TMI Tax Updates - e-Newsletter
December 26, 2017

Case Laws in this Newsletter:

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

Articles

1. CLASSIFICATION OF SPECIFIED SERVICE PROVIDERS INTO CATEGORIES OF RISK TO VIABILITY UNDER THE FINANCIAL RESOLUTION AND DEPOSIT INSURANCE BILL, 2017

   By: DR.MARIAPPAN GOVINDARAJAN

2. GIST OF RECENT PRONOUNCEMENTS ON GST (PART-IV)

   By: Dr. Sanjiv Agarwal

News

1. Frequently Asked Questions - GST

2. Economic growth may touch 7 pc in 2018: Report

Notifications

GST - States

1. G.O.MS.No. 600 - dated 12-12-2017 - Andhra Pradesh SGST

Amendments in the Notification issued in G.O.Ms.No.588, Revenue(CT-II) Dept., Dt.12-12-2017.

2. G.O.MS.No. 588 - dated 12-12-2017 - Andhra Pradesh SGST

To notify the exemptions on supply of services under SGST Act [Section 11(1)]

3. G.O.MS.No. 584 - dated 12-12-2017 - Andhra Pradesh SGST

Exemption from SGST supplies by CSD to Unit Run Canteens and supplies by CSD / Unit Run Canteens to authorised customers notified under section 11 (1).

4. G.O.MS.No. 582 - dated 12-12-2017 - Andhra Pradesh SGST

Exemption of intra-State supplies of goods notified under Section 11(1) of the Act.

5. G.O.MS.No. 556 - dated 17-11-2017 - Andhra Pradesh SGST

Amendments in the Notification No. G.O.Ms.No.259, Revenue (Commercial Taxes-II), 29th June, 2017.

6. G.O.MS.No. 553 - dated 17-11-2017 - Andhra Pradesh SGST

Amendments in the Notification No. G.O.Ms.No.258, Revenue (Commercial Taxes-II), 29th June, 2017 - Changes to rates of tax of certain Goods

7. G. O. (P) No. 141/2017/TAXES - dated 14-11-2017 - Kerala SGST

Notifying exemption of state tax on intra-State supply of heavy water and nuclear fuels by the Department of Atomic Energy, Government of India to the Nuclear Power Corporation of India Limited

8. G. O. (P) No. 140/2017/TD - dated 14-11-2017 - Kerala SGST

Notifying exemption of state tax to a casual taxable person making taxable supplies of handicraft goods

9. G. O. (P) No. 137/2017/TAXES - dated 9-11-2017 - Kerala SGST

Notifying reduction in rate of State tax for tractor parts to 9%

10. G. O. (P) No. 136/2017/TAXES - dated 9-11-2017 - Kerala SGST

Notifying reduction in rate of State tax for certain types of composite works contract, transport of passengers by motor cab and renting of motor cab, services provided by goods transport agency, job work in relation to manmade fabrics, services related printing of newspapers, journals, periodicals etc, services by way of admission to a planetarium

11. G. O. (P) No. 135/2017/TAXES - dated 9-11-2017 - Kerala SGST

Notifying exemption of certain services

12. G. O. (P) No. 133/2017/TAXES - dated 9-11-2017 - Kerala SGST

Notifying liability for registration of services by way of house-keeping such as plumbing, carpentering etc

13. G. O. (P) No. 131/2017/TAXES - dated 31-10-2017 - Kerala SGST

To waive the late fee for late filing of FORM GSTR-3B, for the month of July 2017

14. 969/2017/9(120)/XXVII(8)/2017 - dated 23-11-2017 - Uttarakhand SGST

Amendment in notification no. 514 dated 29/06/2017, regarding Rate of Tax on Goods

15. 3905/CSTUK/GST-Vidhi Section/2017-18 - dated 15-11-2017 - Uttarakhand SGST

Regarding last date of filing of FORM GSTR-3B for the month of January 2018, February 2018 and March 2018

16. 3795/CSTUK/GST-Vidhi Section/2017-18 - dated 6-11-2017 - Uttarakhand SGST

Regarding last date for filing of Form GSTR 3B of different months

17. 840/2017/9(120)/XXVII(8)/2017 - dated 25-10-2017 - Uttarakhand SGST

Corrigendum - Notification No. 526/2017/9(120)/XXVII(8)/2017 dated 29th June, 2017

Highlights / Catch Notes

Income Tax

• Charitable Organization Renting Premises Retains Tax Exemption; Voluntary Donations Not Deemed Commercial Activity u/s 11.

  Case-Laws - AT : Exemption u/s 11 - Charitable activity - renting of premises on commercial basis - merely because the ld AO has found some entries of the voluntary donation/ contributions correlated with their stay in guest house cannot lead to the conclusion that assessee are charging guesthouse/dharmashala on commercial basis. - AT
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• Water Supply Project Recognized as Infrastructural Facility, Eligible for Deduction u/s 80IA of Income Tax Act.

  Case-Laws - AT : Water Supply Project operated and maintained by the assessee is an infrastructural facility and is eligible for deduction u/s. 80IA of the Act - AT
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• Assessing Officer's TDS demand incorrect; Medical Officers responsible for TDS on contract employees at Health Centres u/ss 201(1), 201(1A).

  Case-Laws - AT : Competent authority to deduct TDS - the payments to the contract employees were being made by the respective Medical Officer of various Primary Health Centres and not the assessee and, therefore, the demand raised by the AO is not correct on the ground that TDS is not deducted u/s 201(1) & 201(1A) - AT
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• Section 68: No Additions Made Due to Lack of Evidence on Unaccounted Funds in Share Capital Transactions.

  Case-Laws - AT : Addition u/s 68 - genuineness of the transaction - share capital and share premium - identity and creditworthiness of the investors - the genuineness of the transaction - several other Companies having their Registered Offices at the same address - revenue failed to prove introduction of unaccounted cash/funds in the form of share capital in these companies - no addition - AT
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• Classifying a payment as capital in books doesn't determine its nature; facts must decide if it's capital or revenue.

  Case-Laws - AT : Mere entry in the books of accounts and classifying the said payment as capital, i.e., it has been capitalised in the books will not at all be determinative as it has to be seen on the facts whether such a payment or expenditure falls in the capital filed or revenue field. - AT
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• Repairs and maintenance payments on a cost-to-cost basis exempt from TDS deduction requirements.

  Case-Laws - AT : Non deduction of tax at source (TDS) against payment on account of repairs and maintenance - there is no requirement to make the TDS, when the payments were made on cost-to-cost basis. - AT
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• Microfinance Entity's Charitable Status Restored; CIT Fails to Prove Non-Genuine Operations or Commercial Intent u/ss 11 & 12AA(3.

  Case-Laws - AT : Denial of exemption u/s 11 - cancellation of registration u/s 12AA(3) - Since the assessee is in the micro finance activity, the activity itself is a charitable activity - advances were made to the rural poor - CIT has not proved that there is no charitable activity and the society is not genuine and is running on commercial activity with tangible evidence. - Registration restored - AT
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• Higher Depreciation Rate Approved for Co-Generation Plant Components: RCC Chimney, Driers, Steam Piping, Feeding Systems.

  Case-Laws - AT : Higher rate of Depreciation on co-generation plant - The assessee is entitled for a higher rate of depreciation in the case of RCC Chimney, Bagasee Drier, DC Drier, Steam piping, Coal and gas feeding system and coal handling systems. - AT
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• Organization Serving Gujarati Community in Vijayawada Secures Section 12AA Registration for Charitable Activities.

  Case-Laws - AT : Seeking registration u/s 12AA - proof of charitable activities - Gujarati community does not specify any specific caste or religion or sect i.e. all the communities, castes of the people speaking Gujarati residing in Vijayawada - registration u/s 12AA granted - AT
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• High Court Invalidates Case Transfer u/s 127 of Income Tax Act Due to Lack of Formal Agreement.

  Case-Laws - HC : Transfer of case u/s 127 - non existence of agreement between two jurisdictional Commissioners - Apart from the failure to mention the same in the show cause notice, the only stand of the revenue is that there is an agreement by implication - the first respondent had no jurisdiction to pass the order of transfer. - HC
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Customs

• Customs Act 1962: Section 19 permits separate duty assessment for distinct articles in a set if clearly distinguished by importer.

  Case-Laws - AT : Scope of section 19 of Customs Act, 1962 - Determination of duty where goods consist of articles liable to different rates of duty - The proviso in section 19 does not justify the conclusion that it is a valuation provision but is intended to permit separate assessment for such article in the set for which distinct is evidenced by the importer. - AT
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Service Tax

• Service Tax Demand on Advance Receipts Challenged; Mutual Guarantees Not Considered Advance for Tax Purposes.

  Case-Laws - AT : Demand of service tax on advance receipt - it provides for Advance cum security and in turn the assessee is liable for equal amount of Performance security bank Guarantee. Thus the amount is guarantee from both the sides. Such amount cannot be considered as advance receipt since it is normal feature of contracts. - AT
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• Assessee contests service tax on retention money, claims exemption for exported services provided by engineers abroad.

  Case-Laws - AT : Demand of service tax on retention money - Engineers sent abroad - that the services rendered by the assessee falls under the Export of service which is eligible for exemption from service tax - assessee is not liable for payment of service tax on services rendered abroad. - AT
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• Tribunal Upholds Service Tax on Franchise Service Despite Appellant's Claim of No Representational Rights Granted.

  Case-Laws - AT : Nature of transaction - Sale or service - Franchise service - case of appellant is that they are not covered under the said service as they have not granted any representational rights to their client. - tribunal did not accept the arguments and confirmed the demand of service tax - AT
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• Tribunal Focuses Solely on Service Tax Liability, Sales Tax Payments Irrelevant to Decision-Making Process.

  Case-Laws - AT : It is not for this Tribunal to decided if the liability under sales tax arises or not. This tribunal can only adjudicate if the liability under service tax arises or not. In this regard appellant argument that they have paid sales tax is of no avail. - AT
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• Service Tax Demand Invalidated; Show Cause Notice Quashed Due to Failed Proposed Classification by Department.

  Case-Laws - AT : Demand of service tax - once the departments proposal of classification fails entire show cause notice is liable to be quashed. - AT
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Central Excise

• Furniture Manufacturing at Hotel Site Qualifies as Handicraft Job-Work, Eligible for Tax Exemption Under Central Excise Rules.

  Case-Laws - AT : Job-work - manufacture of furniture items at site (in the hotel) - construction of false ceiling, marble/ceramic/wooden flooring, air conditioning, wooden skirting, ceiling corners, work station, cupboard, storage units etc. - being Handicraft items, eligible for exemption - AT
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• CENVAT Credit Reversal Unwarranted for Decreased Value if Goods Remain Usable in Factory.

  Case-Laws - AT : Reversal of CENVAT credit - Merely because the value of goods diminished in the books of accounts of the assessee would not by itself permit the Department to insist on reversal of the credit particularly when such goods were still available in the factory in usable condition. - AT
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• EOU Penalized for Incorrectly Paying CVD and SAD with Cenvat Credit Instead of Cash.

  Case-Laws - AT : Penalty - 100% EOU - CVD and SAD paid wrongly by utilising cenvat credit, which was ought to be paid in cash - penalty confirmed - AT
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• High Court Finds CESTAT Erred by Not Reviewing Demand Legality After Related Writ Petition Dismissal.

  Case-Laws - HC : CESTAT has held that as Writ Petition has been dismissed it cannot go into question of legality of the demand made by the said letter DD2. According to us, the said approach of CESTAT is completely erroneous. - HC
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VAT

• High Court Examines Judicial Independence in Tribunal Appointments u/s 11 of VAT Act and Rule 6 of VAT Rules.

  Case-Laws - HC : Appointments of administrative member (technical member) of the tribunal - Constitutional validity of Section 11 of the VAT Act and Rule 6 of the VAT Rules - concept of independence of judiciary - High court disposed off the petition with detailed instruction to the government. - HC
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• "De-oiled Paddy Husk" and "Outer Covering of Paddy" Are Distinct Commodities: Clarification on Terminology.

  Case-Laws - HC : The expression de-oiled paddy husk and outer covering of paddy would refer to two different commodities, and paddy husk which is outer covering of paddy, cannot be considered as de-oiled paddy husk - HC
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• Fashion Show Entry via Invitation: Tax Implications Explored Under VAT and Sales Tax Laws with Dissenting Judgment.

