Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 18, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Articles
News
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Shri Ram Vilas Paswan grants permission to display revised MRP due to reduction of rates of GST up to 31st December, 2017
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Industry pitches for bringing natural gas under GST
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The Issue Price for the next subscription period i.e. November 20-22, 2017 for the Series III of the Sovereign Gold Bond Scheme 2017-18 would be ₹ 2,964 per gram with Settlement on November 27, 2017; A Discount of ₹ 50 per gram from the issue price would be allowed to those investors who apply online and the payment is made through Digital Mode
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Draft notification under section 115JG (1) of the Income-tax Act, 1961 in respect of conversion of Indian branch of foreign bank into Indian subsidiary company
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Monetary Transmission in India: Why is it important and why hasn’t it worked well?
(Dr. Viral V Acharya, Deputy Governor - November 16, 2017 - Inaugural Aveek Guha Memorial Lecture, Homi Bhabha Auditorium, Tata Institute of Fundamental Research (TIFR))
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Proposed notification under section 115JG (1) of the Income-tax Act, 1961 in respect of conversion of Indian branch of foreign bank into Indian subsidiary company – comments of stakeholders
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RBI Reference Rate for US $
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Moody’s upgrade Sovereign Credit Rating of India to Baa2 from Baa3
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Minister of Commerce and Industry in Russia to participate in Shanghai Cooperation Organization meeting and bilateral discussions with Russian leadership and business leaders
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Anti-Profiteering Authority - Power to terminate the Chairman and Technical Member of the authority - Provisions of Rule 124 of GST Rules, 2017 amended.
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Appointment of Appellate Authority - Additional Commissioner (Appeals) and Commissioner (Appeals) - assignment of jurisdiction in hierarchy - GST - New Rule 109A
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Form and manner of application to the Authority for Advance Ruling - Manual filing and processing - Goods and Services Tax - New Rule 107A
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Application for refund of tax, interest, penalty, fees or any other amount - Manual filing and processing - Goods and Services Tax - New Rule 97A
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Issue of consolidated tax invoice in case of banking company, NBFC etc. - For the words “supplier shall issue”, the words “supplier may issue” substituted
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Reversal of ITC (GST) - Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases - Supply of services having place of supply in Nepal or Bhutan shall not be considered as Exempted supplies - See amended Rule 43
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Reversal of ITC (GST) - Manner of determination of input tax credit in respect of inputs or input services and reversal thereof - Supply of services having place of supply in Nepal or Bhutan shall not be considered as Exempted supplies - Rule 42 r.w.explanation to Rule 43
Income Tax
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TDS u/s 194C OR 194J - TDS liability carriage fees, editing charges and dubbing charges - the activities covered by Section 194C are more specific and the activities covered by Section 194J are more general in term - the activities covered by Section 194C, Section 194J cannot be applied being more general out of the two. - HC
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Monetary limit for filing an appeal - power of CBDT u/s 119 - the direction issued by the CBDT is binding on all subordinate officers and Section 268A(4) which has been amended with retrospective effect is applicable with all force in pending matters. - HC
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Reopening of assessment - obligation on the part of the assessee does not extend beyond fully and truly disclosing all primary facts - the reopening proceedings are clearly discriminatory. - HC
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Penalty u/s 271C - non deduction of tds u/s 194J / 194C by assessee charitable organization on time - the penalty u/s 271C of the Act cannot be levied for the delayed deduction of TDS amount. - AT
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Additional depreciation - business of manufacture of cold drinks - the assessee is legally entitled to avail the benefit of additional depreciation under Section 32(1)(iia) - The “visicooler” is a “plant & machinery” - AT
Service Tax
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Renting of immovable property Service - sale of space or time for advertisement by municipalities / corporations - demand of service tax with interest confirmed but penalties set aside - AT
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CENVAT credit - services provided to Special Economic Zone - the CENVAT credit of service tax paid on trading activity carried out by the appellant rightly denied. - AT
VAT
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KSS 2017 - The said Scheme is a self contained Code in itself and envisages first the complete payment of tax assessed and then only 10% of assessed interest and penalty and therefore, adjustment of amount lying deposited or paid after the assessment order should also follow the same sequence and the order of preference - HC
Case Laws:
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Income Tax
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2017 (11) TMI 922
Validity of reopening of assessment - addition on account of long term capital gains taxable in the hands of the assessee - JDA - transfer within the meaning of sub sections (ii) and (vi) of Section 2(47) - Held that:- The special leave petition is dismissed. HC order hereby confirmed [2017 (5) TMI 260 - PUNJAB AND HARYANA HIGH COURT] HC has held that the possession delivered, if at all, was as a licencee for the development of the property and not in the capacity of a transferee. In view of cancellation of JDA no further amount has been received and no action thereon has been taken. It was urged that as and when any amount is received, capital gains tax shall be discharged thereon in accordance with law. In view of the aforesaid stand, while disposing of the appeals, we observe that the assessee appellants shall remain bound by their said stand. The issue of exigibility to capital gains tax having been decided in favour of the assessee, the question of exemption under Section 54F of the Act would not survive any longer and has been rendered academic. The Tribunal and the authorities below were not right in holding the assessee-appellant to be liable to capital gains tax in respect of remaining land measuring for which no consideration had been received and which stood cancelled and incapable. - Decided in favour of assessee.
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2017 (11) TMI 921
Reopening of assessment - obligation on the part of the assessee does not extend beyond fully and truly disclosing all primary facts - Held that:- On a mere reading on the reasons for reopening clearly show that there is no allegation against the petitioner that there has been omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that year. The so called reason to believe that income chargeable to tax has escaped assessment is on the ground that the Assessing Officer at the time of scrutiny assessment did not examine as to whether the entire agricultural income was completely exempted or not. This can hardly be a reason to believe that income chargeable to tax has escaped assessment as it is a clear case of change of opinion by the respondent. As pointed out in the case of Calcutta Discount Company Limited, the obligation on the part of the assessee does not extend beyond fully and truly disclosing all primary facts. It is for the Assessing Officer to take an inference on facts and law based on such disclosure. If according to the respondent, his predecessor did not come to a proper inference on the facts disclosed, it is no ground to reopen the assessment, as if permitted and it would amount to a clear case of change of opinion. In the light of the above discussion, the first issue framed for consideration is answered in favour of the petitioner and against the revenue. On 29.12.2016, the petitioner through its authorized representative appeared before the respondent and submitted a written request to keep the notice under Section 143(3) of the Act in abeyance till a speaking order is passed on the petitioner's further representation dated 29.09.2016. However, on 30.12.2016 without any opportunity to the petitioner, the impugned assessment order has been passed. Thus the facts clearly demonstrate that the respondent has not followed the directives in the case of GKN Drive Shafts (India) Limited [2002 (11) TMI 7 - SUPREME Court]. The rebuttal dated 30.08.2016 cannot taken as an order required to be passed on the objections given by the petitioner for reopening the assessment and the manner in which the impugned assessment order has been passed is wholly illegal and the entire proceedings are flawed. The respondent while issuing the rebuttal dated 30.08.2016 did not attach any finality to the proceedings but gave an opportunity to the petitioner to make further submission. On account of this, the petitioner had no opportunity to challenge the rebuttal dated 30.08.2016. This is one more ground to state that the proceedings are in violation of principles of natural justice. Accordingly this issue is answered in favour of the petitioner and against the revenue. The petitioner has referred to an application filed under the Right to Information Act by one Mr.Radhakrishnan who had made an application on 25.01.2017 requesting information as to in how many cases notice under Section 148 of the Act has been issued for reopening the assessment beyond four years of the relevant assessment years for the reason that sale proceeds of coffee seeds after drying and pulping in effect amounts to sale of cured coffee seeds, in how may cases the Department construed that an assessee who has sold raw coffee after pulping and drying and has disclosed in the return that the coffee was subjected to pulping and drying disclosing the expenditure incurred thereon and claimed exemption under Section 10(1) of the Act has not disclosed fully and truly all material facts for his/her assessment warranting reassessment and also warrants penalty and in how many cases the Department has reopened the assessment relying on the decision of the ITAT in the case of TC Abraham. Reply for the first question as given by the Information Officer, dated 01.02.2017, is Nil . For the second question, it was stated that no case has been reopened under Section 148 of the Act for the reason mentioned supra and there is no case in the concerned ward where application of Rule 7B(1) of the Rules has been levied by the Assessing Officer. The above facts would clearly establish that the reopening proceedings are clearly discriminatory. Accordingly this issue is answered in favour of the petitioner and against the revenue.
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2017 (11) TMI 920
Recovery of dues - Obligation to pay only 20% of the outstanding dues - validity of garnish notice to the ICICI Bank - Held that:- The assessee in light of the circulars issued by CBDT was under an obligation to pay only 20% of the outstanding dues and as the same was not done, the department has started proceeding under Section 226(3) of the Income Tax Act, 1961. In the considered opinion of this Court, the department has rightly raised a demand by passing a speaking order. The issue regarding levy of tax of lease premium is not a subject matter of the present writ petition. The issue has to be decided by the authorities where an appeal is pending i.e. CIT(Appeal) and as the assessee has failed to pay 20% of the outstanding dues, this Court is of the opinion that the Department was justified in issuing a demand notice and was also justified in issuing letter dated 04/10/2017. The ICICI Bank has filed an application for intervention and the same is also allowed. The Bank has been heard by this Court. It has been stated by the ICICI Bank that on 05/10/2017, this Court has passed an interim order and it has been observed that there will be no coercive action against the petitioner Company and a legal notice was given by the lawyer of the petitioner Company to the ICICI Bank under the provisions of Contempt of Courts Act, 1971. The ICICI Bank in order to avoid any contempt has permitted transaction in the account which was freezed. It is really strange that in case there was some confusion in respect of interim order passed by this Court, nothing prevented the ICICI Bank to approach this Court. Merely because the learned counsel for the Company has given a legal notice to initiate contempt proceedings, the ICICI Bank has permitted withdrawal of the amount and therefore, in the considered opinion of this Court, the Income Tax Department shall certainly be free to take appropriate steps against the ICICI Bank strictly in accordance with law. This Court in light of the aforesaid as 20% of the demand has not been deposited by the petitioner Company, is of the opinion that no case for interference is made out in the matter and accordingly, the admission is declined.
