Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 20, 2018
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Levy of GST - place of supply of services - intermediary services - When recipient is located outside India the said provisions of section 12 cannot be made applicable and since provisions of section 8(2) are inter-linked with provisions of section 12, the same cannot be made applicable in case the recipient of service is located outside India.
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Profiteering - supply of "Eastern Meat Masala" - benefit of reduction in the rate of tax - The Respondent has not contravened the provisions of Section 171 of the CGST Act, 2017 and hence there is no merit in the application.
Income Tax
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Income-tax (14th Amendment) Rules, 2018 - Amends Rule 10DB. Furnishing of Report in respect of an International Group
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Disallowance of expenses - Disallowance has been merely made on the observation that some of the expenditure are incurred in cash and some vouchers are self made - merely making a ad-hoc disallowance and completely disregarding the audited financial statements was certainly not justified on the part of Ld.A.O.
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Validity of assessment u/s 158BC r.w.s. 158D - The satisfaction recorded by the AO as per Revenue is incorporated in the order sheet and not in the notice. Thus, it is not a valid satisfaction, as satisfaction u/s 158BD has to be recorded by the AO of the searched person and not by the AO of the other person i.e. assessee.
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Deduction u/s 80IC - The allegation of the AO is that assessee has shown the higher profit in the books of accounts to claim the excess deduction u/s 80IC - AO failed to demonstrate that how the assessee has inflated its profit and correspondingly inflated its assets or deflated its liabilities - No additions.
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Addition u/s.56(2)(vii)(c) - income from transaction of shares - there is not even a whisper about money laundering - This object behind introduction of section 56(2)(vii) should be borne in mind - No addition can be made.
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Addition u/s.56(2)(vii)(c) - income from transaction of shares - the offer made by the company was accepted by the shareholders before 1st October, 2009 hence, the contract between the company and the shareholder for issue by the company of shares was completed before 1st October, 2009 - The provisions of section 56(2)(vii) are applicable only from 1st October, 2009.
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Reopening of assessment - Though the return was filed by the assessee beyond the period of time frame as specified u/s. 139(5) of the Act, however, the same was filed much prior to the completion of assessment. Even if the said return was not considered by the AO for the purpose of assessment, the same could have been treated as return in response to the notice u/s. 148 as requested by the assessee.
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Benami transactions - receipt of advance salary - reliance on mere statements - These statements only disclose a receipt of cash. This is insufficient to construe the existence of a “benami” transaction.
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Addition u/s 68 - bogus purchase of shares - paper transactions - So far as the huge rise in the sale price of the shares is concerned, it is trite law that the additions could not be made merely on the basis of suspicion, conjectures or surmises.
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Addition u/s 68 - In the balance sheet of the assessee company in the schedule to share capital, it is very clearly mentioned by way of note that the fresh share capital was raised during the year for consideration other than cash. Hence we hold that provision of section 68 of the Act are not applicable in the instant case
Customs
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Forged DEPB license - importer was a bona fide transferee of the scrips and was not having any knowledge of the forgery etc., in respect of the scrips. - forged DEPBs are ab initio non est.
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Violation of import condition - actual user condition - by obtaining Licences by way of misrepresentation of the status being that of a manufacturer and not complying with the conditions of Licences or Customs Notification do not confer any benefit to the appellants for concessional rate of duty.
Indian Laws
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Dishonor of Cheque - Vicarious liability of Directors - The general averments about they being responsible for the business dealings of the company do not suffice as there is nothing shown that they were in charge of or responsible to the company accused for the conduct of its business “at the time the offence was committed”
SEBI
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Early Warning Mechanism to prevent diversion of client securities
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Review of risk management framework for Equity Derivatives Segment
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Securities and Exchange Board of India (Mutual Funds) (Fourth Amendment) Regulations, 2018
Service Tax
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Business Auxiliary Services - appellants received certain commission on an agreed basis from the hotels on the payment made by the customers - demand of service tax confirmed.
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Cargo Handling Service or not - The mere supply of men and materials per se coupled with the scope of work which limited to the work assigned by M/s. CCCL inside the factory premises, cannot be considered to be a service u/s 65(23).
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Import of services - Clearing and Forwarding Services (C&F services) - the activity of the appellant being wholly performed outside India, is excluded from service tax liability as per Rule 3(ii) of the Taxation of Services (provided from outside India and received in India) Rules, 2006.
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Classification of services - Club or Association Membership Service or not? - services provided to independent customers and not the members - The activities carried out on by the appellant does not fall in the definition of ‘Club or Association’ service - Demand set aside.
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Commercial Coaching and Training Services - services of awarding Graduate/ PG Diploma relating to design management course - the services rendered by the Appellant are in the nature of commercial training or coaching services and leviable service tax for the period in question.
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Demand of service tax - All the information available in the balance-sheet under the head 'other income' was available to the department and while issuing the second show-cause but no objection was raised by the Revenue - demand set aside on the ground of extended period of limitation.
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Though the ST-3 returns were filed, but the assessee never indicated the facts of providing supply of tangible goods services nor disclosed its value to Department, therefore, extended period of limitation is applicable.
Central Excise
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CENVAT Credit - input services - guest houses - Even in relation to a guest house which may not have been situated close to the manufacturing unit of the Assessee, if it is pointed out that the use thereof was not for the personal use or consumption of the employees, exclusion clause in the definition of input service, may not apply.
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CENVAT Credit - value of free after sale services and the warranty period repairs and maintenance are already included in the assessable value of the two wheelers - Credit allowed of the service tax paid on availment of such input services by the manufacturer from their authorized representatives.
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Recovery of CENVAT Credit utilized on inputs and capital goods - two contradictory entries in the exemption notification - The said Notification thus is an optional one in the hands of the assessee and is not an absolute exemption Notification.
Case Laws:
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GST
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2018 (12) TMI 1006
Levy of GST - marketing, promotion and distribution services provided by Sabre India to Sabre APAC - export of service - Section 2(6) of the Integrated Goods and Service Tax Act 2017 read With CGST Act - place of supply of services - distinct person - Composite supply - intermediary services - Held that:- Applicant are on the lookout for potential subscribers who are willing to use the CRS software in their business. It is also important to note that these potential subscribers also require such software for use in their business and require the help/ assistance of the applicant to reach out to Sabre APAC to obtain the said software. Admittedly, the Applicant also undertakes sales promotion and marketing support activities to advance the business of Sabre APAC in India by way of giving marketing support services which includes activities such as PR, promotions, sponsorship, special events and trade shows, as well as any other services necessary to perform its obligations under the Marketing Agreement and to make the CRS Software the reservation system of choice for subscribers and to strengthen the subscribers trust in the brand ‘Sabre’ so as to augment Sabre APACs business in India. Whether or not the applicant is providing Intermediary Services? - Held that:- If the services provided are Intermediary Services then as per the GST Laws the applicant will be liable to tax. An intermediary can be a broker, an agent or any other person and either facilitates the supply of goods and/or services between two or more persons and who cannot change the nature of supply as provided by the principal - the applicant is covered by the said definition of an intermediary because they are definitely acting as a broker/ agent, etc and facilitating the process for sale of CRS Software belonging to their foreign parent company, to the Indian subscribers because they identify such subscribers on their own in India. It is the sales team of the Applicant which approaches potential subscribers in India to whom they explain the features of the CRS Software and the flexibility of said software to integrate with the potential subscriber’s system for smooth functioning. Once the applicant gets a positive response from the subscriber, they scan the credentials and the business potential of the subscriber to whom it is proposed to market the CRS Software. The applicant is not providing services on their own account but on account of Sabre APAC, and thus it is very apparent that the applicant is providing Intermediary Services in the instant case - Since the applicant, being the supplier of service is located in India and the recipient of Service i.e. supplier of goods is located outside India, Section 13 of the IGST Act, 2017 would be applicable to determine the place of service - Since the place of supply of services in the instant case is in taxable territory, the said intermediary services cannot be treated as export of services under the provisions of the GST laws. As per intra-state provisions contained in Section 8(2), the said provisions are subject to the provisions of section 12 of the IGST Act. As per section 12, the provisions of section 12 would be applicable only for determining the place of supply of service where the location of supplier of services and the location of recipient of the services is in India. When recipient is located outside India the said provisions of section 12 cannot be made applicable and since provisions of section 8(2) are inter-linked with provisions of section 12, the same cannot be made applicable in case the recipient of service is located outside India. Ruling:- The marketing, promotion and distribution services provided by the applicant to Sabre APAC would be subject to tax under the provisions of the GST Act.
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2018 (12) TMI 1005
Condonation of delay in filing appeal - time limitation - Held that:- The delay in filing the appeal may not be condoned beyond the period of one month from the expiry of period of limitation, the phrase "communicated to such person" appearing in Section 107(1) of the Act commend a construction that would imply that the order be necessarily brought to the knowledge of the person who is likely to be aggrieved. Unless such construction is offered, the right of appeal would itself be lost though a delay of more than a month would in all such cases be such as may itself not warrant such strict construction. It is largely undisputed that the impugned penalty order was served on the driver of the truck while the penalty order is directed against the owner of the goods. Therefore, for that reason also it may be accepted that the penalty order had not been communicated to the petitioner prior to the date 25.05.2018. The Appellate Authority may condone the delay and proceed to decide the appeal as expeditiously as possible - Petition allowed.
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2018 (12) TMI 1004
Detention of goods - discrepancy in e-Way bill - the value of the goods was mentioned as ₹ 388220/- instead of ₹ 3882200 - Held that:- If a human error which can be seen on naked eye is detected, such human error cannot be capitalised for penalisation. Normally, this Court could not have persuaded to accept the contention on prima facie value as it is a matter for decision by competent authority and this Court can only order release of the vehicle and goods as against Bank guarantee. On verification, if it is found that the petitioner had paid the IGST in accordance with the value shown in Ext.P4, the vehicle and the goods shall be released to the petitioner on executing a simple bond. However, if it is found that the petitioner had not paid the IGST according to the value shown in Ext.P4, the petitioner's goods and vehicle need be released only on furnishing bank guarantee. Petition disposed off.
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2018 (12) TMI 1002
Profiteering - purchase of one Honda City Car - benefit of Input Tax Credit (ITC) was not passed on - benefit of reduction in the rate of tax - Section 171 of the CGST Act, 2017. Reduction in the tax rates - Held that:- It is clear from the DGAP's investigation report that there was no reduction in the tax rate in this case hence, the allegation of profiteering by the Respondent on account of change in tax rate is not sustainable. Benefit of ITC - Held that:- The record also reveals that the base price charged by the Respondent in the post-GST sale invoice dated 14.10.2017 was ₹ 1,73,346/- less than the base price in the preGST sale invoice dated 28.04.2017 due to the reason that in the preGST period, the credit of Excise Duty, NCCD and Cesses etc. was not available to the Respondent as only credit of VAT was admissible while in the post-GST period, the Respondent was entitled to claim the ITC on the entire GST paid @ 45% and when the post-GST purchase invoice dated 29.09.2017 and sale invoice dated 14.10.2017 issued by the Respondent were compared, it was evident that the Respondent had not passed on the burden of the input GST paid @ 45% amounting to ₹ 2,88,661.95/- to the Applicant due to the reason that he was eligible to claim ITC on this amount. It is also clear that there was increase in the ITC which the Respondent could avail in the post-GST era as compared to the pre-GST era and the pre-GST and post-GST sale invoices issued by the Respondent revealed that the base price charged from the above Applicant had been reduced as the benefit of ITC was passed on by the Respondent to the Applicant No. 1. Therefore, the allegation that the Applicant had not been given the benefit of ITC by the Respondent was not proved. The provisions of Section 171 (1) of the CGST Act, 2017 have not been contravened in the present case - the application filed by the Applicant No. 1 requesting for action against the Respondent for violation of the provisions of the Section 171 (1) of the CGST Act, 2017 is not maintainable and hence the same is dismissed - application dismissed.
