Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 27, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Supply of pure food items such as sweetmeats, namkeens, cold drink and other edible items from sweetshop which also runs a restaurant - bundled services - The supply shall be treated as supply of service and sweet shop shall be treated as extension of restaurant.
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Supply or not - amount passed on to the customer by Del Creder Agent (DCA) on account of the early payment before credit period allowed by principal - since it is in the nature of discount, not liable to GST
Income Tax
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Travel expenses claimed as a deduction from the technical know-how fees - claim prohibited by Section 115A(3) - specifically prohibited expenses cannot be allowed.
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AO as also other authorities proceeded on the presumption that since in the preceding years the assessee admitted deduction to the extent of 10%, hence, in future also assessee would continue to be bound by the same.
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Assessee should be allowed deduction u/s 80IC at the enhanced amount of income resulting from disallowances u/s 40(a)(ia) or u/s 43B etc.
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Reopening of assessment u/s 147 - deduction u/s. 801A/IB - reassessment framed by the AO is bad in law for the three reasons.
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Nature of loss - short term capital loss or revenue loss - loss incurred on capital contribution in joint venture - short term capital loss adjustment against the capital gain - alternative claim made by the assessee was correctly accepted by the CIT(A)
Customs
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Strict compliance of provisions of Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012 as amended at the time of assessment, registration and examination, reg
Service Tax
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CENVAT Credit - construction of the Hotels - Cenvat credit availed during the construction is admissible for discharge of service tax liability after such constructed structure is used for providing taxable service
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Refund of service tax on inputs - Article 265 clearly rules that there cannot be collection of tax without authority to Law, so also, the revenue should justifiably prove its authority to reject refund and retain, when clearly the amount did not belong to it, but to another.
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Cleaning services or not - assessee is not clearing the fly ash with the objective of cleaning the pond or free the pond from contamination. Fly ash is being excavated and transported to the specified areas as per the contract - demand set aside.
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Reverse charge mechanism - place of provision of services - Club or Association Services - performance based category services - Since the services are not performed in India partly or wholly, not liable to tax.
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Penalty u/s 78 of FA - GTA Service - the appellant was a dealer and not a provider of output service - Appellant is liable to pay service tax under the reverse charge mechanism - Since there was a bonafide doubt, no penalty.
Central Excise
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Refund of duty paid under mistake of law - applicability of section 11B of CEA, 1944 - The limitation, in the relevant period, being one year, there could be no refund application maintained after that period.
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CENVAT Credit - duty paying documents - while mentioning the vehicle number, the clerical error has occurred - credit cannot be denied - demand set aside.
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Since slitting of coils into sheets does not amount to manufacture, for clearance of sheets received to SEZ Unit, the appellant was required to only reverse the proportionate credit - Demand set aside.
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CENVAT Credit - fraudulent credit or not - The appellants have availed CENVAT Credit on the duty paid on the invoices. So also the entire transaction of the appellant has been through banks - credit cannot be denied merely on the basis of statements.
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Undervaluation - cost of lignite extraction - once petitioned price has not been approved by this authority, the appellant has no right to recover the same from RWPL - the petitioned price cannot be categorised as price actually payable. Hence, is wrongly considered as the transaction value.
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CENVAT Credit - duty paying documents - the Cenvat Credit cannot be denied on the supplementary invoices issued to the sister concern for the differential duty paid.
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CENVAT Credit - input services - transportation of consignment - denial of credit on the ground that the input service with regard to transportation of consignment had not been received by the appellant unit and that the input credit documents were in the name of the sister unit - credit cannot be denied.
Case Laws:
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GST
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2018 (11) TMI 1267
Classification of manufactured item - automotive chains (i.e., silent chains used in petrol engines and roller chains used in diesel engines) - whether classified under HSN 8409 or 7315? Held that:- It is evident that the items are transmission chains which are used in automotive engines and machinery for transmitting mechanical power from one shaft to another and are made of steel. They are articulated chains i.e. made of a series of links or plates which are driven by external sprockets and do not have any other assembly. The Applicant supplies these mainly to automotive industries where they are used in internal combustion engine, they synchronizes the rotation of the crankshaft and the camshaft(s) so that the engine’s valves could open and close at proper time - It is seen that articulated link chains of steel such as roller chain, inverted tooth (silent) chains are included under 7315 irrespective of their intended use and whether they are cut to length or intended for particular use. In the instance case, the items are intended for internal combustion engines of automobiles, motorcycles etc. It is evident that Heading 7315 includes articulated link chains such as roller chains or silent chains which are used as transmission chains for engines of automobiles or machinery. Though these form parts of engines under Chapter 8407 or 8408, they are covered under definition of ‘parts of general use’ which are specifically excluded from chapter heading 8409 - Therefore, articulated link chains ie. ‘Roller chains’ supplied by the applicant are classifiable under CTH 73151100 and ‘Inverted tooth chains or silent chains’ under CTH 73151290 of the Customs Tariff made applicable to GST. Ruling:- “Roller chains” supplied by the applicant are classifiable under CTH 73151100 and ‘Inverted tooth chains or silent chains’ under CTH 73151290 of the First Schedule to the Customs Tariff Act, 1975 as applicable to GST as per Explanation (iii) to Notification 1/2017 -Central Tax (Rate) dt 28.06.2017 and G.O. Ms No. 59, Commercial Taxes and Registration (B1) dt 29th June 2017.
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2018 (11) TMI 1266
Classification of supply - Supply of goods or supply of services - composite supply or mixed supply - Supply of pure food items such as sweetmeats, namkeens, cold drink and other edible items from sweetshop which also runs a restaurant - bundled services - rate of tax - entitlement of input tax credit. Held that:- Composite supply is one where two or more goods or services or both are supplied together, in a natural bundle and in a normal course of business, provided one of which is a principal supply. However, principal supply will be that supply which is predominant over other supplies. This means that the goods and services are bundled owing to natural necessities. The composite supply is taxed at the rate applicable to the principal supply whereas a Mixed supply means two or more individual supplies of goods or service, or any combination thereof; made in conjunction with each other by taxable person for a single price where such supply does not constitute a composite supply. In Mixed Supply, the combination of goods, and/or services is not bundled due to natural necessities, and they can be supplied individually in the ordinary course of business. - In order to identify if the particular supply is a Mixed Supply, the first requisite is to rule out that the supply is a composite supply. A supply can be a mixed supply only if it is not a composite supply, As a corollary it can be said that if the transaction consists of supplies not naturally bundled in the ordinary course of business then it would be a Mixed Supply. Once the amenability of the transaction as a composite supply is ruled out, it would be a mixed supply, classified in terms of a supply of goods or services attracting highest rate of tax. In the case of sweet shop cum restaurant, the services from the restaurant is a principle supply which provides a bundled supply of preparation & sale of food and serving the same and therefore it constitutes a composite supply - It further satisfied the following conditions of a composite supply: (i) Supply of two or more goods or services or both together; and (ii) Goods or services or both are usually provided together in the normal course of business. In the instant case the nature of restaurant services is such that it may be treated as the main supply and the other supplies combined with such main supply are in the nature of incidental or ancillary services. Thus restaurant services get the character of predominant supply over other supplies. Therefore in the present case the supply shall be treated as supply of service and the sweet shop shall be treated as extension of the restaurant in as much as the said activity covered under Schedule II of the Act ibid. Rate of GST - Held that:- Since we already held above that the activity of the applicant come under the purview of “restaurant services”, the same falls under Heading 9963 of GST rates on services under Notification No. 11/2017-Central Rate (Tax) dated 28.06.2017 (as amended time to time) - the rate of GST on aforesaid activity shall be 5% as on date. Admissibility of ITC credit - Held that:- The applicant cannot avail credit on the GST paid on the goods and services used in their Said activity in terms of the notification. Ruling:- The supply shall be treated as supply of service and sweet shop shall be treated as extension of restaurant. The rate of GST on aforesaid activity will be 5% as on date, on the condition that credit of input tax charged on goods and services used in supplying the said service has not been taken. All the items including takeaway items from the said premises shall attract GST of 5% as on date subject to the condition of non availment of credit of input tax charged on goods and services used in supplying the said service.
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2018 (11) TMI 1265
Levy of GST - reverse charge mechanism - payment to PWD, Uttrakhand for construction of road - time of supply when advance payment is released to PWD, Uttrakhand - levy of GST on amount deposited with Central Fund i.e Uttranchal CAMPA and reimbursed by MEA considering as part cost of the road - time & value of supply of services - applicability of Notification no. 13/2017 dated 28.06.2017. Held that:- M/s. NHPC is providing services to Central Government i.e. Ministry of External Affairs and will attract GST @ 12% but by virtue of Notification No. 12/2017 -Central Tax (Rate) dated 28th June, 2017 (as amended time to time), the supply of service in question, is exempted, thus sub-contracting of the said work contract to PWD Govt. of Uttarakhand is also exempted - the said activity comes under the purview of exempted category, therefore, question of payment of GST under reverse charge in terms of Notification No. 13/2017 -Central Tax (Rate) dated 28.06.2017 does not arise. Since their activity is a exempted service, issues of time of supply and applicability of GST on reimbursement lost its relevancy. Ruling:- No GST is applicable on the activity of the applicant since the same falls under exempted services in terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended time to time). On the issues of time of supply and applicability of GST on reimbursement, no provisions of GST is applicable on said issues as supply of service in question falls under exempted services.
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2018 (11) TMI 1264
Supply or not - amount passed on to the customer by Del Creder Agent (DCA) on account of the early payment before credit period allowed by principal - supplier/receiver in the transaction - classification of such Supply and its HSN/SAC Code and applicable GST Rate - exemption under N/N. 12/2017 Central Tax (Rate) dated 28th June 2017, applicable w.e.f. 01.07.2017 - credit of the ITC of the GST charged on such supply. Held that:- As per pricing policy of RIL dated 15.06.2018 regarding supply of goods for sale, the cash discount of ₹ 800/MT/Day is applicable on all grades except plant sweepings and waste grades and will be deducted from the basic price as per price Circular for payment of GST. Further, an additional bonus / discount of ₹ 80/ MT/ Day is available on early payment made by the applicant or the customer against such supplies made by the RIL, if such payment is made within 10 days of supply of the goods. The transaction made between DCA and the Customer for passing on the specified bonus given by the principal is nothing but an additional discount given for early payment made by the customer. In this case there is only one supply made by the principal to the customer. The additional discount relates to supply already made by the principal and passing on such bonus to the customers by DCA is in the nature of pure agent. However, any amount retained by the DCA on account of early payment is in the nature of supply made to the principal as business support services on which the DCA is already paying GST. ITC Credit on GST charged - Held that:- The invoices can be issued by the supplier of the goods and services only - In the instant case, the customer is recipient of the goods supplied by the principal and any amount due to him can be adjusted by credit notes/ debit notes in relation to that supply. As the customer is recipient of the goods or services, he is not liable to issue invoices in respect of goods or services supplied by the principal. When there is no supply to DCA by customer, the DCA is not entitled to take ITC of GST passed on to the DCA in any manner. Ruling:- The additional bonus passed on by the applicant (DCA) to the customer, is not in nature of a supply in accordance with GST Act, 2017. Since, the said transaction is not a supply by the customer; invoice cannot be raised/ issued by the customer and if any amount passes on to the DCA in any manner, the DCA is not entitled to take ITC of the said amount passed on by the customer.
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2018 (11) TMI 1263
Release of detained consignments - non-filing up of Part-B - Held that:- The issue stands squarely covered in favour of the petitioner in the case of SABITHA RIYAZ VERSUS THE UNION OF INDIA AND OTHERS. [2018 (11) TMI 213 - KERALA HIGH COURT], where it was held that typographical error in the E-way bill must be condoned - petition disposed off.
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2018 (11) TMI 1262
Extension of provisional registration - the petitioner applied in July 2017 for migration to GST and for a permanent registration number, it was denied. In the meanwhile, the provisional registration expired because she could not complete the migration process by 31.03.2018 - Held that:- The writ petition is disposed off holding that the 9th respondent will consider the petitioner's application and take further steps accordingly, in one month.
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2018 (11) TMI 1261
Detention of goods with vehicle - vehicle number was typed mistakenly in the e-way bill - Held that:- The learned Division Bench of this Court in Renji Lal Damodaran Vs. State Tax Officer [2018 (8) TMI 1145 - KERALA HIGH COURT] has dealt with an identical issue, where it was held that It is directed to release the goods on the appellant furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules. The respondent authorities are directed to release the petitioner's goods and vehicle on his "furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules - petition disposed off.
