TMI Tax Updates - e-Newsletter
November 9, 2018

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Insolvency & Bankruptcy FEMA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. Practical issues relating to Public and Private Trust

   By: RameshKumar Patodia

News

1. Sugar exports from India to China to begin soon

2. Text of the Article written by the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley on “ Impact of Demonitisation”

Notifications

GST - States

1. 61/2018-State Tax - dated 5-11-2018 - Maharashtra SGST

Amendment to Notification No. 50/2018-State Tax to exempt supply from PSU to PSU from applicability of provisions relating to TDS.

2. MGST.1018/C.R.125/Taxation-1 - dated 31-10-2018 - Maharashtra SGST

Amendment to Notification of Advance Ruling Authority-Appointment of new member (Central Tax) Shri. B. Timothy, Additional Commissioner of Central Tax.

3. ERTS(T) 65/2017/Pt. II/12-54/2018-State Tax - dated 9-10-2018 - Meghalaya SGST

The Meghalaya Goods and Services Tax (Twelfth Amendment) Rules, 2018.

4. ERTS(T) 65/2017/Pt. II/11-53/2018-State Tax - dated 9-10-2018 - Meghalaya SGST

The Meghalaya Goods and Services Tax (Eleventh Amendment) Rules, 2018.

5. 34815-FIN-CT1-TAX-0043/2017-S.R.O. No. 436/2018 - dated 5-11-2018 - Orissa SGST

Amendment in the Notification No. 29890-FIN-CT1-TAX-0043/2017, dated the 18th September,2018 - S.R.O. No. 391/2018.

6. 34124-FIN-CT1-TAX-0043/2017-S.R.O. No. 434/2018 - dated 30-10-2018 - Orissa SGST

The Odisha Goods and Services Tax (Thirteenth Amendment) Rules, 2018.

7. 34061-FIN-CT1-TAX-0043/2017-S.R.O. No. 430/2018 - dated 29-10-2018 - Orissa SGST

Submission of final return in FORM GSTR-10 till 31.12.2018 for the taxpayers whose registration has been cancelled on or before the 30th September, 2018 by the Proper Officer.

8. 33757–FIN-CT1-TAX-0043/2017/FIN-S.R.O. No. 428/2018 - dated 26-10-2018 - Orissa SGST

Amendment in the notification of the Government of Odisha in Finance Department No. 29890-FIN-CT1-TAX-0043/2017, dated the 18th September, 2018.

9. 33753-FIN-CT1-TAX-0043/2017 - dated 26-10-2018 - Orissa SGST

Exemption from obtaining registration by those casual taxable persons whose aggregate turnover is below the specified threshold limit and making inter-State taxable supplies of Handicraft goods.

Indian Laws

10. A-12023(1)/15/2016-Admn.-III (LA) - dated 2-11-2018 - Indian Law

Central Government appoint Mr. Pradip Kumar Premshankar Bhatt, Former Judge, High Court of Gujarat, as President, Income Tax Appellate Tribunal, with effect from the forenoon of 24th October, 2018

Circulars / Instructions / Orders

GST - States

1. 29T of 2018 - dated 24-10-2018

Providing various e-Filing facility to Taxpayers for smooth GST Compliance

2. J.21011/2/2018-TAX/Pt - dated 16-10-2018

Modification to the Guidelines for Deductions and Deposits of TDS by the DDO under GST as clarified in Circular NoJ.21011/2(i)/2018-TAX/Pt dated 26.09.2018

3. J.21011/2(i)/2018-TAX/Pt - dated 26-9-2018

Guidelines for Deductions and Deposits of TDS by the DDO under GST

FEMA

4. 11 - dated 6-11-2018

External Commercial Borrowings (ECB) Policy – Review of Minimum Average Maturity and Hedging Provisions

Customs

5. 43/2018 - dated 8-11-2018

Implementation of Paperless Processing under SWIFT-Uploading of Supporting Documents (eSANCHIT) in Exports

Highlights / Catch Notes

GST

• Job Work Services for Foreign Principals at Applicant's Premises Subject to 18% GST Rate per Specifications.

  Case-Laws - AAR : Levy of GST - job work - The process providing job work service to the foreign principal, in the premises of the applicant as per the specifications of the recipient of services, is taxable - Rate of GST is 18%
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• Items for Solar Cell Production Not GST-Eligible as 'Parts for Manufacture' Under Current Classification Rules.

  Case-Laws - AAR : Classification - Rate of GST - The items used for manufacture of solar cells as listed in Table A, procured by the applicant do not qualify to be termed as 'Parts for the manufacture of Photovoltaic/ Solar cells'
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• Government-Owned SPV's Consultancy Services for Transport Studies Exempt from GST Under Article 243.

  Case-Laws - AAR : Government authority - SPV with 100% government holding - The consultancy services for preparation of transport studies such as comprehensive mobility plan, transit oriented development plan, NMT plan and consultancy services of transaction advisors/preparation of DPRs comes within the purview of the functions of Municipality under article 243 - No GST
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• Tobacco Leaves as Agricultural Produce: Commission Agent Services and Auction Sales Exempt from GST.

  Case-Laws - AAR : Levy of GST - Undoubtedly, tobacco leaves are agricultural produce - The services provided by a commission agent for sale or purchase of agricultural produce is having NIL rate of GST - The tobacco leaves received from trader in an auction is exempted from GST.
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Income Tax

• Warehouse Income to Be Classified as Income from House Property, Not Business Income, for Tax Purposes.

  Case-Laws - AT : Nature of income - Income from warehouse - income from warehouse has to be assessed under the head income from house property not under the head income from business and profession.
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• Assessee Entitled to Additional Depreciation on Plant and Machinery in Seed Division u/s 32(1)(iia.

  Case-Laws - AT : Eligibility for additional depreciation u/s 32(1)(iia) on plant and machineries relating to Seed Division - the instant activity of the assessee is held to be an activity of manufacturing - benefit of additional depreciation u/s 32(1)(iia) allowed.
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• Principle "debitum in praesenti solvendum in futuro" applies to acknowledged liabilities, not mere claims, affecting tax obligations.

  Case-Laws - AT : Ascertain liability / expenses - The maxim "debitum in praesenti solvendum in futuro" relied on by the ld. Authorised Representative, can apply only if there is an ascertained liability for which amount is to be crystallized and paid later, and not to a situation where there is only a claim, with no acknowledged liability.
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• Penalty u/s 271(1)(c) Overturned Due to Revenue's Failure to Fulfill Primary Responsibility in Streedhan Case.

  Case-Laws - AT : Levy of penalty u/s. 271(1)(c) - The primary onus on the Revenue being not discharged, while jewellery to some extent accepted as being the assessee’s streedhan, no case for levy of penalty is, under the circumstances, made out.
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• Unabsorbed business depreciation can be carried forward; business loss can offset short-term capital gains u/s 139(1).

  Case-Laws - AT : Carry forward of unabsorbed business depreciation as per computation of income filed alongwith original return u/s 139(1) - Business loss set off against income from short term capital gain - Since there is no restriction, set off and carry forward allowed.
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• License Fee Capitalization: One-Time Business Startup Cost Must Be Amortized or Depreciated Under Income Tax Act Section 35D.

  Case-Laws - AT : Expenditure on licence fee - One time fee - Since the expenditure was incurred before the commencement of business, the expenditure required to be capitalized in respect of relevant asset and allow the depreciation or the same should be amortized as per section 35D of the Act
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• Taxpayer Can Claim Relief u/s 54F for LTCG Despite Incomplete Construction or Missing Sale Deed.

  Case-Laws - AT : Deduction / Exemption u/s 54F - LTCG - Merely because the sale deed had not been executed or that construction is not complete and it is not in a fit condition to be occupied does not disentitle the assessee to claim s. 54F relief
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• Assessee Denied Deduction for Service Tax Liability Due to Lack of Awareness and Payment Before Filing Return.

  Case-Laws - AT : Deduction towards additional service tax liability - since the assessee is not aware of the expenses of the liability before filing of the return of income and also assessee has not made payment before filing return of income, assessee is not eligible to claim this additional liability in this current AY
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• Assessing Officer's Addition for Unexplained Cash Deemed Incorrect; Bank Deposits Fully Accounted For.

  Case-Laws - AT : Addition on account of unexplained cash received from students and trainees - the cash deposited in the bank is fully accounted for and the addition made by the AO is ex-facie bad
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• Unexplained Administrative Expenses Added: Salaries, Travel, and Professional Charges Related to Business Activities of the Assessee.

  Case-Laws - AT : Addition on account of unexplained administrative expenses - details include details of salaries paid to employees with the services rendered, details of the travelling expenses incurred, details of the professional charges etc. - all these expenditure are related to the business activity of the assessee and it cannot be said that these expenditure have not been incurred
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Customs

• ESANCHIT Platform Boosts Export Efficiency with Paperless Processing, Streamlining Customs and Reducing Administrative Burden for Exporters.

  Circulars : Implementation of Paperless Processing under SWIFT-Uploading of Supporting Documents (eSANCHIT) in Exports
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• Pontoons Classified as Integral Parts of Dredgers Under Customs Code CTH 89051000, Not CTH 89011090.

  Case-Laws - AT : Classification - parts of the dredgers - The pontoons is in any case not classifiable under CTH 89011090, however, it is clearly classifiable as integral parts of dredgers under CTH 89051000 - all parts of Dredger has to be classified under the head Dredger i.e. 89051000
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• Customs Value of Ball Bearings Cannot Rise Solely on DRI Alerts; Requires Substantial Evidence for Rejection.

  Case-Laws - AT : Valuation - rejection of declared value - The value of imported goods cannot be enhanced, merely, on the basis of DRI alerts for enhancing the price of the ball bearing
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Corporate Law

• Appellate Tribunal extends interim relief for auditors to continue with clients until March 2019 or final decision.

  Case-Laws - AT : Appointment of auditor - extension of the period of interim relief granted by this Appellate Tribunal to continue with the auditing assignments of their existing clients till 31.03.2019 or till a newly constituted Bench takes an appropriate final decision in the matter, whichever is earlier - No relief.
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State GST

• New Initiative Enhances e-Filing for GST Compliance: Streamlined Processes, Timely Updates, and Alerts for Taxpayers.

  Circulars : Providing various e-Filing facility to Taxpayers for smooth GST Compliance
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Indian Laws

• Arbitration Seat Confirmed: Parties Agree New York is Juridical Seat, Not Just Venue, Per Clause 15 Agreement.

  Case-Laws - HC : The parties expressly chose to have the place of arbitration in New York. This being the case, juridical seat of arbitration was New York. In fact, the appellant themselves invoked arbitration and submitted themselves to the jurisdiction of New York. This being the case, it is not correct to hold that the place of arbitration referred to in clause 15 was merely a venue and not a seat of arbitration.
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Central Excise

• Refund Approved: Cenvat Credit Reversal Due to Audit Objections Without Show Cause Notice Issued, No Assessment Order Present.

  Case-Laws - AT : Claim of refund - Cenvat credit was reversed based on Audit Objections but no show cause notice was issues - There is no assessment order passed in the present case. Therefore, the question of challenging the same does not arise - Refund allowed.
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• CENVAT Credit Recovery: Errors in Depreciation Calculation and Duty Component Impact Modvat Credit Claims.

  Case-Laws - AT : Recovery of CENVAT Credit - The calculation of depreciation in so far as it relates to the duty component on which Modvat Credit had already been claimed, is certainly a tedious process. It does not mean that the appellant can have the licence to commit a mistake.
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• Suppression Allegation Not Upheld: Demand for Extended Limitation Period Based on Balance Sheet Info Set Aside.

  Case-Laws - AT : Extended period of limitation - suppression of facts - Claiming SSI exemption - Suppression of turnover - As the demand is based on the basis of information appearing in the balance sheet, suppression of such information with an intention to evade duty cannot be alleged - demand set aside.
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• CENVAT Credit Demand Set Aside; SCN Lacked Evidence of Suppression or Mis-declaration; Extended Limitation Period Considered.

