TMI Tax Updates - e-Newsletter
October 3, 2017

Case Laws in this Newsletter:

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

Articles

• Import of Goods for Builders and GST
• GST on Custom House Agents
• More PAN must be allowed to be tagged with one mobile phone and one email id – tax payer and tax practioners must have their discretion in this regard and limit of PAN numbers should be lifted to make tax compliance and review easy

News

• Facility of furnishing Letter of Undertaking extended to more exporters

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• FM: Income Tax Department takes various initiatives to bring about efficiency, transparency, and fairness in Tax Administration; Government is committed to widen the tax base by encouraging and incentivising the new tax payers; Number of tax payers increased significantly from 4.72 crore in financial year 2012-13 to 6.26 crore during the Financial Year 2016-17;

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• Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified

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• India Inc's foreign borrowings nearly halve to $1.64bn in Aug.

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• Calendar for Auction of Government of India Treasury Bills

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• Issuance Calendar for Marketable Dated Securities for October 2017-March 2018

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Notifications

Customs

• 10/2017-Customs (N.T./CAA/DRI) - dated 29-9-2017 - Cus (NT)
  Appointment of Common Adjudicating Authority by DGRI.

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GST

• 36/2017 - dated 29-9-2017 - CGST
  Eighth amendment to CGST Rules, 2017

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• 30/2017 - dated 29-9-2017 - CGST Rate
  Exempting supply of services associated with transit cargo to Nepal and Bhutan.

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• 31/2017 - dated 29-9-2017 - IGST Rate
  Exempting supply of services associated with transit cargo to Nepal and Bhutan.

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• 30/2017 - dated 29-9-2017 - UTGST Rate
  Exempting supply of services associated with transit cargo to Nepal and Bhutan.

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GST - States

• MGST- 1017/C.R. 171 /Taxation-1. - dated 27-9-2017 - Maharashtra SGST
  Corrigendum to notification No.13/2017 State Tax (Rate). Applicability of Reverse charge in respect of services provided by Individual Advocate.

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• 29/2017-State Tax (Rate) - dated 25-9-2017 - Maharashtra SGST
  Amendments in the Notification No. 5/2017-State Tax (Rate)], dated the 29th June 2017,

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• 28/2017-State Tax (Rate) - dated 25-9-2017 - Maharashtra SGST
  Amendments in the Notification No. 2/2017-State Tax (Rate)], dated the 29th June 2017

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• 27/2017 State Tax (Rate) - dated 25-9-2017 - Maharashtra SGST
  Amendment in the Notification No. 1/2017-State Tax (Rate)],dated the 29th June, 2017

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• 26/2017-State Tax (Rate) - dated 25-9-2017 - Maharashtra SGST
  Exemption for intra-state supply of heavy water and nuclear fuels by the Dept. of Atomic Energy to Nuclear Power Corporation of India Ltd.

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• 25/2017 State Tax (Rate) - dated 25-9-2017 - Maharashtra SGST
  Amendments in the Notification No.12/2017- State Tax (Rate), dated the 29th June 2017.

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• 24/2017-State Tax (Rate) - dated 25-9-2017 - Maharashtra SGST
  Amendments in the Notification No.11/2017-State Tax (Rate), dated the 29th June 2017.

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• 34/2017-State Tax - dated 21-9-2017 - Maharashtra SGST
  The Maharashtra Goods and Services Tax (Seventh Amendment) Rules, 2017.

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• 33/2017-State Tax - dated 21-9-2017 - Maharashtra SGST
  TDS deduction from the payment made or credited to the supplier of taxable goods or services or both.

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• 32/2017-State Tax - dated 18-9-2017 - Maharashtra SGST
  Exemption on Handicraft Goods.

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• 03/2017 - dated 18-8-2017 - Maharashtra SGST
  Extension of time Limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Maharashtra Goods and Service Tax Rules, 2017

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• 02/2017 - dated 18-8-2017 - Maharashtra SGST
  Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 of the Maharashtra Goods and Service Rules, 2017.

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Highlights / Catch Notes

GST

• Facility of furnishing Letter of Undertaking extended to more exporters
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• To facilitate exports under GST, it has been decided to allow exporters the facility of furnishing Letter of Undertaking in place of a bond - This facility of furnishing Letter of Undertaking, in place of a bond, is allowed to exporters for exporting goods or services or both - Now no bank guarantee will be required.The relevant notification for this will be issued in due course - FM
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Income Tax

• Expenditure on ESOP - By undertaking to issue shares at a discount, the company does not pay anything to its employees but incurs the obligation of issuing shares at a discounted price at a future date. This is nothing but "expenditure" u/s 37(1)
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• Withdrawing approval u/s 80G - Cancellation of registration u/s 12AA - In a survey conducted, the Managing Trustee of the Assessee admitted that it gave cash and got back donations - the activities of the Assessee were not genuine - registration was rightly cancelled.
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• TPO is not justified in making adjustment of interest on account of alleged delay in recovering the outstanding toward receivables from the AE as per the provisions of section 92CA(3)
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Customs

• Import of aluminium scrap Tense/Taint/Tabor/with FE 20% - The other waste and scrap under CTH 76020090 is restricted item and the appellant imported without any valid license and therefore, confiscation of the goods is justified.
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• Rates of Duty Drawback From 1-10-2017 onwards - Export of Goods
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Central Excise

• Classification of by-product - char-dolachar - the application of Rule 3(b) of the rules and the reasoning of essential character of coal fines by the lower appellate authority is misconceived and cannot sustain
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• Contempt of Court by the officer - this Tribunal finds that Mr. R. A. Singh, the Assistant Commissioner has consciously circumvented and/or disobeyed the order of this Tribunal, which amounts to interference in administration of justice by this Tribunal - Matter referred to HC
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• CENVAT credit - Press Mud is also a waste product similarly emerging during the manufacture of sugar, molasses, therefore the same ratio will also be applicable to press mud
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VAT

• The goods viz. “Blood Collection Monitors, Blood Storage Refrigerators and Deep Freezers, Platelet Agitators with incubators and Plasma Expressers (Electrical and Manual) and Cryobaths” are taxable at the rate of 4% under Entry 61 “Medical Equipments, Devices and Implants” and not in the Residuary Entry of the KVAT Act, 2003 - HC
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Case Laws:

• Income Tax

• 2017 (9) TMI 1602
  TPA - selection of comparable - selection criteria - Held that:- Referring to software development and quality analysis services undertaken by Mentor India for Mentor Group as an independent contractor the companies functionally dissimilar with that of assessee need to be deselected from final list of comparable. Inclusion of communication charges in the gross turnover for the purpose of calculating the deduction u/s 10A - Held that:- As decided in assessee's own case we are inclined to accept the plea of the assessee that communication charges need to be excluded both from the export turnover as well as from the total turnover for the purpose of computing exemption u/s 10A and we direct the TPO/AO to recalculate the exemption by excluding the amount of impugned communication charges from both the total turnover as well as export turnover.

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• 2017 (9) TMI 1601
  Disallowance of depreciation to assessee rust - Held that:- Respectfully following the judgment of the hon'ble jurisdictional High Court in the case of Al-Ameen Charitable Fund Trust (2016 (3) TMI 462 - KARNATAKA HIGH COURT ), we do not find any error or illegality requiring our interference in the impugned order of the learned Commissioner of Income-tax (Appeals), in allowing the assessee's claim for depreciation. It cannot be held that double benefit is given in allowing claim for depreciation for computing income for purposes of section 11. The questions proposed have, thus, to be answered against the Revenue and in favour of the assessee.

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• 2017 (9) TMI 1600
  Payment of cess on green leaf - whether production of green leaf which is 100% agricultural activity and not an admissible deduction under income chargeable ? - Held that:- We find that the issue under dispute is squarely covered by the decision of the Hon'ble Supreme Court in favour of the assessee in the case of CIT vs. APEEJAY Tea Co. Ltd. [2015 (8) TMI 1260 - SUPREME COURT] as held Expenditure on cess should be allowed as a deduction before computing the composite income under Rule 8 and the apportionment is to be made after the income is so computed. Disallowance of depreciation on assets acquiring with NABARD fund - Held that:- As relying on decision of assessee’s own case we find force in the arguments made by the learned Counsel on behalf of the respondent assessee and we very much appreciate the conclusion arrived at by the Ld. CIT(A) while deleting the addition. Going through the provisions of law and appreciating the Scheme of NABARD the Ld. CIT(A) has rightly allowed the depreciation on the assets purchased from out of withdrawal of NABARD fund. We, therefore, uphold the order of the Ld. CIT(A) and dismiss the Revenue’s appeal Disallowance of loss incurred on instant tea - CIT(A) allowing the loss incurred on instant tea export to be set off from the business income as arrived at after application of Rule 8 - assessee had only sought for rectification of a particular claim vide its letter dated 21.12.2005 before finalization of computing of total income of the assessee - Held that:- In the instant case, the time limit for filing revised return u/s 139(5) of the Act had already expired and in view of fact the assessee is only seeking to rectify the particular claim already made in the return, there is no need to make such a claim only by way of revised return. It is enough if the same is made by way of a letter filed duly before the Ld. AO. We find that the assessee had brought to the attention of the Ld. AO vide its letter dated 21.12.2005 seeking for rectification of aforesaid mistakes committed by it in the return. This is evident from the copy of the said letter dated 21.12.2005 which is placed on record before us. We find that the Ld. AO had considered the other mistakes pointed out by the assessee while completing the assessment, but had omitted to consider the rectification pleaded on account of loss on instant tea amounting to ₹ 55,85,622/- alone. No infirmity in the direction given by the Ld. CIT(A) to the ld. AO to consider the instant tea loss of ₹ 55,85,622/- to the computation of composite income and correspondingly exclude the same from the business income computing after application of Rule 8(1) of the Rules Revenue appeal dismissed.