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Income Tax
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2018 (11) TMI 1260
Travel expenses claimed as a deduction from the technical know-how fees - claim prohibited by Section 115A(3) - Held that:- The expenditure incurred is a direct consequence of the agreement for supply of technical services. The technical collaboration agreement necessitated deputation of technical personnel from the foreign company to the KSEB to work within India and in the facilities of the KSEB. The expenditure now claimed is of the travel expenses incurred by the assessee with respect to the technical personnel so deputed by the foreign company to the KSEB. This expenditure incurred has a direct nexus with the technical services supplied and deduction thereof is specifically prohibited under sub-section (3) of Section 115A. In such circumstances, we do not see any reason to interfere with the order of the Tribunal. We answer the question of law raised, against the assessee and in favour of the Revenue.
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2018 (11) TMI 1259
Unexplained fixed deposits - Commissioner of Income-tax (Appeals) admitted the fixed deposit register as a fresh evidence without giving an opportunity of being heard to the Assessing Officer as prescribed under Rule 46A(3) - Held that:- The verification said to have been done by the appellate authority is only a perusal of the list and not a verification of the genuineness of such transactions. The details as entered in the list of cheque payments were also taken as true by the first appellate authority. The first appellate authority erred in having so deleted the addition on mere assumption based on surmises and conjectures; without actually verifying the genuineness of the transactions. The Tribunal also relied on the findings of the CIT (Appeals) with respect to the verification done for the previous years. There is absolutely no verification done as to how many deposits of the previous year were revalidated in the present year. This is a permissible exercise by the AO, who has to do it at the first instance. In fact, the first appellate authority could also have done the said exercise or at least called for a remand report from the AO, which measure was not resorted to. In such circumstances, though after 22 years, we are constrained to remand the matter to the AO. The assessee shall produce the list of depositors and prove their genuineness before the AO. Question of law is answered in favour of the Revenue and against the assessee.
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2018 (11) TMI 1258
Admissions made u/s 132(4) - Additions were made with respect to a Chit carried on by the assessee, the rental income, loans availed by the assessee, i. e. , and those availed from individuals as also from financial institutions - addition with respect to the "DRAWS" indicated in the note-book - adoption of the multiplier as contended by the assessee - Held that:- AO adopted '1000' as the multiplier for the draw. This is not supported by any evidence unearthed, The Draw is a distinguishable item and the assessee's version has to be accepted especially in the context of the confirmations produced before the A. O. In such circumstances, we are of the opinion that the assessee's contention that the multiplier was '100' is more probable, which also stands supported by the confirmations from the various subscribers. Assessing Officer having not obtained any other material to prove that the multiplier is '1000', the adoption of such multiplier can only be said to be a mere surmise or conjecture. We also notice that the figure shown against Draw is clearly distinguishable and a separate multiplier is also possible of easy identification. We, hence, uphold the order of the Tribunal to that extent. Now we are concerned with the multiplier contended of '10000' for individual loans and '100000' against institutional loans we notice that in the course of search the assessee was seen to have launched a prosecution under Section 138 of the Negotiable Instruments Act on the dishonour of a cheque of ₹ 4, 00, 000/-. The contention of the assessee was that the loan was only of ₹ 14, 000/-. In such circumstances, we do not think any credence can be placed on the submission of the assessee that with respect to the individuals the multiplier to be applied is '10000' and that to the institutions '100000'. Even with respect to certain individuals, the assessee had stated on oath that the multiplier to be applied is '100000'. This has to be applied across the board to all the individuals, since there is no substantiating material produced; as confirmation from the individuals. The assessee has also no explanation as to how the multiplier can be applied differently when the figures and names are noted without any distinguishable marks. We, in the above circumstances, answer the questions of law in favour of the Revenue and against the assessee; but, however, confirm the order of the Tribunal with respect to the Chit transaction directing the adoption of the multiplier as contended by the assessee. The Assessing Officer shall re-do the assessment in accordance with the directions herein above.
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2018 (11) TMI 1257
Validity of Block assessment u/s 158BC - suppression found on search - assessee had not disclosed the sales turnover as found in search in the books of accounts - Held that:- Admittedly the assessee started the Bar Hotel in September, 1998. The search was conducted on 29.07.1999. Hence, the block period under Section 158BC were between September, 1998 to 31.03.1999 and 01.04.1999 to 29.07.1999, the assessment years being 1999-2000 and 2000-2001. The notice under Section 158BC read with Section 158BD was issued on 19.11.199. At that point, the time for filing of return even in the first block period had not expired, being 31.12.1999. As rightly noticed by the Tribunal, though an intelligent assumption has been made that the returns would not have disclosed an excess sale consideration but for the search; it remains in the realm of an assumption. There were no books of accounts recovered from the assessee's business premises which showed a lesser sale consideration. Statements of sales were recovered on search both from the assessee's business premises as also the residence of the Managing Director. The statements recovered from the residence of the Managing Director showed a larger consideration. It cannot be assumed that the returns filed would have shown only the figures in the statements recovered from the business premises. As recorded by the Tribunal that the returns for both the assessment years, being 1999-2000 and 2000-2001, was filed by the assessee showing the higher sale consideration as has been found from the documents recovered from the residence of the Managing Director. Hence, if at all, the search materials could have led to a consideration for a re-assessment if there was no correct disclosure and in no circumstance a block assessment. We are, hence, not inclined to interfere with the order of the Tribunal and we answer the question of law in favour of the assessee
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2018 (11) TMI 1256
Entitlement to claim set off of interest income from fixed deposits from the interest paid on borrowed funds - the borrowed funds having been invested in short term fixed deposits till it was utilised - The assessee is a Company, which at that point of time was constructing an air port, for which purpose advances were taken from HUDCO. The funds were parked in short term Fixed Deposits which earned interest income - Held that:- The assessee may be entitled to capitalise the interest payable by it. But what the assessee cannot claim is adjustment of this expenditure against interest assessable under Section 56. Section 57 of the Act sets out in its clauses (i) to (iii) the expenditures which are allowable as deduction from income assessable under Section 56. It is not the case of the assessee that the interest payable by it on term loans is allowable as deduction under Section 57 of the Act. In the first assessment year there is yet another question as to whether the expenditure claimed on salary could have been allowed as against the interest income earned by the assessee from Fixed Deposit. The assessee had claimed expenditure of salary paid to its employees from the interest income earned from the Fixed Deposits. Admittedly, at that point, there was no business income available to the assessee since the air port had not been established. The above extracted paragraph also answers this question. Hence there could have been no expenditure claimed under the Income Tax Act. We hence answer that question also against the assessee and in favour of the Revenue.
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2018 (11) TMI 1255
Addition u/s 80IA(10) read with Section 80IC (7) - no business transacted - addition made on agreed basis in the preceding assessment years though no business had been transacted between the appellant and his alleged sister concern - principle of res judicata - Held that:- It is not in dispute that the reason assigned by the Assessing Officer in applying the provisions of Section 80IA (10) of the Act, is based only on an admission made by the assessee in relation to the two preceding assessment years i.e. 2006-07 and 2007-08. Well, in our considered view, about which there cannot be a dispute, assessment of each year is required to be independently carried out on the basis of material before the AO. The authorities below failed to consider compliance of essential ingredients required for invocation of the said provisions. AO as also other authorities proceeded on the presumption that since in the preceding years the assessee admitted deduction to the extent of 10%, hence, in future also assessee would continue to be bound by the same. This, in our considered view, is not a reasonable approach adopted by the authorities, for each case of the assessee has to be considered independent of the each assessment year and not on the basis of assessment carried out in the preceding year. The approach adopted by the authorities below is erroneous and perverse - Remand the matter back to the Assessing Officer for consideration afresh.
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2018 (11) TMI 1254
Block assessment - Levy of income tax only on 15% of the total receipts disclosed in proceedings under Section 158BC - Held that:- Sub-section (2) of Section 158B which defines “undisclosed income” as including inter alia any income based on an entry in the books of accounts or other documents or transactions representing whole or part of the income, which has not been or would not have been disclosed for the purposes of this Act. The provision does not permit tax to be levied on the entire receipt of money by an assessee and also does not deem undisclosed income to be the entire undisclosed receipts, revealed on search or otherwise. Here, the sale consideration, which was detected on search and seizure, was not reflected in the books of accounts nor the profit returned as income for the subject years. The sale consideration was also for the purchase of apartments in different complexes, the development of which was promoted by the respondent/assessee. The income of the assessee, which stood undisclosed, has to be determined for the purpose of levying income tax. The Tribunal, after looking into the net profit of the assessee in the different projects, directed 15% of the total undisclosed receipts to be taken as the undisclosed income. We are of the opinion that the said direction was perfectly in tune with the provision under Section 150BB and Section 158BH, which specifies that unless otherwise provided all the provisions of the Act, applicable to assessments under Chapter XIVB. - Decided in favour of the assessee Levy of penalty under Section 158BFA - Held that:- What is to be looked at is whether the returns filed under Section 158BC, for each of the assessment years, in the block period conceded income less than that determined finally in the block assessment. As of now the Tribunal had set aside the determination in assessment, levying tax on the entire undisclosed receipts in the respective years and directed determination of income at 15% of the undisclosed receipts. We have upheld the order of the Tribunal and rejected the appeal of the Revenue. Hence a re-computation of the undisclosed income is warranted. Penalty can be imposed only on the excess amounts determined @ 15% of the undisclosed receipts, from that conceded in the returns filed under Section 158BC. We hence answer the question of law in favour of the Revenue and against the assessee
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2018 (11) TMI 1253
Disallowance u/s 80IA to the unit established in Andhra Pradesh - which category the appellant's industry would fall? - Held that:- Section 80IA as was available in the Income Tax Act at that point of time. Various types of industries were referred to therein, under the various clauses, the commencement of which were specified between different periods. There is no consideration by the First Appellate Authority or the Tribunal as to under which category the appellant's industry would fall. If, as the First Appellate Authority found, the claim is only on the basis of an industrial undertaking existing in a industrially backward State, then on the finding of the First Appellate Authority, there is no question of a remand. We notice that the issue has not been considered with reference to the facts and the law as seen from Section 80IA of the Act, as it existed during the relevant assessment years. We set aside the order of the Tribunal and remand the issue to the Tribunal to consider the claim under Section 80IA of the Act with reference to the categorisation of the appellant's industry; as is discernible from the various clauses.
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2018 (11) TMI 1252
Addition on account of jewellery seized - search operations u/s 132 - Held that:- Unexplained investment is a small amount vis-a-vis high income declared by the assessee. No other incriminating material was found during the search operation which could evidence that the assessee has any undisclosed sources of income which were hidden from Revenue. No other incriminating material is brought on record by Revenue to contend that these seized jewelleries were purchased out of any undisclosed income except that the assessee could not bring on evidence to justify/substantiate its acquisition. Thus, on the touchstone of preponderance of probabilities keeping in view the cumulative impact of peculiar factual matrix surrounding this case as discussed above and also keeping in view smallness of the amount vis-a-vis income declared by the assessee over a period of time, we hold that the additions as made by the AO and confirmed by CIT(A) towards unexplained investment in jewellery to the tune of ₹ 8,70,740/- is not sustainable in the eyes of law and we order deletion of this addition as was made by the AO and confirmed by learned CIT(A). We adjudicate this ground in favour of the assessee.