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2017 (11) TMI 919
Monetary limit for filing an appeal - power of CBDT u/s 119 - retrospective effect - Department acted contrary to the Circular issued by CBDT in pursuance of Section 268A - scope of amendment - Held that:- From the policy which has been referred by different High Courts and the intention of the legislation to reduce the pendency of the tax appeal and to have a uniform policy for the department through-out the Country, therefore, the direction issued by the CBDT is binding on all subordinate officers and Section 268A(4) which has been amended with retrospective effect is applicable with all force in pending matters.The intention of the legislation is very clear to prohibit the appeal analogous to the provisions of Code of Civil Procedure where there is a prohibition that appeal upto the value will not be entertained by the Court. The Circular issued by the CBDT under Section 268A of the Act of 1961 is binding on the Department thus the appeal cannot be preferred contrary to the instructions given therein. This Court, however, cannot lose sight of the only issue raised by the Department in reference to Article 141 of the Constitution of India. If an issue has been decided by the Apex Court then the ratio propounded therein is to be applied as a precedence. If the Tribunal or the CIT (Appeals) takes a view contrary to the settled law then rider imposed by the CBDT on filing of appeal cannot be applied. If we hold that appeal would not be maintainable even if the Tribunal or the CIT (Appeals) has taken view contrary to the judgment of the Supreme Court then Article 141 of the Constitution of India would be violated. No statutory provision can stand or be read contrary to the constitutional provision. In view of the above, theory of reading down needs to be applied for making Circular of the CBDT in consonance to the provisions of the Constitution of India otherwise it would not only cause judicial indiscipline but give rise to the anarchy, leading to serious consequences. Accordingly, the Circular issued by the CBDT under Section 268A of the Act of 1961 is held binding on the Department thus appeal cannot be filed, if it is barred. It is, however, with a clarification that if the issue decided by the CIT (Appeals) or Tribunal is contrary to the judgments of the Supreme Court, the Department can prefer an appeal, however, care would be taken to file it only in those cases where the order passed by the CIT (Appeals) or the Tribunal is contrary to the ratio propounded by the Supreme Court on the same issue. In doing so, sanctity of Article 141 of the Constitution of India would be maintained, thereby, serious consequences of taking different view would also be avoided. The Department may incorporate it in the Circular to avoid further controversy. - Decided in favour of assessee.
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2017 (11) TMI 918
Disallowance u/s 14A - Held that:- ITAT noticed the decision of this Court in Maxopp Investment Ltd. v. Commissioner of Income Tax, (2011 (11) TMI 267 - Delhi High Court) that Rule 8D of the Income Tax Rules does not have retrospective operation. In this case, the lower authority had ruled that the provision did have retrospective operation. No question of law, therefore, arises since the ITAT merely followed the ruling of this Court in Maxopp (supra). Treatment of interest for the sum which the assessee claimed as cost of acquisition under Section 55 - Held that:- The assessee sold off its shares to an entity in a bid to disinvest itself of the loss making entity. The two individuals to whom the sum of ₹ 12,25,000/- had paid had assisted the assessee in the disinvestment move. The AO - later the CIT (A) - disallowed these amounts holding that the nature of services rendered by such individuals was not clear and the rationale in the expenditure too was not supported by any documentary evidence. Given that the disinvestment itself is not doubted as is evident from the matters reported by the assessee which are part of the record, the expenses claimed are neither disproportionate nor of the kind that facially require proof as was sought by the authorities below. Consequently, no question of law arises. As far as the capitalization of the interest in the hands of the assessee in the sum of ₹ 2,34,05,003/- is concerned, we notice that the CIT (A) had reversed the AO’s order after noting the decision of this Court in CIT v. Mithlesh Kumari (1973 (2) TMI 11 - DELHI High Court) and a later decision of the Madras High Court - CIT v. Trishul Investments Ltd.[2007 (7) TMI 252 - MADRAS HIGH COURT]. In those decisions, it was held that the interest paid subsequent to the date of the transfer in respect of the money borrowed earlier to purchase the capital asset is also part of the cost of capital asset. The CIT (A) also took note of the reasoning of the Supreme Court in Challapalli Sugar Ltd. v. CIT, (1974 (10) TMI 3 - SUPREME Court).
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2017 (11) TMI 917
Taxability of gifts - Transaction involved gift in terms of Section 4(1) (a) of the Gift Tax Act 1958 to attract any tax liability - Held that:- In the present case, over and above the additional capital contribution of ₹ 1,23,750/- the partner Suman Vijoo, who got more shares pursuant to the reduction of shares of the assessee, on reallocation, had admittedly provided collateral security to the financial transactions of the firm. It is also an undisputed fact that, the said partner by name Suman Vijoo had offered personal guarantee for various financial transactions of the firm and this being the position, it has to be taken together to assess the worth of the said person and the 'consideration' brought in for such reallocation of the shares. The mere arithmetical figures with reference to the total profit in the year in question, which came to be reduced and reduction in the probable portion of profit of the assessee as worked by the appellant/Revenue do not reflect the correct picture in this regard. The more important aspect with reference to the 'collateral security' furnished by the person concerned and the 'personal guarantee' offered by her have not been taken into consideration or dealt with by the Revenue. We are of the view that the first appellate authority as well as the Tribunal were perfectly justified in passing Annexures B and C orders; holding that there was no instance of 'gift' coming within the purview of section 4 (1) of the Act; in turn setting aside Annexure A order passed by the assessing authority. As it stands so, we are of the view that the substantial questions raised are not liable to be answered in favour of the Revenue and they stand answered in favour of the assessee. Appeal fails
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2017 (11) TMI 916
Addition u/s. 36(1)(viia) - Held that:- Entire issue is covered by the judgment of this Court in case of Shri Mahila Sewa Sahakari Bank Ltd. (2016 (8) TMI 377 - GUJARAT HIGH COURT). In the said case, the Court has considered following substantial question of law: “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law and on facts in holding that interest on non performing assets is not taxable on accrual basis looking to the guidelines of the Reserve Bank of India ?” The Court answered the question in favour of the assessee and concurred with the view of the Delhi High Court in case of Vasisth Chay Vyapar Ltd.(2010 (11) TMI 88 - Delhi High Court). In the said decision, contrary to what was argued before us by the counsel for the Revenue, the Court had not only noticed but also referred to at some length the judgment of the Supreme Court in case of Southern Technologies Limited (2010 (1) TMI 5 - SUPREME COURT OF INDIA).- Decided in favour of the assessee and against the Revenue
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2017 (11) TMI 915
TDS u/s 194C OR 194J - TDS liability carriage fees, editing charges and dubbing charges - Held that:- Revenue has not made any grievance regarding applicability of Section 194C to dubbing charges. The finding of fact recorded by the Commissioner (Appeals), which is confirmed by the Appellate Tribunal, is that work of subtitling will be covered by the definition of “work” in clause (iv) of explanation to Section 194C. Reliance is placed by the Commissioner (Appeals) on the CBDT notification dated 12th January 1977. The said notification includes editing in the profession of film artists for the purpose of Section 44AA of the Income Tax Act. However, the service of subtitling is not included in the category of film artists. As noted earlier, sub-clause (b) of clause (iv) of the explanation to Section 194C covers the work of broadcasting and telecasting including production of programmes for such broadcasting or telecasting. The work of subtitling will be naturally a part of production of programmes. Apart from confirming the finding of fact recorded by the Commissioner (Appeals) on both the aspects on placement fee and subtitling charges, the Appellate Tribunal has noted that both Sections 194C and 194J having introduced into the Income Tax Act on the same day, it is observed that the activities covered by Section 194C are more specific and the activities covered by Section 194J are more general in terms. Therefore, for the activities covered by Section 194C, Section 194J cannot be applied being more general out of the two. We have already discussed in detail the findings of fact recorded by the Commissioner (Appeals) as regards placement fees/ carriage fees. We have agreed with the findings of fact based on material on record that when the payment is made towards standard fee or placement fee, the activity involved is the same in both cases. As stated earlier, when services are rendered as per the contract by accepting placement fee or carriage fee, the same are similar to the services rendered against the payment of standard fee paid for broadcasting of channels on any frequency. In the present case, the placement fees are paid under the contract between the respondent and the cable operators/ MSOs. Therefore, by no stretch of imagination, considering the nature of transaction, the argument of the appellant that carriage fees or placement fees are in the nature of commission or royalty can be accepted.
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2017 (11) TMI 914
Deductions u/s.80IB(10) - income computed as income from other sources - Held that:- From the materials on record, it can be seen that the assessee's sole business of real estate development, in the material collected by the Revenue during survey on which the Revenue heavily relies, there was sufficient indication that the amount of ₹ 1.01 crores was the assessee's income from such business. In the statement of the partner of the firm, the disclosure to this effect that the diary impounded during the survey also recorded that such onmoney was received for booking of the flats of Laxmi Residency Project. The Commissioner brought in the angle of morality while rejecting the claim for deduction. The Tribunal, in our opinion, correctly reversed the decisions of the Revenue authorities. The Bombay High Court in case of Commissioner of Incometax, Central II v. Sheth Developers (P) Ltd. [2012 (8) TMI 159 - BOMBAY HIGH COURT] had in somewhat similar background, held that the assessee's claim for deduction under section 80IB(10) of the Act could not be rejected. - Decided against revenue.
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2017 (11) TMI 913
Revision u/s 263 - income chargeable under the head "Capital gains" - Held that:- The appeal stands allowed and the issue is answered in favour of the assessee. However, it is made clear that as and when valuation of the land will be considered, the acquisition of price of ₹ 2 crores will not be considered, only the difference of ₹ 9 crores will be considered for any other purpose or for giving him benefit under the Income Tax Act.
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2017 (11) TMI 912
Undisclosed income worked out in sheets seized during the search - whether the addition is not based upon incriminating material found during search and, hence, the same is bad in law? - statement obtained u/s.133A in case of a survey - Held that:- There was clear admission and statement of oath u/s. 132(4) by the director of the company that the assessee was receiving income which was not disclosed in the books of account. Furthermore, the Assessing Officer has duly recorded in his order that the assessee’s representative was duly called upon to verify the seized documents and the assessee appeared on 02.03.2012 and he has been provided with the documents seized. Upon this, the assessee has not made any comment before the Assessing Officer whatsoever. Incriminating materials were found during search. There was clear admission u/s. 132(4). Hence, it cannot be said that the addition in the present case is not based upon incriminating material found during search. Hence, the cross objection filed by the assessee challenging the validity of the jurisdiction, is dismissed. In the statement of oath u/s. 132(4) of the Act recorded on 24.1.2011, i.e., the date of search, Smt. Madhu Chopra, the director of the company has clearly admitted to the estimate of such unaccounted income already made by Dr. Ashok Chopra said to be to the tune of ₹ 1.74 crores for two years. This admission during search corroborates the statement given by Dr. Ashok Chopra the performing surgeon which was duly based upon register found by the Revenue which disclosed surgeries performed and unaccounted cash payments. From the above, it is amply evident that the additions in this case are based upon cogent materials found during search. - Decided in favour of assessee.