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• 2017 (9) TMI 1599
  Assumption of jurisdiction u/s 153A - no search action has been carried out on the assessee - Held that:- It is clear from the perusal of the provisions of section 153A that notice u/s 153A can only be issued where a search is initiated u/s 132 of the Act or books of account or other documents other documents are requisitioned under section 132A after the 31st day of May, 2003. Thus the AO has power to issue notice to such person requiring him to furnish return of income in respect of each assessment year falling within six assessment years falling immediately preceding assessments relevant to the previous year in which the search is conduced or requisition is made. Therefore, it is clear that for the purpose of assumption and exercise of powers u/s 153A of the Act in case of a person, the initiation of search in terms of section 132 of the Act or 132A of the Act on the said persons is mandatory and therefore whether there is no initiation of search as contemplated u/s 132 of the Act , the fundamental conditions for issuance of notice u/s 153A is not fulfilled. Thus, the person in respect of whom the search is initiated u/s 132 of the Act is the same persons against whom the notice is to be issued u/s 153A of the Act. In view of this legal position , we are of the considered view that since no search has been initiated u/s 132 of th4e Act in the case of assessee ,therefore notice issued u/s 153A of the Act is without jurisdiction and the consequent assessment so framed u/s 143(3) r.w.s 153Á of the Act was also void ab-initio - Decided in favour of assessee.

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• 2017 (9) TMI 1598
  Weighted deduction u/s 35(2AB) - Held that:- We find that the certificate is issued by the prescribed authority i.e. the Secretary to the Govt. of India, Ministry of Science & Technology, Department of Scientific Research and Industrial Research (DSIR), New Delhi. The prescribed authority has approved the expenses claimed by the assessee u/s 35(2AB) of the Act. However, only for the limited purpose of verifying the authenticity of the said documents so produced by the assessee, this issue is set aside to the file of the AO. Ground No.2 is thus treated as allowed for statistical purposes. Disallowance of derivate loss - whether the loss claimed by assessee is only a notional loss and such notional liability would be contingent in nature which is not allowable under any of the provisions of the Act? - Held that:- The loss which is incurred on account of forward contract to sell currency at an agreed price at a future date falling beyond the last date of accounting period is a loss incurred by the assessee on account of the valuation of the contract on the last date of the accounting period and before the date of the maturity of the forward contract and hence is not a contingent liability but an accrued liability and is allowable as an expenditure. We find that the facts of the case before us are similar to the facts of the case before the Special Bench in the case of Bank of Bahrain and Kuwait (2010 (8) TMI 578 - ITAT, MUMBAI).

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• 2017 (9) TMI 1597
  Treating loan as gift u/s. 56 (2)(vi) - Held that:- We find that the assessee had claimed to have received a loan of ₹ 70 lakhs from NTK, that the AO had rejected the claim made by her, that he had recorded the statements of assessee and the creditor, that he held that the amount in question was to be taxed as per provisions of section 56(2)(vi) of the Act, that the FAA has passed a very cryptic and non speaking order. We find that at para 5. 3. 10. 1 to 5. 3. 10. 6 he had simply copied the order of the AO. He had not given any reasons as to why he was not convinced by the submissions made during the appellate proceedings. In our opinion being FAA, the CIT(A) should pass a reasoned and speaking order. The size of the order may not be of material importance, but what is important is reasoning for accepting/rejecting the arguments/submissions of the AO/assessee. It is right of AO as well as assessee to get a reasoned and speaking order. Considering the facts and circumstances of the case, we are of the opinion that in the interest of justice matter should be sent back to the file of FAA and he is directed to pass a reasoned and speaking order after considering the submissions of the assessee and case laws relied upon by the assessee. Effective Ground of appeal , raised by the assessee is allowed her favour in part.

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• 2017 (9) TMI 1596
  Excess cash found during the course of survey - excess stock found during the course of survey - Held that:- In the present case, the assessee had surrendered ₹ 58,00,000 on account of shortage of stock which was claimed to have been sold outside the books of account and the value the inventory relating to work-in-progress weighing 43,803 kg. worked out at ₹ 49,06,000. In the present case, the total value of the sales outside the books of account and the work-in-progress found during the course of search come to ₹ 1,07,06,000 (Rs. 49,06,000 + 58,00,000) which the assessee had already disclosed in its profit and loss accounts from April 1, 2008 to March 16, 2009 i.e., date on which the survey was conducted. In that view of the matter, we arc of the view that no addition was required to be made except the surrendered amount which has already been disclosed by the assessee at ₹ 58,00,000. Therefore, the addition of ₹ 7,18,000 on account of cash found during the course of survey and of ₹ 74,82,000 on account of alleged excess stock was not justified because there was no excess stock rather the stock was short. Accordingly, both those additions are deleted. Appeal of the assessee is allowed.

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• 2017 (9) TMI 1595
  Nature of expenditure - whether the expenditure on ESOP is allowable or not? - Held that:- This issue was decided in favour of assessee-company by the Special Bench of Bangalore Tribunal in the case of M/s. Biocon Ltd. [2013 (8) TMI 629 - ITAT BANGALORE] as held that there is no difference between a case where the company issues shares to the public at market price and pays a part of the premium to the employees for their services and another where the shares are directly issued to employees at a reduced rate. In both situations, the employees stand compensated for their effort. By undertaking to issue shares at a discount, the company does not pay anything to its employees but incurs the obligation of issuing shares at a discounted price at a future date. This is nothing but "expenditure" u/s 37(1). - Decided in favour of assessee Disallowance of provision for standard and non-performing assets - Held that:- The issue in the present ground of appeal is squarely covered by the Hon'ble Apex Court in the case of Southern Technologies Ltd., Vs. JCIT [2010 (1) TMI 5 - SUPREME COURT OF INDIA] wherein it was held that the provision on non-performing assets and debited to P&L A/c in terms of the guidelines of the RBI governing the income recognition cannot be allowed to be deductible expenditure either u/s. 36(1)(vii) or (viia) and it was further held that the guidelines of RBI does not override the provisions of Income Tax Act, 1961. Also the Hon’ble Delhi High Court in the case of Housing & Urban Development Corporation Ltd. vs. Addl. CIT (2017 (7) TMI 144 - DELHI HIGH COURT) observed that based on guidelines issued by the Reserve Bank of India governing recognition of income, no deduction can be claimed. - Decided against assessee

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• 2017 (9) TMI 1594
  Treatment to expenses claimed on crockery, cutlery, utensils, etc. - capital v/s revenue expenses - AO treating the expenses to be capital in nature on the premise that they were incurred in respect of a ‘resort launched for the first time’ - Held that:- By the impugned order of the ITAT, the Assessee’s appeal was allowed and the Revenue’s appeal was dismissed. The Court is not persuaded by the learned counsel for the Revenue that the above concurrent factual finding of the CIT (A) and the ITAT is perverse. No substantial question of law arises as regards the said issue. The entire expenditure incurred on crockery, cutlery, utensils, etc. should be treated as revenue expenditure. Addition on the basis of certain documents retrieved from the hard disc of the computer impounded during survey proceedings - Held that:- CIT (A) has in the order discussed in detail the reconciliation statement, which was prepared twice – once during the proceedings before the CIT (A). No discrepancy was found in the balance sheet and profit and loss account. This finding again has been concurred with by the ITAT in the impugned order. Revenue has been unable to persuade the Court that the concurrent factual finding is perverse. Revenue appeal dismissed.

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• 2017 (9) TMI 1593
  Additions made under Section 153C - tangible material of incriminating nature found in search - Revenue submitted that although the amendment to Section 153C bringing on par the period for which the assessments could be reopened in the case of both the searched person and the ‘other person’, was effective from 1st April 2017 it should be viewed as clarificatory and therefore applicable even to the case on hand Held that:- It is seen that as far as AY 2010-11, in terms of Section 153 C, the assessment had to be completed by 31st December 2012. Even the satisfaction note was prepared only on 8th August 2013. The Court is unable to agree with the revenue's submission. It is plain that the amendment to section 153 C of the Act is prospective. In the present case the assessment for AY 2010-11 had abated by the time the satisfaction note was prepared by the AO of the Assessee. The said assessment could not be reopened in the absence of tangible material of incriminating nature relevant for that AY being found. On facts it has been found that there was no tangible material of incriminating nature for the AY in question that could justify the addition made by the AO. See CIT v. RRJ Securities Limited (2015 (11) TMI 19 - DELHI HIGH COURT) - Decided in favour of the Assessee

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• 2017 (9) TMI 1592
  Recovery of tax - Certain transfers to be void - Petitioner’s application for permission u/s 281 - guard against fraudulent transfers designed to defeat recovery by the revenue - Held that:- The section is asset-specific and transfer-or charge-specific. The section demands, above all, precision. An application is for prior permission to create a charge or effect a transfer in respect of a defined asset. Such an application cannot be disposed of by resorting to generalities (“likelihood”, “huge demands”, “might be revoked”, etc). There is no room in considering an application under Section 281 for a response that is speculative, predicated on imponderables and unknowns such as litigation outcomes, or on suppositions that all stay orders obtained by an assessee are bound to be vacated and an assessee’s appeals lost. Nothing in our experience suggests this to be remotely true. We have considered Mr. Pardiwala’s submission in regard to the tenability of the impugned order. We agree with him that it cannot be sustained for the precise reasons we have outlined, and which we find unacceptable. There is no discussion on the merits of any particular application, proposed transfer or individual asset. Hence, keeping the contentions of both sides open, and without rendering a decision on the merits of the application by the Petitioner, we will set aside the impugned order and direct the 1st Respondent to consider the Petitioner’s application afresh, uninfluenced by the previous order and subject to certain conditions that we will set out hereafter. The 1st Respondent will consider the Petitioner’s application (including subsequent correspondence) under Section 281 de novo by 17th November 2017 (we have extended time because of the intervening Diwali holidays). The 1st Respondent will indicate whether he requires any clarifications or further documents or materials from the Petitioner

