TMI Tax Updates - e-Newsletter
December 8, 2017

Case Laws in this Newsletter:

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

News

1. Mr. N K Singh, Chairman, 15th Finance Commission calls on the Governor, Reserve Bank of India (RBI), Dr. Urjit Patel in Mumbai today; Both discussed the technical and other assistance which the RBI could give enabling the Commission to discharge its wide ranging Terms of Reference

2. Provisions of the Financial Resolution and Deposit Insurance Bill, 2017 meant to protect interests of depositors

3. RBI Reference Rate for US $

Notifications

Customs

1. 113 /2017 - Customs (N.T.) - dated 7-12-2017 - Cus (NT)

Exchange Rates Notification No.113/2017-Custom(NT) dated 07.12.2017

DGFT

2. 42/2015-2020 - dated 6-12-2017 - FTP

Amendment in import policy condition of pepper classified under Chapter 09 of ITC (HS), 2017-Schedule-I (Import Policy)

GST - States

3. F. 3(67)/Fin.(Rev.-I)/2017-18/DS-VI/780 - dated 30-11-2017 - Delhi SGST

Lt. Governor of the National Capital Territory of Delhi appointed Assistant Commissioner of State Tax and Goods and Services Tax Inspector

4. 42/2017-State Tax (Rate) - dated 30-11-2017 - Delhi SGST

Amendment in Notification No. 2/2017-State Tax (Rate), dated the 30th June, 2017

5. F.3(17)/Fin(Rev-I)/2017-18/DS-VI/765 - dated 27-11-2017 - Delhi SGST

Nomination of Sh.Vinay Kumar, Spl Commissioner, DGST as the Member of State Gov.for Advance Ruiling

6. 38/2017-State Tax - dated 27-11-2017 - Delhi SGST

Amendment in Notification No. 32/2017- State Tax, dated 8th November, 2017

7. 37/2017- State Tax (Rate) - dated 27-11-2017 - Delhi SGST

Lt. Governor of National Capital Territory of Delhi, recommendations of the Council, notifies the State Tax on intra-State supplies of goods

8. 34/2017-State Tax (Rate) - dated 24-11-2017 - Delhi SGST

Amendment in Notification No. 1/2017-State Tax (Rate), dated the 30th June, 2017

9. 31/2017-State Tax (Rate) - dated 23-11-2017 - Delhi SGST

Amendment in Notification No. 11/2017-State Tax (Rate), dated the 30th June, 2017

10. F. 3(36)/Fin(Rev.-I)/2017-18/DS-VI/702 - dated 6-11-2017 - Delhi SGST

Lt. Governor of the National Capital Territory of Delhi constitute the Delhi State level Screening Committee on Anti-profiteering

11. 25/2017-State Tax (Rate) - dated 6-11-2017 - Delhi SGST

Amendment in Notification No. 12/2017- State Tax (Rate), dated the 30th June, 2017

12. 24/2017- State Tax (Rate) - dated 6-11-2017 - Delhi SGST

Amendment in Notification No. 11/2017-State Tax (Rate), dated the 30th June, 2017

13. 33229-FIN-CT1-TAX-0043/2017-S.R.O. No. 560/2017 - dated 15-11-2017 - Orissa SGST

Notification on waiver of late fee payable in excess of ₹ 25/-per each day of default for delayed filing of return in FORM GSTR-3B from October, 2017 onwards

14. 33225-FIN-CT1-TAX-0043/2017-S.R.O. No. 559/2017 - dated 15-11-2017 - Orissa SGST

Seeks to exempt suppliers of services through an e-commerce platform liable to collect tax at source under section 52 of the OGST Act from obtaining compulsory registration under section 24(ix) of the Act provided their aggregate all India turnover does not exceed 20 lakh rupees

15. 33221-FIN-CT1-TAX-0043/2017-S.R.O. No. 558/2017 - dated 15-11-2017 - Orissa SGST

Notification in supersession of earlier notification of Govt. of Odisha bearing SRO No-481/2017 dated 13.10.2017 and specifying the registered persons who did not opt for the composition levy U/s 10 as the class of persons only who shall pay the State Tax on outward supplies of Goods at the time of supply

16. 33217-FIN-CT1-TAX-0043/2017-S.R.O. No. 557/2017 - dated 15-11-2017 - Orissa SGST

Seeks to prescribe quarterly furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of upto ₹ 1.5 crore.

