TMI Tax Updates - e-Newsletter
November 11, 2017

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. GST UPDATE ON BOOKS IN GST REGIME

   By: Pradeep Jain

2. PROCEDURE FOR PROCUREMENT OF SUPPLIES OF GOODS FROM ‘DTA’ BY ‘EOU’, ‘EHTP’, ‘STP’, ‘BTP’

   By: DR.MARIAPPAN GOVINDARAJAN

3. LEGAL ENTITY IDENTIFIER

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. The GST Council, in its 23rd meeting held at Guwahati on 10th November 2017, has recommended the following facilitative measures for taxpayers:

2. Recommendations made On GST Rate changes by the GST Council as per discussions in its 23rd Meeting on 10th November, 2017 held at Guwahati

3. The following changes were recommended in the Composition Scheme on the basis of discussions held in the 23rd meeting of the GST Council held at Guwahati today.

4. Businesses can revise GST transition claim form now

5. GST rate on mass consumption items cut to 18pc

6. FAQ on Immovable Property

7. Cabinet approves utilisation of pulses from the buffer stock through Central Government Schemes having nutrition component

8. Cabinet approves Development of Exhibition-cum-Convention Centre at Dwarka, New Delhi

9. Cabinet approves Agreement between India and the Hong Kong Special Administrative Region of China for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income

10. Cabinet approves the protocol amending the Agreement between India and Kyrgyz for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income

11. Cabinet approves Joint Interpretative Declaration between India and Colombia regarding the Agreement for the Promotion and Protection of Investments signed on November 10, 2009

12. RBI Reference Rate for US $

Notifications

GST - States

1. FA-3-74/2017-1-V-(137) - dated 18-10-2017 - Madhya Pradesh SGST

Notifies the Supply of goods by a registered person against Advance Authorisation.

2. FA-3-33/2017-1-V-(133) - dated 13-10-2017 - Madhya Pradesh SGST

Notifies the state tax on intra-State supplies of goods regarding Motor Vehicles.

3. FA-3-33/2017-1-V-(132) - dated 13-10-2017 - Madhya Pradesh SGST

Amendment in the Notification No. F-A-3-33/2017-1-V(42), dated the 29th June, 2017,

SEZ

4. S.O. 3535(E) - dated 30-10-2017 - SEZ

Central Government notifies an additional area of 3.61 hectares, as a part of above Special Economic Zone at Plot No. IT-5, Airoli Knowledge Park-TTC Industrial Area, Villages Airoli and Dighe, District Thane in the State of Maharastra

5. S.O. 3534(E) - dated 30-10-2017 - SEZ

Central Government de-notifies an area of 61.12 hectares at Kesurde Village, District Satara in the State of Maharashtra

Circulars / Instructions / Orders

Customs

1. 142/2017 - dated 8-11-2017

SUB : Requirement of health certificate issued online by the State Veterinary Authorities for export of meat and meat products. –reg.

2. 39 /2017 - dated 8-11-2017

Subject:- Refund of IGST paid on export of goods under Rule 96 of CGST Rules, 2017–Reg.

3. 38 /2017 - dated 2-11-2017

Subject: Implementing Electronic Sealing for Containers by exporters under self-sealing procedure prescribed by circular 26/2017-Cus dated 1st July 2017, circular 36/2017 dated 28.8.2017 and 37/2017 dated 20.9.2017 – reg

Highlights / Catch Notes

GST

• GST Council's 23rd Meeting in Guwahati Introduces Taxpayer-Friendly Measures on November 10, 2017.

  News : The GST Council, in its 23rd meeting held at Guwahati on 10th November 2017, has recommended the following facilitative measures for taxpayers:
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• GST Council Reduces Rates, Simplifies Compliance in 23rd Meeting to Boost Economic Efficiency and Ease of Doing Business.

  News : Recommendations made On GST Rate changes by the GST Council as per discussions in its 23rd Meeting on 10th November, 2017 held at Guwahati
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• GST Council Recommends Simplifying Composition Scheme for Small Businesses with Flat Tax Rate and Expanded Eligibility Threshold.

  News : The following changes were recommended in the Composition Scheme on the basis of discussions held in the 23rd meeting of the GST Council held at Guwahati today.
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• Businesses Can Amend GST Transition Claims for Error Correction and Compliance

  News : Businesses can revise GST transition claim form now
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• GST Rate on Essential Goods Lowered to 18% to Ease Consumer Costs and Boost Economic Activity

  News : GST rate on mass consumption items cut to 18pc
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Income Tax

• Revenue Should Be Recognized Proportionally for Partially Rendered Services; Membership Fees Can Be Distributed Over Time.

  Case-Laws - HC : Accrual of income - Method of accounting - when the services are rendered partially, revenue is to be shown proportionate to the degree of completion of the service and therefore the assessee was justified in spreading over the amount of membership fee and expenses - HC
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• Court Orders Amendment to Income Tax Act's Section 80IA(4)(iii) for Multi-Year Industrial Park Deductions.

  Case-Laws - HC : Deduction u/s 80IA(4)(iii) - industrial park scheme - seeking rectification in the notification dated 26.12.2016 - The interpretation given by the Revenue would mean that this availability of deduction over a span of year would not occur in case of an enterprise carrying on the business of developing any infrastructural facility and would be confined to only one assessment year - revenue directed to amend the notification - HC
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• High Court Affirms AADHAAR Requirement for Tax Returns; Partial Supreme Court Stay Not Applicable to Petitioner's Case.

  Case-Laws - HC : Requirement of AADHAAR number in filing return of income - to state that the partial stay granted by the Hon'ble Supreme Court would enure to the benefit of the petitioner even for filing income tax returns is a plea, which is not sustainable and is liable to be rejected. - HC
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• Arm's Length Price: Clubbing Revenue Streams is Fact-Dependent, Not a Question of Law.

  Case-Laws - HC : Clubbing of income for Arm’s Length Price (ALP) determination - clubbing of two distinct revenue streams - whether to segregate or not segregate two transactions, is entirely a fact dependent exercise that cannot per se be treated as a question of law. - HC
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• Interest on Tax Refunds u/s 244(A) Allowed When Settlement Commission Partially Waives Interest or Tax.

  Case-Laws - SC : Entitlement to interest u/s 244 (A) - refund arose on account of interest that was partially waived by an order of the Settlement Commission - the expression “due” only means that a refund becomes due if there is an order under the Act which either reduces or waives tax or interest - claim of interest allowed. - SC
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• Supreme Court Affirms State's Obligation to Pay Interest on Refunds Under Income Tax Act Section 244A.

  Case-Laws - SC : Payment of interest on refund u/s 244A - The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances - SC
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• Trust Retains Tax Exemptions u/ss 11 & 12 Despite Income from Royalties and Sponsorships; Section 2(15) Applies.

  Case-Laws - AT : Exemption u/s 11 and 12 - Merely because it has received certain fund on account of royalty as well as on account of sponsorship it cannot be said that the activities of the trust are no more covered u/s 2(15) - AT
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• No TDS Required on Payments to Non-Residents if Income Isn't Taxable in India; No Need for Section 195 Order.

  Case-Laws - AT : TDS on payment to non-residents - Once we come to the conclusion that the income embedded in these payments did not have any tax implications in India, no fault can be found in not deducting tax at source from these payments or, for that purpose, even not approaching the Assessing Officer for order u/s 195. - AT
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• Rental Income Not Taxed as Property Income: Company Not Owner u/s 27(iiib) of Income Tax Act.

  Case-Laws - AT : Nature of income from renting of shops - Since the company is neither the owner nor the deemed owner in terms of section 27(iiib) of the Act, therefore the "Contribution from Shops" cannot be assessed under the head "Income from house property. - AT
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• Transfer of Business Leads Not a Slump Sale u/s 50B; Treated as Individual Asset Transfer.

  Case-Laws - AT : Slump sale - amount received by the assessee in lieu of transfer of the business leads - transfer of an individual asset, viz. its business leads - cannot be characterized as a consideration received by the assessee pursuant to a slump sale u/s 50B - AT
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• Individual's Salary Not Taxable in India Due to Non-Resident Status; Lived Abroad Over 182 Days Last Year.

  Case-Laws - AT : Salary income of the assessee for the previous year cannot be held to be taxable because he was not resident in India, as admittedly he was outside India for more than 182 days. - AT
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• Court Upholds Penalty u/s 271(1)(c) for Denied Deduction u/s 80P(2)(a)(i) Due to Interest Discrepancy.

  Case-Laws - HC : Penalty levied u/s 271(1)(c) - eligible for deduction u/s 80P(2)(a)(i) denied - interest paid to the cooperative society exceeds the interest received from the bank on investments - Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise - HC
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Customs

• Online Health Certificate Required for Meat Exports by State Veterinary Authorities to Ensure Compliance and Safety Standards.

  Circulars : Requirement of health certificate issued online by the State Veterinary Authorities for export of meat and meat products.- Customs
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• Exporters to Implement Electronic Sealing for Containers Under New Customs Regulations for Enhanced Security and Efficiency.

  Circulars : Implementing Electronic Sealing for Containers by exporters under self-sealing procedure - Customs
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• Imported Goods Valuation Must Follow Established Principles, Excluding Emails and NIDB; Reassessment of Bills of Entry Required.

  Case-Laws - AT : Valuation - Re-assessment of Bills of Entry - value of subject goods imported in this case cannot be discarded and the same cannot be enhanced by placing reliance on the e-mail, NIDB and the invoices obtained from different sources. - AT
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• Department Reviews Royalty and Pricing Agreements for Accurate Valuation of Imported Goods.

  Case-Laws - AT : Valuation of imported goods - includibility - Before adding the royalty amounts to the value of imported components, it is necessary for the department to examine both the technical assistance agreement as well as the pricing agreement. - AT
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• Authority Oversteps in Determining Origin by Misclassifying Inputs for Goods Imported from Sri Lanka, Violating Customs Law.

  Case-Laws - AT : Determination of origin of imported goods - The Original Authority has apparently exceeded the jurisdiction in going into the aspects of possible classification of inputs used by the supplier in the manufacture of impugned goods in Sri Lanka. - AT
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• High Court Criticizes Tribunal for Not Establishing Prima Facie Case, Violating Natural Justice in Customs Matter.

  Case-Laws - HC : Principles of natural justice - the order does not reflect the application of mind by the Appellate Tribunal as regards the existence of prima facie case or otherwise. - HC
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Service Tax

• State Must Refund Double Tax Payment Due to Unjust Enrichment Doctrine Violation.

  Case-Laws - AT : Refund claim - Once, tax was paid by service provider and later by the service recipient. State has been doubly benefited. - The doctrine of unjust enrichment equally applies to the State. - AT
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• Court Rules Against Retaining Deposit for Capital Expenditure in Telephone Services Case; Demand Set Aside.