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2018 (12) TMI 1001
Profiteering - supply of "Eastern Meat Masala" - benefit of reduction in the rate of tax not passed - Section 171 of the CGST Act - Held that:- There was no reduction in the rate of tax on the above product w.e.f. 01-07-2017, hence the anti-profiteering provisions contained in Section 171 (1) of the Central Goods and Services Tax Act, 2017 are not attracted. There is also no increase in the per unit base price (excluding tax) of the above product and therefore the allegation of profiteering is not sustainable. The Respondent has not contravened the provisions of Section 171 of the CGST Act, 2017 and hence there is no merit in the application filed by the above Applicant and the same is accordingly dismissed - application dismissed.
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Income Tax
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2018 (12) TMI 1000
Concealment of income – imposition of penalty u/s 271(1)(c) - condonation of delay - Held that:- There is a delay of 310 days & 324 days in preferring these special leave petitions respectively which has not been satisfactorily explained. We, therefore, refuse to condone the delay. The Special Leave Petitions are dismissed on this short ground.
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2018 (12) TMI 999
Allowability to exemption u/s. 11 & 12 - rent paid by the assessee to the trustees or to the HUF where the karta was the trustee of the respondent-trust - as per AO payment of such rent would fall foul of section 13(1)(c) income of the trust not qualify for exemption - Held that:- We do not find any reason to entertain this special leave petition. The special leave petition is, accordingly, dismissed. Pending application(s), if any, stand disposed of.
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2018 (12) TMI 998
Reopening of assessment - reasons to believe - special audit report as basis for reopening - Held that:- Special Leave Petitions are dismissed. Pending application(s), if any, stands disposed of accordingly.
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2018 (12) TMI 997
Initiation of assessments under section 153A - proof of incriminating material was found during the search - Held that:- Petitioner seeks permission of this court to withdraw the special leave petition in the light of the Circular No.3/2018 dated 11th July, 2018 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board Direct Taxes. SLP dismissed as withdrawn.
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2018 (12) TMI 996
Investments made by the bank in security as stock in trade - whether Tribunal is right in law in confirming the order of CIT (Appeal) in treating the securities held by the assessee under the category of “held to maturity” as held in the nature of stock in trade? - Held that:- No reason to entertain this petition. Accordingly, the special leave petition is dismissed.
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2018 (12) TMI 995
Offence u/s 276C(2) - Wilful attempt to evade tax - In the case at hand, the accused filed his returns on 16.06.1998 showing his income at ₹ 48,150/-. The Income Tax Officer conducted investigation and determined the income at ₹ 29,05,126/-. The very edifice on which the prosecution was launched against the accused, has crumbled like a pack of cards. There was no necessity for the Income Tax Department to have launched the prosecution hurriedly since the law of limitation under Section 468 Cr.P.C. for criminal prosecution has been excluded by the Economic Offences (Inapplicability of Limitation) Act, 1974. In fact, even in the complaint, the Income Tax Officer has stated that the accused has approached the Income Tax Appellate Tribunal. This shows that the Income Tax Officer was aware of the fact that the accused is agitating his case before the Income Tax Appellate Tribunal, which is the final fact-finding body. Thus it cannot be stated that the accused was wilfully evading the payment of tax. But, unfortunately, the Trial Court had failed to appreciate the contention of the accused in the right perspective. - Decided in favour of assessee
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2018 (12) TMI 994
Addition of bogus unsecured loans u/s 68 - Held that:- There are concurrent finding on facts rendered by the CIT(A) and the Tribunal holding that only ₹ 36 lakhs can be added to the declared income and the balance amount of ₹ 2.99 crores was not hit by section 68 of the Act. This finding is premised on the fact that no enquiry was made in respect of 76 creditors out of 77 creditors and the respondent had provided required documentary evidence in respect of the 76 creditors. Thus, these are essentially finding of fact and the view taken by the Tribunal is a possible view on these facts. In view of the above, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
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2018 (12) TMI 993
Allowability of loss from business of Futures and Options - Tribunal allowed claim - whether company is authorized to do business in futures and options. - Held that:- Assessing Officer while disallowing the losses in futures and options, have accepted the income of ₹ 25,520/shown on account of Futures & Options. This itself would be evidence of the fact that the MOU entitles the respondent assessee to carry on business in futures and options. Thus, dismiss the Revenue's appeal. On facts we find that the view taken by the CIT(A) as well as the Tribunal, cannot be faulted with. The losses on futures and options was incurred post 30th December, 2005 i.e. after clause 68 was introduced in the MOU by an amendment. This appeal is in respect of A.Y. 2007-08 when clause 68 of the MOU was in existence. This entitled the respondent to do business in Futures and Options. No substantial question of law
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2018 (12) TMI 992
Allowability of loss - Defects in the Audited Books of Accounts - destruction of physical accounts due to heavy rains - sharp and continuous fall in nickel prices - Held that:- We note that both the CIT(A) and the Tribunal on examination of the facts have come to the conclusion that there was material evidence available before the Assessing Officer for him to carry out necessary investigation to determine whether or not the loss suffered by the respondent assessee was justifiable. The best judgment assessment can certainly be resorted to by the Assessing Officer in the absence of any record, but it cannot be arbitrary. This is more particularly so when various supporting documents justifying their loss return was filed before the Assessing Officer and he had completely ignored the same. We find that this appeal essentially is in respect of question of facts. In the above view, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
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2018 (12) TMI 991
TDS u/s 194H - Payments of bank guarantee made to the bank - TDS liability - Held that:- The so called bank guarantee commission is not in the nature of commission paid to an agent but it is in the nature of bank charges for providing one of the banking service. The requirement of Section 194H of the Act, therefore, would not arise. No question of law arises.
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2018 (12) TMI 990
Reopening of assessment - receipt as business income - assessee had entered into a Lease Agreement with its sister concern for letting out premises for business purpose alongwith furnitures, fixtures and equipments for the compensation - Held that:- The particular claim which the Assessing Officer wants to revisit through the reassessment proceedings, is not a new one. It was started by the assessee for the first time in the Assessment Year 2000-2001 and was accepted by the Department. Without there being any other change, such issue could not have been reissued in the present assessment year, particularly when the claim was also accepted after scrutiny in the Assessment Year 2001-2002. Thus it can be seen that the reason for reopening the assessment lacks validity or in other words, the Assessing Officer did not have reason to believe that income chargeable tax had escaped assessment. - Decided in favour of assessee.
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2018 (12) TMI 989
Accrual of income - consideration accrued in the assessment year - Held that:- Admittedly, a part of the consideration received by the assessee was offered to tax for the assessment year 2013-14, the assessee filed their return of income and the tax had been paid. In our considered view, the issues raised in these appeals have become academic, since the question is as to in which year, the assessee is required to be taxed. The Revenue does not dispute that in the subsequent assessment year namely 2013-14, the assessee offered necessary consideration received and paid tax thereon. Therefore, the Revenue is not deprived of collection of appropriate rate of tax. Hence, we may not be required to adjudicate the matter and decide the substantial questions of law raised, as the issues raised in this appeal have become academic.
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2018 (12) TMI 988
Nature of expenditure - expenditure incurred in developing/upgrading the software - revenue or capital - Held that:- The case of the assessee, not disputed by the Revenue is that the assessee incurred these expenditure for developing a existing software. This was with the reason to compete in the market and for the improvement of the existing product. Therefore, the Tribunal erred in applying the said decision and consequently, erred in allowing the appeal filed by the Revenue. The CIT-A after taking into consideration the facts of the case, in our opinion rightly held that the products are not similar to development of specific new products and it is in respect of the expenditure incurred in improving of the existing product and the work was initiated for securing the market over others in the field of business and the assessee's business is developing of software and expenditure incurred on a project which was perceived to be of great potential cannot be disallowed because such potential has not been realised. As pointed out that it is not necessary that every expenditure results in taxable income and it cannot be held that unless income is generated, expenditure cannot be allowed. - Decided in favour of the assessee.
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2018 (12) TMI 987
TDS u/s 194C or 194I - non deduction of tds on payment of hotel accommodation expenses - addition u/s 40(a)(ia) - admission of additional evidences - Held that:- The assessee claimed that the above additional evidences clearly establish the nature of the contract with the Hotels and also establish that there are only rate contracts and do not involve any obligation for providing a room or specified set of rooms. Assessee further claimed that since Ld. CIT(A) misunderstood the Circulars issued by the CBDT, therefore, these additional evidences shall have to be considered in order to decide the issue whether provisions of Section 194I would apply in the facts and circumstances of the case. Hon’ble Supreme Court in the case of Tekram [2013 (8) TMI 459 - SUPREME COURT] and Mukta Metal Works [2011 (2) TMI 250 - PUNJAB AND HARYANA HIGH COURT] admitted additional evidences being relevant and required to be looked into for deciding the matter in issue. Therefore, in order to do substantial justice we are of the view that these additional evidences should be admitted for disposal of the appeal Admittedly, the above additional evidences were not before authorities below to decide whether provisions of Section 194I or 194C would apply in the matter. Therefore, interest of justice requires that an opportunity should be given to the A.O. to examine these additional evidences and decide the issue as per Law. - Decided in favour of assessee for statistical purposes.
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2018 (12) TMI 986
TPA - International transaction relating to reimbursement of expense to its Associated Enterprise [AE] - Held that:- As decided in assessee's own case no upward adjustment is proposed to the income of the assessee in relation to the international transaction which was the subject matter of 6 benchmarking. Hence, the upward adjustment of ₹ 13.07.20.653/- made in the original order for the expat support services u/s 92(A(3) is thus reduced to NIL. AO is requested to take the necessary action. Thus we are of the considered opinion that the transfer pricing adjustment of ₹ 6.63 crores deserves to be deleted. We direct accordingly. Disallowance of 10% of the total staff welfare expenses - Held that:- While deciding the objection raised by the assessee in respect of adhoc disallowance of 10%, the DRP has directed the Assessing Officer to delete the same by holding that the disallowance has to be on some basis. There is no dispute that the books of account of the assessee are audited and no specific defect has been pointed out by the Assessing Officer/TPO. Therefore, in our considered opinion, adhoc disallowance is unwarranted and deserves to be deleted as was deleted by the DRP in assessment year 2012-13 - decided in favour of assessee.
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2018 (12) TMI 985
Admission of additional evidence - Erroneous claim of cost of improvement - not in consistence with the copy of the sale deed filed - assessee claimed sum in the return of income as cost of improvement, was actually cost incurred in relation to acquisition of the plot of the land - Held that:- As decided in TEXT HUNDRED INDIA PVT. LTD. case [2013 (6) TMI 72 - DELHI HIGH COURT] Tribunal may admit additional evidences if the same are necessary to do substantial justice in the matter. In the instant case before us the assessee has produced original copies of the agreement to show the willingness to prosecute the appeal. We are of the opinion that if there is some truth in the story of the assessee of the agreement for sale of plots and subsequent settlement for payment to the proposed buyers, the assessee must get chance to prove its innocence and the issue must be decided after due verification and genuineness of the evidences furnished by the assessee as additional evidences. Accordingly, we admit the above additional evidences filed by the assessee. In view of the additional evidences filed vis-à-vis earlier explanation of cost of improvement, we feel it appropriate to restore the issue in dispute involved in the appeal to the file of the Ld. Assessing Officer for deciding afresh - Decided in favour of assessee for statistical purposes.
