TMI Tax Updates - e-Newsletter
December 19, 2017

Case Laws in this Newsletter:

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

Articles

1. Anushka Sharma - Wedding Ring – Customs Law on Import of Jewellery - Duty & Penalty

   By: Rakesh Chitkara

2. Recent Instruction about expanding scope of scrutiny and some related issues- limitation to serve notice for expanded scrutiny

   By: DEVKUMAR KOTHARI

3. MANDATORY PENALTY – LESSER PENALTY NOT IMPOSABLE

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. GSTN brings in option for monthly, quarterly filing of forms

2. I-T dept unearths undisclosed income of ₹ 7,961 cr

3. iPhone prices rise by up to 4.3% after Customs duty hike

4. Year End Review of Ministry of Statistics & Programme Implementation ( MoSPI)

5. Strong Macro-Economic Fundamentals and Reforms for Sustained Growth defined 2017 for Ministry of Finance

6. RBI Reference Rate for US $

7. Bitcoin-inspired illicit investment schemes to face regulatory axe

Notifications

GST - States

1. Va Kar/Vividh/54/2017-S.O. No. 144 - dated 5-12-2017 - Jharkhand SGST

Jurisdiction of the various Authorities

2. Va Kar/GST/21/2017-S.O. No. 142 - dated 4-12-2017 - Jharkhand SGST

Notification regarding e-way bill documents

3. Va Kar/GST/07/2017-S.O. No. 138 - dated 14-11-2017 - Jharkhand SGST

Seeks to amend notification no. 53/2017-Central Tax, dated the 28th October, 2017

4. Va Kar/GST/07/2017-S.O. No. 137 - dated 14-11-2017 - Jharkhand SGST

Seeks to extend the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6 for the month of July, 2017 till 31.12.2017

5. Va Kar/GST/07/2017- S.O. No. 136 - dated 14-11-2017 - Jharkhand SGST

Seeks to extend the time limit for furnishing the return in FORM GSTR-5A the month of July, 2017, August, 2017, September, 2017 and October, 2017 till 15.12.2017

6. Va Kar/GST/07/2017- S.O. No. 135 - dated 14-11-2017 - Jharkhand SGST

Seeks to extend time limit for furnishing the return by a non-resident taxable person, in FORM GSTR-5 for the months of July, 2017, August, 2017, September, 2017 and October, 2017 till 11.12.2017

7. S.O. No. 123-43/2017 State Tax (Rate) - dated 14-11-2017 - Jharkhand SGST

Seeks to amend notification no. 4/2017- State Tax (Rate), dated the 29th June, 2017

8. FIN/REV-3/GST/1/08 (Pt-1)/107 - dated 28-11-2017 - Nagaland SGST

Registered person who did not opt for composition levy

9. FIN/REV-3/GST/1/08 (Pt-1)/106 - dated 28-11-2017 - Nagaland SGST

Exempt from Registration

10. FIN/REV-3/GST/1/08 (Pt-1)/105 - dated 28-11-2017 - Nagaland SGST

Waives late fee for Oct, 2017 in FORM GSTR-3B

11. FIN/REV-3/GST/1/08 (Pt-1)/104 - dated 28-11-2017 - Nagaland SGST

Time period for furnishing in FORM GSTR-1 Turnover less than 1. 5 crore

12. FIN/REV-3/GST/1/08 (Pt-1)/099 - dated 28-11-2017 - Nagaland SGST

Amend NT No. 5-2017 CT(R) Restriction on ITC (Amendment in F.NO.FIN/REV-3/GST/I/08 (Pt-I) “H”,30th June,2017)

13. FIN/REV-3/GST/1/08 (Pt-1)/098 - dated 28-11-2017 - Nagaland SGST

Amend NT No.4_2017 CT(R) Reverse charge on raw cotton (Amendment in F.NO.FIN/REV-3/GST/I/08 (Pt-I) “G”,30th June,2017)

14. NO.F.1-11(91-TAX/GST/2017(Part) - dated 22-11-2017 - Tripura SGST

Notification regarding category of persons exempted from obtaining registration under TSGST Act, 2017

15. NO.F.1-11(91)-TAX/GST/2017(Part) - dated 22-11-2017 - Tripura SGST

Notification regarding the TSGST (Twelfth Amendment) Rules, 2017

16. NO.F.1-11(100)-TAX/GST/2017 - dated 16-11-2017 - Tripura SGST

Notification regarding last date for filing of return in FORM GSTR-3B

17. NO.F.1-11(91)-TAX/GST/2017(Part-VII)-47/2017-State Tax (Rate) - dated 14-11-2017 - Tripura SGST

Seeks to amend Notification No. 12/2017-State Tax (Rate), dated 29th June, 2017

18. NO.F.1-11(91)-TAX/GST/2017(Part-VII)-46/2017-State Tax (Rate) - dated 14-11-2017 - Tripura SGST

Seeks to amend Notification No. 11/2017-State Tax (Rate), dated the 29th June, 2017

19. NO.F.1-11(91)-TAX/GST/2017(Part-VII)-45/2017-State Tax (Rate) - dated 14-11-2017 - Tripura SGST

Notification regarding prescribing 2.5% concessional TGST rates on certain goods supplied to a specific public funded research institutes and subject to specified condition

VAT - Delhi

20. F. No./Zone-5/W-61/MISC./2017-18/716-719 - dated 14-12-2017 - DVAT

Notified general information the Declaration Forms “C” are declared to be obsolete and invalid for all purposes

Circulars / Instructions / Orders

GST - States

1. NO.F.IV-3(15)-TAX/2017/10257-72 - dated 16-11-2017

Order regarding classes of officers of Audit Cell with their jurisdiction under TSGST Act

2. NO.F.1-11(100)-TAX/GST/2017/10302-09 - dated 16-11-2017

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

3. NO.F.1-11(100)-TAX/GST/2017/10310-24 - dated 16-11-2017

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

4. NO.F.IV-3(15)-TAX/2017/10241-56 - dated 16-11-2017

Order regarding classes of officers of Enforcement Wing with their jurisdiction under TSGST Act

Highlights / Catch Notes

Income Tax

• Tribunal Rules No Penalty u/s 271(1)(c) for Shifting Taxability Without Concealment or Inaccurate Details.

  Case-Laws - AT : Penalty u/s 271(1)(c) - assessee has merely shifted the taxability in this year; and hence; there could not be a remotest case for levy of penalty either for concealment of income or for furnishing of any inaccurate particulars - AT
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• Classify Terrace Rental Income as Property Income, Not Other Sources, Due to Its Integral Role in Building.

  Case-Laws - AT : Terrace rental income - income from house property OR income from other sources - The terrace floor cannot exist in the air. It is part of the building which has been constructed on the land beneath the super-structure. It is, therefore, not correct to hold that the terrace does not have any appurtenant land - AT
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• CCTV Cameras and Access Systems Eligible for 60% Depreciation as Computer Peripherals.

  Case-Laws - AT : Higher depreciation @ 60% on CCTV cameras and Control access systems - the Control access systems and CCTV cameras are peripherals attached to computer systems only and their operation and control is done through computers only is acceptable. - AT
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• Interest Deductions Disallowed in Joint Venture u/s 40A(2)(a) Due to Related Party Transactions.

  Case-Laws - AT : Disallowance on interest payment - addition u/s.40A(2)(a) - related parties - investment in the joint venture, under J.V Agreement - the assessee would ordinarily be entitled to deduction of interest on its loans and advances under section 37 (1)/36(1) (iii). - AT
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• Section 147/148 Reassessment Invalid if Case Falls u/s 153C of Income Tax Act.

  Case-Laws - AT : Once the case of reassessment is made out by the AO which falls in the preview of specific provisions of section 153C of the Act, the AO cannot resort to invoke the provisions of Section 147/148 of the Act to assessee or reassess income of the assessee. The action of the AO to initiate the proceedings Under section 147/148 of the Act vitiates the entire reassessment proceedings and the assessment order. - AT
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• Penalty Imposed for Bogus Purchases u/s 271(1)(c); Assessee Found With Undisclosed Income Via False Entries.

  Case-Laws - AT : Penalty u/s 271(1)(c) - bogus purchase found during search - as per a specific provision of explanation 5A assessee has been found to be owner of undisclosed income by furnishing inaccurate particulars of income, based upon entry of bogus purchases in its books of account - penalty confirmed - AT
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• Transfer Pricing Adjustments Limited to International Associated Enterprise Transactions; Domestic Deals Excluded Unless Specified Domestic Transactions Apply.

  Case-Laws - AT : For the purpose of transfer pricing adjustment, the transaction of the assessee with Associated Enterprise outside the country alone has to be taken into consideration. The domestic transaction unless it is a Specified Domestic Transaction, cannot be a basis for making any adjustment. - AT
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• Rental Income Taxed as 'Income from House Property' Based on Building Ownership, Land Ownership Not Required.

  Case-Laws - AT : Rental income - Admittedly assessee was the owner of the building though it might not be the owner of the land. It is not essential that a person who owns a building should be owner of the land upon which it stands for assessing the rental income under the head ‘Income from House Property’ - AT
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Customs

• India Hikes Customs Duty on Imported Electronics, Affecting IGST Rates; Notifications Issued to Stakeholders.

  Notifications : Customs duty electronic goods increased - Effective rates of customs duty and IGST for goods imported into India. - Notification
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• Wedding Ring Import Case Explores Customs Duties and Penalties for Non-Compliance with Jewelry Import Regulations.

  Articles : Anushka Sharma - Wedding Ring – Customs Law on Import of Jewellery - Duty & Penalty
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• Court Grants Duty Refund with Interest Due to Export Non-Occurrence; Time Limit for Claims Acknowledged.

  Case-Laws - HC : Refund claim of duty paid but actual export could not take place - time limitation - The right of the petitioner to seek return of the amount deposited while filing the shipping bill thus stems from the fact that the anticipated export never took place - refund allowed with interest - HC
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Corporate Law

• New Guidelines for Cost Records and Audits in Company Law: Key Compliance and Reporting Requirements Explained.

  Act-Rules : Cost records and audit - Particulars relating to the Items of Costs to be included in the Books of Accounts
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• Investor Education and Protection Fund Authority Updated: New Amendments Under Companies Law Enhance Investor Awareness and Protection.

  Notifications : Constitution of Investor Education and Protection Fund Authority - Notification as amended
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• Supreme Court Confirms Lawyers Can Issue Demand Notices for Unpaid Operational Debts in Corporate Insolvency Process.

