TMI Tax Updates - e-Newsletter
December 1, 2017

Case Laws in this Newsletter:

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

Articles

• Type of Audit in GST
• GST UPDATE ON TREATMENT OF JOINT DEVELOPMENT AGREEMENTS - PART III

News

• Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold and Silver Notified

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• GOI Series-III Sovereign Gold Bonds – next Subscription period – December 4-6 2017

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• Controller General of Accounts launches the upgraded version of Central Pension Accounting Office (CPAO) website www.cpao.nic.in.

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• Fifth Bi-monthly Monetary Policy Statement, 2017-18

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• Highlights of the Monthly Account of the Government of India upto October 2017

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• RBI Reference Rate for US $

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Notifications

Customs

• 112/2017 - dated 30-11-2017 - Cus (NT)
  Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg.

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• F. No. 434/13/2015-Cus-IV - G.S.R. 1465(E) - dated 28-11-2017 - Cus (NT)
  Corrigendum – Notification No. 100/2017-Customs (N.T.), dated the 27th October, 2017

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GST - States

• 32/2017-State Tax (Rate) - dated 24-11-2017 - Delhi SGST
  Amendment in Notification No. 12/2017-State Tax (Rate), dated the 30th June, 2017

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• 47/2017–State Tax - dated 23-11-2017 - Delhi SGST
  Delhi Goods and Services Tax (Tenth Amendment) Rules, 2017

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• 30/2017-State Tax (Rate) - dated 23-11-2017 - Delhi SGST
  Amendment in Notification No. 12/2017-State Tax (Rate), dated the 30th June, 2017

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• 34/2017-State Tax - dated 9-11-2017 - Delhi SGST
  Delhi Goods and Services Tax (Seventh Amendment) Rules, 2017

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• 28/2017 - dated 15-11-2017 - Nagaland SGST
  Amendment in the Notification No. 19-2017 dt 03-11-2017 regarding extension of time limit for GST ITC-04.

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• 27/2017 - dated 15-11-2017 - Nagaland SGST
  Extension of time limit in FORM GSTR-6 by an Input Service Distributor.

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• 26/2017 - dated 15-11-2017 - Nagaland SGST
  Extension of time limit in FORM GSTR-5A.

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• 25/2017 - dated 15-11-2017 - Nagaland SGST
  Extension of time limit in FORM GSTR-5 by non-resident taxable.

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• 24/2017 - dated 15-11-2017 - Nagaland SGST
  Amendment in the Notification No. 15-2017 dt 16-10-2017 regarding extension of time limit for GSTR 4.

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• 23/2017 - dated 15-11-2017 - Nagaland SGST
  Time period for furnishing details in FORM GSTR-1 (Turnover 1.5 crore or more).

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• 22/2017 - dated 15-11-2017 - Nagaland SGST
  Last date for filing return in FORM GSTR-3B For Jan, Feb, March '18.

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• 21/2017 - dated 3-11-2017 - Nagaland SGST
  Extension of time for declaration in FORM GST ITC-01(Amdnmdnet in NO.CT/LEG/GST-NT/12/17-(Notification-18/2017) dated 16th Oct,2017).

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• 20/2017 - dated 3-11-2017 - Nagaland SGST
  Extension of time limit for GSTR 2 & 3 for July (Amendment in NO.CT/LEG/GST-NT/12/17-(Notification-12/2017) dated 11th Sept,2017).

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• 19/2017 - dated 3-11-2017 - Nagaland SGST
  Extension of time limit for FORM GST ITC-04.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/061 - dated 2-11-2017 - Nagaland SGST
  Evidence required by supplier to claim refund.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/055 - dated 26-10-2017 - Nagaland SGST
  Waiving out of late fee for delayed filing of FORM GSTR-3B for Aug & Sep, 2017.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/054 - dated 26-10-2017 - Nagaland SGST
  Prescribe State Tax rate of 0.05% on Intra-State supply.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/053 - dated 26-10-2017 - Nagaland SGST
  GST State tax rate of 2.5 per cent on intra-State supplies of goods, on Food preparations put up in unit containers.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/052 - dated 26-10-2017 - Nagaland SGST
  Supplies as deemed exports under section 147.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/049 - dated 26-10-2017 - Nagaland SGST
  Composotion Scheme Threshold

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/048 - dated 26-10-2017 - Nagaland SGST
  Cross-Empowerment of State Tax officers for processing and grant of refund

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/047 - dated 26-10-2017 - Nagaland SGST
  Amendment in Notification No. F.NO.FIN/REV3/GST/1/08 (Pt-1)/481 dated the 27th September, 2017 - relating to Handicraft goods.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/046 - dated 26-10-2017 - Nagaland SGST
  Exempt from Reverse charge (Amendment in Notification F.NO.FIN/REV-3/GST/I/08 (Pt-I) “K”,30th June,2017).

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/045 - dated 26-10-2017 - Nagaland SGST
  Prescribed State Tax rate on the leasing of motor vehicles.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/044 - dated 26-10-2017 - Nagaland SGST
  Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) “G” dated the 30th June, 2017 - Reverse Charge on supply on goods.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/041 - dated 26-10-2017 - Nagaland SGST
  Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) “P” dated the 30th June, 2017 - Services on which tax payable under RCM.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/039 - dated 26-10-2017 - Nagaland SGST
  Amendment in Rate of Supply of Services (Amendment in Notification No F.NO.FIN/REV3/GST/1/(Pt-1) “N”,30th June,2017)

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/038 - dated 26-10-2017 - Nagaland SGST
  Notification on extension of facility of LUT to all exporters.

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• F.NO.FIN/TAX/MISC/1/98 (Pt) - dated 23-10-2017 - Nagaland SGST
  Constitution of Screening commitee on Anti-profitering under GST.

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• 18/2017 - dated 16-10-2017 - Nagaland SGST
  Extension of time for declaration in FORM GST ITC-01

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• 17/2017 - dated 16-10-2017 - Nagaland SGST
  Extension of time for furnishing return by ISD in FORM GSTR-6.

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• 16/2017 - dated 16-10-2017 - Nagaland SGST
  Extension of time for furnishing return in FORM GSTR-5A

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• 15/2017 - dated 16-10-2017 - Nagaland SGST
  Extension of time for furnishing return in FORM GSTR-4.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/481 - dated 27-9-2017 - Nagaland SGST
  Notification relating to Handicraft goods.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/479 - dated 27-9-2017 - Nagaland SGST
  Exemption on Intra State Supply on Heavy Water Nuclear Fuel.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/478 - dated 27-9-2017 - Nagaland SGST
  Amendments in the Notification No. F.NO.FIN/REV-3/GST/1/08 (Pt-1) “O” dated the 30th June, 2017 - Exemption on Supply of services on FIFA WC U17.

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• F.NO.FIN/REV-3/GST/1/08 (Pt-1)/475 - dated 27-9-2017 - Nagaland SGST
  Amendment on Supply on goods where no refund of unutilized ITC shall be allowed, In the notification of the Government of Nagaland, Finance Department (Revenue Branch), F.NO.FIN/REV-3/GST/1/08 (Pt-1) “H” dated the 30th June, 2017.

