TMI Tax Updates - e-Newsletter
November 3, 2017

Case Laws in this Newsletter:

Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

News

• Indian Advance Pricing Agreement regime moves forward with signing of seven APAs by CBDT in October, 2017

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• Exchange Rate of Foreign Currency Relating To Imported and Export Goods Notified

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• Department of Economic Affairs disposes three (3) FDI proposals aggregating to foreign investment of ₹ 24.56 crore during October 2017

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• FM: India has pledged unequivocal commitment for furthering the cause of New and Renewable Energy;

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• RBI Reference Rate for US $

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• Approval of framework for consolidation of Public Sector Banks

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Notifications

Customs

• 103/2017 - dated 2-11-2017 - Cus (NT)
  Exchange Rates Notification No.103/2017-Custom(NT) dated 2.11.2017

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GST - States

• EXN-F(10)-33/2017 - dated 9-10-2017 - Himachal Pradesh SGST
  Amendments in the Notification 2/2017-STATE TAX (RATE), dated the 30th June, 2017.

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• EXN-F(10)-31/2017 - dated 26-9-2017 - Himachal Pradesh SGST
  The Himachal Pradesh Goods and Services Tax (Seventh Amendment) Rules, 2017.

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• S.O. No. 098 - 33/2017-State Tax (Rate) - dated 20-10-2017 - Jharkhand SGST
  Amendments in the Notification No. 13/2017 vide S. O No.43/2017- State Tax (Rate), dated the 29th June, 2017 - Supply of services by the members of Overseeing Committee to RBI.

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• S.O. No. 097 - 31/2017-State Tax (Rate) - dated 20-10-2017 - Jharkhand SGST
  Amendments in the Notification No. 11/2017 vide S.O. No.41/2017- State Tax (Rate), dated the 29th June, 2017- related to Works Contract.

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• S.O. No. 095 - 38/2017-State Tax (Rate) - dated 20-10-2017 - Jharkhand SGST
  Amendment in the Notification No. 8/2017 - State Tax (Rate) vide S.O No.38/2017, dated the 29th June, 2017

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• Va Kar/GST/04/2017-S.O. No. 094 - dated 18-10-2017 - Jharkhand SGST
  Amendments in the Notification No. S.O. 42 State Tax (Rate) dated the 29th June, 2017 - Notification related to Transit cargo Nepal.

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• Va Kar/GST/07/2017-S.O. No. 096 - dated 17-10-2017 - Jharkhand SGST
  The Jharkhand Goods and Services Tax (Eighth Amendment) Rules, 2017.

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• Va Kar/GST/04/2017-S.O. No. 093 - dated 13-10-2017 - Jharkhand SGST
  Amendments in the Notification No. 5/2017 State Tax (Rate) dated 29th June, 2017.

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• Va Kar/GST/04/2017-S.O. No. 092 - dated 13-10-2017 - Jharkhand SGST
  Amendments in the Notification No. 2/2017 State Tax (Rate) dated 29th June, 2017,

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• Va Kar/GST/04/2017-S.O. No. 091 - dated 13-10-2017 - Jharkhand SGST
  Amendments in the Government of Jharkhand notification No. 1/2017 State Tax (Rate) dated 29th June, 2017,

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• Va Kar/GST/07/2017-S.O. No. 089 - dated 6-10-2017 - Jharkhand SGST
  The Jharkhand Goods and Services Tax (Seventh Amendment) Rules, 2017.

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• Va Kar/GST/04/2017-S.O. No. 090 - dated 6-10-2017 - Jharkhand SGST
  TDS deduction from the payment made or credited to the supplier of taxable goods or services or both.

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• Va Kar/GST/07/2017-S.O. No. 087 - dated 5-10-2017 - Jharkhand SGST
  Last Date for filing of return in FORM GSTR-3B.

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• Va Kar/GST/04/2017-S.O. No. 088 - dated 5-10-2017 - Jharkhand SGST
  Notification related to supply of heavy water and nuclear fuels.

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• Va Kar/GST/04/2017-S.O. No. 086 - dated 5-10-2017 - Jharkhand SGST
  Amendments in the Notification of the Government of Jharkhand S.O. 42 dated the 29th June, 2017

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• Va Kar/GST/04/2017-S.O. No. 085 - dated 5-10-2017 - Jharkhand SGST
  Amendments in the Notification of the Government of Jharkhand S.O. 41, dated the 29th June, 2017

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• Va Kar/GST/04/2017-S.O. No. 084 - dated 5-10-2017 - Jharkhand SGST
  Exemption on “handicraft goods”.

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Circulars / Instructions / Orders

Customs

• 138/2017 - dated 1-11-2017
  Subject: - Discontinuing the requirement for physical copies of certain documents (OOC copy, delivery order issued by shipping line, proof of payment of stamp duty), presently being collected by Terminal Operators for DPD delivery from Port Terminal, reg..
• 54/2017 - dated 12-9-2017
  Subject :- Refund of IGST paid on export of goods under Rule 96 CGST Rules , 2017-Reg.

Highlights / Catch Notes

Income Tax

• Reopening of assessment - - There was no nexus between the reasons to believe that income has escaped assessment and any new tangible material placed on record before the AO - Revenue was unable to point out any fresh tangible material which could form the basis for believing the argument on this aspect. - Reassessment proceedings quashed. - HC
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• Powers of CIT(A) u/s 251 are, indeed, very wide; but, wide as they are, they do not go to the extent of displacing powers under, say, sections 147, 148, and 263 - HC
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• Merely because the Assessee participates in the proceedings pursuant to such notice u/s 148, it does not obviate the mandatory requirement of the AO having to issue to the Assessee a notice u/s 143(2) before finalising the order of the reassessment - HC
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• TDS u/s 194H - TDS on discount provided by the assessee on the sale of pre-paid talk time / recharge coupons - transaction between the assessee and prepaid distributor for recharge coupons is nature of sale & purchase - No TDS liability
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• While calculating annual value of the let out property, maintenance charges paid to the society by the assessee is admissible deduction from the annual let out value u/s 23(1)(b)
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FEMA

• Department of Economic Affairs disposes three (3) FDI proposals aggregating to foreign investment of ₹ 24.56 crore during October 2017
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Case Laws:

• Income Tax

• 2017 (11) TMI 132
  Reopening of assessment - Income earned from the Scorpio agreement would be taxable in the hands of the Petitioner, as royalty under Section 9 (1) (vi) and also under DTAA - difference between Form 26 AS and assessed income - Held that:- In respect of these very Assessee and for the same AY 2010-11, the earlier draft assessment order passed by the AO under Section 144C of the Act has already been set aside by its judgment dated 23rd March 2016. That judgment referred to the order of the DRP which had held that both the Assessees were not eligible Assessee under Section 144C (15) of the Act and that order of the DRP was binding on the AO. It was further held by this Court that the AO could not have disregarded the finding directions of the DRP and passed the final assessment order. This was an issue of jurisdiction of the AO to proceed under Section 144C of the Act against an entity which is a partnership firm incorporated outside India. The fact that is undeniable is that the AO continues to be bound by the order of the DRP which was by this Court by its decision dated 23rd March 2016 in respect of the same Assessees for the same AY 2010-11. Since the Revenue has not challenged that judgment, the AO had no option but follow the DRP's order. Further, the AO was aware that the earlier attempt at disobeying the DRP's order led to invalidation of the draft and the final assessment order. What is surprising is that while disposing of the objections to the reopening of the assessment, the AO again chose to only record that the DRP held that both the Assessees were not eligible Assessees. The AO did not refer to this Court's order dated 24th March 2016. This is despite the fact that the AO was disposing of the objections more than nine months after the judgment of this Court. This conduct of the AO is simply unacceptable. The passing of the draft assessment order pursuant to reopening of the assessment under Section 147/148 of the Act, in respect of both the Assessees and for the same AY 2010-11, is clearly in the teeth of the order of the DRP as well as judgment of this Court and is therefore, unsustainable in law. On this ground, both the draft assessment orders in respect of ESS Distribution and ESS Advertising for AY 2010-11 dated 19th December 2016 are liable to be set aside. Referring to reason for reopening that that the amount received by ESS Distribution from Scorpio, pursuant to the agreement entered into between them, was taxable under Section 9 (1) (i) of the Act read with the relevant provisions of the DTAA, the Court has been shown a computation of income and notes to computation filed by ESS Distribution in the original assessment proceeding. It is clearly mentioned therein that during the year in question ESS Distribution has not conducted any business with Scorpio and accordingly, there were no receipts from Scorpio. Therefore, the said reason recorded for reopening the assessment was apparently invalid. Even as regards the second reason viz., the difference between form 26 AS and the assessed income of the Assessee, all this forms part of the assessment proceeding. There was no new material for the AO to come into the conclusion that any other income arose during the AY in question that was left out from consideration. There was no nexus between the reasons to believe that income has escaped assessment and any new tangible material placed on record before the AO. As regards ESS Advertisement, there was only one reason for reopening of the assessment which is that 30% of the gross advertising revenue was assessed as an attributable income to Indian PE amounting to USD 418,939 had been left out for being considered - The determination of business income attributable to the India PE on an estimated percentage basis was deemed to have considered and taken into account all business income and expenses into its fold. There was no occasion for lifting any particular item reflected in the accounts for a specific treatment. Further the above aspect was already a part of the original assessment and there was no fresh tangible material available with the AO to form reasons to believe that any income of the Assessee escaped assessment. This order, therefore, is mere change of opinion. Existence of PE in India - Held that:- When the Assessee had filed their respective returns for 2009-10 and intimation was sent under Section 143 (1) of the Act, it is difficult to believe that the Revenue was unaware of the Assessees having a PE in India particularly when in each of the other AYs the matter was contested and is pending at various levels of the hierarchy. All this goes to show that the Revenue was unable to point out any fresh tangible material which could form the basis for believing the argument on this aspect. Assessee appeal allowed.