  Case-Laws - AT : CENVAT Credit - duty paying documents - extended period of limitation - in the SCN no specific charge or evidence of any suppression mis-declaration etc. on the part of the appellant has been pointed out - the demand set aside.
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• EOU Export Calculation: Include Both Physical and Deemed Exports for 50% DTA Sealing Compliance.

  Case-Laws - AT : 100% EOU - Even for the purpose of 50% sealing of DTA export of FOB value of exports, the issue have been settled that for calculating the 50% not only the physical exports but also the deemed exports should also be considered.
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• Extended Limitation Period Inapplicable for B-17 Bond Cases Without Fact Suppression or Mis-declaration; One-Year Demand Limit Applies.

  Case-Laws - AT : Applicability of extended period of limitation where B-17 bond has been furnished by 100% EOU - if there is no suppression of fact or mis-declaration on the part of the appellant, demand cannot be raised beyond one year.
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• PSU Appeals Against Extended Period for CENVAT Credit Reversal on Inputs Cleared "As Such" to Sister Unit.

  Case-Laws - AT : CENVAT Credit - inputs which were subsequently cleared “as such” to their sister unit without reversal of credit - a Revenue neutral situation - the appellant is a PSU, the extended period is not invokable
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• Appeal Tribunal Review: Procedural Defect in Committee Setup Deemed Irregularity, Not Illegality.

  Case-Laws - HC : Filing of appeal before the tribunal - Reviewing committee of two commissioners - one officer who is in-charge of both the Commissionerates - defect if any is procedural and an irregularity and not illegality.
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VAT

• Petitioner Must Deposit Entry Tax Principal Before Assessment, No Penalty Required Yet Per Demand Notices.

  Case-Laws - HC : Demand of entry tax to be deposited before assessment order - petitioner is required, at this stage to deposit the principal sum of tax, but not the penalty; as indicated in the two demand notices
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Case Laws:

• GST

• 2018 (11) TMI 406
  Request for withdrawal of their advance ruling application - Rate of GST - composite supply of works contract provided to M/s. APSPDCL - Held that:- Since the applicant withdrew the application before personal hearing, the same is dismissed.

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• 2018 (11) TMI 405
  Request for withdrawal of their advance ruling application - levy of GST - considerations collected by the road transport department in account of issuing fancy number on reservation - Held that:- Since the applicant withdrew the application before personal hearing, the same is dismissed.

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• 2018 (11) TMI 404
  Rate of GST - agricultural tractor trailers (attachment) parts leaf springs, disks, axels, hubs, shacke pins meant for tractor trailers - Held that:- As per the description given by the applicant along with the photographs, the commodity shall be classified as springs and leaves for springs of iron and steel , the commodity falls under the HSN Code 7320 and it listed in the entry no 234 of schedule III of N/N. 01/2017-central tax (Rate), dated: 28.06.2017 and taxable at 9% for CGST and 9% for SGST. Ruling:- The commodity Springs leaves for springs of iron and steel , falls under entry number 234 of schedule Ill of notification number 01/2017 - Central tax (Rate), dated : 28.06.2017 and taxable at 9% under CGST Act 2017 and 9% under APGST Act,2017.

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• 2018 (11) TMI 403
  Levy of GST - job work service to foreign customer - IGST or SGST+CGST? - Applicability of exemption under N/N. 25/2012 dated 20.06.2012 - Held that:- the process of providing job work service to the foreign customer, in the premises of the applicant as per the specifications of the recipient of services is taxable under APGST Act 2017, as per Entry No.26 (HSN Code 9988) Proviso (iv), and liable to tax @ 18%. Applicability of IGST or SGST+CGST? - Held that:- The place of supply for this transaction is location of the service where actually performed i.e., business premises of the applicant which is located in the State of Andhra Pradesh. Hence the tax liability under SGST Act/CGST Act 2017 only applies. Exemption as per N/N. 25/2012 dated 20.06.2012 - Held that:- As the Service Tax Act itself subsumed under Goods Services Tax Act 2017, the Notification referred to, is no more applicable. Ruling:- The process providing job work service to the foreign principal, in the premises of the applicant as per the specifications of the recipient of services, is taxable under APGST Act 2017/CGST Act 2017, as per Entry No.26 (HSN Code 9988) Proviso (iv), and liable to tax @ 18%. The place of supply for this transaction, is location of the service where actually performed i.e., business premises of the applicant, which is located in the State of Andhra Pradesh. Hence the tax liability under SGST Act/CGST Act 2017 only applies. Regarding applicability of Notification No.25/2012, dated 20.06.201 2, as the Service Tax Act itself subsumed under Goods Services Tax Act 201 7, the Notification referred to, is no more applicable.

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• 2018 (11) TMI 402
  Application for withdrawal of Advance Ruling application - Held that:- Since the applicant withdrew the application before personal hearing, the same is dismissed. Accordingly, the application disposed off .

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• 2018 (11) TMI 401
  Classification of manufactured item - items used for manufacture of Solar Cells - whether parts for manufacture of Photovoltaic Cells/Solar Cells to be covered under Entry 234 of Schedule-I of Notification No. 1/2017-Integrated Tax (Rate), dated 28-6-2017 or not? Held that:- It is clear from the whole manufacturing process that silicon wafer is the most important input for the manufacture of solar cells which is treated with the various chemicals during the different steps of texturization, diffusion, junction edge isolation anti-reflection coating, etc. The various chemicals used during the manufacturing process have been specified in Table A from Sr. No. 2-13. These chemicals, though used in the process, yet get consumed lose their independent identity . To qualify as being part of the product for the purpose of aforesaid notification, the item should maintain substantial independent physical identity as when it is used in the final product. All these items mentioned in Table A from Sr. No. 2-13, instead of being treated as parts for the purpose of Entry 234 of the Notification No. 1/2017-IGST (Rate), can only be treated as inputs and do not qualify as parts for the manufacture of Photovoltaic/ solar cells. Ruling:- The items used for manufacture of solar cells as listed in Table A, procured by the applicant do not qualify to be termed as Parts for the manufacture of Photovoltaic/ Solar cells for the purpose of Entry 234 of Schedule-I of Notification No. 1/2017-lntegrated Tax (Rate), dated 28-6-2017.

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• 2018 (11) TMI 400
  Government authority or not - applicant undertakes transport studies, which are undertaken by third party vendors providing Consultancy Services on behalf of the applicant - whether functions of municipality or not - scope of Urban planning - N/N. 12/2017 of Central Tax (Rate), dated:28th June 2017, read with Notification No. 32/2017 of Central Tax (Rate), dated : 13th October 2017. Government authority - Held that:- AMRCL is a SPV which is set up vide Government of Andhra Pradesh G.O. Ms. 141 of MA UD. The applicant has also submitted that it is 100% owned by state of A.P.; that it is answerable to Government of Andhra Pradesh; that its Chairman is the Principal Secretary. The Government of Andhra Pradesh, issued G.O. Rt.No: 599, MA UD(H2) Department, dated 14.09.2015, in which, the Government of Andhra Pradesh has decided that the special purpose vehicle for Vijayawada Metro Rail Project, hence forth be called as AMARAVATHI METRO RAIL CORPORATION LIMITED (AMRC) . Based on above facts, it is evident that the applicant is a Government authority as per the Notification No. 12/2017 - Central Tax dated 28th June 2017. Whether the consultancy services for preparation of transport studies comes within the purview of the functions of Municipality under article 243W r/w Twelfth Schedule to the Constitution of India? - Held that:- Urban Planning is a function entrusted to Municipality under Article 243 W of the Constitution. The applicant has invited our attention to Ministry of Urban Development, Government of India in K-14011/07/2007/Metro/UT dt.29-08-2007, addressed to all the Chief Secretaries of the States and Union Territories, informing the decision that the urban transport and urban planning must go together and that urban transport is an integral part of urban development, which will help in ensuring that urban transport remains an integral part of urban planning at all the times and cities are planned in a wholistic manner - Urban Transportation also is a part of Urban Planning. All the activity is in the nature of urban transportation and urban planning and the same is covered under the purview of the functions of Municipality under article 243W read with Twelfth Schedule to the constitution of India, and the same fall within the purview of the aforesaid exemption notification 12/2017-Central Tax (Rate), dated : 28th June 2017. Ruling:- The applicant / AMRCL is a Government Authority as per Notification No. 12/2017-CT (Rate, dated 28.06.2017. The consultancy services for preparation of transport studies such as comprehensive mobility plan, transit oriented development plan, NMT plan and consultancy services of transaction advisors/preparation of DPRs comes within the purview of the functions of Municipality under article 243 read with Twelfth Schedule to the constitution of India, and accordingly, falls within the purview of the aforesaid exemption notification.

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• 2018 (11) TMI 399
  Levy of GST - sale of tobacco leaves received from farmers made by Commission Agent in an auction - turnover is less than Rs. 20 Lakh - liability to pay GST - Reverse charge mechanism - liability to pay GST when commission agent sell the tobacco leaves received from trader in an auction - Commission Agent receives tobacco from farmers and sell them within the state - value of a supply of goods and/or services. Held that:- The services provided by a commission agent for sale or purchase of agricultural produce is having NIL rate of GST - Undoubtedly, tobacco leaves are agricultural produce and therefore, a commission agent dealing in sale and purchase of tobacco leaves shall be exempted from GST. The above NIL rate of GST on services provided by a commission agent for sale and purchase of agricultural produce is irrespective of who is the principal i.e. whether it is a farmer or a trader. As long as the applicant works as a commission agent for sale and purchase of tobacco leaves, his supply of service shall be exempted vide above referred Notification. Sl.No. 5 of referred Notification is for services of Commission agents. which is peged at 18% GST (9+9). However, applicant being a Commission Agent dealing in sale and purchase of agricultural produce (tobacco leaves) - Sl.No. 24 of the Notification having NIL rate of Tax is applicable on them. Registration - Held that:- Section 23 of CGST Act stipulates that a person who is exclusively supplying exempted services shall not be required to take Registration. Ruling:- As per entry No:24 Notification No:11/2017-Central Tax(Rate) dated : 28.06.20J7, Commission agent dealing with agricultural produce like tobacco attracts Nil rate of duty. The reverse charge provision has not been notified yet. The tobacco leaves received from trader in an auction is exempted from GST. Commission Agent receives tobacco from farmers and sell them within the state - Held that:- As the above service is exempt from tax by the entry No:24 of Notification No: 11/2017-Central Tax(Rate). hence. the commission agent is not liable to collect GST.

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• 2018 (11) TMI 398
  Detention of goods with vehicles - Vires of Rule 140 of the CGST/SCST Rules - collection of security in the form of simple bond for the value of goods and bank guarantee equivalent to the amount of applicable tax, interst and penalty payable as a mandatory condtiion for the release of the goods detained under section 129(3) of the Act - Held that:- The issue is covered by the decision in the case of K. KARUNAKARAN PROPRIETOR, M/S. BHARATH CONSTRUCTION COMPANY, SALEM VERSUS THE ASST. STATE TAX OFFICER SQUAD NO. 1, KERALA STATE GST DEPARTMENT, ALUVA AND THE COMMISSIONER OF STATE GST TAX TOWERS, KILLIPPALAM, KARAMANA, THIRUVANANTHAPURAM [ 2018 (8) TMI 1141 - KERALA HIGH COURT] , where it was held that The respondent authorities directed to release the petitioner s goods and vehicle on his furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules - petition dismissed.

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• Income Tax

• 2018 (11) TMI 397
  Validity of assessment - Assessments for Assessment Year 2008-09 pending on the date of the search - Held that:- Learned counsel for the petitioner, on instructions, seeks permission to withdraw this special leave petition. Permission is granted. The special leave petition is dismissed as withdrawn.

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• 2018 (11) TMI 396
  Reopening of assessment - notice u/s 133 - specific queries with respect to increase in the share capital, with respect to share application money and the income of the assessee from the trading in fabrics - Held that:- SLP dismissed.

