Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 15, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Companies Law
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F. No. 1/4/2016 CL-I, Part-I - G.S.R. 1111(E) - dated
13-11-2018
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Co. Law
National Financial Reporting Authority Rules, 2018
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F. No. 1/27/2013-CL-V(Part) - G.S.R. 1108 (E) - dated
13-11-2018
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Co. Law
Companies (Registered Valuers and Valuation) Fourth Amendment Rules, 2018
GST - States
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40/2018-State Tax - dated
20-9-2018
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Arunachal Pradesh SGST
Notifies that every electronic commerce operator, not being an agent, shall collect an amount calculated at a rate of half per cent of the net value of intra-State taxable supplies.
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23/2018-StateTax (Rate) - dated
20-9-2018
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Arunachal Pradesh SGST
Clarifying the scope and applicability of the notification of the Government of Arunachal Pradesh No.12/2017-State Tax (Rate), dated the 28th June, 2017
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39/2018-State Tax - dated
13-9-2018
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Arunachal Pradesh SGST
Appoints the 1st day of October, 2018, as the date on which the provisions of section 52 of the said Act shall come into force.
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38/2018-State Tax - dated
13-9-2018
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Arunachal Pradesh SGST
Supersession of the notification of the State Government No. 30/2017-State Tax, dated the 20th September, 2017- Set up by an Act of Parliament or a State Legislature;.
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34/2018-State Tax - dated
10-9-2018
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Arunachal Pradesh SGST
Amendments in the Notification No. 32/2017-State Tax dated the 20th September, 2017 and Notification number 15/2018-State Tax dated the 23rd March, 2018.
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33/2018-State Tax - dated
10-9-2018
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Arunachal Pradesh SGST
Amendments in the Notification number 20/2017 - State Tax dated 31st August, 2017 and Notification number 52/2017 - State Tax dated the 16th November, 2017.
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S.O. 269 - dated
5-11-2018
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Bihar SGST
Amendments in the Commercial Taxes Department notification No. S.O. 238, dated the 13th September, 2018.
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9855/D-184/21-छ.ग./18 - dated
5-10-2018
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Chhattisgarh SGST
THE CHHATTISGARH GOODS AND SERVICES TAX (AMENDMENT) ACT, 2018.
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(GHN-113)/GSTR-2018(35)-TH - dated
12-11-2018
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Gujarat SGST
Corrigendum in the Notification No.60/2018-State Tax
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57/2018-State Tax - dated
23-10-2018
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Gujarat SGST
Exemption from Registration To Persons Making Inter State Supplies Of Handicrafts.
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100/GST-2 - dated
6-11-2018
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Haryana SGST
Notification to exempt supply from PSU to PSU from applicability of provisions relating to TDS under HGST Act, 2017.
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099/GST-2 - dated
6-11-2018
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Haryana SGST
The Haryana Goods and Services Tax (Fifteenth Amendment) Rules, 2018.
Trust and Society
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F.No. L-11012/2/2003-L&M - dated
11-10-2018
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Trust and Society
Appointment of Dr. Abhilaksh Likhi, IAS (HY:91), Joint Secretary (Cooperation) in the Ministry of Agriculture and Farmers Welfare
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Valuation of goods supplied - The amortised cost of tools which are re-supplied back to the applicant free of cost shall be added to the value of the components while calculating the value of the components supplied as per the Section 15 of the CGST / SGST / IGST Act 2017.
Income Tax
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Reopening of assessment - reopening relying on audit objection - change of information is impermissible. The Revenue was clearly barred by the provisions of section 147/148 of the Act.
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Provision of warranty - accounting policy - the provisions of warranty made by the assessee company was on the basis of the scientific and consistent method - No addition could be made.
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Rectification of mistake - as long as an order of the Tribunal stands, the assessment order was required to be implemented. Further having implemented it, it was simply not open for him to exercise power of rectification which is meant for correcting any error apparent on record.
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Charitable activities - Entitled to exemption u/s 11(1) - dominant object - the assessee’s activities of running the hospital and the nursing school is intricately connected and dependent on each other and it is one inseparable activity and both are entitled to exemption u/s 11(1).
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Determination of LTCG - once the net sale consideration has been fully applied under the provisions of section 54F, then the deeming consideration as defined u/s. 50C cannot be brought into the provisions of section 54F
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MAT computation - A.O should get the audited balance sheet verified from the office of the Registrar of Companies under whose jurisdiction assessee company falls so as to get it confirmed that the audited balance sheet produced before the Tribunal is as per Schedule-VI of the Companies Act, 1956.
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TDS u/s 195 - payment for use of 'transponder space' as Royalty u/s 9(1)(vi) - India US DTAA - when this income is not chargeable to tax in the hands of the recipient, no liability is there on the assessee to deduct tax at source.
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If at all the A.O wanted to adopt the cost of the asset as recorded in the books of the previous owner, he could have done so when computing the capital gains for the assessment year 2010-11 when the asset was converted from investment to stock-in-trade. The A.O having missed the bus for assessment year 2010-11 cannot make the said adjustment during the impugned assessment years.
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Addition on the basis of entries found in the seized documents - to make an addition on the basis of document which does not state the amount lent by the assessee or borrowed by the assessee is not justified and can not be sustained
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Disallowance of commission paid to the assessee’s son - no evidence was furnished to substantiate that, son has rendered the service in connection with earning of the commission income by the assessee - in absence of the necessary nexus between the earning of income and rendering of services, expenses not allowed.
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Grant of registration u/s. 12AA denied - proof of charitable activities - there was non-application of mind by the CIT(E) - matter restored before CIT(E)
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Addition u/s 68 - it would be reasonable to believe the contention of the assessee of having received the initial finance from his father by way of a gift - Therefore, the genuineness of the transaction and also the creditworthiness of the father has been established.
Customs
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Valuation of imported goods - GI and insulated wire cuttings - value cannot be enhanced on the basis that there were imports of similar items by other importers since the goods were defective and, admittedly, a mixed lot of different sizes and length
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Suspension of CHA License - the Bills of Entry was not filed in the name of the appellant company at the Custom Broker’s office, thus the said regulations cannot be invoked against the appellant company.
