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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter December 21, 2017 Case Laws in this Newsletter: Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws Articles GST on Transfer of Property under Tripartite Agreement RESOLUTION CORPORATION News Implementation of GST Under the Ministry Feedback requested on user-experience of GST application Proactive Measures taken by Government for Smooth Implementation of GST for MSME Decline in Trade Increase in Trade Deficit Economic Advisory Council to the Prime Minister holds its third meeting More than 30 crore Accounts opened under Pradhan Mantri Jan Dhan Yojana Nearly ₹ 52,000 Crore Capital infused in PSBs under Indradhanush Plan RBI Reference Rate for US $ Release of Income Tax Return Statistics for AY 2015-16 India signs Financing Agreement with the World Bank for US$ 125 Million for “Skills Strengthening for Industrial Value Enhancement Operation (Strive) Project." CSR expenditure by companies in North East in 2015-16 ₹ 176.59 Crores Notifications Customs 117/2017 - dated 19-12-2017 - Cus (NT) Amendment in Notification No. 113/2017-CUSTOMS (N.T.), dated 7th December, 2017 GST - States G.O.MS.No. 560 - dated 24-11-2017 - Andhra Pradesh SGST Waiver of late fee payable under Section 47 of the APGST Act, 2017 for delayed filing of the return in FORM GSTR-3B for the months of August and September, 2017 G.O.MS.No. 559 - dated 24-11-2017 - Andhra Pradesh SGST The Andhra Pradesh Goods and Services Tax Act, 2017 (Act No.16 of 2017) – Eleventh amendment to APGST Rules G.O.MS.No. 492 - dated 3-11-2017 - Andhra Pradesh SGST Certain changes to reverse charge tax on goods supplied by Central and State Governments G.O.MS.No. 490 - dated 3-11-2017 - Andhra Pradesh SGST Changes in the list of persons liable to pay reverse charge tax G.O.MS.No. 489 - dated 31-10-2017 - Andhra Pradesh SGST Increasing turnover limit for composition suppliers G.O.MS.No. 488 - dated 31-10-2017 - Andhra Pradesh SGST Ninth amendment to APGST Rules G.O.MS.No. 487 - dated 31-10-2017 - Andhra Pradesh SGST Changes in the payment period for suppliers having rupees 1.5 Cr. and less turnover G.O.MS.No. 486 - dated 31-10-2017 - Andhra Pradesh SGST Cross empowerment for refunds under sections 54 and 55 G.O.MS.No. 485 - dated 31-10-2017 - Andhra Pradesh SGST Changes to the list of persons exempted from obtaining registration under Section 23(2) G.O.MS.No. 484 - dated 31-10-2017 - Andhra Pradesh SGST The Andhra Pradesh Goods and Services Tax Rules, 2017-Amendments to certain rules S.O. 300 - dated 22-11-2017 - Bihar SGST Corrigendum - Notification No. S.O. 203, dated 10th October, 2017 S.O. 298 - dated 22-11-2017 - Bihar SGST Corrigendum - Notification No. S.O. 167, dated 21st September, 2017 S.O. 296 - dated 22-11-2017 - Bihar SGST Corrigendum - Notification No. 2/2017 State Tax (Rate), dated the 29th June, 2017 S.O. 294 - dated 22-11-2017 - Bihar SGST Corrigundum - Notification No. 1/2017 State Tax (Rate), dated the 29th June, 2017 S.O. 292 - dated 16-11-2017 - Bihar SGST Bihar Goods and Services Tax (Tenth Amendment) Rules, 2017 S.O. 290 - dated 16-11-2017 - Bihar SGST Notification regarding time period for furnishing the details in Form GSTR-1 for person having aggregate turnover upto ₹ 1.5 crore S.O. 288 - dated 16-11-2017 - Bihar SGST Waiving off late fee (sec 47) for the month of October S.O. 286 - dated 16-11-2017 - Bihar SGST Exempt suppliers of services through E-Commerce platform from obtaining compulsory registration S.O. 284 - dated 16-11-2017 - Bihar SGST Registered person who did not opt for composition levy S.O. 281 - dated 16-11-2017 - Bihar SGST Corrigendum - Notification No. 46/2017 State Tax (Rate), dated the 14th November, 2017 S.O. 277- 46/2017-State Tax (Rate) - dated 14-11-2017 - Bihar SGST Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29th June, 2017 S.O. 273- 44/2017-State Tax (Rate) - dated 14-11-2017 - Bihar SGST Seeks to amend Notification no. 5/2017-State Tax (Rate), dated the 29th June, 2017 S.O. 271- 43/2017-State Tax (Rate) - dated 14-11-2017 - Bihar SGST Seeks to amend Notification No. 4/2017-State Tax (Rate), dated the 29th June, 2017 S.O. 269- 42/2017-State Tax (Rate) - dated 14-11-2017 - Bihar SGST Amendment in Notification No. 2/2017-State Tax (Rate), dated the 29th June, 2017 S.O. 267- 41/2017-State tax (Rate) - dated 14-11-2017 - Bihar SGST Seeks to amend notification no. 1/2017-State Tax (Rate), dated the 29th June, 2017 Va Kar/GST/04/2017- S.O. No. 119 - dated 6-11-2017 - Jharkhand SGST Facility of LUT extended to all exporters / registered persons subject to conditions Va Kar/GST/04/2017- S.O. No. 118 - dated 6-11-2017 - Jharkhand SGST Registered person shall be eligible for submission of letter of UT Bond S.O. No. 117-32/2017 State Tax (Rate) - dated 2-11-2017 - Jharkhand SGST Seeks to amend Notification No. 12/2017 vide S. O No.42/2017- State Tax (Rate), dated the 29th June, 2017 Va Kar/GST/04/2017-S.O. No. 116 - dated 24-10-2017 - Jharkhand SGST Jharkhand Goods and Services Tax (Tenth Amendment) Rules, 2017 Circulars / Instructions / Orders GST - States CCT Ref. Enft./E3/99/2017 - dated 24-11-2017 Andhra Pradesh Goods and Services Tax Act, 2017 – Transporters/owner of the conveyance – Documents to be accompanied with the Goods vehicle – Certain instructions – issuance – Regarding CCTs Ref. CCW/GST/74/2015 - dated 6-11-2017 AP GST Act 2017 - Officer authorized for enrolling or rejecting application for Goods and Services Tax Practitioner-Reg. CCTs Ref No. CCW / GST / 74 / 2015 - dated 2-11-2017 Procedures for assessments, Revisions, Review & Recovery of taxes relating to the Repealed Acts – Certain clarification issued –Regarding CCTS Ref. No. CCW/GST/74/2015 - dated 31-10-2017 Implementation of Section 151 of APGST Act, 2017- Authorizing officers to obtain certain data/information - Reg. CCT’s Ref. No.CCW/CS(2)/31/2017 - dated 30-10-2017 APPT Act, 1987 – Registrations under APPT – DIPP, GoI – Action points on Ease of Doing Business – Comprehensive instructions issued – Further instructions – Issued - Communicating– Regarding CCTs Ref.in CCW/GST/74/2015 - dated 20-10-2017 Extension of time limit for submitting the declaration in FORM GST TRAN-Under rule 120A of the Andhra Pradesh Goods and Service Tax Rules, 2017 Highlights / Catch Notes Income Tax Unexplained investment u/s 69 - The materials found in the course of survey could not be the basis for making any addition in the assessment. The word “may” used in section 133A(3)(iii) makes it clear that the material collected and statement recorded during the survey u/s 133A are not conclusive piece of evidences by itself. - AT Visit to Get Source Rectification order u/s 154 passed an order to pay interest u/s 234A - in the absence of any direction in the assessment order for charging interest u/s 234A and 234B interest cannot be recovered. - AT Visit to Get Source Customs Revocation of CHA license - forfeiture of security deposit - issuance of bogus exemption certificate - the CHA had performed its part of the duties and no role in the forging of the bill of exchange - No action can be taken against CHA - HC Visit to Get Source Import of vehicles under the EPCG Scheme - violation of import condition - Mere use of the car by Directors in exigency does not debar the appellant from the notification benefit. - AT Visit to Get Source Service Tax Demand of service tax - High Court ought not to have set aside the SCN The High Court ought to have kept in mind the question of limitation and on that basis ordered for adjudication of the issues/demands raised in the show cause notice dated 4th October, 2016 which survive and required an adjudication on merits. - SC Visit to Get Source Non-payment of service tax - best judgment assessment - The appellants did file returns under Section 70 and also made available all the contracts on which service tax liability will arise for them. As such, application of Section 72 cannot be extended based solely on the income tax return without identifying the specific taxable service or service recipient. - AT Visit to Get Source Classification of services - The work undertaken by the appellant makes the site fit and ready for coal mining, but the mining of coal is not the work alloted to be appellant - the activity will be liable for Service Tax under the category of Site Formation and Clearance. - AT Visit to Get Source Renting of immovable property - is more in the nature of the Joint Venture Agreement than a simple rent agreement for usage of immovable property - since the nature is revenue sharing, demand of service tax set aside. - AT Visit to Get Source Central Excise Manufacture - the activity of re-labelling of MRP stickers or affixing higher MRP stickers as in the present case amounts to manufacture - the activity carried out by the appellants at their Faridabad godown amounts to manufacture. - AT Visit to Get Source Classification of goods - The sub-assemblies, chassis and name labels and screws for assembly are all cleared together which makes it clear that the goods cleared have essential characters of television receiver sets and the appellants classified it under CETH 8529 only to avoid higher excise duty and also MRP based assessment - AT Visit to Get Source Case Laws: Income Tax 2017 (12) TMI 1010 Disallowance of Depreciation - appellant is a charitable institution u/s 12A – AO held that the assessee claims expenditure for acquisition of assets claiming depreciation in the computation of income though the appellant enjoys a 100% write off of the cost of assets resulting in double deduction of capital expenditure – assessee contented that the system of allowing depreciation was followed by the assessee for several years - Held that:- On perusal of the judgment of the High Court [2012 (4) TMI 115 - KERALA HIGH COURT] we find that though the question of law is answered in favour of the Revenue. However, at the same time, the appellant was granted relief in the following terms: “We find force in this contention because assessee cannot be taken by surprise by disallowing depreciation which was being allowed for several years and to demand tax for one year after making dis-allowance. We feel assessee should be allowed to write back the depreciation for this year and even for previous and then allow the same to be carried forward for application for subsequent years. It is for the assessee to write back depreciation and if done the assessing officer will modify the assessment determining higher income and allow recomputed income with the depreciation written back by the assessee to be carried forward for subsequent years for application for charitable purposes.” Since the High Court has also already given the benefit for other assessment years we do not find any reason to interfere with the order passed by the High Court. Appeal dismissed. 2017 (12) TMI 1009 Addition u/s 41 - provision made by the assessee on account of claim by the principal contractor due to deficiency in contract work - a contingent liability or an ascertained liability so as to entitle the assessee to claim deduction - Held that:- As the appellant-Revenue has not placed on record a copy of the agreement between the respondent-assessee and BAPL as also correspondence extensively referred to by the Commissioner of Income Tax (Appeals), thus in the absence of the said documents and papers, it would be hazardous and difficult for us to answer the question framed above without examining the contents of the agreement and correspondence exchanged between the parties. Noticeably, the exchange of correspondence itself between the respondent-assessee and BAPL, and BAPL and BMC remained undisputed and was not under challenge. We decline and do not answer the question of law as the appellant-Revenue has not placed on record the said letters including the agreements mentioned above. Without the said documents, it will not be possible to answer the question. The case of the respondent-assessee as accepted by the first appellate authority and the Tribunal is that they had accepted and admitted their liability to pay ₹ 62.99 lacs to BAPL. That facet cannot, in absence of documents, be rejected and upset by us without the said documents on record. Accordingly, we decline to answer the question of law raised by the appellant-Revenue in the absence of documents and papers on record. 2017 (12) TMI 1008 Deduction u/s 80IB - completion of construction within stipulated period - Held that:- The purport of the Explanation (ii) to section 80- IB(10)(a) of the Act is to safeguard the interests of the Revenue wherever the construction has not been completed within the stipulated period. Thus, it cannot mean that the requirement is mandatory in nature and would disentitle an assessee to the benefit of section 80-IB(10)(a) of the Act even in respect of those cases where the assessee had completed the construction within the stipulated period and had made an application to the local authority within the prescribed time. The issuance of the requisite certificate was within the domain of the competent authority over which the assessee had no control. From the findings recorded by the Commissioner of Income-tax (Appeals) as affirmed by the Tribunal, it was clear that the construction had been completed before the stipulated date, i.e., March 31, 2010. It was also not disputed that the certificate of completion was applied on March 29, 2010 which was issued to the assessee on December 31, 2011. The assessee in such circumstances could not be denied the benefit of section 80-IB(10)(a) of the Act. The Commissioner of Income-tax (Appeals) and the Tribunal had rightly adjudicated the issue in favour of the assessee-respondent. 