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TMI Tax Updates - e-Newsletter December 4, 2017 Case Laws in this Newsletter: Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise Indian Laws Articles Input Tax Credit under GST Highlights / Catch Notes Income Tax Benefit of Section 80-IC - A person, an enterprise or an undertaking, is entitled to take the benefit of Section 80-IC only insofar as it carries on business, which is mentioned in sub-section (2) of Section 80-IC and derives profits and gains therefrom. - HC Visit to Get Source Protective addition - when addition was already made in the hands of the overseas companies on substantive basis treating them as residents in India, there is no justification for the Assessing Officer to make such an addition in the hands of a share holder on protective basis, when no benefit was derived by her from these companies to protect the interest of revenue. - AT Visit to Get Source Computation of book profit u/s 115JB - MAT - The carbon credit is credited to the Profit & Loss account held to be capital receipts and not exigible to tax - AO directed to exclude the sale of carbon credits for the purpose of computation of book profits u/s 115JB - AT Visit to Get Source Assessment of trust as AOP - exclusion of Corpus funds - all the voluntary contributions received by the assessee are taxable within the meaning of section 2(24)(iia) of the I.T.Act if the registration u/s 12A is not available to the assessee. - AT Visit to Get Source Transactions through Credit cards - unexplained purchases - The claim of the assessee that he was returning the goods back to the seller at the 3% discount to generate cash for payment of credit card dues on account of financial crisis, is completely unsustainable. - AT Visit to Get Source Addition of interest - accrual of interest - Inter-corporate deposits - it cannot be said that interest has accrued to the assessee during the year when the Inter-corporate deposits is equivalent to non-performing assets in the case of the assessee. - AT Visit to Get Source The donations received for specific purpose of acquiring the capital assets are tied up grants and cannot be treated as income u/s 2(24)(ii)(a) - AT Visit to Get Source Transfer of case u/s 147 - Deemed service of notice u/s 148 - AO never acquired jurisdiction over the assessee. Therefore, section 292BB does not come to the aid of the Department. Compliances would not bestow jurisdiction on the AO, once such jurisdiction never lay with the Assessing Officer to begin with - AT Visit to Get Source Principle of mutuality - assessee club has been formed under the control of Haryana Urban Development Authority (HUDA) - ITAT allowed the benefit of Principle of mutuality except for the amount of interest earned from the fixed deposits in the banks Visit to Get Source Adding net profit and share premium sum u/s 68 - there can be no straitjacket formula for determining share premium which depends upon current strength and future potential of an enterprise. - failure to discharge of onus by assessee - additions confirmed - AT Visit to Get Source Customs Classification of Concentrated Mineral Drops (CMD) - CMD imported by the appellant will not merit classification under 21069099. - would merit classification under CTH 30045020 - AT Visit to Get Source Penalty on CFS - smuggling of prohibited goods - Being the custodian of the goods, the appellant cannot wriggle out of the responsibility by saying that they had outsourced only to licenced Customs Broker and that it was not outsourced to any unknown person. - AT Visit to Get Source DTA clearance by SEZ - who is liable to pay duty - the goods got cleared from the SEZ unit of Anita exports and was examined in the DTA wherein some discrepancy were found out, if that be so, the importer of the said goods from DTA is required to discharge the duty, if any, is the law as it is not the case of the Revenue that the importers were non-existent - AT Visit to Get Source Corporate Law Corporate Insolvency Resolution Process - a 'Power of Attorney Holder' is not competent to file an application on behalf of a 'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant'.” - AT Visit to Get Source Service Tax BAS - The appellants clearly promoted the business of foreign entity for which they received commission. - These type of activities should be considered as Export of Services not liable to service tax - AT Visit to Get Source Central Excise Classification of goods - plastic tanks - tank is a specialised attachment and shape and it clearly shows that it is used for spraying the material in the agricultural field - cannot be classified as storage plastic tanks - tanks are classifiable under heading 8424.00 - AT Visit to Get Source Demand of duty of excise - captively manufactured and consumed armoured cable emerges during the course of manufacture of PVC coated armoured cable - the intermediate product emerges during the course of manufacturing of their final product is not marketable - AT Visit to Get Source Case Laws: Income Tax 2017 (12) TMI 135 Claim for depreciation on capital assets of assessee trust - double deduction - Held that:- Claim for depreciation to assessee trust on the claim assets is allowable. See Directorate of Income Tax Vs. Vishwa Jagriti Mission [2012 (4) TMI 289 - DELHI HIGH COURT ] Also the amendment to the Section 11 was perspective. We also notice that in Commissioner of Income Tax Vs. Seth Anandram Jaipuria Education Society (2017 (3) TMI 896 - ALLAHABAD HIGH COURT) and Director of Income Tax & Anr. Vs. Al-Ameen Charitable Fund Trust (2016 (3) TMI 462 - KARNATAKA HIGH COURT) it was held that the plain language of amendment of Section 11(6) of the Income Tax Act, 1961, made through the Finance (No. 2) Act 2014, established its parliamentary intent in computing income for charitable trust, only with effect from 01.04.2015. The Karnataka High Court took note of the Legislation as well as the memorandum explaining the provisions and circulars issued by the Central Board of Direct Taxes from time to time. - No question of law. 2017 (12) TMI 134 Adopting the cost of acquisition of flat on the basis of gift deed - Held that:- There is nothing on record to doubt the correctness of the report or its contents. The Tribunal has found that in absence of any evidence to doubt the correctness of the approved valuer's report the same should have been accepted by the department. Once, the Act had given the option to the assessee and the assessee had acted in accordance thereof and exercised her option to rely on the fair market value of the assets as on 1.4.1981 which she duly supported with evidence, it was not open to the Assessing Officer to take a different view. Further, the fact that in the gift deed value of the asset was mentioned at ₹ 10,00,000/- is of no consequence. That valuation is irrelevant and extraneous to the issue involved Section 55 (2) (b) (ii) does not require such value to be considered or even be relevant. In any case that value was relevant only for purpose of determination of stamp duty payable on the gift deed and not to determine capital gains. The finding of the Tribunal does not suffer from any infirmity. - Decided in favour of the assessee and against the revenue. Allowance of expenditure incurred in the business of share trading - Held that:- Expenditure incurred in trading shares; cost of improvement of the flat and; legal expenses incurred were claimed by the assessee on the basis of evidence found existing on record. The Tribunal has considered the same and thereafter allowed the claim of expenditure incurred in the business of share trading as also cost of improvement of the flat and litigation expenditure. The findings recorded by the Tribunal have not been shown to be perverse or based on no evidence. Being pure findings of fact recorded on the basis of evidence existing on record, the same do not warrant any interference merely because a different conclusion was also possible to be drawn. Questions of law A, C and D as raised are therefore answered accordingly i.e. the same are on questions of fact and therefore do not warrant any interference in this appeal. 2017 (12) TMI 133 Addition u/s 68 - unexplained cash credit - initial year of commencement of business - Held that:- It was the first year of business of the AOP, and no business activity having been shown to have been conducted by it that could lead to generation of ₹ 92,32,000/- on the first day of the relevant accounting period, the Tribunal has not committed any error in deleting the addition of that amount under Section 68 of the Act at the hands of the assessee. The alternative submission made by the revenue that the genuineness of the transaction and the creditworthiness of the creditors was not established does not merit serious consideration in view of the fact that neither that issue appears to have been raised before the Tribunal at the time of argument nor even otherwise the same requires any further consideration in absence of the revenue having led any evidence to rebut or disapprove the evidence led by the assessee and relied upon by the CIT (Appeals) while recording the finding that the cash credit entries were genuine. - Decided in favour of assessee. 2017 (12) TMI 132 Reopening of assessment - accommodation entry - Held that:- The information received by the petitioner's Assessing Officer is specific, both as to the amount as also to the character of it being an accommodation entry. Not only that the information states that the entries are accommodation entries but that information further states that the person who is shown as a creditor in books of account of the assessee has himself denied the genuineness of that entry. Prima facie, therefore, there is both material as also a reason to believe that the said entries are accommodation entries. In that view of the matter, we find that the jurisdiction appears to have been validly exercised by the Assessing Officer. However, the observations made by us are only confined to the issue whether the jurisdiction to initiate reassessment proceeding had validly arisen against the petitioner for the Assessment Year 2010-11. No part of the observation made would be relevant to the merits of the dispute i.e. whether an addition on the above count is warranted in the entirety of the facts and circumstances of the case. That issue would remain to be examined in the consequential reassessment proceedings to be now conducted by the Assessing Officer in which the assessee would be within its right to rebut the allegation made against him and to lead such evidence in its defence as it may desire to establish that the aforesaid entries were in fact genuine entries and not accommodation entries. 2017 (12) TMI 131 Nature of expenditure - non-compete fee - revenue or capital expenditure - Held that:- The consideration of ₹ 70 lakhs was not expressly towards the non-compete obligation, but towards smoothening the process of acquisition of the asset, i.e., the unit of SML in Madras. Approvals that were required from the financial institutions, income tax authorities and other governmental authorities were towards the finalisation and closure of the acquisition process. Other covenants and obligations imposed upon SML, i.e., warranties, confidentiality, etc., added value to the asset being acquired. There is no doubt that in the facts of the present case, the payment of ₹ 70 lakhs is a capital expenditure and hence the question of law is answered in favour of the Revenue 2017 (12) TMI 130 Expenditure made on account of 'certified data purchase' - Tribunal has recorded a finding of fact that the assessee had actually engaged in the activity of the sale of data to Bajaj Allianz for which it had purchased certain data from another entity - Held that:- The finding of the Assessing Officer and the argument advanced on that basis that the assessee had failed to establish the contents of utility of the data and the process by which it was obtained etc. are largely irrelevant to the issue of the assessment of the income of the assessee. Once it had been established and accepted by the department that the assessee was infact engaged in the activity of purchase and sale of data and had generated revenue therefrom, the finding as to its utility etc., was not a matter that was decisive. While considering the claim of expenditure during the assessment. It is settled principle of Income Tax Law that the Assessing Officer cannot sit in the seat of the assessee and try to conduct the business in the manner he considers prudent. Thus the finding of fact recorded by the Tribunal has not been shown to be perverse. - Decided in favour of assessee. Disallowance of salary expenditure - Held that:- Though the revenue does not dispute the existence of form-16 in respect of the salary disbursement, yet, the existence of such certificates is not enough to establish that such expenditure was genuine or that such payments had actually been made by the assessee. Neither the assessee produced the salary payment register nor it produced the vouchers in support of the salary payments which the Assessing Officer noted to have been made @ ₹ 2000/- to ₹ 8000/- each nor the assessee established total number of its employees, nor it disclosed their names, addresses etc. nor the assessee produced any affidavits of confirmation by any such employee acknowledging the salary payment as claimed by the assessee. The Tribunal has clearly misconstrued this issue and hurriedly concluded