Corporate Law
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National Financial Reporting Authority Rules, 2018
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Companies (Registered Valuers and Valuation) Fourth Amendment Rules, 2018
Indian Laws
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Waiver of pre-deposit of debts - Recovery of Debts - Section 21 of the Banks and Financial Institutions Act, 1993 - Nature and effect of amendment - he quantum of the amount of pre-deposit has been reduced to 50% in place of 75% - the contention of the petitioner that the amendment is prospective in effect, is not acceptable.
Service Tax
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Penalty u/s 78 - when the assessee maintains specified records, the proviso appended to Section 78 of the Act, mandates that imposition of penalties should be restricted to 50% of the determined amount of service tax.
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Extended period of limitation - in each and every case of non payment of service tax and non filing of returns, the extended period would get invoked, thus making the provisions of Section 73 of the Finance Act as infructuous.
Central Excise
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Principles of Natural Justice - allegation of evasion of duty - The authorities have committed a serious error in not allowing the petitioner’s request for cross-examination of the witnesses
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Refund of duty paid by mistake - appellant had not cancelled invoice as per the provisions - There is no specific provision mandate as to how an invoice (duty paying document) has to be cancelled - refund cannot be rejected.
VAT
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Classification of Ribbon Cartridge - Whether Ribbon Cartridge is not a part of computer printer, therefore, not a computer hardware? - The issue is yet to be decided.
Case Laws:
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GST
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2018 (11) TMI 607
Valuation of goods supplied - inclusion of amortised cost of the tool in assessable value - Held that:- The transaction value carried out at an arms length, constitutes the value of supply. Further, Section 15(2) of the CGST Act provides for the inclusion of several other related / relevant amounts in the value of taxable supply. There is no scope of any dispute in this situation about the fact that the cost of the tools is an essential element to be included in the cost of the component finally supplied by the applicant. This is also because without the tools the final component could not have been manufactured. Ruling:- The amortised cost of tools which are re-supplied back to the applicant free of cost shall be added to the value of the components while calculating the value of the components supplied as per the Section 15 of the CGST / SGST / IGST Act 2017.
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2018 (11) TMI 606
Maintainability of Advance Ruling application - scope of section Section 97 (2) (d) of CGST Act, 2017 - CENVAT credit of Excise duty , CVD and SAD paid on Capital Goods purchased prior to July 1st July 2017, credit not claimed earlier - VAT paid on Capital Goods purchased prior to July 1st 201 7 on which Input Tax Credit has not been claimed earlier - Held that:- This authority is of the opinion the questions sought by the applicant in their application do not fall under the ambit of Section 97(2)(d) of CGST Act, 2017. Ruling:- The subject application filed by the applicant firm i.e M/s. NSL Mining Resources India Private Limited is beyond the jurisdiction of this authority, as it is beyond the domain of Sub-section 2 of Section 97 of CGST Act, 2017 and APGST Act, 2017.
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2018 (11) TMI 605
Detention of goods with vehicle - incorrect mentioning of some digits of the correct Truck number on the E-way bill - Held that:- List for admission/final disposal on the expiry of the period as allowed.
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2018 (11) TMI 604
Refund of IGST on goods exported - Held that:- The refund applications would be disposed of within a period of 8 weeks from the date the petitioners carry out the necessary modifications in the GSTR-1 and GSTR-3B forms and communicating it to the respondents - petition disposed off.
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2018 (11) TMI 560
Application for withdrawal of petition - petitioner wants to withdraw this petition - Held that:- The writ petition is dismissed as withdrawn.
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Income Tax
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2018 (11) TMI 603
Reopening of assessment u/s 147 - proof of serving of notice - revision petition u/s 263 - Held that:- The materials on record show that the petitioner had one PAN number; furthermore, it is not in dispute that he was served with proceedings relating to reassessment notice. According to his admission (in the averments in the revision petition) notice of assessment and notice of demand for the subsequent assessment years were received by him. These established that he was functioning at the address to which the reassessment notices (and hearing notices) were addressed. In these circumstances, his claim that the process server’s file noting conclusively established that notice could not be served (due to his absence) and the defect alleged in the affixture (at the address) is insubstantial and unmerited. The revision petition admitted in clear terms that the reassessment order and subsequent demand notice, were received. In the circumstances, the argument that notice of reassessment and hearing notices were not received, rings hollow. Undoubtedly, reassessment proceedings can be initiated and completed after notice to the assessees and granting opportunity to them. However, the facts of this case reveal that not only were the notices received, even the reassessment order was received (the revision petition admits as much) and the assessee did not care to appeal against it; concededly, he filed the revision petition after the period of limitation. Given these facts, the Commissioner cannot be faulted for rejecting the revision petition on the ground that there was no jurisdictional error.
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2018 (11) TMI 602
Disallowance u/s 14A r.w.r. 8D - Held that:- It is accepted and admitted by the counsel for the Revenue that the assessee had not earned any dividend or exempt income in this year. Once this factual position is accepted, the issue raised is covered against the Revenue vide decision of this Court in the case of Commissioner of Income Tax-IV Vs. Holcim India Private Limited, (2014 (9) TMI 434 - DELHI HIGH COURT) and judgement in Cheminvest Limited Vs. Commissioner of Income Tax-VI, (2015 (9) TMI 238 - DELHI HIGH COURT). Depreciation on electrical fittings - rate of depreciation - Held that:- As examined the list and would observe that wall mounting fans, copper flexible cable, tube fitting etc. could possibly fall under the category of ‘electrical fittings’ whereas certain other items like 4KVA voltage Stabilizer, online UPS 1 KVA etc. may not fall under the category of ‘electrical fittings’. However, the disallowance made by the Assessing Officer was ₹ 11,89,000/-. The amount being paltry, we are not inclined to issue notice in the present appeal on the question of rate of depreciation. Disallowance of depreciation on canteen building - canteen contractor had submitted the final bill on 27th April, 2010, i.e. after the end of the financial year - Held that:- Commissioner of Income Tax (Appeals), had rightly observed and held that mere submission of the final bill by the canteen contractor would not show that the canteen had not been put to use and was not operationalized in the Assessment Year itself. After examining the bills of canteen contractor, which pertained to the earlier period, it has been held that the canteen had been operationalized before the Assessment Year had ended. The factual finding has been upheld by the Tribunal. There is no ground and reason to interfere with the said factual finding. - Decided against revenue
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2018 (11) TMI 601
Reopening of assessment - reopening relying on audit objection - Held that:- This court is of the opinion that Carlton (2009 (8) TMI 57 - DELHI HIGH COURT) concludes the issue in the present case ; the audit objection merely is an information. As reiterated in Kelvinator (2010 (1) TMI 11 - SUPREME COURT OF INDIA) by the Supreme court, change of information is impermissible. The Revenue was clearly barred by the provisions of section 147/148 of the Act. The impugned reassessment notice dated March 30, 2017, cannot be sustained. It is hereby quashed ; all consequential proceedings issued and conducted pursuant to the said reassessment notice are also hereby quashed.