  Case-Laws - SC : Corporate insolvency process - Whether a demand notice of an unpaid operational debt can be issued by a lawyer on behalf of the operational creditor? - Held Yes - SC
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PMLA

• Rule 9: Enhanced Client Due Diligence Essential for Compliance with Anti-Money Laundering Regulations in Financial Sectors.

  Act-Rules : Client Due Diligence. - Rule 9 of the PREVENTION OF MONEY-LAUNDERING (MAINTENANCE OF RECORDS) RULES, 2005, as amended
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• Rule 2(d) Defines Officially Valid Documents for Anti-Money Laundering Compliance in Financial Transactions.

  Act-Rules : Officially valid document - Rule 2(d) of the PREVENTION OF MONEY-LAUNDERING (MAINTENANCE OF RECORDS) RULES, 2005, as amended
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Service Tax

• Refund of Unutilized CENVAT Credit Allowed Despite Payment Delay; Procedural Lapse Doesn't Deny Substantial Benefit.

  Case-Laws - AT : Refund of unutilized CENVAT credit - even though the payment was not made by the appellant for the services within the quarter for which the refund was claimed, the same has been made in the subsequent quarter. If that is so, then it becomes only a procedural lapse for which the substantial benefit of refund cannot be denied to the appellant - AT
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• CENVAT Credit Allowed on Essential Interconnectivity Services for Telecom Operations, No Legal Basis for Denial.

  Case-Laws - AT : CENVAT credit - Interconnectivity Usages Services - there is no legal justification to deny the credit on such input service which are essentially required for providing telecommunication service of further inter-connectivity and telephony - AT
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Case Laws:

• Income Tax

• 2017 (12) TMI 881
  Set off of brought forward unabsorbed depreciation denied - Held that:- Circular No. 14 of 2001 had clarified that under Section 32(2), in computing the profits and gains of business or profession for any previous year, deduction of depreciation under Section 32 shall be mandatory. Therefore, the provisions of section 32(2) as amended by Finance Act, 2001 would allow the unabsorbed depreciation allowance available in the A.Y. 1995-96 to 2001-01, to be carried forward to the succeeding years, and if any unabsorbed depreciation or part thereof could not be set off till the A.Y. 2002-03 then it would be carried forward till the time it is set off against the profits and gains of subsequent years. Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year.Therefore, considering the factual position discussed above, we allow the appeal of the assessee and we direct the AO to allow set off, of depreciation pertaining to A.Y 1995-96 to 2000-01, against income of assessment year 2009-10. - Decided in favour of assessee.

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• 2017 (12) TMI 880
  CIT(A)'s power u/s 251 to accept the claim of the assessee for amending the return except otherwise than by filing a revised return - CIT(A) allowed the claim of fringe benefit which was not claimed by the assessee in the return of income - Held that:- Iin the present case under consideration, the assessee had already raised the claim before the AO in respect of expenditure incurred on uniform of employees on office duty but the AO rejected the claim of the assessee but the CIT(A) allowed the case of the assessee. We are of the view that judgment in the case of Goetze(India) Ltd. Vs. CIT (2006 (3) TMI 75 - SUPREME Court) clearly says that appellate authorities have the power to allow deduction or claim for expenditure of the assessee to which he was otherwise entitled, even though no claim was made by the assessee in the return of income and accordingly, he has made a claim before the ld. CIT(A) who has allowed the claim of the assessee. Therefore, considering factual position, we are of the view that the order passed by the ld. CIT(A) accepting the new claim which was not made by the assessee in his original or revised return of income, was not wrong on the part of the CIT(A) in entertaining the new claim of the assessee. Therefore, we hold that the order passed by the ld. CIT(A) does not have any infirmity. Interest under section 234D - whether assessing officer was right in charging interest on excess refund or not? - Held that:- AO was right in charging the interest under section 234D of the Act. The explanation 2 of section 234D clarifies that section 234D(2) shall apply to an assessment year commencing before the 1st day of June, 2003 and we find the A.Y under consideration is commenced before 01.06.2003 and if the proceedings in respect of such assessment year is completed after the said date i.e. 29.03.2004, therefore, we hold that the ld. CIT(A) was not justified in allowing the ground raised by the assessee challenging the charging of interest, therefore, we quash the order passed by CIT(A). Hence, we confirm the order passed by AO U/s 234D of the Act. - Decided in favour of assessee.

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• 2017 (12) TMI 879
  Deduction u/s 80P disallowed - interest income’ earned by the assessee on the deposits placed with the SBI - Held that:- As held by the Hon'ble Bombay High Court in the case of CIT vs. Godavaridevi Saraf reported in (1977 (9) TMI 24 - BOMBAY High Court), we are bound by the decision of the jurisdictional High Court on similar set of facts. Further, in the case of SBH Employees Co-operative Credit Society [2016 (7) TMI 516 - GUJARAT HIGH COURT], the Hon'ble jurisdictional High Court has held the issue in favour of the assessee. Respectfully following the same, we allow the assessee’s appeal and direct the AO to allow the deduction u/s 80P of the Act of the ‘interest income’ earned by the assessee on the deposits placed with the SBI, a nationalised bank. The learned DR had tried to distinguish the facts of the case before us with the above decision stating that in the case of the assessee, the interest is earned on FDR’s, while, in the case before the Hon'ble High Court, the deposits were not fixed deposits. However, from the assessment order, it is seen that the reserves and surpluses have been kept as deposits and there is no reference to ‘FDRs’ by the AO. Therefore, this distinction is not established. - Decided in favour of assessee.

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• 2017 (12) TMI 878
  Penalty u/s 271(1)(c) - additional income on account of forfeiture of earnest money prior to the filing of revised return - Held that:- The Income Tax Department or Investigation Wing never asked the assessee about the alleged additional income on account of forfeiture of earnest money prior to the filing of revised return. Thus, the observation and the finding of the ld. CIT(A) while deleting the said additions are upheld, because at no point of time assessee was cornered by the Department which would compelled the assessee for filing of revised return. It was purely a voluntarily act and that to be it was a business income which was accounted for in the books of account for the subsequent year and assessee has merely shifted the taxability in this year; and hence; there could not be a remotest case for levy of penalty either for concealment of income or for furnishing of any inaccurate particulars. Accordingly, the appeal of the Revenue is dismissed.

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• 2017 (12) TMI 877
  Penalty u/s. 271(1)(c) - defective notice - Held that:- We find that the notice dt. 21-11-2011 issued u/s 274 r.w.s 271 of the Act does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. - Decided in favour of assessee.

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• 2017 (12) TMI 876
  Assessment of the rental income - agreement of renting and hiring terrace - “income from house property” OR “income from other sources” - Held that:- It is noticed that the issue under consideration now has been settled by the Hon’ble Jurisdictional High Court in assessee’s own case [2015 (4) TMI 625 - DELHI HIGH COURT] held that the building the top terrace of which is the subject of focal attention here has been developed for its various portions to be sold or let out with no possibility of the terrace floor being subjected to such utilization. The assessee continues to be the owner of the terrace floor. It has conceivably no other purpose to be served by such property as is held on the terrace floor, except the exploitation of the licensed space for gaining the income that cannot be treated as either income from business or income from other sources. The income was thus rightly returned as income from house property. No logic employed by ITAT in rejecting the claim of it being income from house property. The terrace floor cannot exist in the air. It is part of the building which has been constructed on the land beneath the super-structure. It is, therefore, not correct to hold that the terrace does not have any appurtenant land. Thus decide the issue in favour of the assessee. Disallowance of construction expenses of Vikram Tower - Held that:- In the present case, while deciding the first issue relating to the income received by the assessee from the rent of the same building for which the impugned expenses were incurred on account of repair, we have held in the former part of this order by following the judgment of the Hon’ble Jurisdictional High Court that the income to be held under the head house property and deduction u/s 24(a) of the Act for repairs to be allowed. Since, the repairs & maintenance has already been allowed as per the provision contained in Section 24(a) of the Act. Therefore, no separate deduction can be allowed for repairs & maintenance. Accordingly, we do not see any merit in this ground of the assessee’s appeal. Disallowance of expenditure u/s 14A - Held that:- In the present case, it appears that the calculations made by the assessee for making the disallowance u/s 14A of the Act r.w. Rule 8D of the Income Tax Rules, 1962 were furnished first time before the ld. CIT(A) and not before the AO. We, therefore, deem it appropriate to set aside this issue back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.

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• 2017 (12) TMI 875
  TDS u/s 194C - failure to deduct TDS u/s 194C on subcontract payments addition u/s 40(a)(ia) - Held that:- CIT(A) has verified the salary register submitted by the assessee in the form of letter, however from the order, it is not clear whether it is verified thoroughly with the data sheets, programme sheets and agreements with the employees, if any. Ld. AR has confirmed that this information is available with the assessee to prove the genuineness of the transaction. Ld. CIT(A) deleted the addition relying on the case of Merilyn Shipping (2012 (4) TMI 290 - ITAT VISAKHAPATNAM). However, this decision was reversed by the Hon’ble Supreme Court and further, this transaction needs verification at the AO level, accordingly, this issue is remitted to the file of the AO to verify the genuineness of the transaction and allow the same as per the provisions of law. Assessee may be given opportunity of being heard. Accordingly, grounds raised by the revenue on this are allowed for statistical purposes. Disallowance u/s 14A - Held that:- We direct the AO to recalculate the disallowance as per rule 8D as per the guidelines given above in the case of Transport Corporation of India [2016 (11) TMI 245 - ITAT HYDERABAD] and calculate the disallowance of expenditure under rule 8D(2)(ii) & (iii) taking the average investment from which the exempt income is received. By calculating as per the above direction, in case, the disallowance arrived u/s 14A is less than the disallowance made by Assessee, the disallowance made by the assessee may be sustained. Accordingly, ground raised by the assessee is allowed for statistical purposes.

