TMI Tax Updates - e-Newsletter
December 13, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Removal of difficulty order regarding extension of due date for filing of Annual return (in FORMs GSTR-9, GSTR-9A and GSTR-9C)

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Articles

1. INTEREST SHOULD BE ON THE BASIS OF INCOME AS PER RETURN OF INCOME - a point of view with reasoning

   By: DEVKUMAR KOTHARI

2. McDonald’s: Fast Food, Fast Profits (Part-1)

   By: Dr. Sanjiv Agarwal

News

1. SEZ Policy review committee report

2. Revival of Exports

3. Policy for Regulation of E-Commerce

4. Efforts to Increase Export of Agricultural Products

5. Central Board of Indirect Taxes and Customs (CBIC) to notify the Korean Won (WON) and Turkish Lira (TRY) in the List of Currencies for Exchange Rate

6. Year End Review 2018-NITI Aayog

7. Shaktikanta Das named new RBI Governor

Circulars / Instructions / Orders

GST

1. 01/2018 - dated 11-12-2018

Removal of difficulty order regarding extension of due date for filing of Annual return (in FORMs GSTR-9, GSTR-9A and GSTR-9C) for FY 2017-18 till 31st March, 2019

DGFT

2. 58/2015-20 - dated 12-12-2018

Amendment of Para 2.63 of the Handbook of Procedure (2015-20)

3. Trade Notice No. 39/2018-19 - dated 12-12-2018

Requirement of documents for online IEC applications-clarifications reg.

Customs

4. 52/2018 - dated 12-12-2018

Revision of All Industry Rates (AIRs) of Duty Drawback.

Highlights / Catch Notes

GST

• Annual Return Filing for FY 2017-18 Extended to March 31, 2019 for FORMs GSTR-9, GSTR-9A, GSTR-9C.

  Circulars : Removal of difficulty order regarding extension of due date for filing of Annual return (in FORMs GSTR-9, GSTR-9A and GSTR-9C) for FY 2017-18 till 31st March, 2019
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Income Tax

• Depreciation Disallowance for Trusts u/s 11(6) Effective from Assessment Year 2015-16.

  Case-Laws - AT : Disallowance of depreciation to assessee trust - specific provisions of section 11(6) which bars claim of depreciation of expenditure incurred for charitable purposes is prospective and applies only from the assessment year 2015-16.
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• Income Tax Commissioner Upholds Deletion of Disallowance on Section 10AA Exemption for Interest and Remuneration Issues.

  Case-Laws - AT : Exemption claimed u/s 10AA - interest and remuneration to partners - the CIT(A) was right in deleting the disallowance made by the AO on account of non provision of interest and remuneration from amount of deduction u/s. 10AA.
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• Assessment Error Due to Non-Existent Entity After Merger is Curable u/s 292B of Income Tax Act.

  Case-Laws - AT : Validity of assessment against non existent entity - curable defect u/s 292B - scheme of merger adopted - If the letter has not been filed before the AO during the assessment proceeding, in those circumstances the AO cannot be faulted for passing assessment order.
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• MAT Credit Offset Required Before Calculating Interest u/ss 234A, 234B, and 234C Per Section 115JAA.

  Case-Laws - HC : MAT Credit admissible in terms of Section 115JAA has to be set off against the tax payable (assessed tax) before calculating interest under Sections 234A, 234B and 234C
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• Anesthetists Society's Objectives Extend Beyond Specific Districts, Emphasizing Wider Charitable Purpose and Broader Impact.

  Case-Laws - HC : Charitable activity - Merely because the society is primarily created for the benefit and convenience of Anesthetists, it cannot be said that the object of the society is confined to its members practicing in Sriganganagar and Hanumangarh Districts.
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Customs

• Membrane Elements Classified Under Chapter Sub-heading 842121 for Water Purification Equipment Using Advanced Technologies.

  Case-Laws - AT : Classification of imported goods - membrane elements - The products which fall under Chapter Sub-heading 842121 as mentioned in Column (3) relating to the product "Water purification equipment based on the technologies"
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• Appellants did not meet EOU Scheme conditions for software export; duty and interest demand confirmed by authorities.