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2018 (11) TMI 600
Provision of warranty - accounting policy - Held that:- Neither allowing the provision made for warrantees nor the actual expenses incurred by the company to be deducted from the profits of the company during the year is absolutely arbitrary and unscientific on the part of the assessing authority, to say the least. There was absolutely no basis for the assessing authority to make both the disallowances of provision for warranty as well as actual expenses at the same time in the hands of the assessee. In view of the comparison of actual expenses and provisions made for warranty, the details of which are given in the assessment order itself, we do not find any abnormal fluctuation or excess provision made by the assessee-company on this account. We are satisfied that the practice of making a provision for warranty in the present case has been found to be consistent, scientific and regular by the two appellate authorities below in consonance with the judgment of the hon'ble Supreme Court in the case of Rotork Controls India (P) Ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA). The hon'ble Supreme Court in the aforesaid case, discussed in detail how the accounting entries for product warranty are to be made by the assessee. Both the appellate authorities below were justified in returning the proper findings of facts on the relevant material before them and have rightly found that the provisions of warranty made by the assessee company was on the basis of the scientific and consistent method and therefore, the present appeal of the Revenue does not give rise to any substantial question of law and the same deserves to be dismissed and is accordingly dismissed.
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2018 (11) TMI 599
Rectification of mistake - MAT computation - whether the profits u/s. 115JB ought to be computed after deducting the deduction u/s. 54EC? - Held that:- Undisputed fact is that the Tribunal directed the Assessing Officer to compute the assessee's book profit in a particular manner. The Assessing Officer correctly understood such direction and gave effect to the Tribunal's order also. He now proposes to rectify his order giving effect to the Tribunal's judgement on the ground that there had been an apparent error. In our opinion therefore, there had been no error in the Assessing Officer's order dated 12.12.2017 implementing the Tribunal's direction. It may be that the Revenue has certain disputes with the proposition that the Tribunal adopted while giving such direction. Such issue is not before us and we would therefore not comment on the same. However, as long as an order of the Tribunal stands, the assessment order was required to be implemented. Further having implemented it, it was simply not open for him to exercise power of rectification which is meant for correcting any error apparent on record.
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2018 (11) TMI 598
TPA - addition of overhead expenses @8.5% of the turnover is at Arm's Length Price - assessee could not produce evidence for service rendered as overhead expenses by the Joint Venture partners - ITAT deleted the addition - Held that:- The impugned order of the Tribunal examined the agreement entertained into between the JV partners and the assessee. It found that the agreement provides for overhead office expenses of the respective JV partners being allocated to the assessee to the extent of 8.5% of its turnover. Also the TPO has not benched mark the overhead office expenses debited to determine that it was in excess of comparable transactions. The impugned order on facts independently came to the same conclusion as the CIT(A) that the TPO was not correct in stating that the respondent had not furnished the details in support of his claim for allocation of overhead office expenses to the extent of 8.5%. This was found to be incorrect as the respondent assessee has furnished the Certificate of Auditors of the JV partners indicating its overhead charges. The impugned order further records the fact that for the earlier Assessment Years 2004-2005 and 2005-06 on identical facts, the TPO did not challenge the claim of overhead expenses of the respondent's JV being debited with a cap of 8.5% of the turnover of the assessee. The issue urged by the Revenue is essentially one of finding of facts on which both the CIT(A) and the Tribunal have upheld the assessee's stand - no substantial question of law. Not taking inquiry in earlier years by Assessing Officer will not preclude Assessing Officer to investigate the matter in following years - Held that:- This question has become academic. The impugned order of the Tribunal upholds the order of CIT(A) that on facts for the subject assessment year, there was no justification for enhancement the ALP by disallowing allocation of overhead office expenses of the JV partners to respondent assessee with a cap of 8.5% of the turnover of the respondent assessee. The reliance upon the earlier assessment orders was only in support of the fact that in identical factual situation, the TPO did not vary the ALP in respect of the allocation of overhead office expenses to the expenditure of the respective JV partners allocated to the assessee with a cap of 8.5% of its turnover. Appeal admitted on substantial question of law at Sr. No.(i) - Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing the claim of the assessee following the AS7 of the ICAI and by not appreciating the fact that the same is not notified the provisions of Sec.145 of the I.T. Act, 1961?
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2018 (11) TMI 597
Charitable activities - Entitled to exemption u/s 11(1) - dominant object - Held that:- The Hon’ble Apex Court in the case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [2006 (9) TMI 115 - SUPREME COURT] had held that if the dominant object is charitable then the incidental object for attainment of the dominant / primary object would also be charitable in nature. It was further held by the Hon’ble Apex Court that there is a very clear distinction between the object of a trust to carry on a business activity and the carrying on an activity of profit for achieving its objects. The Hon’ble Apex Court in the case of Thanthi Trust [2001 (1) TMI 80 - SUPREME COURT] had also held that the assessee is entitled to the assessment u/s 11 of the income derived from an activity incidental to the achievement of the objects of the trust. For these reasons, we hold that the assessee’s activities of running the hospital and the nursing school is intricately connected and dependent on each other and it is one inseparable activity and both are entitled to exemption u/s 11(1). Disallowance of depreciation - Held that:- We find that the recent judgment of the Hon’ble Apex Court in the case of CIT v. Rajasthan And Gujarati Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT] had held in favour of the assessee by holding that the amendment brought about to section 11(6) is not retrospective in effect and is only prospective and applicable for and from 2015- 2016 onwards. Therefore going by the dictum laid down by the Hon’ble Apex Court in the case of CIT v. Rajasthan And Gujarati Charitable Foundation (supra), we hold that the assessee is entitled to depreciation on assets though the cost of the same was allowed as application.
