TMI Tax Updates - e-Newsletter
December 17, 2018

Case Laws in this Newsletter:

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

TMI SMS

• GST Valuation - The amortized value of the tool received on FOC basis from the customer is not required to be included in the value of good

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• Supply of service or not - direct transfer of BP business to MSPL and PM business to MPMPL - slump sale - Transaction is liable to GST.

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News

1. India’s Foreign Trade: November 2018

2. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

3. Merger of Banks

4. Recapitalisation of Public Sector Banks (PSBs)

Circulars / Instructions / Orders

SEBI

1. CIR/MRD/CSC/151/2018 - dated 14-12-2018

Cyber Security Operations Center for the SEBI registered intermediaries

2. SEBI/HO/IMD/FPIC/CIR/P/2018/150 - dated 13-12-2018

Clarification on clubbing of investment limits of Foreign Portfolio Investors ("FPIs")

Customs

3. 34 /2018 - dated 1-11-2018

Creation of GST Helpdesks for MSME sector by CBIC to support MSMEs

4. 70/2018 - dated 26-9-2018

Designation of Appellate Authority for the office of the Commissioner of Customs, Chennai - Import Commissionerate under the jurisdiction of the Chennai Zone

5. 69/ 2018 - dated 24-9-2018

Standard operating procedures for discharge of bond executed by nominated agencies/ banks under Notification no. 57/2000-Customs dated 08.05.2000

Highlights / Catch Notes

GST

• Amortized Tool Value Excluded from Finished Goods Valuation Per CBEC Circular No. 47/21/2018 Under GST Rules.

  Case-Laws - AAR : Valuation - inclusion of amortized value of the tool received on FOC basis from the customer in assessable value - CBEC circular No. 47/21/2018 - The amortized value of the tool received on FOC basis from the customer is not required to be included in the value of finished goods manufactured and supplied by the applicant to the customer.
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• Slump Sale of BP and PM Business to Related Parties Considered Service Supply Under GST; Input Tax Credit Addressed.

  Case-Laws - AAR : Supply of service or not - direct transfer of BP business to MSPL and PM business to MPMPL - slump sale - related parties or not - input tax credit - notional consideration (percentage of the business transfer value) - Transaction is liable to GST.
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Income Tax

• Income Tax: CSR Expenses u/s 37(1) Should Be Deductible Per Companies Act Section 135.

  Case-Laws - AT : Expenditure claimed by the assessee company as CSR u/s. 37(1) - the expenditure incurred by assessee on account of ‘CSR’ as envisaged u/s. 135 of the Companies Act, 2013 need to be allowed as deduction.
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• Capital Gains from Minor's Inherited Property Taxed Under Parent's Income as Per Section 64(1A) of Income Tax Act.

  Case-Laws - AT : Clubbing of income - Assessment of capital gain of the minors in the hands of the assessee - The word “any such income” as appears in Section 64(1A) includes capital gain arising out of the sale of the property obtained by the minors from their grandparents by way of settlement.
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• Diwali gifts disallowed u/s 37(1) of Income Tax Act if recipients aren't business-connected; 35% disallowance justified.

  Case-Laws - AT : Disallowing of gift expenses and Diwali Gift expenses u/s 37 (1) - gift for the person who are not connected with the business of the assessee - CIT (A) was justified in restricting the disallowance to 35% of claim.
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• Commission Expenses Disallowed u/s 40(a)(ia) for Not Deducting TDS as Required by Section 194C.

  Case-Laws - AT : TDS u/s 194C - Disallowance of commission expenses u/s 40(a)(ia) - assessee has made provisions of commission at the year end but did not deduct TDS - the liability has been credited in books of accounts therefore, the assessee was liable to deduct TDS thereon.
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• Section 68 Addition Overruled: No Evidence of Fraud in Long-Term Capital Gains; Section 10(38) Exemption Upheld.

  Case-Laws - AT : Addition u/s 68 - bogus claim of long term capital gains - explained share transaction - A.O. did not mention any fact as to how the claim of assessee was sham or bogus. The assessee thus, satisfied the conditions of Section 10(38) of the I.T. Act.
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• Publicity Expenses Deemed Business-Related and Non-Capital, Allowing Tax Deduction for Income Generation Activities.

  Case-Laws - AT : Disallowance of business expenditure on publicity - nexus with business - expenses in question were incurred for earning business income, therefore, it was not capital in nature and would not provide any enduring benefit to the assessee - claim of expenses allowed.
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• Tax Deduction: Section 54F Applies When Full Sale Proceeds Are Used for New Home Purchase, Not Section 50C.

  Case-Laws - AT : Deduction u/s 54F - section 50C has no application in case the entire net sale consideration has been applied for acquiring the new house.
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• Court Rules TDS Deduction on Motor Accident Claims Interest Illegal; Orders Refund to Insurance Company u/s 194A.

  Case-Laws - HC : TDS u/s 194A on interest awarded by the Motor Accident Claims - Deduction of TDS was illegal and contrary to the law of land - Income tax department directed to refund the TDS to the petitioner/Insurance Company
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• Income Tax Laws Permit Deductions for Social and Economic Development Expenses u/s 37, Not Section 80G.

  Case-Laws - HC : Allowability of “project expenses” - The expenditure incurred to carry out social and economic development - deduction u/s 37 does not matter whether or not the expenditure was in the nature of donation or Section 80G of the Act was not attracted -
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• Assessment Validity Challenge Allowed Anytime if Orders Lack Jurisdiction; Consent Cannot Confer Jurisdiction.

  Case-Laws - HC : Validity of assessment - if the corrigendum dated 16th April, 2014 and the order dated 12th March, 2014 of the Assessing Officer is without jurisdiction, the same can be raised at any time and the principle of estoppel will not apply. Mere consent of parties does not bestow jurisdiction, if the order is beyond jurisdiction.
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Customs

• Imported Beverage Cooler SC-80 Classified as Vending Machine Under Customs Heading 8418 69 30 Due to Dispensing Capability.

  Case-Laws - AT : Classification of imported goods - Beverage Cooler SC-80 - The fact that the machine has the capacity to dispense with the fixed quantity of the beverage itself shows that the same is a vending machine - Vending machines stand covered by heading 8418 69 30.
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• Pre-notice consultation u/s 28 of the Customs Act, 1962, on dues recovery and procedural adherence.

  Case-Laws - HC : Recovery of dues - Section 28 of the Customs Act, 1962 - The impugned communication is in the nature of pre-notice consultation. - if the petitioner does not accept the request of the Authority in said notice and if the Authority wishes to seek recovery, the procedure in terms of Section 28 shall be followed.
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• Tribunal Rules: Clear Justification Needed for Rejecting Declared Value of Imported Aluminum Scrap; Assessing Authority Must Explain.

  Case-Laws - SC : Valuation of imported goods - Aluminum Scrap - rejection of declared value - The Tribunal has rightly mentioned that this declared price could be rejected only with cogent reasons by undertaking the exercise as to on what basis the Assessing Authority could hold that the paid price was not the sole consideration of the transaction value.
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Corporate Law

• Amalgamation Scheme Criticized for Ignoring Benefits to APL's 38,075 Shareholders; Deemed Unfair and Against Public Interest.

  Case-Laws - Tri : Scheme of Amalgamation and Arrangement - no benefit is accruing to the thousands of shareholders of APL especially the retail shares holders of the transferee company, (the shareholders of APL as on 31.03.2017 was 38075) therefore, the scheme appears to be unfair, unreasonable and is not in the public interest
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SEBI

• SEBI's CSOC Initiative Enhances Cybersecurity for Financial Intermediaries, Mandating Robust Infrastructure and Continuous Threat Monitoring.

  Circulars : Cyber Security Operations Center for the SEBI registered intermediaries
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• SEBI Clarifies Rules on Clubbing Investment Limits for Foreign Portfolio Investors to Enhance Transparency and Prevent Circumvention.

  Circulars : Clarification on clubbing of investment limits of Foreign Portfolio Investors ("FPIs")
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Service Tax

• CENVAT Credit Allowed After Payment; Cheque Presentation Date Counts as Payment Date if Realized: CCR Rule 4(7.

  Case-Laws - AT : CENVAT Credit - credit to be availed after payment of amount under Rule 4(7) of CCR - Rule 6(2A) of the STR specifies that the date of payment in case of service tax shall be the date of presentation of cheque subject to realization of cheque - none of the cheque issued by the appellant were dishonored. - credit allowed.
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• Debate Over Service Tax Shortfall: Are All Payments for Construction Services Automatically Taxable?

  Case-Laws - AT : Short payment of service tax - Construction services - Merely because the respondents have received certain payments does not lead to the inevitable conclusion that the said consideration was on account of taxable services having been provided by the assessee.
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Central Excise

• Entity Allowed Refund Claim for Double Duty Payment Without Penalty; Re-Credit Taken Without Formal Refund Request.

  Case-Laws - AT : Refund clam - payment of duty twice - once from the cenvat account and subsequently by cash through PLA - re-credit taken suo moto instead of claiming refund - claim allowed - no penalty.
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• CENVAT Credit Denied: Real Estate Agency Services Not Linked to Manufacturing Activity, Excluded from "Input Service" Definition.