that the Assessing Officer had not pointed out the deficiency of vouchers. The finding of the Tribunal is thus, clearly not supported by any evidence. It is, therefore, perverse.Therefore, instead of remanding the matter to the Tribunal to decide the matter afresh, we consider it proper to remand the matter to the CIT (Appeals), which authority had dismissed the appeal of the assessee for his non-appearance. Part disallowance the 'Referral Fee' - Held that:- The expenditure on account of 'Referral Fee' is supported by complete data voucher, form 16A with regard to TDS, PAN numbers of the persons giving their references and also TIN payments made, datewise. Though, the Tribunal found that the expenditure was duly established and genuine, nothing has been shown to doubt the correctness of the finding of the Tribunal in this regard. Accordingly, we find that the Tribunal has not committed any error in accepting the claim of the assessee with regard to the expenditure on account of payment of 'Referral Fee'. The said finding is a finding of fact based on evidence on record. Therefore, the question no.3 raised by the revenue is answered in favour of the assessee 2017 (12) TMI 129 Benefit of Section 80-IC - proof of income derived from business - income earned by way of interest - scope of the term business u/s 2(13) r.w.s 28(i) - Held that:- Both in Sections 80HH and 80-IC, the Legislature has chosen to employ the word “derived” as distinguished from “attributable to”. Had the Legislature used the words “attributable to”, then it would have a much wider effect and it may have encompassed within itself, the income, which is the subject matter of controversy before us. But insofar as a narrow concept has been contemplated by the Legislature for the purpose of grant of benefit of deduction under Section 80-IC, we would think that with regard to the fact that interest, which is earned by the appellant, has nothing to do with carrying on of the business per se, namely, manufacture and sale of the articles in question, the appellant would not be entitled to the benefit of deduction. Undoubtedly, in Section 2 (13) of the Act, “business” is defined. A definition clause is, undoubtedly, to be considered when interpreting a Statute, but it is always subject to the context being otherwise. We may notice in this regard Section 28 of the Act, which provides for the income coming under the heading ‘Profits and gains of business or profession’. We may notice Section 28(i) of the Act, which provides as follows: “28. Profits and gains of business of profession.-The following income shall be chargeable to income-tax under the head “profits and gains of business or profession”,- (i) the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year;” Contrast the words used in Section 28 (i), it does not use the word “derive”; it also does not specify any particular business as such. The entire income from trade and business would be reckoned under the heading ‘business income’. In other words, under Section 80-IC, a person, an enterprise or an undertaking is entitled to take the benefit of Section 80-IC only insofar as it carries on business, which is mentioned in sub-section (2) of Section 80-IC and derives profits and gains therefrom. - Decided against the assessee 2017 (12) TMI 128 Benefit of deduction u/s 80IB - adherence to eligibility criteria - whether assessee is a builder and developer and cannot be termed as a works contractor? - Held that:- In the present case in appeal even though the appellant followed Project Completion method but it has given up his claim and agreed to be assessed on the basis of Percentage Completion method provided the deduction under section 80IB(10) of the Act is allowed to it in the light of Board’s Instruction No. 4/2009 as has been reproduced in para 8.2 of the assessment order as the tax audit report as envisaged before allowing deduction has also been furnished by the assessee. We, therefore, on the peculiar facts and considering entire gamut of the case laws are satisfied that the assessee is a builder and developer and cannot be termed as a works contractor for invoking Explanation below section 80IB(10) of the Act. The appellant having agreed to be assessed on Percentage Completion method, the estimation of income after rejecting accounts by the Ld. CIT(A) in both the years under appeal does not require any interference so that the appellant in this case having filed the requisite audit report also is entitled to deduction under section 80IB(10) in terms of the Instruction No. 4/2009 issued by the CBDT. The assessing authority accordingly shall allow the deduction to the appellant in both the years under appeal. - Decided in favour of assessee. 2017 (12) TMI 127 Protective additions / assessment - profits of all the overseas companies as mentioned in the assessment order are to be taxed in India on the ground that these overseas company were treating as “Resident” in India - Held that:- It is not out of place to mention that when addition was already made in the hands of the overseas companies on substantive basis treating them as residents in India, there is no justification for the Assessing Officer to make such an addition in the hands of a share holder on protective basis, when no benefit was derived by her from these companies to protect the interest of revenue. It is noted that without assessing the income of the assessee for the year under consideration, the Assessing Officer simply transferred the addition made in case of the overseas companies to the assessment order of Sh. Ajay Kalsi on the ground that he exercised control and management of the affairs of the overseas companies as laid down in section 6(3) of the I.T. Act 1961 without brining on record a concrete and substantial evidence to prove his role. Based on the assessment of Sh. Ajay Kalsi, by virtue of being a 50% share holder in Multi Asset Holdings Ltd., the Assessing Officer made an addition of similar amount in case of the assessee meaning thereby that the Assessing Officer did not assess the income of the assessee based on the details filed in her return u/s 153A, but assessed the income of the overseas companies in her hands without any basis - Decided against revenue 2017 (12) TMI 126 Admission of additional evidence - Held that:- Having examined the records he expressed his reservations also on the admitting of the additional evidence produced before the Ld. CIT(A), because the conditions of Rule 46A has not been fulfilled in the case of the assessee. AO further contended that if at all the additional evidence were to be admitted they could not be done without depth enquiry/ investigation which might take a lot of time. However, he did not point out as to which of the evidence paper etc. were in the nature of additional evidence. After considering the Remand Report, the Ld. CIT(A) has rejected the aforesaid objection of the Assessee. However, in our considered opinion, the objection on the admission of additional evidence of the AO was valid one and needs to be enquired/investigated/verification in depth which was not done by him. Keeping in view of the facts and circumstances of the case as explained above, we are of the considered opinion that the orders passed by the Revenue Authorities are against the principle of natural justice and, therefore, the issues involved in the Appeals filed by the Assessee deserve to be set aside to the file of the AO to decide the same afresh, under the law, after detailed enquiry / investigation/verification of the each and every evidence including the additional evidence filed u/R 46A before the Ld. CIT(A) and provide adequate opportunity of being heard to the assessee. 2017 (12) TMI 125 Addition on AMP adjustment - addition made on protective basis following the BLT method was sustained by the ld. DRP - Held that:- We find that the BLT for computing Arm s Length Price of AMP transaction has already been rejected by the Hon ble Delhi High Court in the case of Sony Ericsson (2015 (3) TMI 580 - DELHI HIGH COURT) and thus adjustment even protective basis cannot be sustained. The decision of the Hon ble Jurisdictional High Court is a binding precedent and the lower authorities cannot disregard it merely because the Revenue has challenged it before the Hon ble Supreme Court. Thus, respectfully following the above decision of the Tribunal, we direct the Ld. AO/TPO to delete the protective addition. Accordingly, we allow the relevant grounds of the appeal of the assessee. Disallowance of additional claim of deduction pursuant to the order of the Settlement Commission - Held that:- In view of the findings of Tribunal in assessment year 2012-13 and provision of Section 43B of the Act, deduction for payment of interest is not allowable in the year under consideration. 2017 (12) TMI 124 TPA - selection of comparables - Held that:- The assessee was engaged in the business of software development which requires highly skilled manpower, thus companies functionally dissimilar with that of assessee need to be deselected from final list. 2017 (12) TMI 123 Addition on basis of seized document - addition on adjustment to reduce the excess profit of ₹ 20 crores - Held that:- Though the document in question was not recovered from the possession of the assessee-company, any how, it would not give rise to the addition in question. The A.O. heavily relied upon the seized document copy of which is filed at page-358 of the paper book as well as reproduced in the assessment order. According to it, the estimated profit of year ending in appeal was estimated at ₹ 160 crores. The assessee-company, as per the seized document declared ₹ 140 crores as profit plan as per advance tax. Therefore, it was considered a reduction in the profit of ₹ 20 crores. It is not in dispute that ultimately the assessee- company declared taxable income of ₹ 160,14,24,547. The A.O. in the computation of income has taken the same figure. Therefore, even if the seized document is considered adverse in nature against the assessee-company, assessee-company has already declared more taxable income in the return so filed after the search. Therefore, there is no case of reduction of the profit in the facts and circumstances of the case. Further, A.O. has not brought any evidence on record that as against the declared income at ₹ 167 crores, there is any manipulation or reduction of the profit in the books of account of the assessee-company. Therefore, the A.O. has miserably failed to support his findings for making addition of ₹ 20 crores. - Decided in favour of assessee. 2017 (12) TMI 122 Revision u/s 263 - understated income disclosed by the assessee - Held that:- Apart from issue of refund claimed by the assessee and mismatch of the income and the tax refund as per system of the Department, did not raise the issue of understated income as per gross receipts and net profit and interest from SBI in the show cause notice. Therefore, on such items the Pr. CIT is not permitted to invoke the jurisdiction under section 263 of the I.T. Act or to pass order. It may be noted here that the Pr. CIT without giving notice to the assessee has found that there is understated income disclosed by the assessee. It is well settled Law that assessment cannot be revised on ground which is not mentioned in the show cause notice. Further, when explanation of assessee has not been called for, there is no question of taking any adverse view against the assessee. Further, if Pr. CIT was of the view that contract income is understated, then, he himself should have conducted the enquiry into the matter at the revisional stage and should have called for the explanation of assessee and should have gone into the details and then pass some order. In such circumstances, he should not have restore the matter back to the file of the A.O. The decision relied upon by the Learned Counsel for the Assessee clearly support the submissions of the assessee. As regards the interest earned and TDS deducted by SBI, the Pr. CIT was of the view that this claim has been made against PAN of the Assessee-Firm. However, Learned Counsel for the Assessee referred to PB-14 which is Profit and Loss Account for assessment year under appeal, in which assessee did not make any such claim. Further, such issue was not raised in the show cause notice under section 263 of the I.T. Act. Therefore, such issue cannot be taken in adverse against the assessee in the impugned order under section 263 of the I.T. Act. Considering the totality of the facts and circumstances in the light of above discussion, we are of the view that the assessment order passed by the A.O. is in accordance with Law in which no infirmity have been pointed-out so as to invoke jurisdiction under section 263 - Decided in favour of assessee. 