  Case-Laws - AT : Telephone services - retention of part of deposit made - the retention of the portion of deposit towards capital expenditure incurred and not for provision of telephone service - demand set aside - AT
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• Renting Equipment Excluded from Infrastructure Support in Business Support Services Definition.

  Case-Laws - AT : Providing of equipment on rent, per se cannot be called infrastructure support service. The scope of BSS as defined cannot cover simple renting of equipments - AT
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• Appellant Must Pay Service Tax on Full Amount as Not Classified as Pure Agent Under Relevant Rules.

  Case-Laws - AT : Valuation - reimbursement of expenses - appellant cannot be treated as a pure agent as defined in the rules. Consequently, the appellant is required to discharge service tax on the full amount received - AT
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• Service Tax Not Applicable on "Administrative Charges" for Flat Buyer Rights Transfer, Demand Set Aside.

  Case-Laws - AT : Real estate agent service - consideration received under the heading “Administrative Charges” for allowing transfer of flat buyers right to another person - demand of service tax set aside - AT
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• Appellant Lacks Capacity as Pure Agent; Expenses Must Be Included in Service Tax Valuation Per Relevant Rule.

  Case-Laws - AT : Valuation - reimbursement of expenses - the appellant did not have the capacity to act as pure agent and did not fulfill the conditions of pure agent under the relevant rule. Hence the appellant will not be entitled to exclude expenses incurred. - AT
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Central Excise

• High Court Confirms CESTAT Decision Dropping CENVAT Credit Demand for Common Inputs u/s 11A and Rule 6, 12.

  Case-Laws - HC : CENVAT credit - Whether CESTAT is correct in dropping demand of Cenvat Credit on common inputs issued u/sn 11A of the Central Excise Act, 1944 read with Rule 6 & 12 of erstwhile CCR, 2002 for having not maintained separate accounts as mandated statutorily by law? - Held Yes - HC
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VAT

• Port Trust Classified as "Dealer" u/s 2(viii), Subject to Tax Assessment.

  Case-Laws - HC : The assessee-Port Trust would fall within the meaning of "dealer" under Section 2(viii) of the Act and is consequently assessable to tax under the Act - HC
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Case Laws:

• Income Tax

• 2017 (11) TMI 591
  Revision u/s 264 in favor assessee - CIT rejected the application - non furnishing books of account and other relevant material - GP determination - Held that:- SLP dismissed - HC order confirmed [2017 (11) TMI 518 - PUNJAB & HARYANA HIGH COURT]. HC has held more than sufficient opportunity was provided to the assessee to explain his case of furnishing books of account and other relevant material. The assessee failed to avail the opportunity provided by the Assessing Officer on several occasions. Even during those instances where authorized representative of the assessee appeared, complete details were not filed. Accordingly, the profit rate of 12% to the gross receipts of the assessee was held to be quite reasonable on the basis of the material available before the Assessing Officer. Thus, the CIT finding no error in the order passed by the Assessing Officer, rightly concurred with the view taken by the Assessing Officer and rejected the petition filed by the petitioner under Section 264 of the Act. The present petition has been filed after one year and eight months. Learned counsel for the petitioner has not been able to produce any material on record to substantiate his claim made in the petition. Consequently, finding no merit in the petition, the same is hereby dismissed.

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• 2017 (11) TMI 590
  Payment of interest on refund u/s 244A - refund of excess tax deposited u/s 195(2) - responsibility of revenue u/s 244A for payment of interest on the refund of tax made to the resident/deductor u/s 240 - Whether the resident/deductor is also entitled to interest on refund of excess deduction or erroneous deduction of tax at source u/s195 of the Act – Held that:- It is clear that the appeal of the department deserves to be dismissed as the matter is covered by the judgment of this Court in Union of India Through Director of Income Tax Vs. Tata Chemicals Limited [2014 (3) TMI 610 - SUPREME COURT] wherein held Interest on refund is a kind of compensation of use and retention of the money collected unauthorizedly by the Department - When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited - Even the Department has understood the object behind insertion of Section 244A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded - There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/foreign company. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances - The obligation to refund money received and retained without right implies and carries with it the right to interest. The interest is payable from the date of payment of tax - the resident/deductor is entitled not only the refund of tax deposited under Section 195(2) of the Act, but has to be refunded with interest from the date of payment of such tax – Decided against Revenue.

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• 2017 (11) TMI 589
  Entitlement to interest u/s 244 (A) - refund arose on account of interest that was partially waived by an order of the Settlement Commission - powers of settlement commission - Held that:- Commission cannot either waive or reduce interest which is statutorily payable unless there is express power to do so in that behalf. However, while so saying, the Court went on to clarify that the circulars issued pursuant to the powers under Section 119 of the Act, which empower the authorities under the Act to waive or reduce interest, may be availed by the Settlement Commission to waive interest. We are of the view that the expression “due” only means that a refund becomes due if there is an order under the Act which either reduces or waives tax or interest. It is of no matter that the interest that is waived is discretionary in nature, for the moment that discretion is exercised, a concomitant right springs into being in favour of the assessee. We are, therefore of view that the C.I.T. (Appeals) and the ITAT were correct in their view and that consequently, the High Court was incorrect in its view that since a discretionary power has been exercised, no concomitant right was found for refund of interest to the assessee.

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• 2017 (11) TMI 588
  Revision order u/s 263 - scope of exercise of power under Section 263 - Held that:- As far as the first aspect with respect to exercise of power under Section 263 is concerned, the issue stands concluded, in the light of the amendment with effect from 1989, by insertion of Explanation (c) to Section 263 (1). The non-consideration of the larger claim for Rs.298.93 crores as depreciation and the consideration of only a part of it (Rs.644,81,091) by the assessing officer, who did not go into the issue with respect to the whole amount, was an error, that could be corrected under Section 263. Aruba (16. ) is decisive, in that the provision of Section 263 (1) Explanation (c) was introduced to cater to precisely this kind of mischief. On the aspect of show cause notice, i.e., the second and third questions framed, the court is of the opinion that the ruling in Amitabh Bachhan (2016 (5) TMI 493 - SUPREME COURT) is decisive; it upholds the power of the Commissioner to consider all aspects which were the subject matter of the AO’s order, if in his opinion, they are erroneous, despite the assessee’s appeal on that or some other aspect. This Court is of the opinion that the revisional order, to the extent that it did not provide any pre-decisional opportunity to address the issues it dealt with, could not be sustained; the ITAT has granted relief of a limited nature on that score. However, we do not agree that those issues were incapable of consideration as they were gone into by the AO. Accordingly, the CIT, in exercise of his power under Section 263 will proceed to consider the assessee’s submissions only on those two aspects, before making his order. All questions framed are, therefore, answered in the negative, against the assessee.

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• 2017 (11) TMI 587
  Applicability of Transaction Net Margin Method (TNMM) - selection of MAM - Held that:- The Court is of the opinion that no substantial question of law arises. The difference of opinion between the CIT(A) and the TPO, as to the appropriateness of one or the other methods, cannot per se be a ground for interference; the appropriateness of the method unless shown to be contrary to the Rules specially Rules 10B and 10C, in the opinion of the Court, are hardly issues that ought to be gone into under Section 260A of the Income Tax Act.

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• 2017 (11) TMI 586
  Clubbing of income for Arm’s Length Price (ALP) determination - clubbing of two distinct revenue streams i.e. sale of air time with distribution business, advertisements, sale business, etc by ITAT - ITAT upheld the Appellate Commissioner’s findings that the transactions in question ought to be analyzed in conjunction i.e. after aggregation for arm’s length purposes and also found that the assessee had structured itself in a manner that its profit was maximized as a whole rather than independently as regards these two activities - Held that:- The Court is of the opinion that the ITAT’s decision cannot be faulted. The rejection of the RBI guidelines and the TPO’s omission given due weight to the down linking guidelines were a relevant factor, which in our opinion, the CIT(A) and the ITAT correctly noted to reverse the original findings. It is a settled proposition that whether to segregate or not segregate two transactions, is entirely a fact dependent exercise that cannot per se be treated as a question of law. In the present case, the reasons which impelled the lower authorities i.e. the CIT (A) and the ITAT to uphold the assessee’s plea with regard to aggregation for ALP purposes, are reasonable and cannot be interfered with. - Decided against revenue

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• 2017 (11) TMI 585
  Application of Berry Ratio and Transactional Net Margin Method (TNMM) method - MAM - adjustment made in the present case unsupported by proper application of Rules 10B or 10C of the Income Tax Rules, 1962 - Held that:- The assessee has used Berry Ratio while applying TNMM to benchmark the international transactions. Once, CUP has been accepted as the most appropriate method there is no question of applying any other method to corroborate the analysis made under CUP. The assessee has to explain the benchmarking of international transactions by applying the most appropriate method selected to benchmark the transaction. This Court is of the opinion that the Tribunal’s findings cannot be faulted. The interest offering which the assessee emphasises is nothing but an income attributable to the transaction which it had sought to utilize. In the circumstances, the authorities’ decision, therefore, cannot be characterized as erroneous. The provisions of the acts and rules apply in making the adjustments in the present case; the same would apply even in the case of discount for the sale transaction which was undertaken after six months.

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• 2017 (11) TMI 584
  Requirement of AADHAAR number in filing return of income - petitioner seeking permission to file his income tax returns AY 2017-18 either manually or through appropriate e-filing facility without insisting the petitioner to produce his aadhaar card and/or enrollment ID as defined under Section 139AA - Constitutional validity of Section 139AA - Held that:- After rendering the above finding, it was observed that though the PAN is issued under the provisions of Section 139A of the Act, its function is not limited to giving this number in the income tax returns or for other acts to be performed under the Act as mentioned in Sub-Sections (5), (5A), (5B), 5(C), 5(D) and (6) of Section 139A. It was further observed that Rule 114B of the Rules mandates quoting of this PAN in various other documents pertaining to different kinds of transactions listed therein. It was also observed that for doing many activities of day to day nature, including in the course of business, the PAN is to be given and in the absence of a PAN, it will be impossible to undertake any of the activities, though its requirement is aimed at curbing the tax evasion. It was further observed that if the PAN of a person is withdrawn or is nullified, it definitely amounts to placing restrictions on the right to do business. On a reading of the quoted paragraphs in the decision in the case of Binoy Viswam, [2017 (6) TMI 478 - SUPREME COURT OF INDIA] it would clearly show that the Hon'ble Supreme Court has not stayed the Proviso to Sub-Section (2) of Section 139AA of the Act and the partial stay would be applicable only to facilitate the other transactions, which are mentioned in Rule 114B of the Rules, which pertains to transactions, in relation to which, PAN is to be quoted in all documents for the purpose of Clause (C) of Sub-Section (5) of Section 139A of the Act. Therefore, to state that the partial stay granted by the Hon'ble Supreme Court would enure to the benefit of the petitioner even for filing income tax returns is a plea, which is not sustainable and is liable to be rejected.