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2018 (11) TMI 596
Addition u/s 68 - identity and capacity of the share applicant and genuineness of the transaction - Held that:- Under the facts and circumstances of the case there is no dispute to the identities of the share applicants who are companies having PAN and regularly filing their returns of income. All the notices issued to the share applicants were duly served upon and complied with. All the share applicants had sufficient funds in the form of capital and reserve and surplus to invest. The transaction have been made through banking channels and duly recorded in the books of account and reflected in the Audited Financial Statements. There is no instance of cash deposit in any account. Even the share applicant companies are regularly assessed to tax and also scrutinised. The case of the assessee is squarely covered by the decision of Jurisdictional High Court at Kolkata in the case of CIT v Data Ware Pvt Ltd. (2011 (9) TMI 175 - CALCUTTA HIGH COURT) Considering the facts and circumstances of the case the appellant have proved the identity and capacity of the share applicant and genuineness of the transaction. In view of above addition to be deleted - decided in favour of assessee
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2018 (11) TMI 595
Determination of long term capital gain - Denying the benefit claimed u/s 54F - investment made in one more residential house property - Held that:- As per the provision of Section 54F of the Act, the assessee is entitled to exemption for investment made in a second residential house property from out of the long term capital gains. Merely because the assessee has invested in more than one house property, he cannot be denied rightful exemption on an investment made on the second house property. The assessee claims that the amount of ₹ 40 Lakhs/- investment by him for the purchase of the residential plot by way of advances to M/s Amit Enterprises should be considered for exemption u/s 54F of the Act, as investment in a second house property. We find force in these arguments. Hence we direct the Assessing Officer accordingly. Deeming provisions of Section 50C application to Section 54F - investment of net sale consideration for construction of new residential house property - Held that:- We find that the Visakhapatnam Bench of the Tribunal in the case of DCIT vs. Dr. Chalasani Mallikarjuna Rao [2016 (10) TMI 1032 - ITAT VISAKHAPATNAM] as held the assessee has invested net sale consideration for construction of new residential house property. Though, the full value of consideration as defined u/s. 50C of the Act is more than the net sale consideration as referred in section 54F(1) of the Act, once the net sale consideration has been fully applied under the provisions of section 54 of the Act, then the deeming consideration as defined u/s. 50C cannot be brought into the provisions of section 54F of the Act. Therefore, we are of the view that the assessee is eligible for exemption u/s. 54 of the Act, therefore, the whole of the capital gain is not chargeable to tax even if the capital gain is computed by taking the value as per the provision of section 50C of the Act. Therefore, we direct the A.O. to allow the exemption u/s. 54 - thus we direct the Assessing Officer to re-compute the capital gains
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2018 (11) TMI 594
Addition u/s 68 - denial of natural justice - Held that:- No summons u/s 131 of the Income Tax Act, 1961 were received by the assessee. As argued that the assessing officer has not made any independent enquiry at his end, to disprove the claim of the assessee companies. CIT(A) has passed a mechanical order without considering the legal position and the facts of the case as brought out by the AO. AO has not given adequate opportunity and has passed an order without enquiring. The Kolkata Bench of the ITAT has passed similar order in many cases on the same issue of additions made u/s 68 of the share capital, has set aside the assessment to the file of the AO for fresh adjudication in the lines stated above after giving the assessee adequate opportunity of being heard. Keeping in view the totality of the facts and circumstances of the case and also the orders of the Co-ordinate Bench of the Tribunal in similar matters, we set aside this issue to the file of the AO for fresh adjudication and in accordance with law, after giving the assessee adequate opportunity of being heard. Accordingly Ground No. 3 of the assessee is allowed for statistical purposes. Disallowance u/s 14A r.w.r. 8D - Held that:- We find that it is not in dispute that the assessee has no income from dividends which is exempt u/s 10 of the Act, during the Assessment Year under consideration. Under these circumstances, there cannot be any disallowance u/s 14A of the Act, as held by the Hon’ble Jurisdictional High Court in the case of CIT vs. Ashika Global Securities Ltd. [2018 (7) TMI 1425 - CALCUTTA HIGH COURT]. Hence, we delete the disallowance in question and allow this ground of appeal of the assessee.
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2018 (11) TMI 593
Addition u/s 68 - assessee has provided the source of immediate credit by entering into the bank accounts of the loan credits - Held that:- As gone through the facts in entirety that these loan credits have advanced the money after taking loan or whatever receipts from other parties by account payee cheque. The assessee has explained the immediate source of the entry and source of source cannot be asked for. Hence, delete the addition of unsecured loans and allow the appeal of the assessee.
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2018 (11) TMI 592
MAT computation - adjustment of brought forward loss - whether the book profit figure adopted by the Ld.A.O for the purpose of application of provision of Section 115JB of the Act is correct? - Held that:- Book profit as mentioned in the Provision 115JB refers to the profit before taxes which is arrived at S.No. IX of the above referred statement of profit and loss account. The format of the Profit & Loss Account in the case of the assessee as placed on record before us deviates from the standardized format of statement of profit and loss as per Schedule-VI of 1956 at some places. In normal parlance such sundry balance written off which the assessee has itself accepted to be an income forming part of the head “Income” whereas in audited balance sheet the adjustment has been made from the amount available for appropriation. In such situation there needs proper verification at the end of the Assessing Officer who shall verify/ examine the audited balance sheet of the assessee vis-à-vis Part-II of Form of statement of Profit & Loss Schedule-VI of the Companies Act, 1956. He should also procure certificate from the auditor of the company that whether the adjustment of sundry balance written off is as per Schedule-VI of the Companies Act, 1956 and the book profit in the computation of income is as per Schedule-VI of the Companies Act, 1956. A.O should also get the audited balance sheet verified from the office of the Registrar of Companies under whose jurisdiction assessee company falls so as to get it confirmed that the audited balance sheet produced before the Tribunal is as per Schedule-VI of the Companies Act, 1956. In case a positive reply is received in favour of the assessee, A.O should decide accordingly as per law. Needless to mention that reasonable opportunity of being heard should be provided to the assessee. - Decided in favour of assessee for statistical purposes. Carry forward losses & unabsorbed depreciation - Held that:- In the return for the year under consideration the appellant company had set off brought forward losses and depreciation to the tune of ₹ 74,62,470/-. The set off of unabsorbed depreciation is regulated by provision of Section 32(2) of the Act subject to the provision of sub-section 72(2) of Section 73(3). It is also evident from the perusal of assessment record that AO has not given any specific finding for denying the set off of unabsorbed loss and unabsorbed depreciation. We, therefore set aside the issues raised by revenue to the file of A.O for afresh adjudication in the light of provision of law as applicable in the instant issue i.e. Section 32(2) read with respect to 72(2).
