TMI Tax Updates - e-Newsletter
December 15, 2017

Case Laws in this Newsletter:

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

Articles

1. ITBA – suggestion -1 E-Filing portal - Income Tax Business Application (ITBA) module – suggestion to provide for uploading of zip file. Rar file etc.

   By: DEVKUMAR KOTHARI

2. Incentives as Discounts

   By: CA Akash Phophalia

3. INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (GRIEVANCE AND COMPLAINT HANDLING PROCEDURE) REGULATIONS, 2017

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Frequently Asked Questions - GST

2. Government Panel invites suggestions/comments from stakeholders about the provisions of the Insolvency and Bankruptcy Code and the Rules and Regulations notified there under

3. RBI Reference Rate for US $

4. Insolvency and Bankruptcy Board of India issues Guidelines for Technical Standards for Core Services

Notifications

Customs

1. 115/2017 - dated 14-12-2017 - Cus (NT)

Amendment to notification no 40/2012-Cus (N.T.) dt 02.05.2012

2. 114/2017 - dated 14-12-2017 - Cus (NT)

Customs (Furnishing of Information) Rules, 2017

GST - States

3. 64/2017–State Tax - dated 12-12-2017 - Delhi SGST

Waiving off late fee (sec 47) for the month of october

4. 57/2017-State Tax - dated 12-12-2017 - Delhi SGST

Extension of time to file GSTR-1 quaterly

5. 33/2017-State Tax (Rate) - dated 12-12-2017 - Delhi SGST

Amendment in Notification No. 13/2017- State Tax (Rate), dated the 30th June, 2017

6. NO.F.1-11(91)-TAX/GST/2017(Part-IIIA)-32/2017–State Tax (Rate) - dated 2-11-2017 - Tripura SGST

Notification No.32/2017-State Tax (Rate), dated 02/11/2017

7. NO.F.1-11(91)-TAX/GST/2017(Part-IIIA)-31/2017-State Tax (Rate) - dated 2-11-2017 - Tripura SGST

Notification No.31/2017-State Tax (Rate), dated 02/11/2017

8. NO.F.1-11(91)-TAX/GST/2017(Part-IIIA) - dated 2-11-2017 - Tripura SGST

Notification No.33/2017-State Tax (Rate), dated 02/11/2017

9. NO.F.IV-3(15)-TAX/17(P-1) - dated 31-10-2017 - Tripura SGST

Corrigendum of the Order regarding classes of officers with their jurisdiction under TSGST Act

10. No. F.1-11 (91)-TAX/GST/2017 (Part-VIII)-30/2017-State Tax (Rate) - dated 31-10-2017 - Tripura SGST

Notification No.30/2017-State Tax (Rate), dated 31/10/2017

11. 1854-F.T.- 49/2017-State Tax - dated 18-10-2017 - West Bengal SGST

Seeks to notify the evidences required to be produced by the supplier of deemed export supplies for claiming refund under rule 89(2)(g) of the WBGST rules, 2017

12. 1853-F.T.- 48/2017-State Tax - dated 18-10-2017 - West Bengal SGST

Seeks to notify certain supplies as deemed exports under section 147 of the WBGST Act, 2017

13. 1851-F.T.- 39/2017-State Tax(Rate) - dated 18-10-2017 - West Bengal SGST

Seeks to reduce GST rate on Food preparations for free distribution to economically weaker sections of the society (Pushtahaar)

14. 1802-F.T.- 38/2017-State Tax (Rate) - dated 13-10-2017 - West Bengal SGST

Seeks to exempt payment of tax under section 9(4) of the WBGST Act, 2017 till 31/03/2018

15. 1801-F.T. - 37/2017-State Tax (Rate) - dated 13-10-2017 - West Bengal SGST

Seeks to prescribe State Tax rate on the leasing of motor vehicles [37/2017(R)]

16. 1800-F.T.- 36/2017-State Tax (Rate) - dated 13-10-2017 - West Bengal SGST

Seeks to amend Notification No. 1128-F.T. dated 28/06/2017 [04/2017(R)]

17. 1799-F.T. - 35/2017-State Tax (Rate) - dated 13-10-2017 - West Bengal SGST

Seeks to amend Notification No. 1126-F.T. dated 28/06/2017 [02/2017(R)]

18. 1798-F.T.- 34/2017-State Tax (Rate) - dated 13-10-2017 - West Bengal SGST

Seeks to amend Notification No. 1125-F.T. dated 28/06/2017 [01/2017(R)]

19. 1797-F.T. - 33/2017-State Tax (Rate) - dated 13-10-2017 - West Bengal SGST

Seeks to amend Notification No. 1137-F.T. dated 28/06/2017 [13/2017(R)]

20. 1796-F.T.- 32/2017-State Tax (Rate) - dated 13-10-2017 - West Bengal SGST

Seeks to amend Notification No. 1136-F.T. dated 28/06/2017 [12/2017(R)]

21. 1795-F.T. - 31/2017-State Tax (Rate) - dated 13-10-2017 - West Bengal SGST

Seeks to amend Notification No. 1135-F.T. dated 28/06/2017 [11/2017(R)]

22. 1794-F.T.- 46/2017-State Tax - dated 13-10-2017 - West Bengal SGST

Seeks to amend Notification No. 1142-F.T. dated 28/06/2017 for increasing monetary limit of Composition Levy

23. 1793-F.T.- 45/2017-State Tax - dated 13-10-2017 - West Bengal SGST

West Bengal Goods and Services Tax (Ninth Amendment) Rules, 2017

24. 1792-F.T.- 40/2017-State Tax - dated 13-10-2017 - West Bengal SGST

Seeks to make payment of tax on issuance of invoice by registered persons having aggregate turnover less than ₹ 1.5 crores

25. 1791-F.T.-39/2017-State Tax - dated 13-10-2017 - West Bengal SGST

Seeks to cross-empower Central Tax officers for processing and grant of refund

26. 1790-F.T. - 38/2017-State Tax - dated 13-10-2017 - West Bengal SGST

Seeks to amend Notification No. 1642-F.T. dated 15/09/2017 so as to add certain items to the list of “handicrafts goods”

Income Tax

27. 97/2017 - dated 12-12-2017 - IT

U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Manipur State Rural Road Development Agency’, a body established by Government of Manipur, in respect of the specified income arising to the body

Money Laundering

28. 10/2017 - dated 13-12-2017 - PMLA

Central Government notifies the 31st March, 2018 or six months from the date of commencement of account based relationship by the client

Circulars / Instructions / Orders

GST - States

1. NO.F.1-1 (100)-TAX/GST/2017/9425-32 - dated 31-10-2017

Order regarding extension of time limit for submitting application in FORM GST REG-26

2. NO.F.1-11(100)-TAX/GST/2017/9441-48 - dated 31-10-2017

Order regarding extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 of the TSGST Rules, 2017

3. NO.F.1-11(100)-TAX/GST/2017/9433-40 - dated 31-10-2017

Order regarding extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the TSGST Rules, 2017

4. Order No. 01/2017-State Tax - dated 13-10-2017

West Bengal Goods and Services Tax (Removal of Difficulties) Order, 2017

Highlights / Catch Notes

Income Tax

• No Addition u/s 40(a)(ia) for Non-Deduction of TDS on Interest, No Deduction Claimed by Assessee.