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2017 (11) TMI 911
Addition u/s 68 - unexplained loans - not allowing Assessee to cross-examine witnesses by adjudicating authority - violation of principles of natural justice - Held that:- To substantiate the loan transaction, assessee has filed confirmation with respect to the loan received through cheque. This loan was already repaid by cheque. Also found that AO has issued summon u/s.131 to the creditor who filed letter dated 28/02/2015 alongwith copy of ledger account, bank statement, rate of interest and proof of repayment of loan. Also found that Proprietor of M/s. Mayank Impex (Creditor) attended and his statement had also recorded u/s.131. Mr. Sanjay K, Choudhary, Proprietor of M/s. Mayank Impex in his statement stated that they were engaged in the business of import and trading of diamonds. Also found that assessee was not given any opportunity to cross-examine the lender party and was also not provided copy of statement / reports relied upon by the A O while making the addition. As per considered view denial of such opportunity goes to the root of the matter and strike at the very foundation of the assessment order. Not providing such opportunity amounted to violation of principle of natural justice, a serious flaw which makes the order nullity. Hon’ble Supreme Court in the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] has held that not allowing Assessee to cross-examine witnesses by adjudicating authority though statements of those witnesses were made as basis of impugned order, amounted in serious flaw which made impugned order nullity as it amounted to violation of principles of natural justice. Thus no merit for the addition made by AO without allowing assessee an opportunity to cross examine the person on whose statement addition was made. - Decided in favour of assessee.
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2017 (11) TMI 910
Unexplained cash found during the course of search - whether the cash found from the residence of two directors is from the source of cash-in-hand of the company M/s.Nirala Developers Pvt. Ltd. in which these two person were directors? - Held that:- The payment of advance tax on 6.8.2011 is merely utilisation of cash for the payment of tax for the amount offered by the company during the course of the search. He has not rebutted that on date of search, whether this much amount of cash was available in the cash book or not; and whether at the time of search the cash recorded in the cash book was either found from the premises of the company or from somewhere else, especially when global search was carried out at various places of the Nirala group. So far as his allegation that assessee has been giving varied explanation that, firstly, the said cash found should be included in the disclosure of ₹ 1,95,47,000/-; and secondly, the source of cash is explained from cash-in-hand of the company, in our opinion it does not tantamount to changing of stand, albeit the assessee has explained that whatever cash has been found, the same should be considered to be covered under the huge disclosure made by the company as ultimately the cash found belong to the company only. Nowhere the assessee had stated that the cash belongs to the assessee and then he has changed the stand that it is out of the cash book of the company. Consistently assessee has been stating that the cash found is from the company’s account which is duly recorded in its book. Thus, we do not find any reason to disbelief the assessee that the source of the cash found is out of the cash-in10 hand of the company as recorded in its books of account. Accordingly, the addition of ₹ 5 lacs is directed to be deleted. So far as the cash amounting of ₹ 34,000/- is concerned which is not part of the imprest account, we are of the opinion that since it is very small amount of cash and which could be out of personal savings etc. from the source of income earned by the assessee, no adverse inference should be drawn. Thus, we direct the deletion of entire cash of ₹ 5,34,000/-. Addition on account of alleged unexplained jewellery found during search - sridhan provisions applicability - Held that:- Looking to the assessee‘s family consisting of assessee himself, his wife, his mother, one major unmarried daughter, one minor daughter and one minor son and the status of the assessee being owner and director of various companies then it has to be presumed that certain amount of jewellery would be available.If the availability of jewellery especially in the concept of Indian tradition and general practice in Hindu families whereby jewellery is gifted by the relatives and friends at the time of social functions, viz. marriages, birthdays, marriage anniversary and other festivals, such gifts in the form of jewellery are customary and such practice prevailing in our society cannot be ignored. It was for this prevalent norm and practice in the Indian families where jewelleries are gifted at time of marriage and birth of children and the married ladies receiving ‘stridhan’ from both side of the family, it is presumed that family having certain status will have some jewellery. That is why, CBDT vide it aforesaid instruction, has laid down a criteria of availability of jewellery with various category of family members. Here in this case total jewellery weighing of 1236.24 grams was found and if one goes by the quantity laid/ prescribed per category of family members by the CBDT Instruction, then it works out to 1700 grams, which is lower than the total jewellery found. We therefore, following the ratio laid down in the case of CIT vs. Ratan Lal Vyapari Lal Jain [2010 (7) TMI 769 - Gujarat High Court] hold that the jewellery of 1236.24 cannot be treated as unexplained. Thus, we hold that the jewellery treated to unexplained jewellery of ₹ 10,52,124/- is directed to be deleted. Assessee appeal allowed.
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2017 (11) TMI 909
Notice issued under section 153C - “satisfaction note” has not been recorded by the AO in his capacity as AO of the “searched person” - whether there is no satisfaction that documents “belonging to” the assessee were found? - Held that:- Assessing Officer in the capacity of the searched person only examines the records seized and come to the conclusion as to which of the such money, bullion jewellery or documents belongs to the searched person and to the others. The legislature has provided for recording of such satisfaction by the Assessing Officer of the person searched and thus the Assessing Officer cannot be allowed to record satisfaction in the capacity of Assessing Officer of other person. In our opinion no assessment or other proceeding can be lawfully taken up and completed unless the concerned authority has jurisdiction to do so and the lack of jurisdiction goes to the foundation of the matter and if the foundation is missing, the entire building collapse. Thus, the contentions advanced by the Revenue are rejected. We further find that the Central Board of Direct Taxes (CBDT), who is the Apex Body controlling the Administration of the Income Tax Department, in the aforesaid Circular has clearly directed the officers of the Department either not to file appeals or to withdraw the appeals where satisfaction note is not recorded by the Assessing Officer in the capacity of searched person. In such circumstances, advancing of above arguments are futile and wastage of resources of the Income Tax Department. There is no satisfaction recorded that any document belonging to the assessee was found during the search, it is seen that in the satisfaction note, the assessing officer has not recorded any satisfaction that documents “belonging to” the assessee was found during search. There is amendment in the Income Tax Act with effect from 1st June 2015 whereby the seized documents even if they pertains to or relates to “other person” and does not “belong to” “other person” can be the basis for initiation of proceedings u/s 153C of the Act. We quash the proceeding initiated under section 153C of the Act on the ground that satisfaction note was not recorded by the Assessing Officer in the capacity of Assessing Officer of searched person and in any case since there is no satisfaction recorded of any seized documents being “belonging to” the assessee, hence, the other grounds on merits challenging the additions have become academic, which do not require adjudication. As a result, the appeal of the assessee stands allowed.
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2017 (11) TMI 908
TPA - selection of comparable - Held that:- Assessee is engaged in rendering of services i.e. “Software Development Services”. It is also engaged in the business of rendering technical services related to tabulation, coding and software development. It is established to undertake and engaged in export of software, computer skilled manpower and other computer related activities to carry out development in the area of information technology, computer systems, software, application software, integrated tolls for computer systems and application development, data communication and network. Thus companies functionally dissimilar with that of assessee need to b deselected from final list of comparables.
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2017 (11) TMI 907
Penalty u/s 271C - non deduction of tds u/s 194J / 194C by assessee charitable organization - CIT(A) reversed the order of AO by observing that the assessee has deposited the amount of TDS in the account of Government Exchequer with the delay of few months, therefore there was no default on the part of the assessee under the provisions of TDS - Held that:- From the above discussion, it is clear that the assessee has deposited the amount of TDS with the delay of few months. Therefore, it cannot be concluded that the assessee has defaulted the provisions of TDS. Thus, in our considered view the penalty u/s 271C of the Act cannot be levied for the delayed deduction of TDS amount. Thus, we find no reason to interfere with the findings arrived by the Ld. CIT(A). We hold accordingly. Consequently, Revenue’s appeal is dismissed.
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2017 (11) TMI 906
Disallowance of depreciation on plant and machinery and on Factory Building - business assumed to be shut down - Held that:- After hearing the rival contentions we find that the First Appellate Authority has recorded that the assets in question is part of the “block of assets”. He held that once the asset merges with the existing block of assets, which carry the same rate of depreciation and one asset of the block is put to use then the entire block would be eligible to depreciation. The mill in question remained closed from 05.01.1999. The yarn production was 8087 kgs. Hence it is not a case where the factory has been totally closed down. Only one unit has been shut down - Decided in favour of assessee.
