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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter October 27, 2017 Case Laws in this Newsletter: GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS This outsourcing of work to India would not give rise to a fixed place PE - SC Articles AGENTS UNDER GST NATIONAL COMPANY LAW TRIBUNAL – AN ADJUDICATING AUTHORITY UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016 News GST – Frequently Asked Question GST – Frequently Asked Question RBI Reference Rate for US $ Notifications FEMA 388/2017-RB - dated 24-10-2017 - FEMA Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Second Amendment) Regulations, 2017 GST - States S.O. 255. - dated 24-10-2017 - Bihar SGST waives the late fee payable under section 47 for all registered persons who failed to furnish the return in FORM GSTR-3B. S.O. 253.-40/2017-State Tax (Rate) - dated 23-10-2017 - Bihar SGST Specifying tax rate at 0.05% on supply to registered recipient for export. S.O. 251. - dated 18-10-2017 - Bihar SGST Notifies evidences which are required to be produced by the supplier of deemed export supplies for claiming refund. S.O. 249.-38/2017-State Tax (Rate) - dated 18-10-2017 - Bihar SGST Supply of goods by a registered person against Advance Authorisation. S.O. 247. - dated 18-10-2017 - Bihar SGST The Bihar Goods and Services Tax (Eighth Amendment) Rules, 2017. S.O. 245.-39/2017-State Tax (Rate) - dated 18-10-2017 - Bihar SGST Notifies the State tax rate of 2.5 per cent on intra-State supplies of goods for Food preparations put up in unit containers and intended for free distribution to economically weaker sections. CCT/26-2/2017-18/17 - dated 13-10-2017 - Goa SGST Extends the time limit for making a declaration, in FORM GST ITC-01. CCT/26-2/2017-18/16 - dated 13-10-2017 - Goa SGST Extends the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6 CCT/26-2/2017-18/15 - dated 13-10-2017 - Goa SGST supersession of Notification No. CCT/26-2/2017-18/9 dated the 12th September, 2017 - extends the time limit for furnishing the return in FORM GSTR-5A CCT/26-2/2017-18/14 - dated 13-10-2017 - Goa SGST Axtends the time limit for furnishing the return by a composition supplier, in FORM GSTR-4 CCT/26-2/2017-18/13/3048 - dated 11-10-2017 - Goa SGST Specifies conditions and safeguards for furnishing a Letter of Undertaking in place of a Bond by a registered person who intends to supply goods or services for export without payment of integrated tax. 38/1/2017-Fin(R&C)(19) - dated 10-10-2017 - Goa SGST The Goa Goods and Services Tax (Eighth Amendment) Rules, 2017. 38/1/2017-Fin(R&C)(30/2017-Rate)/2451 - dated 28-9-2017 - Goa SGST Amendments in the Notification No. 38/1/2017-Fin(R&C)(12/2017-Rate) dated 30th June, 2017, 38/1/2017-Fin(R&C)(18)/2452 - dated 28-9-2017 - Goa SGST The Goa Goods and Services Tax (Seventh Amendment) Rules, 2017. 38/1/2017-Fin(R&C)(13/2017-Rate)(Corri.)/2453 - dated 28-9-2017 - Goa SGST Corrigendum - Notification No. 38/1/2017-Fin(R&C)(13/2017-Rate) dated 30-06-2017. F.No.12(46)FD/Tax/2017-Pt-II-124 - dated 23-10-2017 - Rajasthan SGST Specifying tax rate at 0.05% on supply to registered recipient for export. F.No.12(56)FD/Tax/2017-120 - dated 18-10-2017 - Rajasthan SGST Notifying the rate of SGST at the rate of 2.5% on intra-state supplies of food preparations for distribution to Economic Weaker Section. F.No.12(46)FD/Tax/2017-Pt-II-123 - dated 18-10-2017 - Rajasthan SGST Notifying the evidences required to be produced by the supplier of deemed export supplies for claiming refund. F.No.12(46)FD/Tax/2017-Pt-II-122 - dated 18-10-2017 - Rajasthan SGST Notification under section 147 of RGST Act, 2017 regarding notifying certain supplies as deemed export F.No.12(46)FD/Tax/2017-Pt-II-121 - dated 18-10-2017 - Rajasthan SGST Rajasthan Goods and Services Tax (Tenth Amendment) Rules, 2017. F.No.12(56)FD/Tax/2017-Pt-II-119 - dated 13-10-2017 - Rajasthan SGST Notification Under Section 148 of RGST Act, 2017 Regarding Payment of Tax at the time of Issuance of invoice by small taxpayers. F.No.12(56)FD/Tax/2017-Pt-II-118 - dated 13-10-2017 - Rajasthan SGST Amendment in Notification No.F.12(56)FD/Tax/2017-Pt-I-46 dated 29.06.2017. F.No.12(56)FD/Tax/2017-Pt-II-117 - dated 13-10-2017 - Rajasthan SGST Rajasthan Goods and Services Tax (Ninth Amendment) Rules, 2017. F.No.12(56)FD/Tax/2017-Pt-II-116 - dated 13-10-2017 - Rajasthan SGST Notification regarding cross empowerment of officers appointed under CGST Act for refund. F.No.12(56)FD/Tax/2017-Pt-II-115 - dated 13-10-2017 - Rajasthan SGST Amendment in Notification No.F.12(46)FD/Tax/2017-Pt-II-86 dated 15.09.2017 F.No.12(56)FD/Tax/2017-114 - dated 13-10-2017 - Rajasthan SGST Notification Regarding prescribing SGST rate of 65% of applicable State Tax for supply of motor vehicles in certain cases. Circulars / Instructions / Orders Income Tax 26/2017 - dated 25-10-2017 Order under section 119 of the Income-tax Act, 1961 in respect of extension of due date for filing of Country-by-Country Report for reporting accounting year 2016-17 GST - States CCT/26-2/2017-18/4/3047 - dated 11-10-2017 Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03. CCT/26-2/2017-18/3/3049 - dated 11-10-2017 Extension of time limit for submitting the declaration in FORM GST TRAN-1 under Rule 120A of the Goa Goods and Services Tax Rules, 2017. 02/2017-GST - dated 2-8-2017 Functions assigned to the officers under Bihar GST Act,2017 DGFT 35/2015-20 - dated 25-10-2017 Onetime condonation of time period in respect of obtaining block-wise extension in Export Obligation period under EPCG Scheme 36/2015-20 - dated 25-10-2017 Onetime condonation of time period in respect of obtaining extension in Export Obligation period under EPCG Scheme 37/2015-20 - dated 25-10-2017 Acceptance of installation certificate under EPCG scheme by the RAs wherein installation certificate is submitted beyond 18 months Customs 15/2017 - dated 20-10-2017 Subject : Pilot implementation of paperless processing under SWIFT - Uploading of supporting documents regarding. 230/2017 - dated 17-10-2017 Sub: Pilot Implementation of Paperless Processing under SWIFT-Uploading of Supporting Documents-reg. 14/2017 - dated 3-10-2017 Subject: - Invitation of applications for empanelment of chartered Engineers for examination/valuation of Second hand machinery / goods etc in the jurisdiction of Commissioner of Customs (Import), New Custom House, New Delhi-reg. 226/2017 - dated 27-9-2017 Subject: Declaration of full description of Wood ( Rough/Sawn/Chipped/Sliced/Peeled) 227 /2017 - dated 27-9-2017 Subject: Making E-payment of Customs Duty Mandatory -reg. 225/2017 - dated 25-9-2017 Sub: Reduction in the warehouse area handling Import LCL cargo inside the Container Freight Station of M/s. Sudharsan Logistics Pvt. Ltd.-De notification of - reg. 13/2017 - dated 29-8-2017 Subject : Amendment in import policy of gold and silver by the DGFT regarding. 222/2017 - dated 24-8-2017 Sub : Change of name Of the ICD- M/s. Indev logistics Pvt. Ltd. to M/s. Kerry Indev Logistics Private Limited - reg. 12/2017 - dated 23-8-2017 Sub: Requirement of ETA/WPC License for import of Wireless Equipments. Highlights / Catch Notes Income Tax Order under section 119 of the Income-tax Act, 1961 in respect of extension of due date for filing of Country-by-Country Report for reporting accounting year 2016-17 Visit to Get Source This outsourcing of work to India would not give rise to a fixed place PE - Indian company only renders support services which enable the assessees in turn to render services to their clients abroad - SC Visit to Get Source Genuineness of long term capital loss on sale of shares - The Revenue cannot question the timing of shares only because effect thereof would be to reduce the assessee's capital gain arising out of sale of immovable property - HC Visit to Get Source The factory building was not put to use and was sold out prior to it being used for business. Therefore, in such a situation, the provisions of Sec. 50 do not come into operation Visit to Get Source Deemed dividend - looking at the transactions from the objects of section 2(22)(e) it cannot be said that there was diversion of dividend in the form of loans or advances. Visit to Get Source Deemed dividend - looking at the transactions from the objects of section 2(22)(e) it cannot be said that there was diversion of dividend in the form of loans or advances. Visit to Get Source Addition on account of interest paid on share application money - nature of expenses - revenue or capital - the amount received is for the requirements of working capital as the amount so received has been invested in the business of shares - treated as revenue expenditure. Visit to Get Source FEMA Permission to resident and non-resident entities to undertake hedge transactions with simplified Procedures Visit to Get Source Service Tax Mining lease - levy of service tax - The tile of the mining area admittedly retains with the State even on execution of mining lease to excavate mineral from the leased area - The assignment of right to use any natural resource i.e. mineral cannot be treated as a goods - HC Visit to Get Source Management, repair and maintenance service - the term ‘railway’ includes each and every respect of the railway including all rolling stock stations, offices, warehouses, wharves, workshops, factories, etc. Visit to Get Source Nature of renting - commercial or residential - the building was let out to the appellant for residential use by one of its employees. Even if we consider that the said employee did attend to some personal office work from the said premises, the same will not make it use of premises other than the residence. Visit to Get Source VAT Manufacture - process of dilution - An aerated drink was manufactured from cold drink concentrate thus giving birth to a commercially distinct and independently recognized commodity - HC Visit to Get Source Case Laws: GST 2017 (10) TMI 1017 Access to registration certificate of partnership firm - case of appellant is that even though the G.S.T. ID/ password for a partnership firm has been provided to the petitioner, but on logging with the said ID/password, he is not able to access the registration certificate of his partnership firm which is migrated to G.S.T. - Held that: - respondent may seek instructions if any arrangement has been made to resolve such kind of problems. Income Tax 2017 (10) TMI 1016 Disallowance made u/s 40A(3) - Held that:- Assessee's case falls under the exceptions provided in Rule 6DD(b) and Rule 6DD(k) of the Rules. In view of the aforesaid facts and circumstances and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in deleting the disallowance made u/s 40A(3) of the Act in all the years under appeal. Accordingly, the grounds raised by the assessee for all the years under appeal are allowed. Appeal of the revenue is dismissed. 2017 (10) TMI 1015 Investment on purchase of land out of the undisclosed sources - guinity of gift receipt - Held that:- Shri Deep Chand, son of Shri Tejram, who is shown as seller of the property to the assessee, has filed an affidavit stating that he is an old man and uneducated person. He was unmarred. He was not having any successor. Rambir Singh and his wife Kanta Devi (assessee) were taking care of him. He had gifted all his property in the name of Rambir Singh and Kanta Devi (assessee). It is pertinent to note that Shri Deep Chand has categorically clearly stated that the land was given as a gift to the assessee. As per the registered Will, all properties i.e. movable and immovable located in India are to devolve in favour of Shri Rambir Singh husband of the assessee. The ld. CIT(A) has not asked report of A.O. on the veracity of content of the affidavit submitted by Shri Deep Chand. No inquiries were made with regard to sale deed executed instead of gift deed in favour of the assessee whether it was due to bonafide mistake whether the sale consideration mentioned therein was genuine mentioned. In view of these facts, we are of the view that to decide the issue in right perspective, further inquiries with regard to the claim of assessee that property was received as gift and no consideration was paid are required. Hence, the matter is restored back to the file of Assessing Officer to be decided afresh in the light of above observations. Appeal of the assessee is allowed for statistical purposes only. 2017 (10) TMI 1014 Addition u/s 14A r.w.r. 8D - Held that:- facts pertaining to the instant issue are identical as they were in preceding assessment year 2008-09 i.e. since application of Rule 8D of the Income Tax Rules. The assessee then takes us to paper book pages 77 to 98 containing a co-ordinate bench order dated 24.01.2017 for preceding assessment year deleting proportionate interest disallowance on the ground that assessee’s interest free funds exceed its tax free investments amounting to ₹ 651crores. It then confirms latter limb of administrative disallowance amounting to ₹ 63.84lacs. We take cue therefrom to notice that assessee’s tax free investments in the impugned assessment year read a figure of ₹ 684crores as against interest free funds in the nature of share