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• 2017 (12) TMI 874
  Higher depreciation @ 60% on CCTV cameras and Control access systems - assessee claimed higher rate of depreciation on the above said items on the plea that they form part of computer systems - Held that:- As decided in CIT Vs. Citicorp Maruti Finance Ltd [2010 (11) TMI 802 - Delhi High Court] and CIT Vs. Bonanza Portfolio Ltd (2011 (8) TMI 1058 - DELHI HIGH COURT) to decide the issue that the computer peripherals are eligible for higher rate of depreciation. Also as submitted that the Control access systems and CCTV cameras are peripherals attached to computer systems only and their operation and control is done through computers only is acceptable. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow depreciation at higher rate as applicable to computers. Miscellaneous expenditure disallowed - assessee did not furnish the details that were called for by the AO - Held that:- With regard to the amount of Rs. 7.30 lakhs, the assessee cannot be said to have completely discharged the responsibility. At the same time, we cannot fully disallow the said claim, since the expenditure was of routine nature type like travelling, conveyance etc. Under these set of facts, we are of the view that the disallowance may be restricted to 25% of the amount of Rs. 7.30 lakhs in order to take care of deficiencies and other disallowable nature of expenses. In our view, this will put this issue at rest. Accordingly, we modify the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance out of miscellaneous expenses to 25% of Rs. 7.30 lakhs. We order accordingly. Nature of expenditure - expenditure relating to purchase of know-how - revenue or capital - Held that:- CIT(A) noticed that identical payments made by the assessee has been allowed by his predecessor in the assessee’s own case in AY 2000-01 to 2006-07 [2016 (8) TMI 1309 - ITAT MUMBAI]. Also the assessee has earned service fee of Rs. 40.51 crores and in the course of earning the same, the assessee has incurred impugned expenditure, which mainly consisted of payments made to various consultants. Accordingly the Ld CIT(A) correctly held that the impugned payments have been incurred in the normal course of business and accordingly deleted the disallowance. Disallowance made u/s 14A - Held that:- As decided in assessee's own case the year under consideration being AY 2007-08, the provisions of Rule 8D will not apply as per the decision rendered by Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Co.[2010 (8) TMI 77 - BOMBAY HIGH COURT]. He also noticed that the Tribunal had disallowed only to the extent of 5% of the dividend income u/s 14A of the Act in AY 2002-03. Accordingly he directed the AO to compute the disallowance u/s 14A of the Act at 5% of the dividend income. Disallowance to repair expenses - Held that:- CIT(A) has examined the details of repair expenses on test check basis and has given a clear finding that they represent routine repair expenses incurred by the assessee. Before us, the revenue could not produce any material to contradict the finding given by Ld CIT(A). Hence, we do not have any other option but to confirm the order passed by Ld CIT(A) on this issue.

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• 2017 (12) TMI 873
  Period of holding of asset - Whether the period of holding the asset i.e., the property, should be reckoned from the date of completion of the construction of the property or from the date of acquisition of the land? - attribution of value of land - claim of indexation on cost of demolished property - Held that:- The correct position is that the asset consists of two components: (1) Land and (2) Building. When the property is sold, the period of holding has to be reckoned separately for the land and the building. The consideration received can also be split into two parts relating to each component. The above aspects, pertinent to the instant appeal, were not examined either by the AO or the Ld. CIT(A). Therefore, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a fresh assessment in the light of our observation hereinbefore and after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant documents/evidence before the AO. - Decided in favour of assessee for statistical purposes.

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• 2017 (12) TMI 872
  Agricultural income - estimation of income from Agricultural income from ‘other crops’ - Held that:- As perused the table extracted in para 5 of this order and find it contains the details of Agricultural income earned out of Sugarcane and other Cereals and Pulses. Before, CIT(A), the assessee furnished the evidences only to the extent of Rs. 2,33,571/- out of Rs. 24,38,284/-. Therefore, he partly allowed the claim of the assessee. In other words, it is the case of not evidencing the claim rather than not growing the crops at all and earning the Agricultural income at all out of the other crops. There can be many reasons for such failure of furnishing evidences. Therefore, we proceed to estimate the income from Agricultural income from ‘other crops’. In our view, restricting the claim to merely Rs. 2,37,571/- is not fair and reasonable. Therefore, we direct the AO to restrict the claim of Agricultural income out of other crops/cereals/pulses to Rs. 50% of Rs. 24,38,284/-. Thus, the assessee is entitled to relief of Rs. 12,19,142/- on this account. Accordingly, the relevant grounds raised by the assessee are partly allowed. direct the AO to restrict the claim to 50% of the Rs. 24,38,284/- which include the relief of Rs. 2,33,571/- given by the CIT(A). Unsecured loans received by the assessee from the loan creditors - Held that:- We find merit in the request for remanding to the file of the AO. Thus, we find there is need for more facts necessary for adjudicating these grounds meaningfully. Hence, AO is directed to examine these credits afresh and decide the issue fresh in the light of the evidences to be furnished by the assessee during the remand proceedings. AO is free to repeat the addition in case of assessee’s failure to discharge the onus to the satisfaction of the AO. AO is directed to grant reasonable opportunity of being heard to the assessee in accordance with the set principles of natural justice. Accordingly, relevant grounds raised by the assessee are allowed for statistical purposes.

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• 2017 (12) TMI 871
  Levy of capital gains - co-ownership - Held that:- Just because her name was mentioned as a vendor, 1/3rd of the capital gains have been brought to tax in her hands, without examining whether she had any title to the property and whether she had received any consideration. Now, that the title itself is disputed, we are of the opinion that the orders passed by the AO and CIT(A) are to be set aside and the entire matter is to be restored to the file of AO to examine afresh and determine whether assessee has any title to the property and whether she has received any consideration. AO is free to examine all the aspects and determine it afresh on the facts of the case and as per the provisions of law. With these directions, the orders of the authorities are set aside and the entire issue is restored to the file of AO for fresh consideration. Assessee should be given due opportunity to make the submissions/presentation of facts.

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• 2017 (12) TMI 870
  Reopening of assessment - reopening on the basis of the letter received by him from ACIT, Circle 2(3), Hyderabad - undisclosed investment - Held that:- AO has not brought on record, any evidence as to how and when the assessee has made payment of any cash for the purchase of the villa. The AO has unilaterally apportioned the alleged cash payment equally amongst the three A.Ys. Such a procedure is not envisaged under the law. The AO is required to bring on record, the quantum of investment and the mode of investment made during the relevant previous year before making any addition to the returned income of the assessee. No such evidence has been brought on record by the AO The reasons recorded should be self-explanatory and should not keep the assessee guessing as the reasons provide the link between the conclusions and the evidence. The AO, in the event of challenge to the reasons, must be able to justify based on the material available on record and he must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that A.Y, so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the AO cannot be supplemented by filing an affidavit or making an oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches the Court, on the strength of the affidavit or oral submissions advanced”. Thus, the re-assessment proceedings in the case before us are not sustainable. - Decided against revenue.

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• 2017 (12) TMI 869
  Deduction u/s 10A - Held that:- When the assessee company is undisputedly eligible for deduction u/s 10A of the Act, it is entitled for consequential deduction u/s 10A also. So, the foreign exchange gain to the taxable income of the assessee company cannot be added which amounts to double taxation and as such, the ld. CIT (A0 has rightly deleted the same. When the AO has accepted the suo motu disallowance made by the assessee company in the revised computation of income, the suo motu claim made by the assessee company on account of bonus cannot be disallowed. AO has selectively accepted the revised computation of income to the extent of the benefit to the revenue while completing the assessment. - Decided against revenue

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• 2017 (12) TMI 868
  Registration under section 12AA denied - proof of charitable activities - Held that:- Assessee has sufficiently proved with evidence on record that the object of Society are charitable in nature and in pursuance of the said objects it has set up a College where the society is imparting education in a systematic manner in the field of B.Sc. (Nursing) and G.N.M (General nursing and Midwifery). We are unable to approve the view adopted by the ld CIT (E) that assessee has not been able to prove the charitable nature of its objects and genuineness of activities. We, therefore, reverse the findings recorded by the CIT (E) in this regard being based on no evidence and in complete ignorance of material on records. We, therefore, direct the CIT (E) to issue Certificate granting registration under section 12AA in the name of the applicant society, forthwith from the financial year in which application was filed. - Decided in favour of assessee.

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• 2017 (12) TMI 867
  Registration and exemption u/s 12-AA and 80-G(5) - assessee has not spent 85% of its income and furthermore has produced unreliable balance sheet and two separate list of donors which remained un-reconciled and no evidence regarding any charitable activity under taken - ITAT granted exemption as found that the assessee was set up to achieve its object of establishing educational institution or trust, which activity per se is a charitable purpose under Section 2(15) - Held that:- we find that registration of the trust does not involve enquiry into the actual activities or application of funds, etc. The Tribunal has committed no error in following the earlier order. At that stage, the only enquiry required to be conducted was with respect to the object of the trust alone. The objection raised by the Commissioner pertain to matters that may be examined at the stage of assessment. At that stage, if the assessee were to be found to have actually engaged in any non-charitable activity, the benefit of exemption may be denied at that stage in the manner provided by the Act. - Decided against revenue

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• 2017 (12) TMI 866
  Reopening of assessment - denying carry forward of unabsorbed depreciation - Held that:- Attention of this court to the decision of this court in the case of General Motors India P. Ltd. V. Deputy Commissioner of Income Tax, [2012 (8) TMI 714 - GUJARAT HIGH COURT] to submit that the controversy involved in the first ground for reopening the assessment, stands concluded in favour of the assessee by this decision. Book profit determined as per section 115JB(2) on account of non-eligibility of bad debts provision - Held that:- To the extent of the bad debts involved in this case is to the tune of Rs. 3,40,855/only. Considering the smallness of the amount, the court does not deem it fit to enter into the merits of the controversy, and without expressing any opinion on the merits of such ground, leaves it open to the revenue to raise such contention in an appropriate case in future.

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• 2017 (12) TMI 865
  Reopening of assessment - petitioner has not filed any return of income disclosing sale of the immovable property - Held that:- The record of the case shows that earlier, pursuant to a notice under section 148 of the Act, the petitioner had, in fact, filed return on income disclosing the sale of such immovable property, and the Assessing Officer after duly applying his mind to the issue had accepted the return of income. Considering the fact that a return of income had been filed disclosing sale of the immovable property, the very foundation on which the reopening is based in the reasons recorded by the Assessing Officer for reopening the assessment, collapses. Therefore, on the reasons recorded, the Assessing Officer could not have formed the belief that income had escaped assessment, inasmuch as such belief had been formed on a factually incorrect premise. It is settled legal position, that the reopening of the assessment has to be maintainable on the reasons recorded for reopening the same, and that such reasons cannot be substituted. In the facts of the present case, when the original ground for reopening the assessment does not survive, the Assessing Officer seeks to proceed further with the assessment on totally different grounds, which is impermissible in law. - Decided in favour of assessee.