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2017 (11) TMI 905
Passenger Service Fee – whether Security Component [PSF (SC)] is not the income of the appellant - Held that:- The assessee has not utilized any amount of PSF-SC for its own purposes or for any purposes which are not permitted by MOCA/other competent authorities, we, therefore, respectfully following the decision of this Tribunal for A.Y. 2008-09, hold that the said amount is not taxable in the hands of the assessee and direct the Assessing Officer to re-compute the income of the assessee. We also direct the Assessing Officer to see that no portion of the amount calculated by the assessee on account of PSF-SC is utilized by the assessee for its own purposes or for any purpose which are not permitted by MOCA/other competent authorities. The Assessing Officer is further directed that in case he finds that any violation is done by the assessee in this regard, he will be at his liberty to treat the amount so misappropriated as income of the assessee but to that extent only. Further, if any refund is received by the assessee on account of TDS deducted on this component, i.e. on PSF-SC, the same shall also be deposited by the assessee in the Escrow account, failing which it would be treated as income of the assessee to that extent only. Thus, this ground is allowed subject to these directions in each of the A.Ys 2009-10, 2010-11 and 2011-12. Disallowance of refurbishment expenses - Held that:- Held that:- The said expenditure has been incurred only for resurfacing the layer of the runway and to put new tiles to replace floors. Therefore, it cannot be said that expenditure is in the nature of capital as it does not bring into existence any new asset, leaving aside the fact that the said runway /premises is not owned by assessee. No doubt, the assessee is to redesign, upgrade, modernize and also to operate and maintain Airport but the expenditure under consideration has been incurred only to ensure that the existing assets continued to be used for use safely and as per norms to enable assessee to run its activity. Hence, we are of the considered view that the said expenditure is incurred to facilitate of carrying on by the assessee its main business for which the assessee has been engaged and pending the expansion of the Airport etc. Hence, we hold that the said expenditure is revenue in nature and cannot be said to be capital in nature irrespective of the fact that the assessee in its books of account has given treatment of it as capital in nature. We may state that the assessee will not be entitled for depreciation thereon as it is held to be revenue in nature. Disallowance of 25% depreciation of upfront fees - Held that:- The assessee who was assigned the rights to participate in oil exploration in Russia through a consortium for a period of 25 years and paid the total consideration for obtaining 20% membership in the consortium, amounting to ₹ 155.9 crores, was treated to acquire a license, being intangible assets, and thus assessee was entitled to claim depreciation u/s. 32(1)(ii) of the Act. Pune Bench of the Tribunal in the case of Ashoka Info (P) Ltd (2008 (12) TMI 271 - ITAT PUNE-B) has also held that the expenditure incurred on construction of highway is eligible for depreciation @25%, as this expenditure has given rise to an ‘intangible assets’ in the hands of the assessee. In view of above decisions and the facts of the case, we hold that the ld. CIT(A) has rightly held that the payment of upfront fee of ₹ 150 crores paid by assessee to “AAI” has created capital assets in the form of license to develop and modernize the Airport and collect charges as per terms and conditions as prescribed under the agreement entered into which is an “intangible assets” to the assessee. Thus assessee is entitled for depreciation. Treatment of the contribution made by the assessee to MMRDA for construction of Sahar Elevated Road from Western Express Highway, horticulture expenses and other civil works as revenue expenditure - Held that:- No infirmity in the order of the CIT(A) treating the said expenditure to be a revenue expenditure Disallowance made u/s. 40(a)(ia) - Held that:- We restore the issue to the file of the CIT(A) in all the assessment years with a direction to re-decide the issue afresh after giving sufficient opportunity to the assessee on the basis of the directions given in A.Y. 2008-09. Disallowance of retrenchment compensation - Held that:- We noted that the said provision is applicable only if the assessee has incurred any expenditure in any previous year by way of payment of any sum to a employee in connection with voluntary retirement. In this case, we noted that the assessee has not incurred any expenditure by way of payment made to employees but the payment has been made by the assessee to Airports Authority of India in accordance with clause 6.14 of the OMDA on account of retrenchment compensation to be paid by Airports Authority of India to its employees. It is not an amount which the assessee is paying to its employees on their retrenchment. Therefore, the provisions of section 35DDA will not apply. It is not denied that the expenditure incurred by the assessee is revenue expenditure. Treatment of development fees as capital receipt - Held that:- It is not denied that the development fees so collected are utilized only for the purpose of aeronautical assets as per the provisions of section 22A of the Airports Authority of India Act. In view of this fact, we do not find any illegality or infirmity in the order of the CIT(A), which warrant our interference, while holding that the development fees so received by the assessee is a capital receipt. Disallowance made u/s. 14A - Held that:- After hearing the rival submissions we noted that the assessee has not earned any exempt income during the impugned assessment year and therefore, the CIT(A) has rightly deleted the disallowance made by the Assessing Officer u/s.14A.
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2017 (11) TMI 904
Denial of exemption for long term capital gains treating the same as unexplained cash credit - CIT-A allowed the claim - rejecting the claim of the assessee on the basis of theory of surrounding circumstances, human conduct, and preponderance of probability - Held that:- Donor confirmed the fact of making the gift and delivering the shares by transfer to the Demat Account of the assessee. The copy of the demat account of the Donor are also available in Pages 38-39 of the Paper Book which shows that the Donor was holding 40,000 shares of SOCIL as on 31-03-2006. Thus the assessee has substantiated and the Donors have duly confirmed the transaction of gift, therefore the ld AO was not justified in doubting the gift of shares made to the assessee. The assessee and / or the stock broker M/s P Didwania & Co and Toshith Securities P Ltd., both registered share and stock brokers with Calcutta Stock Exchange had confirmed the transaction and have issued legally valid contract notes under the Law. There is absolutely no adverse material to implicate the assessee to the entire gamut of unwarranted allegations leveled by the ld AO against the assessee, which in our considered opinion, has no legs to stand in the eyes of law. We find that the ld DR could not controvert the arguments of the ld AR with contrary material evidences on record and merely relied on the orders of the ld AO. We find that the allegation that the assessee and / or Brokers getting invo2lved in price rigging of SOICL shares fails. It is also a matter of record that the assessee furnished all evidences in the form of bills, contract notes, demat statements and the bank accounts to prove the genuineness of the transactions relating to purchase and sale of shares resulting in LTCG. These evidences were neither found by the ld AO to be false or fabricated. The facts of the case and the evidences in support of the assessee’s case clearly support the claim of the assessee that the transactions of the assessee were bonafide and genuine and therefore the ld AO was not justified in rejecting the assessee’s claim of exemption under section 10(38) of the Act. Hence we hold that the ld AO was not justified in assessing the sale proceeds of shares of SOICL as undisclosed income of the assessee u/s 68 of the Act and therefore we uphold the order of the ld CIT-A and dismiss the appeal of the revenue. - Decided in favour of assessee.
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2017 (11) TMI 903
Disallowance for the business expenses including the depreciation - assessee has not carried out any activity under the head “business or profession during the year under consideration as well as subsequent year - Held that:- It is the disputed fact that no income whatsoever has been shown by the assessee in the financial year which beginning from 2003-04 to 2005-06 and 2008-09 as evident from the order of Authorities Below. It is also disputed fact that assessee has shown various advances in its balance-sheet for the purchase of property as evident from the order of Authorities Below. But the disallowances were made by AO on the ground that there is no business activity carried out by assessee. In our considered view it is a question of fact to establish whether the business of assessee is in existence or not. If yes it is very much eligible for deduction of the expense incurred by assessee. We note that the ld. CIT-A has simply accepted on the submission of the assessee and has come to the conclusion that the assessee is doing business activity. But no contrary evidence has been brought on record to prove the existence of business of assessee in the appellate order except a finding that assessee has made advance for the purchase of property. In our considered view, the advance shown by assessee does not ipso facto prove that assessee is carrying on business. Thus in our considered view the fact that the assessee is running a business needs to be established. Therefore we are inclined to set aside the impugned order and restore the issue back to the file of Ld. CIT(A) with a direction to find out the question of fact as to whether the business of assessee is in existence or not. While doing so, the Ld. CIT(A) shall give a due and fair opportunity of hearing to the assessee as well as call for the remand report from the AO in accordance with law and shall decide the matter by way of a speaking order in accordance with law. Hence, this ground of Revenue’s appeal is allowed for statistical purpose.
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2017 (11) TMI 902
Disallowance of depreciation - beneficial owner of the asset - Held that:- A perusal of section 32 would indicate that for grant of deprecation this section contemplates two conditions. The assessee should be owner of the asset, and the asset has been used for the purpose of business. According to the AO the expression “used” employed in this section would construed as actual user and in case in any year the asset is not used then the assessee will not be entitled for the depreciation. However, in a large number of authoritative pronouncements it has been observed that expression “used” employed in section would embrace deemed user of the asset. The assessee has not closed its business, rather on account of stay operation from the Court manufacturing activities were stopped. The assets were ready for use for the purpose of the business and there was constructive user of the asset. Therefore, depreciation ought to be granted to the assessee - Decided in favour of assessee Addition u/s 41(1) - Held that:- AO has not brought any evidence on the record to show that liability has ceased. The assessee has not written off the liability in the accounts. Therefore, there would not be any addition under section 41(1) of the Act. Hon’ble High Court in the case of Bhogilal Ramjibbhai Atara (2014 (2) TMI 794 - GUJARAT HIGH COURT) considered this aspect and observed that even if debt itself is found to be non-genuine from the very inception that also in terms of section 41(1) of the Act, there is no solution for that. In other words, addition cannot be made unless liability in the accounts has been written off. Therefore, following the decision of the Hon’ble Gujarat High Court in the case of Bhoghilal Ramjibhai Atara (supra), we allow this ground of appeal and delete disallowance.- Decided in favour of assessee
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2017 (11) TMI 901
Disallowance of additional depreciation U/s 32(1)(iia) relating to visicooler machine - Did the article fulfil the function of a plant in the assessee's trading activity? - Held that:- We note that the second condition cited by the AO in the impugned order is not borne from the provisions of Section 32(1)(iia) of the Act. The conditions laid down in Section 32(1)(iia) is that if the assessee is engaged in manufacture of article or thing then it is entitled to additional depreciation on entire additions to plant & machinery provided the items of addition does not fall under any of the exceptions provided in clauses (A) to (D) of the proviso. In the present case the assessee is engaged in the business of manufacture of cold drinks. This fact has not been disputed by the AO. The AO has categorically observed that the assessee's nature of business is manufacture of cold drinks. We therefore find that the assessee is legally entitled to avail the benefit of additional depreciation under Section 32(1)(iia) of the Act. The “visicooler” is a “plant & machinery”. The said item falls within the category of “plant & machinery” as laid down in the l.T. Rules, 1962. The “visicooler” also does not fall within the exceptions provided in clauses (A) to (D) of the proviso to Section 32(1)(iia) of the Act. We note that the assessee is in the business of manufacturing and sale of Coca-Cola, which is a soft drink. Since the assessee is situated at a long distance and the product has to be sold at long distance, the Coca-Cola becomes hot due to the humid weather in the State of West Bengal. It is a known fact that soft drink, like Coca-Cola, cannot be consumed in hot state, whereas it is preferred by majority of customers as a cold drink. So, the assessee, in order to sell its final product to the customers, in various parts of the state required to give the Coca-Cola, in cold state for which the assessee has purchased, the tool, to keep the same in cool condition by the machine called ‘Visicooler’. The test laid down by Hon’ble Supreme Court in the case of Scientific Engineering vs. CIT (1985 (11) TMI 1 - SUPREME Court), was: Did the article fulfil the function of a plant in the assessee's trading activity? Was it a tool of his trade with which he carried on his business? lf the answer was in the affirmative, it would be a plant. When the aforesaid test is applied in the case of Visicooler, the answer is in the affirmative, that is, the Visicooler is a tool which is necessary for carrying out, the business of the assessee, therefore, we do not find any infirmity in the order of CIT(A).Hence, we confirm the order passed by CIT(A). Appeal filed by the Revenue, is dismissed.