  Case-Laws - AT : CENVAT Credit - input services - Real Estate Agency Services - The scope of the definition of “input service” revolves around the manufacturing activity and not the business activity - M/s. CBRE rendered the services of Real Estate Agent simpliciter - credit rightly denied.
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• CENVAT Credit Issue: Fireworks Inputs from Same Manufacturer's Units Not Justifying Rule 16(1) Invocation in Central Excise.

  Case-Laws - AT : CENVAT Credit - inputs - fireworks purchased from their other units - In the present case, the goods are not brought to the factory but they have been bought by the manufacturer and the value of such goods have been included in the assessable value of the final product. The situation does not give raise to invoke Rule 16(1) at all.
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• CENVAT Credit Approved for Card Service Transactions as Directly Related to Manufacturing Process Under Central Excise Rules.

  Case-Laws - AT : CENVAT Credit - input services - Debit and credit card services - said service was availed when the customers had used cards for making payment - The said activity is definitely related to manufacturing activity - credit allowed.
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Case Laws:

• GST

• 2018 (12) TMI 767
  Supply of service or not - direct transfer of BP business to MSPL and PM business to MPMPL - slump sale - related parties or not - input tax credit - notional consideration (percentage of the business transfer value) - Held that:- The Applicant has entered into a Business Transfer Agreement with Merck Ltd (seller) wherein the seller has agreed to sell, transfer, convey, assign and deliver to the applicant or to any affiliates as directed by the applicant for the BPL business which would be transferred as a slump sale on a going concern basis. The Applicant has stated that BPL business means BP business, LS business and PM business as going concern as outlined in Definitions and Interpretations. In respect of transfer of BP business to MSPL and PM business to MPMPL by the seller apparently it is seen and also claimed in the application by the applicant is that the applicant is only directing the seller to transfer these businesses to MSPL and MPMPL and this direction is as per the first agreement between the seller and the applicant - apparently the applicant has directed the seller for transference of these business to MSPL and MPMPL. It is reiterated and clear that the role of the applicant is very crucial in respect of both the agreements as discussed above and without the directions of the applicant, the second agreement could not have materialized and further, in respect of all the terms of the second agreement as detailed above the applicant is an active party in the agreement as well and he and his directors have an active role in all aspects of the agreement, starting from terms relating to parties to agreement, transfer of the BP and PM business, Price and Termination which is very clear from these details of agreement - this role of the applicant is clearly a service covered in para 5 (e) of Schedule-II of Section 7 of the CGST Act, wherein the applicant is doing the act of giving direction to the seller for transfer of BP and PM businesses to MSPL and MP MPL respectively as per his directions and terms and conditions agreeable to him due to special authority in this regard, vested in him through the first agreement dated 21.06.2018 between him and the seller. Levy of GST on notional consideration - Held that:- The present case involves provision of service as per para 5 (e) of Schedule II to Section 7, between related person where the applicant is stating that there is no consideration - the value is to be determined in terms of Rule 28 of the CGST Rules, 2017. Input Tax Credit - notional consideration (percentage Of the business transfer value) - Held that:- The value is to be determined as per Rule 28 of the CGST Rules, 2017 and therefore there is no requirement on our part to answer this question. Ruling:- The applicant s direction to the seller (directed in agreement dated 21 June 2018) for direct transfer of BP business to MSPL and PM business to MPMPL, respectively would qualify as a supply between the applicant and MSPL/MPMPL . The value is to be determined as per Rule 28 of the CGST Rules, 2017.

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• 2018 (12) TMI 766
  Valuation - includibility - inclusion of amortized value of the tool received on FOC basis from the customer in assessable value - CBEC circular No. 47/21/2018-GST dated 08/06/2018 - Held that:- The goods owned by the OEM that are provided to a component manufacturer on FOC basis do not constitute supply as there is no consideration. The Board further clarified that the value of goods provided on FOC basis shall not be added to the value of supply of components. However, the case is different where the contractual obligation is cast upon the component manufacturer to provide moulds/ dies but the same have been supplied by OEM on FOC basis and in such cases, the amortised cost of such moulds and dies shall be added to the value of supply of component. Once it is established that the obligation to provide tools on FOC basis is on the customer then the question of adding the amortised value of tools supplied by the customer does not arise. However, the situation is reverse where the obligation to use tools is on the applicant but provision for the same is made by the OEM on FOC basis. Ruling:- The amortized value of the tool received on FOC basis from the customer is not required to be included in the value of finished goods manufactured and supplied by the applicant to the customer.

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• 2018 (12) TMI 765
  Detention of goods and vehicle - Section 129 of the GST Act - Held that:- The respondent authorities are directed to release the petitioner s goods and vehicle on his furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules - petition disposed off.

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• Income Tax

• 2018 (12) TMI 764
  Validity of assessment - non issue of Draft Assessment Order corrected by issuing a corrigendum to a final Assessment Order - Held that:- The time to pass any order, would expire in the present facts on 31st March, 2014, however, in case a Draft Assessment Order is issued, then the time to pass a final Assessment Order gets extended to one month after the passing of the directions by the DRP in terms of Section 144C(13) of the Act. Nevertheless, the Draft Assessment Order should have in the present facts been passed before 31st March, 2014 in terms of Section 153A(2A). In this case, undisputedly, a final order was passed on 12th March, 2014 and is being sought to be corrected by issue of corrigendum on 16th April, 2014 i.e. after the time to pass the Draft Assessment Order has expired. In International Air Transport Association v/s. Deputy Commissioner of Income Tax [2016 (2) TMI 897 - BOMBAY HIGH COURT] this Court has held that the Draft Assessment Order is necessary in terms of Section 144C(1) of the Act before the Assessing Officer can proceed to pass a final Assessment Order. In the absence thereof, the order is without jurisdiction. So far the contention on behalf of the Revenue that the Respondent was estopped from challenging the corrigendum dated 16th April, 2004, as it was accepted by it and a representation also filed to the DRP. This submission overlooks the fact that there can be no estoppel on issue of law pertaining to jurisdiction. Therefore, if the corrigendum dated 16th April, 2014 and the order dated 12th March, 2014 of the Assessing Officer is without jurisdiction, the same can be raised at any time and the principle of estoppel will not apply. Mere consent of parties does not bestow jurisdiction, if the order is beyond jurisdiction. Therefore, we do not find any substance in this objection of the Revenue.

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• 2018 (12) TMI 763
  Reopening of assessment - deduction u/s 80HHC - knowledge about scheme of amalgamation of two companies - rectification u/s 154 was sought on the ground that, there could be no claim made under sub-Clause (b) of Section 80HHC(1) of the Act, since there is no previous year to the relevant previous year. - Held that:- AO was in the know-how of the amalgamation proceedings. Annexure-F permission was granted for change of assessment year to HCL only by way of a request made at Annexure-E, which is specifically read in Annexure-F as letter dated 28.08.1984. The request for change of previous year specifically indicated that the amalgamation process was on and that they expect the order of the High Court of Kerala approving the scheme of arrangement and amalgamation, shortly. There is no warrant to assume that the assessment order at Annexure-G was passed without knowledge of the amalgamation. We also see that the order at Annexure-G specifically noticed the amalgamation as ordered by Annexure-D. It is also stated in the assessment order that HCL was amalgamated with the assessee Company w.e.f. 01.01.1983. In such circumstances, we do not think that there could be any re-assessment made under Section 147, since then it would merely be a change of opinion as decided in ANDHRA BANK LIMITED VERSUS COMMISSIONER OF INCOME-TAX [1996 (5) TMI 3 - SUPREME COURT] - Decided in favor of assessee. Permissibly to rectification u/s 154 - deduction under Section 80HHC(1)(b) - Held that:- The business of HCL when amalgamated with MPL, continued as the trading division of MPL. For the 27 months comprised in the previous year to the relevant assessment year, the trading division had an export turnover of Rs. 35,31,66,651/- to which was added the export turnover of the business of MPL, which was also ITAs.87,102, 108 201/2002 -19- continuing, coming to Rs. 37,16,659/-. The total of Rs. 35,68,83,310/- was taken for deduction under Section 80HHC(1)(a) at 1%. Then, the total export turnover of MPL for the previous year relevant to the assessment year 1985-86 was taken from which was deducted the export turnover of MPL for the previous year to the previous year which was only Rs. 87,34,764/-. The balance of Rs. 34,81,48,546/- was taken for deduction under Section 80HHC(1)(b) @ 5%. No infirmity in the same. But for the decision in Saraswati Industrial Syndicate Ltd., MPL [1990 (9) TMI 1 - SUPREME COURT] would have had to deduct the export turnover of HCL for the period from 01.01.1983 to 31.12.1983 being the previous year to the previous year comprising of 27 months, between 01.01.1983 to 31.03.1985. Correctly, the AO had also not at the time of passing Annexure-G order sought to deduct such turnover presumably being aware of the Supreme Court judgment. In such circumstances, we do not see any reason to interfere with the order passed at Annexure-G and the interference caused under Section 154 on rectification is found to be bad in law. - Decided in favour of the assessee