17. 33213-FIN-CT1-TAX-0034/2017-S.R.O. No. 556/2017 - dated 15-11-2017 - Orissa SGST

The Odisha Goods and Services Tax (Tenth Amendment) Rules, 2017. 

18. 33031-FIN-CT1-TAX-0043/2017-S.R.O. No. 553/2017 - dated 14-11-2017 - Orissa SGST

Notification seeking amendment of notification no 19873-FIN-CT1-TAX-0022-2017 dated 29.06.2017 bearing S.R.O. No. 306/2017 including exemption of services by way of admission to a protected monuments

19. 33031-FIN-CT1-TAX-0043/2017-S.R.O. No. 553/2017 - dated 14-11-2017 - Orissa SGST

Notification seeking amendment of notification no 19873-FIN-CT1-TAX-0022-2017 dated 29.06.2017 bearing S.R.O. No. 306/2017 including exemption of services by way of admission to a protected monuments

20. 33027-FIN-CT1-TAX-0043/2017-S.R.O. No. 552/2017 - dated 14-11-2017 - Orissa SGST

Seeks to amend notification no 19869-FIN-CT1-TAX-0022-2017 dated 29.06.2017 bearing S.R.O. No. 305/2017.

21. 33023-FIN-CT1-TAX-0043/2017-S.R.O. No. 551/2017 - dated 14-11-2017 - Orissa SGST

Notification which seeks to prescribe 2.5% concessional OGST rate on certain goods when supplied to specific public funded research institutes under specified conditions

22. 33019-FIN-CT1-TAX-0043/2017-S.R.O. No. 550/2017 - dated 14-11-2017 - Orissa SGST

Amendment in the Notification No. 19845-FIN-CT1-TAX-0022-2017 dated 29.06.2017 bearing S.R.O. No. 299/2017 so as to block refund of ITC on certain goods.

23. 33015-FIN-CT1-TAX-0043/2017-S.R.O. No. 549/2017 - dated 14-11-2017 - Orissa SGST

Amendment in the notification No 19841-FIN-CT1-TAX-0022-2017 dated 29.06.2017 bearing S.R.O. No. 298/2017 so as to include cotton under revere charge under section 9(3) of OGST Act, 2017.

24. 33011-FIN-CT1-TAX-0043/2017-S.R.O. No. 548/2017 - dated 14-11-2017 - Orissa SGST

Notification seeking amendment of notification 19833-FIN-CT1-TAX-022-2017 dated 29.06.2017 bearing S.R.O.-296 of 2017 which exempts certain goods from GST U/S 11 of the OGST Act, 2017.

25. 15817/CT., Pol-41/1/2017 - dated 28-10-2017 - Orissa SGST

Notification on further extension of the period for submission of the declaration in FORM GST TRAN-1.

26. 15812/CT., Pol-41/1/2017 - dated 28-10-2017 - Orissa SGST

Notification on further extension of the period for submission of the declaration in FORM GST CAM-03.

27. 15807/CT., Pol-41/1/2017 - dated 28-10-2017 - Orissa SGST

Notification on the extension of the period for submission of the declaration in FORM GST REG-26

28. 15802/CT., Pol-41/1/2017 - dated 28-10-2017 - Orissa SGST

Notification on the extension of the period for submission of the declaration in FORM GST TRAN-1

29. 14602/CT., Pol-41/1/2017 - dated 4-10-2017 - Orissa SGST

Notification on the extension of the period for submission of the declaration in FORM GST CAM-03.

30. 14384/CT., Pol-41/1/2017 - dated 23-9-2017 - Orissa SGST

Notification on the extension of the period for submission of the declaration in FORM GST TRAN-1

31. 14031/CT., Pol-41/1/2017 - dated 16-9-2017 - Orissa SGST

Notification on extension of date of filing of return (GSTR-3B).

