA - No ground to condone the delay running into number of years in all the four appeals. The appellant has not been able to give/prove any sufficient cause to do the same.
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Indian Laws

• Cheque Dishonor Case u/s 139 Highlights Need for Leniency for Female Accused While Balancing Complainant's Interests.

  Case-Laws - HC : Dishonor of Cheque - Offense u/s Section 139 of N.I. Act - Taking note of the fact that the transaction is of the year 2008 and the accused being a woman, leniency is required balancing the interest of the complainant.
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IBC

• Insolvency Professionals Must Use Registered Valuers for IBC 2016 Valuations, No Exceptions Allowed.

  Circulars : Valuation under the IBC, 2016 - no insolvency professional shall appoint a person other than a registered valuer to conduct any valuation under the Code or any of the regulations made thereunder.
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Service Tax

• Revenue's Show Cause Notices for Differential Tax Demand Exceed Authority; Reassessing Already Reassessed Periods.

  Case-Laws - AT : Demand of differential tax - The present show cause notices are reassessment of reassessment for the same period - Such authority is not available to Revenue.
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Central Excise

• High Court Can Hear Appeals on Central Excise and Customs Act Tribunal Orders; Must File Based on Dispute Location.

  Case-Laws - HC : Jurisdiction of HC to entertain an appeal under the Central Excise Act and the Customs Act from the orders of the Tribunal at Mumbai - The appeals in terms of the High Court Rules has to be before the appropriate bench (includes the principal seat at Mumbai) on the basis of the district where the dispute arose.
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• Tribunal Rules No Cash Refund for Unused Education Cess Credits for Appellant Under Tax Regulations.

  Case-Laws - HC : Refund/encashment of unutilized CENVAT - Tribunal has committed no error of law in holding that the appellant cannot claim cash refund or encashment of the unutilized and unavailed amount of Education Cess and Secondary and Higher Secondary Education Cess, lying in its credit
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Case Laws:

• GST

• 2018 (10) TMI 1146
  Input Tax Credit - taxes paid on procurement of goods and services during the Construction period - work contract service - applicant is of the view that it is eligible to claim ITC of taxes paid on procurement of goods and services during the O M period after reversal of input tax credit as per Section 17(2) Of the CGST Act read with Rule 42 of the CGST rules. Whether appellant is eligible to claim full ITC pertaining to procurement of goods and services for construction of the project during the Construction Period as the entire revenue received during the said period is subject to CST? - Held that:- The applicant is a supplier of works contract services for construction of an immovable property and goods and services received by them for construction of immovable property are not owned and capitalised by them, hence restriction contained under clause (c) (d) ibid is not applicable for the applicant - The applicant is paying applicable GST on full value of the project and they are not supplying any exempted goods and services during the construction period of 2 years, therefore they are entitled to claim full ITC paid on all eligible goods and services - Appellant are entitled to claim full ITC during the construction period. Whether appellant is eligible to claim ITCs pertaining to procurement of goods and services during the O M period after reversal of ITC as per Section 17 (2) of the Central Goods and Services Tax Act 2017 read with Rule 42 of the Central Goods and Services Tax Rule, 2017 as Annuity Payment received during the said period is exempt whereas O M payments received are subject to CST? - Held that:- The annuity received by them for the construction of road and bridges is classifiable under SAC 9954 and liable to tax at the applicable rate of GST. The applicant has not specified whether they are supplying any other exempted goods and services during the operation and maintenance period. If they are not supplying any exempted goods and services during the O M periods the provision of section 17(2) of the CGST Act, 2017 are not applicable upon the applicant - The annuity received by the applicant isa payment of the remaining 50% of cost of the project in biannual equal installments on which the applicant would be paying GST during the construction periods. As the annuity so received by the applicant is taxable, there is no need to take apportioned credit under section 17(2) of the CGST Act, 2017. Ruling:- The applicant is rendering taxable services during the construction of roads which is liable to tax; hence they are entitled to claim full ITC under the provisions of section 16(1) of the CGST Act. 2017. The Applicant is entitled to claim ITC on supplies of goods and services or both procured for use in outward supply of O M service purpose, as they are paying GST on 100 percent of the amount received on account of O M of the Project.

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• 2018 (10) TMI 1145
  Levy of GST - charges received on account of washed away / cancelled contracts for supply of goods - Forward Contracts - agreeing to the obligation to refrain from an act, agreeing to the obligation to tolerate an act or a situation, or agreeing to the obligation to do an act - scope of supply and securities - whether GST is applicable on the differential payment received by a party to the aforesaid contract from the other party to the contract is (in) event of settlement , washout or closure of contract by it? Held that:- While it is clear that this activity is not a sale transfer, barter, exchange, licence, rental or lease, it is also apparent that the situation of closure of contract which was related to supply of goods, would also not be covered under the term disposal. The term disposal carries a connotation that the goods physically leave the possession of the supplier, which is not the situation in the present case - Therefore, the scenario of closure of contract by the applicant or its other contracting party would not amount to supply of goods and therefore, no goods and service tax would be applicable as far as supply of goods is concerned. Whether the activity of closure of contract by the applicant or the other contracting party would fall under the scope of the term service or under the scope of the term supply under GST law? - Held that:- It is clear that once an activity does not fall under scope of the term service , it becomes immaterial whether it falls under scope of the term supply for deciding questions of applicability of tax on services under Section 9. From Section 18A of SCRA, it emerges that the term securities which covers commodity derivatives refers to only those contracts which are traded or settled in recognised stock exchange, unless the contracts are notified by the Central Government. By this measure, the claim of the applicant that the closure of purchase/sale of cotton contract by way of settlement between him and the other contracting party in terms of the contract, would be covered under the term securities in the definition of services in Section 2(102) of the CGST Act, 2017 and hence would not entail tax on services, does not seem to be valid. While it is forthcoming that legal provisions discussed above do not exclude the closure of purchase/sale of cotton contract by way of settlement between applicant and the other contracting party in terms of the contract from scope of services, and the applicant would therefore be liable to the provisions of Section 9 of the CGST Act, 2017 - it is evident that intention of the Government, evident from the answer to the FAQ, is not to tax settlements under forward contracts where settlement takes place by way of net settlement of differential of the forward rate over the prevailing market rate on the settlement date. Therefore, we feel that if the executive instruction interprets legal provisions in a manner which provides relief to a taxpayer and publishes these on its website, such relief should flow to the taxpayer. The purchase contracts entered between the applicant and the other contracting party where settlement is made without supply of goods, the activity would be covered under the term securities and therefore would not entail tax - However, in sales contracts entered between the applicant and the other contracting party, where settlement is made without supply of goods on the above terms in as far as the applicant considers a discretionary price other than the market price of cotton on the day of settlement, these would not be covered under the term securities and would therefore become subject to section 9 and section 7 of the CGST Act, 2017. In the present case, there is clearly an agreement between the contracting parties to refrain from bringing in arbitration, which is also built in the contract, if the contract is settled by payment of agreed amount of monies. Therefore, this activity can clearly be considered as supply of service by agreeing to the obligation to refrain from an act , and would therefore by subject to applicable tax - The present activity is also a toleration of the act of not providing the other party to the contract, the agreed quantity of goods at agreed prices at the agreed date, on payment of agreed amount of monies to settle the contract. Therefore, this would be liable for consideration as supply of service by way of agreeing to the obligation to tolerate an act or a situation. The activity of closure of the sale contract of cotton by either of the contracting parties by way of settlement considering a price different from the market price of cotton on the day of settlement would be a supply of service under each of the three limbs i.e. agreeing to the obligation to refrain from an act, agreeing to the obligation to tolerate an act or a situation, or agreeing to the obligation to do an act, mentioned in para 5(e) of Schedule Il to Section 7 of the CGST Act, 2017. Ruling:- In forward contracts in cotton sales, being settled by M/s. Louis Dreyfus Company India Pvt. Ltd. with the other party to the contract by way of payment of the differential of forward rate and prevailing market rate on the settlement date, the same would be falling within the purview of securities as defined in Section 2(101) of the CGST Act, 2017and would therefore not be chargeable to GST. In forward contracts in cotton sales: being settled by M/s. Louis Dreyfus Company India Pvt. Ltd. with the other party to the contract by way of payment of the differential of forward rate and rate fixed by the applicant using his discretion, such rate being different than the market price of cotton on the date of settlement, the same would not be falling within the purview of securities as defined in Section 2(101) of the CGST Act, 2017 and would therefore be chargeable to GST. In the forward contracts in cotton purchase being settled by M/s. Louis Dreyfus Company India Pvt. Ltd. with the other party to the contract by way of payment of the differential of forward rate and prevailing market rate on the settlement date, the same would be falling within the purview of securities as defined in Section 2(101) of the CGST Act, 2017 and would therefore not be chargeable to GST.

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• 2018 (10) TMI 1144
  Rate of GST - supply of solar power generating system and its installation at the site - Classification of supply - EPC Contract - Composite supply - works contract services - What is the applicable GST Rate on supply of Solar Power Generating System? Held that:- The applicant in his Advance Ruling Application and later in additional statement has stated that they are engaged in supply of solar power generating system and its installation at the site which involves simultaneous supply of goods and services under a single contract.. As per submissions made by them the nature of work undertaken by them can be best categorized as Composite turnkey EPC contract. All arguments and submission put forth by applicant categorically classify the nature of work to be supply of solar power generating system and its installation at the site. It is not clear whether the applicants wants clarification of GST rate applicable on supply of Solar Power Generating System under a supply contract or wants clarification of GST rate applicable on execution of contract of supply of solar power generating system along with its installation at the site - In case, if the clarification is sought for Applicable GST Rate on supply of Solar Power Generating System. then the goods should be supplied under a single Supply Contract subject to condition of eligibility of them being devices and parts of solar generating system and only then it would be covered under Entry 234 under notification No 01/2017-CT (Rate) dated 28.06.2017 and would attract 5% rate of tax . The scope of work in instant case is of supply of solar power generating system and its installation at the site which involves simultaneous supply of goods and services under a single contract where Applicant has to inter alia, design, engineer, procure, transport, deliver, develop, erect, install, test , commission and at times maintain service the project after installation. Hence Applicant intends to undertake an EPC contract and not a Supply Contract . The installation of the Solar Power generating system has a permanent location as it is meant for onward sale of power to the consumer. Contract between an EPC contractor and the counter-party is entered into on the premise that the plant would continue to be situated at the place of construction. Such plant would therefore have an inherent element of permanency. The output of the project i.e. Electricity would be available to an identifiable segment of consumer. Thus this output supply would involve an element of permanency for which it would not be possible and prudent to shift base from time to time or locate the plant elsewhere at frequent intervals. The Solar generating system cannot be shifted to any other place without dismantling the same. Further it is a tailor made system as per technical specification which cannot be sold as it is to the other person. Installation of solar power generating system necessarily includes civil work such as development of site, structure foundation, building cable trenches, civil work relating to invertors and control buildings, store rooms , canopies and such other civil structure and related activities as set out in Scope of work and the Technical Specifications. Civil structure cannot be dismantled and moved. Instant case is a single composite turnkey EPC contract of design, engineer, procure, transport, deliver, develop, erect, install, test and commission of project. Contracts of this kind are entered on premise to procure a functional solar power generating system as per specification of the owner for which there is a single lump sum price for the entire contract. Hence on demand of contractor to avoid the legitimate tax the said composite EPC contract cannot be split in two separate contracts, one for supply of goods and another that of services and taxed accordingly. The impugned transaction for EPC Contract for the Solar Power generating system which includes engineering, design, procurement, supply, development, testing and commissioning is a works contract in terms of clause (119) of section 2 of the GST Act - Since the impugned transaction for EPC Contract for the Solar Power generating system is a works contract under section 2(119) as supply of services hence question of principal supply does not arise and so GST tax rate of Solar power Generating System under notification No 01/2017-CT (Rate) dated 28.06.2017, at S. No. 234, under HSN Classification 84, 85 and 94 is not applicable. Ruling:- The nature of work is of Erection, Procurement and Commissioning of Solar Generating System which falls under the ambit Works Contract Services (SAC 9954) of Notification no. 11/2017 Central Tax (Rate) dated 28 June, 2017 and shall attract 18% rate of tax under IGST Act, or 9% each under the CGST and SGST Acts, aggregating to 18%.

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• 2018 (10) TMI 1143
  Levy of GST - services of Pollution Testing of Commercial and Non Commercial Vehicles - Whether the service provided for issuing Pollution Under Control Certificate for Vehicles on behalf of State Government is exempted from the GST or not? Held that:- The services rendered by the applicant is not covered under Schedule III appended to the Central Goods and Service Tax Act, 2017 as well as Goa Goods and Service Tax Act, 2017. Moreover, the applicant claims that the services rendered by him are covered under SAC 9991. The Services provided by the applicant is also not fully covered under SAC 9991 - The Government has authorised the applicant to issue Pollution Control Certificate on payments. It is the service provided by the applicant to the customers on payment of service charges. Since the services of testing of Pollution are provided on payment of service charge, GST is payable at applicable rate. Ruling:- The Activity of issuance of Pollution Under Control Certificate for vehicles issued by the applicant is not covered under SAC 9991 and is covered under Residual Entry and hence, should be taxed @ 18% GST.

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• 2018 (10) TMI 1142
  Liability of tax - sale of villas after completion and obtaining necessary approvals from the competent authority - Held that:- The applicant has failed to produce supporting documents to prove that he has borrowed money from Mr. Zubin Dubash and the amount received by the applicant is accounted in the books of accounts of the applicant as loan and advances. In absence of the supporting documents the amount received by the applicant has been considered as advances received towards sale of villa. The applicant has received advance towards sale of villa prior to issuance of completion certificate. Hence, the same is taxable under GST Act @ 12%. Ruling:- The advance amount received for sale of villa on or after the appointed day prior to issuance of occupancy certificate by the local panchayat is considered as construction services and GST is applicable on two third of the total amount charged for such supply.

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• 2018 (10) TMI 1141
  Levy of GST - cold storage for storing of agriculture produce out of cultivation of plants and poultry eggs which are produce of rearing of life animals/poultry farming. Whether charges received by the cold storage for providing service of storing of eggs, which is produce of rearing of animals/poultry farming in cold storage is exempted from payment of GST in terms of S. no. 24 of Notification No. 11/2017-CT (Rate) and S. no. 54 of Notification no. 12/2017CT (Rate) dated 28.06.2016? Held that:- Eggs are produced out of rearing of chicken (Poultry Farming) for food and as per definition of Agricultural Produce, any produce out of rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. Thus Fresh Eggs in shell on which no further processing is done are covered under definition of agricultural produce . Ruling:- The charges received by the applicant for providing service of storing of fresh eggs in shell on which no further processing is done, which are produce of rearing of animals/poultry farming, are exempted from payment of GST in terms of entry No. 24 of Notification No. 11/2017-CT (Rate) and entry S. No. 54 of Notification No. 12/2017-CT (Rate) dated 28.03.2016.