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2018 (12) TMI 984
Disallowance made on rule 8D R.W.S. 14A - CIT(A) deleted the impugned disallowance made u/s 14A - Held that:- Disallowance u/s 14A of the Act is not called for in the case of the assessee as there is no dividend income earned during the year and the assessee’s case is squarely covered in the judgment of Hon’ble Gujarat High Court in the case of CIT V/s Corrtech Energy (P) Ltd (2014 (3) TMI 856 - GUJARAT HIGH COURT) wherein the Hon’ble High Court has held that “where the assessee has not made any claim for any exemption then in such situation the disallowance u/s 14A of the Act have no application”. Perusal of the audited balance sheet of the assessee shows that as on 31.03.2012 the total of the share capital and reserve and surplus at the end of the year stands at ₹ 39,28,44,695/- and against these interest free funds available with the assessee, the average value of investment is ₹ 29,83,62,600/-, which means that the average investments are less than the interest free fund available with the assessee. Further there is no specific satisfaction by the Ld.A.O which could prove that interest bearing funds have been applied for the investments in group concerns for non business purposes. Also see CIT V/s HDFC Bank Ltd (2014 (8) TMI 119 - BOMBAY HIGH COURT) wherein the assessee’s capital, profit, reserve surplus and current account deposits were higher than the investment in tax free securities, then it would have to be presumed that investment made by the assessee would be out of the available interest free funds - no disallowance u/s 14A was called for by the Ld.A.O - Decided in favour of assessee Disallowance of expenses - Disallowance has been merely made on the observation that some of the expenditure are incurred in cash and some vouchers are self made - held that:- Surprisingly there is no specific observation by the Ld.A.O which could prove that the assessee has claimed the expenses with a motive to evade the tax nor any observation has been made by the Ld.A.O for challenging the genuineness of the particular expenditure. In these given facts and circumstances merely making a ad-hoc disallowance of ₹ 2,00,000/- and completely disregarding the audited financial statements was certainly not justified on the part of Ld.A.O. Therefore we find no infirmity in the finding of Ld. CIT(A) deleting the disallowance - Decided in favour of assessee
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2018 (12) TMI 983
Validity of assessment u/s 158BC r.w.s. 158D - valid satisfaction for the purpose of assumption of jurisdiction u/s 158BD - whether satisfaction has been recorded on the basis of incriminating seized documents scanned in the assessment order, by the AO who had jurisdiction over the case? - search u/s 132 - Held that:- CIT(A) has given the categorical finding that the addition is not sustainable due to the detailed reasons given by the CIT(A) stating hat the name of the assessee viz., Shri Virender Bhatia does not appear on any of the pages mentioned in the Annexures as described in the satisfaction note. These annexures have also been examined by your goodself Valadity of notice issued u/s 158BD - no order dropping the proceedings initiated u/s 158BD of the Act dated 14/7/2005 was ever been served on the assessee - Held that:- Once it is not disputed that no order dropping proceedings had been communicated to the assessee, it ought to have been held that notice issued u/s 158BD of the Act dated 22/7/2007 was without jurisdiction held by Hon’ble Apex Court inc case of Trustees OF H. EH THE NIZAM'S SUPPLEMENTAL FAMILY TRUST VERSUS COMMISSIONER OF INCOME-TAX [2000 (2) TMI 4 - SUPREME COURT] The satisfaction recorded by the Assessing Officer as per Revenue is incorporated in the order sheet and not in the notice. Thus, it is not a valid satisfaction, as satisfaction u/s 158BD of the Act has to be recorded by the Assessing Officer of the searched person and not by the Assessing Officer of the other person i.e. assessee. Therefore, this satisfaction which was recorded in the order sheet and also not communicated to the assessee, is not a valid satisfaction, this preposition of the Ld. AR sustains. The contention of the Ld. DR is that the Assessing Officer is same for all the mentioned assessees do not permit/allow the Assessing Officer not to record satisfaction for each of the assessee separately. It is a mandate as per the provisions of the Act and cannot be overlooked. Therefore, the Assessing Officer does not have valid jurisdiction to frame the assessment. Thus, the cross objection of the assessee is allowed.
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2018 (12) TMI 982
Rejection of books of account - suppressed production expenses just to inflate profit for claiming deduction u/s 80IC - assessee has shown the higher profit in the books of accounts to claim the excess deduction under section 80IC - Held that:- Provisions of section 80IC(7) provides that the provisions contained in subsection 5 and subsection 7 – 12 of section 80IA shall so far as may be applied to the eligible undertaking or enterprise under that section. On looking at the provisions of subsection 10 of section 80 IA. Provides that where it appears to the assessing officer that owing to the close connection between the assessee carrying on the eligible business to which this section applies and any other person or for any other reason the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits which might be expected to arise in such eligible business, the assessing officer sale, in computing the profits and gains of such eligible business for the purposes of the deduction under that section, take the amount of profits as may be reasonably deemed to have been derived there from. On careful reading of the order of the learned assessing officer, we do not find that how the assessing officer has come to a conclusion that assessee is showing more than ordinary profits in its books of accounts. According to us, Such analysis has to be with respect to the profits of the comparable units. No such comparable units were examined by the learned assessing officer for holding that assessee has suppressed the contention of the raw material by 8%. AO has not traced that if the material consumption has been under booked by the assessee, whether the assessee is holding excess stock in the books of accounts then what assessee actually physically hold. Naturally when the assessee as under booked the consumption and in real sense has consumed the material higher than what is recorded in the books of accounts then such closing stock itself is inflated of the raw material to the extent of under booking of the raw material consumption. If the consumption of INR 80 is to be replaced by the consumption of rupees hundred then correspondingly the stock, which is overstated by INR 20 in books is also required to be reduced. Further, it is not the case of the AO that quantitative details, which are also subject to excise of the closing stock is incorrect. In that particular sense the whole exercise carried out by the assessing officer is devoid of any merit. The allegation of the AO is that assessee has shown the higher profit in the books of accounts to claim the excess deduction under section 80IC. To show the higher profit the assessee either might have inflated the assets or have understated certain liabilities, in absence of this, the profitability cannot be shown at higher figure. The corresponding effect of the higher profit has not been identified by the learned assessing officer. No indication has also been drawn by the assessing officer that how the assessee has inflated its profit and correspondingly inflated its assets or deflated its liabilities. According to us This is the simple accounting concept which should have been followed by the learned assessing officer before making the addition. - Decided against revenue.
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2018 (12) TMI 981
Addition u/s.56(2)(vii)(c) - income from transaction of shares - Held that:- The transaction of issue of shares was carried out to comply with a covenant in the loan agreement with the bank to fund the acquisition of the business by the subsidiary in USA, therefore, such a bonafide business transaction cannot be taxed under section 56(2)(vii) especially when there is not even a whisper about money laundering by the AO in the assessment order. Further, we observe that the consideration for the shares was received through banking channel. This object behind introduction of section 56(2)(vii) should be borne in mind. The provisions of section 56(2)(vii) cannot be applied to transaction under consideration. The provisions of section 56(2)(vii) are applicable only from 1st October, 2009. In the instant case, the offer was made by the company to the shareholders to subscribe for the shares on 7 September, 2009 pursuant to resolution passed by board of directors on the same date. Further, on 21st September, 2009, the company informed the shareholders about the acceptance of shares offered by the company. Therefore, the offer made by the company was accepted by the shareholders before 1st October, 2009 hence, the contract between the company and the shareholder for issue by the company of shares was completed before 1st October, 2009. The provisions of section 17 do not apply to the shares allotted by the company to the assessee as the shares were not allotted by the company to the assessee in his capacity of being an employee of the company. The shares were offered and allotted to the assessee by the company by virtue of the assessee being a shareholder of the company. Therefore the provisions of section 17 are not applicable. Circular No. 710 dated 24 July, 1995 also supports the assessee's stand that where shares are offered by company to a shareholder, who happens to be an employee of the company (as Mr. Subodh Menon indeed is), at the same price as have been offered to other shareholders or the general public, there will be no perquisite in the shareholder's hands. In the instant case, the shares were offered to the assessee and other shareholders at a uniform rate of ₹ 100 and therefore, the difference between the fair market value and issue price cannot be brought to tax as a perquisite under section 17 of the Act. - decided against revenue
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2018 (12) TMI 980
Income accrued in India - Addition applying the provisions of section 5(2)(a) - salary and allowances received - period of stay in India - residential status for the year Non-Resident in India as the assessee stayed in India for 13 days - assessee is an employee in IBM India Private Limited and during the financial year 2013-14 was sent on short term foreign assignment to United Kingdom - assessee claimed relief under Article 16(1) of India UK DTAA in respect of salary received in India - Held that:- It is not in dispute that the assessee is a non-resident in India and is a tax resident of UK during the year under consideration. It is not in dispute that his employment is exercised in UK. We find that the ld AO had denied the relief claimed under India –UK DTAA for not furnishing the tax residency certificate during the course of assessment proceedings. Admittedly, the same was furnished by the assessee before the CIT-A for the first time. CITA without asking for a remand report from the ld AO in this regard, proceeded to grant relief to the assessee. The revenue had raised one of the ground on account of violation of provisions of Rule 46A of the Income Tax Rules with regard to the tax residency certificate furnished only before the ld CITA. Hence in the interest of justice and fairplay, we deem it fit and appropriate, to remand this issue to the file of AO , for the limited purpose of verification of the tax residency certificate furnished before the CIT-A. - Appeal of the revenue is allowed for statistical purposes.
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2018 (12) TMI 979
Disallowance of depreciation on the lorry - Held that:- Tribunal is of the considered opinion that the Assessing Officer has to verify the sale receipt, copy of which is available at page 12 of the paper-book and thereafter decide the issue afresh in the light of the judgment of Kerala High Court in Nidish Transport Corporation [1989 (3) TMI 34 - KERALA HIGH COURT], in accordance with law, after giving a reasonable opportunity to the assessee. Disallowance of commission expenses - claim of hire charges - AO disallowed the claim of the assessee on the ground that there was no voucher produced before him - the assessee claims that the vouchers were available to substantiate the payment of hire charges - Held that:- This Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, orders of both the authorities below are set aside and the entire issue is remitted back to the file of the AO. AO shall re-examine the matter in the light of the material that may be produced by the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.
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2018 (12) TMI 978
Unexplained cash credits in his bank accounts u/s 68 - Held that:- There is no reason to suspect the genuineness of the assessee’s claim since the extent of cash withdrawals far exceed the cash deposits made, even if for some reason the version of the assessee having received money from his father-in- law has to be disbelieved. In this view of the matter, the addition made in the order of assessment of ₹ 1,25,700/- as unexplained cash credits, is deleted. - Decided in favour of assessee Charge of interest u/s 234A and 234B - Held that:- The charging of interest is consequential and mandatory and the assessee has no discretion in the matter. This proposition has been upheld by the Hon’ble Apex Court in the case of Anjum H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT] and therefore uphold the action of the AO in charging the said interest.
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2018 (12) TMI 977
Deduction u/s. 80P(2)(a)(i) - interest income from banks other than cooperative banks - interest income from surplus funds/short term deposits with banks is “Income from other sources” taxable u/s.56 - Held that:- As the assessee in the instant case was commercially bound to maintain overdraft with State Bank of India and for that purpose it had to place FDRs, on which the interest income was earned, such an interest arising on these FDRs, in the given circumstances, is in the nature of income under the head “Profits and grains from business or profession” and cannot be characterized “Income from other sources” as held by the authorities below. Once the interest income is construed as “Business income”, the same becomes eligible for deduction u/s. 80P of the Act. Therefore, overturn the impugned order and direct to grant deduction u/s.80P on such interest income in all the three years under consideration. - Decided in favour of assessee.