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• 2017 (11) TMI 583
  Review petition - existence of keying error - counsel for the applicant has contended that the financial statements of the applicant have been signed by the auditor, which will clearly show that major portion of the applicant's income was from property and that there was no business income and this was the keying error - Held that:- This Court is of the considered view that the grounds raised by the applicant are, in fact, grounds, which were canvassed before this Court while arguing the said writ petition. Thus, the settled legal principle is that the revision is not an appeal in disguise. The exercise of review jurisdiction could be done only if the applicant is able to point out an error, which is apparent on the face of the order. From the submissions made, this Court finds that the applicant has not been able to point out any error, which is apparent on the face of the order, but the attempt appears to be re-arguing the entire matter, which is impermissible. For the aforesaid reasons, this Court finds no grounds to entertain this review. Accordingly, the above review application is dismissed.

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• 2017 (11) TMI 582
  Eligibility of deduction u/s 80IA(4)(iii) - industrial park scheme - seeking rectification in the notification dated 26.12.2016 - As per the Revenue's interpretation, an assessee cannot claim deduction under the said provision till all units are sold - whether the benefit of deduction to the petitioner's industrial park would be available to such park from the date of its commencement i.e. 05.09.2010? - Held that:- Once the minimum number of units are located, to expect the Park to postpone benefit of claiming deductions till the entire Park is set up and all the units are located, would be to leave the Park at the vagaries of uncertainty. Setting up of the remaining units, beyond 30 could be time consuming. The existing 30 Units have joined the Park project with an aim to have tax concessions; Impetus to set up such infrastructure facilities would receive a set back if the tax concession to such a Park is left to be opted for,only when the entire project is sold out. If the starting point of deduction is deferred till all units are sold, the assessee would get no deduction on the income arising out of sale of units in earlier years. For example, if the industrial park consists of 100 units, it is possible that the assessee may sell 30 units in the first year, 30 more units in the second year and 30 more in the third year. Remaining 10 units may be sold in the fourth year. As per the Revenue, the deduction would be available only during the year when the sale of these last 10 units are completed. This in turn would mean that the assessee would get no deduction on the sale of 90 units in the earlier years, completely defeating the object of the provisions. We may recall the deduction is available to any enterprise carrying on business of developing or developing and maintaining or developing, operating and maintaining any infrastructural facility. The deduction is spanned over a number of years. The interpretation given by the Revenue would mean that this availability of deduction over a span of year would not occur in case of an enterprise carrying on the business of developing any infrastructural facility and would be confined to only one assessment year. Once, as held in the case of Ganesh Housing (2011 (8) TMI 654 - Gujarat High Court) that the minimum number of units, namely 30 have been located, the Park becomes eligible to opt for the benefit under Section 80IA.It is then that,in accordance with the Circular dated 15.2.2016 that the Project Developer has the option to opt for such concession from the first year of setting up or in a subsequent year as the “initial assessment year” as clarified in the Circular dated 15.2.2016. As a result of a specific finding given by us that the petitioner is deemed to have been eligible for availing tax deduction under Section 80IA(4)(iii) from the Financial Year 2009-2010, Assessment Year 2010-11, the order rejecting the Rectification Application dated 17.3.2017 deserves to be set aside. The condition in the Notification extending the benefit of availing of deductions under Section 80IA(4)(iii) from the date of commencement of 5.09.2010 is a condition not found in any of the other notifications vis-a-vis other such projects, produced in other such cases. Accordingly, the respondents are directed to delete Condition No. 7 in the Notification of 26.12.2016

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• 2017 (11) TMI 581
  Validity of notice issued under Section 245 - Cause of action having arisen to "M/s Premier Security Services" to file this writ petition - Refund of tax already paid to be adjusted against demand outstanding denied - Held that:- Record shows that Assessee before Income Tax Department is "Jasjit Singh", an ''individual' having PAN No. ASSPS7046N. Writ petition has been filed by M/s Premier Security Services, through its Proprietor Jasjit Singh and not by Jasjit Singh himself. In fact photocopy of PAN Card has also been filed as part of affidavit and it also shows that the same is in the name of Jasjit Singh and not in the name of M/s Premier Security Services whereof Jasjit Singh claimed to be Proprietor. Impugned notice under Section 246 has been issued in the name of ''Jasjit Singh''. Assessment Orders, copies whereof have been filed, passed in the name of ''Jasjit Singh'. TDS certificates, which petitioner has placed on record, claiming their benefit show that on pages 27, 28 and 29 the same relate to ''Jasjit Singh' and on pages 32 to 45, the same relate to ''Birendra Singh'. Jasjit Singh may have earned income by running Premier Security Services, but ''Premier Security Services' is not an Assessee before Income Tax Department. Therefore this writ petition at the instance of "Premier Security Services", challenging orders and notices relating to "Jasjit Singh" is thoroughly misconceived and not maintainable.It is not stated anywhere in the writ petition that M/s "Premier Security Services" is a firm or company and a sole proprietor firm and whether registered with Registrar, Firms, Societies and Chits or even with Income Tax Department. Be that as it may, we do not find any cause of action having arisen to "M/s Premier Security Services" to file this writ petition challenging notice dated 16.08.2014, which is in the name of "Jasjit Singh". Moreover, assessment orders are not under challenge and so long as liability of income tax is outstanding, pursuant to the assessment orders, which are operating, ex facie, adjustment of demand, outstanding under such assessment orders, against amount of refund payable to an Assessee cannot be said to be illegal and it can well be adjusted by the authority concerned.

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• 2017 (11) TMI 580
  Rectification of mistake u/s 154 - order passed by his predecessor u/s 263 requires to be amended - whether the activity done by the petitioner amounts to manufacture? - Held that:- With regard to the first issue, the matter has now been settled in various decisions and one of the decisions being that of the High Court of Gujarat in Commissioner of Income Tax -vs- Alfa Lamination [2009 (3) TMI 73 - GUJARAT HIGH COURT] as held after completion of all the processes, CRGO/CRNO coils get converted into transformer core which is the end product which can be used in mfg. of transformer - Tribunal while recording majority opinion & giving due credence to the opinion of the technical experts of the field, is right in holding that assessee is engaged in manufacturing article and is entitled to deduction u/s 80IB. First issue framed for consideration has to be answered in favour of the assessee and it has to be held that the proposal to rectify the so called error in the order dated 20.01.2006 is not tenable Whether the power under Section 154 of the Act could be exercised, after the Commissioner has considered the matter by passing an order under Section 263 of the Act? - As pointed out earlier, the petitioner's predecessor in office had done a thorough exercise and passed the order under Section 263 of the Act dated 20.01.2006, after conducting an inspection of the petitioner's factory and being satisfied that the activity done by the petitioner amounts to manufacture. Unfortunately, the successor in Office namely the second respondent while issuing the impugned notice did not even state as to what is the mistake which is apparent from the record. Thus, it can be safely concluded that the present attempt of the second respondent was to undo what his predecessor has done, which has been clearly held to be impermissible in the case of Festo Elgi Private Limited [1998 (9) TMI 13 - MADRAS High Court]. Thus, following the said decision the Issue No.2 is also answered favourable of the assessee.

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• 2017 (11) TMI 579
  Reopening of assessment - Deemed dividend u/s 2(22)(e) - Held that:- Since the assessment order has already been done and pursuant to the interim order passed by this Court, the petitioner is on appeal before the Commissioner, it is appropriate for the petitioner to pursue such appeal remedy, since the Commissioner, being the fact finding authority, would be able to appreciate/reappreciate the factual position and take note of the legal position. It is needless to state that the Commissioner (Appeals), while deciding the appeal, first decide the question as to whether the reopening of the assessment and assumption of jurisdiction under Section 147 of the Income Tax Act was justified or was it erroneous as done on the factual matrix.

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• 2017 (11) TMI 578
  Stay petition - demand for payment of interest under Section 220(2) - recovery proceedings - non cooperation in proceedings - whether the petitioner satisfies the condition prescribed under Section 220(2A)? - visible financial hardship - Held that:- Merely because the petitioner approached this Court and filed a writ petition, they cannot be put to prejudice nor can it be treated that the petitioner did not co-operate in the proceedings. Therefore, the condition no (iii) contained in Section 220(2A) stands complied with. With regard to other two facts, to be fulfilled for the entitlement of waiver, namely genuine hardship and circumstances beyond the control, the second respondent has interpreted the clause in the freight rate agreement dated 09.06.1987 and concluded that it is a self-inflicted injury by the petitioner. In my view, the second respondent has no jurisdiction to sit in judgment over a condition contained in an agreement between two parties viz., two Government organization and that cannot be put against the petitioner. Thus, the manner in which the second respondent has approached the issue is in-correct. With regard to financial difficulty, the second respondent would state that the petitioner has a fixed deposit of a sum of Rs. 4.4 Crores and they also earned interest income and the said fixed deposit is maintained specifically in connection with Kanniyakumari ferry service, which is a matter of national importance and the fixed deposit has to be maintained for the purpose of acquiring the ferry and cannot be diverted for any other purpose. Thus, the observation with regard to financial condition of the petitioner is also factually in-correct. Thus, for the above reasons, this Court has no hesitation to hold that the petitioner has fulfilled all the three conditions contained under Section 220(2A) of the Act and thus, entitled for waiver of interest. Writ petition is allowed and the impugned order is quashed. It is seen that at the time, when the writ petition was allowed, an order of interim stay was granted on condition that the petitioner pays 25% of the amount demanded within a period of eight weeks. This condition has been complied with by the petitioner. In the light of the above order, the petitioner is entitled for refund of the said amount and this amount can be adjusted against the future assessments.

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• 2017 (11) TMI 577
  Reopening of assessment - exixtence of valid reasons to believe - Held that:- Unless and untill the respondent was able to establish that such claim for direction is the reason of the failure on the part of the assessee to truly and fully disclose material facts, the question of reopening the assessment would not arise. Both in the counter affidavit as well as in the reasons of reopening dated 07.06.2004 there is no allegation that the petitioner has failed to truly and fully disclose material facts necessary for the assessment. The impugned reopening of the assessment is unsustainable in law and it is a clear case of change of opinion as the respondent has miserably failed to point out as to what is the reason to believe that any income chargeable to tax has escaped assessment. Thus it is a case where on suspicion the impugned reopening proceedings have been initiated. At the relevant point of time, the decision of the Hon'ble Division Bench Supreme Court in case of GKN DRIVE SHAFTES (2002 (11) TMI 7 - SUPREME Court ) was not rendered by the Hon'ble Supreme Court and therefore, the petitioner did not seek for furnishing the reason for reopening which resulted in passing of the impugned assessment order. It is only thereafter, the petitioner sought for the reasons and the present writ petition has been filed. Accordingly, the writ petition is allowed and the notice issued for reopening the assessment and consequent assessment order dated 30.03.2004 are quashed. - Decided in favour of assessee.