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• 2017 (12) TMI 864
  Deemed dividend u/s 2(22)(e) - deemed shareholders - whether assessee is not the shareholder of the other Company? - Held that:- Hon’ble Delhi High Court has also held in case of CIT vs. Ankitech (P.) Ltd. in [2011 (5) TMI 325 - DELHI HIGH COURT] that the assessee should be a share holder in the lender company and such holding should be more than 10% of the voting rights, only then Section 2(22)(e) would be attracted. - Decided in favour of assessee.

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• 2017 (12) TMI 863
  Rejection of books of accounts - G.P. rate determination - Held that:- The assessee is not maintaining the day-to-day stock register and specific defects were also pointed out by the Assessing Officer in the books of account. In such circumstances and facts of the case, we find no infirmity in the order of the learned Commissioner of Income- tax (Appeals) who has rightly confirmed the application of section 145(3) of the Act. As regards estimation of income, the learned Commissioner of Income-tax (Appeals) and also confirmed by ITAT rightly directed the Assessing Officer to apply the gross profit rate of 11.5 per cent. on the basis of the past history of the assessee. - Decided against revenue

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• 2017 (12) TMI 862
  Expenditure claimed u/s 10B - whether the assessee has not been approved as a 100% EOU by the Board appointed in this behalf by the central Govt. - Held that:- Where the assessee is registered under the STPI as a 100% EOU, it is entitled for deduction u/s 10B of the Act. See case of Secunderabad Software Services Pvt. Ltd [2014 (7) TMI 546 - ITAT HYDERABAD] Computation of deduction u/s 10B - Held that:- For the purpose of computation of deduction u/s 10B of the Act, if any expenditure is excluded from the export turnover, then the same should also be excluded from the total turnover. See CIT vs. Tata Elxsi Ltd,[2011 (8) TMI 782 - KARNATAKA HIGH COURT] AO not followed the direction of the DRP to take the “profit before depreciation” - Held that:- DRP has directed the AO to consider the margins of the assessee as well as the comparables after excluding the depreciation. Since the AO has not followed the said method while computing the ALP, we direct the AO to recompute the ALP after taking the margins of the assessee as well as the comparables after excluding the depreciation, in accordance with the directions of the DRP. The grounds on this issue are therefore, treated as allowed for statistical purposes. Interest on receivable - assessee had transactions with both the AEs and non-AEs and has not charged “interest on the receivable” - Held that:- Where the assessee is not charging interest on both AE and non-AE transactions and the receivables are outstanding for a period of less than six months, no interest can be charged. For the receipts beyond six months also, we find that the interest is not chargeable because the assessee has not charged any interest on receivable from the non-AEs. Therefore, the grounds of appeal relating to this issue are also treated as allowed.

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• 2017 (12) TMI 861
  Disallowance on interest payment - addition u/s.40A(2)(a) - related parties - investment in the joint venture, under J.V Agreement - Held that:- The expression "commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. We note that loans and advances were given by the assessee to its joint venture on the grounds of commercial expediency therefore the assessee's issue under consideration is not covered by the provisions of section 40A (2) (a) of the Act. Therefore, based on the above discussions, we are of the view that assessee has a interest in its joint venture, and hence if the assessee advances money to a joint venture and the same is used by the joint venture for some business purposes, the assessee would, in our opinion, ordinarily be entitled to deduction of interest on its loans and advances under section 37 (1)/36(1) (iii). -Decided in favour of assessee.

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• 2017 (12) TMI 860
  Validity of reopening of assessment u/s 147/148 - no mention in the reasons recorded that the assessee has failed to disclose fully and truly all material facts necessary for the assessment which has resulted into escapement of income - bar on the powers of the AO to issue notice u/s 148 instead of section 153C - period of limitation - incriminating material found In search - Held that:- From the assessment order that after the initial assessment u/s 143(3) r.w.s. 153A the AO got the alleged incriminating material in the shape of diary and transactions recorded therein found and seized in the search and seizure operation in case of Rajendra Jain Group. Accordingly, the AO proceeded to reassess the income of the assessee u/s 147 of the Act. The entire decisions of the AO to reassess the income of the assessee is based on the seized material and statement of Shri Madan Mohan Gupta recorded u/s 132(4) of the Act for which the specific remedy is provided u/s 153C of the Act. Once the case of reassessment is made out by the AO which falls in the preview of specific provisions of section 153C of the Act, the AO cannot resort to invoke the provisions of Section 147/148 of the Act to assessee or reassess income of the assessee. The action of the AO to initiate the proceedings Under section 147/148 of the Act vitiates the entire reassessment proceedings and the assessment order. Once, the AO is satisfied that the documents seized belong to the persons other than the searched person, the Assessing Officer shall proceed against such other persons and issued notice u/s 153C and assessee or reassess income of such other persons in accordance with the provisions of section 153A of the Act. Therefore, it is mandatory for the AO to proceed u/s 153C if he is satisfied that the seized material reveals the income of such other persons to be assessed or reassessed. Also AO has not recorded in his satisfaction or believe that the income chargeable to tax has escaped assessment on account of failure of the assessee to disclose fully and truly all material facts necessary for assessment then the notice issued u/s 148 beyond the period of 4 years was without jurisdiction and is not sustainable. AO has failed to set out in the reasons recorded as to what facts the assessee has failed to disclose fully and truly then the reopening after 4 years is invalid being without jurisdiction - Decided in favour of assessee.

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• 2017 (12) TMI 859
  Penalty u/s 271(1)(c) - bogus purchase found during search - relevant limb under which penalty has been levied has not been struck off in the notice issued u/s 271(1)(c) - admission of additional evidences - Held that:- Even if the assessee subsequently discloses the income in any return of income furnished afterwards has been specified to be of no consequence. Hence subsequent disclosure or nondisclosure of income in any return of income furnished subsequently has been specifically referred to be of no consequence. Thus as per a specific provision of explanation 5A assessee has been found to be owner of undisclosed income by furnishing inaccurate particulars of income, based upon entry of bogus purchases in its books of account. - the orders of the learned CIT(A) confirming the levy of penalty on merits is sustained and affirmed. Validity of notice issued for levy of penalty - additional evidence - Held that:- In the original ground, the assessee has only contended that the Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the penalty u/s. 271(1)(c). This, by no stretch of imagination, can be said to be covering the additional ground now being raised by the ld. Counsel of the assessee. Be that as it may, we find that the ld. Commissioner of Income Tax (Appeals) had never an opportunity to give a finding on this aspect now being raised by the assessee. Hence, on the facts and circumstances of the case, and in the interest of justice, we remit this issue to the file of the ld. Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) shall give a finding on this additional ground being now raised by the ld. Counsel of the assessee after giving the assessee an opportunity of being heard.

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• 2017 (12) TMI 858
  Bogus purchases - Held that:- Facts of the present case clearly indicate that assessee has engaged in transaction in the grey market. Making transactions in the grey market gives the assessee savings of taxes etc at the expense of Exchequer. In similar situation following the honourable Gujarat High Court decision in the case of Simit P Seth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) disallowance of 12.5% of the bogus purchase has been found to be meeting the end of justice.

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• 2017 (12) TMI 857
  Allowability of commission paid - payment of commission on sales made to ‘sub-agent’ - Held that:- Since the AO accepted the existence of sub-agent of M/s. Surya Jyothi Spinning Mills Ltd., the payment to them on direct sales cannot be denied, as assessee is also receiving commission on direct sales. Moreover, if the sales are to the sub-agent itself, the discount/commission on those sales also cannot be denied. So long as the existence of sub-agent is proved, the commission on direct sales as well as indirect sales has to be allowed. It is noticed that the commission was received as a percentage of sales, whereas the commission to sub-agent was paid on tonnage basis. The rate at which it was paid was not in dispute. AO has not made out a case of excess payment as commission. Since the existence of subagent is proved and AO himself allowed the commission partly, it is of the opinion that the commission paid to M/s. Surya Jyothi Spinning Mills Ltd., both on third party sales as well as on own purchases has to be allowed. Coming to the payments claimed against Mr. Hanuman Das Karwa, HUF, the same is not proved. First of all, the agreement with Mr. Hanuman Das Karwa was not placed on record. The AO examined and recorded a statement and role of Mr. Hanuman Das Karwa is not forthcoming in sales made to sub-agent. It is also not understandable why Mr. Hanuman Das Karwa has to act as an agent for sales to ‘sub-agent’ M/s. Surya Jyothi Spinning Mills Ltd. As seen from the ledger account copy also, the commission was debited on the last day of the year and there are no payments during the year. This indicate that claim of commission to Mr. Hanuman Das Karwa on sales to M/s. Surya Jyothi Spinning Mills Ltd., is not genuine. Assessee failed to justify the claim before authorities. I am of the opinion that the AO/CIT(A) is correct in disallowing the amount. To that extent, the claim of payment of commission on sales made to ‘sub-agent’ itself stated to have been done through Mr. Hanuman Das Karwa, HUF is not genuine on the facts of the case. The grounds to that extent are rejected.

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• 2017 (12) TMI 856
  Adoption of sale consideration invoking provisions of Section 50C - assessee is co-owner of property with 1/4th share - AO failed to refer the matter to DVO - Held that:- In this case, however, the assessee had given reasons why the stamp value should not be adopted, but not made any specific request for reference to valuation officer. Even though specific objections were raised before the Ld.CIT(A), CIT(A) failed to consider the grounds and in fact, got confused with another issue of admission of Long Term Capital Gain during the survey, to opine that assessee tried to evade taxes. The action of CIT(A) in rejecting the specific contentions is not correct. He should have directed the AO to refer the matter to valuation cell. In fact, the grounds raised are not addressed by CIT(A), even though he had considered the mandatory nature of Section 50C in his decision part. Thus it is fit and proper to remit the matter to AO for adjudicating denovo after making a reference to the DVO and after giving due opportunity to assessee and considering his objections. The issue in these grounds are accordingly set aside to the file of AO for adjudicating afresh as per facts and law. - Decided in favour of assessee for statistical purposes.