capital and reserves amounting to ₹ 10,214crores. We therefore find no reason to concur with the above proportionate interest disallowance of ₹ 37,11,56,870/-. We now proceed to deal with administrative expenditure disallowance of ₹ 3,33,94,517/-. It is no more an issue that the above co-ordinate bench had upheld the same in preceding assessment year. We therefore adopt consistency to affirm this latter disallowance of administrative expenditure. This first substantive ground is taken as partly accepted. Adding speculative gains amortized as per RBI guidelines as well as in disallowing such related gain as taxed in preceding assessment years - Held that:- We draw support from above co-ordinate bench findings to delete addition of speculative gains of ₹ 2,64,27,796/- amortized as per RBI guidelines. The assessee at this stage submits that it no more wishes to press for its latter grievance qua addition of ₹ 3,21,05,491/- as an instance of double addition since assessed in earlier assessment years because of the fact that it has not been taxed till date. We appreciate this fair stand to confirm the above latter addition of ₹ 3.21crores. This second substantive ground is therefore partly accepted. Claiming employees’ stock option scheme “ESOP” as per SEBI guidelines, 1999 as revenue expenditure - Held that:- It is not in dispute that assessee’s relevant details pertaining to the impugned ESOP scheme already form part of the case records as indicated in preceding paragraph. It has further come on record that the whether or not such an ESOP expenditure is allowable u/s.37 of the Act or not was of course a debatable issue ultimately settled as per above special bench decision. We therefore find merit in assessee’s additional ground in principle. The same is therefore admitted. We accordingly direct the Assessing Officer to carry out necessary factual verification as per law after affording adequate opportunity of hearing to assessee. Prior period expenditure disallowance - Held that:- The Revenue fails to rebut the fact that the assessee has already succeeded on this prior period expenditure disallowance issue in preceding assessment years. We further find that hon’ble jurisdictional high court decision in PCIT vs. Adani Enterprises [2016 (7) TMI 1250 - GUJARAT HIGH COURT ] holds that such a disallowance is not to be invoked in case an assessee is assessed at the same rate in the two assessment years in question. We therefore affirm the CIT(A)’s findings under challenge. The Revenue’s sole substantive ground dismissed. 2017 (10) TMI 1013 Addition @ 3% profit rate on total purchases - bogus purchases - Held that:- We are of the considered view that the CIT(A) had rightly appreciated that the addition in the hands of the assessee was liable to be restricted only as regards the profit element which was embedded in making of purchases by the assessee from the open/grey market. We find that the CIT(A) though was not oblivious of the fact that in respect of bogus purchases made in a normal business, the courts had consistently estimated the profit margin involved in making of purchases from the open/grey market at 12.5% of the value of the bogus purchases, but then, not loosing sight of the fact that unlike those cases, in the trade line of diamond business the profit margin that would be involved would not exceed 3%, thus for the said reason had restricted the addition in the hands of the assessee @ 3% of the aggregate value of the bogus purchases made by the assessee. We have given a thoughtful consideration to the facts of the case and are persuaded to be in agreement with the view so taken by the CIT(A). We thus being of the considered view that the CIT(A) had fairly concluded that the addition in respect of the purchases which were claimed by the assessee to have been made from the aforementioned parties, viz. (i) Prime Star; (ii) Rajan Diamonds; (iii) Mayur Exports; and (iv) Parvati Exports was liable to be restricted to 3% of the aggregate value of the purchases, therefore, find no reason to dislodge the well reasoned order of the CIT(A). We thus, in the backdrop of our aforesaid observations, finding ourselves as being in agreement with the view taken by the CIT(A), therefore, uphold his order. 2017 (10) TMI 1012 Disallowance of Brokerage expenses - Held that:- The assessee has made the payments to the dalals through cheques. The TDS was also deducted. The income tax details of the persons to whom the dalalis were paid was with the department. The assessee has produced certain persons before the Assessing Officer. The affidavits of these persons were also filed wherein they have admitted that they had done the work for the assessee. The ledger account of these persons duly reflecting the payments and the TDS thereon were also filed. Considering all CIT(A) was not justified in sustaining the addition, accordingly, delete the addition. - Decided in favour of assessee Disallowance of packing expenses - Held that:- CIT(A)’s finding that the bardana purchases for the month of April, 2009 was ₹ 26,614/- and thereafter the purchases were only in the month of October while the sales affected during this period were around 50% of the annual sales. The ld. CIT(A) has recorded that the purchases appears to be inflated in the second half of the year. Before the Bench also the ld AR was unable to controvert this finding of ld. CIT(A), therefore, after hearing both the sides, it is of the view that purchases of bardana in the second half of the financial year relevant to the assessment year were inflated and the disallowance made by the Assessing Officer was justified which has been rightly sustained by the ld. CIT(A). - Decided against assessee Disallowance of telephone expenses, travelling expenses and vehicle and running expenses - CIT(A) has sustained 10% of the expenses debited in the books of account of personal use - Held that:- Assessee was not able to controvert the findings recorded by the ld. CIT(A). There was personal use of telephone, travelling and vehicle running, therefore, find no reason to interfere with the findings of the ld. CIT(A), the same is hereby uphold. - Decided against assessee 2017 (10) TMI 1011 Income accrued in India - fixed place PE in India - DTAA - place of business in India - Held that:- It is clear that there must exist a fixed place of business in India, which is at the disposal of the US companies, through which they carry on their own business. There is, in fact, no specific finding in the assessment order or the appellate orders that applying the aforesaid tests, any fixed place of business has been put at the disposal of these companies. The assessing officer, CIT (Appeals) and the ITAT have essentially adopted a fundamentally erroneous approach in saying that they were contracting with a 100% subsidiary and were outsourcing business to such subsidiary, which resulted in the creation of a PE. No part of the main business and revenue earning activity of the two American companies is carried on through a fixed business place in India which has been put at their disposal. It is clear from the above that the Indian company only renders support services which enable the assessees in turn to render services to their clients abroad. This outsourcing of work to India would not give rise to a fixed place PE and the High Court judgment is, therefore, correct on this score. Insofar as a service PE is concerned, the requirement of Article 5(2)(l) of the DTAA is that an enterprise must furnish services “within India” through employees or other personnel it has already been seen that none of the customers of the assessees are located in India or have received any services in India. This being the case, it is clear that the very first ingredient contained in Article 5(2)(l) is not satisfied. We entirely agree with the approach of the High Court in this regard. Article 42.31 of the OECD Commentary does not mean that services need not be rendered by the foreign assessees in India. If any customer is rendered a service in India, whether resident in India or outside India, a “service PE” would be established in India. As has been noticed by us hereinabove, no customer, resident or otherwise, receives any service in India from the assessees. All its customers receive services only in locations outside India. Only auxiliary operations that facilitate such services are carried out in India. This being so, it is not necessary to advert to the other ground namely, that “other personnel” would cover personnel employed by the Indian company as well, and that the US companies through such personnel are furnishing services in India. This being the case, it is clear that as the very first part of Article 5(2)(l) is not attracted, the question of going to any other part of the said Article does not arise. It is perhaps for this reason that the assessing officer did not give any finding on this score. Best Practice No.1 has no application on the facts of the present case, as the agreement reached applies only to the respondent companies, and not to any general category of taxpayers. It is clear, therefore, that Shri Ganesh is right in relying upon Article 3.6 of the OECD Manual. It is very clear, therefore, that such agreement cannot be considered as a precedent for subsequent years, and the High Court’s conclusion on this aspect is also correct. Having held in favour of the assessees that no permanent establishment in India can possibly be said to exist on the facts of the present case, we do not deem it necessary to go into the cross-appeals that were filed before the High Court, which were dismissed by the High Court agreeing with the ITAT that the calculation of the ITAT would lead to nil taxation. 2017 (10) TMI 1010 Non-compete agreement - gain considered to be long term capital gain - Whether the ITAT was justified in holding that the amount paid by the Company to the assessee in terms of the agreement dt. 24.5.1999, would not fall within the meaning of words ‘right to manufacture, produce or process any article or thing’ but, within the meaning of the words ‘right to carry on any business? - Held that:- SLP dimissed. HC order confirmed [2017 (4) TMI 413 - RAJASTHAN HIGH COURT] Payment received as non-competition fee under a negative covenant was always treated as a capital receipt till the assessment year 2003-04. It is only vide Finance Act, 2002 with effect from 1.4.2003 that the said capital receipt is now made taxable [See: Section 28(va)]. The Finance Act, 2002 itself indicates that during the relevant assessment year compensation received by the Assessee under non-competition agreement was a capital receipt, not taxable under the 1961 Act. It became taxable only with effect from 1.4.2003. It is well settled that a liability cannot be created retrospectively. Observations which are made by the Tribunal and the finding arrived at regarding capital gain and clause to carry on business as introduced in 2003, the observations made by the Tribunal are required to be upheld and same is upheld. - Decided in favour of the assessee 2017 (10) TMI 1009 Scope of Appeal & The Powers of Appellate Authority - Held that:- Under the amended section 251 of the Act, the Appellate Commissioner may confirm, reduce, enhance, or annul the assessment. But he cannot refer the case back to the Assessing Officer for making a fresh assessment; nor can he direct the Officer to decide in accordance with his directions. Records and Satisfaction under Section 158BD - period of limitation - Held that:- Supreme Court in Manish Maheshwari v. CIT (2007 (2) TMI 148 - SUPREME COURT OF INDIA) has held that section 158-BD provides for taking recourse to a block assessment in terms of Section 158-BC regarding any other person, the conditions precedent for that are: (i) satisfaction must be recorded by the assessing officer that any undisclosed income belongs to any person, other than the person regarding whom search was made under Section 132 of the Act; (ii) the books of accounts or other documents or assets seized or requisitioned had been handed over to the assessing officer having jurisdiction over such other person; and (iii) the assessing officer has proceeded under Section 158-BC against such other person. Because of the authoritative assertion of the legal principles in Manish Maheshwari about section 158 BD, we may obviate any reference to Panchajanyam, whose holding turns on its own facts. The upshot of the discussion is that the assessment order, dt.28.07.2005, is vitiated. The statutory requirement for completing the block assessment under section 158BE(2)(b) is “two years from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January 1997.” Determining the limitation under section 158BE (2)(b) of the Act, the Madras High Court in Commissioner of Income Tax vs. K.M. Ganesan [2009 (11) TMI 572 - Madras High Court] has held that if the notice is given first under section 158BC and then correctly given under section 158BD, the limitation runs from the date of first notice. Here, the search under section 132 of the Act was conducted on 04.11.2000; the notice under section 158BC was issued on o8.06.2001. The proceedings were concluded on 28.07.2005, when the Assessing Officer passed the order. The notice under section 158BC of the Act, as is seen, was given way beyond two years ago. Even going by that reckoning, the whole proceedings have been barred by limitation. So, we hold that the impugned order, dt.04.06.2008, of the Appellate Tribunal is unexceptionable and unassailable. The questions of law, therefore, are answered against the Revenue and in favour of the assessee. 