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• 2017 (11) TMI 131
  Admission of investment made as undisclosed income during the block period - Set off against the above undisclosed income being realisation from debtors falling outside block period - Held that:- Indisputably, the assessee has admitted undisclosed income for the block period at ₹ 12.87 lacs. The deduction was claimed by the assessee of ₹ 10,56,991/- against the above undisclosed income as set off being the realization from the debtors prior to block period. Obviously, the onus was on assessee to lead direct evidence to show that he had the said amount of undisclosed income available at the beginning of the block period. Apparently, the calculation made by the CIT (Appeals) while treating 25% of the total sundry debtors covered by unexplained sundry debtors prior to the block period thereby treating 75% of the debtors as outstanding, has no logical basis. We are of the considered opinion that the view taken by the ITAT that the ratio of unexplained debtors and creditors as at the beginning of the block period can be better determined by the ratio of disclosed debtors and creditors as per the books of account as on 31.3.96 being the beginning of the block period is logical and justified and thus, the same does not warrant any interference by this court in exercise of its appellate jurisdiction. Addition towards the loan given to Shri D.P.Agarwal as on 1.4.96 being the first day of the block period - Held that:- As noticed that sum of ₹ 75,000/- was taken by Shri D.P. Agarwal from the assessee in cash and it is also specifically mentioned that no amount was outstanding prior to the said transaction. There was no evidence furnished showing that the amount was advanced by the late father of the assessee and therefore, the bald assertion of the assessee in this regard has rightly been not accepted by the A.O. and thus, the addition made by the A.O. sustained by the CIT (Appeals) and ITAT is absolutely justified.

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• 2017 (11) TMI 130
  Reopening of assessment - Whether when the matter u/s 148 was pending against jurisdiction of the CIT(A), Gwalior, second show cause notice issued on the same subject is without any authority of law? - Held that:- . Since, the original proceedings were pending before the CIT(A), without entering into the question of jurisdiction of the Sawaimadhopur AO, the fact remains that the adjudicating authority could not have issued second show cause notice u/s 148. In that view of the matter, without entering into the matter whether the Gwalior or the Sawaimdhopur, AO has jurisdiction or not, the second show cause notice is held to be not legal. - Decided in favour of assessee.

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• 2017 (11) TMI 129
  Deduction claimed on account of ad-hoc provision for pay revision of employee - accrual of liability - year of assessment - taxation of real income or the book income - Whether the Tribunal was legally justified in reversing the findings of the CIT(A) and allowing the deduction claimed on account of ad-hoc provision for pay revision of employees? - test of necessity - Held that:- Conclusion of ld. CIT (A) that there was no crystallized liability and no agreement was arrived at between the parties, is without any merit. The appellant is a Gramin Bank sponsored by Punjab National Bank and having the trapping of scheduled bank. The appellant is also governed by the instructions issued by the RBI in this regard. In our opinion, the employees are entitled to the revision of the pay not when the report of the commission or committee is submitted to the management, but the employees are entitled to the revised pay from the date when it is found to be due and payable. The submission of report or acceptance of the report has no basis to say that it was not due and will only become due when the pay revision is accepted by the employees. In our view, the employees are entitled to revised pay from the date it was due and payable by the employer. See Commissioner or Income Tax V/s Bharat Heavy Electrical (2012 (9) TMI 515 - DELHI HIGH COURT) - Decided against revenue

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• 2017 (11) TMI 128
  Appellate Authority power u/s 251 to add to or enhance the assessee’s declared income from a source never considered by the AO - Reopening of assessment - undisclosed income - Burden proof on the source of income - assessee pleads in defence that he sold a few bars of gold - enhancing the assessment by taking the assessee’s status as ‘resident’ and by bringing to tax the income earned by him outside India - Held that:- In an appeal against an order of assessment, the Appellate Authority may confirm, reduce, enhance, or annul the assessment. In an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty. The explanation to the provision further emphasizes that the Appellate Authority may consider and decide any matter arising out of proceedings in which the order appealed against was passed, though such matter was not raised before him by the appellant. Full Bench in CIT v. Sardari Lal & Co., (2001 (9) TMI 1130 - Delhi High Court) has held that the inevitable conclusion is that whenever the question of taxability of income from a new source of income is concerned, which had not been considered by the assessing officer, the jurisdiction to deal with the same in appropriate cases may be dealt with under section 147, or section 148, or even section 263 of the Act if requisite conditions are fulfilled. It is inconceivable, according to Sardari Lal, that in the presence of such specific provisions, a similar power is available to the first appellate authority. Eventually, Sardari Lal upheld the decision in Union Tyres[1999 (9) TMI 81 - DELHI High Court]. Undeniably, the precedential position on the powers of the first appellate authority under section 251 undulates. There are seeming contradictions. But, as held by Union Tyres [1999 (9) TMI 81 - DELHI High Court ] and as affirmed on reference by Sardari Lal, there is a consistent judicial assertion that the powers under section 251 are, indeed, very wide; but, wide as they are, they do not go to the extent of displacing powers under, say, sections 147, 148, and 263 of the Act. Therefore, we are in respectful agreement with the view taken by the Full Bench of the High Court of Delhi in Sardari Lal. As a corollary, we hold that the Tribunal’s deleting the enhancement of ₹ 22,15,116/- and canceling the order of the CIT (A) on that issue call for no interference. We thus answer the questions of law partly in the Revenue’s favour

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• 2017 (11) TMI 127
  Requirements of issuing notice under Section 143(2) - validity of reopening of assessment - Held that:- The subsequent judgment of the Division Bench in PR. Commissioner of Income Tax vs. Silver Line [2015 (11) TMI 809 - DELHI HIGH COURT] has revisited the issue wherein held reassessment order cannot be passed without compliance with the mandatory requirement of notice being issued by the AO to the Assessee under Section 143(2) of the Act, the ITAT was in the present case right in concluding that the reassessment orders in question were legally unsustainable. The proposal to reopen an assessment under Section 147 of the Act is to be based on reasons to be recorded by the AO. Such reasons have to be communicated to the Assessee. However, merely because the Assessee participates in the proceedings pursuant to such notice under Section 148 of the Act, it does not obviate the mandatory requirement of the AO having to issue to the Assessee a notice under Section 143(2) of the Act before finalising the order of the reassessment - Decided in favour of assessee.

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• 2017 (11) TMI 126
  Disallowance U/s 14A - whether addition has to be limited to the quantum of income not forming part of the Total income of the assessee even when clear, explicit and unambiguous provisions of section 14A read with Rule 8D do not stipulate any such condition? - Held that:- In Joint Investments Pvt. Ltd. v. Commissioner of Income Tax [2015 (3) TMI 155 - DELHI HIGH COURT] has held that by no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure “incurred by the assessee in relation to the tax exempt income”. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. - Decided in favour of the Assessee.

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• 2017 (11) TMI 125
  Enhancement of assessment pursuant to notice u/s 251 (1)(a) - Power of CIT(A) - no opportunity to contest the proposal for enhancement granted - violation of principles of natural justice - Held that:- The first respondent issued a notice under Section 251 (1)(a) of the Act proposing an enhancement of the income and directed the petitioner to show-cause against the proposal on or before 12.12.2016. Subsequently, a notice was issued by the first respondent dated 10.03.2017 stating that the appeal petition filed by the petitioner against the assessment order dated 12.03.2015 along with the proposal of enhancement of assessment would be heard on 23.03.2016 at 02.30pm. The petitioner would state that the date fixed for hearing having been mentioned as 23.03.2016, the petitioner ignored the said notice as being an incorrect notice and expected a fresh notice would be issued by the first respondent. However, the impugned order came to be passed on 28.03.2017 by which the petitioner's appeal petition against the assessment order dated 12.03.2015 has been allowed and simultaneously the proposal made by the first respondent for enhancement of assessment vide notice dated 10.11.2016 has been confirmed. It is clear that to the said extent, the impugned order suffers from violation of principles of natural justice as the petitioner did not have adequate opportunity to put forth their submissions. There was no response filed by their authorized representative to the notice dated 10.03.2017 and what has been stated in Paragraph 4.5 is factually incorrect. Thus, taking note of the fact that the petitioner should have an opportunity to put forth their objections with regard to the proposal for enhancement as the proposal in the notice impugned to that extent requires to be set aside, and the matter remanded to the first respondent for fresh consideration, who shall issue a fresh notice of hearing giving reasonable opportunity to the petitioner, hear the petitioner in person and pass a reasoned order on merits

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• 2017 (11) TMI 124
  Deduction u/s 43-B - Held that:- In the present case, no dispute with regard to the fact that the deletion of proviso of section 43-B has curative effect and would operate retrospectively. The fact remains that the claim of deduction must fall within the four corner of the proviso of Section 43-B which unfortunately the appellant does not fulfil, therefore, the aforesaid judgments does not rescue the appellant. We have considered the submission of learned counsel for the appellant as well as learned counsel for the revenue, we are of the opinion that the Tribunal has arrived at right conclusion in rejecting the claim of the appellant for claim of the deduction in view of the proviso to Section 43-B. The authorities have rightly recorded the finding of fact which does not require to interfere by this Court.