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• 2017 (12) TMI 855
  Transfer pricing adjustment - entire transaction of the assessee needs to be taken into consideration for the purpose of transfer pricing adjustment or the TPO and DRP have to confine themselves only to international transaction? - Held that:- For the purpose of transfer pricing adjustment, the transaction of the assessee with Associated Enterprise outside the country alone has to be taken into consideration. The domestic transaction unless it is a Specified Domestic Transaction, cannot be a basis for making any adjustment. See CIT v. Keihin Panalfa Ltd. [2016 (5) TMI 203 - DELHI HIGH COURT] and Alstom Projects India Limited (2016 (12) TMI 1408 - BOMBAY HIGH COURT). This Tribunal is of the considered opinion that under the scheme of the Income-tax Act, the transfer pricing adjustment has to be made only in respect of the transaction of the assessee being a tested party, with Associated Enterprise outside the country after comparing the transaction made by similarly placed company in uncontrolled transaction with non-Associated Enterprise. Therefore, we are unable to uphold the order of the Dispute Resolution Panel Accordingly the order of the DRP is set aside and the entire issue is remitted back to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes.

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• 2017 (12) TMI 854
  Rejection of books of accounts - estimation of income - Best Judgement Assessment - Held that:- It is true that in earlier years, the profit declared by assessee on the turnover was only 0.3% and 0.5%. The return was accepted u/s. 143(1) of the Act. It is also a fact that assessee has not appeared before AO and so he has no option than to reject the books of account. Therefore, to the extent of rejection of books of account, I agree with the findings of Ld.CIT(A). However, the AO as well as CIT(A) have not given any comparable cases for estimation at 2%. As assessee has not furnished the books of account for verification and in earlier years, the return of income was accepted u/s. 143(1) and not scrutinized, it is of the opinion that the income can be estimated at 1% of the turnover given in the facts of the case. Therefore, the AO is directed to modify the order restricting the profit estimation to 1% of the turnover. The grounds are accordingly, partly allowed.

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• 2017 (12) TMI 853
  Exemption u/s 11 denied - trust was holding equity shares for the period 01-09-2009 from 04-09-2009 which is hit by a bar u/s 13(1)(d) - Held that:- From perusal of the orders of the authorities below , it is not emanating as to when the will was probated. It is also not emerging from the facts on record as to what was the share ownership pattern of the said company M/s Warden Polyclinic Private Limited from the day will was executed in favour of the assessee till the shares were transferred in assessee’s name in company’s record and its final sale by the assessee. It is also not emanating from records as to the reasons for not transferring of shares in favour of the assessee for last 14 years and whether any litigation was going on w.r.t. these shares. It is also not emanating from records as to the control exercised by the assessee over the immovable property being flat no. 6 at Ben Nevis Warden Road , Mumbai through holding of 100 shares of the said company M/s Warden Polyclinic Private Limited .These propositions are no doubt relevant proposition for adjudicating the dispute between rival parties and fastening of tax liability on the assessee. Thus, keeping in view factual matrix of the case and in the interest of justice, we are inclined to set aside and restore this matter back to the file of the AO for fresh adjudication of the dispute - Decided in favour of assessee for statistical purposes.

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• 2017 (12) TMI 852
  Treatment of rental income received - under the head "Income from House Property" OR ‘’Income from Business/Profession’’ - disallowance of the claim of lease rental paid on the land. annual value of the property which is in the nature of a building is to be charged under the head "Income from House Property’’, if the assessee is the owner of the such building. Admittedly assessee was the owner of the building though it might not be the owner of the land. It is not essential that a person who owns a building should be owner of the land upon which it stands for assessing the rental income under the head ‘’Income from House Property’’. In the circumstances, we are of the opinion that lower authorities were justified in considering the rental income under the head ‘’Income from House Property’’. Once income is assessed under the head "Income from House Property", assessee will be eligible only for allowance mentioned in Section 24 of the Act. We thus do not find any reason to interfere with the orders of the lower authorities. - Decided against assessee.

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• 2017 (12) TMI 851
  Penalty levied on the assessee u/s 271(1)(c) - assessee had willfully furnished wrong particulars of its income, treating its income as exempt u/s 10(23C)(vi) - Held that:- AO passed order u/s 154 of the Act, disallowed the assessee’s claim, observing that the expense had not been debited to the income and expenditure account, nor any claim was made at the time of assessment; that the expenditure was debited to the Grant in Aid account; and that therefore, there was no mistake apparent from the record. The ld. CIT(A), vide order (APB-28-31) dated 12.10.2012, deleted the disallowance. The Tribunal, vide order (APB 33-35) dated 28.06.2013, upheld this deletion made by the ld. CIT(A). It finds mention in para 2.2 of the impugned order, that the assessee had pointed out before the ld. CIT(A) that the assessee’s claim of allowability of salary expenditure of Rs. 18,17520/- had been allowed by the Tribunal. However, the ld. CIT(A) has not dealt with, much less controverted, this assertion of the assessee. Now, once the Tribunal has deleted the disallowance, the very basis for levy of penalty to the extent of the amount of Rs. 18,17,520/- no longer exists. That being so, the penalty qua this amount is also deleted. The AO is requested to provide necessary relief to the assessee accordingly.

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• Customs

• 2017 (12) TMI 846
  Refund claim of duty paid but actual export could not take place - time limitation - export of goods in terms of the shipping bill - It is the case of the petitioner that the export actually could not take place for the reasons which we are not directly concerned with - case of Revenue is that the application for refund of the duty was filed beyond a period of one year from the payment of duty and the application was thus, hit by the limitation prescribed under section 27 of the Customs Act. Held that: - the export of goods would take place upon the same being taken out of India to a place outside India. The definition of 'exporter' under section 2(20) of the Customs Act would make it clear that there is a clear distinction between the stage when the goods meant for export are entered for export and they are actually exported. During this period, any owner, beneficial owner or any person holding himself out to be so, would be considered as an exporter. Subsection (1) of section 12 authorizes the Customs authorities to levy customs duty at the prescribed rates for goods imported into or exported from India. Thus, the incident of levying of customs duty is on export of goods. It is however true that in terms of subsection (1) of section 16 of the Customs Act, the rate of duty and tariff valuation would be determined as applicable to any export goods on the date on which, upon such goods being entered for export, the proper officer makes an order permitting clearance and loading of the goods for exportation under section 51. Reverting back to the facts of the case with this statutory scheme in mind, what actually happened was that the petitioner applied for permission of export of filing shipping bills and depositing self assessed tax. The Customs authorities satisfied that all the requirements are fulfilled, granted permission for export as envisaged under subsection (1) of section 51. However, the export never took place. The assessment of tax be it self assessed or assessed by the Customs authorities would be in terms of section 16 on the basis of the valuation and rate applicable at the time of entry of goods for export. The levying of tax however, would be under section 12 upon the actual export of goods. Subsection (1) of section 51 does require that before the proper officer grants permission for export of goods, he would have to be satisfied that the exporter had to be paid the duty assessed on such goods and other charges payable under the Act. Naturally since the permission for export cannot be granted unless the duty is actually paid, nevertheless, the amount so deposited would be appropriated towards duty only upon exportation of the goods. Under subsection (1) of section 27, the person claiming any refund of the duty or any interest thereof paid or borne by him can make an application in prescribed form to the competent authority before expiry of one year from the date of duty or interest thereof. If the amount deposited by the petitioner is treated as a duty paid and literal interpretation of subsection (1) of section 27 is adopted, the authorities perhaps would right in contending that the application for refund was beyond the period of limitation prescribed. However, such interpretation would lead to anomalous and unintended consequences and must be avoided. In the present case, the petitioner's right to seek refund or in other words the cause for filing application for refund arose only when the export actually failed. Till then, he petitioner could not have applied for return of amount already deposited. If in the meantime, as in the present case, more than a year is passed, the literal interpretation of application of subsection (1) of section 27 would amount to a situation where the cause of action for filing refund application even though had not arisen within one year from the date of deposit of the duty, the applicant for refund would be told that his refund application is barred by limitation. Applicability of section 26 - Held that: - In the present case, the goods were never exported. Even otherwise, clauses (a) and (b) of section 26 cover entirely different situations. Under clause( a), the duty would become refundable on the goods being returned after exportation. Otherwise then by resale. Clause( b) would cover a situation where the goods are reimported within one year from the date of exportation. The right of the petitioner to seek return of the amount deposited while filing the shipping bill thus stems from the fact that the anticipated export never took place. Refund allowed with interest - petition allowed - decided in favor of petitioner.

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• 2017 (12) TMI 843
  Valuation of imported goods - air conditioners of O-General brand - SCN alleged that the imported goods were under-valued for customs duty purposes; the value was sought to be enhanced - Held that: - Rule 12 of the Valuation Rules can be invoked when the appellants failed to produce manufacturer's invoice and other supporting evidence in order to substantiate their declared value, re-determination of assessable value based on contemporaneous imports is to be done, considering similar commercial level in transactions - It is the submission of the appellant that the quantities imported and the country of export were all different. The commercial levels in the transactions were also different. We are of the opinion that this requires a more detailed examination. Regarding comparison of value with reference to imports by EGPL, the appellant contested certain factual findings recorded in the impugned order. Based on a letter received from M/s. RAACO ONE, who is a non-authorized dealer of the air-conditioners, a conclusion was drawn regarding the nature of transaction of air-conditioners in India - this fact requires further examination. Confiscation of goods - Held that: - It is now a well settled legal principle that the Adjudicating Authority cannot order the confiscation of the goods, which were neither seized /detained nor released on a specific bond executed by the owner. In other words, the goods, which were not seized and cleared with no reference of detention or bond cannot be ordered to be confiscated. Appeal allowed by way of remand.

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• 2017 (12) TMI 821
  Valuation of imported goods - misdeclaration of description of goods - demand of differential duty, redemption fine and penalty - Held that: - Heavy melting iron scrap misdeclared as articles of iron and steel suggests that appellant had a pre-determined mind to suppress the actual description of the goods as well as value thereof - there shall be no question of interference to the valuation adopted by the adjudicating authority - demand upheld - appeal dismissed - decided against appellant.