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2017 (11) TMI 900
Addition u/s 14A - Held that:- When dividend is not taxable at all, the expenses pertaining to that would also not be allowable because there is no taxable income of the assessee against which such expenses can be allowed. Further, sub-section (2) of section 14A empowers the AO to determine the amount of expenditure incurred in relation to exempt income in accordance with the method as may be prescribed. The method has since been prescribed by insertion of rule 8D of the I.T. Rules, 1962 w.e.f. 24.03.2008. Sub-section (3) of section 14A mandates that the above provisions of sub-section (2) shall also apply to a case where an assessee claims that no expenditure has been incurred by him in relation to exempt income. The constitutional validity of section 14A read with sub-sections (1), (2) and (3) thereof has since been upheld in the case of Godrej & Boyce Mfg. Co. Ltd. vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT]. Considering the above, the impugned addition of ₹ 8,31,908/- made by the AO by applying rule 8D read with section 14A of the Act has rightly been confirmed by the ld. CIT(A). In view of the above facts and circumstances of the case, the order of the ld. CIT(A) on the issue is confirmed and ground raised by the assessee is dismissed. Purchase of assets - assets purchased were capable of personal use - Held that:- We find that no plausible explanation has been given either before the authorities below or even before us. Therefore, the assets purchased by the assessee, like furniture and mobile set are capable of personal use. Accordingly, in the absence of any satisfactory explanation, we do not find any infirmity in the order of the ld. CIT(A) who has rightly confirmed the action of the Assessing Officer. Thus, Ground No. 2 of the assessee is dismissed. Disallowance on account of unconfirmed creditors - Held that:- CIT(A) has not commented upon such demand letter and has not made any enquiry in this regard. In the interest of justice, the matter is set aside to the file of the ld. CIT(A) who will conduct proper enquiry and find out whether the creditors are still outstanding and genuineness of the demand letter so placed on record. Accordingly, Ground No. 3 is allowed for statistical purposes Non deduction of TDS on fees paid to arbitrators - Held that:- We do not agree with the submissions of the assessee since the TDS is deducted on services rendered whether legal, technical or as mentioned in section 194J of the Act. Therefore, tax required to be deducted. We find no infirmity in the order of the ld. CIT(A) and thus Ground No. 4 of the assessee is dismissed. Disallowance for personal use on account of travelling expenses and telephone expenses @ 10% - Held that:- . The assessee is not maintained any record for use of vehicle and telephone and therefore, personal use cannot be ruled out and also no account for business promotion has been maintained and, therefore, personal use at this juncture, can also not be ruled out. Expenses appear to be quite reasonable. Therefore, we find no infirmity in the order of the ld. CIT(A) who has rightly confirmed the action of the Assessing Officer in this regard. Accordingly, Ground No. 5 is dismissed. Disallowance of loss for long term capital gain as per revised computation - Held that:- As a matter of facts, the assessee filed revised computation during the course of assessment proceedings which was not accepted by the authorities below for the reason that the assessee should have made the claim through revised return. It is settled law that the claim which is legally permissible should otherwise be allowed by the Assessing Officer which, in fact, has not been allowed in the present case and, therefore, the matter is set aside to the file of the Assessing Officer who will allow the claim after verifying the genuineness of the computation of loss as per revised computation filed during the assessment proceedings. Thus, Ground No. 6 of the assessee is allowed for statistical purposes.
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2017 (11) TMI 899
Maintainability of appeal - tax effect - Held that:- We note that in the instant case before us also, the Ld. CIT, DR could not give any explanation as to what grounds of appeal the revenue intends to assail before us. We concur with the observation that there is no application of mind while filing the instant appeals. The department has not cared even to file any revised grounds. In such a scenario, we have no other alternative but to dismiss the appeal preferred by the revenue. On merits, the assessee has brought to our notice that the Ld. CIT(A) called for the remand report wherein the AO in the remand report has accepted after due verification the existence and creditworthiness of the companies which has advanced amounts to the assessee. He relied on the remand report given by the AO and submitted that on merits the AO has no ground to file this instant appeal. We are not inclined to comment on the merits of the case as such. However, taking note of the grounds of appeal raised by the revenue, we are inclined not to adjudicate the same because we do not find any attempt made by the revenue to challenge the decision of the Ld. CIT(A). In such a scenario, we have no other alternative but to dismiss the appeals preferred by the revenue.
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2017 (11) TMI 898
Allowable business expenses - expenditure incurred for New Lock project - Held that:- Technical know-how fees expenses pending for capitalization and differed revenue expenditure was not properly looked into by the Assessing Officer as well as by the CIT(A). Thus, the expenditure incurred for New Lock project has to be verified by the Assessing Officer as the Ld. AR submitted that New Lock project was a new product line belonging to the same business of the Auto-components and taken under the same company with unity of control and common funds and all the Expenditures, and if the said appreciated individually are all revenue in nature. The same has to be verified by the Assessing Officer. The matter needs to be remanded back before the Assessing Officer for this issue. Needless to say, the assessee be given opportunity of hearing.
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2017 (11) TMI 897
Additions in the hands of the assesses on protective basis - a search and seizure operation was conducted in the group concerns of M/s. Dhariwal & Family and also the residential premises of the assessee u/s. 132 - Held that:- While making the addition, the AO was of the view that amount reflected in the slips were paid to assesses on behalf of Dhariwal Industries Ltd. Therefore, the amount reflected in the slip either belonged to Mr. Sohanraj Mehta or Dhariwal Industries Ltd. The assesses being employees of Dhariwal Industries Ltd., had no right to retain the said amount. More over, during the course of assessment proceedings, the assesses have vehemently denied any receipt of the amount reflected in the slips. Under these circumstances, if the AO intends to make an addition in the hands of assesses, he has to bring out some more evidence on record to justify that the amount reflected in the slips were paid to the assesses and assesses have retained it. In the absence of this evidence, we are of the view that the addition made on protective basis in the hands of assesses deserves to be deleted. We accordingly find no infirmity in the order of the CIT(Appeals), who has rightly deleted the additions. Accordingly, we confirm the order of CIT(Appeals). - Decided against revenue.
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Customs
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2017 (11) TMI 896
Maintainability of petition - alternative remedy of appeal - valuation of imported goods - similar goods - stand of the Department is that in the present case, the adjudicating authority has referred to and relied upon the additional material, instances of imports of similar goods, for arriving at the transaction value - Held that: - reliance placed in the case of Messrs Sedna Impex India Pvt. Ltd. & 1 Versus Union of India & 2 [2017 (11) TMI 846 - GUJARAT HIGH COURT], where similar issue was decided and it was held that It is well settled that the High Court would not ordinarily entertain a writ petition directly aimed against an order-in-original in taxing statute where statutory appeals are available, more so when ultimately the issue is one which would travel to the Supreme Court by way of appeal instead of the High Court - the petition is disposed of, leaving it open to the petitioner to file appeal.
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2017 (11) TMI 895
Absolute confiscation - penalty - Smuggling - US Dollar - seizure on the reasonable belief that the same was clandestinely attempted to be exported in illicit manner in contravention of the provisions of Section 11 of the CA read with Section 3(2) of (Foreign Trade Development and Regulation) Act, 1992 (FTDR) Sections 3 & 4 of Foreign Exchange Management Act, 1999 (FEMA) - Held that: - the findings arrived at by the Commr. (Appeals) are not being rebutted by the Revenue and no evidence to the contrary stands placed on record - The appellate authority has observed that there is no admission of guilt by either of the assesses and there are no investigations by the Revenue from various angles, thus requiring the impugned orders to be set aside - appeal dismissed - decided against Revenue.
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2017 (11) TMI 894
Refund of unutilized CENVAT credit - Proper and original documents relating to details of input used in the export goods, credit availed thereon, stock position of impugned inputs as on 31.03.2006 and Shipping Bills have not submitted by the appellant alongwith the claim in the absence of which claim could not be finalized - Whether refund is sanctionable in case where proper and original document have not been submitted by the appellants at the time of filing but filed subsequently? - Held that: - The argument putforth by the appellant is very clear and leaves no doubt as to the fact that credit lying in balance relates to inputs used in the manufacture of export goods. It is a settled law that certificates issued by the qualified professionals like Chartered Accountant cannot be rejected unless proved wrong by definite evidence - refund allowed. Whether benefits of CBEC Circular No. 828/5/2006-CX dt. 20.04.2006 are admissible to the appellant under the facts and circumstances of the case? - Held that: - Para-4 of the Circular provides that the 80% amount can be refunded within 15 days from the date of filing refund claim, if no demand of short levy is pending recovery. In this regard, since the refund was rejected by the adjudicating authority at the adjudication stage in view of pending demand, the issue whether CBEC Circular was applicable at that material time need not be taken up at this stage. The pendency of demand is an ongoing process which keeps changing from time to time. Hence benefit of circular can be given on merits at the material time only. Whether the AR1 s, Shipping Bills, invoices and other documents submitted with refund application are proper documents for sanctioning refund claim? - Held that: - as proof of export is established and procedural lapses have been rectified by the appellant, it is observed that compliance of the requirements of N/N. 5/2006-CE(NT) dated 14.03.06 has been done - substantial benefit cannot be denied for procedural lapses - refund allowed on this ground. Whether the calculation of credit accrued on inputs claimed to be used in the manufacture of export goods supported by the certificate of Chartered Accountant is acceptable? - Held that: - In Para-4 of the certificate, amount of total credit, credit relating to input used in export goods, credit used in discharging duty liability and the balance lying unutilized has been clearly given which leaves no scope of ambiguity. On the plea of difference in calculation, it is observed that while making the calculation the adjudicating authority has taken into consideration the certificate of Chartered Accountant dated 09.05.06 which is with reference to one model namely SPEEDY only. I have pursued the Bill of material submitted vide letter dated 10.05.06 alongwith Chartered Accountant Certificate dated 09.05.06 as well as grounds of appeal - The adjudicating authority has calculated the figure of ₹ 7,59,38,323/- by multiplying total vehicles by ₹ 2254.50/- P which was not warranted in view of the details given in Para-4 of the certificate dated 09.05.06 which clearly indicates that credit of ₹ 945/- lakhs is attributable to inputs used in export of 24607 scooters and 9076 motor cycles; the fact that credit per vehicle of scooter and motor cycle may not be the same; the fact that ₹ 2254.50P. relates to speedy model of scooter only and has been accepted by the adjudicating authority as mentioned in para-2 of page 7 of the adjudication order. Under the circumstances, the plea of difference in calculation is not sustainable. Whether lack of correlation between invoice ARE-1's and non-mentioning of engine number and chasis number on the Shipping Bill are reasonable cause to reject the refund claim? - Held that: - It is observed that since the lapses are procedural in nature and the export of goods has been proved by the bill of lading as well as the certificate given by the Customs officer on the back of ARE-1's submitted by the appellant, the plea is not sustainable. Whether it is mandatory on the part of the applicants to file the refund claim on quarterly basis? - Held that: - there is no bar under the notification to the file the refund claim on annual basis which is evident from the provisions of para-2 of the notification wherein no such condition has been imposed. It provides that such refund cannot be submitted more than once in a quarter. Under the circumstances the plea is not sustainable and refund is not deniable on this ground. Whether the view of the adjudicating authority that claim is not sanctionable on the grounds of possibilities of its utilization when the factory goes in the production and effects domestic clearance? - Held that: - the appellants have pleaded that the factory of the appellant remained closed and as a result, the credit lying in balance cannot be utilized as there were no domestic clearances - reliance placed in the case of Bishen Dyeing Printing & Weaving Mills [2007 (1) TMI 8 - CESTAT, MUMBAI], where it was held that the credit lying was on account of non-utilization in a particular month and the same cannot be kept pending for the future. As such, the refund is permissible under Rule 5 read with Rule 3 of the Cenvat Credit Rules, 2002. - the balance of credit lying unutilized is refundable to the appellants. Appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (11) TMI 893
Voluntary winding up of the company - Held that:- The Court, having heard learned advocate Mr.Hasurkar and having gone through the present report, finds that there appears to be a satisfaction reached by the Official Liquidator that the Voluntary Liquidator had submitted all requisite records and documents for voluntary winding up of the company and had also complied with relevant provisions of the Act for such purpose and that the affairs of the company does not seem to have been conducted prejudicial to the interest of the members of the company and against the public interest. The Court, therefore, finds that the report needs to be accepted and the prayers made therein are required to be granted.