Highlights / Catch Notes

GST

• GST Goods Wrongly Detained in Uttar Pradesh; Proper Procedure Ignored for Transit Endorsement at Exit Point.

  Case-Laws - HC : GST - detention of goods - the goods (whatsoever their correct description be) had originated from outside the State and were being transported outside the State, using the State of U.P. as a transit State, and the goods appear to have been seized near the exit point in State of U.P. the proper officer should have, at most made an endorsement to that effect and allowed the goods to pass through the State of U.P. - HC
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• Court Orders Reexamination of Goods Detention Under UP GST Due to Missing Transit Declaration Form Without Show Cause Opportunity.

  Case-Laws - HC : UP GST - detention of goods - petitioner was not given any opportunity to show cause or give reply to the allegation on which goods have been seized - goods detained on account of absence of Transit Declaration Form (TDF) - matter to be reexamined and fresh order to be passed - HC
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Income Tax

• Section 10A Deduction Denied: Export Sale Proceeds Not Received in Convertible Foreign Exchange Without RBI Approval for Investment.

  Case-Laws - AT : Deduction u/s. 10A - export sales - non-receipt in convertible foreign exchange - Even for the sake of discussion, the plea of the assessee of converting the outstanding sale proceeds into overseas direct investment to be treated as compliance of provision of section 10A(3) then also it cannot be accepted as there is no proper approval of Reserve Bank of India for capitalization of outstanding export sale proceeds. - AT
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• Assessee Not Resident u/s 6; No Obligation to File Income Return or Tax on Foreign Deposits in India.

  Case-Laws - AT : The assessee was not a resident in India in terms of section 6 and was therefore, neither required to file any return of income in India not any income can be brought to tax in India. Therefore, the deposits made in the foreign bank account cannot be held to be included as taxable income in India. - AT
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• No Penalty Imposed for Late Compliance with Notices; Reasonable Cause Established u/s 273B.

  Case-Laws - AT : Penalty proceedings u/s 271(1)(b) - non-compliance of statutory notices - it was difficult to comply to the various notices on short dates - compliances had been made through replies filed through dak or registered post though belatedly - All these facts and circumstances under any prudence do constitute reasonable cause u/s 273B - No penalty - AT
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• Section 69: Unexplained investments require corroborative evidence; DVO report alone insufficient for taxation on undervaluation.

  Case-Laws - AT : Additions u/s 69 - Unexplained investments - undervaluation - AO could not tax the said amounts merely based upon the DVO's report in the absence of any corroborative material to point out under-valuation of the property in question - AT
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• Development Fees Charged to Students Not Exempt as Capital Receipt u/s 12; Not Part of Trust Corpus Fund.

  Case-Laws - AT : Exempted capital receipt u/s 12 - when the development fee received by the assessee is not voluntary but it is a compulsory charge on the students then the same cannot be classified as capital in nature for specific purpose or part of the corpus fund of the assessee trust. - AT
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• Court Upholds Addition of Unexplained Cash Credits u/s 68 Due to Lack of Credible Investor Evidence.

  Case-Laws - HC : Addition u/s 68 - the creditworthiness of the investors could never be established once it was found that there was no person existing who may have entered into such a transaction - HC
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• Court Rules Cancelled Cheque Not Deemed Dividend u/s 2(22)(e) of Income Tax Act: No Payment, No Dividend.

  Case-Laws - HC : Deemed dividend addition u/s 2(22)(e) - Mere issuance of a cheque that was subsequently cancelled and returned without ever being ever presented for encashment and without any money having been paid against the same to the assessee it could never constitute payment of any sum. - HC
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• Tribunal Confirms Additions in Reopened Assessment Due to Assessee's Surrender and Doubts on Share Transactions' Genuineness.

  Case-Laws - HC : Reopening of assessment - Tribunal has sustained the addition not only on the ground of surrender made by the assessee but also after disbelieving the genuineness of the transaction of purchase and sale of shares - additions confirmed - HC
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• Assessee Denied Deduction u/s 80IB for Failing to Maintain Small Scale Industry Status.