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• 2018 (12) TMI 762
  Allowability of “project expenses” - deduction u/s 37 - The expenditure incurred to carry out social and economic development for the village poor - Held that:- The object and purpose of the respondent-assessee is to engage and work for social and economic upliftment of the rural poor, construct water reservoirs etc. It is established for this purpose and receives grants and donations from third parties with the said objective and purpose. M/s Indian Farmers Fertilizer Cooperative Ltd. had sold and supplied fertilizer that was marketed/sold by the assessee to earn profit/income, because the assessee was engaged in social and economic development activities. The expenditure incurred to carry out social and economic development would in this background constitute a ‘business’ or ‘commercial’ activity undertaken by the assessee. It would be a contradiction in terms, if we hold that the expenditure would be non-deductible expenditure or expenditure without business expediency. Under section 37 it does not matter whether or not the expenditure was in the nature of donation or Section 80G of the Act was not attracted. The conditions stated in Section 37 of the Act matter and constitute the test. Expenditure incurred in furtherance of and connected with the business and commercial activities for which the assessee was established cannot be disallowed as expenditure not relatable and incurred for ‘business’ purposes. On the question of capital expenditure, the assessing officer did not refer to or examine whether the capital assets created were for third party villagers. The assessee was not the owner of the assets created and developed. The assets created were not capital assets in the hands of the assessee. The assessee had contributed, developed, financed and created assets which belonged to third persons. The expenditure incurred therefore would not be ‘capital’ in nature in the hands of the respondent assessee. - decided against revenue

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• 2018 (12) TMI 761
  TDS u/s 194A on interest awarded by the Motor Accident Claims - Held that:- Compensation awarded under Motor Vehicles Act or Employees' Compensation Act in lieu of death of a person or bodily injury suffered in a vehicular accident, is a damage and not an income and cannot be treated as taxable income. It is well settled that interest awarded by the Motor Accident Claims Tribunal on a compensation is also a part of compensation upon which income tax is not chargeable as also held by the Division Bench of this Court in Court on its own motion vs. The H.P. State Cooperative Bank Ltd. and others, [2014 (10) TMI 972 - HIMACHAL PRADESH HIGH COURT] - in view of abovesaid decision, deduction of income tax by petitioner/Insurance Company on the awarded compensation and interest accrued thereon is illegal and is contrary to the law of land. This petition is disposed of directing respondent No. 3 Income Tax Officer, Sector 2, Panchkula to refund the TDS to the petitioner/Insurance Company within ten weeks from date of receiving information thereof, which shall be supplied by petitioner/Insurance Company within two weeks from today, as per Rules applicable.

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• 2018 (12) TMI 760
  Addition on account of unaccounted income earned by way of suppression of professional receipts - rejection of books of accounts - profits declared on suppressed receipts - Held that:- Once the AO has worked out unaccounted receipts for the whole year on the basis of evidence found for the period of six months, then such working is based on an estimate and assumption, and in the same manner corresponding expenditure ought to be assumed and estimated, because no entity could earn gross receipts. This fold of dispute has been ignored by the AO on the ground that evidence was not submitted by the assessee exhibiting incurrence of expenditure. To our mind, this was not correct approach at the end of the AO. - Decided against revenue.

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• 2018 (12) TMI 759
  Addition by applying the provisions of section 50C - difference between the actual sale consideration and the stamp value/value determined by the DVO - Held that:- On a careful circumspection of section 50C, which is a deeming provision and provides for substituting the sale consideration with the stamp value or the value as determined by the DVO, as the case may be, as the full value of consideration for the purpose of calculating capital gains, there can be no warrant for ignoring the stamp value/value determined by the DVO etc. In case the difference between the actual sale consideration and the stamp value/value determined by the DVO is less than a certain specified percentage. Invariably, the stamp value or the value determined by the DVO etc. will have to be substituted with the sale consideration as the full value of consideration, even if the later is a rupee less than the former. Adverting to the facts of the extant case, it is found that DVO, in all fairness, scaled down the fair market value of the plot at Rs. 46,96,400/- as against stamp value of Rs. 56,19,000/- after taking into consideration the cumulative effect of all the relevant factors and entertaining the objections taken by ld. AR. In view of foregoing facts the argument of the AR to the effect of ignoring the value determined by the DVO and taking the actual sale consideration as full value of consideration, when the former is more than the later, deserves to be and is hereby jettisoned. I, ergo, uphold the impugned order. - Decided against assessee.

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• 2018 (12) TMI 758
  Deduction u/s 80P(2)(a)(i) - AO rejected the assessee's claim for the reason that the primary / principal business of the assessee is transacting in banking business, therefore the assessee is a primary co-operative bank and it does not fall under the second category of co-operative credit societies as envisaged under Section 80P - Held that:- Respectfully following the decision of the co-ordinate bench of this Tribunal in the case of Udaya Souharda Credit Co-operative Society Ltd. [2018 (8) TMI 1063 - ITAT BANGALORE] we accordingly set aside the impugned order of the CIT (Appeals) for Assessment Year 2014-15 and restore the matter of the eligibility of the assessee's claim for deduction under Section 80P(2) to the file of the AO for re-examination of all aspects thereof by causing necessary enquiries to be made in the matter and to adjudicate thereon by way of a reasoned and speaking order in term of the observations and directions issued by the co-ordinate bench in the case of Udaya Souharda Credit Co-operative Society Ltd. (supra). Since the impugned order of the learned CIT (Appeals) has been set aside and the matter restored to the file of the Assessing Officer for re-examination and adjudication, we refrain from adjudicating the issues / grounds raised by the assessee on merits. - Revenue’s appeal allowed for statistical purposes.

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• 2018 (12) TMI 757
  Income from house property - Addition estimating the annual value of the commercial flat - property or part thereof was vacant during the period - Held that:- In present facts of case, admittedly property at Chennai in dispute has remained vacant post assessment year 2002-03 till date. It is not the case of revenue that the property after being vacant, remained under self occupation of assessee. It is also not been disputed by the revenue that prior to assessment year 2002-03 the property was not let out. It is not at all relevant as to whether property was let out in past or not. These words do not talk of actual let out, but talk about intention of assessee to let out. If property is held by owner for letting out and efforts are made to let it out, such property will be covered by section 23(1)(c), and this requirement has to be satisfied in each year that property was being held to let out, but remained vacant for whole or part of the year. Thus, if a property is held with an intention to let out in the relevant year coupled with efforts made for letting it out, it could be said that such a property is a let out property and the same would fall within the purview of clause (c) of section 23(1). The fact the present case assessee always had the intention of letting out the property at Chennai, post assessment year 2002-03, however, it has been submitted that due to fall in property prices, the same could not be let out year after year because of which disputed property remained vacant. One more relevant factor which we observe is that, assessing officer in any of preceding assessment year, post assessment year 2002-03, has never disputed that the property was not vacant. In fact in assessment order passed for year under consideration, AO is admitting to the fact that property in question was let out only till assessment year 2002-03 and thereafter it was vacant, even during year under consideration. Assessee s case stands squarely covered by view taken by coordinate bench of this Tribunal in case of Premsudha Exports (P) Ltd. [2007 (5) TMI 348 - ITAT MUMBAI], and benefit under section 23(1)(c) has to be granted. - Decided in favour of assessee.

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• 2018 (12) TMI 756
  Deduction u/s 54F - taxability of capital gains on sale of capital asset - whether the capital gains required to be computed by applying section 50C or not? - Held that:- When the assessee has invested the entire net consideration in acquiring the new house. As per section 54F, the conditions required to be satisfied for allowing the deduction u/s 54F is firstly, the asset transferred must be long term capital asset not being a residential house. The assessee should acquire the new house within one year before the transfer or within 2 years from the date of transfer or the assessee required to construct one residential house before one year or within 3 years from the date of transfer. The quantum of allowable deduction is, if the cost of the new asset is not less than the net consideration in respect of the original house, the whole of such capital gains should not be charged u/s 54. From the above, the net consideration is the full value of consideration received or accrued as a result of transfer but not the deemed consideration as defined in section 50C of the Act. Section 54F(1)(a) clearly makes the assessee entitled for the net consideration, if the whole of such amount is paid for acquiring the new house. In the instant case, there is no dispute that the assessee has paid the whole of net consideration for acquiring the new house. On identical facts this Tribunal in the case of DCIT, Circle-2(1), Vijayawada Vs. Dr.Chalasani Mallikarjuna Rao [2016 (10) TMI 1032 - ITAT VISAKHAPATNAM] held that section 50C has no application in case the entire net sale consideration has been applied for acquiring the new house. - Decided in favour of assessee.

