TMI Tax Updates - e-Newsletter
October 26, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax Central Excise

TMI SMS

• The liaison activities when strictly in line with condition specified by RBI permission letter do not amount to supply under GST

  ---

• The Officer cannot throw their hands in desperation and blame the computer and consequently lead to cancellation of GST registration

  ---

Articles

1. Denial of carry forwarding of CESS credit into GST – Course of action

   By: Venkataprasad Pasupuleti

2. Concept and Applicability of TDS and TCS provisions w.e.f. October 1, 2018

   By: Bimal jain

News

1. Monthly Review of Union Government of India upto the month of September 2018 for the Financial Year 2018-19

2. New agri export policy to double farmer’s income: Suresh Prabhu

3. Payroll Reporting in India – A Formal Employment Perspective

4. Five more rice mills cleared for exports to China

Notifications

Companies Law

1. F. No. 1/4/2016-CL-I - S.O. 5385(E) - dated 24-10-2018 - Co. Law

Central Government appoints the 24th October, 2018 as the date on which the sub-sections (2), (4), (5), (10), (13), (14) and (15) of section 132 of Companies Act, 2013 shall come into force

GST - States

2. 38/1/2017-Fin(R&C)(78)/1662 - dated 24-10-2018 - Goa SGST

Amendment in Notification No. 38/1/2017-Fin(R&C)(72), dated the 21st September, 2018

3. 38/1/2017-Fin(R&C)(77) - dated 23-10-2018 - Goa SGST

Supersession Notification No. 38/1/2017-Fin(R&C)(17)/2408, dated the 21st September, 2017

4. 56/2018-State Tax - dated 23-10-2018 - Gujarat SGST

EXEMPTION FROM TDS TO CERTAIN AUTHORITIES OF DEFENCE

5. 55/2018-State Tax - dated 22-10-2018 - Gujarat SGST

Extension for GSTR-3B of September 2018

6. SRO 431 - dated 25-9-2018 - Jammu & Kashmir SGST

Jammu and Kashmir Reimbursement of Integrated Goods and Services Tax for promotion of Small/Medium/Large Scale Industries in the State of Jammu and Kashmir

SEZ

7. S.O.5348(E) - dated 15-10-2018 - SEZ

Central Government notifies an additional area of 4.30 hectares, at Vallancheri and Potheri Villages, Chengalpet Taluk, Kancheepuram District, in the State of Tamil Nadu thereby making total area of the Special Economic Zone 15.69.43 hectares

Circulars / Instructions / Orders

GST - States

1. (GHN-97)/GST-2018/S.79(1)(1)-TH - dated 9-10-2018

Power delegation to Addl.Com., Joint Com. and Dy.Com. under Land Revenue Code

2. Order No. 4/2018-GST - dated 18-9-2018

Extension of time limit for submitting the declaration in FORM GST TRAN-I under rule 117(1A) of the Gujarat Goods and Service Tax Rules, 2017 in certain cases

3. GSL/S5(1)B.19 - dated 3-8-2018

Specification of proper officers under the Gujarat Goods and Services Tax Act, 2017

Customs

4. Instruction No. 18/2018-TRU - dated 25-10-2018

Representation from all India Saccharin manufacturing Association-implementation of Hon’ble Gujarat High Court order dated 07.02.2018 in Special Civil Application No. 1399 of 2018 -reg.

5. 40/2018 - dated 24-10-2018

IGST Export Refunds – extension in SB005 alternate mechanism and revised processing in certain cases including disbursal of compensation Cess – reg.

Highlights / Catch Notes

GST

• Officers cannot blame technical issues like computer failures for canceling provisional registrations; they must follow proper procedures.

  Case-Laws - HC : Restoration of cancelled provisional registration - The Officer cannot throw their hands in desperation and blame the computer or the failure of uploading and consequently lead to cancellation of registration.
  Visit to Get Source

  ---

• GST Rate for "Ada" (Maida/Rice Flour) Set at 5% Under HSN 1902, Sl No. 97 for Vermicelli.

  Case-Laws - AAR : Rate of GST - Classification - Ada - made from 'maida or rice flour' or 'maida and rice flour' - Ada" merits classification under HSN 1902 of the 1st Schedule [Sl No. 97 - Seviyan (Vermicelli)] - Liable to GST 5%
  Visit to Get Source

  ---

• Company Canteen Services for Employees Considered 'Supply' Under GST; Subject to Taxation.

  Case-Laws - AAAR : Levy of GST - providing canteen services exclusively for their employees - The supply of food items to the employees for consideration in the canteen run by the appellant company would come under the definition of 'supply' and would be taxable under GST.
  Visit to Get Source

  ---

• Ship Parts and Equipment Not Eligible for 5% Reduced IGST Tax Rate: Classification Ruling Explained.

  Case-Laws - AAR : Classification of Supply - Whether the parts/spares/equipments which are used on a ship are forming parts of the ship and therefore chargeable to reduced tax @ 5% of IGST - Held No
  Visit to Get Source

  ---

• Liaison Office Activities Not Considered Supply Under CGST/SGST When Compliant with RBI Conditions.

  Case-Laws - AAR : Levy of GST - Supply of services or not - activity of Liaison office - they are in fact working as employees of the foreign office - The liaison activities being undertaken by the applicant when strictly in line with condition specified by RBI permission letter do not amount to supply under CGST and SGST Act.
  Visit to Get Source

  ---

Income Tax

• Taxpayer Penalized for Misclaiming Concessional Tax Rate on Share Gains; Penalty Confirmed u/s 271(1)(c.

  Case-Laws - AT : Levying penalty u/s 271(l)(c) - claiming concessional rate of income-tax on short term capital gains on shares within provisions of Section 111A as against chargeability of business income at normal rates of income-tax - Assessee has made bald statement - Penalty confirmed.
  Visit to Get Source

  ---

• Unexplained Income from Scrap Sales: Consistent Unaccounted Cash Across Years Deemed as Income Outside the Books.

  Case-Laws - AT : Addition on account of sale of scrap out of books - unexplained sale - in all the years assessee has been generated unaccounted cash from the scrap sales outside books, then based on same ratio such unaccounted cash has to be treated as unexplained.
  Visit to Get Source

  ---

• Court Confirms Additions for Bogus Purchases; Assessee Fails to Prove Vendor Legitimacy in Tax Evasion Case.

  Case-Laws - AT : Bogus purchases - assessee wants the Revenue to produce assessee’s own vendors, whom the assessee could not produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence of purchases - Additions and relief granted by the AO & CIT(A) confirmed.
  Visit to Get Source

  ---

• Section 263 Revision Validity: Unnecessary Inquiries on Impermissible Addition u/s 56(2)(viib) for Publicly Interested Company.

  Case-Laws - AT : Validity of revision u/s 263 - addition u/s 56(2)(viib) - company in which public it was substantially interested - When the addition itself is not permissible what point will be served by the assessing officer’s enquiries in this regard is beyond comprehension.
  Visit to Get Source

  ---

• Section 263 Revision Upheld for Three Issues, Dismissed for Legal and Professional Charges After Special Audit Review.

  Case-Laws - AT : Revision u/s 263 - failure of the AO to consider the items of expenditure that were the subject of verification in the Special Audit u/s 142(2A) - Order u/s 263 confirmed with respect to 3 issues but quashed with respect to legal and professional charges.
  Visit to Get Source

  ---

• CIT(A) Claims A.O. Misled on Section 68 Addition, But CIT(A)'s Own Observations Found Misleading and Unjustified.

  Case-Laws - AT : Addition u/s. 68 - The observation of the CIT(A) that the A.O. has given misleading information is itself misleading and does not deserve to be sustained.
  Visit to Get Source

  ---

• Tribunal Dismisses Assessee's Review Request as Unwarranted u/s 254(2) of the Income Tax Act 1961.