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• 2018 (10) TMI 1140
  Supply or not? - Whether the construction activity undertaken by the Company is a supply? - Held that:- The construction activity undertaken by the Company falls within the definition of the business as it includes any adventure, whether or not for a pecuniary benefit Sec 2(17) the Central and State GST Act - The reimbursement of construction cost by the Partners to the Company would fall within the definition of consideration under Sec 2(31) Central and State GST Act as it includes (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both - Hence, the construction activity is a Supply of Service as per the terms of section 7 of the Central and State GST Act. Whether in the facts and circumstances the pooling of land by way of amalgamation of the separate parcels viz Land 1 and Land2 as described in the Statement of relevant facts would constitute a supply under the Central Goods and Services Tax act, 2017 and Telangana Goods and Services Tax Act, 2017? - Held that:- On a careful reading of Section 7 it can be inferred that the said activity of amalgamation of the land do not fall under any of the sub-clauses (1) to (3) of Section 7 of the CGST Act,2017. Further, in terms of clause 1(c) of Schedule II of the GST Act, 2017 any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods. But as per Section 2(52) of the CGST Act,2017, goods includes only moveable property but land is not covered under the definition of goods . Hence pooling of land by way of as described in the Statement of relevant facts of the subject Application would not constitute a supply under the Central Goods and Services Tax act, 2017 and Telangana Goods and Services Tax Act, 2017. Whether in the facts and circumstances construction activity undertaken by the Company with respect to the share belonging to the Partners would be treated a Supply of service under the Central and State GST act? - Held that:- In terms of clause 5 (b) of Schedule II of the CGST, Act, 2017, construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier shall be treated as supply of service - the activity undertaken by M/s Gowra Venture Pvt Ltd with respect to the share belonging to the said partners (as described in the Statement of relevant facts of the subject Application) is a supply of service under the Central and State GST Act, 2017. Whether in the facts and circumstances, the recovery of construction cost by the Company from the partners would be the transaction value for purpose of Section 15 of the Central and state GST Act to be valued in accordance with Sec 15 read with Rule 30 of the Central Goods and Services Tax Rules, 2017 and Telangana Goods an Service Tax Rules, 2017(Central State GST Rules)? - Held that:- The applicant is providing service to owners 2 to 8 who are related persons and therefore the value of the construction service supplied by M/s Gowra Ventures Pvt. Ltd shall be 110% of the cost of provision of the said service. Whether in the facts and circumstance the vesting of the constructed portion upon the Partners , would independently constitute a supply besides the supply on account of recovery of construction cost as aforesaid by the Company? - Held that:- Parcels of land pertaining to the Owners 2 to 8 of the said MOU are amalgamated with the land of the assessee (Owner 1) and the title of the property of the parcels of land remained with the respective owners at any point of time. Further M/s Gowra Ventures Pvt Ltd have provided construction service on the amalgamated land for a consideration to the Owners 2 to 8. Neither any service nor any consideration has been received by owner1 for vesting of constructed portion to the partners (owners 2 to 8) and hence the same cannot be treated as an independent supply. Ruling:- The pooling of land by way of amalgamation of the separate parcels viz Land 1 and Land 2 as described in the Statement of relevant facts would not constitute a supply under the CGST/TGST Act, 2017. The activity undertaken by M/s Gowra Venture Pvt. Ltd., with respect to the share belonging to the partners (as described in the Statement of relevant facts of the subject Application) is a supply of service under the CGST/TGST Act, 2017. The applicant is providing service to owners 2 to 8 who are related persons and therefore the value of the construction service supplied by M/s Gowra Ventures Pvt. Ltd shall be 110% of the cost of provision of the said service. The vesting of the constructed portion upon the partners cannot be treated as an independent supply as neither any service nor any consideration has been received by owner1 for vesting of constructed portion to the partners (owners 2 to 8).

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• 2018 (10) TMI 1139
  Release of detained vehicle with goods - invalid e-way bill - collection of security in the form of simple bond for the value of the goods and bank guarantee equivalent to the amount of applicable tax, interest and penalty - Held that:- The defect found was that the intercepted vehicle was carrying an invalid e-way bill. The document was categorised as invalid for reason of Part-B of the bill having not been uploaded and not accompanying the goods. The learned Counsel for the appellant submits that Part-B was uploaded even before the notice and order, on 10.09.2018. The detention itself was on 09.09.2018 and the subsequent uploading of the Part-B would not efface the defect as pointed out by the Detaining Officer. The vehicle with the goods directed to be released to the appellant on furnishing a bank guarantee for tax and penalty found due and a simple bond without sureties for the value of the goods in the form as prescribed under Rule 140(1) of the CGST Rules - petition disposed off.

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• 2018 (10) TMI 1138
  Extension of period for filing GST TRAN-1 forms - the forms could not be uploaded on the portal within the time granted due to technical glitches - Held that:- Notification No.48, dated September 10, 2018 has been issued for amending the Central Goods and Services Tax Rules, 2017 giving power to the Commissioner for extension of time for submission of declaration form GST TRAN-1 upto March 31, 2019. The power can be exercised by the Commissioner on the recommendation of the Council. In case the petitioner represents to the Council, his grievance shall be redressed by the Competent Authority after affording him opportunity of hearing upto November 30, 2018 - petition disposed off.

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• 2018 (10) TMI 1137
  Detention of vehicle with goods - validity of the Ext.P2 e-way bill expired - invoice number was allegedly manipulated - Held that:- The respondent authorities are directed to release the petitioner s goods and vehicle on his furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules - petition disposed off.

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• 2018 (10) TMI 1136
  Filing of GST TRAN-1 - the respondents are directed to provisionally entertain the GST TRAN-1 and other returns of the petitioner either by way of opening the portal or manually - List the matter on 29.10.2018.

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• 2018 (10) TMI 1135
  Failure to upload FORM GST TRAN-1 within the stipulated time - system error - transitional credit - migration to GST Regime - Held that:- Central and State government would appoint nodal officers in requisite number to address the problem a taxpayer faces due to glitches, if any, in the Common Portal - the petitioner may apply to the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner s uploading FORM GST TRAN-1, without reference to the time-frame - petition disposed off.

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• 2018 (10) TMI 1134
  Failure to upload FORM GST TRAN-1 within the stipulated time - system error - transitional credit - migration to GST Regime - Held that:- Central and State government would appoint nodal officers in requisite number to address the problem a taxpayer faces due to glitches, if any, in the Common Portal - the petitioner may apply to the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner s uploading FORM GST TRAN-1, without reference to the time-frame - petition disposed off.

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• 2018 (10) TMI 1133
  Vires of Section 174(1)(i) and Section 174(2) of the Kerala State Goods and Services Tax Act, 2017 - contravention of Sections 17(b)(ii) and 19 of the Constitution Act, 2016 - Time limitation - Held that:- The issue of limitation raised in this writ petition thus stands squarely answered and in the petitioner s favor. Once a lis can be disposed of, and a grievance can be redressed, on the statutory adjudication, the other issues, especially involving constitutional validity, need not be addressed. The canon of constitutional avoidance is well established. Petition allowed on the issue of limitation.

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• Income Tax

• 2018 (10) TMI 1132
  Rectification application u/s 254(2) - mistakes were pointed out, ground -wise and appeal- wise. - estimation of income on account of on- money - Tribunal has upheld 40% of the addition - tribunal rejected the application on the ground that issues were discussed - Revenue contended that the writ petition is nothing but an attempt to postpone the payment of taxes. These taxes are admittedly due and payable. Held that:- It is difficult, if not impossible, to reconcile this conflict and contrary conclusions, if the Tribunal admits the additional grounds of appeal and indeed refers to them, then, how these grounds of appeal have been dealt with ought to be clarified in the order itself. The Tribunal is a last fact finding authority. It is obliged to consider the appeal on facts and law. The aggrieved parties before the Tribunal must get an opportunity to demonstrate that the findings of the Assessing Officer even if confirmed by the First Appellate Authority, are indeed erroneous both on facts and law. Such an opportunity ought to be extended and no technicalities should come in the way of a proper and complete adjudication of the contested issues. As the last fact finding authority, the Tribunal was, therefore, not empowered to apply the formula and which was invented by it. If there was a discretionary power to correct that mistake, which it discovered and discerned from its order and it was apparent from it, then, that should have been utilised. The order on the miscellaneous application was passed in a haphazard manner. No useful purpose will be served by now sending the matters back to the Tribunal. The matters, if sent back now, may not necessarily benefit the Revenue. It is only a conjecture and surmise or pure guess work that when sent back, the Revenue will necessarily succeed. There is no such guarantee. In the facts and circumstances peculiar to this case and because there are on- money details which were in issue, but such transactions having been flatly denied much less the quantum derived therefrom, all the additions were in the realm of guess work. They were pure conjectures and surmises. Now, sending back both the parties to the Tribunal serves the interest of none and particularly of public revenue. The sustenance is to the extent of Rs. 4,64,59,769/ . - Assessee directed to deposit a sum of Rs. 3,25,00,000/ - Decided partly in favor of assessee.

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• 2018 (10) TMI 1131
  Rectification application to recall an ex-parte order of ITAT rejected - applications were rejected for reason of they having been filed beyond the six months' period as provided under Section 254(2) - reasons for delay - Held that:- Tribunal erred insofar as treating the present applications as rectification applications. Though an application for restoration is not specifically provided; hearing of an appeal after declaring the appellant ex-parte and dismissal for reason of non-appearance of the appellant are procedural in nature and sufficient prescriptions have been made in the ITAT Rules as noticed hereinabove, for restoration and hearing the appeal on merits. In such circumstances, the applications filed ought to have been treated as one filed for setting aside the ex-parte order and the appeals ought to have been restored to be heard on merits. It is seen from the affidavit filed produced as Annexure-E, before the Tribunal that there was a Company Appeal pending before the National Company Law Appellate Tribunal (NCLAT), New Delhi for reason of disputes having arisen within the Management and between the Directors. Notice on the appeal is said to have been received by one of the Directors, who have been specifically removed as per the order of the NCLAT. The present management came into office on the basis of the NCLAT order which is dated 24.5.2017. The applications themselves are filed on 20.12.2017. The dismissal of the earlier appeals were on 19.11.2015. Though sufficient cause has been shown, we are of the opinion that the appeals can be directed to be considered by the Tribunal only on terms. We, hence, direct the appellant to pay an amount of Rs. 25,000/- (Rupees twenty five thousand only) each for the assessment years in each of the appeals before us to the Chief Minister's Distress Relief Fund within a period of one month from the date of receipt of certified copy of this judgment. On production of receipt of the same by the appellant before the Tribunal, there shall be restoration of the appeals and the same shall be considered on merits

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• 2018 (10) TMI 1130
  Disallowance of expenses u/s 40(a)(ia) - default u/s 201 - assessee in default - scope of amendment - Held that:- First proviso to Section 201 stipulates that a person who has failed to deduct tax in accordance with provisions of Section XVII-B shall not be deemed to be an assessee in default, if a certificate is furnished from an accountant in a prescribed form to the effect that resident has furnished return of Income Tax under Section 139 of the Act; has taken into account the sum received for computing income in the return of income tax and has paid tax due on the income declared by him in such return. There is mandatory requirement under Chapter XVII-B of the Act to deduct TDS under certain eventualities and in case of failure to do so, consequences have also been mentioned under Section 201. With the insertion of second proviso to Section 40(a)(ia) and first proviso to Section 201(1) of the Act, exception has been carved that subject to the fulfilment of condition as stipulated in first proviso to Section 201 of the Act, the assessee shall not be treated as assessee in default and the expenses so claimed will be allowed. This Court in Pr. Commissioner of Income Tax-2, Chandigarh Vs. Shivpal Singh Chaudhary [2018 (7) TMI 1850 - PUNJAB & HARYANA HIGH COURT] held that the second proviso to Section 40(a)(ia) and first proviso to Section 201(1) of the Act though inserted by Finance Act, 2012, would be applicable retrospectively w.e.f. 01.04.2005. Thus the matter is remanded back to the Assessing Officer to decide the issue of disallowance of expenses under Section 40(a)(ia) afresh

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• 2018 (10) TMI 1129
  Claim of deduction @100% u/s 80IC - initial assessment year - restriction on more than one initial assessment year - Held that:- The matter is no longer res integra. The issue has already been decided against the assessee in a judgment M/S ADMAC FORMULATIONS VERSUS COMMISSIONER OF INCOME TAX, PANCHKULA [2018 (10) TMI 1001 - PUNJAB AND HARYANA HIGH COURT] as referring decision in Commissioner of Income Tax vs. M/s Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT OF INDIA] dealing with the issue whether the assessee who had availed deductions at the rate of 100% for first five years on the ground that they had set up a manufacturing unit as prescribed under sub section (2) of Section 80IC of the Act can start claiming deduction at the rate of 100% again for the next five years as they had undertaken substantial expansion during the period mentioned in sub section (2) thereof. The answer was given in the negative. The matter is no longer res integra. - decided in favour of revenue.

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• 2018 (10) TMI 1128
  Claim of deduction @100% u/s 80IC - provision of refixing initial assessment year - Held that:- The issue has already been decided against the assessee in a judgment passed in M/s Admac Formulations Vs. Commissioner of Income Tax, Panchkula [2018 (10) TMI 1001 - PUNJAB AND HARYANA HIGH COURT] while dealing with the issue whether the assessee who had availed deductions at the rate of 100% for first five years on the ground that they had set up a manufacturing unit as prescribed under sub section (2) of Section 80IC of the Act can start claiming deduction at the rate of 100% again for the next five years as they had undertaken substantial expansion during the period mentioned in sub section (2) thereof. The answer was given in the negative. - Decided against assessee.

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• 2018 (10) TMI 1127
  Income from sale of shares - Short-term capital gains on sale and purchase of shares as well as speculation income from trading of shares - assessee is a housewife - Tribunal held that the short-term capital gain offered by the assessee cannot be treated as business income - Held that:- The details of the sales and purchase in shares during the year resulted in the conclusion of the Tribunal that total 73 transactions were disclosed. Only one transaction is shown in long-term capital gain category. The other transactions are sales and purchase of shares during the year itself. Out of 72 transactions showing the short-term capital gain, only in the case of ten transactions, the holding period is more than one month. In the majority of the transactions the period of holding is even less than one week. That is ranging from one day to seven days. Hence the argument was rejected that merely because ten transactions disclose holding period of more than one month that is not reflective of the transactions undertaken during the year under assessment. The trend is that the majority transactions have a feature in the holding of shares from one day to seven days. The assessee sold the shares within a period of one week from the date of purchase in more than eighty per cent. of the cases. It is this trend which resulted in the concurrent finding against the assessee. The intention of the assessee in indulging in these transactions is to earn profit at the earliest possible occasion and when there is a rise in the price. The assessee is moving as per the stock market trend. At the first available opportunity, the assessee is selling the shares. This type of activity of sale and purchase is rightly termed, not as an investment, but actuated by motive of sale and purchase so as to earn profit at the earliest occasion. In the year 2006-07, which is immediately preceding the assessment year, the assessee herself offered the profit from sale and purchase of shares as business income. Hence, the shifting stands as also the peculiar nature of the transactions resulted in the Tribunal upholding concurrent findings against the assessee.

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• 2018 (10) TMI 1126
  Benefit of Income Declaration Scheme, 2016 - contention of the appellant is that certain clauses of the Income Declaration Scheme, 2016 had not been taken into consideration by the single member bench of the HC - Held that:- The learned Single Judge has taken into consideration the entire Scheme while disposing of the writ petition as well as the review petition. The appellant was not eligible to get the benefit of the Income Declaration Scheme, 2016, since charges have been framed by the Special Judge, Anti Corruption, CBI against the appellant under Section 120-B, 420, 468 and 471 of IPC. Moreover, we would also like to clarify at this stage that Special Appeal is not maintainable against an order passed in a review petition. The filing of cases repeatedly on the same cause of action amounts to gross misuse of the process of the Court. Accordingly, there is no merit in the Appeal. The same is dismissed with cost quantified at Rs. 10,000/-.