  Case-Laws - SC : Benefit of deduction u/s 80IB - the assessee having not retained the character of ‘small scale industrial undertaking’, is not eligible to the incentive meant for that category. Permitting incentive in such case will be against the object of law. - SC
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Corporate Law

• High Court Rules Amalgamation of Loss-Making Subsidiary with Profit-Making Holding Company Does Not Violate Natural Justice Principles.

  Case-Laws - HC : Compulsory amalgamation of allegedly loss making wholly owned subsidiary (NSEL) with its profit making holding company (FTIL) in public interest - Whether the impugned order was made in violation of the principles of natural justice and fair play? - Held No - HC
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Central Excise

• Clarification on SSI Exemption: Clubbing Clearances for Dummy Units under Notification No. 8/2001 and Validity of Show Cause Notices.

  Case-Laws - AT : SSI Exemption - dummy units - clubbing of clearances - N/N. 8/2001 - validity of SCN issued to each unit - If the revenue is of the view that both the units are not independent and are same, in that case the SCN should have been issued only to the actual alleged manufacturer and the duty demand should have been made against it. - AT
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VAT

• High Court Examines "Reason to Believe" in U.P. VAT Act Section 29 for Reassessment Validity in Tax Escapement Cases.

  Case-Laws - HC : Validity of reassessment proceeding - Section 29 of the U.P. VAT Act, 2007 - interpretation of statute 'reason to believe' - escapement from tax - deemed sale of construction material - In any case being reassessment proceedings, the burden was on the revenue to disclose material to establish otherwise. - HC
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Case Laws:

• GST

• 2017 (12) TMI 342
  UP GST - detention of goods - petitioner was not given any opportunity to show cause or give reply to the allegation on which goods have been seized - goods detained on account of absence of Transit Declaration Form (TDF) - Held that: - Inasmuch as the petitioner had no notice or opportunity to explain his conduct with respect to the discrepancy in the Tax Invoice alleged in the seizure order, we consider it proper to set aside the orders passed u/s 129(1) and 129(3) of the Act - matter remanded for reexamination - appeal allowed by way of remand.

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• 2017 (12) TMI 341
  Detention of goods - absence of Transit Declaration Form (TDF) - mis-description of goods - Refined Palm Oil - penalty - Section 129(1) of UP GST Act - Held that: - at the stage of seizure the detaining authority had not applied his mind, nor formed any opinion as to intention to evade tax. The only allegation made in the seizure order is to the effect that the TDF is absent and that the goods have been mis-described. There is no allegation whatsoever as to the intention of the petitioner to evade tax. In absence of any allegation or evasion of tax being made against the petitioner at the stage of detention and seizure and even at the stage of issuance of notice of penalty, it is difficult to sustain the penalty. As to absence of TDF, though it amounted to a breach of the Rules, yet, in the entirety of the facts circumstances of this case, as admitted to the revenue, it does appear that goods were being transported from Rajasthan to Assam. Also, since the goods had reached near the exit point in the State of U.P. and there is no allegation that the goods were being or had been unloaded inside the State of U.P. - the goods were infact being transported from Rajasthan to Assam as disclosed in the Tax Invoice and other documents found accompanying the goods - breach was purely technical. Mis-description of goods - Held that: - the goods (whatsoever their correct description be) had originated from outside the State and were being transported outside the State, using the State of U.P. as a transit State, and the goods appear to have been seized near the exit point in State of U.P. the proper officer should have, at most made an endorsement to that effect and allowed the goods to pass through the State of U.P. The seizure order as also the penalty order are wholly unsustainable - petition allowed - decided in favor of petitioner.

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• Income Tax

• 2017 (12) TMI 373
  Deemed dividend addition made u/s 2(22)(e) - percentage of beneficial holding - Held that:- As perused the list containing details of share holding of the company duly certified by the Company Secretary which is on record. As per the same, the share holding of the appellant is only 9% but this fact has to be verified by the authorities below. The assessee has submitted the additional evidence before the ld. CIT(A) which was accepted. We find sufficient cause for not submitting documents before the Assessing Officer in this regard and the ld. CIT(A) should have admitted the additional evidence and should have examined the same by taking remand report from the Assessing Officer. Therefore, CIT(A) is directed to admit the additional evidence furnished by the ld. counsel for the assessee with regard to share holding of the company which is claimed to be 9% instead of 50% in all the years and decide the case de novo by affording adequate opportunity of being heard to the assessee. Accordingly the appeal of the assessee for assessment year 2006-07 is allowed for statistical purposes.