2017 (12) TMI 121 Granting loans and advances to subsidiaries /ICD’s - interest bearing funds had been diverted in respect of the inter corporate deposit - Held that:- On perusal of the loans availed by the assessee, it clearly appears that these loans raised by the assessee are tied up loans for specific purposes such as vehicle loan, cash credits, packing credit etc. . There is no specific adverse finding on diversion of funds by the assessee w.r.t. loans raised by the assessee by both the authorities below. Under such circumstances, presumption will apply that the assessee has utilised its own interest free funds available with it for granting loans and advances to subsidiaries /ICD’s and also making investments, wherein we have seen that net owned funds are much higher than combined value of investments as well loans and advances granted by the assessee. The ratio of decision of Hon’ble Bombay High Court in the case of Reliance Utilities and Power Limited (2009 (1) TMI 4 - BOMBAY HIGH COURT) will apply. The additions as sustained by learned CIT(A) stood deleted and relief granted by learned CIT(A) stood confirmed. Disallowance u/s. 41(1) on account of cessation of liabilities - Held that:- CIT(A) has granted relief to the assessee as the assessee has written back these liabilities in AY 2007-08 except two liabilities firstly payable to Shaft Broadcast Private Limited on the ground that this liability was disputed/contested by the assessee before Hon’ble Bombay High Court and secondly liability payable to Mr. Sushant G Mohite wherein part payments was made by the assessee subsequently and partly the same was written back in AY 2007-08. The afore-said claims were made before learned CIT(A) for the first time wherein relief was granted by learned CIT(A) without verification . The AO is directed to make verification of the aforesaid claims so made by the assessee for the first time before learned CIT(A) and if the contentions of the assessee are found to be correct, we find no reason to withhold relief to the assessee. 2017 (12) TMI 120 Unexplained sundry creditors - Held that:- The difference in the sundry creditors worked out by the Ld.CIT(A) and the assessing officer was neither reconciled nor explained by the Ld.DR. there was difference in the quantum. The CIT(A) worked out the difference at ₹ 3,32,11,900/- whereas as per AO it worked out to ₹ 2,78,36,901/-. Purchase of capital goods was first taken up by the assessee before CIT(A) but the same was not explained before the AO and not considered by the AO. All the above difference and issues required to be verified from the assessee’s books of accounts and to be cross verified from the creditors books of accounts which exercise was not done by the AO because of non cooperation from the assessee. Therefore, we are of the considered opinion that the entire issue needs to be remitted back to the file of AO to make the detailed verification and decide the issue a fresh on merits. Accordingly we remit the matter back to the file of the AO with a direction to examine the entire issue and consider the issue afresh on merits. Estimation of income and the additions u/s 41(1) - Held that:- We have set aside the order of the CIT(A) Since the issue with regard to the estimation of income is interlinked with the addition made by the AO u/s 41(1), we are of the considered opinion that the estimation of income also required to be remitted back to the file of the AO and decide the issue afresh on merits after considering the submissions made by the assessee. Accordingly, we remit the entire assessment to the file of the AO for denovo consideration. 2017 (12) TMI 119 Carbon credits - capital receipts OR business income - Held that:- Carbon credits are capital receipts and cannot be considered as business income. Accordingly, we uphold the order of the CIT(A) and dismiss the appeal of the revenue. See CIT. vs My Home Power Ltd. [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT]. Eligible for deduction u/s 80IA - generation of ash - Held that:- The ash is generated in process of generation of power from the manufacturing unit and it is not distinct and different from the activity of the manufacturing of power. The Ld.DR did not place any evidence to show that the assessee is not generating ash out of the manufacturing unit. Therefore, the sale proceeds of ash are directly derived from the generation of power and as such the same are eligible for deduction u/s 80IA. Accordingly, we set aside the orders of the lower authorities and direct the assessing officer to allow the deduction u/s 80IA on sale of ash. Accordingly, the appeal of the assessee on this ground is allowed. Exclusion of sale proceeds of carbon credits from the computation of book profit u/s 115JB - Held that:- The carbon credit is credited to the Profit & Loss account held to be capital receipts and not exigible to tax as held by Hon’ble jurisdictional High Court in My Home Power Ltd.[supra]. Hence respectfully following the view taken by the Coordinate Bench, we direct the AO to exclude the sale of carbon credits for the purpose of computation of book profits u/s 115JB of IT Act. Appeal of the assessee on this ground is allowed. 2017 (12) TMI 118 Denial of exemption u/s 11, 12 and 10(23BBA) - proof of certificate of registration - Held that:- At the time of making the assessment for allowing exemption u/s 11 and 12, the assessee should furnish the proof of certificate of registration being granted by the Ld.CIT. In the absence of furnishing details sought by the CIT and thereafter no correspondence with the income tax authorities demonstrates that the assessee has not shown any interest in pursuing the registration further, hence, we are inclined to believe that the assessee has not submitted the clarifications and did not prosecute the assessee’s case for granting registration u/s 12AA. The assessee failed to establish that the Registration was granted in its case or complied with the requirement for granting the Registration. The Ld.AR referred the assessment order for the assessment year 2006-07 wherein the AO has allowed the exemption without verifying the status of registration and committed an error and we do not incline to continue the same mistake. Accordingly we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee on this ground. Granting of exemption u/s 10(23BBA) - Held that:- The assessee stated that the temple trust was taken over by the endowments department and requested for granting exemption u/s 10(23BBA), but the assessee did not place any evidence to show that the temple trust was constituted by any of the central /state provincial act as required under section 10(23BBA) of the act. Therefore we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. Corpus funds required to be excluded even if the assessee trust is treated as AOP from the purview of the income - Held that:- The resolution passed by the trust is for application of it’s receipts in the manner in which the collection required to be utilized but not the mandate of donors as rightly observed by the Ld.CIT(A). Further the hundi collections are voluntary contributions which cannot be excluded from the definition of income u/s 2(24)(iia) of the Act. The specific purpose donations are excluded by the amendment made in the Finance Act, 1987 w.e.f. 1.4.1989. Therefore, all the voluntary contributions received by the assessee are taxable within the meaning of section 2(24)(iia) of the I.T.Act if the registration u/s 12A is not available to the assesse. The courts have held that the specific purpose or tied up grants are excludible but the assessee has not placed any evidence to show that the hundi collections are received for specific purpose. In addition to the above as held by CIT(A), the hundi collections are also included in the receipts and payments account. The assessee has not produced the balance sheet and demonstrated that the corpus funds are tied up grants and received for capital purpose. 2017 (12) TMI 117 Revision u/s 263 - allowability of capital expenditure out of the revenue receipts - Held that:- CIT during the revision proceedings found that the assessee had made the payments for capital expenditure and claimed as revenue expenditure which is not allowable. Hence, the CIT has taken up the case for revision and held that the order passed by the AO was erroneous and prejudicial to the interest of the revenue. The issue with regard to the allowability of capital expenditure out of the revenue receipts was not examined by the AO and the same was not pending before the CIT(A). Therefore, as per provisions of section 263, the CIT has rightly taken up the case for revision u/s 263. The Ld.AR did not bring any judgement or decision in support of his argument. Therefore, we do not find any infirmity in the order of the Ld.CIT and the same is upheld. The assessee’s appeal on this ground is dismissed. Allowance of revenue expenditure - Held that:- The assessee is not enjoying exemption u/s 11 & 12. Hence the voluntary contribution received by the assessee is taxable income u/s 2(24)(iia) and only the revenue expenditure is allowable deduction. In the instant case, the AO allowed the entire payments as revenue expenditure without verifying the nature of expenditure which included the capital payments. Since the capital expenditure is not allowable, the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue, and the CIT has rightly invoked the provisions of section 263 of the Act and set aside the order of the AO. Therefore, we do not find any error in the order passed by the CIT and the same is upheld. - Decided against assessee. 2017 (12) TMI 116 Transactions through Credit cards - unexplained purchases - Held that:- The details of the purchased items shows that these were the purchases for the requirement of the assessee or family members. These were the personal expenditure met out by the assessee through his credit cards. The items purchased are sarees, jewellery, handicrafts and payment to petrol pumps. Items purchases suggest that the assessee had purchased various items for him or family members. The claim of the assessee that he was returning the goods back to the seller at the 3% discount to generate cash for payment of credit card dues on account of financial crisis, is completely unsustainable. This statement is not supported by any documentary or oral evidence. It is a completely bald assertion which has no legs to stand. The other pleading of the assessee that purchases by credit cards should be taken as turnover and the GP should be estimated on this turnover is also completely baseless, as this contention of the assessee is also completely unsustainable and without any supporting document or oral evidence. Such recitals not supported by any evidence are unsustainable in law and facts. The last plea of the ld AR that the Assessing Officer has added both the cash deposited in the payment of credit cards account and also the purchases made through these credit cards it is of the view that the assessee had purchased the goods through credit cards and payment was made by unaccounted cash. The source of cash is not explained. The repayments have been made by depositing unaccounted cash of these purchases. The source of these purchases is unexplained. For working out the quantum of disallowance, the matter is restored back to the file of ld. CIT(A). - Appeal of the assessee is partly allowed for statistical purposes 2017 (12) TMI 115 Addition of interest - accrual of interest - Inter-corporate deposits - Held that:- It is not denied that the Inter-corporate deposits made by the assessee were not recoverable from the company then what to talk of interest. When the recovery of the money advanced itself is doubtful, the question of accrual of interest, in our opinion, would not arise. Interest would have accrued to the assessee if it got enforceable right and interest would have been received by it. On the same analogy the interest in respect of the non-performing assets in the case of the bankers are not taken to be their income. Even otherwise also since the Revenue has not made any addition in the A.Y. 2010-11 and 2011-12 on the basis of these facts in respect of interest and on the principle of consistency, we are of the view that it cannot be said that interest has accrued to the assessee during the year when the Inter-corporate deposits is equivalent to non-performing assets in the case of the assessee. Non-recognition of interest on loan advanced to Shri Sateesh Kumar - Held that:- The borrower has taken loan by way of pledge 1,26,540 shares of Enzen Global Solutions Private Limited owned by him having face value of ₹ 12,65,400/- along with a demand promissory note and two post dated cheques of ₹ 4,05,00,000/-. The assessee has recognized interest amount of ₹ 10,19,178/- during the F.Y 2007-08 for sixty two days but the said interest was also not recovered. The borrower did not own up the commitment. The borrowers company was performing badly. Under these circumstances also and since the recovery of the original amount itself is doubtful, the interest income in our view can also not be added as income of the assessee. When the principal amount itself is a non-performing asset, interest cannot be said to have accrued to the assessee. We, therefore, in the light of the aforesaid discussions, set aside the order of the CIT(A) and delete the addition - Decided in favour of assessee. 