Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 14, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Articles
News
Notifications
GST - States
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36/2017 - dated
9-11-2017
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Delhi SGST
Delhi Goods and Services Tax (Eighth Amendment) Rules, 2017
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FA-3-62/2017-1-V-(120) - dated
13-10-2017
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Madhya Pradesh SGST
Amendments in the Notification No. FA 3-62-2017-1-V(102), dated the 15th September 2017.
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FA-3-54/2017-1-V-(117) - dated
29-9-2017
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Madhya Pradesh SGST
The Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2017.
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FA-3-42/2017-1-V-(116) - dated
28-9-2017
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Madhya Pradesh SGST
Amendment in the Notification No. FA-3-42-2017-1-V-(53), dated 30th June, 2017.
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FA-3-40/2017-1-V-(115) - dated
28-9-2017
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Madhya Pradesh SGST
The Madhya Pradesh Goods and Services Tax (Amendment) Rules, 2017.
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FA-3-65/2017-1-V-(114) - dated
25-9-2017
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Madhya Pradesh SGST
Corrigendum - Notification No. F A 3-47-2017-1-V(59), dated 30th June 2017.
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FA-3-33/2017-1-V-(112) - dated
25-9-2017
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Madhya Pradesh SGST
Corrigendum - Notification No. F A 3-33-2017-1-V(42), dated 29th June 2017.
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31/2017-State Tax (Rate) - dated
13-10-2017
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Maharashtra SGST
Amendment to Notification No.11/2017-State Tax (Rate)] dated the 29th June 2017.
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MGST-1017/C.R.104/Taxation-1 - dated
7-10-2017
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Maharashtra SGST
CORRIGENDUM - Notification of the Finance Department No. MGST-1017/C.R.104/Taxation-1 [No. 1/2017-State Tax (Rate)], dated the 29th June 2017.
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37/2017-State Tax - dated
7-10-2017
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Maharashtra SGST
Supersession of the Notification No. MGST-1017/C.R. 111/Taxation-1 [No. 16/2017-State Tax] dated the 11th July 2017 - Specifying condition and Safeguards for LUT in place of Bond for export.
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36/2017-State Tax - dated
7-10-2017
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Maharashtra SGST
Maharashtra Goods and Services Tax (Eigth Amendment) Rules, 2017.
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30/2017-State Tax (Rate) - dated
7-10-2017
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Maharashtra SGST
Amendment in the Notification No. 12/2017-State Tax (Rate)], dated the 29th June 2017 - Supply of services associated with transit cargo to Nepal and Bhutan (landlocked countries).
Income Tax
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G.S.R. 1379(E) - dated
10-11-2017
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IT
Supersession Notification No. G.S.R. 625(E) dated 28th August, 2014
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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The administrative authority will be exercised by National Academy of Direct Taxes (NADT)
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Disallowance u/s 40(a)(ia) - Non deduction of TDS - the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004 - AT
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Levy of late filing fee u/s 234E - Late filing of TDS return - the amendment to section 200A(1) is prospective in nature and therefore the AO, while processing the TDS statements/returns in the present appeal for the period prior to 01.06.2015, was not empowered to charge fees - AT
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Assessing Officer is not justified in making addition u/s. 68 of the Act in respect of the amounts received by her from the Firm as a beneficiary - if any proceedings are to be instituted under the Act it is in the case of the partnership firms but not in the case of the assessee. - AT
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Penalty u/s 271AAB - as per the definition of undisclosed income given in Explanation C to Section 271AAB of the Act, the additional income disclosed by the assessee indeed takes the character of undisclosed income - AT
DGFT
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EPCG authorisation - issuance of nexus certificate - For issuance of such certificate, the Chartered Engineer shall act only in the domain of his/her competence. - Handbook of procedure as amended
FEMA
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Downstream Investment - FEMA - New Regulations
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Prohibited activities for investment by a person resident outside India - FDI - FEMA - New Regulations
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Permitted sectors, entry routes and sectoral caps for total foreign investment -FDI - FEMA - New Regulations
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Issue of Indian Depository Receipts (IDRs) - FEMA - New Regulations
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Investment in Depository receipts by a person resident outside India - FEMA - New Regulations
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Investment by a person resident outside India in an Investment Vehicle - FEMA - New Regulations
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Investment by a Foreign Venture Capital Investor (FVCI) - FEMA - New Regulations
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Investment in a Limited Liability Partnership (LLP) - FEMA - New Regulations
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Purchase and sale of securities other than capital instruments by a person resident outside India - FPIs - NRIs / OCIs etc. - FEMA - New Regulations
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Investment on non-repatriation basis - FEMA - New Regulations
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Purchase/ Sale of Capital Instruments of a listed Indian company on a recognised stock exchange in India by Non-Resident Indian (NRI) or Overseas Citizen of India (OCI) on repatriation basis - FEMA - New Regulations
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Purchase/ Sale of capital instruments of a listed Indian company on a recognised stock exchange in India by Foreign Portfolio Investors - FEMA - New Regulations
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Purchase/ Sale of capital instruments of an Indian company by a person resident outside India - FEMA - New Regulations
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Permission to resident and non-resident entities to undertake hedge transactions with simplified Procedures - FEMA
Service Tax
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CENVAT credit - input services for providing output service i.e. lending of loan - the service of recovery agent received by the appellant is an input service. - AT
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Export of services - providing SMS Aggregator services to facebook, Ireland - the Indian subscribers of Facebook cannot be termed as Service Recipient - In such case even the Rule 8 of POP would not apply as the service recipient i.e Facebook is situated in Ireland which is located outside India a non taxable territory. - AT
Central Excise
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Refund claim - EC/SHEC - Area Based Exemption - The appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy - SC
Case Laws:
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Income Tax
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2017 (11) TMI 686
Reopening of assessment - unexplained gifts - Held that:- The argument with regard to the permission to the assessee for inspection of material, the Tribunal has observed that the fact reveals that a gift of ₹ 3,00,000/- has been received but the same has not been disclosed by the assessee and since the intimation from the investigation unit is an administrative in nature therefore the same cannot be permitted to be demonstrated to the assessee. The claim of the appellant/ assessee is that the inspection of record is essential for disposal of the case has been rejected. At the end the Tribunal has held that since the assessee has failed to produce the donors as well as the creditworthiness of the donors whereas various opportunities were allowed to the appellant, which the appellant failed to furnish any explanation, there is no option but to confirm the order passed by the authorities below. No illegality in the orders of the authorities below as well as in the impugned order of the Tribunal and since the assessee/appellant has failed to prove the creditworthiness of the donors as well as failed to place any evidence in support of her contention in respect of the issue which are raised before the Tribunal therefore we find no error in the order of the Tribunal. - Decided against assessee.
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2017 (11) TMI 685
Seeking rectification of the rectification order by passed by the Income Tax Settlement Commission - Held that:- Revenue, in the present writ petition, has only challenged the order dated 17th March, 2016 and there is no challenge to the order of the ITSC dated 31st December, 2015 by which the rectification application of the assessee was allowed, accepting the contention of the assessee that interest under Section 234B should be charged only upto the date of order under Section 245D(1) and not upto the order under Section 245D(4) of the Act, as amendment made by enacting sub-section 2A(b) to Section 234B with effect from 1st June, 2015 was not retrospective and would not apply to pending applications. The Revenue would have to challenge this order dated 31st December, 2015 passed by the Principal Bench of the ITSC by filing an appropriate writ petition. In the said petition, reference can be made to the subsequent order dated 17th March, 2016 passed by the ITSC, but as noticed above, this order dated 17th March, 2016 per se cannot be held to be bad in law for the ITSC does not have power to rectify, review or re-examine the order passed in the rectification application.