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• 2018 (12) TMI 755
  Disallowance of business expenditure on publicity - nexus with business - Held that:- The expenses were incurred during the period January, 2007 to March, 2007 towards the promotion of Times of India, Kannad Edition launched in 2007 and the expenses were accounted for in the month of March, 2007. A.O. in the remand report did not doubt the genuineness of the expenses incurred by the assessee. Further, the authorities below found that it is capital in nature because it provides enduring benefit to the assessee. This question is answered in the case of CIT vs. Berger Paints (India) Ltd.,[2002 (2) TMI 97 - CALCUTTA HIGH COURT] in favour of the assessee. Considering the nature of business of assessee and that expenses in question were incurred for earning business income, therefore, it was not capital in nature and would not provide any enduring benefit to the assessee. The assessee submitted before A.O. that income on this account has been accounted for during the year itself. The submissions of assessee has not been disputed by the authorities below. Therefore, on the same Head when income is offered for taxation and expenses are incurred to earn the income, therefore, such expenses were clearly revenue in nature. The authorities below have failed to point-out as to which capital have been generated out of incurring these expenses. - Decided in favour of assessee.

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• 2018 (12) TMI 754
  Addition u/s 68 - bogus claim of long term capital gains - explained share transaction - Held that:- In the case of the assessee, both twin conditions are satisfied. He has filed copy of the shares certificate with transfer form, copy of debit note issued by Shreeji Broking (P) Ltd., copy of cash receipt of Shreeji Broking (P) Ltd., copy of ledger account of Indus Portfolio (P) Ltd.,copy of form for evidence for payment of securities transaction tax on transaction entered in a recognized stock exchange and copy of the bank statement of the assessee AO had not produced any evidence whatsoever in support of the suspicion. On the other hand, although the appreciation is very high, the shares were traded on the National Stock Exchange and the payments and receipts were routed through the bank. There was no evidence to indicate for instance that this was a closely held company and that the trading on the National Stock Exchange was manipulated in any manner. See MEENU GOEL VERSUS ITO, WARD-31 (1) , NEW DELHI [2018 (3) TMI 1020 - ITAT DELHI] and PREM PAL GANDHI case [2018 (1) TMI 1080 - PUNJAB AND HARYANA HIGH COURT] A.O. did not mention any fact as to how the claim of assessee was sham or bogus. The assessee thus, satisfied the conditions of Section 10(38) of the I.T. Act. The broker through whom transactions have been carried out have not denied the transaction conducted on behalf of the assessee. It, therefore, appears that the addition is merely made on presumption and assumptions of certain facts which are not part of the record. The issue is, therefore, covered in favour of the assessee - decided in favour of assessee.

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• 2018 (12) TMI 753
  Addition on account of Gross Profit not offered for taxation - difference in purchases - difference in the purchases as reflected in Form 26AS and the books of accounts - Held that:- The assessee has successfully proved that there is no major difference in the purchases as reflected in Form 26AS and the books of accounts except for a minor difference of Rs. 2,82,389/- which has already been added by Ld.CIT(A) to the income disclosed by the assessee and the finding of the CIT(A) has not been controverted by the Departmental Representative. No reason to interfere in the finding of Ld.CIT(A) deleting the addition of Rs. 46,11,148/- made by the A.O on account of estimation of gross profit on the estimated sales calculated on the basis of alleged difference in purchases - Decided against revenue

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• 2018 (12) TMI 752
  Addition on account of Training Fees & Royalty Payments - Held that:- We confirm the stand of first appellate authority in deleting the addition on account of Training Fees & Royalty Payments. The payment on account of survey fees has been confirmed by the first appellate authority in the impugned AY. However, the aforesaid payment made by assessee in AY 2008-09 as well as in AY 2012-13 is also covered in the grounds raised by the revenue for those years wherein the Tribunal has confirmed the deletion of quantum addition by first appellate authority. This being the case, the aforesaid addition on account of survey fees also stands deleted. The grounds raised by assessee, in this regard, stands allowed whereas grounds raised by revenue stands dismissed. Addition of cash credit u/s 68 - Held that:- As already noted that the complete onus to prove the fulfillment of primary ingredients of Section 68 viz. identity, creditworthiness and genuineness was upon assessee and the same, on factual matrix has remained un-discharged to a great extent. Since the revenue has agitated the relief provided by Ld. CIT(A) in violation of Rule-46A, we deem it proper to set aside the findings of appellate authority and restore the matter back to the file of Ld. AO for readjudication as per law. The assessee is directed to substantiate its stand with requisite documentary evidences and demonstrate the fulfillment of primary ingredients of Section 68. The allowance of interest payment is consequential in nature which would be adjudicated as per the stand taken by revenue against loan creditors. Resultantly, the grounds urged by revenue as well as by assessee, in this regard, stands allowed for statistical purposes. Quantum addition u/s 40A(3) - CIT-A deleted the addition - Held that:- Not a valid ground to delete the addition without verification of factual matrix. The complete onus to substantiate the arguments advanced by the assessee rested upon him and Ld. CIT(A) erred in shifting the onus of the same on Ld. AO. Therefore, the matter stands remitted back to the file of Ld. AO for verification of submissions made by the assessee before first appellate authority and re-adjudicate the same as per law with a direction to the assessee to substantiate the same. Ground of revenue’s appeal stands allowed for statistical purposes

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• 2018 (12) TMI 751
  Bogus purchases - estimation of profit - Held that:- Profit at the rate of 5% on such transaction has been estimated and added to the total income of the assessee. Similarly, in the case of Ganesh Industries [2018 (10) TMI 739 - ITAT AHMEDABAD] we have considered similar issue, wherein we estimated GP at 5% to 6% on these transactions, because the assessee had already disclosed GP on the alleged bogus purchases at 14.27% in that case. In the present case also, the assessee has already offered profit at 5%. It has shown the income on these purchases at Rs. 15,29,625/-. If we further estimate profit at 5% that will meet ends of justice. It takes care of avoidance of payment of tax etc. and earning of extra profit. Therefore, we partly allow this ground of appeal and direct the AO to estimate profit at 5% (five percent) over and above profit disclosed by the assessee on these alleged bogus purchase. In other words, addition of Rs. 15,29,625/- more would be added to the total income of the assessee. In view of the above discussion, this ground of appeal is partly allowed.

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• 2018 (12) TMI 750
  Addition of capital gains - whether execution of the conveyance of the land is not a transfer within the meaning of section 50C - Held that:- We find that the above property has been purchased by the purchasers vide agreement dated 11.10.1986 and the same was registered with Sub-Registrar, Mumbai vide registration No BOM/M Ward/GEN/895 of 86-87 dt.26.03.1987. The relevant clause of the registration clearly states about the deposits made by assessee with the society and registration of conveyance deed. Once the property is principally transferred in 1987, we find that the CIT(A) has rightly held the provisions of section 50C of the Act will not applied. We confirm the order of CIT(A) and this issue of Revenue’s appeal is dismissed.