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• 2018 (11) TMI 395
  Entitlement to exemption u/s 11 & 12 - allowing capital expenditure - corpus donations received by the assessee in the form of immovable properties - Held that:- The Special Leave Petition is dismissed on the ground of low tax effect, leaving the question of law open. Pending applications, if any, stand disposed of.

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• 2018 (11) TMI 394
  Addition on account of Long Term Capital Gains - reference to the District Valuation Officer for determining the fair market value of the assets as on 01.04.1981 - Held that:- A decided in COMMISSIONER OF INCOME TAX VERSUS GAURANGINIBEN S. SHODHAN INDL. [2014 (2) TMI 78 - GUJARAT HIGH COURT] Assessing Officer is entitled to make the reference to the Valuation Officer in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by the Registered Valuer, if the Assessing Officer is of the opinion that the value so claimed is less than the fair market value. The assessee had relied on the estimate made by the Registered Valuer for the purpose of supporting its value of the asset - Any such situation would be governed by clause (a) of section 55A of the Act and the Assessing Officer could not have resorted to clause (b) - Decided against Revenue.

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• 2018 (11) TMI 393
  Nature of income - Income from warehouse - assessed under the head income from house property OR head income from business and profession - Held that:- Though the ownership has been changed on record but the nature of usage of the warehouse remains the same. Before purchasing the warehouse by assessee, the earlier owner was receiving the income from warehouse as rental income and after change of ownership, the nature of payments made by occupier (Tupperware) remains the same. Thus, the nature of transactions or income generated through this warehouse did not change. The basis taken by assessee regarding the clauses of memorandum of association also holds no force now after the aforesaid decision of Hon'ble Supreme Court in M/S CHENNAI PROPERTIES & INVESTMENTS LTD VERSUS THE COMMISSIONER OF INCOME TAX [2015 (5) TMI 46 - SUPREME COURT]. In view of this, Ld. CIT(A) has rightly held that income from warehouse has to be assessed under the head income from house property not under the head income from business and profession. The computation made by AO under the head income from house property determining the net loss of Rs. 1,51,524/- was, therefore, rightly upheld and confirmed by Ld. CIT(A), which does not need any interference on my part, hence, I uphold the action of the Ld. CIT(A) on the issue in dispute and reject the grounds raised by the Assessee.

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• 2018 (11) TMI 392
  Addition in respect of the service charges received by the assessee from M/s ESAJV D-Art Indo India Pvt. Ltd. - CIT(A) has given relief of 50% of the total addition - Held that:- This addition is unsustainable on the ground that the assessee having included the service charges in its income, the same amount cannot be added again. It was agreed by both the learned DR and AR that the facts of the present case are identical to the facts in the case of Piron Education Pvt. Ltd. This entire amount of Rs. 33,09,000/- forms part of the receipt declared by the assessee as its income in the Profit & Loss account of the year under consideration. Accordingly following the reasoning given in our order dated 31.10.2018 in the case of ACIT vs. Piron Education Pvt. Ltd.[2018 (11) TMI 339 - ITAT DELHI], we direct the Assessing Officer to delete the entire addition on this account. Addition of unexplained cash deposits - Held that:- The addition is unsustainable as the cash deposited is as per the books of accounts being regularly maintained by the assessee. Since the facts are identical following our order and the reasoning in the above said order we uphold the order of the Ld. CIT(A) in deleting this addition and accordingly, this ground is dismissed. Addition on account of unexplained share premium - Held that:- From the balance sheet of the assessee company it is evident that there is no increase in the share capital as well as share premium during the year. Since no amount has been received during the year, the provision of section 68 are not applicable. In view of the above facts and circumstances, we uphold the order of the Ld. CIT(A) on the issue in dispute of deleting this addition. Addition on account of bogus expenses - Held that:- The assessee is carrying on regular business and all the expenses have been actually incurred. Further the assessing officer has made the disallowance arbitrarily ignoring the fact that assessee has actually carried out the business. As regard the survey report on going through the assessment order we note that though the assessing officer is making a reference to the survey report but is ignoring the fact that the allegations made are generic and in the light of evidences submitted by the assessee before him how he has ignored the same. It is important to point out that the assessing officer has not rejected the books of accounts nor has held that the assessee is not carrying any business. The expenses incurred are accounted for in the books of account and there is no material brought on the record that these expenses have not been actually incurred. Since the facts are identical following our order and the reasoning in the above said order we uphold the order of the Ld. CIT(A) in deleting this addition

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• 2018 (11) TMI 391
  Validity of assessment u/s 153C - addition of unexplained rental income received - Held that:- CIT(A) was not justified to hold impounded documents belong to the assessee. Sh. Ravinder Singh did not confirm if the tenant company has paid cash of Rs. 33 lakhs to the assessee as rent security or advance rent. The AO, even as per the impounded document mentioned in the assessment order that the impounded document shows Rs. 33 lakhs rent security received in cash during the year but the AO did not affirm that the alleged amount of Rs. 33 lakhs in cash have been received by the assessee. Even the tenant has not confirmed to have paid any cash of Rs. 33 lakhs to the assessee. Therefore, no credence could be given to the seized/impounded paper because it did not contain any specific thing against the assessee. The seized document is not reliable as it was not supported by Sh. Ravinder Singh in his statement, if any, cash of Rs. 33 lakhs have been paid to the assessee. Thus, there is no basis or material available on record to justify the addition of Rs. 33 lakhs in the hands of the assessee. The authorities below thus, were unjustified in making addition of Rs. 33 lakhs in the hands of the assessee as unexplained rental income received for the above property. We, accordingly, set aside the orders of the authorities below and delete the entire addition. - Decided in favour of assessee

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• 2018 (11) TMI 390
  Levying penalty u/s 271(1)(c) - treating income from sale of fixed assets as well income by way of profit from sale of other fixed assets to be income from core shipping activities albeit the said claim stood rejected by all the authorities concurrently including Mumbai-tribunal in assessee s own case for impugned assessment year 2006-07 - Held that:- This issue being debatable involving interpretation of legal provisions of a newly inserted special scheme of taxation of shipping companies and the explanations offered by the assessee to that effect cannot be termed as not bonafide albeit rejected even by tribunal in quantum. Thus due to detailed reasoning as set out above , we are of the considered view that penalty u/s 271(1)(c) of the 1961 Act in the instant case before us is not exigible as explanations as were submitted by the assessee were bonafide explanations which has taken it out of clutches of penalty provisions as were contained in Section 271(1)(c) of the 1961 Act and hence we have no hesitation in deleting the penalty as levied by the AO u/s 271(1)(c) - Decided in favour of assessee.

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• 2018 (11) TMI 389
  Disallowance of repair & maintenance expenses - nature of expenditure - revenue or capital expenditure - Held that:- These expenses have been incurred on several buildings, some of which have already been capitalized in earlier years and some of which were under construction. The details of the same have been placed the perusal of which reveal that an amount of Rs. 12,88,610/- have been incurred towards Building Number-3 which was under construction during the impugned AY and therefore, the same was required to be capitalized, irrespective of their nature, as rightly held by lower authorities. The remaining expenditure of Rs. 17,60,401/- & Rs. 1,31,766/- pertains to Building Numbers 2 & 1B respectively which have already been completed and capitalized in earlier years and therefore, the same were allowable to the assessee as revenue expenditure, being routine expenditure in nature. Resultantly, the amount of Rs. 12,88,610/- shall be disallowed while computing the income of the assessee & as a logical consequence allowed to be capitalized with under-construction building. The remaining expenditure of Rs. 18,92,167/- would be considered as revenue in nature and would be added with common repair & maintenance expenses Allowance of balance aggregate expenditure - Held that:- Since a particular manner of apportionment has been accepted by the Tribunal in AY 2006-07, respectfully following the same, we direct the Ld. AO to re-compute the disallowance after apportioning them on the basis of gross value of assets. The working of the same has been placed on page number 28 of the paperbook, a perusal of which reveal that the proportion of building in total assets is 45.56% and accordingly, the proportionate disallowance works out to be Rs. 18,86,364/- which shall stand revised to Rs. 27,48,365/- [45.56% of Rs. 60,32,408/-] in view of our adjudication in preceding para 5.1. The Ld. AO is directed to verify the proportion of the assets and if found correct, restrict the said disallowance to Rs. 27,48,365/- The assessee is directed to provide the working of the same to Ld. AO. Both these grounds stand partly allowed. Interest disallowance u/s 36(1)(iii) - Held that:- although the issue has already been restored by Ld. CIT(A) to Ld. AO for re-appreciation of facts but still the disallowance u/s 36(1)(iii) has been upheld, which was erroneous and was not warranted for. We concur with these submissions. While upholding the stand of Ld. CIT(A) in restoring the issue to the file of Ld. AO, we direct Ld. AO to consider the issue after re-appreciation of factual matrix and decide the same as per law with a direction to the assessee to substantiate his claim. The ground stand allowed for statistical purposes. Loss on discarded live stocks [horses] u/s 36(1)(vi) - Held that:- Our attention has been drawn to the fact that there are computational errors in the workings made by Ld. AO since the claim of the assessee was for Rs. 29.56 Lacs instead of Rs. 10.27 Lacs as adopted by Ld. AO. In support of the same, our attention has been drawn to the computation of income. After going through the same, we find that the assessee himself reduced loss by Rs. 10.27 Lacs on account of Loss on discarded livestock whereas it claimed total loss of Rs. 29.56 Lacs against this item, which support the submissions of Ld. Sr. Counsel. It is also noted that the assessee could not substantiate the loss to the satisfaction of Ld. AO. Therefore, we deem it fit to restore the matter back to the file of Ld. AO to re-appreciate the correct factual matrix and re adjudicate the issue as per law with a direction to the assessee to substantiate the same. This ground stand allowed for statistical purposes.

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• 2018 (11) TMI 388
  Depreciation @25% on BSE Trading Right - treating the same as an intangible asset - Held that:- As consequent to demutualization and corporatization Scheme of BSE, 2005, the shares were allotted to the assessee in lieu of the membership card and therefore, the depreciation against the same could not be allowed to the assessee. treating the same as an intangible asset. The issue, at present, stood covered against the assessee by the decision of this Tribunal rendered in Sino Securities (P.) Ltd. Vs ITO [2011 (11) TMI 535 - ITAT MUMBAI]. Disallowance u/s 14A read with Rule 8D - Held that:- As decided in ACIT Vs. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] whereas it has been held that for the purpose of computing disallowance, only those investments which yielded exempt income during impugned AY were to be considered. Therefore, finding strength the argument of Ld. AR, the matter stand remitted back to the file of Ld. AO to verify the computations made by the assessee in this regard. The Ld. AO is directed to consider only those investments which have yielded exempt income during the year. The assessee, in turn, is directed to provide necessary computations in this regard. This ground stand allowed for statistical purposes. The appeal stand partly allowed for statistical purposes. Disallowance of dealing error - AO has disallowed the same invoking the explanation to Section 73 treating the same as speculation business loss - Held that:- Both the lower authorities have proceeded on wrong footing in view of the fact that these were mere punching errors which arose in the normal course of brokerage business. The complete details of these transactions have already been placed in the paper-book. Viewing from any angle, these transactions cannot be said to have arisen out of speculation business as being concluded by the lower authorities. These losses have arisen on account of the fact that these are punching errors while executing the trades and considering the volume of overall business being carried out by the assessee, the proportion of these losses was very miniscule in nature. Therefore, by deleting the same, we allow this ground of appeal.