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• 2017 (11) TMI 576
  Addition on account of bogus payment for purchasing land - addition being commission paid for giving accommodation entries - Held that:- The question which has been posed for our consideration is whether the tribunal is justified in deleting the additions which was made by AO as well as CIT(A) being commission paid by it to M/s. Mrigiya Electronics Industries Pvt. Ltd. for giving accommodation entries was justified when the company was involved in providing accommodation entries after charging commission for the same. In view of the observations that the price of the land was paid with other entry in the bank and there is nothing to show that cash receipt was shown by the assessee. Thus we are in complete agreement with the view taken by the CIT(A) and Tribunal. No case is made out for interference. The issues are answered in favour of the assessee and against the department.

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• 2017 (11) TMI 575
  Consideration received on non-competition obligation - accrual of income - Method of accounting - Memorandum of Understanding cast an obligation upon the appellant not to compete with the business for a period of two years - Tribunal held that the provisions of section 145(1) are not applicable - Held that:- As relying on decision of Gujarat High Court in Commissioner of Income Tax vs. Winner Business Link Pvt. Ltd. [2015 (1) TMI 829 - GUJARAT HIGH COURT] no infirmity in the order passed by the Tribunal. The Tribunal has rightly considered that the method of accounting should be such from which the correct profit of each year can be deducted and that as per the method adopted by the Revenue, the profit in the year in which the card is issued would be more resulting in loss/less profit in the year in which the services will be rendered by the assesseee. We are of the opinion that when the services are rendered partially, revenue is to be shown proportionate to the degree of completion of the service and therefore the assessee was justified in spreading over the amount of membership fee and expenses.

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• 2017 (11) TMI 574
  Eligible for depreciation u/s 32 - whether the depreciation deserves to be computed and allowed with reference to the Written Down Value of such Block of Asset as defined u/s 43(6)? - Held that:- Expression “Used for the purpose of business” in section 32 has to be read harmoniously with the expression “Discarded” occurring in Clause III of sub section (1) thereof. On harmonious reading of these expressions, “Used for the purpose of business” only means that assessee has used the machinery for the purpose of business in earlier years. Therefore once depreciation was allowed on block of assets in previous year actual user of machinery is not required with respect to the discarded machinery and the condition for eligibility of depreciation that machinery is used for the purpose of business would mean that discarded machine is used for the purpose of business in the earlier years for which depreciation is allowed. - Decided in favour of the assessee against the department.

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• 2017 (11) TMI 573
  Deduction u/s 80IA - Held that:- The issue No.1 regarding 80IA deduction is squarely covered by the decision of Bombay High Court Commissioner of Income Tax, Central II vs. ABG Heavy Industries Ltd. reported in (2010 (2) TMI 108 - BOMBAY HIGH COURT Delayed payment of employees contribution of ESI and PF - Held that:- The issue No. 2, the same is now covered by the decision of this Court in CIT vs. State Bank of Bikaner & Jaipur (2014 (5) TMI 222 - RAJASTHAN HIGH COURT) Disallowance u/s 14A - Held that:- The issue is governed by the decision of Supreme Court the case of Godrej & Boyce Manufacturing Company Limited vs. Deputy Commissioner of Income Tax [2017 (5) TMI 403 - SUPREME COURT OF INDIA] as held we do not find any mention of the reasons which had prevailed upon the Assessing Officer, while dealing with the Assessment Year 2002-2003, to hold that the claims of the Assessee that no expenditure was incurred to earn the dividend income cannot be accepted and why the orders of the Tribunal for the earlier Assessment Years were not acceptable to the Assessing Officer, particularly, in the absence of any new fact or change of circumstances. Neither any basis has been disclosed establishing a reasonable nexus between the expenditure disallowed and the dividend income received. That any part of the borrowings of the Assessee had been diverted to earn tax free income despite the availability of surplus or interest free funds available remains unproved by any material whatsoever.While it is true that the principle of res judicata would not apply to assessment proceedings under the Act, the need for consistency and certainty and existence of strong and compelling reasons for a departure from a settled position has to be spelt out which conspicuously is absent in the present case - Decided in favour of assessee.

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• 2017 (11) TMI 572
  Eligibility to registration u/s 12AA - denial of registration on the ground that the assessee had failed to produce material to establish the authenticity of the unsecured loan received by it - revision of mistake seeked - Held that:- The object clause of the assessee as placed on the paper book shows that it is running school for educational purposes. The assessment order of earlier years as placed in the paper book had also clearly pointed out to the same effect. However, liberty was granted to the Assessing Officer to examine the books of account and in case there was any violation of the Act then to disallow exemption under Section 11 of the Act. No illegality or perversity could be demonstrated in the aforesaid approach of the Tribunal. However, inspite of the same, the revenue moved an miscellaneous application before the Tribunal for recalling the order, Annexure A-2. The Tribunal had noticed that by moving the MA, the revenue had tried to review the order which was not permissible under Section 254 of the Act. Further, vide order dated 20.5.2015, the Tribunal had clearly held that the Assessing Officer would be entitled to examine the books of account of the assessee during assessment proceedings and if anything adverse was found, the Assessing Officer can disallow exemption under Section 11 of the Act. The Tribunal had rightly held that the revenue has failed to point out any mistake apparent on the face of the record and rectifiable under Section 254(2) - Decided against revenue

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• 2017 (11) TMI 571
  Penalty levied u/s 271(1)(c) - eligible for deduction u/s 80P(2)(a)(i) denied - interest paid to the cooperative society exceeds the interest received from the bank on investments - Held that:- Sec.80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the cooperative society from its investment with any other cooperative society. This provisions does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the cooperative society from any investment with a cooperative society. It is immaterial whether any interest paid to the cooperative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the cooperative society from its investment in any other cooperative society. Therefore, we do not agree with the argument advanced by the learned counsel for the Revenue. In our opinion, the learned Tribunal was right in allowing deduction under Sec.80P(2)(d) of the Income Tax Act, 1961. ince, the issue on merit has been decided in favour of the assessee no penalty can be levied and as such the Tribunal has committed no error of law in setting aside the penalty under Section 271 (1)(c) of the Income Tax Act. - Decided in favour of assessee.

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• 2017 (11) TMI 570
  Undisclosed deposits - addition of unexplained income in the hands of the assessee - Held that:- Only reliance of one bank account which has been opened by the assessee company and various authority letters given to Mr. Mayur M. Thakkar cannot be the basis to draw an inference that whole of the income accrue and arise in the hands of the assessee company. This matter should further have been seen and considered in the context of probabilities and possibilities of having earned any income by the assessee company from these transactions, being based at Jaipur and carrying out such transactions in Bombay wherein no such blank authorities given to Mr. Mayur M. Thakkar was required in case he could have been carrying out these transactions regularly in Bombay. Thus the assessing authority has wrongly assessed and ld. CIT(A) has wrongly upheld the deposits as additions being unexplained income in the hands of the assessee. Also in case it is considered that all these transactions have been carried out by the assessee company and deposits and making out of drafts and carrying out all these business is a part of the work carried out by the assessee company and these deposits are considered as cash deposits in the bank account then there cannot be any assessment more than the amount of peak credit for both the years being a block period which does not exceed more than 10 lakhs. In no case there can be 100% assessment on the total deposits as an income and cannot be considered as undisclosed income of the block period - Decided in favour of assessee.

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• 2017 (11) TMI 569
  Non-service of notice u/s 148 within the prescribed time - Whether the ITAT has erred in not having considered the issue of non-service of notice u/s 148 within the prescribed time frame despite this fact emerging from the assessment record? - Held that:- Having considered the order, the first contention that notice was not served, is not open after the remand order. In our considered opinion, the view taken by the Tribunal is just and proper. The question is required to be answered in favour of the department against the assessee.

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• 2017 (11) TMI 568
  TDS on Roaming Charges/Interconnect Charges as Technical Fee u/s 194J - revision u/s 263 - Held that:- After perusing the aforesaid order of the Ld. CIT, we are of the considered opinion that the order of the CIT is wrong in assuming the jurisdiction under section 263 because the revisionary proceedings under section 263 have merely been initiated on the basis of the letter received from ACIT (TDS), Chandigarh and the Ld. CIT (TDS) did not arrive at any independent satisfaction for initiation of such proceedings; by acceding to the request of the learned ACIT, the CIT(TDS) has effectively enhanced the time limitation prescribed under section 201(3) for completion of 201 proceedings by a TDS officer; the order passed by the learned ACIT is neither 'erroneous' nor 'prejudicial' to the interest of the revenue since the learned ACIT took one of the two permissible views after conducting a detailed enquiry in respect of applicability of withholding tax provisions on the roaming charges paid by the appellant to the other telecom operators. CIT(TDS) has erred in concluding that roaming charges paid to other telecom operators by the assessee attracts provisions of section 194J without appreciating the facts that - Roaming charges paid by the assessee to the other telecom operators represent payments made for standard facility provided by such telecom operators and hence, cannot be classified as FTS for the purposes of the Act; No human intervention, which is sine qua non for a service to qualify as technical service, is involved in provision roaming services and therefore, roaming charges cannot be construed as Fee for Technical Services for the purposes of the Act CIT has not appreciated the facts that the other telecom operators, to whom the roaming charges have been paid, would have offered income arising from roaming charges received from the assessee to tax and hence, no prejudice would have been caused to the revenue and hence, initiation of 263 proceedings is bad in law and void ab initio. - Decided in favour of assessee.

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• 2017 (11) TMI 567
  Revision u/s 263 - accrual of income in India - CIT setting aside the assessment order to make afresh assessment after examining the issue of claim of deduction of salary earned by the assessee on his employment on deputation to foreign country - Held that:- It is not the case that the assessee has received or deemed to have received any income in India because salary which has been received by the assessee is during his employment in Iraq as a Country Manager for the activities carried out in Iraq. No such income has been received by the assessee for carrying out any activity in India or source of income is from India which could be reckoned as income received or accrued in India. Thus, in terms of subsection (1) of section 6, salary income of the assessee for the previous year cannot be held to be taxable because he was not resident in India, as admittedly he was outside India for more than 182 days. Accordingly, salary of the assessee cannot be taxed in India and the same has rightly been claimed as deduction in the return of income. Thus, on merits we hold that the assessment order passed by the Assessing Officer is not prejudicial to the interest of the Revenue, albeit can be reckoned as erroneous in the absence of any proper enquiry. It is trite law that revisionary jurisdiction under section 263 on an assessment order can only be exercised once the said order is found to be erroneous insofar as it is prejudicial to the interest of the Revenue, i.e., both the conditions should fulfill simultaneously. Thus, even if one of the limbs of said expression used in section 263 is missing, then ostensibly the assessment order cannot be set aside within the scope of revision u/s 263. Hence, on merits we quash the order of the Ld. Pr. CIT and uphold the allowability of deduction of salary as claimed by the assessee. - Decided in favour of assessee.