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• 2017 (9) TMI 1591
  Reopening of assessment - addition u/s 14A - Held that:- AO is obliged to indicate the tangible material on the basis of which he has formed the reason to believe that expenditure in relation to exempt income by the Assessee during the year in question must, in terms of Section 14A of the Act, be disallowed. If indeed there has been no exempt income during the AY in question and that explanation of the Assessee should be accepted by the CIT(A), it is incumbent on the AO to explain on what basis he infers that some expenditure from the alleged income has actually to be disallowed. This appears to be a clear case of non-application of mind. Further, considering that the assessment took place under Section 143(3) of the Act and a specific query was raised in this regard by the AO, revisiting the same issue on the basis of the same material was not justified. Consequently, the first reason for reopening the assessment appears not to be sustainable in law. Excess depreciation was claimed by the Petitioner @ 15% in respect of the electrical installation instead of at the eligible rate of 10% - Held that:- AO has failed to indicate the basis for forming reason to believe that income has escaped assessment. This appears to be based on mere change of opinion. As is the case with the first reason, Explanation 2(c)(iv) to Section 147 would not come to the aid of the AO unless the basis for forming such reason to believe is indicated in the reasons for reopening the assessment. Excess credit of tax deducted at source - Held that:- Nothing has been indicated by the AO in the reasons for reopening the assessment that should explain the basis for forming reasons to believe that income had escaped Expenses claimed on account of payment made to approved gratuity fund assessment - Held that:- Petitioner, in its objections, pointed out that the above reason was based on the original income tax return and not the revised return filed by the Petitioner in which the Petitioner had claimed ₹ 1,98,317/- instead of ₹ 1,98,06,804/- on account of gratuity paid during the AY in question. Obviously, the AO failed to note the changed figures in the revised return. This, being an instance of non-application of mind by the AO, could not constitute a valid reason to believe that income had escaped assessment. None of the reasons for re-opening of the assessment could be said to be valid. - Decided in favour of assessee.

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• 2017 (9) TMI 1590
  Share premium received by the assessee-company - whether cannot be taxed under section 68 - whether the amount received as share premium on issue of share by the respondent-assessees-companies could be taxed as profits and gains of business in the hands of the assessees under section 28(iv)? - Held that:- We find that the issue of bringing the share premium to tax under section 68 of the Act was not an issue which was urged by the appellant-Revenue before the Tribunal. The only issue which was urged before the Tribunal as recorded in para 11 of the impugned order is the addition of share capital and share application money in the hands of the assessee as income under section 28(iv) of the Act. We find that the Commissioner of Income-tax (Appeals) did consider the issue of applicability of section 68 of the Act and concluded that it does not apply. The Revenue seems to have accepted the same and did not urge this issue before the Tribunal. Mr. Bhoot, learned counsel appearing for the Revenue also fairly states that the issue of applicability of section 68 of the Act was not urged by the Revenue before the Tribunal. It is a settled position in law as held by this court in CIT v. Tata Chemicals Ltd. [2002 (4) TMI 42 - BOMBAY High Court] that in an appeal under section 260A of the Act, the High Court can only decide a question if it had been raised before the Tribunal even if not determined by the Tribunal. Therefore, no occasion to consider the question as prayed for arises. Also the amendment to section 68 of the Act by the addition of proviso thereto took place with effect from April 1, 2013. Therefore, it is not applicable for the subject assessment year 2012- 13. So for as the pre-amended section 68 of the Act is concerned, the same cannot be invoked in this case, as evidence was led by the respondents- assessees before the Assessing Officer with regard to identity, capacity of the investor as well as the genuineness of the investment. Therefore, admittedly, the Assessing Officer did not invoke section 68 of the Act to bring the share premium to tax. - Decided in favour of assessee Whether the share premium receipt is capital in nature? - Held that:-We find that the impugned order of the Tribunal upheld the view of the Commissioner of Income-tax (Appeals) to hold that share premium is capital receipt and therefore, cannot be taxed as income. This conclusion was reached by the impugned order following the decision of this court in Vodafone India Services Pvt. Ltd. (2014 (10) TMI 278 - BOMBAY HIGH COURT ) and of the apex court in G. S. Homes and Hotel P. Ltd. (2016 (8) TMI 613 - SUPREME COURT). In both the above cases the court has held that the amount received on issue of share capital including premium are on capital account and cannot be considered to be income. Also the definition of income as provided under section 2(24) of the Act at the relevant time did not define as income any consideration received for issue of share in excess of its fair market value. This came into the statute only with effect from April 1, 2013 and thus, would have, no application to the share premium received by the respondent-assessee in the previous year relevant to the assessment year 2012-13 - Decided against revenue

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• 2017 (9) TMI 1589
  Reopening of assessment - Reasons recorded for initiating proceedings u/s 148 - unexplained subscription to assessee's capital of assessee - Held that:- The law on this subject is well settled. As held in Kelvinator (2010 (1) TMI 11 - SUPREME COURT OF INDIA), the powers under Section 147 of the Act have to be exercised after a period of four years only if there is a failure to disclose fully and truly all material facts and information, by the Assessee. In the present case, the reasons to believe contained the names of the very same five companies which were initially disclosed by the Petitioner during the assessment proceedings. The number of shares subscribed to by the said companies is the same and the amount received has been disclosed by the Assessee. There is no new material which has been found or mentioned in the reasons to believe which were not contained in the information provided by the Assessee prior to the conclusion of assessment under Section 143 (3) of the Act. In the facts of this case, the primary facts have not been shown to be false. The five companies do exist. They did subscribe to the share capital of the Petitioner. They did pay the money to the Petitioner. All the five companies are assessed to tax. These are the primary facts. The reasons to believe rely upon a letter received from the Investigation Wing and Mr. Chaudhary submits that this letter was in fact an investigation report. The report does not form part of the reasons and neither was it annexed to the reasons. Interestingly, even the counter affidavit is silent as to the material which has not been disclosed by the Petitioner. The counter affidavit merely states that the information was specific and the information would be provided to the Petitioner during the assessment proceedings. Thus, if the Revenue had any basis to show that the primary facts were incorrect, the same ought to have been set out in the reasons to believe. That has not been done in the present case. Thus, the Petitioner cannot be said to have failed to disclose fully and truly all the material facts. This being a jurisdictional issue, the assumption of jurisdiction under Sections 147 and 148 of the Act was erroneous. - Decided in favour of assessee.

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• 2017 (9) TMI 1588
  Surrender made by the assessee in the course of the survey and confirmed two months later in writing - retraction made by the Assessee two years after the declaration - No reason to entertain this special leave petition, which is, accordingly, dismissed. HC order confirmed [2017 (5) TMI 172 - DELHI HIGH COURT] as Court is not satisfied that the retraction made by the Assessee two years after the declaration was bonafide. There was no satisfactory explanation for not including the said amount in the return of income filed by the Assessee on 26th September, 2009. - Decided against the assessee.

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• 2017 (9) TMI 1587
  Registration as a Trust under Section 12AA cancelled - proof of charitable object of trust - HC has held [2016 (9) TMI 307 - DELHI HIGH COURT] formal deed of trust was not necessary for the grant of registration under Section 12A/12AA of the Act. It is not necessary that present aims and objects of the Trust should be the same at the time of its establishment and registration u/s 12AA allowed - Held that:- We do not find it to be a fit case for interference under Article 136 of the Constitution. It is more so, in view of the fact that the main grievance of the Revenue is that the Respondent should get its Trust registered under the Trust Act and learned counsel appearing for the respondent states that they will take necessary steps in this behalf immediately and get the Trust registered. After getting it registered, they will submit the same to the Income Tax Department. The special leave petition stands dismissed.

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• 2017 (9) TMI 1586
  TPA - ALP determination - Applying the entity level turnover - Held that:- It is undisputed and apparent from the directions of the Hon’ble DRP that the Hon’ble DRP had directed the TPO to calculate the ALP by restricting the adjustment to the international transaction and also allowing credit of amount of ₹ 3698683/- already added back by the assessee in the computation of taxable income. It is very much evident that while passing the order subsequent to the directions of the Hon’ble DRP, the AO has not followed the directions of the Hon’ble DRP in this regard and has proceeded to calculate the ALP by applying the entity level turnover. Therefore, we deem it fit to restore this issue to the file of the TPO/AO for giving effect to the directions of the Hon’ble DRP in a proper manner after verification and after affording due opportunity to the assessee to present its case. Accordingly, ground no. 6 and 8 of the assessee’s appeal stand allowed for statistical purposes. Challenging selection of two comparables viz. ITDL Imagetic Ltd. And Tirupati Incs Ltd. - Held that:- On going through the profiles of these two comparables, it is undisputed that ITD Imagetic Ltd. is not manufacturing business whereas Tirupati Inc. Ltd. manufacturers printing inks on the other hand, the assessee is a trading company. It is undisputed that the risk profile of a manufacturing company is different from that of a trading company. We are of the considered opinion that the risk profile and the functionality of these two companies being different than that of the assessee company, these two companies should not have been selected as a comparable. Accordingly, we restore these two comparables to the file of the TPO with the direction that these two companies be excluded from the final set of comparables if on verification it is confirmed that both these two companies carry out manufacturing operations. Needless to say, the assessee will be afforded due opportunity of being heard at the time of verification by the TPO. Accordingly, ground no. 7 stands allowed for statistical purposes.