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• 2018 (11) TMI 387
  Addition made by the voluminous shares trading as ‘business in nature’ - assessee is a non-resident individual residing in Bahrain, and is pursuing her teaching profession over there - Held that:- Assessee being an NRI has been investing in equity and mutual funds in India. CIT(A) has observed that there is no borrowed funds that has been used for this purpose and the gain/loss has been declared by assessee consistently as income under the head capital gains. This position has been accepted by revenue till A.Y. 2007-08, however only for A.Y. 2008-09 & 2009-10 Ld.A.O. treated capital gain declared by assessee as income from business or profession. Again from A.Y. 2011-12 and 2012-13 assessee had declared income under the head “Capital Gains”, which has been accepted by revenue authorities. We do not agree with reasoning of Ld.AO that since assessee travels to India there exist Permanent Establishment. Further it has been submitted by Ld.Counsel that order passed by Ld. CIT (A) for A.Y. 2008-09 and 2009-10 has not been appealed by revenue before this Tribunal, thereby accepted the long standing position taken by assessee. - decided against revenue

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• 2018 (11) TMI 386
  Seeking stay of disputed outstanding demand - partial recovery made - Held that:- Recovery is already made by the AO of Rs. 22,72,75,655/- which is about 66% of the gross disputed outstanding demand of Rs. 34,51,73,238/- and hence, we feel it proper to grant stay of the disputed outstanding demand for a period of six months from the date of this order or till the disposal of these appeals whichever is earlier. Also in case, there is any change in this factual position because of any refund by the AO against the said recovery u/s 266 (3), both parties will be at liberty to seek amendment in this stay order. We have noted that the hearing of these appeals was first fixed on 25.09.2018 and on this date, the hearing was adjourned to 15.10.2018. On 15.10.2018, the hearing was adjourned to 31.0.2018 and on 31.10.2018, since the bench did not function; the hearing was again adjourned to 07.02.2019. In view of granting of stay, we prepone the hearing to 03.12.2018 and the registry is directed to issue notices to both sides. We want to make it clear that the assessee should not seek any adjournment in course of hearing of these appeals without justifiable reasons and if the assessee does so, then the stay granted by this order shall stand vacated automatically.

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• 2018 (11) TMI 385
  TPA - Comparable selection - onsite filter application - Held that:- We restore back the entire TP matter to the DRP for fresh decision with the direction that onsite filter should be applied to all comparables. Whatever comparables are found after applying that filter along with the other filters which were already applied by TPO in the first round, the final list of comparables should be drawn after deciding other objections if any such as functional similarity / dissimilarity etc. The DRP should pass necessary order as per law in the light of above discussion after providing adequate opportunity of being heard to both sides and if required DRP can obtain remand report from the AO/TPO in this regard. Deduction u/s 10A - whether the total turnover can also be reduced by the amount of expenditure which were incurred in foreign currency and which were reduced by the AO from export turnover? - Held that:- As per the judgement of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT], it was held that total turnover is sum total of export turnover and domestic turnover and therefore, if an amount is reduced from export turnover then the total turnover also goes down by the same amount automatically. Since the directions of DRP on this issue is in line with this decision of Hon'ble Karnataka High Court, we decline to interfere in the directions of DRP on this issue. This issue is decided against the revenue and these grounds of revenue’s appeal are rejected.

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• 2018 (11) TMI 384
  Addition towards commission paid to foreign agent - non deduction of tds - Held that:- It is the case of the assessee that as per the terms of the agreement, what the assessee actually receives from the foreign customer is 98% of the invoice value after deduction of 2% commission amount. For e.g., if the invoice raised by the assessee is for Rs. 100, it actually receives Rs. 98 from the foreign customer. Notably, while deciding identical issue in assessee’s own case for assessment years 2009–10 and 2011–12, the Tribunal has deleted similar disallowance made by the Assessing Officer holding that on the reasoning that the assessee has realised only net amount and further the impugned payments are not liable for deduction of tax at source, since the same is not taxable in India in the hands of recipients. Following the same, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance - Decided in favour of assessee.

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• 2018 (11) TMI 383
  Assessment u/s 153A r.w.s. 143 - addition u/s 14A - Held that:- It is an undisputed fact that there was no incriminating material found in the course of search leading to addition/disallowance made u/s. 14A of the Act. It is the finding of the Assessing Officer that assessee had filed return of income making suomotu disallowance u/s. 14A of the Act which return was filed prior to the date of search and the assessment was completed u/s. 143 of the Act. The Revenue could not rebut the findings of the Ld.CIT(A). Therefore, in the absence of any incriminating material found in the course of search and in view of the of the decision of the Hon'ble Jurisdictional High Court in the case of CIT v. Continental Warehousing Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT] - CIT(A) has rightly deleted the disallowance made u/s. 14A. Decided in favour of assessee Addition u/s 14A - disallowance of indirect expenses under Rule 8D (2)(ii) - Held that:- It is the finding of the Assessing Officer that the assessee received dividend income of Rs..750/- and claimed as exempt income. In the circumstances, the disallowance shall be restricted only to the exempt income received by the assessee. Thus, we direct the Assessing Officer to restrict the disallowance u/s. 14A r.w. Rule 8D to Rs..750/-. Grounds raised by the Revenue are dismissed and the grounds raised by the assessee for the Assessment Year 2013-14 are partly allowed.

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• 2018 (11) TMI 382
  Eligibility for additional depreciation u/s 32(1)(iia) on plant and machineries relating to Seed Division - Held that:- If we examine the facts of the instant case in the light of the judgment of the Hon'ble Bombay High Court in the case of Jalna Seeds Processing and Refrigeration Co. Ltd. [2000 (2) TMI 56 - BOMBAY HIGH COURT], an irresistible conclusion which can be drawn is that the pre-processed seeds procured by the assessee are quite different in its usage and marketability qua the final product. The various stages of processing undertaken by the assessee, which were canvassed by the assessee before the Assessing Officer also, have not been disputed by the Revenue at any stage. Thus,the instant activity of the assessee is held to be an activity of manufacturing; thus, assessee is eligible for additional depreciation u/s 32(1)(iia) of the Act on its plant and machineries relating to Seed Division. - decided in favour of assessee.

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• 2018 (11) TMI 381
  Revision u/s 263 - AO had ignored that out of the three items i.e. land, building and plant and machinery, capital gain on land could either be short term or long term, depending on the period of holding, as it was not a depreciable asset, whereas building and plant and machinery being depreciable items had to be taxed under ‘short term capital gains’ - C.I.T. was also of the view that the stamp duty value of the property was to be deemed as full value of the consideration for the purpose of section 48 r/w section 50C of the Act - "lack of inquiry" OR "inadequate inquiry" Held that:- A perusal of the original assessment order shows that the issue of capital gains was duly considered by the Assessing Officer and he proceeded to compute the short term capital gain at Rs. 22,86,227/- whereas it was the assessee’s claim during the course of assessment proceedings that no capital gains had been earned. Thus, it is not the case of the department that no information regarding the impugned transaction was called for by the Assessing Officer or that the transaction was not enquired into by the Assessing Officer. It is very much evident that relevant details in this regard were submitted by the assessee during the course of assessment proceedings and the same form part of the record. Therefore, no inference can be drawn that the Assessing Officer has not examined the issue although he may not have expressed it in as many terms as may be considered appropriate by his superior authority and even if the inquiry was inadequate, the same cannot be a ground for revision. It is settled law that an order cannot be termed as erroneous unless it is not in accordance with law. Section 263 does not visualise the substitution of judgment of the Ld. C.I.T. for that of the Assessing Officer. Assessing Officer’s order cannot be held to be erroneous and prejudicial to the interest of the revenue within the meaning of section 263 - Decided in favour of assessee

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• 2018 (11) TMI 380
  Addition of provision for contract loss / expenses - crystallized liability or uncertain liability - no evidence filed by the assessee with regard to provision for rental compensation - Held that:- Just because a claim was filed by the contractor of the assessee, would not mean that assessee was legally bound to pay such amount. The maxim "debitum in praesenti solvendum in futuro" relied on by the ld. Authorised Representative, can apply only if there is an ascertained liability for which amount is to be crystallized and paid later, and not to a situation where there is only a claim, with no acknowledged liability. Commissioner of Income Tax (Appeals) fell in error in taking cognizance of the arbitration proceedings initiated well after the end of the relevant previous year, and coming to a conclusion that there was a crystallized liability of Rs. 70,00,000/- due from the assessee to M/s. Garabandal Constructions Pvt. Ltd as at the end of the relevant previous year. As for the rental compensation of Rs. 55,00,000/- nothing is available on record to show how it was computed or the basis on which assessee claimed itself to be liable to pay such compensation. In these circumstances, we are of the opinion that ld. Commissioner of Income Tax (Appeals) fell in error in allowing the claim of the assessee to the extent of Rs. 1,25,00,000/-. - decided in favour of revenue

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• 2018 (11) TMI 379
  Levy of penalty u/s. 271(1)(c) - undisclosed jewellery - streedhan - Held that:- Rendering an explanation as to the entire jewellery being her streedhan and as belonging to other two ladies, which stands accepted by the Revenue in part. The finding of the relevant asset (gold and diamond jewellery) in the present case, as being the assessee’s property, could, u/s. 69B, however, be validly invoked by the Revenue only where the same stands found from her possession, as from her room, locker, etc. or, even otherwise, shown to be under her control. An explanation could only follow a finding as to the relevant asset/s as belonging to the assessee. The issue, we may clarify, is not if the assessee owns any jewellery, which she admittedly does, but as to what extent? This is as, apart from other family members, there are two ladies in the house who could also have streedhan or otherwise own the jewellery found. The allowance of a part relief by the Revenue in quantum proceedings on that ground is, again, without any basis in facts, and merely a guess work. The primary onus on the Revenue being not discharged, while jewellery to some extent accepted as being the assessee’s streedhan, no case for levy of penalty is, under the circumstances, made out. - Decided in favour of assessee.

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• 2018 (11) TMI 378
  Carry forward of unabsorbed business depreciation as per computation of income filed alongwith original return u/s 139(1)- Business loss set off against income from short term capital gain - Held that:- As observed that assessee has paid 10% tax on long-term gain on which STT has not been paid per provisions of section 112 of the Act. Thus subsection 2 of section 71 is applicable to the facts of the present case as assessee has a positive income under the head capital gains (including long term and short term capital gains). Is on a careful reading of sub section 2 of section 71, it is apparent that there is no restriction imposed on exercising option of setting off of business loss against income under the head capital gains (either long term capital gain or short term capital gain). The facts of the present case assessee has also exercised its right under section 112 of the act and has paid 10% tax on the long term capital gains, and therefore what remains to be adjusted against the business loss is the short term capital gains amounting to Rs. 10,58,675/-. The balance unabsorbed business loss amounting to Rs. 1,29,10,486/- has been carried forwarded by assessee. We do not find any infirmity in the above computation and carry forward of business loss which is in consonance with the provisions of the act We therefore do not agree with computation adopted by Ld.AO - we direct AO to allow carry forward of unabsorbed business depreciation as per computation of income filed alongwith original return under section 139(1) of the Act. - Decided in favour of assessee

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• 2018 (11) TMI 377
  Disallowance of expenditure on licence fee - claimed by the assessee as a revenue expenditure - as per AO the expenditure was incurred for the purpose of setting up of Retail outlet, therefore, the expenditure was capital in nature - assessee paid signing fee for the training of the dealers and its staff and supervision and coordination of the construction of the retail outlet - Held that:- Since the unit was commissioned on 01.10.2005 and the expenditure was incurred during the construction period before commencement of the business, the said expenditure cannot be related to the expenditure of the impugned assessment year. AR did not provide details with regard to the dates of training given by the Reliance Industries to dealers and the staff. Similarly no break up of the expenses incurred for the training and construction related activities were submitted. The signing fee was one time payment which was related to the setting up of construction of Reliance petrol pump unit and the expenditure was incurred prior to the commencement of the business, therefore, we are unable to accept the contention of the assessee that the expenditure be treated as revenue expenditure for the year under consideration. Since the expenditure was incurred before the commencement of business, the expenditure required to be capitalized in respect of relevant asset and allow the depreciation or the same should be amortized as per section 35D of the Act AO has rightly treated the expenditure as capital expenditure and allowed the depreciation - decided against assessee.