  Case-Laws - AT : TDS u/s 194A - addition u/s 40(a)(ia) for non-deduction of TDS against payment of interest on loan - The Assessee has not claimed deduction of interest. So there is no question of making addition. - AT
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• Court Rules Against 50% Income Estimation for Medical Professional; Lack of Evidence for Enhanced Assessment.

  Case-Laws - HC : Rejection of books of account - estimation of income from the profession of surgery and consultancy - Whether there exist any basis for estimating the income from the medical profession as carried on by the assessee @ 50% of the receipts, as enhanced? - Held No - HC
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Customs

• Customs 2017 Rules: Mandatory Data Submission for Compliance; Enhancing Transparency & Efficiency in Customs Operations.

  Notifications : Customs (Furnishing of Information) Rules, 2017 - Notification
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• Court Rules Unpaid Charges Don't Block Exemption Grant; Applicants Weren't Warned of Possible Denial During Process.

  Case-Laws - HC : Cost recovery charges - in the present case, nonpayment of the charges cannot be the base for rejecting the grant of exemption from the date of the application. This is so because admittedly all the while when such application was pending, the petitioners were never conveyed that such application shall not be processed, entertained or granted since the current charges are not paid. - HC
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VAT

• Court Rules on AO's Jurisdiction: Tax Assessment Order Exceeded 5-Year Limit, Invalidated 10% CST Tax Imposition.

  Case-Laws - HC : Jurisdiction - power of AO to pass order after almost 11 years from the end of the year which is beyond the period of limitation - imposition of the additional tax @ 10% for non-submission of Form 'C' for CST sales - When a statute mandates re-assessment to be done, within five years, it cannot be contended that assessment can be done at any time - HC
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Case Laws:

• Income Tax

• 2017 (12) TMI 681
  Undisclosed gold jewellery - It was argued that it displayed in the marriage after hving been taken out from the stock and subsequently placed back in the stock - Held that:- We find that the document B-31 relied against the assessee records entries that were considered adverse both to the assessee, and also his brother. The nature of these entries and the manner in which they have been recorded is same in both cases. The document having been read by the Tribunal in favour of the assessee's brother, we do not see how the Tribunal could have read it differently in the case of the present assessee. Perhaps, the only reason to read it differently was because of mistake that crept in the order of the Tribunal when it recorded that certain gold jewellery had been seized from the assessee. However, as has already been noted above, no gold jewellery was seized from the assessee. Thus, the case of the assessee and his brother, Ravindra Kishore was same and identical. There is thus, no material to justify the addition on account of undisclosed gold jewellery. - Decided in favour of assessee.

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• 2017 (12) TMI 680
  Rejection of books of account - estimation of income from the profession of surgery and consultancy - Whether there exist any basis for estimating the income from the medical profession as carried on by the assessee @ 50% of the receipts, as enhanced? - Held that:- No evidence exists to doubt the correctness or completeness of the books of account of the assessee. In the instant case, books of account of the assessee were rejected unfounded suspicion. Absence of vouchers, in the peculiar facts of this case did not give rise to any presumption that there was any non-disclosure of income inasmuch as there is no evidence to doubt the correctness of the entries made in the OPD register as also Indoor Patient register. For the A.Y. 2008-09 the assessee had been assessed under Section 143(3) of the Act at a total income of Rs. 2,84,371/-. In that assessment the books of account of the assessee were also accepted. It clearly appears that the income disclosed by the assessee in the present year is similar or comparable to the income which the department assessed at the hands of the assessee five years later. This fact itself indicates that the rejection of books of account and the consequential best judgment assessment made by the assessing officer in the present year is wholly excessive, arbitrary and unfounded. Thus answer question no.1 in favour of the assessee and against the revenue. We have found that the rejection of books of account of the assessee was unfounded. Consequently the estimation and enhancement of income that followed also cannot be sustained - Decided in favour of assessee.

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• 2017 (12) TMI 679
  Addition u/s 41 - remission of liability - Held that:- Tribunal did not render a final finding, but it was of the prima facie view that there is a remission of liability in favour of the assessee company and that this is the paramount issue, which the Assessing Officer has to examine. Thus, the Assessing Officer, having examined and held against the assessee, which decision was reversed by the Commissioner of Income Tax (Appeals), the Tribunal should consider as to whether the Commissioner of Income Tax (Appeals) was justified in rendering a finding to the effect that there was reduction on the liability in the hands of the assessee. However, the Tribunal did not do so, but was solely guided by the observations made by it in the earlier order. We are of the considered view that as the earlier order was of the prima facie view, the Tribunal is required to consider independently as to whether the finding rendered by the Commissioner of Income Tax (Appeals) is proper or not and that the matter should be remanded to the Tribunal for a fresh consideration. Accordingly, the above tax case appeal is allowed, the impugned order is set aside and the matter is remanded to the Tribunal for a fresh consideration

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• 2017 (12) TMI 678
  Addition u/s 41 - cessation or remission of liability - Held that:- The fact that the assessee did not show the amount in its profit and loss account may itself not invite applicability of Section 41 of the Act. Treatment given in accounting entries does not give rise to taxable event. To invoke Section 41 of the Act, the initial burden was on the revenue to establish cessation or remission of liability of Rs. one crore. That burden was not discharged. In as much as it had been found by the CIT (Appeals) and the Tribunal that the amount of Rs. one crore received by the assessee from M/s Widecom Group INC. had been adjusted against the sale price payable to the assessee by that entity, there did not survive any scope to invoke section 41 of the Act in favour of the revenue. Thus Question no. 1 as raised in the memo of appeal is answered in favour of the assessee Cessation of liability in terms of provisions of Section 41(1) - Assessee company is a wholly owned subsidiary of Widecom Group Inc, Canada - Held that:- the assessee is a subsidiary of M/s Widecom Group INC is of no consequence in the facts and circumstances of the case. It is admitted that the two companies are separate juristic persons. Also, there is nothing to doubt the genuineness of the transaction of sale of goods made by the assessee to M/s Widecom Group INC. Thus, Question no. 3 is answered in favour of the assessee and against the revenue.

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• 2017 (12) TMI 677
  Assessment against legal heirs - making the petitioners liable for the alleged income tax, which was payable by the petitioners' father - Held that:- This Court finds that the issues canvassed by the petitioners in these writ petitions are complicated questions of fact. Rather they are disputed questions of fact, which are needed to be established by the petitioners - the propounders of the affidavits. Therefore, the petitioners should necessarily avail the remedy under the provisions of the Income Tax Act, 1961, which provides for an appeal before the Income Tax Appellate Tribunal. Further, it is relevant to point out that the Tribunal, being the last forum, which can adjudicate into the factual disputes, would be well within its jurisdiction to call for the records, examine and appreciate the correctness of the same, make a thorough exercise and then come to a conclusion as to whether the order of assessment has been passed in a proper manner in due compliance of the provisions of the said Act. Hence, the petitioners have to avail the appeal remedy provided under the said Act. For all the above reasons, this Court holds that the writ petitions are not maintainable.