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2018 (11) TMI 1251
Addition on account of stock valuation difference - AO has made addition to the closing stock on the basis of the valuation of the closing stock of runner riser made by the sister concern of the appellant - AO observed that assessee has not given reasonable basis at all for changing the valuation of the stock - Held that:- As the valuation of the assessee was backed by the trade tax order as well as data derived from appellant’s audited accounts we do not find any justification for sustaining the addition on account of under valuation of closing stock. Further, the addition has been made by AO only based on the valuation made by sister concern in its that case. It was also not known whether the valuation of stock made in that particular concern was on the basis of cost or net realizable value whichever is less. Merely because some other assessee has valued the stock at different figure, addition in the hands of the another person cannot be made without finding out that what is the cost of the goods purchased by that assessee as well as the net realizable value in the hands of that assessee. Therefore, in absence of any such finding by AO in the assessment order on in the remand proceedings, we do not find any infirmity in the order of the CIT (Appeals) in deleting the above addition. Decline in gross profit rate - Held that:- The book results have been discarded by the learned assessing officer despite there is comparative yield and burning loss in consonance with earlier financial years. On the reading of the order of learned assessing officer, it is apparent that without rejecting the books of accounts the book results have been enhanced by the learned assessing officer. If the assessing officer wanted to reject the books of accounts of the assessee then it is mandatory that he should have pointed out latent, patent, and glaring defects in the books of accounts. In absence of it the addition to the gross profit cannot be sustained. Over and above the books of accounts are audited and there is no finding of the assessing officer that system of accounting followed by the assessee is such which does not result into deducing the correct financial result there from. In view of this we uphold the order of the learned commissioner appeals in deleting the addition on this account. Addition on account of unverifiable expenses - Held that:- commissioner appeals upheld the addition on principle basis however, he found that it is on the higher side and therefore he restricted it to ₹ 50,000 out of ₹ 1 lakh disallowed by the learned AO. Even otherwise, we are of the view that those expenses should have been disallowed for which assessee failed to produce cogent evidence. Such instances should have been noted by the learned assessing officer and disallowance to that extent should have been made. The disallowance made by the learned AO is merely based on estimation. Such ad hoc disallowance as such cannot be sustained. No infirmity in the order of the learned commissioner appeals in deleting the addition of ₹ 50,000. Addition under section 68 - Held that:- It is apparent that during the course of appellate proceedings the learned CIT appeal has obtained to remand report from the assessing officer on the various submission and details furnished by the assessee. Same were also confronted to the assessee and obtained the rejoinder to the remand report. The assessee has submitted the detail chart mentioning the name and address of all the parties along with the permanent account number and amount of credit balance with the assessee company. The confirmations were also filed. Even otherwise when AO has allowed the creditors to continue without disallowing the purchases made from those creditors, part of which is transferred to the security deposit account, it is unusual to state that the genuineness of the creditors are not established. AO has accepted the genuineness of the purchases from this parties. In view of this, we do not find any infirmity in the order of CIT (Appeals) by deleting the above addition. - Appeal decided against revenue
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2018 (11) TMI 1250
TPA - MAM selection - benchmarking - application of CUP method the prices of international transactions of export of the various grades of stainless steel products was compared with prices of export of the same grades of stainless steel products to unrelated party on the same or the nearest possible date - rejection of the Chinese market quotation adopted by the assessee applying CUP method for comparability analysis of the export made to the foreign associated Enterprises - Held that:- The cardinal principle of the transfer pricing regulations is to compare like with like and to eliminate differences, if any, by suitable adjustment. Rule 10B(3) also provides for appropriate comparability adjustments to made in the PLI of the tested party and comparable companies while computing the arm s length price. In almost all the decisions, the prices are backed by some exchanges or some reputable agencies, which are in the business of providing price-based data. No such evidences were led by the assessee in case of these Chinese quotations, which are downloaded from the Internet without any Comparability analysis, cannot be accepted. Before the learned Transfer Pricing Officer the assessee also did not substantiate that how the Chinese market quotations support the rule 10 B and D of the income tax rules. Further according to the OECD Transfer Pricing Guidelines For Multinational Enterprises And Tax Administration (July 2017) in Para number 2.18 has stated that the term quoted price refers to the price of the commodity in the relevant period obtained in an international or domestic commodity exchange market. The quoted price also include prices obtained from recognized and transparent price reporting or statistical agencies or from governmental price setting agencies where such indexes are used as a reference by unrelated parties to determine prices in transactions between them. Therefore, we fully agree with the order of the learned Transfer Pricing Officer and the learned Dispute Resolution Panel in holding that the Chinese market quotations downloaded from Internet by the assessee of BAO steel and LIiSCO cannot be used for comparability analysis in CUP method. Rejection of bulk discount of 5% relevant for adjustment made in J 4 black coil exported to its associated enterprise - Held that:- This case requires an evaluation of whether the different volumes should result in an adjustment of the transfer price. The relevant market should be researched by analyzing transaction in similar products to determine typical volume discounts. No such market research or any other market policy of the assessee was produced before us or authorities below, therefore, the facts of the case before us are not such. Even otherwise, the assessee has not shown that there was any pricing policy with the associated enterprise of giving a bulk discount. It was also not shown that what is the bulk quantity purchased on which discount is eligible. In all the circumstances, the claim of the assessee is merely an ad hoc claim without any supporting evidences. No documents was also placed before the lower authorities or before us that giving the volume discount is a market trend or commercial practice in steel business when assessee is a premium steel manufacturer of the country. In view of this we do not find any infirmity in the order of the lower authorities in rejecting 5% bulk discount to the assessee.Therefore, this contention is rejected. Prices based on the date of order acceptance cannot be applied in the present case - Held that:- There has to be a binding element behind all the transactions to make them one and connected. Such data was also not available before the learned Transfer Pricing Officer or learned Dispute Resolution Panel. If this fact is established by the assessee then the issue is squarely covered in favour of the assessee on this point by the decision of the coordinate bench. Therefore, respectfully following the decision of the coordinate bench, we also direct the AO to compute the ALP considering the transactions of export to associated enterprise on aggregate basis after assessee establishes before him that all these export transactions of the associated enterprise are interlinked. To this extent, this issue is sent back to the file of the learned AO/TPO with a direction to the assessee to substantiate the argument that the transactions of export of goods to associated enterprise are interlinked. Analysis based upon the nickel price adjusted export data - Held that:- Neither before the learned Transfer Pricing Officer, before the learned Dispute Resolution Panel , or before us this data is made available. Even the composition of the each product with respect to the nickel content, steel content, chromium content et cetera has not been established. Therefore, we do not have any alternative to give such kind of adjustment to the assessee at this stage. Therefore we set aside this issue to the file of the learned assessing officer with a direction to the assessee to substantiate its claim accordingly with respect to the nickel content in the product, nickel price variations over the period, variation in other commodity prices et cetera. The AO may examine the detail and then decide the issue afresh with respect to the alternative claim of the assessee. Alternatively the assessee has also stated that if the CUP method cannot be applied in the case of the appellant due to the reasons stated above, the alternative claim of the assessee is that international transactions undertaken by the assessee to be benchmarked applying the Transaction Net Margin Method - Here the assessee has given multiple data to justify the benchmarking methodology with respect to sale of export of steel material to its Associated Enterprises; therefore, such are not the facts before us as are decided by the coordinate bench. Further the other decisions relied upon are also related to the non-availability of the data. Therefore, unless the assessee says that there are no data available for benchmarking under the CUP method, the TNMM should be the alternative method could not be accepted. Therefore, this argument of the learned authorised representative is rejected. Difference in the arm s-length price of goods exported by the appellant to its associated enterprise fall within the range of 5% of the transacted price as provided under the second proviso to section 92C (2) of the act - Held that:- respectfully following the decision of the coordinate bench in the assessee s own case, we set aside this argument of the assessee to the file of the learned assessing officer/Transfer Pricing Officer, with a direction that if there are more than one prices the learned Transfer Pricing Officer is directed to consider the 5 percent as in the case for assessment year 2006 07. Accordingly, this argument of the assessee is accepted. Certain errors in the comparison made by the Transfer Pricing Officer in his order - The errors pointed out by the assessee with respect to assessment year 2008 09 deserve consideration by the learned Transfer Pricing Officer. The assessee is directed to show the error to the learned TPO/assessing officer and the learned AO and TPO are directed to verify the error and if found correct it may be rectified. Therefore, this argument of the assessee is accepted. Adjustment of basic customs duty when the price of the product of export is compared with the domestic market prices - The main claim of the assessee is with respect to the export of J1 black coil for assessment year 2008-09. On careful analysis of page number 168 of the order of the learned Transfer Pricing Officer in category II of the benchmarking, the basic customs duty has been considered by the learned Transfer Pricing Officer therefore this argument has already been addressed by the learned Transfer Pricing Officer by granting appropriate adjustment. It is also clear on reading page number 10 of the order of the Transfer Pricing Officer at para number five. Therefore, now this grievance of the assessee is resolved. Addition in the arm s length price of interest of loan to subsidiaries - Held that:- The assessee has granted loan to its subsidiary company. Therefore, economic purpose and substance of the debt claim or debt for which granting of credit calls for the lending rate would be determinative. The commercial expediency and related benefits of close connections with the above transaction, of course, would have a marginal significance and effect. The lending rates shown by the bankers as adopted by the learned Transfer Pricing Officer will not have any factoring of that consideration. Furthermore, the credit rating would also be an issue when the banks are lending to a foreign party. The learned assessing officer has also stated that adjustment for securities also required to be made and the bankers extending loan in foreign currency would be insisting on sufficient security which looking at the financial health of the subsidiary is not possible and therefore interest rates are required to be imputed which will take care of this aspect also. In the present case, the borrower is the subsidiary of the lender company and therefore we do not find it necessary to include the same in the interest cost. Therefore, the interest rate adopted by the learned Transfer Pricing Officer is further required to be reduced by this factor. In view of these facts, we do not find any reason that interest charged by the assessee at LIBOR +200 is not at arm s-length. For ad-hoc adjustment of transaction cost, security and single customer risk upon interest rate - Held that:- According to us the markup towards the transaction cost is exorbitant and comparison with the bank is also untenable. In view of this, we do not see any rational in the impugned in further cost and risk premium on the rate directed by the learned Dispute Resolution Panel . Accordingly we direct the learned Transfer Pricing Officer to not to charge any risk premium following the decision of the coordinate bench. In view of this, the transaction cost imputed of 300 basis points cannot be sustained. We find that the learned Transfer Pricing Officer should have considered for both the years the LIBOR +200 basis points in both the financial year financial year for the benchmarking for the interest income of the assessee. Addition on issue of corporate guarantee - international transaction - Held that:- In the present case, the assessee itself has charged 1.5% guarantee commission. It has shown this transaction as an international transaction, benchmarked it applying CUP method. Further, no evidence has been laid down before us that it is part of the shareholders activity and not an independent international transaction. No evidence is placed before us that it is not at the behest of the AE but an obligation of the assessee. In view of this we reject this contention of the assessee that corporate guarantee issued by the assessee is not an international transaction. The assessee has charged guarantee commission from AE @ 1.5 %. The ld TPO has bench marked it after obtaining the quotation from various banks, which are 2.68 %. He further added 2 % as mark up because of security and margin adjustments. The assessee substantiated the Alp stating that ING Vasya bank has given a quote of 1.5 % further similar is stated to be the quote of Indusind bank. The TPO has also taken the quotes of Axis Bank, Canara Bank, PNB, and ICICI bank, bank of Baroda, HDFC bank, and SBI. He arrived at Arithmetic mean of 2.68 %. In the present case the ld TPO has benchmarked the transaction by obtaining the quote from bankers and Hon Bombay High court in case of THE COMMISSIONER OF INCOME TAX, MUMBAI Vs M/s EVEREST KENTO CYLINDERS LTD [2015 (5) TMI 395 - BOMBAY HIGH COURT]. Even otherwise the commission charged by the assessee also in conformity with the rates quoted by Indusind bank and ING vasya bank. Further, the reasons given by us with respect to Risk adjustments and margins while deciding the issue of Interest receipt relying on the decision of Bharti Airtel decision [2014 (3) TMI 496 - ITAT DELHI] are equally applicable for this transaction too. Disallowance under section 14 A r.w.r. 8D - Held that:- For assessment year 2007 08 the learned assessing officer has applied rule 8D for making disallowance under section 14 A of the Income Tax Act of ₹ 3 9214001 where the assessee has earned the exempt income of rupees 1162000/ . Now it is a settled judicial precedent that for assessment year 2007 08 the rule 8D the does not apply. The assessee has contested that in assessment year 2006 07 the assessing officer has made an addition of ₹ 50,000 under section 14 A on the ground that assessee has earned a sum of ₹ 482.26 crores as dividend on investment of ₹ 25209.08 lakhs and no disallowance has been offered by the assessee. For that year vide para no. 9 of the order of the coordinate bench following assessee s own case has restricted the disallowance to the extent of ₹ 25,000 under section 14 A of the Income Tax Act. During the year the dividend income on the by the assessee is ₹ 1162000 /- which is far less compared to the earlier year and there is no finding by the learned AO that assessee has spent sums for earning dividend income. Therefore in the interest of justice and following the binding precedent we restrict the disallowance under section 14 A of the Income Tax Act on estimate basis at ₹ 25,000 for this year too. No satisfaction recorded by the assessing officer with respect to the correctness of the claim of the assessee of disallowing u/s 14A - Held that:- Now the judicial precedent is settled that before invoking the provisions of rule 8D the learned assessing officer has to record the satisfaction about the correctness of the claim of the assessee and without recording, that satisfaction the disallowance cannot be made. The learned departmental representative also could not show the satisfaction of the learned assessing officer. Even otherwise it is also a settled law that the disallowance under section 14 A of the Income Tax Act cannot exceed the exempt income which is only ₹ 237000/-for this year. In absence of any satisfaction recorded by the assessing officer the disallowance made cannot be sustained. Hence, we direct the learned assessing officer to delete the disallowance of ₹ 4 4808080/- under section 14 A of the act. Accordingly, ground number six of the appeal of the assessee for assessment year 2008 09 is allowed. Disallowance of depreciation on cars sold to employees - Held that:- there is still the block of the appreciable asset in existence therefore the depreciation cannot be disallowed if the sale consideration of the assets is less than the written down value of that block. Even otherwise after the concept of the block of assets introduced in the Income Tax Act, the identity, for the limited purpose of the claim of the depreciation, of an individual asset is obliterated. In view of this we do not find any justification for making disallowance of ₹ 1 98212/ of depreciation on account of sale of cars to the employees. Accordingly, ground number seven of the appeal of the assessee for assessment year 2008 09 is allowed. Disallowance of Bad Debts - Held that:- Both the parties agreed before us that this issue is covered in favor of the assessee by the decision in the assessee s own case for the assessment year 2006-07 wherein, following the decision of Hon ble Supreme Court in the case of T.R.F. Ltd. vs. CIT [2010 (2) TMI 211 - SUPREME COURT] deleted the disallowance of bad debts claimed in that year. Disallowance of depreciation on computer peripherals - Held that:- The power supply equipments and computer peripherals are held to be the part of the computers and are eligible for depreciation at the rate of 60%. The issue is squarely covered by the decision of BSES YAMUNA POWERS LLD. / BSES RAJDHANI POWERS LTD. [2010 (8) TMI 58 - DELHI HIGH COURT] in favour of the assessee. The learned departmental representative could not point out any other decision, which binds us. Therefore, respectfully following the decision of the honourable High Court s the disallowance deleted by the learned commissioner appeals of ₹ 231402/ on account of excess claim of depreciation is confirmed. Addition on account of interest capitalization to be deleted as relying on assessee own case Tribunal upheld the alternative contention of the assessee and allowed deduction of interest expense incurred on earning interest on short term deposits under section 57 (iii) of the Act.