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2017 (11) TMI 684
Deduction under section 80IB - A, B, C, D and E buildings are constructed on a plot admeasuring 2.36 acres and if 2.36 acres of land is proportionately divided between five buildings, the land pertaining to the “E” building would be less than one acre and, hence, deduction under section 80IB( 10) cannot be allowed - Does the respondent assessee satisfy the condition (b) of Section 80IB(10) of the Act which requires the project claiming the deduction to be on size of a plot of land which has a minimum area of one acre? - Held that:- The issues raised herein namely non-satisfaction of condition (b) of Section provided in Section 80IB(10)(b) of the Act stood satisfied and concluded against the Revenue by the decision of this Court in Commissioner of Income Tax Vs. Bramha Associates [2011 (2) TMI 373 - BOMBAY HIGH COURT] Does respondent assessee satisfy condition (c) of Section 80IB of the Act which requires the project claiming deduction must have residential units in it, not in excess of minimum builtup area of 1000 sq.ft.? - Held that:- Both the CIT(A) as well as the Tribunal have on facts concluded the issue in favour of the respondent assessee. This concurrent finding of fact is duly supported by the remand report of the Assessing Officer accepting the fact that even when flats are joined, the combined area is less than 1000 sq.ft.. The Revenue has not shown the concurrent finding of fact leading to satisfaction of clause (c) of Section 80IB(10) of the Act to be perverse in any manner. No substantial question of law
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2017 (11) TMI 683
Addition of undisclosed income - addition on the basis of assessee’s statement, retracted by specific affidavit - addition made by the respondent u/s 145(3) - rejection of books of accounts - Held that:- Firstly, the statement which was recorded on 23rd February, 2005 if it is taken alongwith the letter dated 23rd February, 2005 at Annexure-A, the contention raised by the appellant with regard to retraction is supported by his own letter. Apart from that the refund was granted on 19th October, 2005 and taking subsequent proceedings u/s 147, the contention raised by the assessee with regard to retraction is required to be accepted. The Tribunal, CIT(A) and the AO has seriously committed an error in adding income ₹ 2,70,248/- in spite of affidavit of 20th November, 2007 and letter dated 23rd February, 2005 and rejection of books of accounts u/s 145. The statement which has been made by the appellant that the assessee was compelled to make statement in view of goods which was attached was of pericible nature and the cost was three times of tax which are required to be paid therefore, it was contended that the assessee will adopt easy way to be caught hold of the tax authority. Tribunal has seriously committed an error in adding ₹ 77,298/- ignoring provisions of the act therefore, both the issues are required to be answered in favour of the assessee.
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2017 (11) TMI 682
Penalty u/s 271(1)(c) - wrong claim of deduction u/s 80IB - ITAT deleted the addition - Held that:- It is noted from the records that the claims made by the assessee were based on experts advice and backed by certification issued in Form 10CCB. It is also noted that the revised return so filed was also a valid return filed within the stipulated time. Case of Chander Pal Bagga & Harshvardhan Chemicals Ltd [2002 (5) TMI 15 - RAJASTHAN High Court] wherein it is held that no penalty can be imposed if exemption is claimed on the basis of advice of advocate. The Hon’ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd [2012 (9) TMI 775 - SUPREME COURT] held that inadvertent and bona fide error does not amount to concealment or furnishing of inaccurate particulars. It is also noted that the assessee had furnished the explanation vide letter dated 27- 03-2013 (pg 183 to 188) that transaction is in the name nature of commercial transaction and the assessee received money from the company against the agreement to sale of land to the company and assessee has provided all the evidence in support of her contention. Thus in view of the above facts and circumstances of the case, we concur with the findings that no furnishing of inaccurate particulars of income by the assessee proved. - Decided against revenue
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2017 (11) TMI 681
Re-opening of assessment - reopening of assessment on the ground that the same was prompted by audit objection - ITAT quashing reopening orders - Held that:- Audit note dated 24.06.2010 pointing out that the assessee was engaged in the business of manufacturing ceramic tiles. The assessee had incurred a sum of ₹ 19,99,107/- of prior period expenses but added only ₹ 8,18,923/- out of this sum instead of the entire sum of ₹ 19,99,107/-. The Assessing Officer responded to such audit objection in letter dated 10.02.2011 conveying that he does not agree to such audit objection since according to him the expenditure had actually crystallized during the year under consideration and therefore rightly allowed. He concluded that such objection may therefore be dropped. Despite this, he eventually issued the notice for reopening by recording reasons which only referred to this discrepancy. We also have further letter dated 30.12.2011 of the Assessing Officer to the Accountant General reiterating that the audit objection was not acceptable despite which reassessment was framed. It can thus be seen that all along the Assessing Officer was under compulsion to act according to the point of view of the audit party although he himself did not agree with such view point. From the stage of reassessment till the reopening of assessment he had acted only mechanically, perhaps in compulsion - Decided against revenue.
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2017 (11) TMI 680
Scope for recovery of any amount from the appellant - addition of undisclosed income of the appellant, irrespective of the fact that inter-transactions are involved in group of the cases including the appellant and other cases of group have been set-aside by the Tribunal - Held that:- First of all, on the question of company, in view of the fact that the original order which was passed under Section 256(1), in which relief was granted and permission was not granted by the Tribunal which was not challenged. In that view of the matter, the order of the company would stand final. In the case of V.M. Dawra, in view of the statement which was made, since the source of income is to be established by the department and they cannot merely rely on a letter written by the Chartered Accountant, in that view of the matter, the contention raised by counsel for Mr. V.M. Dawra is required to be accepted. Even otherwise in the case of Mr. Vimal Choudhary, the matter was remanded back to the authority and the relief was granted which was not challenged by the department. On the basis of reasoning given by the tribunal, if in one case, the department has not challenged the order of the tribunal which was remitted back and relief granted in favour of the assessee. Thus on the principle of parity, Mr. V.M. Dawra is required to be granted the same relief. In that view of the matter, the issue is answered in favour of the assessee and against the department.
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2017 (11) TMI 679
TDS u/s 194A - payment of interest In Site Restoration Fund Account - whether deposits in Site Restoration Fund Account are made for a fixed period and which carry interest as applicable to time deposit - Held that:- As decided in assessee's own case in view of the provisions of section 194A(3)(vii) it has held that the provisions of section 194A(1) have no application to the assessee's case. Thus, once the ITAT has given a finding of fact that the SRF a/c is not a time deposit, the AO's action in revisiting the issue on the basis of earlier submission made by the assessee in a verification relating to a previous assessment year (and subsequently retracted) cannot be upheld, in view of the fact that the Hon'ble IT AT has found that the assessee's case does not fall u/s 194A(1) and that there was no liability or the part of the assessee to deduct any tax on site restoration fund of ONGC or on interest paid on site restoration deposit of ONGC, the assessee cannot be said to be an assessee in default within the meaning of section 201(1). In view of the fact it cannot be held to be an assessee in default u/s 201(1), the question of any liability for interest u/s 201(1A) simply does not arise. - Decided against revenue
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2017 (11) TMI 678
Penalty u/s 271AAB - non maintaining books of accounts u/s 44AA for his commodities transactions - intention of the assessee to evade payment of tax - Held that:- It is not in dispute that the assessee s case falls within the ambit of 271AAB(1)(a) of the Act as admittedly the assessee had satisfied the cumulative conditions prescribed thereon. We are not inclined to accept arguments of the assessee that he is not required to maintain books of accounts u/s 44AA of the Act for his commodities transactions, in view of the fact that the assessee himself had considered his case to be eligible for tax audit and had accordingly, filed the return of income u/s 139(1) of the Act on 30.09.2013 for the assessment year 2013-14. It is not in dispute that the due date for filing return of income for non-tax audit assessees is 31.07.2013 for the assessment year 2013-14. In the instant case, the assessee himself had accepted the fact that he is engaged in commodities trading business and accordingly, he is mandated to maintain books of accounts u/s 44AA of the Act. It is not in dispute that as on date of search i.e. 01.08.2012, the assessee had not entered the commodities transaction in its books of accounts. Hence, as per the definition of undisclosed income given in Explanation C to Section 271AAB of the Act, the additional income disclosed by the assessee indeed takes the character of undisclosed income. Even assuming that the mistake lies on the part of the Accountant by not entering the entries in the books of accounts regarding the commodities transaction, which might tantamount to reasonable cause, the assessee would still be exigible for levy of penalty as no immunity could be claimed in terms of Section 273B of the Act. We find that the Ld. CIT(A) had looked into irrelevant circumstances for deleting the levy of penalty in the instant case forgetting the fact that the levy of penalty u/s 271AAB of the Act is automatic in nature as per the plain reading of the provisions of the Act. Hence, we hold that the Ld. AO had rightly levied penalty at 10% of undisclosed income amounting to ₹ 30lakhs in the instant case. - Decided against assessee.