  Case-Laws - AT : The contentions of the assessee is an desperate attempt to seek some how review of the tribunal order which is beyond mandate of Section 254(2) of the 1961 Act and hence these contentions are dismissed as devoid of any merits.
  Visit to Get Source

  ---

• Assessing Officer's Reopening u/s 147 Unjustified Due to Reliance on Investigation Wing, Exceeding Four-Year Limit.

  Case-Laws - AT : Reopening of assessment u/s 147 - AO was not justified to reopen the assessment only on the basis of information received from Investigation Wing, that too beyond period of limitation of four years.
  Visit to Get Source

  ---

• Non-Resident Commission Not Taxable in India Without Business Connection or Permanent Establishment u/s 195.

  Case-Laws - AT : TDS u/s 195 - commission paid to non-resident - in absence of any business connection or source of income and consequently any permanent establishment in India, the said income in the hands of the foreign agent is not taxable in India
  Visit to Get Source

  ---

• Section 115J MAT Confirms Additions for Incomplete Project Liabilities as Foreseeable Losses in Profit and Loss Accounts.

  Case-Laws - HC : MAT - additions u/s 115J - provisions for liability towards incomplete projects - whether in the nature of foreseeable loss, which is an ascertainable liability and is reflected in the Profit And Loss account accepted by the Registrar of Companies - Additions confirmed.
  Visit to Get Source

  ---

• Trust's Tax Exemption Stands Despite Saree Distribution; Section 10(23C)(iiiad) Clarified for Educational Trusts.

  Case-Laws - HC : Exemption u/s 10(23C) (iiiad) - mere spending a meagre amount, out of the total income derived by the trust, towards the distribution of sarees to mothers and grandmothers of children studying in the school, cannot be the basis to deny the benefit of exemption.
  Visit to Get Source

  ---

• Supreme Court upholds service of notice u/s 282(2) as valid, despite delivery to security guard at factory.

  Case-Laws - SC : Validity of reopening of assessment - proper service of notice - Scope of Section 282(2) - service of notice at the factory premises of the Assessee on the security guard - Apex Court dismissed the SLP of the assessee.
  Visit to Get Source

  ---

Customs

• Extension of SB005 Mechanism for IGST Export Refunds with Revised Procedures; Streamlined Compensation Cess Disbursal for Exporters.

  Circulars : IGST Export Refunds – extension in SB005 alternate mechanism and revised processing in certain cases including disbursal of compensation Cess – reg.
  Visit to Get Source

  ---

Service Tax

• Court Overturns Rejection of Export Service Refund Claim Due to Ambiguity in Credit Period Details.

  Case-Laws - AT : Refund Claim - export of services - Rejection of refund by the Commissioner (Appeals) solely on the ground that there was no clarity as to for which period such credit had been debited is not acceptable
  Visit to Get Source

  ---

Central Excise

• Valuation of Captively Used By-Products Under Central Excise: Applying Revenue Neutrality in Duty Recovery.

  Case-Laws - AT : Valuation - by products - determination of the value for assessment of goods utilized captively - the principles of revenue neutrality would apply for recovery of duty sought by the Revenue
  Visit to Get Source

  ---

• Paying Duty Before Show Cause Notice Stops Penalty Under CENVAT Credit Rules 2004 & Central Excise Act Section 11AC.

  Case-Laws - AT : Penalty u/r 15 (2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - once duty is paid prior to issuance of show cause notice, the proceedings have to be stopped and the department cannot proceed further for imposition of penalty.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2018 (10) TMI 1315
  Levy of GST - Supply of services or not - activity of Liaison office - concept of distinct person and related person. - Whether liaison office is liable to pay GST? - Held that:- The applicant/liaison office is working as per the terms and conditions stipulated by RBI and the reimbursement of expenses salary of employees is paid by Mls Takko Holding GmbH to the liaison office. No consideration for any activity is being charged by the liaison office and the liaison office does not have any business activities of its own as specified by RBI conditions. Further, Schedule I of CGST Act specifies that supply of services between related parties or distinct persons as per Section 25, even without consideration, constitute a supply. Takko is acting as an extension of the German Office in its procurement activities from suppliers in India as has been spelt out in the RBI permission letter. Hence, they are neither related nor distinct persons, but are in fact working as employees of the foreign office. Accordingly, none of the liaison activities of Takko is covered under the definition of supply. Hence, Takko would not be a supplier under CGST /SGST Act and hence is not required to obtain registration under Section 22 of CGST /SGST Act or pay CGST, SGST or IGST as applicable. Ruling:- The liaison activities being undertaken by the applicant when strictly in line with condition specified by RBI permission letter do not amount to supply under CGST and SGST Act. The Applicant is not liable to pay CGST, SGST or IGST, as applicable. The Applicant is not required to get itself Registered under GST for the liaison activities.

  ---

• 2018 (10) TMI 1314
  Classification of Supply - import of goods/spares, which are supplied on ships and these equipment form an essential part of the ship, and makes the ship sea worthy. - whether classified under CTH 8479 or otherwise? Whether the said parts/spares/equipments which are used on a ship are forming parts of the ship and therefore chargeable to reduced tax @ 5% under Sr.No.252 of Notification No.1/2017 Central Tax (Rate) dated 28.06.2017? Held that:- Items like Anchor, Bow, Bowsprit, Fore and Aft, Hull, Keel, Mast, Rigging, Rudder, Sails, Shrouds, Engines, gearbox, Propeller, Bridge, etc. are the very essential parts of a ship or vessel and are quite clearly parts of a vessel/ship and a ship cannot be imagined to be in existence without these parts - in addition to the above there are some additional equipments that are required to be made available on a ship as a measure of statutory compliances under various marine acts such as Merchant Shipping Act or Additional Safety measures such as Walkie-talkie, Binoculars, Life Jackets, Lifeboats, etc. Though these are also to be compulsorily made available on a vessel and ship but cannot be taken to be parts of a ship as per general understanding but are rather additional equipments on a ship - Also, there are other essential items like furniture, fans, air-conditioners, television, etc which are very essential for comfort of officers and crew of the ship but do not come under essential parts or equipments of a vessel/ship. These items are essential parts of a ship/vessel are such essential components of a vessel/ship without which the ship would not be complete and would not exist. These are very integral for the functioning of the ship and can also be separated from the ship for repair/replacement. The classification of goods under Sr. No. 252 depends solely on the nature of use to which the goods are put to. The items mentioned at Sr. Nos A, B, C, D, E, G, H, I, J, K, M and S are essential parts of a ship/vessel without which the ship would not be complete and would not exist. These are very integral for the functioning of the ship. Hence out of the 504 goods mentioned in [Annexure I-A of this ARA application and reproduced by them mentioning their uses in page nos 24 to 39 of their compilation A made before this authority as an additional submission] we are of the opinion that out of the 504 items mentioned by them, only goods used in the equipments mentioned at Sr. Nos. A, B, C, D, E, G, H, I, J, K, M and S of the above table can be considered as parts of a ship and therefore would be eligible to concessional rate of GST as contended by the applicant. Parts which are used in equipments mentioned in Sr. Nos F, L, N, O, P, Q, R, T, U, V will not be eligible for concessional rate of duty since the said equipments cannot be considered as essential parts of a ship. Ruling:- Only those goods that are used in equipments mentioned at Sr. Nos A, B, C, D, E, G, H, I, K, M and S of the table will liable to GST @ 5% (CGST-2.5% and SGST-2.5%) or IGST @ 5% under entry 252 of Schedule 1 of GST Notification No. 01/2017-Central tax (rate) dated 28th June, 2017 as amended and schedule 1 of Notification No. 01/2017-Integrated Tax (Rate), dated 28-06-2017 as amended.