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• 2017 (12) TMI 675
  Notice under Section 226 (3) - second respondent is due and payable of the income tax and certain monies of the second respondent were lying with the hands of the petitioner/Bank - Held that:- As per recent amendment to Securitisation And Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI Act) viz., Section 20 E, and Section 31 B of the Recovery of Debts and Bankruptcy and Financial Interest Act (RD & BFI Act), the secured creditor shall have precedence over all dues, over the Central and the State Government. Also the petitioner, being a secured creditor, is entitled to exercise their rights under Section 35 of the SARFAESI Act, and the question of issuing notice under Section 226 (3) of the Income Tax Act does not arise. See case of Assistant Commissioner (CT) Anna Salai-III Assessment Circle Vs. The Indian Overseas Bank [2016 (12) TMI 373 - MADRAS HIGH COURT] Thus as there is no dispute to the fact that the petitioner is a secured creditor, and in such circumstances, they have precedence over all the dues, payable to the Central Government and the State Government. The impugned notice cannot be enforced against the petitioner/Bank, and it is held to be not sustainable in law. - Decided against revenue

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• 2017 (12) TMI 674
  Addition under section 153A - addition u/s 68 - Held that:- In the facts of the present case, the Tribunal has recorded a finding of fact to the effect that no incriminating material had been found during the course of the search proceedings and that the statement of the director which is stated to have been recorded during the course of search under section 131 of the Act, and which forms the basis for the impugned addition, was recorded much later on 7.12.2009. In the light of the cited decision Principal Commissioner of Income Tax v. Saumya Construction P. Ltd., [2016 (7) TMI 911 - GUJARAT HIGH COURT] it was not permissible for the Assessing Officer to make any addition under section 153A of the Act when no incriminating material had been found during the course of the search. Lack of approval under section 153D - Whether it would invalidate the assessment order and was not a curable defect? - Held that:- In the facts of the present case, as the assessment order has been passed by an Income Tax Officer, the requirement of obtaining the prior approval of the Joint Commissioner under section 153D of the Act was absolute. The Tribunal, however, has recorded a finding of fact that there is nothing on record to indicate that the prior approval of the Joint Commissioner was obtained. As a natural corollary therefore, in the absence of the requirement of prior approval of the Joint Commissioner being satisfied, the whole proceeding would stand invalidated. The Tribunal was, therefore, wholly justified in holding that the impugned order of assessment would stand vitiated in view of non-compliance of the provisions of section 153D of the Act. On this count also, therefore, the appeal, does not merit acceptance.

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• 2017 (12) TMI 673
  Reopening of assessment - claim of bad debts - Held that:- When the proceedings in respect of M/s. Kala Mines was decided in appeal and the issue of bad debts was resolved, the Respondent came to know about the income that has escaped assessment and the Petitioner ought to have placed these orders on record. We are not inclined to agree with these submissions. What the proviso to Section 147 postulates is material which was necessary for assessment, which the Assessee failed to fully and truly disclose. There is no clear statement in the reasons as to which material the Petitioner failed to disclose. On the Department's own showing in view of subsequent events that is the appeal of M/s. Kala Mines being allowed, that the reopening of the assessment was necessary. Even in the order, there is no reference to the argument of the Petitioner that he had not failed to disclose fully and truly all material facts. It is not enough that in the reasons supplied there is one line to the effect that 'due to failure on the part of the assessee to disclose fully and truthfully all material facts necessary for his assessment for the relevant Assessment Year, AY 2010-11'. This is just copying and incorporating the language of the section to assume jurisdiction. Such mere lip service is not enough. The jurisdictional requirement in the present case, namely, the failure of the assessee to fully and truly disclose all material facts, is not established. Furthermore, there are no particulars in the reasons supplied to the Petitioner which alone could be the foundation of the order passed under Section 148 of the Act. - Decided in favour of assessee.

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• 2017 (12) TMI 672
  Income from the share trading - Capital gain or business income - Held that:- The number of scrips purchased and sold during the year was 100% more than the last assessment year. As also observed that in the turnover of purchase value and sale, there is a huge increase from Rs. 2.37 crores to 5.98 crores. It was found as a matter of fact that the assessee earned Rs. 16.10 lakhs on the trading of shares which were held by him only for a period of one to seven days. Thus, a finding of fact was recorded that major portion of STCG was out of the sale of shares that were held only for a maximum period of one week. Thereafter, the Appellate Tribunal referred to the finding of the first Appellate Authority. Short holding period, volume of the scrips and frequency of the transactions are major factors to decide the issue as to whether the assessee is an investor or was doing business in shares and security. After considering the peculiar facts of the relevant assessment year namely that the STCG of Rs. 16.62 lacs was from the shares which were held for a maximum period of one week, the finding of fact recorded by the first Appellate Authority has been upheld by the Appellate Tribunal. As already quoted above, a sum of Rs. 16,62,262/was held as business income. In our view, the findings of fact recorded by the Appellate Tribunal are based on record.

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• 2017 (12) TMI 670
  Assumption of jurisdiction by the TPO and subsequently the ultimate reference to the dispute resolution panel - denial of principles of natural justice - not to to afford a reasonable opportunity of hearing to the assessee concerned - Held that:- In the facts of the present case, although the circular dated March 10, 2016 was not in vogue at the material point of time, the applicability of the principles of natural justice and the requirement of the assessing officer deciding on a jurisdictional fact cannot be denied. The section as it stands requires the assessing officer to take a decision on a jurisdictional fact. That by itself implies that, the assessing officer while taking a decision on such jurisdictional fact, ought to afford a reasonable opportunity of hearing to the assessee concerned and thereafter pass a speaking order. AO not having afforded any opportunity of hearing to the first petitioner on the jurisdictional issue raised, it ought not to have transferred the matter to the TPO. The assessing officer has acted in breach of the principles of natural justice in doing so. The assumption of jurisdiction by the TPO and subsequently the ultimate reference to the dispute resolution panel are therefore at fault, in the facts of the present case. Thus setting aside the writing dated April 16, 2015 of the TPO and the dispute resolution panel subsequent thereto. The assumption of jurisdiction by the TPO is set aside. The assessing officer is requested to proceed on the basis of the show cause issued by him dated March 11, 2015 and the reply given thereto by the assessing concerned contained in the writing dated March 24, 2015, in accordance with law, and in consonance with the circular of the department dated March 10, 2016.

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• 2017 (12) TMI 669
  Nature of income - falling under income to business or income from house property - premises for the purpose of carrying out its obligations under warehousing transaction - Held that:- The transactions are such that they have to be treated as one where the respondent carries on its activity of warehousing and in the course of such activity, utilizes its premises for the purpose of carrying out its obligations under warehousing transaction. Those do not contain the salient features of lease of immovable property and cannot be considered as one falling purely as utility of house property to generate income as such. We arrive at this conclusion on the basis of the findings rendered by the Tribunal through which it has reversed decision of the first appellate authority and the assessing authority after duly adverting and considering the relevant facts and materials and by assimilating the nature of the transaction of the assessee-corporation. The concept of letting of a property by an owner is clearly distinct in business parlance and commercial parlance from utilizing the premises available to a person for carrying out the activity of letting such premises to use, in the course of its activity, particularly warehousing. In this view of the matter, we are guided by the principles of law laid down in Sultan Brothers (1963 (12) TMI 4 - SUPREME Court) and we cannot but conclude that the findings rendered by the Tribunal essentially rest as mixed question of law and facts. - Decided against revenue

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• 2017 (12) TMI 668
  TDS u/s 194H - failure to make TDS on the agency commission paid - Held that:- Transactions between the appellant and the Ad Agencies are based on principal to principal basis. Therefore, appellant was not under any obligation to deduct tax u/s 194H. - Decided against revenue