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2017 (11) TMI 889
Oppression and mismanagement - Misuse of Digital signatures - Control of private key - eligibility of EGM - Held that:- Information Technology Act, 2000 and the Rules made there-under have provided enough safeguards and security in order to prevent misuse, tamper/fraudulently use etc of Digital Signature. Since the second Respondent has admittedly in possession of his Digital Signature with all keys and transacting with the same for subsequent transactions, which are convenient to him and his own family members, the allegation of its misuse by his elder brother namely Late Shri Anand Prakash Sanghi (the first Petitioner herein) is totally baseless and un-tenable and the same is hereby out rightly rejected. And the subsequent transactions especially with regard to impugned allotment of shares to the second Petitioner, his own family members and his group are declared as violation of Memorandum and Articles of Association of Respondent No. 1 Company. All these acts constitute acts of oppression and mismanagement as contended by the Petitioners on the part of Respondents. (1) The resolutions alleged to have been passed at the EGMs held on 19.03.2007 for non-recognizing the allotment of 20,00,000 shares that were allotted by the first Respondent Company on 01.03.1998 is hereby set aside with a consequential direction to the Registrar of Companies, Ministry of Corporate Affairs, Hyderabad,Telangana not to take on record the Form No.23 filed by the 2nd Respondent in this regard. (2) The resolutions alleged to have been passed at the EGM, alleged to have been held on 19/03/2007 for non-recognizing the allotment of 84,99,937 shares that were allotted by the first Respondent Company on 01/04/2006 is hereby set aside with a consequential direction to the Registrar of Companies, Ministry of Corporate Affairs, Hyderabad, Telangana, not to take on record the Form 23 filed by the Second Respondent in this regard; (3) The allotment of 45,00,000 shares and 84,99,937 shares that were alleged to have been allotted to the Respondent group on 19/03/2007 and 22/04/2006 respectively are hereby set aside with consequential direction to the Registrar of Companies, Ministry of Corporate Affairs, Hyderabad(Telangana) not to take on record the Forms 2 filed by the second Respondent in this regard; (4) Hereby directed the first Respondent Company to rectify the Register of Members reinstating the names of the Petitioners and to delete the names of the Respondent group with respect +to the shares alleged to have been allotted on 22/04/2006 and 19/03/2007; (5) The Registrar of Companies, Ministry of Corporate Affairs, Hyderabad, is hereby directed to take appropriate action(s) to carry out above directions immediately, after receipt of copy of this order and directed the Registry of NCLT to mark a copy of this order to the Registrar of Companies, Hyderabad. (6) The other reliefs, which are prayed in the Company petition, are hereby rejected as Petitioners are not entitled for those reliefs. (7) The Respondent No.1 Company and 2nd Respondent are hereby directed to follow all the extant provisions of Companies Act, 2013 and Memorandum and Articles of Association of the Company and also duly follow the Principles of Natural Justice in running the affairs of the Respondent No.1 Company without any deviation.
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2017 (11) TMI 888
Corporate Insolvency Resolution Process - Held that:- There is no disciplinary proceedings pending against the IRP as evidenced from Form-2 and his name is reflected in IBBI website. The IRP is directed to take charge of the Corporate Debtor’s management immediately. IRP is also directed to cause public announcement as prescribed under Section 15 of the I&B Code, 2016 within three days from the date the copy of this Order is received, and call for submissions of claim by the creditors in the manner as prescribed. We declare the moratorium which shall have effect from the date of this Order till the completion of corporate insolvency resolution process, for the purposes referred to in Section 14 of the I&B Code, 2016.
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Insolvency & Bankruptcy
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2017 (11) TMI 892
Corporate insolvency resolution process - Whether the advocate who issued the demand notice in Form-3 has got any authority to issue the notice? - Whether the dispute raised by the respondent/corporate debtor comes under the definition of section 5(6) of I&B Code, 2016? - Held that:- A demand notice issued in the instant case was not issued in terms of the provisions of the Adjudicating Authority Rules and I&B Code. We hereby hold that the demand notice issued by the applicant advocate was not issued Under S. 8(l) of I&B Code, and therefore the contention on the side of the respondent that Annexure A notice is not a notice issued under S. 8(1) of I&B code is sustainable. This point is answered accordingly. Here in this case respondent has no case that the dispute he already raised with the applicant is pending for any consideration before any adjudicating authority or in any Court. However, it has come out in evidence that respondent disputed quality of the goods received upon receipt of the goods and communicated the complaint in writing to the applicant in appropriate time. No explanation forth coming from the applicant regarding the disputes highlighted in the notices issued by the respondent to the applicant. More over the copy of reply notice evidently received by the applicant not at all produced along with the application. The documents produced on the side of the respondent not at all challenged on the side of the applicant. Therefore, the respondent succeeded in proving that a dispute regarding quality of the goods and the money liable to be paid by the respondent was pending for consideration with the applicant even before the statutory notice issued by the applicant and that it is a genuine dispute which according to us comes under the purview of section 5(6) of I&B code. Respondent has succeeded in proving existence of a genuine dispute prior to issuance of demand notice and, therefore, this application is liable to be rejected.
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2017 (11) TMI 891
Corporate insolvency resolution processes - main plea taken by the appellant is that no notice was issued or served by the Adjudicating Authority on the appellant - proof of existence of dispute - Held that:- Though it was reported that no notice has been served at the given address, but the Adjudicating Authority wrongly treated the notice deemed to have been served. It is a settled law that on refusal of the notice by a party, the same can be deemed to have been served, but for insufficient or on wrong address, return of notice cannot be treated to be served. From the aforesaid fact, we find that the impugned order dated 25th July, 2017 was passed by the Adjudicating Authority completely in violation of rules of natural justice. The letter issued on behalf of the appellant – Corporate Debtor dated 1st June, 2016 shows that there is also an ‘existence of dispute’ as is clear from the relevant portions and the preliminary objections. Though it was reported that no notice has been served at the given address, but the Adjudicating Authority wrongly treated the notice deemed to have been served. It is a settled law that on refusal of the notice by a party, the same can be deemed to have been served, but for insufficient or on wrong address, return of notice cannot be treated to be served. From the aforesaid fact, we find that the impugned order dated 25th July, 2017 was passed by the Adjudicating Authority completely in violation of rules of natural justice. For the reasons aforesaid, the impugned order cannot be sustained. The said order is accordingly set aside.
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2017 (11) TMI 890
Corporate insolvency procedure - proof of existence of dispute - Held that:- In the present case, we find that there was an “existence of dispute” between the parties. Learned Counsel for the Respondent-’Operational Creditor’ while did not dispute the aforesaid fact and submits that the amount due to the ‘Operational Creditor’ have already been paid. In view of the fact that there was a dispute between the parties and the decision of the present case is covered by the Hon’ble Supreme Court in “Mo bi lox Innovations Private Ltd v. Kirusa Software Private Ltd [2017 (9) TMI 1270 - SUPREME COURT OF INDIA]” we have no other option but to set aside the impugned order. The said order is accordingly, set aside.
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Service Tax
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2017 (11) TMI 887
CENVAT credit - services provided to Special Economic Zone - C & F Agent services - denial on the ground that it has been entirely used for trading activity? - Held that: - Hon ble High Court of Madras in the case of M/s. Ruchika Global Interlinks vs. CESTAT & CCE [2017 (6) TMI 635 - MADRAS HIGH COURT] has clearly held that for trading activity, appellant is not entitled to the CENVAT credit of service tax - the CENVAT credit of service tax paid on trading activity carried out by the appellant rightly denied. Demand of interest and penalty - Held that: - the appellant has not paid or short-paid the service tax by reason of collusion, wilful misstatement, suppression of fact or contravention of the provisions of Rule with intend to evade payment of service tax and they have been filing the returns regularly - no penalty is imposable on the appellant u/s 78 of the FA because the condition for imposing the penalty under Section 78 is not present in this case and it was an interpretational issue and therefore, the penalty under Section 78 on the appellant dropped. Appeal allowed in part.
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2017 (11) TMI 886
Renting of immovable property Service - sale of space or time for advertisement by municipalities / corporations - Held that: - reliance placed in the case of Municipal Corporation Rajahmundry. Versus Commissioner of Service Tax & Central Excise-Visakhapatnam [2017 (7) TMI 685 - CESTAT HYDERABAD], where it was held that there cannot be any dispute on taxability on this score when the said activity is not being shown to be covered by any exclusion or exemption from service tax thereof. We therefore hold that this activity will definitely be leviable to service tax but only for the normal period of limitation. Further, it was held in the case that if the amounts received by the appellants are only towards advertisement tax collected by them under statutory powers bestowed on them, that activity cannot be brought under ambit of service tax and the taxable value thereof cannot be taxed as sale of space and time for advertising service. We dispose of the appeals filed by municipalities and municipal corporations by upholding the service tax liability with interest but setting aside the penalties imposed by the lower authorities. Penalties - Held that: - since the penalties on similarly placed corporations/municipalities are set aside we find that the lower authorities were correct in not imposing any penalties/setting aside the penalties. Appeal allowed in part.