  Case-Laws - AT : EOU Scheme - the appellants had not fulfilled the conditions of use of capital goods/equipment for development of software, meant for export - confirmation of duty/interest demand by the authorities below cannot be faulted with.
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• Revised All Industry Rates of Duty Drawback to Boost Export Competitiveness and Align with Market Conditions.

  Circulars : Revision of All Industry Rates (AIRs) of Duty Drawback.
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DGFT

• DGFT Clarifies Online IEC Application Requirements: Essential Documents for Efficient Importer Exporter Code Processing.

  Circulars : Requirement of documents for online IEC applications-clarifications reg.
  Visit to Get Source

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• Handbook of Procedure Para 2.63 Amended: New Guidelines for Exhibits at National and International Events, DGFT Compliance Enhanced.

  Circulars : Amendment of Para 2.63 of the Handbook of Procedure (2015-20) - Exhibits Required for National and International Exhibitions or Fairs and Demonstration
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Indian Laws

• India's SEZ Policy Overhaul Proposed to Boost Investment, Streamline Regulations, and Enhance Economic Growth

  News : SEZ Policy review committee report
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Service Tax

• Utensil Polishing by Job Worker Classified as Business Auxiliary Service, Subject to Service Tax.

  Case-Laws - AT : Business Auxiliary Service - job work - polishing the utensils - Since the appellant is a job worker and is not engaged in the manufacture of the excisable goods in its factory, the activity of job work should be considered as a service, leviable to Service Tax as BAS
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VAT

• Section 4 CST Act: Agreement in Gujarat and Puducherry Doesn't Establish Sale in Those Regions.

  Case-Laws - HC : Location of sale - where the situs of a sale - The agreement executed in Gujarat and Puducherry does not make the sale within that State or Union Territory, as Section 4 of the CST Act provides that sale of goods is deemed to take place in a State, only when the goods are within the State.
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Case Laws:

• GST

• 2018 (12) TMI 620
  Input tax credit - credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return - Restriction of credit u/s 16 - GSTR-3 versus GSTR-3B - Held that:- Issue Notice returnable on 9th January, 2019.

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• 2018 (12) TMI 610
  Penalty - Circular No.41/15/2018-GST dated 13.4.2018 - Held that:- Issue Notice returnable on 11th December, 2018. In the meanwhile, it would be open for the respondent to release the vehicle in question in accordance with law.

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• 2018 (12) TMI 609
  Seizure of goods - Section 67(2) of the UPGST Act - Held that:- The proceedings under Section 130 can be initiated only when the person transporting the goods or the owner of the goods transporting the goods fails to pay the amount of tax and penalty for the release of the goods as per section 129(1) of UPGST Act - The matter requires consideration.

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• Income Tax

• 2018 (12) TMI 608
  Addition on account of guarantee commission chargeable to its associated enterprises - tribunal deleted addition - whether the benchmark fixed by the Transfer Pricing Officer (TPO) for the international transaction by considering arm’s length rate of the bank guarantee at 3% under Section 92CA(3) of the Income Tax Act, 1961 was correct? - Held that:- Question No.1 has been rightly decided by the High Court in favour of the Assessee and against the Revenue. The same would, therefore, not require reopening in this appeal. Interest charged u/s 234B - MAT computation - Whether interest was not payable by the assessee/respondent under Section 234B of the Income Tax Act, 1961 on failure to deposit the advance tax in respect of tax payable under Section 115JB? - Held that:- The matter will require an in-depth hearing. List the appeal on the said question i.e. question No.(ii) as per its turn.

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• 2018 (12) TMI 607
  Accrual of income - whether duty drawn back accrues to the assessee only on passing of the order by appropriate authority and not in the year of export? - Held that:- Delay condoned. Issue notice. Until further orders, the operation of the impugned order shall remain stayed.

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• 2018 (12) TMI 606
  Reopening of assessment - case of petitioner is that since amalgamation, the company had no legal existence - also, it was claimed that M/s. Dharmanath Share including the commission amount, have been taxed. The same cannot now be taxed in the hands of assessee - Held that:- We see no reason to entertain this petition. Accordingly, the special leave petition is dismissed.