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• 2018 (12) TMI 749
  TDS u/s 194C - Disallowance of commission expenses u/s 40(a)(ia) - assessee has made provisions of commission at the year end but did not deduct TDS - Held that:- We find that the assessee has credited amount of expenses as provisions in the account hence, the liability has been credited in books of accounts therefore, the assessee was liable to deduct TDS thereon. Hence, the finding of CIT (A) are upheld. , The issue is covered by the decision of Co-ordinate Bench in assessee's own case [2013 (9) TMI 1227 - ITAT RAJKOT] - Decided against assessee. Disallowance of expenses incurred towards increase in authorized share capital - nature of expenditure - revenue or capital - claim of deduction under section 35D - Held that:- We find that the expenditure has been incurred towards increase of authorized capital of the company. Hence, expenditure related to enduring benefit therefore, same has been rightly held to be capital in nature. Therefore, following decision of PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED [1996 (12) TMI 6 - SUPREME COURT] and BROOKE BOND INDIA LIMITED [1997 (2) TMI 11 - SUPREME COURT] we upheld the same. So far the claim of deduction under section 35D is concerned, the same is not allowable as the expenditure is not related to plants and machinery as it was related to increase of share capital. - Decided against assessee. Disallowance of foreign traveling expenses u/s 37(1) - Held that:- AO has pointed out that expenditure was incurred for pleasure trip to Four Season Multitrade Pvt. Ltd. Resorts, Bali. Further, vouchers prepared and passed are self-prepared without any check. The expenses were incurred on gift articles and DVD as well as CDs. Therefore, in such circumstances and in absence of anything brought on record to show that thing are different for this year as in A.Y.2006-07. In view of this matter, respectfully following the findings of tribunal in assessee own case in preceding assessment year. Therefore, the finding arrived at by the lower authorities are confirmed. Accordingly, this grounds of appeal is therefore, dismissed. Disallowing of gift expenses and Diwali Gift expenses u/s 37 (1) - Held that:- We find that the expense were incurred on account of gift for the person who are not connected with the business of the assessee. Therefore, the expenses are not wholly and exclusively incurred for the purpose of business carried on by the assessee. Further, the facts are identical of A.Y. 2006-07 and same has not been controverted by the assessee. Therefore, respectfully following decision of tribunal in assessee`s own case for the A.Y. 2006-07 dtd. 13.09.2013, we are of the view that Ld. CIT (A) was justified in restricting the disallowance to 35% of claim. Addition on account of bad debt written off claimed by the assessee u/s 36(1)(viia) - Held that:- We find that the issue is squarely covered by the decision of Hon'ble Supreme Court in the case of T. R. F. Ltd. vs. CIT [2010 (2) TMI 211 - SUPREME COURT]. As the assessee was not required to establish the debt become bad if it has been written off in books of accounts as irrecoverable. Therefore, we do not find any infirmity in the order of CIT (A), accordingly, same is upheld. Disallowance of gift expenses on account of alleged non business purpose - Held that:- We find that the expense were incurred on account of gift for the person who are not connected with the business of the assessee. Therefore, the expenses are not wholly and exclusively incurred for the purpose of business carried on by the assessee. Further, the facts are identical and same has not been controverted by the assessee. Therefore, respectfully following decision of tribunal in assessee`s own case for the A.Y. 2006-07 dtd. 13.09.2013, we are of the view that Ld. CIT (A) was justified in restricting the disallowance to 35% of claim. Disallowance foreign travelling expenses u/s 37(1) - Held that:- in the assessee`s own case also shows that the details of each and every items of expenditure was discussed and it was noticed that expenses incurred by Jay Mehta and Juhi Mehta , Shri Raj Poddar and his wife were not wholly and exclusively for the business purpose. Therefore, in such circumstances and in absence of anything brought on record to show that thing are different for this year. In view of this matter, respectfully following the findings of tribunal in assessee own case in preceding assessment year. Such disallowances have been also confirmed in A.Y.2007-08. Thus, the finding arrived at by the lower authorities are therefore, confirmed. Disallowance of business promotion expenses - Held that:- We find that expenditure has been incurred for the purchase of movie tickets, T20 Match tickets, Kashmiri Shawls, silver boxes and other gift articles. Though the assessee has given the copies of the bills / vouchers but the names of beneficiaries of the impugned expenditure has not been supplied, therefore, it cannot be said that the expenditure was incurred wholly and exclusively for the purpose of business and the same was incurred in relation to expenditure on dealer, suppliers etc. In view of these circumstances, we do not find any infirmity in the order of the CIT (A). Accordingly, same is upheld. Disallowance of club expenses - Held that:- We find that expenditure has been incurred for corporate membership of club for the officials and clients of the assessee company. The assessee is being company, there cannot be any personal element involved. Hence, we concur with the findings of the CIT (A). Therefore, This ground of appeal is dismissed. Disallowance of deduction claimed from book profit under clause (vii) of explanation to section 115JB available to sick company - Held that:- the benefit of exclusion of the entire profit under the above sub-clause shall be available for the year in which net worth becomes positive and the company shall be liable to pay tax under section 115JB from the next year. This view if further, supported by the decision of Hyderabad ITAT in PRAGA TOOLS LTD. [2013 (12) TMI 1412 - ITAT HYDERABAD] wherein it was held that that the benefit of reduction of the entire profit given under subclause (vii) is available for the year in which the net worth becomes positive. Therefore, the CIT (A) has rightly followed the said decision of Tribunal. In view of these facts and circumstances, were have no reason to interfere with the findings recorded by the Ld. CIT(A). In view of this matter, this ground of appeal is dismissed.

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• 2018 (12) TMI 748
  Disallowance of depreciation on fixed assets of media library created by way of capitalisation of stock and scrap in trade - Held that:- It is evident that in the assessment year 2007-08, the total addition of Rs. 7,97,00,000/-has been made to the fixed assets of media library, which included amount of Rs. 3,19, 95,890/- on account of revaluation of the stock in trade. No doubt that in view of the order of the Tribunal(supra), the assessee is not entitled to depreciation in respect of the amount of Rs. 3,19,95,890/-however, the claim of the depreciation in respect of the balance amount of rupees ( 7,97,00,000 – 3,19,95,890) = 4,77,04,110/- cannot be denied, if otherwise it is allowable in terms of section 32 of the income tax act. Similarly the additions made to the media library of Rs. 2,13,783/- and Rs. 11,21,148/- are also eligible for depreciation if actual addition to fixed asset has been made by the assessee subject to the conditions of Section 32. We find that the lower authorities have not examined this issue of allowability of the depreciation other than the amount of Rs. 3,19,95,890/-, we feel it appropriate to restore this issue to the file of the Ld. Assessing Officer for examining the allowability of the depreciation on the amount other than the Rs. 3,19,95,890/-in accordance with the provisions of the Act. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. The ground of the appeal, is accordingly allowed for statistical purposes. Disallowance of staff welfare and other business expenses - Held that:- Addition mainly in view of nonproduction of the vouchers or logbook or other evidences in support of the claim of the expenses by the assessee. It is also settled law that no such disallowance can be made on ad hoc basis without pointing out specific defects in the claim of the assessee. In view of the above facts and circumstances of the case and the issue of the claim of depreciation already restored to the file of the Ld. Assessing Officer, we feel it appropriate to restore this issue also to the file of the Assessing Officer for deciding a fresh after providing adequate opportunity of being heard to the assessee. Disallowance of expenditure incurred through the credit card held by the directors of the company - Held that:- In absence of the details of expenses incurred by the credit card for the purpose of the business of the company, the AO made disallowance at the rate of 50% of the total expenses incurred through the credit card . We have heard the rival submissions of the parties on the issue in dispute .Since the disallowance on this account has also been made on percentage basis in ad-hoc manner without pointing out specific expenditure being not for the purpose of the business, we feel it appropriate to restore the issue also to the file of AO for deciding afresh after providing adequate opportunity of being heard to the assessee. This ground of the appeal is also allowed for statistical purposes.

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• 2018 (12) TMI 747
  Reopening of assessment - failure to obtain the approval of the appropriate authority as envisaged under Sec.151(1) - Held that:- A.O while issuing the notice under Sec. 148 had failed to obtain the approval of the appropriate authority as envisaged under Sec.151(1) of the Act, and had issued the notice under Sec. 148 after obtaining the approval of the Addl. CIT, Range-2(1), Mumbai. We are of the considered view that in the backdrop of the aforesaid facts read with the settled position of law the notice issued by the A.O under Sec. 148 in the absence of approval of the appropriate authority contemplated under Sec. 151(1) cannot be sustained. In terms of our aforesaid observations the notice issued by the A.O under Sec.148 cannot be upheld and is quashed. - Decided in favour of assessee.

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• 2018 (12) TMI 746
  Clubbing of income - Assessment of capital gain of the minors in the hands of the assessee - eligibility of exemption under Section 54F - Held that:- As carefully gone through the provisions of Section 64. The word “any such income” as appears in Section 64(1A) includes capital gain arising out of the sale of the property obtained by the minors from their grandparents by way of settlement. Therefore, the Assessing Officer has rightly clubbed the minors’ income in the hands of the assessee. Since the nature of bank deposit is not readily available for verification, this Tribunal is of the considered opinion that the matter needs to be verified by the Assessing Officer. Accordingly, orders of both the authorities below are set aside and the matter is remitted back to the file of the Assessing Officer only for a limited purpose of verifying whether the capital gain was deposited in the specified Capital Gains Account as required under Section 54F of the Act. The Assessing Officer shall verify the nature of deposit and thereafter decide the issue whether the assessee is eligible for exemption under Section 54F of the Act or not. Eligibility for exemption under Section 54F - Investment of sale proceeds in the name of the assessee and her husband - AO restricted the investment to the extent 50% - Held that:- In a male dominating society, investment made in the name of the husband is also to be considered as investment. While adjudicating the issue arises for consideration, the prevailing customary practice in the society cannot be ignored by the judicial authorities. Even though the property sold stands in the name of assessee alone and the investment was admittedly made in the name of assessee and her husband, this Tribunal is of the considered opinion that the object of enactment to promote housing facility in the country is achieved and the assessee’s husband cannot be considered as a third party as far as the assessee’s investment is concerned. Therefore, this Tribunal is of the considered opinion that the assessee is eligible for exemption under Section 54F of the Act even though the investment was said to be made in the joint name of assessee and her husband. Therefore, we are unable to uphold the orders of the authorities below. Assessing Officer is directed to grant exemption under Section 54F of the Act.

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• 2018 (12) TMI 745
  Addition by way of set-off of interest expenditure under the head House Property - assessee claimed such deduction only by way of revised computation in the course of the assessment proceedings - Held that:- Since the AO has not gone into the claim of the assessee no finding was given on the claims made by the assessee. The observations of the CIT(A) that since there is no adverse finding by the Assessing Officer, there is no justification in accepting the claim of the assessee is wrong. Since the AO has not gone into the claim of the assessee, we are of the view that this matter has to go back to the AO for proper verification of details of property acquired, rental income shown, loan borrowed for acquisition of property, interest paid on such loan etc., so as to satisfy that the condition u/s. 24(b) of the Act are complied for allowing such deduction. Thus, we restore the issue of deduction u/s. 24(b) of the Act to the file Assessing Officer for denovo consideration. AO shall provide adequate opportunity of being heard to the assessee and adjudicate the issue in accordance with law. Revenue's appeal allowed for statistical purpose.