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2018 (11) TMI 1249
Allowing pro-rata deduction u/s. 80IB(10) - Held that:- The allowability of proportionate deduction u/s. 80IB(10) in respect of completed units is no more res integra. Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Brahma Associates [2011 (2) TMI 373 - BOMBAY HIGH COURT] and Commissioner of Income Tax Vs. Vandana Properties [2012 (4) TMI 54 - BOMBAY HIGH COURT] approved allowing of proportionate deduction u/s. 80IB(10) in respect of completed eligible units. The Tribunal in catena of orders have been consistently allowing proportionate deduction u/s. 80IB(10) in respect of units which are complete in every respect in consonance with the conditions set out u/s. 80IB(10) of the Act - no infirmity in the findings of Commissioner of Income Tax (Appeals) in allowing pro-rata deduction to the assessee in respect of completed residential units. Allowing deduction u/s. 80IB(10) considering size of plot as more than one acre after including area acquired for DP road - Held that:- The total area of size of plot on which the housing project has been constructed is 7689 sq. mtrs. After reducing the area of 1502.25 sq. mtrs. acquired by PCMC for construction of approach road, the net area of the plot on which the residential complex has been constructed is 6186.75 sq. mtrs. AO while computing the area of plot only considered saleable area of Wing A and B and further erred in reducing the area ear marked for DP road. The Assessing Officer worked the total area of plot as 3808.56 sq. mtrs. The First Appellate Authority while adjudicating this issue followed the decision rendered in the case of Commissioner of Income Tax Vs. Vandana Properties [2012 (4) TMI 54 - BOMBAY HIGH COURT] and Bunty Builders Vs. Income Tax Officer [2010 (2) TMI 791 - ITAT, PUNE] and calculated the size of plot by including the area marked for DP road and the other areas excluded by Assessing Officer.
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2018 (11) TMI 1248
Unexplained cash credit u/s 68 - Genuineness of the loan - Held that:- In case of the bank statement of the assessee it is apparent that cash was deposited prior to issue of cheque to the assessee. It is also apparent that four years bank statement was not provided by the assessee to the assessing officer. In case of Siddh Sai reality private limited, the lender shown profit of ₹ 12 lakhs for the year but filed a return of income of ₹ 120,000. Further prior to the issue of the cheque of ₹ 10 lakhs on 14 2012 to the assessee there was deposit of ₹ 9 lakhs and ₹ 1 lakhs on two different dates prior to the issue of cheques to the assessee. On these transactions, the learned assessing officer has expressed its doubt about the genuineness of the transaction. This genuineness of the transaction can only be proved by the production of the directors before the assessing officer which assessee has failed to do repeatedly - We set aside the whole issue back to the file of the learned assessing officer with a direction to the assessee to produce the directors of both the lenders companies before the assessing officer for the examination and to explain the source of cash deposited in their bank account before issue of cheques to the assessee. - Decided in favour of assessee for statistical purposes.
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2018 (11) TMI 1247
MAT u/s 115JB - levying penalty on tax sought to be evaded in respect disallowances/ additions made under computation of income under normal provisions as well computation of book profits under section 115JB - Held that:- In considered view ratio laid down in the case of CIT vs. Nalwa Sons Investments Ltd. [2010 (8) TMI 40 - DELHI HIGH COURT] is squarely applicable to the present facts of the case. Admittedly in the present case penalty has been levied on an amount which forms part of computation of book profit under section 115JB of the Act. And therefore concealment of income would have no role to play and would not lead to tax evasion. Respectfully following the decision in the case of CIT vs. Nalwa Sons Investments Ltd., (supra), which has been approved by Hon’ble Supreme Court based upon which a Circular also has been issued by CBDT, we do not find any case to interfere with. - decided against revenue.
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2018 (11) TMI 1246
Unexplained jewellery - CIT-A upholding the addition to the extent of 10% of jewelry seized as unexplained - Held that:- On identical facts and circumstances in the similar search and in case of another two female members of the same family the identical additions made by the revenue has been deleted by the coordinate benches in the above stated orders submitted by the learned authorized representative. In view of this, the issue is squarely covered in favour of the assessee and respectfully following the decision of the coordinate benches as stated before, where the learned departmental representative could not find any difference in the facts and circumstances, we allow ground number one of the appeal in favour of the assessee. Addition as cash in hand found at the residence of the assessee in view of the explanation given and other evidences submitted - Held that:- Except explaining, the cash left by husband of the appellant no other evidences were submitted before the lower authorities. It was also not known whether the husband of the assessee was in possession of the above sum in cash at the time of his death or not. We also appreciate that lower authorities have already granted benefit of ₹ 1 lakh to the assessee even in absence of any evidence. However it cannot be denied that looking to the financial status of the assessee and the total amount of jewelry found at the residence of the assessee and the size of the business carried out by the family and also the size of rental income earned by the assessee being a lady member, Gift of ₹ 4.10 Lkahs received on her birthday from non relatives offered in her return of income and accepted by AO, the sum of ₹ 1 Lakh treated as explained out of the total sum received of ₹ 2.25 lakhs by the assessee from her husband seems quite low. Contrarily the acceptance of full sum as explained in absence of any evidence is not possible. Therefore, refereeing to facts stated above, further reduction in the addition is granted of ₹ 50,000/- on account of addition in the hands of the assessee on account of cash received from deceased husband of the assessee. Hence, we direct the LD AO to restrict the addition only to the extent of ₹ 1 Lakhs instead of ₹ 1.50 lakhs - Decided partly in favour of assessee.
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2018 (11) TMI 1245
Penalty u/s 271(1)(c) - suppression of Long term Capital gain arising from the sale of the subject property by understating the consideration received - Held that:- We are unable to comprehend that now when the assessee on the one hand had acknowledged receipt of an amount of ₹ 7,00,00,000/- vide nine account payee cheques drawn on Union Bank Of India, Oshiwara Branch, from the aforesaid purchasers, than how a claim raised by her to the contrary that she had only received an amount of ₹ 6,25,00,000/- would survive. We are of the considered view that as the explanation of the assessee which clearly militates against the material available on record is found to be false, thus the CIT(A) had rightly sustained the penalty imposed by the A.O under Sec. 271(1)(c) for suppression by the assessee of the long term capital gain arising from the transfer of her leasehold rights in the subject property. We thus, finding no infirmity in the order of the CIT(A) sustaining the penalty imposed by the A.O under Sec. 271(1)(c) of the Act, uphold the same. - decided against assessee.
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2018 (11) TMI 1244
Rectification application u/s. 154 - claim of the assessee that the assessee is a public charitable trust and not a private trust and therefore, maximum marginal rate is not applicable in the case of the assessee - section 167B applicability - Held that:- In the present case, it is stated before us that as per clause 3(h) of the trust deed, the funds and income of the Trust shall be solely utilized for the achievement of the objects of the trust but we find that as per para no. 12 of the same trust deed, the trust shall be irrevocable but the trustees at any time in their discretion and for the better fulfillment of the objects of the trust may dissolve the trust and distribute the funds and properties of the trust to such institution or persons, as they may decide and approved by the objects of the trust. When we read both these clauses simultaneously, it comes out that during the life time of trust, the income / funds of the trust cannot be utilized by the trustees but if at any point of time, the trustees decides to dissolve the trust, the funds and properties of the trust can be distributed to any person as the trustees may decide and therefore, it cannot be said that the trust fund cannot be used by the trustees at all. Under these facts, in our considered opinion, the share of the trustees in the trust fund is not known and it is indeterminate and therefore, there is no infirmity in the orders of the lower authorities as per which, they applied provisions of section 164(1) of IT Act. Hence we decline to interfere in the order of CIT (A) on this issue. - Decided against assessee.
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2018 (11) TMI 1243
Interest u/s 244A - Held that:- CIT(A) has directed the AO to allow the interest u/s 244A upto date of refund and excluding interest component including in the refund granted earlier in computing base figure for the present working of interest u/s 244A of the Act. The matter of controversy has rightly been adjudicated in favour of the assessee by CIT(A). The issues are squarely covered by the decision of the assessee’s own case [2011 (1) TMI 1536 - ITAT MUMBAI]. No distinguishable facts and law have been produced before us by revenue from deviating the finding of the CIT(A). We uphold the finding of the CIT(A) on these issues and decide these issues in favour of the assessee against the revenue.
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2018 (11) TMI 1242
Addition u/s 68 - assessee obtained loans from 6 entities - proof of credit received in the impugned AY - Held that:- So far as the addition of ₹ 79 Lacs is concerned, Ld. CIT(A), after examining confirmation of accounts, has recorded a finding that credit of the same was not received by the assessee during impugned AY and therefore, the addition u/s 68, to that extent, could not be made. We agree with the arguments of Ld. AR to that extent. Accordingly, the conclusion drawn by CIT(A), to that extent, stand confirmed. Regarding the balance fresh loans of ₹ 20.50 Lacs as obtained by the assessee during impugned AY, in terms of submissions of Ld. AR, we deem it fit to restore the matter back to the file of Ld. AO for deciding afresh as per law with a direction to the assessee to substantiate the same with documentary evidences etc. The ground of appeal stand allowed to that extent. - decided partly n favour of assessee.
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2018 (11) TMI 1241
Capital gain - Transfer of a capital asset u/s 50C - value adopted or assessed by any authority of the State Government or Stamp Valuation Authority - determine the fair market value as per the circle rate / stamp value rate - Held that:- It is not disputed by the revenue authorities that the transfer of right over the plot admeasuring 299 sq. yds amounts to transfer of a capital asset in terms of section 2(47). The assessee had acquired the plot in question by way of allotment and had acquired the right through endorsement document. This endorsement document has been further transferred to another buyer, because he was the beneficial owner of the said property in which he had the right. It is not a case that any registration has been done in the favour of the assessee for the allotment of the plot. Even the assessee has transferred his right on the plot to another buyer for again there is no registration of the said transfer and consequently there is no value adopted or assessed by any authority of the State Government or Stamp Valuation Authority. The deeming fiction for taking the full value of consideration in respect of transfer of a capital asset u/s 50C is applicable where the value is assessed by stamp valuation authority, then such a value is deemed to be the full value of the consideration receipt or accruing as a result of such transfer. The word ‘assessable’ in section 50C at the time of transfer was inserted w.e.f. 1.10.2009 and therefore, in the assessment year 2007-08 the assessable value at the time of transfer cannot be taken as full value of the consideration. Either at the time of agreement or at the time of transfer there was no value assessed or assessable by the stamp valuation authority or therefore, the market value based on some ITI inquiry cannot be substituted with the actual consideration received by the assessee. Thus, the difference as worked out by the AO on the basis of un authenticated ITI report cannot be added; and accordingly, amount is directed to be deleted. - Decided in favour of assessee.
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2018 (11) TMI 1240
Non-granting of deduction u/s 80IC - enhancement of income due to certain additions/disallowances made in the assessment order - Held that:- It is evident from the nature of additions made by the AO, which led to the reduction in the amount of deduction u/s 80IC, that the same are on account of business transactions. First disallowance is u/s 40(a)(ia) on account of the failure of the assessee to deduct tax at source on business expenses incurred. Second disallowance is at 20% of the purchases made by the assessee for want of availability of complete vouchers and there are other two disallowances u/s 43B of the Act. To sum up, these additions made by the Assessing Officer relate to the business activity of the eligible unit for which the assessee is entitled to deduction u/s 80IC of the Act. The Assessing Officer has also not disputed the otherwise availability of deduction to the assessee. CBDT Circular No.37/2016 dated 02.11.2016 issued in the context of deductions under Chapter VI-A on enhanced profits says that f there is an enhancement of income because of such disallowances, the deductions under Chapter VIA should be granted on the enhanced income. It has been clearly spelt out in para 4 of the Circular that not only the fresh appeals be not filed on such issue, but the appeals already filed in Courts/Tribunals should be withdrawn or not pressed. To put it simply, the Department has accepted the position that enhancement of income due to the above additions/disallowances should be coupled with the proportionately increased amount of deductions under Chapter VI-A of the Act. Since all the disallowances/additions made in the assessment order resulting in the enhancement of income fall within the nature of disallowances mentioned in the Circular, we hold that the assessee should be allowed deduction u/s 80IC at the enhanced amount of income resulting from such disallowances etc.