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• 2018 (10) TMI 1125
  Validity of corrigendum order to to cure the defect / mistake - Non-compliance of the mandatory provisions of Section 144-C while passing an scrutiny assessment order u/s 143(3) - transfer pricing - procedure contemplated under Section 292B - Held that:- The window dressing which has been attempted by the Revenue would not give life to an order passed without jurisdiction. It is to be pointed out that the order of assessment, once issued under Section 143 (3), becomes final and reopening the same is impermissible. The mistake committed by the Revenue in not following the mandatory requirement of Section 144-C by passing an order under Section 143 (3) cannot be cured by the issuance of a corrigendum. In other words, the proceedings issued in the name of corrigendum trying to correct its mistakes only by introducing a Section without realising the consequences of not following the mandatory requirement u/s 144-C will not do justice to either of the parties. The necessity for the Parliament to incorporate Section 144-C is not only to safeguard the Revenue, but also the assessee and any mistake committed by any one of them, the said party is supposed to face the consequences and cannot put the hands of the clock back and start afresh.Though it is the submission of the Revenue that it is a procedural irregularity, which can be corrected through issuance of a corrigendum and no prejudice would be caused to the assessee, however, it is to be pointed out that the act committed by the Revenue is an incurable illegality, which cannot stand protected by Section 292B of the Act. If the contention of the Revenue is accepted, then it would literally render all the provisions of the Income Tax Act subservient to Section 292B. In effect, any error or omission or mistake committed by the Revenue at any stage of a proceeding cannot be sought to be cured by taking umbrage under Section 292B. Allowing such a contention would be misreading the intention of the Parliament in enacting Section 292B and Section 144-C. The question of limitation raised by the Revenue would in no way save the Revenue from the non-compliance of Section 144-C of the Act. The non-compliance of the mandatory provisions of Section 144-C of the Act, being an incurable illegality, renders the assessment order null and void. Learned single Judge has taken into account all the relevant facts and laws and has given a well considered finding and we are of the considered opinion that no interference is called for with the order passed by the learned single Judge. Appeal dismissed.

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• 2018 (10) TMI 1124
  Disallowance u/s 14A - investment was made by assessee on last day of relevant year - assessee made suo-moto disallowance on the basis of method provided in Rule 8D of IT rules - Held that:- Referring to the working of the disallowance u/s 14A we observe that an apparent mistake was pointed out by the assessee during the course of assessment proceedings itself before the Ld.A.O by way of providing the revised calculation of the disallowance u/s 14A r.w.s.8D of the IT rules. It has been consistently held in various judgments that during the course of assessment proceedings if any new claim or a revised claim by way of filing a revised computation of income or placing any material facts on record, then the Assessing Officer is duty bound to assess the correct income of the assessee on that basis. The claim of the assessee cannot be set aside merely by taking the basis that the assessee has suo-moto made disallowance in the income tax return. As perused the above working given by the assessee and are of the considered view that the same is correct and interest disallowance on the alleged investment in SBI Premier Liquid Mutual Fund should have been separately calculated at Rs. 1,05,000/- rather than making it a part of average investment because the specific details of the nexus of interest bearing funds to the investment in the alleged mutual fund are appearing on record. We therefore hold that the disallowance made u/s 14A of the Act r.w.s. 8D of IT rules should be restricted to Rs. 3,47,930/- only. In the result Ground No.1 of the assessee’s appeal is allowed. Deduction claimed to reduce the disallowance offered for tax u/s 14A - Held that:- The case of M/s. Goetze India Ltd [2006 (3) TMI 75 - SUPREME COURT] will not be applicable in the facts of the assessee because in the instant appeal the issue is not related to filing of revised return. Rather in the instant appeal the issue was related only to the correct calculation of disallowance u/s 14A of the Act. It was duly submitted by the assessee during the course of assessment proceedings but no weightage was given by the assessing authority to said calculation. Therefore Ground No.2 of the assessee is also allowed.

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• 2018 (10) TMI 1123
  Addition u/s. 50C on account of STCG - non referring the mater to DVO for determination of Fair Market Value - Held that:- Assessee having income from Salary, Short Term Capital Loss & Bank F.D. Interest etc. Assessee filed the return of income for A.Y. 2010-11 on 02.04.2011 declaring total income of Rs. 92,400/-. During the course of assessment, appellant filed all necessary documents and detailed submissions and during assessment proceeding, assessee raised an objection towards valuation of the property. But A.O. did not bother to refer matter to the DVO. In appellant proceedings CIT(A) clearly mentioned that assessee’s only objection to application of section 50C is that the Assessing Officer did not refer his case to the Valuation Officer for determination of Fair Market Value because despite the fact that appellant raised an objection before the lower authorities for referring the mater to DVO for determination of Fair Market Value but lower authorities did not bother. Therefore, stand of the revenue is not sustainable. Therefore, we set aside the order of the A.O. and remand this matter back to the Assessing Officer who will refer this matter to the file of the DVO. Thereafter will decide the matter in accordance with law. - Decided in favour of assessee for statistical purpose.

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• 2018 (10) TMI 1122
  Addition u/s 68 - unexplained capital receipt - "onus' on the assessee to prove to satisfaction of the A.O the "nature" and "source" of the credits in the books of accounts." - Admission of additional evidences by hte CIT(A) - Held that:- All the aforesaid evidences have been filed at the instance of the Ld.CIT(A) and, therefore, the said evidence is covered by Rule 46A(4) which does not require to satisfy the conditions of Rule 46A(1) of Income-tax Rules, 1962. We further notice that under the provisions of section 250(4), the CIT(A) has wide discretion to make such further enquiry, as he thinks fit or to direct the AO to make further enquiry in the light of grounds taken by the assessee. Even rule 46A(4) clarifies that nothing contained in Rule 46A(1) shall curtail the CIT(A)’s power to direct the production of any document or the examination of any witness to enable him to dispose of the appeal Definition of income as provided u/s 2(24) of the Act at the relevant time did not define as income in consideration received for issue of shares in excess of its fair market value. This came into the statute wef 01-04-2013 and thus would have no application to the share premium received by the respondent assessee in the previous year relevant to the AY prior to 2013-14. Similarly, the amendment to section 68 of the Act, by addition of Proviso was made subsequent to previous year relevant to the subject assessment year and cannot be invoked. Therefore, we are of the considered view that even under this count no addition can be made towards share premium u/s 68 of the Act, as it is on account of capital a receipt does not come within the ambit of definition of “income”. CIT(A) has rightly deleted the additions - decided in favour of assessee.

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• 2018 (10) TMI 1121
  Eligibility for deduction u/s. 80(P) denied - area of operation not confined to ‘a taluk' - amended clause 80P(4) - Impact of article "a" used therein - providing credit facilities to its members for Agricultural And allied Rural Development activities - Held that:- Explanation (b) to section 80P(4) is a defining provision employing the word ‘means’. The Hon’ble Apex Court in the case of West Bengal State Warehousing Corporation vs. Indrapuri Studio Pvt. Ltd [2010 (10) TMI 1059 - SUPREME COURT] held that when the word ‘means’ is used in a definition, it signifies strict interpretation. It is trite law that an exemption provision is to be strictly construed. Moreover, the Cardinal rule of construction is that a provision must be given its ordinary meaning. Natural and ordinary meaning of words should not ordinarily be departed from. The words “having its area of operation confined to a taluk” obtained in the Explanation (b) to sub-section (4) of Section 80P should be understood as ‘limited to’ or ‘within bounds’ of a taluk. The first letter of the English alphabet which precedes the word ‘Taluk’ is used “before nouns and noun phrases that denote a single, but unspecified, person or thing…….”. [Webster’s Dictionary] ’A’ is used to mean or denote ‘one’. A Taluk is a revenue division. Few villages constitute a taluk and few taluks constitute a District. The mischief of sub-section (4) will not fall on a primary cooperative agricultural and rural development bank provided it’s operation is limited to a taluk and the principal object of which is to provide for long term credit for agricultural and rural development activities. Since the assessee’s area of operation was not confined to a Taluk for the relevant assessment year, we hold that it was not entitled to the benefit of deduction u/s. 80P(2) As relying on assessee's own case for the immediately assessment year 2010-2011 we hold that the Income-tax authorities are justified in denying the assessee the benefit of deduction u/s 80P(2) of the I.T.Act, for the impugned year, as well. - Decided against assessee.

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• 2018 (10) TMI 1120
  Allowable busniss expenditure u/s 37(1)- payment for resuming the mining activity by Categories ‘A’ & ‘B’ companies - Held that:- The fact that the compensation is proportionate to area of illegal mining outside the leased area and that the assessee has paid the proportionate compensation for mining in the areas outside the sanctioned area allotted to it and that 10% of sum is to be transferred to SPV and the balance 10% is to be reimbursed to the respective lessees, according to us, proves that it is a payment made as ‘compensation’ for extra mining, without which the assessee could not have resumed its activities. Therefore, we are inclined to accept the contention of the assessee that it is compensatory in nature and is a ‘business expenditure’ and is allowable u/s 37(1) of the Act. Disallowance of expenditure incurred towards Corporate Social Responsibility (CSR) - Held that:- Having regard to the rival contentions and the material on record, we find that the direction of the ITAT in the earlier Assessment Years holds good for the relevant assessment years under consideration. Therefore, respectfully following the decision of the coordinate Bench on similar set of facts, we direct the A.O. to recalculate the expenses allowable under CSR after disallowing the sum of capital expenses. Accordingly, Ground No.4 is treated as allowed for statistical purposes.

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• 2018 (10) TMI 1119
  Reassessment in the case of a dissolved company even for the year in which the company was existing - reopening against not existing company - Held that:- Since, in the instant case, the Assessing Officer has issued notice u/s 148 on a non-existent company as the assessee company has been liquidated vide the order of the Hon'ble High Court dated 06.08.2009, therefore, we do not find any infirmity in the order of the CIT(A) quashing the re-assessment proceedings. We, therefore, uphold the same. The ground raised by the Revenue is, accordingly, dismissed. See VERTEX CUSTOMER MANAGEMENT INDIA PVT. LTD. VERSUS DCIT, CIRCLE- 26 (1) , NEW DELHI [2018 (7) TMI 823 - ITAT DELHI] - Decided in favour of assessee.

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• 2018 (10) TMI 1118
  Disallowance in respect of Commission and incentive made - Held that:- It is pertinent to note that the CIT(A) and the Assessing Officer has relied upon the assessment order for Assessment Year 2003-04 but failed to appreciate that in the assessee’s own sister concern in case of Bulk Explosives, this issue has been decided in favour of the assessee. In-fact, the CIT(A) has noted the said decision in paragraph 6(3) of the order but still confirmed the disallowance without giving any proper reasons. In case of BULK EXPLOSIVES C/O BHARAT EXPLOSIVES LTD. VERSUS DCIT, CIRCLE NOIDA [2013 (6) TMI 853 - ITAT DELHI] held this is a case where the assessee has proved the identity of the Commission Agents. The nature of services were stated. Tax was deducted at source and payments made through cheques. In the case of Combined Associates, the major commission agent, the genuineness of the claim has been prima facie accepted by the A.O. of Combined Associates. In our view the assessee has discharged the burden of proof that lay on it. There is no adverse material collected by the A.O. There is no allegation of illegal payments, much less evidence. The disallowance was made on mere surmises. Hence we are inclined to allow the claim of the assessee. - decided in favour of assessee.

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• 2018 (10) TMI 1117
  Penalty levied u/s 271AAA - basic requirement of the section 271AAA is not fulfilled i.e. the assessee failed to elaborate the manner in which the undisclosed income was derived - diversified views - Held that:- It is the settled position of law that when two views are possible on an issue the view which is favourable to the assessee has to be accepted in view of the decision of Hon'ble Supreme Court in the case of Vegetable Products Ltd.[1973 (1) TMI 1 - SUPREME COURT]. Since the assessee in the instant case has surrendered additional income and paid the taxes due thereon and no specific query was raised by the search party at the time of search to substantiate the manner of earning such income, therefore, following the decision of PR. COMMISSIONER OF INCOME TAX SURAT 2 VERSUS M/S SHAHLON SILK MILLS PVT LTD. [2018 (2) TMI 1287 - GUJARAT HIGH COURT] and various other decisions relied on by the CIT(A), we are of the considered opinion that the penalty u/s 271AAA is not leviable in the instant case. The order of the ld. CIT(A) is accordingly upheld and the grounds raised by the Revenue are dismissed.

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• 2018 (10) TMI 1116
  Transfer pricing - proper allocation of expenses - proof of expenses incurred leasing business with AE - Adjustment made in the transaction of purchase of home base segment - The TPO formed a belief that homebase segment was artificially showing higher operating margin of 49%, while the domestic operation was showing loss of 24.13% - Held that:- When the accounts are regularly maintained in the course of business, duly audited under the provisions of the Act, free from any qualification by the auditors, they should be taken as correct unless there are strong and sufficient reasons to indicate that they are unreliable. As mentioned elsewhere, the TPO proceeded on a false premise that the appellant has not allocated any expenses to the homebase segment, whereas, as demonstrated elsewhere, not only the appellant has allocated routine expenses, the details were also furnished before the lower authorities. No merits in the additions made in this segment. We, accordingly, set aside the findings of the DRP and direct the Assessing Officer to delete the additions made under home base segment. This substantive grievance of the assessee is allowed. Adjustment made in the transaction of provision of Market Support Services [MSS] - segment of MSS has been benchmarked by the appellant using TNMM as the most appropriate method - selection of comparable - Held that:- Companies functionally different with that of assessee as routine service provider need to be deselected from the final list. Adherence to RPT filter need to be assured. Loss incurred during the year taken as income of the assessee - Held that:- It appears that the Assessing Officer, while passing final assessment order, has considered the returned income of the assessee as loss. We, accordingly, direct the Assessing Officer to verify and treat the income as such.

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• 2018 (10) TMI 1115
  Disallowance u/s 35D - deduction on account of preliminary expenses - Held that:- The income from freight having been received by the assessee-company from its operation for the first time in the financial year 1995-96, the business had commenced in that year and the assessee was entitled for deduction on account of preliminary expenses to the extent of 1/10th in each of the ten successive years. It is, however, observed that the similar claim made by the assessee of having commenced the business of transportation in the financial year 1995-96 was rejected by the Assessing Officer on the ground that there was no evidence produced by the assessee to support and substantiate the same. CIT(Appeals), on the other hand, confirmed the said disallowance made by the Assessing Officer by referring to Clause (ii) of sub-section (1) of section 35D, whereas the claim of the assessee, as submitted by the ld. Counsel for the assessee, is made as per Clause (i) of sub-section (1) of section 35D. Restore this issue to the file of the Assessing Officer for deciding the same in accordance with Clause (i) of sub-section (1) of section 35D after verifying the claim of the assessee of having commenced the business of transportation in the financial year 1995-96. Disallowance of assessee’s claim for set off of speculation loss against the profit earned by the assessee from delivery based transactions - Held that:- The gross total income of the assessee would not consist mainly of income, which is chargeable under the head “capital gains” as its business income could be more than income from capital gains and the profit from the purchase and sale of shares could be deemed to be a speculation profit as per Explanation to section 73. Consequently the assessee would be entitled to set off this speculation loss from the said profit as per section 73 as rightly claimed by it. Therefore, allow the claim of the assessee for such set off and allow assessee's appeal Disallowance u/s 14A r.w.r. 8D - sufficiency of own funds - Held that:- As clearly evident from the relevant balance-sheet of the assessee-company showing that sufficient own funds were available with the assessee-company to make the investment in shares at the relevant time, find merit in the contention of the ld. Counsel for the assessee that the disallowance on account of interest under section 14A as made by the Assessing Officer by applying Rule 8D and confirmed by the ld. CIT(Appeals) is not warranted. The disallowance under section 14A read with Rule 8D thus works out to Rs. 4,03,050/- as against Rs. 15,23,813/- worked out by the Assessing Officer. I accordingly direct the Assessing Officer to re-compute the disallowance to be made under section 14A read with Rule 8D and allow partly the appeal of the assessee for A.Y. 2010-11.