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• 2018 (11) TMI 376
  Mark to market loss - Allowance of foreign exchange fluctuation loss as notional - Held that:- Even though Board circular No. 3/2010 considered the ‘marked to market losses’ has notional. This issue was examined by the Coordinate Bench and Hon’ble Jurisdictional High Court in the case of VST Industries Ltd.[2013 (8) TMI 941 - ITAT HYDERABAD] has upheld the issue and distinguished that CBDT instruction No. 3/2010 would only apply to derivative transactions and not to transactions in the course of business. Since there is a finding that the loss incurred is not out of derivatives and was incurred in the course of the normal business on the transactions entered into by Assessee, we do not see any reason to interfere with the order of Ld. CIT(A). There is no merit in Revenue grounds and accordingly the same are rejected.

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• 2018 (11) TMI 375
  Disallowing of deduction u/s. 54 - non-completion of construction within a period of 3 years - condition precedent for claiming benefit - Held that:- Sec. 54F is a beneficial provision for promoting the construction of residential house & requires to be construed liberally for achieving that purpose. The intention of the Legislature was to encourage investments in the acquisition of a residential house and completion of construction or occupation is not the requirement of law. The words used in the section are ‘purchased’ or ‘constructed’. The condition precedent for claiming benefit u/s 54F is that the capital gain should be parted by the assessee and invested either in purchasing a residential house or in constructing a residential house. Merely because the sale deed had not been executed or that construction is not complete and it is not in a fit condition to be occupied does not disentitle the assessee to claim s. 54F relief. See COMMISSIONER OF INCOME-TAX VERSUS SAMBANDAM UDAYKUMAR [2012 (3) TMI 80 - KARNATAKA HIGH COURT]. Thus even on the basis of non-completion of construction of the new asset within the period of 3 years, the deduction u/s.54 of the Act cannot be denied to the Assessee. - Decided in favour of assessee.

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• 2018 (11) TMI 374
  Estimation of income - rejection of books of accounts - voluntary declaration of additional income - Held that:- Since the assessee has voluntarily declared Rs. 30 lakhs as additional income, AO should have verified the basis of declaring additional income and should have verified the books of account and estimating the income merely relying on the statement given by the partner, is not correct. In our view, estimating the income without properly verifying the books of account nor rejecting the books of account is also not proper. The Hon’ble Supreme Court in the case of CIT Vs. S. Khader Khan Son [2013 (6) TMI 305 - SUPREME COURT] held that statement recorded u/s 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. Therefore, the statement recorded during the survey proceedings cannot be relied upon to complete the assessment and estimating the taxable income relying on such statement. We reject the estimation of income made during this AY under consideration. Since the assessee has already declared additional income, the same may be considered as taxable income for this AY under consideration. Additional service tax liability - Held that:- We find that assessee has not claimed the above liability as expenditure since the assessee is not aware of the expenses of the liability before filing of the return of income and also assessee has not made payment before filing return of income. Therefore, assessee is not eligible to claim this additional liability in this current AY and assessee can claim this additional liability in the year in which it makes the payment and claim it as expenditure in the year of payment.

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• 2018 (11) TMI 340
  Recovery of tax - Seeking for dispensation of notice to respondent No.3 - Held that:- Taking into consideration this is an intra Court appeal and by impuged order appellants have been directed to refund a sum of Rs. 15,82,41,007/-, this Court is of the considered view that impugned order dated 07.08.2018 passed in Writ Petition [2018 (9) TMI 355 - KARNATAKA HIGH COURT] deserves to be stayed till next date of hearing as otherwise prayer sought for in the appeal may become infructuous.

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• 2018 (11) TMI 339
  Addition of consultancy income - Held that:- The said amount has been included in the consultancy income declared by the assessee. The assessee having included the said amount in its income, we wonder how the same amount can be added again while computing taxable income. Irrespective of the fact whether assessee has rendered any services or not, the amount received by the assessee is income in its hand. The assessee having included such income in its profit and loss account, the same amount cannot be added and we direct the AO to delete the entire amount - Decided in favour of assessee Addition on account of unexplained cash received from students and trainees - Held that:- the cash deposited in the bank account is duly accounted for. The assessee is maintaining regular books of accounts and the cash deposited in the bank account is duly reflected in the cash book maintained by the assessee. It is not the case of the AO that such cash deposited in bank account is not accounted for in the books of accounts of the assessee. Thus, the cash deposited in bank account is accounted for cash and we uphold the order of the CIT(A) in deleting the above said addition by holding that the cash deposited in the bank is fully accounted for and the addition made by the AO is ex-facie bad - Decided in favour of assessee Addition on account of bogus purchase of fixed assets - Held that:- assessee is imparting education for various courses being run by it. For imparting education and running these courses the assessee has to have the fixed assets. The assessee in fact has purchased these fixed assets. It is not the case of the AO that assessee has not purchased these fixed assets. The AO is looking into the commercial expediency of the assessee. AO cannot examine the business, wisdom and the commercial expediency of the assessee. The assessee having purchased the fixed assets for the purpose of its business, no adverse view can be taken. We further note that the AO despite assessee claiming only depreciation on such fixed assets, has added back the entire amount. This clearly shows the arbitrariness on the part of the AO. The Ld. CIT(A) has considered the facts in the right perspective and has rightly deleted the addition - Decided in favour of assessee Addition on account of advertisement and business promotional expenses - allowable deduction u/s 37 - Held that:- CIT(A) was justified in deleting the addition made by the AO. The assessee has submitted the complete details and the observations of the AO that assessee has not submitted the supporting evidence is factually incorrect. The assessee has actually incurred these expenditures and the same are duly accounted for in the books of accounts. The assessee is imparting education and training. The expenditure incurred is for publicizing such education and training courses being run by the assessee. Thus, the expenditure is directly related to the business of the assessee and the ld. CIT(A) has rightly deleted the addition.- Decided in favour of assessee Addition on account of loan repaid by the assessee during the year - Held that:- assessee has filed sufficient evidences so as to establish identity, creditworthiness and genuineness of the transactions. As discussed above, there is nothing abnormal so as to draw any adverse inference against the assessee. It may be relevant to point out that he AO has made addition without application of mind. This fact gets established that AO has made addition of the amount paid back and not that of the amount received by the assessee. In fact, the above analysis clearly demonstrate that the assessee has discharged its onus fully in respect of the credit. The observation made by the AO in the assessment order are factually incorrect. The AO has not brought any material so as to draw any adverse inference.- Decided in favour of assessee Addition in respect of the credit appearing in the name of Piron Design Pvt. Ltd. - Held that:- Firstly, the transaction is not that of cash credit. Even assuming that this is a cash credit, assessee has filed all necessary evidences so as to establish the identity and genuineness and creditworthiness. It is not only the income of the year under consideration that can only establish the creditworthiness of the creditor. It is the source from which the credit has arisen which is important for establishing the creditworthiness and the genuineness. In this case, the assessee has purchased the furniture and the credit has arisen on that account. Considering this fact, we hold that CIT(A) was right in deleting the addition. - Decided in favour of assessee Addition on account of unexplained administrative expenses - Held that:- The assessee having incurred the expenditure, the AO cannot question the wisdom of the Assessee. The observation of the AO regarding classroom activity is also incorrect. AO has ignored the fact which has been rightly recorded by the CIT(A) that this classroom expenses relate to payment made to Reliance Webstore through which apparently E-learning classes were conducted. As gone through the details of the various expenses placed in the PB. Pg. 413-456. These details include details of salaries paid to employees with the services rendered, details of the travelling expenses incurred, details of the professional charges etc. After examination of these details, all these expenditure are related to the business activity of the assessee and it cannot be said that these expenditure have not been incurred. CIT(A) was right in deleting the additions- Decided in favour of assessee

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• Benami Property

• 2018 (11) TMI 365
  Trustee - Transfer of property - trustee or a person standing in a fiduciary capacity - daughter in law holding property for the benefit of her mother-in-law as per Section 4(3)(b) of the Prohibition of Benami Transactions (Prohibition) Act, 1988 - whether the relationship between mother-in-law and daughter-in-law can be held to be fiduciary in nature, and whether the daughter-in-law can be held to be a trustee of the mother-in-law? Held that:- In Indian society, it is not unusual for a daughter-in-law being treated as a trustee of mother-in-law. In fact, in most large families the daughter-in-law plays an extremely important role in nurturing and bringing up the family. Enormous amount of faith and trust is reposed in the daughter-in-law. In fact, the relationship between the two is one of confidence, trust and belief and not unusual to see in society. A mother-in-law confiding in daughter-in-law and vice-versa to the exclusion of the other family members and enjoying strong bonding is a part of our ethos and culture - Admittedly, Smt. Shakuntala Devi belonged to a wealthy family. In her cross-examination, she states that her father used to deal in shares, had rental income and was a very wealthy man. She had five brothers, who looked after her even after the demise of her father. She was married to Mr. Maheshwar Dayal in 1939, and they were living together in 1876, Haveli Jugal Kishore, Chandni Chowk, Delhi. The transfer letter written by Shri Balbir Singh Goel to the DDA in the name of Smt. Sudha Dayal gives her address as the address of the mother-in-law. The said letter, in original, which bears the extract mentioned above, as receipt of part sale consideration, is clear evidence of the fact that Smt. Shakuntala Devi had paid money to purchase the plot. Smt. Sudha Dayal had authorised her father-in-law Mr. Maheshwar Dayal to deal with the municipal authorities. The evidence is overwhelming and pointing to the fact that Smt. Sudha Dayal always had trust in her mother in law. Thus, Smt. Shakuntala Devi is entitled to seek a declaration that the property actually belongs to her. Going by the letters written by Smt. Sudha Dayal, which are on record, it cannot be held that she did not trust her mother-in-law or that she could not have been in a fiduciary relationship. Since it is stated that there was a legal impediment in the transfer of her brother s property, in the name of anyone except the blood relations, it is not unimaginable for an understanding to be arrived at that though the money is being paid by the mother-in-law, the property would remain in the daughter-in-law s name. The bar under Section 4(1) of the Benami Transaction Act, which is the basis of the application under Order VII Rule 11 CPC would, therefore, not apply in the present case, as it is protected by Section 4 (3)(b) of the Benami Transaction Act. Whether the suit is barred by time limitation? - Held that:- All along when Smt. Sudha Dayal was alive, no dispute had arisen between the parties. She passed away in 1987 but the property had continued to remain in her name. No occasion had arisen for Smt. Shakuntala Devi to seek cancellation of the mutation in the name of Smt. Sudha Dayal as she had passed away and Smt. Shakuntala Devi remained all along under the presumption that the property is for the benefit of the whole family. It was only when the family of Smt. Sudha Dayal, after her demise, challenged this position in 2014, that the cause of action arose for her to assert her rights. Thus, the suit is not barred by limitation - The second suit by Smt. Shakuntala Devi seeks cancellation of the conveyance deed in favour of Mr. Mayank Dayal, which was executed in 2014 itself. This suit is also not barred by limitation. Petitions disposed off.

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• Customs

• 2018 (11) TMI 372
  Application for early hearing - Notification No. 132/2004-Cus., dated 25-11-2004 - whether the assessee is entitled to the benefit of exemption notification - Held that:- Let the matters be listed in February, 2019 - The application stands disposed of.

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• 2018 (11) TMI 371
  Imposition of ADD - import of Polyester Staple Fibre (goods) - maintainability of appeal u/s 9C in case of termination of Anti Dumping enquiry / investigation - Held that:- Hon'ble Delhi High Court in the case of Jindal Poly Film Ltd. Vs. Designated Authority & Anr. [2018 (9) TMI 1294 - DELHI HIGH COURT] has held that an appeal under Section 9C of the Tariff Act would be available even in case of an order of termination of proceedings for imposition of Anti-Dumping duties. There is an efficacious alternative remedy to the Tribunal is available from the impugned order dated 25th January, 2018. Therefore, we have not examined the merits of the petitioner's grievance. The petitioner is at liberty to file an appeal to the Tribunal under Section 9C of the Tariff Act. Petition disposed off.