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• 2017 (11) TMI 123
  TDS on sharing of profit with joint venture partner - addition u/s 40(a)(ia) - sham transaction - Held that:- Upon analyzing the Memorandum and other materials on record, the Commissioner accepted the assessee’s stand that the said sum was not expenditure incurred by the assessee to attract the provisions of Sections 194H or 194J of the 1961 Act. As a consequence, the question of disallowance of payment by applying the provisions of Section 40(a) (ia) could not arise. These findings by the Commissioner are based on appreciation of materials on record. The Tribunal also concurred with the findings of the Commissioner. The Tribunal, in its decision under appeal, observed that the assessing officer did not point out any defect in the “settlement/contract”. There is no cloud on remittance of the said sum to Alishan, which has been referred to as a paper company by the assessing officer. But the Revenue has not been able to establish any defect or fault in the transaction itself between the assessee and Alishan. The transaction of purchase and sale of the land by the assessee pursuant to the MOU is not in dispute. Doubt has been sought to be raised on lopsided profit sharing arrangement, which according to the Revenue, is a colourable device adopted for evading tax. But as we have already observed, the first and the second appellate bodies, upon appreciation of evidence did not find any reason to negate the transaction as sham, which would have rendered assessee’s explanation unsatisfactory. We do not find any perversity in the findings of the Commissioner or the Tribunal - Decided against revenue

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• 2017 (11) TMI 122
  Addition on unexplained cash credit under section 68 - proceedings under section 153C - Held that:- The condition precedent for issuing notice u/s 153C and assessing or re-assessing the income of such other person, is that the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned should belong to such other person has not been satisfied. If the requirement is not satisfied, recourse cannot be had to the provisions of Section 153C of the I.T. Act. In the present case, the department did not produce any evidence to prove that assessee-company received any accommodation entry or any material was found during the course of search to prove that cash credit already received by assessee-company was bogus or that it was taken through some other person on giving cash to them. Therefore, no material was found during the course of search to prove that any money (cash credit) belonging to the assessee-company. The conditions of Section 153C of the I.T. Act, are therefore, not satisfied. In view of the above discussion, we are of the view that initiation of proceeding under section 153C of the I.T. Act against the assessee-company is bad in law and is liable to be quashed. We, accordingly, set aside the orders of the authorities below and quash the initiation of proceedings under section 153C of the I.T. Act. Appeal of the assessee-company is allowed.

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• 2017 (11) TMI 121
  Penalty u/s 271(1)(c) - non genuineness of the gifts - Held that:- After considering the details furnished by the assessee, the copy of the income tax returns of the donors and the statements of the donors, we are of the opinion that the Assessing Officer has not pointed out any of the details furnished by the assessee to be incorrect, erroneous or false. The Assessing Officer has doubted the genuineness of the gifts on the ground of human probabilities. In our opinion, what is humanly probable is certainly a matter of opinion and, therefore, the denial of the acceptance of gifts in the assessment proceedings on the basis of human probability may be justified, but, the same cannot the basis for the purpose of levying penalty under Section 271(1)(c), specially when there are overwhelming documentary evidences in support of the genuineness of the gifts which is further fortified by the statements of the donors. Therefore, we are of the considered opinion that the assessee cannot be said to have furnished inaccurate particulars of income or have concealed the income so as to make him liable for penalty under Section 271(1)(c) of the Act. - Decided in favour of assessee.

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• 2017 (11) TMI 120
  Deduction of TDS from bank guarantee commission paid on or before 31st. December 2012 - Held that:- Notification issued by the CBDT prescribed that no tax is required to be deducted in case of payments of bank guarantee commission to the banks - Hon Delhi High court in JDS apparel P. ltd (2014 (11) TMI 732 - DELHI HIGH COURT) has held that bank is not acting as an agent of the assessee. No tax is required to be deducted on bank guarantee commission paid to a Nationalised Bank and therefore, disallowance has been correctly deleted by the ld CIT(A). In the result solitary ground of appeal is dismissed.

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• 2017 (11) TMI 119
  Bogus purchase - profit determination - Held that:- As observed that the assessee has achieved turnover of ₹ 7.19 crores and net profit is 75.23 lacs. We have carefully gone through the paper book filed by the assessee running into 472 pages . We have also observed that these parties are not traceable and notices issued by the AO u/s. 133(6) to these parties have returned un-served. The inspector deputed by the A.O to verify these parties have reported that these parties are not traceable. The assessee is not able to produce stock register and the assessee is not able to shown movement of the material. The assessee has however claimed that purchases invoices are available and payments were made by cheques. It is claimed by the assessee that consumption and utilisation of the material is proved which is disputed by the Ld. DR who has stated before us no such documents to prove consumption/utilisation of material has been filed by the assessee before the AO . The assessee was directed to file paper book before the bench which is now filed by the assessee in two volumes running into 472 pages. The assessee has not filed any certificate with the paper book that these documents have been filed before the A.O and / or learned CIT(A) and from the careful perusal of these document filed in paper book before us , we could not find that the assessee has co-related purchases with the sales and utilisation/ consumption of the material was proved by the assessee before the authorities below. No, doubt large number of documents are filed before us running into 472 pages in paper book filed in two volumes. These documents need verification and authentication by the authorities below . Thus, keeping in view interest of justice and fair play it is deemed fit and appropriate that the matter need to be set aside and restored to the file of the A.O for fresh determination of the issue on merits de-novo in accordance with law as we are of the considered view that the assessee so far could not prove utilisation / consumption of material and genuineness of the purchases but since large number of evidences are filed before us , the same required verification/authentication by authorities below. Appeal of the assessee allowed for statistical purposes.

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• 2017 (11) TMI 118
  Income from sale of shares - capital gain or business income - Held that:- After carefully considering the voluminous transactions entered into by the assessee during the year and the overall conduct of the assessee , we are of the considered view that gains arising from purchase and sale of shares which are squared within 30 days of purchase by the assessee, the same may be treated as a business income and correspondingly STT paid be allowed as deduction in accordance with law , while the transactions for purchase and sale of shares which are squared after 30 days of its purchase, the same may be treated as income from capital gains. In view of decision of CIT v. Pruthvi Brokers & Shareholders (2012 (7) TMI 158 - BOMBAY HIGH COURT) the claim of the assessee raised for the first time before tribunal for grant of deduction towards STT paid is admitted and allowed as business deduction after verification on merits in accordance with law and corresponding STT paid on such shares income of which is held to be business income be allowed by the AO after verification. For the limited purposes we are restoring this matter to the file of the A.O to make computation of business income as well capital gains on shares after verification of period of holding of such shares in accordance with our above directions.

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• 2017 (11) TMI 117
  TPA - comparable selection - selection criteria - Held that:- Assessee is into providing ITeS services thus companies functionally dissimilar with that of assessee need to be deselected from final list of comparable.

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• 2017 (11) TMI 116
  Claim of deduction u/s 80IB(10) - out of the total 149 flats built by assessee, 10 flats were having area of more than 1500 sq ft. - AO had noted that the Valuer appointed by the Revenue authorities had certified that 10 flats were having an area exceeding 1500 sq. ft but the 2 Valuers / Architects appointed by the assessee had certified that the area in respect of the 10 flats were less than 1500 sq.ft - reason for the difference in the area as calculated by the Valuers was on account of the measurement of the thickness of the wall. Held that:- The Valuer appointed by the Revenue had considered the thickness of the external walls at 18” at six places which was in actual a double wall taken as an architectural projection for aesthetic purpose whereas the Architects had considered the thickness of the wall at 6” which was as per the sanctioned plan. We find that CIT(A) in his order has also noted that the Valuer approved by Revenue had not given the breakup of the calculation for arriving at the area exceeding 1500 sq.ft. for 10 flats. He has also noted that that Shri Ruparel has observed that as a general trend prevalent in the industry, the architectural projections in the form of features, chajjas, hollow boxes, solid boxes for enhancing the aesthetics of the building which is also allowed by the local authorities are not counted by any Corporation in the built-up area calculations and the projections was not utilizable from inside and neither it was added to the carpet area nor it was in habitable nature. The findings namely that the projections are external projections, it is for the purpose of aesthetic beauty of the building, are not habitable and not utilizable from inside and all allowed by the Corporation and not considered by them for the purpose of calculating the area of the flat, has not been controverted by the Revenue. In such a situation, we are of the view that the deduction u/s 80IB(10) of the Act cannot be denied to the assessee. We therefore direct the AO to allow the deduction on the entire project. Thus the grounds of the assessee are allowed. As far as Revenue’s grievance with respect to granting of prorata data we find that Ld.CIT(A) after considering the decisions cited in his order has noted that the various authorities have held that assessee is entitled to deduction with respect to the units which have complied with the condition laid down u/s 80IB(10) of the Act. Before us, Revenue has not brought on record any contrary binding decision in its support nor has controverted the findings of Ld.CIT(A). No reason to interfere with that portion of order of Ld.CIT(A) and thus the grounds of Revenue are dismissed.