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• 2018 (12) TMI 605
  Income received by way of rent - ITAT treated as business income - nature of income - Held that:- Delay condoned. Leave granted.

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• 2018 (12) TMI 604
  Charitable activity - Rejecting the application of the assessee u/s 12A - Held that:- Adverting to the facts of the present case, indisputably, the assessee society has been constituted to bring the doctors dealing in Anaesthesia speciality entitled to be registered with the Medical Council of India together for the purpose of inter alia the development of medical science, publication of research magazine, to promote the research and practical work and to organise the seminars etc. Merely because the society is primarily created for the benefit and convenience of Anesthetists, it cannot be said that the object of the society is confined to its members practicing in Sriganganagar and Hanumangarh Districts. Obviously, the education programme and research work to be undertaken by the assessee society in larger perspective are going to benefit the public at large and therefore, the activities of the assessee society do fall within purview of general public utility so as to make it entitled for registration under Section 12A of the Act. We are firmly of the view that the issue involved in the present appeal stands squarely covered by decision of the Apex Court in Ahmedabad Rana Caste Association’s case [1971 (9) TMI 8 - SUPREME COURT] and decision of this court in Jodhpur Chartered Accountants Society’s case [2002 (4) TMI 28 - RAJASTHAN HIGH COURT] in favour of the assessee society and thus, no substantial question of law arises for consideration of this court in the present appeal.

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• 2018 (12) TMI 603
  Credit for brought forward MAT credit after calculating interest u/s 234-B and 234-C - whether Appellate Tribunal was right in law in holding that the question of payment of interest to the assessee would arise only if set off MAT credit is allowed against the advance tax payment and it should be treated on par with the Advance tax? - Held that:- The Substantial Question of Law arising for consideration in this appeal has been answered against the Revenue in the case of Commissioner of Income Tax vs. Tulsyan Nec Ltd. [2010 (12) TMI 23 - SUPREME COURT OF INDIA]. The Hon'ble Supreme Court confirmed the decision in the case of CHEMPLAST SANMAR LTD [2009 (4) TMI 61 - MADRAS HIGH COURT]. The Hon'ble Supreme Court held that the MAT Credit admissible in terms of Section 115JAA has to be set off against the tax payable (assessed tax) before calculating interest under Sections 234A, 234B and 234C - Decided against revenue

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• 2018 (12) TMI 602
  Reopening of the assessment - change of opinion - value of closing stock i.e, work in progress was not adopted - Held that:- The find that the Assessing Officer has taken all the figures from the Profit and Loss Account filed by assessee along with the return of income, wherein, they have claimed a total expenditure of Rs. 11,30,92,666/- and admitted value of work in progress to the extent of Rs. 10,61,14,603/-. AO, while completing the assessment under Section 143(3) vide order dated 07.03.2001, opined that the indirect expenses incurred to the extent of Rs. 69,52,063/-, should not be incurred in the work in progress. This, according to the subsequent officer was incorrect. Therefore, re-opening was ordered. The assessee objected to the re-opening by contending that it is a clear case of change of opinion. However, this was rejected and the assessment was completed vide order dated 11.11.2005. AO has come to the conclusion that the correct value of closing stock i.e, work in progress was not adopted. There is absolutely no allegation of any failure on the part of the assessee to fully and truly disclose all material facts for assessment. In the absence of any such allegation, the re-opening of the assessment was a clear case of change of opinion. The order passed by the Tribunal calls for no interference. - Decided in favour of assessee