  Case-Laws - HC : Whether as a fashion development and promotion society, which conducts fashion shows provides entertainment by hosting such shows? - Whether payment for admission includes sponsorship? - the events are non-ticketed events where entry is by special invite of the organizers - Dissent judgment with different reasoning - HC
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Case Laws:

• Income Tax

• 2017 (12) TMI 1235
  Disallowance of exemption u/s 54EC while computing the Long-Term Capital Gain on the sale of immovable property - Held that:- In the present case, the Appellate Tribunal has taken into consideration various clauses in the development agreement. Sub-clause (d) of clause (3) of the agreement provides that after full payment of consideration, the construction shall be undertaken by the developer. Admittedly, on the date of execution of the development agreement, the entire consideration was not received by the respondent-assessee. The physical possession of the property subject matter of development agreement was parted with by the respondent-assessee on 1st March, 2008. It was held that on that day, complete control over the property was passed on to the developer. After having perused the various clauses in the agreement and the aforesaid factual aspects, the Tribunal has taken 1st March, 2008 as the date of transfer. This finding is fully consistent with the law laid down by the Division Bench in the case of Chaturbhuj Dwarkadas Kapadia (2003 (2) TMI 62 - BOMBAY High Court). Therefore, no fault can be found with the impugned judgment of the Tribunal when it was held that the investment made in the sum of Rs. 50,00,000/by the respondent-assessee on 22nd August. 2008 was within the period specified under Section 54EC of the said Act.

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• 2017 (12) TMI 1233
  Transfer of case u/s 127 - non existence of agreement between two jurisdictional Commissioners for passing the order of transfer - Held that:- In the present case, it is not even the case made out in the show cause notice that the agreement as contemplated by the first part of clause (a) of sub­section (2) of section 127 exists. The existence of such agreement between two jurisdictional Commissioners is a condition precedent for passing the order of transfer. Except for the request which came from the investigation office, Chennai of transferring the case, there is no reference whatsoever to any such agreement. Clause (b) of sub­section (2) of section 127 provides for consequences when there is no such agreement. When the jurisdiction to pass an order of transfer under clause (a) of sub­section (2) of Section 127 can be exercised only when there is such an agreement, the fact that such an agreement exists ought to have been stated in the the show cause notice as the same is a jurisdictional fact. Apart from the failure to mention the same in the show cause notice, the only stand of the revenue is that there is an agreement by implication. This stand is completely contrary to paragraph 5 of the decision of the Apex Court in the case of Noorul Islam Educational Trust (2016 (10) TMI 982 - SUPREME COURT). The decision in the case of Ramswaroop (2016 (5) TMI 491 - BOMBAY HIGH COURT) will also bind this Court for the reasons stated above. Thus in absence of any such agreement, the first respondent had no jurisdiction to pass the order of transfer.

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• 2017 (12) TMI 1226
  Competent authority to deduct TDS - TDS liability on salary - payments made to the Pharmacists and Civil Assistant Surgeons deployed on contract - Held that:- CIT(A) has considered the details and submissions made by the assessee and gave a categorical finding that the assessee is a Government organization and head of Medical & Health Depart for Khammam District and appointing contract employees in the designations of MPHA(M), MPHA(F), Lab Technician Grade-II, Pharmacist Grade-II and Medical Officer for carrying out the activities relating to rural family welfare services. In the process of implementation of the said welfare services, funds were being granted by the Government of Andhra Pradesh to the assessee, who in turn allocated the budget amongst the Medical Officers of various Primary Health Centres working under his control. In fact, the payments to the contract employees were being made by the respective Medical Officer of various Primary Health Centres and not the assessee and, therefore, the demand raised by the Assessing Officer is not correct on the ground that TDS is not deducted under section 201(1) & 201(1A) and allowed the appeals of the assessee. We also find from the paper book at page Nos. 29 & 30, wherein it is clearly mentioned that who are the DDOs to make the payments to various parties, therefore, the assessee is not a competent person to deduct TDS. In view of the above, we find no infirmity in the order of the ld. CIT(A). Thus, this ground of appeal raised by the revenue is dismissed.

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• 2017 (12) TMI 1225
  Addition u/s 69C as unexplained expenditure - Held that:- We find that the coordinate benches of the Tribunal have been taking a consistent view while making sustaining the part addition ranging from 5% to 12.50% or a reasonable percentage of the bogus purchases depending upon the facts of the case in order to tax the savings which the assessee might have made by purchasing the material from gray market by way non payment of VAT and other incidental taxes. Taking the consistent view with the decision of the Co-ordinate Benches of the Tribunal, we are also of the view that 100% addition is not sustainable but only profit on the said purchases could be assessed. We are therefore of the considered view it would be fair and reasonable to make addition at the rate of 12.5% of the said unexplained expenditure. As a result, the appeal of the department is partly allowed. The AO is directed to make the addition at the rate of 12.5% of such purchases. Addition treating the sale of scrap as unaccounted sales - Held that:- We find from the order of the Co-ordinate Bench of the Tribunal in assessee’s own case for the assessment year 2009-10 held that CIT(A) has allowed the scrap sale in view of the norms prescribed by the DGFT of foreign trade wherein the normal scrap can be allowed to the extent of 5%. The scrap of the assessee was to the extent of 2.91% which was found within the limit. The scrap record was maintained by the assessee in RG 1 which was verified by the excise department. Moreover, in earlier years also the scrap was sold and accepted by DCIT u/s.143(3) of the Act in view of the order dated 30.12.2010 for A.Y.2008-09. In view of the above said reasons, we are of the view that the CIT(A) has decided this issue judiciously and correctly Disallowance of expenditure incurred in relation to exempt income u/s 14A - Held that:- We find that the ld.CIT(A) deleted the addition by recording the findings of facts that the assessee’s own funds were far more than the investments made in the securities yielding tax free income. Therefore, the disallowance u/s 14A r.w.rule 8D(2)(ii) was not called for. See CIT V/s RELIANCE UTILITIES AND POWER LTD. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT V/s HDFC Bank Ltd (2014 (8) TMI 119 - BOMBAY HIGH COURT)

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• 2017 (12) TMI 1221
  Seeking registration u/s 12AA - proof of charitable activities - scope of the object clauses - well being of the Gujarati community - Held that:- The society is incorporated not only for the purpose of Gujarati Community, but also for other public charitable purposes which includes general public of Vijayawada and the society is also running school which is for public charitable purpose. The CIT rejected the registration considering only one of the objectives i.e. for well being of the Gujarati community. Gujarati community does not specify any specific caste or religion or sect i.e. all the communities, castes of the people speaking Gujarati residing in Vijayawada. In the instant case the Trust had large number of other objects for the benefit of general public apart from objects for benefit of a Guajarati community. Taking into consideration of other objects we hold that this is fit case for grating registration 12AA and the case is squarely covered by the case laws cited supra. Accordingly, we grant the registration u/s 12AA of I.T.Act to the society and allow the appeal of the assessee. Since we have allowed the appeal of the assessee and granted the Registration u/s12AA we consider it is not necessary to adjudicate alternate claim of the assessee. Accordingly we set aside the order of the Ld.CIT and grant registration to the society u/s 12AA of I.T.Act. - Decided in favour of assessee.

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• 2017 (12) TMI 1220
  Interest on purchase tax - Outstanding amount - AO held that the interest on purchase tax is covered by the provisions of section 43B of IT Act and allowable on actual payment basis - Held that:- The interest liability on unpaid purchase tax would fall within the purview of any sum payable by way of tax, duty fee or cess, etc. and the same cannot be treated as interest within the meaning of section 2(28A) of IT Act. The assessee has not paid the interest on monies borrowed for the purpose of business. The purpose of introducing the Section 43B to allow the deduction on actual payment is to ensure the compliance. In the instant case the assessee failed to make the payment of purchase tax and paid the interest thereon which takes the character of tax but not the interest. Therefore, the interest payable on purchase tax is hit by section 43B of I.T.Act and required to be allowed on actual payment basis. - Decided against assessee Depreciation on co-generation plant - AO disallowed the depreciation claimed by the assessee @80% and reworked the depreciation at 15% except in the case of 12.35 KVA turbine as per the details given - Held that:- The assessee is entitled for a higher rate of depreciation in the case of RCC Chimney, Bagasee Drier, DC Drier, Steam piping, Coal and gas feeding system and coal handling systems. In the case of sub station tower line, the expenditure required to be treated as revenue expenditure. Accordingly we direct the AO to allow higher rate of depreciation on the items mentioned above and in the case of substation tower line to allow the same as revenue expenditure. The appeal of the assessee in Ground Nos. 3 and 4 are allowed.

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• 2017 (12) TMI 1219
  Revision u/s 263 - accrual of commission - Held that:- From the agreement, it is evident that the assessee is entitled for commission as well as the overheads, but the same was not admitted in the return of income. The assessee is following mercantile system of accounting and the assessee required to admit the income on accrual basis, which the AO did not verify at the time making the assessment. The assessee did not place any evidence to establish that the commission has not accrued or there was change in terms of the agreement. Therefore, we hold that the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue and accordingly we uphold the order of the CIT on this issue and dismiss the appeal of the assessee. Non deduction of tax at source on freight charges - Held that:- As on the date of taking up the case for revision u/s 263, there is a difference of opinion prevailing with regard to the legal position on disallowance u/s 40(a)(ia) for non deduction of tax at source. If, two views are possible on an issue and the ITO has taken one view, the said order cannot be treated as prejudicial and erroneous to the interest of the revenue as held by Hon’ble Supreme Court in the case of CIT Vs. Max India Ltd. [2007 (11) TMI 12 - Supreme Court of India]. In the instant case, there is no dispute that the freight payment already made and two views are possible for disallowance u/s 40(a)(ia) and the AO has taken one of the possible views. Hence, there is no case for taking up the case for revision u/s 263. Accordingly, we set aside the order of the Ld.CIT on this issue and allow the appeal of the assessee on this ground. Addition on account of sundry creditors - Held that:- After due verification of the books of accounts, the AO completed the assessment. Outstanding sundry creditors is not the income and it is a liability to be paid by the assessee. Merely for not submitting the confirmations, there is no case for under assessment which is prejudicial to the interest of the revenue and cannot be held against the assessee. Since the assessee has produced the books of accounts and after due verification of the books of accounts, assessment was completed, without referring any defects with regard to sundry creditors, the CIT cannot hold that the assessment as erroneous and prejudicial to the interest of revenue. Accordingly, we set aside the order of the Ld.CIT on this issue and allow the appeal of the assessee. Low profit margin - Held that:- Once the books of accounts and the relevant vouchers are placed before the AO, after due verification of the books of accounts the assessment is completed u/s 143(3), the observation of the CIT with regard to low profit margin is baseless and there is no case for revision u/s 263. Therefore, the order passed by the CIT u/s 263 on this issue is unsustainable. Accordingly, we set aside the order of the Ld.CIT on this issue and allow the appeal of the assessee.

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• 2017 (12) TMI 1218
  Denial of exemption u/s 11 - cancellation of registration u/s 12AA(3) - proof of charitable activity - assessee is advancing loans to the poor and needy - micro finance activity of borrowing and lending to the poor people - Held that:- Since the assessee is in the micro finance activity, the activity itself is a charitable activity as held by ITAT, Visakhapatnam in the case of Spandana (Rural and Urban Development Organization) Vs. ACIT (ITAT-VSP) (2010 (2) TMI 1166 - ITAT VISAKHAPATNAM) and Income-tax Officer, Ward-2, Rishikesh v. Swami Omkarnanda Saraswati Charitable Trust [2017 (12) TMI 1177 - ITAT DELHI] On going through the applications, we observe that the applicants are rural poor with the meagre income of Rs. 10,000 to Rs. 20,000/- per annum. The applications placed before us establish that the advances were made to the rural poor. The DR could not controvert the above facts. Therefore, on this ground, the observation of the CIT, that the assessee failed to prove the advances and loans to the poor is without any foundation, hence unsustainable. The next objection of the CIT on violation of section 13(1)(c) the assessee has given a sum of Rs. 25,67,128/- to Sri V. Prabhu Das, the founder of the society and the assessee explained that the surplus funds were given as advance with interest and the entire sum was collected by the society. Though the Ld.AR argued that there was no violation u/s 13(1)(c), we are unable to accept the contention of the Ld.AR and following the decision in the case of Aggarwal Mitra Mandal Trust vs. DIT [2006 (9) TMI 214 - ITAT DELHI-A] direct the AO to restrict the disallowance to the extent of violation but not on total income. Assessee is not registered u/s 25 of the Company’s Act as envisaged u/s 11 to 13 - Held that:- We have considered the order of the Ld.CIT and gone through the section 11 to 13 and we find that there is no requirement for section 11 to 13 that the institution should necessarily registered with Registrar of Company’s Act. The society is registered under Societies Act, also eligible for grant of registration u/s 12AA of I.T.Act. The assesse society was already granted registration and the same was cancelled by the Ld.CIT. The Ld. DR during the appeal hearing did not place any case law supporting the contention of the CIT. CIT has not proved that there is no charitable activity and the society is not genuine and is running on commercial activity with tangible evidence. As per the discussion in the preceding paragraphs the society is carrying on charitable activities as per the objects. Therefore we hold that the cancellation of registration u/s 12AA of the Act is unsustainable and we set aside the order of the Ld. CIT and allow the registration already granted to be continued. However, we direct the AO to restrict the exemption u/s 11 with regard to the violation of section 13(1)(c) to the extent of the violation. Appeal of the assessee is partly allowed