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• 2018 (12) TMI 744
  Disallowance of expenditure claimed by the assessee company as CSR u/s. 37(1) - allowable busniss expenditure - Held that:- Since the ‘CSR’ expenses are mandatory for companies incorporated as per the Companies Act, 2013 and the expenditure have been incurred by the assessee as envisaged under the Companies Act, 2013. So we are of the opinion that it has to be allowed and we take note that the Tribunal in Jindal Power Ltd.[2016 (7) TMI 203 - ITAT RAIPUR] has already held that the introduction of explanation 2 to sec. 37(1) of the Act w.e.f. from 1st August, 2015 cannot be held to be retrospective in operation. Therefore, the expenditure incurred by assessee on account of ‘CSR’ as envisaged u/s. 135 of the Companies Act, 2013 need to be allowed as deduction. Therefore, the ‘CSR’ expenditure which the assessee company was obliged to discharge because it was a statutory obligation upon the assessee company so, the deduction should have been allowed as per the law in force for this assessment year and we direct the AO to allow the expenditure. - Decided in favour of assessee.

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• 2018 (12) TMI 743
  Reopening of assessment - wrong windmill depreciation claim - assessee had wrongly included land cost in its windmill depreciation claim - Held that:- No failure on the taxpayer’s part to disclose “fully and truly” all necessary facts in its return of income. Learned Departmental Representative’s case is that the assessee had wrongly included land cost in its windmill depreciation claim and therefore, its disclosure made in assessment proceedings does not satisfy the latter lines of truly ‘ in section 147 1st proviso’ in the Act. There is no dispute first of all that the Assessing Officer’s reopening reasons did not specifically indicate the assessee’s failure in not having disclosed all the relevant facts “fully and truly” at the first instance. Omission on part of an Assessing Officer is fatal to validity of the reopening in issue. We further find as per assessee’s particulars of depreciation allowable in respect of block of assets in the relevant previous year that it had nowhere included land cost of Rs. 20,000,000/- for the purpose of the relief in issue. This clinching fact has gone unrebutted at the Revenue’s behest during the course of hearing. We therefore affirm the CIT(A)’s findings holding the impugned reopening to be not sustainable in the eyes of law. The Revenue fails in its sole legal ground. - Decided in favour of assessee.

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• 2018 (12) TMI 742
  Addition u/s. 68 - disallowance of interest expenditure relating to loans added u/s. 68 - Non supply of copies of statements nor afforded opportunity of cross examination - Held that:- AO did not make further enquiries on the evidences furnished by the assessee. AO has simply rejected them without assigning any reasons. In fact, the assessee has produced the lenders before the AO, who have also confirmed the loan transactions. Instead the AO has placed reliance on the report given by search officials, brushing aside the confirmation given by the lenders and also brushing aside the various documents furnished by the assessee to prove the cash credits. Even though the AO has stated that the assessee has failed to prove the three basic tenets of a legal loan transaction, yet he has not substantiated the same with any credible reasons. Hence, it is a case of mere rejection of various evidences furnished by the assessee. We notice that the AO had asked the assessee to produce books of accounts from one of the lenders, which were not produced. Supreme Court has held in the case of Kishanchand Chellaram vs. CIT [1980 (9) TMI 3 - SUPREME COURT] that the materials, which were not supplied to the assessee, could not be used against the assessee. The Hon’ble Supreme Court in the case of Andaman Timber Industries [2015 (10) TMI 442 - SUPREME COURT] has held that, if the statements of the witnesses were the basis for passing the orders, then not allowing assessee to cross examine witnesses by Adjudicating Authority amounted in serious flaw which make impugned order nullity as it amounted to violation of principles of natural justice. Hence, for these reasons also, the impugned additions cannot be sustained. - Decided in favour of assessee.

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• Customs

• 2018 (12) TMI 738
  Valuation of imported goods - Aluminum Scrap - rejection of declared value - enhancement of assessable value - Held that:- As per Sections 14(1) and 14(1-A), the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in that provision. Section 14(1) is a deeming provision as it talks of deemed value of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods. This, ordinarily, is the course of action which needs to be followed by the Assessing Officer. This principle of arriving at transaction value to be the assessable value applies. Exceptions are, however, carved out and enumerated in Rule 4(2). As per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of which the Assessing Officer arrives at his own assessable value. The Tribunal has clearly mentioned that this declared price could be rejected only with cogent reasons by undertaking the exercise as to on what basis the Assessing Authority could hold that the paid price was not the sole consideration of the transaction value. Since there is no such exercise done by the Assessing Authority to reject the price declared in the Bills of Entry, Order-in-Original was, therefore, clearly erroneous. There is no merit in the appeal - appeal dismissed.

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• 2018 (12) TMI 737
  Export of Non-Basmati Rice - prohibition in terms of N/N. 67 dated 23.1.2003 issued under rule 11 of the Export (Quality Control and Inspection) Act, 1963 - Held that:- The appeal is admitted on substantial questions of law.

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• 2018 (12) TMI 736
  Attachment of immovable property - direction for completion of investigation in a time bound programme - Held that:- To enable the respondents to complete the investigation, we direct the petitioners or any of them who may be summoned by the competent authority for giving the statement in the ongoing investigation to appear before the Competent Authority. Since we do not have the full details of the investigation, it would not be proper for us to give any rigid time frame for completing the same - The authorities would attempt to complete the investigation as expeditiously as possible and issue a show-cause notice to the petitioners, if upon completion of investigation the case for proceeding further is made out. This may be done preferably by 31st March, 2019. Petition disposed off.

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• 2018 (12) TMI 735
  Recovery of dues - Section 28 of the Customs Act, 1962 - Held that:- Clause (a) to sub-section 1 of Section 28 of the Customs Act envisages a proper officer requiring the assessee to show cause why the duty or the interest which has not been levied or short paid or short levied or erroneously refunded, should not be recovered. The second proviso to said clause, however, provides that before issuing such notice, the proper officer shall hold pre-notice consultation with a person chargeable with duty or interest in such manner as may be prescribed. The impugned communication is in the nature of pre-notice consultation. - if the petitioner does not accept the request of the Authority in said notice and if the Authority wishes to seek recovery, the procedure in terms of Section 28 shall be followed. Petition disposed off.

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• 2018 (12) TMI 734
  DEPB License - case of Revenue is that DEPB licenses were obtained by the seller by fraud - recovery of dues - Held that:- The assessee does not dispute that the DEPB scrips in question were not obtained through fraud - The Department has not brought any evidence on record to suggest that the assessee was party to the fraud. In fact, possibly there is no such allegation in the show-cause notice also - appeal dismissed - decided against Revenue.

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• 2018 (12) TMI 733
  Classification of imported goods - Beverage Cooler SC-80 - whether classified under CTH 8418 50 00 or under CTH 8418 69 30 of CTA? - Held that:- Heading 8418 takes into its ambit the refrigerators, freezers or freezing equipments. The sub-heading 50 00 relates to the other furniture for storage and display, incorporating refrigerating or freezing equipments. The sub-heading 8418 69 30 covers vending machines other than automatic vending machine - the heading 8418 50 00 is for the other goods used for storage and display, incorporating refrigerating or freezing equipments. As is clear from the wordings, the said headings cover the goods which are meant for storage as well as display of beverages to be sold. Admittedly all the items falling under heading 8418 invariably have storage facilities apart from refrigeration or freezing or cooling. As such, as rightly observed by the authorities below, the classification of a product would depend upon the additional feature or function which the machines carry apart from cooling or storage. As per catalogue produced by the appellant, the machines in question have a very small storage facility and the same are not designed for display of the articles stored therein. There is no feature shown in the said catalogue indicating any display of the products stored inside. The fact that the machine has the capacity to dispense with the fixed quantity of the beverage itself shows that the same is a vending machine. The contention of the learned Advocate that heading 8418 69 30 only covers the automatic vending machine, without any human intervention, cannot be accepted inasmuch as the said heading includes vending machines, other than automatic vending machines. This indicates that automatic vending machines are not covered by the said heading which relate to only vending machines. Vending machines stand covered by heading 8418 69 30 specifically includes the vending machines and the goods in question admittedly being vending machines have to be held as covered by the said heading. Appeal dismissed - decided against appellant.

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• Corporate Laws

• 2018 (12) TMI 739
  Scheme of Amalgamation and Arrangement - Transferor Company is the group holding company and primarily holds shares in the Transferee Company. The Transferee Company is a specialty pharmaceutical company engaged in development, production and marketing of branded and generic formulations - Held that:- The scheme is devised mainly to benefit the four share holders of Gabs who are also the promoters of APL (common promoters). In addition to the above, by this scheme, huge tax liability is being avoided, the scheme does not provide for complying with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011. In view of the above infirmities, no benefit is accruing to the thousands of shareholders of APL especially the retail shares holders of the transferee company, (the shareholders of APL as on 31.03.2017 was 38075) therefore, the scheme appears to be unfair, unreasonable and is not in the public interest and as such the Bench is of the considered view not to sanction the scheme as proposed.