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2018 (12) TMI 976
Reopening of assessment - reasons for reopening were not provided to the assessee - Held that:- A perusal of documents on record indicates that the reasons for reopening were not furnished to the assessee. The Revenue has not brought on record any document indicating that the reasons for reopening were ever furnished to the assessee. The Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. [2002 (11) TMI 7 - SUPREME COURT] has categorically held that the Assessing Officer is bound to furnish the reasons within a reasonable time on the request of assessee. In the present case we find that the assessee while replying to the notice u/s. 148 dated 20-03-2015 had specifically asked for the reasons for reopening vide communication dated 21-04-2015. Again notice u/s. 148 was issued to the assessee on 24-03-2015 the assessee vide communication dated 27- 10-2015 asked for the reasons for reopening. However, on both the occasions the Assessing Officer has failed to provide the reasons for reopening to the assessee. Assessee has not complied with the notice u/s. 148 as no return of income was filed in response to the notice u/s. 148 - Held that:- Though the said return was filed by the assessee beyond the period of time frame as specified u/s. 139(5) of the Act, however, the same was filed much prior to the completion of assessment. Even if the said return was not considered by the Assessing Officer for the purpose of assessment, the same could have been treated as return in response to the notice u/s. 148 as requested by the assessee. Further, we find that the Assessing Officer never communicated to the assessee that the return filed on 31-03-2013 cannot be considered in proceedings u/s. 148 of the Act. Hence, the objections raised by the Department against the return dated 31-03-2013 are unsustainable - decided in favour of assessee.
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2018 (12) TMI 975
Suppression of closing stock of gold - Held that:- Even after considering the reconciliation submitted by the learned authorised representative, there remains a difference of 624.33 gms in the quantity of the gold which also needs to be explained and reconciled. Therefore, in the interest of justice, the issue is sent back to the file of the assessing officer with a direction to the assessee to produce before the assessing officer the stock register maintained by the assessee along with the month wise stock statements submitted to the bankers and to demonstrate that the difference in each month is on account of unfixed gold only. The assessing officer is also directed to verify the above details, if produced by the assessee, and decide the issue in accordance with the law after giving proper opportunity of hearing. In the result ground number 1 of the appeal of the revenue is allowed with above direction. Addition applying gross profit rate at the rate of 4.328% on alleged unaccounted sale of diamond jewellery - Held that:- This ground same as above to be restored to the file of the assessing officer for examining the issue afresh in light the evidences which the assessee may submit in this regard and after giving proper opportunity to the assessee before deciding the issue as per law. Addition on account of Sundry Creditors who had not responded to the summons issued u/s 131 - Held that:- Although, the Ld. Sr. Departmental Representative has argued at length that the Ld. CIT (A) has erred in deleting these additions, no factual infirmity or contradiction could be pointed out by her in this regard. We find that the Ld. CIT (A) has reached a logical conclusion in this regard and these factual findings remain un-contradicted. Accordingly, we find no reason to interfere with the findings of the Ld. CIT (A) on this issue and we dismiss ground no. 3 of the department’s appeal. Addition of travelling expenses - Held that:- It is undisputed that the assessee failed to produce documentary evidences in respect of these expenses before both the lower authorities and nor could justify its claim that the expenses has been incurred for purely business purposes. The Ld. CIT (A) has apparently accepted the contentions of the assessee without examining the veracity of the claim in detail. This should not have been done. However, in interest of justice, we deem it appropriate to restore this issue also to the file of the Assessing Officer to examine the issue afresh and direct the assessee to establish beyond reasonable doubt that these expenses were for business purposes. The AO shall afford proper opportunity to the assessee before adjudicating this issue as per law. Accordingly ground stands allowed for statistical purposes. Disallowance u/s 40A(3) on account of salary paid to partners - Held that:- Submissions of the assessee were not properly considered by the lower authorities in this regard. The Authorised Representative has drawn our attention to the submissions/documents which have been filed by the assessee to support the claim that the impugned payments were not against payment of salary but were rather debited to the capital account and were withdrawals of the partners. Apparently both the lower authorities have not considered this aspect of the assessee’s submission. Accordingly, in interest of justice, we deem it fit to restore this issue to the file of the Ld. CIT (A) to verify the claim of the assessee with the books of accounts that the impugned payments were debits to the capital accounts of the partners and were not payments against salary to the partners. Addition under the head ‘business promotion expenses’ - Held that:- AR as drawn our attention to the submissions made before the Ld. CIT (A) in this regard and has submitted that the submissions were not properly considered by the Ld. CIT (A). A perusal of the order of the Ld. CIT (A) also shows that the submissions of the assessee have not been discussed by the Ld. CIT (A) while dismissing the ground. It is our considered opinion that interest of justice would be served if this issue is re-examined by the Ld. CIT (A) after duly considering the submissions made by the assessee Disallowance of sales promotion expenses - expenses were incurred for purchasing tickets for Commonwealth games and the assessee had claimed that this would result in expansion of the client base - Held that:- Authorised Representative has drawn our attention to the detailed submissions made before the Ld. CIT (A) and it is evident that the Ld. CIT (A) has dismissed the assessee’s ground without properly considering the submissions made by the assessee. Accordingly, in our considered view, this issue also needs to be restored to the file of the Ld. CIT (A) for fresh adjudication.
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2018 (12) TMI 974
Addition of profit rate at the rate of 12.5% of the bogus purchases - purchases from grey market - Held that:- Revenue has not doubted the sales carried out of the bogus purchases by the assessee. The assessee also maintain stock tally, payments are made by cheque. But the assessee could not produce delivery challans, lorry receipts, transportation details etc. during the course of assessment proceedings and even now before us. These parties i.e. the seller parties have admitted that they have not made any sale or purchase transaction and in that eventuality only inference can be drawn is that the assessee might have made purchases from grey market and made sales. In this entire process, the assessee might have save the VAT payment and made purchases at a lower rate from grey market. Hence, assessee might have earned higher profit. Accordingly, now the only alternative left with the AO is application of profit rate. The AO has estimated the profit rate @ 12.5%, which is confirmed by the CIT(A) relying on the decision of Hon’ble Gujarat High Court in the case of Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] and Bholenath Poly Fab P. Ltd. [2013 (10) TMI 933 - GUJARAT HIGH COURT]. I find from the facts of the case that the lower authorities have rightly estimated the profit rate @ 12.5% & which is quite reasonable. - Decided against assessee.
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2018 (12) TMI 973
Addition to bogus purchases - information from the Sales Tax Department of Maharashtra that the said concern, M/s. Amar Enterprise figures in the list of hawala dealers - Held that:- While the orders of the authorities below reveal that the purchases were not properly substantiated by the assessee, but it also reflects the plea of the assessee that the material corresponding to such invoices has been used by the assessee for business - corresponding sales of the products have not been doubted. As case of Simit P. Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) comes into play whereby it has been inferred that under such circumstances, the reasonable inference is that assessee had indeed effected the purchases, but not from the stated concern. In this case, assessee had canvassed that the impugned purchases was of essential raw materials which was consumed in the business of offset and plate processing. What is required to be added to the returned income is the savings effected by the assessee by making such purchases not from the stated concern, but from undeclared source in the grey market. Considering these aspects, in our view, it would be in the fitness of things that 12.5% of the impugned purchases be considered as an addition required to be made to the returned income in order to plug the leakage of revenue - thus restrict the addition to 12.5% of the impugned purchases and delete the balance. - decided partly in favour of assessee.
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2018 (12) TMI 972
Addition u/s 68 - assessee has not substantiated the genuineness of fresh share capital and share premium applied for and allotted by the assessee company - Held that:- As decided in ITO, WARD-13 (1) , KOLKATA VERSUS M/S ANAND ENTERPRISES LTD. [2018 (9) TMI 1779 - ITAT KOLKATA] AO had erroneously invoked the provisions of section 68 of the Act to the facts of the instant case, which, in our considered opinion, are not at all applicable herein. This is a simple case of acquiring shares of certain companies from certain shareholders without paying any cash consideration and instead the consideration was settled through issuance of shares to the respective parties. In the balance sheet of the assessee company in the schedule to share capital, it is very clearly mentioned by way of note that the fresh share capital was raised during the year for consideration other than cash. Hence we hold that provision of section 68 of the Act are not applicable in the instant case and accordingly the entire addition deserves to be deleted - decided in favour of assessee.
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2018 (12) TMI 971
Addition u/s 68 - bogus purchase of shares - paper transactions - genuineness of purchase of shares - Held that:- The gain on sale of earlier investment has been reflected by the assessee in his return of income for AY 2004-05 and the same has been accepted by the revenue. In support of genuineness of purchase of impugned shares, the assessee has placed on record contract note, relevant share certificate, statement of demat holding on various dates. The perusal of the share certificate reveal that the said shares were transferred in assessee’s name and the said shares were subsequently converted into demat form which is evidenced by the statement of demat holding as on 31/05/2004. The cost of these shares has been reflected in assessee’s Balance Sheet for the financial year 2003-04. All the aforesaid facts lead us to conclude that the assessee, in fact, acquired the share at some point of time and the said transactions were not mere paper transactions. Nothing on record suggest that any cash transactions got exchanged between the assessee and the share broker - assessee invested the entire gains in purchase of new house property - So far as the huge rise in the sale price of the shares is concerned, it is trite law that the additions could not be made merely on the basis of suspicion, conjectures or surmises. Nothing on record suggest that the assessee, in any manner, collided with his share broker to manipulate the price of the stated shares. - addition deleted - decided in favour of assessee. Eligibility of claim u/s 54F - claim denied only on the premise that the possession of the flat could not be obtained by the assessee within stipulated period of time - Held that:- No ground to deny the deduction particularly when the assessee has acquired certain rights in the property and has appropriated the capital gains towards the same and fulfilled all the other conditions as envisaged by Section 54F. The assessee could not be penalized for delays in the construction which is a common feature of the industry. Therefore, we hold that the assessee was entitled for deduction u/s 54F. AO is directed to allow the same. - decided in favour of assessee. Addition on account of low household expenses are concerned, we concur with the stand of lower authorities, in this regard and therefore, dismiss this ground of assessee’s appeal.
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2018 (12) TMI 970
Deemed income - unexplained money/investment toward acquisition cost of AGA through GPOA - transfer of a gas agency - Valuation of business - taxability of the impugned sum in the assessee’s hands - Held that:- Circumstantial evidence constitutes a good ground for inference as to ownership of an asset, i.e., of belonging to the assessee, or investment therein by him (C.K. Sudhakaran v. CIT [2005 (9) TMI 68 - KERALA HIGH COURT]), the other, overwhelming inference that arises is of the assessee being, on the contrary, a front man for others. The money, after all, could directly have exchanged hands between the owner and the Vendees. The amount disclosed as salary income could well be the commission income allowed to him for being an attorney, or for acting as a conduit of funds. The Revenue has not caused proper verification or an investigation into the facts, with the ld. CIT(A), rather than completing the process initiated by the AO, merely proceeded by, as it were, blaming the AO, whose efforts were hampered by the lack of proper assistance by the assessee, constraining him to draw inferences on the basis of the material before/information available with him. Taxability of the impugned sum in the assessee’s hands is dependent on the basic facts, including the transfer of the gas agency itself, yet unascertained, the primary onus to lead which is on the assessee. No fetters are placed on either side, even as the burden to prove his return, and the claims preferred thereby, is on the assessee, who in the present case is in receipt of money [CIT v. Calcutta Agency Ltd. [1950 (12) TMI 4 - SUPREME COURT] and CIT v. R. Venkata Swamy Naidu [1956 (2) TMI 3 - SUPREME COURT]. The AO shall adjudicate afresh, issuing definite findings of fact, in accordance with law, and after allowing the assessee proper opportunity to state his case. The matter, accordingly, setting aside the impugned order, is restored to the file of the AO for the purpose. Revenue’s appeal is allowed for statistical purposes.