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• 2017 (9) TMI 1585
  Disallowance of contribution towards Gratuity Fund(GF)maintained by Life Insurance Corporation (LIC) - Held that:- We find that the assessee was making payment to LIC towards Employees Group cum Life Assurance Scheme after creating a trust deed that it had made an application to the CIT for approval. Thus there is no doubt that payments had been made by the assessee to LIC in a particular Scheme. The granting of approval for a GF is not in the hands of the assessee. It could only make an application and deposit the money. We find that in the case of Baroda Gujarat Gramin Bank similar issue had arisen and the Tribunal referring to the case of Bitoni Lamps Ltd. (2004 (9) TMI 74 - PUNJAB AND HARYANA High Court) as held that if payments towards funds were made no disallowance should be made even if approval was pending and had decided the issue in favour of the assessee

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• 2017 (9) TMI 1584
  Addition of expenditure incurred on Venue Management expenses, venue expenses, stage decoration expenses and miscellaneous expenses - assessee failed to submit the details in time and for want of verification - Held that:- Merely because the expenses were allowed in subsequent year is also not sufficient to hold that these expenses are allowable in this year also, The assessee has to submit evidences and justifications for incurring of these expenses to fall with in mandate and provisions of the 1961 Act. The assessee has claimed these expenses in return of income filed with the Revenue and the onus is on the assessee to prove and substantiate its allowability within provisions and mandate of the 1961 Act. The issue of allowability of expenses is purely factual matter which requires investigation of facts at the first stage and thereafter it is to be allowed or disallowed by weighing in the context of provisions and mandate of the 1961 Act. The assessee filed details at the fag end of assessment proceedings when assessment proceedings were going to be barred by law of limitation preventing AO to conduct necessary verification and enquiry for want of time. Thus, keeping in view entire factual matrix of the case, this matter need to be restored back to the file of the AO for de-novo adjudication of all the issues on merits

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• 2017 (9) TMI 1583
  Disallowance u/s 14A - no expenditure was incurred to earn exempt income - Held that:- The appellant has not made any fresh investment during the year. He has received interest only on the investments made in earlier years. The appellant is engaged in the banking business activities. The investments held by the banking concerns are treated as a part of its business income. Therefore, income arising from such investments is treated as part of business income falling under the head profit and gains of business. The appellant contended that no expenditure was incurred for earning above exempt income which does not form part of the total income. The Assessing Officer has disallowed total exempted interest earned without any basis. It is undisputed fact that the assessee company has earned tax exempt income. The provisions of section 14A states that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income, which does not form part of the total income under the Act. The AO has not given any finding as to how the claim of the assessee bank that no expenditure was incurred to earn exempt income was incorrect. Furthermore, it is undisputed fact that exempt income is earned from securities, which were invested in the earlier years. No any fresh investments have been made. - Decided in favour of assessee.

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• 2017 (9) TMI 1582
  Withdrawing approval u/s 80G - cancellation of the registration granted to the assessee u/s 12A - no proof of charitable purposes - Held that:- It is not disputed that the name of the assessee figures in the said list and the fact that SHG & PH has admitted that Donations given by SHG and PH to the Assessee were against cash received from them in Financial Year 2012-13 of a sum of ₹ 1,23,87,550/-. Even at this stage all admissions were by third parties and the same were not binding on the Assessee. However in a survey conducted in the case of the Assessee on 24.8.2015, the Managing Trustee of the Assessee admitted that it gave cash and got back donations. We have already extracted the statement given by the Managing Trustee. Even in the proceedings for cancellation of registration, the Assessee has not taken any stand on all the evidence against the Assessee. Thus the conclusions drawn by the CIT(E) in the impugned order which we have extracted in the earlier part of the order are correct and calls for no interference. It is clear from the evidence on record that the activities of the Assessee were not genuine and hence their registration is liable to be cancelled u/s.12AA(3) of the Act, and was rightly cancelled by the CIT(E) - Decided against assessee.

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• 2017 (9) TMI 1581
  Bogus purchases - addition by CIT(A) applying profit rate of 12.5% - Held that:- From the record, found that assessee has shown good GP during the years under consideration. Keeping in view the normal GP being shown by the assessee engaged in the similar business, found that assessee had shown reasonable good GP. Direct the AO to restrict the addition to the extent of 10% in the A.Y.2010-11 where assessee had shown GP of 10.43%. AO is directed to restrict the addition to the extent of 8% in the A.Y.2009-10 and 2011-12 where assessee had shown GP of 11.72% and 11.89% respectively.

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• 2017 (9) TMI 1580
  Addition on sale of agricultural land/asset - distance of more than 8 KM from the local limit of Municipalities and less population as provided u/s 2(14)(iii) - CIT-A held that the agricultural land sold to Housing Society, the land though entered in Revenue record as agricultural and profit on sale assessable to Capital Gain tax - Held that:- The ratio of decision of Hon’ble Supreme Court in Smt. Sarifabibi Mohamed Ibrahim & Ors. (1993 (9) TMI 10 - SUPREME Court) squarely applicable is applicable on the fact of the present case. The assessee is permanent resident of Mumbai. The assessee has not shown any income from agriculture activities. The assessee in the return of income has also shown as income from ‘salary’ from M/s Federal Brands Ltd. No evidence to substantiate that any agriculture activity was undertaken by the assessee during the period of holding the land with him, was placed on record by the assessee. The assessee claimed that during the period of holding installed irrigation system, created check dam, water sprinkle etc. No evidence of such activity is filed on record. None of the activity carried by the assessee during the period qualified as agriculture activity. The facts of the various decision relied by ld. AR of the assessee are at variance and the ratio of none of the case is applicable. Moreover, the decision of the Hon’ble Supreme Court is a binding precedent by virtue of Article 141 of the Constitution of India. Thus, we do not find any illegality or infirmity in the order passed by ld. CIT(A). Deduction of cost of acquisition as per section 48 - Held that:- We have seen that while taxing the Capital Gain arising on sale of land, the AO and the ld. CIT(A) has not considered the deduction on account of Index Cost of Acquisition and the cost of Improvement as provided under section 48 of the Act. The assessee has filed an application for addition ground of appeal which we have admitted of this order. As we have noted that assessee’s claim for deduction on acquisition of cost of improvement has not been considered by the lower authorities. Thus, we deem it appropriate to restore the additional ground of appeal to the file of AO to verify the Cost of Acquisition and improvement thereon and grant the appropriate relief to the assessee in accordance with law. Needless to say that before considering the deduction of Index Cost of Acquisition along with the Cost of Improvement the AO shall grant the assessee an opportunity of hearing The AO further directed to grant the benefit of beneficial rate of tax as provided u/s 112 of the Act.

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• 2017 (9) TMI 1579
  Revision u/s 263 - penalty proceedings u/s. 271(1)(c) - Held that:- We find similar issue has come up in the case of Dharmanandan Diamonds Pvt. Ltd v. ACIT [2017 (3) TMI 1567 - ITAT MUMBAI] and CIT v. Paramanand M Patel [2005 (7) TMI 72 - GUJARAT High Court] and in the case of CIT v. Subhash Kumar Jain [2010 (9) TMI 772 - Punjab and Haryana High Court] set aside the order of the Learned Commissioner of Income Tax passed u/s 263 of the Act in directing the Assessing Officer to initiate penalty proceedings u/s. 271(1)(c) of the Act. Where the Commissioner of Income Tax finds that the Assessing Officer had not initiated penalty proceedings u/s. 271(1)(c) in the Assessment Order he cannot direct the Assessing Officer to initiate penalty proceedings u/s. 271(1)(c) of the Act in exercising of revisional power u/s 263 of the Act. - Decided in favour of assessee.

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• 2017 (9) TMI 1578
  TPA - international transaction - Adjustment u/s 92CA(3) - interest on delay in recovering the outstanding trade receivables from the AE - Held that:- No adjustment can be made on account of interest on receivables on credit granted by the Indian Subsidiary to its foreign AE. Respectfully following the decisions cited above, we hold that the TPO is not justified in making adjustment of interest on account of alleged delay in recovering the outstanding toward receivables from the AE as per the provisions of section 92CA(3) of the I.T. Act.See Kusum Healthcare Pvt. Ltd. [2017 (4) TMI 1254 - DELHI HIGH COURT]. The first issue raised by the assessee in the grounds of appeal is accordingly allowed. Dividend distribution tax - taking the surcharge @ 10% instead of 7.5% on final dividend declared in June 2010 - Held that:- The issue is restored to the file of the Assessing Officer with the direction to apply correct surcharge as per law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The additional ground raised by the assessee is allowed for statistical purposes.

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• 2017 (9) TMI 1577
  Addition on account of Statutory Liabilities/Taxes u/s 43B - Held that:- Assessing Officer has issued notice u/s. 142(1) to the assessee on 06.01.2010 for fixing the date on 18.01.2010 and no one attended nor any reply filed. Another notice was issued u/s. 142(1) on 26.07.2010 fixing the case on 04.08.2010. This notice also stood un-complied. The assessee has not filed any follow up action report against the FIR filed on 31.08.2010. The assessee has also filed computation of income (PB-2). During the course of hearing, the ld. DR objected that it was not filed before the lower authorities. Therefore, the matter should go back to the Assessing Officer. In the computation of income, statutory liability has been allowed of ₹ 9,66,271/- whereas in the balance sheet at page No.19, the statutory liability is appearing as ₹ 10,90,192/-. CIT(A) has also confirmed the addition of ₹ 10,90,192/-. The assessee has shown to have disallowed the statutory liabilities of ₹ 9,66,271/- in the computation of income, but no evidence, like copy of ITR-4, is produced before us in respect of this fact. Therefore, the matter is restored to the file of AO to decide the issue afresh after proper verification. The assessee shall be given reasonable opportunity of being heard. Disallowance on account of salary - Held that:- Assessee failed to produce any books of account before the authorities below to justify the salary expenditure to the above extent. The assessment has been made u/s. 144 of the Act. Even the assessee did not produce any salary payment details to the security guards. Before the CIT(A) also, only statistical data has been submitted. As per Form No. 3CD report, part-B, Sr. No. 9(b), the books of account are reported by Tax Auditor to have been maintained on computer system. Thus, even if missing of books of account is taken for granted for a moment, the assessee could have produced the books after taking their print out from the computer, which he failed to do so. Therefore, we are of the opinion that the ld. Authorities below have rightly made adhoc disallowance of this expenditure. - Decided against assessee.