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• 2018 (10) TMI 1114
  Scrutiny assessment - Non issuing notice u/s. 143(2) upon the assessee company - validity of assessment u/s 144 - ITO's jurisdiction to assess the corporate entity like the assessee company - transfer of the jurisdiction as contemplated u/s. 127 of the Act to ITO, Wd-6(1), Kolkata - Held that:- No notice u/s. 143(2) was issued by ITO, Wd-6(1), Kolkata before completing the assessment. We note that ITO, Wd-34(2), Kolkata did not enjoy the jurisdiction over the assessee company by virtue of both the earlier Notification No. 228/2001 dated 31.07.2001(CBDT) as well as the latest Notification No. 50/2014 dated 22.10.2014 of CBDT. Therefore, the assessment completed by ITO, Wd- 6(1), Kolkata on the strength of the notice issued u/s. 143(2) of the Act by ITO, Wd-34(2), Kolkata (who did not enjoy jurisdiction) is non-est in law and, therefore, is bad in law and consequently null in the eyes of law. Moreover, we also take note that Pr. CIT/CIT-12, Kolkata under whom ITO, Ward-34(2), Kolkata functioned has not issued any order of transfer of the jurisdiction as contemplated u/s. 127 of the Act to ITO, Wd-6(1), Kolkata. In the light of the above as well as the contention of the assessee that no opportunity of hearing was rendered to it by ITO, Wd-6(1), Kolkata before framing assessment u/s. 144 of the Act which omission on the part of AO also is against principles of natural justice and the impugned assessment u/s 144 of the Act is fragile for non-adherence of principles of natural justice on the part of AO. - Decided in favour of assessee.

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• 2018 (10) TMI 1113
  Disallowance u/s 14A - no expenditure incurred towards exempted income - Held that:- It is settled law that the dissatisfaction as to the claim of the assessee of the amount incurred towards exempted income or no expenditure incurred towards exempted income, is prerequisite for invoking provisions of section 14A(2) read with rule 8D of the Rules. We find that the Ld. CIT(A) in para 4.3.1 of the impugned order has recorded that AO has not given the finding that he was not satisfied with assessee’s claim of no expenditure incurred on the investment activity. The recording of dissatisfaction whether expressly or impliedly, is a requirement of law for making disallowance by the Assessing Officer and the Ld. CIT(A) cannot substitute the said dissatisfaction, which the Assessing Officer is required to record. Though on the merit, the Ld. CIT(A) has correctly recomputed the disallowance by way of segregating the interest expenditure directly related to investment for earning exempt income and interest which could not be directly attributable to any particular income, but once he himself has held that mechanical applying of Rule 8D by the AO is not tenable in view of the judicial pronouncement relied upon by the Ld. AR, he cannot proceed to recompute the disallowance. As per the records available before us, the Revenue has not filed any appeal challenging the finding of the Ld. CIT(A) that Assessing Officer has not given any finding as to dissatisfaction on the claim of the assessee of no expenditure incurred towards investment activity. Thus the action of Ld. CIT(A) in proceeding on merit to re-compute the disallowance under section 14A read with Rule 8D, is not justified and we accordingly reject it. - Decided in favour of assessee. Disallowance u/s 36(1)(iii) - assessee raised loan funds at high rate of interest but transferred to a sister concern or group concern at lower rate of interest or no interest without any business purpose - Held that:- In the instant case, the assessee has failed to substantiate that the funds extended to sister concern were for the purpose of the business. In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any infirmity in the same, accordingly we uphold the disallowance and enhancement by the Ld. CIT(A) - decided against assessee.

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• 2018 (10) TMI 1112
  Transfer pricing - determination of ALP - comparable selection - selection of MAM - application of CUP method as against TNMM - R&D activities and and providing related engineering and technical support and services - determining the arm's length price ('ALP') of the Appellant's international transactions pertaining to payment of management cost contributions (after allowing network administration costs) to its Associated Enterprise (AE) - TP documentation - Held that:- the rise in profit is definitely not a relevant factor and hence not determinative of the issue - a business decision, may at times turn out bad and unprofitable for various reasons as necessarily all business decisions cannot always meet with success. Accordingly, the question whether the decision was commercially sound or not was consequently held to be not relevant for deciding the issue. Referring to views followed in 2009-10 and 2012-13 AYs the issues are remanded back to the file of the TPO directing that qua the claim of management cost, the TPO shall, considering the past history to decide the issues in terms of the directions first determining the nature of transaction whether the payment made in terms of the Cost Contributing Agreement were cost sharing arrangement or in the nature of intra-group services and thereafter determine the issue of selection of most appropriate method which the Co-ordinate Bench has directed to first apply CUP using some comparable instances following Rule 10B(1)(a)(i) and in the eventuality the TPO comes to the conclusion that the relevant data is not available, he is free to select any appropriate method for fresh determination of ALP after hearing the assessee. Similarly, qua the R&D expenses etc. the Co-ordinate Bench remanded the issue back. The appeal of the assessee is allowed for statistical purposes.

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• 2018 (10) TMI 1111
  Addition on account of interest earned in surplus funds parked with banks - treating it as income from other sources OR to be treated as capital receipt and reduced from the cost of per-operative expenses accordingly - Held that:- Since the assessee in instant case is not free to use the funds for any purpose except TCB project and since there is no allegation that any part of fund has been used for any other purposes and since no addition was made by the Assessing Officer on this account in assessment year 2009-10, therefore, we find no infirmity in the order of the ld. CIT(A) in deleting the addition made by the Assessing Officer by treating such interest income from fixed deposits as capital receipt which would go to reduce the pre-operative expenditure. We, therefore, uphold the same and the ground raised by the Revenue is dismissed.

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• 2018 (10) TMI 1110
  Profit earned on sale of agricultural land - Taxing the gain arising on transfer of agricultural land as claimed as exempt - lower authorities for treating profit on sale of plot of land as business income - Held that:- From the record we found that six plots of agriculture land was bought by the assessee with eight other persons. These plots of land were held for lease by owner and thereafter sold and profit accruing there on was claimed as exempt being income from sale of agricultural land. After analyzing the factual position, the lower authorities reached to the conclusion that intention of the assessee was to earn profit rather than investing in the agricultural land to be used for agricultural purposes. Assessee was not at all interested in carrying out any agricultural activity. If it all in case that intention of assessee was to embark on a venture in the nature of trade as distinguished from a capital investment. CIT(A) has discussed the various judicial pronouncements and also the criteria laid down in case of Mahaveer Enterprises [1997 (4) TMI 21 - RAJASTHAN HIGH COURT] to the facts of the instant case and reached to the conclusion that assessee alongwith 8 other persons entered into transaction for sale and purchase of land. Intention was not to carry out any agricultural activity as because sale was carried out barely within few months of the acquisition. CIT(A) also observed that area of land located is being developed for the purpose of Holiday Homes, Farm houses located near to Karjat. The detailed findings so recorded by lower authorities by applying various judicial pronouncements have not been controverted by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of lower authorities for treating profit on sale of plot of land as business income. - decided against assessee.

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• 2018 (10) TMI 1109
  Deduction u/s 10AA - whether or not trading activity as carried out by the assessee during impugned AY would constitute service in terms of Section 10AA so as to enable him to claim deduction under the said Section? - Held that:- In M/S GITANJALI EXPORTS CORPORATION LIMITED VERSUS ADCIT-5 (1) , MUMBAI AND VICE-VERSA [2013 (5) TMI 922 - ITAT MUMBAI] Tribunal has taken a consistent view that keeping in view the over-riding effect of the provisions of Section 51 of the SEZ Act, 2005, the term service for the purpose of Section 10AA, deriving its meaning from Rule 76 of the SEZ Rules 2006 includes trading activities if it relates to the import of the goods for the purposes of re-export. Nothing on record suggest that the above decisions have been reversed subsequently by any higher judicial authorities. Further, the revenue is unable to bring on record any contrary decisions. Therefore, respectfully following binding judicial pronouncements, we find no infirmity in the impugned order. Having held so, in principal while agreeing with the claim of the assessee u/s 10AA, we deem it fit to restore the matter back to the file of Ld. AO to examine and verify the financial results reflected by the assessee in Deepak Gems (SEZ) since the same was not delved into by Ld. AO on account of the fact that the assessee was not eligible to claim the deduction u/s 10AA. The Ld. AO is directed to verify the financial results of the assessee reflected in the aforesaid unit and if found satisfactory, grant deduction thereof as per assessee’s claim.

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• 2018 (10) TMI 1108
  Disallowance of the depreciation on data acquisition and incidental services, general and administration expenses and head office expenses - DRP declined to interfere with the action of the AO on the ground that similar disallowance was made by the AO in respect of AY 2007-08, 2008-09 and 2-009-10 and was upheld by the learned DRP and, therefore, rule of consistency demands that the said view - Held that:- In assessee s own case for the AYs 2009- 10, we find that in all the appeals relating to the AY 2007-08 to 2009-10, the assessee alleged that the learned DRP did not dispose of the assessee s objections by way of a detailed and speaking order. So also for this year also Ld. DRP recorded that because a view was taken for the earlier years by the DRP, the same course is followed and no discussion is made in the impugned order - remit the matter to the DRP for passing a speaking and reasoned order on the various objections taken by the assessee on disallowances made by the AO. Inclusion of service tax amount in respect of the M/s HOEC contract - denial of applicability of provisions of Section 44BB of the Act in respect of revenue earned by the assessee in terms of the agreement with the M/s HOEC - Held that:- For the purpose of computing the presumptive income of the assessee for the purpose of Section 44BB of the Act, the service tax collected by the assessee on the amount paid to it for rendering services is not to be included u/s 44BB(2) of the Act. Since the service tax is not an amount paid or payable or received or deemed to have been received by the assessee for the services rendered by it and the assessee is only collecting the service charge for passing it on to the Government. In view of the binding precedent while respectfully following the same, we allow Ground No.5 and direct the learned AO to delete the addition. Denial of applicability of provisions of Section 44BB in respect of revenue earned by the assessee in terms of the agreement with the M/s HOEC - AO determined the income as fee for technical services u/s 9(1)(vii) of the Act read with Section 44BA of the Act and estimated the profit at 25% of the gross receipts in respect of the above contract - Held that:- Services are intrinsically related to the exploration etc. of the mineral oils and covered by Section 44BB of the Act. We are, therefore, of the considered opinion that the finding of the learned CIT(A) is perfectly correct and does not warrant any interference. We, therefore, do not find any substance in the grounds of appeal of the revenue and dismiss the same. - Decided in favour of assessee.

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• 2018 (10) TMI 1107
  Business expenditure and claim of depreciation - disallowance on the ground that assessee has not carried out business activities. - CIT(A) also rejected the assessee’s alternate claim that the expenses were allowable U/s 57(iii) - Assessee submitted that the Ld. CIT(A) had decided the identical issues regarding allowability of business expenses and regarding allowability of depreciation in favour of the assessee for Assessment Year 2013-14; which was accepted by Revenue and no appeal was filed by Revenue. The Ld. Counsel for Assessee further submitted that in Assessment Year 2014-15, the Assessing Officer himself allowed the business expenses as well as depreciation on the aforesaid issues. It was further submitted by the Ld. Counsel for Assessee that the disputed issues in the present appeal before us, in ITAT, are squarely covered in favour of the assessee by virtue of order of ITAT, Delhi Benches, Delhi in assessee’s own case. Held that:- following the decision in the earlier case which is accepted by the revenue, decided in favor of assessee.

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• 2018 (10) TMI 1106
  Disallowing bank guarantee expenses u/s 37(1) - CIT-A treating the same as capital in nature - Held that:- We note that the authorities below erred in not allowing the deduction of the commission expenses either as revenue or in the form of depreciation. The expenditure is treated as capital in nature if there arises some fixed assets out of such expenditure but it is not so in the case before us. Once, the assessee has incurred any expense in connection with its business then he has liable for deduction either in the form of revenue expenses, preliminary expenses or depreciation. As we note that no benefit has arisen to the assessee out of such expenses which is enduring in nature. Therefore we are inclined not to treat such expenses as capital in nature. The bank guarantee was furnished by the assessee for satisfactory performance of the work assigned to it. Therefore, in our considered view, it is directly linked with the trading/revenue activities of the assessee. Therefore we are of the view that such expenditure should be treated as revenue in nature. In holding so, we find support and guidance in the case of Neo structo construction Ltd. [2013 (7) TMI 851 - GUJARAT HIGH COURT], thus we note that if performance guarantee has forfeited by the concern party then the same is allowable as deduction to the assessee. - decided in favour of assessee.

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• 2018 (10) TMI 1105
  Deduction u/s 10B - Treating the interest income from GEB as "Business Income" OR "Income from other sources" - Held that:- Refering to the case of CIT AND DCIT, BANGALORE VERSUS M/S MOTOROLA INDIA ELECTRONICS PVT LTD [2014 (1) TMI 1235 - KARNATAKA HIGH COURT] the provisions of section 10B(4) of the Act mandates to claim the deduction for the profit of the business of the undertaking registered as 100% EOU. Therefore, the profit earned in the form of interest income by the assessee from such eligible unit in the course of the business is eligible for deduction u/s 10B of the Act. Therefore, we find no infirmity in the order of ld CIT(A). Hence, the ground of appeal of the Revenue is dismissed. e Reducing the amount of freight and insurance from the export turnover / total turnover for working out the deduction u/s 10B - Held that:- Amount of freight and insurance needs to be excluded from the export turnover as well as from the total turnover while calculating the amount eligible for deduction u/s 10B of the Act. Hence, we find no infirmity in the order of ld CIT(A). The ground of appeal of the Revenue is dismissed. Calculating the amount eligible for deduction u/s 10B of the act without reducing the interest on capital and remuneration to partners - Held that:- As relying on ALIDHRA TEXSPIN ENGINEERS VERSUS THE ACIT, VAPI CIRCLE, VAPI [2016 (5) TMI 202 - ITAT AHMEDABAD] we hold that the assessee was very much eligible to work out the quantum of deduction u/s 10B of the Act without reducing the amount of interest on capital and remuneration to the partners. Hence, we do not find any infirmity in the order of ld CIT(A). Thus, the ground of appeal of the Revenue is dismissed.

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• 2018 (10) TMI 1104
  Addition made u/s 56(2)(vii)(b)(ii) on account of purchase of immovable property - transfer of capital assets - date of the agreement with regard to the sale of the property - bogus transaction - Held that:- The term transfer U/s 2(47)(v) read with Section 53A of the Transfer of Property Act includes if a right in the property is transferred by one person to another person thereby the said right get extinguished from transferor and vested with the transferee by virtue of an agreement to sell then to that extent it amounts to transfer of capital assets. Even otherwise the deficiency of registration in the agreement was subsequently made up as the sale deed was executed and registered and therefore, the transaction of transfer would take effect from the date of agreement which was subsequently culminated into the sale deed. Accordingly when the agreement to sell dated 28/3/2013 has not been held to be bogus then the transaction would be treated to have been completed on 28/3/2013 and consequently the same would not fall in the year under consideration. Once the transaction of purchase of property in question is completed in the preceding year then the provisions of Section 56(2)(vii)(b) of the Act cannot be invoked on such transaction. - Decided in favour of assessee.