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• 2017 (11) TMI 115
  TDS u/s 194H - TDS on discount provided by the assessee on the sale of pre-paid talk time - assessee was selling the recharge coupon / vouchers and starter pack to the customers through the net of distributors - AO has treated the discount given by the assessee to its distributors on the sale of recharge coupons/ starter pack as commission expenses - assessee treated the aforesaid transaction as sale at a price net of discount in the books of accounts - nature of agreement - Held that:- On perusal of the agreement it can be inferred that the transaction between the assessee and the distributor was based on principal to principal basis and which is in the nature of purchase and sale transaction. There was no clause in the agreement suggesting that the assessee is liable for the payment of the commission to the distributors. The distributor was authorized to sale the prepaid recharge coupons at a price of its/ his choice but not exceeding MRP determined by the assessee. We also find that all the risks & rewards attached with the product were shifted to the distributor. Thus we hold that there was no agreement between the assessee and the distributor as of principal and agent. under the post-paid connection there are certain services rendered by the assessee such as collection of documents for proof of identity, delivery of SIM cards, collection of charges etc. Against these services the distributors are paid the amount of agreed commission by the assessee after deducting TDS u/s 194H of the Act. As we find that in case of prepaid connection the recharge coupons are sold to the distributors on outright sale basis at a discounted price. The amount of discount is not recorded in the books of accounts. Therefore we hold the transaction between the assessee and prepaid distributor for recharge coupons is nature of sale & purchase. Thus amount of discount cannot be equated with the commission as envisaged under section 194H of the Act. the provisions of TDS under section 194H of the Act are not attracted on the sale of recharge coupons for the prepaid talk time to the distributors and accordingly the assessee cannot be treated as assessee in default for non deduction of TDS u/s 201. See Bharti Airtel Limited Vs. CIT & ANR. [2014 (12) TMI 642 - KARNATAKA HIGH COURT ] - Decided in favour of assessee.

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• 2017 (11) TMI 114
  Computation of long term capital gain on sale of a flat - determination of Fair Market Value as on 1.4.1981 - Held that:- As gone through the copy of valuation report furnished before the Tribunal. As notice that the registered valuer has adopted a rate of ₹ 360/- per sq.ft., and accordingly arrived at a value of ₹ 3,33,000/-. He has also qualified his report by stating in para 4 of his report that there are no comparable instances of sales in the area and accordingly determined the value on the basis of personal enquiries. However he has not described the details of enquiries, which renders the valuation report a bald one. Accordingly I am of the view that the valuation report furnished by the assessee may not come to its help for the reasons discussed above. CIT(A) has determined the value of ₹ 1,71,000/- on the basis of sale instance of a flat located in the same society that took place on 23.11.1983. In fact, the above said sale agreement was furnished by the assessee before the AO. Even though sale instance is subsequent to the valuation date of 1.4.1981, yet the Ld CIT(A) has adopted the same without discounting the same. Since the sale instance is a better evidence and in the absence of any other material, Ld CIT(A) was justified in adopting the fair market value as on 1.4.1981 at ₹ 1,71,000/-. Accordingly uphold his order passed on this issue. Deduction of professional fee paid to M/s B.R Dalal & Co for tax consultation and to Shri A.G. Pandit for drafting agreement for sale and transfer of shares of the flat - Held that:- In respect of drafting sale agreement and transfer of shares, it is of the view that the same should be considered as expenses incurred in connection with the transfer, since the agreement is required for effecting transfer and the transfer cannot be considered as complete unless the shares were also transferred. Accordingly reverse the order of Ld CIT(A) on this issue and direct the AO to allow the deduction paid for drafting sale agreement and transfer of shares. Assessee has also claimed the loss of ₹ 2,98,000/- and interest loss of ₹ 4,49,971/- should be treated as cost of flat. First of all, the fair market value as on 1.4.1981 has been substituted as cost of flat and hence the same would subsume all the costs. Secondly, both the items cannot be related to the cost of purchase, as they are independent transactions. Accordingly confirm the orders of tax authorities on this issue. Deduction claimed u/s 54EC - Held that:- The claim of the assessee is allowable as per the decision rendered by Hon’ble Madras High Court in the case of CIT Vs. C. Jaichander & another [2014 (11) TMI 54 - MADRAS HIGH COURT ]

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• 2017 (11) TMI 113
  Rejection of books of accounts - estimation of income - Held that:- We find that AO while rejecting the books of accounts have listed various reasons which led him to believe that the books of accounts have not been maintained properly. Some of the reasons pointed out by him are no proper explanation for identical opening and closing stock, wrongly considering excess cash and unexplained investment in furniture and material which pertained to deemed income u/s 69A and 69B of the Act in the Profit and Loss account while working of the gross profit / net profit for the year, discrepancies in paper consumption and other expenses. The aforesaid findings of AO have not been controverted by Ld.A.R nor has assessee pointed out any mistake or fallacy in the findings of AO. We uphold the action of AO in rejecting books of accounts. Once the books of accounts are rejected u/s 145(3) of the Act, the next step is to estimate the profits. We find that for the purpose of estimating profits, AO has considered the net profits of the assessee for past three years and to it added the additions made u/s 69A and 69B of the Act and after granting the credit for the amount disclosed by the assessee in the return of income, made addition of the balance amount. Before us, the Ld.A.R. has not pointed out any grave error in the method of estimation considered by AO. In such circumstances, we find no reason to interfere with the order of Ld.CIT(A) and thus, the ground of the assessee is dismissed. Addition in respect of agricultural income - Held that:- Revenue has also not placed any material on record, to show that the assessee does not own the land or has sold the land or the land is not well irrigated. Considering the income shown by the assessee in earlier years which has also not been doubted by the Revenue and considering the fact that the assessee has shown agricultural income of ₹ 6,71,575/- in the year under consideration as compared to the income of ₹ 6,40,000/- shown in immediately preceding year, the income shown by the assessee seems to be reasonable. Considering the totality of these facts, we are of the view that the agricultural income shown by the assessee does not require any interference and the AO was not justified in estimating the agricultural income and treating ₹ 6,71,575/- as income from other sources without any evidence to the contrary. In view of the aforesaid facts, we set aside the order of AO in treating the income of ₹ 3,21,575/- as income from other sources and direct to consider it as income from agriculture. Thus, the ground of the assessee is allowed. Addition on account of excess remuneration - Held that:- For invoking provisions of Sec.40A(2)(b) of the Act. AO is required to form an opinion having regard to the fair market value of the services rendered. The AO has to record a finding as to whether the expenditure is excessive or unreasonable in relation to the requirements of Sec.40A(2)(b) of the Act. AO has to prove that the transaction is not bonafide or the value of services paid by the assessee is not in consonance with the fair market value. The opinion of the AO should be formed objectively from the point of view of a prudent businessman and taking into consideration all the relevant circumstances. In the present case, we are of the view that AO has not brought any material on record to demonstrate that the salary of the wife of the assessee is excessive so as to invoke the provisions of Sec.40A(2)(b) of the Act. In such a situation we are of the view that no disallowance of expenses on account of excess salary payment was called for. Thus the ground of the assessee is allowed. Telephone charges and travelling expenses - Held that:- We find that AO had disallowed 20% of telephone and travelling expenses considering that the personal element of expenses is not being ruled out. Before us, assessee has stated that no such expenses have been disallowed by Revenue in earlier years. Considering the totality of the aforesaid facts, we are of the view that in the present case the ends of justice shall be met if the disallowance of expenses is restricted to 10% of the expenses. We thus direct accordingly. Thus the ground of assessee is partly allowed.

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• 2017 (11) TMI 112
  Disallowance under section 40A(3) - Held that:- Where genuineness of transactions made in cash in excess of ₹ 20,000 was not disbelieved by authorities, same cannot be disallowed under Section 40A(3). - Decided in favour of assessee.