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• 2017 (11) TMI 566
  Slump sale - amount received by the assessee in lieu of transfer of the business leads to L & T Infotech Ltd. - accessibility to business income - whether sum could be categorized as an amount received in lieu of a slump sale transaction, which thus could be brought within the sweep of Sec. 50B? - Held that:- We find that the facts of the case revealed that the assessee had received an amount of Rs. 9,80,50,000/- (supra) in lieu of transfer of its business leads to L & T Infotech Ltd., which would in no way be held to constitute a 'Business activity' in itself. We are of the considered view that the facts that the aforesaid amount of Rs. 9,80,50,000/- was received by the assessee only for transfer of an individual asset, viz. its business leads can safely be gathered beyond doubt from the very fact that the other assets, viz. Computers (forming part of the block of assets) remained as such with the assessee. Similarly, we find that the business liabilities of the assessee, viz. Sundry Creditors of Rs. 1,03,68,351/- also remained with the assessee on 31.03.2003. We further find that the assessee had in the notes forming part of its accounts as on 31.03.2003, had in terms of Accounting Standard 18 (AS-18) in its 'Related party disclosures' therein categorically disclosed that the aforesaid amount of Rs. 9,80,50,000/- was received by it in lieu of transfer of its business rights to L& T Infotech Ltd.. We have deliberated on the facts of the case and after giving a thoughtful consideration to the same, are of the considered view that as the assessee had neither transferred an undertaking or any part of an undertaking, or a unit or division of undertaking or a business activity taken as a whole, but what have been transferred is an individual asset, viz. business leads, which does not constitute a business activity on its own, therefore, are unable to persuade ourselves to subscribe to the view of the lower authorities which had held that the amount of Rs. 9,80,50,000/- (supra) received by the assessee was liable to be characterized as a consideration received by the assessee pursuant to a slump sale as per the provisions of Sec. 50B of the 'Act'. We thus in the backdrop of our aforesaid observations set aside the order of the CIT(A) and therein conclude that the amount of Rs. 9,80,50,000/-(supra) had rightly been reflected by the assessee as a business income. Disallowance of the interest cost on the inter-company deposits - Held that:- Now when we have held that the amount of Rs. 9,80,50,000/- (supra) was liable to be brought to tax under the head business income, therefore, the disallowance by the A.O of the interest cost of Rs. 22,11,622/- on the intercompany deposits held by the assessee, for the reason that the same were attributable to the earning of income from transfer of business leads, which had been held to be liable to be assessed as "Slump sale", thus, cannot be sustained. Appeal of assessee allowed.

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• 2017 (11) TMI 565
  TPA - selection of comparable - Held that:- Assessee has provided software development services i.e. IT services and also IT enable services i.e. ITES services to its associate enterprises, thus companies functionally dissimilar with that of assessee need to be deselected fro final list.

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• 2017 (11) TMI 564
  Re working profit from the project - AO has assessed the total income of the partnership firm till the date of dissolution on the basis of closing work-in-progress as on the date of dissolution of the firm - CIT(A) re-worked the profit from the project by taking into account total receipts from the project and applied project completion method to determine the income subject to verification of assessee’s claim with regard to parking space / escalation recovery - Held that:- We are of the view that the CIT(A) was right in re-working profit from the project on the basis of project completion method. We do not find any error in the order of CIT(A); hence, we are inclined to uphold the order of CIT(A) and dismiss the appeal filed by the assessee.

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• 2017 (11) TMI 563
  Contribution received from the Shops - assessable under the head "Income from House Property" or " Income from business or profession" - Held that:- The assessee's main object as stated in its Memorandum of Association was to acquire on license or by purchase, lease, exchange, hire or otherwise lands and property of any tenure, or premises in any part of India and to license or sub-license or lease or sub-lease or let, such lands or property or premises or any part thereof, clearly spells out that the assessee's main business is to carry out systematic and regular activity in the nature of business of letting out property. We also note that section 27(iiib) read with section 269UA(f) of the Act, is not applicable in the instant case as the agreement is only for use of property and not for the transfer of the same. Since the company is neither the owner nor the deemed owner in terms of section 27(iiib) of the Act, therefore the "Contribution from Shops" cannot be assessed under the head "Income from house property. The said issue is squarely covered by the Hon'ble Supreme Court judgment in Chennai Properties & Investments Ltd.'s case (2015 (5) TMI 46 - SUPREME COURT) wherein it had been held that in case, letting of the properties was in fact the business of the assessee, then the assessee's income disclosing the same under the head income from business has to be upheld and it cannot be treated as income from house property. - Decided in favour of assessee.

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• 2017 (11) TMI 562
  TDS u/s 195 - default under section 201(1) & 201(1A) of the Act for not deducting tax while making remittance to non-residents - withholding of tax - PE in India - commission paid to export commission agents - Held that:- The issue in question is covered, in favour of the assessee, by the decision of the co-ordinate bench in the case of DCIT vs. Welspun Corp Ltd [2017 (1) TMI 1084 - ITAT AHMEDABAD] Commission payments made to the non resident agents did not have any taxability in India, even under the provisions of the domestic law i.e. Section 9. Once we come to the conclusion that the income embedded in these payments did not have any tax implications in India, no fault can be found in not deducting tax at source from these payments or, for that purpose, even not approaching the Assessing Officer for order under section 195. In our considered view, the assessee, for the detailed reasons set our above, did not have tax withholding liability from these payments. As held by Hon’ble Supreme Court in the case of GE India Technology Centre Pvt Ltd Vs CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] payer is bound to withhold tax from the foreign remittance only if the sum paid is assessable to tax in India. The assessee cannot, therefore, be faulted for not approaching the Assessing Officer under section 195 either. As regards the withdrawal of the CBDT circular holding that the commission payments to non resident agents are not taxable in India, nothing really turns on the circular, as de hors the aforesaid circular, we have adjudicated upon the taxability of the commission agent’s income in India in terms of the provisions of the Income Tax Act as also the relevant tax treaty provisions.

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• 2017 (11) TMI 561
  Addition u/s 68 - amount credited in the “Clients account” maintained by the assessee with the bank - Held that:- When the amounts aggregating to Rs. 29,91,792/- credited in the “Clients account” maintained by the assessee with the bank, could safely be held to be the clients money which were held by the assessee in a fiduciary capacity, therefore, the same could not be assessed as the unexplained credit in its hands under Sec. 68 of the ‘Act’. We are of the considered view that in the backdrop of our aforesaid observations, the amount of Rs. 29,91,792/- (supra) could not have been assessed as the unexplained cash credit of the assessee under Sec. 68. We are also of the view that now when the revenue had been accepting the aforesaid practice of the assessee in offering the unidentified amounts received from the clients and forming part of the “Clients account” for tax, after a lapse of a period of three years, and on the said basis had assessed the amounts of Rs. 2,51,576/-(supra) and Rs. 3,50,554/-(supra) offered by the assessee for tax after a lapse of a period of three years in AY: 2006-07 and AY: 2007-08, respectively, therefore, a different yardstick and an inconsistent approach would not be permissible on its part for the year under consideration. We are of the considered view that as we have set aside the entire addition of Rs. 29,91792/-(supra), therefore, the contention of the assessee that the taxing of the amount of Rs. 9,49,687.96 (supra) during the year under consideration would lead to ‘double taxation’ in its hands is rendered as academic. Disallowance of the interest on borrowed capital in respect of the short term interest free funds which were made available by the assessee to its subsidiary company - Held that:- We find from a perusal of the records that though it is contended by the A.O that advances were made by the assessee out of its interest bearing funds, however, a claim to the contrary was raised by the assessee, therein claiming that the advances to the ‘Sister concern’ were made out of the share capital, reserves and surplus which were available with the assessee. We are of the considered view that in the backdrop of the aforesaid facts read with the settled position of law, the matter in all fairness needs to be restored to the file of the A.O. We thus restore the matter to the file of the A.O, with a directon to re-adjudicate the issue keeping in view the aforesaid judgments of the Hon’ble Supreme Court in the case of S.A. Builders Ltd. (2006 (12) TMI 76 - SUPREME COURT OF INDIA) - Decided in favour of assessee for statistical purposes. Disallowance in respect of the foreign travelling expenditure - Held that:- We are persuaded to be in agreement with the contentions of the ld. A.R that there was an impeccable procedure for sanctioning by the assessee company of the foreign travelling undertaken by its employees/directors, as well as approval of the expenses incurred therein. We have given a thoughtful consideration to the issue before us and after deliberating on the material available on record in the backdrop of the contentions raised by the authorized representatives for both the parties, are unable to persuade ourselves to be in agreement with the view arrived at by the lower authorities in respect of the proportionate disallowance of the foreign travelling expenses in the hands of the assessee. We thus being of the considered view that the foreign travelling expenses which are irrebutably found to have been incurred by the assessee wholly and exclusively for the purpose of its business, therefore, find no justification for any proportionate disallowance of the said expenditure in the hands of the assessee. We thus delete the disallowance in respect of the foreign travelling expenses. - Decided in favour of assessee.

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• 2017 (11) TMI 560
  Exemption u/s 11 and 12 denied - non charitable activities - whether the assessee’s activity falls under the category of advancement of any other object of General Public Utility and the last proviso to Section 2(15) is clearly applicable to it as "Income from Sponsorship/ Royalty’ is explicitly business receipt in nature? - Held that:- Admittedly, the assessee is engaged in the activity of promotion of basketball and is carrying on charitable activities. Merely because it has received certain fund on account of royalty as well as on account of sponsorship it cannot be said that the activities of the trust are no more covered under section 2 (15) of the act. See Rajasthan Cricket Association versus additional CIT [2017 (4) TMI 346 - ITAT JAIPUR] No infirmity in the order of the Ld. CIT A, in allowing exemption to the assessee trust under section 11 and 12 of the income tax act. - Decided in favour of assessee.

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• 2017 (11) TMI 526
  TPA - Comparable selection criteria - Held that:- : The assessee company is engaged in the business of designing and developing softwares. The assessee is also providing support services through Call Centre. The assessee is providing Information Technology Services (ITS) and Information Technology Enabled Services (ITES) to its holding company M/s. Parametric Technology Corporation (PTC USA). Thus, the assessee is a captive service provider thus functionally dissimilar companies need to deselected from final list of comparable.