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2018 (12) TMI 968
Reopening of assessment u/s 147 - change of opinion - entitled to benefit of section 12A - Held that:- The assessee furnished audited financial statement for the year ending 31/03/2008, computation of total income and other relevant material for making its claim. It is not the case that any new tangible material came to the notice of the AO at the later stage. Rather, it is a case, where the AO incorrectly applied the provision of the Act, therefore, on the same set of facts/claim, merely on the basis of “change of Opinion” the completed assessment under section 143(3) is not permissible. It is noteworthy that at the relevant time, the assessee was entitled to benefit of section 12A of the Act, therefore, from this angle also, AO was not within the legal parameters to reopen the completed assessment. Thus, so far as, reopening is concerned, we are of the view that it was wrongly reopened, consequently, this ground of the assessee is allowed
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Benami Property
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2018 (12) TMI 969
Benami transactions - receipt of advance salary - attachment orders - Initiating Officer held the chairman to be the beneficial owner and 49 employees of these colleges as benamidars thereafter attaching the salary bank accounts of these employees up to the value of the alleged benami property - Held that:- In the present case, the property, i.e. the money involved in the transaction is mostly with the Income Tax Authorities. The Respondents have admitted that they have attached the value of the amount held as benami property which is impermissible under the Act. The said attachment would amount to double attachment which is an illegal usurpation of property. Such provisions of value thereof are not available in the Benami Act. Every transaction where cash is paid to person in lieu of a future promise cannot be a benami transaction as there is no lending of name. There can be no benami transaction if the future benefit is due from the person who is also the holder of property. Using a juxtaposition in the definition as per 2 (9) A, where the money is transferred to, or is held by, a lecturer, and the consideration for such money has been provided, or paid by, another person ; In the present case, all the appellants have never held the movable property or the same was registered in their respective banks. The attachment in the present appeals are not effected under the PMLA, 2002, though the members of Adjudicating Authority, PMLA, 2002 are also now dealing with the cases under the Benami Act, but majority of the cases are being decided by these members under the PML Act, 2002. It is an expert authority as claimed. The provision of Section 2(u) of PMLA is not applicable. It was rightly argued by Shri Anirudh Bakhru, learned counsel for the appellant that once the entire salary advance was returned back to the Trust, the question of Appellant depositing any amount out of it in his bank account did not arise. Therefore, there was no benami property lying in the Bank account of the Appellant which has been attached. There is no denial on behalf of respondent that no such amount was ever deposited in the bank, the IO went ahead and issued a Provisional Attachment order under sub-section (3) of section 24 of the Act for provisionally attaching the aforesaid Indian bank account of the Appellant by completely disregarding the facts recorded in the sworn statement of the Appellant and his reply to the show cause notice. The only material present with the initiating officer were sworn statements. These statements only disclose a receipt of cash. This is insufficient to construe the existence of a benami transaction.These statements would show that the money in question was no longer with the college staff and was either returned or spent and could not have been attached. Insufficient proof to establish a benami transaction.
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Customs
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2018 (12) TMI 960
Time Limitation - short levy of duty on the imported goods due to willful mis-declaration and suppression of facts and on the strength of forged documents - whether the finding of the CESTAT that the demand was barred by limitation is sustainable or not? - Held that:- The authorities have sufficiently described the wrong transactions and the allegedly illegal benefit obtained by the importers in respect of the rate of duty, from paragraph 43 onwards in the said show cause notice. Undoubtedly, if the importers will be entitled to demonstrate that the allegations against them cannot be established on the basis of the show cause notice, that however does not entitle them to the relief of setting aside of the order against them on the ground of limitation - appeal allowed - Matter restored before the CESTAT.
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2018 (12) TMI 959
Maintainability of appeal - jurisdiction - issue regarding rate of duty - Section 130 of the Act - Held that:- This is a classic case of rate of duty and by virtue of exclusion provided in Section 130 of the Act, this Court would not have jurisdiction to entertain such appeal. As the issue relates to rate of duty by virtue of Section 9A(8) of the Tariff Act read with Section 130 of the Act, the appellant-Revenue would have to approach the Hon'ble Supreme Court in terms of Section 130 E of the Act - appeal disposed off.
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2018 (12) TMI 958
Forged DEPB license - finalization of assessment of Bills of Entry - Section 82 of Customs Act, 1962 - Held that:- In the instant case the assessments were provisional and at the time of finalization it was brought to the light that the DEPB scrips were forged having known the fact the department cannot put the Revenue at loss due to the argument that the importer was a bona fide transferee of the scrips and was not having any knowledge of the forgery etc., in respect of the scrips. In respect of DEPB scrips, Tribunal and Courts have been consistently holding that the forged DEPBs are ab initio non est. There is no infirmity with the order passed by the Commissioner (A) and that the appeal does not survive - appeal dismissed - decided against appellant.
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2018 (12) TMI 957
Violation of import condition - actual user condition - N/N. 97/2004-Cus dated 17-9-2004 - whether the appellants were actual users in terms of Notification No 97/2004-CUS dated 17.09.2004 and as to whether they have violated any of the conditions of the Notification so as to be ineligible for the exemption claimed on the impugned goods? Held that:- The licenses were obtained disclosing to the DGFT authorities that they were manufacturer exporter. For being a manufacturer, the appellants should be owners/lessee of the mines or get the ore mined with the help of job workers. The appellant s case doesn t fall under either of these categories. Even if one accepts the argument of the appellants that mining is an activity that amounts to manufacture for the purposes of FTP, the essential condition should be that they are owners of the product even if they get the same manufactured with the help of a job worker. In the instant case the onus for establishing their claimed status of being a manufacturer exporter and fulfilling the conditions of the licence obtained is squarely on the appellants. The status of the appellant decides the eligibility to the Licences. It is not the appellant s case that their status as a manufacturer exporter was fixed by the authorities. It was accorded as per their own declarations. Therefore, it is to be observed that the appellants have not passed the eligibility criteria to lay claim for the benefit of the exemption claimed. The actual user (Industrial) definition as per Para 9.4 of the FTP during the relevant period means a person who utilses the imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit . Thus, the appellant having obtained the Licenses under the said category as Manufacturer exporter had to fall within this stipulated definition of actual user and as noticed from his activities has failed to comply with this requirement as he has neither used it in his own premises or in a job worker premises for his own use. They are in fact Job worker for M/s OMC who have at no point of time parted with the ownership of either the premises or the product to the appellants - by no stretch of imagination the appellants can be treated as manufacturer exporter. As discussed above, they have suppressed the facts in the course of obtaining the licences. Therefore, they have violated the eligibility criterion of the Licences and thus violated the provisions of Notification 97/2004 and there is no ambiguity in the language of Notification or the policy. There is no ambiguity in the Customs Notification, FTP and Licences issued thereunder, the terms have to be strictly interpreted as per the plain wordings thereof. This being the case, by obtaining Licences by way of misrepresentation of the status being that of a manufacturer and not complying with the conditions of Licences or Customs Notification do not confer any benefit to the appellants for concessional rate of duty - As the conditions of the Notification have been violated, the appellants have rendered the imported goods liable for confiscation under Section 111(o) of Customs Act, 1962. Penalty u/s 114A and Section 114AA of Customs Act, 1962 - Held that:- Notification does not provide for levy of penalty. When confiscation and demand of duty is on account of violations of conditions of the Notification, one need not traverse beyond the Notification for the purpose of demand of duty and imposition of penalty - the penalty imposed on the main appellants i.e., M/s. KCC is not maintainable. Appeal allowed in part.
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Corporate Laws
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2018 (12) TMI 964
Dissolution of company - possibility to proceed with the winding up for want of fund and assets - Held that:- Having heard the learned advocate for the Official Liquidator and on perusal of the record of this Report and in facts of this case and considering the ratio laid down by the Hon'ble Apex Court in the case of Meghal Homes Pvt. Ltd. [2007 (8) TMI 447 - SUPREME COURT OF INDIA], the Report deserves to be accepted. The company viz. M/s. Gujarat Taxfeb Private Limited is hereby dissolved under Section 481 of the Companies Act and the Official Liquidator attached to this Court stands discharged and is relieved as liquidator of M/s. Gujarat Taxfeb Private Limited. Accordingly, Report is allowed
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2018 (12) TMI 963
CLB power to pass orders u/s 10 CPC - Held that:- Whether the acts committed by respondent No.2 would be dealt with as the acts in pursuance to the MOU or qua oppression to cause prejudice to the petitioner and the Company. If the acts noticed were independent of the MOU executed, then the allegations would squarely fall within Sections 397 and 398 of the Companies Act, 1956. If not, then it would be mere breach of the MOU and would not be covered under Sections 397 and 398 of the Companies Act. Tribunal further held that if tomorrow this court were to uphold the validity of the MOU in the suit, then the appellant would obviously not be entitled to any reliefs sought now. Based on these aspects, the Tribunal held that the subject matter before this court in the suit and before the Tribunal was the same and the parties were the same. Hence, the Tribunal exercised its discretion and stayed further proceeding in the petition. It is clear from the nature of pleadings in the petition and in the suit that there is commonality of facts running through two matters. The crux of the issue is the MOU dated 09.11.2011 under which the parties have taken steps. If the MOU is upheld, the steps taken by respondent No. 2 would be in terms of the MOU. If for some reason the MOU is struck down then the issue about oppression and mismanagement would arise for consideration. The issue of legality and validity of the MOU dated 9.11.2011 is pending in the civil suit. The impugned order has rightly stayed the proceedings before the CLB under principles akin to section 10 of CPC. The view taken in the impugned order appears to be a plausible view. Accordingly, no reason to interfere in the present appeal
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2018 (12) TMI 962
Winding up petition - Held that:- The person acknowledging should have an interest which would suffer by the acknowledgement at the time it is made. There should be a jural relationship between him and the person who is making the admission. An acknowledgement by a stranger does not amount to acknowledgement of debt. This judgment would not help the respondent in view of what I have held above i.e. the Acknowledgement of debt is vide the Scheme of demerger approved on 16.12.2011 and the payment received by the petitioner on 25.1.2012. Hence, the debt is due and payable by the respondent company to the petitioner. Submission of the respondent that the products that were delivered/supplied by the petitioner were rusted and defective and hence on merit also no debt is due and payable to the petitioner is baseless keeping in view the clear cut acknowledgement made as noted above, the respondent/ the predecessor-in interest of the respondent who would not have been acknowledging the debt due if defective products have been supplied. There is no merit in the defence of the respondent. Accordingly, the petition is admitted and the Official Liquidator attached to this Court is appointed as the Provisional Liquidator. He is directed to take over all the assets, books of accounts and records of the respondent-company forthwith. The citations be published in newspapers accordingly.
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2018 (12) TMI 961
Compounding of the offence under Section 441 of the Companies Act, 2013 - whether this Tribunal has jurisdiction to consider this application? - Held that:- Applicant alleged to have committed the offence under Section 165(1) and 165(3) of the Companies Act, 2013 within jurisdiction of Special Judge (Commercial Court) Bangalore. Ld. Special Judge at Bangalore is dealing with criminal case against the applicant. This Tribunal cannot get jurisdiction to consider the application for compounding of the offence against the applicant only because he shifted registered offices of some of his companies from Bangalore to Kolkata. This application for compounding of the offence for which trial is pending before Special Judge (Commercial Court) Bangalore is not maintainable before this Tribunal at Kolkata. Apart form above, this application is not maintainable for other reasons. Section 3(a) of Section 441 states that every application under this Section shall be made to the Registrar who shall forward the same together with his comments to the Tribunal. In this case, this application is filed before this Tribunal by the applicant only and it has not been forwarded by the ROC. Sub-Section 6(a) of Section 441 of the Act also makes it clear that any offence which is punishable under this Act, with imprisonment or fine or both shall be compoundable with permission of the Special Court. In this case, no such permission from the Special Court is on record. For this reason also, the application is not maintainable.
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Insolvency & Bankruptcy
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2018 (12) TMI 967
Corporate Insolvency Resolution Process (CIRP) - default in payment - Held that:- This Company Petition is complete in all respects as mentioned u/s 8 and 9 of the Insolvency & Bankruptcy Code, Corporate Debtor defaulted in making payment of ₹30,51,543.30/-, as on 28.04.2017, after receiving of Demand Notice no dispute has been raised, henceforth it is hereby admitted.