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2017 (11) TMI 677
Disallowance of expenses relatable to exempt income u/s 14A read with rule 8D - Held that:- No disallowance under section 14A read with Rule 8D of the Rules can be made wherein, investments on which income earned is exempted, but the investment held as stock-in-trade. However, the AO will verify that the investment is made in stock-in-trade and will, accordingly decide the claim. This issue in both the appeals of the assessee is allowed for statistical purposes and remanded the matter back to the file of AO for verification. Adhoc disallowances to the extent of 50% of expenses on computer software, conveyance expense and diwali expenses - Held that:- According to AO, the expenses are not fully vouched and hence, he disallowed by estimating at the rate of 10% and accordingly, he disallowed ₹ 75,000. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) also confirmed the action of the AO. As the assessee is unable to controvert the findings of the Assessing Officer even now before us, the assessee could not substantiate the disallowance made by the AO, hence, we confirmed the disallowance.
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2017 (11) TMI 676
Levy of penalty u/s 271(1)(c) - addition on bogus purchases - Held that:- AO is not sure about the charge on which penalty is to be levied. The AO has also invoked issue of concealment of particulars of income. He is also levied penalty for furnishing of inaccurate particulars of income as is clear from the order of the AO. In view of this facts and circumstances, we are of the view that the AO himself is not sure about the levy of this charge. Since, the issue is covered by the decision of Hon’ble Bombay High Court in the case of Samson Perinchery (2017 (1) TMI 1292 - BOMBAY HIGH COURT), respectfully following the same, we delete the penalty and allow the appeal of the assessee.
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2017 (11) TMI 675
Validity of revision order u/s 263 - absence of any scientific basis for fixing the percentage to make the provision for slow moving inventories of spares - Held that:- As the non-satisfaction of the Commissioner about the scientific basis of creating the provision, has not been referred to in the notice, dated 26.02.2016, at all, whose relevant portion has been reproduced by us in the earlier part of the order. Therefore, the preliminary point which is sought to be raised by the assessee based on the judgment of Hon’ble Supreme Court in the case of Amitabh Bachchan (2016 (5) TMI 493 - SUPREME COURT) is very much applicable in the given facts of the present case. Notably, section 263(1) of the Act obligates the Commissioner to give the assessee an opportunity of being heard before passing of his order. as the non-satisfaction of the Commissioner about the scientific basis of creating the provision, has not been referred to in the notice, dated 26.02.2016, at all, whose relevant portion has been reproduced by us in the earlier part of the order. Therefore, the preliminary point which is sought to be raised by the assessee based on the judgment of Hon’ble Supreme Court in the case of Amitabh Bachchan (supra) is very much applicable in the given facts of the present case. Notably, section 263(1) of the Act obligates the Commissioner to give the assessee an opportunity of being heard before passing of his order. The relevant discussion in the order of the Commissioner reveals that he has not disputed the factual matrix brought out by the assessee but has sought to deny the deduction only because, in his opinion, there was no scientific basis for fixing the percentage of provision. The objection of the Commissioner, in our view, is quite untenable in as much as the basis for making the provision was explained by the assessee to be the aging analysis of the spares lying in the inventory. Why and how the Commissioner does not find it to be a scientific basis is not elaborated. - Decided in favour of assessee.
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2017 (11) TMI 674
Amount received as beneficiary of firm - addition u/s 68 - assessee is one of the beneficiaries in the Estate of late Shri M.S. Kotwal who is partner in the partnership firm - addition on the ground as the amount received by the assessee is from the firm which has not paid any taxes on the transaction of introduction of capital by new partners and transferred property there off relating to the firm and since the assessee did not pay the taxes it is the income and it should be treated as the income of the assessee and should be taxed u/s. 68 - . Alternatively, AO concluded that the investments made by the assessee should be treated as unexplained investment u/s. 69 Held that:- AO's conclusion is not permissible under law. If the Assessing Officer was of the view that there is distribution/transfer of assets by the Firm appropriate action should be taken in the hands of the Firm. The assessee has fully explained the sources of the amounts received by her which were invested by her in purchase of properties and therefore none of the conditions laid down in the provisions of section 68/69 are attracted so as to invoke the said sections. Ld.CIT(A) taking note of the fact that the assessee received amount from the partnership firm as a beneficial owner to the Estate of her grandfather who was a partner of the partnership firm and also taking note of the fact that even the amount received by the assessee from the Firm is exempted u/s. 10(2A) as business income and further taking note of the fact that assessee has not received these amounts during the current Assessment Year, he rightly held that the provisions of section 68 and 69 have no application to the facts of the case. We also find force in the contentions of the Ld.CIT(A) if at all if any proceedings are to be instituted under the Act it is in the case of the partnership firms but not in the case of the assessee. Thus we hold that the Assessing Officer is not justified in making addition u/s. 68 of the Act in respect of the amounts received by her from the Firm as a beneficiary. We further find that the assessee explained the source of investments made in the residential flats and therefore the investments made in such residential flats cannot be treated as unexplained investment u/s. 69 of the Act. In view of what is stated above we uphold the order of the Ld.CIT(A) in deleting the addition made u/s. 68 of the Act. - Decided in favour of assessee.
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2017 (11) TMI 673
Eligibility for exemption under section 11 - denial of claim by AO observing that the activities of the assessee are business activities - expenditure towards conducting various tournaments, grants to District associations for conducting league tournaments and development of game and other heads such as Administrative & Maintenance - what are the receipts of the assessee and how assessee has been incurred towards the objects - Held that:- The assessee has already constructed a stadium at Visakhapatnam suitable for conducting "test matches". During the year under consideration, the assessee has also commenced construction of stadiums at various places like Mangalagiri, Kurnool & Kadapa. During the year, it has also acquired land at Nellore for the purpose of constructing a stadium. The assessee has admitted the incomes under the major heads such as BCCI reimbursements of Rs. 20,64,17,339/- and interest of Rs. 1,26,10,435/- on FDR‟s & SB accounts. Out of these receipts, the assessee incurred expenditure towards conducting various tournaments, grants to District associations for conducting league tournaments and development of game and other heads such as Administrative & Maintenance. From the above, it is very clear that the receipts received by the assessee in relation to sports of cricket and also incurring expenses towards development of the stadiums, which is also related to sports of cricket and also clearing the land for the purpose of construction of stadium which is also related to the sports of a cricket. Certain funds are granted to the District Associations for the purpose of development of cricket sports. Therefore, all the receipts received by the assessee are incurred in connection with sports of the cricket. Therefore, the Assessing Officer is not justified in observing that the activities of the assessee are business activities. We find that the Assessing Officer simply observed that the activities of the assessee are converted into business activities without making any enquiry, which object is converted into business. Simply making observations without recording the reasons, is not a sufficient to constitute that the assessee is converted from charitable to business activity. Therefore, the observations of the Assessing Officer are not correct and it has to be rejected. Assessing Officer is not correct in rejecting exemption claimed by the assessee under section 11 of the Act also not correct in rejecting the claim of the assessee under section 10(23C)(iv) of the Act. - Decided in favour of assessee.