2017 (12) TMI 114 Disallowance u/s 14A - Held that:- The Hon’ble Delhi High Court in the case of H.T. Media Limited (2017 (8) TMI 962 - DELHI HIGH COURT) observed that there was to be a minimum compliance with the mandatory requirement u/s 14A(2) read with Rule 8D which requires A.O. to examination of the accounts of the assessee and upon arriving at a dissatisfaction as to correctness of the claim of the assessee in respect of expenditure incurred in relation to exempt income. A.O. can determine the amount of expenditure which should be disallowed in accordance with the method prescribed under rule 8D of the rules. The court explained that unless such dis-satisfaction was recorded in the manner indicated u/s 14A of the Act, the question of invoking rule 8D of rules and the formula there under does not arise. In the present case, the assessing officer has not given any finding in respect of interest expenditure incurred by the assessee. Thus, we find no reason to interfere with the order passed by the Ld. CIT(A). - Decided in favour of assessee. Addition u/s 40A - assessee is outsourcing job work relating to reeling and doubling from sister concern namely Sri Venkataraya Threads Pvt. Ltd - Held that:- We find that the A.O. has not made any enquiry whether the payment made by the assessee is excess according to the norms prevailing in the similar industry. It is submitted that the assessee has to increase the price for the purpose of business expediency. We find neither A.O. nor CIT(A) gave any reasons for the disallowance. Accordingly, we find that the A.O. is not justified in invoking section 40A(2)(b) of the Act and accordingly we set aside the order passed by CIT(A) and we direct the A.O. to allow the claim of the assessee.- Decided in favour of assessee. 2017 (12) TMI 113 Belated return filed u/s 139(4) - limitation for exercising option u/s 11(2) - Held that:- In the facts of the present case and as observed from the assessment records, assessee had furnished the details under Form 10 before the assessment proceedings had been initiated. Therefore the assessing officer had the benefit of verifying claim of exemption during the pendency of assessment. On a careful reading of section 139 of the Act, we are of the opinion that subsection (1) and (4) of section 139 have to be read together and, on such a reading, it is very clear that return is filed within the specified period under subsection (4) has to be considered as having been made within the time prescribed in subsection (1) or subsection (2) of section 139 of the Act. In other words if a return is filed within the time specified under subsection (4) of 139 of the Act and the action contemplated by Explanation to section 11 (1) of the Act exercised in writing along with such a return filed under subsection (4) of section 139, the requirements of Explanation to section 11 (1) would stand satisfied. Appeal filed by the revenue stands dismissed. 2017 (12) TMI 112 Long term capital gains tax on sale deed - Held that:- The sale deed recitals show that the building was demolished and vacant plot was handed over. Whereas the MOU shows the existence of super structure. The assesse claims the sale of vacant site after demolition of the building, State Bank of Hyderabad letters referred in the appellate order evidences the existence of the building and the process of demolition. From the above it is clear that neither the assessee nor the AO has collected nor the assessee has furnished the complete facts. It appear that the sale tranasaction is interlinked with Smt. Anuradaha, Shri Anil kumar, the purchaser and the assessee. Further examination of the contents of the suit referred by Shri Anil kumar and D. Sri Rama Krishna are also appear to be crucial for arriving at the correct factual position. Therefore we are of the considered opinion that the case required to be remitted back to the file of the AO to verify the entire facts and to decide both the issues of sale consideration and the cost of construction on merits. Both the ld.AR and the DR have agreed for remitting the matter back to the file of the AO. Accordingly, we set aside the orders of the lower authorities and remit the matter back to the file of the AO for de-novo consideration. 2017 (12) TMI 111 Non eligibility of exemption u/s 11 - donations received for specific purpose - voluntary contribution received by Trust as income of the Trust as per section 2(24)(iia)? - Held that:- The donations were received for specific purpose for acquiring the fixed assets. This is evidenced by the letters placed before us from the donors. The funds are not freely available to the assessee society, for utilizing its objectives other than acquiring specified assets. The entire amount received for acquiring the fixed assets was utilized by the assessee and there are no surplus funds available to the assessee. The above facts are not disputed by the Ld.DR. The fact that the amount was utilized was evidenced by the Balance Sheet, thus the facts of the case is squarely covered by the decision of the Coordinate Bench of Bangalore in the case of Vokkaligara Sangha [2015 (8) TMI 920 - ITAT BANGALORE], wherein the Coordinate Bench held that contributions received for specific purpose cannot be regarded as income u/s 2(24)(iia) of the act. Respectfully following the view taken by the ITAT, Bangalore, we hold that the donations received for specific purpose of acquiring the capital assets are tied up grants and cannot be treated as income u/s 2(24)(ii)(a) of I.T.Act. Accordingly, we set aside the orders of the lower authorities and allow the appeal of the assessee 2017 (12) TMI 110 Transfer of case u/s 127 - reason for transferring the entity was not mentioned in the order - deemed service of notice u/s 148 - Held that:- The order dated March 24, 2009 passed by the learned Commissioner of Income-tax Gwalior under section 127 of the Act, the entity centralised with the Assistant Commissioner of Income-tax (Central Circle) is M/s. Welcome Coir Industries with permanent account number which pertains to a firm and it was earlier getting assessed with Income-tax Officer 2(2), Gwalior, while the assessee, M/s. Welcome Coir Industries Ltd. is a company having a different permanent account number. Also, in this order, nothing has been discussed as to whether before passing of this order, any reasonable opportunity of being heard was ever given to the concerned entity or not and as per the information collected by the Commissioner of Income-tax (Appeals) from the office of the learned Commissioner of Income-tax, Gwalior, it has been found that the order under section 127 of the Act was passed just on the basis of the approval granted by the Chief Commissioner of Income-tax, Bhopal and no opportunity of being heard was given to the assessee before passing of this order. It has also been found that the reason for transferring the case under section 127 of the Act was not mentioned in the order. Further, and importantly, even if the order under section 127 dated March 24, 2009 is considered to be existing even today, as not having been challenged in a court under appropriate proceedings, the Assessing Officer cannot assume jurisdiction on the assessee, M/s. Welcome Coir Industries Ltd. on the strength of this order, because the entity centralised with the Deputy Commissioner of Income-tax/Assistant Commissioner of Income-tax (CC) on the basis of this order is M/s. Welcome Coir Industries, the firm and not M/s. Welcome Coir Industries Ltd., the company, as even admitted by the Assessing Officer in his letter dated April 30, 2012 written to the Joint Commissioner of Income-tax, Central Range, Kanpur. Deemed service of notice under section 292BB does not deal with, nor would cure such jurisdictional defect, i.e., the absence of jurisdiction. As discussed by the learned Commissioner of Income-tax (Appeals) in paragraph 12.10 of his order, the Assessing Officer claims jurisdiction by virtue of the order dated March 24, 2009 passed under section 127 of the Act, i.e., by way of transfer of jurisdiction. However, the said order has been found to be void ab initio, as the case of the assessee was not centralised thereunder. Thus, the Assessing Officer never acquired jurisdiction over the assessee. Therefore, section 292BB of the Act does not come to the aid of the Department. Compliances would not bestow jurisdiction on the Assessing Officer, once such jurisdiction never lay with the Assessing Officer to begin with. "Acquiance neither confers, nor takes away jurisdiction" is the applicable legal maxim here. Accordingly, this grievance of the Department is rejected as sans merit. 2017 (12) TMI 109 ‘Principle of mutuality’ - assessee club has been formed under the control of Haryana Urban Development Authority (HUDA) which is authority established by Haryana Government - Held that:- There can not be said to be straight jacket formula to say that in every a mutual concern the members must be entitled to a share in the surplus. In the aforesaid case laws as discussed by the Hon’ble Supreme Court in Banglore Cliub’s (2013 (1) TMI 343 - SUPREME COURT) if the scheme or the mechanism of functioning of a mutual organization is so devised that a taint of commerciality is involved, the income of the organization can be subjected to tax. As observed by the hon’ble supreme court, it is difficult and vexed question as to at what point of time the relationship of mutually ends and that of trading begins. Since the affairs of the assessee trust are controlled by the serving officers of HUDA, hence it has to pass through greater scrutiny as the chances of it crossing the thin line between the mutuality and commerciality are very high. However, at this stage, so far the Assessment Years under consideration are concerned, the revenue could not point out the taint of commerciality in the contribution, management and application of the surplus collected through contributions and subscriptions from the members and for price of the facilities availed by its members, hence, the same cannot be said to be taxable income of the society. Receipt from interest on FDR’s - It is held that for the assessment years under consideration, the assessee is entitled to the benefit of the doctrine of mutuality in respect of the surplus amount received as contributions or price for some of the facilities availed by its members. However the amount of interest earned by the assessee from the fixed deposits in the banks will not fall within the ambit of the mutuality principle and will therefore, be exigible to Income-Tax in the hands of the assessee-club. Our above decision will apply mutatis-mutandis to all the captioned appeals. In view of the above all the captioned appeals are treated as partly allowed. 2017 (12) TMI 108 Adding net profit and share premium sum under section 68 - discharge of onus by assessee - Held that:- We bear in mind that there can be no straitjacket formula for determining share premium which depends upon current strength and future potential of an enterprise. The assessee's act and conduct herein in having received such a high share premium purportedly towards share capital and premium in showing continuing inability to furnish the requisite information citing subsequent financial difficulties leading to its premises being seized therefore does not inspire confidence. The above explanation supporting non-production of evidence despite the Tribunal's clearcut observations is highly unpalpable and improbable. There is no explanation much less a justifiable one in support of its non-co-operation adopted in the second round of assessment before the Assessing Officer taken up in furtherance to this Tribunal's directions. The assessee admittedly did not undertake even a single step to prove identity, capacity and genuineness/ creditworthiness of its 13 share premium paying applicants. We repeat that this is not the assessee's case of having not being afforded adequate opportunity of hearing in the instant consequential proceedings. The same factual position continued in the three remand proceedings as well wherein it would file only photocopy of the confirmations in some of the cases. All the above 13 parties seem to be based in Ahmedabad only. The assessee still could not produce even one of the 13 parties in question We notice from the case record that all the above photocopy confirmations are dated September 1, 1995 i.e. well before this Tribunal's remand direction dated June 12, 2009. Rather the same is well before the Commissioner of Income-tax (Appeals)'s former order dated September 14, 2005 (supra). All this reflects the assessee's lack of explanation despite getting its matter remanded back to the Assessing Officer. We further observe that the assessee's act and conduct in not being able to file even a single original confirmation and its subsequent action in submitting all 4 photocopies of the same date indicates a very serious genuineness issue. - Decided in favour of revenue Customs 2017 (12) TMI 107 Misdeclaraion of imported goods - According to the Revenue, the goods were to be graded only as Grade “A” and “AA” whereas the assessee had graded the goods under the grades A, B and C - Section 130E(b) of the Customs Act, 1962 - Held that: - Insofar as grading is concerned, apart from the letter dated 22.12.2000 of the Board of Foreign Trade, Ministry of Economic Affairs, Taiwan confirming that grades B, C and D also exist, what was available on record is an intra-departmental communication dated 12.04.1999 - The above materials, according to the learned Tribunal, were sufficient to reverse the finding of the primary and the First Appellate Authority on the point of grading. Valuation - evidence of contemporaneous value of the imported yarns i.e. Partially Oriented Yarn of Polyester (POY), Polyster Textured Yarn (PTY) and Polyester Filament (PFY) - Held that: - The finding of the learned Tribunal is that almost half of number of the said bills of entry relating to each item of Yarn i.e. POY and PFY did not pertain to the yarns imported by the assessee and, in case of the rest, there was a variance in the price mentioned in the aforesaid bills of entry and those in the standing order; yet the prices mentioned in the said standing order were adopted to determine the transaction value. Tribunal thought it proper to take the view that the claim of the Revenue on the basis of contemporaneous records is not established and what was done was a determination/assessment based on the standing order which is prohibited by Rule 8(2) (v) of the Customs Valuation Rules, 1988 - If the basis on which the learned Tribunal had arrived at its conclusion and thought it proper to reverse conclusions of the primary and First Appellate Authority is to be considered in the light what has been stated above we will have no hesitation in coming to the conclusion that in the present case the learned Tribunal has arrived at a conclusion which is possible and permissible upon due consideration of the relevant materials. Appeal dismissed - decided against appellant. 