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2018 (12) TMI 966
Corporate Insolvency Resolution Process (CIRP) - existence of a dispute - Held that:- There is a dispute, about the unpaid operational debt, between the parties which is supported by abundant evidence. This dispute existed before the serving of demand notice under section 8, and the Operational Creditor had notice of existence of such dispute. Further, this dispute truly exists in fact and is not spurious, hypothetical or illusory, as has been stated in the judgment of the Hon’ble Supreme Court in Mobliox case (2017 (9) TMI 1270 - SUPREME COURT OF INDIA). For the reasons mentioned above, we hereby reject this petition as, under section 9(5)(2)(d), the notice of dispute has been received by the Operational Creditor.
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2018 (12) TMI 965
Corporate insolvency process - ) Whether the amount claimed by the Financial Creditors is an Investment or it is an amount advanced as a Loan? - Whether the amount claimed by the Financial Creditors is discharged as on date or is still in continuance? - Held that:- ‘The amount advanced by the Financial Creditors is an amount advanced as Loan’. Moreover the Debtor has not made out a case of disbursement of any ‘Dividend’ or ‘Profit’ so as to demonstrate the impugned transaction at all related to an Investment. Though there is pending dispute, prior to institution of the Petition U/s. 7 of the Code, the Adjudicating Authority need not to look into that dispute for the adjudication of the S. 7 Petition. In this case, the Bench has also perused the Orders of the Hon’ble Bombay High Court in the said Civil Suit and noticed that the Hon’ble Bombay High Court, in any way, has not restricted this Bench from proceeding in this case. At the cost of repetition, the issues in that Suit are altogether different and do not relate the question of default in repayment of an admitted Financial Debt. As far as the question of the ‘default’ is concerned, it has already been established supra. Hence, to conclude the discussion it can be stated that the Petition under Adjudication deserves Admission. The facts of the case have already established that the amount claimed is ‘Financial Debt’ as defined U/s. 5 (8) of the Code and there is a Default in the re-payment of the Debt as defined U/s. 3 (12) of the Code. As a consequence, keeping admitted facts in mind that the Financial Creditor had not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Financial Creditor the Bench is of the conscientious view that this Petition deserves ‘Admission’.
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Service Tax
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2018 (12) TMI 955
Business Auxiliary Services - appellants received certain commission on an agreed basis from the hotels on the payment made by the customers - Held that:- The appellants are suggesting the names of the hotels to their customers to whom they are also booking travelling facilities and arranging for the itineraries. The appellants are receiving certain amounts from the hotels on the event of the customers checking into the hotels and paying room rents, etc. This activity certainly falls in the category of Promotion or Marketing of service provided by the client . The definition of Promotion and Marketing submitted by the appellants relying on Webster s Dictionary would not be of any help to them in view of the categorical and clear mention of Promotion or Marketing of service under Business Auxiliary Services - appeal dismissed - decided against appellant.
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2018 (12) TMI 954
Valuation - inclusion of value received by the individual cable operators - clubbing the value of services provided by the individual cable operators - Held that:- The appellants formed an association and have registered themselves, as MSO/cable operators and have paid part of the tax liability. The demand of service tax is not only based on the statement of the Managing Partner but is also based on the records / registers retrieved during the investigation. Therefore, we find that there is no merit in the submissions made by the appellants. The demand is confirmed and penalty under Section 76 is set aside and other portions of the order are upheld - appeal allowed in part.
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2018 (12) TMI 953
Construction of Commercial or Industrial Complex Service - Construction of Residential Complex Service - period from November 2004 to May 2007 - period from February 2007 to September 2007 - Held that:- The liability of service tax in respect of the impugned services came to be tested in the case of M/s. Real Value Promoters Pvt. Ltd. [2018 (9) TMI 1149 - CESTAT CHENNAI], where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service. For the period after 1.6.2007, service tax liability under category of ‘commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, ‘Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 952
Interpretation of statute - Cargo Handling Service - scope of the service - Held that:- Admittedly, the word ‘cargo’ is not defined under the Act. The discussion of the adjudicating authority in the Order-in-Original makes it clear that as per the work order issued by M/s. CCCL to the assessee, the work assigned was handling of materials as per directions of M/s. CCCL within the factory premises of M/s. CCCL for loading raw materials such as coal and slag on to tippers for transportation. The above activity undertaken by the assessee is clearly on the goods as part of the production process. The impugned service in the case on hand will not fall within the fold of Cargo handling Service since admittedly, the assessee was only assisting in loading raw materials and is not involved in the transportation of any final products as transportation is a must in the case of Cargo Handling. The mere supply of men and materials per se coupled with the scope of work which limited to the work assigned by M/s. CCCL inside the factory premises, cannot be considered to be a service under Section 65 (23) ibid - appeal dismissed - decided against Revenue.
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2018 (12) TMI 951
Construction services - sub-contract - Construction of Residential Complex Service - demand of tax with interest and penalties - Held that:- The issue decided in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2018 (9) TMI 1149 - CESTAT CHENNAI], where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service. For the period after 1.6.2007, service tax liability under category of ‘commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, ‘Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. The impugned demands made in all these appeals for composite contracts under construction of residential complex instead of works contract cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 950
Recovery of erroneous refund granted - Section 11A of the Central Excise Act, 1944 - Held that:- An identical issue of demand of erroneously granted refund in the same assessee’s case, was the subject matter of Tribunal decision in Commissioner of Central Excise, Customs & Service Tax, Noida V/s M/s Moser Baer Photovoltaic Ltd. & M/s Moser Baer Solar Ltd. [2018 (1) TMI 113 - CESTAT ALLAHABAD] laying down that the assessee was entitled to refund of service tax in terms of N/N. 40/12-ST dated 20.06.2012 - appeal allowed - decided in favor of assessee.
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2018 (12) TMI 949
Demand of interest and penalties - non-payment of service tax - rent received - Held that:- There was delay in dispatch of the Order-in-Original and therefore the demand of interest cannot sustain. This argument is neither tenable nor acceptable. The demand of interest is correct and proper and therefore is upheld. Penalty u/s 78 - Held that:- The appellant had not collected service tax from the tenants and that the matter was remanded by Commissioner (Appeals) to requantify the service tax liability giving cum-tax benefit. Taking note of this fact, it is established that the appellants were under the bonafide belief that they are not liable to pay service tax and were not collecting the service tax from the tenants. Further, there is no evidence to establish that they had suppressed facts with intention to evade payment of service tax - the penalty imposed under section 78 cannot sustain. Penalty u/s 77(2) of FA - non-filing of returns within the stipulated period - Held that:- Since the appellant has later filed the returns and also paid the service tax and taking into consideration that the appellant is a Government wing, the penalty imposed under section 77(2) cannot sustain and requires to be set aside. Appeal allowed in part.
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2018 (12) TMI 948
Extended period of limitation - suppression of value of the services - Section 73 of Finance Act, 1944 - Held that:- The provisions of Section 73 of the Finance Act, 1994 provides for raising of demand only up to 5 years, even if in case of any suppression on the part of the assessee - In the absence of any authority to raise the demand beyond the period of 5 years, the contentions of the learned advocate is agreed and it is held that the demand could have been raised and confirmed only for the period of 5 years from the relevant date. Matter remanded to the Original Adjudicating Authority for quantification of the demand falling within the period of 5 years from the date of issuance of SCN - appeal allowed by way of remand.
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2018 (12) TMI 947
Import of services - Clearing and Forwarding Services (C&F services) - services performed outside India - Rule 3(ii) of the Taxation of Services (provide from outside India and received in India) Rules, 2006 - Reverse charge mechanism - Held that:- There is no dispute that the service is provided outside the territory of India, but the Revenue wants to tax the assessee since it collects sale proceeds in India. But the legislature in its wisdom, has framed Rule 3(ii) to encourage exports and in turn foreign exchange remittances - the activity of the appellant being wholly performed outside India, is excluded from service tax liability as per Rule 3(ii) of the Taxation of Services (provided from outside India and received in India) Rules, 2006. On an identical set of facts this very Bench of the Tribunal in the case of M/s. Bnazrum Agro Export Pvt. Ltd. [2018 (4) TMI 1239 - CESTAT CHENNAI] has held that such activity would not be exigible to service tax by virtue of Rule 3(ii) of the Rules. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 946
Commercial Coaching or Training Service on computer training Service - period of dispute is from 01.07.2004 to 15.06.2005 - demand of service tax - Held that:- Issue decided in the case of M/S GARGI CONSULTANTS PVT. LTD. VERSUS CCE, ALLAHABAD [2013 (5) TMI 695 - CESTAT NEW DELHI], where it was held that a computer training institute is covered by the expression vocational training institute and as such, was exempted from service tax - demand of ₹ 7,13,334/- with interest for the period from 10.09.2004 to 15.06.2005 is set aside on the ground of limitation - However, the demand for the previous period namely from 01.07.2004 to 09.09.2004 amounting to ₹ 1,02,200/- with interest thereon which has already been conceded by the Ld. Advocate, is upheld. Valuation - inclusion of value of course materials for the purpose of arriving at value of taxable service - Held that:- Reliance placed in the case of CHATE COACHING CLASSES PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, AURANGABAD [2012 (6) TMI 721 - CESTAT, MUMBA], where it was held that since the expression is not used in the notification and the fact that the books sold are of another entity, we do not find any reason to deny the benefits of the Notification No.12/2003-ST - the demand of ₹ 45,919/- for supply of study materials for the period 2004-05 and 2005-06 cannot sustain. Franchisee Service - Renting of Immovable Property Service - Demand of service tax - Held that:- the demands of service tax under Franchisee Service amounting to ₹ 1,23,927/- and Renting of Immovable Property Service amounting to ₹ 1,57,598/- with interest have already been conceded by the Ld. Advocate and are therefore upheld. The appellants will be required to pay up these liabilities also with interest thereon. As the demand of ₹ 7,13,334/- for the period 10.09.2004 to 15.06.2005 under Commercial Coaching or Training Service and ₹ 45,919/- in respect of tax liability on value of course materials have been set aside, the penalties under Section 78 ibid is also modified - The total penalty imposed under Section 78 ibid., is therefore required to be reduced/modified to ₹ 3,83,725/-. Appeal allowed in part.
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2018 (12) TMI 945
Classification of services - Club or Association Membership Service or not? - services provided to independent customers and not the members - appellants are engaged in providing various club facilities to their members - Held that:- The appellant is a private limited company which is engaged in operating and managing ‘Palm Meadows’ club and the Members of the said club are not the members in the strict sense but they are customers of the appellant - the Members of the private limited company are different from the customers. The activities carried out by the appellant does not fall in the definition of ‘Club or Association Membership Service’ as provided in Section 65(25a) of the Finance Act, 1994 - Further, the scope of ‘Club or Association Membership Service’ have been discussed and clarified vide Board Letter MD(DR) F No. B1/6/2005-TRU dated 27.7.2005. It is clarified vide the said Circular that any service provided or to be provided to its Members by any Club or Association in relation to provision of services, facilities or advantages for a subscription or any other amount are liable for service tax. In the present case, the service recipients are totally independent person and they are only the customers who avail services of the appellant independently under the scheme formulated by the appellant. Further, the appellants are not paying the service tax on the entrance fee and are paying service tax with regard to all other services provided by them and it has been admitted by the Manager of the Company in its statement recorded during the investigation. The activities carried out on by the appellant does not fall in the definition of ‘Club or Association’ service - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 944
Non-payment of Service Tax - Commercial Coaching and Training Services - period from 1.4.2011 to 31.3.2013 - demand of service tax on other income shown in the balance-sheet for the year 2011-12 relating to various services on which Service Tax not paid invoking the extended period of limitation. Non-payment of Service Tax on commercial coaching and training services for the normal period of limitation - Held that:- The judgment of this Tribunal in appellant own case [2017 (10) TMI 710 - CESTAT MUMBAI] for the period 2006-07 to 2010-11 is squarely applicable, wherein this Tribunal upheld the adjudication order dated 30.3.2013 confirming the levy of Service Tax on the services of awarding Graduate/ PG Diploma relating to design management course by the appellant observing that it is taxable under category commercial coaching and training services - there is no justification or reason in not following the aforesaid finding of the Tribunal in the appellant's own case that the services rendered by the Appellant are in the nature of commercial training or coaching services and leviable service tax for the period in question. Other income shown in the balance-sheet for the year 2011-12 relating to various services on which Service Tax not paid invoking the extended period of limitation - Held that:- All the information available in the balance-sheet under the head 'other income' was available to the department and while issuing the second show-cause but no objection was raised by the Revenue. We find merit in the contention of the Ld. Advocate for the Appellant - invoking longer period of limitation confirming the demand of ₹ 3,88,762/-, on 'other income' is untenable in law, hence, set aside. Penalty u/s 78 - Held that:- Since the preset demand notices were issued as a continuation to the earlier notice invoking larger period of limitation and the present demand notices are for normal period of limitation, therefore, imposition of penalty under Section 78 cannot be sustained against the appellant - penalty u/s 78 set aside. However, penalty and interest imposed under the other provisions of the Finance Act, 1994 are hereby upheld. Appeal allowed in part.