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• Insolvency & Bankruptcy

• 2018 (12) TMI 741
  Corporate insolvency process - claim as made by the Operational Creditor - Held that:- The records as well as the statements made by the Corporate Debtor based on affidavit that it is unable to satisfy the claim as made by the Operational Creditor, this petition stands admitted as envisaged by Section 9 of the IBC, 2016 as against the Corporate Debtor. Moratorium in terms of Section 14 of IBC, 2016 will commence from the date of this order admitting the petition and the proposed Interim Resolution Professional (IRP) proposed by the Operational Creditor, namely, Miss. Sarita Duck with Registration No. as noted above is appointed as an Interim Resolution Professional (IRP) to commence and carry forward the CIRP against the Corporate Debtor. In terms of Section 17 of IBC, 2016, the powers of the Board of Directors of the Corporate Debtor shall stand suspended and the IRP appointed by this Tribunal as proposed by the Operational Creditor will take charge of affairs of the Company henceforth. In terms of Section 19 of IBC, 2016, the Board of Directors of the Corporate Debtor whose powers stands suspended as well as its personnel shall fully co-operate with the IRP appointed herein and due co-operation shall also be extended to the IRP by the employees, associates and professionals rendering their service to the Corporate Debtor. IRP to exercise the powers within the confines of IBC, 2016 and shall perform all duties as behoved upon IRP under the provisions of IBC, 2016 as well as all attendant rules and regulations, without any let and shall also file the status report in relation to the progress of the CIRP of the Corporate Debtor. A copy of this order shall be duly communicated to the Operational Creditor, Corporate Debtor as well as to learned IRP, namely, Miss Sarita Duck at the earliest not later than three days from today.

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• 2018 (12) TMI 740
  Corporate insolvency process - default in payment of dues - proof of pre-existing dispute - Held that:- In this case, the corporate debtor has not raised any objections or disputed the quality of the goods supplied by the operational creditor anytime before the demand notice was issued by the operational creditor or even the reply was not sent within 10 days period in terms of section 8 of the IBC, 2016. In view, of the above this Tribunal is of the view that the there exists no pre-existing dispute between the corporate debtor and the operational creditor. Therefore the instant Petition is admitted and we order the commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed within 180 days, reckoning from the day this order is passed.

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• Service Tax

• 2018 (12) TMI 732
  Short payment of service tax - Construction services - the entire case of the Revenue is based upon the payment made by Obra Thermal Power Station, without actually finding out as to whether the said payments are against any taxable services or are against the exempted services, as contended by the assessee - Held that:- There is no category of services disclosed in the show cause notice. Merely because the respondents have received certain payments from the said M/s Obra Thermal Power Station does not lead to the inevitable conclusion that the said consideration was on account of taxable services having been provided by the assessee. There is no evidence for the same, in the absence of which, the demand should not have been upheld against them. Appeal dismissed - decided against Revenue.

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• 2018 (12) TMI 731
  Refund of CENVAT Credit - rejection on the ground of limitation - Section 11B of CEA - Held that:- Admittedly, refund claim was made on 30.07.2015 for the period ending March 2014 and in view of clause (f) of Explanation B to Section 11B of the Central Excise Act 1994, date of payment is to be taken into consideration for computation of one year period to file the refund application. In its order dated 19.02.2016, the original adjudicating authority has given his clear finding under para 5 that provision of Rule 6(3) of the Service Tax Rules, 1994 deals with such a situation and the same is fully applicable to the present refund claim. It is an admitted fact that appellant was not put to notice before the rejection of its claim except being asked to submit copies of documents like invoices, GAR-7, cenvat claim certificate, copy of purchase order, work order, work sheet etc. and there is no noting available in the order-in-original as to if alternative plea for availment of cenvat credit was made before the adjudicating authority or not - There is no denying of the fact that adjudication of tax dispute being made by quasi judicial authorities, all provisions of the Code of Civil Procedure is not directly applicable to it. But when there is no express provision made to meet such a contingency which is not contemplated in the procedure prescribed for such adjudication of tax disputes, spirit of provision of civil procedure may be brought into service for effective adjudication. The appeal is allowed in part entitling the appellant to avail cenvat credit for the refused refund claim of Rs. 28,18,361/- and the period of availment of such credit shall commence after the statutory appeal period of appeal is over - appeal allowed in part.

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• 2018 (12) TMI 730
  Rectification of Mistake - Held that:- The dispute is only with regard to whether the activity of transport of the coal within the mining area will be classifiable under category of mining service or goods transport agency service. It is necessary to clarify that service tax amount paid by the appellant under agreement for loading of coal by classifying the same under mining service remains confirmed and appropriation of same by the original Adjudicating Authority is upheld. The final order No. 52632-52633 of 2018 dated 23rd July, 2018 is modified as required - ROM application allowed.

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• 2018 (12) TMI 729
  Liability of Service tax - GTA Service - It is the case of the Revenue that the appellant assessee being one of the seven specified categorized person and having paid freight charges is liable to pay service tax on “Transport of Goods by Road Service” received - Held that:- The amendment that a factory being registered under the State Government as SSI Unit, need not pay Service Tax, being confused them about the non-taxability. However, GTA services were taxable w.e.f. 01.01.2005 - it is also found from the records that the appellants have paid the service tax demand alongwith interest for the period 2011-2012 and also for the period April-June, 2012. The element of fraud or collusion or willful miss-statement or suppression of facts or contravention of any of the provisions with the intent to evade payment of service tax - demand for the extended period is set aside as barred by limitation - penalty also set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 728
  CENVAT Credit - duty paying documents - invalid documents - Held that:- The assessee has brought on record the supporting invoices issued by M/s TATA MOTORS (which is duly registered with Central Excise) and has issued regular excise invoices evidencing payment of Central Excise duty on those CHASSIS NUMBER AND ENGINE NUMBERS of the TIPPERS. Though the Ld. Comm. (A) accepted the fact that under proviso to sub rule (2) of the rule 9 of CCR, 2004 there is an inbuilt provision of leniency which provides that even if the document does not contain all the particulars, but contains the details of duty or service tax as accounted for in the books and accounts, then the Dy/ Asst. Commissioner may allow the Cenvat Credit. Hon’ble Supreme Court, Hon’ble High Courts and the Tribunal have consistently held that when it has been established beyond doubt that the duty stood paid on the goods and the goods were received by the assessee, denial of credit on the procedural irregularity would not be justified. Credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 727
  CENVAT Credit - credit to be availed after payment of amount under Rule 4(7) - extended period of limitation - absence of allegation of suppression of facts - Held that:- Rule 4(7) of the Cenvat Credit Rules, 2004, states that “the Cenvat Credit in respect of input service shall be allowed, on or after the day that which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or, as the case may be, challan referred to in Rule 9.” Rule 6(2A) of the Service Tax Rules, 1994 specifies that the date of payment in case of service tax shall be the date of presentation of cheque subject to realization of cheque - it is also found from the records that none of the cheque issued by the appellant were dishonored. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (12) TMI 726
  CENVAT Credit - various input services - Renting of immovable property - Work contract service - Air travel agent - Mandap keeper - Club or association service - Rent-a-cab - Authorized service station - Photography - Tour operator - Courier service - Held that:- Almost all the input services have been held as input services in the judgments cited by the appellant - all the services are indeed input services and credit is admissible. Rent-a-cab service - Held that:- On perusal of invoice, it is found that it is not rent-a-cab whereas it is service of supply of tangible goods which was used for organizing medical camp which is in connection to promotion of their product, therefore, it is an input service. Appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 725
  CENVAT Credit - input services - air travel agent services - hotel services - debit and credit card services - Held that:- The appellant has now produced before the Tribunal, the documents with regard to air travel and hotel services to argue that these services were used for official purposes only. On going through this document, it is seen that the minutes of meeting would show that the officers of the company are required to attend the LSPM Meeting. This meeting is intended to plan the strategy and the production requirement. The list of participants who have attended the meeting also is furnished. All these would indicate that appellant has availed such services for official purposes only. However, since the documents have not been verified, the matter requires to be remanded to the adjudicating authority, who shall verify whether the services of air travel agent and hotel services are availed for official purposes. Debit and credit card services - Held that:- The Ld. DGM of the Company has explained that credit / debit card services (service tax paid for transactions using such card) was availed when the customers had used cards for making payment. The said activity is definitely related to manufacturing activity and the disallowance stating that these have no nexus with manufacturing activity is incorrect - credit allowed. Air travel agent services - accommodation services - Held that:- The errors in calculation with respect to all these three services are to be considered afresh by the adjudicating authority. The reconsideration of calculation errors shall be confined to services impugned in this appeal and services remanded by Commissioner (Appeals) only. Appeal allowed in part and part matter on remand.