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• 2017 (9) TMI 1576
  Nature of income - Income arising from transfer of petroleum exploration/mining rights by ONGC to certain private companies - assessee received a sum of ₹ 219.76 crores as ‘Signature bonus’ for demitting 60% share in the oil fields and the AO treated the same as Revenue receipt and brought it to tax. - CIT(A) treated the same as taxable as Capital Gains - determination of cost of acquisition, if to be taxed as capital gains. Held that:- Record does not support the observation of the AO that the signature bonus was a payment towards compensation to the assessee for the profit which it loses, as a consequence of production sharing contract. Signature bonus was received by the assessee in lieu of the transfer of 60% of rights in the oil fields, as such, by no stretch of imagination could it be said that the receipts on that account would be to receive the compensation for loss or profit. Under the joint operation agreement ONGC surrendered 60% of the rights to the other companies agreeing to receive signature bonus. We, therefore, hold that the amount of ₹ 219.76 crores received by ONGC is for transfer of 60% of shares in the Revenue yielding oil fields, as such, is capital in nature. Here in this case, the transfer was in the nature of slump sale and as is held by the Hon’ble Apex Court in PNB Finance Ltd. (2008 (11) TMI 7 - SUPREME COURT) referring to the decision in CIT vs. B.C. Sriniwas Shetty (1981 (2) TMI 1 - SUPREME Court) and holding that the ratio of Artex Manufacturing Co. (1997 (7) TMI 7 - SUPREME Court) has no application to the facts of the case and prior to 1.4.2000 there was no computation provision that could be brought to tax as capital gains the consideration received in slump sale. While respectfully following the same, we are of the considered opinion that the amount of ₹ 219.76 crores received by the assessee as signature bonus for demitting 60% shares in the three oil fields cannot be brought to tax. Even otherwise, as is held by the Ld. CIT (A) in this matter the transaction did not result in any capital gain in as much as by demitting 60% of share in three oil fields the book value of which is ₹ 882.86 crores the assessee received only a sum of ₹ 219.76 crores. Viewing from any angle the amount received by the assessee as signature bonus is not liable for tax. We, therefore, dismiss the grounds of appeal of the Revenue.

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• 2017 (9) TMI 1575
  Unexplained/unproved purchase/investments in purchase u/s. 69 - prove the genuineness of the purchases and sale transactions - Held that:- In the Assessment Years before us i.e. 2006-07, 2008-09 and 2009-10 the assessee could not produce the necessary evidences to show that there is actual delivery of goods and in fact it is the finding of the Assessing Officer that the assessee expressed inability to produce any documents regarding the mode of delivery of material purchased and sold. The finding of the Assessing Officer is not rebutted with evidences. In the circumstances we cannot follow the order of the Tribunal for the Assessment Year 2007-08 and delete the entire addition of bogus purchases though vehemently relied upon by the Learned Counsel for the assessee. On a careful reading of the observations of the decision of the Ld.CIT(A) we do not find any valid reason to interfere with the findings and decision made by the Ld.CIT(A) in estimating the Gross Profit on such bogus purchases. However, in respect of the percentage adopted by the Ld.CIT(A) towards initial investment of capital on these purchases at 20% is on higher side. Thus, we direct the Assessing Officer to modify this percentage to 10% instead of 20% adopted by the Ld.CIT(A). Except for this percentage there is no infirmity in the order passed by the Ld.CIT(A) - Decided partly in favour of assessee.

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• 2017 (9) TMI 1574
  Rectification application - period of limitation - Held that:- No force in these miscellaneous petitions primarily because of the reason that the Statute does not authorize us to entertain any petition which has been filed u/s 254(2) at any time beyond a period of six months from the date of the order. The Tribunal has been given power to admit an appeal after the expiry of the relevant period, if it is satisfied that there was sufficient cause for not presenting it within that period as per Section 253(5). However, this Tribunal is not enshrined with such powers in respect of a miscellaneous petition filed u/s 254(2) of the Income Tax Act. If we are not given that power, then it is not expected from us to exercise such power which is not provided in the Act. The Tribunal, being creation of law, is bound by the statutory provisions and our jurisdiction is simply to interpret and follow the Statute. There is no scope for us to import any word into the Statute which is not there. Such importation would be nothing but to amend the Statute. Miscellaneous applications filed by the assessee are barred by limitation and accordingly they are dismissed as unadmitted.

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• 2017 (9) TMI 1573
  Addition u/s 14A - Rule 8D applicability - recording of satisfaction in the shape of reasons as to why voluntary disallowance made by the assessee was unreasonable and unsatisfactory - Held that:- If the order of the Assessing Officer indicate that he is not satisfied with the correctness of the claim of the assessee or the claim of the assessee that no expenditure has been incurred, he has to proceed in the manner indicated in rule 8D(2) of the Rules, 1962. The court then examined the order of the Assessing Officer passed in that case which contained various reasons and details of disclosure made by the assessee and found that there was compliance of requirement of section 14A(2) of the Act, 1961 and order shows application of mind on the part of the Assessing Officer to the accounts of the assessee from the assessment order itself. Revenue when confronted with the aforesaid expositions of law could not place anything otherwise before this court so as to persuade us to take a different view. He, however, submitted that whatever has been omitted by the Assessing Officer, the same has been rectified by the Commissioner of Income-tax (Appeals) in the appellate order, when it has discussed everything in detail justifying as to why exemption of expenditure claimed by the assessee was rightly disallowed by the Assessing Officer. In our view, jurisdiction to apply section 14A of the Act, 1961 contemplates satisfaction of condition precedent therein, on the part of the Assessing Officer. If he has illegally exercised jurisdiction, the same cannot be said to have been rectified by order passed by the appellate authority inasmuch as the order of the assessing authority itself being illegal as statutory mandatory condition was not satisfied, such illegality could not have been cured by order passed by the appellate authority.- Decided in favour of assessee.

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• Customs

• 2017 (9) TMI 1572
  Import of restricted item - Waste and scrap - confiscation - Held that: - There is no dispute that the other waste and scrap under CTH 76020090 is restricted item and the appellant imported without any valid license and therefore, confiscation of the goods is justified. Redemption fine - penalty - Held that: - It is seen that the lower authority had considered the submissions of the appellant and had given the finding in detail - the redemption fine and penalty is reduced - appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 1571
  Compromise and arrangements - Winding up – Suits stayed on winding-up order - Claim against respondent company in Liquidation - rejection on the ground that the order dated 10.05.2011 was passed by the custom authorities without informing the Official Liquidator of the proceedings pending before it. Held that: - similar issue decided in the case of Sales Tax Officer Versus Byford Ltd. [1982 (5) TMI 149 - HIGH COURT OF DELHI], where it was held that the recovery proceedings can be stayed by the company judge. But not the penalty proceedings - Since the facts of the present case, are similar to the facts of the cases cited above, hence once after inviting claim of the custom authority; asking it to file it in proper format with documents, the Official Liquidator should not have rejected it on grounds that it ought to have been given an opportunity to contest the custom duty/penalty levied upon the respondent company by Custom authorities; the duty/penalty having been levied upon the respondent company under the provisions of Section 117 of the Customs Act, 1962 by following a procedure established by law. Appeal allowed - decided in favor of Customs Authorities.

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• 2017 (9) TMI 1570
  Advance License Scheme - non-production of Export Obligation Discharge Certificate (EODC) - Held that: - Division Bench of the Tribunal in the case of GLS Film Industries Pvt. Ltd. [2015 (12) TMI 723 - CESTAT NEW DELHI] has held that matter needs to be remanded awaiting the decision of DGFT and produce the copy of the same - matter remanded to the adjudicating authority to await decision of the DGFT authorities and decide the matter thereof - appeal allowed by way of remand.

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• 2017 (9) TMI 1569
  Penalty u/s 114A of the Customs Act, 1962 - non-payment of service tax - the appellant sold the SKO other than PDS, due to utmost emergency to Govt. organization - Held that: - It is a well settled law that in the matter of imposition of penalty, the conduct and/or attending extenuating circumstances are material and relevant - In the present case, the appellant had not disputed the payment of duty which they have paid upon notice. The conduct of the appellant could not show to invoke the ingredients as mentioned u/s 114A of the CA, 1962 - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1568
  Revocation of CHA license - forfeiture of security deposit - smuggling of Red Sanders wood, a prohibited item - violation of Regulation 13(a) and 13(d) of CHALR, 2004 - Held that: - there was no involvement of the appellant in the attempt of illegal export of Red Sanders. Further, the appellant co-operated with the investigating officers - revocation of license and forfeiture of the security deposit at this stage is excessive and is set aside - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1567
  Absolute confiscation - import of Raw Hide Skin - fake and fictitious documents - Held that: - the Customs Officers tried to identify the owner of the goods and no one turned up with proper evidence - appeal dismissed - decided against appellant.