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• 2017 (12) TMI 372
  Benefit of deduction u/s 80IB - eligible business - assessee ceases to be a small scale industry - Held that:- We do not see any difference in the situation where the assessee, is not initially eligible, or where the assessee though initially eligible loses the qualification of eligibililty in subsequent assessment years. In both such situations, principle of interpretation remains the same. Thus, while there is no conflict with the principle that interpretation has to be given to advance the object of law, in the present case, the assessee having not retained the character of small scale industrial undertaking , is not eligible to the incentive meant for that category. Permitting incentive in such case will be against the object of law. For the above reasons, we hold that the assessee is not entitled to benefit of exemption if it loses its eligibility as a small scale industrial undertaking in a particular assessment year even if in initial year eligibility was satisfied.

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• 2017 (12) TMI 371
  Mesne profits - capital or revenue receipt - whether the Tribunal was correct in holding that mesne profits, cannot be part of book profit u/s. 15JB, as it was held as capital assets? - Held that:- As perused the impugned judgment and order passed by the the High Court of Judicature [2016 (6) TMI 534 - BOMBAY HIGH COURT] whereby the High Court has dismissed the appeal preferred by the appellant herein only on the ground that the decision relied upon by the Tribunal i.e. in the case of Narang Overseas Pvt. Ltd., (2008 (2) TMI 817 - ITAT MUMBAI ) held that the same is capital in nature. We are of the considered opinion that this was not a correct approach of the High Court for the simple reason that merely because one authority has followed its own decision in another case and that matter in appeal has been dismissed on technical grounds still the High Court has to decide the question on merits. Therefore, we set aside the impugned judgment and order passed by the High Court and remand the matter back to the High Court for deciding the same on merits expeditiously and in accordance with law.

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• 2017 (12) TMI 370
  Reopening of assessment - surrender of income - Held that:- In the first place, the validity of the reassessment proceedings was not an issue raised by the assessee before the Tribunal. That issue had been decided against the assessee by the CIT (Appeals) which part of the order was not challenged in appeal before the Tribunal. Then, as to the addition made on merits, we find that the assessee had himself admitted to have written to the assessing officer on 10.03.2004 and surrendered the disputed amount. It is true that the offer made by the assessee in the said letter was worded as being subject to a condition that the penalty proceedings may not be initiated against him. We find, the fact that the surrender had been made with the condition to by peace may be relevant to and may be considered in the penalty proceedings. The present proceedings being the quantum proceedings we do not find any error in the order of the Tribunal in so far as the Tribunal has sustained the addition not only on the ground of surrender made by the assessee but also after disbelieving the genuineness of the transaction of purchase and sale of shares. In view of the matter, we do not find any error in the order of the Tribunal. Accordingly, question nos. A and E are answered in affirmative i.e. in favour of the revenue and against the assessee.

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• 2017 (12) TMI 369
  Deemed dividend addition u/s 2(22)(e) - Held that:- From the plain reading of Section 2(22)(e) it transpires the legislature seeks to tax certain payments made by specified persons as deemed dividend by treating such payments to be dividend payment on notional basis. Mere issuance of a cheque that was subsequently cancelled and returned without ever being ever presented for encashment and without any money having been paid against the same to the assessee it could never constitute payment of any sum. The assessee never came gained receipt of any amount of money against the aforesaid cheque from GIL. No money passed through from GIL to the assessee. Notwithstanding the fact the cheque was subsequently cancelled and returned, the provision of Section 2(22)(e) never got attracted to the facts of the case for a simple reason that no amount of money was ever received by the assessee. To apply a notional provision of the statute the revenue should have shown to exist actual fact of payment and it could not have inferred notional or deemed dividend on a notional payment in absence of express intention to that effect expressed by the legislature. Thus in absence of satisfaction of statutory precondition of "payment" of "any sum", to the assessee the provision of Section 2(22)(e) was never attracted. - Decided in favour of the assessee.