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2018 (11) TMI 591
TDS u/s 195 - payment for use of 'transponder space' as Royalty u/s 9(1)(vi) - India US DTAA - income accrued in India - P.E. in India - Held that:- Since facts are identical and it is undisputed that the payment is not taxable in the hands of the recipient. Respectfully following the precedent of the Hon’ble Apex Court in the case of G. E. Technology Centre Pvt. Ltd. (2010 (9) TMI 7 - SUPREME COURT OF INDIA) we are of the considered opinion that when this income is not chargeable to tax in the hands of the recipient, no liability is there on the assessee to deduct tax at source. Accordingly, in the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and decide the issue in favour of the assessee.
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2018 (11) TMI 590
Unexplained cash credit - establishment of identity of creditors - Held that:- It is also evident from the perusal of the record that all the four companies are regularly assessed to tax and their assessment u/s 143(3) have been framed for AY 2006-07 and copies of the same are placed. They carry regular business activities and have sufficient funds for giving on credit towards interest. Identity of four companies are well established. Genuineness is duly proved by the transactions which are made through account payee cheque. All necessary details including bank statement/ financial statements, confirmation of account, PAN detail have been filed with these four companies and are placed on record at all proceedings are sufficient to prove the creditworthiness. The alleged unsecured loan of ₹ 1,02,00,000/- and ₹ 1,25,00,000/- were accepted during the year and were repaid also during the year which supports the contention of the assessee that the alleged loans were taken for business needs and were repaid back when the funds were available. Respectfully following the decision of ACIT V/s Girish Kumar Sharda (2014 (10) TMI 352 - ITAT INDORE) as well as detailed finding of fact by CIT(A) which is unconverted by the Ld. Departmental Representative as no material evidence has been placed to prove anything contrary. Therefore we find no infirmity in the finding of CIT(A) deleting the addition of ₹ 1,02,00,000/- and ₹ 1,25,00,000/- for alleged unsecured loans and also deletion of disallowance of interest on such loans at ₹ 6,14,855/- and ₹ 5,55,815/- and also deleting the addition for undisclosed expenditure of ₹ 5,25,000/- and ₹ 6,25,000/-. We accordingly dismiss Revenue’s Ground No.1, 2 &3 for Assessment Year 2006-07 and 2007-08 respectively. Nature of income - Rental income earned - house property or busniss income - Held that:- The alleged receipts of ₹ 26,87,635/- are purely rental income from renting out unsold property and manner of earning such income is purely taxable under the head income from house property and by no canon can be treated as business income and therefore the assessee is eligible for deduction u/s 24 of the Act @30% of the rental income which in this case is ₹ 7,92,350/-. The plea of the assessee further finds support that in the subsequent years this claim of the assessee of showing rental income of house property and claim of deduction u/s 24 has been consistently allowed by the revenue authorities. We therefore set aside the finding of CIT(A) for Assessment Year 2006-07 and allow the sole ground No.1 raised by the assessee.
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2018 (11) TMI 589
Determination of the short term capital gains - AO adopting the cost of the previous owners being partnership firm - FMV determination - conversion of the said land into stock-in-trade - AO did not accept the contention of the assessee company and had taken the cost of acquisition of the said land being stock-in-trade at the cost as recorded in the books of the firm as on the date of revaluation, and the difference between cost as per the books of the firm being the previous owners, and the sale price received by the assessee, was treated as short term capital gains - CIT-A deleted the addition - Held that:- computation for assessment year 2010-11 wherein the capital gains has been determined at Nil, has not been dislodged by the Revenue and that position continues to remain. As long as this position continues, the cost of acquisition in the hands of the assessee company for the purpose of computing the profits or gains on the sale of the said converted stock-in-trade being land during the years only same are sold cannot be disturbed. Obviously what has been sold by the assessee is stock-in-trade and its business is the sale of the land represented as stock-in-trade. Obviously, the business income would be the difference between the sale consideration received by the assessee on the transfer of the said stock-in-trade being the land and the cost as disclosed by the assessee in respect of the said land for assessment year 2010-11 being the year in which the conversion was done and the capital gains disclosed. If at all the A.O wanted to adopt the cost of the asset as recorded in the books of the previous owner, he could have done so when computing the capital gains for the assessment year 2010-11 when the asset was converted from investment to stock-in-trade. The A.O having missed the bus for assessment year 2010-11 cannot make the said adjustment during the impugned assessment years. Perusal of the order of the CIT(Appeals) clearly shows that the Ld.CIT(A) has taken this issue into consideration when deciding the appeal. - Decided against revenue
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2018 (11) TMI 588
Addition on the basis of entries found in the seized documents from the residence of the assessee during the course of search - Held that:- We find that the documents seized from the possession of the assessee contains calculations of interest mentioning therein the amount, rate of interest, period and amount of interest. The authorities below had tried to decode the contents of the document by coming to the conclusion that the last three digits were removed from the amount and various amounts were mentioned by deleting the last three zeros. For example, ₹ 1,00,000/- has been mentioned as ₹ 100/- and ₹ 5,00,000/- has been mentioned as ₹ 500/-. We further observe that the said document does not state whether the amounts stated therein are the loans given or accepted by the assessee. We also find that the assessee has denied or disowned the said document right from the inception when the search was conducted on the assessee and also tried to explain his stand by filing an affidavit the copy Indisputably , the document is seized from the possession of the assessee and onus is on the assessee to explain the contents therein but we find that even before the CIT(A) the assessee has specifically stated the presumption of the AO as wrong the monies mentioned therein represented loan given by the assessee whereas the said document is silent as to the money lent or borrowed by the assessee. Moreover the document is not in the handwriting of the assessee or his family or singed by the assessee. Considering all we observe that it is a guess or presumption of the AO that the money might have been lent by the assessee and assessee is deriving interest out of money lent. Moreover, during the course of search nothing incriminating material or unaccounted wealth was found to corroborate the contents of the paper. Under these circumstances, we are of the considered view that to make an addition on the basis of document which does not state the amount lent by the assessee or borrowed by the assessee is not justified and can not be sustained. - Decided in favour of assessee.