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• Insolvency & Bankruptcy

• 2017 (9) TMI 1566
  Time limit for initiation of insolvency resolution process - Insolvency Bankruptcy Code, 2016 - Application for initiation of corporate insolvency resolution process by operational creditor - whether time of fourteen days given to the adjudicating authority for ascertaining the existence of default and admitting or rejecting the application is mandatory or directory? - Held that:- After analysing the provision of fourteen days time within which the adjudicating authority is to pass the order, the NCLAT immediately jumped to another conclusion, viz. the period of seven days mentioned in proviso to sub-section (5) of Section 9 for removing the defect is mandatory. We are not able to decipher any valid reason given while coming to the conclusion that the period mentioned in proviso is mandatory. The order of the NCLAT, thereafter, proceeds to take note of the provisions of Section 12 of the Code and points out the time limit for completion of insolvency resolution process is 180 days, which period can be extended by another 90 days. It is to be borne in mind that limit of 180 days mentioned in Section 12 also starts from the date of admission of the application. Period prior thereto which is consumed, after the filing of the application under Section 9 (or for that matter under Section 7 or Section 10), whether by the Registry of the adjudicating authority in scrutinising the application or by the applicant in removing the defects or by the adjudicating authority in admitting the application is not to be taken into account. In fact, till the objections are removed it is not to be treated as application validly filed inasmuch as only after the application is complete in every respect it is required to be entertained. In this scenario, making the period of seven days contained in the proviso as mandatory does not commend to us. No purpose is going to be served by treating this period as mandatory. In a given case there may be weighty, valid and justifiable reasons for not able to remove the defects within seven days. Further, we are of the view that the judgments cited by the NCLAT and the principle contained therein applied while deciding that period of fourteen days within which the adjudicating authority has to pass the order is not mandatory but directory in nature would equally apply while interpreting proviso to sub-section (5) of Section 7, Section 9 or sub-section (4) of Section 10 as well. After all, the applicant does not gain anything by not removing the objections inasmuch as till the objections are removed, such an application would not be entertained. Therefore, it is in the interest of the applicant to remove the defects as early as possible. Thus, we hold that the aforesaid provision of removing the defects within seven days is directory and not mandatory in nature. However, we would like to enter a caveat. In fine, these appeals are allowed and that part of the impugned judgment of NCLAT which holds proviso to sub-section (5) of Section 7 or proviso to sub-section (5) of Section 9 or proviso to sub-section (4) of Section 10 to remove the defects within seven days as mandatory and on failure applications to be rejected, is set aside.

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• 2017 (9) TMI 1565
  “Corporate Debtor” locus to prefer appeal under sub-section (1) of Section 61 through its Board of Directors or authorise person or its officers except through the “Interim Resolution Professional” - Held that:- The Role of 'Interim Resolution Professional' starts after initiation of 'Corporate Insolvency Resolution Process' against the 'Corporate Debtor'. The 'Interim Resolution Professional' once given consent to function directly or indirectly he cannot challenge his own appointment, except in case where he has not given consent. If the 'Corporate Debtor' is left in the hands of 'Interim Resolution Professional' to raise his grievance by filing an appeal under Section 61, it will be futile, as no 'Interim Resolution Professional' will challenge the initiation of 'Insolvency Resolution Process' which ultimately result into the challenge of his appointment. For example, if an application under Section 7 or 9 is admitted and at the stage of admission, the 'Interim Resolution Professional' is not appointed and such appointment is made later on within 14 days of admission under Section 16, then in case of appointment of an ineligible 'Interim Resolution Professional' against whom a Departmental proceeding is pending, can the 'Corporate Debtor' prefer appeal under Section 61 challenging the appointment of 'Interim Resolution Professional', if the 'Corporate Debtor' is asked to be represented through the same very 'Interim Resolution Professional'? The answer will be in negative means a 'Corporate Debtor' in such case cannot be represented to the 'Interim Resolution Professional', whose appointment is under challenge and for all purpose to be represented through the person who represented the 'Corporate Debtor' at the stage of admission before the Adjudicating Authority. At this stage, it is desirable to notice that though pursuant to Section 17, the Board of Directors of a 'Corporate Debtor' stand suspended (for a limited period of 'Corporate Resolution Process maximum 180 days or extended period of 90 days i.e. 270 days), but they continued to remain as Directors and members of the Board of Directors for all purpose in the records of Registrar of Companies under the Companies Act 2013. For the reasons aforesaid, we also reject the plea taken by Learned Counsel for the appellant that the “Corporate Debtor” has no locus to prefer appeal under sub-section (1) of Section 61 through its Board of Directors or authorise person or its officers except through the “Interim Resolution Professional”.

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• 2017 (9) TMI 1534
  Adherence to procedure prescribed under IBC. 2016, and IBBI Regulations, 2016 and also followed Principles of Natural Justice - validity of Debt Assignment agreements - allegation of related party - Held that:- The applicant's action throughout the entire CIRP proceedings which is not acceptable considering the preamble of the Code. After perusing various records, the Bench is of the opinion that there is no relationship between SCL and MFL. The Applicant's submission that the agenda of the meeting of CoC would have far reaching effect which is prejudicial to the interest of the Financial Creditors including the Applicant is factually not correct, since none of the other financial creditors objected to the agenda and it is only the Applicant objected to it. With regard to the intentions of the Corporate Debtor as well as its related party SCL, we would like to add that the proceedings before the Adjudicating Authority under the IBC is summary proceedings. Therefore, mens rea cannot be raised before the Adjudicating Authority under the IBC proceedings. BIFR proceedings have finally been concluded by passing final orders due to the reasons stated above. It is settled position of law that Assignee cannot get more rights than what its original Assignor has. Admittedly, the EXIM Bank was a party to all concerned proceedings for resolving dispute in question as stated supra. We have carefully examined various orders passed by the BIFR especially touching upon material allegations made by the applicant herein and are satisfied that all interim orders having a material bearing on the issue and also other relevant documents like MRA 2007 etc are valid and thus declared as such and are binding on the parties. The issue cannot be adjudicated in isolation ignoring all developments taken place. At the same time, it is to point out here, that in normal parlance, whatever, interim order(s) passed in a case would merge in the final orders. However, this principle would not be applicable in the present case for the reasons stated supra. The Adjudicating Authority, i.e. NCLT in the instant case, cannot go into roving enquiry especially in the case where several issues have been settled by BIFR and executing several agreements as detailed supra. In the light of aforesaid contentions and findings, We are satisfied that the Learned IRP has acted strictly in accordance I with law by duly following the extant procedure prescribed under IBC. 2016, and IBBI Regulations, 2016 and also followed Principles of Natural Justice.

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• Service Tax

• 2017 (9) TMI 1563
  Refund of unutilized credit - rejection on the ground of nexus with finished output - Held that: - reliance placed in the case of Commissioner of C.Ex. Nagpur Versus Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT], where it was held that the cost of any input service that forms a part of the cost of the final product, then Credit of Service Tax paid on such input services would be allowable - the input services have been availed of by the Respondent herein in the course of its business of providing outward services and hence, the Respondent is to refund claim of CENVAT Credit lying in its account due to export of service - refund allowed - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1562
  Condonation of delay - Held that: - the application is allowed and the delay of 33 days in filing the appeal is condoned. Rectification of mistake - Held that: - the cause title of Appeal No.ST/2258/2012 CU(DB) before the CESTAT will be read as - Commissioner of Service Tax, Delhi Versus “M/s. L. R. Sharma & Co. Respondent”. Appeal disposed off.

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• 2017 (9) TMI 1561
  Franchisee Service - Levy of service tax - Revenue has issued a show cause notice it was culminated into adjudication order wherein it was held that the arrangement between the appellant and educational institute is of franchise agreement accordingly the franchise fee is liable for service tax - interpretation of statute - Penalty - Held that: - as per the agreement, the appellant is providing the technical school of education as well as their brand name Podar Jumbo Kids to the franchisee against which the appellant is collecting the franchise fee - Tribunal correctly held that as per the agreement all the four ingredients of the definition of Franchise are fulfilled accordingly the service was classified as franchise service. There was no doubt regarding the classification of service as franchise service therefore there was no reason to interpret differently by the appellant - penalty upheld - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 1560
  Import of services - reverse charge - classification of services not done - non-levy of service tax - appellant operating in India is the recipient of online information and database access and/or retrieval services - reverse charge mechanism - Held that: - where section 66A of Finance Act, 1994 is sought to be invoked, the classification of the service must necessarily be dealt with in concatenation with identification of the recipient. The impugned order has failed to so and is liable to be set aside on that count itself. the adjudicating authority has transposed the transactions onto a portion of the definition in section 65(75) and section 65(105)(zh) of Finance Act, 1994 without any discussion to identify the appellant as the recipient of the service and, in accordance with the special provisions of section 66A, the deemed provider of the service for liability to tax. This is an essential requirement considering the manner in which section 66A has been enacted as a deviation from the general norm in section 66 of Finance Act, 1994. It would appear to us that the tenor of the various decisions handed down by the Tribunal, and cited by the rival sides, have not been appreciated for the valorous attempts to clarify this much-misinterpreted provision of Finance Act, 1994. It, therefore, devolves upon us to enlighten both disputants and, at the same time, provide ourselves with that steady and unwavering beam within which we will find the resolution to this dispute. The attempt in the present dispute was to hold the Indian branch of a foreign entity liable to tax on consideration paid to an overseas entity arising from contractual relationship of the foreign headquarters of the appellant with CRS/GDS operators outside the country. The thread of provider-recipient relationship as interpreted by Tribunal in the several decisions is unwavering and constant - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1559
  100% EOU - Refund of unutilised Credit - rejection on the ground of nexus and time limitation - Held that: - In the present case the appellant is a 100% EOU and exporting their entire service and there is no domestic sale of the service. In such case the entire Cenvat Credit which is availed is eligible for refund to the appellant - the refund claim cannot be denied on merit. Time Limitation - Held that: - the input received during the period 16/05/2008 to 31/03/2010 for which the refund claim was filed on 24/04/2012 - refund is admissible only for a period for one year prior to 24/04/2012 attributed to export made during that period - the appellants are entitled for the refund claim of accumulated Cenvat Credit attributed to the export made during the last one year from the date of file, i.e. 24/04/2012, Cenvat Credit relatable to the export prior to one year is time barred. The adjudicating authority should re-quantify the refund - appeal allowed by way of remand.

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• 2017 (9) TMI 1558
  Banking & Financial Services - amount paid by the Appellant as fee/ charges to service providers - revenue neutrality - time limitation - Held that: - on the issue of Revenue Neutrality, the said defence was not taken by the Appellant before the lower authorities so that this aspect cannot be ascertained - This aspect of revenue neutrality also requires to be verified from the factual matrix of the present case. Extended period of limitation - Held that: - the adjudicating authority has invoked the extended period of limitation for demanding service tax from the appellant by holding that they had suppressed vital information with the intention to evade payment of tax - this issue was also not considered. The Appellant should be given a chance to prove their case on ground of revenue neutrality and time bar - appeal allowed by way of remand.