  ---

• 2018 (10) TMI 1313
  Levy of GST - providing canteen services exclusively for their employees - Supply of services or not - scope of supply and consideration - Held that:- The appellant company has admitted that they are serving food to the employees for cash, though there is no profit involved in the transaction. In spite of the absence of any profit, the activity of supplying food and charging price for the same from the employees would surely come within the definition of supply as provided in Section 7(1)(a) of the GST Act, 2017. Consequently, the appellant would definitely come under the definition of supplier as provided in subsection (105) of Section 2 of the GST Act, 2017. Moreover, since the appellant recovers the cost of food items from their employees, there is consideration as defined in Section 2(31) of the GST Act, 2017. Ruling:- The supply of food items to the employees for consideration in the canteen run by the appellant company would come under the definition of supply and would be taxable under GST.

  ---

• 2018 (10) TMI 1312
  Rate of GST - Classification of the commodity - commodity Ada - whether the commodity Ada should be classified under the HSN Code 1902 along with Seviyan (Vemicelli) attracting GST at the rate of 5% or should be classified under residual entry at Sl No. 453 of the Third Schedule of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 and State Government Notification No. 360/2017 attracting 18% GST? Held that:- The applicable rule in this case is Rule 4 and as per the same, Ada is to be classified under the heading appropriate to the goods to which it is most similar in character. The product, Ada , in sum and substance, is something akin, i.e., similar in character to Vermicelli . Both are made from maida or rice flour or maida and rice flour and are manufactured through an identical process and ada is used for giving richness to certain regional varieties of payasams called Ada Pradhaman and Palada Pradhaman , which are popular in Kerala and certain parts of Tamil Nadu. There is indeed nothing to differentiate ada from vermicelli except for the dies that are used in the manufacturing process which gives it a different shape. Applying Rule 4 of the General Rules of Interpretation of the First Schedule to the Customs Tariff Act, 1975 and the principles of classification of goods as settled by the various judgments of the Hon ble Apex Court, Ada merits classification under HSN 1902 of the 1st Schedule [Sl No. 97 - Seviyan (Vermicelli)] of Notification No. 01/2017 - Central Tax (Rate) dated 28.06.2017 and State Government Notification No. 360/2017 attracting 5% GST. Ruling:- Ada is rightly classifiable under HSN 1902 of the 1st Schedule [Sl No. 97-Seviyan (Vermicelli)] of Notification No. 01/2017-CentraI Tax (Rate) dated 28.06.2017 and State Government Notification No. 360/2017 dated 30.06.2017 attracting 5% GST.

  ---

• 2018 (10) TMI 1311
  Restoration of cancelled provisional registration - migration from VAT to GST - failure to upload necessary information - Held that:- Although under the GST regime all applications required to be done online. in the event any dealer faces any problem in uploading such data, the Commissioner ought to place alternative authority with the Sales Tax Officer or appropriate officer before whom manual returns can be filed and or the dealers be assisted in uploading the necessary information at their respective offices. The Officer cannot throw their hands in desperation and blame the computer or the failure of uploading and consequently lead to cancellation of registration. The CT GST Circle, Cuttack- I, West is directed to attend the problems faced by the petitioner forthwith in terms of the direction issued by the Commissioner positively within a week from the date of receipt of a certified copy of this order - writ application is disposed of.

  ---

• Income Tax

• 2018 (10) TMI 1310
  Disallowance u/s 14A - expenditure involved for exempt income - Held that:- The Special Leave Petition is dismissed.

  ---

• 2018 (10) TMI 1309
  Addition on the ground of unexplained construction and working in progress expenses - profit estimation - no books of accounts and supporting bills/vouchers were maintained by the assessee at the time of search - Held that:- Delay condoned. The Special Leave Petition is dismissed.

  ---

• 2018 (10) TMI 1308
  Validity of reopening of assessment - proper service of notice - Scope of Section 282(2) - service of notice at the factory premises of the Assessee on the security guard - difference between “served” and “issued” - Held that:- The Special Leave Petition is dismissed.

  ---

• 2018 (10) TMI 1307
  Disallowance of Retrenchment Compensation, Renovation expenses, Repairs and maintenance, Advertisement expenses and Sales promotion expenses - Held that:- The assessee had taken a contention that the assessee had continued the business. In fact, it was the partnership which had continued the business. In such circumstance, there can be no claim of retrenchment compensation by the assessee who had sold the establishments and business was also continued by the transferee firm. With respect to renovation expenses and repairs and maintenance, the Assessing Officer found that since the business itself was sold, there was no reason for incurring such expenses. The assessee had taken a specific contention that the renovation was done with a view to sell the business to the partnership firm. The Assessing Officer took the view that if the renovation was done after the decision to sell the business was taken, then necessarily it is not an expenditure incurred for the business of the assessee. We do not think such a view can be taken especially since the assessee had a case that he expended the amounts for the purpose of sale, in which sale he had also declared long term capital gains coming to Rs. 75 lakhs. In such circumstances, the renovation expenses and expenses for repairs and maintenance have to be allowed as an expenditure under Section 37. Advertisement expenses and sales promotion expenses; which were also carried out prior to the same and after the sale. The dis-allowance has been made by the A.O only to that portion expended after the sale, which also we find to be proper. The order of the A.O on that count is liable to be restored. Retrenchment compensation is concerned the order of the A.O is restored. As far as renovation and repairs and maintenance, the dis-allowance made by the A.O is bad in law and the order of the Tribunal is upheld. On the question of advertisement expenses and sales promotion, the question is answered in favour of the Revenue and against the assessee and the order of the AO is restored which declined the advertisement expenses and sales promotion expenses after the date of sale.

  ---

• 2018 (10) TMI 1306
  Disallowance of expenses incurred for foreign travel of the staff of the assessee company claimed under Section 37 - Held that:- FAA had allowed the claim in toto. Tribunal while considering the appeal of the revenue confined the dis-allowance to 20% as has been done in the year 2009-10. The Revenue has filed the appeal contending that 100% dis-allowance has to be made in all instances. We do not think that the appeal can be sustained especially since the Assessing Officer himself had in certain instances granted 50% dis-allowance. The Tribunal also noticed the fact that, for the next year, the AO had disallowed only 20% of the expenses claimed. The very same procedure was adopted for the year 2008-09 also.

  ---

• 2018 (10) TMI 1305
  Revision filed u/s 264 - declining the grant of approval u/s 10(23C)(vi) r.w.s. 11 - whether an educational institution is existing solely for educational purposes or not, has to be considered and decided not merely by mechanically reading and reproducing the relevant provisions of law but by considering the nature of the activity and the hidden principles behind it, which in my considered view, is essential. Held that:- It is not established by the revenue that the petitioner is carrying on any other activities for profit other than running the school. Therefore, when the only predominant activity is being carried on by the petitioner trust, viz.,the running of the school as stated mere spending a meagre amount, out of the total income derived by the trust, towards the distribution of sarees to mothers and grandmothers of children studying in the school, cannot stand in the way of the Assessing Officer to deny the benefit under Section 10(23C) (iiiad). Thus find that the respondents are not justified in rejecting the claim of the petitioner under Section 10(23C) (iiiad) of the said Act. Accordingly, the writ petition is allowed and the impugned order is set aside. Consequently, the respondents are directed to consider the claim of the petitioner under Section 10(23C) (iiiad).

  ---

• 2018 (10) TMI 1304
  Disallowing of expenses for provision of one year warranty - Held that:- This expenditure related to the maintenance and repair charges expended by the assessee on Air Conditioner units supplied to the customers. CIT (Appeals) in particular believed that this was based on actual cost involved in rendering such past sale services. Adhoc 10% disallowance of various expenditure in absence of bills and vouchers for the same - assessee had not produced bills and vouchers for the expenditure - Held that:- Commissioner of Income Tax (Appeals) allowed additional evidence to be produced at the appellate stage, call for the remand report and came to the conclusion that all expenditure were duly reflected. No question of law arises.