2017 (12) TMI 1007 Disallowance u/s 14A r.w.r. 8D - Held that:- Assessing Officer has taken value of investments yielding exempt income at ₹ 76.74 lac. As against this, the assessees’s capital fund at the close of the year stands at ₹ 2.97 crore. This shows that the assessee’s capital fund is far in excess of the amount of investments in securities yielding exempt income, thereby requiring no disallowance under clause (ii) of rule 8D(2). Turning to clause (iii) of Rule 8D(2), it is seen while making disallowance under Rule 8D(2)(iii), it is only the average of those investments which have yielded exempt income are to be taken into consideration and not the average of all investments as has been done by the AO in this case. Adverting to the facts of the instant case, it is seen that the disallowance has been made in ignorance of law as approved in ACB India Ltd. vs. ACIT (2015 (4) TMI 224 - DELHI HIGH COURT ) . Therefore, set aside the impugned order and direct the computation of correct amount of disallowance under clause (iii) of Rule 8D(2). As regards the computation made under clause (i) of rule 8D(2), the ld. AR submitted that such calculation suffers from infirmities which have not been sorted out by the ld. first appellate authority as well. She submitted that certain expenses which do not relate to exempt income have also been considered. Without going into the details of such expenses, I consider it expedient to set aside the impugned order on this score as well and remit the matter to the file of Assessing Officer for deciding this issue as per law, after allowing reasonable opportunity of being heard to the assessee. It is made clear that if the disallowance under clauses (i) and (iii) of Rule 8D(2) exceeds the amount of exempt income, then, the disallowance should be restricted to the extent of exempt income as has been sustained in the first appeal. If, however, this exercise results in some further relief to the assessee, the same should be granted. Enhancement of income u/s 57(iii) - assessee earned interest income on fixed deposits with the bank - deduction was claimed for a sum being the amount paid to the bank on overdraft facility and the remaining amount was offered to tax - Held that:- The issue raised through this ground is no more res integra in view of the judgment of the Hon'ble Supreme Court in the case of CIT vs. Dr. V.P. Gopinathan (2001 (2) TMI 10 - SUPREME Court ) in which it has been held that interest on loan taken by the assessee from bank on the security of fixed deposits cannot be reduced from his income by way of interest on the fixed deposits placed by him in the bank. Reliance of the ld. AR on certain decisions contrary to that of the Hon'ble Apex Court in the case of Dr. V.P. Gopinathan (supra) cannot be sustained. Therefore, uphold the impugned order on this score. 2017 (12) TMI 1006 Interest shown as payable to M/s Intra Port India Ltd. disallowed - Set off the loss - Held that:- A.O is not right in holding that in order to set off the loss of M/s Intra Port India Ltd., the interest is being claimed to have been payable to M/s Intra Port India ltd. Both the authorities below have proceeded on the premise that M/s Intra Port India Ltd., has been taken over by the assessee group and that it is thereafter, that the claim is being made. A search has taken place in the case of the assessee group on 03.01.2002, whereas M/s Intra Port India Ltd., is allegedly taken over by the assessee group only from 24.04.2004. Therefore, there cannot be any possibility of raising the claim of interest payable to M/s Intra Port India Ltd., for the A.Y 2001-02 to 2004-05 after taking over the said company. In view of the same, we are inclined to remit the issue to the file of the A.O with a direction to verify and determine as to when the company, M/s Intra Port India Ltd., was taken over by the Bagga group, after taking into consideration all evidence filed by the Assessee including the additional evidence admitted by the Tribunal and thereafter to decide the issue of allowability of interest. 2017 (12) TMI 1005 Unexplained cash u/s 69A - cash found in survey - proof of cash not belonging to assessee but to sister concern - Held that:- We find that the assessee has not given any explanation before the A.O. why the retraction letter dated 19.04.2010 is placed before the A.O. during the course of the assessment proceedings not communicated to the department. Even before us, the assessee has not given any explanation why this letter is not communicated to the department immediately. Only that the partner Rajababu Khandenwala, he himself admitted that the cash found during the course of the survey out of unrecorded sales made by the assessee firm now before A.O. said that I simply signed the papers without going it cannot be accepted, we find that this argument raised by the counsel by the assessee is rejected. Sofaras another argument raised by the counsel that this cash is belonging to the sister concern of the assessee firm. The assessee is not able to establish names of the sister concern and type of business carried by the sister concern and books of accounts of the sister concern. Simply submitted before the A.O. that the cash found during the course of survey is belonging to sister concern is not sufficient. The assessee also failed to explain the sister concern companies also existed in the premises of the assessee firm. The assessee has failed to give details of the sister concern. Thus the assessee failed to recharge burden casted upon him to explain that the cash found during the course of survey not belonging to assessee and it is belonging to sister concern. Thus addition made by CIT(A) is confirmed and the appeal filed by the assessee is dismissed. 2017 (12) TMI 1004 Rejection of books of accounts - addition of G.P. - Held that:- This is a fact that the assessee was not maintaining quality wise details of the commodities traded, therefore, it shall not be possible to verify the correctness of the valuation of the closing stock. Therefore, the Bench is of the view that the books of account were rightly rejected by invoking the provisions of Section 145(3) of the Act. Further the Assessing Officer made the addition of ₹ 4.00 lacs and the ld. CIT(A) restricted it to ₹ 3.00 lacs. After considering both the sides and various other aspects of the case including the increase in the sales turnover from 10.85 crores to 13.90 crores, the estimated addition of G.P. at ₹ 3.00 lacs is in higher side, therefore, the addition on this count restricted at ₹ 2.00 lacs. Disallowances out of shops expenses, telephone expenses, low household withdrawals and interest not charged respectively - Held that:- Since, the addition on account of gross profit has been sustained, therefore, no specific additions out of various expenses debited in the P&L account can be sustained. In view of the factual and legal position, the same are directed to be deleted. 2017 (12) TMI 1003 Depreciation in respect of assets given on lease by the appellant in earlier years - Held that:- We find that this issue is squarely covered in favour of assessee and against Revenue by Tribunal’s decision in assessee’s own case in earlier years. Respectfully following the Tribunal’s decision and also Hon’ble Supreme Court in the case of I.C.D.S Ltd. (2013 (1) TMI 344 - SUPREME COURT) we allow the claim of depreciation on earlier years transactions as well as in previous years transactions. This issue of assessee’s appeal is allowed. Treating the notional gain arising on securitization of lease receivables as taxable receipt - Held that:- This issue is covered against assessee and in favour of Revenue by Tribunal’s decision in assessee’s own case for AYs 2000-01 to 2003-04 [2015 (5) TMI 1068 - ITAT MUMBAI] as there is a gain to the assessee representing the difference between the amount financed and the amount shown as outstanding in the loans and advance account. The assessee deferred the said gains over a period of two years and credited ₹ 1.68 crores for A.Y. 2002-03 (Rs. 4.75 crores for A.Y. 2003-04) to the profit and loss account of the years under consideration. Since it is not the case of the assessee that the said sum represents capital receipt, learned CIT(A) concluded that the said sum should be treated as having been earned in the course of business activities carried on by the assessee and it is therefore revenue in nature. Double taxation - Held that:- The assessee stated that this issue can be remitted back to the file of the AO for verification of figures and facts and this should be taxed as the assessee itself offered income. We find that the plea of the assessee is quite reasonable and we direct the AO to allow the relief in response to double taxation of the same income. Learned CIT Departmental Representative also agreed to the proposal and stated that the issue can be remitted back to the file of the AO for verification of figures and consequentially allow relief to the assessee. Addition u/s 14A - sufficiency of own funds - As the learned Counsel for the assessee referred to the decision of Hon’ble Bombay High Court in the case of HDFC Limited [2014 (8) TMI 119 - BOMBAY HIGH COURT] wherein it is held that the presumption is in favour of assessee that in case assessee’s own interest free funds are more than investment which yielded exempt income than no disallowance under section 14A of the Act on account of interest can be made. In the present case, the AO has simply adopted formula and made disallowance under section 14A of the Act. 2017 (12) TMI 1002 Addition u/s 14A r.w.r. 8D - sufficiency of own funds - Held that:- The assessee has made investment out of its own funds which are sufficient to cover the value of investment, in that case, no disallowance of interest is required to be made under section 14A of the Act read with Rule 8D(2)(ii) of the Rules. When this was confronted to the learned Sr. Departmental Representative, he fairly conceded the position. As the issue is squarely covered in favour of the assessee, respectfully following the Hon’ble Bombay High Court in the case of HDFC Bank (2014 (8) TMI 119 - BOMBAY HIGH COURT ), we allow this issue of assessee’s appeal. Disallowance of administrative expense under Rule 8D(2)(iii) - Held that:- When a query was put to the learned Counsel that once the assessee itself has disallowed the sum of ₹ 37,38,476/-, Ld Counsel narrated that there is no estoppel against law and the income wrongly declared under wrong notion or under mistaken notion can be deleted. Thus we restrict the disallowance at ₹ 3,32,645/- being administrative expense under Rule 8D(2)(iii) of the Income Tax Rules. See case of Tata Industries Ltd. [2016 (7) TMI 1011 - ITAT MUMBAI] 2017 (12) TMI 1001 Addition u/s 14A - sufficiency of own funds - Held that:- The presumption will be that the assessee has made investment out of interest free funds unless and until the AO has pointed out in nexus that the investment that all the interest bearing funds have been invested. The presumption will be in favour of assessee in view of the decision of Hon'ble Bombay High Court decision in the case of CIT vs HDFC Bank Limited [2014 (8) TMI 119 - BOMBAY HIGH COURT]. In view of the above facts and circumstances, assessee has share capital and resources which is much more than the investment of tax free incomes and once assessee has sufficient own funds for making investment, then the presumption will be that no disallowance can be made on account of interest. This view of ours is supported the decision of Hon’ble Bombay High Court in the case of HDFC Bank Ltd. (supra). Accordingly, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same. Similarly, in respect of disallowance under Rule 8D(2)(iii), there is no expenses relatable to exempt income in the profit and loss account of the assessee and other expense of ₹ 3,64,208/- have already been disallowed by the assessee suo moto. In view of these facts, we confirm the order of CIT(A) and this issue of Revenue’s appeal is dismissed. Disallowance under section 14A r.w.r 8D made while computing book profit under section 115JB - Held that:- This issue is covered in favour of assessee and against Revenue by the decision of Special Bench of this Tribunal in the case of ACIT vs. Vireet Investments (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] wherein the Tribunal has clearly held that no disallowance under section 14A of the Act r.w.r 8D of the Rules can be made while computing book profit under section 115JB of the Act. The learned CIT Departmental Representative could not controvert the above proposition. Disallowance of redemption of the provision made for reduction of preference shares while computing the book profit under section 115JB - Held that:- Delete the disallowance made by AO on account of the reduction of provision made on the redemption of preference shares. Accordingly, the orders of the lower authorities are reversed and this issue of the assessee’s appeal is allowed. Scope of assessment u/s. 153A in respect to completed assessment - Held that:- Once assessment has attained finality, then the AO while passing independent assessment order u/s. 153A/143(3) of the Act could not disturb the assessment order which has attained finality unless the material gathered in the course of search u/s. 132/153A of the Act established that the finality attained in the assessment were contrary to the facts unearthed during the course of search. See CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd.(2015 (5) TMI 656 - BOMBAY HIGH COURT ). Accordingly, we confirm the order of CIT(A) and this appeal of Revenue is dismissed. 