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• 2017 (9) TMI 1557
  GTO service - failure to collect and deposit tax - Held that: - the demand was not quantified in the Show Cause Notice as well as in the Adjudication order and therefore, the proceedings cannot stand - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1556
  CENVAT credit - taxable services as well as non-taxable services - non-maintenance of separate set of books - Held that: - reliance placed in the case of M/s. Aster Pvt. Ltd. Versus CC&CE, Hyderabad [2016 (6) TMI 866 - CESTAT HYDERABAD], where it was held that Rule 6(3A), as seen expressly stated is nothing but a procedure contemplated for application of Rule 6(3). Therefore, the argument of the Revenue that the requirement to intimate the department about the option exercised, is mandatory and that on failure, the appellant has no other option but to accept and comply Rule 6(3)(i) and make payment of 5% / 10% of sale price of exempted goods / value of exempted services is not acceptable or convincing - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1555
  Classification of services - Consulting engineer service or works contract service - C.B.E.C. Circular No.58/7/2003-S.T. dt. 20.05.2003 - Held that: - On perusal of this circular, it is seen that the said circular pertains to using a wrong Accounting Code for payment of Service Tax clarification. Since the dispute does not pertain to wrong Accounting Code, the circular is not applicable - in this case nature of contract is admittedly a works contract as is evident from the nature of the contract enclosed with the show cause notice and as has been mentioned in the appeal in the statement of facts. However, where service component is not separately mentioned, the composite works contract cannot be divisible prior to 01.06.2007. Scope of SCN - the allegation in the show cause notice is to classify the impugned service as ‘Consulting Engineer Service’ - Held that: - the contract in this case is a works contract and hence the service provided is works contract service. On that ground too, the show cause notice is not sustainable. Time limitation - Held that: - the issue of indivisibility of the works contract prior to 01.06.2007 involved question of interpretation of law - extended period not invoked. Appeal dismissed - decided against Revenue.

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• Central Excise

• 2017 (9) TMI 1554
  Pre-deposit - amount paid from un-utilized CENVAT credit account maintained by the appellant - whether the mandatory deposit of 7.5% as per Section 35F (i) of the Central Excise Act is required to be made in cash or the same can be paid by utilizing CENVAT credit account maintained by the appellant? - Held that: - in section 35 it is not specifically mentioned that amount has to be deposited only by way of cash payment - the view taken by the lower appellate authority that the deposit u/s 35F (i) cannot be made from CENVAT credit account, is not correct interpretation of law as long as the CENVAT credit is permitted for utilization under Rule 3 (4) of the CCR, 2004 - matter remitted to the ld.Commissioner (Appeals) for re-considering the case on merit - appeal allowed by way of remand.

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• 2017 (9) TMI 1553
  Penalty u/s 11AC - undervalued the goods sold from their depots - the respondent had deposited the entire amount of differential duty together with interest - Held that: - The lower authority had not examined the facts of the case in the light of the ingredients under Section 11AC of the Act - the matter is remanded to the adjudicating authority to decide afresh with respect to imposition of penalty u/s 11AC of the Act - appeal allowed by way of remand.

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• 2017 (9) TMI 1552
  CENVAT credit - transmission tower materials - structural parts of the boiler - Held that: - Revenue strongly relied upon the decision of the Tribunal in the case of Commr. of Central Excise & Customs, BBSR Vs. Shyam DRI Power [2007 (10) TMI 120 - CESTAT, KOLKATA], wherein it has been held that tower materials are not eligible for Cenvat Credit as they are used for transmission of electricity and not for manufacturing parts and components - on eligibility of the Cenvat Credit on transmission tower materials is required to be examined in the light of the said decision. Cenvat Credit on structural support - Held that: - the present matter should be looked into after considering the applicability of the larger Bench decision and other decisions as referred by the Ld. Counsel for the assessee and use of the items in the manufacture of the final products. Appeal allowed by way of remand.

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• 2017 (9) TMI 1551
  100% EOU - Refund of unutilized CENVAT credit - rejection on the ground of Time Limitation - section 11B of Central Excise Act, 1944 - Held that: - though their Lordships in the case of mPortal India Wireless Solutions Pvt. Ltd., [2011 (9) TMI 450 - KARNATAKA HIGH COURT], has held that export of software for the relevant period of time was not a taxable service nevertheless it was considered as a product developed and exported by the appellant. It would mean their Lordships had considered the specific product which were exported by a 100% EOU, similar facts arise in these appeals wherein it is undisputed that the respondents are manufacturers and exporters of goods - it is a settled law that the judgment of jurisdictional High Court needs to be followed when there are conflicting views expressed by various High Courts - appeal rejected - decided against Revenue.

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• 2017 (9) TMI 1550
  Clandestine removal - Penalty u/s 11AC - shortage of stock detected during stock verification - Held that: - Shri Gajanand Sharma, Supervisor and authorized signatory of the appellant, in his statement, admitted the clearance of goods of shortage quantity were not recorded in the statutory records & Registers - it is clearly evident that the goods in question were cleared clandestinely - demand of duty with interest justified. The impugned order is upheld subject to the appellant being entitled to the option to pay penalty of 25% of duty as determined, within 30 days from the date of receipt of this order - decided partly in favor of appellant.

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• 2017 (9) TMI 1549
  Valuation - advance intermediary licence - includibility of additional consideration - interest - penalty u/s 11AC - Held that: - the issue is no more res integra in view of the decision in the case of RELIANCE INDUSTRIES LTD. Versus COMMISSIONER OF C. EX. & CUS., RAJKOT [2008 (4) TMI 443 - CESTAT, AHMEDABAD], where it was held that the claim that the appellant was having a bona fide belief that the additional discounts are permissible has to be accepted and demand of duty has to be confined to duty within the normal period of limitation. No penalty will be justified - penalty set aside. Demand of interest prior to 11.05.2001 - Held that: - the Tribunal has set aside the demand of interest for the period prior to 11.05.2001 in the case of AIA Engineering Pvt.Ltd. v. CCE, Ahmedabad-II [2014 (9) TMI 1033 - CESTAT AHMEDABAD] - interest set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1548
  Clandestine removal - principles of Natural Justice - appellant submitted that they had supplied the details of Job-workers and payment particulars. But no investigation was conducted - Held that: - the Adjudicating Authority is bound to follow the observation of the Tribunal for the purpose of passing the denovo adjudication - In the present case, the Adjudicating Authority passed the order in total disregard of the remand order of the Tribunal which is a gross violation of principles of judicial discipline. Therefore, the Adjudication order passed by the Commissioner (Appeals) cannot be sustained - matter is remanded to the Adjudicating Authority afresh as per the directions of the earlier remand order of the Tribunal - appeal allowed by way of remand.

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• 2017 (9) TMI 1547
  Classification of by-product - char-dolachar - whether that impugned by-product char-dolachar, emerging during manufacture of sponge iron will merit classification under CETH 26190090 as maintained by the department or under CETH 27012090 as held by the lower appellate authority? - Rule 3(a) of the General Rues of Interpretation to the First Schedule of the CETA, 1985 - Held that: - There is no dispute that the impugned by-product is emerging during the manufacture of sponge iron. Hence, applying Rule 3(a) of the General Rules of Interpretation CETH 26190090 is the sub-heading which provides the most specific description for the impugned goods and hence that will have to be adopted. This being so, the application of Rule 3(b) of the rules and the reasoning of essential character of coal fines by the lower appellate authority is misconceived and cannot sustain - appeal allowed - decided in favor of Revenue.

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• 2017 (9) TMI 1546
  Contempt of Court by the officer - Refund of the amount deposited during investigation - disobedience of order of tribunal - Held that: - this Tribunal finds that Mr. R. A. Singh, the Assistant Commissioner has consciously circumvented and/or disobeyed the order of this Tribunal, which amounts to interference in administration of justice by this Tribunal. Accordingly, this Tribunal is referring a statement of case to the Hon'ble Allahabad High Court for initiating appropriate proceedings of contempt against the contemor Mr. R. A. Singh.

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• 2017 (9) TMI 1545
  CENVAT credit - manufacture of dutiable and exempt goods - non-maintenance of separate records - Held that: - the issue is no longer res Integra and has been settled by the judgment of Hon’ble High Court of Allahabad in the case of Balrampur Chini Mills Limited vs. CCE, Allahabad [2013 (1) TMI 525 - ALLAHABAD HIGH COURT] which held that bagasse arising in the course of manufacture of sugar cannot be treated as excisable goods, it continues to remain waste and it does not become manufacture of final product for the purposes of rule 6 of CCR, 2004 - Press Mud is also a waste product similarly emerging during the manufacture of sugar, molasses, therefore the same ratio will also be applicable to press mud - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 1544
  Validity of SCN - Time limitation - CENVAT credit - Held that: - I do not find any grounds of appeal relied on by Revenue to establish that the finding of learned Commissioner (Appeals) that the show cause notice under consideration is time barred in respect of demand of Cenvat credit of ₹ 14,72,924/- - credit allowed. CENVAT credit - sales commission - N/N. 02/2016-CE(NT) dated 3rd February, 2016 - Held that: - sales promotion includes services by way of sale of dutiable goods on commission basis - credit allowed. Appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1543
  Pre-deposit - whether mandatory deposit of seven and half percent as per Section 35F (i) of the Central Excise Act 1944, is required to be paid in cash or the same can be paid from CENVAT Credit Account maintained by the appellants? - Held that: - It is observed from the provisions of Section 35F (i) that it is not specifically mentioned that amount has to be deposited only by way of cash payment - the view taken by the First Appellate Authority, that deposit under Section 35F (i) cannot be made from CENVAT Credit Account, is not the correct appreciation of law so long as the CENVAT Credit is permissible for utilisation as per Rule 3(4) of the CCR, 2004 - matter remanded to the First Appellate Authority with directions to decide the appeals on merits - appeal allowed by way of remand.