2017 (12) TMI 106 Doctrine of merger - Settlement Commission in exercise of its power conferred under Section 127-I (1) of the Customs Act, 1962, sent the case back to the adjudicating authority for adjudication in accordance with the provisions of the Customs Act - whether the subject matter of the show cause notice issued to the petitioner is a fit case for settlement before the Commission? - Held that: - Admittedly, all the records are available in Chennai, in the office of the Settlement Commission and the petitioner has sought for issuance of writ of certiorari, to quash the order passed by the Settlement Commission, which was passed at Chennai and this Court has got jurisdiction to entertain this writ petition. The present writ petition is for writ of certiorari and the correctness of the order passed by the Settlement Commission is to be decided. The impugned order has not been passed on the merits of the petitioner s claim for settlement, but the application has been rejected on the ground that the petitioner failed to provide the required cooperation to the Settlement Commission to settle the case in a true spirit of settlement. The facts recorded by the Settlement Commission in paragraph 7.4 shows the conduct of the petitioner. It appears that the authorized representative, who was engaged by the petitioner, did not extend full cooperation. That apart, there has been change of the authorized representative. There is every justification on the part of the Settlement Commission for having refused to entertain the application. However, one more reason assigned by the Commission in Paragraph 7.8 of the impugned order is that the petitioner failed to make full and true disclosure in the application for settlement. However, this conclusion is not supported by adequate findings. Thus, it can be safely concluded that the application was rejected for non-cooperation. In such circumstances, it cannot be stated that the revenue would be prejudiced or put to difficulty for appearing before the Settlement Commission at Chennai, especially when the respondents admit that the Chennai Bench of the Settlement Commission exercises jurisdiction over the State of Andhra Pradesh. The matter is remanded to the respondent for fresh consideration with a specific direction to the petitioner to extend the full cooperation for the disposal of the matter by the Settlement Commission without seeking for adjournment on vexatious or untenable grounds - petition allowed by way of remand. 2017 (12) TMI 105 Classification of imported goods - Concentrated Mineral Drops (CMD) - food preparation or not - whether the goods imported by the appellant viz. Concentrated Minerals Drops (CMD), Elete Electrolyte (Elete) and Nanosil would merit classification as declared by the appellant under CTH 30045020 or under CTH 21069099 as maintained by the department? - Held that: - We are unable to find any facts or evidence adduced by department to establish that CMD is a food preparation per se. By its very nature the use of the word preparations" in heading 21.06 will surely result in foods to be subjected to some type of preparation or in other words, food that has been worked on so as to result in substance like those exemplified in note 5 & 6 of Chapter 21 - We are not able to appreciate that CMD drops would be of genre sought to be explained in the aforesaid chapter notes 5 & 6. Whether CMD drops can be brought into the umbrella of the residual heading 21069099, when all the other prior sub headings are evidently relating to specific preparations made out of food, like sterilized or pasteurized millstone, and the like? - Held that: - On a comparison of the labels of the appellants CMD drops and that of Kevas Concentrance Mineral Drops, it is noted that both claim to be products from Great Lake of Utah and more or less make the same claims about the ingredients and minerals therein. Both the labels indicate an advisory that the product is not a drug / medicine and not intended to treat, prevent or cure any diseases. In our opinion, therefore Keva's Minerals Drops can be considered as a product identical to that imported by the appellant herein - Tribunal in the case of CC New Delhi Vs Keva Industries [2012 (4) TMI 67 - CESTAT, NEW DELHI] has held that the goods being natural sea water had not undergone any processes to be called as 'food preparations or any other preparation'; that there was no test report brought about by Revenue to discharge the burden of proof to claim that goods in question subject to Tariff Entry 2106 and also to satisfy that it was a preparation with or without certain composition and had undergone the process - In the case at hand also there has been no evidence adduced, say by way of an expert opinion or test report from a competent authority / organization to support the claim of the department, that the products are food preparations - the impugned Concentrated Mineral Drops imported by the appellant will not merit classification under 21069099. Valuation of imported goods - enhancement of value - whether the enhancement of the declared import values by the department is in order? - Held that: - From the narration in the SCN it is found that certain details had been retrieved from the hard disc and other documents recovered from the premises of the appellant. From these documents, it emerged that commercial invoices submitted by the appellant at the time of import indicated lower values per bottle against actual values - the appellant has not disputed the fact of recovery of the hard disc / files / documents which have been analyzed by the Commissioner as aforesaid. They have also not been able to adequately refute, by adducing any evidence to the contrary that the adjudicating authority has erred in arriving at the aforesaid conclusions concerning undervaluation. In the circumstances, we are unable to find any infirmity with that portion of the impugned order rejecting the value declared for the impugned goods and redetermining the same. However, to arrive at the exact quantum of differential duty liability considering the impugned goods as classifiable under CTH 2501, but on enhanced assessable value based on the re-determined unit values arrived at in para-29 of the impugned order, the matter is remanded to the adjudicating authority for this limited purpose. Appeal allowed in part and part matter on remand. 2017 (12) TMI 104 Penalty on CFS - smuggling of prohibited goods - red sanders - outsource of function without the permission of the Commissioner of Customs, Tuticorin - Held that: - the appellant who is a CFS Agent has to obtain written permission from the Commissioner of Customs to outsource any of the functions entrusted upon him. Undisputedly, the appellant has not obtained any such permission even though they have outsourced the responsibility of transport of the stuffed container from their CFS area to Tuticorin Port - Being the custodian of the goods, the appellant cannot wriggle out of the responsibility by saying that they had outsourced only to licenced Customs Broker and that it was not outsourced to any unknown person. The standing order is issued by the Commissioner basing on Regulations which are already in existence. Being a service provider, for export of goods, and the offence involved being smuggling of prohibited goods, the penalty is upheld. Appeal dismissed - decided against appellant. 2017 (12) TMI 103 Violation of EPCG Scheme - actual use condition - it was alleged that that two vehicles imported by M/s Hotel Tunga Regency Pvt. Ltd. were used for personal purpose - According to Revenue, even the documentary evidences failed to establish that the vehicles were exclusively used for the tourism purpose of the foreign tourists. There is no dispute by the appellant that the vehicles were used by the Directors (although appellant says at times used). So also appellant could not establish with clean hands that the vehicles were exclusively used for the tourism purpose of the foreign visitors to the hotel - Revenue s further submission is that the EPCG licence impose obligation on the appellant both on user criterion as well as earning of foreign exchange, it was the burden of the appellant to establish that it has fulfilled the condition of the notification, policy as well as the EPCG licence. Held that: - Due to paucity of time the order could not be recorded - Order is reserved and expect to be pronounced by 10/12/2017. 2017 (12) TMI 102 Confiscation of goods - scope of the term 'importer' - mutilation of goods - Held that: - these appeals can be disposed off on pure question of law as to who is importer. Undisputedly, appellant is a unit situated in SEZ area has cleared the goods from SEZ to DTA though he had filed Bills of Entry on behalf of the DTA unit, discharged duty liability on behalf of DTA unit as is mandated in. It is conceptually clear that clearance made from a SEZ to DTA are considered as imports for the DTA unit and the provisions of the Customs Act 1962 would apply in full force to such imports. In the case in hand, undoubtedly the goods got cleared from the SEZ unit of Anita exports and was examined in the DTA wherein some discrepancy were found out, if that be so, the importer of the said goods from DTA is required to discharge the duty, if any, is the law as it is not the case of the Revenue that the importers were non-existent. The appellant Anita Exports cannot be considered as an importer, in the facts and circumstances of this case. Accordingly, no duty liability arises and hence goods even if they are liable for confiscation no duty liability arises on the appellant herein. The case in hand, since the goods area mutilated goods and the appellant being held as not an importer, the appeals to the extent they contest the impugned order before this Tribunal are allowed - appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2017 (12) TMI 101 Corporate Insolvency Resolution Process - notice under sub-Section (1) of Section 8 was not given by the respondent –‘Operational Creditor’ but through Advocate/Lawyers’ Firm - Held that:- There is nothing on record to suggest that the person/Law Firm was authorised by the ‘Operational Creditor’ or the Law firm is holding any position within the office of the ‘Operational Creditor’. Thus we hold that the application under Section 9 preferred by the respondent-‘Operational Creditor’ was not maintainable. The 'I&B Code' is a complete Code by itself. The provision of the Power of Attorney Act, 1882 cannot override the specific provision of a statute which requires that a particular act should be done by a person in the manner as prescribed thereunder. Therefore, we hold that a 'Power of Attorney Holder' is not competent to file an application on behalf of a 'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant'.” . See Palogix Infrastructure Limited Vs. ICICI Bank Limited [2017 (10) TMI 913 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] - Application dismissed. 2017 (12) TMI 100 Maintainability of application under Insolvency and Bankruptcy Code, 2016 - period of limitation - Held that:- Insolvency and Bankruptcy Code, 2016 has come into force with effect from 1st December, 2016. Therefore, the right to apply under I&B Code accrues only on or after 1st December, 2016 and not before the said date (1st December, 2016). As the right to apply under section 9 of I&B Code accrued to appellant since 1st December, 2016, the application filed much prior to three years, the said application cannot be held to be barred by limitation. In so far as the application under section 9 of the Arbitration and Conciliation Act, 1996 preferred by appellant, it has been specifically pleaded by the appellant and not disputed by the respondent that the appellant filed an application to withdraw the application under section 9 of the Arbitration Act, expressly reserving liberty to institute fresh proceeding for interim relief. In such circumstances and as no arbitral dispute is pending, the application cannot be rejected. There is nothing on the record to suggest that the respondent disputed the claim prior to issuance of notice under section (1) of section 8 of the I&B Code. Thus we are of the view that the Adjudicating Authority, Mumbai Bench was not correct in holding that the application was barred by limitation. For the said reason the order rejecting the application cannot be sustained. 