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2018 (11) TMI 587
Gain on sale of shares - character of income - capital gain or busniss income - Held that:- When seen holistically the action of the assessee appears to resonate with the consistent position taken in past and in subsequent assessment years. While some circumstances do indicate the regularity in transactions and trapping of business, other overwhelming circumstances negate the same. Thus, benefit of doubt deserves to go to assessee. Therefore, the action of the Revenue to treat the gains arising on sale of shares (Rs.40.67 Lakhs) as business income cannot be approved as it denies the set off of loss of short term capital loss (Rs.39.27 Lakhs) arose from the similarity of transactions in the preceding assessment year. Thus, we are disposed to hold that the action of the CIT(A) in confirming the order of the AO is misplaced. We accordingly set aside the order of the CIT(A) and direct the AO to treat the income arising from delivery based transactions in shares under the heard ‘capital gains’ as claimed by the assessee.
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2018 (11) TMI 586
Disallowance of interest paid on unsecured loan - Held that:- As during the course of appellate proceedings before the CIT(A), he has again stated that the assessee could not substantiate his argument that interest was paid in respect of loan utilized for making investment in the partnership firm and no fund flow statement was filed which shows interest bearing fund, if any were utilized for making investment in the partnership firm. In absence of any nexus being established by the assessee in support of his contention that the borrowed funds have been utilized for making investment in the partnership fund, we accordingly do not see any infirmity in the order of the lower authorities. Further, we have gone through the decisions relied upon by the AR and find that the same does not support the case of the assessee as the same were rendered in their peculiar facts and circumstances of the case. - decided against assessee. Disallowance of commission paid to the assessee’s son - Held that:- In absence of demonstrating through verifiable evidence that Shri Ashish Mantri has rendered the service in connection with earning of the commission income by the assessee and in absence of the necessary nexus between the earning of income and rendering of services, no infirmity in disallowance of the commission payment to Mr Ashish Mantri and confirm the findings of the authorities below which remain uncontroverted before us. - decided against assessee.
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2018 (11) TMI 585
Maintainability of appeal - Monetary limits - tax effect - Revision of monetary limits for filing of appeals by the Department before Income Tax Appellate Tribunal - Held that:- From Clause 12 & 13 of the above said circular it is clear that these instructions are applicable to the pending appeals also and as per clause 13, there is clear cut instruction to the department to withdraw or not to press the appeals filed before the ITAT wherein tax effect is less than ₹ 20,00,000/-. These instructions are operative retrospectively to the pending appeals. Keeping in view the CBDT Circular No. 3 of 2018 dated 11.07.2018, we are of the view that the Revenue should not have filed the instant appeal before the Tribunal.
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2018 (11) TMI 584
Grant of registration u/s. 12AA denied - proof of charitable activities - Held that:- It is clear that the reply dated 06.06.2017 filed by the assessee before the CIT(E) that the assessee is an Authority incorporated under the Karnataka Urban Development Authorities Act, 1987 and was neither a trust or society. Further in its letter dated 20.6.2017, the assessee has also cited decisions rendered by judicial forums as to how the assessee who are carrying on activities similar to that of the assessee in the present case were held to be institutions entitled to registration u/s. 12AA of the Act. None of these submissions were considered by the CIT(Exemptions). He has proceeded on the basis that the assessee is a trust constituted under a Trust Deed. Therefore the argument that there was non-application of mind by the CIT(E) to the contentions of the assessee is correct. The impugned order should be set aside and the issue with regard to grant of registration u/s. 12AA should be remanded to the CIT(Exemptions) for consideration de novo in the light of the facts as brought out by the assessee in its replies dated 06.06.2017 and 20.6.2017. The assessee will also be at liberty to file further evidence to substantiate its case for grant of registration u/s. 12AA of the Act. The CIT(E) is directed to decide the application for grant of registration u/s. 12AA of the Act of the assessee afresh, after affording assessee opportunity of being heard. - Decided in favour of assessee.
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2018 (11) TMI 583
Addition u/s 68 - genuineness gift transaction - Held that:- The assessee has claimed the opening capital of ₹ 6,31,450 as a gift from his father. In absence of gift deed or confirmation, the AO found it reasonable to restrict to restrict the opening capital to ₹ 2,00,000 and added an amount of ₹ 4,31,450. Firstly, we find it difficult to understand if the AO has doubted the gift transaction, what made him to restrict the addition to ₹ 4.31 lacs. Either the transaction has to be accepted or rejected in totality. To our mind, this arbitrariness in the approach of the AO is a good ground for us to delete the subject addition. Further, during the appellate proceedings, the assessee submitted the affidavit of the father of having given the gift to the assessee and also other supporting documentation in support of creditworthiness which we have noted above. In peculiar facts of the case, where the assessee has started a new business, it would be reasonable to believe the contention of the assessee of having received the initial finance from his father by way of a gift. Therefore, the genuineness of the transaction and also the creditworthiness of the father has been established which has been supported by land records/earnings. The addition so made by the AO is hereby deleted and the ground is allowed.
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2018 (11) TMI 561
Disallowance u/s 14-A - AO had proceeded to calculate the disallowance based upon the investments made by the assessee - Held that:- As the Revenue accepts that the assessee had not earned any exempt income in the Assessment Year in question. In view of the aforesaid accepted factual position, no substantial question of law arises
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Customs
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2018 (11) TMI 582
Principles of natural justice - the applicants/original petitioners refused to answer or to appear pursuant to the summons so issued - Held that:- The issue is writ-large before the authority and the applicants/original petitioners are duty bound to cooperate with the authorities. S.O. to 02.11.2018. Ad interim relief granted earlier to continue till further orders.
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2018 (11) TMI 581
Condonation of delay in filing appeal - appellant had sufficient cause for not filing the appeal within the time - Held that:- This Court in Parsi Dairy Farm Vs. Assistant Commissioner of Central Excise, [2015 (8) TMI 787 - BOMBAY HIGH COURT] had an occasion to consider an identical issue and it upheld the dismissal of appeal on the ground that the Central Excise Law and the Customs Law are the special laws and, therefore Section 5 of the Limitation Act, 1963 providing for condoning the delay is not applicable - appeal dismissed - decided against appellant.