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• 2018 (10) TMI 1103
  Disallowance of expense of insurance policy - as contended that it is the consistent policy of the assessee to claim the insurance premium in the year of incurrence and this is not the first year of operation of the assessee - Held that:- Where the factum of insurance premium being actually paid and the incurrence of expenditure for the purposes of business has not been disputed by the Revenue and the assessee has been consistently claiming the same in the year of incurrence and/or has been allowed by the Revenue in the past, and given by the nature of expenditure of insurance premium in the overall context of the business of the assessee being in the business of dairy marketing, which undisputedly is not going to distort the determination of true profit/loss, such consistent claim of expenditure should not be disturbed. Where this is the first year of claim of such an expenditure and in which case, the principle of consistency will not apply and infact, the stand taken for the year will set the precedent for the subsequent years. We therefore, set aside the matter to the file of the Assessing Officer for the limited purpose of verifying as to whether the assessee have been claiming similar expenditure towards insurance premium in the past in the year of incurrence and where the same is found to be correct, the AO is directed to allow the same following the principle of consistency. - Decided in favour of assessee for statistical purposes. Addition of maintenance expenses is purely an adhoc disallowance which cannot be sustained in the eyes of law and the same is hereby deleted and the ground so raised by the assessee is allowed.

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• 2018 (10) TMI 1102
  Denying the claim of set off of loss of share business allegedly in view of Explanation to section – 73 - Held that:- Following decision of the co-ordinate bench in assessee’s own case for AY 2008-09 [2017 (2) TMI 723 - ITAT DELHI] which is squarely applicable to the issue in controversy, loss suffered by assessee on derivative transaction is not speculative loss and as such eligible to be adjusted against business income and Explanation 73 of the Income Tax Act is not attracted. So the addition made by AO and affirmed by Ld. CIT(A) is ordered to be deleted. Consequently present appeal is allowed in favour of assessee.

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• 2018 (10) TMI 1101
  Reopening of assessment - Reasonable and sufficient opportunity of being heard not provided by the CIT(A) - notice issued on wrong address - Held that:- In the present case, it is noticed that the AO issued notices u/s 148 and 142(1) at the address D-60, Noida Authority, Sector-108, Noida. However, the assessment was framed by mentioning the address of the assessee as P-3, Shop No. LGF 20, Krishna Apra Plaza, Sector-18, Noida, therefore, there is force in the submission of the assessee that the notices u/s 148 and 142(1) were issued at a wrong address i.e. the plot which was claimed to be not constructed at that time and the CIT(A) has also passed the impugned order without bringing any material on record that the notice for hearing was served upon the assessee. It is well settled that nobody should be condemned unheard as per the maxim “audi alteram partem”. Therefore, by keeping in view the principles of natural justice, deem it appropriate to remand this case back to the file of the AO to be adjudicated 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 1100
  Exemption u/s 54F - short term capital gain from sale of depreciable assets u/s 50 - sale of factory shed - failure to deposit the net consideration in the capital gain account scheme within the time specified under section 139(1) - Held that:- As relying on case of DY COMMISSIONER OF INCOME TAX VERSUS HIMALAYA MACHINERY (P) LTD. [2012 (12) TMI 607 - GUJARAT HIGH COURT] the capital gain income earned by the assessee on the sale of depreciable assets being factory shed is eligible for exemption u/s 54F of the Act as it is long term capital assets as per the provision of Section 2(42A) of the Act. Thus, we have no hesitation in deleting the addition made by the AO by disallowing the exemption available to the assessee. Similarly, we also note that there is no dispute the net consideration was utilized by the assessee before filing the income tax return within the due date as specified under section 139(4) of the Act. Therefore, in our considered view the assessee is eligible for exemption under section 54F of the Act, though he failed to deposit the net consideration in the capital gain account scheme within the time specified under section 139(1) of the Act. See ASHOK KAPASIAWALA VERSUS THE ITO WARD-7 (1) , SURAT [2015 (10) TMI 2045 - ITAT AHMEDABAD] - decided in favour of assessee

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• 2018 (10) TMI 1099
  Disallowance of exemption u/s. 10B - specified conditions were not fulfilled - approval of STPI units of the assessee was not ratified by the Board of approvals as mandated u/s 10B - CIT(A) reversed the order of AO by observing that the approval from STPI is sufficient enough to meet the requirements as specified u/s 10B - Held that:- We note that in the case of Cat Lab Pvt. Ltd.[2014 (2) TMI 1247 - ITAT PUNE] in the identical facts and circumstance held that there is no need to take separate approval from the BOA for claiming the deduction u/s 10B of the Act. CIT(A) in the own case of the assessee for the Asst. Year 2009-10 allowed the exemption u/s 10B of the Act after due verification. Against the order of ld CIT(A) for Asst. Year 2009-10, the Revenue has not preferred any appeal which implies that the order of the ld CIT(A) has reached to its finality. Learned DR has also not disputed the fact that the appeal was not preferred by the Revenue against the order of CIT(A) for the A.Y. 2009-10 on the issue of exemption u/s 10B of the Act. In such circumstances we are of the view that no appeal can be filed by the revenue, once, the order of ld. CIT(A) in any of the year has reached to its finality. See UNION OF INDIA AND OTHERS VERSUS KAUMUDINI NARAYAN DALAL AND ANOTHER [2000 (12) TMI 101 - SUPREME COURT] - decided against revenue.

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• 2018 (10) TMI 1098
  Disallowance of labour expenses - addition treating the same as bogus on the ground of inadequate financial capacity of the labour contractor - Held that:- On perusal of the detail filed by the assessee regarding the labour expenses it was noted that the same were claimed in the earlier years but no disallowance of whatsoever was made by the AO in any of the year. GP ratio has been accepted by the AO during the assessment proceedings. We also find that the books of accounts were duly accepted filed by the assessee during the assessment proceedings. We also note that the payment was made through banking channel after deducting the TDS on such payment. There was no defect pointed out on the above submission of the assessee. - Decided in favour of assessee. Disallowance of Diesel Expenses - Held that:- The assessee has furnished all the necessary details in support of diesel expenses and no defect of whatsoever was pointed out by any of the authority. The assessee also explained that the work was carried out at the location only after the monsoon season. The assessee also submitted that there was more work during the fag end of the previous year i.e. the month of February and March of 2010. Therefore, more diesel expenses were incurred by it. We note that the submissions made by the assessee were not doubted, disregarded by any of the authority below. Therefore, we hold that the addition was made by the AO and subsequently confirmed by the ld CIT(A) is based on surmise and conjuncture. No hesitation in reversing the order of authorities below. Hence, the ground of appeal of the assessee is allowed.

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• 2018 (10) TMI 1097
  TDS u/s 192 - provision for expenses - non deduction of tds on Employees Stock Option Plan (ESOP), leave encashment, gratuity and bonus - assessee in default u/s 201(1)/201(1A) - assessee submitted that the provisions of section 192 not required at the time of entry made in the books - Held that:- Refereeing to assessee's contention that it is not actual payment but only provisions were made for the liability to be discharged in future this fact has not been disputed by the AO that these are only provisions made on account of Leave encashment, Bonus and Gratuity expenses. Hence in view of the decision of the Hon’ble Delhi High Court in the case of CIT vs. Tej Quebecor Printing Ltd. [2006 (1) TMI 56 - DELHI HIGH COURT] when there is no actual payment of these perquisites being part of salary, then the liability to deduct tax at source under section 192 of the Act does not arise. - decided in favour of assessee.

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• 2018 (10) TMI 1096
  Disallowance of re-insurance premium paid by the assessee to the non-resident re-insurance companies under Section 40(a)(i) - when the provisions of Section 2(9) of the Insurance Act, 1938 is applicable with effect from 26.12.2014, why it is not applicable for earlier assessment years? - Held that:- This Tribunal is of the considered opinion that the provisions of Section 2(9)(c) of Insurance Act, 1938 is very much applicable to the re-insurance business, therefore, the profit of non-resident insurance company or the person in India who has standing contract with underwriters, who are members of the Lloyds, is taxable in India. Hence, the assessee has to necessarily deduct tax on the premium paid to non-resident re-insurance company for reinsurance. Even otherwise, if the assessee claims that there was no person in India, who has standing contract with underwriters who are members of the Lloyds and premium was paid directly to nonresident re-insurance company, then the transaction of the assessee is clearly in violation of provisions of Section 2(9)(c) of Insurance Act, 1938. The entire re-insurance arrangement of the assessee- company is in violation and contrary to the provisions of Section 2(9) of Insurance Act, 1938. Therefore, the entire re-insurance premium has to be disallowed under Section 37 of the Act. In this case, the Assessing Officer disallowed the reinsurance premium for non-deduction of tax. Section 2C read with Section 2(9)(c) of Insurance Act, 1938 prohibits any person from doing insurance or re-insurance business in India otherwise permitted under Insurance Act, 1938. Therefore, there is a clear prohibition for payment of re-insurance premium to the non-resident re-insurance companies. Hence, the disallowance has to be made under Explanation 1 to Section 37 of the Act also. Tribunal is of the considered opinion that the Assessing Officer has rightly disallowed the reinsurance premium under Section 40(a)(i) of the Act. Therefore, the CIT(Appeals) is not justified in restricting the claim of the assessee to 15% without any reason. - Decided in favour of revenue. Disallowance of provision created towards claim incurred but not reported and claim incurred but not enough reported - Held that:- This Tribunal is of the considered opinion that merely because the incident happened during the year which is the basis for making claim, that cannot be a reason for allowing the compensation payable by the assessee. The compensation payable by the assessee has to be allowed in the year in which the amount of compensation was determined. Since the compensation amount was not determined during the year under consideration, this Tribunal is of the considered opinion that the same cannot be allowed. Hence, the CIT(Appeals) is not correct in allowing the claim of the assessee. Accordingly, the order of the CIT(Appeals) is set aside and that of the Assessing Officer is restored. Deduction u/s 36(1)(viia)(c) - Held that:- The assessee-company is an insurance company and it is not a financial company, therefore, the applicability of Section 36(1)(viia)(c) of the Act ought to have been examined. The Assessing Officer had no occasion to examine the same. The CIT(Appeals) simply directed the Assessing Officer to allow the claim of the assessee on the ground that the same was not examined by the Assessing Officer. There is no discussion in the order with regard to the applicability of provisions of Section 36(1)(viia)(c) of the Act. Therefore, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. Payment of survey fees to non-residents and reimbursement of expenditure - Held that:- Admittedly, it is a reimbursement of expenditure incurred by non-resident surveyors who were engaged by the assessee to estimate / quantify the damages occurred outside the country. The entire services of surveyors were rendered outside the country, therefore, this Tribunal is of the considered opinion that the income of the surveyors is not liable for taxation in India in respect of service rendered to the assessee. Therefore, the assessee is not liable to deduct tax. As rightly submitted by the Ld. Sr. counsel for the assessee, the assessee is expected to deduct tax provided the recipient is liable for taxation on the amount received from the assessee. No reason to interfere with the order of the lower authority. MAT computation - Addition of reserve for unexpired risk while computing book profit under Section 115JB - Held that:- Since Section 115JB is not applicable to the insurance companies, this Tribunal do not find any infirmity in the order of the CIT(Appeals). Accordingly, the same is confirmed. TDS U/S 194D - assessee has paid commissions while accepting re-insurance premium from various other insurance companies in India without deduction of tds - Held that:- The responsibility of paying commission is not on the assessee. The commission was deducted by the respective insurance companies who are paying re-insurance premium to the assessee at the time of making payment. Therefore, this Tribunal is of the considered opinion that the assessee cannot be found fault for non-deducting the tax. The situation may stand otherwise in case the assessee, after receiving entire re-insurance premium, makes payment of commission. In this case, the respective insurance companies themselves act as agents and deduct the commission by themselves. Hence, the CIT(Appeals) has rightly allowed the claim of the assessee. Provision towards Employees Short Term Benefits in the computation of book profit - Held that:- the provisions made for Employees Short Term Benefit cannot be allowed as deduction. Rule 5(a) of First Schedule to the Act clearly says that the expenditure or any provision which is not admissible under the provisions of Section 30 to 43B in computing the profits and gains of a business shall be added back. In view of the specific provision in Rule 5(a) of the Act, the claim of the assessee cannot be allowed. Therefore, the CIT(Appeals) is not justified in allowing the claim. We are unable to uphold the order of the lower authority. Accordingly, the order of the CIT(Appeals) is set aside and that of the Assessing Officer is restored. Computation of MAT under Section 115JB - Held that:- It is not in dispute that the applicability of provisions of Schedule VI of the Companies Act was excluded in respect of insurance companies. Therefore, the provisions of 115JB of the Act, which enables the companies to compute the book profit, may not be applicable to the insurance companies. Therefore, this Tribunal do not find any infirmity in the order of the lower authority. Accordingly, the same is confirmed. Deduction of Securities Transaction Tax while computing the book profit - Held that:- It is not in dispute that the assessee has paid Securities Transaction Tax. It is not a provision, therefore, it need not be added back to the profit of the assessee in view of Rule 5(a) of First Schedule to the Income-tax Act. Moreover, as discussed in the earlier part of this order, the provisions of Section 115JB of the Act are not applicable to the insurance companies. In view of the above, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Disallowance of infra payment made to car dealers under Section 37(1) - genuineness of payment was not proved - Held that:- From the material available on record it appears that the assessee-company in order to propagate its insurance business, had arrangement with motor car dealers in their showroom for providing space, computer stationeries, etc. For that, the assessee appears to have made the payment. The assessee has filed copies of invoice, confirmation letters from service providers and details of premium collected by the motor vehicle dealers from the customers. There is no doubt about the genuineness of service rendered by the car dealers. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Depreciation on investments - Held that:- The CIT(Appeals) by placing reliance on the order of this Tribunal dated 18.08.2005 confirmed the disallowance made by the Assessing Officer. Right from the assessment year 1989-90 to 2004-05, similar claim of the assessee was disallowed. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Profit on sale / redemption of investment to be allowed by placing reliance on the order of his predecessor for assessment years 1996-97, 1997-98, 1998-99, 2001-02 and 2002-03, decided the issue in favour of the assessee. Contribution to Pension Fund - Held that:- This Tribunal is of the considered opinion that Superannuation Fund is nothing but a fund created by the respective employer to compensate the employees who are retiring from service on superannuation. Therefore, the nomenclature of fund is immaterial. The benefit given to an employee by the employer on superannuation has to be construed as Superannuation Fund. Therefore, this Tribunal is unable to uphold the contention of the assessee that the Pension Fund is different from Superannuation Fund. Hence, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Failure of AO give credit on the TDS amount - Held that:- Orders of both the authorities below are set aside and the issue of tax deducted at source is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter and find out whether the tax was actually deducted at source in respect of the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee. Levy of interest under Section 234B and 234C of the Act is mandatory. Therefore, the Assessing Officer shall recompute the interest while giving effect to the order of this Tribunal. Accordingly, the levy of interest under Section 234B and 234C of the Act is remitted back to the file of the Assessing Officer.