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• 2017 (11) TMI 111
  Reopening of assessment under section 147 - Held that:- This issue is squarely covered in favor of the assessee and against Revenue by the decision of Hon’ble Supreme Court in the case CIT vs. Foramer France (2003 (1) TMI 101 - SUPREME Court) has taken the view that the first proviso to section 147 lays down an exception whereby the AO is not permitted to exercise his jurisdiction in reopening the assessment beyond a period of four years from the end of the relevant assessment year. Once the exception carved out by proviso to s. 147 comes into play, the case would fall outside the ambit of s. 147 of the Act. As per proviso to s. 147 no action under this section can be taken after expiry of four years from the end of the relevant assessment year, unless inter alia, income chargeable to tax had escaped assessment by reason of failure of the assessee to make full and true disclosure of all material facts necessary for assessment. In case, there being no whisper in the reasons supplied to assessee that income escaped assessment by reason of assessee’s failure to make a full and true disclosure of all material facts necessary for assessment, notice under s. 148 issued beyond four years from the end of relevant assessment year was barred by limitation under proviso to s. 147 hence without jurisdiction. If either of these conditions is not fulfilled the notice is without jurisdiction. If the notice issued u/s 148 fails to satisfy either of the conditions, it deserves to be quashed. However, the officers have many time issued notices for reopening the assessments even beyond four years from the end of the assessment year without fulfillment of any of the legal conditions as stipulated in the first proviso to this section. Appeal of assessee is allowed.

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• 2017 (11) TMI 110
  Computation of income from property - disallowing the maintenance charges paid in respect of let out properties - Held that:- We find that the issue raised in this ground is covered by the decision of the Tribunal in the case of Ms.Allo Bejan Daver (2011 (4) TMI 1277 - ITAT MUMBAI) wherein it has been held that the maintenance charges paid to the society are to be reduced the rent received while calculating the ALV u/s 23(1) of the Act. Also in case of Barodawala Properties Ltd. (2001 (12) TMI 875 - ITAT MUMBAI ) is concerned, we find that the Tribunal in subsequent judgments have held that while calculating annual value of the let out property, maintenance charges paid to the society by the assessee is admissible deduction from the annual let out value u/s 23(1)(b). - Decided in favour of assessee Damages received by the assessee from the licensee for the period falling beyond the period of the leave and license agreement - Held that:- The undisputed facts of the case that the licensee did not vacate the flats as per the terms of leave and license agreement and as a result the assessee received ₹ 10,40,000/- as damages pertaining to that period when the licensee occupied the premises without any valid authority as per the licensee deed dated 31.5.2006 and the said damages related to the period after 31.5.2006. We find merit in the argument of AR that the said receipt is a capital receipt and not liable to tax. Thus direct the AO to exclude the amount of ₹ 10,40,000/- from the ALV. Addition made on account of notional interest @ 10% on interest free security deposits received by the assessee while computing the annual value of the residential properties u/s 23 - Held that:- As decided in assessee's own case actual rent received by the assessee far exceed the Municipal ratable value and, therefore, the annual value of the property need to be computed under section 23(1)(b) of the Income Tax Act, 1961. This Court in the case of Commissioner of Income Tax Vs. J.K. Investors (Bombay) Ltd. [2000 (6) TMI 9 - BOMBAY High Court ] has held that while computing the annual value under Section 23(1)(b) of the Income Tax Act, 1961 the notional interest on the security deposit / advance rent cannot be included in the income from house property under section 23( 1 )(b) of the Income Tax Act.

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• 2017 (11) TMI 109
  Interest on Fixed Deposits as well as the interest from staff loans is not income derived from the undertaking for the purpose of allowing deduction u/s 10A/10B of the Act. Disallowance of cost of software - Held that:- It is the contention of the assessee that it is into purchase and sale of software and there is a trading activity. Therefore, the cost of software purchased for sale cannot be treated as capital expenditure, has considerable force. It is the contention of the assessee that the profit and sale of software has been offered to tax and there is a trading activity and in such circumstances such cost of software cannot be treated as capital in nature. For the limited purpose of verification as to whether this cost of software was on account of trade in software or it was used for internal purpose, we restore this matter to the file of the Assessing Officer who shall verify the fact and if it is found that this cost of software was incurred for sale the same shall be allowed as cost of purchase and no disallowance should be made treating it as capital expenditure. The Assessing Officer shall pass orders after verification of this fact and after providing opportunity to the assessee. This ground is allowed for statistical purposes. Setoff of loss while computing the deduction u./s 10A - Held that:- This issue is now decided by the Hon’ble Supreme Court in the case of CIT v. Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] as held the deduction under section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression “total income of the assessee” in section 10A can be reconciled by understanding the expression “total income of the assessee” in section 10A as “total income of the undertaking”. Therefore, though section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. Software consumable expenses are revenue in nature Revision u/s 263 - entitled to carry forward unabsorbed depreciation beyond 8 years and set off against the current year profits - Held that:- As perused the Assessment Order and also the appellate order arising out of the original Assessment Order and find that this specific issue as to whether the assessee is entitled to carry forward unabsorbed depreciation beyond 8 years and set off against the current year profits is not the subject matter of assessment order or appellate proceedings. Therefore, we are of the view that since the Assessing Officer has not examined this aspect of the matter the Ld.CIT is justified in directing the Assessing Officer to look into these aspects. In any case the Ld.CIT has set aside the re-assessment and directed to conduct enquiry and take a decision in accordance with the law after giving proper opportunity. There is no prejudice caused to the assessee as there is no specific direction to disallowance unabsorbed depreciation as well as deduction u/s 10A while computing the book profits. Since issues have not been examined by the Assessing Officer in the course of the assessment proceedings, we are of the view that the action of Ld.CIT u/s 263 is in order. However, we make it clear that the Assessing Officer may also examine the contention of the assessee that if the profits are not eligible for deduction u/s 10A the same may be considered for deduction u/s 80HHE while computing the incomes of the assessee under normal provisions as well as while computing book profits u/s 115JB of the Act. Hence the appeal of the assessee preferred against 263 order is dismissed with the above observations.

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• 2017 (11) TMI 108
  Levy of penalty u/s.271(1)(c) - capital gain - Held that:- In this case, all the information given in the return was not found to be incorrect or inaccurate. In this case, any statement made or any detail supplied by the assessee is factually not incorrect hence, prima-facie assessee could not be held guilty or furnishing inaccurate particulars of income. In order to expose the assessee to the penalty unless the case is strictly covered by the provision the penalty provision cannot be invoked. In this case assessee mainly made a claim of capital gain which is as per Revenue assessee is not entitled by itself would not attract the penalty under section 271(1)(c) of the Act. We find that assessee has merely claimed the capital gain which was not acceptable or was not acceptable to Revenue would not attract the penalty under section 271(1)(c) of the Act. We notice that the assessee has furnished all the details and claim made by the assessee, in our view, cannot be considered to be not bonafide, i.e. it was one of the possible claims. Further the assessee has offered explanation before the tax authorities and the same was not found to be false. Under these set of facts, we are of the view that the impugned penalty is not sustainable. Accordingly, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to delete the penalty. - Decided in favour of assessee.

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• 2017 (11) TMI 107
  Claim of deduction u/s 80IA - indulgence in manufacturing activity - converting the S.S. Sheets into S.S. casserole containers - Held that:- The manufacturing process involved in converting the S.S. Sheets into S.S. casserole containers, clearly establishes bringing into existence a new product having a distinctive name, character, and use. We are persuaded to subscribe to the observations of the CIT(A) that the S.S. fabricated parts which are made by the assessee from the S.S. sheets, are the result of transformation from S.S. Sheets which is different in size, shape, contour and utility, is a entirely a commercially different product, distinct from the raw material, and as such falls within the four corners of the term ‘manufacture’. That still further on the basis of the material made available on record by the assessee, we find that the assessee during the year under consideration had employed more than 10 workers in the process of manufacturing carried on by him with the aid of power. We are thus of the considered view, that as the assessee had cumulatively satisfied both of the requisite conditions contemplated u/s. 80IB(4), therefore the CIT(A) had rightly observed that the assessee stood duly entitled towards claim of deduction under the aforesaid statutory provision. We thus further find ourselves to be in agreement with the ld. A.R. that in light of the settled position of law, now when the assessee had been held as eligible and therein entitled towards claim of deduction under the aforesaid statutory provision for the preceding years, viz. A.Y. 2005-06 and A.Y. 2006-07, therefore unless the said relief granted in the said preceding years in which such claim was made and accepted is withdrawn or set aside, the A.O cannot be allowed, to hold a different view and disentitle the assessee from claim of the deduction under the same statutory provision during the year under consideration. We thus in light of our aforesaid observations finding no reason to take a different view, therefore uphold the order of the CIT(A) that the assessee stood duly entitled for claim of deduction u/s. 80IB(4). - Decided in favour of assessee.