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• 2018 (12) TMI 601
  Not allowing deduction u/s. 80P(2)(a)(i) in respect of MSEB commission income and interest received on FDRs with bank - Held that:- Hon’ble Bombay High Court in CIT VS. Asian Cable Corporation Ltd. ( [2003 (3) TMI 87 - BOMBAY HIGH COURT] after applying the provisions of section 80AB, has held that deduction under s. 80-O should be allowed with reference to net receipts and not on gross receipts. It, ergo, becomes palpable that the eligible amount for deduction can be the 'income’ and not the 'gross receipts’ from the specified source. Since the amount of gross receipt from MSEB commission in this case is less than the amount of expenses incurred for earning such commission and deduction has been separately allowed by the AO in respect of such expenses, there can be no distinct deduction u/s. 80P because of the negative income earned by the assessee from this activity. Therefore, countenance the view point of the first appellate authority on this point. The second component of the disallowance of deduction is interest received by the assessee on FDR with IDBI bank amounting to Rs. 3,01,034/-. Here again, it is noticed that the assessee earned interest income of Rs. 3,01,034/-. As per assessee’s own version given to the authorities, it incurred cost of funds at Rs. 3,32,967/- for earning such interest income. Once again, it is clear that the deduction for a sum of Rs. 3,32,967/- has been allowed by the AO. The amount of gross interest income, being less than the amount of expenses incurred, cannot entitle the assessee to qualify for separate deduction u/s. 80P on the amount of gross interest received. Approve the view taken by the CIT(A) on this score. Expenses incurred against earning of MSEB commission and cost of funds incurred against the interest received on FDRs should be allowed as deduction - Held that:- In this regard, it is observed that the CIT(A) has categorically noticed that the assessee was allowed deduction for these two expenses. It would be just and fair if the AO verifies the assessee’s contention for allowing deduction of these two expenses. In case, the deduction is found to have been allowed for these two sums, then there is no scope for allowing any further deduction. In case, the finding of the ld. CIT(A) is found to be wanting, then the deduction should be allowed to the extent of expenses incurred, namely, Rs. 1,50,000/- and Rs. 3,32,967/-.

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• 2018 (12) TMI 600
  TDS u/s 195 - Disallowance u/s. 40(a)(i) - non deduction of tds on payment as ‘Royalty’ covered u/s. 9(1)(vi) read with Explanation 2 (iva) and Explanation 5 - assessee failed to withhold tax on the payment made to Amazon - DTAA - Held that:- As decided in assessee's own case [2018 (10) TMI 1434 - ITAT PUNE] Explanation 5 has been inserted to section 9(1)(vi) by the Finance Act, 2012 with retrospective effect on 01-06-1976 and since the payment had already been made before the insertion of the provision, no deduction of tax at source could have been made. The Tribunal further observed that there was no amendment in the DTAA between the two countries analogous to the Explanation 5 to section 9(1) of the Act and accordingly Amazon was not chargeable to tax in respect of Web hosting charges received from the assessee in India. The Tribunal still further held that the amount paid to Amazon, at the first instance, was not in the nature of royalty itself. DR fairly admitted that the facts and circumstances prevailing in the instant year are mutatis mutandis similar to those of preceding years. Respectfully following the precedent, I overturn the impugned order on this score and order for the deletion of addition of made and confirmed by the authorities below. - Decided in favour of assessee.

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• 2018 (12) TMI 599
  Addition in the assessment order framed u/s. 153A - absence of any incriminating material found in search - Held that:- We are inclined to hold that there was no incriminating material found during the course of search and seizure operation in the hands of assessee for AY 2004-05. As relying on case of Soumya Construction [2016 (7) TMI 911 - GUJARAT HIGH COURT] to hold hat the AO is not entitled and empowered to make any addition in the assessment order framed u/s. 153A r/w s. 143(3) of the Act for AY 2004-05 in absence of any incriminating material therefore, the addition made by the AO and reduced by the ld. CIT(A) is not sustainable and thus, we direct the AO to delete the entire addition made in absence of incriminating material for AY 2004-05. Rejection of books of accounts u/s. 145 - estimation of sales price of shops - estimating the unaccounted receipts of the project "Cosmo Complex" - Held that:- Referring to the general principle and guidance for valuation of rate of multi-story building from ground to top floor, rate adopted by the AO and ld. CIT(A) and weighted average rate submitted by the appellant, we are of the considered opinion that the assessee has not disputed the rate adopted by the ld. CIT(A) for ground and first floor of Rs. 30,042/-, which is must less than the weighted price of first floor as of Rs. 50,251.77 and little higher than the weighted price of first floor of Rs. 29,288.33 as submitted by the assessee and which has not been seriously objected or opposed by the ld. DR. Therefore, the adoption of rate by ld. CIT(A) for ground and first floor of Rs. 30,042/- per sq. mt. is confirmed. For rate of second floor CIT(A) has adopted rate of Rs. 30,042/- for second floor and as per assesee the weighted rate for this floor is Rs. 17,703.97. Keeping in view these facts and figures submitted by both the parties and by taking a balancing and reasonable approach and view, we find it appropriate to take average rate of these two which is approximately Rs. 24,000/- per sq. mt. and AO is directed to recalculate the addition for second and third floors sale of shops and offices accordingly. For fourth and fifth floor, CIT(A) has adopted similar rate of Rs. 22,000/- per sq. mt. for both these floors, whereas weighted average as per assessee for these two floor are Rs. 11,056.58 and Rs. 11,545.41 respectively. Keeping in view these facts and figures submitted by both the parties and by taking a balancing and reasonable approach and view, we find it appropriate to take average rate of these two which is approximately Rs. 16,500/- per sq. mt. and AO is directed to recalculate the addition for fourth and fifth floors sale of shops and offices accordingly. Consequently, grounds of assessee for AY 2008-09 are partly allowed with the directions to the AO to recalculate the on money earned by the assessee from sale of shops and floors from first floor to top floor during the relevant financial period of FY 2007-08.- Decided partly in favour ofassessee