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2017 (11) TMI 672
Addition u/s 68 - addition in the hands of conduit companies which were merely used for providing accommodation entries - Shri S.K. Gupta was providing accommodation entries - Held that:- It is an admitted fact that the assessee is also one of the group concerns of Sh. S.K.Gupta and on the application of the Sh. S.K.Gupta before the ITSC, ITSC was pleased to direct the computation of the entire undisclosed income relating to various conduct companies controlled by Sh. S.K.Gupta shall be in the hands of Sh. S.K.Gupta. As assessee is one of the 34 conduit companies, 09 out of whom approached the Tribunal in Omni Farms Pvt. Ltd. [2015 (1) TMI 1119 - ITAT DELHI] and batch of cases wherein the Tribunal noticed that pursuant to the computation of undisclosed income by the ITSC in relation to various conduit companies controlled by Sh.S.K.Gupta, in the hands of Sh. S.K.Gupta himself and held that since credit entries in the case of conduit companies has been considered in the hands of Sh.S.K.Gupta by the order of Income Tax Settlement Commission, no separate addition u/s 68 is required to me made in the hands of conduit companies which were merely used for providing accommodation entries - Decided in favour of assessee.
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2017 (11) TMI 671
Levy of late filing fee u/s 234E against the order passed u/s 200A - scope of amendment to section 200A(1) - Held that:- Following the referred decision in the case of Gajanan Constructions and others [2016 (11) TMI 1247 - ITAT PUNE] we hold that the amendment to section 200A(1) is prospective in nature and therefore the AO, while processing the TDS statements/returns in the present appeal for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Therefore the intimations issued by the AO under section 200A of the Act in this appeal are unsustainable and the demand raised by way of charging of the fees under section 234E of the Act not being valid is deleted. AO is not empowered to charge fees under section 234E of the Act by way of intimation issued under section 200A of the Act in respect of defaults before 01.06.2015 and consequently allow the ground of appeal raised by the assessee.
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2017 (11) TMI 670
Disallowance of interest paid to NBFCs without deduction of tax u/s 40(a)(ia) - Tax withholding obligations u/s 194A of the Act not discharged - assessee submitted the certificate of the C.A., in prescribed performa, in respect of each company and all these NBFCs are assessed to tax in India on their income - rationale behind the insertion of the second proviso to Section 40(a) (ia) - Held that:- As decided in case of Rajeev Kumar Agarwal vs Addl. CIT [2014 (6) TMI 79 - ITAT AGRA] the net effect of the amendments is that the disallowance u/s 40(a)(ia) shall not be attracted in the situations in which even if the assessee has not deducted tax at source from the related payments for expenditure but the recipient of the monies has taken into account the receipts in computation of income, paid due taxes, if any, on the income so computed and has filed his income tax return u/s 139(1) - it is beyond doubt that the underlying objective of section 40(a)(ia) was to disallow deduction in respect of expenditure in a situation in which the income embedded in related payments remains untaxed due to non-deduction of tax at source by the assessee - section 40(a)(ia) cannot be seen as intended to be a penal provision to punish the lapses of non-deduction of tax at source from payments for expenditure- particularly when the recipients have taken into account income embedded in these payments, paid due taxes thereon and filed income tax returns in accordance with the law. A curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced - it cannot subscribe to the view that it could have been an "intended consequence" to punish the assessees for non-deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax - That will be going much beyond the obvious intention of the section - the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004 – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee.
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2017 (11) TMI 669
Undisclosed income arising out of appearance fee in ICC Awards function - no evidence except the computer print out taken from a third party - Held that:- The addition was made on the basis of a print out taken from the computer of a third party who happened to be an employee of Matrix and there are no other corroborative evidence brought on record to prove the fact that the payment mentioned in the seized material was actually received by the assessee. On the contrary, the passport submitted by the assessee clearly established the fact that neither she had travelled to Sidney in relevant period nor hosted the ICC event for which she was supposed to receive cash payment. It is further relevant to observe, even Ms. Sandhya Ramchandra, from whose computer such print out was taken had stated before the Departmental Authorities that she was not aware of the fact mentioned in the said Annexure as it was for a period prior to her appointment in Matrix. In these circumstances, simply relying upon a untested / unverified document and without any other corroborative evidence to demonstrate that the assessee has actually received cash payment of ₹ 2,50,000 for hosting an event in Sidney, the addition, in our view, is unsustainable. Therefore, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the ground raised. Addition on account of cash receipts - addition as per the document found and seized from the computer of Ms. Sandhya Ramchandra - Held that:- Undisputedly, the aforesaid seized documents was not found from the possession of the assessee but from a third party. It is also a fact that apart from this seized material, there is no other corroborative material on record to demonstrate that the cash payment mentioned in the seized material was actually made to the assessee. On the contrary, the assessee when was confronted with the seized material had categorically denied of having received the cash payment. Further, an affidavit was also filed on behalf of Matrix India Entertainment Pvt. Ltd., stating that no cash payment was made to the assessee. In fact, Ms. Sandhya Ramchandra, in her statement also could not state anything about cash payment as it was prior to her employment. Thus, in the absence of any other corroborative evidence, except the seized material, which was found from a third party it cannot be presumed that the assessee has received the cash amount of ₹ 30,80,000. That being the case, we do not find any infirmity in the order of the learned Commissioner (Appeals) in deleting the addition Addition of sum received as remuneration from Matrix India Entertainment Pvt. Ltd. - Held that:- As discussed by the learned Commissioner (Appeals), the assessee had received amount of ₹ 2,80,000 in cheque and has accounted for in her books of account. She has also offered it as income in the impugned assessment year. The aforesaid factual finding of the learned Commissioner (Appeals) has not been controverted by the learned Departmental Representative. Therefore, we uphold the order of the learned Commissioner (Appeals) on this issue. Ground raised is dismissed. Addition on account of various expenditure - Held that:- It is evident, except the print out taken from the computer of Ms. Sandhya Ramchandra, there is no other material before the Department to conclusively prove that expenditure of ₹ 6,86,000 was incurred in cash on behalf of the assessee by Matrix. In fact, in an affidavit filed on behalf of Matrix India Entertainment Pvt. Ltd., it has been categorically stated that no cash payment has been made to the assessee. It is also a fact that the amount in dispute was added at the hands of the Matrix India Entertainment Pvt. Ltd. as well. In view of the aforesaid, we uphold the order of the learned Commissioner (Appeals), ground raised is dismissed. Addition on account of unexplained expenditure in purchase of house - Held that:- The addition made on account of expenditure incurred in cash for purchase of house was made on the basis of certain documentary evidences seized from third parties, it is evident that the cash receipts have been generated by Shri Vijay Kandhari and were also signed by him. We fail to understand why Shri Vijay Kandhari, was not examined by the Department to find out the actual fact. Similarly, it is evident that the Assessing Officer has not made any enquiry with the house owner to find out the exact amount received by him for selling the house to the assessee. Moreover, in an affidavit filed on behalf of Matrix, it was accepted that no cash was either paid or accepted on behalf of the assessee. It is also a matter of record that Ms. Sandhya Ramchandra, from whose computer some of the seized materials were found was never questioned on this issue. Therefore, in the absence of any direct and clinching evidence indicating incurring of cash expenditure for purchasing the house, addition cannot be made on mere presumption and surmises. Addition made on estimation / extrapolation - Held that:- In the absence of any direct evidence demonstrating that the assessee had received cash payment from Matrix, as shown in the evaluation sheet, no addition can be made merely on presumption and surmises and on estimate basis. For making the addition on account of cash component, it was the duty of the Assessing Officer to bring on record corroborative evidence to establish the fact that the entries made in the evaluation sheet were correct. Therefore, in the absence of any evidence brought on record, the addition was rightly deleted by the learned Commissioner (Appeals). The decisions relied upon by the learned Authorised Representative also support the aforesaid view. Therefore, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the ground raised by the Revenue. Revenue appeal dismissed.