2017 (12) TMI 99 Insolvency & Bankruptcy Code - Maintainability of the application under IBC, 2016 - Held that:- t the notice of demand despite efforts taken by the Applicant has not been served. Further no evidence has also been adduced about the service of the application upon the ‘Corporate Debtor’ all of which precludes the ‘Corporate Debtor’ to reply or appear before this Tribunal and under such circumstances it has been held by the Hon’ble Appellate Tribunal to be not in consonance with the principles of natural justice. In addition to the above, non-compliance of the provisions of Section 9(3)(c) on the part of the Applicant is also fatal to the maintainability of the application under IBC, 2016 by an Operational Creditor as held by the Hon’ble NCLAT in the case of Smart Timing Steel Ltd. v. National Steel and Agro Industries Ltd. in Company Appeal (AT) (Insolvency) [2017 (6) TMI 880 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL COMPANY APPELLATE, MUMBAI] - Petition dismissed. PMLA 2017 (12) TMI 98 Offence under PMLA - provisional attachment order - Held that:- On the similar issue another judgement has been delivered in the matter of Shri Ajay Kumar Gupta Vs. Adjudicating Authority (PMLA) [2017 (8) TMI 135 - MADRAS HIGH COURT]. In the present case that the Hon’ble High Court has dealt with the issue of retrospective effect, the said judgment has binding effect upon us. This Tribunal cannot take the different view as the judgment has been passed between the parties under the PML Act. Full respect has to be given to the said Judgement. The impugned order is set-aside. The appeals are allowed. The attachment order passed u/s 5 was contrary to law. The attached properties shall stand released forthwith. The appellants may take necessary steps to take the possession as per the law. As far as the criminal complaint pending against the appellant, Mr. Satyanarayana, for offence before the Special Court is concerned, the same would be decided as per its own merit and without any influence of the judgement passed by me today. My respected brother who is a member and heard the matter with me though agreed that the appeals are liable to be allowed but he has given his own independent reasons. 2017 (12) TMI 97 Offence under PMLA - provisional attachment orders - final order by the Madras High Court was reserved on 13.06.2017 and the same was rendered on 13.07.2017, whereby the provisional attachment order 09/2017 dated 07.04.2017 was quashed - Held that:- We are of the view that it is a serious matter that once the Adjudicating Authority as well as the Deputy Director, Directorate of Enforcement were party before the Writ Petition where the quashing orders were passed and were aware of the proceedings, the impugned order has been passed contrary to the judgment given by the Madras High Court stated to be on account of some communication gap. We are of the view that necessary steps should be taken immediately so that it should not happen in future as the Adjudicating Authority is supposed to respect the orders of Higher Courts. In the present case, there is no valid explanation given by the learned counsel for the respondent as to why the order of the High Court was not given due respect except the statement made by the learned counsel for the respondent that the Department may challenge the order passed by the Madras High Court or the respondent might not be aware. At present there is no impediment not to accept the judgment of the Higher Court i.e. Chennai High Court where the proceedings of Section 5 (Provisional Attachment Order) have been quashed. Thus the attachment does not exist. The appellant would be entitled to take back the possession of the attached property as per procedure to release the properties. Service Tax 2017 (12) TMI 93 CENVAT credit - duty paying invoices - supplementary invoices - Rule 9(1) BB of the Cenvat Credit Rules, 2004 - whether on the strength of supplementary invoices issued by the service provider of service tax paid under Section 73(4A) of Finance Act, 1994, the appellant is entitled to avail Cenvat credit or not? - Held that: - proviso to Section 73(4A) is all in nature of settlement of dispute and as per the said provision if the amount of service tax along with interest and 1% penalty during the period of default has been paid, in that circumstance proceedings are to come to an end. In that circumstance, the allegation of fraud, collusion, wilful suppression of facts or non payment of service tax with intent to evade payment of service tax under the Act or Rule, cannot be held that these ingredients are there - In the absence of these ingredients, in terms of Rule 9 (1) BB of Cenvat Credit Rules, Cenvat credit cannot be denied to the appellant. Reliance placed in the case of Indian Oil Corporation Ltd. Versus CCE Mumbai II [2011 (6) TMI 520 - CESTAT, MUMBAI]. On the basis of supplementary invoices Cenvat credit cannot be denied on the ground of fraud, collusion, wilful misstatement or suppression of facts - appeal allowed - decided in favor of appellant. 2017 (12) TMI 92 Suo moto adjustment of credit - Held that: - identical issue decided in the case of Sopariwala Exports Pvt. Limited Versus Commissioner of Central Excise, Vadodara [2013 (5) TMI 430 - CESTAT AHMEDABAD], where it was held that the amount paid by mistake cannot be termed as duty in the case on hand. No proceedings against the appellant sustainable for denial suo moto Credit availed by them for the Service tax paid by them, which was not required to pay by them - appeal allowed - decided in favor of appellant. 2017 (12) TMI 91 Business Auxiliary Services - entered into an agreement with M/s. Decathlon SA, France for various services - export of services or not? - Held that: - the services rendered by the appellants clearly fall under the category of Export of Services. It is also clear from the clarificatory Circular issued by the Board vide 111/05/2009-ST, dated 24.02.2009 - In the present case, the service being category 3 Services of Rule 3(1)(iii), the Board clarified that it is possible that Export of Services may take place even when all the relevant activities take place in India, so long as the benefits of these services are provided outside India - The appellants clearly promoted the business of foreign entity for which they received commission. They had no arrangement with the Indian sellers of goods and neither they received any consideration from them. These type of activities should be considered as Export of Services not liable to service tax - reliance placed in the case of M/s. Microsoft Corporation (I) (P) Ltd. Versus CST. New Delhi [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)]. Appeal allowed - decided in favor of appellant. 2017 (12) TMI 90 Abatement - classification of services - case of Revenue is that the construction services would come under ‘completion and finishing services’ which is only sub-category of Commercial or Industrial Construction Service - Held that: - the issue whether works contract service is subject to levy of service tax prior to 1.6.2007 has been settled by the judgment of the Apex Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]. The appellant having accepted the liability after 1.6.2007 and for re-quantification of demand for this period, the matter is required to be remanded, which we hereby do. Penalty - Held that: - the issue of classification of this service was a matter of dispute and therefore the penalties imposed are unwarranted and requires to be set aside. Appeal allowed in part and matter on remand for purpose of re-quantification. 2017 (12) TMI 89 The above appeals are pending before the Tribunal for more than a decade. Ahead of the transition of Indirect Tax to GST, this Tribunal has been given a mandate to dispose of all old cases at least prior to 2007 - it would be appropriate and prudent to close the file for the purpose of statistics. We, however make it clear that the appeals along with stay order / interim orders, if any, will continue before the Tribunal and the matters are closed only for the purpose of statistics - appeal disposed off. 2017 (12) TMI 77 Refund claim - respondent herein discharged the Service Tax liability twice once by debiting the amount in Cenvat Credit and second by way of cash deposit at the instance of Revenue authorities - It is the case of the respondent that the amount paid by cash by them on the instance of Revenue is uncalled for as during the period in question, there was no bar for utilisation of Cenvat Credit for discharge of Service Tax under reverse charge mechanism - Held that: - the First Appellate Authority has correctly interpreted the law to hold that the Order in Original that rejects the refund claim of the respondent is incorrect - The provisions of Cenvat Credit Rules 2004, during the period in question in this case, do not provide or explicitly barred utilization of cenvat credit for discharge of Service Tax liability under the reverse charge mechanism. The said clause was introduced with effect from 2012 - appeal dismissed - decided against Revenue. Central Excise 2017 (12) TMI 88 On what basis is an issue concerning the jurisdiction of the CESTAT to entertain an appeal on the judicial side being referred by the Bench of the CESTAT to the President of the CESTAT on the administrative side? - Held that: - Respondent no.1- CESTAT, has filed an affidavit through its Registrar. It is stated by the respondent that the matter was listed on the judicial side, when the two members’ Bench had referred the matter to the President on the question of jurisdiction - The explanation is also being given in view of the order passed by the Allahabad High Court dated 20th August, 2015, a copy of which has been enclosed as ‘Annexure-B’. Pre-deposit - maintainability of the appeal in absence of mandatory deposit - Held that: - practice directions have been issued with regard to the removal of objections by the Registry, listing of matters, inspection, furnishing of certified copies etc. Mr. Mittal states that these directions are not being complied with. This aspect would also be examined and appropriate administrative orders can be issued - The appeals filed by the petitioners, which is still awaiting registration in the Registry of the Tribunal would be registered as per Rules, for hearing, within two weeks from today and the date of hearing would be communicated to the learned counsel for the petitioners. Petition disposed off. 2017 (12) TMI 87 Classification of goods - plastic tanks - case of Department is that the plastic tanks are reservoir tanks and similar container is classifiable under 3925 1000 - claim of appellant is that these are Agriculture Spraying Unit/ Slurry units, blowers classifiable under 8424 9000 as parts of mechanical appliances of kind used in agriculture or horti-culture - whether the goods classifiable under CTH 3925 1000 or under CTH 8424 9000? - Held that: - it is found that the tank manufactured by the appellant is specifically made for one M/s. Boraste Agro Implements and Allied Industry which are involved in the business of agricultural equipment. A tank manufactured by the appellant is having various fitments and it has a specific shape which is used for making spraying unit which has a specific use in the agriculture purpose - As per the photographs referred by the ld. Counsel, on careful perusal of the same, we find that the tank is a specialised attachment and shape and it clearly shows that it is used for spraying the material in the agricultural field. Therefore it is clear that the tank manufactured by the appellant is not for general use of storage of water. Though the plastic tank is otherwise classifiable under Chapter 3925 but in the present case it is specially designed tank and admittedly used as part of spraying system for agriculture and it merits classification under 8424. - identical issue decided in the case of Elgi Ultra Appliances [1999 (7) TMI 422 - CEGAT, CHENNAI], where it was held that the goods in question are classifiable under heading 8424.00 and entitled to the benefit of Notification No. 46/94. Appeal allowed - decided in favor of appellant. 2017 (12) TMI 86 Valuation - includibility - whether the cost of free supply goods by the customer should be included in the assessable value of appellant's manufactured goods? - Held that: - Rule 6 states that any goods supplied directly or indirectly by the buyer free of charge for use in connection with the production and sale of such goods to the extent that such value has not been included in the price actually paid or payable shall be treated to be the amount of money value of additional consideration flowing directly or indirectly from the buyer to the assessee in relation to sale of the goods being value. As per this Rule, from 01.07.2000, the value of free supplied goods by the buyer which is used in connection with the production of the goods, to be sold to the buyer is includable in the assessable value - In the present case, the cenvat credit was availed by the buyer of the goods and not by the appellant. Therefore the landed cost of free supplied goods should be taken for inclusion in the assessable value, accordingly no deduction on account of excise duty of free supplied goods is permitted. No profit was added with reference to the addition of cost of free supplied goods. Therefore there is no question that excise duty is included in the cost of free supplied goods, accordingly cum duty price benefit cannot be extended in the peculiar facts of the present case. Revenue neutrality - Held that: - the cenvat credit was not taken by the appellant, rather it was not available to them whereas the cenvat credit was admittedly taken by the buyer. Secondly, the appellant, due to crossing the exemption limit of ₹ 1 crore are required to pay duty on other goods also. Therefore, the revenue neutrality does not apply in the facts of the present case. Time limitation - Held that: - the appellant have not disclosed the fact of receipt of free supplied goods and use thereof in the production to the department at any point of time. Therefore, there is a clear suppression of fact on the part of the appellant - extended period rightly invoked. Appeal dismissed - decided against appellant. 