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• 2018 (10) TMI 1095
  Additions u/s 56(2)(viib) - income from other sources - receipt of share application money - amount received from one shareholder - benefit passed on to other shareholder - transactions involving family arrangement with respect to transfer of shares - lifting of corporate veil - Held that:- In the case of the assessee company also the corporate veil is required to be lifted and thereafter the transaction has to be viewed in the light of the relevant provisions of the Act. Provisions of Section 56(2)(viib) of the Act, cannot be invoked in the case of the assessee company because by virtue of cash being brought into the assessee company by Mrs. Sasikala Raghupathy for allotment of equity shares with unrealistic premium the benefit has only passed on to her daughter Mrs. Vani Raghupathy and there is no scope in the Act to tax when cash or asset is transferred by a mother to her daughter. Hence we hereby direct the Ld.AO to delete the addition made by invoking the provisions of Section 56(2)(viib) of the Act in the case of the assessee company. - Decided in favour of assessee.

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• 2018 (10) TMI 1094
  Income from sale of shares - capital gain or busniss income - period of holding - Held that:- In the instant case, the assessee has entered repeatedly in the above scrips which he had already disposed of. The same is done in a systematic and organized manner which is sine qua non of business income. In view of the above repetitive transactions of purchase and sales in the scrips of Bharati Shipyard and Sah Petro, the Ld. CIT(A) has rightly treated the amount as business income. However, we direct the AO to allow the related business expenses on the above income. The assessee is directed to file before the AO the relevant documents/evidence on the above. Needless to say, the AO would give reasonable opportunity of being heard to the assessee in this regard. - decided in favour of assessee.

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• 2018 (10) TMI 1093
  Disallowance of interest u/s 36(1)(iii) - the amount of capital work in progress and advance given for purchase of machinery - interest bearing funds attribution - Held that:- We agree with the assessee that no interest bearing funds can be attributed to have been used for the purpose of making impugned investment in capital work-in-progress and advance for purchase of machinery. The Revenue,we find, has not pointed out any nexus between the interest bearing funds of the assessee and the investment in the same and the disallowance has been made by giving a vague/ general statement that the funds have been found to have been advanced for the purchase of capital asset without specifying whether /which interest bearing funds have been so used. In the absence of the same and considering the totality of the facts and circumstances of the present case, we hold that no disallowance of interest is warranted in the present case as per the provisions of section 36(1)(iii) of the Act. The disallowance so made therefore, directed to be deleted. - Decided in favour of assessee. Disallowance of expenses u/s 14A - assessee had contended that the investment had been made out of sale of mutual funds held in the preceding year - Held that:- As demonstrated through the schedule of investment forming part of the balance sheet showing none of the old investments of Rs. 8.5 crores appearing in the investments of the current year which show new investments of Rs. 2.60 crores. Thus we find that the assessee had clearly demonstrated the attribution of the source of the investment in the mutual funds to be out of non interest bearing sources. There was no occasion at all to invoke the provisions of section 14A and made disallowance of interest under the same. The disallowance, therefore, made is directed to be deleted. - Decided in favour of assessee. Disallowance of expenses for purchase of diesel u/s 40A(3) - payment made in cash exceeding the specified limit - Held that:- in the present case the assessee has filed evidence to establish the genuineness of the expenditure and also the business expediency for making the payment in cash, by filing copies of accounts of both the parties one from whom diesel was purchased in regular course and the other in urgent situations only making payment to him in cash on demand. The Revenue has not controverted the said facts. Therefore the genuineness of the expenditure and also the business expediency for making the payment in cash stands established - no disallowance u/s 40A(3) was warranted ,merely for the reason that the assessee's situation did not fall in that listed in Rule 6DD of the Income Tax Rules,1962. - decided in favour of assessee. Disallowance of foreign travelling expenses - allowable busniss expenditure u/s 37(1) - Held that:- he fact that the travelling was undertaken by the directors of the assessee company was established by the assessee filing details and copy of account of travelling expenses. The revenue has not controverted the said fact. Further the fact that the assessee has made considerable export sales in the immediately succeeding years of Rs. 32 lacs and Rs. 1.42 crores has also remained uncontroverted. Therefore there is no reason for attributing any personal/non business usage in the said expenses when the entire travel has been undertaken by the directors of the company resulting in visible increase in sales in the succeeding year. The disallowance upheld by the CIT(A) to the extent of Rs. 87,000/- is purely adhoc without any basis - decided in favour of assessee.

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• 2018 (10) TMI 1092
  Disallowance of depreciation - whether the assessee has put the asset to use for the purpose of its business? - Held that:- It is the claim of the assessee that it has generated revenue in the impugned as well as subsequent assessment years by using the said asset. In our view, the claim of the assessee that it has generated revenue by using the asset for the purpose of its business needs to be examined and the assessee deserves an opportunity to demonstrate such fact through proper documentary evidence. In view of the aforesaid, we are inclined to restore the issue to the file of the Assessing Officer for denovo adjudication after due opportunity of being heard to the assessee. This ground is allowed for statistical purposes. Disallowance of bad debt - reasoning on which the Assessing Officer has rejected the claim of bad debt is, it is in the nature of provision - Held that:- It appears from the impugned order of the learned Commissioner (Appeals) that the assessee created the entry for reducing the bad debt from the account of the debtor on 30th September 2007 i.e., after closure of the financial year relevant to the impugned assessment year. Further, it requires verification whether the claim was allowed on actual write off. In view of the aforesaid, we restore the issue to the Assessing Officer to examine whether the assessee has passed accounting entries with regard to the provision for bad debt in terms of the ratio laid down in M/S SOUTHERN TECHNOLOGIES LTD. VERSUS JOINT COMMNR. OF INCOME TAX, COIMBATORE [2010 (1) TMI 5 - SUPREME COURT OF INDIA]. Penalty proceedings u/s 271(1)(c) - Held that:- The additions on the basis of which the penalty under section 271(1)(c) of the Act was imposed by the Assessing Officer in assessment year 2007–08 has been restored back to him for denovo adjudication while deciding assessee’s appeal. Therefore, in absence of such additions, penalty under section 271(1)(c) of the Act will have no leg to stand.

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• 2018 (10) TMI 1091
  Assessment u/s 153A - Unexplained gifts - assessee has challenged assumption of jurisdiction for framing the assessment under section 153A read with section 143(3) - Held that:- The assessee has filed regular return of income for AY 2001-02 on 02.03.2009, wherein the gift received from the above said parties of Rs. 11.23 lakhs has been disclosed in the capital account which is enclosed with the return of income. The bank balances of the saving bank account No. 5222 mentioned with the State Bank of Bikaner and Jaipur is also disclosed in the balance sheet as on 31.03.2001 and there is no incriminating material available with the assessing officer for framing this assessment under section 153A read with section 143(3) - The assessment originally made is unabated and once, there is no incriminating material found during the course of search in relation to the income added as undisclosed income, the proposition argued by the learned Counsel for the assessee relying on the decision in the case of Continental Warehouse Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT] is clearly applicable in respect of undisclosed income added by the AO despite the fact that there is no incriminating material found during the course of search - Decided against revenue. Addition on account of unexplained cash credit - Held that:- the assessee has filed regular return of income for AY 2005-06 on 01.09.2005 under section 139 of the Act and along with the return of income the assessee has disclosed this amount of Rs. 25,000/- in the balance sheet being liability in the name of Shri Gulab Adnani. Further, we also find that there is no proceeding pending before the AO on account of regular assessment and there is no incriminating material available with the assessing officer for framing this assessment under section 153A read with section 143(3) of the Act. The assessment originally made is unabated and once, there is no incriminating material found during the course of search in relation to the income added as undisclosed income, we delete the addition. Revision u/s 263 - undisclosed gift received - Held that:- We find from the assessment order and the order of PCIT revising the assessment, that there is no incriminating material found during the course of search which reveals that this gift amount is undisclosed. The assessment framed by AO is neither erroneous nor prejudicial to the interest of the Revenue and hence, the PCIT cannot assume jurisdiction under section 263 of the Act for revising the assessment. Accordingly, we quash the revision order passed by PCIT under section 263 of the Act and allow the appeal of the assessee.

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• 2018 (10) TMI 1090
  Disallowance of the deduction u/s 80IA - delay of 31 days in the filing of the return of income - deduction not allowable u/s 80IA r.w.s. 80AC, if the return of income is filed beyond the due date under section 139(1) - Held that:- The return was not filed within the time prescribed U/s 139(1) of the Act. There was clear violation of provisions of Section 80AC of the Act. The delay was of 31 days in filing the return of income We are of the view that the benefit U/s 80IA of the Act cannot be claimed without fulfilling the conditions laid down in Section 80AC of the Act. The provisions of Section 80AC of the Act are very clearly and unambiguous, therefore, there is no reason to find out whether the provisions are directory and mandatory. When the provision is clear and unambiguous then there is no scope for any authority to go beyond such unambiguous and clear provision of the law. The law clearly provides that the deduction shall not be allowed unless the return furnished on or before the due date specified under sub-section (1) of Section 139 of the Act - Decided against assessee

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• 2018 (10) TMI 1089
  Revision u/s 263 - exercise of jurisdiction by the Commissioner under section 263 - allowability of depreciation on know-how, trademarks and patents - Held that:- The issue of claim of depreciation on know-how, trademarks and patents has thus been decided by the Tribunal in favour of assessee by deliberations in the appeal relating to assessment years 2004-05 and 2005-06 vide consolidated order dated 12.12.2017. The issue thus, on merits stands decided in favour of assessee. Once the issue has been decided in favour of assessee then, on merits the order of Commissioner under section 263 of the Act cannot be upheld. Coming to the second aspect of the order of Commissioner in invoking the jurisdiction under section 263 the Tribunal has taken a view that where bifurcation of assets had taken place in assessment year 2003-04 and depreciation had been allowed on the assets i.e. tangible assets and know-how, trademarks, patents and balance value attributed to goodwill; Assessing Officer had allowed the depreciation on tangible assets and the value attributed to know-how, trademarks and patents while completing assessment for assessment year 2003-04, which cannot be disturbed. AO denied the depreciation on goodwill, which was allowed by the Tribunal vide separate order. The assets thus, entered into the block of assets and depreciation was claimed on the WDV from assessment year 2004-05 onwards. Commissioner in the year under appeal vide order passed under section 263 had held the order passed by the AO in allowing the aforesaid depreciation on know-how, trademarks and patents, as erroneous and prejudicial to the interest of Revenue. AO had allowed the depreciation on WDV of intangible assets of know-how, trademarks and patents, since the same was allowed to the assessee since the year of first claim and it had entered into the block of assets. Tribunal vide order dated 12.12.2017 in assessment years 2004-05 and 2005-06 has held that once the assets entered into block of assets, then depreciation on WDV on such assets cannot be disturbed in the subsequent orders. AO could not have tinkered with the claim of depreciation on know-how, trademarks and patents in the subsequent years and hence, the order passed by the Assessing Officer allowing the same, cannot be said to be erroneous and hence not prejudicial to the interest of Revenue. Consequently, there is no merit in the exercise of jurisdiction by the Commissioner under section 263 of the Act. Thus, we hold the order passed by the Commissioner under section 263 is both invalid and bad in law both on jurisdictional issue and even on merits - Decided in favour of assessee.

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• 2018 (10) TMI 1088
  Addition u/s 69 - Unaccounted income in the shape of long term capital gain - exemption u/s 10(38) denied - failure to prove existence of long term capital gain on sale of listed shares on recognized stock exchange - Held that:- In this case the assessee has recorded the purchase transactions of shares in the books of accounts and shown in the Balance Sheet as on 31st March, 2009. The books of accounts of the assessee were duly audited and have not been disputed by the AO. The AO has denied the claim of the assessee by relying on the report of the ITO Investigation, Indore as well as the statement of Shri Mahesh Pancholi recorded by the AO. Both the parties have advanced the arguments similar as in the case of Shri Pramod Kumar Lodha vs. ITO [2018 (8) TMI 508 - ITAT JAIPUR] as held that merely supplying of statement to the assessee at the fag end of the assessment proceedings is not sufficient to meet the requirement of giving an opportunity to cross examine the witness when the witness himself was not available at the place. Accordingly, we hold that the denial of the claim on the basis of suspicion without any cogent material to show that the assessee has brought back his own unaccounted income in the shape of long term capital gain, the said action of the AO is not sustainable. The authorities below qua this issue and delete the addition made by the AO on this account. - Decided in favour of assessee

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• 2018 (10) TMI 1087
  Reopening of assessment - non recording of reasons properly - addition u/s 68 - reopening beyond four years from the end of relevant assessment year - Held that:- In the instant case there are no enquiries which have been confronted to the assessee despite specific request and as such, there is no material which could enable the learned Assessing Officer to form an opinion that income of assessee has escaped assessment so as to allege that share capital represented accommodation entries. Infact in the case of Pratibha Finvest (P) Ltd. v. ITO [2012 (12) TMI 575 - DELHI HIGH COURT] assessee has not even requested for reasons recorded during the course of assessment proceedings; and therefore, the facts of the case of assessee are totally distinguishable. Lastly, so far as the judgment in the case of Raymond Woolen Mills Ltd. vs. ITO [1997 (12) TMI 12 - SUPREME COURT] held that correctness of material is not a thing which can be considered at the stage of assumption of jurisdiction under section 147 of the Act. There is no dispute to the aforesaid proposition and however on the facts of the case, there is no tangible material and therefore, action u/s. 148 of the Act is invalid. Thus the notice issued u/s 148 of the Act was held invalid and therefore, I confirm the action of the Ld. CIT(A) in treating the assessment order passed u/s. 147 r.w.s. 143(3) of the Act as ab-initio-void and reject the ground raised by the revenue. Even on merits, it is noted that the issue is squarely covered by order of the Tribunal in the case of ACIT vs. M/s. Kapis Impex Pvt. Ltd. [2018 (3) TMI 1607 - ITAT DELHI] - no enquiries whatsoever have been made by the Assessing Officer by deputing Inspector or directing the assessee to produce shareholders. All what has happened is that summons under section 133(6) of the Act which was complied with by one shareholder and in the other case summon stood served. The conclusion of the learned CIT(A) to delete the addition by holding that once shareholders do exist, have their own independent identity, source of income, maintain books of accounts, carry on their business and earn income from investments not only in assessee but also shares of other companies, then the inevitable conclusion is that they are not paper companies is upheld and the addition in dispute is deleted. - Decided in favour of assessee

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• Customs

• 2018 (10) TMI 1085
  Refusal to clear the cargo - the petitioner's counsel contends that even this Court has observed in Ext.P1 judgment that the authorities should subject the petitioner's Cargo to chemical analysis. But they have not done so - ex-parte order - principles of Natural Justice - Held that:- True, either party may have its own justification about the respective pleas. But the fact remains that the matter has been pending before the Tribunal. Any parallel adjudication by this Court may affect the proceedings before the Tribunal. The Tribunal-a competent one, at that will look into all these issues-either party raises. Nevertheless, as contended by the petitioner's counsel, the Ext.P3 order indeed refers to the report of chemical analysis. Whatever be its utility, it meets the ends of justice if a copy of that report is supplied to the petitioner. After all, the analysis concerns the petitioner's cargo. The respondent authorities will supply a copy of the Laboratory report as mentioned in paragraphs 16 and P17 of the Ext.P3, in three days from the date of receipt of a copy of this judgment. The validity of that report is entirely for the Tribunal to decide - petition disposed off.