2017 (10) TMI 1008 Directions issued under Section 144C(5) of the Income Tax Act by DRP - maintainability of the Writ Petition - transfer pricing adjustment - whether the DRP has recorded any factual findings while disagreeing with the TPO with regard to computing quantum of adjustment? - Held that:- DRP while issuing directions has directed adjustment by examining the facts. This direction is required to be implemented by the Assessing Officer after which it ripens into an assessment order open to challenge in terms of the provision of the Act. This appears to be precisely the reason for terming the impugned order as a direction under Section 144C (5) of the Act and it ripens into an order on being given effect to by the Assessing Officer. Therefore, we are convinced that the decisions cited by Mr.N.Venkatraman, cannot be applied, at this juncture, as the factual position requires to be considered, which obviously cannot be done in a Writ Petition and therefore, the impugned direction issued by the DRP has to be given effect to and the third respondent has to pass an order of assessment, which can be questioned by the petitioner by filing an appeal before the Tribunal. For all the above reasons, the Writ Petition is dismissed with direction to the third respondent to give effect to the directions issued by the DRP, dated 13.12.2016, by passing an assessment order, after which, it is open to the petitioner to challenge the same before the Tribunal 2017 (10) TMI 1007 Extension of the stay of outstanding demand - Held that:- Whether an order of stay should be vacated is definitely available with the ITAT but such discretion should be exercised judicially. Given the above background when as recently as on 4th August 2017, the ITAT thought it fit to extend the stay “for a further period of six months from today or till the disposal of the appeal, whichever is earlier”, the appeal not having been being disposed of, the ITAT was under no compulsion to immediately vacate the stay only because a request for an adjournment by one day was made by the AR of the Petitioner. The appeal, which is now listed for hearing before the ITAT on 20th November 2017, could have been either advanced to an earlier date or it made clear that there would be no further adjournment on that date. The Petitioner assures the Court that the Petitioner-Assessee will proceed with its appeal on 20th November 2017 without seeking any adjournment. In view of the above assurance, no further directions are called for in this regard. In the circumstances, the Court sets aside the order dated 10th October 2017 passed by the ITAT and directs that the appeal of the Petitioner be listed on 20th November 2017, the date already fixed by the ITAT. The interim order dated 4th August 2017 of the ITAT is restored. 2017 (10) TMI 1006 Assumption of jurisdiction u/s 153A - ITAT held the assumption of jurisdiction u/s 153A as erroneous inasmuch as the material seized during the search was not ‘incriminating'- Held that:- ITAT has come to the above conclusion by relying on the decision of this Court in Commissioner of Income Tax v. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]. The ITAT has, in the impugned order, discussed in detail the 'materials’ seized during the course of search and has concluded that it was not incriminating. Having been shown the same material by the learned counsel for the Revenue, the Court too is unable to come to a different conclusion. No substantial question of law arises 2017 (10) TMI 1005 Deduction u/s. 80IC for Baddi Units - profits derived from manufacturing activities and marketing activities bifurcation - Held that:- As in assessee's own case [2017 (10) TMI 939 - GUJARAT HIGH COURT] Appellate Tribunal was right in law and on facts in allowing the deduction u/s. 80IC of the Act for Baddi Unit as held in the earlier assessment year that there was no separate marketing division and therefore, there was no transfer of goods from eligible to non-eligible undertaking. Thus, in absence of any separate marketing division, there could not be separation of profit and expenditure. It was also found that the brand was owned by the foreign collaboration and there cannot be any profit attributable to such brand. More importantly, the Tribunal noted that in the preceding assessment year 2007-08, the assessee had set up such a claim. The Assessing Officer had framed scrutiny assessment during which no disallowance was made. No attempt was made on part of the Revenue either to take such order in revision nor process of reopening of exemption was resorted to. - Decided against revenue 2017 (10) TMI 1004 Addition on long term capital loss on sale of shares - proof of colourable device to evade tax - Held that:- Though the shares were sold offmarket, the Assessing Officer also confirmed that the sale prices were the same as those prevailing in the listed market. Thus there was no element of doubt about the correctness of the sale price of the shares. The volume of shares acquired through gifts by relatives has not been brought on record. These being the facts we are in agreement with the view of the Tribunal that merely because the shares were sold during the said period when the land was also sold, the former leading to long term capital loss and the later to long term capital gain, would not by itself establish colourable device to evade tax. As is held by this Court as well as by the Supreme Court on large number of occasions, commercial expediency and legitimate tax planning is always open to an assessee. The Revenue cannot question the timing of shares only because effect thereof would be to reduce the assessee's capital gain arising out of sale of immovable property. - Decided against revenue 2017 (10) TMI 1003 Right to property - long term capital gain - period of holding - whether is a capital asset u/s. 2(14)? - assessee was holding the right to property during the period 1st April, 2002 to 10th February, 2006 i.e. for a period of 4 years and 9 days (exceeding 36 months) - Held that:- The owners of the plot have authorised the developer to take the plot and the moment the assessee has booked the flat and flat has been allotted to the assessee, a valuable right has created. It is a capital asset and that right continued till the assessee entered into tripartite agreement dated 10th February, 2006. Under section 45 of the Income Tax Act transfer of a capital asset is chargeable to tax under the head ‘capital gains’ and not under the head ‘income from business’. It is not a case of the Revenue that the assessee was regularly booking flats and selling the same so that it can be said that the assessee has entered into a business transaction. The income shown by the assessee has to be assessed under the head ‘income from capital gains’. The capital derived by the assessee is long term capital gain as the assessee held the right on the asset for more than 36 months. We therefore set aside the order of the CIT(A) and direct the AO to treat the said profit as long term capital gains a returned by the assessee. - Decided in favour of assessee. 2017 (10) TMI 1002 Additions made on the basis of the fall of GP rate - CIT-A deleted the addition - Held that:- The variance in GP rate, according to the Ld. CIT (A) had to be considered in holistic view, but picking up some units for penalization without reward to the units where the GP rate was increased is bad. In respect of FL 2 Unit, gas division, parvat fabrication and parvat wires the declination was in significant Ld. CIT (A) observed that there is marginal declination. In respect of all these units Ld. CIT (A) observed that no specific case of inflation of direct expenses or suppression of receipts was found by the AO. Merely because there is decrease in the GP rate addition could be made in the absence of any specific finding as to the incorrectness of the accounts. On this aspect, we are in agreement with the Ld. CIT (A) because the AO had to take both the increased and decreased in GP rate in respect of all the units as a whole but leaving the profit making units unrewarded it is not fair to pick up only such units where the GP rate is on a fall. - Decided against revenue Addition made on account of interest earned on year marked funds - CIT-A deleted the addition - Held that:- As per the comments of C&AG the interest earned on these ‘earmarked fund’ shall be transferred and credited to the ‘earmarked fund’ and the corporation has no authority to use or expand or utilized the interest earned for its own purposes, and any credit of this ‘earmarked fund’ to the accounts of the assessee results in understatement of loss and current liabilities. However, AO felt that the interest earned on the ‘earmarked fund’ would also go to the same kitty of funds of the company, as such, the interest amount of ₹ 12,32,322/- has to be treated as income. Ld. CIT (A) on this aspect found that in respect of all the assessment years 2005-06 and 2006-07 also in appeal Ld. CIT (A) accepted the contention of the corporation and held that the interest earned on ‘earmarked fund’ FDR cannot be treated as income of the corporation. Following the same in respect of the AY 2007-08 also Ld. CIT (A) granted relief to the assessee. No change of facts from those of the assessment years 2005-06 and 2006-07 is brought to our notice. We do not find any illegality or irregularity in the Ld. CIT (A) in taking the same view on identical facts - Decided against revenue 2017 (10) TMI 1001 Reopening of assessment - bogus purchases - Held that:- CIT(A) merely accepted the contentions of the assessee without any necessary verifications, enquiry and investigations and estimated income to the tune of 12.5% of bogus purchases based on certain case laws. These purchases to the tune of ₹ 7,47,73,908/- are appearing in books of the assessee and the onus is on the assessee to prove that these are genuine and bonafide expenses claimed by the assessee which were incurred wholly and exclusively for the business of the assessee, including producing the parties before the authorities. This is to be read in the light of provisions of Section 69C read with proviso which was introduced by Finance Act,1998 w.e.f. 1-4-1999 . Under these circumstances we are inclined to set aside and restore the issues covered by this appeal back to the file of the AO who will de-novo decide the issues on merits in accordance with law. The AO shall grant opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law before de-novo adjudicating the issues on merits. The evidences and explanations submitted by the assessee shall be admitted by the AO in the interest of substantial justice. Since, the assessee did not co-operated during assessment proceedings by not participated in the assessment proceedings deliberately, we would like to clarify that this is an open remand. 2017 (10) TMI 1000 Addition on account of profit on sale of factory building treating the same as Income from Other Sources - Sec 50 applicability - Held that:- The undisputed factual matrix is that the assessee has purchased a property comprising of land and factory building during the year and also expended money on its extension. It is also notable that the factory building was not put to use by the assessee for its business of manufacturing of packing material. Instead, during the year itself assessee sold the said property for a consideration, which has yielded surplus. The surplus has not been offered for taxation and instead, assessee claimed depreciation on the block of factory building on the WDV as reduced by the sale consideration. Notably, the cost of acquisition and cost of improvement thereof amounting to ₹ 15,00,000/- (net of ₹ 3,00,000/- in respect of land) and ₹ 1,09,96,039/- respectively were added to the value of the block of factory building. In considered opinion, the assessee has clearly brought out that the factory building was not put to use and was sold out prior to it being used for business. Therefore, in such a situation, the provisions of Sec. 50 of the Act do not come into operation, as canvassed by the assessee before me. Sec. 50 prescribes for computation of Capital Gains in cases where the capital asset forms part of block of assets in respect of which “depreciation has been allowed” under the Act. Quite clearly, it is a conceded position that the factory building in question was not put to use for business and thus, it cannot be construed to be a capital asset in respect of which depreciation has been allowed under the Act. Therefore, the treatment accorded by the assessee is incorrect. At the same time, even the treatment by the Assessing Officer of assessing the surplus on the sale of factory building as ‘income from other sources’ is also untenable. Pertinently, the factory building is a capital asset and merely because assessee has acquired it and sold during the year itself would not change its character. Therefore, it is a case where the capital asset on which depreciation has not been allowed has been sold within a period of less than 12 months of its acquisition and, therefore, the resultant surplus is a Short Term Capital Gain. Such a surplus ostensibly cannot be assessed as ‘income from other sources’. 