2017 (12) TMI 1000 Revision u/s 263 - AO had not examined the addition to be made in the light of the provision of section 69C for bogus purchases - Held that:- In the present case, the assessee has shown the expenditure on purchases in the books of accounts and explained the source of payment through banking channels. In such circumstances, there was no basis to say that applicability of the provisions of sec.69C of the Act were not enquired into by the AO while concluding the assessment. The Hon’ble Allahabad High Court in the case of Pr. CIT vs Ram Shankar Yadav (2017 (8) TMI 858 - ALLAHABAD HIGH COURT) held that provisions of Sec.69C of the Act are not mandatory and the AO has discretion to add or not to add unexplained expenditure based on sound judicial principles. In the impugned order, the CIT has observed that the AO ought to have made enquiries from the alleged bogus purchase bill/entry providers and held that purchases were bogus. The AO has already held that the purchases were bogus and the only question before him was as to whether the entire purchases ought to be added as income or only a portion of the purchases towards inflated cost. CIT has made reference to Explanation-2 to Sec.263 of the Act introduced by the Finance Act, 2015. Explanattion-2 so introduced sets out cases in which order of the AO can be deemed as erroneous. The said explanation does not dispense with compliance or existence of (i) there being no enquiry made by the AO; (ii) the AO’s conclusion being contrary to CBDT Circular or (iii) against decision of Jurisdictional High Court or Supreme Court. In the present case the CIT in the impugned order has not brought facts to show the existence of absence of enquiry especially when the AO has already concluded that the purchases by the assessee from four parties mentioned by the DGIT(Investigation) Mumbai in its report were bogus. Thus the orders of the AO were not erroneous and prejudicial to the interest of the revenue for failure to make enquiry on the applicability of Sec.69C of the Act. We, therefore, quash the orders u/s 263 of the Act and allow the appeals of the assessee. 2017 (12) TMI 999 Levy of penalty u/s 271(1)(c) - Held that:- In the instant case, it could be seen from the aforesaid facts, the assessee had bonafide doubt and belief as to in which year the capital gains had to be offered ie. in Asst Years 2006-07, 2007-08 or in 2010-11. This confusion gets further strengthened by the act of the AO by trying to levy capital gains in Asst Years 2006-07 and 2007-08 in the search assessments for which show cause notices were issued by the AO. Even though the cash component got surfaced only pursuant to the search, the year of taxability of capital gains was in dispute between the assessee and the revenue. Moreover, the assessee had offered the entire cash component in the revised return and the assessment for the Asst Year 2010-11 was framed by the AO u/s 143(3) of the Act on 31.3.2013 accepting the same. There was absolutely no concealment of income or furnishing of inaccurate particulars of income by the assessee for the Asst Year 2010- 11 , for which penalty u/s 271(1)(c) of the Act has been levied by the ld AO. Hence we hold that the facts before the Hon’ble Delhi High Court are squarely distinguishable from the facts of the instant case. Hence the decision relied upon by the ld DR does not advance the case of the revenue. In view of the aforesaid facts and findings and by placing reliance on the decision of the Hon’ble Jurisdictional High Court in the case of Durga Kamal Rice Mills [2003 (4) TMI 26 - CALCUTTA High Court] we hold that the revenue had not made out any case for levying the penalty u/s 271(1)(c) of the Act for the Asst Year 2010-11. Accordingly, the grounds raised by the assessee are allowed. 2017 (12) TMI 998 Claim u/s 54 with regard to second house purchase disallowed - Held that:- As the assessee was allotted two flats on two different stories. It is not the case of the assessee that both the flats on different floors were used as one residential house. Naturally it could not have been so for the reason of these two flats situated on different stories can not constitute one house. CIT(A) was justified in restricting the benefit of exemption u/s 54 only in respect of one flat. This ground is not allowed. See case of Smt. Syrtle D’Souza Vs. Income Tax Officer, Ward 19(3)(4), Mumbai [2012 (9) TMI 118 - ITAT MUMBAI - Decided against assessee 2017 (12) TMI 997 Validity of assessment against non existent entity - Held that:- As on the date of draft assessment order dated 21.12.2011 and assessment order dated 25.10.2012 passed in JCBML merged with JCBIL, the taxpayer in this case, was not in existence and drew our attention to assessment order dated 25.10.2012 for AY 2008-09 in case of JCBMPL merged with JCBIL w.e.f. 01.04.2009 pursuant to the scheme of amalgamation as approved by Hon’ble High Court of Bombay vide its order dated 05.02.2010 and vide orders dated 05.02.2010, 26.02.2010 and 26.02.2010 passed by Hon’ble High Court of Delhi. This fact has been duly recorded by ld. DRP in its order dated 21.09.2012, available at page 52 of the paper book. So, on the date of completion of assessment, in case JCBMPL merged with JCBIL w.e.f. 01.04.2009, it was not in existence and was a non-entity. So, we are of the considered view that assessment order itself is a nullity and is not sustainable in the eyes of law. 2017 (12) TMI 996 Addition of incurred advertisement, sales promotion, entertainment, travelling, business and miscellaneous expenses on doctors and business guests - prohibition on the doctors and medical practitioners from receiving gifts, freebies from the pharmaceutical companies/ individuals - Held that:- We set aside the orders of the authorities below and allow the claim of the assessee. We make it clear that the AO has not doubted the genuineness of the expenditure incurred by the assessee but the disallowance was made by the AO only on the ground that the said expenditure is hit by the explanation to Section 37(1) being prohibited by the MCI Regulations, 2002 issued on 10.12.2012 w.e.f. 14.12.2012 and consequently CBDT Circular no. 5/2012 dated 01.01.2012. Thus, when the genuineness of the expenditure is not doubted then the claim of the assessee cannot be disallowed in view of the binding precedent of Hon’ble jurisdiction High Court in case of Dr. Anil Gupta Vs. ACIT [2017 (12) TMI 931 - RAJASTHAN HIGH COURT] - Decided in favour of assessee. 2017 (12) TMI 995 Revision u/s 263 - AO has mechanically allowed ESOP expenditure claimed by the assessee without establishing whether the same has actually accrued or not - Held that:- Special Bench of the ITAT in the case of Bicon Ltd. vs. DCIT [2013 (8) TMI 629 - ITAT BANGALORE] held that the ESOP expenditure is not a contingent liability and, that it is an expenditure, that such expenditure is on account of ascertained (not contingent liability) and that it cannot be treated as a short capital receipt. Therefore, discount on shares in the ESOP is an allowable deduction. From the above, it is evident that the premise adopted by the ld. Commissioner of Income Tax in the show cause notice u/s. 263 that the ESOP expenditure were not allowable, as they were contingent liability and has reliance upon the Tribunal’s decision in this regard, stand overruled by the Special Bench of the ITAT. Hence, the final direction of the Commissioner of Income Tax that the Assessing Officer should examine the issue afresh after conducting necessary enquiry and investigation as the same had not actually accrued, is not at all sustainable. It is not the case that there is any Hon’ble High Court decision on the issue which the ld. Commissioner of Income Tax has followed, which overruled the Special Bench decision as above. Thus in the background of the afore-said discussion and precedent, we do not find the order of the ld. Commissioner of Income Tax passed u/s. 263 holding the ESOP expenditure to be contingent and directing further examination by the Assessing Officer sustainable. Accordingly, we set aside the order passed by the ld. Commissioner of Income Tax u/s. 263 and decide the issue in favour of the assessee. 2017 (12) TMI 994 Rejection of books of accounts u/s.145(3) - G.P. rate determination - Held that:- AO has not brought any material on record suggesting that the assessee was involved in selling liquor and not recording the same. Since, the purchase and sales are to be notified to State Excise Department as well, the AO has not brought any material suggesting that the State Excise Department has adversely reported about the sale and purchase. Under these undisputed facts, we are of the view that the Assessing Officer was not justified in rejecting the books of accounts. Further, even it is assumed that the books of accounts were not giving true picture of profit. The AO u/s 144 of the Act is under statutory duty to find out the profit declared by comparing with the similarly situated persons, if such information is not available in that event the Assessing Officer is required to deduce profit on the basis of average of last five years GP which is not done in this case. Hence, the action of the Assessing Officer rejecting the books of accounts is not justified. We therefore, direct the Assessing Officer to adopt gross profit @ 17.40% as declared by the assessee, as in this year there is an increase in sales. Ground no. 1 and 2 of the assessee’s appeal are allowed. Addition u/s 69A - Held that:- AO made addition on the basis that no confirmation by Shri O.P. Gupta. It is seem that the assessee has filed a copy of Power of Attorney given by Shri O.P. Gupta in favour of the assessee. The assessee has also filed bank’s statements reflecting the debit entry about the money re-paid to Shri O.P. Gupta. It is also noticed that the Assessing Officer has not issued any summon to Shri O.P. Gupta for the purpose of verification the correctness of claim of assessee. In the absence of proper enquiry by the Assessing Officer, in our view, the addition is unjustified. Therefore, after considering the totality of the fact we deem it appropriate to set aside this issue to the file of the Assessing Officer for the purpose of verification afresh. Therefore, these grounds are allowed for statistical purpose. Addition invoking the provisions of section 69A - amount taken by the assessee from his wife - Held that:- It is demonstrated by the assessee that this transaction is duly reflected in the books of accounts. The assessee has also filed income tax return of Smt. Sunita Devi. Therefore, we are of the view that authorities below were not justified in making the addition. The AO is directed to delete the addition. Thus, Ground no. 6 is allowed. Addition u/s. 68 as unexplained credits - Held that:- We find that the assessee has not furnished any supporting evidences. Therefore, these grounds of the assessee’s appeal are dismissed. disallowance @ 10% of expenses incurred on conveyance, business promotion and staff welfare on the ground of personal use - Held that:- As seen that the assessing Officer has made disallowance on the basis of surmises. Since, the disallowance is made on the basis of conjecture and surmises without basing the disallowance on material evidence. Therefore, we direct the AO to delete the addition. 2017 (12) TMI 993 Reopening of assessment - assessment was reopened observing that the assessee has substantial interest of 94.54% in M/s. Model Sales Agency Pvt. Ltd. which has advanced loans to the assessee and his other concerns - Held that:- This fact came to the notice of the AO during the assessment of M/s. Model Sales Agency Pvt. Ltd. Thus, in our opinion this information was sufficient to make a belief by the AO that income has escaped assessment. Thus the reopening of assessment was valid. The assessee has not paced on record any material to prove the facts otherwise. Thus, the re-opening of assessment under section 147 is valid. In the result the ground No.1 &2 are dismissed. Addition of deemed dividend u/s 2(22)(e) - AO treated the advance as deemed dividend holding that the assessee was having substantial interest of 94.54% in Model Sales Agency Pvt Ltd which has advanced loan to the concern - CIT(A) confirmed the action of AO - Held that:- We have seen that the assessee has not placed on record any material to convince us to take a contrary view; hence the ground of appeal raised by assessee is dismissed. Disallowances of service charges - no TDS made - CITA) confirmed the action of AO holding that the assessee has admitted that no TDS has been made. Secondly, the assessee had debited the expenses on the basis of debit notes sent be service provider. The said expenses have not paid by the assessee and claimed as not payable to Tripura on line Lottery so the expenses were not paid wholly and exclusively for the purpose of business - Held that:- We have noted the assessee has not placed on record any material to convince us to take a contrary view; hence the ground of appeal raised by assessee is dismissed. Lottery terminal charges and logistic paper charges - non deduction of TDS as the provisions of section 40(a)(ia) are applicable - CIT(A) confirmed the action of AO on both the disallowance holding that the assessee has admitted that no TDS has been made - Held that:- The assessee had debited the expenses on the basis of debit notes sent be service provider. The said expenses have not paid by the assessee and claimed as not payable to Tripura on line Lottery so the expenses were not paid wholly and exclusively for the purpose of business. We have noted the assessee has not placed on record any material to convince us to take a contrary view; hence the ground of appeal raised by assessee are dismissed. Disallowance of mobile charges - no TDS was made - CIT-A confirmed the same - Held that:- We have noted that before us neither the assessee has filed any documentary evidence or any written submission to substantiate the grounds of appeal. Hence, this ground of appeal is also failed. Disallowance of various expenses postage expenses, courier expenses and stationary expenses - expenses are not verifiable - Held that:- We have noted that the assessee has not raised any ground of appeal before ld CIT(A) challenging these disallowances. We have noted there is no adjudication of these grounds of appeal by ld CIT(A). Even otherwise the assessee has not filed any documentary evidences to substantiate his claim that all expenses were made wholly and exclusively for business. Hence, this ground of appeal is also dismissed. Disallowance under section 14A - CIT(A) partly sustained the disallowance @ 5% of the exempt income - Held that:- We have seen that in absence of any explanation or documentary evidences on record the disallowance sustained by ld CIT(A is reasonable one. Hence, this ground of appeal is also dismissed. Denial of benefit of section 10(36) - addition for the want of evidence - CIT(A) confirmed the action of AO that no proof was furnished by assessee even at the stage of appeal - Held that:- We have not that the assessee has not placed any evidence before us except raising the grounds of appeal. Thus, we do not find any merit in the ground of appeal; hence this ground of appeal is also dismissed. 