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• Corporate Laws

• 2017 (12) TMI 849
  Application under Order 7 Rule 11 of the Code of Civil Procedure - cheques bounced with the remarks, account closed - debts - application at Exhibit11 that is prior to leave to defend application for rejecting the plaint under Order 7 Rule 11 (a) (d) of the Code of Civil Procedure - main thrust of the contention is that there is no cause of action reflecting from the bare reading of the plaint and the suit is barred by law - Held that:- Considering the chronology of events, and the facts which are entangled, the Court deems it proper that Order 7 Rule 11 of the Code of Civil Procedure application is required to be heard afresh in detail. Hence, in view of the proposition of law, if the ground is sufficiently explained, the Court need not to deal with all other aspects which are raised by way of contention and therefore, the Court deems it proper to dispose of the present revision application only on this solitary ground with necessary consequential directions in the interest of justice. Considering the aforesaid circumstance, the order dated 12.10.2015 is quashed and set aside hereby with a direction to the learned 5th Additional Senior Civil Judge, Gandhidham to deal with and decide the application at Exhibit11 submitted under Order 7 Rule 11 of the Code of Civil Procedure afresh by extending proper opportunities to the respective parties appearing in the suit and shall pass a reasoned order dealing with rival contentions in the proceedings.

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• 2017 (12) TMI 847
  Workmen to approach the NCLT - Held that:- Whether or not there was/is any violation, and the effect thereof and the consequences following therefrom, would be examined by the NCLT. While dealing with the aforesaid situation, the NCLT would examine the directions given and findings recorded in the order passed by the Supreme Court in Ghanshyam Sarda And Others Versus M/s. Shiv Shankar Trading Co. And Others [2014 (12) TMI 982 - SUPREME COURT.] The workmen and the respondents would be entitled to refer to the subsequent order passed by the Supreme Court in the contempt proceedings dated 18th November, 2016. In view of the aforesaid position, learned Senior counsel for the petitioner does not press his prayer challenging vires of Section 4 (b) of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 as modified by the Code. He further submits that the question as to whether Trade Unions can invoke the jurisdiction of NCLT under the Code is subjudice before the Supreme Court and they would abide by the decision of the Supreme Court. This statement is without prejudice to the rights and contentions of the petitioner-trade union to challenge the vires of the Code, if so advised, for it is submitted that the trade unions have been wrongly denied the right to invoke the jurisdiction of the NCLT under the Code. We direct that the interim orders passed on 16th June, 2017, 6th July, 2017 and 21st August, 2017 would continue and would be in operation for a further period of 2 months from today so as to enable the workmen to approach the NCLT. It will be, thereafter, for the NCLT to decide whether or not to continue with the said interim orders and / or to modify, amend or vacate the same. Similarly in case there is violation of the directions given in the order dated 26th May, 2017, by which it was directed that the Company would keep Rs. 2.5 crores in reserve, it will be open to the petitioner to invoke contempt jurisdiction and also for the workmen to highlight the said fact before the NCLT.

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• 2017 (12) TMI 831
  Oppression and mismanagement - Illegal transfer of shares - forged of signature on the transfer deed as alleged by petitioner - maintainability of petition - Held that:- Petitioner in this case is questioning the increase in the authorised share capital of the first respondent company and allotment of 9000 shares to respondent No. 6. Therefore, shareholding pattern as on 15.03.2013 has to be taken into consideration while considering whether the petitioner is entitled to file this composite petition. As on 15.03.2013 authorised share capital of the first respondent company was Rs. 1.00 lac divided into 1000 shares of Rs. 100/- each. Out of 1000 equity shares shareholding of the petitioner is 20%. Even according to respondents, shares of the petitioner were transferred to Respondent No. 3 on 15.03.2013. Therefore, prior to the transfer of her shares, petitioner was holding more than 10% shareholding in the equity share capital of the first respondent company. Therefore, this composite petition filed by the petitioner is maintainable. Period of limitation - Held that:- In view of the finding that ROC is not a “court”, time spent by the petitioner before ROC cannot be excluded for computing the period of limitation. No document is filed to show that letter dated 19.07.2016 addressed to ROC, MP was received by ROC, MP and reply was filed by ROC. Therefore, letter dated 19.07.2016 cannot be taken into consideration. Even assuming that time taken by ROC can be excluded for petitioner made a specific reference for rectification of Register of Members in the letter dated 10.10.2016 which was replied by ROC on 27.10.2016 and, therefore, the time consumed by ROC is only 17 days. Even that 17 days is excluded, still this petition is not within limitation. Delay of 31 days condoned for filing the composite petition- Held that:- In the case on hand, after the shares of the petitioner were transferred, there was a decision to increase the authorised capital and there was a decision of the company to allot 9000 shares to respondent No. 6. In case if the delay is condoned and if name of the petitioner is rectified in the register of members, then there is a cause for the petitioner to say that increase in the share capital and allotment of 9000 shares to Respondent No. 6 is illegal and if such course is adopted it would be detrimental to the interest of Respondent No. 6 and to the company also. Therefore, it is not a case where delay caused by the petitioner would not affect rights of the other parties also in case if the delay is condoned. Keeping the above said facts in mind, this Tribunal is of the considered view that there are no reasons to condone the delay. Moreover, the petitioner is not entitled for any relief on the ground of delay and latches. Tribunal jurisdiction to entertain the plea of forgery of transfer deeds - Held that:- In the case on hand, allegation of forgery of transfer deed is made by the petitioner. The transfer deed as such is not available before this Tribunal even to compare the signature of petitioner. Plea of forgery has been raised by the petitioner nearly after fifteen years. Therefore, it is a complicated question of law and it cannot be solved in a summary manner by exercising jurisdiction of Section 59 of the Companies Act. It is a matter which has to be resolved only after taking evidence of both the parties. Therefore, in the given facts and circumstances of the case, this Tribunal cannot exercise its jurisdiction to order rectification in the Register of Members in view of the plea of the petitioner that her signature has been forged on transfer deeds. As already said, this petition is not within time and petitioner is not entitled for any relief of rectification of Register of Members on the grounds of delay and latches. When the relief of rectification of Register of Members is barred by limitation and hit by delay and latches, there is no question of examining whether the transfer of shares took place according to the provisions of the Companies Act and Articles of Association of the Company. Further, when the relief for rectification of Register of Members is barred by limitation, petitioner is not entitled to seek reliefs for oppression and mismanagement.

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• 2017 (12) TMI 827
  Oppression of mismanagement - Allotment of equity shares disproportionate - Held that:- Appellant approached the Tribunal and put its grievances under sections 59, 241, 242, 244 of the Companies Act with prayers of transfer of shares, allotment of shares and meetings deciding allotment to be declared null and void. Tribunal except deciding on the issue of removal of the appellant/petitioner, has not dealt with any other grievances/prayer of the Appellant and disposed of the petition without dealing with the merits. Allotment of equity shares disproportionate to the holding of the existing shareholders is act of oppression of R-2 and R-3 was one of the main issues put for consideration before the Tribunal. The shareholding of the appellant reduced to almost 14% from 49.99. Yet the Tribunal without going into the merits of the case had disposed of the Company Petition. Section 62 clearly specifies the manner in which the shares of a company are, to be offered and it is only when the party to whom it has been offered declines or is deemed to have declined, that the shares are to be distributed among the other shareholders of the company. The appellant further argued that the increased of paid up capital of the 1st Respondent is in violation of Section 62 of the Companies Act, 2013 which brought the combined shareholding of 2nd and 3rd Respondent at more than 50% of the total shareholding of the 1st Respondent & reduced the shareholding of the appellant to 14.29% on 26th November, 2016 prejudicial to the interest of the appellant with the sole view to oppress her. We have seen the facts of the case and to our mind the approach of NCLT, Hyderabad to pick and choose the issues is not appropriate on not giving any findings on the oppression committed against the appellant, if any. The Tribunal has, not given any findings on the issues relating to share capital and oppression committed against the appellant and have dealt with the matter relating to removal of the appellant from the directorship. We, therefore, remand back the matter to the Tribunal to deal with the issues raised in the petition on merit. However, in the meantime National Company Law Tribunal, Hyderabad may pass an order that if any Board Resolution is passed for removal of the appellant from the post of Director, the same shall not be given effect till the disposal of the case by it. We expect that the National Company Law Tribunal (NCLT), Hyderabad will decide the matter expeditiously in terms of Section 422 of the Companies Act, 2013.

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• Insolvency & Bankruptcy

• 2017 (12) TMI 850
  Corporate insolvency process - whether, in relation to an operational debt, the provision contained in Section 9(3)(c) of the Code is mandatory? - Held that:- In the present case, the rules merely flesh out what is already contained in the statute and must, therefore, be construed along with the statute. Read with the Code, they form a self-contained code being contemporanea expositio by the Executive which is charged with carrying out the provisions of the Code. The true construction of Section 9(3)(c) is that it is a procedural provision, which is directory in nature, as the Adjudicatory Authority Rules read with the Code clearly demonstrate. Whether a demand notice of an unpaid operational debt can be issued by a lawyer on behalf of the operational creditor? - Held that:- Since there is no clear disharmony between the two Parliamentary statutes in the present case which cannot be resolved by harmonious interpretation, it is clear that both statutes must be read together. Also, we must not forget that Section 30 of the Advocates Act deals with the fundamental right under Article 19(1)(g) of the Constitution to practice one s profession. Therefore, a conjoint reading of Section 30 of the Advocates Act and Sections 8 and 9 of the Code together with the Adjudicatory Authority Rules and Forms thereunder would yield the result that a notice sent on behalf of an operational creditor by a lawyer would be in order.

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• 2017 (12) TMI 834
  Insolvency resolution by operational creditor - corporate insolvency procedure - Held that:- Admittedly, no notice was issued under sub-section (1) of Section 8 of the I&B Code . In terms with Rule 5, other informations were also not placed before the Adjudicating Authority. The Respondent having failed to provide all the details as required under Form-5 as noticed above, the application under sections 433 and 434 of the Companies Act, 1956 cannot be treated to be an application under section 9 of the I&B Code in terms of Rule 5 of Transfer Rules, 2016. In such circumstances, in view of proviso to Rule 5 of the Transfer Rules, the application under Sections 433 and 434 of the Companies Act, 1956 stands abated. For the reasons aforesaid, declare that the application preferred by Respondent under Sections 433 and 434 of the Companies Act, 1956 stood abated.