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2018 (11) TMI 580
Penalty u/s 112 and 114AA of CA - failure to carry out due diligence in establishing bona fide of importer and failure to produce the importer for cross examination by Customs Authorities - Held that:- The Customs Brokers are temporarily engaged by the companies or firms for assisting them in processing of documents and assessments of goods for clearance after import or for clearance for the purpose of export. The said regulations and other provisions of the Customs Act that the obligations and responsibility of the Customs Brokers end once the goods are examined by Customs Authorities and orders for out of charge are issued and the goods are cleared from the control of Customs on importation. It is not free from doubt that when the goods were cleared from customs control they were not Velvet Fabric but they were Knitted Polyester Fabric as declared by the importer. Penalty set aside - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 579
Valuation of imported goods - GI and insulated wire cuttings - enhancement of value on the basis that there were imports of similar items by other importers - Rule 6 of Valuation Rules, 1988 - Held that:- In the Customs Valuation Rules, 1998, the concept of similar goods applies only to the goods which are comparable in terms of their features, volume, quality and other properties - Since the goods were defective and, admittedly, a mixed lot of different sizes and length, there is no infirmity in the order of the Commissioner (A) - appeal dismissed - decided against Revenue.
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2018 (11) TMI 578
Penalty on CHA - Under valuation - Diamond powder - misdeclaration - Held that:- The appellant as a CHA was engaged by the importer for clearance of the Diamond powder and he has admitted that they were aware that the carats were wrongly shown in the Documents. When it is so then it is a case of negligence on the part of the appellant - penalty upheld but the quantum is reduced - appeal allowed in part.
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2018 (11) TMI 577
Suspension of CHA License - validity of proceedings initiated against CHA Firm - invocation of Regulations 11(d), 17(9) and 18(c) - Held that:- All these regulations put onus on the Customs Broker to do or refrain from doing certain activities - In the instant case, the Bills of Entry was not filed in the name of the appellant company at the Custom Broker’s office, thus the said regulations cannot be invoked against the appellant company. There is no merit in the impugned order suspending the license of the appellant - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2018 (11) TMI 609
Corporate Insolvency Resolution Process - Respondent corporate debtor failed to clear the outstanding dues - Held that:- The applicant ‘financial creditor’ has placed on record voluminous and overwhelming evidence in support of the claim as well as to prove the default. It is pertinent to mention here that the Code requires the adjudicating authority to only ascertain and record satisfaction in a summary adjudication as to the occurrence of default before admitting the application. The material on record clearly goes to show that respondent had availed the loan facilities and has committed default in repayment of the outstanding loan amount. As a sequel to the aforesaid discussion it is seen that the applicant bank clearly comes within the definition of Financial Creditor. The material placed on record further confirms that applicant financial creditor had disbursed various loan facilities to the respondent corporate debtor and the respondent has availed the loan and committed default in repayment of the outstanding financial debt. On a bare perusal of Form -I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt. Thus in terms of Section 7(5)(a) of the Code, the present application is admitted.
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2018 (11) TMI 608
Corporate Insolvency Resolution Process - Initiation of corporate insolvency resolution process by financial creditor - form and manner of the application - Held that:- A conjoint reading of the aforesaid provision would show that form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of the Code. We are satisfied that a default amounting to lacs of rupees has occurred within the meaning of Section 4 of the Code and the application under sub-section (2) of Section 7 is complete; and no disciplinary proceedings are pending against the proposed Interim Resolution Professional. Thus, the application warrant admission as it is complete in all respects. We direct that Interim Insolvency Resolution Professional to make public announcement immediately with regard to admission of this application under Section 7 of the Code.
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Service Tax
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2018 (11) TMI 575
Liability of Service Tax - SIM Cards given free of cost to the distributors without any consideration - telecommunication services - Rule 5(1) of Determination of Value Rules - Held that:- Issue notice on the application for stay as well as in the Civil Appeal.
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2018 (11) TMI 574
Waiver of mandatory pre-deposit - maintainability of application - Held that:- The relevant provision for the purpose Section 73 (5) of Central Excise Act, 1944 has been amended w.e.f. 06/08/2014. Prior to the said amendment, the provision was giving a discretion to this Tribunal to consider the financial hardship and accordingly to determine the pre-deposit amount. However, post-amendment the said discretion has been curtailed and the pre-deposit of 7.5% of the demand confirmed has been made mandatory. Hon'ble High Court of Allahabad in the case of Ganesh Yadav vs. Union of India [2015 (7) TMI 304 - ALLAHABAD HIGH COURT] has held that the provisions of mandatory pre-deposit, as is stand post amendment Section 35F of the Finance Act, are not ultravires or unconstitutional. There is no direction for the Tribunal to order waiver of pre-deposit - application dismissed as not maintainable.
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2018 (11) TMI 573
Penalty u/s 78 - Presence of malafide intent or not - reverse charge mechanism - Held that:- Since the service tax amount was not deposited by the appellant within the stipulated time and such amount was deposited as a consequence of the objection raised by the audit wing, it is manifest that provisions of Section 78 of the Act, are attracted for imposition of penalty on the appellant. However, in case, when the assessee maintains specified records, the proviso appended to Section 78 of the Act, mandates that imposition of penalties should be restricted to 50% of the determined amount of service tax - the quantum of penalty is thus reduced to 50%. Appeal allowed in part.
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2018 (11) TMI 572
Erection Commissioning Installation Services - sub-contract - Extended period of limitation - only reason advanced in the impugned order for invocation of the extended period is that the appellant was not paying any service tax and did not file any returns - Held that:- Such reasoning adopted by the ld. Authorities would not advance their case in as much as in each and every case of non payment of service tax and non filing of returns, the extended period would get invoked, thus making the provisions of Section 73 of the Finance Act as infructuous. The Hon’ble Supreme Court, in the case of Continental Foundation Joint Venture vs. Commissioner of Central Excise, Chandigarh [2007 (8) TMI 11 - SUPREME COURT OF INDIA] Supreme Court has held that where the matters stand referred to the Larger Bench, doubting the correctness of the earlier judgments, there was scope of entertaining a doubt about the views to be taken which rules out application of Section 11(A) of the Central Excise Act and extended period of limitation is not available to the Revenue. Appeal is allowed on the ground of time bar.
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2018 (11) TMI 571
Classification of services - Cargo handling services/mining services - services of hiring of pay loader and tripper for loading and transport of the coal from different sidings including mechanically unloading and finished goods in mine areas - Held that:- Identical issue decided in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR VERSUS SINGH TRANSPORTERS [2017 (7) TMI 494 - SUPREME COURT], where it was held that A mine is not to be understood necessarily in respect of pit-heads of the mining area or the excavation or drilling underground, as may be, but also to the peripheral area on the surface. The said definition has no apparent nexus with the activity undertaken and the service rendered - Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (11) TMI 570
Stay of proceedings - denial of refund claim - CENVAT Credit - Held that:- Applications (IA No.6-10) for stay of proceedings in the High Court are dismissed.