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Circulars / Instructions / Orders

GST - States

• 08/2017-GST - dated 3-11-2017
  Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03
• FIN/REV-3/GST/1/08 (Pt.1) - dated 31-10-2017
  Addition to earlier Rules/Amendment to Rules, Notifications and Circular relating to Nagaland GST Act, 2017.
• 09/2017-GST - dated 31-10-2017
  Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03.
• 10/2017-GST - dated 31-10-2017
  Extension of time limit for submitting application in FORM GST REG-26
• 07/2017-GST - dated 26-10-2017
  Nodal Officer for TDS

Customs

• 42 /2017 - dated 28-11-2017
  Subject: Drawing of samples for the purpose of grant of drawback -reg
• 41 /2017 - dated 28-11-2017
  Subject: Applicability of IGST / GST on goods transferred / sold while being deposited in a warehouse. -reg.
• 150/2017 - dated 27-11-2017
  SUB : Implementing Electronic Sealing for containers by exporters under selfsealing procedure by circular 26/2017-Customs dated 01.07.2017, 36/2017 dated 28.08.2017, 37/2017 dated 20.09.2017 and 41/2017 dated 30.10.2017 –reg.
• 40/2017 - dated 27-11-2017
  Approval as the custodian of imported goods under Section 45 (1) of the Customs Act, 1962 - Central Warehousing Corporation, Panambur, Mangaluru granted as the CCSP/custodian of the imported goods

Highlights / Catch Notes

Income Tax

• Considering the assessee’s failure to maintain the fool-proof records on the identity of the donors, we are of the opinion that the principle of adhocism adopted by CIT(A) is the only method available in this case for taxing donations as “Anonymous Donations”. - AT
  Visit to Get Source

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• Assessment of Firm as AOP - in terms of section 167 the share of the members of AOP are indeterminate - In such case the whole of the income of such an AOP is to be taxed at the maximum marginal rate, as being an AOP with indeterminate share - HC
  Visit to Get Source

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• Interest u/s.244A - AO directed to re-compute the amount of interest u/s. 244A by first adjusting the amount of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component. - AT
  Visit to Get Source

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• Addition u/s 68 - The assessee has failed in establishing the creditworthiness of the donors, occasion for making the gifts and why and donors who were strangers and not men of means gifted such huge amounts to the assessee HUF out of love and affection - HC
  Visit to Get Source

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Customs

• Drawing of samples for the purpose of grant of drawback - Wherever export consignments are selected for assessment or examination, the officer of Customs not below the rank of Assistant or Deputy Commissioner of Customs would determine the need to draw sample on merits of each case.
  Visit to Get Source

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• Import of coal - coking coal or not - coal imported by appellants under 19 Bills of Entry is eligible for the benefit of exemption notification under 21/2002-Cus - AT
  Visit to Get Source

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Case Laws:

• Income Tax

• 2017 (11) TMI 1610
  Addition u/s 68 - failure to discharge the burden of explaining the gift - Held that:- Referring to Assessing authority as well as the impugned order of the Tribunal and we find that there is no illegality in coming to the conclusion that the present case is fully covered within the parameter of Section 68 of the Act. The assessee has failed in establishing the creditworthiness of the donors, occasion for making the gifts and why and donors who were strangers and not men of means gifted such huge amounts to the assessee HUF out of love and affection. - Decided against assessee.

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• 2017 (11) TMI 1609
  Extension of stay - proof of financial hardship or irreparable injury so as to grant any further extension of stay - Held that:- The demand is about ₹ 129,00,00,000/- (Rupees one hundred and twenty nine crore only). It is an admitted fact that a sum of ₹ 70,00,00,000/- (Rupees seventy crore only) is deposited by the petitioner which amounts to about 55% of the outstanding demand. In order to further protect the interest of the revenue and keeping in mind the fact that the appeal is slated for final arguments before the Appellate Tribunal and balancing the equities on both sides, the petitioner is directed to retain a balance of another 20% in Account No.0037238007 maintained with CITI Bank, M.G.Road Branch, Bengaluru-560 001. The said balance is rounded off to ₹ 26,00,00,000/- (Rupees twenty six crore only) shall be maintained pending disposal of the appeal by the Appellate Tribunal. It is directed that the respondent shall not take further steps pursuant to order dated 15/11/2017 (Annexure-H) and notice dated 20/11/2017 till the disposal of the appeal by the Appellate Tribunal.-

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• 2017 (11) TMI 1608
  Jurisdiction for initiating prosecution proceedings u/s 276C(1) - Wilful attempt to evade tax, etc. - unaccounted cash seized during search u/s 132 - concealment of income and filing of false statements in the return of income - small tax evaders versus large tax evaders - Held that:- This Court is of the considered view that the present writ petition is premature. Firstly, the impugned proceedings is only a show cause notice and therefore, the petitioner has to respond to the same and it cannot be questioned in a writ petition. The sheet anchor of the submissions of the learned counsel for the petitioner is by referring to Section 279(1) of the Act. The Proviso under Section 279(1) of the Act enumerates officers, who may issue such directions or instructions to the authorities, who have been enumerated under Section 279(1) of the Act. Therefore, to say that the respondent has no jurisdiction even to issue the show cause notice is a plea, which is stated to be rejected. - Decided against assessee.

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• 2017 (11) TMI 1607
  Denial of depreciation on plant and machinery - asset was to be used for trial production business of manufacture of 'Clinker' - period of time asset being used - Held that:- In facts of the present case, we find that the issue is no longer res integra in view of the decision of Industrial Solvents & Chemicals (P) Ltd. (1978 (6) TMI 20 - BOMBAY High Court). We have no hesitation in holding that the Order of the Tribunal cannot be faulted inasmuch as the jurisdictional High Court has already held that once plant commences operation and even if product is substantial and not marketable, the business can said to have been set up. Mere breakdown of machinery or technical snags that may have developed after the trial run which had interrupted the continuation of further production for a period of time cannot be held ground to deprive the assessee of the benefit of depreciation claimed - Decided in favour of assessee.

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• 2017 (11) TMI 1606
  Condonation of delay in filing the revised return of income u/s 119 - claim of the petitioner both under Sections 80HHC and 80-IA - Held that:- The condonation of delay is a discretionary matter and a fair exercise of discretion cannot be interferred with in exercise of the extra jurisdiction under Article 226 of the Constitution of India. This Court does not find anything arbitrary in the impugned order passed by Respondent No. 1. Moreover, admittedly, the claim of the petitioner both under Sections 80HHC and 80-IA of the Act, is an issue which is highly debatable. As is recorded in the impugned order also, the matter is pending before the larger Bench of the Supreme Court in the case of Asstt. CIT v. Micro Labs Ltd. [2015 (12) TMI 708 - SUPREME COURT]. Thus it cannot be said to be a bonafide omission in the original return to make a claim of the deduction clearly admissible to the assessee. The issue being a debatable one, the revised return for that purpose could not have been filed by the assessee and Respondent No.1 cannot be faulted in rejecting such condonation of delay application. The petitioner-assessee cannot seek the condonation of delay in filing the revised return for such purposes as a matter of right even though such claim is not clearly admissible in law on merits. The use of discretion by the Authority concerned, in such circumstances, rejecting the very application seeking the condonation of delay, cannot be said to be wrong in any manner.

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• 2017 (11) TMI 1605
  Status of the assessee - Partnership or AOP - no agreement between the persons to constitute a partnership firm as required under section 4 of the Partnership Act - Held that:- The status of an unregistered partnership cannot be bestowed on the appellant- assessee. The order of the authorities under the Act, i.e., Assessing Officer, Deputy Commissioner of Income-tax (Appeals) as well as the Tribunal holding that the applicant-assessee is an AOP and not unregistered firm is justified. - Decided in favour of the respondent-Revenue Shares of the persons carrying on the business indefinite and unspecified - Held that:- We note that the order of the Tribunal dated March 7, 1993 specifically refers to the statement made by Shri Satish Dongare and Shri Anand Meshram members of the AOP who have specifically denied any knowledge of their share in the applicant-assessee, i.e., AOP. In terms of section 167 of the Act as in force during the subject assessment year where individual shares of the members of an AOP in the whole or in part is indeterminate/unknown then tax would be charged on such AOP at the maximum marginal rate. In the present case, as is evident from the order of the Tribunal dated March 7, 1993, it is clear that one of its members namely Mr. Satish Dongare disputes he is a partner and states his father is one and even does not indicate his share. The other member, viz., Mr. Anand Bajirao Meshram clearly states that he not aware of his share in the firm. Thus, in terms of section 167 the share of the members of AOP are indeterminate at least in part due to the unequivocal statement of Mr. Anand Meshram and Mr. Satish Dongare. In such case the whole of the income of such an AOP is to be taxed at the maximum marginal rate, as being an AOP with indeterminate share. - Decided in favour of revenue