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• 2017 (11) TMI 106
  Commission income - treated as business income OR income from other sources - Held that:- The commission paid to the assessee company is a non-genuine transaction and that the directors / employees of the assessee company have played no role in effecting their sales and that all the parties were contacted by him only and even no follow-up for recovery of bills payment was ever made by any of the directors / employees of the assessee company. Moreover, the assessee has even expressed its unwillingness to cross-examine any of the parties, including Shri Amit Gandhi. Therefore, an adverse inference is hereby drawn that the commission income which is alleged to have been earned @5% on sales of M/s.Shree Chem Industries, is of non-genuine character and accordingly the said sum of ₹ 7,33,360/- is hereby treated and taxed under the head “Income from Other Sources’. No reason to interfere in the order of the lower authorities treating the commission income as income from other sources. Claim of depreciation on the Rolls Royce Car - Loan processing expenditure and interest expenditure on the loan obtained for the purpose of purchasing the said car from Kotak Mahendra Bank Ltd. - Held that:- AO pointed out contradiction in the averment made by the assessee during the assessment proceedings vis-à-vis statement of the Director Shri Sunil Shah. Further, as admitted by the broker and the sub-broker that Shri M.L.Tandon, Director of the assessee company has never visited their office in respect of the trading in shares / derivatives and that the entire such business takes place mostly through telephonic conversation and that Shri Chopra, employee of the group companies, used to visit the broker / sub-broker only twice or thrice a year. It is hardly believable that an ordinary employee of a company could be provided with such a costly vehicle for the purpose of visiting the broker / sub-broker for carrying out the trading activities. In view of all these facts as a whole, AO held that the car is and has never been used for the Directors of the assessee company wholly and exclusively for the purpose of business of the assessee company and as such the depreciation claimed on Rolls Royce and interest incurred on loan obtained from Kotak Mahindra Bank Limited were disallowed. On similar reasoning, claim of processing charges paid to the bank and expenses incurred on car was also declined. Nothing was brought on record to controvert the findings recorded by the lower authorities to the effect that car was never used for the purpose of business, accordingly we do not find any reason to interfere in the findings of AO which was confirmed by the CIT(A). It is pertinent to mention here that each year is separate and independent, therefore, contention of assessee that assessee-company was having substantial share transaction / income in the subsequent year, the same cannot be considered for allowing depreciation during the year under consideration when it is established that car was not used for the purpose of business during the year under consideration. - Decided against assessee.

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• 2017 (11) TMI 105
  Unexplained investment made in Mutual Funds and unexplained cash deposits with ICICI Bank - no appearance on behalf of the assessee at the time of hearing fixed in this case earlier on 29.09.2016, 30.11.2016, 11.01.2017 and 23.02.2017 - additions deleted by CIT-A on additional evidence filed by the assessee without giving any opportunity to the Assessing Officer to verify the same - Held that:- Keeping in view the non-compliance on the part of the assessee, this appeal of the revenue is being disposed of ex-parte qua the respondent-assessment after hearing the arguments of the ld. D.R. and perusing the relevant material available on record. As rightly submitted by the ld. D.R., relief has been given by the ld. CIT(Appeals) to the assessee by deleting the additions made by the Assessing Officer on account of unexplained investment made in Mutual Funds and unexplained cash deposits with ICICI Bank respectively by relying on the correspondence made with Calcutta Province of the Society of Jesus, who runs St. Lawrance High School without giving any opportunity to the Assessing Officer to verify the same. As pointed out by him in this regard, the said correspondence was not even available when the assessment was framed by the Assessing Officer vide an order dated 30.12.2011 passed under section 144/147. Thus we set aside the impugned order of the ld. CIT(Appeals) on the issues raised by the Revenue in this appeal and restore the matter to the file of the Assessing Officer for deciding the same afresh after verifying the additional evidence filed by the assesesee for the first time before the ld. CIT(Appeals) in the form of correspondence with Calcutta Province of the Society of Jesus. Appeal of the Revenue is treated as allowed for statistical purposes.

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• Customs

• 2017 (11) TMI 104
  Inclusion of name of Mr.R.Nandanan as a 'G' card holder in the Customs Broker Licence of the petitioner - Jurisdiction restriction - Held that: - a person who is employed under a Customs Broker and who has passed the examination referred to sub-regulation 3 may, on his appointment under any other Customs Broker, with the approval of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, be exempted from passing of such examination - Thus, the rights of the petitioner are not fully foreclosed and even assuming that the identity card in Form-G issued to Mr.R.Nandanan on a earlier occasion while he was working in M/s. Green Channel is said to be an error, that cannot be a ground to deny the relief to the petitioner. Regulation 17(4) of the New Regulation, empowers the respondents to exempt the employee who has already passed such examination. The writ petition is allowed by directing the respondents to consider the petitioner's application for issuance of identity card in Form-G dated 25.05.2015 and 12.10.2015 and consider the same by applying Regulation 17(4) and pass appropriate orders on merits - decided in favor of petitioner.

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• 2017 (11) TMI 103
  Prayer for consideration of interim reply - authenticity of certificates of origin - The allegation is that the certificate has been obtained by mis-representation of facts - Held that: - This issue will be adjudicated by the authority viz., the respondent, after completion of the cross examination of the persons from whom the department has recorded statements under Section 108 of the Customs Act. Hence, for such purpose, the direction as sought by the petitioner cannot be granted and it is directed that the respondent shall adjudicate the cases based on the oral and documentary evidences that may be placed before it - respondent shall have to take note of the Customs Tariff Rules, 1995 and examine whether it is applicable to the facts and circumstances of the case - petition dismissed - matter on remand.

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• 2017 (11) TMI 102
  Absolute Confiscation of Foreign Currency and Indian Currency - Baggage Rules - case of appellant is that he is carrying the amount for medical treatment - Held that: - appellant requires this currency for the purpose of treatment on relying upon circular No.5/2002/09 dated 01.07.2008, issued by foreign currency department - RBI held that the appellant being resident individual, can utilize unspent foreign currencies under his possession. Mere non-declaration does not mean absolute confiscation. Coming to such a conclusion, he held that the currencies needs to be confiscated but to be released on payment of redemption fine. Currency to be released on payment of Redemption fine - quantum of redemption fine and penalty reduced - appeal allowed in part.

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• 2017 (11) TMI 101
  Penalty on firm u/s 112(a) of CA, 1962 - penalty on partner u/s 1114AA of CA, 1962 - mis-declaration of goods - it was alleged that behind the consignment of slippers, undeclared quantity of ladies under-garments were concealed at the rear end, in excess of the declared goods - Held that: - the Partner of the Firm Shri Abdul Wahid has not filed any appeal before the Tribunal against the Order-in Appeal which upheld the penalties on him. Hence, the submissions in the written note as to both appeals should be considered as one appeal, is rejected as Shri Abdul Wahid had preferred an appeal before the first appellate authority independently and should have filed an appeal before the Tribunal also. Quantum of redemption fine and penalty - Held that: - the said redemption fine is proportionate to the modus operandi adopted by the appellant in concealing the under-garments and not declaring the same - the penalty imposed on the said ladies under-garments is also proportionate and requires no interference on this point. Confiscation of slippers - Held that: - the said goods are liable for confiscation is correct findings recorded and correctly held as confiscated - the ends of justice would be met if the redemption fine imposed on confiscation in respect of 66,000 pairs of slippers is reduced to ₹ 75,000/- and the penalty is reduced to ₹ 50,000/-. Appeal allowed in part.

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• Insolvency & Bankruptcy

• 2017 (11) TMI 100
  Corporate Insolvency Resolution Process - whether there is existence of a dispute between the parties - Held that:- The respondent had earlier raised dispute and brought to the notice of applicant through various correspondences revealing existence of dispute between the parties much before the receipt of the demand notice issued in the present case under section 8 of the Code. Secondly, the respondent has claimed that the company's property lying with the applicant has not been returned despite repeated demands. In this respect the applicant has admitted that company's two 7 to 8 years old vehicles were disposed of by him under justifiable reason and was duly appropriated. In that view of the matter the contention of the respondent regarding dispute and confusion on the amount of debt due, cannot be totally overlooked. Besides, there had been a bargain between the parties. The applicant has admitted in his application that there was a settlement between the parties and it was inter alia agreed that the balance amount shall be payable by respondent company to the applicant on receipt of the award of the pending International arbitration. Needless, to say that adequacy of existence of dispute is not to be seen. Respondent has placed sufficient particulars in support of existence of dispute. In such scenario it can only be said that the claims and debts in question are not free from dispute. In the aforesaid factual background in our opinion the dispute raised by the corporate debtor qualify as a dispute as defined under sub-section (6) of Section 5 of the Code. For the reasons stated above this application is rejected. We make it clear that any observations made in this order shall not be construed as an expression of opinion on the merit of the controversy and the right of the Applicants before any other forum shall not be prejudiced on account of dismissal of instant application.

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• 2017 (11) TMI 99
  Corporate insolvency process - proof of Corporate Debtor committing a default - Held that:- It is evident that Corporate Debtor has committed default and the amount @ ₹ 4,50,000/- plus 2% of the profit after tax has not been paid since 01.06.2016. The invoices have been raised (Annexure-2 (Colly) and there is default committed within the meaning of Section 3(12) read with Section 4 and Section 9 (1) of the Code, 2016. The notice under Section 8 of the Code has been duly served. Even the bank statement (Annexure-4 and 5) have been filed to satisfy the requirement of Section 9(3)(c) of the Code. The Operational Creditor has also proposed the name of Interim Insolvency Professional namely Mr. Deepak Arora, 23 Ka 4, Jyoti Nagar, Near Vidhan Sabha, Jaipur-302005, [email protected], who has made declaration in accordance with the provisions of Rule 9 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. As a sequel to the above discussion, this petition is admitted and Mr. Deepak Arora is appointed as an Interim Resolution Professional. His registration number is IBBI/IPA- IP/00032/2016-17/1049. In pursuance of section 13 (2) of Code, we direct that -t Interim Insolvency Resolution Professional shall immediately make public announcement with regard to admission of this application under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code.