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• 2018 (12) TMI 598
  Validity of assessment against non existent entity - curable defect u/s 292B - scheme of merger adopted - Held that:- In the instant case, the Ld. Counsel has produced before us letter dated 22/09/2014 addressed to the Assessing Officer informing the merger of the assessee with M/s Dalmia Cement (Bharat) Ltd. On perusal of the said letter, we find that though the letter is having stamp of the office of the Assessing Officer, but it is not bearing in the receipt or diary Number. There is no reference of this letter in the assessment order also. The assessee has also not produced any copy of the order sheet of the assessment proceedings to support that said letter was filed before the Assessing Officer in the course of assessment proceedings. In our opinion, verification of the fact whether this letter was filed before the Assessing Officer during assessment proceeding is very important. If the letter has not been filed before the Assessing Officer during the assessment proceeding, in those circumstances the Assessing Officer cannot be faulted for passing assessment order on M/s Dalmia Cement Venture Limited. In such circumstances, the assessment need to be restored to the file of the Assessing Officer for passing a fresh assessment order.

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• 2018 (12) TMI 597
  Disallowance of exemption claimed u/s 10AA - Turnover for trading and treated entire sum as taxable income by not giving any specific findings - Held that:- In the present case undisputedly in the partnership deed there is no clause providing payment of interest on capital and remuneration to the partners therefore, CIT(A) was right in denying application of order of ITAT, Rajkot in the case of Meridian Impex [2013 (9) TMI 605 - ITAT RAJKOT] in favour of the Revenue in the present case having distinct and dissimilar facts and circumstances. In the present case the appellant has not charged any interest and remuneration as per partnership deed therefore, the appellant firm cannot be compelled to charge interest or rumuneration. Therefore, we are inclined to hold the CIT(A) was right in observing that the disallowance made by the AO on account of non provision of interest and remuneration of s.10AA deduction is erroneous and incorrect and law and facts as in the peculiar facts of the present case the partnership deed clearly lays down that no interest and remuneration is payable and hence, the first appellate authority right in deleting the disallowance made by the AO on account of non provision of interest and remuneration from amount of deduction u/s. 10AA. No valid reason to interfere with the same and thus, we confirm the same. Accordingly, grounds of Revenue are dismissed.