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2018 (12) TMI 943
Condonation of delay of 15 days in filing the appeal - authorized signatory was unavailable - Held that:- The delay is condoned - MA (COD) is allowed.
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2018 (12) TMI 942
Penalty - computer training and coaching services providing by a computer training institute - N/N. 9/2003-Service Tax dated 20.06.2003 & 01/2004- Service Tax dated 04.02.2004 - Held that:- The appellant requests that there was a confusion during the relevant time about the taxability of the services provided by them. These views have been held by various judicial pronouncements that where-ever there was confusion about the taxability of service, the imposition of penalty is not warranted - penalty set aside - appeal allowed in part.
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2018 (12) TMI 941
Failure to discharge service tax - classification of services - supply of tangible goods services or convention services - Circular dated 29.2.2008 - time limitation - Held that:- The sound systems, LCD projector etc. supplied by the appellant used in organizing various events cannot come within the scope of convention service, but correctly falls under the scope of tangible goods service. The learned Commissioner (Appeals) in the impugned order analyzing the circular dated 9.7.2001 recorded its finding in holding that the same is not applicable to the facts of the present case inasmuch as in the said circular, it was clarified that while providing space for holding convention service, any other ancillary services are also provided then such ancillary services cannot in any manner dilute the classification of the services as 'convention service'. Time limitation - Held that:- Since the assessee though registered with Service Tax Department for other services namely, erection commissioning and installations services and paying Service Tax regularly with respect to the said services by filing the ST-3 returns, but never indicated the facts of providing supply of tangible goods services nor disclosed its value to Department, therefore, extended period of limitation is applicable to the appellant's case. In absence of any contrary evidence placed by the appellant rebutting the said findings of the learned Commissioner (Appeals), the impugned order is upheld - appeal dismissed.
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2018 (12) TMI 940
Principles of Natural Justice - CENVAT Credit - case of appellant is that the allegation of department of excess credit availed is imaginary and not supported by any evidence - Held that:- The Commissioner had not considered several aspects and evidences on record. The impugned order is accordingly liable to be set aside - matter remanded to the adjudicating authority to decide the matter afresh and to pass order in accordance with law - appeal allowed by way of remand.
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2018 (12) TMI 934
Abatement claim - receipt of payment after 1.6.2007 - whether the Tribunal was right in allowing the appeals filed by the assessee without verifying the claim of the assessee that they completed the services prior to 01.6.2007 and consequently, they are entitled for abatement? - Held that:- The matters are remanded to the Adjudicating Authority to verify as to whether the assessee is entitled to the benefit of the decision of the Hon’ble Supreme Court in the case of Larsen & Toubro Limited [2015 (8) TMI 749 - SUPREME COURT] and examine as to whether the assessee has completed the services prior to 01.6.2007 though payments were received by the assessee after the said date - appeal allowed by way of remand.
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Central Excise
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2018 (12) TMI 939
Penalty - delayed payment of duty - Held that:- Gujarat High Court in case of Banian & Berry Bearing Pvt. Ltd. Vs. UOI, [2002 (8) TMI 837 - GUJARAT HIGH COURT] observed that marginal delay of 2 to 10 days in making fortnightly payment on stray occasions, should not result into penal consequence. The Court had referred to Latin Maxim providing that minor lapses in law should not be visited with penalty. It is declared that the petitioner shall not have to pay any further amount of penalty - petition disposed off.
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2018 (12) TMI 938
Validity of remand order - Utilization of credit of additional excise duty - Additional Duties of Excise (Goods of Special Importance) Act, 1975 - principles of natural justice - Held that:- We are unable to approve the manner in which the Tribunal has dealt with the appeal before it. There was no further investigation of facts which had to be carried out which could have necessitated remand to the adjudicating authority. When there is no further inquiry necessary to be done, the Tribunal or any appellate authority is not expected to remand the matter to the subordinate authority to decide the issue which the appellant authority can itself decide. It is axiomatic that the orders of this Court are binding upon the Tribunal. In the absence of any higher forum staying the orders of this Court, the Tribunal being an authority within the State of Maharashtra is obliged to follow and implement the decision of this Court. The remand directed by the impugned order of the Tribunal was not justified - substantial question of law is answered in the negative that is in favour of the appellant and against the respondent - appeal restored.
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2018 (12) TMI 937
Stay of operation of an order dated 22.01.2014 - Held that:- It would emerge that the pending appeal before the Tribunal is an offshoot of the earlier order of the Tribunal, which is in challenge in this tax appeal. The appeal before the Tribunal is admitted after the appellant has made the mandatory predeposit. Allowing the Tribunal at this stage to proceed further with the appeal, would duplicate the efforts. If the present appeal of the appellant was to succeed, the orders consequential to the Tribunal's judgment would automatically not survive. The Notice of Motion is disposed of.
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2018 (12) TMI 936
CENVAT Credit - input services - guest houses located next to the factory premises - scope of SCN - Held that:- The term 'input service' contained in CENVAT Credit Rules 2004, contains certain exclusion clause. Clause (C), inter alia, excludes travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily, for personal use or consumption of any employee. Accordingly, if the guest houses were utilized by the Assessee for extending benefit to the employees, for the personal use or consumption, the Assessee was not entitled to avail CENVAT credit thereof. Even in relation to a guest house which may not have been situated close to the manufacturing unit of the Assessee, if it is pointed out that the use thereof was not for the personal use or consumption of the employees, exclusion clause in the definition of input service, may not apply. In the circumstances, while the Tribunal has already remanded the issue for fresh consideration, we do not interfere with the remand order. Appeal disposed off.
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2018 (12) TMI 935
Pre-deposit - It is the case of the petitioner that due to financial constraints, it could not deposit the aforesaid amount of ₹ 25 lacs within the stipulated period - Held that:- This Court cannot lose sight of the fact that an appeal under Section 35G of the Act of 1944 lies against the order of the CESTAT before this Court and the petition under Article 226 of the Constitution of India is not proper remedy. The petitioner having filed an appeal before this Court against the earlier order dated 13.05.2005 of the Tribunal cannot circumvent such course or remedy. The present writ petition laying challenge to the order passed by the CESTAT way back on 07.02.2012, is apparently a subterfuge to overcome the hurdle of limitation which stands expired six years ago - petition not maintainable and is dismissed.
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2018 (12) TMI 933
Condonation of delay of 25 days in filing appeal - appeal rejected only on the reason that the said appeal was filed beyond the period as prescribed under the relevant statute - Held that:- Since the first respondent has rejected the appeal only on the reason that the same was time barred, without expressing any view on the merits of the matter, the valuable statutory right of appeal provided to the petitioner cannot be denied on the simple reason that the said appeal was filed with meagre delay of 25 days. This Court is inclined to set aside the impugned order and remit the matter back to the first respondent to consider the appeal and pass orders on the same in accordance with law - Appeal allowed by way of remand.
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2018 (12) TMI 932
CENVAT Credit - duty paying invoices - denial on the ground that the subject invoices are debit notes which are not eligible documents for availing CENVAT credit in terms of Rule 9(1) of CENVAT Credit Rules, 2004 - Held that:- The Hon’ble High Court of Rajasthan in the case of Bharati Hexacom Limited [2018 (6) TMI 435 - RAJASTHAN HIGH COURT] held that CENVAT credit can be availed on the basis of debit notes. This is a binding legal precedent, ratio of which applies to the present case. Denial of credit also on the ground that the appellant had not submitted debit notes before him - Held that:- Copies of these debit notes have now been enclosed in the paper book submitted by the appellant which contains all the relevant details. The service tax amount has been indicated in pen in these four debit notes but that should not be a limitation for availing of CENVAT credit and there is no requirement in the CCR 2004 that all the details of the invoice should be printed on a computer. There is no allegation in the show cause notice that service tax has not been paid by the service provider - credit allowed. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 931
Valuation - includibility of cost of ‘prototype’ in assessable value - the value assigned to the scrap arising from the conversion process that was retained by the appellant and the percentage of ‘scrap’ adopted - Held that:- It is not clear whether the prototype is subjected to testing within the factory of the appellant or elsewhere. Similarly, it is not ascertainable if the prototype is assembled in the premises of the appellant or at another location after clearance of the disassembled parts. In the absence of any such evidence, it is impossible to crystallise the leviability of duty, if at all. It was in almost identical circumstance that the Tribunal held in Commissioner of Central Excise, Mumbai – II v. Jyoti Structures Ltd [2004 (5) TMI 358 - CESTAT, NEW DELHI] that ‘destruction testing’ erases the prototype out of existence and, thereby, of dutiability. The various elements of the ascertained assessable value suffer from infirmities - To determine any deficit in the value adopted for assessment in comparison with the price declared as per the contract, the exercise requires to be carried out afresh in the light of our observations on these elements - matter remanded back to the original authority to re-determine the acceptability of the declared price for assessment and the duty liability, if any, arising from unaccounted value of these elements - appeal allowed by way of remand.
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2018 (12) TMI 930
Extended period of limitation - misdeclaration of method of manufacture of NIVARON 90 - suppression of facts - whether the date of inspection by departmental officers at the unit of the appellant has any bearing in deciding the period of limitation when issuing SCNs in the proceedings initiated against the latter? Held that:- The visit of the officers on 11.11.93 was only the starting point of the investigation. It cannot therefore be said that just because officers visited the premises of the appellant on 11.11.93, the department has automatically come to know about the alleged modus operandi as reflected in the SCN dt. 17.5.96. It is but evident that only after analysis and study of the documents seized under Mahazar on the date of visit, and subsequently has the department acquired reasonable belief that the appellant had, as indicated in para 3.0 of the SCN, filed wrong / false declarations; removed medicaments without payment of duty; no Central Excise Gate Passes were issued for removal of the excisable goods and no price lists were filed and no statutory accounts were maintained for the manufacture and clearance of goods. The date of inspection of 11.11.1993 will not have any bearing for being considered as the relevant date for issue of SCN within the period of limitation. The demand is not time-barred and the charge of suppression has been rightly held to have been proved by the authorities below - appeal dismissed.