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• 2017 (12) TMI 1217
  Deemed dividend u/s 2(22)(e) - Held that:- In the facts of present case assessee has merely been a medium to transfer the loan amount by M/s Sharma Medicare Pvt.Ltd. to M/s Eastern Creations Ltd. due to the restriction u/s 3(1)(iii)(d) of Companies Act, 1956. A specific query was put forth by Bench to Ld.AR, as to why intercorporate loans were not advanced to M/s Eastern Creations. Ld.AR was unable to reason out the business exigency for advancing loans to M/s Eastern Creation through assessee. In over all consideration of the issue as deliberated upon in the foregoing paragraphs, we are of the view that Ld.AO was within his realm to invoke provisions of Sec.2(22)(e) of the Act. We therefore uphold the action of authorities below. Accordingly ground No. 1 and 2 raised by assessee stand dismissed. TDS u/s 194 - interest paid to financial companies - Addition u/s 40(a)(ia) - non deduction of tds - Held that:- AO has rightly made addition of interest paid to these financial companies for non deduction of TDS u/s 194 of the Act. However in the event assessee is able to produce relevant information before Ld.AO to establish that M/s Reliance Capital Ltd. and M/s Bajaj Capital Ltd. have paid tax on such interest received, then Ld.AO shall grant relief to assessee as per law. Addition made towards purchase of medicines and materials - Held that:- We observe that assessee is rendering OPD services, where patients are attended by assessee and cost of medicines issued at the counter are included in the fees payable by them. However, we fail to understand how entire medicines/materials worth Rs. 21,41,248/- would be distributed amongst the patients. Ld.AR has not filed any details like total number of patients attended by assessee during the year, in order to establish a reasonable distribution of medicines purchased by assessee. He has also not placed on record details of medicines/materials purchased. We therefore do not find any infirmity in restricting the disallowance to Rs. 50,000/- by Ld.CIT(A). The same is therefore upheld.

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• 2017 (12) TMI 1216
  Addition on money received on sale of flats - search and seizure action u/s. 132 - statements recorded during the course of the search - Held that:- The undisputed facts before us are that search and seizure action u/s. 132 of the IT Act took place on 17.11.2014 on the assessee as well as its group company. The assessee submitted return of income on 31.10.2015 declaring total income of Rs. 13,48,82,480/-, which was subsequently revised to Rs. 13,45,71,200/- on 7.07.2016 and finally revised the return on 30.12.2016 by including therein a sum of Rs. 72,50,000/- and paid taxes thereon. The sum of Rs. 72,50,000/- declared by the assessee relate to the Chestnut project, single building project completed during the year in respect of which evidence was found during the course of the search for on money received and it was also surrendered by the assessee company during the course of the search and is included in the sum of Rs. 63,39,52,372/- added by the Assessing Officer to the assessee’s income. We noted that the AO while computing the total income of the assessee has considered the revised return declared by the assessee at Rs. 13,45,71,200/- Therefore, the addition of Rs. 72,50,000/- has to be confirmed and, accordingly, we confirm the said addition of Rs. 72,50,000/-.The assessee has also included the said amount in its revised computation and paid taxes thereon on 27.12.2016. Addition made on the basis of estimating the sale consideration in respect of the flats - Held that:- From the documents in the booking, it is evident that different flats and different shops have been booked at different rates by the assessee. From page 443 of the paper-book, as found during the course of search, the assessee has given discount on the bookings at different rates to different customers. We noted that in respect of two shops although the base rate has been mentioned @21,000 per sq. ft, the assessee has given discount around Rs. 4150 per sq. ft. and booked the shops @17500 per sq. ft including the club charges of Rs. 750/-. Similarly, in respect of flat also we noted that the base rate has been mentioned @12,000/- per sq. ft and after adding floor rise, club charges, infra charges etc., total rate came to Rs. 14375 per sq. ft. and the assessee has also given discount of Rs. 1000/- and ultimately booked the flat @13,350 per sq. ft. Even on the same very page had the details of the flats which had been booked @ 14550/-, 14300/- and Rs. 13225/- per sq. ft. Therefore, the conclusion drawn by the Assessing Officer while making the addition is based just on assumption as if the assessee the assessee has sold all the flats @15750 per sq. ft. In view of this fact, we delete the addition of Rs. 33,47,33,101/- made on the basis of estimating the sale consideration in respect of the flats @15750/- per sq. ft. and Rs. 9,97,40,450/- based on the presumption as having being booked shops @26000/-. Project completion method has been followed consistently by the assessee. Both the projects relating to the flats and the shops in respect of which the evidence were found for receipt of on-money by the assessee were not completed during the year. Since these projects were not completed during the year, the amount received by the assessee is merely a booking amount i.e. only the advance received for booking of the flat/shop. These amounts therefore in our view cannot be added during the impugned assessment year. We are of the view that the project completion method is one of the method of accounting where the expenses identifiable with the project are to be allowed in the year when the project is completed. Similarly, the receipt from the project is to be accounting for as income only in the year in which the project is completed. Direct the AO to make the addition in respect of these on-money in the respect assessment years in which the projects have been completed. Estimation of income - Income tax imposed on the real income and not on the income which have estimated by the assessee - Held that:- Material except the estimated profit computed during the course of the search that the actual profit from the said project was much more that the actual profit shown by the assessee. Income tax has not be levied or vested on the estimated profit, it has to be levied on the real income derived by the assessee. In our view, no addition can be made by the Assessing Officer merely on the basis of the statement of the assessee recorded during the course of the search until and unless there are corroborative evidence to support that the assessee has derived income whatever was estimated during the course of the search. No cogent material or evidence was brought to our knowledge by the learned DR. We, therefore, set aside the order of the CIT(A) on this issue and delete the addition made by the Assessing Officer to the extent of Rs. 12,04,18,428/-

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• 2017 (12) TMI 1214
  “Upfront Fees” or as ‘licence fee’- nature of expenditure - capital in nature or is on revenue count - Held that:- Mere entry in the books of accounts and classifying the said payment as capital, i.e., it has been capitalised in the books will not at all be determinative as it has to be seen on the facts whether such a payment or expenditure falls in the capital filed or revenue field. If the assessee had acquired any right by making payment of Rs. 150 crores, then under the terms of OMDA it is clearly stipulated that the payment of ‘annual fee’ of 45.99% of the gross revenue of the year is not made continuously then the OMDA agreement will come to an end. On this fact also the assessee has not acquired any licence or right by making the payment of Rs. 150 crores. Thus, on this count also it cannot be held that the said sum is for acquiring any licence or right. In view of the aforesaid discussion and analysis we are of the opinion that the payment of Rs. 150 crores is to be treated as revenue expenditure and order of the Ld. CIT (A) allowing such expenditure is affirmed and grounds taken by the revenue is dismissed. Nature of expenses - repair and maintenance of building, plants and others - revenue or capital expenditure - Held that:- Since, AO has himself has not classified or distinguished as to which repairs is for new infrastructure or for construction of new structure, therefore, we are unable to give any finding that any of the expenditure as noted above pertains to new construction. As he himself has treated to be revenue, then in that case, we hold that the entire expenditure under the head repair and maintenance is allowable as revenue expenditure in the year in which it is claimed. The judgements relied upon by the Ld. CIT DR would not apply under such facts and circumstances of the case. However, we agree with one of the contentions of the Ld. CIT DR that an amount debited under this head cannot be treated as expenditure on repair and maintenance and therefore, AO is directed to remove this expenditure from the head ‘repair and maintenance of building etc. With this direction, ground No. 2 as raised by the revenue is partly allowed. Disallowance u/s 14A to the tune of 5% of the dividend income - Held that:- In view of various judicial pronouncements as relied upon by the Ld. Sr. Counsel above, which carves out the proposition that in such a situation it can be presumed that such an investment has been made out of own funds/interest free funds and therefore, on this count also, we do not find any reason for any disallowance of interest. Coming to the reasonableness of disallowance made by the Ld. CIT (A) who had disallowed 5% of the dividend income out of indirect expenditure, we find that the said conclusion of the Ld. CIT (A) is not only reasonable but also is in consonance with the certain judicial precedent and therefore, we do not find any reason to interfere in such a finding and same is affirmed accordingly ground No. 3 as raised by the revenue is dismissed. Eligible business specified in section 80IA(4)(i) - Held that:- No the assessee is carrying on the business of operating and maintaining of airport which is an eligible business specified in section 80IA(4)(i) for which assessee is eligible for claim for deduction u/s 80IA. In support of the claim, audit report in prescribed form had already been obtained. The said claim was not made in the return of income, because there was a huge loss of more than Rs. 155.55 crores. It was only when huge income was assessed at positive figure; assessee has made its claim for deduction u/s 80IA. In light of this background, the direction of the Ld. CIT (A) to the AO is in accordance with the law and no interference is called. Disallowance of payment made by AAI in respect of CWIP - revenue or capital expenditure - Held that:- In light of the categorical stipulation with regard to the treatment of capital work in progress, it is ostensibly clear that it was the CWIP which was taken over by the assessee by making such payment of Rs. 45.50 crores and assessee itself has capitalised the said amount under the head capital-work-inprogress in the subsequent year also. On the completion of CWIP the same was stipulated to be transferred to the concerned completed work assets and depreciation was to be allowed on such assets. Thus, in light of these documents and facts, we hold that Ld. CIT (A) has rightly held that payment of Rs. 45.50 crores to AAI in respect of work in progress is clearly capital expenditure and same cannot be allowed as revenue expenditure. Thus, order of the Ld. CIT (A) on this score is affirmed and the ground raised by the assessee is dismissed. Penalty proceedings u/s 271(1)(c) - Held that:- Merely because assessee has made a claim for revenue expenditure which later on has been held to be capital in nature does not mean that assessee is guilty of either furnishing of inaccurate particulars of income or concealment of income. Though the finding in the quantum proceedings are of great pervasive value, however such a finding alone in the quantum side does not leads to conclusion that penalty is to be levied or confirmed automatically. What is to be seen is, whether the assessee’s claim was otherwise allowable under the law or not. Here in this case at the stage of AO itself, part of the expenditure has been treated as revenue, therefore, in such a situation it cannot be held that assessee has furnished any inaccurate particulars of income or assessee’s explanation has been found to be false or unsustainable in law. The finding of the Ld. CIT (A) that assessee has made full disclosure and merely because the claim has been found to be unsustainable by the appellate authorities it does not mean that assessee has furnished inaccurate particulars of income and in such a situation the principle and laid down in the judgment of Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT) is clearly applicable.

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• 2017 (12) TMI 1204
  Revision u/s 263 - AO has not verified claim of deduction U/s 80IA on account of income from Railway Siding, Water project and captive power consumption and committed an error in passing the Assessment Orders - Held that:- The assessee company had claimed the deduction u/s. 80IA(4) of the Act in accordance of the provisions of the Act and the assessing officer has rightly allowed the same after making elaborate enquiry regarding the eligibility of assessee's claim, before specifically denying this deduction in respect of CER and allowing the same in respect of CPP, Water Supply and Treatment Plant and Rail System. The order of the Assessing Officer may not have dealt specifically on all these issues in the assessment order but that by itself is not sufficient reason to hold that the assessment order is erroneous and prejudicial to the interest of revenue. It is for the Ld.PCIT to point out as to what error was committed by the Ld. AO in taking a particular view. On a perusal of the agreement dated 16.01.2007 entered with South Western Railway, Hubli division for railway system we find clauses in the agreement are exactly identical to the agreement entered into by M/s.Ultratech Cements Limited for the railway siding in its premises. On analyzing the agreement and clauses thereon and the provisions of the Act it has been held by the Coordinate Bench in the case of M/s.Ultratech Cements Limited (2017 (12) TMI 1134 - ITAT MUMBAI) that the Railway System operated by the assessee is an infrastructure facility and entitled for the deduction u/s. 80IA of the Act. Section 80-lA was an instrument of legislative policy, conceived with a view to provide an impetus to private sector participation in infrastructural projects. We also find from the letter dated 04.03.2014 submitted to the Assessing Officer it was clearly stated that this facility is being operated and maintained by the assessee company. Therefore, it can be said that the assessee is operating and maintaining the infrastructure facility in the form of water supply project. Therefore, applying the same principles as was held in the case of Railway system we hold that the Water Supply Project operated and maintained by the assessee is an infrastructural facility and is eligible for deduction u/s. 80IA of the Act. - Decided in favour of assessee.