2017 (12) TMI 992 TPA - selection of comparable - Held that:- M/s. Vertex Customer Services India Pvt. Ltd., the taxpayer is a wholly owned subsidiary of Vertex India Limited UK engaged in the provision of services in the field of customer relationship management, managing call-centre and IT Enabled Services (ITES). The taxpayer is providing services to the Vertex Group Companies under various sub-contractual arrangements and can be characterized as a BPO and ITES provider to its Associated Enterprises (AE) and a less complex entity as it performs functions and assumes risks that are less extensive as compared to the AE, thus companies functionally dissimilar with that of assessee need to be deselected from final list of comparability. 2017 (12) TMI 991 Validity of reopening of assessment - reasons to believe - undisclosed sales - reopening made on the basis of the audit objection - Held that:- No infirmity in the order of the Ld. CIT (A) in quashing the assessment proceedings for the reason that in the reasons recorded by the Ld. assessing officer is no allegation that the sale on part of the assessee to disclose fully and truly all material facts necessary for assessment. Further the reopening has been carried out after the 6 years and what was the tangible material that has come to into the possession of the Ld. assessing officer for reopening has also not been mentioned. More importantly it was merely on the reappraisal of the same set of facts which were there in the original assessment. In view of this we confirm the order of the Ld. CIT (A) in quashing the reopening proceedings of the assessment. Therefore the solitary ground of the appeal of the revenue is dismissed. 2017 (12) TMI 990 Disallowance of depreciation - gurgoan unit had suspended working during the year - Held that:- Under the law claim of the depreciation on the entire block of assets has been rightly made by the assessee and should have been allowed. The AO‟s contention that Gurgoan assets were not used therefore, depreciation should not be allowed is not in accordance with the provisions of the Act - Decided against revenue Disallowance of deprecation on electric fittings - rate of 15% OR 25% as claimed by the assessee - Held that:- After careful consideration of the facts of the case, these fittings cannot be equated with normal electrical fittings. The items in question are related to plant and machinery and as such eligible for higher rate of depreciation i.e. 25%. The action of the AO is not upheld. Allowable business expenditure - Held that:- CIT(A) has deleted holding that these expenditure was incurred for the purposes of the business and they are minimum amounts as per the rules. In view of this we do not find any infirmity in the order of the ld CIT(A) in deleting the above addition. accordingly, ground No. 3 of the appeal of the revenue is dismissed. Suppression of stocks with respect to dyes and moulds which was shown at opening stock but not in closing stock - Held that:- CIT(A) has deleted the addition holding that the stocks not shown in the closing stock were in fact sold during the year and same were also supported by copy of the invoice as well as the correspondence. In view of this we do not find any infirmity in the order of the ld CIT(A) in deleting the above addition. Consequently, ground No. 4 of the appeal of revenue is dismissed. Addition on account of lower gross profit - Held that:- The appellant has furnished the details called for. The books of account as prescribed are maintained and also the books of account are audited as seen from the 3 CA and 3 CD reports. Lower G.P. compared to earlier years may be one of the factors to be taken into account while resorting to rejection of trading results but it should not be the sole basis. The AO made some theoretical calculations and proceeded to estimate income. The action of the AO is not in accordance with the legal position as on date on the issue. In view of the above discussion, the AO is hereby directed to accept the G.P. declared by the appellant Disallowing on account of payment of ESI - Held that:- The above payment is on additional payment of ESI and not at all in any way can be said that it is penalty or infringement. Therefore, disallowance of this payment is totally devoid of merits and should be deleted. Disallowance of bad debts with respect to two parties who are the customers of the assessee and whose accounts have been written off - Held that:- CIT(A) allowed the claimed of the assessee as it satisfied necessary conditions. The ld AO disallowed it as the assessee could not file copies of the account of the assessee from the books of those parties. We do not find any justification for making this addition and hence, ld CIT(A) has rightly deleted the above disallowance. In the result ground No. 7 of the appeal is dismissed. Addition as expenses on freight and cartage extremely high as compared to previous year - Held that:- The above disallowance was deleted by the ld CIT(A) holding that AO has not pointed out any mistake in the details furnished but has made disallowance on ad hoc basis. We do not find any infirmity in the order of the ld CIT(A) in deleting the above addition. in the result ground No. 8 of the appeal is dismissed. Addition holding that club subscription did not have any nexus with the business of the assessee - Held that:- CIT(A) deleted the above disallowance holding that AO has not given any reason for the disallowance. Therefore, we confirm the order of the ld CIT(A) in deleting for which we also could not find any reason in the assessment order. In the result ground No. 9 of the appeal is dismissed. 2017 (12) TMI 989 Grant of registration under Sec. 12AA - first proviso of Sec.12A(2) applicability - retrospective effect - Held that:- The first proviso of Sec. 12A(2) as had been made available on the statute vide the Finance (No. 2) ‘Act’. 2014, with effect from 01.10.2014, being a beneficial provision intended to mitigate the hardships in case of genuine charitable institutions, thus, find ourselves to be in agreement with the view taken by the Tribunal in the aforesaid appeals. We thus, are of the considered view that the first proviso of Sec. 12A(2) would be applicable to the case of the present assessee. We therefore set aside the order of the CIT(A) and consequently delete the addition - Decided in favour of assessee 2017 (12) TMI 988 Unexplained investment u/s 69 - suppression of value of stock - statement u/s 131 recorded - Held that:- Statement recorded u/s. 133A of the Act we find that no allegation of suppression of physical stock has been charged against the assessee. The addition has been made and sustained by Ld. CIT(A) merely on the basis of statement recorded during survey proceedings and Revenue has not pointed out any defect in the books of account / stock register maintained by assessee suggesting that assessee has suppressed the stock. In the absence of any documentary evidence, the addition cannot stand merely on the basis of statement recorded during survey proceedings From the survey proceedings, we find that prescribed format has not been used by the survey team. Therefore, the information gathered during survey proceedings cannot be relied upon. Simply the tax paid by assessee during survey proceedings does not mean that assessee has admitted undisclosed income. In our considered view, for finding out the undisclosed income of assessee there had to be tangible materials available on record which in the instant case are missing. We also find that the statement recorded during the survey proceedings u/s. 131 of the Act does not have any evidentiary value. Therefore, the same cannot be used as a basis for making such addition. The materials found in the course of survey could not be the basis for making any addition in the assessment. The word “may” used in section 133A(3)(iii) makes it clear that the material collected and statement recorded during the survey u/s 133A are not conclusive piece of evidences by itself. - Decided in favour of assessee. 2017 (12) TMI 987 Revision u/s 263 - deduction on account of depreciation on assets of assessee trust need not to be allowed - Held that:- As on today the disallowance of depreciation as done by the revenue pursuant to proceedings u/s.263 of the Act, cannot be sustained in view of the quashing of the said orders by the Tribunal. The Hon’ble High Court of Karnataka [2016 (3) TMI 462 - KARNATAKA HIGH COURT] has also upheld the decision of the Tribunal. In such circumstances, we are of the view that there is no merit in these appeals by the Revenue and they are liable to be dismissed. The disallowance of depreciation cannot be sustained. 2017 (12) TMI 986 Rectification order u/s 154 passed an order to pay interest u/s 234A - whether charging of interest is a statutory provision and omission of applying statutory provision is a rectifiable mistake u/s 154 - Held that:- We find that assessee filed a return of income declaring a loss of ₹ 2,84,909/- The return of income was filed on 31.03.2010 which was required to be filed on 30.09.2009. The Assessing Officer vide assessment order dated 23.12.2012 completed the assessment after making certain additions and in the body of assessment order charged interest u/s 234B. However, he did not make any direction to charge any interest u/s 234A of the Act later on he passed an order u/s 154 on 10.05.2013 and created an additional demand of ₹ 2,14,9,438/- being interest for six months which the assessee was liable to be charged u/s 234A of the Act. The Ld. CIT(A) has deleted the demand for interest by following the decision of Hon'ble Supreme Court in the case of CIT Vs. Ranchi Club Ltd.[2000 (8) TMI 79 - SUPREME Court] The conclusion of Hon'ble Supreme Court in the case of CIT Vs. Ranchi Club Ltd. is that in the absence of any specific mention of the Assessing Officer in the assessment order for charging of interest u/s 234A and 234B, no interest would be recovered from the assessee merely by way of a demand notice. We further find that Hon'ble Delhi High Court in the case of CIT Vs. Kishan Lal (HUF) [2002 (8) TMI 74 - DELHI High Court] has again followed the order of Hon'ble Supreme Court and has held that in the absence of any direction in the assessment order for charging interest u/s 234A and 234B interest cannot be recovered. - Decided against revenue 2017 (12) TMI 985 Validity of assessment - requirements of eligible assessee as contemplated u/s. 144C(1) - Held that:- If an assessee does not fulfill the condition of eligible assessee then Draft Assessment Order is to be quashed. From the conditions, as contemplated under clause (15), it is evident from the use of word “and” that both the conditions have to be fulfilled. Admittedly, in the present case, no adjustment has been proposed by Id. TPO and, therefore, assessee did not fulfill the condition of eligible assessee as contemplated u/s. 144C(15)(b). Therefore, the draft assessment order is to be quashed. Further, we find from the directions of the Tribunal that the matter had been restored back only to the Assessing Officer on the issue relating to section 14A and, therefore, there was no requirement of making any reference to the TPO. In the second round of proceedings, the Assessing Officer was required to pass the assessment order within the limitation prescribed u/s. 153. On this count the contention of assessee is that Assessment Order should have been passed under section 153(2A). This plea cannot be accepted because Assessing Officer was only required to give effect to the finding and direction of Tribunal and, therefore could pass order at any time. Under such circumstances, the assessment order passed by the Assessing Officer cannot be held to be barred by limitation and, accordingly, is to be upheld in the eyes of law. Addition u/s 14A - Held that:- We find that Assessing Officer has, inter alia, observed in paras 7.1 and 7.2 that in terms of the decisions of Hon’ble Bombay High court in the case of Godrej & Boyce Manufacturing Ltd. v. Dy. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] even in the remand proceedings the assessee failed to furnish any corroborative evidence to show how investments were made by it and through which funds. Therefore, in the absence of discharge of onus the expenditure had to be disallowed. From the above it is evident that proportionate disallowance is to be made for earning exempt income. We, accordingly confirm the findings of Assessing Officer. Customs 2017 (12) TMI 984 Whether the CESTAT was justified and correct in law in passing an order of remand to the original adjudicating authority to first decide the issue of jurisdiction, after decision of the Supreme court in Civil Appeal preferred against the decision of Delhi High court in Mangli Impex Limited v. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT]? Held that: - It was recorded in the said order that the respondent-Revenue had no objection if the remand order passed by the Tribunal was set aside with a request to the Tribunal to decide the issue on merit without taking into consideration the decision of the Delhi High Court in Mangli Impex Limited - the Tribunal would independently apply its mind on the question of jurisdiction and decide the issue - decided in favor of appellant. 2017 (12) TMI 983 Revocation of CHA license - forfeiture of security deposit - issuance of bogus exemption certificate - Section 9(1) of the Customs House Agent Licensing Regulation, 2004 - Held that: - it was found that the CHA had received a copy of the bill of exchange with zero customs duty duly signed by the then Custom officer. The CBI has also stated in the charge sheet that the respondent CHA had retained photocopies of the said bill of exchange for its office records and had forwarded the original copies of the same along with his bill to the importer for getting payments, thus clearly implying that the CHA had performed its part of the duties and no role in the forging of the bill of exchange - respondent’s direct involvement with the importer i.e. the beneficiary was not established - appeal dismissed - decided against Revenue. 2017 (12) TMI 982 Provisional release of goods - Schedule C of Narcotics Drugs and Psychotropic Substances (Regulation of Controlled Substances) Order, 2013 - prayer for interim relief - Held that: - Prima facie, it is very clear that no person is entitled to import any controlled substance specified in Schedule C without obtaining No Objection Certificate from the Narcotics Commissioner. Therefore, no interim relief can be granted as far as the prayer clauses (c2) and (c4) are concerned. The effect of grant of prayer clause (c5) will be that this Court has accepted that the provisions of the said Order of 2013 are not applicable to the third category of goods. Therefore, none of these reliefs can be granted. The payer for interim relief will have to be considered only as regards those goods where the provisional release has been permitted. Therefore, the prayers for interim relief in relation to the said goods will have to be considered after amendment is carried out. 2017 (12) TMI 981 Rate of tax - inter-state sale or not? - e-auction - Whether the clarification issued by the Commissioner dated 07.04.2006, is valid and proper? Held that: - Merely because, one of the officers of the Customs Department, issued a receipt to the petitioner accepting 4% of the tax, that would not prevent the Commercial Taxes Department to take appropriate steps to recover the tax payable in the State of Tamil Nadu. It appears that only for that reason, when action was initiated by the assessing officer, the petitioner rushed to the Commissioner and sought for clarification. In the facts and circumstances, the clarification issued by the Commissioner is perfectly legal and valid and there is no reason to interfere with the same - petition dismissed - decided against petitioner. 2017 (12) TMI 980 Benefit of N/N. 64/2008-Cus dated 9.5.2008 - EPCG Scheme - violation of import condition - Vehicles - Held that: - While grievance of Revenue is that the car was not found in the premises of the hotel and no foreign tourists were found therein, but that was used for the personal purpose of the appellant hotel, there cannot be claim of notification benefit. There was no enquiry conducted to show that car was not used for such purpose, for which the plea of Revenue should not sustain - Revenue having failed to prove that the vehicle was not used for the purpose of foreign tourists and not also proved that there was no foreign exchange earned, the appellant should not suffer. It had maintained logbook and car was used for foreign tourists and foreign exchange was earned. Mere use of the car by Directors in exigency does not debar the appellant from the notification benefit. A plethora of documents submitted by the appellant could not rule out use of the vehicle for the foreign tourism and stray use of the vehicle by Director shall not dis-entitle the appellant when appropriate foreign exchange earning remain undoubted and uncontroverted by the Revenue. Reliance placed in the case of Hotel Excelsior Ltd., Jagdish Rai Sood, Director, Raman Kumar Sood, Director, Ajay Kumar Sood, Director, Satish Kumar Sood, Erstwhile Director Versus Commissioner of Customs (I And G), New Delhi And Vica-Versa [2015 (12) TMI 1045 - CESTAT NEW DELHI], where it was held that proceedings initiated against HEL and its Directors for violation of condition of notification or the EPCG licence are not sustainable as the same are pre-mature as HEL is still in possession of the cars and registered the same as tourist vehicle. Appeal allowed - decided in favor of appellant. 2017 (12) TMI 979 Cancellation of permission issued by the concerned authority - case of appellant is that the cancellation of the permission on 29/11/2005 was not communicated to it by the above said authority for which that matter has been agitated before the appellate authority - Held that: - action of the appellant in importing the material against a withdrawn import permit, should not prejudice the decision on their fresh application by the Registration Committee for fresh imports - The appellate order of the Agricultural Ministry having resulted in remand of the matter to the Registration Committee, learned adjudicating authority shall enquire as to the fate of that remand and appropriately consider result thereof while re-adjudicating the matter. 2017 (12) TMI 978 Rectification of mistake - this Tribunal while remanding the appeal has relied upon the decision of the Hon'ble Supreme Court in the case of Chandana Impex Vs. CCE, Delhi [2011 (7) TMI 88 - SUPREME COURT OF INDIA] wherein the case was remanded to the Tribunal with a direction to examine the issue of jurisdiction afresh in the light of the decision in CCE Vs. Sayed Ali [2011 (2) TMI 5 - Supreme Court] - Held that: - there is no error apparent on the face of the record which needs to be corrected under the scope of ROM application filed by the appellant - the scope of ROM application is limited to the rectification of error which is apparent on the face of the record - ROM application dismissed. Corporate Laws 2017 (12) TMI 977 Winding up petition - respondent company is unable to pay its debt -Held that:- Though the reply affidavit and the affidavit of the Chartered Accountant were later on filed after the statement was made before this Court to pay ₹ 9,29,500/- in installments to the petitioner, however since there is a dispute raised based on the checking/ verification of the invoices by the Chartered Accountant and on calculation made by the Chartered Accountant of the respondent company for net outstanding amount payable of ₹ 6,33,500/- to the petitioner company, instead of taking further action in the matter for giving advertisement of the petition and for winding up of the respondent company, the petitioner could be permitted to withdraw ₹ 6,33,500/- deposited by the respondent company being the admitted amount due to be paid to the petitioner company and for the disputed amount, the petitioner could be relegated to take appropriate remedy in law, including filing of civil suit against the respondent company. In view of the above, the petitioner is permitted to withdraw ₹ 6,33,500/- deposited by the respondent company with the Registry of this Court with interest, if any accrued thereon. The Registry shall make payment of ₹ 6,33,500/- with interest, if any accrued thereon, to the petitioner within a period of TWO WEEKS from today. The petition with prayer for winding up is not accepted and stands dismissed with liberty to the petitioner to take appropriate remedy in law, including filing of civil suit, against the respondent company for recovery of the disputed amount. 2017 (12) TMI 976 Winding up petition - proof of eligible debt - Held that:- Other than a mere bald denial, there is no attempt to explain as to how and when the petitioner completed the work. On completion of the work in all contracts normally a completion certificate or other document is issued by the architect or the engineer in charge indicating that the work has been completed. No such document or any other like document is available on record to support the contention of the petitioner that the work was completed to the satisfaction of the concerned architect/official of the respondent. In the absence of any such document on record, keeping in view the nature of the present proceedings, it is appropriate that the petitioner be left to take steps under the civil proceedings, as per law. It cannot be said that there exists any debt which the respondent is unable to pay. There is no merit in the preset petition and same is dismissed. Insolvency & Bankruptcy 2017 (12) TMI 975 Seeking liquidation of the Corporate Debtors - Held that:- In the case on hand, except M/s. Gaurinandan Fashion Private Limited., there are no other financial creditors or operational creditors. Hence, in view of the proviso to sub-section (8) of Section 21 of Insolvency and Bankruptcy Code, 2016, the Committee of Creditors shall be constituted by the Board and not by the IRP or RP. Therefore, the Committee of Creditors constituted by IRP is not a legally valid committee. The entire resolution process undertaken by the Committee of Creditors which is not validly, constituted cannot be taken into consideration. However, the so-called Committee of Creditors did not accept the resolution plan. No resolution plan is made available for the scrutiny of this authority till today. Admission order was passed by this Tribunal on 29.03.2017. In view of sub-section (1) of Section 12 of Insolvency and Bankruptcy Code, 2016 Corporate Insolvency Process shall be completed within a period of 180 days from the date of admission of application to initiate CIRP. In the case on hand 180 days already expired. Although the constitution of the Committee of Creditors is not valid, the period given for completion of Insolvency Process has been completed and, therefore, under Section 33, this Adjudicating Authority ordered for liquidation of the corporate debtors vis. Pooja Tex-Print Private Limited. Hence, this Adjudicating Authority hereby pass order of liquidation in respect of corporate debtors Pooja Tex-Print. (P.) Ltd. and direct the Liquidator to issue public announcement stating that the corporate debtors Pooja Tex-Print. Ltd. is in liquidation. 2017 (12) TMI 974 Corporate insolvency resolution process - whether the Corporate Debtor has committed a default for enabling the “Financial Creditor” to file application before the Adjudicating Authority in terms of Section 7 of the Code? - Held that:- Under clause (b) of Section 7 (3) of the Code, the name of Insolvency Resolution Professional is required to be proposed by the Financial Creditor. Copy of the written communication in Form No.2 furnished by the Interim Resolution Professional is at Annexure A-7. Mr. Anil Kohli has been registered with Insolvency & Bankruptcy Board of India vide Registration No. IBBI/IPA-001/IP/P00112/2017-18/10219. He has given the necessary information. He has been appointed as Interim Resolution Professional in one case and as Resolution Professional in two cases already, but certified that there are no disciplinary proceedings pending against him. The written communication sent by Mr. Anil Kohli in Form No.2 is in order. No defect in the application has been pointed out and complete information has been given. In view of the above, the instant petition deserves to be admitted. The petition is thus admitted and the moratorium is declared for prohibiting all the following in terms of sub-section (1) of Section 14 of the Code 2017 (12) TMI 973 Corporate Insolvency Resolution Process - Held that:- We are of the view that the petitioner has disclosed all the details required by Section 10 of the Code read with Rule- 7 of the Rules. The particulars of the corporate applicant and those of the financial debt have been disclosed in material particulars. The name of the Interim Resolution Professional has also been proposed. The record of the financial debt as per the Books of the Corporate-Applicant; and record of the ‘Operational Debtors; certificate of eligibility of the Interim Resolution Professional, Books of Account showing default; copies of the audited financial statement for the Financial Year ending 31.03.2016 and 31.03.2017, all have been placed on record. A list of assets and liabilities as on 31.03.2017 has also been duly reflected. It has been submitted that the applicant company is in dire need of a resolution plan in the interest of all the stakeholders. The present application has been filed in the requisite form-6 containing the required particulars in terms of sub-section 2 of section 10 of the Code. The petitioner satisfies all the statutory requirements. Therefore, we are inclined to admit the application. In view of the above, we are satisfied that the present application is complete and that the applicant corporate debtor has committed a default. Therefore, as the application is complete the present application is admitted under section 10 (4) (a) of the Code. The corporate insolvency resolution process shall commence from the date of this order under sub-section 5 of section 10 of the Code. 2017 (12) TMI 972 Corporate Insolvency Resolution Process - Held that:- To initiate the present proceedings, the Operational Creditor has issued notice under Section 8(1) of the Code. The same was not replied to. Due Compliance of the mandatory provisions of Section 9(3) (a) (b) (c) has been made. The Operational Creditor has filed the statement of its ledger accounts reflecting the debit and credit balances as well as the annual balance confirmation statement by the Corporate Debtor. The balance of as ₹ 5,55,14,360/- has been duly confirmed by the Corporate Debtor. The certificate by the Operational Creditor’s Banker has also been filed in compliance of Section 9(3)(c) of the Code certifying that the last payment of ₹ 6,56,730/- received from the Mahindra AMP Mahindra FIN Services Ltd and Mahindra Mahindra FIN in the account of the Operational Creditor was on 16.05.2017. On notice being served on the Corporate Debtor, Mr. Vikrant Mahajan, Director of the Respondent Corporate Debtor appeared in person. He did not wish to file his reply nor contest the prayer made in the petition. Infact he admitted the amount due to the petitioner but submitted that since the Corporate Debtor has not been in business for the last 2 years, he is unable to liquidate his financial debt. In view of the admission made on behalf of the Corporate Debtor and having complied with all other requirements under the Code, there is no impediment in admitting the petition. 