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• 2018 (12) TMI 596
  N.P. determination - Determining a rate of 4% to disclosed turnover - allowability of depreciation allowance - Held that:- From past profit history chart of the assessee, it is abundantly clear that the average rate of profit of last four years was @ 2.74% of Turnover before Depreciation. Even if immediately preceding year's percentage is considered, it is 3.90%. On that basis estimated net profit @ 4% of turnover of Rs. 59,83,70,923/- will be Rs. 2,39,34,837/-. This net profit would be before depreciation, and depreciation allowance should be provided separately. Whether depreciation allowance should be provided separately or not - Held that:- Depreciation shall have to be allowed separately, even if in case of estimation of net profit. Hence, in assessee`s case under consideration the assessable income is to the tune of Rs. 2,39,34,837/- which would be further reduced by depreciation. It has been held in the case of Lali Construction Co. vs. Asstt. CIT [2014 (9) TMI 500 - PUNJAB & HARYANA HIGH COURT]that depreciation is allowable from net profits, even if total income is computed by applying net profit rate. Thus we consider it fair and direct the A.O. to apply the rate of 4% to disclosed turnover and depreciation should be allowed separately from the profit so arrived by applying rate of 4% to disclosed turnover. - Decided against revenue.

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• 2018 (12) TMI 595
  Disallowance of depreciation to assessee trust - whether depreciation allowable on expenditure incurred for capital purpose where the expenditure was already treated as application of income for the objects of the assessee-trust in terms of section 11(1)(a)? - Held that:- The assessee is a charitable institution registered under section 12A and assessed accordingly. It is the case of the Revenue that once the capital expenditure has been claimed as deduction u/s 11(1)(a) as application of income for the objects of the trust, depreciation claimed on the same assets amounts to double deduction which is not permissible in law having regard to the provisions of section 11(6) of the Act which prohibits such deduction. We find that the Hon’ble Supreme Court in the case of Rajasthan and Gujarati Charitable foundation Poona [2017 (12) TMI 1067 - SUPREME COURT] has held that even if the entire expenditure incurred for acquisition of capital assets is treated as application of income for charitable purpose under section 11(1)(a) of the Act, the assessee would continue enjoy also the benefit depreciation under section 32 of the Act. Hon’ble Supreme Court observed that the argument that the grant of depreciation amounts to giving double benefit to the assessee is not acceptable. Hon’ble Supreme Court further held that specific provisions of section 11(6) which bars claim of depreciation of expenditure incurred for charitable purposes is prospective and applies only from the assessment year 2015-16. The assessee is entitled to depreciation allowance notwithstanding fact that entire expenditure incurred for acquisition of capital assets were admitted as application of income for charitable purpose under section 11(1)(a). - Decided against revenue.

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• 2018 (12) TMI 594
  Income from share transaction - Income to be treated as income under the head short term capital gain or income from business or profession - sale of shares held for less than 30 days - Held that:- On a perusal of the assessment orders passed under section 143(3) of the Act for assessment years 2014–15 and 2015–16, it is evident, though, the assessee offered substantial income from share transaction as short term capital gain compared to business income, the AO has accepted assessee’s claim without treating the short term capital gain as business income. Merely because the business income is shown at a lesser figure, that by itself cannot be a reason to treat the short term capital gain derived from sale of share as business income. More so, when the Assessing Officer has not disturbed the assessee’s claim in any other assessment year. Therefore, applying the rule of consistency also assessee’s claim of short term capital gain has to be accepted. We direct the Assessing Officer to assess the amount of Rs. 4,17,413, received from sale of shares held for less than 30 days and shown under the head short term capital gain as business income. Grounds raised are partly allowed.

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• Customs

• 2018 (12) TMI 619
  EOU Scheme - development of software for export to outside India - depreciation on removal of capital goods - Held that:- N/N. 140/91-Cus., dated 22.10.1991 exempts specified goods, when imported into India by the software development unit, for the purpose of development of software etc. The central excise duty exemption has also been provided under Notification No.1/95, dated 4.1.1995 for domestically procured capital goods for use in development of software for the purpose of export. The duty exemption provided in the said notifications is subject to certain conditions. It is an admitted fact on record that during the course of visit by the Central Excise officers to the unit of the appellant, the registered premises was in possession of some other entity and not with the appellant. Thus, it is evident that as per the condition of the notification as well as the terms of the bond, the appellants had not fulfilled the conditions of use of capital goods/equipment for development of software, meant for export - confirmation of duty/interest demand by the authorities below cannot be faulted with. Depreciation on removal of capital goods from the factory - Held that:- The submissions of the appellants regarding value of depreciated capital goods have not been considered and the duty demand has been confirmed in entirety - the matter should be remanded to the learned Commissioner (Appeals) for examination of such worksheet and other documents for computation of the duty liability afresh. Appeal allowed by way of remand.