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• 2017 (12) TMI 667
  Computation of capital gain - AO treated the expenses incurred by the assessee on the construction to be bogus - Held that:- The assessing officer or revenue did not brought on record any evidence proving that bills are not genuine or bogus even no confirmation except Axiom Buildwell Pvt. Ltd. was asked for. The assessing officer simply treated the expenses incurred by the assessee on the construction to be bogus. As decided in the case of Daulat Ram Rawatmull [1972 (9) TMI 9 - SUPREME Court] that onus is on the party which alleges that apparent is not real. No cogent material or evidence is brought to our knowledge by the ld. DR which may prove that the expenditure incurred by the assessee were bogus, not only this, we noted from the copy of the balance sheet audited balance sheet of the assessee along with schedule of the fixed assets available at page 67 that the assessee has duly shown the addition in the building at Noida amounting to Rs. 1,06,08,738/-. The assessing officer in correctly mentioned in the assessment order that in the schedule of the fixed assets cost of the building has been shown only at Rs. 6763526/-. Thus we set aside the order of the CIT(A) and delete the addition made by the assessing officer confirmed by the CIT(A) which was just based on the assumption and the presumptions without bringing any evidence on record. - Decided in favour of assessee.

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• 2017 (12) TMI 664
  Interest u/s 234B for not paying the alternative minimum tax as per scheme of advance tax u/s 208 - assessee made payment of alternative minimum tax under the provisions of section 115JC - Held that:- Hon’ble Supreme Court in case of JCIT vs. Rolta India Ltd. (2011 (1) TMI 5 - SUPREME COURT OF INDIA) has decided this issue on merit after considering the decision of Hon’ble Karnataka High Court in case of Kwality Biscuits Ltd. vs. CIT [1999 (11) TMI 48 - KARNATAKA High Court] and held that the interest u/s 234B and 234C shall be payable on failure to pay advance tax in respect of the tax payable u/s 115JA and 115JB. Following the decisions of above we do not find any error or illegality in the impugned orders of the ld. CIT(A). - Decided against assessee.

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• 2017 (12) TMI 663
  Reopening of assessment - Time limit for notice - period of limitation - assessment barred by limitation - Held that:- Hon’ble kerala High Court in case of CIT Vs. Vaikundam rubber Co. Ltd. (2000 (11) TMI 52 - KERALA High Court ) and accordingly hold that the limitation for reassessment has to be considered on the date when the ld. CIT (A) passed the order in case of M/s Tirupati Automobiles Pvt. Ltd. which was subject matter of appeal before the Tribunal in which the Tribunal passed the directions on 26.03.2010. There is no dispute that the ld. CIT(A) in case of M/s Tirupati Automobiles Pvt. Ltd. passed the order on 15.07.2009 and on that date the limitation for reassessment for the assessment years 2001-02 & 2002-03 already expired as 6 years from the end of the relevant assessment years expired on 31.03.2008 and 31.03.2009 respectively. Therefore, the limitation as on the date of the order passed by the ld. CIT(A) dated 15.07.2009 was not available for reassessment of this income for these two assessment years. Accordingly, the reopening of the assessment is barred by limitation as provided u/s 149 r.w.s. 150(2) of the Act. - Decided in favour of assessee.

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• 2017 (12) TMI 662
  Scope of assessment u/s 153C - addition u/s 68 - Held that:- Additions made by the AO are beyond the scope of section 153C because no incriminating material or evidence had been found during the course of search so as to doubt the transactions. It was noted that in the entire assessment order, the AO has not referred to any seized material or other material for the year under consideration having being found during the course of search in the case of assessee, leave alone the question of any incriminating material for the year under appeal - Decided in favour of assessee.

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• 2017 (12) TMI 661
  Scope of assessment u/s 153A - Disallowance of deduction u/s. 35D - Disallowance of claim of indexation on the sale of property - Held that:- We find that the additions made by the AO are beyond the scope of section 153A of the Income Tax Act, 1961, because no incriminating material or evidence had been found during the course of search so as to doubt the transactions. It was noted that in the entire assessment order, the AO has not referred to any seized material or other material for the year under consideration having being found during the course of search in the case of assessee, leave alone the question of any incriminating material for the year under appeal. - Decided in favour of assessee.

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• 2017 (12) TMI 660
  Revision u/s 263 - assessment order is erroneous and prejudicial to the interest of revenue in allowing depreciation on the 3G Spectrum cost claimed by the assessee under section 32(1) - CIT-A directing the AO to instead allow deduction under section 35ABB on the ground that the 3G Spectrum was only an extension of the original license for operating telecom services and not a separate intangible asset - Held that:- From the judgment of Hon’ble Supreme Court in the case of Smifs Securities Ltd. (2012 (8) TMI 713 - SUPREME COURT) and the facts of the present case, it is clear that the assessee has rightly claimed depreciation under section 32 of the Act on 3G spectrum. It means that the expenditure towards 3G Spectrum is not expenditure for acquiring any right to operate telecommunications services. Out of the service areas in which 3G spectrum was won by the assessee, it had acquired the rights to operate telecommunication services in the year 1995-1997 for Maharashtra, Gujarat, Uttar Pradesh West, Madhya Pradesh, Haryana. Andhra Pradesh, Kerala, Punjab telecom circles. In year 2001-02 it acquired rights for Himachal Pradesh, Uttar Pradesh East and thereafter in the year 2007-08 for Jammu & Kashmir. Even if 3G Spectrum was not applied or allotted, assessee could have still continued providing telecommunication services under existing license. The license to operate telecom services is issued u/s. 4 of the Indian Telegraph Act, 1885 which provide rights to establish and operate telecom services. As stated above, without such license one is not ever eligible to bid for 3G Spectrum. 3G Spectrum fees are merely for right to use a particular frequency/spectrum while providing telecommunication services. In view of the above, even the provisions of section 35ABB of the act are not applicable to such payment. In view of these facts, we are of the view that the assessee is entitled for claim of depreciation on merits also and AO has rightly allowed the claim while framing assessment under section 143(3) of the Act and the revision order of CIT Under section 263 of the Act is bad in law. - Decided in favour of assessee.

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• 2017 (12) TMI 659
  Deduction u/s. 80IA - assessee is doing a works contract - whether assessee is a works contractor or a a developer? - Held that:- The assessee is doing contract work but that work is according to the requirement and specification of the customer and the same has been done by using materials purchase from third parties other than the customers. Thus, though the assessee is doing a works contract the same would not fall within the meaning of the word ‘works contract’ for the purpose of the Act due to the exclusion provided in the meaning of ‘work’ in section 194C of the Act. The issue raised by the Ld. CIT that the assessee is not doing the development work but is only doing the contract also does not stand to test as the assessee admittedly is developing the roads and railway lines and the bridges thereof. Development encompasses within itself contract work. The agreement between the assessee and the customer being the government is for the development of the infrastructure facility being roads and rail systems and bridges by participating in the tenders. Under these circumstances, we are of the view that the AO was right in law in granting the assessee the benefit of deduction u/s. 801A(4) of the Act. See ARSS Infrastructure Projects Ltd. Versus ACIT [2014 (1) TMI 847 - ITAT CUTTACK ] Also this Tribunal in assessee’s own case for A.Ys 2008-09, 2009-10, 2010- 11 and 2007-08 [2017 (6) TMI 776 - ITAT KOLKATA] held that assessee is a developer vide order dt. 07-10-2016. Also see case of M/s. GVPR Engineers Ltd &Ors [2012 (4) TMI 149 - ITAT HYDERABAD ] - Decided against revenue