2017 (12) TMI 971 Corporate insolvency process - liability recoverable from the Corporate Debtor - Held that:- Corporate Debtor has been issuing C-Forms and the terms and conditions printed on the invoice clearly provide for a period of 60 days to make the payments, failing which the unpaid amount would attract interest @ 24% per annum. Though the business transaction existed for some time, it is only with effect from 14.05.2016 that the payments became irregular. The emails on record have acknowledged the liability to pay, though the Corporate Debtor has expressed its financial difficulty in liquidating the same. There is no dispute raised in respect of the liability to repay and merely repudiating the same in the reply to the notices would not absolve the Corporate Debtor from initiation of the resolution process against them. E-mails, issuance of ‘C forms, part payment by way of acknowledgement of the outstanding liability on 23.10.2016 as well as their specific confirmation of the outstanding liability of 27.65 lakhs as on 01.04.2017 arc clear admission of a debt due by the Corporate Debtor to the Operational Creditor. In view of the above, as there is a clear liability recoverable from the Corporate Debtor, the Operational Creditor is entitled for initiation of the resolution process. Service Tax 2017 (12) TMI 969 Validity of High Court order - the SCN dated 4th October, 2016 issued to the respondent proposing levy of service tax has been set aside with liberty to the appellants to issue a fresh SCN - Held that: - the High Court ought not to have set aside the SCN dated 4th October, 2016 in its entirety and directed issuance of fresh SCN. The High Court ought to have kept in mind the question of limitation and on that basis ordered for adjudication of the issues/demands raised in the show cause notice dated 4th October, 2016 which survive and required an adjudication on merits. The SCN dated 4th October, 2016 in so far as the surviving issues/demands are concerned shall be adjudicated subject to such contentions as may be advanced on behalf of the respondent in its reply/additional reply that may be filed in the matter. Appeal allowed. 2017 (12) TMI 968 Condonation of delay of 56 days in filing appeal - the order under challenge was served at its factory premises whereas the administrative office was situated elsewhere which consumed sometime in preferring the appeal - Held that: - delay in preferring the appeal was not unduly long. The explanation of the assessee was neither untenable nor baseless. It is not the case that the Tribunal lacked power to condone delay - Delay in filing appeal before the Tribunal is condoned - COD application allowed. 2017 (12) TMI 967 Business Auxiliary services - services provided by the appellant to various clients on behalf of other event managing parties like M/s Rural Communication Marketing Pvt. Ltd. and M/s Lintas India (P) Ltd. - case of Revenue is that Since, the appellants did not organize the events, road shows directly for the client, the services rendered were sought to be taxed as BAS - extended period of limitation - Held that: - there is no merit in the submission of the appellant that the parties to whom they raised bill and received the consideration cannot be considered as their clients or service recipient. The services were rendered to the main client on behalf o these two parties. Though, the appellant provided only part of the service which was agreed upon between these two parties and the ultimate client, the same will be squarely covered under the tax entry of BAS– “provision of service on behalf of the client” - There is a reason for a bonafide belief in such arrangement regarding non-liability of sub-contractor when the main contractor is liable to discharge full service tax. Though the said principle is not applicable against the tax liability but the question of invoking extended period is to be answered in favor of the appellant - there is no case of fraud, mis-statement etc. in the non-payment of tax on this activity by the appellant, extended period cannot be invoked. N/N. 16/2002-ST - services rendered by the appellant through M/s Lintas India (P) Ltd. for UNICEF - denial on the ground that the appellants did not provide service directly to UNICEF - Held that: - Though the bills were raised in the name of M/s Lintas India (P) Ltd., the nature of service is clearly mentioned as charges towards branding cost of three UNICEF Van, UNICEF Girl Star activities, cost of UNICEF Float Operational for 30 days, branding of Van for UNICEF. A perusal of these bills make it clear that the services are for UNICEF though the bill is raised through M/s Lintas India (P) Ltd. - denial of exemption not sustainable. Appeal allowed in part. 2017 (12) TMI 966 Non-payment of service tax - best judgment assessment - details accounts not maintained by appellant - invocation of Section 72 of FA, 1994 - Held that: - the appellants categorically asserted that they did not provide any other service other than those, the details of which have been submitted to the lower authorities. The Revenue also could not point out excess receipt on these contracts or the taxable service which gave them the consideration escaping the tax. In the absence of specific allegation with reference to the nature of service or the service recipient it is not tenable to hold an income of the appellant even if it is admitted to be an actual income, as consideration for a taxable service. The appellants did file returns under Section 70 and also made available all the contracts on which service tax liability will arise for them. As such, application of Section 72 cannot be extended based solely on the income tax return without identifying the specific taxable service or service recipient. Demand not sustainable - appeal allowed - decided in favor of appellant. 2017 (12) TMI 965 Business auxiliary services - the appellant had entered into an agreement with DIL and was performing various activities and received consideration in foreign currency - export of services or not? - Held that: - under the Export of Service Rules, 2005, taxable services have been divided into three categories. Admittedly, the services provided by the appellant fall under the category 3 - On the question whether the services mentioned in category 3 qualify as export, various judicial pronouncements have held that to qualify as export, the service recipient should be located outside India and the fact that the service is performed in India is not relevant - the services provided by the appellant qualify as export of service. Reverse charge mechanism - commercial training or coaching service - technical collaboration agreement between M/s.DIL and DAIPL under which M/s.DIL would train the employees of DAIPL with regard to the Daikin technology - Rule 3(ii) of the Taxation of Services (provided from outside India and received in India) Rules, 2006 - Held that: - the Commissioner has given no finding on this aspect at all and has confirmed the demand and penalty - the matter is liable to be remanded back to adjudicating authority to examine the contention of appellant afresh and given proper findings. Manpower recruitment or supply service - commercial concern or not? - Held that: - the department has not brought out the fact that the foreign company is a commercial concern engaged in manpower recruitment or supply service - As per the agreement, fee and airfare and cost of the specialist is to be borne by M/s.Daikin Air-conditioning India. Admittedly, these payments are being made by Indian company to Japanese company as a whole - the issue is covered by the judgement of this Tribunal in the case of Volkswagen India Pvt.Ltd. vs. CCE [2013 (11) TMI 298 - CESTAT MUMBAI], where it was held that The global employees working under the appellant are working as their employees and having employee-employer relationship. There is no supply of manpower service rendered to the appellant by the foreign/holding company. Penalty - revenue neutral situation - technical consultancy service - Held that: - the entire situation was Revenue neutral as the credit was available with the appellant themselves - the Revenue neutral situation comes about in relation to the credit available to the appellant himself and not by way of availability of credit to anyone else - penalty not justified. Appeal allowed in part and part matter on remand. 2017 (12) TMI 964 Classification of services - Site Formation and Clearance, Excavation and Earth Moving and Demolition services or mining services? - Held that: - The activities carried out by the appellant, though in relation to mining, cannot be considered as mining activity. The work undertaken by the appellant makes the site fit and ready for coal mining, but the mining of coal is not the work alloted to be appellant. Further, it is seen that the activity undertaken is also not a part of composite activity of mining - the activity will be liable for Service Tax under the category of Site Formation and Clearance. Penalty - Held that: - there were many contractors who were undertaking similar kind of work for various coal fields and there were doubts on Service Tax liability on the activity carried out by them - this is a fit case to exercise discretion under Section 80 of the Finance Act, 1994, for waiver of penalty. But, such waiver can be granted only if the appellant has already paid the entire Service Tax liability along with interest for the disputed period. Impugned order is upheld regarding demand of Service Tax and interest - Matter remanded only for deciding penalty. 2017 (12) TMI 963 Penalty u/s 78 of FA - it was alleged that assesse have not paid the service tax on the entire value of taxable services received and also have suppressed/short declared the value of taxable service - Held that: - Commissioner (A) has not imposed any penalty u/s 78 of FA, 1994 on the ground that the assesse has been filing the return periodically and identical issue pertaining to earlier year, the appeal of the assessee is pending - penalty was rightly not imposed as there was no suppression - appeal dismissed - decided against Revenue. 2017 (12) TMI 962 Penalty u/s 78 - Business Auxiliary Services - service tax with interest paid before issuance of SCN - Held that: - appellant in this case paid the service tax along with interest before the issue of SCN - also there was a confusion regarding the taxability of the amount received by the appellant from the banks and the non-banking financial companies - penalty dropped - appeal allowed - decided in favor of appellant. 2017 (12) TMI 961 Rectification of mistake - case of appellant is that in para 11(i) of the Final order, it is mentioned that courses “which train the students for award of university degree such as B Sc. BBA etc. in our view such courses cannot be considered as vocational courses.", which according to learned Counsel is wrong - Held that: - the appellant has already got the substantial relief and there is no further scope to grant the relief - It may be mentioned that under the garb of rectification, a fresh order cannot be passed by the Tribunal. It may be mentioned that every sentence or words or argument cannot be reproduced in the order. Only cumulative effect will have to be mentioned in the order. Rectification of Mistake application is misuse of judicial process, and the same has no merit. - ROM application dismissed. 2017 (12) TMI 960 Refund of excess amount paid - GTA service - case of Revenue is that as per Rule 14 of CCR, 2004, when Cenvat credit has been taken or utilized wrongly, the same along with interest has to be recovered but in this case, the assesse did not pay the interest which he is liable to pay - Held that: - there is no case of wrong utilization of Cenvat credit under Rule 14 of CCR, 2004 as contended by the department and the respondent is not liable to pay any interest thereon - reliance placed in the case of Billforge Pvt. Ltd [2011 (4) TMI 969 - KARNATAKA HIGH COURT] - appeal dismissed - decided against Revenue. 