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• 2017 (12) TMI 1203
  Addition u/s 68 - genuineness of the transaction - share capital and share premium - identity and creditworthiness of the investors - the genuineness of the transaction - several other Companies having their Registered Offices at the same address - Held that:- Evidences and material on record clearly prove identity of the Investors, their creditworthiness and genuineness of the transaction in the matter. We rely upon the decision of the Hon’ble Supreme Court in the case of Orissa Corporation Pvt. Ltd. [1986 (3) TMI 3 - SUPREME Cour]. Since the assessee produced sufficient evidence before A.O. therefore, initial burden upon assessee to prove identity of the Investors, their creditworthiness and genuineness of the transaction have been discharged. The case set-up by the A.O. against the assessee was that the premises belong to M/s. Bhushan Steel Companies and other companies are having same registered office. This created a suspicion in the mind of the Revenue. The Ld. CIT(A) therefore, rightly noted that there is no Law that more than one Company cannot have its registered Office at one address. The Investor Companies would have changed their address later on. It is also an admitted fact that source of the capital introduced in these companies were established during the respective assessment proceedings, including in the assessee. No evidence was found during the course of search or survey to indicate introduction of unaccounted cash/funds in the form of share capital in these companies. - Decided in favour of assessee.

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• 2017 (12) TMI 1199
  Addition u/s 36(1)(iii) - diversion of interest bearing loan into interest free advances - Held that:- This issue requires a fresh examination at the end of the ld. CIT(A). Hence, we direct the ld. CIT(A) to take proper remand report from the AO to examine the agreement of loan, Maintenance contract and ‘receiving rent-free office accommodation as per agreement to establish the commercial expediency. Therefore, in all fairness we set aside order of the ld CIT(A) and direct the ld. CIT(A) to take the proper remand report from the AO and then go through the loans documents, business contract to receive rent free office and maintenance contract to establish the commercial expediency. Therefore, we allow this ground for statistical purposes Disallowance u/s 40(a)(ia) - non deduction of tax at source u/s 194A - assessee failed to produce the copies of declaration in Form no.15G/H from the parties - Held that:- Coordinate Bench Hyderabad, in the case of Malineni Babulu Vs. ITO [2015 (8) TMI 705 - ITAT HYDERABAD] wherein it has been held that declaration of the payees in the prescribed form with it at the time when the interest was paid to the respective customers, in this position, the assessee cannot be held to be liable to deduct tax therefrom u/s 194A of the Act. We further hold that if the assessee bank was not liable to deduct tax at the time of payment of interest, then section 40(a)(ia) of the Act is not attracted and the assessee cannot be held liable to pay tax. Therefore, we are of the view that section 40(a)(ia) cannot be invoked by the AO in a situation when the assessee has filed Form 15G/15H before the Appropriate Authority. Non deduction of tax at source by the assessee to the parties against payment on account of repairs and maintenance - Held that:- Assessee was rendering different types of service to the customers. Firstly, it was rendering service directly and secondly he was undertaking repairs and service on behalf of the companies for whom products were sold. It is seen that the assessee had deducted TDS when services were on behalf but has not deducted any TDS when the payments was made by way of any reimbursement to the services. We are of the view that the payment was by nature of reimbursement for repair costs met by the customers. Therefore, there is no requirement to make the TDS, when the payments were made on cost-to-cost basis. Therefore, based on the factual position explained above, we confirm the order passed by the ld. CIT(A).

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• 2017 (12) TMI 1177
  Denial of benefit of section 11 and 12 - non charitable activities - assessee has rented out various commercial properties and reported commercial receipts in the form of rental income which is separate activity purely commercial in nature and does not have any relation between educational activities - Held that:- In the present case the Revenue has brought no such evidence or material on record except that the assessee has earned rental income. Further the allegation against the assessee that it is giving the dharmashala on rent to its inmates and charges room rent from them is devoid of any merit because the amount of donation received by the assessee is not classified based on the room used by such guest. Further the actual receipt of the money at dharmashala is also stated to be the voluntary contribution. It is not the case of the revenue that the rooms used by the inmates for the year shows the actual receipts based on some pre-decided room tariffs or based on certain facilities. Further merely because the ld AO has found some entries of the voluntary donation/ contributions correlated with their stay in guest house cannot lead to the conclusion that assessee are charging guesthouse/dharmashala on commercial basis. In fact it is tradition whenever the people stay in the dharmashala etc, they contribute according to their capacity to contribute and not in accordance with the pre-fixed tariff rates. No infirmity in the order of the ld CIT (A) in holding that the rental income received by the trust is not hit by the proviso to section 2(15) of the Income Tax Act. Appellant is engaged in the business of selling education - Held that:-The claim of the revenue is that assessee has to demonstrate that it exists for the poor and needy people. We do not subscribe to that view as while reading the provision of section 2 (15) no such condition is available. According to that section charitable purposes includes 'education' in its literal meaning. If the trust is providing education it carries on charitable activity, hence we reject this argument of the revenue. In view of this, the reliance placed upon by the ld Assessing Officer on the decision of the Uttarakhand High Court is incorrect. The Next issue raised by the ld AO is that assessee trust when amended the trust deed did not initiate the same to the ld AO/ Revenue. It is required to be noted that assessee has amended the deed but it has not amended any of the objects of the deed. Only amendment was with respect to the borrowings powers of the trust for loan. Therefore, it is irrelevant that such amendment was not intimated to the Assessing Officer. As we have already held that the assessee is not hit by the first proviso to section 2(15) of the Act the issue of receipts of the activities exceeding the specified limit does not apply. In view of this ground Nos. 2 and 3 of the appeal of the revenue is dismissed. Donation given to another trust who is not eligible -Held that:- The provision of section 13(1)(c) provides that if any income of the trust eligible for computation of income u/ss 11 and 12 uses or applies its income directly or indirectly for the benefit of any person specified under sub-section 3 then it loses the exemption. In the present case we do not find that assessee has violated any such condition. The assessee has given donation to the trust having the object of education, which is also one of object of the assessee trust. In view of this according to us assessee has utilized its income for the purposes of its own object by donating to that trust. It is not the case of the revenue that such donations are given to the trust, which does not have the objects of education. Six vehicles have been purchased in the name of the trustees - Held that:- revenue must first establish that income or the property of the trust is diverted during the previous year in favour of specified persons. The vehicles are stated to be purchased in earlier years and not in this year. Therefore it is apparent that during the year assessee trust has not diverted any income for purchasing such vehicles during the year. However it is the claim of the revenue that assessee is paying interest on loans taken for various vehicles. In the order of the ld AO it has not been established that how the amount of interest paid amounts to the application of income is diverted in favour of the specified persons. Ld AO has only established that six out of none vehicles have been registered in the name of specified persons but it has not been established that how the income is diverted by the assessee in favour of the specified persons. Therefore as the full facts of the issue are not available on record this issue is set aside to the file of ld AO to first establish that there is any diversion of income of the trust during the year in favour of the persons specified when the vehicles are registered in the name of persons other than the assessee. Anonymous donation received - Held that:- AR has stated that the complete name and address of the donors is placed at pages No 286 to 340. We have carefully considered the rival contention of this aspect and perused the relevant documents placed at pages No 286 to 340 of the paper book. In these papers, assessee has tabulated the name, address, date, and amount of donation received. In view of this we do not find any infirmity in the order of ld CIT (A) in holding that such voluntary contribution cannot be said to be anonymous donation. However on verification of the details submitted by the assessee it shows such total donation at Rs. 39,68,455/- whereas the ld AO has computed such donation at Rs. 4081528/-. In view of it, this ground is set aside to the file of the ld AO to reconcile difference of Rs. 113073/- with the donation list given by the assessee and amount of donation computed by him. In the result ground No 6 to the extent of only Rs. 113073/- is set aside to verify whether the assessee has name and address of such donors available with it or not. Loss of exemption on whole of its income or only part of the income to the extent of violation when the assessee loses exemption u/ss 11 & 12 - Held that:- We do not agree with the contention of the revenue that the trust loses exemption on whole of its income, we agree with the view of the ld AR that the denial of exemption under section 11 should be limited to the amount which was diverted in violation of section 13 of the Act. See CIT v. Fr. Mullers Charitable Institutions [2014 (2) TMI 1033 - KARNATAKA HIGH COURT]

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• 2017 (12) TMI 1174
  Transaction of conversion of shares from stock-in-trade to investment and its subsequent sales - LTCG OR business income - Held that:- As relying on case of Deeplok Financial Services Ltd. Versus CIT-A [2017 (4) TMI 300 - CALCUTTA HIGH COURT] wherein held Section 45(2) of the Act provides for conversion by the owner of a capital asset into or its treatment by him as stock-in-trade of a business carried on by him as chargeable to income-tax as income of his previous year in which such stock-in-trade is sold or otherwise transferred by him and fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of a capital asset. The Act however does not provide for the conversion of stock-in-trade into capital asset. - Decided against revenue

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• Customs

• 2017 (12) TMI 1209
  Mis-declaration of value - section 19 of Customs Act, 1962 - Determination of duty where goods consist of articles liable to different rates of duty - Held that: - Section 19 empowers the ascertainment of rate of duty when goods are presented as a set of articles for clearance. That it is not a provision for valuation should be apparent from the reference within it to specific and ad valorem as the two mutually exclusive possibilities. It empowers the application of the highest rate of duty that would be leviable on the various articles in the set to all the articles. Impliedly, this is to be resorted to when a single value is declared for the set as a whole and it is merely the most appropriate rate of duty that is to be determined from among the varied rates for each article in the set. The proviso in section 19 does not justify the conclusion that it is a valuation provision but is intended to permit separate assessment for such article in the set for which distinct is evidenced by the importer. The impugned order has referred to proviso in section 19 of Customs Act, 1962 as the authority to club the values of the various goods. There is no finding as to the applicability of section 19 of Customs Act, 1962 to the facts pertinent to the dispute. Such finding should necessarily decide if the goods are presented as a set of articles with a unified, non-separable value, enumerate the various articles that comprise the set, ascertain the rate of duty applicable to each and then compute the duty liability of the unified value by applying that identified rate of duty. Without such an exercise, invoking of section 19 of Customs Act, 1962 is not consummated. Appeal allowed by way of remand.

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• 2017 (12) TMI 1181
  Redemption fine - penalty - license not obtained from D.G.F.T for export of certain consignment of graphite equipments - Held that: - Imposition of redemption at the rate of 15% of the value assessed in each case may considered to be justifies - So far as the penalty is concerned, that is imposed to deter contravention of law since No such imposition shall be bonus to the evader and an incentive to break the law So far as penalty imposed on the employee of the appellant in Appeal No.C/472 is concerned he is found to be General Manager-Marketing of the appellant. Keeping in view that the main appellant was an artificial person being a Company, infraction of law is only possible with the human intervention. Accordingly, role of General Manager-Marketing in exporting goods without licence calls for levy of penalty. Ld. Authority was rightly imposed penalty on him. Appeal allowed in part.

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• 2017 (12) TMI 1178
  Valuation - imported cut & polished Diamonds - redemption fine - Held that: - when value of diamonds imported was mis-declared and that was confiscated, imposition of a token redemption fine of Rs. 5,00,000/- under misplaced sympathy is liable to criticism - So also when there was huge difference in the value declared and determined, establishing deliberate mis-declaration, levy of penalty of Rs. 5 lakhs also appears to be too low and is an incentive to wrong doing. Appeal dismissed - decided against appellant.