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2018 (11) TMI 1239
Disallowance of expenses w.r.t. payments made to K G N Enterprises for plaster work - notices u/s. 133(6) returned unserved - Held that:- The assessee did discharged its burden by bringing on record all necessary details and no addition to the income of the assessee by way of disallowance of expenses w.r.t. payments made to K G N Enterprises for plaster work is warranted merely based on suspicious and only ground that notices u/s. 133(6) returned unserved in the absence of other incriminating evidence in the possession of AO which could substantiate that this payments were bogus and merely accommodation entries were taken is not sufficient to discredit the version of the assessee. The payments were made to said party for plaster work which is directly related to business of the assessee and similar payments made to the said party in preceding year stood allowed by the AO itself in scrutiny assessment framed u/s 143(3) of the 1961 Act. Suspicion howsoever strong cannot take the place of proof is cardinal rule of jurisprudence. Thus, based on our above detailed discussions and reasoning, we are ordering for deletion of aforesaid additions to the tune of ₹ 9,15,043/- as was made by the AO and later confirmed by learned CIT(A). The assessee succeeds in this appeal. - Decided in favour of assessee.
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2018 (11) TMI 1238
Allowance of busniss loss - proof of enough sale/purchase of shares to justify that the assessee was in share trading business - Held that:- A perusal of the order passed by the A.O. also shows that the income of the assessee was computed under the head ‘profits and gains of business or profession’ by the A.O. himself which fully supports the claim of the assessee that the business of trading in shares was carried on by him during the year under consideration. Accept the contention of the learned counsel for the assessee that the business of trading in shares was carried on by the assessee during the year under consideration and allow ground no 1 of the assessee’s appeal. Disallowance of interest - Held that:- Paper book shows that the entire borrowed funds were utilised by the assessee for personal purposes and there is nothing to show that such borrowed funds were utilised even partly for the purpose of business of trading in shares. Even the learned counsel for the assessee has not raised any material contention in support of the assessee’s case on this issue and has only contended that disallowance was made by the assessee suo moto in the computation of income on account of interest. In this regard, it is observed that the Ld. CIT(A) has already allowed a relief to the assessee on this issue to the extent of ₹ 53,910/- by observing that there was a double disallowance to that extent. We, therefore, find no merit in the case of the assessee. Claim for set of off brought forward business loss - Held that:- CIT(A) by way of an additional ground has not been decided by the Ld. CIT(A) vide his impugned order. Since the claim of the assessee relating to the set of off brought forward business loss requires verification from the relevant record, direct the A.O. to consider and decide the same after necessary verification in accordance with law. Ground no 3 of the assessee’s appeal is accordingly treated as allowed for statistical purpose.
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2018 (11) TMI 1237
Reopening of assessment u/s 147 - deduction u/s. 801A/IB - reopening beyond a period of four years - eligibility of reason to believe - Held that:- The assessee has correctly relied on the order Hon’ble Supreme Court in the case of Hindustan Lever Ltd. v/s. ITO (2004 (2) TMI 42 - BOMBAY HIGH COURT ) wherein the assessment reopened beyond a period of four years from the end of the relevant assessment year were held to be bad in law where there was no failure on the part of the assessee to disclose the material facts fully and truly in the assessment proceedings. We are of the view that the reassessment framed by the AO is bad in law for the three reasons namely that re-assessment is proposed to be done after four years despite there being no failure on the part of the assessee to disclose materials facts in the return of income of original assessment proceedings; that the re-opening of assessment is just change of opinion without being any tangible material before the AO and that the objections filed by the assessee against the re-opening before the AO were not disposed off by way speaking order and therefore quash the re-assessment proceedings as being without valid jurisdiction and also the consequent order - decided in favour of assessee.
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2018 (11) TMI 1236
Validity of reopening of assessment - no notice u/s 143(2) was issued and served on the assessee - Held that:- The assessee had not replied to the notice u/s 148. In these facts and circumstances, it is incumbent on the part of the AO to issue separate notice u/s 143(2) of the Act by treating the letter dated 14.11.2014 containing the income details of the assessee, as return filed in response to notice u/s 148 of the Act. It is not in dispute that the notice u/s 143(2) was never issued and served on the assessee after the issuance of notice u/s 148 of the Act. We find that in the case of PCIT vs Oberoi Hotels Pvt Ltd [2018 (6) TMI 1472 - CALCUTTA HIGH COURT] by placing reliance on the decision of CIT vs Hotel Blue Moon (2010 (2) TMI 1 - SUPREME COURT OF INDIA) had held that issuance and service of notice u/s 143(2) within the prescribed time is mandatory in nature and noncompliance of the same cannot be cured even u/s 292BB. Hence respectfully following the said decision and in view of the undisputed fact that no notice u/s 143(2) of the Act was issued and served on the assessee, we find no infirmity in the order of the ld CITA cancelling the re-assessment order as unsustainable in law. - Decided against revenue.
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2018 (11) TMI 1235
Nature of loss - short term capital loss or revenue loss - loss incurred on capital contribution in joint venture - short term capital loss adjustment against the capital gain - Held that:- The assessee had entered into an agreement with other party M/s. R.A. Business Solution Bangalore as per which the assessee was to be paid ₹ 66 lacs immediately and the balance amount of ₹ 6,69,00000/- was claimed as revenue loss by the assessee for the year under consideration. However, the assessing officer has held that above cited loss is not allowable because capital contribution to Joint venture is not revenue expenditure. The above facts demonstrate that the assessing officer himself has treated the claim of revenue loss of the assessee as capital loss. We have noticed from the findings of the ld. CIT(A) that this alternative claim was also made before the assessing officer however the same has not been considered by the assessing officer at the time of finalization of the assessment for the year under consideration. It is clear from the findings of the assessing officer and the CIT(A) that assessing officer has himself treated the revenue loss claim of the assessee as capital loss. No infirmity in the decision of the CIT(A) directing the assessing officer to adjust the short term capital loss against the capital gain as per section 70(2) of the act as the Department has treated the claim of revenue loss of the assessee as capital loss. No merit in the cross objection filed by the assessee as the assessee itself had made alternative claim to set off loss against capital gain as elaborated in the findings of the CIT(A). Accordingly, the appeal of the Revenue and cross objection filed by the assessee are dismissed.
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2018 (11) TMI 1234
Reopening of assessment - reasons to believe - Held that:- In the light of the fact that assessee has not filed any return of income, there was every reason to believe that there was escapement of income chargeable to tax in terms of Explanation 2(a) to section 147. It is not disputed before me that the deposits in the bank account referred to by the AO in the reasons recorded would be above the limit of income which is not chargeable to tax. Thus uphold the validity of initiation of proceedings u/s. 148 of the Act. Capital gain on sale of property - belonging of property to assessee or a firm of partnership - Held that:- The sale deed under which the property was sold clearly shows that both the assessees were owners of the property. The assessee having sold the property as belonging to them and having received the sale consideration on their own account cannot be permitted to plead that they were not the owners of the property. U/s. 45 of the Act, long term capital gain arising on transfer of a capital asset is liable to tax in the hands of the transferor. Since the transferors of the property were assessees, capital gain is to be taxed in their hands. Thus the plea of the assessees that property belongs to the firm cannot be accepted in the income-tax proceedings. As far as dispute with regard to FMV as on 1.4.1981 is concerned, it is of the view that the claim of the assessee that FMV of the land is ₹ 1,10,000 is not supported by any evidence; whereas the AO has based his conclusion based on a Gazette Notification of 1999 giving the value of the properties in the vicinity of the area, where the property of the assessee is situated. No merit in the submissions of the assessee on this issue. Claim for deduction on account of brokerage - There is no evidence filed by the assessee to substantiate its claim that it paid brokerage and therefore the claim made by the assessee is rejected. Cost of construction of the property - AO has adopted cost of construction of the building by estimating the same at ₹ 11,20,000 - Held that:- The only credible evidence available is the evidence of the Chartered Engineer towards value of the property for the purpose of availing loan by the assessee from KSFC. This report gives the year of construction as 2000 to 2001 February, whereas the assessee claims that it had carried out construction between the period 05.10.2001 and Nov. 2003. The assessee has himself claimed indexation only from the year 2003 for the purpose of computing long term capital gain. This has been apparently done based on the bill of J.J. Construction, Mysore. It would be just and appropriate to adopt the cost of construction as given in the registered engineer’s report at ₹ 18 lakhs. Since the assessee has claimed indexation benefit only from 2003, the same is directed to be allowed only from 2003. The AO is accordingly directed to compute the long term capital gain.
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Customs
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2018 (11) TMI 1233
Surrender of Passports - Smugglers - case of petitioners is that the right to travel is a fundamental right, and that right stands denied if the petitioners passports are taken away - Section 10 of the Passport Act - Held that:- A person desirous of visiting a foreign country or countries must apply under Section 5 of the Act to the passport authority. The application received, the passport authority will inquire into the request. Then, he may issue the passport or travel document for the countries the applicant has asked. Or under Section 5 (2) (b), the passport authority can limit the permission to a specified country or countries. Still, under clause (c) of the same subsection, the authority can refuse the permission. With partial refusal or total refusal under clause (b) or clause (c) of subsection (2) respectively, the passport authority must record the reasons. Section 6 (1) speaks of the passport authority s refusal to endorse on an existing travel document under clause (b) or clause (c) of sub-section (2) of Section 5. On the other hand, sub-section (2) deals with the authority s refusal to issue the passport or travel document for visiting any foreign country under clause (c) of subsection (2) of Section 5. That is, sub-section (2) concerns issuing the passport, rather than endorsing on the passport. It contains more grounds of refusal than sub-section (1). Yet clause (b) in subsection (1) and clause (c) in subsection (2) are common: that the presence of the applicant in such country may, or is likely to, be detrimental to the security of India. A person suffers a disqualification to get the permission to travel if his or her presence in another country, as mandated under Section 6 (1) (b) of the Passport Act, to be detrimental to the security of India . A person gets no passport or travel document if, as Section 6 (2) (c) holds, his departure from India proves detrimental to the security of India . And under Section 10 (3) (c), a passport is subjected to variation, impounding, or revocation in the interests of the sovereignty and integrity of India, the security of India, friendly relations of India with any foreign country, or in the interests of the public. Can Security of India include Economic Security of India ? - Held that:- Explanation to Section 157A of the Patents Act, 1970, defines the term. The expression Security of India takes into its sweep any action necessary for the security of India. But the definition is contextual and refers to fissionable materials; traffic in arms, ammunition, and implements of war, and other goods and materials relatable to a military establishment. It also covers the actions taken in time of war or other emergency in international relations - Interest of Security of India also stands defined in Section 68 of the Semiconductor Integrated Circuit Layout-Design Act. Again this definition, too, is contextual and relates to any action necessary for the security of India which relates to the use of a layout-design or a semiconductor integrated circuit incorporating a layout-design or an article incorporating such semiconductor integrated circuit . And this designing must, in turn, be relatebale to fissionable materials, the traffic in arms, and so on, as is defined in the Patents Act, 1970. The American Supreme Court has held that the term national security is not defined in the Act of August 26, 1950, but it is clear from the statute that it should comprehend only those activities of the Government that are directly concerned with the protection of the Nation from internal subversion or foreign aggression, and not those which contribute to the strength of the Nation only through their impact on the general welfare. Right to travel is a fundamental right - Any provision that affects this fundamental right needs strict interpretation. Interpolation is not one established method of interpretation, especially, of a provision with far-reaching consequences: economic is an interpolation before security - A person can be denied the right to travel abroad if the authorities are satisfied that the ingredients of Section 6 are satisfied. The RPO can act on any person s information, and the Customs Department suffers no disqualification to notify the RPO. But that information received, the RPO must act independently. He must ensure that the allegations, taken as true, contravene any of the eventualities spelt out either in Section 6 or Section 10 of the Passport Act - security will not encompass economic security. Petition allowed.
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2018 (11) TMI 1232
The petitioner wants this Court to record the respondents' assurance, and direct the authorities to redress the petitioner's grievance within a time frame - Held that:- The petition is disposed off holding that the respondent authority will consider the petitioner's Ext.P7 representation and take appropriate decision expeditiously, in three months.