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2017 (11) TMI 885
Penalties u/s 76, 77 and 78 - erection, commissioning and installation service - composite contract - Held that: - as appellant is not contesting their liability of service tax, which has been paid along with interest, the provision of Section 73(3) of the FA, 1994 are invokable to the facts of this case. In that circumstance, no SCN was required to be issued to the appellant. Penalty not invokable on appellant by invoking section 80 - penalties set aside - appeal allowed.
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2017 (11) TMI 884
Refund claim - input services - courier service - transportation of goods - control tower charges used in SEZ operations - denial on the ground that the services were post manufacturing expenses and some of the services were wholly consumed in SEZ - Held that: - the assessee is entitled for refund of service tax paid for the services which is in relation to authorised operations in the SEZ - the refund in respect of the transportation service is allowed by relying upon the decision in the case of Tata Consultancy Services Ltd. [2012 (8) TMI 500 - CESTAT, MUMBAI] - appeal dismissed - decided against Revenue.
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2017 (11) TMI 883
VCES Scheme - short payment of service tax - claim of Revenue was that the VCES declaration made by appellant was false - Held that: - as required under sub Section (1) of Section 108 of Finance Act, 2013 the appellant had complied with the requirements of said sub Section (1) of Section 108 ibid and, therefore, as provided under said sub Section (1) appellant had got immunity from penalty interest and any other proceedings under the Chapter - Section 111 of Finance Act, 2013 empowers demand to be issued under Section 73 of Finance Act, 1994 - neither the demand under Section 111 of Finance Act, 2013 nor demand under Section 73 of Finance Act,, 1994 was maintainable in view of immunity granted to the appellant by provisions of sub Section (1) of Section 108 of Finance Act, 2013 - appellant is entitled to be issued with certificate in the form VCES-III - appeal allowed.
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2017 (11) TMI 882
Penalty - cleaning services - jurisdiction of revisionary authority to impose penalty - Held that: - the High Court of Karnataka in the case of CST, Bangalore Vs. Motor World [2012 (6) TMI 69 - KARNATAKA HIGH COURT] has held that when the assessing authority in its discretion has held that no penalty is leviable by virtue of Section 80 of the Act, the revisionary authority cannot invoke his jurisdiction and impose penalty for the first time - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 881
Refund of unutilized input credit - denial on the ground that they have filed the refund claim beyond period of one year from which they exported their final products - Held that: - reliance placed in the case of Commissisoner of Central Excise Versus GTN Engineering [2011 (8) TMI 960 - MADRAS HIGH COURT], where it was held that the relevant date should be the date on which the export of goods was made - refund not allowed - appeal dismissed - decided against appellant.
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2017 (11) TMI 880
CENVAT credit - construction services - input services - principles of res-judicata - Held that: - the construction was raised at Hosakote factory but the appellant has wrongly taken the credit at their Maruthalli factory and when it was pointed out during the audit the appellant paid back the credit which was appropriated by the Revenue - the period in dispute is March 2008 during that time, the construction service fall in the definition of input service under Rule 2(l) under the phrase setting up of a factory and the Commissioner (Appeals) has wrongly applied the amended input service definition which came into force from 01.04.2011 which is probably wrong. Also, the subsequent demand at Hosakote factory is barred by principles of constructive res judicata as it amounts to double demand for the same service and it is not permitted under law. Credit allowed - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (11) TMI 879
Benefit of N/N. 63/95-CE dated 16.03.1995 - Whether the Tribunal was correct in law in interpreting N/N. 63/95-CE dated 16.03.1995 and holding that the appellant is not entitled to claim exemption under N//N. 63/95-CE dated 16.03.1995 from Central Excise duty on the goods supplied to Bharat Earth Movers Ltd. (BEML) for further supplying to Ministry of Defence and is liable for payment of Central Excise duty amounting to ₹ 22,49,354/- such conclusion is legally sustainable in the eye of law? Held that: - Taking into consideration the notification of 2006 which squarely covered the case of the appellant and in view of certificate issued by competent authority, the appellant is entitled for the benefit - both the units are covered under the said notification and goods are ultimately supplied for use by Ministry of Defence. Therefore, it is clarified that even if goods are cleared / sold by the first unit to the second unit, it is covered by the said notification since it is ultimately meant for supply for Ministry of Defence - the appellant will be entitled for the refund - appeal allowed - decided in favor of assessee.
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2017 (11) TMI 878
N/N. 23/2003 dt. 31.03.2003 - Whether the ld. CESTAT was correct in law in extending the benefit of concessional rate of duty to the assesse in respect of scrap sale subject to the approved limits of SION fixed by the DGFT, when no such norms were fixed during the relevant period when such scrap were sold which is in violation of conditions prescribed under N/N. 23/2003 dt. 31.03.2003? Held that: - The contention raised by the respondent is required to be accepted in view of the fact that while considering the matter, the Tribunal has specifically observed that demand for differential duty since was dropped in respect of subsequent period - Tribunal was correct in holding that Since the input output norms have since been fixed by the DGFT the benefit of concessional rate for the scrap will be available to the appellants. The view taken by the Tribunal is just and proper - appeal dismissed - decided against Revenue.
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2017 (11) TMI 877
CENVAT credit - air travel agent service - duty paying documents - whether on the basis of invoices issued by the travel agent having enclosed the e-ticket showing the amount of service tax paid on the e-ticket by the airlines, the appellant is entitled to avail CENVAT credit in terms of Rule 9(2) of CCR, 2004 or not? - Held that: - It is an admitted fact that the e-ticket has been issued for travel of the appellant only and on which service tax has been paid. The said service tax has been borne by the appellant only. On the basis of this e-ticket issued by airlines and the commission shown by the travel agent in their invoice, the appellant is entitled to avail CENVAT credit under Rule 9(2) of CCR, 2004, as it is not disputed that appellant has not availed the services and not paid the service tax - reliance placed in the case of Patel Air Freight Versus Commissioner of C. Ex., Cus. & S.T., Hyderabad-II [2017 (1) TMI 803 - CESTAT HYDERABAD] - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 876
Refund of unutilised CENVAT credit - input services - Documentation fees - freight charges - rent - travelling expenses - denial on the ground of nexus - Held that: - the appellants are manufacturing the PP bags in the shed at Tumkur which has been taken on monthly rent for eventual export - the Tumkur factory was registered under Central Excise but was doing only stitching, printing and packing for appellant’s unit at Doddaballapur. Therefore the activity undertaken by the appellant at Tumkur is in relation to the final product manufactured/exported and thus eligible to CENVAT credit. Refund claim - rent - Held that: - reliance also placed in the case of Commissioner of C. Ex., Delhi-III Versus Sunbeam Hi Tech Medicare [2015 (2) TMI 1166 - CESTAT NEW DELHI], where it was held that the rent paid for the sister unit also fall in the definition of input service as the same is being used for the purpose of manufacturing the products which is eventually exported - denying the refund on account of rent paid for the sister concern is wrong and not sustainable. Appeal allowed - decided in favor of appellant.
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2017 (11) TMI 875
Remission of duty - whether there was any negligence on the part of appellant or not? - Held that: - appellant has taken all due precautions required to avoid any sort of break of fire in the factory - The finding of Original Authority that fire was on account of negligence is without any basis - remission of duty allowed - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 874
Confiscation - raw material - finished goods - excess of raw material - Held that: - only 8908 Mtrs. of Grey Cloth were not entered in statutory records in comparison to the quantity declared by the Respondent in RG23A Part -1, but such excess of raw material were within the factory and the same was not liable for seizure /confiscation under Rule 25 of the Central Excise Rules, 2002. There is no evidence that such non accountal of goods still in the factory was with an intent to evade payment of duty. Confiscation under Rule 25 of the Central Excise Rules, 2002 not attracted on mere non accountal of goods in RG-1 - It is on record that quantity of 179794.9 Mtrs. of Grey Cloth has been ascertained on the basis of figure provided by the Respondent and no actual verification was done by the investigation - demand on the above grounds not sustainable. Redemption fine on raw materials - reduction on quantum of redemption fine - Held that: - We do not find any provision in Central Excise Act and Rules made thereunder to confiscate raw-materials. The goods seized at the trading premises and godown of M/s Om Textiles & M/s Sagar Trading Co. were returned to M/s Om Textiles & M/s Sagar Trading Co. by the representatives of Revenue on 13/10/2003. Therefore, we accept the contentions raised by the ld. Counsel for the respondents in respect of this issue. Appeal dismissed - decided against Revenue.
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2017 (11) TMI 873
Clandestine manufacture and removal - case of Revenue is that it is undisputed fact that the said hand written slips were found within the factory premises and therefore, they should be accepted as evidence of clandestine removal - Held that: - Revenue did not carried any investigation in respect of procurement of raw-materials, manufacture of goods alleged to be clandestinely removed, transporters of the goods alleged to have been clandestinely removed and the purchasers of said goods - Revenue also did not investigate into flow back of money on clearance of alleged clandestinely manufactured goods. Clandestine manufacture of goods by M/s Deep Jyoti Rubber Pvt. Ltd. alleged in the said Show Cause Notice dated 06/11/2003 is not established - the value of clearance for both the years 2001-02 & 2002-03 was less than threshold limit of ₹ 1 Crore and therefore, the said Show Cause Notice 06/11/2003 does not sustain - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 872
Refund claim - denial on the ground that the respondent is manufacturing dutiable as well as exempted goods and such bond for exempted variety of goods cannot be accepted - Held that: - similar issue decided in the case of CCE Versus Drish Shoes Ltd. [2008 (10) TMI 664 - CESTAT, NEW DELHI], where it was held that Considering language of Rule 6(6)(v) of Cenvat Credit Rules, 2004 the petitioner are entitled to avail Cenvat Credit in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt - refund allowed - appeal dismissed - decided against Revenue.
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2017 (11) TMI 871
CENVAT credit - duty paying documents - it was alleged that M/s VKMW, the supplier of Goods (Copper Ingots) to the respondent, had no manufacturing facility at their declared factory premises and were engaged in issuing fraudulent invoices to their customers showing fictitious production of copper ingots in their unit, hence the goods said to be consigned on their invoices to their customers/buyers were actually not covered by such invoices, i.e. the goods covered by these invoices were not actually manufactured by M/s VKMW and only the invoices showing bogus clearance of finished goods had been issued, therefore no CENVAT credit was admissible on these invoices. Held that: - the findings of the learned Commissioner (Appeals) have not been assailed by the Revenue except bald allegation - It is an admitted fact that Revenue have taken action against the said M/s VKMW only in the year 2010. Thus, during the period of transactions 2004 05 and 2006 07. The appellant have entered into transaction with the said M/s VKMW bona-fide. It is also admitted fact that neither the Revenue had cancelled the registration certificate of the said M/s VKMW nor given any public notice as to the fraud committed by the said M/s VKMW. Thus, under the scheme of the Act, the respondent-assessee acted and bona-fide have procured the inputs from the said M/s VKMW on payment of duty by making payment for the invoices through the banking channel. The respondent-assessee have discharged their onus as regards genuineness of the transactions in question - appeal dismissed - decided against Revenue.