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• 2018 (11) TMI 370
  Classification of imported goods - Old and Used Pipelines, Pontoons etc. as an integral part of the dredgers - Dredgers were imported earlier - now appellant sought to classify the pontoons under CTH 89051000 (same as dreedgers) - the Revenue says that goods imported under both the said bills of entry dated 07.02.2017 were imported separately, the same cannot be a part of accessories of a complete Dredger already imported with Pipelines, Pontoons and other accessories, and are classifiable under respective head of the goods i.e. 89079000 and 73049000/85015390 of the Customs Tariff Act, 1975 - Benefit of N/N. 12/2012-Cus dated 17.03.2012. The entire case of the Revenue is on the basis that the two consignments i.e. bills of entry No. 8465433 and 8465442 both dated 07.02.2017 were not imported along with three dredgers. Therefore, the same cannot be classified under the head of ‘Dredgers’ and will be classifiable under the respective head of individual parts. Held that:- In the peculiar facts of the present case, there is no difference in the nature of the goods imported with three dredgers and goods imported subsequently under two bills of entry dated 07.02.2017. It is also not disputed that whether the same parts and accessories i.e. pontoons, pipes etc. imported with first consignment and similar items imported in the second consignment were used put together for the activity of dredging for their clients. Both the consignments were imported by the appellant for only one project. Since the dredger and its parts are huge in size and quantity, it is not possible to import the entire consignment at a time. Therefore, the entire goods were imported in piece-meal. However, all the goods presented together would constitute dredger and then only it can be used for the work assigned to the appellant. From the facts of the case, even though the same parts were imported along with three dredgers but the remaining parts which were imported subsequently which are subject matter of this case were used for the same work in the same manner. In this position, some parts of same goods cannot be treated differently. Once the integral part of equipment is imported and other equipment and parts are imported then, even though the goods transported at different time, shall be considered as put together and classification to be decided accordingly. Therefore, merely because of the fact that the goods in question in the present case imported under two bills of entry and subsequent to import of three Dredgers for the purpose of classification of the consignment to be taken together and will merit classification under one Chapter head of Dredger. As regards the heavy reliance placed by the department on Accessories (Condition) Rules, 1963, that only if the parts and accessories are imported along with dredgers then only it is classifiable under the head of dredger. In this regard, we find that there is no dispute that the same importer has imported all the goods for the same purpose i.e. execution of works contract. Therefore, it cannot be said that the second consignment was not imported along with dredgers. From HSN Notes of Chapter 89, it can be seen that the goods imported by the appellant i.e. pontoons, pipes and other accessories are not excluded, therefore, the said goods being integral part of Dredger merit classification as Dredger under CTH 8905. This also clearly shows that the goods in question i.e. pipes, pontoons and other accessories are nothing but part and parcel of Dredger and are correctly classifiable as dredger under 8905. The pontoons imported by the appellant in the present case is in any case not classifiable under CTH 89011090, however, it is clearly classifiable as integral parts of dredgers under CTH 89051000 - all parts of Dredger has to be classified under the head Dredger i.e. 89051000 - the goods of bills of entry No. 8465433 and 8465442 both dated 07.02.2017 are correctly classifiable under heading CTH 89051000 and accordingly eligible to exemption Notification No. 12/2012-Cus dated 17.03.2012. Appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 369
  Valuation - rejection of declared value - enhancement of transaction value on the basis of DRI Alerts - Held that:- For enhancement of value of imported goods, value is to be enhanced on the basis of Valuation Rules and DRI alerts cannot be relied upon - Revenue has not produced any evidence to show that in NIBD data, the value has been declared @ US$ 1.60 per kg for ball bearing imported from China. In fact, the authorities below relied on the assessment of enhancement value and the same cannot be relied to enhance the value of imported goods. The value of imported goods cannot be enhanced, merely, on the basis of letter written by Commissioner of Customs (Import) Mumbai for enhancing the price of the ball bearing - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 368
  Non-speaking order - appealable order or not - Section 17 of the Customs Act - Held that:- The concerned Custom House/Deputy Commissioner of Customs have failed to pass a speaking order, as required under the law prescribed under Section 17 of the Customs Act. Hence, practically there was no appealable order before the Commissioner (Appeals) - the impugned order of Commissioner (Appeals) is a nullity. Matter remanded to the Deputy Commissioner, Custom House, with direction to pass a reasoned order, as required under Section 17 of the Customs Act, within a period of 45 days from the date of receipt of copy of this order - appeal allowed by way of remand.

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• Corporate Laws

• 2018 (11) TMI 373
  Appointment of auditor - extension of the period of interim relief granted by this Appellate Tribunal to continue with the auditing assignments of their existing clients till 31.03.2019 or till a newly constituted Bench takes an appropriate final decision in the matter, whichever is earlier, which is now sought to be extended till 31.03.2020 - Held that:- Clearly an “appropriate Bench” was available from 23.03.2018 or at least from 06.04.2018 onwards when the parties had given their written consent, till 11.07.2018 the date on which the then Presiding Officer demitted office. Thus a window for hearing and disposing of the matter was available for more than three months. The counsel for the parties, particularly, the counsel for the Applicants / Appellants for whom early hearing the appeal was very crucial as they had approached this Appellate Tribunal within a week of the impugned order and interim reliefs were also given in a very short time frame, neither availed this window of three months plus nor even intimated a date to the Registry as stated in the Court on 06.04.2018. Responding to the administrative order dated 18.06.2018 the Applicants / Appellants in an affidavit submitted that the counsel for the parties could not fix an immediate future date of hearing because of the vacation of the Hon’ble Bombay High Court during 07.05.2018 to 02.06.2018 and the vacation of the Hon’ble Supreme Court between 20.05.2018 to 01.07.2018. Therefore, on 19.06.2018 when the matter was taken up 06.08.2018 was sought as the convenient date under the expectation that a new Presiding Officer would be in position soon after the earlier Presiding Officer demitted office. They also pleaded that there were only 29 working days available during 06.04.2018 – 19.06.2018, the vacation period. Thus no merit in the above submissions of the Applicants / Appellants. Even by their own submissions there were 29 working days during the vacation of the Supreme Court / High Court. This Appellate Tribunal has had no vacation at all. Even assuming that the Applicants / Appellants were really in trouble finding a convenient date not coming back to the Court was a serious misbehavior since a date had to be given as per the decision on 06.04.2018 even to complete SAT’s own records including the cause list. In any case no fresh ground has been brought in this Miscellaneous Application. The fact that some of the clients follow the calendar year and others the financial year and the timelines relating to appointment of auditors etc are well known to the Applicants / Appellants. It was on the same grounds that this Appellate Tribunal granted interim relief by order dated 19.01.2018 and 15.02.2018 (supra). Given the fact that the Applicants / Appellants failed to take advantage of the availability of an appropriate Bench of this Appellate Tribunal for more than three months in arguing their appeals, the Miscellaneous Application citing grave urgency has no merit; particularly when the grounds raised in this Miscellaneous Application had already been considered in our January / February orders (supra).

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• Insolvency & Bankruptcy

• 2018 (11) TMI 407
  Corporate Insolvency Resolution Process - outstanding dues - Held that:- Nothing shows that the amount claimed by the Operational Creditor is not due as alleged by the Corporate Debtor in the reply affidavit. In the absence of the Corporate Debtor, as considered the reply affidavit in detail and satisfied that none of the objections are sustainable under law. Come to a conclusion that the outstanding amount as claimed by the Operational Creditor is due and despite issuance of demand notice, the corporate Debtor failed to discharge its debts and therefore, an application of this nature is liable to be admitted provided the Operational Creditor succeeds in proving that the requirement to be meted out as per Section 9(5)(a) to (e) is satisfied. The Applicant has produced affidavit under Section 9(3)(b) of the Code to the effect that there is no notice given by the corporate Debtor relating to a dispute of unpaid operational debt. Instead of producing a copy of the certificate from the financial Institutions in compliance of Section 9(3)(c) Code, the Operational Creditor has produced the copy of statement of accounts. The Operational Creditor succeeds in proving that demand notice has been issued to the Corporate Debtor along with the copy of invoices and the demand notice has been delivered on the Corporate Debtor. Section 9(5)(e) of the Code not meted out because the operational Creditor has not proposed the name of the Insolvency Professional. The application is liable to be admitted

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• FEMA

• 2018 (11) TMI 367
  FERA violation - cases against a number of exporters for presenting forged copies of shipping bills, GR-I Forms, invoices etc. where no shipment had actually taken place - denial of principle of natural justice - violation confirmed on statement taken during investigation - relying upon statements made under the Customs Act for the purpose of the adjudication proceedings under FEMA - Held that:- Principles of natural justice has been duly followed and the appellant have failed to avail of the opportunities given to him. Moreover, his silence over receipt of the relied upon documents afresh in 2008 after the Tribunal s remand order of 16.11.2007 also casts shadow on his intentions except that he appears to be trying to delay the decision. On merits as discussed above, his 3 statements which are voluntarily and the investigations done by the Customs brings out the offence as well as his involvement. A decided in Vinod M. Chitalia vs. UOI [2012 (5) TMI 157 - BOMBAY HIGH COURT] the investigations done under Customs Act, can be used for the purpose of FERA/FEMA also, as the transaction in this case also is the same. The court further held that “in assessing these findings, the Court cannot be oblivious of the fact that clandestine transaction of the nature involved in the present case, are within the peculiar knowledge of persons such as the appellant who are parties to those transactions. The burden which is cast upon the adjudicating authority to establish a violation must be assessed from a robust and common sense perspective. Clandestine violations take place under the cloak of secrecy. To impose a burden of establishing in an adjudication proceeding, every conceivable link of an unlawful transaction would result in a manifest failure of justice and would defeat the underlying purpose of the Act. Appeal dismissed.

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• Service Tax

• 2018 (11) TMI 364
  Penalty u/s 77 and 78 of FA - Revenue is of the view that the service tax and interest having not paid on or before 28.11.2012, for which reason also the penalty under Section 77 and 78 was attracted - Renting of Immovable Property Services - Held that:- A perusal of the records reveals that the appellant had questioned the legality and based only on the directions of the Hon’ble High Court of Kerala, the dispute came to be settled. This being the case, no penalty could be exigible for which reason the penalty is set aside - The interest being mandatory, however, the adjudicating authority has to work out the same - appeal allowed in part.

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• 2018 (11) TMI 363
  Liability of Service Tax - various Maintenance Charges collected by Gujarat Industrial Development Corporation from the industrial plot owners - Held that:- The issue is no longer res-integra as in the light of the judgment of Hon’ble Bombay High Court in the case of Maharashtra Industrial Development Corporation [2018 (2) TMI 289 - CESTAT MUMBAI], there is no taxability on Maintenance Charges collected by State Industrial Development Corporation from the industrial plot owners - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 362
  Classification of services - Residential Complex Service - Construction of Residential Complexes or Works contract service? - period from March 2007 to March 2009 - N/N. 12/2003-ST dated 20.06.2003 - Held that:- The issue is covered by the decision in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST under Section 65(105)(zzzh) ibid, ‘Construction of Complex Service under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services simpliciter. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 361
  CENVAT credit - input services - duty paying documents - denial on the ground that the appellant has not taken cenvat credit against proper documents as per Rule 9(2) of the Cenvat Credit Rules, 2004 - Held that:- As the queries made by the Revenue has been answered by the Estate Office, UT, Chandigarh certifying that they are registered with the Service Tax Department and they have charged service tax from the appellant on the lease rent which have been deposited with the Revenue Department - Considering the said fact that the appellant has paid service tax on lease rent, therefore, the appellant is entitled to avail cenvat credit of the service tax paid on the said service. The appellant has correctly availed cenvat credit of Service Tax paid on lease rent to Estate office, UT, Chandigarh - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 360
  Liability of appellant (service-receiver) to pay service tax - Works Contract - the appellant reimbursed the total amount of service tax to the service provider who paid the entire service tax - Held that:- Although service provider was required to be 50% of the service tax but paid 100%, therefore, in the light of the decision of this Tribunal in the case of Katrina R. Turcottee [2012 (12) TMI 579 - CESTAT AHMEDABAD], wherein it has been held that if service tax has been paid on behalf of the assessee by third party, the same shall be treated that assesssee himself has paid service tax, therefore, as service provider has paid service tax on behalf of the appellant, the same to be deemed as the appellant paid service tax. The appellant has discharged their service tax liability through service provider. Therefore, no liability of service tax arises against the appellant - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 359
  Non-payment of Service Tax - Construction of complex service - allegations were made on the basis of the balance sheet and profit and loss account of the assessee - Held that:- The assessee’s stand that during the period in question they have provided exempted services does not stand considered by the Original Adjudicating Authority. If the assessee has actually provided exempted services no tax can be demanded in respect of the same. Setting aside of the demand on the exempted services is after verification of the entries made by the assessee, by the Adjudicating Authority. Revenue cannot be held to be aggrieved with the said order inasmuch as admittedly exempted services cannot be taxed and such as setting aside of the demand by Commissioner (Appeals) is subject to verification by the Original Authority. Appeal dismissed - decided against Revenue.