2017 (12) TMI 85 CENVAT credit - waste and refuse - Rule 6 of the Cenvat Credit Rules - Held that: - identical issue has been decided by the order of Tribunal in Shivratna Udyog Ltd. & Ors. [2017 (9) TMI 985 - CESTAT MUMBAI], where relying in the decision in the case of Rallies India Ltd. [2008 (12) TMI 46 - HIGH COURT BOMBAY] it was held that in case of by product or waste cenvat credit cannot be denied - appeal allowed - decided in favor of appellant. 2017 (12) TMI 84 CENVAT credit - capital goods - removal of capital goods to sister units - Rule 4(5) (a) of CCR - Held that: - appellant is required to pay duty on the depreciated value that is by deducting 2.5% per quarter for the period from taking credit till the date of removal of capital goods - appeal is allowed by way of remand only for quantification purpose. 2017 (12) TMI 83 Clandestine removal - inputs - diversion of stock - physical verification - Held that: - the Learned Commissioner have erred in selectively relying on the evidence on record, leading to erroneous conclusion. We find that no discrepancy was found in the stock of raw materials on physical verification. Further, the variation found in the stock of armchair is only 7.3%. Chairs without arm is only 0.8%, PCC crates differences 3.4%, plastic scrap differences 1.74%. Thus, these variations are very small and are attributable to the normal variation in physical stock taking calling for no adverse inference. Further, the variation in respect of baby chairs is 10%. The appellant gave a cogent explanation that during inspection, when the physical verification of stock was done, the same was done at a hurried pace leading to error in counting. That chairs with and without arms in total are about 8% more. Whereas baby chairs are less by 10%. Thus, there being equivalence in the difference, ipso facto explains the error in physical stock taking. Diversion of raw material - shortage of stock - Held that: - the appellants have made payment for such inputs through the banking channel. Further, other than bald allegation. There is no evidence of diversion of the raw materials. The reliance placed on the statement of the security guard is also misplaced as he had categorically stated that the ‘Vahan Register’ was being maintained by them at their sweet will and also there was no proper system of recording. Other security guards during the other shifts may not have always recorded the entry of trucks in the said Vahan Register - Revenue have disputed 84 invoices/transactions and have disputed the vehicle numbers with respect to 3 - 4 vehicles/invoices. We hold that such minor error cannot lead to drawing of adverse inference under the fact that the Learned Commissioner have not disputed the production of finished goods and the clearance on payment of duty. Further we find that there is no allegation in the show cause notice that the appellants have acquired raw material – PP granules from some other source. We further find that there is no finding as to flow back of cash to the appellants. The statements recorded in the course of investigation, reliance on which have been placed by the Learned Commissioner, are not reliable in view of non-observation of the condition precedent in Section 9D of the Central Excise Act. We further find that the transporters have also supported delivery of the inputs in question to the factory of the appellants. Further, the supplier of raw material, namely, the proprietor of M/s JK Enterprises have also supported the delivery of the raw material being disputed by Revenue. We further hold that discrepancy, if any found in the records maintained by the transporter cannot lead to adverse inference against the appellant – manufacturer. Appeal allowed - decided in favor of appellant. 2017 (12) TMI 82 CENVAT credit - transportation of inputs by Railways - duty paying documents - denial of credit on the ground that the appellants produced photo copies of monthly consolidated certificate/RR/money receipt issued by the Railways - Held that: - Admittedly, the documents which the appellant produced are prescribed as one of the eligible documents by Notification No.26/2014-CE(NT) - the admitted position is that the appellant availed taxable service for transporting inputs by Railways and did suffer service tax. The provisions of Rule 9 is basically to ensure that no assessee availed the credit which is not due to them - In the present case, the denial of credit on the ground that the documents produced were officially prescribed by the rule only from a particular date is not justifiable. The original authority directed to examine supporting documents which the appellant claim are duly authenticated by the service provider (Indian Railways) and to examine the eligibility of the appellant for such credit - appeal allowed by way of remand. 2017 (12) TMI 81 CENVAT credit - input service - GTA service - reverse charge mechanism - Revenue held a view that they are not eligible for such input service credit as the ‘place of removal’ should be considered factory gate and any expenses incurred thereafter will not be eligible for credit - Tribunal gave clear remand directions for the Original Authority to examine the applicability of the decision of Hon’ble High Court of Chhattisgarh in Ultratech Cement Ltd. [2014 (8) TMI 788 - CHHATTISGARH HIGH COURT] to the facts of the present case - Held that: - the Original Authority after categorically recording that “the point of sale as per the terms of contract (purchase)/PO) between the assessee and the client is the destination/client’s premises as the sale is on FOR destination basis”, proceed and arrived at a contrary decision. In fact, he attempted to make a distinction between ‘place of delivery’ and ‘place of sale’ by relying on the Board Circular dated 20/10/2014 and the provision of Sale of Goods Act, 1930 - the Original Authority mis-directed himself in making such distinction after having recorded the factual position in para 18 of the impugned order dated 28/09/2015. In the face of such factual finding there could be no further interpretation to distinguish the place of delivery from point of sale - credit on GTA service allowed. CENVAT credit - input service - auction service - Held that: - the credit is allowed on this service. Appeal allowed - decided in favor of appellant. 2017 (12) TMI 80 Scope of Remand proceedings - Doctrine of merger - only point on which the Revenue is aggrieved by the impugned order is that when the remand direction was given by the Tribunal, the Commissioner should have decided the case afresh by not restricting to the dispute of ₹ 77.61 lakhs which was agitated by the respondent in their appeal resulting in the remand direction - Held that: - Admittedly, the said final order dealt with the grievance of the appellant relating to a limited issue of eligibility or otherwise of Cenvat credit of ₹ 77.61 lakhs. No other point or dispute relating to other issues were ever raised or discussed in the final order. There is no ground for either parties to present their grievance on any other mater. In such situation, it is very clear the Tribunal can only act within the appeal proceedings and set aside or modify or change that portion of the order which appellant is aggrieved of. We do not find any merit in the submission that in such restricted remand the Original Authority has the power to proceed and examine all issues raised the show cause notice afresh to arrive at the liability or otherwise of all credit which is much beyond ₹ 77.61 lakhs. That will not be legally an admissible proposition. Even examining the doctrine of merger, we note that the Tribunal order can merge only on the issue which was examined and decided and cannot go beyond the scope. Appeal dismissed - decided against Revenue. 2017 (12) TMI 79 Benefit of N/N. 4/2006 dated 01.02.2006 - clearance of Cement - Revenue held a view that the main appellant availed the concessional rate of duty when they have cleared cement with brand name of another person - charge of clandestinely unaccounted clearance of branded cement was also made against the main appellant - Held that: - N/N. 4/2006 dated 01.02.2006 allowed concessional rate of duty for cement cleared by the appellant. One of the conditions to be fulfilled is that cement manufactured should not be from such clinker which is not manufactured within the factory and cement should not be bearing brand name or trade name (whether registered or not) of another person - The Revenue during investigation collected material as well as oral evidence to support the case that the main appellants had violated the conditions and avail ineligible exemption. The stationary used by the appellant, the packing material available in the factory and the statements of responsible person of the main appellant corroborated the case of the Revenue. The unaccounted clearance is also evidenced by private document corroborated by the statement of the Director of the main appellant. Admittedly, the main appellant did make clearances of cement which were not entered into in the RG-I register. The reasons recorded by the original authority are based on material as well as oral evidences gathered during investigation. The appellant’s present appeal cannot bring in any categorical contrary evidence to persuade us to interfere with the said impugned order - there is no merit in the appeal fined by the appellant and two of its Directors against confirmation of demand and imposition of penalties - penalties imposed on the paid employees namely Sh. Ram Kishor, Authorised Signatory and Sh. Bhawani Singh Sekhawat, Munim/ Supervisor of the main appellant are not justifiable. They acted as per the direction of the Directors, as paid employees. They did not gain personally in these transactions - penalty u/r 26 of the CER, 2002 on them is not justifiable. Regarding penalties imposed on M/s Kamdhenu Cement and Sh. Satish Kumar Kabu, Director of M/s Kamdhenu Cement, the only allegation in the proceedings against them is that they were part of alleged document in the form of letter dated 31.12.2007 to claim termination of agreement for use of “Kamdhenu” brand - Held that: - the termination per se by itself will not help the main appellant to claim the concession under the said notification - No other action or role on the part of these two appellants have been discussed to justify penalty on them under Rule 26 of the Central Excise Rules, 2002. Further, the forged nature of the termination letter could not be categorically established with corroboration as no verification was made from the signatories of the said letter. We also note that the provision which is invoked in the impugned order was notified only w.e.f. 01.03.2007 - penalties set aside. Appeal allowed - decided in favor of appellant. 2017 (12) TMI 78 Refund claim - whether the Appellant are entitled to refund of ₹ 17,34,292/- paid in the year 1992? - Held that: - pursuant to the Order of the Tribunal dated 30.6.2003, the Department has enforced three Bonds after furnishing the details of such Bonds and the conditions thereof appended to the Notification. The said Bonds have been appropriated against the refund amount of ₹ 17,34,292/-. The contention of the Appellant that the observation of the Tribunal in its order dated 30.6.2003 should not be followed, in my opinion, is misplaced, inasmuch as, no Appeal has been filed by either sides and the said order has been pursued by the Appellant in various forums. Appeal dismissed - decided against appellant. 2017 (12) TMI 76 Monetary amount involved in the appeal - the duty amount involved in the case is ₹ 32,592/- and interest thereon - maintainability of appeal - Held that: - In view of Second proviso to Section 35B (1), this Tribunal has discretion to refuse to admit the appeal in respect of order referred to clause (b) or Clause (c) or clause (d) where amount of duty, amount of fine or penalty determined by such order does not exceed ₹ 50,000/-(before 6/8/2014) and ₹ 2 Lakhs (on or after 6/8/2014) - In view of the above discretion provided to this Tribunal, we refuse to admit this appeal - appeal dismissed on monetary ground. 2017 (12) TMI 75 Marketibility/excisability - Benefit of N/N. 67/95 dated 19.03.1995 - captively manufactured and consumed armoured cable emerges during the course of manufacture of PVC coated armoured cable - case of Revenue is that as appellant is clearing the PVC coated armoured cables by availing N/N. 12/2012 –CE dated 17.03.2012. Therefore, the armoured cable manufactured and captively consumed by the appellant is not eligible for exemption under N/N. 67/95 dated 19.03.1995 - Held that: - Although the function of the goods emerges at the intermediate stage and final goods, is transmission of electricity, but the goods at intermediate stage, cannot be sold in the market without a protective PVC coating, which is known as outer sheath - Further, no instance has been brought in our knowledge by both the sides whether, the intermediate product is capable of being sold in the market - the intermediate product emerges during the course of manufacturing of their final product is not marketable - decided in favor of appellant. Whether the appellant is entitled for benefit of N/N. 67/95 dated 16.03.1995? - Held that: - the issue has been examined by this Tribunal in the case of KEI Industries Ltd. [2016 (12) TMI 532-CESTAT-New Delhi], where it was held that the appellant is entitled for benefit of N/N. 67/1995 ibid for intermediate product emerging during the course of manufacture of final product - the appellants are entitled for benefit of N/N. 67/95 while they are clearing their final goods by availing benefit of N/N. 6/2006 dated 01.03.2006 and 12/2012 dated 17.03.2012 - decided in favor of appellant. Appeal allowed - decided in favor of appellant. 