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• 2017 (11) TMI 1604
  Reopening of assessment - computing deductions u/s 80IC - Held that:- The issue of computing deduction u/s 80IC qua inclusion of other income such as rent, surplus on sale of assets, sale of scraps , insurance claims, provisions no longer required etc to the tune of ₹ 9,56,18,376/- was subject matter of appeal before learned CIT(A) and is hit by the second proviso to Section 147 which could not have been re-opened by the AO u/s 147 as the assessment order stood merged with the appellate order of learned CIT(A), but to say that learned CIT(A) is seized of the matter w.r.t. determining the controversy as to the inclusion of export benefits to the tune of ₹ 2,36,32,653/- for computing eligible profits derived from the industrial undertaking for computing deduction u/s 80IC is fallacious and to contend that the assessment order originally framed u/s 143(3) cannot be now subject to re-assessment proceedings u/s 147 despite the income having escaped assessment in light of Hon‟ble Supreme Court decision in the case of Liberty India Limited (2009 (8) TMI 63 - SUPREME COURT) is not acceptable and is hereby rejected as learned CIT(A) was never seized of this controversy. Thus, we uphold re-assessment order passed by the AO u/s 147 - Decided in favour of revenue.

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• 2017 (11) TMI 1603
  Penalty u/s. 271(1)(c) - allowability of expenses on year to year basis or in the year of completion of project - assessee has claimed expenses and consequently business losses to be carried forward in the previous year relevant to the assessment year while the project was not completed in the previous year under consideration and since the assessee is following project completion method, these expenses could not have been claimed in the year under consideration - Held that:- It is possible to form a bonafide belief on the date of filing return of income i.e. on 31.10.2005 that the expenses could be allowed from year to year basis. The Learned AR has also submitted that the assessee had no other income even till today and therefore there was no advantage to the assessee in claiming expenses and declare losses from year to year as the losses could be carried forward only for a limited number of years. In such a situation claiming the expenses in the year of completion would have been advantages to the assessee as in that case all the expenses could have been allowed. Considering all explanation of the assessee that the claim had been made under bonafide belief has to be accepted and it will not be appropriate to levy penalty under section 271(1)(c) in this case. Accordingly we set aside the order of CIT(A) and delete the penalty levied. SEE Chaitra Reality Ltd. v. DCIT [2011 (3) TMI 1746 - ITAT MUMBAI] - Decided in favour of assessee.

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• 2017 (11) TMI 1602
  Unexplained expenditure - accommodation bills for introducing unaccounted goods into the accounted streams - CIT-A came to conclusion that disallowance @25% of the alleged bogus purchases is warranted but as differential between GP ratio of the year under consideration with GP ratio of AY 2012-13 which was the highest GP ratio in the last 5 years led learned CIT(A) to uphold additions to the tune of 100% of alleged bogus purchases - Held that:- We have discussed anomaly in working of learned CIT(A) as he undertook cherry picking by choosing highest GP ration in all these five years as well chose for subsequent years without giving any basis/justification for such choice. We have observed that the tribunal in assessee’s own case after considering entire factual matrix of the case has upheld addition to the tune of 12.50% of the alleged bogus purchases for AY 2009-10 Respectfully following the afore-stated decision of the tribunal in assessee’s own case for AY 2009-10, disallowance in the instant appeal is restricted to 12.5% of the bogus purchases - Decided partly in favour of assessee.

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• 2017 (11) TMI 1601
  Ingenuity of loss - reimbursement of the cost of short supply replenished to the buyer as deduction under the head ‘Profits and Gains of the business' - Held that:- On appreciation of the evidences submitted by the assessee, such as the settlement deed, the high seas sale details, the income tax return of the buyer and debit notes, it is apparent that the adequate evidences to justify the loss incurred by the buyer, which was partly compensated by the assessee and claimed as a business loss cannot be disallowed. Furthermore, AO also verified that the buyer has accounted for this loss may be towards the reduction in the cost of the purchase of the fixed assets by the buyer, but that does not make any difference regarding the claim of the assessee. As the above loss has been incurred by the assessee during the course of the business and incurred during the year, hence, the assessee is entitled to get the deduction of the same. Regarding the genuineness of the claim, it is supported by the settlement deed and confirmation of the buyer who received the above sum by issuing the debit note. The ld CIT (A) has considered all the reasons given by the ld Assessing Officer for disallowance and after that has allowed the claim of the assessee. The ld Departmental Representative also could not point out any error in the order of the ld CIT (A). In view of this we confirm the finding of the ld CIT(A) in deleting the disallowance of ₹ 4.85 crores on account of reimbursement of the cost of short supply replenished to the buyer as deduction under the head ‘Profits and Gains‖ of the business. In the result, the solitary ground of appeal of the revenue is dismissed. Disallowance u/s 14A - Held that:- Admittedly, the assessee has earned exempt income of ₹ 55204/- as per page No. 7 of the assessment order. The above issue is squarely covered in favour of the assessee in case of Joint Investments Pvt. Ltd vs. CIT [2015 (3) TMI 155 - DELHI HIGH COURT] wherein, in para No. 9 Hon'ble High Court has held that disallowance cannot swallow the entire exempt income. Therefore, the disallowance u/s 14A confirmed by the ld CIT (A) of ₹ 1545259/- is restricted up to ₹ 55204/-.

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• 2017 (11) TMI 1600
  Disallowance of 25% of depreciation on upfront fees - Held that:- As decided in assessee's own case for A.Y. 2007-08 that CIT(A) has rightly held that the payment of upfront fee of ₹ 150 crores paid by assessee to “AAI” has created capital assets in the form of license to develop and modernize the Airport and collect charges as per terms and conditions as prescribed under the agreement entered into which is an “intangible assets” to the assessee. Thus assessee is entitled for depreciation at the rate of 25% on the said payment of upfront fee. Nature of expenses - expenses incurred towards realignment of nallah's in forecourt of proposed integrated Terminal, reallocation of CPWD staff and other operational expenditure - revenue or capital - Held that:- As decided in case of the assessee for A.Ys. 2009-10, 2010-11 and 2011-12 nothing has been discussed about the nature of the expenses, position of crystallisation of these expenses, availability of particulars of the payees, etc. It has been observed in the order by Ld. CIT(A) that whenever payments are actually made against these provisions, TDS is deducted as was stated by the Ld. Counsel. But, what are the precise facts in this regard has not been discussed in the order. No details are available or discussed by the Ld.CIT(A) regarding various aspects, e.g. when these expenses were actually incurred, in whose name these are finally credited, who are the actual payees, when the payments were made actually and whether the TDS was deducted at the time of making of payments or not? Nothing has been brought out on record to ensure that finally there was no revenue leakage and full compliance of the TDS provisions was made ultimately. We find that order of Ld. CIT(A) is devoid of any factual narration and, therefore, we find it appropriate to send this issue back to the file of the CIT(A) for complete factual analysis. Disallowance as retrenchment compensation paid to AAI - Held that:- Following the order of his predecessor in the assessee’s own case for A.Ys. 2010-11 and 2011-12 wherein noted that the said provision is applicable only if the assessee has incurred any expenditure in any previous year by way of payment of any sum to a employee in connection with voluntary retirement. In this case, we noted that the assessee has not incurred any expenditure by way of payment made to employees but the payment has been made by the assessee to Airports Authority of India in accordance with clause 6.14 of the OMDA on account of retrenchment compensation to be paid by Airports Authority of India to its employees. It is not an amount which the assessee is paying to its employees on their retrenchment. Therefore, the provisions of section 35DDA will not apply. It is not denied that the expenditure incurred by the assessee is revenue expenditure. Nature of receipt - treatment of development - revenue or capital receipt - Held that:- It is not denied that the development fees so collected are utilized only for the purpose of aeronautical assets as per the provisions of section 22A of the Airports Authority of India Act. In view of this fact, we do not find any illegality or infirmity in the order of the CIT(A), which warrant our interference, while holding that the development fees so received by the assessee is a capital receipt. Rate of depreciation allowed on taxiways, aprons, parking bays and bridges @15% instead of 10% - Held that:- Tribunal we have allowed the assessee depreciation @15% for A.Ys. 2009-10, 2010-11 and 2011-12 also. Facts and circumstances being similar and respectfully following the order of the Tribunal in the assessee’s own case, which has been relied upon by the CIT(A), we see no reason to interfere with the impugned order. We uphold the same and dismiss the ground raised by the Revenue.