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• 2017 (12) TMI 658
  Addition on account of unexplained cash credit and unexplained money u/s 69A - Held that:- AO did not bring any cogent evidence to disprove the same. We note that AO had raised a controversy about the receipt of the money from the assessee by his father. The assessee’s father has categorically stated in his affidavit that he has received the amount. In respect of non-filing of return by the assessee’s father for the A.Y 2009-10, we are of the view that this cannot result in any taxation in the assessee’s hand because sale was agricultural land and does not attract capital gain tax. Therefore the addition of Rs. 54,20,000/- made by the AO has been rightly deleted by CIT(A). Regarding the addition of Rs. 14,00,000/-, we are of the view that assessee during the assessment proceedings had provided to the AO a copy of the sale bill in respect of the household articles of his father. The AO did not bring on record and cogent evidence to prove that sale bills of household articles are bogus. Based on the factual position, we are of the view that order passed by the CIT(A) does not contain any infirmity. Therefore, we confirm the order passed by the ld. CIT(A). Addition under the head of unexplained expenditure and addition under the head concealed income earned from security charges - Held that:- AO during the assessment proceedings made his own estimate of what the assessee would have spent but we observe that the assessee had been supported by his son and his father was getting tax free pension which was sufficient to meet the family expenses. Therefore, considering the factual position, we are of the view that the order passed by the CIT(A) does not contain any infirmity. Therefore, we confirm the order passed by the CIT(A). Regarding securities charges AO treated the sum of Rs. 71,937/- as concealed income ignoring the explanation that the amount paid to security personnel had to be increased by the like amount and consequential there would be no effect on the income. We note from the remand report that the AO has not controvert the fact that payment of Rs. 71,937/- to security personnel was debited to the security service charges received account resulting in netting off of the receipts to that extent. Therefore, the assessee’s explanation that if the security charges received were to be increased by Rs. 71,937/- to Rs. 2,34,473/-, the payment made to security personnel of Rs. 65,364/- was also required to be correspondingly increased by Rs. 71,937/- with no effect on the taxable income is quite acceptable and therefore, we confirm the order passed by CIT(A). Revenue appeal dismissed.

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• 2017 (12) TMI 657
  Addition on account of transfer fees and premium received from members on utilization of Transfer of Development Rights - concept of mutuality - Held that:- Issue relating to taxability of the amount of trans charges is squarely covered in favour of the assessee by the decision of Hon’ble Bombay High Court in assessee 's own case for the previous years wherein the decision of the Tribunal holding that voluntary contribution received by the assessee society from its members as transfer charges is not liable to tax on the basis of principle of mutuality was upheld by the Hon’ble Bombay High Court [2011 (7) TMI 1306 - BOMBAY HIGH COURT] following its earlier decision rendered in the case of Sind Co-operative Housing Society vs. ITO [2009 (7) TMI 15 - BOMBAY HIGH COURT ] - Decided in favour of assessee.

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• 2017 (12) TMI 656
  Nature of income - sale of shares and securities - business income or short term capital gain - Held that:- We are of the view that in assessee’s case under consideration, the Department had been accepting the same account of income as short-term capital gain in assessment years 2005-06 to 2007-08. We note that the Department has been consistently accepting the assessee as an Investor and not a trader, in past assessment years therefore, we do not uphold the order of the ld. CIT(A), following the Rule of consistency.The revenue should follow the consistency in taxing a particular income of the assessee. For that we rely on the judgment of the Hon’ble Supreme Court in RadhasoamiSatsang vs. CIT (1991 (11) TMI 2 - SUPREME Court). So, we do not uphold the order of the ld. CIT(A) and we direct the CIT(A) to treat the assessee as an investor TDS u/s 194A - addition u/s 40(a)(ia) for non-deduction of TDS against payment of interest on loan - Held that:- The computation of income contained in the return of income does not show any income under the head "Business or Profession". The Assessee has not claimed deduction of interest. So there is no question of making addition. The borrowings were not utilized in acquisition of shares. As the transactions of shares have mostly been treated as done on investment account, therefore, there is no basis for addition of interest u/s.40(a)(ia) and hence we confirm the order passed by CIT(A). Addition on account of low drawing by the assessee - Held that:- A.O. has not brought on record unusually high level of standard of living, if any. In the family of 4-5 persons drawing aggregating to Rs. 5,59,958/- appears reasonable on the facts on record. Therefore, considering the factual position, we do not find any infirmity in the order passed by the CIT(A), therefore, we confirm the order passed by the CIT(A).

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• 2017 (12) TMI 655
  Allowability of claim of interest expenses u/s 36(1)(iii) - Held that:- The case of the assessee further supported by the decision of the Hon'ble Bombay High Court in case of CIT Vs. Reliance Utilities and Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] wherein it has been held that if the assessee has higher non-interest bearing funds available then the non interest bearing advances, then the presumption lies in favour of the assessee that such advances are out of such interest free funds available. In the present case the total interest free shareholders fund available with the assessee is Rs. 6.16 crores whereas the total interest free loans to the companies is Rs. 61.06. lacs, loan to suppliers is Rs. 93.83 lacs and to other is Rs. 1.18 lacks. Therefore, we direct the ld AO to delete the disallowance of Rs. 1428923/-. Therefore, ground Nos. 1 to 3 of the appeal are allowed. Non granting of TDS credit - Held that:- Admittedly, the assessee did not make the claim for TDS in the return of income though offered the income of interest from which tax is deducted for taxation. Hon'ble Delhi High Court in CIT Vs. Jai Parabolic Springs Ltd [2008 (4) TMI 3 - DELHI HIGH COURT] has held that there is no prohibition on the powers of the appellate authorities to entertain the additional claim for the just decision of the case. Therefore, accordingly, we reverse the finding of the lower authorities and direct the ld AO to verify the claim of the assessee of TDS of credit and if found in accordance with the law same may be granted. In the result appeal of the assessee is allowed with above direction. Addition on account of closing stock - Held that:- In the present case the difference is of 8346 bags. On principle we agree with the findings of the lower authorities, that if a different stock in quantity is shown to the banker then in the books before the revenue authorities the balance difference is required to be added in the hands of the assessee as income. However, as the lower authorities has not given proper opportunity of reconciliation of the stock to the assessee the issue is set aside to the file of the ld Assessing Officer with a direction to the assessee to produce the quantitative register maintained before the excise authorities as stated in the reply before the ld AO before the expiry of three months from the date of the receipt of this order and reconcile the difference. The ld Assessing Officer is directed to verify the claim of the assessee and if the stock register balance with the Excise authorities and the bank are not reconciled, to that extent the addition may be made. - Decided in favour of assessee. Addition of miscellaneous expenses - Held that:- We direct the AO to delete the disallowance of Rs. 52000/- out of telephone expenditure as the above expenditure was incurred by the company for the director for official use. Accrued interest on post office saving certificate and national savings certificate - Held that:- We set aside this issue back to the file of the ld AO to compute the interest income accrued during the year and tax the same as only that much income can be said to have accrued to the assessee during the year. Accordingly, ground No. 3 and 4 of the appeal of the assessee are allowed with above direction.