2017 (10) TMI 999 Addition of unexplained cash credits - assessee-society has been granted registration under section 12A and 80G - Held that:- The assessee--society, in the present case, has been able to prove the identity of the investors, creditworthiness and genuineness of the transaction in the matter. A.Y. 2007-2008 - CIT(A) on examination of the evidence and material on record, found that all the lender companies are registered with ROC and regularly assessed to income tax and filed their PAN and copy of the acknowledgment of filing their return. Therefore, the identity of the lender companies have been proved. The Ld. CIT(A) also examined their balance sheet and other material on record to show that all the lender companies have regular source of income and they have sufficient funds with them to give loans to assessee-society. Their source are coming from earlier years and all the loans and advances have been given through banking channel. Therefore, all the lenders have sufficient capacity to give loans and advances to the assessee-society. The Ld. CIT(A) found that the loans and advances have been repaid in same year or in the next year through banking channel which would support the findings of the Ld. CIT(A) that the lender companies were genuine companies and have given loans/advances to assessee-society. The findings of fact recorded by the Ld. CIT(A) have not been rebutted by the Revenue department through any evidence or material on record. Since the statements relied on by Assessing Officer were not subjected to cross-examination on behalf of the assessee-society and both of them did not appear before A.O. at the assessment stage as well as at remand proceedings, therefore, even if assessee-society do not appear before Assessing Officer in the remand proceedings, the fact remains that their statements could not be subjected to crossexamination on behalf of the assessee-society. Therefore, their statements cannot be read in evidence against the assessee-society. Considering the totality of the facts and circumstances of the case in the light of finding of fact recorded in A.Y. 2008-2009 above, we are of the view that the Ld. CIT(A), on both appreciation of facts and material on record, correctly deleted the addition - Decided in favour of assessee. 2017 (10) TMI 998 Transfer pricing adjustment on account of AMP Expenses - Held that:- Abnormal expenses incurred under the head AMP cannot be termed as international transaction and thus the AO had wrongly invoked the provisions of Chapter X of the Act for the said AMP spent, thus the addition is therefore directed to be deleted. Adjustment on account of notional interest attributable to delayed payments receivable from the AE - Held that:- The amendment in section 92B, at least to the extent it dealt with the question of issuance of corporate guarantees, is effective from 1-4-2012. The assessment year being an assessment year prior to that date, the amended provisions of section 92B have no application in the matter. Additions deleted Disallowance of deduction under section 10A - Held that:- The impugned order of the ITAT in the case of AIPL for AY 2009-10 on the issue of allowing the deduction under Section 10A of the Act suffers from no legal infirmity either in its analysis of the legal provisions or in its conclusions. The Court is not inclined to frame any question of law on the issue concerning a Section 10A deduction in the appeal of the Revenue against AIPL for AY 2009-10. We direct the Assessing Officer to allow the deduction claimed under section 10A of the Act by the assessee Addition u/s 14A - Held that:- Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Thus additions deleted. Assessing interest on income tax refund as income from other sources - Held that:- In the instant case the fact that the interest was withdrawn in the year under consideration itself or in the subsequent year, is not clear from the order of the authorities below. It is also not clear what is the amount which has been withdrawn subsequently. The relevant ITNS-150 has not been produced before us. In the facts and circumstances of the case, we feel it appropriate to restore the issue to the file of the Assessing Officer for adjudication after appreciation of the facts and in the light of the decision cited by the Ld. counsel of the assessee. The assessee shall be afforded adequate opportunity of being heard. The ground of appeal is accordingly allowed for statistical purpose. 2017 (10) TMI 997 Deemed dividend addition u/s 2(22)(e) - Held that:- Since the money in question remanded with the assessee only for one day and was returned to GCP without any utilisation it cannot be treated as advance or loan within the meaning of section 2(22)(e) and came to the aforesaid conclusion. CIT(A) placed reliance on the decision of ITAT Mumbai Bench in the case of Praveen Bhimshi Chheda Shiv Sadan vs DCIT (2011 (5) TMI 857 - ITAT MUMBAI) wherein it was held that the provision of section 2(22)(e) of the Act cannot be attracted where the transaction was circuitous transaction and the money which initially belonged to the company was returned to it on the very same day. The Tribunal held that looking at the transactions from the objects of section 2(22)(e) of the Act it cannot be said that there was diversion of dividend in the form of loans or advances. CIT(A) accordingly deleted the addition made by AO. Disallowance of exemption under section 54 - Held that:- The assessee claimed deduction during the year. It was contended that since the assessee has not been able to purchase the new property within the specified period, he has declared this capital gain in the next assessment year. In this regard, attention was invited which is computation of income for the subsequent year. As per the assessee has declared the capital gain on this property in a subsequent year 2012-13. We are of the view that the issue needs to be set aside to the file of the AO with the directions that he shall verify the return for the next assessment year. In case the capital declared in the subsequent year, then the said capital gain need to be deleted. Accordingly, the AO is directed to verify the claim of the assessee. In case the AO is of the view that the capital gain is chargeable to tax in the year under consideration, then he shall delete the income in the subsequent assessment year 2012-13, as we are of the view that the same income cannot be taxed twice. Disallowance of an amount being brokerage and legal expenses paid while computing capital gain on the sale of property bearing No. B-7, Sector-72 - Held that:- We note that the AO had disallowed this expenditure on the ground that assessee has not filed the details. This is factually incorrect. A sum of ₹ 2,26,750/- was paid to Noida Authority as one time lease charges at the time of purchase of the Plot. The evidence of the same was submitted placed at PB. Pg. 99 along with the bank statement at page 101 whereby a sum of ₹ 113375/- (being 50% share. of the assessee of ₹ 226750) is the debit appearing. Thus, the same being cost of acquisition it was rightly deducted while computing capital gain. Before the AO assessee submitted the ledger Account (PB Pg.99) of the property showing the amount of expenses paid to Noida Authority and the same was co-related with the bank statement at PB Pg. 101 where in PO is made on 30.6.2010 for making payment to Noida Authority. In our view the Ld. CIT(A) has gone wrong ignoring these evidences and confirming the disallowance made by the AO, hence, the addition in dispute is deleted. Disallowance of deduction being the expenditure incurred by the assessee in respect of property bearing No. S-143, Greater Kailash, Part-II, New Delhi - Held that:- This amount was incurred by the assessee on this property after the purchase. In our view the same is to be included in the cost while computing the capital gain. The AO has disallowed the same and the Ld. CIT(A) has confirmed the disallowance ignoring the explanation and evidences submitted by the assessee in support thereof. Since the assessee having incurred the expenditure the same ought to have been allowed while computing cost of the assets sold, hence, the addition in dispute is deleted. Disallowance being the expenditure incurred on legal and brokerage at the time of sale of the above property - Held that:- As per the provision of the Section 48, the capital gain is to be computed after deducting from the actual consideration received, the expenditure incurred in connection with such sales. The assessee having incurred these expenses the AO and Ld. CIT(A) have gone wrong in disallowing the same, hence, the addition in dispute is deleted. 2017 (10) TMI 996 Revision u/s 263 - AO not considered the aspect of deemed dividend and claim of depreciation on motor lorries at 30% while framing the search assessment u/s 153A - Held that:- It is not in dispute that as on the date of search the original assessment for Asst Year 2010-11 was completed u/s 143(3) of the Act and hence stood unabated. It is now well settled by various high courts including the Hon’ble Jurisdictional High Courts relied upon supra that the concluded assessments could be disturbed only in the event of presence of any incriminating materials found in the course of search. We find from the above explanation of various seized documents found in the course of search, there was absolutely no material much less any incriminating material, so as to disturb the earlier concluded assessment for the Asst Year 2010-11. Hence the ld AO had rightly not considered the aspect of deemed dividend and claim of depreciation on motor lorries at 30% while framing the search assessment u/s 153A of the Act. The assessee had given proper explanations regarding these items before the lower authorities as reproduced above. We find that the assessee had also duly explained the complete contents of the seized documents relied upon by the ld CIT in his order. In our considered opinion, those materials are not incriminating at all and are forming part of regular books of accounts of the assessee. These explanations have been completely ignored by the ld CIT while directing the ld AO to frame the assessment afresh. We hold that when an addition could not be made as per law in section 153A proceedings, then the said order cannot be construed as erroneous warranting revisionary jurisdiction u/s 263 of the Act by the ld CIT. Thus we find that the order of the ld CIT u/s 263 of the Act deserves to be quashed. - Decided in favour of assessee. 2017 (10) TMI 995 Revision u/s 263 - AO not considered the aspects in the assessments framed u/s 153A - Held that:- We find that there are no incriminating materials found during the course of search for the Asst Years 2008-09, 2010-11 and 2011-12 as the issues addressed by the ld CIT are only interpretation of law and not based on any materials found in the search. With regard to the Asst Year 2009-10, we find from the above explanation of the assessee, there was absolutely no material much less any incriminating material, so as to disturb the earlier concluded assessment for the Asst Year 2009-10. Hence the ld AO had rightly not considered these aspects in the assessments framed u/s 153A of the Act. The assessee had given proper explanations regarding these items before the ld CIT as reproduced above. We find that the assessee had also duly explained the complete contents of the seized documents relied upon by the ld CIT in his order. Thus those materials are not incriminating at all and are forming part of regular books of accounts of the assessee. These explanations have been completely ignored by the ld CIT while directing the ld AO to frame the assessment afresh. We hold that when an addition could not be made as per law in section 153A proceedings, then the said order cannot be construed as erroneous warranting revisionary jurisdiction u/s 263 of the Act by the ld CIT. We hold that even on merits, there is no case made out by the ld CIT for making any addition on the issues proposed in the show cause notice of ld CIT. In these facts and circumstances, we find that the order of the ld CIT u/s 263 of the Act for the Asst Years 2008-09 to 2011-12 deserve to be quashed. - Decided in favour of assessee. Allowance towards additional depreciation u/s 32(1)(iia) of the Act on plant and machinery - Held that:- The assessee is engaged in the manufacturing activity and thereby eligible for deduction u/s 80IB of the Act. Once it is held so, the allowance towards additional depreciation u/s 32(1)(iia) of the Act on plant and machinery is automatic and this was specifically brought to the notice of the ld CIT by the assessee which has been conveniently ignored by the ld CIT while passing the revision order u/s 263 of the Act. In these facts and circumstances, we find that the order of the ld CIT u/s 263 of the Act deserves to be quashed. Accordingly, the grounds raised by the assessee are allowed.