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• Insolvency & Bankruptcy

• 2017 (12) TMI 1212
  Corporate insolvency resolution process - Held that:- Sub-section 5 starts with non-obstante clause saying that notwithstanding any other law contrary to this Code, this Authority shall have jurisdiction to decide any application or proceeding by or against the Corporate Debtor or corporate person, any claim made or against by the Corporate debtor or corporate person including clients by or against any of its subsidiaries situated in India and also in respect to the priority of any question of law or facts in relation to insolvency resolution or liquidation proceeding of the corporate debtor or corporate person under this Code. This is a non-obstante clause provision giving right to file any application or claim in respect to the corporate debtor or corporate person despite such issues are governed by some other law in conflict with this law. It has to be borne in mind, it is an overriding provisions in respect to other laws but not to the provision of this Code, therefore, if any law is laid down in this Code to do a particular thing in particular manner, this Authority cannot exercise this jurisdiction given under this sub-section to override a specification already given in this Code by giving an interpretation contrary to the mandate in that particular section. It has to be understood that this sub-section is not meant for exercising jurisdiction over the mandates already given in the Code. Therefore, asserting jurisdiction u/s 60(5) of the Code to tweak super majority is a misconceived idea, therefore, we have not found any merit to consider the plea of this applicant to direct the committee of creditors to take up something which has already been decided by them in compliance of the provision of this Code. The applicant counsel has raised various contentions saying that workmen will suffer; the resolution plan value is double to the net liquidation value given by the valuers, likewise many other contentions. By seeing all these contentions, can all these assume jurisdiction to this Authority to go as if they were not in the mind of the legislators when this Code has been passed. To bring in this Code, thorough exercise has been done by studying the Indian law and various foreign laws, thereafter committee dedicated its time and then it went before parliament, referred to standing committee, soon after examination by the standing committee; bill has been approved by the Parliament after thorough discussion. Can such legislation be changed by this Authority applying its wisdom or ignorance, ignoring all the exercises that have been made by this country? We believe it is not. As to Notification given by government on 25.10.2017, it has been given to say that requisite of shareholders’ resolution or approval is not an impediment to carry out the resolution plan, it need not be read into to say that this Bench has to give clarification before passing order of liquidation. The language is simple and clear saying shareholder approval is not required to the resolution plan or to any of its clauses. Application filed by the Workmen stating that if this company has been liquidated, the workmen will suffer for it - Held that:- the jurisdiction lies with this Bench to exercise its power u/s 31 of IBC only when a plan is approved by the CoC as stated in the Code, here, for no plan has been approved by the CoC, there cannot by any occasion to this Bench to make any observation in respect to a decision come from CoC meeting. In section 30 also, no discussion has made in respect to rejection of a Resolution Plan, it only talks about approval of a Plan with 75% super majority of vote share of the CoC. When there is no consensus to take any decision with 75% majority, it cannot be said that this Bench will interfere with the rights of the Committee of Creditors. When no decision has been taken by CoC, no jurisdiction will lie to this Bench to make any observation, that apart, the jurisdiction given u/s 30 is only limited to approve or reject the Resolution Plan approved by the CoC with super majority. When such is the case, how could it be expected that this Bench would be in a position to invoke its jurisdiction to go into the claim made by the workmen. Therefore, this Application is hereby dismissed making an observation that this Bench is devoid of jurisdiction to decide this application. Prayer to pass an order requiring the Corporate Debtor to be liquidated in terms of the provisions of Chapter III of Insolvency & Bankruptcy Code, to issue a public announcement stating that the Corporate Debtor is in liquidation - Held that:- The Insolvency Resolution Process of 270 days is already over by 14.10.2017, since no resolution plan has been received by this Bench, as contemplated u/s 30(6) of the Code, this Bench hereby orders the Corporate Debtor to be liquidated in the manner as laid down in this Chapter, to issue a public announcement stating that corporate debtor is in liquidation and also to send this order to the RoC with which the corporate debtor is registered by appointing the Resolution Professional herein as the Liquidator u/s 34 of the Code for the purposes of this liquidation by holding that all powers of the Board of Directors, key managerial personnel and the partners of the Corporate Debtor will cease to have effect and shall be vested in the liquidator with direction to the personnel of the corporate debtor and to extend cooperation to the liquidator as may be required by him in managing the affairs of the corporate debtor. RP appointed as liquidator is entitled to charge fees for the conduct of the liquidation process as agreed by the CoC in the 12th meeting held on 10.10.2017, in the alternative as prescribed in the IBBI (Liquidation Process) Regulations. It has been further directed that the company shall be liquidated as laid under Chapter III of IB Code r.w. IBBI (Liquidation Process) Regulations 2016.

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• 2017 (12) TMI 1196
  Corporate Insolvency Resolution Process - whether Section 14(2) of the Code gives protection to the IRP not to pay for the electricity consumption charges to the Electricity Company pending completion of the CIRP? - Held that:- Section 56 of the Electricity Act, 2003 applies to every citizen of India and whole of India except the State of Jammu and Kashmir. Whoever that failed to pay the electricity consumption charges, even by the highest dignitary in India has to face the interruption of electricity supply under Section 56 of the Electricity Act, 2003. But Insolvency and Bankruptcy Code gives exemption for the Corporate Debtors undergoing CIRP for a particular period, namely the ‘moratorium period’. Therefore, Section 14(2) of the Code must prevail over Section 56 of the Electricity Act, 2003. Therefore, the electricity authorities are not entitled to disconnect the power supply to the Corporate Debtor, M/s. ABG Shipyard Limited, invoking Section 56 of the Electricity Act, 2003. It may be said that it amounts to absolving the Applicant or the Corporate Debtor from paying the electricity consumption charges. But it is not so. The Electricity Company can claim the power consumption charges as an ‘Operational Creditor’ from the assets of the Corporate Debtor on par with other operational creditors based on priorities given in the Code and the Rules and Regulations. Therefore, the Corporate Debtor or the Applicant is not absolved from paying the charges. The claim of the Corporate Debtor to pay the electricity consumption charges shall be taken into account by the Resolution Professional along with other Operational Creditors following the priorities given under the Code, Rules and Regulations. In view of the above discussion, there shall be a direction to the Dakshin Gujarat Vij Company Limited, Piplod Division Office, not to disconnect the power supply to M/s. ABG Shipyard Limited, Surat Unit, during the moratorium period. However, Dakshin Gujarat Vij Company Limited is entitled to make a claim for electricity consumption charges with the Resolution Professional and the Resolution Professional shall receive such claim, and process it along with other Operational Creditors following the priorities given in the Code, Rules and Regulations.

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• 2017 (12) TMI 1180
  Corporate insolvency procedure - proof of eligible debt - Held that:- On perusal of the petition along with supported documents and pleadings of respondents and relevant law, we are convinced that the instant petition (application) is complete in all respects, as prescribed under section 9(2) of Code, and satisfied/fulfilled all the conditions prescribed under section 9(5) of the Code so as to admit the case, and to pass consequential order by invoking powers conferred on the Adjudicating Authority under sections 13,14,15 and 16 of Code. In view of the above facts and circumstances of the case, we are of the considered opinion that it is a fit case for admission.

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• Service Tax

• 2017 (12) TMI 1213
  Extended period of limitation - penalty u/s 77 and 78 - Construction of Residential Complex - Held that: - there was no occasion for the Department to know the fact of non-payment of Service Tax by the appellant. For this reason Department could not issued show-cause notice within the normal time period of one year. The failure on the part of the appellants in as much as they have not obtained the Service Tax Registration and also not filed periodical ST-3 return, they have suppressed the fact of non-payment of Service Tax from department therefore the extended period was rightly invoked - the demand of Service Tax and interest thereof is upheld. Penalty u/s 77 and 78 - Held that: - Since the issue of penalty u/s 78 is mixed question of law and fact, we are of the view that the matter needs to be reconsidered by the Adjudicating Authority - For the purpose of re-deciding the issue of penalties imposed under Section 77 & 78, the matter is remanded to the Adjudicating Authority. Partly decided against appellant and part matter on remand.

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• 2017 (12) TMI 1211
  Sale of SIM cards - demand of service tax - extended period of limitation - Held that: - as per the judgment of Honble Apex Court in the Appellants own case viz IDEA MOBILE COMMUNICATION LTD. Vs. COMMR. OF C. EX. & CUS., COCHIN [2011 (8) TMI 3 - SUPREME COURT OF INDIA] it was held service tax to be payable - However since the issue was in dispute in many cases before the Tribunal, particularly in Appellants own case in Idea Mobile Communication Ltd. [2012 (8) TMI 565 - CESTAT, NEW DELHI], the tribunal set aside the demands for the extended period - the demands of service tax on sale of sim cards raised by invoking extended period and penalty to that extent is not sustainable against the Appellant. Demand of service tax - International roaming services provided to persons coming to India - Held that: - the subscribers are not of the Appellant but of foreign telecom network operator. There is no contract between the Appellant and subscriber of foreign telephone operator. In such case when the service has not been given to any subscriber, the service tax demand cannot be made - demand set aside. Business auxiliary Service - Held that: - the services of giving space on towers for erection of antenna, usage of tower rooms for installation of equipments, usage of generator sets etc by the Appellant would fall under the category of Business Support Service - the adjudicating authority shall scrutinize the service tax payment made by the Appellant and shall communicate the deficiency to the Appellant who shall make payment of the same alongwith interest. Penalty - Held that: - the Appellant shall be liable to penalty u/s 78 to the extent of the service tax amount stand confirmed. However the penalty u/s 77 is reduced to Rs. 5,000/-. Appeal disposed off.

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• 2017 (12) TMI 1210
  CENVAT credit - job-work - Rule 6 of the CCR, 2004 - inputs/input services used for providing taxable and exempted output services - non-maintenance of separate records - Held that: - it is not in dispute that the activities undertaken by M/s IHT & IHC were in respect of goods on which the principal manufacturers were paying duty. It is the accepted fact of the show cause notice that the principal manufacturers were discharging central excise duty on final products - In terms of Rule 3 of Cenvat Credit rules 2004 the job-worker is eligible to avail credit of tax paid on input and input services where the jobwork is undertaken in terms of N/N. 214/86 CE dt. 25.03.1986 i.e when the principal manufacturer is discharging duty on final products. The Appellants have correctly availed the cenvat credit used in job-work activity and the bar of Rule 6 of the CCR, 2004 would not apply - appeal allowed - decided in favor of assessee.

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• 2017 (12) TMI 1205
  Management, Maintenance and Repair Service - software - levy of tax - Held that: - the services repair, maintenance and management of software by the entity situated outside India was carried out through internet. Such services were brought into tax net by insertion of proviso to Rule 3 (ii) of the Taxation of Services (Provided From Outside India and Received in India), Rules, 2006 vide N/N. 6/2008 - ST dt. 01.03.2008 - the services become taxable by insertion of above w.e.f. 01.03.2008, whereas in the present case the demand pertains to the period 13.06.2005 to 17.11.2006, hence the service tax is not leviable - demand not sustainable. Business Support Service - Held that: - the services were rendered in respect of providing international roaming services to the customers of the Appellant and the same falls under the category of Telecommunication services and the same is not taxable - demand set aside. Development & Supply of content for Telecommunication, Advertising and Online Information Services - demand paid before issuance of SCN - penalty - Held that: - except services under the category of “Development & Supply of content for Telecommunication, Advertising and Online Information Services” no service tax is payable and the demands are set aside. In case of demand under the Category of D & STA Services taking into consideration the fact of deposit of Service tax with interest before issuance of show cause notice and the revenue neutrality, we find it fit not to impose any penalty - penalty not sustainable. Appeal allowed in part.

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• 2017 (12) TMI 1202
  Penalty - non-payment of service tax - case of appellant is that since the levy of service tax was not clear and the issue has been subject matter of disputes in many cases, therefore the Appellant could not pay service tax - Held that: - the intention of the assessee towards non payment of service tax is whether due to dispute about levy or confusion has to be looked into by observing the facts of the each case - The demands of the extended period can be invoked only when there is ingredients of fraud, suppression or malafide intention on the part of the assessee for non-payment of tax. On the other hand the penalty can be waived only by taking recourse to section 80 of the Act. It is proper to remand the case to the adjudicating authority - appeal allowed by way of remand.

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• 2017 (12) TMI 1200
  Penalty u/s 76, 77 and 78 - non-payment of service tax and non-declaration of the same - Held that: - appellant were neither paying service tax correctly nor even declaring in the ST-3 returns - It is observed that if at all appellant had any bonafide intention, though they had not paid service tax in time, they could have very well declared taxable value in their ST-3 returns, they failed to do so, this clearly shows that appellant had pre-determined mind not to pay service tax hence suppressed of facts from the department. Only after detection of the department, appellant have come forward and paid service tax. Therefore intention to evade payment of service tax established. There is suppression of facts regarding non-payment of service tax with the department, therefore ingredient required for imposing penalties u/s 76, 77 and 78 indeed exist - penalty upheld - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 1197
  Nature of transaction - Sale or service - Franchise service - case of appellant is that they are not covered under the said service as they have not granted any representational rights to their client. They argued that they are involved in supply of beverage vending machine bearing name ‘BEVERAGE EXPRESS’ to various clients - time limitation - interpretation of the term 'Franchise'. Held that: - In the instant case the appellant are giving machine containing their company logo, which may be illuminated, affixed on the said machine. The said machine in terms of agreement is required to be placed in such manner that the logo/illuminated logo is clearly visible - significant importance has been given to the display of logo/advertisement and other indication/mark affixed on the machine. There are clauses that prohibit appellant from the obstructing/defacing or removing the same from the said machine. The agreement also prohibits adding any other logo, mark (other than agreed and approved by the appellant. Agreement also prohibits the appellant’s clients from moving or removing machine from its original place of installation without prior approval of the appellant. Clause in agreement show that clients are required to keep illuminated sings on the machine, if any, illuminated all the times. The article 6 of the said agreement prescribed that franchisee shall not have any right, title or interest in the appellant’s trade mark/trade name/logo. Aforesaid agreement also prohibits franchisee from selling any other beverages from the vending machines in terms of clause (b) of Article 3 of agreement. In fact as per clause (e) of Article 3, the appellant or its nominee only have right to refill, reload the raw material in the vending machine. In terms of above condition of the agreement itself apparent that the appellant have granted representational right to the franchisee. To any person wishing to have beverages, it would appear that he is buying beverages from the appellant and not from the franchisee as it is the appellant’s name that appears on the machine and same is prominently displayed on the machine. The raw material used also appearing the brand name of the appellant. To a person purchasing the beverage from the said vending machine it would appear that he has buying the same from the appellant through franchisee. In this circumstances, it cannot be denied representational rights have been granted to the franchise by the appellant - demand upheld under franchise service. The next issue raised by the appellant related to fact that they are paying sales tax/VAT on the said transaction under the category of transfer of rights to use as deemed sale and therefore no service tax can be demanded on the said transaction - Held that: - It is not for this Tribunal to decided if the liability under sales tax arises or not. This tribunal can only adjudicate if the liability under service tax arises or not. In this regard appellant argument that they have paid sales tax is of no avail. Time limitation - appellant claim is that that they have paid sales tax on the same transaction therefore there was no intention to evade duty - Held that: - mere fact of payment of sales tax is not sufficient to hold that they are not liable to service tax - extended period to be invoked. Penalty - appellant claims that there was no intention to evade payment of duty therefore penalty should not have been imposed - Held that: - it is apparent that when the agreement was drafted appellant themselves believed that they are granting franchisee rights. In this circumstances failure to take responsibility and pay duty can only be attracted intention to evade - penalty upheld. Simultaneous penalty u/s 76 and 78 - Held that: - It is seen that entire period of dispute is prior to 16-5-2008, when Section 78 was amended - matter placed for de novo examination. Valuation - Held that: - cum tax benefit needs to be extended to the appellant. Appeal is dismissed except on the ground of granting cum duty benefit. Matter is remanded to the Adjudicating authority to calculate cum duty benefit and rework the penalties accordingly - part matter on remand.