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• 2017 (12) TMI 368
  Addition u/s 68 - ingenuity of transaction - Held that:- Assessee is a private limited company and it being further admitted to it that the alleged investors were close friends and business associates of its directors and/or share holders, as the case may be, the burden rested squarely on the assessee to disclose true and correct details of the persons it claimed had made the substantial investments of Rs. 3.46 crores. That burden was not discharged. The identity of the alleged investors was never established and the assessee did not discharge its burden to lead evidence on that issue. The finding of the Tribunal is a finding of fact recorded on the basis of evidence and application of the correct principle/rule of evidence. The same calls for no interference by this Court and it is hereby sustained. Once, the identity of the investors was not established the assessee could not in any case claim to establish either the genuineness of the transaction or the creditworthiness of those persons. Therefore, the objection raised by learned counsel for the assessee as to lack of opportunity to cross-examine the Bank Manager or other witnesses, is largely inconsequential. Even if such opportunity has been granted to the assessee by the Assessing Officer, it would have led to no different result inasmuch as since the assessee failed to establish the identity of the investors, the genuineness of the transaction itself gets disapproved for the reason that for a genuine transaction there must first exist genuine person to perform that transaction. Also, for that reason, the creditworthiness of the investors could never be established once it was found that there was no person existing who may have entered into such a transaction. - Decided against the assessee and in favour of the revenue.

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• 2017 (12) TMI 367
  Payment of registration fee to be equitable to an intangible asset - Held that:- We find that the finding of the Tribunal is not supported by reasons, especially on the factual aspect as to what is the effect of payment of the registration fee for acquiring such a licence. That apart, the assessee's alternate claim that it should be treated as a revenue expenditure has also been negatived by the Assessing Officer. We find that the Assessing Officer, has not given independent reason as to why the alternate submission of the assessee is not accepted. Therefore, we find that the finding of the Tribunal in paragraph 13 on the second issue, in our considered opinion, has been rendered without going into the commercial aspect of the effect of the registration fee paid by the assessee, which, even according to the Assessing Officer, is a huge expense. Remand the matter to the Assessing Officer for fresh consideration.

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• 2017 (12) TMI 366
  Addition u/s 69B - on money received - as per Tribunal purchase price paid through banking channel and and the date-wise payment made by the assessee not being controverted, the appeal filed by the Revenue was dismissed - production of additional evidence - Held that:- We find from the contentions raised before the Tribunal that the Revenue did not plead that there was violation of Rule 46A of the said Rules in the matter of production of additional evidence before the Commissioner of Income Tax (Appeals). We have noticed that the Assessing Officer participated in the appeal proceedings and his observations were also taken note of by the Commissioner of Income Tax (Appeals). Thus, we find that the contention that there has been an infraction of Rule 46A of the said Rules was never pleaded by the Revenue either before the Commissioner of Income Tax (Appeals) or before the Tribunal. Accordingly, we find that no question of law, much less, any substantial question of law arises for consideration in this appeal.