- Decided in favour of assessee. 2017 (10) TMI 994 Addition on account of interest paid on share application money - nature of expenses - revenue or capital - Held that:- It is pertinent to mention here that it is not the case of the revenue that assessee has diverted interest bearing funds without charging any interest, rather it is a case where it is an admitted position of facts that assessee has received handsome amount of interest which is not even questioned by the AO or DR, this interest has been earned as a result of the amount received from Conquer. The appellant has received share application money not to increase its capital base but for the requirements of working capital as the amount so received has been invested in the business of shares. In view of these facts and after relying on the decision of Pune ITAT in the case of SR Thorat Milk Products Pvt. Ltd. Vs ACIT [2016 (7) TMI 257 - ITAT PUNE] the interest paid on share application money is treated as revenue in nature - CIT-A was correct to delete the addition. - Decided against revenue 2017 (10) TMI 993 Gain on sale of immovable properties - business income or capital gain - Held that:- The assessee has not filed any Wealth Tax Return, and if filed, not placed on record showing the said plots as investment as per valuation to be made under the wealth tax rules. This goes to prove that the assessee is carrying on the business of purchase and sale of properties and is a property dealer-direct selling agent holding assets as stock in trade and not as investment. Accordingly, find no infirmity in the order of the ld. CIT(A) who has rightly confirmed the action of the Assessing Officer. Ground of the assessee is dismissed. No transfer of assets is involved - Held that:- It is evident from record that the assessee had made investment in shares in two companies and the companies have been closed and it was stated that the name of the company had been struck out under the Companies Act and the shares invested as loss. Therefore, there cannot be any gain to the assessee in this regard and the same cannot be the income of the assessee from any angle. Accordingly, the addition so confirmed by the ld. CIT(A) is directed to be deleted. Ground of the assessee is allowed. Addition being 20% of the various expenses for which no evidence, such as copies of bills, vouchers were furnished - Held that:- No satisfactory reply or cogent explanation was put forth. The ld. CIT(A) confirmed the action of the Assessing Officer. Before here also, no cogent explanation has been put forth under such facts and circumstances of the case. Find no infirmity in the order of the ld. CIT(A) who has rightly confirmed the action of the Assessing Officer. Thus, Ground of assessee dismissed. Addition on account of wage expenses because no bills and vouchers were produced before the Assessing Officer as well as before the ld. CIT(A). Since the assessee has not produced any cogent explanation before any of the authorities below or even before us, ld. CIT(A) has rightly confirmed the action of the Assessing Officer. Ground of assessee dismissed. 2017 (10) TMI 992 Undisclosed sales - assessment u/s 153A - Held that:- We are of the opinion that present case is not the case of Lack of enquiry but it is a case of not understanding the accounting entries made by the assessee in the books of accounts. The Ld. assessing officer has failed to appreciate that when the assessee has already booked sales of 2404 bags in the books of accounts by crediting the sales account and debiting the cash on hand, there cannot be once again an addition on account of the gross profit on the same sales. In the present case, the Ld. assessing officer has failed to appreciate that assessee has already accounted the sales in the books of accounts at the prevailing market rate and profit thereto has already been added by the assessee in its normal accounts. Therefore, there cannot be an unaccounted sales and consequent addition. - Decided in favour of assessee. Benami Property 2017 (10) TMI 977 Suit barred by the provision of Section 4(1) of the Benami Act - suit for partition filed - Held that:- A reading of the plaint shows that there is no cause of action pleaded of the suit property being inherited prior to passing of the Hindu Succession Act, 1956 or that the suit property was thrown into a common hotchpotch on a particular date, month and year. Also, in any case even assuming a plea was there of an existence of HUF, there is no evidence whatsoever led by the appellant/plaintiff that there existed an HUF and how that HUF came into existence and how that HUF s existence with its properties was then found recorded in various records including public records. Appellant/plaintiff therefore cannot have the benefit of the exception contained in Section 4(3) of the Benami Act that the suit property should not be held to be a benami property but should be held to be HUF property. The other exception of Section 4(3) of the Benami Act is that the suit property was purchased in trust by the defendant nos. 1 to 3, however, even that cause of action is absent in the plaint. Also, no such case was argued on behalf of the appellant/plaintiff in the court below that the suit property has been purchased in trust or by the defendant nos. 1 to 3 in a fiduciary capacity. Therefore, even second exception contained in Section 4(3) of the Benami Act is not available to the appellant/plaintiff. Trial court also rightly notes that after purchase of the suit property in the name of defendant nos. 1 to 3 by the sale deed dated 7.12.1959 there is no further act done by the late father Sh. Waryam Singh in the form of making of any Will or making of a declaration or drawing up of a document that the suit property will not vest with the defendant nos. 1 to 3 in the suit but will vest with the entire family. Accordingly, in opinion, the mere fact that the father Sh. Waryam Singh paid consideration of the suit property would not make the property as owned by the father, and more so because such a plea in fact would be a plea which will be barred by Section 4(1) of the Benami Act. Also find no admission that the suit property at Green Park was a family property and had to be divided between all the family members. In fact, if this was so then the earlier suit would have been decreed under Order XII Rule 6 CPC and which was not so done and that the suit filed by the sister Smt. Pushpa Sahsni, respondent no. 9 herein, defendant no. 4 in the earlier suit, was in fact dismissed in default. Appeal dismissed. Customs 2017 (10) TMI 991 Maintainability of appeal - Benefit of N/N. 40/2006-CUS - Held that: - this High Court do not have jurisdiction to entertain and adjudicate the present appeal. The question raised in the present appeal amongst other things relates to determination of a question relating to the rate of duty of customs and whether or not duty of customs was leviable in view of the exemption N/N. 40/2006 - reliance placed in the case of Commissioner of Service Tax Versus Ernst & Young Pvt. Ltd. And Others [2014 (2) TMI 1133 - DELHI HIGH COURT], where it was held that Determination of any question relating to rate of tax would necessarily directly and proximately involve the question, whether activity falls within the charging Section and service tax is leviable on the said activity. The said determination is integral and an important injunct to the question of rate of tax. In the context of Sections 130 and 130E of the Customs Act, 1962, it has to be held that the present appeal is not maintainable before this High Court as one of the issues amongst other things which is required to be determined and decided has a relation to the rate of duty of customs - appeal dismissed being not maintainable. 2017 (10) TMI 990 Maintainability of petition - Principles of Natural Justice - gist of the allegation against the petitioners is that they have diverted the goods bonded in their private bonded private warehouses without payment of duty - whether the case on hand is one where there has been violation of principles of natural justice or whether the petitioners were afforded reasonable opportunity to put forth their defence? - Held that: - The facts clearly demonstrate that the Department had afforded sufficient and more than adequate opportunity to the petitioners. The conduct of Mr.Saraf clearly would show that he had been avoiding the proceedings. Prima facie it appears that but for the arrest and detention by CBI, he would not have cooperated with the department in giving the statements under Section 108 of the Act. Thereafter, he has failed to cooperate in the adjudication process. The charge being diversion of bonded goods without payment of appropriate customs duty. The charge is a serious charge and if the petitioners were totally innocent and if they had not committed any violation, they ought not to have avoided the adjudication. Thus, the facts clearly show that the petitioners failed to avail the opportunity granted to them. Therefore, the plea that the petitioners did not have adequate opportunity is a plea to be rejected. Petition dismissed being not maintainable. 2017 (10) TMI 989 Jurisdiction - power of DRI to issue SCN - Held that: - Considering that the question of law raised is yet to be decided by the Supreme Court in the appeals filed against the judgment of this Court in Mangali Impex Ltd. [2016 (5) TMI 225 - DELHI HIGH COURT], which has been stayed by the Supreme Court, the Court is not in a position to entertain the present petition and grant any of the reliefs as prayed for - petition dismissed. 2017 (10) TMI 988 Principles of Natural Justice - only ground for assailing the said order before this Court under Article 226 of the Constitution of India is, the breach of principles of natural justice by the Respondent, a Quasi Judicial Authority - Held that: - this Court is satisfied that the principles of natural justice have not been followed in the present case and Respondent Authority appears to have passed the said order in a hot haste without giving a reasonable and breathing time to the petitioner Company for taking its defence before the said Authority and verify the relevant evidence produced by them. The said order, therefore, cannot be sustained and deserves to be set aside. The Quasi Judicial Revenue Authorities while assigned the job of collection of Revenue in accordance with law need not act in a rash manner and throw the principles of natural justice to winds like it has been done in the present case and this Court does not find any justification for fixing three consecutive dates for personal hearing on 06/10/2015, 07/10/2015 and 08/10/2015 and then closing the opportunity for the petitioner Company to defend its case and passing an ex- parte order. The ends of justice cannot be met merely because an order raising a demand of tax or duty is passed by the Authority concerned but such orders also have to show that not only the adequate opportunity has been given to the assessee concerned but also there has been due and reasonable application of mind on the part of the Authority concerned before raising such demand. Petition allowed with costs - matter on remand. 2017 (10) TMI 987 Provisional assessment of goods - furnishing of Bond and Bank Guarantee - Held that: - Mere pendency of an appeal before the Appellate forum will not amount to stay of the order passed by the lower forum/authority. In the instant case, the valuation of the identical goods passed by the Commissioner of Customs (Appeals) is binding on the third respondent - the third respondent cannot mechanically insist upon the production of bond and Bank guarantee without referring to the earlier decision passed by the Commissioner of Customs (Appeals), which is in favor of the petitioner - petition allowed. 2017 (10) TMI 986 Refund of duty paid - Section 26A of the Customs Act, 1962 - misdeclaration of goods - import of hazardous waste in the guise of Light Melting Scrap (LMS) - Held that: - the impugned goods were not cleared by the Customs for home consumption whereas the provisions of Section 26A would apply only in cases where the goods have been cleared for home consumption and later, such goods are identified to the satisfaction of the Deputy Commissioner/ Additional Commissioner as imported goods are exported as specified in Clause (a) to (c) of Section 26A - the application of the appellant for refund is within the limitation period and since the goods were not cleared for home consumption, the Doctrine of Unjust Enrichment is not attracted - appeal allowed - decided in favor of appellant. 