  ---

• 2018 (10) TMI 1303
  MAT - additions u/s 115J - provisions for liability towards incomplete projects - whether in the nature of foreseeable loss, which is an ascertainable liability and is reflected in the Profit And Loss account accepted by the Registrar of Companies - Held that:- In the present case, the company on the finalisation of accounts in a particular previous year, computes the profit and loss of each contract, up to the stage at which it has been completed. This cannot be said to be an ascertained liability especially since the contract is not completed and the loss or profit can be finally determined only on completion of the contract, at which point, definitely the assessee can claim it. AO while computing the income under Section 115-J has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The Assessing Officer thereafter has the limited power of making increases and reductions as provided for in the Explanation to the said section. To put it differently, the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115-J. We are of the opinion that the losses can be determined only at the completion of the contract and even as per the accounting standards, there is a high degree of uncertainty in determining the future loss of a running contract. Clause (c) of Section 115J(1A) permits the Assessing Officer to add back the provisions made so as to reflect the correct profits and to determine the income as per Section 115J as has been noticed in Apollo Tyres(2002 (5) TMI 5 - SUPREME COURT). The provision was introduced to bring to tax companies who adjust their accounts in such a manner resulting in zero tax phenomenon. The attempt of such a computation, as made by the legislature, is to ensure payment of a minimum corporate tax on the profits as declared in its own accounts. The Explanation permits additions to be made so that the actual profits derived is taxed. What is not reflected for reasons only of provisions made with respect to contingent liabilities, are also brought to tax. Whether the provision for bad and doubtful debts could be added back for the purpose of determining the income under Section 115JA? - Held that:- Assessing Officer is directed not to make any addition with respect to the provision for bad and doubtful debts, insofar as the computation of income under Section 115JA of the Income Tax Act for the subject year. See Commissioner of Income Tax v. HCL Comnet Systems and Services Ltd [2008 (9) TMI 18 - SUPREME COURT].

  ---

• 2018 (10) TMI 1302
  N.P. determination - ITAT confirmed the net profit rate of 15% while estimating the income of the new business unit - Held that:- It has come on record that the assessee did not produce any evidence and it is on the basis of a statement made by one Rajeev Agarwal, who was a member of the assessee's firm that an estimate was made taking the net profit rate of the assessee to be 20%, which was after consensus reached at 15%. This is recorded in the order of the CIT and the Tribunal has taken this into account. The assessee was also granted relief on this basis. Such being the case, we are of the opinion that no question of law arises in this matter and the facts are also concluded.

  ---

• 2018 (10) TMI 1301
  Computation of deduction 80IA/80IB - Tribunal held that components of price for sale of electricity fixed on the basis of tax liability should not be taken as part of the transfer price of coal and sale price of electricity in computing the relief - Held that:- Issue to be decided in favour of the assessee, by judgement of M/S. NEYVELI LIGNITE CORPORATION LIMITED VERSUS THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE  IV (4) CHENNAI [2013 (1) TMI 136 - MADRAS HIGH COURT] which says:- “Where under the agreement the tax component is part of the sale of electricity from the Thermal Power Generating Stations and the mere fact that a component of the tariff makes a reference to the tax liability with reference to income streams, does not make such a component as not income to be excluded in considering the relief under Section 80IA/80IB.” - Decided against revenue

  ---

• 2018 (10) TMI 1300
  Penalty u/s 271(1)(c) - concealment of income by way of wrong claim of cost of acquisition to evade long term capital gains - Held that:- We gather that the issue pertains to valuation of leasehold rights as on 1.4.1981. AO did not accept valuation adopted by the assessee and made corresponding additions. We notice that on merits itself substantial additions were deleted by higher authorities. Thus the issue itself was highly debatable and substantially fact based. In background of such facts the Tribunal held that this is not a fit case for penalty. No interference is needed. - Decided against revenue

  ---

• 2018 (10) TMI 1299
  TDS u/s 195 - non-deduction of tax on commission paid to non-resident outside India - addition u/s 40(a)(i) - income accrued in India - PE in India - Held that:- As decided in assessee's own case AO has accepted that the payment made by the assessee is on account of commission and compensation to the foreign agent and therefore it is not the case of the AO that the payment in question is either fee for technical service or royalty which could be taxed in India as per provisions of sec.9(1) of the Act. We further note that the AO has supported his finding by citing the reason that commission income arises in India because right to receive commission arises when the order is executed by the assessee in India. Logic and contention of the AO is absolutely erroneous and based on mis-interpretation of the term ‘accrue or arise in India’ as per the provisions of sec.9(1). The commission is paid to foreign agent for services rendered by the agent outside India and the agent has no business link or source of income in India. Therefore, in absence of any business connection or source of income and consequently any permanent establishment in India, the said income in the hands of the foreign agent is not taxable in India. - decided in favour of assessee.

  ---

• 2018 (10) TMI 1298
  Reopening of assessment u/s 147 - reopening of assessment beyond the period of four years - validity of reasons to believe - information received from Investigation Wing - non independent application of mind - share application money received - Held that:- Assessee had submitted the reply before the Assessing Officer along with ITRs, share application forms, acknowledgement of receipts of shares, bank statements of the share applicants, names and addresses of the share holders and value and quantity of shares etc. and other evidences as required by the Assessing Officer. AO had accepted the reply of the assessee and did not make any addition on this count. The case of the assessee has been reopened on the same issue regarding the share application money received from the above five parties on the basis of information received from Investigation Wing. The assessee, thus, had disclosed all material facts necessary for completion of assessment. The Assessing Officer has not spelled out in the assessment order as to what material facts or evidences were not disclosed/produced by the assessee relating to share capital increased during the year under consideration. Therefore, in our considered opinion, the Assessing Officer was not justified to reopen the assessment only on the basis of information received from Investigation Wing, that too beyond period of limitation of four years. - Decided in favour of assessee.

  ---

• 2018 (10) TMI 1297
  Reopening of assessment - addition u/s 68 - reopening after 4 years - Held that:- AO himself recorded in the order that the approval of the Additional CIT Range-V, New Delhi was obtained and stated that it was so u/s 151(2) of the Act. As a matter of fact in respect of the cases where notice u/s 148 was proposed to be issued after the expiry of four years from the end of the relevant assessment year, Section 151(1) is applicable but not Section 151(2) of the Act. Section 151(2) clearly states that it is applicable to the cases other than the cases falling under sub-section (1). A plain reading of Section 151 makes it amply clear that the learned AO misread the same and did not follow the mandate of the proviso to Section 151(1) of the Act inasmuch as the case in hand relates to the proposed notice u/s 148 after the expiry of four years from the end of the relevant assessment year. On this ground, assessee succeeds. It is not the case of the revenue that any evidence is there on record to establish that any notice u/s 143(2) was issued before the conclusion of the assessment after its reopening, nor did the learned AO record finding that because of the failure of the assessee to furnish fully and truly all material facts necessary for the assessment, there was escapement of income from assessment. In these circumstances, we find it difficult to hold that the impugned order suffers any illegality or irregularity warranting interference by the Tribunal. The reasons recorded by the learned CIT(A) are perfect and there is no ground for us to interfere with the same. - Decided against revenue.

  ---

• 2018 (10) TMI 1296
  Rectification of mistake - Reopening of assessment - Additions u/s 69A - Held that:- The ingredient of Section 147/148 are different than the ingredients of Section 153C. The document recovered clearly mention the name of the assessee, description of plot of land and the figure mentioned is Rs. 2,71,00,000/-. The date is also mentioned in this document marked as Annexure A-3/page 221 seized from Mr Madan Kolambekar and Jai Corp Group. The assessee did sold the plot of land to these parties. The assessee was in denial mode while revenue stated that on 23. 08. 2013 , reasons for re-opening were furnished to the assessee while the assessee is in denial mode. The said finding by learned CIT(A) achieved finality as no appeal/CO is filed by the assessee. The tribunal set aside the matter to the file of the AO for fresh adjudication with adequate safeguards so that the assessee is not un-fairly treated. All these conceptions of the assessee are misplaced/baseless and an desperate attempt to some how wriggle out of the well reasoned and fair order passed by tribunal to advance substantial justice to both the parties based on peculiar factual matrix of the case. The contentions of the assessee is an desperate attempt to seek some how review of the tribunal order which is beyond mandate of Section 254(2) of the 1961 Act and hence these contentions are dismissed as devoid of any merits.