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• 2017 (12) TMI 653
  Treatment of the transaction of purchase and sale of shares - capital gains or business income - CIT(A) erred in treating the Short Term Capital Gain as Business Income - Held that:- We find that the ld. Commissioner of Income Tax (Appeals) has duly followed the ITAT decision in the assessee’s own case which is in appeal before the Hon'ble jurisdictional High Court. As rightly pointed out by the ld. Departmental Representative, the ld. Commissioner of Income Tax (Appeals) has correctly followed the ITAT order with respect to the short term capital gain shown by the assessee and has already granted relief in respect of the long term capital gain, the facts about which were different. Accordingly, we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals). Accordingly, we uphold the same.- Decided against assessee

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• 2017 (12) TMI 652
  Validity of assessment against non existent amalgamated company - Held that:- In the present case the assessment was framed by the AO on the non-existent amalgamated company, not on the amalgamating company. Therefore, the assessment framed was void ab initio and accordingly the same is quashed. Since, we have quashed the assessment framed by the AO therefore no separate finding is being given on the issues raised in the Departmental appeal. - Decided in favour of assessee.

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• 2017 (12) TMI 650
  TPO - selection of comparable - Held that:- Assessee is engaged in provision of information technology (IT) enabled services in the nature of survey programming, data collection, data analysis and business research, thus companies functionally dissimlar with that of assessee need to be deselected from final list. Working capital adjustment - Held that:- We are in agreement with the Ld. Counsel, that while comparing the margins earned by the comparable companies there is always the assessee, the difference on account of working capital employed should also be factored into. In order to improve the reliability of results, the financial data of comparable companies are required to be adjusted. This Tribunal in Mentor Graphics Noida Pvt. Ltd.[2007 (11) TMI 339 - ITAT DELHI-H] and Sony India [2006 (10) TMI 88 - DELHI HIGH COURT] has held that in practice such adjustments usually include adjustments for accounts payable, accounts receivable and inventory.

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• 2017 (12) TMI 647
  Capital gain on sale of land - LTCG OR STCG - Held that:- The assessee claims that the payment towards acquisition of land was made in October-1996 as evidenced from the formal purchase-deed dated 04/01/2007. The formal purchase-deed has been executed which merely ratifies earlier act of acquisition and possession. Thus, when accounted from the date of possession vouched by payment of consideration, we find no rationale in the appeal of the Revenue. The CIT(A), in our view, has come to a rightful conclusion while holding the Asset sold to be Long Term Capital Asset. We do not find any error in the process of reasoning adopted by the CIT(A). - Decided against revenue

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• 2017 (12) TMI 646
  Penalty u/s 271(l)(b) - no proper notice giving “reasonable opportunity of being heard” to the assessee - Held that:- the notice has been issued for six years comprising AYs. 2008-09 to 2013-14, fixing the compliance on one single day. It is noteworthy that the non- application of mind of the AO is glaringly evident from the fact that though as per the heading of the notice, it is for AYs. 2008-09 to 2013-14, the penalty has been imposed for A.Y. 2014-15 also. The ld. CIT (A) also has confirmed the penalty for A.Y. 2014-15 without application of mind. Further, as per para 9 (b) of the notice, information as on 01.04.2003 has been asked for, which was beyond the purview of the AO under the notice issued u/s 142(1) of the Act. The notice was issued on 7.12.2015. The compliance was required to be made on 11.12.2015. Information was asked on 27 points. Compliance for such voluminous information was required on one single day, within a period of four days. Now, by any stretch of imagination, in such a short period of four days, it is well-nigh impossible for such voluminous documentary information, comprising details-facts and figures, to be gathered, collated, compiled and presented before the AO. That being so, the notice issued can, in no manner, be said to be a proper notice giving “reasonable opportunity of being heard” to the assessee. - Decided in favour of assessee.

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• 2017 (12) TMI 645
  Penalty proceedings u/s 271(1)(c) - quantum addition restored back - Held that:- Since the issue in quantum has been restored to the Assessing Officer for fresh adjudication, the penalty is also restored accordingly. Our view in restoring the penalty to the A.O is fortified by the judgment of the Hon'ble Supreme Court in the case of Mohd. Mohatram Farooqui vs. CIT (2010 (2) TMI 1122 - SUPREME COURT) in which it has been held that if addition is restored to the A.O, then penalty should also be restored. - Decided in favour of assessee.

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• Customs

• 2017 (12) TMI 676
  Exemption from payment of deployment of staff - cost recovery charges - Circular dated 10.04.2013. Held that: - the Government of India, issued a circular providing for exemption from payment of cost recovery charges by the custodians of the ports subject to certain conditions. The basic condition was of satisfying the basic performance norms of minimum cargo and documents handled during a certain period. Such norms would show that for a set up of specified number of officers of specified cadres, the seaport should have achieved a minimum volume and the value of import and export cargo. The port should also have minimum number of documents of bills of entry or shipping bills annually. Para 5 of the circular is of utmost important. Clause (a) of para 5 provides that volume/value and number of documents in case of seaports must be met in each of the preceding two financial years. Clause (b) of para 5 provides that exemption from gross recovery charges would be prospective. Clause (c) of para 5 imposes an additional condition that no cost of recovery charges shall be outstanding. The reference to no cost recovery charges shall be outstanding also has a bearing on this aspect of the matter. If on one hand, the Government of India expects that the custodian should pay up the charges and not be in arrears of such charges, when the application for exemption is being processed, the contention that such exemption even if later on granted, would only be prospective, would be incongruent. On one hand, the custodian would have to, pending finalization of the application for exemption, go on depositing the recurring charges with the Government of India, failing which, he would be stated to be breaching condition contained in clause (c) of para 5 of the circular, and on the other hand when such application is granted, the custodian would be told that no refund can be granted for such charges already deposited since the exemption is always prospective. Grant of exemption from the date of the application, if the application is in order and no delay can be attributed to the petitioners in either making the application or supplying necessary information to the department, cannot be stated to be retrospective operation of the order of exemption. Pending such application for exemption, the custodian cannot discontinue depositing the charges with the Government. In a given case, it may happen that the application is ultimately rejected for valid reasons. It is possible to argue that in such circumstances, the Government of India, cannot be left uncovered for the period during which such application was made and was pending with the authorities. It is perhaps therefore correct on the part of the Government of India to insist that pending such application for exemption, the petitioners should have gone on depositing the recurring cost recovery charges. However, in the present case, nonpayment of the charges cannot be the base for rejecting the grant of exemption from the date of the application. This is so because admittedly all the while when such application was pending, the petitioners were never conveyed that such application shall not be processed, entertained or granted since the current charges are not paid. The condition of grant of exemption under impugned order dated 15.12.2015 of the exemption being available from the date of the order is struck down. It is provided that such exemption for payment of cost recovery charges would be available from the date of the application i.e. 12.04.2013 - petition allowed - decided in favor of petitioner.