2017 (10) TMI 985 Smuggling - gold - confiscation - redemption fine - penalty - Held that: - the genuineness of the appellant is doubted and the goods were rightly seized - carrying the gold in temple is doubtful, therefore, it is a case of smuggling of gold by the appellant from Nepal to India - confiscation upheld. Cross-examination of witnesses - Held that: - in the case of Surjeet Singh Chhabra Vs. Union of India [1996 (10) TMI 106 - SUPREME COURT OF INDIA], the Hon'ble Apex court has held that when the goods have been recovered in the custody of the appellant itself during the course of investigation, in that circumstances by providing cross-examination of the witnesses is of no help - Admittedly, the goods in question has been recovered from the personal custody of the appellant. Therefore, there is no requirement to give cross-examination to the appellant of the panch witnesses. The value of gold is ₹ 6,26,258/- and redemption fine and penalties are imposed of ₹ 1 lakh each which are highly excessive, therefore, the redemption fine and penalty are reduced to Rs,50,000/- each. Appeal allowed in part. 2017 (10) TMI 984 Clearance of finished goods without filing bills of entry - case of Revenue is that Customs was in dark. It had no scope to know whether the boat cleared was war ship falling under CTH 8906 manufactured by appellant - Held that: - There is no dispute that the raw materials were sent to the ware house of the appellant under in-bond bill of entry for use in manufacture. Dispute on classification was raised by Revenue contending that the boat manufactured by appellant was of the nature dealt by CTH 8903. We do not understand why Maharashtra Police shall be investing huge public money for purchase of boat for pleasure without being used for the purpose of patrolling. There was breach of law for not informing the excise authorities as to the manufacture carried out in ware-house and also there was breach of law made by appellant without filing ex-bond of bill of entry. Maharashtra Police having clarified that the boats were meant for the purpose of security and patrolling, no penalty is imposable on the appellant in the fitness of the circumstances of the case since warship was exempt from duty. Appeal allowed - decided in favor of appellant. 2017 (10) TMI 983 Smuggling - red sandal - Held that: - in this case only the truck driver has given inculpatory statement that on the instruction of the respondent, the Red Sandal was loaded in the truck but no other evidence is on record to implicate the respondent in the proceedings. Moreover, the person who found to be the owner of Red Sandal, penalty of ₹ 5,00,000/-, has been imposed, whereas on the respondent, the penalty was imposed to the tune of ₹ 50,00,000/- without any reason - appeal dismissed - decided against Revenue. Corporate Laws 2017 (10) TMI 982 Members Voluntary winding up - Held that:- Upon the scrutiny of the records submitted by the Voluntary Liquidator, Official Liquidator, Delhi attached to this Court is satisfied that the Company, its directors and the Voluntary Liquidator have complied with the provisions of Sections 484 to 497 of the Companies Act 1956 read with Companies(Court) Rules, 1959 as they relate to the Members Voluntary winding up of a company and also in view of the facts that the Registrar of Companies and Income Tax Department have given their NOCs for dissolution of company. Further Official Liquidator has not received any complaint of representation against the Voluntary Liquidator, and the Official Liquidator is of the opinion and of the view that including liquidation proceedings and affairs of the Company does not appear to have been conducted in a manner prejudicial to the interest of its member or to the public interest and thus in the circumstances the Company stands dissolved from the date of submission of this petition to this Court. Ordered accordingly. Insolvency & Bankruptcy 2017 (10) TMI 981 Corporate Insolvency Resolution Process - Held that:- There being "existence of dispute", we hold that the petition under section 9 preferred by respondent- "Operational Creditor" was not maintainable. For the reasons aforesaid, we set aside the impugned order dated 1st June, 2017 passed by the Ld. Adjudicating Authority, Chennai Bench in Company Petition. In effect, order (s), if any, passed by Ld. Adjudicating Authority appointing any 'Interim Resolution Professional' or declaring moratorium, freezing of account, if any, and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action, if any, taken by the Interim Resolution Professional', including the advertisement, if any, published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by Respondent under Section 9 of the I&B Code, 2016 is dismissed. Learned Adjudicating Authority will now close the proceeding. The appellant company is released from all the rigour of law and is allowed to function independently through its Board of Directors from immediate effect. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional', if appointed, and the Respondents will pay the fees of the Interim Resolution Professional, for the period he has functioned. The appeal is allowed with aforesaid observation and direction. PMLA 2017 (10) TMI 980 Provisional attachment - offence under PML Act - Held that:- In the instant case, as the adjudication process has not yet started and the matter is at the stage of show-cause notice and provisional attachment, it is not proper for this Court to express any opinion on this aspect of the matter. It is also evident from the show-cause notice that allegations of money-laundering are made in respect of transactions spanning over a period of time, even beyond the period when the amendment was brought about. This is evident from paragraphs 9.40 and 9.46 of the show- cause notice. It is well established by catena of decisions of the Apex Court that High Court will not entertain a petition under Article 226 of the Constitution, if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken, itself contains a mechanism for redressal of the grievance. This is not a case where extraordinary jurisdiction of High Court under its writ jurisdiction has to be exercised ignoring the efficacious machinery provided under the Act. Hence, without expressing any opinion on the merits of the matter and making it clear that whatever prima facie opinion is expressed shall be confined only for the purpose of deciding the maintainability of the writ petition, by reserving liberty to the petitioner to urge all necessary grounds before the competent authority, this writ petition is dismissed. It is made clear that that period taken in prosecuting this writ petition before this Court shall be excluded for the purpose of time limit prescribed under the Act, both for seeking redressal by the petitioner and also with regard to duration of the provisional attachment order. Service Tax 2017 (10) TMI 975 Mining lease - levy of service tax - royalty - whether the royalty under the Act of 1957 is a “consideration” or not and further if that is “consideration”, then what would be the effect pertaining to payment of service tax? Held that: - the royalty is nothing but a “consideration” to have mining operations in the leased area on execution of a mining lease. It is a part of agreement arrived between the parties to have lease of a mining area to undertaking mining operations. The royalty being “consideration” certainly places assignment of right to use natural resources deposited in the leased area as a “service” as defined under Section 65-B(44) of the Act of 1994, according to which, any activity carried out by a person for another for consideration is a service - the notification dated 13.4.2016 is not at all in conflict with its enabling Act i.e. the Finance Act, 1994 and the same does not suffer from any illegality. There is no transfer of immovable property too as the lease granted is only to excavate mineral from the leased area and that activity at the most can be physical `transfer of property by its “renting” as prescribed under Section 65(90a) of the Act of 1994, but not the transfer of title in immovable property. Section 65(90a) pertains to transfer of immovable property by renting and that includes leasing of immovable property for use in furtherance of business and commerce. The absence of the word “title” in this provision is quite important and that indicates the entire activity as transfer of possession of the immovable property for its use or consumption by way of renting, letting, leasing, licencing or by other similar arrangements, as the case may be. The exclusion under Section 65-B(44) is for transfer of title in immovable property, which is conspicuously absent in the grant of lease for mining operations. The tile of the mining area admittedly retains with the State even on execution of mining lease to excavate mineral from the leased area. Petition dismissed - decided against petitioner. 2017 (10) TMI 974 CENVAT credit - capital goods - input services - denial on the ground that as per Rule 2(c) of CCR, 2004, the appellant is not entitled to avail CENVAT credit on capital goods and as appellant is providing exempted output service, therefore, they are not entitled to avail CENVAT credit on input services availed for providing those services - Held that: - as appellant is provider of cargo handling services and they use tippers as capital goods for providing that service and same is covered under Rule 2(B) of CENVAT Credit Rules, 2004 as capital goods - The period under dispute is prior to 22.6.2010. In that circumstance, the show-cause notice issued by invoking Rule 2(C) as amended by CENVAT Credit Rules, 2004 is not applicable to the facts of this case - Credit on capital goods allowed. Input services - Held that: - On the basis of the evidence produced, it is a fact that on cargo handling service of urea, the appellant is paying service tax. Therefore, appellant is providing taxable output service - credit on input services allowed. Appeal allowed - decided in favor of appellant. 2017 (10) TMI 973 CENVAT credit - input/input services - telecommunication services - Held that: - at the time of availment of CENVAT credit, it was not disputed that the said credit has been used by the appellant for providing taxable output service. It is also a fact that the service which has been provided by the appellant is a taxable service. The only issue is that the appellant could not realize the amount from the service recipient and during the impugned period, the service tax was payable on realization of the service tax from the service recipient. In that circumstance, I hold that the services provided by the appellant is a taxable service and for providing output taxable service, as per Rule 3 of CCR, 2004, the appellant is entitled to avail CENVAT credit. The same issue was dealt by this Tribunal in the case of CST, Ahmedabad vs. Krishna Communication [2013 (6) TMI 137 - CESTAT AHMEDABAD], where it was held that It is settled law that there cannot be one to one co-relation in availing of the CENVAT Credit of the input service to the provision of output service. Appeal allowed - decided in favor of appellant. 2017 (10) TMI 972 CENVAT credit - operational charges of the windmill projects situated at Chitradurga - case of Revenue is that the credit availed by the respondent was regular on the ground that it is not pre-condition that input services must be received in the manufacturing premises for availment of CENVAT credit - Held that: - the issue is squarely covered by the decision in the case of Parry Engg. & Electronics P. Ltd. Versus C.C.E. & S.T., Ahmedabad-I, II, III [2016 (1) TMI 546 - CESTAT AHMEDABAD], where it was held that Cenvat credit is eligible on maintenance or repair services of Windmills, located away from the factory - credit allowed - appeal dismissed - decided against Revenue. 2017 (10) TMI 971 Management, repair and maintenance - interpretation of statute - railways - Whether the appellant is required to pay Service Tax on the activity of management, repair and maintenance as defined under Section 65 (105) (zzg) of the Finance Act, 1994 for providing services to the railways? Held that: - the term ‘railway’ includes each and every respect of the railway including all rolling stock stations, offices, warehouses, wharves, workshops, factories, etc. - the appellant shall be entitled to benefit of the N/N. 24/2009 dated 27/07/2009 as amended by N/N. 54/2010-ST dated 21/10/2010 - appeal allowed - decided in favor of appellant. 