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2018 (11) TMI 1231
Revocation of CHA License - forfeiture of security deposit - alterations in the bills of entry - revocation on the ground that Appellant allegedly tampered the name and address of importer in 2 B/E pertaining to ICD, Panki, Kanpur and thus knowingly aided and abetted fraudulent availment of CENVAT Credit by importer - Held that:- Appellant did not stand to gain in any manner and the only person who stood to benefit from such alteration was the importer and at no point of time during investigation, despite opportunity being available, importer did not furnish or relies on the said letter dated 09.12.2013 or stated that cuting in the Bs/E was made by appellant. Moreover no evidence of any kind was ever furnished by importer to establish issuance or service of said letter on appellant, bald assertion that they wrote the letter dated 09.12.2013 to appellant cannot be accepted and clearly appears to be an afterthought on the part of importer. The Department has failed in bringing on record any evidences to establish that the alterations in the Bs/E were carried by appellant and therefore the finding of Commissioner that appellant tampered the Bs/E is ex facie erroneous and perverse. The impugned order revoking Appellant s licence and forfeiting security deposit is hereby set aside - Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1230
Jurisdiction - Revocation of CHA License - fraudulent availment of draw back by some fictitious firm - it was alleged that the appellant and M/s. Pawan Kumar Tiwari has facilitated the customs clearance of the exported goods of certain fictitious exporting firms. Held that:- The cause of action arose in Delhi Customs and prohibition order was issued to them, which resulted suspension and revocation of the appellant’s licence in Kolkata Customs House. It is on record that Hon’ble Cestat, New Delhi has set aside the prohibition order issued by the Commissioner of Customs (General), New Delhi. It is also on record that the said order of the Cestat, New Delhi has been accepted by the Commissioner of Customs, Kolkata vide letter dated 04.12.2017 . No other evidence regarding involvement of appellant is on record before the respondent Commissioner - there is no justification for revoking the CHA licence of the appellant at the strength of allegation contained in the order of the Commissioner of Customs, Delhi, which has been set aside by Hon’ble CESTAT, New Delhi and Revenue has not preferred any appeal against the order. Appeal allowed - decided in favor of appellant.
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Service Tax
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2018 (11) TMI 1228
Business Auxiliary services - RCV would be sold by M/s Tata Sky Ltd. to distributers at concessional rate and same would be further sold by authorized distributer to customers at MRP which was a higher price - discount received and earned by the appellant - Held that:- The distributers were purchasing RCVs from M/s Tata Sky Ltd. at discounted price and selling the same at MRP to the customers and retaining the different between the two as profit - the different between the purchased and sales price is not commission and not covered by ‘Business Auxiliary Service’ - demand set aside. CENVAT Credit - duty paying documents - appellants had availed Cenvat credit of service tax paid by M/s Tata Sky Ltd. through invoices through which RCVs were sold to the appellant - Held that:- Since the appellants were not providing any output service, therefore, they were not eligible for Cenvat credit of ₹ 75,28,164/- - credit not allowed. Penalty - Held that:- On perusal of Sub-rule 3 of Rule 15 of Cenvat Credit Rules, 2004, it is found that the service provider is liable to be imposed with penalty under the said provisions in case of fraud, collusion etc. and if the intention of the service provider is to evade payment of service tax - in the present case, the appellant was not required to pay any service tax. Therefore, the question of intention to evade payment of service tax does not arise - penalty set aside. Appeal allowed in part.
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2018 (11) TMI 1227
CENVAT Credit - construction of the Hotels - denial of credit on the ground that provision of services through the said Hotel was not possible till such time the construction of Hotel was not completed - Held that:- Hon’ble Andhra Pradesh High Court has held in the case of M/s Sai Sahmita Storages Pvt. Ltd. [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] that Cenvat credit availed during the construction is admissible for discharge of service tax liability after such constructed structure is used for providing taxable service - demand do not sustain. Penalty imposed under Rule 15A of Cenvat Credit Rules also not sustainable. It is establish in the show cause notice that the service tax under the category of Intellectual Property Service to the tune of ₹ 9,72,352/- was paid before the issuance of show cause notice and interest was also paid. We find that revenue has failed to identify whether the interest paid was sufficient or short and therefore the confirmation of demand with interest on the same and penalty of ₹ 10,000/- is not sustainable. Abatement on Short Terms Accommodation Service, Restaurant Service, Mandap Keeper Service also remains allowed. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1226
Classification of service - business of carrying out Erection, Commissioning or Installation of Towers for cellular companies - whether classified as works contract service or not - Held that:- The Apex court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] has held that in the case of composite contracts which involved both supply of goods as well as provision of service, this would be classifiable only under ‘Works Contract Service’ w.e.f. 01.06.2007. The Hon’ble Apex Court has further held that for the period prior to 01.06.2007, composite contracts cannot be vivisected and charged to service tax under other categories. From the documents produced, it is evident that the activities carried out are in the nature of ‘Works Contract’ and hence would be liable for service tax under Works Contract Service w.e.f. 01.06.2007 only and not for the prior period. Demand in respect of M/s. RMC - period of demand made is up to 31.03.2007 - Held that:- The various works contracts executed by M/s. RMC will need to be scrutinized and verified before concluding that no service tax liability survives on the erection activity of transmission towers - matter remanded. Demand under the category of GTA Service from M/s RMC - Held that:- This demand is not contested by M/s RMC and hence we uphold the same - interest also upheld. Appeal allowed in part and part matter on remand.
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2018 (11) TMI 1225
Validity of SCN - Penalty u/s 77 (1)(a), Section 77 (2) and Section 78 of FA - Held that:- The transaction was duly recorded in the books of accounts maintained in the ordinary course of business. Further admitted fact is that appellant had paid the service tax along with interest under intimation to revenue, prior to issuance of show cause notice - the issue of show cause notice for the demand of ₹ 3,52,260/- along with interest & proposed penalty, is bad under the provisions of section 73(3) read with proviso and explanation. The provisions of section 73 are not attracted under the facts and circumstances of this case. The appeal is allowed and the impugned order is set aside so far it has confirmed the demand and the penalty - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1224
Classification of services - works contract service or not - construction of Ore Handling Plant (OHP) and Coal Handing Plant (CHP) at Bhilai Steel Plant as sub-contractor of M/s. Heavy Engineering Corporation (HEC), Ranchi under Composition Scheme - Held that:- The issue regarding classification of service is settled in favour of the appellant vide this Tribunal order in case of appellant themselves pertaining to earlier period M/S S.K. SAMANTA & CO. (P) LTD. VERSUS COMMR. OF SERVICE TAX, KOLKATA (VICE-VERSA) [2018 (7) TMI 1669 - CESTAT KOLKATA], wherein it has been held that the activities undertaken by the appellant falls within the works contract service and liable to the benefit of Works Contract Act subsequent to 01.06.2007 in view of the decision of the Hon’ble Supreme Court in case of Commr. Of Central Excise & Customs, Kerala vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]. Extended period of Limitation - Held that:- It is on record that for the previous period department had been issuing the show cause notice which was subject matter of appeal before this Tribunal - the appeal is rightly covered under the Works Contract Service as they have provided services alongwith supply of materials, even though in a small proportion - the department is precluded from invoking the extended period for raising of the demand - entire demand is time barred. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1223
CENVAT Credit - common input services which were consumed for carrying out the activity of manufacturing dutiable goods and also for trading activity - non-maintenance of separate records - Held that:- he appellant seems to have confused with regard to traded goods and trading activity. The traded goods cannot be considered as an exempted goods whereas the trading activity as per Rule 2(e) of CENVAT Credit Rules, 2004 is an exempted service. The appellants do not have a case that they have maintained separate accounts with regard to the common input service used for trading and manufacturing activity - the demand raised is legal and proper and requires no interference. Penalty - Held that:- However, the appellant has been maintaining register with regard to the traded goods on the bonafide belief that they are maintaining separate accounts as provided under Rule 6(2) of CENVAT Credit Rules, 2004 and has not availed credit on such goods - the penalty imposed is unwarranted and requires to be set aside. Appeal allowed in part.
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2018 (11) TMI 1222
Validity of SCN - grounds raised in SCN not clear - Liability of service tax - Appellants were receiving and providing IUC services from Sri Lanka Telecom, a service provider situated outside India - reverse charge mechanism - Held that:- The show cause notice has not specified the category of service falling under any of the sub-clause to Section 105 of the Finance Act, 1994 under which the demand of service tax has been proposed. It is well settled that lack of such clarity in the show cause notice and omission to indicate the specific category of service under which the tax is proposed to be demanded will vitiate the proceedings ab initio. The circulars dated 15.7.2011 and 19.12.2011 are very much applicable pari materia to IUC charges paid by the appellant to Sri Lanka Telecom, where it has been reiterated that when the service provider is located abroad, he is not covered under the definition under Section 65(105). Hence, the service provided by foreign vendors cannot be taxed under Telecommunication Service. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1221
Extended period of limitation - penalty - appellants collected service tax on Man-power Supply Service but failed to remit the same to Government account - Held that:- When the appellants have furnished details on 15.09.2006, then the show-cause notice ought to have been issued within one year from the date of such knowledge received by the department. On the peculiar set of facts presented by appellants on the case, when the department has come to know about the contract agreement between the appellants and their clients, showing details of services rendered by them under Man-power Supply service, the invocation of extended period after 15.09.2006 cannot sustain - the demand for the period 15.09.2006 to 31.03.2008 cannot sustain and requires to be set aside - appeal partly succeeds on the ground of limitation. In identical set of facts, the Hon'ble Jurisdictional High Court in the case of M/s. V.N.K. Menon & Co., Vs CESTAT, Chennai [2015 (7) TMI 266 - MADRAS HIGH COURT] has upheld the decision of Tribunal which set aside the demand after the date when department came to know about the details. Period prior to 15.09.2006 - Held that:- The ingredients of suppression are very much present prior to 15.09.2006. Only pursuant to the investigation conducted not only with appellants but also with many of their clients like M/s. SPIC, M/s. Raddison GRT, M/s. Aircel, etc., did the fact of collection of service tax and the evasion come to light. Discernible, these facts were suppressed from the Department till the investigation. This being so, not only is the extended period invocable up to 15.09.2006 and demand in Annexure-A of the notice sustainable with interest up to that date but the penalty equal to the amount of such revised tax liability is also imposable. Appeal allowed in part.
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2018 (11) TMI 1220
Business Auxiliary Services - appellants were receiving commission from the financial institutions - appellant have not obtained registration and not paid service tax - Held that:- The issue requires to be remanded to the adjudicating authority for the reason that the respondent has argued that the department has not looked into any other document except the document respondent has entered with ICICI Bank. All the documents on which the demand has been raised have to be looked into. Penalties - Held that:- The issue had travelled upto the Larger Bench of the Tribunal. Being an interpretational issue, the respondent has put forward reasonable cause to set aside the penalties and no penalty can be imposed on the respondent - penalty cannot be imposed. Appeal allowed by way of remand.
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2018 (11) TMI 1219
Levy of service tax - Construction Services - Amount received in advance - abatement under N/N. 1/2006/ST dated 1/3/2006 - whether the appellants were required to pay the service tax on the amount received by them from the prospective buyers, In advance? - extended period of limitation - penalty. Held that:- No doubt as per section 67 of the Act a person in the case where the provisions of service is for consideration in money, is liable to pay the service tax on gross amount charged by the service provider for the service provided or to be provided by him. But simultaneously there is no denial of fact that the levy in question was imposed for the first time by the amendment to Finance Act 1994 with effect from 1/07/2010 to Section 65(105) (zzzh). The Notification No. 136/2010 as impressed upon by the appellant is perused. It becomes clear that vide the said Notification the advance receipt by a builder till 30th June 2010 for which service was provided by him after 30th June 2010 was not to be taxed thereby qualifying that services of appellant were not taxable prior 1/07/2010. When the explanation as inserted in Section 65(105)(zzzh) is read along with clarification given by CBEC vide letter No. 334/3 TRU dated 1/07/2010, it again becomes amply clear that if agreement is entered into or any payment is received for sale of complex or apartment in residential complex service tax will be leviable on such transaction only with effect from 1/07/2010 - the impugned demand for the period since 1/04/2007 till 30th June 2010 is not sustainable the same has wrongly been confirmed. Demand for the remaining period - Held that:- In view of Notification No. 1/2006 ST dated 1/3/2006 the abatement on construction services till 30th June 2010 was 67 per cent however the said Notification of amended vide Notification No. 29/2010 ST dated 22/06/2010 with a further amended vide Notification No. 26/2012 ST dated 20th June, 2012. Vide which the taxable service to the extent of 25 per cent only is made taxable. Hence the appellant is held to be entitled for the abatement at the rate of 75 per cent. The computation at the rate below is an error apparent, as such the same is liable to be re-computed the matter needs to be remanded for this limited purpose. Extended period of limitation - Held that:- The appellant was not liable to pay the service tax prior to 1st July 2010 there remains no reason for alleged suppression. Otherwise also to invoke the extended period of limitation heavy burden rests upon the Department to proof some positive Act on account on the assessee other than the mere inaction or failure to discharge the liability - extended period cannot be invoked. Penalty - Held that:- The apparent allegation is delay in discharging the liability the allegation as grave as of misinterpretation and suppression are not at all attributable. For the similar reason penalty also will not ordinarily to be imposed unless the party either acted deliberately in defiance of law and was guilty of dishonest conduct - penalty also set aside. The matter is sent back to the Adjudicating Authority below for the limited purpose of computing the demand after affording the abatement of the extent of 75 per cent - appeal allowed by way of remand.