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• 2017 (11) TMI 525
  Addition on account of interest of funds borrowed for acquiring immovable - loan taken by the assessee was for investment in purchase of property or for earning interest? - whether the interest expenditure incurred by the assessee on the loan availed of from M/s. Reliance Capital Limited is directly related with the interest income earned on advance made to M/s. Omaxe Limited should be allowed to be deducted from the said interest income u/s 57 (iii) - Held that:- When we examine all these facts in the light of the fact that M/s. Reliance Capital Limited, M/s. Omaxe Limited and assessee are into litigation before Hon'ble Delhi High Court qua the property in question and the property has also not been transferred in the name of assessee, the assessee will certainly get benefit of interest payment on the loan of Rs. 6,00,00,000/- u/s 57 (iii) of the Act as it is not a house property income as has been held by the AO. Rather it was invested in the commercial property made by the assessee to get assured return / interest from his investment of Rs. 6,00,00,000/-. Thus CIT (A) has rightly held that this income is to be treated as income from other sources and the interest paid by assessee to M/s. Reliance Capital Limited is to be allowed as expenditure incurred for earning the income u/s 57 (iii) of the Act. Moreover, when there was a categoric understanding between the assessee and M/s. Reliance Capital Limited that the assessee will get assured return, the interest was being paid for the purpose of earning interest i.e. assured income from M/s. Omaxe Limited and acquisition of the property was incidental only. - Decided against revenue

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• Customs

• 2017 (11) TMI 559
  Forfeiture of properties of respondents - smuggling - COFEPOSA Act - It is alleged that the respondent and his associates used to over-value the consignments declared before the customs authorities in India. Whereas, the consignments were declared to be of exorbitant values in India, the declarations made before the customs authorities of the importing countries indicated a significantly lower value. Main contention of petitioner is that the documents produced by the respondent to establish that the properties in question were purchased in 1993 were unregistered and, therefore, the respondent had failed to prove that the properties were legally acquired. Held that: - there was ample evidence on record to substantiate the respondent’s claim that the said properties were purchased in 1993. As opposed to the same, the Competent Authority had not produced any material that would even remotely cast a doubt as to the respondent’s claim - The Tribunal had also noted that the Competent Authority had not even discussed that the firm involved in the illegal activities were established in the year 2000 and there was no allegation that respondent was involved in any illegal activity prior to the year 2000. Petition dismissed - decided against petitioner.

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• 2017 (11) TMI 558
  Doctrine of merger - Refund of SAD - deposit of SAD in lieu of sales tax at the time of import u/s 3(5) of the CTA, 1975 - denial of refund on the ground that the refund application was filed after expiry of period of one year from the date of payment of SAD - Held that: - it is well settled that doctrine of merger is not applicable when a Special Leave Petition against a decision of a High Court is summarily dismissed without recording reasons - what binds this Court is the law laid down by a Coordinate Bench of this Court in the case of CMS Info Systems Limited [2017 (1) TMI 786 - BOMBAY HIGH COURT], where it was held that The power to consider that refund claim and grant it, if permissible, is traceable to Section 27 of the Customs Act, 1962. Therefore, it was impossible to ignore the statutory bar and contained in sub-section (1) of Section 27 at any time - appeal allowed - decided in favor of Revenue.

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• 2017 (11) TMI 557
  Interest on delayed refund - relevant date - principles of natural justice - Held that: - It is true that while deciding the application for stay and/or for waiver, the Appellate Tribunal is not expected to write detailed Judgment. This Court has repeatedly held that prima facie consideration of merits of the case made out by the appellant is required to be made while deciding such application. It is true that the Appellate Tribunal is not expected to write elaborate Judgment for coming to the conclusion whether prima facie case exists or not. In the facts of the case, the order does not reflect the application of mind by the Appellate Tribunal as regards the existence of prima facie case or otherwise. The Appellate Tribunal has not done its duty and therefore, the application made by the appellant will have to be reconsidered by the Appellate Tribunal - appeal restored for reconsideration.

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• 2017 (11) TMI 556
  Refund claim - unjust enrichment - retrospective effect of amendment or not? - Whether the provisions of unjust enrichment inserted in Rule 9(B)(5) of the Central Excise Rules, 1944 vide Notification No.45/99-CE(NT) dated 25.6.1999 could be invoked and applied retrospectively on transaction effected prior to the date of the issue of the Notification i.e. during the period April, 1997 to March, 1998? Held that: - Revenue has tried to justify on the ground of unjust enrichment. He has relied on the decision of the Supreme Court which has been made retrospective effect and in our considered opinion, when the competent authority i.e. Superintendent, Central Excise Range-I has passed the order of refund, it will not be appropriate to adjudicate the same issue in a refund application preferred by the assessee, more particularly when he has specifically made a declaration and last time when the matter was argued, counsel for the appellant has specifically made the point that the tax which has been paid was part of the price which has been recovered. The Tribunal and all other authorities committed a serious error in refusing to refund the amount and after the order passed which was not challenged. Refund allowed - appeal allowed - decided in favor of assessee.

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• 2017 (11) TMI 555
  Concession in terms of N/N. 26/2000-Cus dated 1.3.2000 read with N/N. 19/2000 dated 1.3.2000 - Original Authority held that the country of origin certificates could not be accepted as the same have been obtained by filing incorrect declaration with the Sri Lankan Authorities - Held that: - the Original Authority categorically held that the goods were not of Chinese origin and as such, anti-dumping duty cannot be levied on them, which is otherwise leviable if the goods are of Chinese origin - Having recorded thus, the Original Authority proceeded to hold that the appellant is not eligible for preferential rate though admittedly, the goods have originated from Sri Lanka. In other words, the goods were held to be of not Chinese origin and also not of Sri Lankan origin. In other words, we note that it is clear that the question of country of origin of the present goods is left hanging without a finding by the Original Authority. The goods were neither of Chinese origin nor of Sri Lankan origin. We note that the same is not a tenable position. The Original Authority has apparently exceeded the jurisdiction in going into the aspects of possible classification of inputs used by the supplier in the manufacture of impugned goods in Sri Lanka. Holding that one of the input and the final product fall under the same four digit classification, it was concluded that the provisions of the Rule 7 have not been fulfilled. More specifically, reference was made by the Original Authority to condition (b) and (d) of the Rule 7. This is based on the certain reports received from Sri Lankan Customs. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 554
  Penalty u/s 114AA - There is no evidence of the appellant carrying precious or semi-precious stones in the past out of country and again bringing it into India in violation of provisions of Customs Act. The impugned order is purely based on presumption and evidence of statement of purchase of these goods in India - Held that: - We find that there is no corroborative evidence on these transportation of impugned goods from India and back to India. The evidences which will categorically establish such movement are not available. It would appear that the lower authorities mostly based their finding on the general statement of the appellant about past activities and also on that he travelled many times abroad. To demand and recover customs duty it is necessary to establish the importation of dutiable goods into India. The Revenue apparently made certain presumptions based on certain collected evidence regarding purchase of cut or polished stones in Jaipur by the appellant. Beyond this, there is no evidence of its movement out of country and reimportation into India. Confirmation of duty cannot be made based on presumptions and assumptions - duty and penalty set aside. A perusal of Section 114AA shows that penalty is imposable under the said Section on a person who knowingly or intentionally makes signs or uses in declaration statement or document which is false or incorrect in any material particulars in the transaction of any business for the purpose of this Act. The said person shall be liable to penalty not exceeding five times the value of goods. The lower authorities did not justify with the reason for imposition of penalty separately u/s 114AA when equal amount of penalty has already been imposed under Section 114A. In fact, what type of false or incorrect materials were submitted by the appellant was not discussed - penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 553
  Maintainability of appeal of Revenue - appealable order before Tribunal - Held that: - It is clear that CHALR, 2004 specifically provided an appellate remedy for the aggrieved CHA against the action by the Licensing Authority. No provision has been made for Revenue for appeal. In case no provision for appeal has been made in the CHALR, 2004 for both the parties it will follow that general principles of Customs Act shall automatically be applied - The Tribunal in various decisions, held that the Revenue cannot file appeal against the order of the Commissioner issued under CHALR, 2004. Forfeiture of security deposit - violation of provisions of CHALR 2004 - Held that: - the proceedings resulting in the impugned order were badly delayed by more than three years which also makes the order without jurisdiction. The time limit prescribed under CHALR, 2004 is to be strictly followed by the Licensing Authority. Appeal dismissed being not maintainable.

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• 2017 (11) TMI 552
  Additional duty of Customs - N/N. 30/2004 dated 09.07.2004 as amended - denial of exemption on the ground that credit of excise duty or additional duty of customs on inputs or Service Tax on input services has been taken - Held that: - similar issue of eligibility of importer for exemption under N/N. 30/2004 CE came up before the Tribunal recently in M/s Artex Textiles Pvt Ltd [2017 (9) TMI 1205 - CESTAT NEW DELHI], where by relying on the judgement of the Hon’ble Supreme Court in the case of SRF Ltd. [2015 (4) TMI 561 - SUPREME COURT], where it was held that appellants were entitled to exemption from payment of CVD in terms of N/N. 6/02. Legal position brought in by the amendment in the said proviso of Notification No.30/2004 - mplication of the amendment has been brought-out in the circular dated 21.07.2015 for better appreciation - Held that: - circular makes it clear that the amendment carried-out basically to make it clear that equal treatment should be given to the domestic manufacturers vis-a-vis importers. In other words, the amendment is to make the intention clear that the said conditions are to be satisfied by the manufacturers of such goods and not the buyer/importer of such goods. From the contents of the circular and also amended entry of the proviso in Notification No.30/2004, we note that the legal position laid down by the Hon’ble Supreme Court on more than one occasions is continued to be relevant and applicable to the present case also. Admittedly, there is no Cenvat credit availed by the manufacturer of the imported goods, neither the buyer/importer availed any such credit. As such, we find the amendment will not act as a bar for extending benefit to the present impugned goods from payment of CV duty. The legal position with reference to levy of additional duty of customs was examined at length by the Hon’ble Supreme Court in M/s Aidek Tourism Services Pvt Ltd [2015 (3) TMI 690 - SUPREME COURT] and it was held that for the purpose of saying what amount, if any, of additional duty is leviable under Section 3(1) of the Customs Tariff Act, it has to be imagined that the articles imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon. The exemption of additional duty of customs extended to the respondent by the impugned order is legal and proper - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 551
  Valuation of imported goods - includibility - royalty - The claim of the appellant is that the goods such as raw materials for the manufacture of finished products as well as final products for trading were imported from other related group companies and not from AKZO Noble International BV Netherlands to whoever royalties are paid. Hence, it is their claim that the royalty cannot be held to be paid as a condition of the sale of goods by the principal. Held that: - the appellant as well as the suppliers of raw materials and finished goods are both subsidiaries of the principal in Netherlands - The question of adding of royalty amount to the assessable value of the goods imported from related persons was considered by the Hon’ble Supreme Court in the case of Matsushita Television & Audio (I) Ltd. Vs CC [2007 (4) TMI 5 - SUPREME COURT OF INDIA], where it was held that royalty in relation to the sale only includible in assessable value. Before adding the royalty amounts to the value of imported components, it is necessary for the department to examine both the technical assistance agreement as well as the pricing agreement. Before taking the final view in the matter, it is necessary to re-examine the matter of both license agreement as well as supply contract simultaneously, to see if the enhanced royalty was in the guise of adjustment of the price of components - matter remanded for reconsideration. Appeal allowed by way of remand.