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• 2017 (11) TMI 1599
  Disallowance of debentures transferred in contravention of the directions of the Hon’ble High Court of Delhi - shares have been issued for consideration other than cash being OCDs - assets so transferred in the scheme of demerger - Held that:- As admitted by both the parties that the source of investment of ₹ 200 crores as OCDs is not the subject matter of examination u/s 68 of the Incometax Act, 1961 in the hands of the assessee company. The source has been explained being money received by CHPL from the sale of shares held by it to Indian Hotels Company Limited. The company has also paid the capital gains tax on the said transaction. The Department had not even challenged this issue and, therefore, the only issue before us is whether ₹ 128 crores received by the assessee company as OCDs between 01.04.2009 to 25.05.2010 is the income of the assessee u/s 2(24) of the Act. From the above discussion, we feel that it is merely a case where ₹ 128 crores of OCDs having been received by the assessee company against issuance of shares in the ratio of 1:6 to the owner of the said OCDs. It is thus a case of issuance of shares for consideration other than cash. We fail to understand how the consideration received can be said to be an income of the assessee company. The company has received debentures against which it has issued shares at a premium. As further observe that in AY 2009-10, there was no requirement in law even in section 56 or any other section, which mandates that the company would not issue shares at other than the fair market value. Hence a company was free to issue shares at a premium or at par based on the decision taken by its Board. Therefore, it is a simple case where shares have been issued for consideration other than cash being OCDs and this is a transaction clearly on capital account. The Ld. CIT(A) has extensively dealt with this issue and his findings of facts are accurate and correct. We find no reason to interfere with the order of Ld. CIT(A) and the addition of ₹ 200 crores made by the Assessing Officer has rightly been deleted by the ld. CIT(A) vide impugned order. - Decided against revenue

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• 2017 (11) TMI 1598
  Disallowing the bogus purchases u/s. 69C - profit estimation - Held that:- From the record we found that the average Gross Profit for the last 5 years is 3.65% and average Gross Profit of subsequent 3 years from A.Y, 2012-13 to 2014-15 (all assessed u/s. 143(3) of the Act) is 5.87%, whereas the current Gross rate Profit offered by the assessee in the year under consideration is 8.15%. We found that GP rate in the A.Y.2012-13 was 5.39% and the assessment was framed u/s.143(3). In the A.Y.2013-14 it is 6.10% and in 2014-15 6.11% when the assessment was framed u/s.143(3). Thus, the average GP rate works out to 5.87% against which during the year under consideration assessee has declared GP rate of 8.15% which is much better than the GP rate declared in other years and for which assessment was framed under scrutiny assessment u/s.143(3). Keeping in view totality of facts and circumstances of the case, we restrict the addition to the extent of 2% of the GP in respect of the alleged bogus purchases. We direct accordingly.

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• 2017 (11) TMI 1597
  Interest u/s.244A while granting the refund - Held that:- Since the statute itself has already prescribed a particular method of adjustment in explanation to section 140A(1), then justice, fairness, equity and good conscience demands that same method should be followed while making adjustment for refund of taxes, especially when no contrary provision has been provided. Under these circumstances and aforesaid discussion, we find that the judicial proprietary demands that order of the Tribunal of earlier years must be followed and therefore we direct the AO to re-compute the amount of interest u/s. 244A by first adjusting the amount of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component. Thus, with these directions, the appeal of the assessee is allowed.

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• 2017 (11) TMI 1596
  Reopening of assessment - reopening of relying on the information sent by the search wing and without receipt of any seized material relevant to the assessee - Held that:- We hold that at the stage of issue of notice for reopening, the only question which is to be considered is whether there was relevant material on which a reasonable person could, have formed a requisite belief. However, whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction. Since in the present case, the AO had the tangible material from the Investigation Wing in which it was categorically mentioned that the assessee had paid ‘on money’of ₹ 1 crore to Hiranandani Group and moreover no scrutiny assessment was carried out prior to reopening inititated by the AO. Therefore, while relying upon the proposition laid down by the Hon’ble Supreme Court in the case of ACIT vrs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007 (5) TMI 197 - SUPREME Court), we dismiss this ground raised by the assessee and uphold the order of Ld. CIT(A). Additions made as relied upon the statement of the directors of Hiranandani Group admitting the receipt of cash money from the assessee - denial of natural justice - Held that:- Not providing copies of the statement of the Director of the Hiranandani Group to the assessee before making additions and not providing opportunity of cross examination to the assessee itself amounts to infringement of ‘legal rights’ of the assessee which caused prejudice to the rights in this context. In view the interest of justice, we set aside the order of Ld. CIT(A) and remit the matter back to the file of AO with a direction to provide copies of statement of directors/promoters of Hiranandani Group and to provide opportunity of cross examination to the assessee and thereafter pass afresh order assessment. Appeal filed by the assessee are allowed for statistical purposes.

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• 2017 (11) TMI 1595
  Disallowance u/s 14A - Held that:- We direct the AO to disallow 2% of the dividend income u/s 14A of the Act Disallowance of the claim of the appellant u/s 80IA in respect of its power generation plant - as per AO claim of the assessee was wrong as being not as per the provisions of the Act - whether the assessee is entitled to captive consumption of power or not? - Held that:- In the case of Tamil Nadu Petro Products Ltd [2010 (11) TMI 645 - MADRAS HIGH COURT] it is held the said contention can have no application to the case on hand. Inasmuch as we dealt with the issue in the light of section 80-IA and in particular sub-clause (iv) of the said section which provides for the benefit even in respect of electricity generation plant established by the assessee and the income derived from such enterprise of the assessee, it will have to be held that the assessee fully complied with the requirements prescribed under section 80-IA in order to avail the benefits provided therein. Therefore, the contention based on the interpretation of the expression 'derived from' can have no application to the case where the provisions of section 80-IA get attracted.- Decided in favour of the assessee Disallowance u/s 14A - Held that:- In this case, we find that the ld.CIT(A) partly allowed the ground of the assessee by deleting the addition of ₹ 40,84,000/- on account of interest under rule 8D(2)(ii) by considering the facts that the assessee‟s own funds in the business of assessee were far more than the investments from which tax free dividend income was earned to the tune of ₹ 422.79 crores following the decision in the case of HDFC Bank Ltd. V. DCIT (2016 (3) TMI 755 - BOMBAY HIGH COURT) and also the decision in assessee's own case for the assessment years 2008-09 and 2009-10. In our considered view, the issue is squarely covered by the ratio in favour of the assessee Provision for slow and non moving stock disallowed - method of accounting or valuation of stock - unascertainable expenditure allowance - Held that:- The assessee itself has duly disclosed all the facts qua stock written off during the year in its audited accounts. Moreover, the stock register was prepared and maintained as per the Accounting Standard followed by the assessee regularly which also duly disclosed all stock in the accounts. Since the assessee is engaged in the manufacturing of chemical, pesticides and powder which are easily evaporable or are susceptible to damage and cannot be used in the finished goods. Besides, the ld. AR submitted that the assessee has been following the accounting method regularly which is also duly disclosed in the audited financial statements. Since, the assessee is engaged in the manufacturing of chemicals and pesticides using inputs in the form of chemical powder and liquid which are evaporative and damageable. After considering the submissions of the rival parties and considering the facts of case, we do not find any infirmity in the order of ld.CIT(A). The case laws relied by the revenue have been examined and found to be not applicable to the present facts. Accordingly, we affirm his order and reject the ground taken by the Revenue. Treatment to expenditure on account of implementing “Project Disha" - revenue or capital expenditure - Held that:- The expenditure incurred by the assessee to an external consultant Ernst and Young as legal and professional charges for “DISHA” cannot be treated as capital expenditure as the same was incurred to bring overall efficiency and improvement in the existing business of the assessee by undertaking special campaign in the phased manner during the year. In our opinion, the expenditure incurred by the assessee is of purely revenue in nature and cannot be treated as capital nature as has been done by the AO. - Decided against revenue

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• 2017 (11) TMI 1594
  Addition u/s 68 - unexplained cash credit - Held that:- The contentions of the Ld. DR that the statement of the directors of the assessee should have been taken into consideration by the CIT(A) and the addition of the undisclosed income was justified by the assessee. This contention can not have a support unless and until the supportive documents were taken into congnizance by the Assessing Officer. The Assessing Officer has not taken any efforts to verify the statements of the Directors from the record. The CIT(A) has rightly deleted the additions by taking into consideration all the aspects of statements as well as the documents produced by the Assessee before the Assessing Officer. - Decided in favour of assessee.