  ---

• 2018 (10) TMI 1295
  Addition u/s. 68 - CIT(A) found that the assessee has submitted all the necessary details of the parties providing the loans - Held that:- The observation of the CIT(A) that the A.O. has given misleading information is itself misleading and does not deserve to be sustained. When it is obvious that there is such close proximity in these companies and the evidence has been given by the A.O. that it is a modus operandi to route money in the form of share application and share money. In such situation, the minimum which was expected from the CIT(A) was to make necessary enquiry and cogently rebut the finding of the A.O. It is settled law from the decision in the case of Sumati Dayal vs. CIT [1995 (3) TMI 3 - SUPREME COURT] and CIT vs. Durga Prasad More [1971 (8) TMI 17 - SUPREME COURT] that the Revenue authorities are not supposed to put on blinkers but should look into the surrounding circumstances and the contemporaneous evidence. CIT(A) has passed an order not based upon the correct facts. Hence, we are remitting the issue to the file of the CIT(A) to consider the issue afresh and pass a speaking order on all the issues raised by the A.O. - Appeal by the Revenue stands allowed for statistical purpose.

  ---

• 2018 (10) TMI 1294
  Revision u/s 263 - CIT observed that, re-assessment made was concluded without any apparent examination of items of expenditure that were the subject of verification in the Special Audit u/s 142(2A) that the assessee company was subjected to - treat the reassessment order to be an erroneous so far as it is prejudicial to the interest of the revenue in terms of section 263 - time barred - Held that:- It is evident that apart from the specific items from the special audit report mentioned in the reasons recorded for reopening, in these reasons itself the entire special audit report and the various discrepancies therein have been made part of the reasons recorded. In this view of the matter, the assessee’s claim that the items mentioned above in relationship of impugned claim of expenditures were not subject matter of reassessment, is not tenable. As evident from the assessee’s response given to the ld. CIT itself, it has been mentioned that Software support charges, Share service cost and SAP license fees were duly mentioned in the special audit report and were made part of the reasons recorded as all items dealt in the special audit report were mentioned to be part of reasons recorded. Hence, the assessee’s plea that these items were not subject matter of reassessment is not at all sustainable and is totally against the facts arising out of the appeal. This aspect has also escaped the attention of the CIT who has justified the power to invoke section 263 otherwise on the plank that Explanation 3 of section 147 which in his opinion empowers him to do, despite the issue not being subject matter of reassessment. However, this Explanation 3 alone cannot empower the ld. CIT to exercise the jurisdiction over items which are not subject matter of the reassessment as held by the exposition of the Hon'ble jurisdictional High Court in the case of ICICI Bank Ltd. [2012 (2) TMI 308 - BOMBAY HIGH COURT]. The entire premise that these items were not made subject matter of reassessment fails inasmuch as these items were duly mentioned in the special audit report and all the items dealt in the special audit report were made part of the reasons recorded and the assessee is very much aware about the page numbers of the special audit report where these items are dealt with. Hence, the entire plea of the assessee that the order passed u/s. 263 of the Act on the above items is time barred fails as these were subject matter of reassessment order passed on 30.03.2016. The notice for revision was issued on 28.06.2016 and, hence, the same is well within the period of limitation, qua these issues. Regarding Legal and professional charges - CIT observed that A.O. needed to make further enquiry. - Held that:- If the ld. CIT was not in agreement with the view of AO, as in his opinion, some other amount was required to be disallowed, he should have spelt out the same. It is also not the case of the ld. CIT that there was something more in the special audit report on this issue which has not been examined by the A.O. The ld. CIT has not spelt out any such figure rather he has asked the A.O. to make further enquiry. In our considered opinion, this direction by the ld. CIT is not at all sustainable on the anvil of the decision of Gabriel India Ltd . [1993 (4) TMI 55 - BOMBAY HIGH COURT] mentioned by the ld. Counsel of the assessee before the ld. CIT himself. It is also settled law that if there are two views possible and if the A.O. has adopted one view with which the ld. CIT does not agree, the same will not give rise to the jurisdiction by the ld. CIT. Order u/s 263 confirmed with respect to 3 issues but quashed with respect to legal and professional charges. - Decided partly in favour of assessee.

  ---

• 2018 (10) TMI 1293
  Validity of revision u/s 263 - addition invoking provisions of section 56(2)(viib) - assessee submitted that provisions of section 56(2)(viib) were not applicable to the assessee as the company was to be treated as a company in which public it was substantially interested - Held that:- The provisions of section 56(2)(viib) invoked in the notice u/s. 263 by CIT is not applicable to the assessee company. As the assessee company was falling under section 2(18) being a company in which public are substantially interested. This fact has subsequently been duly accepted by the learned CIT- himself in the aforesaid order. Despite that he has held that assessing officer has not made detailed enquiry on the valuation of shares and he had set aside the matter to the file of assessing officer. We find that learned CIT is passing contradictory order when learned CIT - accepts that provisions of section 56(2)(viib) are not applicable to the assesses as this section provides for addition as income from other sources of share premium not properly explained in the hands of companies in which Public are not substantially interested. When the addition itself is not permissible what point will be served by the assessing officer’s enquiries in this regard is beyond comprehension. A.O. has dealt with the issue. He has been provided with the valuation report. In these circumstances further enquiry as directed by the learned CIT will not only be a futile exercise, it would serve no purpose whatsoever. We also note that the proviso to section 68 in this regard is also not applicable to company in which public are substantially interested. This proviso mandates that the companies to whom inter alia shares at premium are issued should also satisfy the A.O. - Directions of the ld. CIT(A) can neither remove any error from the A.O.’s order nor cure any prejudice or loss to revenue. - Decided in favour of assessee.

  ---

• 2018 (10) TMI 1292
  Reopening of assessment - Disallowance of 12.5% of bogus purchase - reasons to believe - Held that:- Credible and cogent information was received in this case by the assessing officer that certain accommodation entry provider/bogus suppliers were being used by certain parties to obtained bogus bills. The assessee was found to have taken accommodation entry/bogus purchase bills during the concerned assessment year from different parties. Based upon this information assessment was reopened. The credibility of information relating to reopening remains un-assailed. In such factual scenario, AO has made the necessary enquiry. The issue of notice to the party has returned unserved. Assessee has not been able to provide any confirmation from any of the party. Assessee has also not been able to produce any of the party. Necessary evidence relating to transportation of the goods was also not on record. In this factual scenario, it is amply clear that the assessee has obtained bogus purchase bills. Mere preparation of documents for purchases cannot controvert overwhelming evidence that the provider of these bills is bogus and non-existent. The Sales Tax Department in its enquiry has found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. There is no doubt that these parties are non-existent. We find it further strange that assessee wants the Revenue to produce assessee’s own vendors, whom the assessee could not produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence of purchases. In light of the overwhelming evidence, the Revenue authorities cannot put upon blinkers and accept these purchases as genuine. - Decided against assessee.