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• 2017 (11) TMI 550
  Valuation - Re-assessment of Bills of Entry - re-assessment on the ground that the appellant had undervalued the imported goods - Held that: - the adjudicating authority has not specifically discussed the submissions of the appellant and discarded the declared value, solely relying on the e-mail received from M/s Leoch Battery and the NIDB data obtained by the Department. The E-mail data cannot be accepted as the contemporaneous import, for the reason that the period of import indicated there in was from September, 2011 to January, 2012 - there is no specific data available in the NIDB report that the goods are of identical/similar in nature and also the quality of the goods imported is not proportionate to the quantity mentioned in such data. Thus, value of subject goods imported in this case cannot be discarded and the same cannot be enhanced by placing reliance on the e-mail, NIDB and the invoices obtained from different sources. Extended period of limitation - Held that: - the department has not brought on any corroborative evidence to show suppression of facts on the part of the appellant in defrauding the Government revenue - demand beyond the normal period set aside. Appeal allowed - decided in favor of appellant.

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• Service Tax

• 2017 (11) TMI 549
  Rectification of mistake - GTA service - appeal against the order of Commissioner (Appeals) - Whether, in the facts and circumstances of the case, the decision of CESTAT in refusing to recall the Final Order for purpose of hearing the appeals together was correct in law even after admitting and correcting the mistake? - Held that: - there is no need to advert to the substantial questions of law, raised in the instant Civil Miscellaneous Appeals and at the same time, reserve the rights of the appellant to raise all tenable grounds and substantial questions of law, on the merits of the case, if any, appeal is filed, against Final Order No.41563 of 2017 in Appeal No.ST/505/2009, dated 09.08.2017 - reserving the rights of the appellant in both the appeals, instant Civil Miscellaneous Appeals are dismissed

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• 2017 (11) TMI 548
  100% EOU - Interest on delayed refund - relevant date - expiry of three months from the date of receipt of application for refund or on the expiry of the said period from the date on which the order of refund is made - Held that: - This issue is no longer res integra and has been settled by various decisions of the Tribunal; the High Court and the Supreme Court - the Hon’ble Supreme Court in the case of Ranbaxy Laborites [2011 (10) TMI 16 - Supreme Court of India] has categorically held that the appellant is entitled to interest after the expiry of three months from the date of filing the refund application till the refund is finally sanctioned - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 547
  Valuation - Event management services - The case of the revenue is that service tax is payable on the gross amount charged by the service provider, including the expenses incurred by the appellant and subsequently reimbursed by the service receiver - case of appellant is that such expenses have been incurred by the appellant on behalf of the clients as a pure agent and hence not includible in the assessable value for charging service tax - Held that: - Section 67 of the Finance act deals with the valuation of services for charging of service tax. The said section was substituted w.e.f. 01.05.2006. Concurrently the service tax valuation rules were also introduced which provide for arriving at the value for purpose of charging service tax. Under old section 67 the value of taxable services was defined as “Gross amount charged by the service provider”. The period involved in the present case is from Oct 2002 to March 2007. It covers the period covered under old and new section 67 - By considering the nature of service provided by the appellant, we are of the view that all such expenditure would go towards provision of event management services by the appellant. The service itself cannot be completely rendered without such equipments or services. Hence we have no hesitation in concluding that such amounts are to be considered as part of gross amount charged by the appellant. Pure Agent - rule 5 (2) of the Service Tax Valuation Rules 2006 - Held that: - In the said rule, expenditure incurred by the service provider as a pure agent can be excluded from the value of taxable service subject to the condition that all the eight conditions specified there are satisfied - it is to be concluded that the appellant did not have the capacity to act as pure agent and did not fulfill the conditions of pure agent under the relevant rule. Hence the appellant will not be entitled to exclude expenses incurred. Reliance placed in the decision in the case of Neelav Jaiswal & Brothers Versus CCE, Allahabad [2013 (8) TMI 147 - CESTAT NEW DELHI], where it was held that unless all the conditions pure agent are satisfied, the appellant will not be entitled to any exclusion from the taxable service for amounts received towards salary, provident fund, etc. Quantum of service tax to be demanded - Held that: - the case is required to be remanded to the adjudicating authority for re-quantification of demand for consideration of the misgivings of the appellant. Appeal allowed in part and part matter on remand.

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• 2017 (11) TMI 546
  Real estate agent service - consideration received under the heading “Administrative Charges” for allowing transfer of flat buyers right to another person - Held that: - identical issue decided in the case of CST, New Delhi Versus M/s Ansal Properties And Infrastructures Ltd. [2017 (9) TMI 1071 - CESTAT NEW DELHI], where it was held that the respondent is a real estate developer selling their constructed flats. They are dealing with the buyers, old or new, on principal to principal basis. Accordingly, we are in agreement with the impugned order that no service tax liability can be confirmed against the respondent under this category - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 545
  Valuation - amount reimbursed towards fee payable to broadcast personnel - Department was of the view that service tax was required to be paid on the full amount received by the appellant from M/s. Prasar Bharti - case of appellant is that appellant was only acting as an agent of M/s. Prasar Bharti and have received reimbursement of the broadcast personnel fees which in turn has been paid by the appellant to the personnel as a “pure agent” - Held that: - section 67 specifies that wherever the provision of service is for a consideration, the taxable value would be a gross amount charged by the service provider for such service. The Service Tax (Determination of Value) Rules 2006 provides for exclusion from the taxable value, amount received in the capacity of “pure agent”. To decide whether the appellant was acting as a pure agent, we need to refer to rule 5 (2) of the Service Tax Valuation Rules 2006. In the said rule, expenditure incurred by the service provider as a pure agent can be excluded from the value of taxable service subject to the condition that all the eight conditions specified there are satisfied - The adjudicating authority has elaborately discussed these criteria and held that appellant has not fulfilled the same - the appellant cannot be treated as a pure agent as defined in the rules. Consequently, the appellant is required to discharge service tax on the full amount received from M/s. Prasar Bharti i.e. including both the commission at the rate of 10% as well as broadcast fees. Reliance paced in the case of Neelav Jaiswal & Brothers Versus CCE, Allahabad [2013 (8) TMI 147 - CESTAT NEW DELHI], where it was held that unless all the conditions pure agent are satisfied, the appellant will not be entitled to any exclusion from the taxable service for amounts received towards salary, provident fund, etc. Demand upheld - Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 544
  Refund claim - service tax paid under the ‘Work Contract Service’ - time limitation - Held that: - identical issue has come up before the Tribunal in the case of Ramky Infrastructure Ltd. Vs. CST-II Kolkata [2017 (4) TMI 1130 - CESTAT KOLKATA], where it was held that As the payment made by the appellant is not of service tax, therefore, as held by this Tribunal in the case of Shankar Ramchandra Auctioneers (2010 (4) TMI 391 - CESTAT, MUMBAI) the provisions of section 11B of the CEA are not applicable - refund allowed - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 543
  Business Auxiliary Service - Commercial Training or Coaching Centre Service - demand on the ground that Business Auxiliary service was received by Bentley, Australia for its business in India and also used/ utilised in India - Held that: - with regard to categorization of service for the purpose of consideration as export, under Export of Service Rules 2005, the CBEC vide Circular dated 24.02.2009 has clarified that for category III services, falling under Rule 3(1)(iii) ibid, even if the relevant activities taken place in India, the said service should be considered as export, so long as the benefit of those services accrued outside India - In the present case, since the appellant had provided the services to M/s.Bentley, Australia, such service should be construed as export, in view of the clarification furnished by the CBEC - demand set aside. Commercial Training or Coaching Service - demand on the ground that the same was provided by the appellant for imparting skill and knowledge and also the services do not fall under the exclusion part of such definition - Held that: - It is an admitted fact on record that the appellant is an Information Technology Company, engaged in providing IT Services. The software provided by the appellant cannot be used by the customers /clients, unless their employees are properly trained to use such software. Thus, in such an eventuality, providing of assistance/training to the customer/client of the software would be construed as incidental and ancillary to the sale of software. Thus, providing such training will not fall under the purview of Commercial Training or Coaching Centre Service - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 542
  Non-speaking order - appealable order - CENVAT credit - input services - Held that: - the impugned order is not sustainable in law because, the learned Commissioner (Appeals) has not given any finding on merits and has straightway rejected the appeal of the appellant on the ground that the original authority has not passed any appealable order - the letter issued by the Superintendent to the assessee is an appealable order and the learned Commissioner should have decided the appeal on merits rather than dismissing the same being not maintainable - appeal allowed by way of remand.

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• 2017 (11) TMI 541
  Refund claim - rejection on the ground of time bar and part refund rejected on the ground that the appellant has not provided copy of the agreement of commission paid to the foreign commission agent who provided the services to the appellant - Held that: - the said refund claim has been filed within one year, the period provided for filing refund claim. As per CBEC Circular, the time-limit has been extended to one year in terms of N/N. 17/2009-S.T., dated 7-7-2009 - refund allowed being not time barred. The refund claim of Rs. 80,545/- has been denied on the ground that appellant has not produced copy of agreement for providing the services, which is in fact not required as per the notification in question, as the invoices issued by a foreign agent for availing the services is sufficient document to entertain the refund claim - refund cannot be denied. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 540
  Penalty - proviso to Section 73(1) - Extended period of limitation - manpower recruitment agency service - department found that the activity undertaken by the appellant was liable to be classified under manpower recruitment agency service and the fact of rendering taxable service was unearthed only because of the verification conducted by the officers of the department and the appellant had suppressed the taxable value - Held that: - the appellant has started supplying the manpower from 1-5-2008 and at that time this service was not taxable and this service was made taxable with effect from 16-5-2008 and therefore the appellant was not aware that his activity is taxable service - Further when the department on verification pointed out, then immediately the appellant deposited the service tax along with interest before the issue of show cause notice and that itself shows his bona fides to pay the tax and there is no allegation in the show cause notice that he has suppressed the facts with intention to evade tax - penalty unjustified - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 539
  Condonation of delay in filing appeal - Held that: - Appellant being a Municipality and has enormous responsibilities of the nature aforesaid, if its appeal is thrown at the threshold without condonation of delay, the public body shall suffer and public interest would be hampered. Therefore the delay is condoned. Looking to the co-operative attitude of the appellant, it is considered proper to grant an opportunity to the appellant to reconcile the facts and figures for determination of appropriate liability so that Revenue’s interest shall be protected. Appeal allowed by way of remand.