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• 2017 (11) TMI 1593
  Reducing the cost of acquisition - Held that:- CIT (A) has noted that the fact that the copy of registry which the Assessing Officer claimed to reflect the cost per acre at ₹ 50,000/- per acre was never provided to the assessee for his comments and, therefore, the Assessing Officer’s reliance on the same was not justified. As placing reliance on the judgment Jagat Mohan Kapur (1994 (4) TMI 50 - CALCUTTA High Court) as well as Heera Lal Lokchandani vs ITO (2006 (11) TMI 241 - ITAT CUTTACK) for holding that the cost inflation index cannot be applied in the reverse direction. As DR in the course of proceedings before us, could not point out any judgment to the contrary favouring the revenue in this regard. Therefore, in such a circumstance, we find no reason to interfere with the order of the Ld. CIT (A) on this issue and we uphold the same. Income from sale of land - nature of land - Held that:- As undisputed that the land existed in the name of the assessee and the copies of Jambandi were also filed as a proof of the agricultural land being registered in the name of the assessee and, therefore, the ld. CIT (A) was correct in negating the claim of the Assessing Officer that the income of ₹ 1,06,62,500/- had to be treated as income from capital gains. Deduction u/s 54B - Held that:- As per revised agreement dated 20.03.2008, the date of possession was shifted to 3.5.2009. He has also noted that the land was finally registered on 28.05.2009 in the name of the assessee and the payments till then were kept by the assessee in the capital gain account scheme. Ld. CIT(A) has also noted that the agreement was made first and the possession was transferred as per the terms of the agreement and that the Assessing Officer had not been able to point out anything adverse or defective in that agreement. The Ld. CIT(A) had also referred to the provisions of section 53A of the Transfer of Property Act and provisions of section 2(47)(v) applicable to the assessment order in question and has held that the assessee satisfied all the conditions for claiming of deduction u/s 54B of the Act. This factual finding of the Ld. CIT (A) could not be negated by the Ld. Sr. DR during the course of proceedings before us. The department has not been able to point out any factual or legal defect in the action of the Ld. CIT (A) in directing the Assessing Officer to allow claim of deduction u/s 54B. In the circumstances, we find no reason to interfere with the order of the Ld. CIT (A) on this issue also - Revenue appeal dismised.

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• 2017 (11) TMI 1592
  TP adjustment - selection of comparable - Held that:- Assessee is into rendering ITES services, thus companies functionally dissimlar with that of assessee need to be deselected from final list of comparable.

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• 2017 (11) TMI 1591
  TPA - comparable selection criteria - Held that:- UT Starcom Inc’s India Branch [assessee] is the Indian Branch of UTS US and is into providing software development services to UTS US and IT enabled customer support services to the group customers in the Asia-Pacific region, thus companies functionally dissimilar with that of assessee need to be deselection from final list.

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• 2017 (11) TMI 1590
  Claim for deduction under section 80-IB - assessee company is engaged in the business of developing and building housing projects - date of commencement of the project - dispute regarding the built up area - Held that:- FAA has recorded a finding that no development activity was carried on by the assessee prior to the appointed date, that is, 01/10/1998. A perusal of the assessment order shows that the AO has treated the date of approval of the project by the Noida authority, i.e., 03/09/1998 as the date of commencement of project. However, this reasoning of the AO seems illogical as grant of approval does not necessarily mean commencement of development and building activities. The AO has not demonstrated with concrete evidence that the assessee had in fact commenced operations relating to development and construction prior to 01/10/1998. Even in the proceedings before us, the Department could not demonstrate that the assessee had commenced the development and construction before the appointed date. In such a circumstance we are unable to concur with the interpretation of the AO on this issue. the basis for calculation of built up area has been inserted in the Act w.e.f. 01/04/2005 and prior to this the built up area was to be considered as per the general terms of the agreements and certificates issued by the architects. It is undisputed that the project was completed in the year 2001 and at that point of time, the definition of built up area was not in the Act. The assessee had furnished sale deeds before the AO where in the built up area was less than 1000 ft.². These sale deeds were not found to be incorrect or fabricated. The sale deeds have been signed both by the buyers as well as by the seller and have been duly witnessed. The assessee has also submitted certificates from the architects regarding the two projects “Kingston” and “Monarch” with respect to the built up area. It is also a fact on record that the assessee has been granted deduction under section 80-IB (10) of the Act for assessment years 2000–01 to 2005–06 and assessment year 2007–08. There has been no change in facts and circumstances in the year under consideration and there being no evidence to the contrary, the rule of consistency requires that the settled position should not be disturbed. The Hon’ble High Court of Allahabad in the case of CIT versus Arif industries Ltd (2017 (4) TMI 530 - ALLAHABAD HIGH COURT) has also held that the insertion of the definition of “built up area” was prospective in nature. While doing so, the Hon’ble High Court of Allahabad referred to the judgment in CIT versus Sarkar Builders (2015 (5) TMI 555 - SUPREME COURT)wherein considering the applicability of section 80-IB (14) in respect of projects which were approved before 01/04/2005. - Decided against revenue

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• 2017 (11) TMI 1589
  Disallowance u/s 14A - Held that:- It is seen that the assessment year under consideration is 2011-12 and the provisions of rule 8D are applicable. It is common submission that similar treatment was given by the respective authorities below for the A.Ys. 2008-09 and 2009-10. The Tribunal has upheld the action of the CIT(A) for such years, meaning thereby that disallowance of interest got deleted and disallowance @ 0.5% of the average value of investment got sustained. In the absence of any change in the factual scenario and respectfully following the precedent, we uphold the impugned order. To put it simply, the respective grounds raised by both the sides stand dismissed. Allowing excess deduction claimed u/s 36(1)(vii) - Held that:- The Hon'ble Supreme Court in Catholic Syrian Bank vs. CIT (2012 (2) TMI 262 - SUPREME COURT OF INDIA) has observed that the provisions of section 36(1)(viia) apply only to rural advances and the provisions of section 36(1)(vii) apply on other advances. It has been held that both these provisions are distinct and independent items of deduction and operate in their respective fields. It is relevant to note that Explanation 2 has been inserted by the Finance Act, 2013 w.e.f. 01.04.2014 diluting the position laid down in Catholic Syrian Bank (supra). Such an insertion has been made prospectively and hence cannot be applied retrospectively to the year under consideration. No contrary decision has been brought on record by the ld. DR in which such Explanation has been held to be retrospective. We, therefore, countenance the view taken by the ld. CIT(A), in principle, in allowing deduction u/s 36(1)(vii) in addition to the deduction u/s 36(1)(viia). Computation of deduction u/s 36(1)(viia)- Held that:- Total provision made by the assessee stands at ₹ 934.38 crore. As section 36(1)(viia) grants deduction in respect of total provision for bad and doubtful debts and the same is not confined to provision for rural branches only, we hold that the quantum of deduction has to be seen in the light of the total amount of provision consisting of both rural and non-rural branches. Viewed in this light, the action taken by the ld. CIT(A) in reducing the amount of deduction to the extent of provision for bad and doubtful debts in respect of rural branches alone, becomes unsustainable. We, therefore, direct that deduction of ₹ 637,56,78,375/- be allowed u/s 36(1)(viia). Software expenses - revenue or capital in nature - Held that:- Having heard both the sides and perused the relevant material on record, it is observed that similar issue was raised in the appeals for assessment years 2008-09 and 2009-10. The Tribunal has upheld the view taken by the CIT(A) for such earlier years wherein noticed that a sum of ₹ 1,65,47,264/- was in the nature of AMC expenses and, hence, allowable. The remaining amount was held to be capital in nature and the Assessing Officer was directed to allow depreciation. Amortized premium on HTM securities - Held that:- It was fairly admitted that the amount was offered for taxation and no deduction was claimed either before the Assessing Officer or before the CIT(A). He submitted that the additional claim has been raised because of the favorable judgment of the Hon'ble Bombay High Court in CIT vs. HDFC Bank Ltd., (2014 (8) TMI 119 - BOMBAY HIGH COURT). Since this issue was not raised before the authorities below, we are of the considered opinion that the ends of justice would meet adequately if the Assessing Officer is directed to consider the assessee s claim in the light of the judicial precedents available on the issue