2017 (12) TMI 959 Refund claim - unjust enrichment - Held that: - the impugned order has been passed on the basis of assumption and presumption; however, appellant is ready to produce the Chartered Accountant certificate to the effect that incidence of duty has not been passed on to the service provider or to anyone else and he has borne the element of service tax himself - these cases needs to be remanded back to the original authority with a direction that the appellant will produce the Chartered Accountant Certificate to rule out the unjust enrichment - appeal allowed by way of remand. 2017 (12) TMI 958 Renting of immovable property - Joint Venture (JV) agreement - sharing of revenue - Revenue entertained a view that the amount of consideration received by the appellant from warehousing corporation is liable to be taxed as the premises of the appellant were rented out to the warehousing corporation to be used for business or commerce - Held that: - Considering the overall scope of the terms of the agreement, we find that the same is more in the nature of the Joint Venture Agreement than a simple rent agreement for usage of immovable property - reliance placed in the case of Mormugao Port Trust Versus Commissioner of Customs, Central Excise & Service Tax, Goa- (Vice-Versa) [2016 (11) TMI 520 - CESTAT MUMBAI], where similar issue was dealt and it was held that The money flow to the Assessee from SWPL, under the nomenclature of Royalty, is not a consideration for rendition of any services but infact represents the Appellant’s share of revenue arising out of the Joint Venture being carried on by the Assessee and SWPL - demand set aside - appeal allowed - decided in favor of appellant. Central Excise 2017 (12) TMI 957 Extended period of limitation - Job-work - N/N. 214/86-CE dated 25.03.1986 - Held that: - it is not disputed that the principal manufacturer/s, had submitted such declaration under the N/N. 214/86-CE - The fact that principal manufacturer/s did not honour the undertaking given by the department and thus they did not discharge the duty liability cannot be cited as a fact or circumstance against the assessee to invoke extended period of limitation. While the duty liability may arise against the assessee as a legal consequences of non compliance made by the principal manufacturer/s, yet, the assessee had neither concealed nor suppressed any fact in this regard. There is no evidence or allegation by the revenue that the assessee ever concealed or suppressed the facts that the principal manufacturer/s had not discharged the duty liability. It appears it was a matter for the revenue to have addressed and made proper verification/s with regard to the conduct of the principal manufacturer/s at the relevant time. That having not been done, the assessee cannot be subjected to recovery by invoking extended period of limitation in absence of suppression or concealment - appeal dismissed. 2017 (12) TMI 956 Validity of order directing to make pre-deposit while Remanding back the proceedings - Held that: - Under sub-section (1) of Section 35, the appellate Tribunal has a power to pass such orders on the appeals as it thinks fit, either confirming, modifying or annulling the decision appealed against or it may also refer the case back to the authority which passed such decision or order with such directions as the appellate Tribunal may think fit, for a fresh adjudication after taking additional evidence, if necessary. The powers of the Tribunal, thus, while entertaining an appeal at the hands of aggrieved person are quite wide. Nevertheless, requiring an assessee to deposit hefty sum of ₹ 50 lakhs while remanding the proceedings for fresh consideration, would not be justified, when the Tribunal, remanding the proceedings for fresh disposal was essentially wiping out the order of adjudicating authority which is adverse to the assessee-appellant. If that be so, requirement of deposit of ₹ 50 lakhs by way of pre-condition would be rather harsh and onerous. Similar view taken in the case of WAGHBAKRIWALA RAYONS Versus UNION OF INDIA [2016 (2) TMI 18 - GUJARAT HIGH COURT]. The adjudicating authority shall pass fresh order after giving opportunity of hearing to the petitioner, however, without insisting on the condition of deposit of ₹ 50 lakhs as directed by the Tribunal - petition allowed. 2017 (12) TMI 955 Transfer of unutilized CENVAT credit - interpretation of statute - transfer of factory - whether Sub-Rule 1 of Rule 8 requires transfer of the entire factory to another site or it is applicable even to a transfer of a part of the activity undertaken in the factory? - Held that: - the letter dated 18th May 2002 makes it very clear that only a part of the activity of manufacture of final product of grey and processed fabric has been transferred to the unit at Dhamni. Thus, only a part of manufacturing activity has been transferred from Dadar unit to Dhamni unit and the yarn manufactured at Damni is again brought back to Dadar for the purposes of manufacturing of grey and processed fabrics. On plain reading of Sub-Rule 1 of Rule 8, it is apparent that it contemplates shifting the entire factory of the assessee. Rule 8(1) will not apply if only a part of the manufacturing activity is shifted to another site. In the present case, out of three units at Dadar which were used for manufacture of final product of grey and processed fabric, only one unit has been shifted and not entire factory - SubRule 1 of Rule 8 of the CENVAT Rules will not apply to the facts of the case. SubRule 6 of Rule 57F talks of shifting of the plant or factory to another site - this rule also not applicable in the present case. Appeal dismissed - decided against appellant. 2017 (12) TMI 954 Classification of goods - sub-assemblies and chassis - whether or not such components which were manufactured and cleared by the main appellant are liable to be assessed as television receivers under CETH 8528 or parts of television receivers falling under CETH 8529? - time limitation. Held that: - Admittedly all the components and parts and chassis are numbered and are cleared with a required set of screws and name labels of the manufacturer. All the parts and components were numbered for a particular TV set and have clear identifiability - The sub-assemblies, chassis and name labels and screws for assembly are all cleared together which makes it clear that the goods cleared have essential characters of television receiver sets and the appellants classified it under CETH 8529 only to avoid higher excise duty and also MRP based assessment - goods are correctly classified under CETH 8528 of the Tariff. Time limitation - Held that: - The proceedings which resulted in the impugned order dated 26/03/2014 started with a visit of the officers to the factory of the appellant on 02/12/2002. Evidences were collected during the course of detailed investigation. Statements were recorded in order to ascertain the background facts of the manufacturing process. It was also revealed that the very same goods were classified differently when cleared for export. The Original Authority recorded that it apparently reveals the motive of the appellant for improper gain to avoid payment of higher duty of excise under CETH 8528. We are in agreement with the findings of the Original Authority that the present show cause notice was not issued on similar set of evidences or facts which were subjected to decision in the earlier proceedings - extended period rightly invoked. Appeal dismissed - decided against appellant. 2017 (12) TMI 953 CENVAT credit - input services in their unit at Shahjahanpur - repair and maintenance service - IPR service - advertisement service - Revenue entertained a view that these input services were not exclusively attributable to the goods manufactured and cleared by the appellant at their Shahjahanpur unit - Held that: - though the appellant company is engaged in the manufacture of various items, the service provided by M/s Tekcare on which service tax has been paid, is with reference to products manufactured and cleared by Shahjahanpur unit only - In view of the evidences and supporting documents submitted by the appellant to assert that the repair and maintenance service received by them is only with reference to products manufactured at Shahjahanpur unit, denial of credit is not justifiable - credit allowed. IPR services - Held that: - the lower authority is not correct in holding that trademark licence is also for goods procured from other units and marketed by the appellants. The agreement is mainly for use of trademark for manufacturing and selling. The trademark ‘Electrolux’ cannot be used for the trading goods in terms of the agreement - We are in agreement with the appellant that the terms of agreement are to be read together to understand scope of the same - credit allowed. Advertisement service - Held that: - admittedly the Kelvinator brand products are manufactured at other units of the appellant also. However, the credit availed by the appellant is supported by purchase orders and invoices issued to the appellant for advertisement services - denial of credit not justified. Appeal allowed - decided in favor of appellant. 2017 (12) TMI 952 Manufacture - MRP based valuation - allegation of the Revenue is that through their activity of packing and repacking the electric fans and re-labelling the MRP stickers on the cartons in respect of the fans which were sent outside, the appellants had engaged in the process of manufacture under Section 2(f)(iii) of the CEA - whether the activity carried out by the appellants in their Faridabad godown amounts to manufacture under Section 2(f)(iii) of Central Excise Act? - interpretation of statute. Held that: - first part of definition in Section 2(f)(iii) involves packing or re-packing of goods specified in Third Schedule in a unit container. In this regard, we find that the activity carried out by the appellants in their Faridabad godown cannot be called as packing or re-packing in unit container because as per the statement of Sh. J.P. Gupta, Dy. General Manager, four motors and four sets of blades received from their factory at Paonta Sahib were packed together in master cartons - The activity cannot be called packing or re-packing of goods in unit containers because the master carton in which four blades sets and four motors sets were packed and MRP sticker applied is not a unit container. Coming to the labelling part, which was carried out in the appellants godown, we find that at the time of receipt of goods, the said goods bore the MRP stickers valid for 10 or 11 states. However, if the said goods were to be dispatched to states other than those 10 or 11 states, the old MRP sticker was changed and a new higher value MRP sticker was affixed - The word re-labelling is followed by the inclusive part which expressly mentions alteration of retail sale price as one type of re-labelling, which on its own would amount to manufacture - the activity of re-labelling of MRP stickers or affixing higher MRP stickers as in the present case amounts to manufacture - the activity carried out by the appellants at their Faridabad godown amounts to manufacture. Extended period of limitation - Held that: - the reasoning given by the Ld. Commissioner that the appellants have pre-planned the entire things to evade the central excise duty is not convincing - there does not appear any mens rea on the part of the appellants - extended period not invokable - matter is therefore required to be remanded back to the adjudicating authority to work out the demand for normal period of limitation. Penalty - Held that: - In the absence of mens rea, the penalty is not imposable on the appellants under Section 11AC of the Central Excise Act. The penalty on other appellants under Rule 26 of Central Excise Rules, is also not imposable in the absence of any malafide intent. Appeal allowed in part - part matter remanded for purpose of re-quantification of demand for the normal period of limitation. 