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2018 (11) TMI 1218
Refund of service tax on inputs - inputs used for provision of export services - Rule 5 of CENVAT Credit Rules, 2004 - Held that:- Revenue has not disputed the payment of Service Tax on the input services used by the appellant for its export of service. From a perusal of Order-in-Original as also the impugned Order-in-Appeal, it is not their case that refund was denied because of violation compliance or violation of conditions of Rule 5 of CCR. The only reason for the denial of refund by the Revenue is on the allegation that the export proceeds were received by the appellant’s successor, i.e. realised by its successor at Italy - from the case of National Engg. Industries Ltd. Versus Commr. of C.EX., Jaipur [2007 (12) TMI 170 - CESTAT, NEW DELHI], it is clear that the receipt of export proceeds in Indian currency, in lieu of Foreign exchange, even makes it sufficient to be considerd as receipt of foreign currency, in India. Article 265 clearly rules that there cannot be collection of tax without authority to Law, so also, the revenue should justifiably prove its authority to reject refund and retain, when clearly the amount did not belong to it, but to another. Refund allowed - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1217
Cleaning services or not - activity of excavation and transportation of fly ash from the pond, for channeling the slurry water-flow - levy of service tax - Board’s Notification F. No. B1/6/2005-TRU dated 27/07/2005 - Held that:- In the present case, the activity of excavation and transportation of fly ash from the pond, for channeling the slurry water-flow cannot be termed as “cleaning activity” in terms of Section 65 (24B) of the Finance Act. The Respondent is not clearing the fly ash with the objective of cleaning the pond or free the pond from contamination. Fly ash is being excavated and transported to the specified areas as per the contract. The issue in the present case is covered by the decision of this Bench in the case of M/s. Calcutta Industrial Supply Corporation Vs. Commissioner of Service Tax, Kolkata [2017 (11) TMI 158 - CESTAT KOLKATA], where it was held that It appears that the purpose of the tender is for disposal of Ash in the abandoned mines of ECL. The appellant is engaged for transportation and disposal of Ash in the abandoned mines. The letter does not show that the appellant was engaged for cleaning of the premises. Therefore, the demand of Service Tax under the category of cleaning service is not justified. Appeal dismissed - decided against Revenue.
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2018 (11) TMI 1216
Reverse charge mechanism - Club or Association Services - expenditure incurred by the appellants in respect of the services provided by persons situated outside India and expenditure incurred for their branch office operations - Rule 3(1)(ii) of Taxation of Services (Provided from Outside India and Received in India) Rules 2006. Held that:- Rule 3(ii) specifies performance based category services, namely, specified taxable services performed in India; even part performance being sufficient for requiring discharge of service tax under reverse charge - From the facts on record, it is found that the impugned services provided outside India will fall within the ambit of Rule 3(ii). Even as per the show cause notice, it is alleged that the services provided in Thailand and other places are leviable to service tax since it is intended for members in India. Thus, department does not have a case that the impugned services are physically performed in India. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1215
Valuation - inclusion in assessable value - cost of HSD received free of cost from M/s. Ultratech Cement Ltd. to whom services were provided - Held that:- There is no dispute that the appellants have received HSD free of cost - The Hon'ble apex court, in the case of Commissioner of Service Tax Vs M/s. Bhayana Builders Pvt. Ltd., [2018 (2) TMI 1325 - SUPREME COURT OF INDIA] has held that the value of goods/materials supplied free of cost by the service recipient is not included in the gross amount for the purpose of service tax - demand cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1214
Refund of CENVAT Credit - rejection for the reason that the input services have been filed by the appellant prior to taking registration and therefore credit is not eligible - Held that:- The said issue has been settled by the decision of Hon. Jurisdictional High Court in the case of CST, Chennai vs E-Care India Private Limited [2017 (4) TMI 1089 - MADRAS HIGH COURT], where it was held that registration cannot be a ground for rejection of refund - refund is to be allowed - appeal dismissed - decided against Revenue.
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2018 (11) TMI 1213
Jurisdiction - maintainability of appeal - Rebate/Refund of service tax paid - export of services - rejection on the ground of time limitation - N/N. 41/2012-ST dated 29.06.2012 - Held that:- In view of the amendment carried out by Finance Act, 2015 dated 14.05.2015 vide which the jurisdiction to entertain such an appeal has been ousted. In view of the specific amendment in Section 86 of the Finance Act, 1984 vide Finance Act, 2015, the present appeals are not maintainable before this Tribunal and the appeal lies before the Revisionary Authority in accordance with the provisions of Section 35EE of Central Excise Act, 1944. All the appeals are dismissed being not maintainable before this Tribunal.
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2018 (11) TMI 1212
Reverse Charge Mechanism - Import of Service - appellant procured the services of commission agents located outside India to cause sale of goods exported - Held that:- The Appellants had filed Form EXP-3 before the Service Tax Authorities on 10/10/2012. The issue is no more res-integra in view of the decisions of the Tribunal in the case of PRAZ INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, PUNE-III [2017 (4) TMI 1286 - CESTAT, MUMBAI], where it was held that If the procedure prescribed is not fulfilled there would be no consequence of denial of the benefit of the notification. The case of appellant is that of a procedural lapse, which is condonable and denial of substantive benefit on such procedural oversight, is unjustified - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1211
Non-payment of service tax within time - Club Or Association Service - Restaurant Service - Renting Of Immovable Property Service - non-registration - threshold exemption under Section 69 of the Act read with Rule (4) of the Service Tax Rules, etc. - penalty. Club And Association Services - Held that:- In the case on hand, the demand (of short payment) relates to the period 2008-09 (second half) to 2010-11 - the decision in the case of M/s. Handloom Export Promotion Council Vs. C.S.T., Chennai-II [2018 (8) TMI 1590 - CESTAT CHENNAI], squarely applies to the case in hand, where it was held that This Bench in M/S. COSMOPOLITAN CLUB VERSUS CCE & ST, MADURAI [2018 (2) TMI 1052 - CESTAT CHENNAI], has held that for the period up to 30.06.2012, there cannot be any service tax liability on the amounts collected by the clubs/associations from its members under various categories of members - the demand on short payment on the Club and Association Services is not sustainable. Renting of Immovable Property Services - Held that:- In the very same case of M/s. Handloom Export Promotion Council (supra), this Bench has taken a view that the same fell within the taxable category - demand with interest upheld. Restaurant Service - Held that:- This issue requires fresh adjudication in the light of the appellant’s explanation supported by its income and expenditure statement and other material documents - matter on remand. Penalty - Held that:- The issue of taxability under the Clubs and Association Services was mired in litigation and was only laid to rest by the decision of High Courts - With regard to Renting of Immovable Property Services provided by the appellants, the appellant was under a mistaken assumption that there would be no tax liability since the appellant had leased out its own premises and that there was no short payment on Restaurant Service - there was reasonable cause for the failure to discharge the impugned tax liabilities, hence impositions of penalties are unjustified - penalty set aside. Appeal allowed in part.
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2018 (11) TMI 1210
Penalty u/s 78 of FA - GTA Service - appellant had incurred considerable expenditure towards freight inwards and outwards but has not paid service tax on the same - Held that:- There is no case that the appellant did not cooperate with the verification of accounts or that the appellant had parallel set of accounts etc. Mere failure to pay service tax cannot be presumed as suppression of facts with intent to evade payment of service tax. Further, the appellant was a dealer and not a provider of output service - Appellant is liable to pay service tax under the reverse charge mechanism. Penalty - Held that:- This aspect was under doubt and confusion and mired by litigations for a long time - penalty set aside. The impugned order is modified to the extent of setting aside the penalty imposed under section 78 without disturbing the service tax demand or interest thereon or the penalty imposed under section 77 of the Finance Act - appeal allowed in part.
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2018 (11) TMI 1209
Extended period of limitation - Department, being in the knowledge of all the facts since 23.11.2009, issued the SCN only on 22.03.2013 i.e. after around more than three years which is beyond the period of limitation - Held that:- The assessee-appellants have deposited the Service Tax along with interest, but, inadvertently, under different head. The assessee-appellants had reversed the Credit wrongly availed by them for the period under dispute much before the issuance of the show cause notice. Hence, bonafide of assessee-appellants cannot be questioned - Penalty also do not sustain. Appeal allowed - decided in favor of assessee-appellants.
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Central Excise
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2018 (11) TMI 1208
Refund of duty paid under mistake of law - applicability of section 11B of CEA, 1944 - time limitation - Held that:- The assessees paid up the tax and later realised that they are entitled to exemption. The limitation, in the relevant period, being one year, there could be no refund application maintained after that period. Petition dismissed - decided in favour of the Revenue and against the assessees.
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2018 (11) TMI 1207
CENVAT Credit - duty paying documents - debit notes suggesting the price variation/ short receipt of raw material and credit sought to be denied - Held that:- The compensation is not part of value of goods whereas the same is on the form of penalty for non-lifting of the goods, hence the same cannot be liable to excise duty - demand set aside. CENVAT Credit - duty was demanded on some invoices which were not included in the list of invoice - Held that:- The said invoice which was alleged to have been issued for removal of goods clandestinely, the same were Proforma invoice. The department has not adduced any other evidence that other than this Proforma invoice that the goods were cleared clandestinely. Therefore, on the basis of Proforma invoice, the demand cannot be confirmed - demand set aside. CENVAT credit - non reversal of cenvat credit in respect of certain inputs and finished goods cleared - Held that:- The appellant has not disputed the demand but they only submitted that the lapse is of non reversal of credit/payment of duty on the part of employee - demand upheld. Exemption under N/N. 67/95-CE dated 16.03.1995 - appellant have manufactured and used sofa within their factory for captive consumption on which demand was raised - Held that:- Since the sofa was used in factory’s office, and the same being on capital goods is entitled for exemption under Notification 67/95-CE dated 16.03.1995., accordingly, the sofa manufactured and used within the factory is exempted under the said Notification - demand set aside. CENVAT credit - demand confirmed on the goods cleared by the appellant on non returnable gate passes without reversal of cenvat credit - Held that:- The appellant has not disputed the demand, however they only pleaded that the non reversal of credit is not due to intention but only due to clerical error - demand upheld. Penalty (on all issues mentioned above) - appellant strongly submits that wherever there is non payment of duty/ non reversal of credit, as explained in their submission it is not due to malafide intention but only due to clerical error, therefore penalty should not be imposed - Held that:- As per the explanation given by the appellant and the facts of the case for each and every goods there are one or other document available on record, therefore it cannot be said that the appellant had malafide intention, accordingly, they made out a good case for waiver of penalty - Penalty upheld. CENVAT credit - cenvat credit of inputs said to have not been received on the ground of statement given by Sh. Rajesh Kumar Upadhyay, Security Guard and non mention of invoice in the gate register - Held that:- The statement of Sh. Rajesh kumar Upadhyay is not conclusive as he stated in general that he enters each and every consignment in the gate register. However he did not explicitly pointed out that invoice which is not entered in the gate register, the goods of said invoices were not received, except this there is no other evidence. There is no dispute that all such invoices are recorded in the statutory record, books account, therefore, mere none mention in the gate register alone, the credit cannot be denied - credit allowed. CENVAT Credit - demand confirmed on the allegation that the appellant have not received the goods mentioned in the invoices on the ground that the size of MDF board mentioned in the supplier’s invoice did not match with the size mentioned in the appellant’s record - Held that:- There is no dispute that the appellant have indeed received the inputs i.e. MDF boards and it is also not undisputed that the MDF board is not used in manufacture as such form but it is used by stapling 2 boards or more. This also not the case of the department that they have purchased some different material unaccounted. Therefore, on the basis of the facts that input i.e. MDF boards was received by the appellant and the same was used in the manufacture of final product, other than the different of thickness of the MDF board - The department neither investigated or nor brought anything on record that the goods mentioned in the invoice were not received by them - demand cannot sustain. CENVAT Credit - credit denied on one of the input namely, PU Foam only on the ground that in the invoice, the vehicle No. was mentioned as GJ3AF 8382 which is not existing as per RTO report, whereas the correct No. is GJ3AX 8382 - Held that:- Except this minor different in the vehicle Number, the department could not adduce any evidence, moreover it is fact that vehicle number GJ3AX 8382 is correct as per RTO record. Therefore, it is obvious and while mentioning the vehicle number, the clerical error has occurred - credit cannot be denied - demand set aside. CENVAT Credit - credit denied by the lower authority on PVC/coated fabric on the basis of invoice raised by M/s Responsive Industries Ltd. - Held that:- There is no dispute that the inputs were recorded in the statutory record and books of account, therefore, merely because in the consignee column appellant’s name is not appearing, credit cannot be denied - demand set aside. Penalty on director of the appellant company Sh. Pulin J shah u/r 26 - Held that:- Firstly, the majority of demand has been set aside and remaining the demand is only due to clerical error which has been paid along with interest, consequently, the appellant has not directly dealt with the goods which is liable for confiscation - It is also undisputed that the SCN has not proposed confiscation of any goods on which excise duty was escaped, for this reason also the penalty on Sh. Pulin J. shah, Director of the appellant company cannot be sustained - penalty set aside. Appeal allowed in part.