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• 2017 (9) TMI 1542
  Clearances made to SEZ Unit developer - demand of duty - SCN was issued alleging that respondent being not a contractor of SEZ unit hence, not eligible for exemption from central excise duty, clearances cannot be treated as exports and the fact that he was not a contractor was suppressed from the Department - Held that: - the clearances made by the respondent to an SEZ unit are exports as per the provisions of the SEZ Act 2005 - Circular of CBEC dated 27.12.2006 relied upon, wherein it was clarified that all clearances made to SEZ developer and SEZ co-developers are deemed to have been treated as exports as per Section 2(m) of the SEZ Act 2005. As regards the claim of the Revenue that respondent has not followed the procedure of ARE-1, it was held that non-preparation of ARE 1 is a condonable procedure lapse, if it is confirmed that goods are exported - There is no dispute as to the fact that the respondent had shown the clearances made to SEZ unit as clearances without payment of duty in the monthly returns. Appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 1541
  Entitlement of interest - interest on abated duty - interest for delayed payment - Held that: - the duty paid by the appellant in terms of Pan Masala Packing Machines (Capacity determination and collection of Duty) Rules, 2008 is required to pay in advance which appellant fail to do so, therefore, the interest is correctly paid by the appellant. Although, the abatement claims have been filed for that period, the appellant is not entitled to claim interest on the abated amount as there is no such provision. Interest for delayed refund - Held that: - the appellant is entitled for interest after three months from the date of filing of refund claim and till the date of sanctioning refund. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 1540
  CENVAT credit - receipt of defective goods back into their factory - Rule 16 of CER, 2002 - It appeared to revenue that appellant was receiving broken pieces packed in bags and the same were not be eligible for Cenvat credit under the said Rule 16 of the said Rules - Held that: - Cenvat credit was admissible to the appellant - the SCN has also mentioned that the issue is recurring in nature and SCN have been issued time to time - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (9) TMI 1539
  Recovery of amount refunded and interest paid on the refund amount - section 40(1) of the VAT Act - the petitioner had purchased goods from dealers who themselves were eligible under the said scheme - breach of condition no.19 of the notification dated 11.10.2013 - the case of the petitioner was that the condition no.19 would not disentitle the petitioner from seeking refund on such purchases - Section 37 of the VAT Act. Held that: - Under subsection (1) of section 37 thus, it is open for a registered dealer to apply for a provisional refund pending assessment. Under subsection (2), it is open for the Commissioner by imposing necessary condition to grant such provisional refund. Such provisional refund can be disturbed only in terms of subsection (4) of section 37 if on assessment, the provisional refund granted is found to be in excess. In order to disturb the provisional refund already granted what is therefore necessary is to assess the return of the petitioner - A provisional refund once granted under subsection (4) of section 37 can be disturbed and recovery can be demanded only on final assessment and not otherwise. In can be appreciated that during the assessment, many issues may come up and ultimate tax liability of an assessee can be judged only on final assessment. There cannot be a stand alone assessment of a refund claim in isolation, keeping the rest of the return unassessed. In the present case, no such assessment is framed. In that view of the matter, impugned orders dated 20.07.2017 and 25.07.2017 in both the petitions are set aside - petition allowed - decided in favor of petitioner.

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• 2017 (9) TMI 1538
  Validity of assessment order - principles of Natural Justice - Held that: - the petitioner has stated in his representation / letter to the respondent that, their Zonal Office has been shifted to Gurgaon (Hariyana) and all the documents are available in the said Office, and requested for further four weeks' time to produce the same. The respondent cannot disbelieve the said request, nor, there was any material available with the respondent, to come to conclusion that the statement of the petitioner was false - matter is remanded to the respondent for fresh consideration - appeal allowed by way of remand.

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• 2017 (9) TMI 1537
  Levy of tax on sale value on purchase suppression found with regard to check post extract - reversal of Input Tax Credit on purchases from registration cancelled dealers - Held that: - not only there is a direction to the petitioner to produce the documents and details but there is a pointed direction to the assessing authority to furnish the purchase list including supplier name, address, invoice number, sales amount, etc., to the petitioner. Further there is a direction to investigate on issuance of Form C also through Departmental Cell. The bank account of the petitioner was directed to be checked to find out payment, if any, to the dealers listed. With regard to the issue relating to reversal of Input Tax Credit, there is a direction to the petitioner to produce the tax invoices and also prove the payments made for those transaction and the assessing officer, on the strength of the invoices, was to conduct an enquiry through departmental source and to prove that on the date of invoices, the supplier was not registered. Unfortunately, the respondent ignored the directions issued and completed the assessment in a summary manner. The matter is remanded back to the respondent for fresh consideration, who shall scrupulously follow the directions issued by the appellate authority - appeal allowed by way of remand.

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• 2017 (9) TMI 1536
  Classification of goods - rate of tax - Blood Collection Monitors - Blood Storage Refrigerators and Deep Freezers - Platelet Agitators with incubators - Plasma Expressers (Electrical and Manual) - Cryobaths - whether the said goods would fall within the ambit and scope of Entry 61 of the III Schedule to the KVAT Act, 2003, which reads as “61. Medical Equipments, Devices and Implants” taxable at the rate of 4% or would be taxable at the rate of 12.5% in the Residuary Entry as per Section 4(1)(b)(iii) of the KVAT Act, 2003? Held that: - the well settled legal principles for interpretation of various Entries under the Tax Laws are that such Commodities have to be interpreted in the manner in which the persons concerned with that Trade will construe them to be or in other words, the Common Parlance Test or Trade Parlance Test has to be applied while making such interpretations. There is no doubt that the collection of Blood samples and Diagnosis of the various contents of the Blood is a useful and integral part of the Medical treatment and without the Diagnosis of the Blood samples, possibly, the Medical Science as far as Allopathy is concerned, cannot even work. The integrity of the Blood Banks and Blood Bank Equipments with the Medical profession comprising of Diagnosis and treatment of the human beings and animals cannot be doubted and they cannot be separated also. The nature of business of the petitioner-assessee who is a registered dealer with the Respondent Department is nothing except dealing with the Blood Bank Equipments and other Medical Equipments. It was not selling usual Refrigerators or Cold Storages. These Refrigerators are specially designed for storing only Blood samples before or after their processing. Therefore, there is no good reason even to treat the Refrigerators specially designed for Blood samples as not falling within the wide scope of Entry 61, which as quoted above reads as ”Medical Equipments, Devices and Implants” - The other Blood Bank Equipments are undoubtedly covered by Entry 61 of the III Schedule to the KVAT Act, 2003. The goods viz. “Blood Collection Monitors, Blood Storage Refrigerators and Deep Freezers, Platelet Agitators with incubators and Plasma Expressers (Electrical and Manual) and Cryobaths” are taxable at the rate of 4% under Entry 61 “Medical Equipments, Devices and Implants” and not in the Residuary Entry of the KVAT Act, 2003 - petition allowed - decided in favor of petitioner.

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• Wealth tax

• 2017 (9) TMI 1535
  Cash seized represents the asset u/s 2(ea) of the Wealth Tax Act - Held that:- We find that the said sub clause (vi) of the clause (ea) of section 2 defines the assets to mean “cash in hand” in excess of ₹ 50,000 of individuals and HUF. Undisputedly, the assessee is an individual. The Longman Business dictionary defines “cash in hand” as the amount of money in the form of cash that a company has after it has paid all its costs; the amount of money held by a company in the form of notes and coins. But, in the case before us, the cash is no longer in the form of notes and coins, but is in the form of a deposit in PD A/c under the control of the Department. The interpretation of the provisions of the Wealth Tax Act by the learned CIT (A), in our opinion, is therefore, misplaced. The money belonging to the assessee was lying in the P.D A/c of the CIT as on the valuation date for appropriation in accordance with section 132B of the Act. Thus, it is not under the free control of the assessee. Therefore, cash in hand in excess of ₹ 50,000 found and seized by the Department from the premises of the assessee is not taxable under the Wealth Tax Act. - Decided in favour of assessee.

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• Indian Laws

• 2017 (9) TMI 1564
  Offence under Section 138 of NI act - issue of cheque and dishonoring - onus to prove debts - Held that:- As has been laid down in Bharat Barrel’s case (1999 (2) TMI 627 - SUPREME COURT), the respondent can rebut the presumption under Sections 139 and 118 of the NI Act by raising a probable defence. The respondent in doing so can either bring in his own evidence or rely upon the evidence submitted by the appellant. In the present case the respondent deposed that he had only received by way of loan from the appellant an amount of ₹ 1,76,000/-. This assertion without any proof is not likely to go very far in raising a probable defence, but the appellant himself admitted that a cheque for the sum of ₹ 1,76,000 and cash ₹ 24,000/- was paid to the respondent, strengthens the defence of the respondent. Even this stand in cross-examination by the appellant is contradictory to the agreement which mentions that loan amount of ₹ 2 lacs includes interest. The fallacy in the appellant’s case is also brought from the fact that the loan agreement mentions that a post-dated cheque for the amount of ₹ 2,00,000/- bearing no.965528 dated 27.12.11 drawn on SBI, Rail Bhawan was handed over to the appellant at the time of execution of the loan agreement but in his complaint as well as in his evidence, the appellant had stated that the said cheque was handed over to him after he raised a demand for repayment of the loan amount to the respondent in December of 2011. The controversy whether a cheque given as security can be brought within the purview of Section 138 of the NI Act does not arise here as a cheque has to be issued for the amount which is due to the holder of the cheque. The various contradictions in the appellant’s version has put a serious doubt as to whether there exists a legally subsisting liability of ₹ 2 lacs in favour of the appellant. The various inconsistencies in the stand taken by the appellant leads the Court to believe that the existence of the liability to be highly improbable. Since the appellant was not able to prove the amount of ₹ 24,000/- allegedly paid by cash to the respondent as loan along with a cheque of ₹ 1,76,000/-, the cheque in question which was for the amount of ₹ 2,00,000/- can in no way be said to have been issued for the legally existing liability of ₹ 1,76,000/-.

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