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• 2018 (12) TMI 618
  Reclassification of the imported goods - revaluation - goods declared as Aluminium Scrap Throb Grade - Sl.No.579 of N/N. 21/2002-Cus. - Held that:- Indubitably, NML is a reputed and recognized testing centre of a national stature. As such, credence will certainly have to be accorded to these test reports of NML. If the appellants had found any inconsistency or discrepancy in the NML reports, they could have challenged the same or asked for retest of the samples, neither of which been done in this case. In the circumstances, there is no reason to interfere with the reclassification of the goods and also the consequent enhancement of the value. Redemption fine - penalty - Held that:- The enhancement of value is around Rs. 10 lakhs resulting in differential duty liability of around Rs. 4.8 lakhs - there is a case for reduction in the quantum of redemption fine - reduction of redemption fine allowed - quantum of penalty also reduced. Appeal allowed in part.

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• 2018 (12) TMI 617
  Classification of imported goods - membrane elements - whether decided under CTH 84212190 or under CTH 84219900 OF CTA? - N/N. 6/2006-CE dt. 1.3.2006 - Held that:- The undisputed facts are that against the 14 bills of entry filed during the period March 2007 and January 2008. The appellant had declared the classification of the product under CTH 84212190 and availed benefit of N/N. 6/2006-CE dt. 1.3.2006 as amended. The products which fall under Chapter Sub-heading 842121 as mentioned in Column (3) relating to the product Water purification equipment based on the technologies mentioned at Clause (a), (b) and (c) of the said entry is eligible to the benefit of said notification. Therefore the said notification allows exemption to water purification equipment only which are used for purification of water adopting technologies mentioned under Clause (a) to (d). The appellant themselves had admitted that exemption notification to the said product was inserted w.e.f. 1.3.2007 mentioning through new Sr. No. 8B where the classification of sub-heading was shown as 842121. Needless to mention to claim the benefit of an exemption, the burden lies on assessee to satisfy that their case falls within the four corners of the Notification - appeal dismissed - decided against appellant.

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• Service Tax

• 2018 (12) TMI 616
  Principles of natural justice - Classification of services - supply of tangible goods service or GTA Service? - Held that:- The request of the appellant is to allow them to place evidences to show that the services were rendered in Navi Mumbai SEZ area and also the services provided by them are classifiable under port services and not under supply of tangible goods service; the Revenue's contention is that the Ld. Commissioner following the precedent which has been subsequently overruled by the higher forum, dropped the demands - the matters need to be remanded to the adjudicating authority - appeal allowed by way of remand.

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• 2018 (12) TMI 615
  Business Auxiliary Service - job work activities for polishing the utensils on behalf of the other manufacturers - extended period of limitation - Held that:- Since the appellant is a job worker and is not engaged in the manufacture of the excisable goods in its factory, the activity of job work should be considered as a service, leviable to Service Tax under the category of “Business Auxiliary Service” - In view of the Circular dated 15.07.2011, there was ambiguity in understanding the position of law and accordingly, the appellant did not pay the Service Tax liability for the job work activity undertaken by it. Extended period of limitation - Held that:- Since the issue involved genuine interpretation of the statutory provision, the charges of suppression, wilful misstatement, fraud etc. cannot be levelled, for initiation of show cause proceedings beyond the normal period of limitation - admittedly since the SCN was issued beyond the normal period the same, this will not stand for judicial scrutiny. Appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 593
  Insurance Auxiliary Services - exempted output services or not - agents are paid commission based on the insurance premium earned by them - reverse charge mechanism - Principles of natural justice - Held that:- It was directed that claim of the appellants that they have already reversed the credit in excess of demand made by the Authorities be verified. It is seen that they have not verified the fact and correctness of amount of reversal. It has been only been held by the original Adjudicating Authority as well as the Appellate Authority that the appellants did not provide any documentary proof etc. towards the same. The matter requires to go back to the original Authority to examine the issue properly - appeal allowed by way of remand.