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2017 (11) TMI 668
Addition as unexplained money U/s 69A in respect of unsecured loan - Held that:- The assessee has received ₹ 25.00 lacs from Shri S.P. Singh. The assessee has submitted the PAN card of Shri S.P. Singh. Shri S.P. Singh has also filed a civil case against the assessee to recover the amount. These facts are undisputed. The assessee had disclosed the receipt of ₹ 25.00 lacs in her books of account. The amount was received through banking channels only. The ld. CIT(A) himself has recorded that the appellant is enjoying the money received from Shri Satpal Singhy without any intention to return the same. This fact itself shows that there cannot be an addition for the receipt of the amount from Shri S.P. Singh. Further the ld. CIT(A)’s observation that this is also covered by the provisions of Section 56(1)(vii)(a) of the Act is also unjustified. The pending civil suit for recovery of the liability against the assessee itself suggest that provisions of Section U/s 56(1)(vii)(a) of the Act cannot be invoked at this stage. In view of these facts, we direct to delete the addition. Addition as undisclosed investment in purchase of immovable property U/s 69 - Held that:- We observe that in the earlier pleadings that the ld. AR had submitted that the assessee was having only agricultural income but while explaining the opening cash balance, the ld AR of the assessee has admitted that the assessee was also having dairy business. There is no evidence available on record, which establishes that the assessee was having any other income than agricultural income. In view of all, we direct to accept the source from agricultural income to the tune of ₹ 2.00 lacs only and the balance amount of ₹ 2,94,290/- remains unexplained, hence addition to that extent is sustained. Hence, ground No. 2 of the appeal is partly allowed. Addition made to Mr. Ankush treating it as advance made from undisclosed sources - Addition treating agriculture income as undisclosed income - Held that:- We find that the assessee has taken the income out of business of ₹ 3,58,662/- as source to explain the advance to Shri Ankush. The agricultural income declared was ₹ 7.80 lacs, for which the separate addition has been also made by the Assessing Officer. Thus, the advance to Shri Ankush of ₹ 10.00 lacs which apparently explained by the assessee is out of the income from business and agricultural income so claimed. In the earlier paragraph of the order, we have also dismissed the claim of the assessee regarding the income from business and estimated the agricultural income at ₹ 2.00 lacs. In this cash flow statement, it was taken as ₹ 7.80 lacs. Thus considering the fact that the addition can be made only either for advance of ₹ 10.00 lacs or the income so declared from business and agriculture. The facts regarding the agricultural income are established but the quantum of agricultural income appears to be on higher side. The income from the business declared at ₹ 3,58,662/- is not established, therefore, considering the totality of the facts and circumstances regarding the agricultural income, the opening cash balance and claim of business income unsustained and also other facts and circumstances, we sustain the addition of ₹ 10.00 lacs advance made to Mr. Ankush where source of the same is not established. However, we direct to delete the addition made on account of agricultural income of ₹ 7.80 lacs as the same was claimed as source of the advance to Mr. Ankush. Hence, ground No. 3 of the appeal is dismissed and ground of the No. 4 of the appeal is allowed.
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2017 (11) TMI 667
Deduction u/s 54F entitlement - assessee is seeking exemption on the ground that it has constructed a residential house - objection of Assessing Officer are three-fold, firstly the assessee has 1/8th rights over the property on which the new asset is constructed; secondly, the construction started prior to transfer of original asset and thirdly the new asset can not be treated as residential house as same has been constructed on the commercial land - As per assessee by way of settlement amongst the co-owners, the assessee was given absolute rights over the new asset thus the assessee is entitled for exemption as claimed Held that:- We find that the Revenue has not brought any material on record suggesting that on commercial land no residential house can be constructed. Even there is no material suggesting that any unauthorized construction by the assessee would debar it from claiming exemption u/s 54F. In the absence of such material, in our considered view benefit of section 54F cannot be denied. PP Another objection of the AO is with regard to the fact that construction of residential house was started prior to transfer of original asset. This objection is also misplaced when the assessee is entitled to exemption u/s 54F if the residential house is purchased one year before the transfer of the original asset. Therefore, in our considered view merely because the construction was started prior to transfer of original asset, if same is completed within three years of transfer of original asset, would not come into way of entitlement of exemption. Another objection of the AO is that the assessee is having 1/8th share in the commercial land on which the new asset has been constructed. The explanation of the assessee is that by way of settlement the assessee was given absolute rights on the new asset. We are of the view that this claim of the assessee requires verification at the end of the AO. Therefore, we modify the finding of ld. CIT (A) to the extent that AO would verify from other co-owners about the factum of relinquishment of their rights into new asset. If the AO finds correctness into the claim of the assessee, he would allow the entire claim lest he would restrict the same to the extent of 1/8th of the cost of construction of new asset. Ground No. 1 of the revenue’s appeal is partly allowed for statistical purpose
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Customs
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2017 (11) TMI 666
Power of the registrar of the Tribunal to transfer a case before another bench with the consent of parties - Intervernor's application filed under Order 1 Rule 8A read with Section 151 CPC on behalf of the Customs Excise and Service Tax Appellate Tribunal Bar Association through its President - Held that: - Surprisingly, without any authority of law, the Registrar by the impugned Notification dated 10.10.2017 has passed an order that in all such appeals when both the parties to the appeal agree, the matter can be transferred and heard at the Principal Bench, New Delhi subject to the approval of the President. The intervenor, who is the CESTAT Bar Association are aggrieved by the aforesaid order stating that once the Union Cabinet has created, by Notification, a Bench at Allahabad to hear appeals arising from U.P., no such direction can be given to transfer such appeals in exercise of power under Section 129 of the Customs Act - It is to be remembered that the Gazettee Notification has been issued creating a Bench at Allahabad by carving out the jurisdiction from Delhi, as such the Registrar has no power to create any further jurisdiction apart from what has been created by the Gazettee Notification. A jurisdiction of the Bench can not, under any circumstances, be conferred merely upon the consent of the parties - application allowed.