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• 2017 (12) TMI 365
  Process of assessee's return u/s 143 - refund claim - eligible interest under Section 244A - period of limitation - Held that:- For the assessment year 2015-16, the case was selected for scrutiny and notice under Section 143 (2) was issued on 04.07.2016. Apart from that, the time limit of one year from the end of the financial year is over, and the question of issuing an intimation under Section 143 (1) does not arise, as there is a statutory prohibition under second proviso to Section 143 (1). This is so, because, the return of income was filed by the assessee on 28.11.2015, and the period of one year expired on 31.03.2017. Application/representation, dated 13.07.2017, given by the petitioner for grant of refund was received by the respondent on 20.07.2017, after issuance of notice under Section 143 (2) of the Act. However, that does not mean the return needs to be endlessly kept pending. In fact, this aspect was also considered in Group M. Media India (P) Ltd. (2017 (1) TMI 1149 - BOMBAY HIGH COURT), wherein, the Court observed that, CBDT has issued notification, vide Instruction No.7 of 2002, dated 01.08.2002, wherein, they specifically directed the Assessing Officer of the Revenue to process all returns, in which, refunds are payable expeditiously. Reference was also made to the Citizen's Charter issued by the Income Tax Department, in its vision statement, published in 2014, that the Department aspires to issue refund along with interest under Section 143 (1) of the Act within six months from the date of electronically filing the returns. Writ Petitions are disposed of with the following directions:- i) The respondent is directed to consider the petitioner's Application/representation, dated 13.07.2017, (which was received by the respondent on 20.07.2017) for the assessment year 2016-17, and process the return filed for the said assessment year under Section 143 (1) of the Act and pass appropriate orders within a period of six weeks from the date of receipt of a copy of this order. ii) So far as the scrutiny assessment for the year 2015-16 is concerned, the petitioner is directed to extend full cooperation in the assessment proceedings and the Assessing Officer is directed to complete the scrutiny assessment as expeditiously as possible.

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• 2017 (12) TMI 364
  Rejection of books of accounts - N.P. determination - Held that:- NP rate is to be taken average of last five years which will come to 4.066, therefore, in our considered opinion 5% which is assessed by the tribunal is just and proper, therefore, first issue is answered in favour of the assessee. Addition of interest income and other income - Held that:- Taking into consideration, the interest amount paid on the loan which was taken and interest which is on unpaid amount and other income, in view of assessment on net profit that amount cannot be added separately to the income. Second issue is also answered in favour of the assessee.

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• 2017 (12) TMI 363
  Reopening of assessment - violation of principles of natural justice - whether the respondent could not have passed the impugned order on 25.9.2017, as he fixed the date for production of documents on 27.9.2017? - Held that:- There has been violation of the principles of natural justice. The petitioner having been afforded an opportunity to produce the records on or before 27.9.2017, the respondent should have waited till 27.9.2017. The explanation offered by the learned senior standing counsel that the officer himself has secured the documents from the concerned Sub-Registrar and therefore, proceeded to pass the impugned order, is not a convincing reply, as the officer by intimation dated 11.09.2017, not only called for the copies of documents, but also the copies of the profit and loss account, the balance sheet and auditor's report Under Section 44 AB of the Act for the assessment year 2009-2010. Thus this Court is convinced that the impugned order has been passed in violation of the principles of natural justice. These are sufficient reasons to hold that the impugned order cannot stand to the test of law. Writ petition is allowed, the impugned order is set aside and the matter is remitted back to the respondent for a fresh consideration

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• 2017 (12) TMI 362
  Addition u/s 14A r.w.r. 8D - Held that:- No merit in the Departmental Appeal on this issue. It is not in dispute that assessee-company has not earned any dividend income in assessment years under appeal. The Hon’ble Delhi High Court in the case of Cheminvest Ltd., vs. CIT-VI, New Delhi (2015 (9) TMI 238 - DELHI HIGH COURT ) has held that if there is no exempt income, there can be no question of making any disallowance under section 14A of the I.T. Act Addition on the basis of the seized material - Held that:- Whatever entries are referred to in the seized document, have been duly explained by assessee-company before the authorities below and all the entries in the seized document are reflected in the books of account. The payments received from Central Coal Field Ltd., have been mentioned in the bank account of the assessee12 company and payments mentioned in the seized documents have been made to the three parties. The Ld. CIT(A) therefore, on proper appreciation of all the seized documents in reference to the books of account, correctly deleted the addition. Addition on account of unexplained cash found during search - Held that:- No merit in this ground of appeal of the Revenue. The assessee -company explained the availability of the cash found during the course of search as available to the assessee-company and the group companies at the time of search which were duly reflected in the books of account, confirmation of the availability of the cash were filed, which supports the explanation of assessee-company. No material has been brought on record to dislodge the findings of fact recorded by the Ld. CIT(A). Revenue appeal dismissed.