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• 2017 (12) TMI 1194
  Works Contract Service - transmission and/ or distribution of electricity - benefit of N/N. 45/2010-ST dt. 20.7.2010 - CBEC Circular No. 123/5/2010-TRU dt. 24.5.2010 - Held that: - N/N. 45/2010-ST dt. 20.7.2010 issued under Section 11C of the Central Excise Act, 1944 exempts for the period upto 26th day of February 2010 for all taxable services relating to distribution of electricity. Vide N/N. 11/2010-ST dt. 27.2.2010 the taxable services provided for transmission of electricity have been exempted - From the above, it is apparent that any services provided for transmission of electricity are exempted for the entire period. The services provided relating to distribution of electricity are exempted upto 21st day of June 2010 and all services relating to transmission of electricity are exempted upto 26th day of February 2010 in terms of N/N. 45/2010 read with N/N. 11/2010-ST. - The order in so far as it relates to the service provided in respect of transmission and distribution of electricity is set aside and the matter is remanded to the Commissioner for fresh adjudication after examining all the contracts individually for this purpose. Benefit of N/N. 1/06 - appellants failure to provide the necessary documentary evidence in support of the claim that fulfill the condition of the notification - Held that: - The appellant has contended that both these conditions can be verified and returns filed by them and by the invoices issued by the appellant itself apparent that these conditions can easily be verified and the Commissioner has not examined the issue in proper perspective and has simply dismissed the defense without application of mind - matter is remanded to the Commissioner. Abatement in respect of GTA service - N/N. 32/04-ST - denial on account of appellant failure to submit the necessary documents - Held that: - The Revenue has prescribed procedure in this regard wherein GTA service recipient can make necessary declaration and on that basis abatement under N/N. 32/04-ST is allowed. The appellant has not followed the said procedure which has been prescribed vide F. No. 166/13/2006 CX.4 dt. 12.3.2007, wherein CBEC has clarified that if the service provider makes a declaration on the consignment notes then the said declaration would be accepted. It is seen that the appellant have neither followed that procedure nor made any attempt to satisfy the said notification. In these circumstances appeal filed by the appellant cannot be entertained - appeal dismissed. Appeal is partly allowed by way of remand and partly dismissed.

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• 2017 (12) TMI 1193
  Franchise service - representational rights - Held that: - the preliminary purpose of the agreement would clearly be the grant of rights to use the premises and/or equipment. The said agreement according to Revenue in Clause (10) contains certain conditions which have been relied by Revenue to assert that they turn into the transaction of supply of Franchise Service - After the said clauses, we are unable to find any merit in the argument of the Revenue. The said clause nowhere grants representational rights to the dealers. In fact, the said agreements in various clauses set out the terms for the petroleum products of equipment and premises and there is practically nothing in the agreement which can be termed as grant of representational rights. Revenue has relied solely on Clause(10) of the said agreement which in our opinion does not grant in representational rights - Appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 1191
  Non-payment of service tax - receipt of advance from their customer which were later adjusted against the bills received on completion of stages of the contract - liability of interest - Held that: - In case of Advance receipt from the customers, the amount was received by the assessee as security/ guarantee amount. It is obvious that for big contract which spread over years, the service provider needs to have specific performance guarantee from their customer. The assessee in turn of such security amount has issued Bank Guarantee amount to their customer. We find from the contract with Chettinand Cement Corporation Ltd.,produced by the Appellant that it provides for Advance cum security and in turn the assessee is liable for equal amount of Performance security bank Guarantee. Thus the amount is guarantee from both the sides. Such amount cannot be considered as advance receipt since it is normal feature of contracts. There is no doubt to our mind that the advance cum security bank guarantee to the assessee by the contract awarding party is in the form of earnest money. Thus the same is not liable to tax. It is also found from the certificate issued by the Chartered Accountant that the aseessee has discharged service tax liability on the entire amount of such advances. We thus find no reason to hold that the said amount is liable to be taxed at the time of receipt. Demand on retention money - Engineers sent abroad - export of service - Held that: - it is not in dispute that the services were rendered abroad. It is also not in dispute that the main contractor of the assessee received the consideration in foreign currency who in turn made payment to the assessee. In such case we find that the services rendered by the assessee falls under the Export of service which is eligible for exemption from service tax - assessee is not liable for payment of service tax on services rendered abroad. Appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 1190
  Sale of Packaged Software - demand on the ground that during impugned period 01.04.2006 to 15.05.2008 and 27.02.2010 to 31.03.2011 their services were not taxable and hence the amount recovered from customers representing service tax is liable to be paid in terms of Section 73A (2) - Appellant had claimed that they have discharged the service tax liability from their cenvat credit account which accrued to them as a result of service tax charged by their suppliers and nothing remains to be paid - Held that: - the claim of the Appellant regarding eligibility to claim cenvat credit and actual availability of cenvat credit to them remains to be verified against their service tax liability which has not been verified by the revenue. In such case if the Appellant is able to show that they had received cenvat credit charged from their suppliers which utilized for payment of their service tax liability in that case there cannot be any demand against the Appellant - case remanded to the original authority for denovo consideration - appeal allowed by way of remand.

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• 2017 (12) TMI 1189
  Authorised Service station - activity of servicing/ repairing of vehicles undertaken by the Appellant for customers - whether in the given facts the Appellant can be taxed under the category of Authorised Service station? - Held that: - only for the reason that the Appellant was using job cards bearing brand name of M/s Tata the Appellant does not become authorized service station of M/s Tata. The adjudicating authority has reached to conclusion that the Appellant are deemed authorized service station by quoting the clause of agreement between M/s Tata and M/s Pandit Automotive. We however find that none of these clause implicate Appellant as service provider to M/s Tata or that M/s Tata has approved the Appellant as jobber of M/s Pandit Automotive. Only for the reason that the stationary or software of M/s Tata or that M/s Tata were not concerned with Appellant working for M/s Pandit Automotive would not lead to situation that the Appellant has stepped into the shoes of M/s Pandit Automotive. Clearly in case of servicing and repairing of vehicles for which the Appellant billed the vehicle owners could not have been under the banner of M/s Tata which was not concerned with such activity. The Appellant is neither the agent of M/s Tata nor they have acted on behalf of M/s Tata. In such case the Agency by Estoppel cannot be applied in the present case. It is fit to remand the matter back to the adjudicating authority for Denovo consideration who would decide the case on merits as well as time bar aspect - appeal allowed by way of remand.

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• 2017 (12) TMI 1188
  Classification of service - site formation, clearance, excavation and earth moving service or Cargo Handling Service? - benefit of N/N. 17/2005-ST dated 7-6-2005 - Held that: - we find that loading, unloading and transportation is ancillary, there are various other activities where main service such as quarrying, excavating, sizing, stockpiling, over burden removal, dozing etc., therefore it cannot be said that service provided by the respondent is mainly transportation, loading, unloading therefore this being ancillary service to the various other main services, overall services cannot be classified as Cargo Handling Service - once the departments proposal of classification fails entire show cause notice is liable to be quashed. Services involved is correctly classifiable under Site Formation and clearances, excavation and earth moving and demolish service provided for construction of road of National Highway, the same is exempted under N/N. 17/2005-ST dated 7-6-2005. Appeal dismissed - decided against appellant.

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• 2017 (12) TMI 1184
  Refund claim - services consumed in SEZ unit - N/N. 17/2011-ST dated 1.3.2011 - denial of refund on the ground that there were no nexus between the services and the operation carried out in the SEZ - Held that: - In absence of proper enquiry being conducted to bring out that the service was not utilized or the evidence adduced was insufficient nor there was any evidence, it is not possible to be appreciated that the appellant was disentitled to the benefit of refund. The flimsy plea of Revenue is also that the invoices were in the name of head office and tours were not verifiable as well as certain invoices were not relatable do not base on any enquiry result for which allegation of Revenue without discharging its burden of proof fails to stand. Further, stand of Revenue does not seem to be substantiated without any cogent or credible evidence brought to record. We may make it clear that we have not read the show cause notice hypertechnically but minutely. Taking note of method of approach of learned adjudicating authority to law, failing to examine relevant evidence, without causing enquiry wherever needed as well as improper evaluation of evidence and having suspicion on the appellant, his order is set aside - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1173
  Abatement - maintenance and repair service - Case of Revenue is that as no sale of materials have taken place, the respondents are not eligible for abatement as per N/N. 12/2003-ST dated 20.6.2003 - Held that: - It is not disputed that the respondents have discharged the sales tax on the works contract under section 7C of TNGST Act, 1959. So also they have informed the department vide letter dated 19.3.2005 addressed to the Assistant Commissioner of Service Tax, Chennai that they have proper inventory system to arrive the value of material sold to each customer - respondents having discharged the sales tax on 70% of the contracted value, they are eligible for abatement as per the notification - appeal dismissed - decided against Revenue.

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• Central Excise

• 2017 (12) TMI 1237
  Whether in the facts and circumstances of the case and in law respondent no. 3 was required to serve a copy of the impugned order dated 9th January, 2015 upon the Official Liquidator, High Court, Bombay? Held that: - in view of the fact that the order was not served on the company and on account of closure of the company as recorded above, there was no justification in proceeding to pass the impugned orders. On behalf of the Revenue, Mr. Bangur, learned counsel for the Revenue has not been able to demonstrate as to how the case of the appellant is incorrect. Admittedly, the company was closed at the relevant time and there was proper service of the impugned orders upon the appellant. The CESTAT dismissed the appeals and concluded that the mode of service by affixing a copy of the order on the factory gate was within the purview of Section 37C of the Act on the basis that this was not disputed by the appellant - Delay in filing the appeals is condoned and the Central Excise Appeals are remanded to the Commissioner of Central Excise (Appeals) for fresh consideration on merits and in accordance with law

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• 2017 (12) TMI 1234
  Whether the Tribunal was right in holding that the provisions of Rule 57AC (2)(b) are applicable to deny the credit of balance of the 50 percent of duty paid on the said capital goods in the next financial year 2001-02 when there is no such provision in Rule 57A (2)(C)? Held that: - In this case, the Apex Court observed that Rule 57AC does not restrict grant of credit in a given financial year. Further, it was observed that whereas 50% of the credit can be taken in one financial year, the balance may be availed in subsequent years, subject to the condition that the capital goods are still in possession and use of manufacturer of the final products in the subsequent year - In the circumstances, the ultimate view taken by the Appellate Tribunal in the present case of confirming the demand of 50% credit availed by the appellant in the year 2001-02 cannot be faulted with, as admittedly, the capital goods were not used from December 2000 onwards. Appeal dismissed - decided against appellant.