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2018 (11) TMI 1206
Clandestine removal - Transfer of inputs (imported goods) without reversing SAD Credit - shortage of raw materials/ packaging material - revenue neutrality - Held that:- The inputs were removed from appellants one unit to their own another unit and the recipient unit is entitled for the Cenvat Credit, in this fact the entire exercise is Revenue/appellant neutral. Their cannot be any malafide intention to remove the input without reversing the SAD as there is neither any gain nor loss to the Revenue in reversing the credit - being the case clearly of Revenue neutral the demand is not sustainable. Shortage of raw material and packing material - demand is mainly based on the statement of Sh. Sameer Parekh dated 05.02.2010 - Held that:- Though in the statement Sh. Sameer Parekh admitted the shortage however he immediately after five days by affidavit retracted his statement dated 05.02.2010. He explained the reason of shortage - The statements recorded of some transporter do not reveal the actual co-relation of alleged clandestine removal - also, there is force in the submission of the appellant that the shortage is only minimum to the extent of 0.5% whereas in the type of industry of appellant the difference of 3% to 5% of shortage is possible - demand cannot sustain. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1205
Denial of Rebate claim and demand of duty - credit reversed is claimed by the appellant as rebate considering the clearances to SEZ Unit as export, in terms of SEZ Act and Rules - Revenue’s case is that the portion of the H.R.Coils, which are slit to the dimensions as per the requirement of their SEZ Unit are not intended for use in the DTA Unit and as such will not be entitled to the cenvat credit - Held that:- The appellant, instead of receiving the H.R.Coils in the factory and availing cenvat credit and subsequently sending them to job workers for slitting, has chosen to directly send the coils to the job workers for slitting and availed cenvat credit only after receipt of the sheets. There is no infirmity in such procedure. Rule 4 (5) of the Cenvat Credit Rules, 2004, provides for clearing the inputs for carrying out various processes. Rule 3(4)(b) of the Cenvat Credit Rules, 2004 provides that inputs on which cenvat credit have been availed may be cleared as such subject to reversal of the proportionate credit. Since slitting of coils into sheets does not amount to manufacture, for clearance of sheets received to SEZ Unit, the appellant was required to only reverse the proportionate credit. Since, there is no dispute that such reversal have been made, there is no scope for ordering payment of any other amount. The lower adjudicating authority appears to have proceeded on a completely wrong footing by considering the slit sheets as inputs for the appellant. He has overloaded the fact that the items procured on which cenvat credit stands availed are H.R.Coils procured from SAIL. Considering H.R.Coils as input, the cenvat credit cannot be denied. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1204
CENVAT Credit - by-products/waste materials arising in the course of manufacture - husk, dry husk, gluten, oil and oil cakes etc. - exempt goods - Rule 6 (3) of Cenvat Credit Rules, 2004 - Held that:- Admittedly, the Adjudicating Authority has dropped the demand by treating the entire period being prior to 1/3/2015. As such his findings on the Explanation 1 introduced with effect from 1/3/2015 are not available - we set aside a part of the impugned order, for the period post 1/3/2015 and remand the matter back to Commissioner to consider the Explanation 1 to sub Rule 1 of Rule 6 and give his findings on the same. Appeal allowed by way of remand.
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2018 (11) TMI 1203
CENVAT Credit - appellants have availed CENVAT Credit which was fraudulently passed on by M/s. Leadsman Enterprises - allegation of the Department is that since the first stage dealer has received only MS Wires and Coils from the manufacturer, they cannot issue CENVAT invoices to the appellants describing the goods as scrap - Held that:- When the invoices had clearly stated the description of the goods and the duty paid, the appellants cannot be expected to go behind the accounts maintained or transactions made by the first stage dealer so as to ensure whether the credit availed is correct or not. To hold the assessee liable for availing credit fraudulently, there must be positive evidence to show that they have indulged in some wilful act enabling them to avail such wrong credit - In the present case, there is nothing brought out from the evidence so as to establish that the appellants have any role in the offence, if any, committed by M/s. Leadsman Enterprises and other first stage dealers. The appellants have availed CENVAT Credit on the duty paid on the invoices. So also the entire transaction of the appellant has been through banks. Apart from certain assumptions based on the statements given by M/s. Leadsman Enterprises, there is no cogent evidence to prove that the appellants have availed wrong credit. The demand raised cannot sustain and required to be set aside - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1202
Undervaluation - short payment of duty - cost of lignite extraction - contravention of provisions of Section 4 of Central Excise Act, 1944 read with Rules 4, 6 8 of Central Excise Rules, 2002 - whether the transaction value of the lignite extracted and supplied by the appellant shall be the petitioned price as alleged by the Department or the adhoc price as is prayed by the appellant? Held that:- The Commission as constituted under the Electricity Act, 2003 shall determine the tariff of a generating company under a multi-year tariff framework for each financial year in furtherance of the petition alongwith the requested documents as mentioned therein by the generating company. The Rule permits the generating company for filing for provisional determination of transfer price at mine-mouth before taking up mining. Such provisional determination is mentioned to be the guiding factor for determination of final transfer price which has to be determined after a lengthy and time-taking procedure to be followed by the Commission in furtherance of Regulation 13 thereof. The transaction value is the price actually paid or payable for the goods. The price actually paid in the present case is adhoc/ interim price and the price payable would be the price as would be finally fixed by RERC - Ld. Commissioner Adjudication has gone wrong while still considering the petitioned price to be the transaction value for the lignite supplied by the appellant. Otherwise also, since the price could only be fixed by RERC, an appointed authority under Electricity Act, 2003, once petitioned price has not been approved by this authority, the appellant has no right to recover the same from RWPL - the petitioned price cannot be categorised as price actually payable. Hence, is wrongly considered as the transaction value. Extended period of limitation - Held that:- There is no suppression of facts on part of the appellant. The question of intent to evade tax has no relevance in the given facts and circumstances. Ld. Commissioner Adjudication is therefore opined to have been wrong while permitting the Department for invoking the extended period of limitation for issuing the impugned Show Cause Notice - extended period cannot be invoked. The demand of excise duty is not sustainable - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1201
Clearance of goods by Appellant (sub-contractor) to NTPC (for Mega Power Project) - benefit of N/N. 6/2006-CE dated 01.03.2006, read with N/N. 21/2002-Cus dated 01.03.2002 - Held that:- The respondent have complied with both the conditions as required under the exemption under N/N. 6/2006-CE and accordingly entitled to exemption from excise duty - In similar issue this Tribunal in the case of Paramount Communication Ltd. V/s CCE, Jaipur-I, [2016 (7) TMI 863 - CESTAT NEW DELHI] held in favour of the assessee under similar facts and circumstances - appeal dismissed - decided against Revenue.
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2018 (11) TMI 1200
CENVAT Credit - input services - Insurance service during the month of February, 2011 - denial on account of nexus - Held that:- This issue has been laid to rest by the decision of the Hon’ble Karnataka High Court in Stanzen Toyotetsu India Pvt. Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT], as well as the decision of the Hyderabad Bench of CESTAT in Ramboll Imisoft Pvt Ltd. [2016 (6) TMI 1071 - CESTAT HYDERABAD], where it was held that the group insurance services availed for the benefit of employees qualify as input services - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1199
CENVAT Credit - common input services for trading as well as manufacturing activity - non-maintenance of separate records - Rule 6(3) of the CENVAT Credit Rules, 2004 - Held that:- The issue decided in the case of M/S. SHANTI GEARS LTD. VERSUS PRINCIPAL COMMISSIONER OF GST & CENTRAL EXCISE (COIMBATORE) [2018 (6) TMI 378 - CESTAT CHENNAI] where it was held that The appellants have reversed the credit, as under Rule 3(5), when they have cleared the goods as such. In a normal trading activity, the goods which are procured, are sold and there is no question of availing the credit of such goods or clearing them on the payment of duty. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1198
CENVAT Credit - duty paying documents - supplementary invoices - Rule 9 read with Rule 8 of the Central Excise Valuation Rules, 2000 - Held that:- Rule 9(1) (b) of the Cenvat Credit Rules, 2004 prescribes that Cenvat Credit on supplementary invoices involving sale of goods is denied in the circumstances where suppression of facts, mis-statements etc. are involved. In the present case, there is no sale of goods, but the differential duty was paid on the stock-transfer of goods by M/s. Jai Balaji Sponge Ltd. to the appellant - the Cenvat Credit cannot be denied on the supplementary invoices issued to the sister concern for the differential duty paid. Appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1197
CENVAT Credit - input services - transportation of consignment - denial of credit on the ground that the input service with regard to transportation of consignment had not been received by the appellant unit and that the input credit documents were in the name of the sister unit - Held that:- This Bench in the above case of M/s. Greaves Cotton Ltd. [2014 (8) TMI 654 - CESTAT CHENNAI] after considering an identical situation and after considering the decisions of various higher fora has held that when two units belong to the same manufacturer and the input service relates to the business of the same assessee, there is no reason to deny input service - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (11) TMI 1196
Distribution of CENVAT Credit - area based exemption - the input service credit eligible / availed by units availing area based exemption were distributed to the appellant unit at Puducherry which according to department is not eligible - Held that:- In the present case, the appellant has availed the credit on ISD invoices distributed by their Head Office. To such availment or utilization of credit by appellant, the proviso to Rule 3(4) does not apply at all - the demand raised alleging that the appellant has violated provisions of Rule 2(l) r/w proviso to Rule 3(4) cannot sustain. CENVAT Credit - input service - membership fee for membership in Bombay Gymkhana Club Ltd. - Held that:- Such membership fee paid by the appellant does not have any nexus with their manufacturing activity - credit not allowed - demand upheld. Appeal allowed in part.
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2018 (11) TMI 1194
N/N. 116/1969-CE dated 03.05.1969 for the period 1982-85 - eligibility of the product ‘Darzamol’ injection I.V. - Held that:- What is not in dispute is that the Commissioner of Central Excise (Appeals) had set aside demand proposed against the appellant. It is also evident that no appeal was preferred by the department against this order and hence the same can be said to have attained finality for the department. This being so, as per sub-clause (ec) of clause (B) of Explanation to Section 11B of the Central Excise Act,1944, the duty has become refundable as a consequence of the order of the said appellate authority. We are unable to fathom the reasoning for rejection of the refund claim by the lower authorities only on extraneous and frivolous legal ground namely, assessee paid the duty voluntarily in three stages - appeal allowed.
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CST, VAT & Sales Tax
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2018 (11) TMI 1193
Condonation of delay of 210 days in filing appeal - HPVAT Act - applicability of section 5 of Limitation Act to the Appellate/Revisional proceedings under the HPVAT Act? - Held that:- This issue is no longer res integra and has been answered against the petitioners by a Coordinate Bench, to which one of us (Ajay Mohan Goel, J.) is a Member, in THE STATE OF HIMACHAL PRADESH AND OTHERS VERSUS TRITRONICS INDIA PRIVATE LTD., M/S WEB TECHNOLOGIES, SWELECT ENERGY SYSTEM LTD., M/S. PARAS SALES CORPORATION, M/S. MAHESH UGYOG [2018 (8) TMI 599 - HIMACHAL PRADESH HIGH COURT], where it was held that Section 5 of the Limitation Act is not attracted and the Revision Petition was held to be not maintainable being barred by limitation. The application seeking condonation of delay is dismissed.
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Indian Laws
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2018 (11) TMI 1229
Proceeding amounting to arbitration or not - Appointment of an arbitrator - Whether Clause 16.3 which provides for an appeal really provides for an arbitration and therefore whether the High Court was entitled to appoint an Arbitrator under Section 11(6) of the Act? Held that:- Arbitration has always been understood to mean the process by which a dispute is resolved by an arbitrator chosen or acceptable to both sides under an arbitration agreement between the two parties. In the present case, under Clause 16 of the Agreement only the party dissatisfied by the order of the Competent Officer can approach the Commissioner. It is, therefore, not possible to hold that the proceedings before the Commissioner constitutes as an arbitration. The present Clause 16 and in particular Clause 16.3 does not provide for the reference of any dispute that may arise between the parties to an Arbitrator. The purpose of this Clause is to vest the Competent Officer and the Commissioner with supervisory control over the execution of work and administrative control over it from time to time and thus to prevent disputes. The intention is not to provide for a forum for resolving disputes. Thus, in the present circumstances no Arbitrator could have been appointed by the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996. Appeal allowed.
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