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• 2018 (10) TMI 1084
  Export of Garnet produced from Beach Sand Mineral - allegation of illegal activity of mining - Direction to produce the certificate/documents to show the legitimacy of the source for Beach Sand Minerals and Natural Garnet brought to Cochin Port for export by the writ petitioner - ban on mining operation for Beach Sand Minerals imposed by the Tamil Nadu Government - authorities felt that the Beach Sand Minerals out of which Natural Garnet is produced by the petitioner, was illegally sourced and transported to Kerala for export. Held that:- While exporting, the exporter not only has to be concerned with the Customs Act but he must also adhere to other prohibitory laws like the MMDR Act, The Tamil Nadu Prevention of Illegal Mining, Transportation and Storage of Minerals and Mineral Dealers Rules, 2011 . Merely because export of a particular product is permitted freely under the Foreign Trade Policy and the Foreign Trade (Development and Regulation) Act , the export of any item in violation of other prohibitory laws, cannot be permitted by court - In any case, it is not a case of total ban on export imposed by the authorities but when the exporter is able to satisfy the legal source of the mineral to be exported, he is at liberty to export them. In fact, it is the specific case of the learned counsel for the petitioner that all the items awaiting for export have been sourced through legal operations. If that be the case, if the petitioner can satisfy the authorities about the legitimate source of the minerals, they can carry on with their export activities without any hindrance. The learned single Judge has considered all the above aspects and noted that the custom authorities have issued Exts. P2 and P3 orders in accordance with the powers conferred upon them, under the Customs Act as also the notification issued under the Foreign Trade Policy read with the Foreign Trade (Development and Regulation) Act. Therefore, the court concluded that there is no illegality in the issuance of Exts. P2 and P3 orders and the petitioner is at liberty to export his goods, as soon as he is able to satisfy the authorities on the legal source, of the exported minerals. Appeal dismissed - decided against appellant.

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• 2018 (10) TMI 1083
  Benefit of exemption at serial no. 217 in notification no. 17/2001-Cus dated 1st March 2001 - import of machinery and equipment - according to Revenue, the benefit is limited to such as are in possession of a contract awarded by the specified authorities for the specified purpose - Held that:- It is amply clear from the records that the first appellate authority had been given strict, and particular, directions on the judgments to be relied upon following which the impugned order had been issued. By no stretch of imagination can it be said at this stage that the first appellate authority detracted from the directions of the Tribunal - Having complied with the directions of the Tribunal and, having rendered a finding on the basis of such decision as enumerated to the appellate authority by the Tribunal, no flaw can be ascribed to the order. In order to enable the proper application of the binding law, the matter is remanded back to the first appellate authority, after setting aside the impugned order, for the particular purpose of deciding the dispute in the light of the decision of the Hon’ble Supreme Court in re Gammon India Ltd. [2011 (7) TMI 17 - SUPREME COURT OF INDIA ] - appeal disposed off by way of remand.

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• 2018 (10) TMI 1082
  Penalty u/s 114(i) of the Customs Act, 1962 - Smuggling - Red Sanders - prohibited item - Held that:- The learned Commissioner in para 71 of the impugned order has correctly observed that the Appellant, Shri Dinesh Panwar has not merely acted as a Customs House Agent but acted as an authorized signatory of the exporting firm - further the goods which were to be exported were prohibited goods. Therefore, in view of above, Appellant, Shri Dinesh Panwar, has violated the provisions of Section 114(i) of the Customs Act, 1962. However, in the given facts and circumstances of the case, the penalty imposed appears to be on higher side and, therefore, same is reduced from Rs. 5,00,000/- to Rs. 50,000/- - penalty upheld - quantum reduced. Penalty on Shri Abad Ahmed and Shri Saddam Ahmed - Held that:- Both Shri Abad Ahmed and Shri Saddam Ahmed have taken godown on rent, where the Red Sander Wood, which is prohibited item, were found stored - they have not done any act violating the provisions of the Customs Act - penalty not warranted. Appeal allowed in part.

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• Insolvency & Bankruptcy

• 2018 (10) TMI 1086
  Investigations against Ex-Directors of the Company - pending liquidation proceedings one of the operational creditors filed application under Section 60(5)(c) r/w Section 67 of I&B Code with prayer to seek directions on the 2nd respondent including appellants to deposit their passports with the Registry of the Tribunal during the pendency of the said application - Held that:- After the investigation if any report is filed against the Ex-Director it will always open to the Adjudicating Authority to pass appropriate order under Section 66 read with Section 67 of the I&B Code. In view of provisions aforesaid, it cannot be stated that the Adjudicating Authority is not empowered to direct the ex-Directors not to leave the country without prior permission of the Adjudicating Authority. Further any order is passed under the law it cannot be held to be violative of Article 21 of Constitution of India. Further, we find that the Adjudicating Authority has not stayed the movement of the appellants, but has only observed that if they intend to leave the country should take the permission of the Adjudicating Authority. Therefore, the order can not be held to be an order of permanent injunction on the appellants.

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• FEMA

• 2018 (10) TMI 1081
  Condination of delay as per Section 19 of FEMA - delay in filing appeal - sufficient cause for not filing it within specified period - Held that:- On receipt of the adjudication order, that notwithstanding that efforts were again made by the respondent to serve the copies in person on the appellant, but because of the appellant leaving her residence/premise without any notice could not enable the said service and the postal endorsement is a proof of the same, and that way back in 2009 and 2010, they were pasted on the last known addresses of the appellant. In spite of that the appellant failed to file any appeal, and suddenly in 2017 she filed the appeals and took the plea that she was in jail and hence the delay, while by their own admission, she was sent to jail only in February, 2017, while the impugned order are of 2008 and 2009. I do not find any cause having being given to explain the delay. Following decision in Esha Bhattacharjee case (2015 (1) TMI 1053 - SUPREME COURT), and in the facts of the case as discussed in previous paras see no reason for condoning the delay. Justice is for both the sides- the appellant and the respondent and such huge delay and thereafter attempts to cover it up would lead to denial of justice to the other side. No ground to condone the delay running into number of years in all the four appeals. The appellant has not been able to give/prove any sufficient cause to do the same.

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• Service Tax

• 2018 (10) TMI 1077
  100% EOU - Refund of CENVAT Credit - refund was rejected on the ground that availment of CENVAT Credit for the disputed period was not reflected in the ST-3 returns and the returns filed at the end of the quarter showed the available credit balance as zero - N/N. 27/2012-CE (NT) dated 18.06.2012 - Held that:- Since the appellant claimed that revised returns were filed manually and the same were available with the department for necessary verification, the matter should be remanded to the original authority for verification of ST-3 returns manually filed by the appellant and the input service invoices, based on which credit was availed by the appellant - appeal allowed by way of remand.

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• 2018 (10) TMI 1076
  Penalty - Non-payment of Service Tax - import of certain services from over-seas entities - reverse charge mechanism - Section 66A of Finance Act - Held that:- Since the appellant did not pay the service tax attributable to receipt of taxable service, the CERA audit officers have rightly pointed out such mistakes. Being a Service Tax registered assessee, the appellant was required to comply with the statutory provisions, including payment of service tax within the stipulated time frame. Penalty rightly upheld - appeal dismissed - decided against appellant.

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• 2018 (10) TMI 1075
  Penalty u/s 76 and 78 of FA - liability of tax duly discharged - Held that:- There is no dispute about the liability of Service Tax of Rs. 41,61,205/- pertaining to the period January, 2013 to March, 2013 which has been confirmed by the Commissioner in the impugned order. Also it is not in dispute that the entire amount of Service Tax along with interest of Rs. 2,13,191/- had been discharged by the respondent. The learned Commissioner recorded his findings where it is held that 'the noticee had paid their entire service tax liability in respect of the impugned SCN by 14.08.2013 i.e. before initiation of investigation by the way of an authorized visit by the officials of the DGCEI to the premises of Gufic on 25.09.2013 which has resulted in the issuance of the said SCN on 21.10.2013. Hence the allegation of intention to evade payment of Service Tax on the part of the noticee does not stick. As such I do not find this to be a fit case for imposition of penalty under Section 78 of the FA, 1994, as the proviso to Section 73 (1) does not fit into the scheme of things'. There is no reason to interfere with the observations made by the learned Commissioner, which is supported by reasons - appeal dismissed - decided against Revenue.

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• 2018 (10) TMI 1074
  CENVAT Credit - input services - outdoor catering services (canteen service) - period August, 2011 to September, 2015 - Held that:- The credit availed by the appellant on Service Tax paid on outdoor catering services during the period is not admissible - reliance placed in the case of M/S. WIPRO LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-III [2018 (4) TMI 149 - CESTAT BANGALORE] - credit not allowed. Benefit of reduced penalty - Held that:- The benefit to discharge 25% of the penalty is allowed subject to fulfillment of the conditions laid down under Section 11AC of the Central Excise Act, 1944. Appeal allowed in part.

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• 2018 (10) TMI 1073
  Demand of differential tax - difference between the figures so received from Hindalco and the value of the services reflected by the appellants in ST-3 returns - demand of service tax with interest and penalties - extended period of limitation - Held that:- The decision to reassess the service tax in respect of both the appellants for the period from April, 2005 to 31 March, 2010 is already exercised by Revenue by issue of other show cause notices in respect of consideration on account of amount of PF and Bonus. The present show cause notices are reassessment of reassessment for the same period - Such authority is not available to Revenue. Appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1072
  Construction of residential complex service - non-payment of service tax - penalty - Held that:- Undisputedly, the appellant had though rendered taxable services under the category of construction of residential complex service during the relevant period 1.7.2010 to 30.6.2012, but failed to discharge appropriate service tax in time and also failed to furnish periodical ST-3 returns indicating the amount of taxable value received against the said service. Thus the fact of rendition of taxable service as well as value of service had been suppressed from the knowledge of the department - penalty u/s 78 upheld - however, benefit of reduced penalty is to be provided. Liability of service tax of Rs. 1,33,477/- - Held that:- Even though the appellant have been claiming that the value against which the said amount of service tax demanded represents loans received from various persons, wrong entry and thereafter correction in their books of account etc. - both the authorities below have not addressed on the defence advanced by the appellant - to ascertain the correctness of the claim of the appellant, the matter needs to be remanded to the adjudicating authority. Appeal allowed in part and part matter on remand.

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• 2018 (10) TMI 1071
  Valuation - Maintenance and Repair Services to various motor vehicles - includibility - whether cost of such spare parts, lubricants etc. is required to be added in the cost of the services provided by them? - Held that:- Reference can be made to this Bench’s decision in the case of Tanya Automobiles Pvt. Ltd. v. Commissioner of Central Excise & Service Tax, Meerut-I [2016 (1) TMI 704 -CESTAT ALLAHABAD], wherein it was held by relying upon precedent decisions that the value of the parts used during the course of repair of the services would not represent the value of the services, so as to require their addition in the value of the services - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1070
  100% EOU - Refund of unutilized CENVAT Credit - CVD paid on capital goods - service tax paid on Air Travel Agent service - Rule 5 of the Cenvat Credit Rules, 2004 - denial of refund also on the ground that requirements of Rule 9 (6) of the rules not complied with. Service tax paid on Air Travel Agent service - Held that:- Rule 5 specifies the formula for claiming refund of service tax paid on the input services. On reading of the said rule, it transpires that there is no specific mention that the taxable service should conform to the requirement of Rule 2 (l) for consideration, whether such service is a input service or not and whether, such service has the nexus with the output service - Since Rule 5 of the rules is silent on these aspects, the denial of refund benefit for air travel agent service on the ground that the said service does not qualify as input service, shall not stand for judicial scrutiny - denial of refund not justified. Refund of CVD amount paid on the capital goods - Held that:- The appellant admits that it is not entitled for refund of CVD amount paid on the capital goods - the impugned order, denying the refund benefit of CVD amount cannot be interfered with. Refund benefit denied on the ground that the requirements of Rule 9 (6) of the rules have not been complied - Held that:- It is evident that there are contradictions between the findings vis-a-vis the submissions. Thus, in order to meet the ends of justice, the matter should be remanded to the original authority for a proper fact finding, whether the requirement of Rule 9 (6) of the rules have in fact been complied with by the appellant in true letter and spirit. Appeal allowed in part and part matter on remand.

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• 2018 (10) TMI 1069
  Refund of accumulated CENVAT Credit - export of services - Relevant time - Rejection of refund on the ground of time limitation - Rule 5 of CENVAT Credit Rules, 2004 read with Notification No. 27/2012-CE(NT) dated 18.6.2012 - Held that:- The issue is no more res integra and considered by the Larger Bench of this Tribunal in the case of Span Infotech Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE], where it was held that In respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis. Matter remanded to the adjudicating authority to compute the time limit - appeal allowed by way of remand.

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• 2018 (10) TMI 1068
  Liability of service tax - construction services - scope of services provided to railways - whether design, supply and erection of warehouse for exclusive use of CONCOR to store imported and export containerized cargo would fall under the scope of exclusion clause of construction work of Railways? - Held that:- The learned Commissioner (Appeals) has decided the issue in favour of the respondent on the ground that the Revenue could not establish that the construction undertaken by the respondent were not in relation to Railways - We do not find merit in the said findings of the learned Commissioner (Appeals) inasmuch as the burden to claim exemption from the levy requires to be established by the claimant that his case falls within the four corners of the exemption clause. In the present case, it is the respondent’s burden to establish before the authorities below through cogent evidence that the construction undertaken by them relates to Railways. The mater is remanded to the learned Commissioner (Appeals) who shall examine whether the construction undertaken by the respondent fall within the exception clause of the definition of ‘construction service’ as was in force during the relevant time - appeal allowed by way of remand.

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• 2018 (10) TMI 1067
  Demand of differential duty paid - disclosure of incorrect gross receipts in the returns - no evidence produced by appellant in rebutting the allegations - Held that:- The appellants were neither serious in prosecuting their case before the authorities below nor before this Tribunal by producing evidences to rebut the allegation of the department of excess receipt of the taxable value as were shown in the respective balance sheets of the financial year 2007-08 and 2008-09 in comparison to the ST-3 Returns - impugned order upheld - appeal dismissed - decided against appellant.

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• 2018 (10) TMI 1066
  CENVAT Credit - time limit for taking credit - denial of credit on the ground that such credit was not taken within the prescribed period of six months from the date of issue of invoice - Rule 4(7) of Cenvat Credit Rules, 2004 - Held that:- It is an admitted fact that the invoices were issued by the service provider to the appellant during the month of February/ March 2013 and June 2014 and that the appellant had availed Cenvat Credit in November 2014 and January 2015. Since the invoices were issued by the service providers prior to the date of amendment of Rule 4(7) of the Rules, the provisions of unamended Rule 4(7) will be applicable for consideration of the dispute. Under the rule (effective upto 31.08.2014), there were no restrictions/stipulations contained that the assessee should avail the Credit within six months from the date of invoice / payment of service tax. Such embargo brought out in the statute at later date will not snatch away the statutory right of the assessee to avail Cenvat Credit. Credit allowed - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (10) TMI 1065
  Maintainability of appeal - Jurisdiction - Whether the appeals arising under Section 130 of the Customs Act and Section 35G of the Central Excise Act from the orders of the Tribunal at Mumbai, can be presented and heard before the principal seat of the High Court, even when the impugned order of the Tribunal arises out of places which are allotted to the Benches at Nagpur and Goa? Held that:- It cannot be disputed that the Bombay High Court has jurisdiction to entertain an appeal under the Central Excise Act and the Customs Act from the orders of the Tribunal at Mumbai. The issue for consideration is only which of the benches (includes the principal bench at Mumbai) would accept and decide a statutory tax appeal - The practice of the Court as enunciated in Chapter XXIV­A read with Chapter XXXI Rules 1 to 3 of the Appellate Side Rules provide that appeal under the Customs Act and the Central Excise Act i.e. tax appeals which arise out of districts relating to which of the benches at Nagpur, Aurangabad, Goa and the principal bench have been allotted are to accept the filing of an statutory tax appeal. The presentation of these five appeals in terms of the High Court Rules has to be before the appropriate bench (includes the principal seat at Mumbai) on the basis of the district where the dispute arose. It is a settled position in law that the practice of the Court is the law of the Court. In terms of the Appellate Side Rules, the appeals have to be presented at that bench (including the principal seat) which has been allocated the place where the dispute has arisen and not the place where the appellate authority is situated. The preliminary question is answered in the negative that is in favour of the respondent Revenue and against the appellants.