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2018 (12) TMI 929
CENVAT Credit - input services - services received by appellant from their authorized service stations with regard to free after sale services and repairs etc. of warranty period - Held that:- The matter is no longer res-integra as this Tribunal in the case of Carrier Airconditioning & Refrigeration Ltd. vs. CCE, Gurgaon [2016 (3) TMI 124 - CESTAT NEW DELHI] has already held that services provided by the authorized representative/ service stations are on behalf of the manufacturer and the service tax paid on availment of such services by the manufacturer, they are entitled for Cenvat credit of such input services. Thus, since the value of free after sale services and the warranty period repairs and maintenance are already included in the assessable value of the two wheelers, the service tax paid on availment of such input services by the manufacturer from their authorized representatives the appellant/assessee is entitled for credit of such input services. CENVAT Credit - input services - service tax paid on the commission for procuring the advertisement services - Held that:- The activity of hiring of print media agent for ultimate purpose of advertising is very much part of advertising service and since the advertisement charges forms the part of assessable value of the appellants finished product any cost incurred and services availed in this regard form the part of assessable value and thus the appellant is entitled for credit of such input services - the appellant are legally entitled to avail input service credit of the service tax paid by them on the commission charged by the print media agent for advertising their advertisement material into various newspapers. CENVAT Credit - input services - renting of infrastructural facilities from M/s Honda Siel Car Pvt. Ltd. - Held that:- Common facilities availed by the appellant on rent basis are in „relation to the manufacture of goods‟ and then on integral part of overall activity of manufacturing - also since the charges of rent/license fee paid by the appellant must have been included in the cost of the finished product manufactured by the appellant as per the provisions of Cenvat Credit Rules they are entitled for credit of service tax paid by them as the facilities were in relation to manufacturing of their finished product - the appellant has rightly availed Cenvat credit of service tax paid on rent of infrastructural facilities. Extended period of limitation - Held that:- Since all the material facts have always been available with the Department and the appellant have been audited by the Department on the regular intervals during the period of demand, the necessary element for invoking the extended time period of 5 years for demanding reversal of the Cenvat credit are not available in the present case - demand is barred by period of limitation. The penalties imposed under Rule 26 of the Cenvat Credit Rules on the appellants who are paid employees of the main appellant is not warranted. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 928
Clandestine removal - the entries made in the private records when compared with the statutory records were found to be missing from the statutory records - Held that:- The entire case of the Revenue is based upon these records, without there being any further corroboration as regards the receipt of the raw material or the actual manufacturer of the boilers or the actual identification of the transporters and the buyers and evidences showing receipt of the same in cash from their customers. The allegation of clandestine removal are required to be established by producing sufficient evidences or at least evidences to the extent which inspires confidence in the Revenue’s allegations of clandestine removal. Undervaluation - Held that:- The onus to prove is on the Revenue, who is alleging to the contrary. The said allegations were upheld on the basis of mere assumption and presumption. Further the appellants have also claimed the benefit of small scale exemption notification which the Commissioner (Appeals) has observed that though the clearances are well within the prescribed limit but the appellant have failed to give progressive value of clearances on various dates when different effective rates have to be applied for working out the duty liabilities. Having held that there is no evidence of either clandestine removal or under valuation, there are no merits in the impugned orders - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 927
Recovery of CENVAT Credit utilized on inputs and capital goods - It is the case of the Revenue that Sl. No. 90 of Notification 04/2006-CE being absolute in nature, the assessee ought to have availed the same and had no option to pay duty as per Sl. No. 91 of the above Notification - whether the disallowance of CENVAT Credit to the tune of ₹ 51,35,255/- and consequent demand of penalty under Rule 15(2) is justifiable? Held that:- This Bench had occasion to decide a similar issue, in the case of M/s. Sripathi Paper & Boards Vs. C.C.E. & S.T., Tirunelveli [2018 (9) TMI 891 - CESTAT CHENNAI], where it was held that A bare reading of Sl.No. 90 of the Notification, it is found that the same is controlled by the condition No. 10. While the rate of duty on the goods described at Sl.No. 90 are ‘nil’ ie., exempted, the goods at Sl.No. 91 are taxed at 4%; Sl.No. 90 is controlled by condition No. 10 whereas Sl.No. 91 is controlled by condition No. 11. The absolute exemption Notification, N/N. 29/2004-CE dated 09.07.2004 as amended by Notification No. 58/2008-CE dated 07.12.2008 and another Notification No. 59/2008-CE dated 07.12.2008, referred to emanates is mandatorily required to be availed by the assessee, whereas, the exemption Notification No. 04/2006 in the case on hand, provides two options with different duty liabilities and different conditionalities. The said Notification thus is an optional one in the hands of the assessee and is not an absolute exemption Notification. Appeal dismissed - decided against Revenue.
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2018 (12) TMI 926
CENVAT Credit - duty paying invoices - invoices issued by M/s Abhay Kumar Awasthi did not reflect the name of the appellant - extended period of limitation - Held that:- Though the Lower Authorities have observed that the appellants have not proved beyond doubt the receipt of the services but appreciating the assessee’s stand that the same stand reflected in their books of account and there being no objection to that effect in the show cause notice, it has to be held that appellant was entitled to avail said credit. Time Limitation - Held that:- The demand is barred by limitation inasmuch as the appellants were regularly filing returns and were reflecting the said credit in which case demand raised beyond the normal period has to be held as barred by limitation - demand set aside. Demand of Interest - Held that:- As the said interest is in respect of the differential duty paid by the appellant in respect of price escalation and in terms of various decisions is required to be paid. However, as per the settled law the limitation aspect would be applicable to the interest demand also - the invoice date on which differential duty was paid by the assessee is not available, it is deemed fit to remand the said aspect to the Original Adjudicating Authority for deciding on the limitation. Penalty - Held that:- The payment of interest on the differential duty being a technical issue when all the aspects were known to the Revenue, no mala fide can be attributed to them so as to invoke penal provisions - penalty set aside. Appeal allowed by way of remand.
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2018 (12) TMI 925
Reversal of CENVAT Credit - Rule 6(3) of the CENVAT Credit Rules - It is the case of the Revenue that the appellant had contravened Rule 6(3) of the CENVAT Credit Rules, 2004 in as much as they had not discharged the liability of payment of 10% of the value of exempted goods cleared to the SEZ Developers - Held that:- In the case of Fosroc Chemicals (India) Pvt. Ltd. [2014 (9) TMI 633 - KARNATAKA HIGH COURT], it is found that the Hon’ble jurisdictional High Court after considering the rival contentions as well as the decisions of various judicial fora, has held that the amendment to Rule 6 vide N/N. 50/2008 dated 31.12.2008 shall have retrospective effect. The impugned demand is unsustainable - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 924
CENVAT Credit - MS Sheets used exclusively in the manufacture of exempted PCC pipes - benefit of adjustment of the amount reversed by them - Held that:- The appellant is liable to reverse the CENVAT Credit, however, the amount of ₹ 21,48,550/- already paid by them being over and above the amount of Credit disallowed, the same is required to be adjusted from the amount already reversed as above. Therefore, we deem it fit to remand the matter for the limited purpose of re-quantification of demand on this issue alone after giving adjustment of the amount already reversed by the appellant - there being no suppression of facts, penalty set aside - matter on remand. Classification of goods - MS Specials/Flanges and Tees cleared as pipes falling under Chapter Heading 7305 - Department has alleged that the same are pipe fittings falling under Chapter Heading 7307 - Short payment of duty - appellant had cleared a dutiable final product upon payment as per Rule 6(3)(b) - N/N. 23/2004-CE (NT) dated 10.09.2004 - Held that:- Appellant has conceded the same and the respective demands have already been paid by the assessee. Penalties - Held that:- There is no whisper of any allegation of suppression of facts with intention to evade payment of duty or invocation of any provision pertaining to extended period in the Show Cause Notice - there is no positive evidence to indicate suppression of facts with intention to evade payment of duty and thus the ingredients for invocation of extended period are not present in the case on hand - Penalties set aside. Appeal allowed in part - part matter on remand.
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2018 (12) TMI 923
CENVAT Credit - inputs - bought out items - certain items which are brought into the factory by the appellant and cleared along with the final product which was exported to Vietnam - Held that:- The very same issue has been analyzed in the case of KCP Ltd. [2018 (12) TMI 845 - CESTAT CHENNAI] and the Tribunal has held that the credit to be eligible - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 922
Interest on delayed refund - relevant date - whether the date of refund application as required in Section 11B of the Customs Act has to be the date of application on which it has been filed or it has to be the date on which the deficiencies in the application got corrected? Held that:- When even read with Section 11BB of Central Excise Act that for the payment of interest after three months from the date of receipt of refund application, the applicant shall be entitled for the interest at the rate as prescribed. The provision is nowhere expressing about application to be called so only in case it is supported by the requisite documents - The law has been settled that the fiscal legislation has to be construed strictly and one has to look merely at what is said in the relevant provision. It is also apparent from record that the deficiency, whatever, noticed in the application was informed to the applicant after 15 days. It is Department s acknowledged case that the application was filed on 15.03.2017 and the copy of the Final Order was asked from the applicant vide the Department s letter dated 30.03.2017 - the statute is not making any distinction in the date of receipt of application from that of the receipt of the application complete in all respect. The explanation as relied upon by Commissioner (Appeals) of some Custom Refund Regulations cannot supersede the statute and the mandate thereof in the Section 11B and 11BB of the Central Excise Act, 1944. Appeal allowed - decided in favor of appellant.
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2018 (12) TMI 921
100% EOU - Irregular CENVAT Credit - it was alleged that appellant had availed excess credit of ₹ 3,123/0 compared to Annexure-10 Registry, utilized an amount of ₹ 11,088/- without availability of credit - Held that:- The appellant is a 100% EOU and as and when the audit pointed out the irregular availment of credit, the appellant reversed the same along with interest and also paid 25% of the penalty as directed by the original authority. The department has not brought any evidence on record to show that the appellant have suppressed the material fact with intent to evade payment of duty. As and when it was brought to their notice, they reversed the same. The impugned order imposing the penalties is not sustainable and the same is set aside - appeal allowed - decided in favor of appellant.
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2018 (12) TMI 920
Rectification of mistake - contention of the Ld. Counsel for the applicant is that the matter was heard on 03.11.2016 and order was reserved - Held that:- Some of the contentions have not been considered by this Tribunal while passing the final order. In that circumstance, there is a mistake apparent on record which is required to be rectified - ROM Application allowed.
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CST, VAT & Sales Tax
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2018 (12) TMI 1003
Reopening of assessment - escaped taxation - levy of penalty - TNGST Act - Held that:- On a perusal of the records of the case, the order of the appellate authority and the Tribunal, which are the final fact finding authority, it is seen that they have come to the conclusion that Slip Nos. 10 and 11, do not point any sales suppression and that therefore, proceedings cannot be initiated under Section 16(1) of the TNGST Act, for reopening of the completed assessment, so as to include therein any turn over, which had escaped taxation. There is no evidence or materials which would justify initiation of proceedings under Section 16(1) of the TNGST Act - Revision dismissed.
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2018 (12) TMI 919
Rectification of order - rejection the reason that the original C-Forms were not filed by the petitioners - inter-state sales - Held that:- There is no dispute to the fact that the petitioners, along with their returns, furnished those C-Forms in original, since in the counter affidavits, the said fact is admitted. However, those original C-Forms were misplaced by the office of the respondent and are not traceable till today. When such being the admitted position of fact, the respondent is not entitled to harp upon Rule 12(3) of the CST (Registration and Turnover) Rules, 1957 and insist the petitioners to furnish the duplicate C-Forms, as prescribed under the above said Rule. Admittedly, the petitioners have filed the duplicate C-Forms, when they made their representation in pursuant to the orders of assessment passed against them. Therefore, the respondents ought to have considered the duplicate C-Forms and pass appropriate orders, based on such C-Forms, as though the petitioners have complied with in furnishing the C-Forms in respect of their inter-state Sales. The matter is remitted back to the Assessing Officer for passing fresh orders on the rectification petitions, by considering the duplicate C-Forms already filed by the petitioners - appeal allowed by way of remand.
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Indian Laws
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2018 (12) TMI 956
Dishonor of Cheque - Vicarious liability - Section 141 of the Negotiable Instruments Act, 1881 - Held that:- The petitioners are not stated to be signatories of the cheque in question. They cannot be roped in merely because they have been directors of the company. The general averments about they being responsible for the business dealings of the company do not suffice as there is nothing shown that they were in charge of or responsible to the company accused for the conduct of its business “at the time the offence was committed” - petition allowed.
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