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2017 (11) TMI 870
CENVAT credit - manufacture of dutiable as well as exempt goods - non-maintenance of separate set of books - Rule 6 of the CENVAT Credit Rules, 2004 - Held that: - CBEC Circular dated 25.04.2016 withdrawal of the pressmud and bagasse - bagasse and pressmud are arising during the manufacture of sugar. Hence the ratio of the judgment of Hon’ble Apex Court in the case of M/s DSCL Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT] , will apply equally two products, where it was held that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of Section 2(f) of the Act and the absence of manufacture, there cannot be any excise duty - appeal dismissed - decided against Revenue.
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2017 (11) TMI 869
CENVAT credit - It is the case of the Revenue that appellant have recomputed value of the inputs as per the provisions of Section 4(1)(b) of the Central Excise Act, 1944 and discharged appropriate duty - Held that: - the issue is no more res integra as is covered by the ratio of the Larger Bench decision in the case of SILVASA MACHINES Versus COMMISSIONER OF CENTRAL EXCISE, VAPI [2012 (11) TMI 772 - CESTAT, AHMEDABAD], where it was held that amount of Cenvat credit taken by the assessee, of the duty paid on the invoice value as shown in the invoice can be considered as correct assessable value and duty liability to be discharged - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 868
Penalty - job-work - N/N. 05/2006-CE dt. 01.03.2006 - Held that: - there is no evidence of the appellants mala-fide disclosed in the show cause notice and the appellants activities of conversion of Rail into Swtiches and crossing, out of the material supplied by the Railways, is capable of an interpretation that such activities does not amount to manufacture - the fact of the purchase order itself specified that no excise duty is required to be paid which further strengthened the assessees believe that their activity does not amount to manufacture. In the absence of any evidence to the contrary reflecting upon the assessee's mala-fides, imposition of penalty upon them is not justified - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 867
Interest and penalty - CENVAT credit availed wrongly, was reversed - Held that: - Since the appellant had merely availed the credit and reversed the same before utilizing the availed credit for remittance of duty, interest liability would not arise - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE Versus M/s BILL FORGE PVT LTD, BANGALORE [2011 (4) TMI 969 - KARNATAKA HIGH COURT], where it was held that interest and penalty is not imposable where credit wrongly availed has been reversed prior to utilization - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 866
Manufacture - interpretation of statue - validity of SCN - Held that: - the impugned Order-in-Original did not give any categorical finding of the six components which were directed to be examined by this Tribunal whether to have been cleared from their manufacturing unit - Shri Pathak has stated that the appellant were supplying some goods from trading warehouse and that blower air inlet and condenser was not cleared from the factory but they were supplied from their trading warehouse to M/s General Motors India Ltd. Therefore, the show cause notice was not issued with fullest consideration after examining all the facts and provisions of Rule 2(a) of said Rules of Interpretation as stated above were wrongly invoked for the issue of said show cause notice and for that reason the said show cause notices not sustainable and, therefore, the impugned Order-in-Original is set aside - appeal allowed - decided in favor of appellant.
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2017 (11) TMI 865
SSI Exemption - whether the appellant-assessee who is engaged in the manufacture of Iron and Steel products and who was paying duty on their clearances at normal rate whether they can opt for exemption with effect from 06 May, 2006 under N/N. 8/2003 CE dated 01.03.2003? - Held that: - although it is mentioned in Clause 2(i) that the option has to be made in writing for not availing the exemption. Admittedly, the appellant have not filed any option not to avail the exemption prior to 06 May, 2006, when they opted to avail the exemption. Further sub Clause (e) and (f) of sub-clause (ii) of Rule 2 of the said notification, gives option to the assessee to specify the date from which option under the notification has been exercised and also to give details or the aggregate value of clearances of services or goods till the date of exercising option. The SSI Exemption is available to the appellant assessee with effect from 06 May, 2006 - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (11) TMI 864
Waiver of penalty and interest - recovery of tax arrear - Karasamadhana scheme - Section 42 of Chapter-V - Sections 62(4) and 63(7) of the KVAT Act, 2003 - Held that: - Admittedly, the ‘KSS 2017’, is a self contained and special piece of legislation enacted under the special circumstances in the month of March, 2017, to pave the way and to provide the clean slate for the new indirect regime of GST to be implemented from 01.07.2017 with a view to put an end to the pending litigation and also to recover the arrears of revenue under the old Enactments which were to be repealed under the new GST law. The main object and urgency of the implementation of the said Scheme carved out the special provisions in the said Scheme for achieving the twin objectives of the quicker and easy recovery of the arrears of tax and other demands and putting an end to the pending litigation. Naturally, it was a beneficial and welfare Scheme to provide the win-win situation for both the tax payers and the tax collectors. Though the said provisions made in the Scheme cannot be read as repugnant and in conflict with the provisions of relevant statutes, which the said Scheme covered but the at the same time, it also cannot be said that the usual procedure of assessment, adjudication, appeals and recovery provisions under the statutes themselves can be given the overriding effect over the said Scheme ‘KSS 2017’, even to the extent of undoing the purpose of the Scheme itself. The stand of the Respondents-Department in the present cases, is incongruous and unsustainable and the same defeats the purpose of the Scheme for the Dealers, who voluntarily opted for the same giving up their valuable rights of disputing the entire liability as per the adjudication orders passed by the Assessing Authorities and putting an end to the litigation and paying the remaining arrears of tax, interest and penalty as per the provisions of the Scheme and thus giving finality to the dispute and achieving the twin purposes of the Scheme itself. Since under the ‘KSS 2017’, the arrears of tax as well as the arrears of interest and penalty were to be determined in terms of the assessment order itself and remaining unpaid as on 15.03.2017, as required in Clause 2.4 quoted above, while scrutinizing the applications as per Clause 3.2 of the ‘KSS 2017’ itself, the Assessing Authority is not entitled to undertake fresh adjudication process of computing or adjusting the amounts deposited, in the manner he chose or applying the provisions of Section 42(6) of the Act - The provisions of Section 42(6) of the Act, read in conjunction and on sequence with other Sub-sections of Section 42, upon a harmonious reading would reflect that normally assessee is expected to first square up its liabitlity to pay the tax with the returns itself and thereafter upon passing of the assessment order and if the amount paid falls short of the aggregate amount of tax and other amount (penalty) and interest payable, such amount paid shall be first adjusted against interest. This sequence of payments and adjustments under Section 42(6) does not govern the payments and adjustments subject to appellate proceedings under Sections 62 or 63 of the Act nor they are applicable to special Schemes like ‘KSS 2017’ in the present case. The said Scheme is a self contained Code in itself and envisages first the complete payment of tax assessed and then only 10% of assessed interest and penalty and therefore, adjustment of amount lying deposited or paid after the assessment order should also follow the same sequence and the order of preference. The well settled rule of interpretation of Tax laws that in case the two views are possible, the one favourable to the assessee should be adopted, clearly leads this Court to the aforesaid conclusion. The stand of the Revenue on the contrary therefore is not in consonance with the over all objective and clear provisions of the ‘‘KSS 2017’, promulgated with the avowed purpose of quick recovery of arrears of tax, interest and penalty and putting a quicker end to the litigation for both the parties. During the pendency of the appeal, the payment or the deposit made by the petitioners-assessees, after the assessment orders are passed, remains the colourless deposit and cannot be adjusted under any specific head of the ‘total demand’ comprising of tax, interest and penalty and the full effect and play of the ‘KSS, 2017’ can be given to the assessee on a beneficial and purposive interpretation of the provisions of the said Scheme, only if such payment or deposit is first adjusted against the outstanding or arrears of tax, then against interest and then against penalty amount. This Court is of the clear opinion that the rejection of the applications filed by the petitioners-assessees under the Scheme ‘KSS 2017’, after adjustment of the amounts deposited by them after the assessment orders were passed, first under the head ‘interest’ and thereafter computing the arrears of tax, interest and penalty is unsustainable in law and illegal and the impugned orders therefore deserve to be quashed and set aside and the writ petitions deserves to be allowed - petition allowed - decided in favor of petitioner.
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2017 (11) TMI 863
Maintainability of petition - return of pre-revision notice was issued to the appellant - alternative remedy - writ petitions were dismissed, giving liberty to the petitioner, either to seek for rectification of the orders passed by the Commercial Tax Officer, Perur Assessment Circle, Coimbatore, respondent herein, by invoking the power under Section 84 of the Tamil Nadu Value Added Tax Act, 2006 by filing a petition or to file an appeal before the Appellate Authority. Held that: - As per Section 51 of the Act, any person objecting to the order passed by the appropriate authority under Section 22, Section 24, Section 26, sub - sections (1), (2), (3) and (4) of section 27, section 28, section 29, section 34 or sub-section (2) of section 40 other than an order passed by a Deputy Commissioner (Assessment) may, within a period of thirty days from the date on which the order was served on him, in the manner prescribed, appeal to the Appellate [Deputy] Commissioner having jurisdiction: Provided that the Appellate Deputy Commissioner may, within a further period of thirty days admit an appeal presented after the expiration of the first mentioned period of thirty days if he is satisfied that the appellant had sufficient cause for not presenting the appeal within the first mentioned period. Whereas, in Section 54 of the Act, any person objecting to an order passed Or Proceeding recorded under this Act for which an appeal has not been provided for in section 51 or section 52 may within a period of thirty days from the date on which a copy of the order or proceeding was served on him, in the manner prescribed file an application for revision of such order or proceeding to the Joint Commissioner: Provided that the Deputy Commissioner may within a further period of thirty days admit an application for revision presented after the expiration of the first mentioned period of thirty days, if he is satisfied that the applicant had sufficient cause for not presenting the application within the first mentioned period. If according to the appellant, revision under Section 54 of the Act is the only remedy available to the appellant and not an appeal as indicated, it is always open to the petitioner to challenge the assessment orders for the years 2012-2013, 2013-2014, 2014-2015 and 2007-2008, respectively in the manner provided therefor, under the Statute and that there is no need for this court to say as to whether a revision or appeal, as the case may be, would be the appropriate remedy, which the appellant has to take recourse. Petition dismissed being not maintainable.
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