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2017 (11) TMI 665
ADD - New Shipper Review - clear float glass of nominal thickness ranging from 4 mm to 12 mm - import from Saudi Arabia, UAE and Pakistan - time limitation - One of the contentions raised by the domestic industry before the Designated Authority was that the Designated Authority has no jurisdiction in the present matter due to lapse of time, as maximum period available to the Designated Authority to conclude the investigation is 18 months in terms of Rule 17 and the same having expired, the initiation itself is bad in law - whether the New Shipper Review Investigation commenced by the Designated Authority vide initiation notification, dated 23.09.2015 culminating in the final findings, dated 10.04.2017 is barred by time as it has exceeded 18 months? Held that: - At the instance of the third respondent, the Designated Authority initiated New Shipper Review Investigation pursuant to notification dated 23.09.2015. This review was initiated invoking the power under Rule 22 of the ADD Rules. In terms of Sub-Rule (1) of Rule 22, if a product is subject to anti-dumping duties, the Designated Authority shall carryout the periodical review for the purpose of determining individual margins of dumping for any exporters or producers in the exporter country in question, who have not exported the product to India during the period of investigation, provided that these exporters or producers show that they are not related to any of the exporters or producers in the exporting country, who are subject to the anti-dumping duties on the products - Sub-Rule (2) of Rule 22 places an embargo on the Central Government not to levy anti-dumping duties under Sub-Section (1) of Section 9A of the Customs Tariff Act, during the period of review under Rule 22(1). Proviso under Rule 22(2) provides that the Central Government may resort to provisional assessment and may ask guarantee from the importer to safeguard the interest of the revenue. The impugned notification dated 10.04.2017, is a result of the review undertaken in terms of Rule 22. It appears that this review being sought for by a producer in a foreign country, who has not exported his product into India, is referred to as a New Shipper Review, though such a term dose not find place in the ADD Rules. The rule contemplates two types of review, the first is done after a reasonable period has lapsed, since the imposition of anti-dumping duty. This review can be on the own initiative of the Designated Authority or on request by any interesting party, who submits positive information substantiating the need for such review. The third respondent, who sought for review under Rule 22 is not an interested party, in respect of the period of investigation, which led to the issuance of the notification, dated 11.12.2014, the said period being 01.10.2011 to 31.12.2012. Therefore, Rule 23(1A) is not applicable to the present case. Rule 23 (1B) is a review to be undertaken notwithstanding anything contained in Sub-Rule 1 or 1A and this review is undertaken prior to the expiry of the period of 5 years from the date of imposition of anti-dumping duty and this review can be undertaken by the Designated Authority on his own initiative or upon a duly substantiated request made by or on behalf of the domestic industry. This contingency does not arise in the present case. Therefore, Rule 23 (1B) does not apply. The review under Sub-Rule (1) of Rule 23 shall be concluded within a period of 12 months from the date of initiation. Thus, both in the cases of mid-term review and sunset review, (as popularly known in the industry), the time limit is 12 months. While undertaking such review, the other Rules enumerated in Sub-Rule (3) of Rule 23 would apply. Thus, Rule 22 and Rule 23 operate in different spheres and well defined compartments and the plea that subject Rule 23(3) read with Rule 17 should be superimposed in Rule 22 to fix a time limit amounts to re-writing the Rule, which is impermissible. Thus, the Court is fully convinced that the interpretation sought to be given by the petitioner lacks merit. Period of investigation for the new shipper review was from 01.07.2015 to 31.03.2016, for which notification was issued on 23.09.2015 - Held that: - to state that by superimposing Rule 23(3) into Rule 22 and hold that the period of limitation will commence from 23.09.2015 and end with 22.09.2016 is a plea to be rejected. Admittedly, the Designated Authority can assess whether the new shipper review is warranted for continued imposition of duty or reduction thereof, only after the investigation is over for the fixed period of investigation, which came to an end on 31.03.2016. Obviously the investigation report could not have been submitted on the close of 31.03.2016. Thus, the contention raised by the petitioner is wholly devoid of merits. In a recent decision in the case of Sandisk International Limited [2017 (2) TMI 924 - SUPREME COURT] filed by the Designated Authority, challenge was against the judgment and order of the Delhi High Court interferring with the final findings of the Designated Authority. On going through the facts of the case, the Hon'ble Supreme Court observed that the High Court was not justified in exercising its writ jurisdiction and in setting aside the final findings of the Designated Authority and the High Court should have asked the writ petitioner to await the issuance of final notification under Rule 18 and to challenge the same before the appropriate forum under Section 9C of the Customs Tariff Act. The New Shippers Review initiated vide notification, dated 23.09.2015, culminating in the final findings dated 10.04.2017, is not barred by time - In the absence of any time limit fixed in Rule 22, a review undertaken under Rule 22 is not required to be completed within 12/18 months as required under Rule 23(3), but an accelarated procedure. Petitions are dismissed being not maintainable.
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2017 (11) TMI 664
Restoration of appeal - case of appellant is that the consultant who was earlier handling the appeal passed away and the appellant entrusted the work to the present counsel and vakalat was filed on 25.1.2017 - Held that: - it is seen that the appellant has made out sufficient cause for restoration of the appeal - appeal restored to the file of Tribunal. Jurisdiction - power of DRI to issue SCN - Held that: - the matter had come up before the Hon’ble Delhi High Court in the case of Mangali Impex vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT], where the matter has been remanded for further reconsideration - following the same, present matter also placed on remand for reconsideration - appeal allowed by way of remand.
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2017 (11) TMI 663
Whether the learned Commissioner is justified in passing an order of confiscation, in respect of lactose (claimed edible grade) imported by the respondent, which was found to be unfit for human consumption, on being tested, whether allowing redemption without any fine and penalty for re-export under the provisions of Section 125 & Section 112 of the Customs Act, 1962 is proper or redemption fine should have been imposed? Held that: - the learned Commissioner have allowed re-export in terms of the CBEC Circular No.100/2003Cus dated 28th November, 2003, wherein the Board have given discretion to allow re-export of goods found not fit for import with or without penalty - there is no error in the impugned order of the Commissioner in his exercising the discretion not to impose penalty. - non imposition of redemption fine was in terms of discretion under Section 125 of the Customs Act, 1962 read with CBEC Circular. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (11) TMI 662
Validity of Cash down land purchase scheme and scheme of land purchase by instalments - SEBI had initiated action against the company for violation of Sections 11-AA and 12(1-B) of the SEBI Act as the company had not obtained a certificate of registration as required under Section 12(1-B) of the SEBI Act - Held that:- Having regard to the number of depositors and the huge stakes involved, it would be a mammoth task to identify the investors, identify the lands that have been purchased, value the land and realize the actual value by way of sale of properties. Learned Amicus Curiae have suggested that it would be appropriate if a committee is constituted consisting inter-alia of Competent Authority under TNPID Act, representatives from the Revenue Department, representatives from the legal fraternity, representatives from the Economic Offences Wing, representatives of SEBI and a team of Chartered Accountants to carry out the task of identifying the investors, identifying the lands that have been purchased, getting the land valued and raising funds for settlement of dues of investors / depositors by actual sale of landed properties. This Court deems it appropriate to constitute a Committee headed by Hon'ble Mr.Justice N.Paul Vasanthakumar, Retired Chief Justice of the Jammu and Kashmir High Court. The Committee shall consist of two senior members of the legal fraternity, namely, Mr.B.Kumar, Mr.M.S.Krishnan, who have been assisting this Court as Amicus Curiae and also Mr.C.Manishankar, Senior Advocate and Additional Advocate General. In addition, the Committee shall include the Competent Authority under TNPID Act, namely, Additional Commissioner of Land Administration or a person nominated by the Additional Commissioner of Land Administration not below the rank of the Joint Secretary to the State Government, two nominees of the Revenue Secretary to the State of Tamil Nadu of the rank of Revenue Divisional Officer, a nominee of the Additional Director General of Police, Economic Offences Wing, not below the rank of Superintendent of Police and a nominee of the Regional Director, SEBI not below the rank of Deputy General Manager. All depositors / investors of the Company should apply to the Committee with details of their investments and documents in support of their claims within the time stipulated in the advertisement. The claims shall be processed by the Committee and the list of depositors and their respective claims shall be finalised. Bogus claims can obviously be rejected. The Committee shall take necessary steps to identify the properties of the Company, its sister concerns, Directors and transferees, to ascertain the location, marketability and title thereto and thereafter proceed to sell the properties. The committee may obtain the assistance of a team of experts of the Revenue Department and a competent legal team to perform the acts mentioned above. The committee may also constitute an Accounting team to look into the bank accounts and other financial documents of the company, its Directors, its sister concerns, etc. and to ascertain whether there has been secretion of funds of the Company. The amounts realized from out of the sale of the properties shall be deposited in a special account opened for this purpose, which may jointly be operated by any two members of the committee nominated by the Chairperson. The Company and each of its Directors shall make an initial deposit of ₹ 10,00,000/- (Rupees ten lakhs only) each for the expenses required for implementation of this order. The Company, its Directors, its sister concerns shall also provide the Committee a befitting office space and infrastructure in Chennai to carry out this order. The office space shall be provided by the Company either at its office in Masilamani Street, T.Nagar, Chennai or at Old Door No.59/1, New No.119, Canal Bank Road, CIT Nagar, Chennai-600 035. In case the amounts realized are not sufficient to settle the claims of all depositors / investors in full, the depositors / investors shall be paid on pro rata basis in proportion with the amounts deposited by them in the Company as substantiated by cogent documents. The FIR shall, however, be kept alive as the prosecution may have to continue if the amounts realized are not sufficient to pay the amounts due to all depositors / investors.
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Service Tax
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2017 (11) TMI 661
Service tax on advocates - period from 1st April 2016 to 5th June 2016 - Reverse charge mechanism - fees payable to advocates - N/N. 30/2012-ST dated 20th June 2012 - Held that: - There is no prejudice caused to the Department for the simple reason that the service tax from 1st April 2016 itself ought to have been collected on reverse charge basis. If any client who has paid the fees of the Senior Advocate, has failed to make payment of the corresponding service tax on reverse charge basis, it would be open to the Department to proceed against such client to recover the service tax in accordance with law - petition disposed off.