  ---

• 2018 (10) TMI 1291
  Addition on account of sale of scrap out of books - unexplained sale - CIT(A) restricted the addition to Rs. 8,08,420/- out of total addition of Rs. 48,04,151/- made by the AO - Held that:- Once it is an undisputed fact that one of the Director has admitted in his statement that assessee company was indulged in unaccounted sale of scarp generated in the manufacturing process in cash in the assessment years 2010-11 to 2012-13; and manufacturing process of the Manesar unit continued to be the same for all the three years, then in our opinion CIT(A) has rightly held that if scrap has been generated and sold during the assessment year 2012-13 in the earlier years, then same should be there in the assessment year 2012-13 also. He has elaborately discussed and explained meticulously based on seized material how estimate of scrap sale can be made where no material is found. Such an action of CIT(A) is justified, because it is matter of record that in all the years assessee has been generated unaccounted cash from the scrap sales outside books, then based on same ratio such unaccounted cash has to be treated as unexplained. Thus, we do not find any infirmity in the order of the Ld. CIT (A) and the same is affirmed. Disallowance u/s 14A - sufficiency of own funds - Held that:- In wake of availability of such huge surplus fund, which is far more than the investment made by the assessee, we direct that no disallowance of interest can be made. With regard to indirect expenses, we find that assessee has not discharged its prima facie onus as to why no expenditure is attributable for earning of such a huge exempt income and it is only when assessee discharges his onus, then AO has to record his ‘satisfaction’ having regard to the accounts maintained by the assessee and on the claim made by the assessee. Thus, we hold that in so far as disallowance of indirect expenditure is concerned the same has rightly been confirmed by the CIT (A) and to this extent order of the Ld. CIT(A) is confirmed. - decided against revenue.

  ---

• 2018 (10) TMI 1290
  Levying penalty u/s 271(l)(c) - assessee wrongly declared the business income arisen on wrong trades executed on behalf of the clients as short term capital gains on sale of shares, claiming concessional rate of income-tax on short term capital gains on shares within provisions of Section 111A as against chargeability of business income at normal rates of income-tax, clearly causing prejudice to Revenue by way of short payment of income-tax - Held that:- Assessee has made bald statement before us but no details of the chartered accountant who made these mistakes and under what circumstances these glaring mistakes were committed by chartered accountant is not brought on record. No affidavit of the said chartered accountant nor any affidavit of the assessee is filed on record to substantiate that what is averred before us is true and correct but only bald statements are made. These mistakes are glaring mistakes committed in return of income filed with Revenue having direct impact on legitimate expectation of Revenue in depriving Revenue in collection of legitimate income-tax dues payable to them within mandate of the 1961 Act. No bonafide of committing such glaring mistakes are brought on record and these bald pleas cannot be accepted. No hesitation in confirming the penalty levied by the AO u/s 271(1)(c) which was later confirmed by learned CIT(A). The assessee fails in this appeal. - Decided against assessee.

  ---

• 2018 (10) TMI 1289
  Unaccounted investment in silver articles weighing 1812 grams - benefit of the CBDT Circular No. 1916 dated 11.5.1994 - Jewelry revived under India tradition - Held that:- One cannot ignore the fact that in the Indian families there is a culture of giving silver ornaments and utensils on auspicious and marriage occasions. Restricting the limit of 500 gm/250 gm/100 gm only to the “gold jewellery ornaments” will not serve the true purpose of the CBDT instructions and it has to be applied hamnoninerly in the light of the Indian culture and traditions. The impugned silver jewellery weighing 1812 gms valuing at Rs. 75,278/-should not have been added to the income of the assessee and the benefit of the CBDT Circular No. 1916 dated 11.5.1994 should also be spread so as to cover the silver articles weighing 1812 gms. We therefore set aside the orders of both the lower authorities and delete the addition of Rs. 75,278/- for the alleged unaccounted investment in silver articles and allow the grounds raised by the assessee. - decided in favour of assessee.

  ---

• 2018 (10) TMI 1288
  Disallowance of interest in respect of advances to companies / other concerns - Held that:- The issue of disallowance of interest in respect of advances to companies / other concerns has been subject matter of deliberation from AYs 1993-94 to 2001-02 where the ITAT, after considering relevant submissions and by following the judgement of Hon’ble Supreme Court in the case of S.A. Builders vs CIT[2006 (12) TMI 82 - SUPREME COURT] has restored the matter to the file of the AO for fresh consideration. We set aside the issue to the file of the AO to be considered afresh. Adjustment to closing stock of finished goods - Held that:- We direct the AO to make suitable adjustments towards opening stock in respect of Modvat adjustment made to closing stock of finished goods. Disallowance of pooja expenses - Held that:- Since, the facts involved in this year are identical to the facts which have been considered by the ITAT for earlier assessment years, by following the Tribunal’s order in assessee’s own case, we decide the issue in favour of the assessee and direct the AO to delete disallowance made towards disallowance of pooja expenses. Payments to relatives of deceased employees to be allowed. Disallowance of expenditure in relation to exempt income u/s 14A - Held that:- We find that the co-ordinate bench has considered similar issue for AY 2001-02 wherein by following the decision of Hon’ble jurisdictional High Court in the case of Godrej & Boyce Mfg Co Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] has restored the matter back to the file of the AO for fresh consideration. Disallowance of loss on compensation of enforcement of security - deduction u/s 37(1) claimed - Held that:- We do not find any merit in the findings of the AO for the reason that the AO has not denied the fact that the assessee has borrowed loan from M/s ILFS for the purpose of its business. In the process, the assessee has pledged NOCIL shares held by two of its subsidiary companies with the lender for security of loan. As per the contractual agreement between the parties, the assessee has reimbursed loss incurred by two subsidiary companies. Therefore, said loss is incurred wholly and exclusively in connection with the business of the assessee and accordingly, the AO was incorrect in disallowing loss on account of compensation on enforcement of security. Loss claimed by the assessee the assessee has arrived at a loss by taking into account the price of shares of NOCIL as on the date of pledging such shares with ILFS and reduced from the sale price of shares, then the total loss claimed by the assessee can be allowed in total. The facts are not clear. Though the assessee has filed copies of returns filed by two subsidiary companies for AY 2002-03, on perusal of statement of long term capital loss computed by the companies, it appears that the companies have applied the benefit of indexation to arrive at a loss. Therefore, we are of the considered view that the issue needs to be reexamined by the AO for the limited purpose of verification of facts with regard to computation of loss arrived at by the parties in terms of their agreement. Accordingly, we set aside the issue to the file of the AO and direct him to cause necessary enquiries in the light of our discussion hereinabove, after providing reasonable opportunity of hearing to the assessee. Appeal filed by the assessee is partly allowed, for statistical purpose.

  ---

• 2018 (10) TMI 1287
  TDS u/s 194H - Default u/s.201(1) & 201(1A) - default for not deducting the tax on 'roaming charges' paid to other service providers - Held that:- After considering the same, the AO held the assessee to be an assesses in default for not deducting tax at source in respect of trade discount given to its distributors on prepaid SIM cards and prepaid recharge vouchers. The AO also held the assessee to be in default for not deducting the tax on 'roaming charges' paid to other service providers. AO, thus computed the demand of tax and interest against the assessee in respect of the above two aspects. After recording a detailed finding, both AO and CIT(A) has held the assessee liable u/s.201(1) and 201(1A). Nothing was placed before us so as to persuade us to deviate from the findings of the lower authorities. - Decided against assessee.

  ---

• 2018 (10) TMI 1286
  MAT computation - computation of ‘book profits’ made by the assessing officer under section 115JB - addition of expenditure on ‘repairs and maintenance’ disallowed under normal provisions - assessee is a corporate entity and has drawn its accounts in accordance with the provisions of the Companies Act - Held that:- Undisputed fact is that it has debited aforesaid expenditure in the Profit and Loss account and the adjustment of such a nature, while arriving at book profits, is not envisaged by Explanation 1 to Section 115JB, which as per settled legal position, is a separate and complete code in itself. Upon due consideration, we find that the facts of the present case are squarely covered by case of APOLLO TYRES LTD. VERSUS COMMISSIONER OF INCOME TAX [2002 (5) TMI 5 - SUPREME COURT] as held Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J. The provisions of Section 115JB are on similar lines as the provisions of Section 115J. Therefore, drawing analogy from the ratio of the above cited decision of Hon’ble Apex Court, we delete the impugned adjustment u/s 115JB - decided in favour of assessee

  ---

• 2018 (10) TMI 1285
  Maintainability of Appeals to the Appellate Tribunal - Eligibility of person who verified and signed the Form No.36 and attachments thereto - assessee company being would up - assessee in default u/s 201 - Held that:- We have carefully perused the Form No.36 filed in the name of the assessee company on 12/4/2018, the grounds of appeal and other attachments filed before us and find that they have been verified and signed by one Shri V.Balaji Bhat, said to be ex-Director of the assessee company. In view of the fact that the assessee company was wound up by the decision of the Hon’ble Karnataka High Court dated 8/10/2012 and an Official Liquidator being appointed by that order, the erstwhile Directors of the assessee company are rendered functus officio and therefore the person who verified and signed the Form No.36 and attachments thereto has done so in clear violation of the provisions of section 253(6) of the Act r.w. Rules 45(2) and 47(1) of the IT Rules, 1962 (‘the Rules’). Thus the present appeal for assessment year 2011-12 filed on 12/4/2018 in Form No.36 and attachments thereto are invalid and non est and therefore dismiss the appeal in limine.