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• Service Tax

• 2017 (11) TMI 97
  Simultaneous Penalty u/s 76 and 77 - Held that: - the issue is squarely covered in favor of the appellant in the case of Commissioner of Service Tax, Service Tax Commissionerate, Bangalore Versus AK & I Advertising Private Ltd. [2011 (7) TMI 1060 - Karnataka High Court] wherein it has been consistently held that the penalty under provisions under section 76 and 78 cannot be simultaneously imposed - also, the Adjudicating Authority has given the benefit by observing that once penalty under section 78 is imposed, then no separate penalty under section 77 or 76 are mandated - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 96
  Interest and penalty - CENVAT credit availed but not utilized and is reversed - input services - Held that: - This issue has also been decided in favour of the assessee in the case of CCE vs. Strategic Engineering Pvt. Ltd. [2014 (11) TMI 89 - MADRAS HIGH COURT] wherein Hon’ble Madras High Court has held that mere taking of credit would not compel the assessee to pay interest as well as the penalty - interest and penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 95
  Reduction of penalty imposed u/s 78 to 25% - Held that: - the assessee has not paid the service tax for the period from 1/2004 to 6/2007 but on being pointed out by the department, the assessee paid the service tax with interest much before the issue of SCN - the Commissioner (A) has given the benefit by relying upon the decision of Hon’ble High Court of Kerala in the case of CCE vs. Oriental Steel Trunks Agrico Industries [2009 (3) TMI 617 - KERALA HIGH COURT] wherein the Hon’ble High Court has upheld the decision of the Tribunal waiving of the penalty by taking into account the voluntary payment of service tax with interest before issue of SCN - reduction of penalty justified - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 94
  Penalty u/s 76 and 77 - delayed payment of service tax - Held that: - There is no dispute as to the fact that appellant had received the consideration and despite that they have not discharged the service tax liability. This reasonable/justifiable cause which has been accepted by the first appellate authority i.e., non-receipt of payment and written off bad debts, in my view cannot be a reasonable cause for setting aside the penalties imposed under Section 76 of the Finance Act, 1994 and to that extent, the impugned order needs to be set aside and the appeal of the Revenue needs to be allowed Since the penalty imposed under Section 76 is upheld the penalty imposed under Section 77 also needs to be upheld. CENVAT credit - duty paying documents - credit availed without producing any documents - Held that: - the CENVAT credit was availed of the service tax paid by the Telephone Service providers and the courier services and the address is of the respondent at Belgaum - the finding of the first appellate authority that the respondent is eligible to avail CENVAT credit needs to be accepted and to that extent, the appeal of the Revenue on this point is rejected. Appeal allowed in part.

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• 2017 (11) TMI 93
  CENVAT credit - unregistered premises - Held that: - similar issue decided in the case of M/s Actis Advisers Pvt. Ltd. Vs. CST, Delhi-IV [ 2014 (9) TMI 182 - CESTAT NEW DELHI], where it was held that denial of Cenvat Credit on the ground that at the time of receipt of inputs/input services by a output service provider, there was no registration with the Central Excise, is not correct - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 92
  Time limitation - on subsequent audit for the disputed period, it was detected by the audit wing that the appellant had short paid Service Tax amount of ₹ 57,390/-. By invoking the extended period of limitation, the said amount was confirmed against the appellant - Held that: - Since the activities of the appellants were already in the knowledge of the Department at the time of conducting the first audit and admittedly no discrepancies were noticed by the Audit Wing, it cannot be said that there is element of suppression, fraud etc., on the part of the appellant in defrauding the Government revenue - extended period of limitation cannot be invoked for confirmation of the Service Tax demand - demand set aside - appeal allowed. Penalty u/s 78 for the period April 2004 to June, 2004 - Held that: - the Department has not specifically alleged regarding non-maintenance of statutory records by the appellant. Since the appellant complied with the statutory requirement of maintenance of proper books of accounts and did not pay the Service Tax due to the reason of financial difficulties, non-payment of such tax amount cannot be a defensible ground for imposition of penalty under Section 78 ibid, which specifically provides that in case of fraud, suppression etc. such provisions can only be invoked - penalty set aside by invoking section 80. Interest liability - Held that: - proper quantification of the interest amount is required in this case. Therefore, the matter is remanded to the original authority for quantification of the actual interest liability - matter on remand. Appeal allowed in part and part matter on remand.

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• 2017 (11) TMI 91
  Refund claim - N/N. 41/2007 dated 06/10/2007 - input services - denial on the ground that the input services not confirming to the definition of Port service - Held that: - the services namely, Inland Haulage Charges, Freight Outward Charges, B.L. Charges, Terminal Handling Charges etc. were used/utilized by the appellant within the port of export, facilitating exportation of the goods. Since admittedly, the said services were used within the port of export, irrespective of the classification of those services, the same should merit consideration as port service for the purpose of benefit of refund - refund allowed. With regard to refund claim of the fumigation service, there is agreement between the overseas purchaser and the appellant for undertaking fumigation services in respect of goods exported by the appellant. Since there is agreement between the appellant and the overseas purchaser of goods, the requirement of the Notification has been duly complied with - refund allowed. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (11) TMI 90
  Valuation - fixation of Special Rate (value addition) - N/N. 1/2010-CE dared 6.2.2010 - whether net excise duty paid and not the total amount of duty paid is required to be deducted from the sale value of goods? - Held that: - when an amount of duty is refunded to the assessee, under N/N. 1/2002-CE, the same has to be deducted from the excise duty paid by the appellant while arriving at actual value addition - this Tribunal in the case of Dharampal Satyapal Ltd. vs. CCE [2016 (5) TMI 1049 - CESTAT KOLKATA] took the view that portion of excise duty which is refunded to the appellant under N/N. 32/95-CE is the duty which is considered as exempt. Whether freight outward is not to be deducted from the sale Value since as per explanation given in Para 6 (5) of Notification, only excise duty, value Added Tax and other indirect taxes are required to be excluded? - Held that: - It is settled law that in the context of Section 4(3)(C) when the goods are on FOR destination sales and the freight is paid by the seller and the goods are to be insured by the seller, then the seller cannot claim deduction of freight and insurance from sale price - also, in the balance sheet for 2011-2012, the freight outward is shown under selling and distribution expenses. Hence, the freight outward is includible in the sale value. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 89
  Valuation of imported goods - old and used machines - enhancement of value - appellant have accepted the enhanced value and has cleared the goods by paying duty on such enhanced value - principles of natural justice - Held that: - It is a matter of common experience that the importers, clear the goods, by payment of duty on the enhanced value, inasmuch as the goods imported by them are required and cannot be allowed to be retained by the Customs as the same incurr demurrage and other expenses. It is again a fact of common knowledge that settlement of dispute take years and the imported goods cannot be allowed to be deteriorated in quality till the final out-come of the dispute. Inasmuch as the machines imported by the appellant were required in the assessee s factory, the same were cleared by them on payment of the duty on enhanced value and this fact by itself cannot be adopted as a ground for resolving the disputed issue of valuation. As regards the valuation issue, we note that the same has been enhanced at the time of assessing bills of entries itself on the basis of the opinion of Chartered Engineer. On going through the said opinion, we note that he has not given the value of old and used machine but has only indicated the value of the new machines that too without any basis. Revenue has not adduced any evidence to show flow of any under hand consideration to the supplier of the goods. As per the settled law, the transaction value has to be adopted as correct assessable value for the purposes of payment of duty unless the same is proved to be incorrect, on the basis of positive and tangible evidences. Apart from expressing doubt about the correctness of the transaction value, in the present case, the Revenue, upon whom onus is placed, has not produced any evidence to reflect upon the inaccuracy of the transaction value. In such a scenario, we are of the view that transaction value has to be adopted the correct assessable value. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 88
  CENVAT credit - input - case of the Revenue is that as the appellant has yield out the excess electricity generated by them to the power grid, therefore, the electricity which has been transferred to the power grid, the input pertaining to the part of the electricity yield to power grid, they are not entitled to avail Cenvat Credit - Held that: - identical issue came up in appellants own case for the earlier period [2015 (6) TMI 404 - CESTAT NEW DELHI], where it was held that Electricity sent for synchronization to power grid, would be treated as job worker. There is no dispute that the electricity was returned back to the Appellant s factory, and there is a substantial compliance with the provisions of Rule 4(5)(a) of the Rules. The power grid charged 10% of the value of electricity for providing of synchronisation. The learned Advocate contended that the appellant was importing higher quantum of electricity other than the unit, that were being exported to the grid. So, it is not a case of sale of excess electricity generated in the captive power plant to the energy grid. The fact of the case is more clearly transpired from the order of the Tribunal in the appellant's own case JINDAL STAINLESS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, ROHTAK [2008 (8) TMI 332 - CESTAT, NEW DELHI], where it was held that the demand on the ground that the inputs were used in generation of electricity which was cleared outside the factory of production is not sustainable. Appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 87
  CENVAT credit - input services availed at the job-work - job-work carried out at other unit of assessee - Held that: - the assessee has a centralized accounting system and the other units, where the job work is being carried out, is nothing but an extended unit of the main unit. The movements of the materials from the main unit to the job work unit were on the strength of Delivery Challan-cum-Material Gate Passes and job worked items were returned by the job work units under their own Material Gate Pass. Reliance placed in the case of Greaves Cotton Ltd. Versus Commissioner of Central Excise, Chennai-II & IV [2014 (8) TMI 654 - CESTAT CHENNAI], where it was held that in so far as both the units are under the same manufacturer and the input service credit is related to the advertisement charges, "relating to business" of the same assessee, there is no reason to deny the input service credit to the appellants. CENVAT credit allowed - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 86
  Rectification of mistake - Held that: - there is no basis for entertaining the present applications. We are unable to identify any apparent mistake in the final order. The fact remains that the dispute to be resolved has been correctly identified and the material facts are supporting evidences like dates, documents etc. have been examined for a decision. In the name of rectification of mistake, the Tribunal cannot entertain a plea for reviewing the order on reappraisal of such facts/ evidences, in order to arrive at a different decision. There is no apparent mistake to be rectified in the final order - ROM application dismissed.