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2017 (11) TMI 660
Closure of proceedings - invocation of Section 73(4A) of FA - duty paid alongwith interest and penalty - Held that: - the appellant has paid the service tax along with interest and also paid 1% penalty and requested the department for closure of the proceedings but the department did not close the proceedings and proceeded to issue the show-cause notice and by passing the impugned order imposed various penalties. Further, I also find that the Commissioner has allowed the closure of the proceedings only for the period 8.4.2011 t 31.3.2012 by holding that the said proviso is only prospective and also held that no penalties are imposable for this period. Tribunal in the case of SS Service providers [2016 (9) TMI 486 - CESTAT CHANDIGARH] has held that provisions of Section 73(4A) will be applicable even for the period prior to the issuance of Show-cause notice. If the ratio of the above decision is followed, then the department should have closed the proceedings as the appellant has paid the duty, interest and 1% penalty. Once the appellant pays duty along with interest, no show-cause notice should have been issued. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 659
Refund of unutilized CENVAT credit - export of services - providing SMS Aggregator services to facebook, Ireland - rejection on the ground that the services of BSS provided by the Respondent to M/s Facebook does not qualify as export of service - whether the Respondent are eligible to refund of accumulated cenvat of input services in terms of Rule 5 of Cenvat Credit Rules? - Held that: - Under the terms of agreement we find that the Respondent is getting paid by the facebook based upon the number of SMS messages successfully transmitted through Respondent's network. It also provides the fees based upon the Billable Message Length , Unicode Message, Undelivered Message which would not be chargeable, Long Codes fees etc. It provides the fee structure based upon nature of message. In sum and substance the Respondent is rendering services to M/s Facebook and getting fees for services provided in each month. The subscribers are not even aware of the existence of the Respondent and their role in services provided by Facebook. The Respondent and the subscribers are not into contractual agreement. There is no consideration flowing to the Respondent from such subscribers. The Respondent is working under the directions/instructions and discretion of Facebook. The subscribers are dependent upon facebook for receipt/ delivery of their SMSs - The Tribunal in the case of M/s Paul Merchants Ltd. [2012 (12) TMI 424 - CESTAT, DELHI (LB)] has held that Export of Services Rules, 2005 and Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 have been framed, following general principle that taxable service provided by a person in India will be subject to tax only when it has been consumed in India, and Service Tax must be levied in that taxable area where service has been consumed. Coming to the Rule 3 of the Place of Provision of Service Rules, 2012 and its application to the instant case, we find that the proviso to said Rule states that in case location of the service provider is not available in the ordinary course of business, the place of the provision shall be the location of the provider of Service. Further as per Rule 2 (i) of the said Rules the Location of Service Provider is the location of his business establishment. In the case in hand there is no dispute about the facts that the service recipient is Facebook which is located outside India and thus its location is available. Hence the Indian subscribers of Facebook cannot be termed as "Service Recipient". In such case even the Rule 8 of POP would not apply as the service recipient i.e Facebook is situated in Ireland which is located outside India a non taxable territory. There is no dispute about the fact that the consideration of service was received from M/s Facebook in convertible Foreign Exchange therefore there is no doubt in our mind that the services of the respondent is clearly exported to Facebook, Ireland, hence the refund claim under Rule 5 of Cenvat Credit Rules, 2004 is admissible to the respondent. Appeal dismissed - decided against Revenue.
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2017 (11) TMI 658
CENVAT credit - input services - Case of Revenue is that the appellant is engaged in providing output service i.e. lending of loan. The activity of seizing of vehicle by the recovery agent appointed by the appellant is not an input service for lending of loan to the customer, therefore the service does not fall under the category of input service, accordingly cenvat credit was disallowed - Held that: - the lending service is not limited to disbursing the loan but it includes the recovery of the said lended money which is one of the vital part of the overall activity of lending of money. Therefore the service received for taking repossession of the vehicle by recovery agent is an input service which is used for the service of lending. Any service used for providing output service is an input service. As discussed above, the service of taking repossession of the vehicle which is an activity in relation to recovery of the loan is used for overall service of lending. Therefore as per the main part of the definition, the service of recovery agent received by the appellant is an input service. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 657
Valuation - Security Agency Service - Revenue held a view that the appellant did not consider the gross amount received for rendering the taxable service to discharge service tax. They have paid service tax only on their commission - Held that: - pleading bonafide understanding of law to the effect that service tax liability only on the commission accruing to them, the appellant did not pay service tax on the salary component paid to the Security Guard which in turn was received from the clients. We find that the appellant have made out a case for such bonafide belief though now they are not contesting on the merit of their tax liability as upheld by the lower authorities - Considering the nature of scope of the appellant activity run by ex-Service men, we find that provision of Section 80 can be invoked to set aside the penalty imposed under Section 78 on the appellant. While upholding the tax liability which in any case is not contested, we set aside the penalty imposed - appeal allowed in part.
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2017 (11) TMI 656
GTA Service - transportation of sugarcane from collection centres to the factory - Revenue made out a case that as the recipient of services for transportation of sugarcane from collection centres to the factory, the Appellant was liable to pay service tax on the amounts paid to the transporters - Held that: - the definition of “Goods Transport Agency” under Section 65(50b) of Finance Act, 1994 and provision of Rule 4A of Service Tax Rules are logically inconsistent. The entry in the Act defines “Goods Transport Agency” as one which issues consignment notes and thereafter Rule 4B says that “Goods Transport Agency” have to issue consignment note. So which criteria have to be satisfied first is not clear. That is to say if a goods transport operator does not issue consignment note he does not come within the meaning of “Goods Transport Service” and then the requirement under Rule 4B also is not enforceable. The provisions of Service Tax are not attracted in the transaction involved, as the appellant have only acted as a facilitator for the farmer for quick and speedy transport of sugarcane to the factory to ensure more effective recovery of sugar. Appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (11) TMI 655
Refund claim - EC/SHEC - Area Based Exemption - industrially backward area - whether the Education Cess and Higher Education Cess which were paid along with the excise duty was also liable to be refunded along with the central excise duty in terms of the exemption notifications? - Divergent views. Held that: - Government itself has taken the position that where whole of excise duty or service tax is exempted, even the Education Cess as well as Secondary and Higher Education Cess would not be payable - Education Cess is on excise duty. It means that those assessees who are required to pay excise duty have to shell out Education Cess as well. This Education Cess is introduced by Sections 91 to 93 of the Finance (No.2) Act, 2004. As per Section 91 thereof, Education Cess is the surcharge which the assessee is to pay. Section 93 makes it clear that this Education Cess is payable on ‘excisable goods’ i.e. in respect of goods specified in the first Schedule to the Central Excise Tariff Act, 1985. Further, this Education Cess is to be levied @ 2% and calculated on the aggregate of all duties of excise which are levied and collected by the Central Government under the provisions of Central Excise Act, 1944 or under any other law for the time being in force. Sub-section (3) of Section 93 provides that the provisions of the Central Excise Act, 1944 and the rules made thereunder, including those related to refunds and duties etc. shall as far as may be applied in relation to levy and collection of Education Cess on excisable goods. A conjoint reading of these provisions would amply demonstrate that Education Cess as a surcharge, is levied @ 2% on the duties of excise which are payable under the Act. It can, therefore, be clearly inferred that when there is no excise duty payable, as it is exempted, there would not be any Education Cess as well, inasmuch as Education Cess @ 2% is to be calculated on the aggregate of duties of excise. There cannot be any surcharge when basic duty itself is Nil. When two views are possible, one which favours the assessees has to be adopted - there were divergent views in case laws cited, the one which favors the assessee has been followed - reliance placed in the two judgments given in Bharat Box Factory Ltd. [2007 (6) TMI 524 - CESTAT, NEW DELHI] and Cyrus Surfactants Pvt. Ltd. [2007 (6) TMI 325 - CESTAT, NEW DELHI] held that Education Cess and Higher Education Cess would also refundable along with excise duty. The appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 654
Clandestine removal - dismissal of appeal by a non-speaking order - Held that: - The tribunal is a final fact finding authority. Though the tribunal has considered the grounds of appeal, there is no discussion - by relying on the decision of Punjab and Haryana High Court in the case of CCE Chandigarh Vs. Modern Alloys - 2010 (285) ELT 364 (P&H), tribunal dismissed the appeal - the impugned order is set aside and the matter is remitted to CESTAT, Chennai. CESTAT, Chennai is directed to issue notice to both parties, provide opportunity, consider the issues raised in the appeal and pass orders on the appeal on merits and in accordance with law - appeal allowed by way of remand.