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• 2017 (11) TMI 1588
  Initiate proceedings under section 153C OR under section 147 - validity of reopening of assessment - Revisionary proceedings under section 263 - assessee being one of the beneficiary of the accommodation entry in the books of account of the concerns of S.K. Jain - Held that:- In this case what has been found, is the regular entries in the books of account of the concerns of S.K. Jain group, in which name of the assessee is appearing. Such entries in the cash books depicting the details of cheques issued in favour of the assessee as well as cash deposit through intermediates on various dates cannot be reckoned as document or books of account of the assessee. This fact has been noted by the Pr. CIT in the impugned order right from pages 7 to 15, wherein one of the entries pertains to the assessee for a sum of ₹ 1 crore. Thus, the contention raised by the ld. counsel on this point is out rightly rejected that the proceedings under section 153C should have been initiated instead of under section 147. As regards the contention that material or information found during the course of search in the case of S.K. Jain group cannot be held to be a tangible material pertaining to the assessee, we are unable to accept such a contention for the reason that, firstly, there was a categorical information and material coming on record post passing of the original assessment order under section 143(3) that assessee was one of the beneficiaries of accommodation entries provided by one of the group concern of S.K. Jain and not only that, a specific amount (of ₹ 1 Crore) has been mentioned which prima-facie pertained to the assessee. This definitely constitutes a tangible and definite material having live-link nexus with the income chargeable to tax escaping assessment. Here in this case there was a definite information and material found qua the assessee which at least needed verification and examination and hence, in our opinion such a material and information does constitute a tangible and relevant material sufficient enough to form ‘reason to believe’ that income chargeable to tax has escaped assessment. Apart from that, it is seen from the records that the assessee had raised similar objections after the receipt of “reasons recorded” before the Assessing Officer during the course of re-assessment proceedings, which have been amply dealt with and discussed by the Assessing Officer inn detail vide his separate order, copy of which has been placed in the paper book. Against the said order, assessee has not sought for any remedy nor has it challenged this issue in appeal after the passing of the assessment order. In any case, we have already held Assessing Officer has rightly acquired jurisdiction under section 147 based on the information/material referred to in the “reasons recorded”. Accordingly, this contention raised by the ld. Counsel is also rejected. So far as the contention that no notice under section 143(2) has been issued or served upon the assessee during the course of re-assessment proceedings, we find that assessee has neither challenged this issue after the passing of the re-assessment order nor has raised this issue before the Pr. CIT during the course of revisionary proceedings under section 263, wherein the assessee had raised several legal issues/ objections before the Pr. CIT challenging the validity of the reassessment proceedings. Even before the Tribunal at the time of filing of appeal, this issue has neither been raised in the grounds nor has any additional ground been raised so that department could have got the opportunity to object or respond to such a plea after verifying the record in this regard. Thus, such an oral plea at a last moment not arising from the impugned order and without any verification of record cannot be entertained. CIT has amply demonstrated in his impugned order that this issue was neither enquired into nor was verified by the Assessing Officer once the information and the material in hard copy and in form of CD was made available to him. AO should have verified the genuineness of the transaction and also should have carried out adequate enquiry to come to a logical conclusion that either there is no accommodation entry and the contents found qua the assessee being one of the beneficiary of the accommodation entry in the books of account of the concerns of S.K. Jain group are false or bogus; or assessee had amply demonstrated and substantiated before the AO regarding the genuineness of the transaction of the accommodation entry. In absence of such a mandate which was cast upon the AO, we are of the opinion that the assessment order is not only erroneous but also prejudicial to the interest of revenue, as this matter definitely requires proper enquiry and verification by the AO. Thus, we hold that the Ld. Pr. CIT has rightly exercised his jurisdiction under section 263 in setting aside the order of the Assessing Officer being erroneous - Decided against assessee.

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• 2017 (11) TMI 1587
  Correctness in granting exemption u/s.10(23C) in respect of the additions made u/s.68 - Held that:- The words used in the section is “any income” received by any trust is exempt. Therefore, the income of the appellant trust assessed by the A.O. by making addition u/s 68 shall also qualify for exemption. This proposition of law is supported by following decisions. See Sri Krishna Educational and Social Trust Vs. ITO (2013 (2) TMI 209 - Madras High Court). Consider 10% of the donations as anonymous and tax the same u/s 115BBC - such direction is not within the powers of the Ld. CIT(A) because it amounts to assessing new source of income - Held that:- Merely writing some names and their addresses, in our opinion, falls short of the legal requirement. Therefore, in our view, the names and addresses taken for verification on test check basis, goes to cast of doubt about the genuineness of the such records, name of donors, donations etc., From that point of view, considering the assessee’s failure to maintain the fool-proof records on the identity of the donors, we are of the opinion that the principle of adhocism adopted by CIT(A) is the only method available in this case for taxing donations as “Anonymous Donations”. As such, the CIT(A) fairly restricted such charge of taxation only to 10% of the entire donations in both the years. All the verifiable identity of the donors, if any will fall in the balance 90% of the entire donors in both the years. From this point of view, we are of the opinion, order of the CIT(A) is fair and reasonable and it does not call for any interference. AO initiated the enquiry into the said donations. He also gathered the adverse evidence against the assessee from a donor named Shri Balu Shivaji Pawar vide letter dated 26.12.2012. Therefore, the counsel’s argument before us regarding the creation of new source by the CIT(A) for the first time in his order of enhancement of the assessment, is not sustainable. Accordingly, the only ground raised by the assessee in both the C.O’s are dismissed.

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• 2017 (11) TMI 1586
  Cancelling the registration u/s. 12AAA(3) - objectives of the assessee-trust - proof of charitable activities - receipt of donations - Held that:- The activities of the trust in relation to its education activities have not been doubted and on the basis of same activities registration u/s 12AA of the Act was awarded to the assessee. Simply the assessee has received donation from some parties which are involved in the bogus transactions cannot be the basis for the denial of the registration certificates as discussed above. We also find that the ld. CIT(Ex) has cancelled the registration on the ground of non-genuineness of transaction though the same was routed through banking channel. Thus in our considered view the genuineness of the transaction cannot be doubted in the aforesaid facts & circumstances. See CIT Vs. Green Infra Limited [2017 (4) TMI 185 - BOMBAY HIGH COURT]. We are also in disagreement with the finding of ld. CIT(Ex) that the QSP gave its accounted money through bank to the assessee and received the same in cash from the assessee and subsequently the cash was offered to tax under IDS. It is because why a prudent man will convert the accounted money into unaccounted form and thereafter he will offer the same to tax under IDS. There is no documentary evidence available in support of the above finding of the ld. CIT(Ex) which is based on his surmise & conjuncture. - Decided in favour of assessee.