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• 2017 (11) TMI 85
  Service of letter - Refund of CENVAT credit with interest - denial on the ground of limitation - whether the appellant’s letter dated 20.11.2008 claiming that the amounts paid by them were under protest is received by the authorities or otherwise? - Held that: - the claim of the appellant that they have sent some letter under certificate of posting seems to be correct, however, I find that there is definitely an anomaly in the said letter dated 20.11.2008 being posted under certificate of posting to the jurisdictional Assistant Commissioner. It is seen from the records that the said letter dated 20.11.2008 is addressed to the Superintendent of Central Excise (Preventive), Hassan and the letter under certificate of posting also indicates the same address. In my view, when the refund application is filed with the Assistant Commissioner of Central Excise, Customs and Service Tax, Malanadu Division, the letter addressed to Superintendent (Preventive), Hassan is misaddressed and definitely cannot be considered as delivered to the jurisdictional Assistant Commissioner. There seems to be a very serious anomaly as the letter sought to be relied upon by the appellant is of 20.11.2008, while the letter which is indicated to the postal authorities as being in the envelope is showing date of 9.11.2008. This anomaly has not been explained by the appellant anywhere in the grounds of appeal. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 84
  Refund claim - deposit made by the respondent during the investigation stage - Time Limitation - Held that: - once an amount has been reversed on the direction of investigation authorities, the same should have been refunded back to the assessee without any delay, when it is noticed that the assessee is not required to discharge the same - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 83
  CENVAT credit - MS platforms which are procured for weighbridge installed by the respondent - denial of credit on the ground that MS platforms which were ordered by the respondents were directly delivered to the site of weighbridge and were not received in the factory premises - Boards Circular No.146/57/95-CX dt. 12/09/1995 - Held that: - the assessee has availed CENVAT credit on MS platforms without receipt of inputs to his factory premises thereby contravening the provisions of Rule 4(1) of CCR, 2004. The assessee being the principle manufacturer, the above mentioned circular appears to be not applicable in the instant case. The first appellate authority has appreciated the entire case on its factual matrix which is very evident from paragraph No 6 & 7 of the Order-in-Appeal. Though the first appellate authority may have relied upon the Board’s circular which is being contested by the Revenue, the factual matrix of the documents being in the name of the respondent and the weighbridge being installed is for the respondent is not being disputed. Appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 82
  CENAVT credit - outward Transportation of goods - subsequent reversal on the direction of the Superintendent and availment of re-credit and refund claimed for the interest paid on such reversal - Held that: - eligibility to avail CENVAT credit on service tax paid on outward transportation of the goods till 31.03.2008 is already settled in favour of the assessee and respondent herein in the case of ABB Ltd.[2011 (3) TMI 248 - KARNATAKA HIGH COURT] by the Hon’ble High Court of Karnataka. Respectfully following the said ratio, the eligibility to avail CENVAT credit having been settled in favour of the respondent herein, debits made by him were incorrect and availed the suo moto credit. Availment of credit suo moto - Held that: - The facts of the case in Sopariwala Exports [2013 (5) TMI 430 - CESTAT AHMEDABAD] are similar to the facts in this case - the issue of availing CENVAT credit either suo moto is also settled in favor of the respondent. As regards the refund of interest paid by the respondent, in the first place when appellant are eligible to avail CENVAT credit and reversed the same on the instance of the Revenue authorities along with interest, which has been paid in cash, as they are eligible for the refund of interest also. Appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 81
  Clandestine removal - goods fount short - non-receipt of inputs - Held that: - the learned Commissioner have accepted the genuineness of the transaction, but have erred in observing that such transactions cannot be considered as certificate of genuineness. We also find that the duty paid by the appellants on the clearance of the finished goods, particularly thinner, have been accepted by the Revenue. We also find that in addition to paying duty through Cenvat account, appellant have also paid part of the duty payable through PLA. The learned Commissioner have erred in observing that such payment through PLA is about only 1% of the sales value or turnover. We also find that there is no allegation in the show cause notice that the input – OCS have been procured by the appellant from elsewhere. It has also been brought to our notice in the course of argument that the storage tank of OCS in the factory of the appellant also has a beater for processing in order to manufacture thinner. We further find that there is evidence on record that the appellant have deputed manpower for production and there has also been electricity consumption regularly. The SCN is not sustainable, save and except the demand of ₹ 8,984/-, towards the shortage of inputs found at the time of inspection - appeal allowed in part.

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• CST, VAT & Sales Tax

• 2017 (11) TMI 80
  Issuance of 'C' Form declaration to the petitioner - whether the issuance of 'C' forms could be stopped for the reason that the Appeals were not disposed by the Appellate Authority? - Held that: - there has been no justification to withhold 'C' Form Declarations, solely on the ground that the Appeal Petition filed by the petitioner as against the imposition of penalty is yet to be disposed of - Writ Petition is disposed of, by directing the respondent to issue 'C' Form declaration to the petitioner, by unlocking the on-line facility - petition allowed.

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• 2017 (11) TMI 79
  Maintainability of petition - Jurisdiction - Attachment of Bank Account - According to the petitioners, they have succeeded before the Tribunal and therefore, attaching the petitioner's bank account maintained with respondents does not arise - Held that: - the entire cause of action has arisen outside the jurisdiction of this Court, in the sense that the order-in-original has been passed by the Commissioner of Central Excise, Shillong and the appeal was filed before the CESTAT, Kolkata, in which the petitioner states that they have fully succeeded and the attachment of the bank account maintained with respondents 6 to 9, has been made by the 3rd respondent whose office of which is situated in Guwahati - writ petition is not maintainable before this Court, and is dismissed.

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• Indian Laws

• 2017 (11) TMI 98
  Revoke the censor certificate issued by the second respondent for the movie 'Mersal' - petitioner submit that some of the scenes in the movie depicted wrong facts with reference to operation of G.S.T - as wrongly stated that G.S.T. is collected at 28% in India as against 7% in Singapore, but, no free medical aid is provided in India as being done in Singapore - also another factual assertion has been made that GST is not being charged on the liquor - Held that:- The petitioner cannot be stated to be a person aggrieved. After all, the second respondent is the competent authority to consider as to whether the film requires a proper certification or not. The certification given by the second respondent has not been put into challenge. In a matured democracy, view of the minority has to be allowed to be expressed. The question as to whether the said view is palatable or not can never be the one for debate. We are unable to see any non-application of mind involved as the petitioner has failed to substantiate it. Much has been said on Section 6 of the Cinematograph Act. Section 6(1) of the Act speaks about the suo motu powers to be exercised by the first respondent, that too after due notice. Therefore, no reliance can be placed upon it. Section 6(2) of the Act speaks about an interim measure, that too, for a period of two months from the date of the Notification and thus has no application. This provision also mandates a prior notice. We do not find any material to press into service the aforesaid provisions in a case of this nature. The petitioner has rushed to this Court in a hurry after giving a representation on 20.10.2017 Friday at about 8 p.m. The writ petition was filed on 23.10.2017 (Monday). Therefore, without even waiting for the first respondent to act, even for exercising his power, if otherwise exercisable under Section 6(2) of the Act, the petitioner has rushed to this Court. Even on merits, we do not find any case made out. The depiction in the movie is nothing more than an expression. It is for the movie goers to look it in their own perspective. Nobody can be forced to see the movie. Ultimately, it is the choice of an individual. Therefore, we do not find any merit in this writ petition.

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