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2017 (11) TMI 653
Refund claim - GTO Service - extended period of limitation - Section 73 of the Finance Act, 1994 - Whether the first respondent is justified in observing that service tax was not recoverable under Section 73 of the Finance Act, 1994 from a recipient of GTO service for the aforesaid period inasmuch as the show cause notice issued for the category of persons mentioned under Section 71A is rightly covered under Section 73 as explained above? Held that: - When the adjudication itself has been set aside, the 2nd respondent is entitled for refund. Reliance placed in the case of COMMISSIONER OF C. EX., PONDICHERRY Versus TEBMA SHIPYARDS LTD. [2013 (10) TMI 1322 - MADRAS HIGH COURT], where it was held that As per the Finance Act, 2004, Section 73(1)(a) of the Finance Act was amended with effect from 10-9-2004 validating the notice issued to Goods Transport Operators Service recipients by removing the clause “the persons liable to file the returns under Section 70” from erstwhile Section 73 of the Finance Act. The very initiation of proceedings by issuance of show cause notice is bad in law. Appeal dismissed - decided against Revenue.
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2017 (11) TMI 652
Abatement of duty payable u/s 3A due to Closure of factory - delay in intimation - Whether demand for Central Excise duty for non manufacturing period i.e. closure of factory is justified u/s 3A of the Act when it is contrary and ultra vires to Article 265 read with entry 84 of the Union List to the Constitution of India? - Held that: - no basis was laid even before first authority or the Tribunal and when the act and provisions are made it is not to be presumed ultra vires unless it has been quashed and set aside by the High Court or any High Court or the Supreme Court, in writ jurisdiction - regarding Section 35G it will not be appropriate to held any provision to be unconstitutional because power under section 35G is only to be exercised in substantial question of law arising out of the Central Excise Act and not on any constitutional point - decided against assessee-appellant. Section 10 of the General Clauses Act - Whether Tribunal is justified in denying substantial right of assessee over and above procedural lapse of delayed intimation of closure of factory when it was due to unforeseen circumstances beyond control and under immunity of Section 10 of the General Clauses Act of 1897? - Held that: - when considering the rule there are five conditions which are required to be fulfiled since the assessee is claiming exemption. If one is to claim exemption and non-payment of tax, interpretation of such exemption should be construed and it is in aid to rule. Once the interpretation is found to be proved one has to go by the rule - the rule even if it is construed liberally cannot travel beyond the next working day of the closure either it is Saturday, Sunday and public holiday or any other circumstances where the movement of a person is not possible to reach the office of the Central Government or the respondent namely in a case of curfew or any other exigency, the time can be extended and all documents on record do not show that on the date of intimation of there was curfew in the area which is to be proved by the assessee and not by the department - assessee will be entitled only for the benefit of the next working day not beyond that - decided partly in favor of appellant. Appeal allowed in part.
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2017 (11) TMI 651
Remission of duty - reversal of credit - Held that: - the Commissioner has relied upon the surveyor's report and the insurance claim made with the insurance company M/s.Cholamandalam M.S. General Insurance Co. Ld., wherein the insurance company has settled the total claim of Rs..15,51,91,320/- against the claim of the appellant for remission of duty on the destroyed goods. Evidence of surveyor's report and the insurance company is conclusive, the department has no iota of evidence to rebut the claim of the respondent or to rebut the sanction of the insurance claim by the insurance company - application for remission of duty allowed - appeal dismissed - decided against Revenue.
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2017 (11) TMI 650
CENVAT credit - MS angles, shapes, section, MS plate, MS scrap and rail (other than rail using railway) - Held that: - Cenvat Credit for the steel items used in supporting structures have been held as allowable by Hon’ble Madras High Court in the case of India cement Ltd. [2011 (8) TMI 399 - MADRAS HIGH COURT] - so far the other items used by the appellant, these have been used in the fabrication of machines required for manufacture of paper, which is an excisable product, credit allowed. Extended period of limitation - Held that: - there is no allegation of any mala fide and/or suppression of facts on the part of the appellant. Further, learned Commissioner (Appeals) have also observed that the issue is wholly interpretational in nature. Accordingly, the show cause notice invoking the extended period of limitation is not maintainable. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 649
CENVAT credit - Rule 6 (3A) of the CENVAT Credit Rules 2004 - rectified spirit - Held that: - identical issue decided in the case of Bajaj Hindustan Sugar Ltd. Vs. CCE Lucknow [2016 (8) TMI 386 - CESTAT ALLAHABAD], where it was held that ethyl alcohol and rectification spirit are on and the same. Rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item no. 22072000 - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 648
Penalty u/r 209A of CER, 1944 - Clandestine removal - Revenue was of the view that RIL was consuming Ferro Chrome in excess hence, RIL have manufactured more quantity of billets/flats as against the quantity shown in record and cleared the same clandestinely without payment of duty - it was alleged that the appellant was responsible for his conduct to the business at the material time and the goods cleared from the factory without payment of appropriate excise duty is with his consent and connivance. Held that: - It has not been brought on record by the Revenue that from where the other inputs were procured and used in the manufacture of final goods. Further, I find that for the commission received by M/s. RIL it has been alleged that the same is towards the sale proceeds of the goods cleared clandestinely. Whereas the Revenue has issued a show cause notice to demand service tax on the commissions earned. In that circumstance, penalty on the appellant is not imposable merely on the charge that appellant has failed to satisfactorily explain the contradiction in various statements recorded during investigation, being overall in-charge of M/s. RIL. A specific role of the appellant has not been alleged for the activity of M/s. RIL. In that circumstance, penalty on the appellant is not imposable. Penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 647
CENVAT credit - input items which were not used as accessories but were cleared separately, as such, to one of their clients - case of the appellant is that they have reversed the credit when cleared the inputs to the client - Held that: - the appellant did discharge full liability on such inputs which were cleared as such by them. In fact, as claimed by the appellant, they have paid more than the amount of credit availed on the same, as there was marginal increase in the sale value. In such situation, there is no ground for further recovery of any ineligible credit from the appellant - no justification to order for further recovery of credit on these inputs which were already reversed by the appellant at the time of clearances - penalty also not imposable - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 646
Waste - clearances of fibres in the guise of waste - whether the appellant, in the garb of waste have been clearing the finished products? - natural justice - Held that: - the learned Commissioner has failed to present the witnesses of revenue, the statements of which have been relied, for cross-examination - also, learned Commissioner has failed to exercise the jurisdiction vested on him to ensure the attendance of witnesses in the course of adjudication proceedings - under the provisions of law all the powers of a Civil Court are vested in the adjudicating authority in ensuring the attendance of witness, which we find from the findings on record, have not been resorted to. Thus the order is vitiated for failure to exercise jurisdiction vested in the learned Commissioner - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 645
CENVAT/MODVAT credit - duty paying documents - attested photocopies of the invoices - Held that: - the Courts below have failed to follow the directions in the remand order of this Tribunal to verify the fact of duty paid nature of the inputs and their receipt in the factory of production and subject to that, allow the Cenvat credit - it is not disputed that the inputs are of duty paid nature and further they have been duly received and utilised in the factory of production - credit allowed - appeal allowed - decided in favor of appellant.
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