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• PMLA

• 2017 (12) TMI 840
  Offence under PMLA - provisional attachment order- Complaints filed by the banks making allegation against the company for availment of Agri Loans by forged and fabricated documents, which were disbursed to the appellant no. 1 company - Held that:- Admittedly, no notice was issued nor any opportunity was granted to the banks of being heard. Thus, the impugned order is liable to be set- aside. Had any notice been issued to all the banks and opportunity was granted for hearing, the banks could have made their claim and argued that the properties in question were not involved in the money laundering. As is evident that ED as well as AD failed to considered the reply filed by the appellant contrary to 8(2) of the Act. The issue of mortgage of properties was already available with ED while recording the statement of appellant under section 50 of the Act. Even the Adjudicating Authority failed to considered the reply filed by the appellant where the full details were disclosed. However, both ED and Adjudicating Authority chose not to discuss the main issue. The impugned order is completely silent and has been passed without even considering the documents and explanation provided by the appellants by way of reply and compilation as filed before the Adjudicating Authority.Prima facie, the provisional attachment order as well as the impugned order is an arbitrary order passed by the Adjudicating Authority whereby five (5) properties of the appellants have been attached, without any cogent reason or any basis. In view of the above, the appeal is allowed the impugned order is set aside. The matter is remanded back to the Adjudicating Authority for re-hearing after issuing the notice to all banks and shall consider and discuss the reply filed by the appellant and to be filed by the banks before passing the order on merit. Since, it is an important matter, the final order be passed within 180 days from today.

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• Service Tax

• 2017 (12) TMI 841
  CENVAT credit - Interconnectivity Usages Services - denial on the ground that the appellant is providing interconnectivity service to other telecom operators which is his output service for which the interconnectivity services received has no connection as input service - Held that: - Inter-connectivity of services of various telecom operators is a basic requirement for providing telecommunication service. No telecom operator operates alone. In the present case DGM (Maintenance) is managing inter-connectivity inward as well as outward for BSNL who is providing telephone service to the ultimate consumers. Inter-connectivity is between the telecom operators only - there is no legal justification to deny the credit on such input service which are essentially required for providing telecommunication service of further inter-connectivity and telephony - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 838
  Liability to tax - construction of complex service - Revenue entertained a view that these are part of a common residential complex and as such, liable to tax - Held that: - It has been consistently held that to tax the appellant under “construction of complex service”, it is necessary to record that the construction are of residential complex of having 12 or more dwelling units or parts thereof. These complexes, should share common facilities, even if they are independent houses. Such categorical finding is required to satisfy the statutory provisions of Section 65(91a) of the Finance Act, 1994 - in the present case, the evidences are lacking - the impugned order fails to justify the demand. GTA service - demand of service tax - Held that: - the appellants have hired the service of individual truck owners, who did not issue consignment notes. As such, these activities are not covered by tax liability under GTA service. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 837
  Outdoor catering service - only premise on which the impugned order came to a conclusion regarding non-liability to the service tax is on the basis of payment arrangement for the facilities like space, infrastructure provided by the club to the respondent - Held that: - A full reading of the agreement makes it clear that the respondent has been appointed as an outdoor caterer to render catering service in the premises provided the Anand Niketan Club. Various terms of the agreement makes it clear that Anand Niketan Club has no obligation or responsibility in providing such service of catering by the respondent. There is no shared responsibility or obligation, legally enforceable against the Anand Niketan Club except the provisions of terms and conditions inbuilt in the contract - there is no scope for interpreting the agreement as Joint Venture Agreement for a catering service. Penalties - Held that: - the impugned order records that the tax liability confirmed under “Outdoor catering service” and “man power supply services” provided to IOCL stands paid along with interest and the same has been ordered to be appropriated - penalty rightly set aside. Appeal allowed in part.

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• 2017 (12) TMI 836
  Refund of unutilized CENVAT credit - various input services - denial on the ground that there is no nexus with the output service of the appellant i.e., the Information Technology Software Service - Held that: - all the services have been held to be eligible input services as per the decisions cited by the appellant - CENVAT credit allowed. Procedural errors in documentation CENVAT credit stand disallowed for the reason that the appellant has not submitted copies of the relevant documents such as invoices at the time of claiming refunds - Held that: - learned consultant asserts that the appellant is in a possession of such documents and in a position to submit the same to make good the deficiency in the documentation - matter remanded to the original adjudicating for a de novo decision on this subject after considering the documents submitted by the appellant. Export Turnover Ratio and Apparent error and double disallowance - whether the maximum refund allowable is to be calculated on the basis of gross or net CENVAT credit which has been taken by the appellant? - Held that: - we set aside the findings of the lower authorities on the subject matter of export turnover ratio and remand the issue back to the original authority for redetermination of the same and also re-determine such refund amounts keeping in view the amended definition of exports turnover services from 1.4.2012. Credit availed in particular quarter and payment made in next quarter - Held that: - even though the payment was not made by the appellant for the services within the quarter for which the refund was claimed, the same has been made in the subsequent quarter. If that is so, then it becomes only a procedural lapse for which the substantial benefit of refund cannot be denied to the appellant - the original authority is directed to verify the fact of payment for such services in subsequent quarter and then allow the refund. Appeal allowed by way of remand.

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• 2017 (12) TMI 835
  Composition scheme - whether appellant is eligible to composition scheme under Rules, 2007? - Held that: - Admittedly, the appellants are liable to Service Tax for the work executed in pursuance of the impugned contract only w.e.f. 01/06/2007 as such any payment of Service Tax prior to 01/06/2007 will not bar the appellants from following the procedure as available under 2007 Rules. Admittedly, separate letter of intimation was not filed for availing the said scheme. However, from the date of introduction of works contract service the appellants have started discharging service tax at the rate of 2 per cent availing the procedure under 2007 Rules - the appellants are entitled for Composition Scheme in the present case. With reference to correct rate of duty to be followed under the Composition scheme we note that there is no dispute that the appellants have to discharge Service Tax either at 2 per cent or at 4 per cent depending on the effective rate of duty applicable during the period of providing service. The appellant are not contesting this issue. Any short payments because of adopting lower rate are to be verified by the jurisdictional authorities for correct quantification. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 830
  Refund of unutilized CENVAT credit - export of services - Business Auxiliary Services - Rule 6A of the Service Tax Rules 1994 - N/N. 27/2012-CE(NT) dt. 18/06/2012 - Held that: - the Commissioner(Appeals) held that BAS is covered under Rule of Export of Service Rules, 2005 and foreign currency was received for payment of such services. The foreign company of the appellant is located in Ireland and the sole recipient of services rendered by them. Further it is on record that they locate potential customers for the products of the foreign company located abroad. Though the services are provided with respect to buyers in India, the benefit of the same accrued to the company located abroad. The Commissioner(Appeals) has also relied upon the decision in the case of ABS India ltd. Vs. CST Bangalore [2008 (8) TMI 53 - CESTAT Bangalore] wherein the Tribunal has held that booking of orders for sale of goods manufactured by the subsidiary of the appellant which is located in Singapore was services exported and the appellant was not required to pay service tax - the Commissioner(Appeals) held that the services rendered by the respondent are not intermediary services but an export of services. Impugned order upheld - appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 824
  Penalty u/s 77(1), 77(2) and 78 of the FA, 1994 - delay in payment of service tax - Held that: - there is no infirmity in the impugned order wherein the Commissioner(Appeals) has given reasons for invoking Section 80 for dropping the penalties against the assessee - there was a delay in payment of service tax on account of lack of awareness and the assessee being the State Government undertaking are not well acquainted with the provisions of the service tax - penalties rightly set aside by invoking section 80 - appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 822
  CENVAT credit - credit on capital goods availed in full, later on reversed - Rule 4(2) of the CCR - Held that: - the appellant has proved by way of documentary evidence that they have only taken 50% of the credit during the first year and they have also submitted the reconciliation statement to prove the same - also, the intention behind the provision of Rule 4(2) is not to restrict taking credit but utilisation thereof and in the present case, the appellant has only taken credit and not utilised the same as has been shown by way of documentary evidence. Reliance placed in the case of Bill Forge India Pvt Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] where it has been held that if the credit has been taken wrongly and the same has been reversed, then the assessee is not liable to pay interest and penalty. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (12) TMI 882
  CENVAT credit - input service - sales commission paid to commission agents in connection with sale - Held that: - reliance placed in the case of M/s Mangalam Cement Ltd., M/s J.K. Lakshmi Cement Ltd, M/s K.E.I. Industries Ltd Versus CCE, Udaipur [2017 (12) TMI 426 - CESTAT NEW DELHI], where it was held that the CBEC vide Circular No. 943/4/2011-CX. Dated 29/04/2011 has clarified that Cenvat credit is admissible on the services of the sale of the dutiable goods on commission basis - Explanation to Rule 2(l) of Rules says in clear terms that there is no bar on availment of the Cenvat credit on sales promotion service by way of sale of dutiable goods on commission basis - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 842
  Valuation - food supplements - valued u/s 4 or u/s 4A? - Department took the view that the goods "food supplements" are assessable to Central Excise duty under Section 4A of the Act based on M.R.P - scope of SCN - Held that: - In the instant case, there has been a change in the classification after 8-digit heading was introduced. The impugned goods therefore will fall under different entries of the M.R.P notifications for the two years concerned. It is only in this respect, that the classification has been gone into by the adjudicating authority. It is also not the case that the appellants were classifying the goods under a particular heading and that the department has changed the classification without giving notice to them - we do not find any infirmity in the conclusions of the lower appellate authority that the original authority has not travelled beyond the scope of SCN as alleged by the appellant. Penalty u/s 11AC - Held that: - the entire dispute was one of interpretation. It is also to be kept in mind that assessee was a SSI unit and may not have been in the know of things. It is also not alleged that they had removed any part or whole of the goods in a clandestine manner - there is a case for setting aside penalty imposed under Section 11AC, which we hereby do. Penalty is therefore set aside. Appeal allowed in part.