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• 2018 (10) TMI 1064
  Refund/encashment of unutilized CENVAT credit account - Section 11B of the Act of 1944 - rejection of refund on the ground that statutory provisions neither provide for sanction of refund in cash nor do they permit an assessee to utilize the accumulated CENVAT credit of Education Cess and Secondary of course, to the procedure and conditions contained therein - The Act of 1944 does not contain any provision for refund of the Excise Duty or other levies payable under the Act, until and unless the same are proved to have been erroneously paid or recovered with a further proof that its burden has not been passed on to the customers. CENVAT credit lying in an assessee’s account creates an infallible and indefeasible right, which in the present case is indispensable and undeniable; however, to the extent of making payment of the corresponding cess, if any, payable on or after that date, as categorically stipulated in 1st and 2nd proviso to Rule 3 (7) (b) of the CENVAT Credit Rules, 2004. Since the CENVAT Credit Rules, the repository of rights of an assessee to avail credit of the duty or other sums paid on inputs does not entail or even envisage refund of such credit in cash and encashment cannot be claimed as a matter of course. It can also not be asserted that an assessee is entitled to or has an ingrained or vested right to claim refund of Education Cess and Secondary and Higher Secondary Education Cess or any other duty paid in accordance with the law dehors the CENVAT Credit Rules, 2004. Tribunal has committed no error of law in holding that the appellant cannot claim cash refund or encashment of the unutilized and unavailed amount of Education Cess and Secondary and Higher Secondary Education Cess, lying in its credit - appeal dismissed - decided against appellant.

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• 2018 (10) TMI 1063
  Maintainability of appeal - Section 35-G of the Central Excise Act, 1944 - Held that:- Apparently, the issue, which is fundamental, is whether Sulphuric Acid, which emerges during the manufacture of the final product, is entitled to exemption under the Notifications issued (50 of 2003 and 89 of 1995). Having regard to the judgment rendered by this Court in Commissioner of Central Excise & Service Tax Vs. M/s Tirupati LPG Industries Ltd. and connected cases, [2017 (4) TMI 695 - UTTARAKHAND HIGH COURT] we are of the view that this Appeal may not lie before this Court. The Appeal is dismissed as not maintainable.

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• 2018 (10) TMI 1062
  CENVAT Credit - fake invoices - without receipt of goods, the appellant had availed fraudulent Cenvat Credit in respect of Central Excise duty indicated in the invoices of the manufacturer/dealer - Held that:- Since under the instructions of Chemspan Marketing, the goods were consigned by the manufacturer to the appellant’s factory and detailed particulars of movement of goods were reflected in the invoices, it cannot be said that the appellant did not receive the goods and availed fraudulent Cenvat Credit - the dealer had also maintained adequate records to demonstrate receipt of excisable goods at its registered premises and thereafter, dispatch of those goods from such premises to the factory of the appellant - the receipt of duty paid goods under the cover of Central Excise invoice in the factory of the appellant cannot be questioned or doubted under such circumstances. In absence of any plausible evidence being produced by Revenue in support of claim of non-receipt of duly paid goods in the factory and availment of wrong credit by the appellant, the adjudged demand cannot be confirmed on the appellant - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1061
  Valuation - De-natured Rectified Spirit was being cleared to their other unit located at Kashipur which was further used in the manufacture of Ethylene Glycol - whether valuation to be done under Rule 8 of the Central Excise Valuation Rules, 2000? - time limitation. Held that:- Admittedly in the present case the entire demand is beyond limitation and further the entire duty being paid by the appellant was being availed as credit by their Kashipur unit. The appellants have also taken a categorical stand before Commissioner that during the relevant period in question that Kashipur unit has paid duty out of their PLA Account to the extent of Rs. 35.00 Crores and as such, the duty now being confirmed against the assessee to the extent of Rs. 4.00 Crore, they were in a position to avail the same as credit and to utilize for discharge of duty at their end on their final product. The entire situation was revenue neutral - the demand on the point of limitation would not be sustainable - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1060
  Waiver of Penalty - penalty was set aside on the ground that there was no mala fide on the part of the assessee - valuation of the goods supplied to defence as also in respect of stock transfer - whether the demand is required to be paid under Section 4 or 4A? - Held that:- As against the finding of the Appellate Authority as regards absence of any mensrea on the part of the assessee, Revenue has not advanced any evidence to rebut the same. The said finding of the Commissioner (Appeals) does not stand rebutted by the Revenue by production of any evidence - there are no reasons to interfere in the impugned order of Commissioner (Appeals) - appeal dismissed - decided against Revenue.

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• 2018 (10) TMI 1059
  SSI Exemption - clubbing of clearances - related person - close relationship between the Directors and Partners in the four companies - Inter Connected Undertakings - N/N. 8/2003-CE dated 1.03.2003 - issuance of four distinct SCNs individually to four units. Held that:- Undisputedly in the present case revenue has proceeded to issued four distinct show cause notices individually to each of the unit. In the impugned order Commissioner has also confirmed the demand against each of the unit individually - This fact of issuance of four distinct show cause notice and confirmation of the demand against unit separately is recognition of the fact that each of the unit exists as an independent unit. It is not understood how four separate demands can be made when the entire case is for clubbing the clearance of the four different entities/ units by treating the entire scheme from creation of the units as façade for evading the central excise duty. In case the four units/ entities are treated as separate units/ entities for proceeding each of them separately the entire basis for proceedings get vitiated. The entire case of revenue in the show cause notice and the impugned order is based on the fact to show that all the four units are interconnected units and hence related to each other in terms of Section 4(3)(b) of the Central Excise Act, 1944. And since they are related there clearances has been sought to be clubbed. The approach of the revenue in the entire matter reflects the poor appreciation of law. The concept of related person as have been incorporated in the Section 4 and Valuation Rules, is for the purpose of determination of the correct assessable value in cases where the goods are being cleared though the related person. The admittance of relationship between the two units for the purpose of said section goes to signify the existence of two separate entities which may have some relationship impacting the transaction value between the two. It is now settled by various judicial pronouncements that to club the clearances of the two separate entities one should be shown to be the dummy of the other. Since department has failed two discharge the said burden the clubbing of the clearances as proposed by the revenue in the present case cannot be upheld. Since there are no merits in the grounds for raising the demand against each of the unit separately, the order of Commissioner is set aside on this ground itself without going into any other arguments advanced by the appellants in appeal or during the course of hearing - appeal allowed - decided in favor of appellant.

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• 2018 (10) TMI 1058
  Clandestine removal - MS Ingots - shortages of the finished goods as also the raw materials - Held that:- Revenue in their memo of appeal have again referred to the evidences collected by them during the course of investigations and have not advanced any arguments on the detailed chart prepared by the Commissioner vide which he has compared the 116 entries with the RG-1 entries and have concluded that the same stand mentioned in the statutory records and were cleared on payment of duty. In the absence of any rebuttal to the above finding of Commissioner, there is no infirmity in the impugned order of Commissioner - appeal dismissed - decided against Revenue.

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• 2018 (10) TMI 1057
  CENVAT Credit - Waste Disposal Charges - period July 2015 to June 2016 - Held that:- This Tribunal Dow Agro Sciences India P. Ltd. [2018 (7) TMI 3 - CESTAT MUMBAI] has held that Cenvat Credit of service tax paid on Hazardous Waste Management service is admissible - credit allowed - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (10) TMI 1056
  Revocation of the reversion order issued in proceedings dated 18.12.2014 - promotion to the post of Deputy Commercial Tax Officer by fraudulent means - first respondent initiated disciplinary proceedings on the allegation that the writ petitioner has submitted a bogus Junior Grade Accountancy Certificate and placed the writ petitioner under suspension. Held that:- In view of the fact that the writ petitioner was under continuous suspension for a long duration and he had not served in the reverted post for about five years, it is not preferable to interfere with the order of reversion at this point of time. However, the charge memo issued against the writ petitioner is to be proceeded with and an enquiry in accordance with the provisions of the Discipline and Appeal Rules must be conducted. This Court is of an opinion that the writ petitioner has to submit his explanations/objections in respect of the allegations set out in the charge memo and defend his case by establishing his innocence or otherwise. Contrarily, the charge memo, at this point of time, cannot be quashed in view of the fact that the allegations raised in the charge memo are certainly serious and in relation to the submission of bogus Junior Grade Accountancy Certificate in order to secure promotion to the post of Deputy Commercial Tax Officer. The order of suspension issued against the writ petitioner was revoked, this Court is of an opinion that the writ petitioner should co-operate for the conclusion of the disciplinary proceedings and for passing final orders. The writ petitioner is directed to co-operate for the conclusion of the enquiry in all respects. In the event of non-cooperation on the part of the writ petitioner, the same shall be recorded by the Competent Authorities and if any such instances are found, then the time limit granted by this Court will not be binding on the respondents - petition disposed off.

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• Wealth tax

• 2018 (10) TMI 1055
  Net-wealth for the purpose of wealth-tax as provided in section 2(ea)(v) - inclusion of land - amendment made by the Finance Act, 2013 with regard to urban land which is basically an agriculture land, but fall within the ambit of urban municipal limit - Held that:- After the amendment, such land would not be included in the net-wealth for the purpose of wealth-tax as provided in section 2(ea)(v). DR unable to controvert this finding of fact recorded by the CIT(A). As far as urban land viz. Muthiya and land at Vastral are concerned. CIT(A) has recorded a specific finding of fact that construction has commenced. Now this is a finding of fact recorded by the ld.CIT(A) who is at a higher pedestal in the hierarchy. The ld.first Appellate Authority has observed that observation of the AO qua non-commencement of construction is factually incorrect. This finding of the fact could be reversed only if the something is brought to our notice. No material has been brought to our notice, which can show that this finding of fact is contrary to the facts. In the absence of such step, we do not see any reasons to interfere in the orders of the ld.CIT(A), hence, all the appeals of Revenue in the case of Kantibhai T. Savaliya is dismissed. As far as appeals of Shri Harshadbhai K. Savaliya, he was also owner and in possession of two types of land; one claim which is agriculture land within ambit of municipal limit, and another nonagriculture land under construction. CIT(A) has accepted the fact that agriculture land are not required to be included in the net wealth of the assessee on account of amendment made in the Wealth Tax Act by Finance Act, 2013. As far as non-agriculture lands are concerned, constructions have been commenced on them. The ld.CWT(A) has been satisfied with the quality of evidence produced by the assessee in this regard. There is no disparity of facts qua the facts of Shri Kantibhai T. Savaliya, which we have discussed in the earlier part of the order, wherein we have noticed the finding of the ld.CIT(A) in the Asstt.Year 2007-08. Taking into consideration all these aspects, we do not find any merit in these appeals, thus dismissed.

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• Indian Laws

• 2018 (10) TMI 1080
  Dishonor of Cheque - first appellate Court pointing the inconsistency in the defence version and failure to prove the cheque was stolen from her, dismissed her appeal drawing presumption under Section 139 of N.I. Act - Whether there is any error in the reasoning or finding of the Courts below? Held that:- Under Section 118(a) of the N.I. Act, Court is obliged to presume, until the contrary is proved, that the initial burden in this regard lies on the defendant to prove the non-existence of consideration by bringing on record such facts and circumstances which would lead the Court to believe the non-existence of the consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal. In the present case, the accused has not brought out any fact on record for the Court to believe there was no passing of consideration. The complainant and accused are not strangers. The accused in the cross examination of the complainant by way of suggestion, admits that she knew the complainant and he used to visit the share broker office next to her residence and he used to come to her house. At no point of time before trial or during trial, she has explained the possession of her signed cheque with the complainant. It is also not the case of the accused that the complainant is man of no means. An accused in cheque bounce case is not without any opportunity to discharge the burden of presumption. The opportunity shall be by either at the time of reply notice or through cross examination of the prosecution witnesses or through mounting the witness box or examining any other person in support of defence. The reverse burden can be discharged by raising bona-fide doubt in the mind of the Court regarding consideration or enforceable debt through all or any of the above said mode - In this case, the accused had not opted any of the above mode to shift the burden. Except suggesting to the complainant that he has stolen the cheque and without knowing the financial and family background, he could not have advanced a huge sum of Rs. 2,80,000/- . In the said circumstances of the fact and law, the finding of the Courts below does not fall under any of the category to interfere in revision. Taking note of the fact that the transaction is of the year 2008 and the accused being a woman, leniency is required balancing the interest of the complainant. The accused has been confined to prison for about 80 days pursuant to the Judgement - Therefore, no further sentence of imprisonment is required, instead, half of the cheque amount (Rs.1,40,000/-) is ordered as compensation payable to the complainant. Criminal Revision Case is partly allowed and the conviction passed by the Courts below are confirmed. However, the sentence imposed on the revision petitioner/accused is modified into period of sentence already undergone by the revision petitioner/ accused.

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• 2018 (10) TMI 1079
  Dishonor of Cheque due to insufficiency of funds - rebuttal of presumption - section 138 of NI Act - Held that:- It is well settled that the statutory presumptions available under Section 118 and 139 of the Negotiable Instruments Act, 1881, can be discharged by the accused. Such presumption cannot be static. It can be discharged by bringing out probabilities - The probabilities always need not be by way of direct evidence - Even circumstantial evidence or even admission on the side of the complainant is sufficient to discharge the legal presumption. Mere denial by the accused of consideration or issuance of the cheque will not discharge the legal presumption. The evidence of P.W.1, when carefully seen, his entire evidence in cross-examination read together, the same indicates that there is no privity of contract between the accused and himself. In fact, he has shown ignorance about the nature of legal notice issued by the accused and himself. He appears to have totally ignorant of the facts. His entire evidence indicates that only his brother had some dealing with the accused - this Court does not find any material to hold that the complainant has proved his case. The complainant has not discharged his burden in establishing the passing of consideration - appeal dismissed.

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• 2018 (10) TMI 1078
  Dishonor of cheque due to insufficiency of funds - Section 138 of NI Act - recovery of loan - rebuttal of presumption - The incriminating circumstances which put before the accused, he denied the evidence of complaint as false and he opted for examining witness on his behalf - Held that:- On a careful perusal of the records reveals that the complainant has proved that the accused borrowed a sum of Rs. 1 lakh and issued a cheque on 01.02.2008, when he presented, the cheque was returned. Therefore, within 15 days from the statutory period, the accused failed to pay the amount. Therefore, he committed the offence and Courts below found that the complainant has proved, the execution of cheque and drew the legal presumption. Whereas, the accused has stated that the complainant has not proved, the loan transaction between both the parties and he has attempted to prove that he has not borrowed money and also the cheque has not been issued for the legally enforceable debt - It is well settled law that once the execution of the cheque is admitted and the signature is not disputed and it is the legal presumption that the cheque is issued for the legally enforceable debt. No doubt, the presumption is rebuttable presumption. Therefore, it is for the accused to rebut the presumption. If not through direct evidence but by way of probable defence - the Courts below found that the said legal presumption has not been rebutted by the accused in the manner known to law. This Court does not find any perversity in the order passed by both the Courts below. Therefore, the criminal revision in Crl.R.C.No.1430/2013 filed by the accused is dismissed.

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