  ---

• 2018 (10) TMI 1284
  Disallowance of commission expenses u/s. 40(A)(2)(b) - unreasonable and excess payment of expenses - Held that:- The assessee has substantiated the payment of commission with supporting materials, debit notes etc along with the details of services rendered for which commission was paid. It is also undisputed facts that these two persons were also paid commission along with salary in the past years. The provision of section 40(A)(2)(b) provide for disallowance of only the excessive or unreasonable expenditure and not the entire expenditure. AO has failed to disprove supporting material furnished by the assessee in support of the aforesaid commission payment. AO has also failed to substantiate with relevant material that commission payment made by the assessee is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment has been made. AO to disallow the entire commission expenses u/s. 40A(2)(b) of the act without substantiating and restricting the disallowance to the unreasonable and excess payment of expenses is not correct. - Decided in favour of assessee.

  ---

• 2018 (10) TMI 1268
  Penalty proceeding u/s 271(1)(c) - Dis-allowance u/s 80IA restricted to gross total income computed in order u/s 143(3) - Rejection of assessee's claim that sales tax incentive is in nature of capital receipt and therefore not taxable - Held that:- We do not think that the CIT(A) or the Tribunal was wrong in setting aside the order of the Assessing Officer levying penalty on Point Nos.1 and 2 reproduced above. As mentioned earlier, with reference to these points in the quantum proceedings, the Appeals have already been admitted in which a substantial question of law is raised. This would clearly indicate that there are debatable and arguable questions raised which would certainly be another factor to be taken into consideration whilst imposing penalty under section 271(1)(c) of the Income Tax Act, 1961. Addition to the total income on account of items not considered to be eligible for 100 % depreciation - Held that:- Considering the facts that we have discussed above and especially considering that when the claims as mentioned herein were made by the Assessee, they were governed by judicial decisions of the Tribunal, we do not think that this judgment would apply in the factual matrix before us. From the facts of the present case, it is clear that they were debatable and arguable questions which certainly did not warrant the levy of penalty on the Assessee. - decided against revenue

  ---

• Customs

• 2018 (10) TMI 1283
  Bail Application - Smuggling - blackish brown hard shape substance suspected to be narcotics - Petitioner, is alleged to have disclosed that he was involved in the booking of parcels containing drugs and he was doing this to earn more money - section 37 of NDPS Act - Held that:- Public Prosecutor has been given an opportunity and he has opposed grant of bail. Therefore, before petitioner is entitled to be released on bail, this Court has to be satisfied that there are reasonable grounds for believing that the accused is not guilty of such an offence and that he is not likely to commit the same while on bail. The field test allegedly indicated THC+ and 9 out of 10 packets were neither tested nor sampled. The physical properties weight of the suspected substance as recorded in the complaint panchnama, its memo are at variance with the one’s recorded by the Chemical Examiner. Panchnama records the substance as ‘blackish brown hard shaped’ with weight of the sample being 5 grams. Chemical Examiner has noted the content to be ‘greenish-brown coloured soft mass’ with weight of sample being 3.4 grams. The parcel that is booked is not booked in the name of the petitioner but in the name of one Rakesh Kumar. Even the ID proof, which was submitted, was not of the petitioner but of Rakesh Kumar. Rakesh Kumar is alleged to be an employee of DHL, the courier agency. The article was recovered in the possession of the courier agency. The discrepancy that is being further pointed out is that the article was booked on 17.08.2013 and was allegedly dispatched from the Chandigarh branch on 17.08.2013 and reaches Delhi on 24.08.2013. For the period between 17.08.2013 and 23.08.2013, the article admittedly remained in the possession of DHL but there is no tracking report or status with regard to said period of seven days. Further, the statement under section 67 of NDPS Act, of the petitioner, relied on by the respondents, is not as incriminating as is sought to be projected. It only records that whatever mistake he and his owner have committed, he apologises for the same and in future, he shall not book any parcel in which there are drugs. Further as per the petitioners the statement was not voluntary and has been retracted immediately. Thus, there are reasonable grounds for believing that the present petitioner is not guilty of the offence for which he has been charged - the petitioner is not likely to commit any offence on bail, learned counsel for the petitioner has pointed out that there are no criminal antecedents and further that he had booked several parcels in the past and no complaint was received qua any of the parcels that he booked. This has not been controverted by the prosecution. The requirements of Section 37 NDPS Act, have been fulfilled and, therefore, it is a fit case in which the petitioner is to be released on bail - on petitioner furnishing a bail bond in the sum of Rs. 25,000/- with one surety of the like amount to the satisfaction of the Trial Court, petitioner shall be released on bail, with certain restrictions imposed - petition allowed.

  ---

• Service Tax

• 2018 (10) TMI 1282
  Freezing of petitioner's Bank Account - granting installments for paying the service tax dues - Held that:- The sumtotal of the entire exercise is that the Court is left with very poor assistance on behalf of such respondents and this is a routine matter. Learned advocate Shri Nirzar Desai volunteered to appear on behalf of respondent nos.2 and 3 and file reply by next date of hearing. We permit his appearance and we shall take reply on record subject to conditions. The freezing order of the petitioner's bank accounts is suspended.

  ---

• 2018 (10) TMI 1281
  Maintainability of appeal - monetary amount involved in the appeal - Held that:- In the present appeal the amount involved is Rs. 25,76,454/-. In terms of the Instructions issued by the Central Board of Indirect Taxes & Customs dated 11.07.2018, the monetary limit fixed for filing appeals in the High Court stands raised to Rs. 50 lakhs, which is applicable even in pending cases. As the amount of tax involved in the present appeal is less than Rs. 50 lakhs, the same may be permitted to be withdrawn.

  ---

• 2018 (10) TMI 1280
  Construction of Residential Complex Services - Composite contract - short-payment of service tax - whether a composite contract involving provision of service as well as transfer of property in goods could be covered under CICS and RCS from the date of introduction of service tax levy on such services? Held that:- The issue stands squarely covered by the decision of this Bench in appellant’s own case REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST under Section 65(105)(zzzh) ibid, ‘Construction of Complex Service under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services simpliciter. The impugned order cannot then sustain and requires to be set aside - appeal allowed - decided in favor of appellant.

  ---

• 2018 (10) TMI 1279
  100% EOU - Refund Claim - rejection on the ground that appellant failed to submit required documents to establish that the services were to be treated as export of service - Held that:- The agreement for sale need not be necessarily a written one in a pre-defined format. It can be through oral agreement or written request made in letter correspondence. It can also be offer and acceptance communicated through emails. Therefore, rejection of refund claim on the ground that agreement copy has not been submitted is improper. Going by the order-in-original dated 25.08.2015 and 13.01.2015, in which refund claim amount has been referred in tabular form, the disputed amount of refund claim was Rs. 2,86,171/- and Rs. 4,69,426/- respectively. Going by the ST-3 copy submitted, the total amount outstanding to the credit of the appellant was Rs. 10,19,895/- which indicates that after deducting the claim amount adjudicated upon in those two order-in-originals, the balance amount remaining is Rs. 2,64,298/-, which is also found reflected in the order-in-original dated 16.06.2015 in tabular form. Rejection of refund by the Commissioner (Appeals) solely on the ground that there was no clarity as to for which period such credit had been debited is not acceptable for the reason that by application of mind, such amount could have been ascertained even by a man of ordinary prudence having no technical expertise that of Commissioner (Appeals) has. The appellant is eligible for the entire refund claim of Rs. 2,64,294/- which shall be paid by the respondent department within three months along with applicable interest - Appeal allowed.