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• 2017 (12) TMI 839
  Valuation - appellant was clearing certain goods to their own sister concern situated elsewhere - The department was of the view that the valuation of clearances made by the appellant to their own sister concern are to be done in terms of Rule 8 of the Central Excise Valuation Rules, 2000 read with Section 4 of the CEA, 1944 - penalty - Held that: - It stands admitted that such clearances are to be valued on the basis of the value adopted in terms of Rule 8 of the Central Excise Valuation Rules 2000 read with Section 4 of the Act - penalty set aside - the duty demand as well as interest are upheld as the same are not being challenged in the present proceedings - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 833
  CENVAT credit - whether the appellant is eligible to avail the credit of services tax paid by their consignment agent viz. clearance and forwarding agent? - Held that: - the Commissioner(Appeals) has given the finding that appellant has sold their goods through the C&F agents and are eligible as per Rule 2(l) of CCR. Hence the services of C&F fall under the category of C&F, the assessee is entitled for credit of service tax paid on the commission given to the consignment agents - from 01/04/2008, the assessee is not entitled to avail service tax paid on outward transportation, this amendment has no effect so far as the services of C&F agents are concerned and when their services are accepted as input service prior to 01/04/2008, the same services will continue to be input services even after 01/04/2008 - CENVAT credit on input services in respect of which tax paid on C&F agent services even after 01/04/2008 allowed - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 832
  Non-accountal of scrap - non-payment of duty - demand of duty under proviso to Section 11A of the CEA, 1944, along with interest under proviso to Section 11AB and proposal to impose penalty u/s 11AC of the Act - Held that: - the appellant has shown the said scrap in the register in Form Annexure-IV and it is also a fact that when the said scrap is sold by issuing invoice, the same invoice is reflected in the RG-1 register - It is not the case of the Revenue that the appellant have removed the scrap clandestinely and therefore, simply on the allegation of non-accountal of record properly, the demand cannot be confirmed against the assessee - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 829
  CENVAT credit - input services - Sales Promotion Service - Employee Group Insurance service - Rent-a-cab Service - Rent of marketing office - Manpower recruitment for marketing office - Held that: - in appellant’s own case for the previous period Universal Power Transformers Pvt. Ltd. Versus The Commissioner of Central Excise, Bangalore [2017 (12) TMI 817 - CESTAT BANGALORE], this Tribunal held in favor of the appellant by holding that service tax paid on those impugned input services are eligible as CENVAT Credit as per the definition of “input service” provided in the CCR, 2004 - all these services fall in the definition of ‘input service’ and the appellant has rightly taken the CENVAT credit on these impugned services - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 826
  CENVAT credit - demand of 10% / 5% of the value of exempted final products - Rule 6(3)(b) of the CENVAT Credit Rules, 2004 - Held that: - as per Rule 6(2) of CENVAT Credit Rules, 2004, separate accounts is required to be maintained only in respect of inputs used in the manufacture of exempted final products and not in respect of input services used in the manufacture of exempted final products - Section 73 was amended whereby Rule 6 of the CENVAT Credit Rules was amended and provides that the assessee is entitled to the benefit of amended provision of Section 73 of the Finance Act, 2010 even if the appellant has not filed any application. The appellant is required to reverse proportionate cenvat credit in respect of input services used in the manufacture of exempted final products and for this purpose, I remand the case back to the original authority to verify whether the appellant has reversed the proportionate cenvat credit of input services attributable to exempted final products - appeal allowed by way of remand.

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• 2017 (12) TMI 825
  CENVAT credit - Rule 3 (5) of CCR, 2004 - Held that: - the audit party should have either themselves or through other officers get a panchnama made and proper statements should have been recorded. In the absence of these, mere observations of the audit party cannot be considered as an evidence - merely because some data on the computerized invoices are written by hand not sufficient to hold that such invoices are bogus and fabricated - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 823
  Rectification of mistake - case of appellant is that the Rule 6(6)(a) was given retrospective effect from 10.02.2006 and not 10.02.2008 as has been mentioned in para 6 and 7 of the Tribunal’s order dated 17.08.2017 - Held that: - in para 6 and 7 of the Tribunal’s order is corrected and the date “10.02.2008” is replaced by “10.02.2006” wherever it appears. The second issue relates to the claim of the appellants that the decision in the case of Sujana Metal Products has not been considered in proper perspective - Held that: - the said decision has been examined in para 5 of the impugned order. In Rectification of Mistake jurisdiction the said matter cannot be considered by the Tribunal - claim dismissed. ROM application allowed in part.

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• 2017 (12) TMI 820
  CENVAT credit of additional duty (GSI) - the department is that the dealer is not authorized to issue supplementary invoice, the AED (GSI) passed on the basis of supplementary invoice is not admissible to the appellant - Held that: - As per the fact of the case which is not under dispute that sugar purchased by the appellant has suffered AED (GSI) as the same was admitted by the lower authorities, the sugar sold by the dealer is duly duty paid including AED (GSI) - In the present case, as an additional precaution the dealer have issued supplementary invoice in respect of AED (GSI) showing the cross reference of the original dealer invoice - there is no reason why credit of GSI should not be allowed to the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 819
  Clandestine removal - proceedings kept in abeyance - call book - Held that: - the long passage of time without any action on part of the department would not be justified making it difficult for the assessee to defend their position - after reactivating the dormant show-cause notices proceedings, the petitioners had full information that the department was proceeding with the said notices also. However, this would not be vital since all other material aspects are common. In the result, impugned order dated 28.02.2017 in connection with the show cause notices dated 15.01.2003 and 28.02.2003 is set aside. Principles of Natural Justice - adjudication of the issue - SCN dated 07.06.2007 - Held that: - Though the petitioners have applied for cross-examination of such witness admittedly, the same was not granted. This consideration is also therefore being tainted with breach of natural justice. The impugned order vis-a-vis the show-cause notice dated 07.06.2007 is, therefore, set aside on this limited ground and proceedings are remanded to the adjudicating authority for fresh consideration. Petition allowed in part and part matter on remand.

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• 2017 (12) TMI 818
  100% EOU - proceedings kept in abeyance - call book - petitioners had made duty free imports of raw materials on the condition that the finished product would be exported. According to the authority, the petitioners had made clearance of finished goods in DTA area in breach of the Government policies - Held that: - the department issued the show cause notice to the petitioner on 22.8.2002. After the petitioners' reply to the show cause notice dated 2.10.2012, no further hearing took place upto 21.9.2016 when the department activated the show cause notice proceedings. In the meantime the proceedings remained dormant. The reason for keeping the proceedings in abeyance or the reason for reactivation, had not been communicated to the petitioners. In the meantime, the unit closed down in the year 2006 when the competent authority activated the show cause notice proceedings. After a long passage of time, it would not be possible for them to muster necessary documents and materials to defend their position. The department had carried the matter in appeal before the Supreme Court. However, the SLP is confined to whether the circular dated 14.12.2015 issued by CBEC (pertaining to keeping the case in call book) is in conformity with the provisions contained in section 37B of the Central Excise Act. Petition allowed.

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• CST, VAT & Sales Tax

• 2017 (12) TMI 848
  Validity of present FIR - only point urged by the learned counsel for the petitioner is that the opposite parties have already initiated proceedings under Sections 60(3) and Section 31(2) of the Bihar Value Added Tax, 2005 for the offences as alleged in the complaint petition, hence the present FIR could not have been lodged for the same offence in view of the well settled principle of law that a person cannot be convicted twice for the one and the same offence - Held that: - the learned counsel for the petitioner has failed to demonstrate any provisions in the Bihar Value Added Tax, 2005, which provides for criminal prosecution of the person who has furnished forged TIN number of the purchaser on the bills pertaining to the goods being transported through the check post. The fundamental rights guaranteed under Article 20(2) of the Constitution of India incorporates the principles of autrefois convicts or double jeopardy, which means that no person shall be prosecuted or punished for the same offence more than once - In order to attract the protection guaranteed under Article 20(2) of the Constitution of India, it is to be seen as to whether the ingredients of the offences alleged under two separate Acts are same or different. In the present case, while the petitioner is being proceeded under the Bihar Value Added Tax Act, 2005, for concealing or failing to disclose full and correct particular of sale or purchase etc. as well as for evasion of tax, the present prosecution has been launched under various sections of the Indian Penal Code for committing forgery and cheating by furnishing invalid and false TIN number of the purchaser on the bill. Thus, the offence under the provisions of the Bihar Value Added Tax Act were, it seems, consequent to the offences under the Indian Penal Code, which ostensibly were committed first. Hence, in the present case, the same set of facts definitely constitute offence under two different law i.e. one under the Indian Penal Code and other under the Bihar Value Added Tax Act, 2005, thus neither Article 20(2) of the Constitution of India has any relevance to the present case nor the present criminal prosecution can be said to be barred or a case of double jeopardy, much less liable to be quashed, therefore, there is no merit in the contention raised by the petitioner herein. Petition dismissed - decided against petitioner.

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• Indian Laws

• 2017 (12) TMI 845
  Default to issue distress warrant - dishonor of cheque - The prosecution case, as alleged, against the petitioners is to the effect that one Shrivardhan Kalyani filed a petition of complaint through his authorized attorney, Md. Turban Ansari against M/s. Chakraborty Consultancy Services, a partnership firm and its partners, that is the petitioners herein, alleging that the petitioner nos.2 and 3 were in charge of and responsible to the firm for the running of its day-to-day business and were involved in sale and purchase of equity shares on behalf of the firm. Held that: - The petitioners had sought to discharge their onus under Section 139 of the Negotiable Instruments Act by leading evidence through D.W.1 to the effect that immovable property had been conveyed in favour of opposite party no.2 in discharge of their liability towards the opposite party no.2 - Certified copy of the sale deed had been exhibited as Exhibit A. There is nothing in the recitals of the sale deed that the transfer of such property was in discharge of the liability of the petitioners’ firm towards the opposite party no.2. Evidence had also been led to show that the cheque on presentation was dishonoured due to insufficient funds and in spite of receipt of notice of dishonour no payments were made. There is also evidence on record that the petitioners were in charge of and responsible to the partnership firm for the running of its day-to-day business at the time of commission of the offence. In fact the petitioners had signed the dishonoured cheque in question - the conviction of the petitioners was rightly recorded. Revision petition disposed off.

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• 2017 (12) TMI 844
  Time limitation - complainant under Section 138 of the Negotiable Instrument Act - it was alleged that the complaint of petition is barred by the Law of Limitation - non-compliance of the mandatory provision of law as contemplated under Section 202 of the Code of Criminal Procedure - Held that: - Section 142-A has been incorporated in the Negotiable Instrument Act, 1881 on 15.06.2015. The aforesaid Section of Negotiable Instrument Act has been given retrospective effect stating inter-alia, as if that sub-Section had been in force at all material times. In the case under reference the petition of complaint filed by the opposite party no. 1 is saved by Section 142-A of the Negotiable Instrument Act. Moreover, learned Additional Chief Judicial Magistrate, Bidhannagar has duly examined the representative of the complainant at the time of issuance of summons. That goes to show that learned Magistrate has duly complied the provision of Section 202 of the Code of Criminal Procedure and being satisfied about the case of the complainant, issued summons against the petitioner and other accused persons. Revision Application dismissed.

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