2017 (10) TMI 970 Non-payment of service tax - service rendered in relation to construction of flats - benefit of reduced penalty - Held that: - For the years 2010 to 2012, the appellant did not pay its tax liability for no good reason advanced without being a party to the batch of Writ Petitions involved in the above said reported judgment - Had the appellant come out with clean hands paying the taxes duly which were due as per law, from 1.7.2010, it would not have invited penalty to the extent of 25% of the tax due as ordered by learned adjudicating authority. When the appellant was not before the Hon'ble High Court in the batch of Writ Petitions, it would be proper to reduce the litigation confirming penalty to the extent of 25% of tax due imposed by adjudicating authority under Section 78 of the Finance Act, 1994 waiving balance amount of penalty of 75% payable under that section. So far as penalty under Section 77 is concerned, that is confirmed. Appeal allowed in part. 2017 (10) TMI 969 Classification of services - ‘laying of Optical fibre cables’ for BSNL and for others - whether the service would be classifiable under Site formation services or not? - Held that: - the activity is not classifiable under Section 65(105)(zzza) read with section 65(97a) under the classification ‘site formation and clearance, excavation and demolition’ etc. - the appellant is not liable to pay service tax for the period prior to 01 July, 2012 - penalties also set aside. Demand for the period subsequent to 30 June, 2012 - assessee claims that the activity will be taxable under the classification of works contract wherein they will be entitled to deduction for the material component or in the alternative entitled to compounding of the tax as per the scheme of the Act and the Rules - Held that: - the demand for the period subsequent to 30 June, 2012 set aside by way of remand to the Adjudicating Authority with direction to re-determine the tax in accordance with law - penalties set aside. Appeal allowed in part and part matter on remand. 2017 (10) TMI 968 Levy of service tax - commercial coaching and training services - claim of appellant is that they did not have any profit motive, hence they are not liable to pay tax - Held that: - we do not find any evidence that has been placed by the appellant that the value collected is without any profit. Besides, it is immaterial whether the service is rendered with profit motive or otherwise for levy of Service Tax - appeal dismissed - decided against appellant. 2017 (10) TMI 967 Renting of immovable property service - commercial or residential - consideration received for letting out a building to M/s Plasser (India) Pvt. Ltd. for use of Sh. Thomas Hentze for residence and personal office - interpretation of word ‘personal office’ - Held that: - from the agreement it is clear that the purpose of letting will be residential only and the lessee shall be responsible if the premises is used for other than residence. All the consequences including extra levy shall be the liability on the lessee - the terms of lease make it clear that the building was let out to the appellant for residential use by one of its employees. Even if we consider that the said employee did attend to some personal office work from the said premises, the same will not make it use of premises other than the residence. Extended period of limitation - Held that: - Admittedly the tax liability on his particular tax entry has been a subject matter of substantial litigation - demand is time barred. Appeal allowed - decided in favor of appellant. 2017 (10) TMI 966 Penalty - Closure proceedings - Section 73 (4) of FA - Held that: - It would appear that the closure under Section 73 (3) was not considered, only on the ground that the service tax liability paid by the appellant was for period spread over more than three years. I find that as long as full service tax liability with interest is discharged by the assessee and the ingredients of Section 73 (4) could not be brought out with supporting evidence, the case has to be closed under Section 73 (3). Such closure is not barred only by the reason that the demand pertains to longer period. When the assessee admits the liability, irrespective of the duration and pay the same with interest, the case has to be closed - In the present case, the bar under Section 73 (4) cannot operate. While upholding the tax liability of the appellant with interest, I find the penalty imposed based on the proceedings initiated is not justifiable - appeal allowed in part. Central Excise 2017 (10) TMI 965 Condonation of delay - Site formation service - contract for production, Drilling & Associates Work in Underground Sindesar Khurd Mine - the decision in the case of M/s. Teknomin Construction Ltd. Versus C.C.E. & S.T., Jaipur [2017 (4) TMI 704 - CESTAT NEW DELHI] contested - Held that: - delay condoned - appeal admitted. 2017 (10) TMI 964 CENVAT credit - reversal - the decision in the case of M/s Maruti Suzuki India Limited Versus Commissioner, Central Excise Commissionerate, Delhi-III [2017 (5) TMI 697 - PUNJAB AND HARYANA HIGH COURT] contested - Held that: - Leave granted. 2017 (10) TMI 963 CENVAT credit - duty paying invoices - credit taken on the basis of photocopy of the courier bill of entry - Held that: - in case of Union of India vs. Hira Steels Ltd [2010 (9) TMI 867 - CHHATTISGARH HIGH COURT], Cenvat credit taken on photocopies has been held to be valid, as there is no dispute regarding the receipt of duty paid inputs under such invoices and their use in the manufacture of finished goods cleared on payment of duty - credit allowed. CENVAT credit - capital goods - 100% credit taken in the first year of acquisition - Held that: - originally when the machinery was acquired in their factory, they had taken only 50% of the credit in the year of receipt and the balance 50% was taken only in the next financial year - further, the credit was taken but not utilised - relying upon the decision of the Karnataka High Court in the case of Commissioner vs. Bill Forge PVt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], the appellant are not liable to pay interest and penalty. CENVAT credit - duty paying documents - input services - denial on the ground that in the bill, service tax registration is not mentioned and further some of the bills are not in the prescribed format - Held that: - excepting the service tax registration number all other details have been given in the bills - even certificate of service tax registration has also been placed on record which shows that the service provider had the service tax registration at the time when the input service was provided to the appellant - reliance placed in the case of Commissioner Vs. Techno Vision [2006 (7) TMI 556 - CESTAT, MUMBAI], it has been held that if the transaction is bonafide, credit could not be denied even if duty paying documents are invalid Rule 9 of Cenvat Credit Rules 2004. Appeal allowed - decided in favor of appellant. 2017 (10) TMI 962 CENVAT credit - input services - Renting of immovable property service - insurance services - Held that: - Since the appellants were not having sufficient space in the factory to store the inputs and the packing material, therefore, they had taken the premises outside the factory and also took the dealer's registration only exclusively to the appellant's factory and the goods have not been sold or removed to any other person, which fact has not been denied by the Revenue - storage is directly connected to the production - the appellant has produced the receipt of insurance premium and which shows that the insurance is with regard to the finished products and other property of the appellant in the factory. The appellants are entitled to the CENVAT Credit on service tax paid on rent of dealer's premises which is nothing but an extension of the factory of the appellant - appellants are entitled to the CENVAT credit on security services availed for dealer's premises as well as insurance paid for the finished goods stored in the factory premises - appeal allowed. 2017 (10) TMI 961 Penalty u/s 11AC - the appellant availed CENVAT credit in June 2007 in respect of input service which was received before 10.09.2004 when the Cenvat Credit Rules, 2004 was not in existence - credit was already reversed - Held that: - Considering the fact that the appellant is Govt. of India undertakeing and there cannot be any malafide intention, the appellant made out a strong case for waiver of penalty - penalty set aside - demand of credit with interest upheld - appeal allowed in part. 2017 (10) TMI 960 Benefit of N/N. 6/2002 dated 01/03/2002 - appellants availed credit of NCCD leviable on the inputs - Held that: - Admittedly, availing credit of NCCD will debar the appellant from claiming exemption under notification 6/2002. Having realized the said position, the appellants fully reversed the credit amount of ₹ 1,01,632/- - the Hon’ble Supreme Court in Chandrapur Magnet Wires Ltd. [1995 (12) TMI 72 - SUPREME COURT OF INDIA] held that reversal of credit even subsequently should be construed as non-availment of such credit. The full reversal of credit by the appellant should satisfy the condition of non-availment of credit making them eligible for the exemption, if otherwise eligible on other grounds - appeal allowed - decided in favor of appellant. 2017 (10) TMI 959 CENVAT credit - iron items and cement used in construction of storage tank - Held that: - similar issue has come up in appellants own case before this Tribunal in the case of Ultratech Cement Ltd. Vs. CCE Bangalore [2017 (6) TMI 796-CESTAT-Bangalore] where it was held that on such items, the assessee is entitled to avail Cenvat Credit - appeal allowed - decided in favor of appellant. 2017 (10) TMI 958 Penalty - AED - N/N. 06/2005-CE dated 01.06.2005 - dispute is with regard to period prior to registration - Held that: - the assessee is required to be penalties under Rule 25 of Central Excise Rules 2002 read with section 11AC of the Central Excise 1994 as non payment of AED came to the knowledge of the Department only during the course of investigation. As assessee has paid the entire amount of duty along with interest. In that circumstances, the assessee is entitled for benefit of reduced penalty of 25% of duty. Appeal dismissed. 2017 (10) TMI 957 Clandestine removal - non-maintenance of proper records - Held that: - the directions of the Ld. Commissioner (A) in the first round of litigation are binding on the Revenue and in the remand proceedings those directions have not been followed by the authorities below - As in remand proceedings the directions of the Ld. Commissioner (A) given by the order dated 18.05.2007 has not been complied with. Therefore, the matter is remanded back again to the adjudicating authority first to comply with the directions of the Ld. Commissioner (A) vide order dated 18.05.2007 and thereafter to pass an appropriate order - appeal allowed by way of remand. 2017 (10) TMI 956 Demand of duty with interest and penalty - it was alleged that as the assessee has failed to reverse the Cenvat Credit on inputs contained in semi finished goods i.e. the work in progress or inputs lying in stock, therefore, contravening the provisions of Rule 11(2) and 11(3) of the Cenvat Credit Rules 2004 - Held that: - the fact is on record that the said Cenvat Credit was never used or utilized by the assessee for subsequent clearances - unutilized Cenvat credit lying in their Cenvat Credit account shall lapse in terms of Rule 11(2), 11(3) of Cenvat Credit Rules 2004. As the Cenvat Credit has not been utilized by the assessee therefore, no demand can be made against the assessee. No demand is sustainable against the assessee, therefore the penalty does not arise. Appeal allowed - decided in favor of assessee. 2017 (10) TMI 955 Penalty u/s 11AC - Failure to make monthly payment of excise duty for the month of May 2011 to August 2011 within the prescribed time limit - Rule 8 read with Rule 8(3A) of CER, 2002 - Held that: - this is the case of delayed payment of excise duty and the appellant have declared assessed duty in their monthly return and paid the duty along with interest. Rule 8 itself provide that if there is a delay the assessee is required to pay duty along with interest for the delayed period. The facts of the case that there is no case of suppression of fact even the show cause notice or order does not indicate that there is suppression of fact or malafide intention on the part of the appellant - penalty upheld - appeal allowed. 2017 (10) TMI 954 CENVAT credit - inputs used in the repair of transformers - repaired transformers are cleared without payment of duty - Held that: - there is no dispute that the appellant is required to reverse the cenvat credit in respect of the input used in repairing of old transformers. Extended period of limitation - Held that: - the suppression of fact is established - extended period invoked. Penalty u/s 11AC - Held that: - The penalty u/s 11AC cannot be waived, however it is observed that the adjudicating authority has not extended the benefit of 25% as per the first proviso to Section 11AC - As per the Board Circular No.208/07/2008-CX-6 dt. 22.5.2008, the adjudicating authority must give the option of 25% penalty in the adjudication order - Since the adjudicating authority has not granted the benefit of first proviso to Section 11AC of the Act, the appellant deserve the relief under that proviso, accordingly invoking the proviso of Section 11AC of the Act, the penalty reduced to 25% of ₹ 2,36,148/-. Appeal allowed in part. 2017 (10) TMI 953 Refund claim - rejection on the ground that the appellant for the month of March 2011 filed refund twice - Held that: - the filing of refund claim once in a month or as the case may be in a quarter is procedural requirement and to avoid the multiple refund. However just because of the reason that two refund claims were filed for one particular period, refund cannot be rejected - The sanctioning authority at most should verify that by filing the second refund claim whether any excess amount is claimed by the assessee - appeal allowed - decided in favor of appellant. 