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• Corporate Laws

• 2017 (12) TMI 665
  Bail proceedings against Directors - Held that:- A perusal of the order dated 01.09.2017 shows that a sum of Rs. 15 crores had already been deposited and a further sum of Rs. 5 crores was required to be deposited by 6.9.2017. In the order dated 08.09.2017, it is recorded that Rs. 5 crores was also deposited and Mr. Pawan Shree Agarwal was appointed as amicus curiae for all the projects with certain directions. On 21.09.2017, the Amicus Curiae pointed out that a sum of Rs. 7816 crores was required to be refunded to home buyers and he was directed to invite options from the home buyers of the 61 projects whether they were inclined to take possession of the flats or desirous to get the amount refunded. The matter was again taken up on 30.10.2017 when R-l company was also impleaded as a party at the behest of respondent no. 3 & 4. The Directors-respondent no. 3 and 4 were to get bail subject to deposit of a sum of Rs. 750 crores in the registry of the Supreme Court and further directions were issued. After hearing learned Counsel for the parties, we direct that the order which has already been passed in the forenoon session by this Bench shall be subject to compliances of all directions including the one mentioned in the preceding paras. In pursuance to our direction if a new Board of Directors is constituted then it shall also be bound to obey the directions of Hon’ble the Supreme Court which are binding on all authorities in any case.

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• 2017 (12) TMI 651
  Corporate insolvency procedure - whether application under Section 7 of the I&B Code has been filed by the Power of Attorney holder which according him is not permissible - Held that:- As noticed, in the present case the application under Section 7 has been filed by the Deputy General Manager of the Bank, in the authorisation order it is mentioned as Power of Attorney, but that will not change the complex of the instrument which is an order of authorisation. In view of such position of law the submission made by the counsel for the appellant can not be accepted. The appellant then referred to the impugned order and submitted that the Adjudicating Authority has treated the 1st respondent as ‘secured creditor’ and has made certain observations. However, as it has no relevancy with admission of the application, we are not expressing any opinion. We find no merit in this appeal.

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• 2017 (12) TMI 648
  Corporate insolvency procedure - Held that:- A plausible dispute is shown to exist as between the parties to stave of the insolvency process by the Corporate Debtor, as contemplated under the provisions of IBC, 2016. In addition, it is also noticed that the certificate from the bankers is not in conformity as per section 9(3)(c) of IBC, 2016 inasmuch as the certificate does not disclose the amount of unpaid liability. Thus, taking into consideration the above facts and circumstances of the case, we are constrained to dismiss this Petition but without costs.

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• Insolvency & Bankruptcy

• 2017 (12) TMI 654
  Corporate insolvency procedures - whether scheme sanctioned by the BIFR shall be deemed to be approved resolution plan under Sec. 31(l) of I & B Code? - Held that:- It is pertinent to mention that part 2 of the I & B Code 2016 there is no such power which empowers adjudicating authority to review the already sanction scheme under sub-section (1) of Sec. 31 of the I & B Code. Since the petitioner has sought an extension of the sanctioned scheme, given the modification of MDRS already submitted before the BIFR. It is also to be pointed out that this power was earlier vested under sec. 262(6) of the Companies Act, 1956 and after that Companies Act, 2013. The said section has been omitted from I & B Code, and further I & B Code has not made any provision which empowers adjudicating authority to review the sanctioned scheme under the Code because there is no specific provision which authorises the Tribunal to review the scheme. So, we are not authorized to extend the term of scheme even though the matter is pending before the BIFR and under Sec.262(6) of the Companies Act Tribunal was empowered to do so but now coming into force of the I & B Code and without any statutory provision to the effect we cannot extend the term of sanctioned scheme. Since the scheme has already been approved and it is also on record that till-date, the company could not turn its net worth into positive within the period of sanctioned scheme, therefore, it will be presumed that corporate applicant has violated the term of the sanctioned scheme. Thus, liquidation proceedings shall follow, in accordance with the provisions of I & B Code, 2016.

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• 2017 (12) TMI 649
  Corporate insolvency procedure - Held that:- Section 45 says about declaration of undervalued transactions by a Liquidator or Resolution Professional. In case of undervalued transactions, Section 47(1) of the Code enables a Creditor, in case Resolution Professional has not reported it to the Adjudicating Authority, to file an application. It is not stated in Section 47 that a Creditor should be a Financial Creditor or a Secured Financial Creditor. Section 47 gives authority to a Creditor, Member or Partner of a Corporate Debtor to make an Application to the Adjudicating Authority to declare a particular transaction as void, in case Resolution Professional did not take any action. The very fact that the Resolution Professional was given the task of dealing with undervalued transactions and in case if the Resolution Professional fails to do the same, certain other persons as named above were given authority to move before this Adjudicating Authority, clearly goes to show that Section 47 of the Code applies even during pendency of Corporate Insolvency Resolution Process. Section 49 enables the Adjudicating Authority to pass orders to set aside the undervalued transactions as referred to in sub-section (2) of Section 45, and therefore keeping the allegations in the Application and keeping the Report dated 5.9.2017 of Insolvency Resolution Professional in the matter, this Adjudicating Authority is of the considered view that this Application, before this Adjudicating Authority, is maintainable. There is no provision in the IB Code that enables the Creditors other than those who triggered the Insolvency Resolution Process to be impleaded as parties. However, the Operational Creditor can file claims, raise objections before Insolvency Resolution Professional and also invoke the jurisdiction of this Adjudicating Authority. That means, a right of audience is always there to the Applicant in his capacity as Operational Creditor. Similarly, the Insolvency Resolution Professional shall also give notice of all meetings of Committee of Creditors to all the Operational Creditors including the Applicant and consider the objections, if any, raised by the Operational Creditors. In that view of the matter, a formal order of impleading the Applicant as a party to the insolvency proceedings is not necessary in the facts and circumstances of the case and as per the provisions of law.

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• Service Tax

• 2017 (12) TMI 687
  Classification of services - business of Structural Glazing and Cladding - whether the directions issued by the Tribunal are mandatory in nature for the Commissioner (Appeals) to comply with the same scrupulously? - Held that: - Useful reference can be made to the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Kamalakshi Finance Corporation [1991 (9) TMI 72 - SUPREME COURT OF INDIA] wherein it has been held that directives of the Superior Authorities are binding on the Lower Authorities. In the light of the above dictum, the Commissioner (Appeals) is bound by the directions issued by the Tribunal and is required to consider the submissions made by the petitioner - matter is remitted back to the respondent for a fresh consideration.

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• 2017 (12) TMI 685
  Writ of Prohibition - tour operator services and/or travel agent services - if the petitioners have rendered tour operator services and/or travel agent services to other than those, who are either Haj or Umra pilgrims, the second respondent has to examine as to how such transactions have to be assessed? - Services rendered to Indian Haj and Umra pilgrims, who go to Saudi Arabia - petitioners' case is that such services are fully exempt by relying upon the Notifications dated 30.10.2009 and 20.8.2014 - Held that: - This Court does not wish to express anything on the merits of the matter and it is made clear that a decision would be taken by the second respondent in accordance with law after perusal of the documents produced by the petitioners. It is reiterated that on production of the records, the second respondent shall examine as to what are the types of services rendered by the petitioners and in case the second respondent is of the opinion that the services rendered by the petitioners to the Indian Haj and Umra pilgrims are liable for service tax, it is needless to state that the second respondent shall afford an opportunity of personal hearing by way of issuing a show cause notice, so that the petitioners will be able to canvass the contentions raised before this Court in these writ petitions. This Court holds that the prayer sought for in these writ petitions is premature - petition dismissed - decided against petitioner.