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• Central Excise

• 2018 (12) TMI 614
  Rectification of Mistake - Held that:- On going through the case records vis-à-vis the grounds urged in the miscellaneous applications filed by the applicants, it is found that there is no justifiable reason to interfere with the said orders passed by the Tribunal - ROM Application dismissed.

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• 2018 (12) TMI 613
  Valuation - manufacture of Polywool Yarn of different variety - short payment of duty - whether the subjected goods are required to be assessed under Rule 6(b)(i) or under Rule 6(b)(ii) of the erstwhile Central Excise Valuation Rules, 1975? - Held that:- Issue is decided in the case of COMMISSIONER OF CENTRAL EXCISE, THANE VERSUS M/S. ESSEL PROPACK LTD. [2016 (8) TMI 708 - SUPREME COURT], where it was held that Tribunal found that during this period, there was a solitary sale transaction which was at Rs. 100 per k.g. in December, 1997 - In these circumstances, since that was the only comparable price available with the Tribunal, there is nothing wrong in adopting that solitary sale as the basis for arriving at the valuation for the period in question as well - appeal dismissed.

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• CST, VAT & Sales Tax

• 2018 (12) TMI 612
  Taxability - transfer of right to use of non-exclusive trade mark license - Held that:- The exception carved out Clauses (d) and (e) of the paragraph no. 97 of the decision of the Supreme Court in the case of Bharat Sanchar Nigam Ltd. Vs. Union of India and others, [2006 (3) TMI 1 - SUPREME COURT] as have been found in existence in the facts of the present case, would continue to deprive the revenue from imposing any tax on such transactions. The Tribunal also appears to have noted that, in the subsequent years, the revenue authorities have themselves accepted the aforesaid position of law and not imposed tax. Revision dismissed.

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• 2018 (12) TMI 611
  Location of sale - transfer of property in goods - where the situs of a sale is, when the sale is of a trade mark or patent, admittedly assessable to tax as a sale of intangible, incorporeal goods? - penalty. Held that:- In the present case, there is no fiction created so as to bring within the concept of sales, a transaction which ordinarily would not have been termed to be sale of goods. In this context, the submission of the assessee that they had been using the trademark or patent rights in their products which could be sold all over India has to be dealt with. It was also pointed out that, just as the transferor, the transferee also gets the right to use the trademark or patent rights on specified goods which could be marketed and sold anywhere in the country. The consideration of situs of sale insofar as the parties to the transaction herein, the seller and the purchaser, whose principal place of business exist in two different States offers no difficulty insofar as the specific provisions under the CST Act. We are also of the opinion that the amendment to the definition of sale in the CST Act though relevant for the six instances where there is a deemed sale of goods, has no effect insofar as the subject transaction. Dehors the amendment, the sale would come within the concept of sale as available under the CST Act, in which instance we have to look at Section 3, having accepted the sale of a trademark or patent rights as a sale of goods. The situs of the principal place of business, from where the owner of such trademark exercises his right to sell specified goods, under the trademark or enforces his patent rights, which has been obtained by them as a statutory right, is the place where the goods exist. Section 3 of the CST Act, applies on all fours and the agreement of transfer of the intangible, incorporeal rights; nay goods, occasions the movement of the said goods from Kerala to that other State where the transferee has their principal place of business. The agreement executed in Gujarat and Puducherry does not make the sale within that State or Union Territory, as Section 4 of the CST Act provides that sale of goods is deemed to take place in a State, only when the goods are within the State. Otherwise any goods could be taken by the seller to another State and delivered to the purchaser making it an intra-State sale. Assessment of non-competition fee - Held that:- There is no sale of goods in the said transaction and it has to be reiterated that the fees are paid by the purchaser outside the State to the assessee within the State. Hence Exhibit P9 to the extent it assess the non-competition fee is set aside - penalty set aside. Penalty - Held that:- Revision is allowed finding no cause for penalty and as a consequence the revision is rejected. Revision allowed.

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• 2018 (12) TMI 592
  Entitlement to Interest on refund amount - relevant date for calculation of interest - pre-deposit of amount - Held that:- Issue notice.

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