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• 2018 (12) TMI 724
  CENVAT Credit - inputs - fireworks purchased from their other units - Rule 16(1) of Central Excise Rules 2002 - Held that:- The definition of input show that not only the inputs that is used for manufacture of final products but also those goods cleared whose value is included in such final product will come within the definition of inputs. Further, all goods used in the factory by the manufacturer of the final product would come within the definition. This means any goods used by manufacturer within the factory is input. The words used are ‘by the manufacturer’ and not ‘for the manufacture’. The authorities below have erred in interpreting that in order to qualify as inputs, the goods have to be used for manufacture. Rule 16 speaks about situation wherein duty paid goods are brought into factory for refine, reconditioned or for any other reason - In the present case, the goods are not brought to the factory but they have been bought by the manufacturer and the value of such goods have been included in the assessable value of the final product. The situation does not give raise to invoke Rule 16(1) at all. The demand cannot sustain and requires to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 723
  CENVAT Credit - whether the provisions of amended Rule 3(5B) of the CENVAT Credit Rules (CCR), 2004 are applicable, requiring the reversal in respect of the provisions made on account of non-cenvatable, non/slow moving goods? - period from 2007-08 to 2008-09. Held that:- Hon’ble High Court of Bombay in the case of Commissioner of Central Excise Vs. M/s. Hindalco Industries Ltd. [2011 (6) TMI 662 - BOMBAY HIGH COURT] has considered a somewhat similar issue, where it was held that where the goods have been shown as written off goods, the benefit is available, case relates to a period prior to the amendment of Rule 3 by the insertion of sub-rules (5B) and (5C). The applicability of Rule 3(5B) is prospective. Consequently, there can be no demand of reversal of Credit on the opening balance (Rs.1,17,61,774/- as on 01.04.2007). The Show Cause Notice incorporates the reply filed by the assessee, taking note of the Additional provisions made for the period 2008-09 and 2009-10 up to August 2009 which are invariably hit by the provisions of Rule 3(5B) and therefore, the Credit availed, if any, is required to be reversed - matter remanded to the file of the adjudicating authority to verify and demand appropriate reversals. Appeal allowed in part and part matter on remand.

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• 2018 (12) TMI 722
  CENVAT Credit - input services - Real Estate Agency Services - Held that:- As long as a service is used directly or directly, in or in relation to, the manufacture of final products and clearance thereof, such service is an eligible input service. M/s. CBRE was entrusted with the work of completing the process of selling the land belonging to the appellant within a reasonable time. This has no connection with the ‘financing’ activity figuring in the inclusive part of the definition of “input service”. The role of M/s. CBRE is thus limited; may be the purpose of the appellant is different but what is important is the service provided by the service provider that is used by the manufacturer, directly or indirectly, in or in relation to, the manufacture of final products and clearance thereof. The scope of the definition of “input service” revolves around the manufacturing activity and not the business activity. M/s. CBRE rendered the services of Real Estate Agent simpliciter - credit rightly denied - appeal dismissed - decided against appellant.

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• 2018 (12) TMI 721
  Valuation - Motor Spirit - High Speed Diesel - clearance of products to its own depots by payment of duty at the rate specified per kilo liter for volumes at ambient temperature - under-valuation - demand of differential duty - Held that:- Identical issue decided in the case of INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF C. EX.. PANCHKULA [2013 (1) TMI 526 - CESTAT, NEW DELHI], where it was held that the appellant has rightly paid the excise duty as per transaction value in terms of Section 4 of the Central Excise Act and there is no justification for allegation of under-valuation of the goods with a view to evade excise duty - appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 720
  Rectification of Mistake - the issue involved was non-availment of Cenvat credit of Additional duty levied under sub-section (5) of Section3 of Customs Tariff Act resulting excess availment of refund under in terms of N/N. 56/02-CE dt.14.11.2002 whereas this Tribunal has decided the issue of availment of credit on outward transportation of freight charges - Held that:- Considering the fact that this Tribunal has not decided issue correctly vide order dated 30.08.2018, the Registry is directed to relist the appeal for fresh hearing as and when next Division Bench resumes - ROM Application allowed.

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• 2018 (12) TMI 719
  Rectification of Mistake - the issue involved was denial of refund of education cess and higher education cess and the value addition in terms of N/N. 56/02-CE dt.14.11.2002 whereas this Tribunal has decided the issue of availment of credit on outward transportation of freight charges - Held that:- Considering the fact that this Tribunal has not decided issue correctly vide order dated 30.08.2018, the Registry is directed to relist the appeal for fresh hearing as and when next Division Bench resumes - ROM application allowed.

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• 2018 (12) TMI 718
  Rectification of Mistake - Section 35C(2) of the Central Excise Act - Held that:- The issue is not more res-integra and stands settled by the Larger Bench of the Tribunal in the case of M/s Berger Paints India Ltd. V/s Collector of Customs [1993 (8) TMI 85 - CEGAT, NEW DELHI]. It stands held that second application for rectification of alleged mistake in an order rejecting an application for rectification is not maintainable. Review of the order cannot be sought under the garb of ROM. The relief sought by the applicant, which is relatable to the long drawn process of arguments by both the sides cannot be said to be mistake apparent from the records. The present ROM application is rejected on the ground of non-maintainability.

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• 2018 (12) TMI 717
  Demand of Interest and penalty - reversal of irregularly availed and utilized cenvat credit of education cess and secondary and higher education cess - Held that:- The proposal of recovery of wrongly availed cenvat credit has no more significance as apparently and admittedly the credit has already been reversed. Demand of Interest - Held that:- Interest set aside by the Commissioner Appeals himself. Nothing has been brought that Department has filed an Appeal challenging the same. Penalty - Held that:- It is the apparent and admitted case that the wrongly availed cenvat credit on education cess was not utilized till the time Department conducted audit in the appellant’s premises. Admittedly, the said entire credit has been reversed even prior the issuance of impugned Show Cause Notice. It is also the apparent fact that the duty otherwise has been regularly paid by the appellant. These admissions makes it abundantly clear that there is no case of alleged intent to evade duty - The finding of the Commissioner that the Rules are clear and unambiguous is too insufficient to invoke the grave provision of imposing penalty - penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (12) TMI 716
  Valuation - inclusion of design/ art work/ photo film is developed by them - charges recovered separately - Held that:- The issue involved is no longer res-integra. In the appellants own case, this tribunal has decided the matter for the past period M/S. SHOGINI TECHNOARTS PVT. LTD., SHRI VIJAY M. ATHAWALE, SHRI VINAYAK M. ATHAWALE VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-III [2018 (4) TMI 759 - CESTAT MUMBAI], where it was held that The order passed by the Tribunal was not challenged by the Appellant or the revenue and has thus attained finality. Therefore no fault can be found with the method of such valuation - appeal dismissed - decided against appellant.

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• 2018 (12) TMI 715
  Valuation - related party transaction - removal to sister units - Rule 8 of the Valuation Rules - time limitation - Held that:- The facts of the present case are covered by the decision of the coordinate bench of the Tribunal in the case of Jay Yushin Ltd. vs. Commr. Of Central Excise, New Delhi [2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI], where it was held that there is no dispute that clearance of excisable goods on short payment of duty had taken place. The fact that the differential duty was subsequently debited (albeit voluntarily) by the assessee before the issue of SCN will not debar the issuance of SCN in relation to the short payment occurring on the relevant date. The appeal filed by the appellant is allowed on limitation.

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• 2018 (12) TMI 714
  CENVAT Credit - contravention to the provisions of Rule 3 (5A) of the Cenvat Credit Rules, 2004 - it was alleged that assesses have not paid Central Excise duty on the clearance of used and rejected machinery/machinery spare/equipment - Held that:- Rule 3(5A) of Cenvat Credit Rules, 2004, prescribes that “if the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on the transaction value” - the appellant all along stated that waste and scrap generated from the capital goods were brought into the factory much before 01.04.1994, when where was no provisions for availing credit on the capital goods. It is the case of the appellant that since there is no provision for availing credit on the capital goods, no Excise duty was required to be paid - appeal dismissed - decided against appellant.

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• 2018 (12) TMI 713
  Refund clam - payment of duty twice - CENVAT Credit - inputs/input services - coir mattress - benefit of N/N. 01/2011-CE dated 01.03.2011 - Section 11B of CEA - Penalty - Held that:- Department have not alleged any suppression of facts with intent to evade payment of duty. Further, the first appellate authority has held that there was no such intent to warrant imposition of penalty. It is not in dispute that duty has been paid twice, once from the cenvat account and subsequently by cash through PLA. It is also not in dispute that the respondent assessee was eligible for refund. The only dispute was that whether the re-credit could be taken suo moto or a refund claim was required to be filed. Thus under the facts and circumstances of the case no penalty is imposable. The issue is covered by the decision of the Tribunal in the case of Commissioner of Central Excise, Surat-II vs. Vardhman Acrylics Ltd. [2013 (5) TMI 6 - CESTAT AHMEDABAD], where it was held that suo-moto admissible Cenvat credit taken, after getting a favourable decision from the first appellate authority, is correct. Appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2018 (12) TMI 712
  Liability of tax - works contract service - benefit of section 3-F(2)(B)(i) of the U.P. Trade Tax Act, 1948 - Held that:- Considering that tribunal is the highest fact finding authority, it was expected that tribunal would look into all such factual aspects with a greater minuteness/clarity. Considering the fact that in respect of previous year, similar issues raised have already been remitted to the tribunal, where it is reported to be pending, it would be appropriate that this matter be also remitted to the tribunal, for examining the two aspects, which have not been dealt with by it elaborately - appeal allowed by way of remand.

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