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• 2017 (12) TMI 683
  Business Auxiliary Service - marketing services in relation to sale of paper bags - Held that: - the appellant has claimed that they are eligible for CENVAT credit on the service tax paid by Shri V.M. Radhakrishnan for the commissions paid by the appellant to him. In that case, the services rendered by Shri V.M. Radhakrishnan is an input service for appellant. If this is to be accepted then the case of appellant that part of the commission pertains to Shri V.M. Radhakrishnan is incorrect - the appellant is liable to pay the service tax on the entire commission received by him. CENVAT credit of service tax paid by Shri V.M. Radhakrishnan - Held that: - The documents placed require verification and for this limited purpose, matter is remanded to the adjudicating authority. Penalty u/s 76 and 78 - Held that: - It is clear that the appellant was holding a bonafide belief that they are not liable to pay service tax. In fact, they had discharged the service tax other than the amount of commission received by Shri V.M. Radhakrishnan - the appellant has put forward a reasonable cause for not discharging service tax liability and there is sufficient ground to invoke section 80 of the FA, 1994 - penalty upheld. Appeal allowed in part and part matter on remand.

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• 2017 (12) TMI 682
  GTA services - Reverse Charge Mechanism - CEBC Circular dated 17.12.2004 - Held that: - Since the service tax liability due from the appellant stands deposited with the Govt of India by RTCL, as per the CBEC Circular, no demands can be raised on the appellant - demand set aside - interest also set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (12) TMI 666
  Clandestine manufacture and removal - shortage of raw material and finished goods - evidence on record to corroborate the allegation of clandestine removal of the goods - Held that: - It is a fact on record that the raw materials found during the course of investigation to manufacture final products other raw material required for manufacturing the, the Revenue has not produced any evidence from where other raw materials were procured or found shortage. It is essential to allege that clandestine manufacture and removal of the goods. No evidence has been produced on record how the goods were manufactured, from where the other raw materials procured, to whom the goods sold, how the goods transported and no tangible evidence has been produced to confirm that the same has been cleared without payment of duty. Therefore the whole of the demand is based on assumption an presumptions. As there is no allegation of shortage of other raw materials which were required to manufacture the said clandestine manufacture of the goods and there is no allegation how the said other raw materials were procured, therefore, the charge of clandestine manufacture and removal of the goods is not sustainable. The department has considered that there is wastage of 22% to 25% in the manufacture of final products relying on the Standard Input Output Norms that the appellant has clandestinely manufactured goods. In respect of the said allegation, Shri Vikas Aggarwal during the cross examination has stated that the number of shifts was recorded in the hot press production sheets which were not relied on by the department. Therefore, the statement cannot be relied in-toto. Although the appellant is manufacturing three final products the demand has been made on average basis which is not sustainable in the eyes of the law. In the absence of any corroborative evidence produced by the Revenue on record merely on the basis of shortage of raw materials during the course of investigation, which has been contested by the appellant that there is no shortage of raw material and finished goods and without adducing any evidence on record for clandestine manufacture and removal of the goods, the demand confirmed on assumption and presumpiton is not sustainable against the appellants - appeal allowed - decided in favor of appellants.

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• CST, VAT & Sales Tax

• 2017 (12) TMI 686
  Rejection of claim of exemption on payment to sub-contractors - Held that: - this Court noted that on the first issue, namely payment to sub-contractors, the petitioner stated that out of 18 sub-contractors, they had enclosed records in respect of 14 sub-contractors, for which, exemption had been claimed under Rule 8(5)(c) of the Tamil Nadu Value Added Tax Rules, 2007 - in the instant cases, in respect of the assessment year 2012-13, it appears that there are 11 sub-contractors and that the petitioner had enclosed records in respect of all the 11 sub-contractors while claiming exemption under Rule 8(5)(c) of the said Rules - matters are remitted back to the first respondent for a fresh consideration along with the assessment for the year 2013-14, which has also been remanded - petition allowed by way of remand.

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• 2017 (12) TMI 684
  Levy of penalty u/s 27(3)(c) of TNVAT Act - the respondent alleged that there is sales suppression (stock difference) and computed the tax payable by the petitioner - Held that: - the respondent, being an independent Statutory Authority in the capacity of Assessing Officer of the petitioner, is required to examine the objections filed by the petitioner on merits and in accordance with law. However, the respondent did not do so, but completed the assessment and passed the impugned assessment order solely on the ground that the petitioner has already accepted the omission at the time of inspection. The manner, in which, the petitioner completed the assessment is a clear abdication of the statutory duty cast upon the respondent. Merely because there is a proposal from the Enforcement Wing Officials, that cannot be as a gospel truth to accept as it is and has to consider the objections of the assessee and then take a decision. It was found that the Assessing Officer had acted on the basis of the direction of the higher authorities and accordingly, the assessment order was quashed - the impugned assessment is illegal, devoid of reasons and liable to be set aside - petition allowed - matter is remitted back to the respondent for a fresh consideration - petition allowed by way of remand.

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• 2017 (12) TMI 671
  Jurisdiction - power of AO to pass order after almost 11 years from the end of the year which is beyond the period of limitation - Section 9(2) of the Central Sales Tax Act, 1956 read with Rule 5(6) and 5(10) of Central Sales Tax (Pondicherry) Rules, 1967 - power to over look the provision of the Central Sales Tax Act, 1956 and Central Sales Tax (Pondicherry) Rules, 1967 - imposition of the additional tax @ 10% for non-submission of Form 'C' for CST sales - interpretation of statute. Held that: - The dealer has to file Form 'C' / Form 'I' / Form 'F' for the concessional rate of tax claimed for the turnover reported and determined as above. Rule 12(7) of the Central Sales Tax Registration and Turnover Rules 1957 mandates filing of the declaration in Form 'C'/'F'/'I' as the case may be, to the prescribed authority within three months after the end of the period to which the declaration forms relates. However inspite of several reminders, the dealer has not filed C, F, I Forms for the year 2005-2006 till date for some of the transactions - As per Section 2(k) of the Central Sales Tax Act, 1956, "year" in relation to a dealer, means the year applicable in relation to him under the general sales tax law of the appropriate State, and where there is no such year applicable, the financial year. Interpretation of statute - Held that: - It is well settled that Tax Laws have to be given strict construction and interpretation. Reference can be made to few decisions. - There is no equity in tax, and the principle of strict or literal construction applies in interpreting tax statutes. Hence, on the plain language of the statute, if the assessee is entitled to two benefits, he has to be granted both these benefits - If there are two reasonable interpretation of taxing statutes, the one in favour of the assessee has to be accepted. If initial assessment is permitted to be done, at any time, say in the case on hand, after a decade, after the submission of the returns, for the years 2004-2005 and 2005-2006 and if for any reasons, the whole or part of the turn over is assessed at a rate lower than the rate at which it is assessable then, it would give leverage to the Taxing Authority, to do assessment, as in the case on hand, after 10 years and re-assess upto a further period of another five years, on the whole, 17 years. When a statute mandates re-assessment to be done, within five years, it cannot be contended that assessment can be done at any time. When the assessee is mandated to submit returns, within a prescribed period and the Assessing Officer has to scrutinise the accounts and to conduct any enquiry, if he considers necessary and pass an assessment order, levy tax, if any and collect the same, after the close of the financial years, it cannot be contended that initial assessment can be made at any time. Decided in favor of assessee.

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