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• 2017 (12) TMI 1231
  CENVAT/MODVAT credit - capital goods acquired on lease - Whether the Modvat Credit availed by M/s. Ispat Industries Ltd., on capital goods acquired by them on lease in terms of Rule 57(R)(3) of Central Excise Rules, 1944 can be availed prior to reimbursing the leasing company for the Excise Duty component or the same can be availed only after reimbursing the leasing company for the excise duty portion? Held that: - Sub Rule (3) basically provides that the credit of the specified duty paid on the capital goods shall be allowed to a manufacturer if the capital goods are acquired by the manufacturer on lease, hire purchase or loan agreement, from a financing company subject to following the procedure provided in clauses (i) to (iv) in SubRule 3. The basic entitlement to avail credit is laid down in Sub Rule 3. Clauses (i) to (iv) lay down the procedure for availing of a credit. Subclause (b) of clause (ii) incorporates a requirement of producing a certificate from the financing company to the effect that the duty specified on such capital goods has been paid by the said manufacturer to such financing company prior to payment of first lease rental installment, or first hire purchase installment or first installment of re payment of loan, as the case may be, along with a copy of the agreement entered into with the said financing company - The difference in Sub Rule (3) of erstwhile Rule 57R and Sub Rule (3) of Rule 57AC is crystal clear from the plain reading of both the Sub Rules. The procedure which is provided under Sub Rule (3) of Rule 57R is not provided in the amended provision. From the date of conversion, the procedure which is required to be followed as per sub clause (b) of clause (ii) of Rule 57R(3) will not apply. As far as SBI is concerned, the admitted position which is recorded in paragraph 2.1 of the impugned order is that the excise duty was reimbursed under Rule 57R(3) and in particular Sub Rule (3) thereof. The finding recorded on the basis of admitted position is that there was no contravention. In paragraph 2.1, the Appellate Tribunal, after considering 57R(3) has rightly observed that the said provision does not contain any stipulation to the effect that credit on capital goods acquired on lease can be availed only after reimbursement of the excise duty component to the financing company. The clauses (i) to (iv) of Sub Rule (2) of Rule 57R provide for procedure and not a condition precedent. The finding of fact recorded is that till the date of conversion into Non Convertible Debentures, no installment was paid towards repayment to IFCI. A letter of IFCI placed on record shows that only interest was paid - As regards the impugned order subject matter of Appeal No.173 of 2008 is concerned, the same is dated 10th September 2017. By that time, the order dated 24th July 2006 was passed by the Appellate Tribunal on the Appeal preferred by Respondent assessee and on that ground, the Appeal has been dismissed. Appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 1230
  Whether the amount demanded by the Superintendent of Central Excise as duty of Central Excise by a mere letter DD2 without issuance of Show Cause Notice under Section 11A (1) of the Central Excise Act, 1944 and without determination of the Central Excise duty due under Section 11A (2) of the Central Excise Act, 1944 and without granting any opportunity of being heard in the matter is an amount which can be recovered as Government dues under Section 142 of the Customs Act, 1962 as Central Excise duty due to the Government? Held that: - under Section 142 of the Customs Act, there is a provision authorising authorities under the Customs Act to deduct any sum payable by any person under the Customs Act while ordering payment of any amount under the provisions of the said Act - Perusal of the impugned order of CESTAT shows that the said Tribunal was impressed by the order of dismissal of Writ Petition filed by the Appellant for challenging demand made by the said letter DD2. The CESTAT has not decided the contentions raised by the Appellant on merits. CESTAT has held that as Writ Petition has been dismissed it cannot go into question of legality of the demand made by the said letter DD2. According to us, the said approach of CESTAT is completely erroneous. There is no option but to set aside the impugned judgment and order and to remand the Appeals to the CESTAT for deciding the same on merits - matter restored.

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• 2017 (12) TMI 1229
  Refund claim - period prior to the registration of the respondent - Held that: - The Court herein held that the refund would not be denied to the assessee merely on the basis of non-registration of the premises. This Court in the above decision also held that under the Rules it is not a condition precedent that input service has to be received at registered premises only of the out put service provider. Therefore, merely for the reason that the premises is not registered, that can not be a ground to deny the benefit of CENVAT Credit - appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 1224
  Clandestine removal - 2031.421 MT of Sponge Iron - It is pleaded that at the time of visit of the officers to the factory on 04.09.2008, though the stock of finished goods. i.e. Sponge Iron has been checked, no discrepancy were found; that the Department's case is based mainly on the quantity of Iron Ore fed into the kiln, as determined from the entries in the production log registers and the assumption that the Sponge Iron yield of the plant is uniform @ 61% - Held that: - during the course of search proceedings, at the appellant's factory, the department has recovered various documents related to the manufacture of sponge iron i.e. production log register in which the details of feeding of raw material had been recorded. We find that there is no dispute about the fact that such records are recovered from the factory as well as the contents. On the basis of such production log register, the adjudicating authority has determined the total quantum of raw materials which have been used in the manufacture of sponge iron. On the basis of the statements recorded from Production Manager of the appellant, it has been inferred that the normal yield of sponge iron in the manufacturing process is in the range of 57% to 61% of the ore fed into the kiln. Taking the yield to be 61%, the Revenue has estimated the production and demanded duty on the same after deducting the quantity already accounted. During the course of search of the factory, the department has recovered several documents such as transporters bills, consignment receipt, weighment slips etc. showing receipt of sponge iron despatched from the appellant”s factory as well as records in loose sheets showing the despatch of the finished product to various customers. In some of these cases Central Excise invoices were found to have been issued but in many other cases no Central Excise invoices have been issued indicating, that a large number of consignments have been cleared without payment of duty. On the basis of these incriminating documents recovered by the Department, it is evident that large scale evasion of duty has been done by the appellant. Opportunity of cross-examination - section 9D of the Central Excise Act, 1944 - Held that: - For satisfying the requirements prescribed in Section 9D ibid, an opportunity for examination and cross examination of witnesses may be extended through an effective hearing to all connected parties. Additional evidence may also be admitted as per law. The impugned order needs to be set aside and matter remanded to the adjudicating authority - appeal allowed by way of remand.

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• 2017 (12) TMI 1223
  Penalty - 100% EOU - CVD and SAD paid wrongly by utilising credit, which was ought to be paid in cash - Held that: - the Machining Division has wrongly paid the CVD as well as SAD by making use of cenvat credit - In terms of Rule 3(4) of the CCR, 2004, Cenvat Credit cannot be utilised for payment of such customs duties. Consequently, there is no infirmity in the view taken by the adjudicating authority that such duty payment is required to be made only through cash and not allowed to be done by making use of cenvat credit - penalty upheld. Cenvat credit by the Foundry Division of the total duty paid by the Machining Division - Held that: - Cenvat credit was taken wrongly by the Foundry Division since such duty was paid using the cenvat credit account by the machining division and cannot be considered to be payment of duty. The cenvat credit also has been taken on the basis of non prescribed duty paying documents - reversal of such cenvat credit taken alongwith interest and levy of penalties upheld. Appeal dismissed - decided against appellant.

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• 2017 (12) TMI 1222
  CENAVT credit - input services - Engineering Service, Business Auxiliary Service etc. from foreign based service provider - reverse charge mechanism - Held that: - Section 66A of the Finance Act, 1994 was brought into the statute w.e.f. 18.04.2006. After the inclusion of such Section service tax became liable to be paid on specified services received from outside India. But the dispute is of the period prior to this date. The appellant has paid the service tax on reverse charge basis even for the period prior to 18.04.2006. But such service tax paid cannot loose the colour of tax only because the service tax on reverse charge basis has been held to be payable only w.e.f. 18.04.2006 - Having paid the service tax, the appellant is entitled to cenvat credit thereof since there is no dispute that such services, otherwise satisfy the norm of input service. The fact of payment of service tax is not in dispute and hence, there is no reason to disallow the cenvat credit of such service tax. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1215
  Intermediate goods - benefit of N/N. 67/95 - clearance of intermediate products viz. Acetic Acid, Ethyl Acetate and Anhydride cleared by the appellants to a unit situated in the SEZ without payment of duty in terms of Rule 30 of SEZ Rules, 2005 - Held that: - the issue is no longer res integra and has been settled in favour of the appellant in their own case Trichy Distilleries & Chemicals Ltd. Versus Commissioner of Central Excise, Trichy [2017 (12) TMI 1133 - CESTAT CHENNAI], where it was held that the appellants are very much entitled to the benefit of N/N. 67/95-CE in respect of intermediate goods used to manufacture final products which were supplied to a SEZ unit - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1208
  What should be the valuation in respect of goods cleared to their own unit by the appellant when the transaction value of the same goods charged to independent customer is available? Held that: - As per the Valuation Rules, under Section 4 the first principle is that if the transaction value is available, the same will prevail; in case transaction value is not available resort to be made under Section 4(1)(b) and Rules made thereunder - In the present case there is no dispute that for the same goods which were cleared to their own unit by the appellant, the transaction value charged to the independent customer is available. If that be so, the transaction value will prevail over the valuation under Rule 8 - even in case where the goods were supplied to their own related unit, the transaction value shall be preferred and applied. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1207
  Valuation - turnover discount - cash discount - freight & insurance - finalization of provisional assessment - Held that: - the adjustment of excess payment of duty under one head against short payment of duty in another head during the finalization of provisional assessment is allowed - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1206
  Whether the goods namely Acid Slurry (organic surface active agent) falling under Chapter heading 3402.90 of Central Excise Tariff is eligible for exemption N/N. 88/88 dated 01.03.1988 which exempts synthetic detergents vide Sr. No.26 of the table attached to the notification? Held that: - As per the definition of synthetic detergent it is used for washing clothes etc. the Acid Slurry cannot be used for washing clothes or any other substance. Acid Slurry is one of the inputs used in the manufacture of synthetic detergent. In the trade parlance also, Acid Slurry is not known as synthetic detergent. The chemical laboratory report of chemical examiner though show that the Acid Slurry found mentioned in the literature as synthetic detergent but that itself is not sufficient to decide that the synthetic detergent mentioned in the notification satisfies synthetic detergent its primary use for washing of clothes etc. All synthetic detergent which are sold in the market is a formulation of Acid Slurry and various inputs such as sodium carbonate, dolomite powder, perfume and colour etc. Therefore there is a difference between Acid Slurry and synthetic detergent. As per the plain reading of Sr. no. 28 as reproduced above, it can be seen that the goods used captively is only exempted when it is used within the same factory of the manufacture - it cannot be said that the amendment is of clarificatory nature. Appeal dismissed - decided against appellant.

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• 2017 (12) TMI 1201
  Reversal of CENVAT credit - Rule 3(5B) of the CCR 2004 - bushes used for the manufacture of finished goods which would lose value during the use and were required to refurbish from time to time - Held that: - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE Versus INGERSOLL RAND (INDIA) LTD. [2013 (2) TMI 32 - GUJARAT HIGH COURT], where it was held that There is significant difference in the accounting approach for the income-tax purpose and the approach for stock maintenance for the purpose of manufacturing activities relevant for the question of excise. Merely because the value of goods diminished in the books of accounts of the assessee would not by itself permit the Department to insist on reversal of the credit particularly when such goods were still available in the factory in usable condition. Relying on the aforesaid decision of Hon'ble High Court Appeal no.E/86187/17 is allowed - In respect of Appeal no.E/86188/17 Commissioner (Appeals) has not given any finding on the issue in dispute. The matter is remanded to the Commissioner (Appeals) for decision on the issue covered in the dispute. Appeal allowed in part and part matter on remand.

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• 2017 (12) TMI 1198
  CENVAT credit - input service - insurance of cars, tractors - group personal accident insurance - insurance of their employees - Held that: - to examine if the credit is admissible or not, it has to be first ascertained if the vehicle was capital goods or not. Similarly, while ascertaining the admissibility of credit on insurance service, it has to be first ascertained if the said service was used primarily for personal use or consumption of any employee - The lower authorities have not given any final findings on these two issues - Since the lower authorities have not examined on these aspects, the impugned order is set aside and the matter remanded to the original adjudicating authority to give specific findings on the above aspects - appeal allowed by way of remand.

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• 2017 (12) TMI 1195
  Refund of accumulated Cenvat Credit - Rule 5 of CCR - N/N. 5/2006-CE(NT) - Held that: - In terms of Rule 5 and N/N. 5/2006-CE(NT) issued thereunder the refund claim under this provision can be sanctioned only in respect of accumulated cenvat credit, which the assessee is not in a position to utilize for the clearance of goods in home consumption that means the cenvat credit should lie unutilized in the account of the assessee - In the present case, the cenvat credit was utilized by the appellant before sanction thereof. Since, the amount of cenvat credit has been utilized there is no question of refund of the said amount under Rule 5 of CCR, 2004 - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 1192
  Clandestine removal - 51.715 MT of M.S. ingots - demand based on “hearsay” evidence - Held that: - issue is settled that “hearsay” evidence cannot be admitted as evidence to decide any case - In the present case against the appellant the case is based on only on statement of Shri. Abdul Razzak Mundrawal who is given the version of Shri. Gupta and particularly in absence of statement of Shri. Gupta's, statement of Shri. Abdul Razzak Mundrawal based on hearsay cannot be used to confirm the demand against appellant - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1187
  Penalty u/s 11AC of CEA and u/r 26 of CER - mismatching of figures in ER-1 and ER-4 - Held that: - if provisions of Section 11AC of the Act are there then there is no discretion to waive the penalty against the assessee - Admittedly, in this case, Revenue has failed to brought on record the evidence that the appellants did not pay the duty due to fraud, collusion, willful mis-statement etc. As provision of Section 11AC of the Act are missing, therefore, no penalty is imposable on the appellant - Further, under rule 26 of Central Excise Rules, 2002 penalty on co-appellant is imposable subject to the provision of Section 11AC of the Act. Admittedly, the provision of Section 11AC of the Act are missing, therefore, penalty on the co-appellant is also not warranted. Penalties set aside - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1186
  CENVAT credit - clearing and forwarding agent service - Held that: - if clearing and forwarding service involves the services of sales promotion, credit should be available as sales promotion is specifically included in the inclusion clause of definition. However the factual aspect whether the clearing and forwarding service involves sales promotion has not been verified for the reason that Cenvat credit was otherwise being allowed by the department - matter is remanded to the adjudicating authority to pass a fresh order. Penalty u/r 15(1) - Held that: - there was no malafide on the part of the respondent in availing credit on clearing and forwarding service. Considering overall facts and circumstances and since credit being allowed by the department for the past period respondent have rightly entertained the bonafide belief that credit is legally admissible. Therefore respondent is not liable for penalty u/r 15(1). Appeal allowed in part and aprt matter on remand.