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• 2018 (11) TMI 358
  Demand of differential duty - mis-declaration of value of taxable consideration received - Held that:- Even for the sake of argument it is accepted that service tax was recovered by the appellant even in that case if the activity did not attract service tax then such collected service tax can be recovered by invoking provision under Section 73 of Finance Act, 1994 and that present show cause notice did not invoke Section 73A of Finance Act, 1994 and, therefore, the said issue should not interfere in the decision making in the present case - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (11) TMI 357
  Filing of appeal before the tribunal - Reviewing committee of two commissioners - one officer who is in-charge of both the Commissionerates - Held that:- On an identical facts, in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS COROMANDEL FERTILIZERS LTD. [2009 (4) TMI 193 - BOMBAY HIGH COURT], it was held that where one Commissioner holds charge of two Commissionerates and the Commissioner of the two Commissionerates constitutes the Reviewing Committee, then that one Commissioner holding charge of the two Commissionerates would constitute a committee - the question is answered in the affirmative i.e. in favour of the Respondent-Revenue and against the Appellant-Assessee. Correctness of remand of the matter - remand on the ground that there is no discussion in the 01A by the Commissioner (A), about the admission by the authorized signatory about non maintenance of accounts - remand on a ground which was never raised by the Department in the SCN nor before the adjudicating authority nor before Commissioner (A) but was raised for the first time before the Tribunal and further when the said ground is factually incorrect - Held that:- These matters are dismissed as not pressed. Appeal dismissed.

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• 2018 (11) TMI 356
  CENVAT Credit - inputs which were subsequently cleared “as such” to their sister unit without reversal of credit - Rule 3(5) of Cenvat Credit Rules - time limitation - Held that:- The appellant being the public sector undertaking cannot be saddled with any malafide suppression or mis-statement, with intent to evade the payment of duty. In any case the credit required to be reversed by the Appellant was available as credit to their sister units, who could be utilise the same for the payment of duty of excise. Thus leading to a Revenue neutral situation even after the subsequent obtaining of centralised registration, the appellant was paying the entire duty on behalf of the other units. In as much as and admittedly Revenue neutral situation is involved in the present appeal and the appellant is a PSU, the extended period is not invokable - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 355
  Applicability of period of limitation where B-17 bond has been furnished by 100% EOU - goods manufactured and cleared in DTA by use of raw-material procured from EOU as well as from indigenous Vendor against invalidation of Advance Authorization - imports or not - exemption under Serial No. 3 of Notification No. 23/2003-CE dated 31.03.2003 denied - suppression of facts or not Held that:- The procurement of raw material from 100% EOU/Advance License Holder, the manufacture of goods out of such raw material and removal of finished goods in DTA under Exemption Notification 23/03-CE under exemption serial No. 3 were disclosed to the department, therefore, there is absolutely no suppression of fact on the part of the appellant. Moreover, the issue involved is of grave interpretation of Notification. The Supreme Court in the case of Favourite Industry [2012 (4) TMI 65 - SUPREME COURT OF INDIA] extended the benefit of same notification interpreting same issue involved in the present case, therefore, the appellant had bonafide belief that since the raw material procured is produced or manufactured within India, they are entitled for exemption on the DTA clearances; therefore, we agree with this proposition that the appellant had no malafide intention to evade the duty of excise. The contention of Ld. Commissioner that since B17 Bond was executed by the appellant limitation shall not apply is not sustainable - on the issue of limitation particularly in respect of 100% EOU, the demand is not sustainable on limitation as the SCN was issued beyond the period of 1 year - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 354
  Eligibility of the exemption N/N. 23/03-CE dated 31.03.03 - exemption to the clearance of goods by EOU to holders of advance license - denial of exemption on the ground that permission of Development Commissioner was not taken by the appellant for effecting the supplies to holders of advance license - it was also alleged that the values of said supplies made to the holders of advance license exhausted the limit of 50% of the FOB Value of export prescribed under para 6.8 (a) of FTP for making DTA sales - time limitation. Held that:- As per the condition 11 of the Notification no any requirement of permission of Development Commissioner exist, therefore as per the plain reading of the Notification together with the condition, exemption is not based on any permission to be obtained from the Development Commissioner, therefore, the contention of the Revenue that the permission of Development Commissioner was not obtained in order to avail the exemption Notification No. 23/2003-CE is patently incorrect and without any basis. Even for the purpose of 50% sealing of DTA export of FOB value of exports, the issue have been settled that for calculating the 50% not only the physical exports but also the deemed exports should also be considered. Time Limitation - Held that:- Since the appellant have been supplying the goods to advance license holder by intimating to the department and the departmental officer was debiting the advacne license/ advance release order the entire facts was well within the knowledge of the Department, therefore, there is no iota of suppression or mis-declaration on the part of appellant hence, the demand for the extended period issued in the SCN dated 05.05.2009 is clearly time barred. Whether for removal of scrap in DTA for computing the 50% of FOB value of export, whether the export includes deemed exports or otherwise? - Held that:- This issue has been considered time and again in the case of Nandan Synthetics P. Ltd. vs CCE [2014 (6) TMI 128 - CESTAT AHMEDABAD], where it was held that the assessee is eligible to clear goods to Domestic Tariff Area by taking 50% of the deemed exports value as their eligibility. Appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 353
  CENVAT Credit - duty paying documents - credit availed on the basis of such endorsed invoices received from the principal manufacturers for whom they were doing job work - documents were issued by fake/ non-existent firms - it was also alleged that provisions of sub-rule (2) of Rule 7 of the CCR-2002 not complied with - CBEC Circular No. 713/29/2003-CE dated 07.05.2003 - invocation of Extended period of limitation. Held that:- The appellants are job workers who received goods from various principal manufacturers. The appellants are not buyers of the goods as the said goods are purchased by the principal manufacturers and supplied to the appellants for the purpose of processing by endorsing the invoices. The appellant do not come in contact with the suppliers - in the SCN no specific charge or evidence of any suppression mis-declaration etc. on the part of the appellant has been pointed out - the demand of Cenvat Credit is set aside on the ground of limitation. Rebate claim to M/s Dolar Tek - penalty on M/s RTML - appellant has argued that Section 11AC of Central Excise Act, 1944 cannot be invoked to impose penalty as there is no demand raised in the said proceedings against the appellant - Held that:- It is seen that the SCN issued to the appellant in the said case only makes allegation regarding wrong availment of credit without citing any evidence infact the SCN presumes that there are bogus/ fake suppliers and does not substantiated the said allegation by any evidence whatsoever. In these circumstances imposition of penalty under Section 11AC read with Rule 15(2) of the Cenvat Credit Rule is not sustainable - penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 352
  Extended period of limitation - suppression of facts - Claiming SSI exemption - Suppression of turnover - it was alleged that the appellant had suppressed the fact regarding forfeited security amount from the Department. Held that:- There is no doubt that in the present case, the case was made out on the basis of examination of balance sheet. The amount in question was duly reflected in the audited balance sheet and profit and loss account of the Appellant - It is not the allegation of the Department that the appellant were showing different amounts in the balance sheet, ledgers and books of accounts in order to avoid payment of tax - The demand for extended period can be issued and confirmed only in cases where the non-payment of tax is by reason of fraud/ collusion/ willful mis-statement/ suppression of fact/ contravention of any statutory provision with intention of evade tax. The department has to establish with supporting evidence, the existence of factors indicating willful mis-statement / suppression of facts. The non-collection of duty from the customers also supported the bonafide belief. The entire dealings are on records and the payments they have made and received are through banking channel only. Further, the clearance had taken place under cover of Central Excise invoices which were duly entered in the Central Excise records and therefore intention to evade payment of duty is not establish. As the demand is based on the basis of information appearing in the balance sheet, suppression of such information with an intention to evade duty cannot be alleged and therefore, the demand raised by the Department is hit by limitation and as a result of which the extended period cannot be invoked in the facts of the present case - invocation of extended period not justified. The impugned order is set aside on the ground of limitation only without going into further merits of the matter - appeal allowed.

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• 2018 (11) TMI 351
  Recovery of CENVAT Credit availed - Rule 14 of the CCR 2004 - Appellant availed dual benefit i.e., CENVAT Credit of Excise Duty paid on the capital goods as well as depreciation on the Excise Duty paid on the capital goods under Section 32 of the Income Tax Act, 1961 - Held that:- The judgement of the jurisdictional High Court in the case of S.L. Lumax Ltd. [2016 (5) TMI 273 - MADRAS HIGH COURT] prevails, being a binding one, where it was held that The calculation of depreciation in so far as it relates to the duty component on which Modvat Credit had already been claimed, is certainly a tedious process. It does not mean that the appellant can have the licence to commit a mistake. However, since neither the adjudicating authority nor the Commissioner (Appeals) has given any finding on the acceptance or otherwise by the Income Tax authorities of the revised return claimed to have been filed by the appellant, a factual finding is required to be given. Matter is remanded back to the file of the adjudicating authority, the assessee-appellant directed to furnish revised return as well as income tax assessment Order based on its revised return to the satisfaction of the lower authority and the lower authority shall pass a fresh Order - appeal allowed by way of remand.

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• 2018 (11) TMI 350
  Imposition of penalty - duty demand along with interest has been paid by the appellant much before the issuance of SCN - difference in the assessable value adopted by the appellant when cars were cleared from its factory premises and the final sale price adopted by Renault India Pvt. Ltd. to the dealer - Short payment of service tax - no suppression of facts - Held that:- Taking into consideration the fact that the appellants have discharged excess duty during the impugned period and also the fact that the department has quantified the figure on the basis of the exercise undertaken by the appellant themselves for confirming the demand, it is held that the ingredients necessary for imposing penalty under section 11AC is not attracted in the present case. There is nothing to establish that the appellants have suppressed facts with intent to evade payment of duty. The scenario that short-payment of duty had occurred was only because the appellants were arriving the assessable value on the basis of the cars cleared to their Delhi dealers. Penalty set aside - appeal allowed in part.