2017 (12) TMI 74 Clandestine Manufacture and Removal - shortage of stock - MS Ingots - CTD bars - Held that: - Undisputedly, at the time of physical verification done on 29.07.2003 there was shortage of 624.085 MTs. of Ingots/raw materials. Interestingly, the quantification of duty demand is not based on this shortage of raw materials. Instead, department conducted search operations at the premises of buyers of finished products (M/s. NHS, M/s. Anand Steel, M/s. MMSD) and suppliers of raw materials (M/s. MMSS) and the quantification of duty is based on the evidences like note book, chits etc., recovered from the premises of the above and also the statements. The other evidence relied upon is the power consumption pattern given by a Chartered Engineer on the basis of conduct of trial production. M/s. DSRM has contended that no cross-examination was extended to Shri Natarajan in terms of section 9D of the Central Excise Act, 1944, hence the allegations made in the impugned proceedings would thus not be sustainable. We find merit in this contention. There are any number of decisions by higher appellate courts that adjudication proceedings gets vitiated for not extending cross-examination of concerned persons - clause (9) of section 9D, the person from whom statement have been recorded by the department during an investigation has to be examined by the adjudicating authority before admitting the statement recorded as evidenced against the notice-appellant - the allegation concerning quantity of removal of 1219.80 MTS of CTD bars and the demand confirmed in the impugned order of ₹ 31,96,509/neither do have any sound basis or adequately supported by any corroboratory evidence - demand set aside. An amount of ₹ 11,48,044/- is raised as duty demand for 445.17 MTs of CTD bars clandestiney cleared by M/s. DSRM to M/s. Anand. The evidence in this regard is the chits recovered from the residential premises of Shri M.C. Nagarathinam, Partner of M/s. Anand and also his statement. Shri Nagarathinam was cross-examined. He has identified the chits. Further, M/s. NHS and M/s. Anand are conoticees to these proceedings. Therefore, it cannot be said that they are third parties. Thus, we do not find any ground to interfere with the quantification of duty demand made in respect of M/s. NHS and M/s. Anand - demand upheld. An amount of ₹ 12,90,032/- is demanded as duty on clandestine clearance of 615.24 MTS. of CTD bars for the period 18.06.2001 to 03.10.2003. The search operations were conducted at M/s. DSRM's premises on 29.07.2003 - Held that: - On verification, it was found that some of them were non-existant or not registered with commercial taxes for dealing in CTD bars. The verification at the transporters end and Regional Transport Authority revealed that the vehicles mentioned in the purchase bills did not pertain to lorry but to two wheelers and cars. The department recorded statement of various persons like Proprietor of M/s. MSSD, M/s. SSS, Trichy etc., to conclude that M/s. MMSD (the related Unit of the M/s. DSRM) has not purchased CTD bars from M/s. MSSD, M/s. SSS, Trichy etc. Based on this, they arrived at the conclusion that M/S. DSRM had cleared unaccounted CTD bars to M/s. MMSD (the related Unit) through which the said goods were sold to buyers. That M/s. DSRM had obtained bogus bills from M/s. MMSD, M/s. SSS, Trichy etc., showing purchase of CTD bars by M/S. MMSD (the related Unit of M/s. DSRM) and gave cheques to such traders, who would give back the money by cash showing it as for his personal use. Shri A. Jaimulabdeen was cross-examined and he has denied these allegations. Instead, he has stated that M/s. MSSD had purchased CTD bars from M/s. MMSD - Similar retraction is seen to be done by other traders in their cross-examination. The other evidence which department relies upon to demand duty on this count is the electricity consumption pattern. This evidence of electricity consumption cannot be made the basis for establishing clandestine clearance and demand of duty. As the statements given by shri Jaiulabdeen, Shri M. Shajahan of M/s SSS, Trichy are retracted, we have to say that department has not been able to sufficiently establish the basis of duty demand to the tune of ₹ 12,90,032/-. However, we cannot ignore the fact that M/s. MMSD was a related Unit of M/s. DSRM. But merely being a related Unit cannot be the basis for the demand of duty - matter on remand. Appeal allowed in part and part matter on remand. 2017 (12) TMI 73 CENVAT credit - input/capital goods - SS & CR Coils, SS Plates, HR Sheets, CS Seemless Pipe, M/s Angles, Channels, etc. for fabrication of various machineries viz. Blenders, Storage tanks, foundation/structures of machineries within the factory premises - Held that: - the issue has been recently considered by the Principal Bench at Delhi in Singhal Enterprises Pvt. Ltd’s case [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. SS & CR Coils, SS Plates, HR Sheets, CS Seemless Pipe, M/s Angles, Channels, etc. used for fabrication of machineries/capital goods and structure for capital goods within the factory premises are eligible to CENVAT credit, since supported by Chartered Engineer’s Certificate. Appeal allowed - decided in favor of appellant. 2017 (12) TMI 72 SSI Exemption - includibility - defence supply - Held that: - defence supply shall be includible in the clearances in absence of any law to such exclusion while computing the aggregate value for SSI benefit - appeal dismissed - decided against appellant. 2017 (12) TMI 71 Valuation - erection / installation charges - Held that: - there is no allegation or evidence put forth that the buyers were liable to pay to, or on behalf of assessee, by reason of, or in connection with the sale, the purported amounts alleged by the department as erection and installation charges - strictly following the interpretation of definition “ transaction value” in Section 4 (3) (d) ibid., additions on the alleged score of erection / installation cannot be sustained. Board’s clarification cannot override a legal provision of the statute. Appeal allowed - decided in favor of appellant. Indian Laws 2017 (12) TMI 96 Intellectual Property Rights jurisdiction - plea of rectification upon abandonment - Held that:- The first question posed is how an approach to the superior Court i.e. the High Court, under Section 111 of the 1958 Act, can be contingent on a permission or grant of leave by a court of subordinate jurisdiction. The above is also contended to be plainly contrary to the provisions of Section 41 (b) of Specific Relief Act, 1963. It is also urged that Section 32 of the 1958 Act provides a defence to a claim of infringement which is open to be taken both in a proceeding for rectification as well as in a suit. The said defence statutorily available to a contesting party cannot be foreclosed by a deemed abandonment of the issue of invalidity, it has been contended. Section 111 of the 1958 Act and the corresponding Section 124 of the 1999 Act nowhere contemplates grant of permission by the civil court to move the High Court or the IPAB, as may be, for rectification. The true purport and effect of Sections 111/124 (of the old and new Act) has been dealt within detail and would not require any further discussion or enumeration. The requirement of satisfaction of the civil Court regarding the existence of a prima facie case of invalidity and the framing of an issue to that effect before the law operates to vest jurisdiction in the statutory authority to deal with the issue of invalidity by no means, tantamount to permission or leave of the civil court, as has been contended. It is a basic requirement to further the cause of justice by elimination of false, frivolous and untenable claims of invalidity that may be raised in the suit. While Section 32 of the 1958 Act, undoubtedly, provides a defence with regard to the finality of a registration by efflux of time, we do not see how the provisions of aforesaid section can be construed to understand that the proceedings under Sections 46 and 56 on the one hand and those under Sections 107 and 111 on the other of the 1958 Act and the pari materia provisions of the 1999 Act would run parallelly. As already held by us, the jurisdiction of rectification conferred by Sections 46 and 56 of the 1958 Act is the very same jurisdiction that is to be exercised under Sections 107 and 111 of the 1958 Act when the issue of invalidity is raised in the suit but by observance of two different procedural regimes. In the light of the above while answering the question arising in the manner indicated above, we dismiss all the appeals under consideration and affirm the order passed by the High Courts. 2017 (12) TMI 95 Appointment of Shri Rakesh Asthana to the post of Special Director, CBI - Held that:- We cannot question the decision taken by the Selection Committee which is unanimous and before taking the decision, the Director, CBI, had participated in the discussions and it is based on relevant materials and considerations. Further, even in the FIR filed by the CBI, the name of Shri Rakesh Asthana has not been mentioned at all. Thus, lodging of FIR will not come in the way of considering Shri Rakesh Asthana for the post of Special Director, after taking into consideration his service record and work and experience. From the Minutes of the Meeting (MoM) of the Selection Committee, we find that the news items reported in the print and electronic media that no decision was taken with respect to the appointment on the post of Special Director, CBI in the meeting of the Selection Committee held on 21.10.2017 are factually incorrect. Likewise, the statement of the Professor of the University of London reported in the Indian Express appears to be based on the newspaper reports which have been found to be factually incorrect, and therefore, it has no substance. In view of the foregoing discussion, we are of the considered opinion that the appointment of Shri Rakesh Asthana – Respondent No. 2 herein to the post of Special Director, CBI does not suffer from any illegality. The writ petition fails and is dismissed. 2017 (12) TMI 94 Interim measures, etc. by Court - Foreign arbitral award - petitioner seeks interim reliefs pending enforcement and execution of a foreign arbitral award - ‘whether the ‘court’ as referred to in Section 9 of the Act in the case of international commercial arbitrations which take place outside India, is a ‘court’ as defined under Section 2(1)(e) or as defined in the Explanation to Section 47 of the Act? - Held that:- If the interpretation of the provisions of Section2(1)(e)(ii) of the Act as sought to be placed on behalf of the respondent is accepted, it would bring about an anomalous situation defeating the intent of the legislative provisions, as derived from a cumulative reading of the amending provisions as noted above. The purpose and object of the amended provisions of the 2015 Act must certainly prevail over a narrow interpretation which would defeat the purpose and object of the 2015 Amendment Act. The petitioner who holds monetary awards against the respondent would be prevented from approaching the court for interim reliefs where the assets of the respondent are available within the jurisdiction of this Court. The Court would have territorial jurisdiction if the monies/the bank accounts are located within the jurisdiction of the Court. The legislature would not envisage a situation that a party can invoke jurisdiction of the Court to enforce a monetary award under Section 47 and 49 of the Act, however, for any relief of the nature Section 9 interalia contemplates the jurisdiction of the same Court would not be available. This would create a complete incongruity in giving effect to the provisions of Section 9 in a situation as in the present case and defeat the legislative intent. In the above circumstances, the submissions as urged on behalf of the respondent that the petitioner cannot seek a relief in respect of the bank account at Pune, also cannot be accepted, as the definition of ‘Court’ under ‘Explanation’ to Section 47 would confer jurisdiction on this High Court as the assets/bank accounts of the respondent are situated within the jurisdiction of this Court and not the principal Civil Court of original jurisdiction, as provided in the pre-amended provisions. Significantly now both the amended provisions namely Section 2(1)(e) and ‘Explanation’ to Section 47 respectively confer jurisdiction only on the concerned High Court. Thus in the present case it would be the ‘Court’ as defined in ‘Explanation’ to Section 47 which would be the Court having jurisdiction to entertain the Section 9 petition, and this Court would accordingly have jurisdiction to entertain this petition.
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