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• Customs

• 2017 (11) TMI 1585
  Penalty u/s 112 of CA - demand of penalty from widow of late V.M.G.Srinivasa Vandayar, the petitioner - case of petitioner is that in terms of Section 112 of the Customs Act, 1962 the liability is personal in nature and cannot be recovered against the estate of the deceased - Held that: - if proceedings are to be initiated against the petitioner, then liability should have been fixed on the petitioner, for which proper procedure was required to be followed, more so, when it is the case of the Department that the petitioner is liable in terms of Section 112 of the CA. Thus, the present attempt of the first respondent to make good the loss of Revenue after the demise of the petitioner's husband cannot be permitted - petition allowed - decided in favor of petitioner.

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• 2017 (11) TMI 1584
  Import of coal - coking coal or not - benefit of N/N. 21/2002-Cus, dated 01.03.2002 - whether the coal imported by appellant under 19 Bills of Entry are eligible for exemption of customs duty under N/N. 21/2002 or otherwise? - the main stand of Revenue is that the Corex technology does not require coking coal and the weakly coking coal said to be imported cannot get the benefit of the exemption - Held that: - identical issue came up before the Bench in Mumbai in respect of the coal imported by appellant for using corex furnace through Port in Goa and the Bench in the case of JSW Steel Ltd. [2015 (12) TMI 1389 - CESTAT MUMBAI], after considering the entire gamut of the arguments and the findings held in favor of applicants - the self issue is now settled in favour of the main appellant and it has to be held that coal imported by appellants under 19 Bills of Entry is eligible for the benefit of exemption notification under 21/2002-Cus and impugned order has to be held as unsustainable - question of upholding penalties on the other appellants and the main appellant does not arise - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1583
  Quantum of redemption fine - case of appellant is that reduction of redemption fine from ₹ 3,94,000/- to ₹ 1,20,000/- has not been translated into the order portion - Held that: - the Commissioner (Appeals) has indicated in para 4.4 of the impugned order his inclination to reduce the redemption fine to ₹ 1,20,000/- - Presumably by inadvertence, the same has not been reflected in the order portion in para-5 of the impugned order. Ld. D.R. fairly concedes this fact - redemption fine under Section 125 ibid should also be reduced from ₹ 3,94,000/- to ₹ 1,20,000/- - appeal allowed.

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• 2017 (11) TMI 1582
  Waiver of pre-deposit to admit the appeal - the applicant are involved in actions which will render the goods for confiscation and cannot escape penal action under Section 112 - Held that: - the applicant did not make out a case for full waiver of the penalty imposed on him. The role of the applicant cannot be completely ruled out at this stage - it is ordered that pre-deposit of ₹ 1.5 lakhs to be paid within four weeks - On payment of such amount, the appeal will be taken up for regular disposal.

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• 2017 (11) TMI 1581
  Refund of excess duty - excess duty paid was pointed out by assessment of Bill of Entry - N/N. 46/2011 as amended - section 27 of CA - Held that: - In similar set of facts, Hon'ble High Court of Delhi in the case of Micromax Informa Tics Ltd., [2016 (3) TMI 431 - DELHI HIGH COURT] held that refund claim can be preferred when the assessment is under EDI system and duty liabilities are discharged; wherein their Lordships interpreted the Provisions of Section 27 of the Customs Act, 1962 - the impugned order is correct and legal and does not suffer from any infirmity - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 1580
  SAD Refund - whether change in description of the goods in domestic retail invoice, is sufficient ground to deny benefit of refund under N/N. 102/2007? - Held that: - The goods imported in bulk from Indonesia having sold on retail basis, on certified sales invoices, which have been and assessed at the hands of the VAT authorities and which have been certified by the statutory auditor and the appellant, there cannot be any doubt that the goods imported were sold on “AS IT IS” basis - The attempt of the department to verify the sales by addressing the letters to some of the buyers has not elicited any response and that cannot mean that the goods were not sold to them - rejection of refund unjustified - appeal allowed - decided in favor of appellant.

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• Insolvency & Bankruptcy

• 2017 (11) TMI 1579
  Corporate Insolvency Resolution Process - proof of existing debt - Held that:- The applicant has miserably failed to establish the existence of operational debt as well commission of default by the respondent-company. It is pertinent to state here that the legal notice dated 22nd November, 2016 issued by the applicant, inter alia, reveals that the respondent vide e-mail dated 16th September, 2016 disputed and denied the claim of the applicant. The said e-mail dated 16th September, 2016 has not been enclosed. It is further seen at Annexure-J that the respondent-company in its undated letter, inter alia, disputed the claim as wrong and unordered for. Needless to say that when the claim is not admitted and clearly disputed by the respondent, it become more onerous on the applicant to prove its claim by adducing sufficient documentary evidence. However, no such documentary evidence could be produced to bind the respondent as corporate debtor and to satisfy existence of default in payment of corporate debt. As a sequel to the above discussions the application is rejected.

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• 2017 (11) TMI 1578
  Corporate insolvency procedure - Held that:- After the petition is admitted, it cannot be permitted to be withdrawn. Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 says that the Adjudicating Authority may permit withdrawal of the application under Rules 4, 6 & 7 of the Rules, as the case may be on a request made by the applicant before its admission. So, there is no scope of accepting the submission made on behalf of the respondent/Corporate Debtor In any case, it was observed in the order dated 05.07.2017 admitting the petition that copy of the petition along with the entire Paper Book was received by the Corporate Debtor on 30.05.2017. The petition was filed after service of demand notice. However, no caveat was filed by the respondent. The matter was listed today only for passing formal order of appointment of Interim Resolution Professional, The Interim Resolution Professional has already furnished his written communication in Form No. 2 along with the petition as already observed in the order of admission dated 05.07.2017. As per sub-section (1) of Section 16 of the Code, the Adjudicating Authority has to appoint Interim Resolution Professional within 14 days from the date of insolvency commencement date and the date of commencement is the date of admission as per Section 9 of the Code.

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• Service Tax

• 2017 (11) TMI 1577
  Maintainability of appeal - VCES - whether the appeal relies upon before the Tribunal against rejection of VCES declaration 2013 or otherwise? - Held that: - Hon'ble High Court of Madras in the case of Narasimha Mills Pvt. Ltd. Vs. Commissioner of Central Excise (Appeals), Coimbatore [2015(06)LCX 0020 has settled the law and held that appeal provision under section 85 & 86 of Finance Act, 1994 will apply to the proceedings arising out of VCES declaration - the rejection of VCES is contestable before Tribunal, however the rejection of VCES is appropriate - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 1576
  Valuation - includibility - Revenue is of the view that the free services provided by M/s. Bharti Airtell and the services for which M/s. Bharti Airtell have charged certain amounts from the applicant are includable in the assessable value of the services provided by the applicant - difference of opinion - Held that: - As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon'ble President to refer the matter to the third member to resolve the issue: - Whether the appellants be granted full waiver of pre-deposit of Service Tax, fine and penalty for stay of operation of impugned order as held by Member (Judicial) - matter referred to Third Member.