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• 2017 (12) TMI 1185
  Refund of duty paid on intermediate goods - case of appellant is that Assistant Commissioner and the Commissioner (Appeals) had no jurisdiction to take any contrary view to the Tribunal’s order when it is in operation - Held that: - The right course of action on the part of the Revenue was to challenge the Tribunal’s order which they already done so by filing the appeal before the Hon’ble High Court. Therefore since there is no stay the refund was supposed to be given to the appellant - Since the appeal of the Revenue was admitted before the Hon’ble High Court it is just and proper that the matter should go back to the adjudicating authority who should wait for the outcome of the appeal pending before the High Court - appeal allowed by way of remand.

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• 2017 (12) TMI 1183
  CENVAT credit - input services - whether the appellant is entitle for the Cenvat credit in respect of services namely Hotel accommodation service, rent a cab service, tour operator service and membership of club service? Held that: - as per the nature of the service there is no dispute that it is used in the overall functioning of the appellant’s business - On all these services this tribunal time and again decided that these services are input service and Cenvat credit is admissible. As regard the Cenvat credit in respect of rent a cab service on or after 1-4-2011 as per the amended rule 2(l) of Cenvat credit rules, credit on rent a cab service is not admissible - demand of Cenvat credit on rent a cab service from 1-4-2011 onwards is upheld. Appeal allowed in part.

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• 2017 (12) TMI 1182
  Refund of interest - interest paid on wrongly availed CENVAT credit - appellant have claimed the refund of interest pertaining to the period from 17-3-2012 to 30-8-2013 on the ground that during such period interest was chargeable only when the assessee takes the credit and utilize it - Held that: - When the Rule 14 was amended the effect of amended rule has to be given for the period on or after 17-3-2012 according to the amended provision for the period after 17-3-2012 interest is chargeable only when the assessee not only taking credit but also utilized the same - In the facts of the present case, appellant admittedly though taking credit but the same was not utilized till 30-8-2013, therefore for the period from 17-3-2012 onwards as per the amended provision, interest is not chargeable on unutilized cenvat credit - interest paid for the period 17-3-2012 till reversal i.e. 30-8-2013 is refundable to the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 1179
  CENVAT credit - whether the respondent was eligible for CENVAT Credit on the steel goods namely, round channel, parallel flat, Mill plates, Angles, MS Beam, MS Bars, Plate, HR Coil etc? - Boards Circular No. 267/11/2010-CX dated 8.7.2010. Held that: - the credit on these items is admissible atleast for the period prior to 7.7.2009. After 7.7.2009, these items were excluded from the purview of input - In the present case, period involved is 2007, therefore, the amendment made in the definition of input services, which is effective from 7.7.2009 is not applicable in the year 2007 - input used for manufacture/fabrication of various capital goods is allowed for CENVAT credit. Time limitation - Held that: - the period involved is March, 2007 whereas the show-cause notice was issued on 21.3.2012. Therefore, the extended period cannot be invoked as no suppression of facts or mala fide can be attributed to the respondent. Appeal dismissed on merits as well as on time bar - decided against Revenue.

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• 2017 (12) TMI 1176
  Valuation - towers used for transmission of signals - inclusion of items consumed for the purpose of erection of tower. - Held that: - the Hon’ble Supreme Court in the case of PCC Pole Factory vs CCE, [2003 (10) TMI 53 - SUPREME COURT OF INDIA], allowed the claim of the assessee-Appellants where PCC Poles were used for transmission of the electric energy. There was no further activity of manufacture and no business was carried out by the Electricity Board. Identically, in the instant case, the towers were used by the assessee-Appellants for only transmission of the signals without carrying out any further business activity - appeal allowed - decided in favor of appellant-assessee.

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• 2017 (12) TMI 1175
  Job-work - manufacture of furniture items at site - hotels items like wardrobe, under counters in toilets, waiter station, cabinet etc. were erected piece by piece - Held that: - the demand raised on account of the work undertaken by the Respondents, where they received only labour charges from the hotel management, cannot be sustained because the same cannot be considered as ‘manufacture’, especially when the raw material, design etc. were supplied by the hotel management. The Respondents got only the labour charges and the same cannot be brought under the purview of the excise duty. Demand raised on some items of furniture, claimed as ‘Handicrafts’ under the first agreement - Benefit of N/N. 76/86-CE dated 10.02.1986 - Held that: - In the said certificate, it was certified that the said items come under the category of the ‘Handicrafts’. The adjudicating authority has not brought any material on record to rebut the above mentioned findings - handicrafts exempted. Appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2017 (12) TMI 1238
  Vires of the second explanation to Section 2(m) of the Delhi Entertainment and Betting Tax Act - The GNCT of Delhi amended Section 2 (m) of the Entertainment Tax Act by adding two explanations and took the position that these provisions were clarificatory; the amendments were inserted on 1 October 2012 but brought into force with effect from 01 April 1998. These amendments are the subject matter of challenge in the present writ proceedings - FDCI challenges the impugned amendment to the Explanation on the ground that the power of a state is to impose taxes under Entry 62 of list II on “luxuries including entertainment” and consequently the impugned explanation is ultra vires the Constitution and is beyond the scope of Entertainment Tax Act - petitioners argue that entertainment is an activity by which one person provides entertainment to another; organizers such as the petitioner, through sponsorship funding organize or create events. Whether an event is an entertainment or not would depend on the facts and as such entertainment could not be defined in a straitjacket formula. Whether as a fashion development and promotion society, which conducts fashion shows provides entertainment by hosting such shows? - Whether payment for admission includes sponsorship? - the events are non-ticketed events where entry is by special invite of the organizers Dissent Decision - Both the Judges delivers different judgments. In one view, no entertainment tax can be collected and allowed the writ petitions. Another view is that entertainment tax can was rightly demanded and dismissed the appeal of the writ petitions.

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• 2017 (12) TMI 1232
  Appointments of administrative member (technical member) of the tribunal - Constitutional validity of Section 11 of the VAT Act and Rule 6 of the VAT Rules - concept of independence of judiciary - it was alleged that the provisions are violative of the basic structure of the Constitution of India - Government Resolution dated 2nd June 1973 issued by the Finance Department, Government of Maharashtra - amendment to the said resolution. Held that: - no Member covered by clauses (a), (b) or (c) of sub­rule (1) of Rule 6 of the VAT Rules shall be appointed without making effective consultation with the High Court of Judicature at Bombay. A Bench of two or more Members shall always be headed by a Judicial Member appointed under clauses (a), (b) or (c) of sub­rule 1 of Rule 6 of the VAT Rules. The matters which are required to be decided by the Members sitting singly shall always be placed before a Judicial Member only. In case of emergency, when none of the Judicial Members are available, the matters where an urgent ad­interim or interim relief is sought can be placed before the Administrative Member sitting singly. As far as selection of the Members covered by clauses (d), (e) and (f) of sub­rule (1) of Rule 1 of Rule 6 is concerned, the State Government shall constitute a proper Selection Committee preferably headed by a retired Judge of this Court, in the light of observations made in this judgment and order. The State shall also ensure that the Members shall be judicially trained in the sense that they have long experience of dealing with quasi­judicial proceedings and/or adjudication proceedings. High court disposed off the petition with detailed instruction to the government.

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• 2017 (12) TMI 1228
  Whether the paddy husk sold by the dealer is exempted under schedule-1, serial no. 4 of notification dated 20 December 2007? Held that: - the Tribunal was justified in holding that the expression de-oiled paddy husk and outer covering of paddy would refer to two different commodities, and paddy husk which is outer covering of paddy, cannot be considered as de-oiled paddy husk - It is not disputed that the dealer had purchased paddy husk which would be covered within the meaning of the expression "outer covering of paddy - revision dismissed.

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• 2017 (12) TMI 1227
  Validity of reassessment order - the assertion made by the learned counsel for petitioner that an opportunity of hearing was not given - Held that: - a perusal of the assessment orders dated 21.02.2017, and 01.03.2017, clearly reveal that while the Assessing Officer has noted the specific plea mentioned hereinabove, the Assessing Officer has not dealt with the said plea. In fact, the Assessing Officer has rejected the said plea by merely observing that the said plea is general in nature. The Assessing Officer is duty bound to give cogent reasons for rejecting the specific plea raised by the petitioner. However, the Assessing Officer has failed to do so - this Court has no other option, but to set aside the assessment order dated 21.02.2017, and the assessment order dated 01.03.20 17, and to remand the case back to the Assessing Officer - petition allowed by way of remand.

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• Indian Laws

• 2017 (12) TMI 1236
  Interpretation of statute - real construction of the decree dated 21.04.1995 - maintainability of execution case - mortgage suit. Held that: - It appears from Annexure-1 to the Writ Petition that it is clearly written at the top ‘DECREE IN ORIGINAL SUIT’ under Order XX Rules 6 and 7 of the Code of Civil Procedure in form Schedule XLII - The decree as contained in Annexure-1 to the Writ Application has been prepared as per Form No. I the mortgage suit was decreed but the decree was not drawn correctly, at this stage, the learned single Judge despite having recorded a finding that the decree is not properly worded came to a conclusion that the plaintiff Bank having not filed an application for preparation of a final decree in terms of Order 34 Rule 5 C.P.C. within a period of three years from the date of expiry of 30 days which was prescribed to the defendants for payment, an application for final decree became barred by law of limitation in terms of Article 137 of the Limitation Act, 1963. To me, it appears that there is no question of applying the law of limitation for preparation of a final decree because the plaintiff Bank was not given a preliminary mortgage decree in terms of Order 34 Rule 4 read with Form 5A of Appendix ‘D’ of the Code of Civil Procedure and if the Bank was not given this opportunity to file an application for preparation of a final decree, there was no fault on the part of the Bank in not applying for preparation of a final decree. No doubt, law of limitation is based on a sound public policy but at the same time the court would not be willing to apply the rigours of the Limitation Act to defeat a just and valid claim of the Bank which has now crystalised on adjudication by a competent court of law. Applying principle of limitation in the facts of this case would amount to deprive the plaintiff Bank of the fruits of the judgment for no fault on its part. It would amount to giving undue benefit to the borrowers and the guarantors by construing a decree in original suit, as contained in Annexure-1, as a preliminary mortgage decree which is required to be issued in a title mortgage suit under Order XXXIV Rule 4 of the Code of Civil Procedure. In the present case, it cannot be said that an application for preparation of a final decree came to be barred by limitation after three years from the date of expiry of 30 days from the date of decree i.e. 21.04.1995. Since we come to a conclusion that the learned single Judge has construed Annexure-1, which is in conformity with a decree in original suit, as a preliminary mortgage decree, by adding and reading something which is not there in Annexure-1 and thereby misconstruing the decree, in favour of the plaintiff Bank to its detriment, we would hold and declare that the decree as contained in Annexure-1 is a simple money decree in terms of Order XX Rules 6 & 7 C.P.C. and it may at best be construed as if the Bank has given up its claim to satisfy the decree first from the sale proceeds of the mortgaged property. The Execution Case No. 5/1996 was maintainable and the view taken by the learned single Judge that the said execution case was non est, with all respect to the learned single Judge, cannot be upheld. Time limitation - Held that: - he period of limitation prescribed for the execution of any decree (other than a decree granting a mandatory injunction) or order of any civil court as prescribed under Article 136 of the Schedule of the Limitation Act, 1963 would apply in the facts of the present case. This provides 12 years period of limitation and, therefore, a decree dated 21.04.1995 was executable for a period of 12 years from the date of expiry of 30 days with effect from 21.04.1995, therefore, an application under Section 31A of the DRT Act, 1993 filed on or before 21.05.2007 would not be barred by limitation - In the present case, the O.A. (Ex.) No. 15/2006 was filed by invoking Section 31A of the DRT Act on 06.03.2006, therefore, an application under Section 31A of the DRT Act was filed well within the period of limitation. Appeal allowed.

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