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2018 (11) TMI 569
Maintainability of appeal - failure to make pre-deposit - Held that:- In the circumstances, in view of the subsequent amendment to Section 35F of the Act of 1944 requiring a pre-deposit of 7½% of the amount of duty claimed, it would be appropriate to direct the petitioners to deposit 10% of the amount claimed against it, with the appropriate authorities within four weeks from date - application disposed off.
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2018 (11) TMI 568
Principles of Natural Justice - petitioner’s request for cross-examination of the witnesses denied - evasion of duty - Held that:- The authority has committed a serious error in not granting cross-examination of witnesses. At an interim stage, when the adjudication is still going on, we would be loth to interfere. However, when fundamental flaw of breach of basic principles of natural justice is cited, we are left with no choice but to examine the issue further. The grounds for refusal of cross-examination of witnesses mainly were that the same is not a matter of right, that the statements were not retracted, that they were voluntarily made and are supported by documentary evidences and were also allowed to be perused by the partner of the firm. The authorities have committed a serious error in not allowing the petitioner’s request for cross-examination of the witnesses - impugned order set aside - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 567
Supply of goods for Nabinagar Thermal Power Project - Sl. No. 336 of N/N. 12/2012-C.E., dated 17-3-2012 - exemption denied on the ground that the supplies made to mega power projects are identified and listed under Sl. No. 338 of the very same notification - Held that:- The appellant produced due certification from project authorities and there is no dispute regarding supply of goods to the project as per ICB. In such situation, the claim of the appellant for exemption under Sl. No. 336 cannot be declined. It is not for the Revenue to insist that the appellant should avail another exemption though applicable to the appellant. The same is at the choice of the appellant. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 566
Refund of duty paid by mistake - rejection on the ground that the appellant having been not able to produce satisfactory document to show that the amount has not been collected from their purchase - Held that:- Both the lower authorities have not appreciated this evidence, which is indicative of the fact that there was no recovery of the said amount from the purchasers. The only finding recorded by the lower authorities is that the appellant had not cancelled invoice as per the provisions. There is no specific provision mandate as to how an invoice (duty paying document) has to be cancelled - refund cannot be rejected - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 565
Delay in filing Rectification of mistake application - condonation of delay in filing appeal - Held that:- The relevant Final Order was issued by the Tribunal on 29-3-2017. The six months period allowed under Section 35C(2) of the Act requires the ROM, if any, to be filed on or before 28-9-2017. Since the RoM application filed by the Revenue has been received on 27-11-2017, it is beyond the period of six months. In the absence of any provision in Section 35C(2) to condone any delay in filing the RoM application beyond six month, delay canoot be condoned - ROM application dismissed.
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2018 (11) TMI 564
Method of valuation - supply of goods to the J & K Police authorities - Section 4A of the Central Excise Act, 1944 - Held that:- The assessee-Respondents have supplied the shoes to J & K Police authorities in terms of bulk order. As the institutional supplies are not covered by MRP valuation under Section 4A, valuation cannot be done u/s 4A - appeal dismissed - decided against Revenue.
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2018 (11) TMI 563
Area Based exemption - substantial expansion by 25% for the purpose of availing the exemption - Held that:- A certificate was issued by the DIC with respect to installation of plant & machinery and increase in new employment of more than 25% which resulted in increase in the production - benefit remains allowed - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (11) TMI 562
Classification of Ribbon Cartridge - Whether Ribbon Cartridge is not a part of computer printer, therefore, not a computer hardware as such not amenable to tax @ 4% instead it was taxable @ 10% as an unclassified item as it was an accessory of computer printer and not its part? Held that:- This Court is of the view that the Tribunal has not considered the matter in the correct perspective and approach, thereby, rendering its judgment erroneous and liable to be interfered with. The matter requires reconsideration at the level of the Tribunal for the reasons, firstly, it is to be ascertained as to whether the Dot Matrix printer could be used without the ribbon cartridge as has been opined by the Assessing Authority without referring to any material before it - appeal allowed by way of remand.
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Indian Laws
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2018 (11) TMI 576
Waiver of pre-deposit of debts - Recovery of Debts - Section 21 of the Banks and Financial Institutions Act, 1993 - Nature and effect of amendment to Section 21 of the Act of 1993 as brought about by the Amendment Act of the year 2016 - Held that:- Ordinarily, the amendment of substantive law is presumed to be prospective in operation and the amendment of procedural law is presumed to be retrospective in operation - The pre-amendment provisions of Section 21 of the Act 1993 required the appellant to deposit 75% of the decreetal sum which the DRAT had the discretion to waive or reduce, depending upon the facts and circumstances of the individual case. The said Section came to be amended by substitution of certain expressions by Act 44 of 2016 w.e.f. 01.09.2016. By such amendment, the quantum of the amount of pre-deposit has been reduced to 50% in place of 75%; and the power of DRAT to waive has been restricted to the extent of 25%. The 2016 Amendment to the provisions of Section 21 of the Act of 1993, in substance, relates not to the right of appeal as such, but to the condition subject to which the said right becomes exercisable; ordinarily such conditions fall within the domain of procedure especially when the alteration of said conditions is not substantial, inasmuch as even after amendment, discretion is left with the DRAT to reduce the amount of pre-deposit, although not below 25% of the decreetal amount. Therefore, the law by which such conditions are varied cannot be construed to be substantive law but shall remain within the realm of procedural law - the contention of the petitioner that the amendment is prospective in effect, is not acceptable. Even if the Amendment Act 2016 that takes away the discretion of the DRAT to waive the condition of pre-deposit is assumed to be that of substantive law, the Amendment being by way of substitution, has to be construed as being of retrospective effect. Substitution of a provision of law or the words in a provision of law results in replacement by the new provision when new words are substituted in place of existing ones; therefore, the amended provision should be read as if it existed from the inception of the enactment. Also, even after amendment, the substance of the proviso to Section 21 is retained and what is trimmed is the condition subject to which the right of appeal is to be exercised. The trimming of condition, in essence, relates to the law of procedure, which is normally retrospective in operation. Therefore, the contention of the petitioner that the amendment is prospective in effect, is not well founded. Petition dismissed - decided against petitioner.
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