2017 (12) TMI 951 Clandestine removal - Imposition of penalties and personal penalties u/s 209A - first contention of the appellants is that the impugned order was passed ex-parte - case of appellants are also that the employees are not distinguishable from the company and hence could not be penalized when the company had been subjected to penalty - principles of natural justice - Held that: - In the remand proceedings, the appellants did not submit any reply despite repeated reminders and did not attend personal hearing despite being given a number of opportunities - no reply was filed by the appellants either within the stipulated period or even till the date of adjudication - sufficient chances were given to the appellants to present their case but the appellants did not avail those opportunities and hence there is no violation of natural justice by the adjudicating authority. The Department has been able to successfully prove the allegations of clandestine removal and evasion of duty done in various ways by the appellants as also the taking of illegal credit and illegal utilization of such credit by the appellants. It is also clear that the appellants were resorting to such fraudulent clearances repeatedly and systematically over a long period of time in complete disregard of the provisions Central Excise Act and the Rules thereunder - In view of the foregoing, the order of the Ld. Commissioner confirming the demand of ₹ 1,10,41,745/- for the extended period alongwith interest and imposing penalties on the appellant M/s ATPL is upheld - The denial of Cenvat Credit of ₹ 63,839/- as well as interest and penalty of the same amount are upheld - Considering the systematic and planned suppression of production, clandestine removal of goods and clearance of the goods without payment of duty, penalties under Section 11AC of the Act and Rule 9(2) and Rule 173Q are correctly imposed. Penalty on Sh. Deepak Singh, M.D - Held that: - the Managing Director was fully responsible for the fraud, which was played on the Revenue in various ways. Hence, separate penalty on Managing Director is fully justified. The penalty on Sh. Deepak Singh, M.D. is therefore upheld. Penalty on Sh. VK Sachdeva, General Manager (Finance) - Held that: - overall superintendence of excise matters rested with him and he was the fully aware of the law and implications of its violation. He has willfully connived with the management. His role in the fraud has been proven and hence the penalty on Sh. V.K. Sachdeva has been correctly imposed. Penalty on Sh. N.M. Gupta, AGM (cost and accounts) - Held that: - Sh. N.M. Gupta, AGM has fully abetted in all the activities leading to clandestine removal of goods and clearance of goods without payment of duty and fraudulent evasion of central excise duty. Hence, the penalty imposed on him is fully justified. Personal penalties on the Managing Director, Sh. Deepak Singh, Sh. V.K. Sachdeva and Sh. N.M. Gupta u/s 209A of CER - Held that: - the appellant employees were very much aware that the goods were liable to confiscation and what they were doing had implications of contravention of the laws; still, they willfully and systematically connived with the management in clandestine removal of goods through different modus operandi - penalties upheld. The penalty in the case of Sh. N.M. Gupta, has indeed been enhanced was 50,000/- to ₹ 2,00,000/- and in the case of Sh. V.K. Sachdeva penalty has been enhanced from ₹ 1,00,000/- to ₹ 2,00,000/-. It is settled position of law that in the remand proceedings the amount of penalty cannot be enhanced especially when there are no new facts or evidence to justify that - the penalty imposed on Sh. N.M. Gupta is reduced to ₹ 50,000/- and penalty imposed on Sh. V.K. Sachdeva is reduced to ₹ 1,00,000/-. Appeal allowed in part. 2017 (12) TMI 950 Reversal of CENVAT credit - Pressmud, Bagasse and Compost, Boiler Ash etc. - Rule 6 of CCR - Held that: - if any input is contained in waste by product or goods the cenvat credit shall not be denied - the Cenvat credit either by way of Rule 6(3) or otherwise cannot be denied. In case of removal of waste or by-product Rule 6(3) has no application - appeal allowed - decided in favor of appellant. 2017 (12) TMI 949 Clandestine removal - shortage of finished goods - whether the demand raised against the assessee are sustainable in the facts and circumstance of the case, on account of clandestine removal or not? - Held that: - Admittedly, the SCN has been issued to the assessee on the basis of wastage as per SION norms and not on the actual basis. Further, during the course of investigation neither any discrepancy in the statutory records is found nor any shortage or excess of the goods were detected. In that circumstances, without any corroborative evidence, demands against the assessee are not sustainable - As the demands are not sustainable, penalties are also not imposable on the assessee and its partners - appeal allowed - decided in favor of appellant. 2017 (12) TMI 948 Principles of Natural justice - Section 9D of Central Excise Act, 1944 - Held that: - the appellant in the reply to the show cause notice had made a specific request for cross examination of the panchas, but the original authority has given no finding at all on this request - the procedure under Section 9D ibid has not been followed by the adjudicating authority - there has been gross violation of natural justice caused to the appellants in the proceedings before the adjudicating authority. The matter needs to be remanded back to the adjudicating authority for de novo adjudication by following the procedure under Section 9D of the Act and by observing the principles of natural justice - appeal allowed by way of remand. 2017 (12) TMI 947 Refund of excess duty paid - price variation clause - Section 11B of the CEA - Held that: - Punjab and Haryana High Court in the case of Mauria Udyog Ltd. [2006 (8) TMI 49 - PUNJAB & HARYANA HIGH COURT] held that if the clearance of goods are not on provisional basis and subsequently, the prices are reduced, that cannot be made the foundation for seeking refund and the provisions of Section 11B of the CEA is applicable in such circumstances - refund not allowed - appeal dismissed - decided against appellant. 2017 (12) TMI 946 Refund claim - price variation clause - denial on the ground of time limitation - Held that: - reliance placed in the case of MAHARASHTRA CYLINDERS PVT. LTD. Versus CESTAT, MUMBAI [2010 (8) TMI 235 - BOMBAY HIGH COURT], where it was held that no record to show that the clearances were effected on provisional basis, refund of duty not arises in self-assessment - refund rightly denied - appeal dismissed - decided against appellant. 2017 (12) TMI 945 Jurisdiction - Refund claim - case of Revenue is that it is only the competent Asst. Commissioner who can sanction the refund claim before the Commissionerate Bangalore-I whereas the show cause notice was issued by Bangalore-I, II and III Commissionerate - Held that: - it was the duty of the original authority to send the refund claim to the concerned Commissionerate who is competent to sanction the refund - there is no infirmity in the impugned order and therefore, the impugned order is up held by dismissing the Revenue appeal - decided against Revenue. 2017 (12) TMI 944 Demand of interest - CENVAT credit - denial on the ground of non-production of input invoices - Held that: - the appellants have reversed the credit of ₹ 1,60,975/- in June 2014 itself and he has also paid interest of ₹ 90,341/- payable under Rule 14 of CENVAT Credit Rules, 2004 - appellant have got sufficient CENVAT credit in their CENVAT credit account and they have not utilized the same, thus, interest not payable - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE Versus M/s BILL FORGE PVT LTD, BANGALORE [2011 (4) TMI 969 - KARNATAKA HIGH COURT] - appeal allowed - decided in favor of appellant. 2017 (12) TMI 943 CENVAT credit - damaged inputs / not received inputs in the factory - Held that: - the appellants have taken full quantity of inputs and has not returned any damaged goods and they have not rejected any quantity of the inputs. In order to prove they have also produced the stock statements which was not seen by both the authorities and in the show cause notice no short receipt has been alleged - the debit notes are only issued to reduce only certain amounts from the payments due to the supplier and not on account of rejection of goods - appeal allowed - decided in favor of appellant. 2017 (12) TMI 942 Refund claim - case of Revenue is that the appellant is liable to pay interest on the CENVAT credit taken wrongly even though it was reversed before its utilisation in terms of Rule 14 of the CCR, 2004, and refund of interest not allowable - Held that: - the department cannot take coercive action when the appeal is pending before the higher judicial forum and refund cannot be adjusted against arrears of revenue when the matter in dispute has not attained finality - appeal allowed - decided in favor of appellant. 2017 (12) TMI 941 Refund of excise duty paid - denial on the ground of time limitation - N/N. 12/2012-CE dated 17.3.2012 - whether the time limit prescribed under N/N. 12/2012 dated 17.3.2012, which stipulates that refund claim is required to be filed within six months from the date of clearance of vehicle is to be taken as from the date of clearance or from the date of registration of the vehicle as Taxi? - Held that: - the time limit to be counted from the date of cause of action - Admittedly, in this case, cause of action arises from filing the refund claim after registration as Taxi. If period is taken from the date of registration as Taxi then the refund claim filed by the respondent is within time - appeal dismissed - decided against Revenue. 2017 (12) TMI 940 N/N. 67/1995-CE, dated 16.03.1995 - clearance of intermediate products, tapes / strips of plastics - It appeared to the department that the said tapes / strips of plastics captively consumed in manufacture of fabrics / sacks are liable to duty - appellant cleared fabrics / sacks (finished goods) claiming SSI exemption under N/N. 8/2003-CE dt. 01.03.2003 as amended - Held that: - similar issue decided in the case of Priyal Hosieries, Priya Garments, The Carnataka Knitting Co., M.V. Exports, PVS Knittings, Ajay Vijay Industries, Bhairav Overseas, Anbu Garments, K.N. Tex and Popular Hosiery Factory Versus CCE Coimbatore [2017 (11) TMI 1248 - CESTAT CHENNAI], where it was held that The final products may be made out of the same product or out of different products. Clause (vi) does not contemplate that the manufacturer should manufacture only ‘one final product’ or that if he manufactures only one product that product itself should be both dutiable and exempted. The intermediate products are eligible for benefit of N/N. 67/95-CE as amended - appeal allowed - decided in favor of appellant. 2017 (12) TMI 939 CENVAT Credit - various input services - Held that: - all these services on which CENVAT credit has been denied fall in the definition of “input service”. The Commissioner (A) has observed that the appellant have not produced documentary evidence to substantiate their claim; whereas, the appellant has stated that they had produced the documents but still the Commissioner (A) has not seen the documents though the appellant had attached the copies of the challan, statement showing computation, sample bills along with the present appeal - case is remanded for the verification of the documents - appeal allowed by way of remand. 2017 (12) TMI 938 Refund of excess duty paid - supplementary claims - denial on the ground of time limitation - Held that: - the supplementary claims filed by the appellants cannot be held as time-barred - similar issue decided in the case of SHASUN CHEMICALS & DRUGS LTD. Versus COMMR. OF C. EX., PONDY [2010 (4) TMI 638 - CESTAT, CHENNAI], where it was held that as initial claim was within time and was allowed, supplementary claim could not be said to be time barred - appeal allowed - decided in favor of appellant. 2017 (12) TMI 937 CENVAT credit - Manufacture - Polymer Modified Bitumen (PMB) - Department was of the view that since the product PMB was not a manufactured product, there is no need to pay the duty on the same. But a view was taken that the appellant had wrongly availed the cenvat credit on input and input services attributable to this product. Held that: - the appellant has paid the duty on the product PMB inspite of the fact that the Apex Court has held that it has not been manufactured. It is settled position of law that once duty has been paid it is to be considered as a reversal of the cenvat credit availed as has been held by the Hon’ble Gujarat High Court in Creative Enterprises [2008 (7) TMI 311 - GUJARAT HIGH COURT]. Denial of credit at the time of merger of M/s TVBILP with the appellant - only ground raised in the SCN is that the permission of the jurisdictional Dy. Commissioner was not taken as required under Rule 10(3) of the CCR - Held that: - the appellant is in a position to satisfy the Deputy Commissioner on the requirement of Rule 10(3). When it is so, then we set aside the impugned order and remand the matter to the adjudicating authority to decide the issue denovo - matter on remand. CENVAT credit on PMB - Revenue was of the view that since the product PMB is not a manufactured product, no cenvat credit would be admissible on the inputs and input services used in the production of such goods - Held that: - the stipulation in Rule 6(3) is a mechanism to expunch a part of the credit which is attributable to the goods which do not suffer duty, the adjudicating authority’s view that the entire credit taken should be expunged is perverse - It is also seen that an Explanation-1 has been inserted in Rule 6 to the effect that for the purpose of this rule, ‘exempted goods’ shall include non-excisable goods cleared from the factory for a consideration - there is no justification for demanding reversal of the entire credit taken - Since the matter is being remanded, the adjudicating authority is also directed to verify the amount actually reversed and to requantify the overall demand. Appeal allowed in part by way of remand. Indian Laws 2017 (12) TMI 970 Bribery - the consideration of ₹ 6,50,000/- has been given to the respondent only to secure a job in Tamil Nadu Electricity Board - order of acquittal - Held that: - As rightly pointed out by the learned X Metropolitan Magistrate, Egmore, for any employment in Tamil Nadu Electricity Board, the criteria for selection is the basic qualification and eligibility. There cannot be any payment of money for securing a job. Therefore, since the appellant has paid a sum of ₹ 6,50,000/- to the respondent with enough knowledge that the money is being paid as a bribe for securing a job, it cannot be said that the consideration is a lawful one - the order of acquittal passed by the learned X Metropolitan Magistrate, Egmore is confirmed - appeal dismissed.
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