  ---

• Central Excise

• 2018 (10) TMI 1278
  Rectification of Mistake - ex-parte order - appellant contend that they were not intimated about the date of hearing, i.e. 20.01.2016, as they have not served with any notice - Held that:- It is seen that the Tribunal does not assign a specific date on the date of hearing when the case is adjourned and the adjourned date is intimated by an adjournment notice and this procedure was adopted in the assessee's own case and the case stood adjourned to 16.9.2015, and the assessee received the adjournment notice dated 15.7.2015. The Revenue has not pointed out that the adjournment notice, fixing the date of hearing as 20.01.2016, was sent to the assessee. The non-appearance of the assessee before the Tribunal on 20.01.2016 is not attributable to the assessee, as they did not have due communication of the date of hearing - This is a sufficient ground to recall and set aside the order dated 20.01.2016, so that the appeal can be heard by the Tribunal and decided on merits and in accordance with law. The appeal stands restored to the file of the Tribunal to be heard and decided on merits, giving liberty to the assessee and the Revenue to canvass all points.

  ---

• 2018 (10) TMI 1277
  Maintainability of appeal - monetary amount involved in the appeal - Held that:- In the present appeal the amount involved is Rs. 26,68,741/-. In terms of the Instructions issued by the Central Board of Indirect Taxes & Customs dated 11.07.2018, the monetary limit fixed for filing appeals in the High Court stands raised to Rs. 50 lakhs, which is applicable even in pending cases. As the amount of tax involved in the present appeal is less than Rs. 50 lakhs, the same may be permitted to be withdrawn.

  ---

• 2018 (10) TMI 1276
  Maintainability of appeal - monetary amount involved in the appeal - Rule 5 of the CENVAT Credit Rules, 2004 - N/N. 5/2006-CE (NT) dated 14.3.2006 - Held that:- The monetary limits, involved in the instant case, being well below the amount fixed in the instruction dated 11.7.2018, we hold that the Department cannot pursue this appeals - appeal dismissed as withdrawn.

  ---

• 2018 (10) TMI 1275
  Reversal of CENVAT Credit in terms of Rule 6(3A)(b)(iii) of the CENVAT Credit Rules, 2004 - no speaking order has been passed - suppression of facts - time limitation - Held that:- There is force in the contention of the appellant that most of the demand is time-barred as there was no suppression of fact on the part of the appellant with intention to evade tax. Further, the appellants have been giving intimation from time to time regarding reversal of CENVAT Credit as per CCR, 2004 but the Commissioner (A) has not given any findings in these two appeals with regard to the issue involved. The appeals need to be remanded back to the Commissioner (A) with a direction to give specific findings on merit as well as on limitation - Appeals are allowed by way of remand to the Commissioner (A) to dispose of the appeal within a period of 02 months.

  ---

• 2018 (10) TMI 1274
  Rectification of Mistake - the appellants' contention is that inasmuch as the proceedings against the main appellant was dropped, all the appeals of the co-appellants should have also been allowed - Held that:- There are no merits in the above contention of the applicants. The Tribunal examined and appreciated the evidences available in respect of each appellants and based upon the same, the appeals of the present three appellants were rejected while allowing the appeal of M/s.Sofina Fashion. Similarly, the issue of cross-examination cannot be said to be a mistake apparent on the face of the records, requiring any rectification. The entire ground raised in the ROM applications are relatable to the merits of the case - It is well settled law that a mistake requiring any rectification has to be a mistake apparent on the face of the records and any issue which requiring long drawn arguments from both sides cannot be held to be a mistake apparent on the face of the records. ROM application dismissed.

  ---

• 2018 (10) TMI 1273
  Valuation - by products - determination of the value for assessment of goods utilized captively - Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Held that:- Tribunal in HM Polycontainer Ltd. v. Commissioner of Central Excise [2010 (6) TMI 444 - CESTAT, MUMBAI] to the effect that transaction value after abating expenses of the assessee is also on acceptable basis of computation even under rule 8 and find no law in the valuation adopted by assessee - Hon’ble High Court of Bombay in Commissioner of Central Excise, Customs & Service Tax, Vapi v. Tarapur Grease India Pvt. Ltd [2015 (11) TMI 1168 - BOMBAY HIGH COURT] has held that the principles of revenue neutrality would apply for recovery of duty sought by the Revenue - appeal allowed - decided in favor of appellant.

  ---

• 2018 (10) TMI 1272
  Rectification of Mistake - Revenue has contended that in the first paragraph of the order dated 23/10/2017, the appellant's name was wrongly mentioned as "Jawahar Shetkari SSK Ltd.", instead off "Commissioner of Central Excise, Kolhapur". It is further contended that instead of allowing the appeal in favour of Revenue, in the operative portion at para 8, it has been wrongly mentioned as "appeal dismissed". Held that:- Considering the fact that there are typographical error in the order and that different set of facts and law, the appeal was disposed off by the Tribunal vide order dated 23/10/2017, I am of the view that ends of justice would be met, if the submissions made in both these applications are considered and the appeal is taken up for hearing afresh - appeal restored to its original number.

  ---

• 2018 (10) TMI 1271
  Rectification of Mistake - applicant has contended that the submissions made in the written note dated 08.02.2018 were not considered in proper prospective - Held that:- The basic issues raised by the applicant regarding the issues that show cause proceedings are barred limitation of time, imposition of equal amount of penalty etc., were considered by the Tribunal vide order dated 16.03.2018 and findings were recorded therein - there are no merits in the application filed by the applicant for rectification of mistake - ROM Application dismissed.

  ---

• 2018 (10) TMI 1270
  Rectification of mistake - Held that:- The Bench is responsible for its orders and not for errors committed on the administrative side falling under the purview of the Registry and subordinate to the President in the discharge of its administrative responsibilities. The time of the judicial side should not be tied up in flaws arising on the administrative side. The distinction between the two used to be amply demonstrated in the healthy convention devised for the format of judgments. The table requiring assent of the author of the judgment was a part and parcel of the document emanating from the Tribunal. Unfortunately, and without any consideration of the rationale for its incorporation, and in the usual hurry to deliver cosmetic reforms, this table was proscribed for which instructions were issued despite reservations of several members who are conscious of the relevance, and the importance, of such conventions. We direct Registry to place this matter before the President for restoration of the format - the application for rectification of mistakes is disposed off.

  ---

• 2018 (10) TMI 1269
  Penalty u/r 15 (2) of the CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 - due to inadvertence, Development Cess paid on the imported commodity was taken as CENVAT credit, which was reversed on being pointed out - Held that:- The audit officers had not specifically alleged regarding the involvement of the appellant in the activities of fraud, collusion, suppression etc., in defrauding the Government revenue. Thus, under such circumstances, the provisions of sub-rule (2) of Rule 15 read with section 11AC ibid cannot be invoked for imposition of the penalty on the appellant. Also, reliance placed in the case of Gaurav Mercantiles Ltd. [2005 (8) TMI 120 - BOMBAY HIGH COURT], wherein imposition of penalty was set aside, holding that once duty is paid prior to issuance of show cause notice, the proceedings have to be stopped and the department cannot proceed further for imposition of penalty. Penalty set aside - appeal allowed - decided in favor of appellant.

  ---