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• 2017 (11) TMI 538
  Cargo Handling Service - department’s allegation is that the appellant was a cargo handler and provided cargo handling service - Held that: - Appellant’s activity does not begin with loading nor end with unloading. Its primary activity from the origin itself was transporting. Unit rate was fixed by the appellant to be charged from the recipient of services. Without any objective examination done by Revenue to show that, the activity carried out by appellant was for packing, unpacking as well as loading and unloading, it cannot be presumed that the appellant had provided Cargo Handling Service - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 537
  Leasing of equipments - Department entertained a view that such renting of goods should be covered under taxable category of Business Support Service - Held that: - providing of equipment on rent is not categorized in any of the activities itemized therein - the appellant is no way connected to the business establishment for running the business of the client and is only supplying the equipment on rental basis. Providing of equipment on rent, per se cannot be called infrastructure support service. The scope of BSS as defined cannot cover simple renting of equipments - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 536
  Telephone services - retention of part of deposit made, when the connection was discontinued prematurely - Held that: - There is nothing on record to suggest that the portion of the deposit retained by was towards provision of telephone service. The expenditure under Section 67 providing for adjustments made form any deposit to be considered as part of assessable value was given in a different context. In respect of schemes such as Own Your Telephone (OYT wing) a part of charges for telephone service was recovered by debiting of security deposit - In the facts of the present case, the retention of the portion of deposit towards capital expenditure incurred and not for provision of telephone service - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 535
  Refund claim - appellant prays that same transaction having been doubly taxed, firstly, in the hands of the service provider and secondly, in the hands of the service recipient, appellant is entitled to refund of the amounts so doubly paid - Held that: - Once, tax was paid by service provider and later by the service recipient. State has been doubly benefited. Therefore, recourse available to the State is to refund the money not due to the State. It is established principle of law that any amount not due to the State is not collectible - The doctrine of unjust enrichment equally applies to the State. It is directed that the appellant should be refunded of the amount paid by service provider to the appellant - Since there is double payment and the liability was of the appellant, the appellant should not be denied Cenvat credit. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (11) TMI 534
  Evasion of duty - jurisdiction of Settlement Commission - Held that: - This Court, would entertain the Petition under Article 226 arising out of the order of the statutory Tribunal, only if it is found that the view taken by the Tribunal is either perverse or impossible. No perversity or impossibility is noticed in the order of the learned Tribunal - The learned Tribunal has given cogent and sound reasons as to why it felt it appropriate to entertain the grievance of Respondent No.1 - petition dismissed - decided against petitioner.

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• 2017 (11) TMI 533
  Clandestine removal - Whether the Tribunal was justified in upholding a charge of clandestine removal in the absence of any documentary evidence to show acquisition and consumption of unrecorded raw material and manufacture of unaccounted goods? - Held that: - The Tribunal found that the report made by the Court receiver did not support the version of the assessee that processed fabrics taken over by the Court Receiver and sent back to their SMP godown were co-relatable to the bales of processed fabrics initially cleared by the applicant on payment of duty to the Coimbatore dealer and which were taken over by the Court Receiver. The Tribunal had noticed a portion of the Receiver's report which indicates that there were no marking on the goods to indicate under which invoice the goods were received and there was no way to separate the goods received, as the marks on the goods revealed only the manufacturing month and year. It was not possible to separate the goods as per the invoices which were exhibited in the plaint in the said suit. Paragraph 5 of the impugned order of the Tribunal also recorded the fact that the appellant's attempt to establish corelation failed, movement of bales from the factory to Coimbatore on payment of duty is evident from the excise invoices but there was no corresponding document to show that return, bale wise, of the goods from Coimbatore. The Tribunal found that return of duty paid goods from Coimbatore either to the appellants SMP Godown or from factory at Roha had not been established and there were no entries in the factory Inward Register showing return of goods under Rule 173H of the Central Excise Rules. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 532
  Clandestine removal - corroborative evidences - Summoning of persons - Whether in the facts and circumstances of the case, the CESTAT was correct in law rejecting the evidences recorded/collected in an inquiry conducted under Section 14 of the Central Excise Act, 1944 which is deemed to be “judicial proceedings” under Sub-Section (3) of Section 14 ibid, within the meaning of Section 193 and Section 128 of the Indian Penal Code, 1860? - Held that: - The Tribunal came to the conclusion that most of the witnesses had retracted their statements on the basis that their statements were obtained under duress and coercion. None of these statements were voluntary and the Commissioner had relied upon different versions of their original statements. The Tribunal also observed that after perusing the documentary evidence relied upon by the Commissioner that the transport receipt, goods challans and other documents did not bear acknowledgments of any of the respondents for having received the consignment of tobacco. In the facts of the case, there was no corroborative documentary evidence to substantiate such statements and in the absence of these link documents it was not proper to conclude that there was clandestine clearance of goods. The settled legal position for establishing clandestine clearances is that there had to be a strong body of evidence which the Tribunal found was lacking in the present case. The Tribunal found that the evidence of drivers would have been useful in proving a fact of supply of raw tobacco at a particular destination but the revenue had not recorded the statements of any of the drivers of transporters of raw tobacco. On the date of interception of 90 cartons of raw tobacco, immediate verification carried out of the stock in the respondent’s factory did not reveal any shortage or excess and there was no evidence of unaccounted production or clearance - the Tribunal has examined the evidence threadbare and has correctly come to the conclusion that the order of the confiscation of 90 cartons of Jarda and the demand made of Central Excise duty upon the main respondent and imposition of penalty and interest cannot be sustained. Appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 531
  Condonation of delay - power of the Appellate Tribunal to invoke Section 14 of the Limitation Act - Sub-Section (2) of Section 35C - Held that: - the Apex Court in the case of Commissioner of Sales Tax, UP. Versus Madan Lal Das & Sons, Bareilly [1976 (9) TMI 135 - SUPREME COURT OF INDIA], where it was held that though Section 14 may not in terms apply to the quasi-judicial Tribunals, the principle of Section 14 based on advancing the cause of justice would certainly apply to exclude time taken by the applicant in prosecuting proceedings which are bona fide and with due diligence. The Apex Court in the case of M.P. Steel Corporation v. Commissioner of Central Excise [2015 (4) TMI 849 - SUPREME COURT] held that though a statue imposes embargo on the power of the Tribunal to condone the delay by providing that delay only upto the period of 60 days can be condoned, the time spent by the applicant in prosecuting wrong proceedings which are bona fide with due diligence can be excluded while computing the period of limitation. The Appellate Tribunal ought to have considered the issue whether the petitioners can be given benefit of the principles analogous to Sub-Section (2) of Section 14. Therefore, in the facts of the case, the matter will have to be remitted to the Appellate Tribunal for reconsideration of the prayer made by the petitioners for exclusion of time under (2) of Section 14. However, the number of factual aspects will have to be gone into - petition allowed by way of remand.

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• 2017 (11) TMI 530
  CENVAT credit - Whether the Hon’ble CESTAT is correct in dropping demand of Cenvat Credit on common inputs issued under Section 11A of the Central Excise Act, 1944 read with Rule 6 & 12 of erstwhile Cenvat Credit Rules, 2002 for having not maintained separate accounts as mandated statutorily by law? - Held that: - both the authorities has gone into detail regarding the point which has been canvassed by counsel for the appellant and that statement recorded by Director Deepak Hazara was also considered by the authority in detail and he has not disputed the same during the audit which was conducted from the 14th July, 2004 to 19th July, 2004. Taking into consideration concurrent finding of both the authorities, we see no substantial question of law arises in the appeal - appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2017 (11) TMI 529
  Constitutional validity of Section 2(11) of the Port Trust Act - tax on sale of goods - scope of the term 'Dealer' - Petitioner's main contention in the Writ Petition is that the sale of goods by the Petitioner is in pursuance of their statutory functions under the Port Trusts Act and these sales are not executed by the Petitioners as a matter of business for commercial enterprise but by way of administering and managing the port of Bombay. The Petitioner has accordingly submitted that they are not carrying on any business of buying or selling goods. The Petitioner has accordingly contended in the Petition that they are not entitled to pay tax on the sale of goods effected by them under the said Act. Held that: - This Court has in the case of Controller of Stores, Central Railway, Bombay Vs. The Commissioner of Sales Tax, Maharashtra State [1995 (2) TMI 374 - BOMBAY HIGH COURT] considered the challenge to the inclusion of entities in the definition of “dealer” both amended by Section 2(11) of the said Act and Section 2(8) of the MVAT which is pari materia. It was held in the case of Controller of Stores that the Explanation to Section 2(11) of the said Act which had included “Railway Administration” in “dealer” has been held to be clarificatory and that Indian Railways represented by the Controller of Stores is a dealer. - It is clear from the deeming fiction brought in by the explanation that all these entities are now within the definition of “dealer” irrespective of whether they carry on business. - the Port Trust falls within the definition of dealer and is liable to sales tax under the said Act. The judgment of the Supreme Court in M/s Cochin Port Trust Versus State of Kerala [2015 (4) TMI 936 - SUPREME COURT] holds the field, where it was held that the activities of the assessee in respect of buying, selling, supplying or distributing goods, executing works contract, transferring the right to use any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration, whether in course of business or not, would fall within the purview of Section 2(viii) of the Act. Hence, the assessee-Port Trust would fall within the meaning of "dealer" under Section 2(viii) of the Act and is consequently assessable to tax under the Act The legislature having greater latitude for classification in taxing statute was competent in amending Section 2(11) of the said Act and thus there is no merit in the challenge to the constitutional validity of Section 2(11) of the said Act. Petition dismissed - decided against petitioner.

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• 2017 (11) TMI 528
  Extension of stay order - extension sought for the sole reason that the petitioner has not filed any Writ Petition in respect of the revised assessment order for the assessment year 2009-10, whereas, they have filed the Writ Petitions in W.P.Nos.31968 to 31970 of 2015 challenging the assessment orders for the years 2006-07 to 2008-09, as could be seen from the typed-set of papers filed in support of this Writ Petition - Held that: - the first respondent was not justified in refusing to extend the order of stay, though the interest of the Revenue is fully safeguarded, that is to say, 50% of the disputed tax and the balance 50% was secured by way of Bank Guarantee - the interest of the Revenue is fully safeguarded and the first respondent is directed to consider and dispose of the Appeal Petition on merits and in accordance with law - petition allowed by way of remand.

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• 2017 (11) TMI 527
  Rectification of assessment order - petitioner requested the respondent to refer to the Government Order and revised the assessment by exercising powers under Section 55 of the Act - application has been rejected on the ground that there is no direction in the Government Order to levy tax below 10% - Held that: - identical issue decided in the case of J.G.Hosiery Private Limited V. Special Commissioner & Commissioner of Commercial Taxes, Chennai and another [2017 (11) TMI 524 - MADRAS HIGH COURT], where on similar issue it was held that since the petitioner has approached this Court challenging a notice proposing to levy tax at 10%, the matter has to be necessarily remanded to the Assessing Officer - matter is remanded to the respondent for fresh consideration - petition allowed by way of remand.

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