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• 2018 (11) TMI 349
  Claim of refund - Cenvat credit was reversed based on Audit Objections but no show cause notice was issues - refund rejected on the ground that the assessment has not been challenged by assessee - Section 11B of the Central Excise Act, 1944 - Held that:- In the decision in the case of Aman Medical Products Ltd. [2009 (9) TMI 41 - DELHI HIGH COURT], the Delhi High Court has distinguished the Priya Blue [2004 (9) TMI 105 - SUPREME COURT OF INDIA] and Flock India [2000 (8) TMI 88 - SUPREME COURT OF INDIA] case and hold that if the service tax is paid on bona fide mistake then there is no need to challenge the assessment order - It was clarified in the case of Aman Medical products ltd. that the decision of the Apex Court in the case of Priya Blue Industries is applicable in a situation where there was a lis (contest) between the Department and the assessee at the time of assessment whereas in the instant case the amount was paid without contest. Therefore, the ratio of the decision in the Priya Blue Industries is not applicable in the present case. There is no assessment order passed in the present case. Therefore, the question of challenging the same does not arise. The ratio of the decision in the case of Micromax Informatics Ltd. [2016 (3) TMI 431 - DELHI HIGH COURT], Physical Research Laboratory [2016 (6) TMI 1179 - CESTAT, MUMBAI] are applicable in the present case, where it was held that Under Section 27 of the Act, as it now stands, it is not open to an authority to refuse to consider the application for refund only because no appeal has been filed against the assessment order, if there is one. Appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 348
  Reversal of CENVAT Credit - credit attributable on the value of written off inputs, spares and capital goods in their accounts for the financial year 2009-10 - case of appellant is that inventory was partially written off during the year 2009-10 and the obligation to reverse CENVAT credit in case of partial written off of inputs and capital goods came into existence w.e.f 1.3.2011 and not prior to the said date. Held that:- This provision to reverse the proportionate CENVAT credit on partially write off came into existence from 1.3.2011 whereas the period involved in the present case is 2009-10. The inventory against which the partial write off was made was available with the appellant and there was no physical removal of the goods. In reply to the show-cause notice also, the appellant has given a detailed chart showing that there was partial write off - The amendment w.e.f 1.3.2011 was not retrospective and it was prospective. Credit need not be reversed - appeal allowed - decided in favor of appellant.

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• 2018 (11) TMI 347
  CENVAT Credit - fake invoices - no receipt of goods - reliance placed on the statement of Shri. P. Sivarama Krishnan, Proprietor of the appellant - Held that:- Most of the questions were not required since, after giving the first statement on 14.09.2012, the appellant had not made any attempts to ascertain if there were any doubts and offer clarification. Further, it is not forthcoming as to what prompted this present officer to record the second statement on 19.02.2015; there is no explanation offered anywhere or even by the appellant who got itself subjected to re-examination. The whole scenario appears to be a set up, that too, after a long gap of nearly 29 months, which was not required. There is no merit in the argument of appellant that the Revenue has not relied on the statement of M/s. PE in its Show Cause Notice since, in the statement dated 14.09.2012 the appellant has acknowledged having gone through the statement of M/s. PE, wherein he has also accepted the statement as ‚true by which further probe of the Revenue was blocked. Appeal dismissed - decided against appellant.

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• 2018 (11) TMI 346
  100% EOU - CENVAT Credit - credit denied on the ground that appellant availed benefit of N/N. 22/2003-CE dated 31.3.2003 - Held that:- In the present case, the appellant made a declaration on 30th December 2013, in respect of the dues not paid by him during the period July 2009 to March 2012. As such the service tax, which was required to be paid by the head office from July 2009 to March 2012, was not being paid and was ultimately, by taking the benefit of the said scheme, was declared on 30.12.2013. This leads to the inevitable conclusion that there was suppression or mis-statement by way of non-payment of tax on the part of the assessee’s head office, which was ultimately paid by taking the shelter under the said scheme. The facts clearly leads to the conclusion that tax was not being paid during the relevant period and as such it can be concluded that there was suppression or mis-statement on the part of the assessee, thus leading to non-availability of credit to them. Applicability of Board’s Circular No. 170/5/2013-ST dated 8.8.2013 - Held that:- There is no clarification to the effect that the duty/tax paid under the said scheme would be admissible as a credit. It only clarifies that the Cenvat credit would be governed by the Cenvat credit Rules, 2004 - the said rule deny availing the credit in respect of the tax/duty paid under suppression or mis-statement - the said circular is not applicable to the facts of the case. The appellant is entitled to the credit of Rs. 2,78,19,091/- and the demand along with penalty is set aside - appeal disposed off.

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• 2018 (11) TMI 345
  Valuation - includibility - advertisement cost borne by distributors - Revenue is of the view that the distributors had borne a part of the advertisement cost which otherwise would have been incurred by the respondent - Rule 6 of the Central Excise Valuation Rules, 2000, read with Section 4 of the Central Excise Act, 1944. Held that:- The Clause 2.12 (c ) makes it clear that the distributor ‘shall’ advertise the product of the respondent. There is a further stipulation that the advertisements will have to be approved by the respondent. However, after going through the entire agreement, no clause is found which deals with the expenditure on such advertisement. On the basis of the agreement it cannot be stated that the respondent has obligated the distributors to incur the advertisement expenses. Tribunal had occasioned to consider a similar matter in the case of Maruti Suzuki India Ltd. vs. CCE [2008 (8) TMI 118 - CESTAT NEW DELHI]. In the above case the Tribunal examined whether the dealer’s share of expenses can be considered as additional consideration for sale to be added to the assessable value. The Tribunal was considering, in that case, joint advertisements whose expenses were shared between the manufacturer and the dealer - it was held by the Tribunal that since extent of expenses of dealers is not linked to number of vehicles sold by them & advertisement is not done by all dealers, dealers expenditure on advertisements is not includible. Appeal dismissed - decided against Revenue.

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• 2018 (11) TMI 344
  Demand of duty on the basis of classification list - time limitation - Held that:- The consequential to the classification dispute, the demand raised for the period from September 1991 to July 1993 was set aside, though on the ground of limitation by this Tribunal. Therefore no purpose will be served if any issue of classification is decided in the present appeal - the appeal become infructuous and disposed of without deciding the issue of classification.

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• CST, VAT & Sales Tax

• 2018 (11) TMI 343
  Levy of VAT or service tax - activity is in nature of sale or service - activity of providing passive infrastructure and related operations and maintenance services to various telecommunication operators in India - Held that:- The Special Leave Petition is dismissed.

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• 2018 (11) TMI 342
  Exemption from tax under package Scheme of Incentives - eligibility - prorata turnover or entire turnover of Ratnagiri unit - exemption from whole of tax under Serial No.1 of N/N. VAT/1505/Cr 122/Taxation dated 1.4.2005 issued under Section 8(4) of Mah.VAT, 2003 - Chapter 14 of MVAT Act, 2002 as retrospectively amended/substituted by Mah.Act 22 of 2009 - applicability of Section 93 of MVAT Act, 2002 as amended by Act 22 of 2009 - monetary ceiling limits of exemption before 28.08.2009 being the date of coming into force Maharashtra Act 22 of 2009 Held that:- the appellant availed a fresh eligibility and entitlement certificate on 21st October 2002/10th February 2003 and in the said certificate, the SICOM has not incorporated any condition to the effect that the availment of benefit would be proportionate to the increase in production capacity additional investment. The certificates have been issued after issuance of circular dated 17th January 1998 There is force in the submission of the learned counsel when he submits that Section 93 would come into effect only from 27th August 2009 and the units which have not already exhausted the monetary ceiling limits by the said date would continue to be governed by the amended Section 93 irrespective of the date of the eligibility or entitlement certificate. i.e. before 1st April 2005 or after 1st April 2005 or whether before 27th August 2009 or after 27th August 2009. The appellant who has already exhausted the ceiling limit on 27th August 2009 thus cannot be governed by Section 93(1) since its cumulative quantum benefits are already availed. If the assessment order is perused, it can be seen that the appellant has paid full tax on sales from 1st April 2009 i.e. after exhausting the Cumulative Quantum of Benefits in terms of the eligibility certificate in March 2009. The life of the certificate was till May 2011 but since the ceiling limit was exhausted by March 2009 from April 2009, the appellant unit becomes liable for payment of sales tax. The returns were filed by the appellant for the years 2005 -06 and he was also granted refund of Rs. 5,65,39,588/ on 4th February 2006 and 1st March 2006. However, subsequently, the assessment order had been passed on 22nd March 2013 which raised a demand of tax of Rs. 1,42,36,378/ by partially recalling the refund already granted. This also includes the interest of Rs. 1,49,48,197/levied under Section 30(3) of the MVAT Act, 2002. The dealer though had claimed 100% exemption without applying pro rata and he has not produced any books of accounts nor has he enlisted the goods manufactured by his old and new units and there is no identification as a dealer is liable for pro rata application. In this backdrop, the appellate authority confirmed the order passed by the Assessing Authority and held that the appellant is liable to pay an amount of Rs. 2,91,84,575/ . This order was upheld by the Tribunal on more or less same grounds and the Tribunal concluded that there is no conflilct between Section 8(4) of the Bombay Sales Act and Section 93 of the MVAT Act, 2002 and they are independent provisions, mutually exclusive for units holding entitlement certificate and both operate in separate sphere. The Tribunal held that the argument of the appellant that he is entitled for full exemption is not accepted since Section 93 came to be amended with retrospective effect from 2009 and this amendment has been upheld by the Hon ble High Court as well as the Apex Court and thus, the appellant is entitled to enjoy the benefits on pro rata basis. The amendment inserted by Act No.XXII of 2009 would only govern those units where the Cumulative Quantum of Benefits has not yet lapsed without full utilization and is in the process of being availed. The eligibility availed under Section 93(1) is computed for a particular year and if there is excess availment, then, the benefits can be withdrawn. The orders passed by the Assessing Authority, the Appellate Authority and the Tribunal cannot be sustained and they suffer from a gross illegality. The appellant could not have been made to pay the tax for the sales affected from 1st April 2005 to 27th August 2009 and the assessment order is liable to be quashed and set aside. The assessment order quashed - decided against Revenue.

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• 2018 (11) TMI 341
  Demand of entry tax to be deposited before assessment order - in the earlier round of litigation, HC rejected the challenge to the demand notices - Petitioner seeks clarification of the directions contained in the judgment - Held that:- the High Court, while disposing of the main petition of the present petitioner did not shut down the petitioner’s doors for contesting the assessment. - This is an inbuilt indication in the judgment which would convince us that the High Court required the petitioner, at this stage to deposit the principal sum of tax, but not the penalty; as indicated in the two demand notices dated 13th April 2016. Ordinarily even otherwise, there cannot be demand of penalty even before assessment is made and penalty imposed. Once the petitioner therefore abides by the directions of the Court by filing return-cum-challan and also deposits the principal tax demanded in the two demand notices, the mechanism of assessment being completed in accordance with law, would operate. It goes without saying that once assessment is complete, all statutory rights and remedies would be available to the assessee - if the penalty is confirmed, the Department could assert its right to recover the same. Application disposed off.

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• Indian Laws

• 2018 (11) TMI 366
  Challenge to Arbitral Award - Jurisdiction of Court - award being a foreign award and the juridical seat of arbitration being outside India - law governing the arbitration agreement being Foreign Law - whether the award passed by the Arbitral Tribunal could be challenged in this Court under Section 34 of the Act? Held that:- The arbitration award under Section 31(3) of the Act is required to be a reasoned award unless the parties agree otherwise or is an award that is passed on agreed terms as contemplated under Section 30. It is not in dispute that the impugned award was passed by the Arbitral Tribunal by applying the provisions of the Commercial Arbitration Rules of the American Arbitration Association. This being the case, we find that Mr Chinoy is correct in submitting that the Federal Arbitration Act was ipso jure the law applicable to the arbitration / arbitration proceedings. Rule 52(c) clearly stipulates that the parties to an arbitration shall be deemed to have consented that the judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof. Having consented and submitted to the jurisdiction of U.S. Law, it is not correct in submitting that the arbitration award is governed by the Laws of India. On a plain reading of clause 15, it is clear that the place of arbitration referred to in clause 15 is the seat of arbitration. The parties expressly chose to have the place of arbitration in New York. This being the case, juridical seat of arbitration was New York. In fact, the appellant themselves invoked arbitration and submitted themselves to the jurisdiction of New York. This being the case, it is not correct to hold that the place of arbitration referred to in clause 15 was merely a venue and not a seat of arbitration. Once the juridical seat of arbitration is outside India, and also the law governing the arbitration agreement is Foreign Law, then clearly, Part-I of the Arbitration and Conciliation Act, 1996 is impliedly excluded - the learned Single Judge was absolutely correct in holding that the award passed by the Arbitral Tribunal, in the facts and circumstances of the present case, could not be challenged before this Court, under Section 34 of the Act. Appeal dismissed.

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