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• 2017 (11) TMI 1575
  Reverse Charge Mechanism - royalty - whether the appellant is liable to pay service tax under the heading Intellectual Property Service for the services rendered by their foreign counterpart M/s. Delphi Technologies Inc. USA? - Held that: - the period involved is prior to 18.4.2006 on which date Section 66A came to be introduced in the Finance Act, 1994 - The issue whether the assesse is liable to pay service tax under reverse charge mechanism on royalty paid to foreign counterpart stands settled in favour of the assessees in the judgment of Indian National Shipowners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT], where it was held that Before insertion of section 66A with effect from 18-4-2006, there was no authority to levy service tax on Import of service. Explanation below section 65(105) did not give any authority to levy service tax on import of services - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1574
  Valuation - includibility - reimbursable expenses - charges collected under the heads A.R-4 expenses - DBK Charges - DEEC Endorsement Charges etc. - whether reimbursable expenses are includible in taxable value or not? - Held that: - the issue is settled in the case of Commissioner of Service Tax Versus M/s. Sangamitra Services Agency [2013 (7) TMI 862 - MADRAS HIGH COURT], where it was held that Various expenditure includible in the taxable value of Carrying and Forwarding service were reimbursed by the principals on the basis of actuals - the demand on reimbursable expenses is neither legal nor proper and requires to be set aside. The amount, if any, collected over and above the actual would not fall under CHA Services - demand unsustainable - decided in favor of appellant. Business Auxiliary Services - demand on incentive received from Shipping Liner - Held that: - the issue decided in the case of M/s. Indo Lloyd Freight Systems Pvt. Ltd. Versus Commissioner of Service Tax, Chennai [2017 (8) TMI 400 - CESTAT CHENNAI], where it was held that the activity of the appellant as a custom house agent is to provide services to importers/exporters and the disputed activity was only a facility arranged by them to their clients. The appellant has no obligation to arrange transport of cargo through a particular shipping liner. Therefore, the amount received cannot fall within the category of commission so as to be subjected to levy of service tax - demand under Business Auxiliary Services set aside. The learned counsel for appellant has also put forward the grievance that the Commissioner has not taken note of the amounts paid by the appellant - That appellant would be able to establish with documents that entire liability has been discharged before the issuance of show-cause notice - matter is remanded for such re-examination. Penalty u/s 76 and 78 - Held that: - the appellant has discharged substantial portion of the demand even prior to issuance of show-cause notice - though it is alleged that appellant has suppressed facts with intent to evade payment of tax, there is no specific evidence to prove the same - penalties set aside. Appeal allowed in part and part matter on remand.

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• 2017 (11) TMI 1573
  Valuation- includibility - reimbursable amounts which have been collected on the items like Security Guards, Videography Police, Escorts, DM/CMM charges etc - Whether the demand has to be upheld by not excluding the reimbursable expenses from the value of the services as held by Ld. Member (Technical) or the same have to be excluded subject to verification of the agreement between the appellant and the banks and the invoices etc. as held by ld. Member (Judicial) - extended period of limitation - difference of opinion - majority decision. Held that: - the decision of the Hon‟ble Delhi High Court in Intercontinental Consultants & Technocrafts Pvt. Ltd. [2012 (12) TMI 150 - DELHI HIGH COURT] has not been considered, before a decision is arrived at by the ld. Member (T). The Hon‟ble Delhi High Court held that the rule 5 (1) of the Valuation Rules 2006 is ultra virus of the substantive legal provisions of Section 67 and 68 of Finance Act, 1994. The High Court was dealing with similar reimburseable expenditure regarding travel or accommodation - The facts of the present case along with connected documentary evidences are to be examined - the findings of the ld. Member (J) with reference to remand of the matter to the Original Authority is correct - the amounts claimed to be re-imburseable expenses can be excluded from the assessable value subject to verification of the agreements between the appellant and the banks and the supporting documents like invoices, etc to be submitted by the appellant. Time limitation - Whether the extended period of limitation has been rightly invoked as held by ld. Member (Technical) or the demand is barred by limitation as held by ld. Member (Judicial ) and as such, the appeal is to be allowed in toto, on the said disputed issue? - Held that: - Admittedly, the appellants maintained records of all the expenses and the present demand was based on such records. In such situation, I find that the demand cannot be invoked by alleging willful misstatement, fraud and intention to evade payment of tax. Here, the extended period was invoked on the ground that the information was not disclosed to the Department. When there is a bonafdide doubt based on the interpretation of the legal provisions, the question of suppression and willful mis-statement cannot be sustained. - The extended period of limitation cannot be sustained in the facts and circumstances of the present case. Consequent on the findings by the 3rd Member on reference, in terms of majority view, the impugned order is set-aside and appeal is allowed with consequential relief on the point of time bar.

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• 2017 (11) TMI 1572
  Valuation- includibility - reimbursable expenses incurred for producing the programme - pure agent - Held that: - In the present case the respondent after producing the programme on their own transferred the copyright in the said programme to M/s Sanvedana Entertainment and M/s Percept Picture Company Limited. Accordingly the respondent was not appointed as a pure agent to incur the expenses on behalf of the M/s Sanvedana Entertainment and M/s Percept Picture Company Limited - the adjudicating authority shall decide afresh all other aspects raised in the show-cause notice and also raised by the respondent which were not considered at all - appeal allowed by way of remand.

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• 2017 (11) TMI 1571
  Classification of services - rent a cab service or Supply of tangible goods service? - Held that: - The essential criterion specified for classification of the service under the supply of tangible goods is that goods should be supplied without transferring the right of possession and effective control - As per the facts of the present case, the vehicles during the course of service remain under the ownership of respondent and are given to the clients only for transportation of passengers - appeal dismissed - decided against Revenue.

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• Central Excise

• 2017 (11) TMI 1569
  Penalty - CENVAT credit - credit availed twice - case of appellant is that availment of CENVAT credit in appellants factory being voluminous the error of availing credit twice over is a clerical error - Held that: - the reasoning given by the First Appellate Authority is correct and pertinent to the issue in hand as regards imposition of penalty, as appellant is an unit in the organized sector - First appellate authority has held that neither in the original proceedings nor in the appeal proceedings, the appellant has explained with any reasonable clarity as to how such credit came to be taken by them which act in my view was against all accounting norms. In the absence of a valid clarification on such amount so want only taken by them, there is no basis on which they could claim innocence and therefore, there is no reason on my part to examine whether there were any bonafide grounds on their part in taking credit irregularly in excess of the eligible amount as per the documents. Penalty upheld - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 1568
  CENVAT credit - Event Management services - period April 2005 to August 2009 - Held that: - It is also not disputed that cenvat credit availed by appellant for this period is based upon the invoices raised by their Head Office as an ISD - In my view, since the Event Management Services have organised an event for the appellant's brand “Essar Steel”, Cenvat Credit availed by them and subsequently distributed to other units as also to this unit seems to be in consonance with the law - reliance placed in the case of Castrol India Limited [2013 (9) TMI 709 - CESTAT AHMEDABAD], where it was held that The services had to be held as relatable to business of manufacturing only since the services are directly relatable to promotion of goods - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1567
  Penalty - clandestine removal - Demand under Rule 8(3A) - Held that: - very same issue decided in the case of M/s. Varadhalakshmi Mills Ltd. And M/s. Sona Rajendra Spinners (P) Ltd. Versus CCE, Madurai And CCE & ST, Salem [2016 (4) TMI 15 - CESTAT CHENNAI], where it was held that demand of duty under Rule 8(3A) is unsustainable as the said Rule has been struck down by the Hon'ble High Court and the demand of duty and penalty imposed in the impugned orders is liable to be set aside - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1566
  Duty liability - clearance of rejected / unusable cut components arising during the course of manufacture of the said leather uppers - Revenue entertained a view that the appellants did not discharge duty when they cleared such rejected shoe uppers - Held that: - all the invoices issued during the relevant period were for clearance of cut scrap of leather. However, it is a fact that some purchase orders / quotations did indicate ‘rejected uppers’ for intended purchase. Other than these, there is no evidence to show that the appellant did clear shoe uppers in the guise of scrap - There is no allegation in the proceedings before the lower authorities that the invoices which covered the clearance of the impugned goods are manipulated and intentionally mis-stated - demand set aside - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (11) TMI 1565
  Refund claim - Form P - Held that: - It is high time that the third respondent - the Commissioner of Commercial Taxes fixes personal responsibility on the officers, who delay such refund claims. Even when the Assessing Officers are summoned to court for non compliance of directions issued to effect admitted refund of excess tax, the Officers invariably state that their superior officers are yet to approve it. Hence, it is high time for the third respondent to evolve a procedure, by which, individual officers will be personally held liable for delaying such admitted refund claims - petition disposed off.

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