2017 (10) TMI 952 Refund claim - time limitation - N/N. 49/2007-ST, dated 6.10.2007 - Held that: - Notification says that the claim for refund shall be filed on a quarterly basis, within 60 days from the end of the relevant quarter during which the said goods have been exported - In the present case, the appellant has filed the refund claim after expiry of the period of 60 days. When it is so then it is the contravention of the provisions of clause 2(e) of the N/N. 49/2007-ST dated 6.10.2007 - appeal dismissed - decided against appellant. 2017 (10) TMI 951 Refund of duty - supplementary invoices - Held that: - there is no material on record based on which the courts below have drawn the adverse inference of any manipulation of showing less transaction value in the original invoices - facts stated by the appellant before the Revenue in the refund application and in reply to the show cause notice have not been found untrue nor any adverse material available on record before the court below - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2017 (10) TMI 950 Manufacture - coal briquettes - case of assessee is that since there was no distinction between coal and coal briquettes, there could have been no levy of tax on coal briquettes on their sale within the State of U.P - Whether coal briquettes are as same as coal and hence no liability of tax can be fastened on the sale of coal briquettes? - Held that: - Admittedly the expression manufacture as defined under the Act, brings within its ambit various processes including the adaptation, treating and processing of goods - reliance placed in the decision in the case of Sonebhadra Fuels Versus Commissioner, Trade Tax, UP., [2006 (8) TMI 304 - SUPREME COURT OF INDIA], where it was held that the process of making coal briquettes will amount to a "manufacture" as it is processing, treating or adapting coal - revision application dismissed. 2017 (10) TMI 949 Jurisdiction - power to revise - whether the writ court can revise the order of this court passed under section 11 of U.P. Sales Tax Act, 1948 which provides Revision by High Court in special cases? Held that: - the judgment and order dated 13.7.2017 passed by this court in Trade Tax Revision No. 67 of 1994 cannot be annulled or reviewed by invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India inasmuch as the issue in question has been dealt, considered and decided by this Court in Trade Tax Revision against the petitioner. The writ court cannot sit in appeal over the judgment of this court passed in Trade Tax Revision. The petitioner has admittedly raised the issue raised herein before the Sales Tax Tribunal under section 10 of the U.P. Sales Tax, 1948. Admittedly, feeling aggrieved by order of Sales Tax Tribunal, the Revision under section 11 of the U.P. Sales Tax Act, 1948 was filed before this Court bearing Trade Tax Revision No. 67 of 1994 which has finally been decided vide judgment and order dated 13.7.2017. The efficacious and appropriate remedy is not the writ petition but the order of the Trade Tax Revision could have been assailed before the Hon'ble Apex Court, if the petitioner so advised. The petitioner may, therefore, approach the Hon'ble Apex Court, if so advised but it cannot re-agitate the same issue before the writ court by filing writ petition under Article 226 of the Constitution of India. Petition dismissed. 2017 (10) TMI 948 Manufacture - cold drink - whether the process of dilution amounts to "manufacture"? - Held that: - it cannot possibly be countenanced or accepted that the process which the assessee adopts does not result in the creation of a new marketable commodity. A cold drink concentrate and an aerated drink obtained after processing the concentrate can never possibly be viewed as being of the same genre or form. The process undertaken by the revisionist results in the formation of a commodity which obtains an identity which is distinct from the original product which was cold drink concentrate. An aerated drink was manufactured from cold drink concentrate thus giving birth to a commercially distinct and independently recognized commodity - revision dismissed. 2017 (10) TMI 947 Penalty u/s 10-A of the CST Act, 1956 - allegation against the petitioner is that they have purchased Wind Mill and other spare parts for mills and the Form 'B 'certificate issued to the petitioner for registration under the provisions of the CST Act does not include the Wind Mill - Held that: - The Hon'ble Full Bench of this Court in the case of State of Tamil Nadu v. Nu-Tread Tyres [2006 (7) TMI 578 - MADRAS HIGH COURT] has held that Section 10(b) of the CST Act provides for an offence if any person being a registered dealer falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration. The expression falsely represents, clearly shows that the element of mens rea is the necessary component of the offence. The levy of penalty is not authorized, as there is no allegation of false representation or mis-representation on the part of the petitioner - petition allowed - decided on favor of petitioner. 2017 (10) TMI 946 Principles of natural justice - service of notice - the petitioner was not issued any notice prior to completing the assessment and they had no opportunity to rebut the allegations against them - Held that: - the first respondent did not afford a reasonable opportunity to the petitioner before impugned assessment orders were passed. For the above reasons, this Court is inclined to grant relief to the petitioner - petitioners are directed to treat the impugned proceedings as show cause notice and to file their objections - petition allowed by way of remand. 2017 (10) TMI 945 Validity of assessment order - TNGST Act - it was alleged that petitioners have effected transaction with the registration cancelled dealers - Held that: - The Hon'ble Supreme Court in State of Maharashtra Vs. Suresh Vs.Suresh Trading Company [1996 (2) TMI 451 - SUPREME COURT OF INDIA] has held that the subsequent registration cancellation does not effect the right of the purchasing dealer for deduction . Apart from this reason, there appears to be no other reason on which the petitioner has challenged the order of assessment - matter is remanded back to the respondent to assess the petitioner to the correct rate of tax without going into the aspect that the petitioner has effected transaction with the registration cancelled dealers - petition allowed by way of remand. Indian Laws 2017 (10) TMI 979 Offence under Narcotic Drugs and Psychotropic Substances Act, 1985 - Held that:- Appellant Rajeev Verma is guilty of committing offence under Section 8/21 and 8/29 of Narcotic Drugs and Psychotropic Substances Act, 1985. This Court has already held that except the confessional statement recorded under Section 67 of the Narcotic Drugs and Psychotropic Substances Act, 1985 of the co-accused Rajeev Verma and the appellant Abdul Aziz, there is no other evidence against Abdul Aziz for holding him guilty for offence under Section 8/29 of Narcotic Drugs and Psychotropic Substances Act,1985. Accordingly, it is held that the prosecution has failed to prove the guilt of the appellant Abdul Aziz beyond reasonable doubt and accordingly, he is acquitted of the charge under Section 8/29 of Narcotic Drugs and Psychotropic Substances Act, 1985. Accordingly, the conviction of the appellant Rajeev Verma for offence under Sections 8/21 and 8/29 of Narcotic Drugs and Psychotropic Substances Act, 1985, recorded by Special Judge (N.D.P.S.Act), Gwalior by judgment dated 27-10-2004 in Special Sessions Trial No.2/2002 is hereby affirmed. The conviction of appellant Abdul Aziz for offence under Section 8/29 of Narcotic Drugs and Psychotropic Substances Act, 1985 recorded by Special Judge (N.D.P.S.Act), Gwalior by judgment dated 27-10-2004 in Special Sessions Trial No. 2/2002 is hereby set aside, and the appellant Abdul Aziz is acquitted of all the charges. The huge quantity of Heroine which has been recovered from the possession of the appellant Rajeev Verma cannot be lost sight. The maximum sentence for offence under Section 8/21 of Narcotic Drugs and Psychotropic Substances Act, 1985 is twenty years and a fine of ₹ 2 lac. The Trial Court has awarded jail sentence of 10 years and a fine of ₹ 1 lacs. This Court is of the considered opinion that the Trial Court has already adopted a very lenient view while awarding sentence, and hence, the sentence awarded by the Trial Court does not call for interference and hence, the jail sentence of 10 years and a fine of ₹ 1 lacs awarded by the Court of Special Judge (N.D.P.S.Act), Gwalior by judgment dated 27-10-2004 in Special Sessions Trial No.2/2002 is hereby affirmed. The appellant Abdul Aziz is on bail. His bail bonds stand discharged. The fine amount, if deposited by the appellant Abdul Aziz, be returned back. The appellant Rajeev Verma is on bail. His bail bonds and surety bonds are hereby cancelled. He is directed to immediately surrender before the Trial Court for undergoing the remaining jail sentence. 2017 (10) TMI 978 Proceedings in the criminal complaint - complaint through authorized representatives - offence under NI Act - Offences by Companies - Held that:- The complaint was filed through the authorized representative of the respondent no.1 Shri Girish Joshi. His authorization is supported by the resolution passed by the complainant company. The complaint also specifically mentions that the representative has personal knowledge in respect of the facts of the case as well as on the basis of record with complainant company. The verification statement also mentions that Shri Joshi has been appointed by the complainant company by passing Board Resolution, authorizing him to file complaint and lead evidence against the accused as he knows the facts of the case. In view of the above, there is no infirmity in the filing of the complaint of Shri Girish Joshi as authorized representative of respondent no.1. If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company. It is crystal clear that if the person who commits an offence under Section 138 of the Act is a company the company as well as other person in charge of or responsible to the company for the conduct of business of company at the time of commission of offence is deemed to be guilty of the offence. It creates constructive liability on the person responsible for the conduct of business of the company. In the light of the aforesaid observations, it will have to be seen that the applicant is one of the person whose is concerned with the day to day affairs of the company. As stated in complaint the applicant is looking after day to day affairs of accused no.1. He has dealt with complainant company in respect of subject transaction. He has acted in connivance with other in dishonour of cheque. The complainant must be given an opportunity to prove the same by leading the evidence before the trial Court. The proceedings cannot be quashed at the threshold. No reason to interfere in the order issuing process passed by the trial Court. As perused the reply filed by the advocate for the complainant and the documents in the form of E-mail being relied upon by the complainant. According to the respondent no.1 the E-mails were exchanged between the parties which shows the complicity of the applicant in the subject transaction. The said E-mails and its veracity has to be tested in evidence during the course of trial. Prima facie case is made out showing involvement/participation of the applicant in the said transaction. It is pertinent to note that the applicant has annexed some of the E-mails and the copy of consent terms to the application. According to the complainant, applicant is responsible for dishonour of about 27 cheques and several complaints have been filed by the respondent no.1 in which the applicant is accused and he did not appear before the trial Court, and, hence proclamation has been issued against him declaring him as absconding. In the light of the aforesaid observations, no finding that the applicant has made out any case for quashing the proceedings by invoking the inherent powers under Section 482 of the Code of Criminal Procedure, and, hence, the petition deserves to be dismissed. 2017 (10) TMI 976 Dishonour of cheque - offence under section 138 of the NI Act - period of limitation - Held that:- Since the complaint petition has been filed beyond the prescribed period of one month and the learned Magistrate has not condoned the delay after being satisfied with the sufficient cause shown by the complainant for not making the complaint within such prescribed period, on a careful consideration of the submission made at the Bar impugned order dated 25.02.2003 passed by the learned S.D.J.M., Jagatsinghpur in I.C.C. Case No. 127 of 2002 in taking cognizance of offences punishable under section 138 of the N.I. Act read with section 420 of the Indian Penal Code is not sustainable in the eye of law and accordingly, the same stands quashed.
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