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• 2017 (12) TMI 361
  Revision of assessment u/s 263 - registration granted to the assessee trust u/s 12AA cannot be invoked retrospectively under section 12AA(3) - Held that:- Referring to Circular No. 1 of 2011 dated 06.04.2011 issued by the CBDT it is held that section 12AA(3) is applicable only from the assessment year 2011-12. Thus we hold that this ground on which an order under section 263 of the Act was passed by the Ld. CIT is bad in law. Coming to the second reason for which the Ld. CIT (Exemption) invoking powers under section 263, we find that the Ld. CIT (Exemption) records that the facts as narrated by him has been established in the assessment order passed under section 147/143(3) of the Act dated 27.03.2014. When this fact has been considered in the assessment by the Assessing Officer and a considered and possible view taken, there is no ground for invocation of powers under section 263 of the Act, specifically when there is no allegation of non application of mind by the A.O. or that any prejudice or any error was committed by the Assessing Officer which caused prejudiced to the revenue. The Ld. CIT (Exemption) mentioned that these facts were considered by the Assessing Officer in his order, thus ruling out non-application of mind to this issue by the A.O. Cancellation of registration granted to the under section 12AA by the Ld. CIT (Exemption) Kolkata by invoking his powers under section 12AA(3) - Held that:- Retrospectively cancellation of the registration granted to the assessee is bad in law. See case of Agra Development Authority vs CIT [2013 (8) TMI 549 - ITAT AGRA]

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• 2017 (12) TMI 360
  Addition u/s 14A r.w.r.8D - Held that:- For assessment year 2010-11 this Tribunal in assessee’s own case has set aside the issue to the assessing officer to compute the disallowance under rule 8D (2) (iii) at the rate of 0.5% of investments which actually have resulted in the exempt dividend income and rather than 0.5% of the average total investment. Following the rule of consistency we are also inclined to set aside this issue back to the file of Ld. AO for recomputing the disallowance under rule 8D (2) (iii) for the year under consideration with a similar direction to consider 0.5% of the investments which actually have resulted in the exempt dividend income.

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• 2017 (12) TMI 359
  Addition of bogus purchases - scope of jurisdiction of Section 153A - Held that:- From the order of the Assessing Officer it can be clearly seen that no incriminating material is found during the search activities. In-fact the group is engaged in the business of manufacturing and started through flag ship concerned M/s Tegh International. In-fact, the assessment was long back concluded and the same was not disputed by the Revenue authorities. - Decided in favour of assessee.

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• 2017 (12) TMI 358
  Addition u/s 14A - Held that:- As no specific nexus has been established by the Assessing Officer about the receipt of the exempt income and incurring of expenses, hence, no disallowance of expenses is called for. - Decided in favour of assessee.

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• 2017 (12) TMI 357
  Short term capital gain on sale of shares - non materialization of transaction - hypothetical income - Held that:- The facts as emerged before us are that the proposed transaction of sale of shares did not materialize at all. No agreement or MOU or any sale bill etc. with respect to sale of these shares has been brought on record. It is contended that no such document was entered into and therefore there was no question of bringing on record any such document. Further, even sale consideration of the impugned share has not been determined. Only an advance of Rs. 25 Lakhs is stated to have been received which has been deducted by the assessee from the cost of Investment in the Balance Sheet. No further amount is reported to have been received by the assessee. Thus, under these circumstances it is not justified at all to presume that sale of shares has taken place. No income has accrued in the favor of assessee. Apparently, the proposed transaction of sale fell through and did not materialize. Under these circumstances, it cannot be held at all that any capital gain was earned by the assessee on sale of impugned shares. Thus, addition made by the AO is illegal and factually incorrect and the same is here by directed to be deleted. Addition for deviation u/s 145A - assessee did not include amount of Excise duty and VAT while making valuation of the closing stock - Held that:- Hon’ble Delhi High Court in case of CIT vs. Mahavir Aluminium Ltd.,[2007 (11) TMI 41 - HIGH COURT OF DELHI] it was held that if there is change in closing stock to give effect to Section 145A, there must necessarily be a corresponding adjustment in the opening stock of the year. Similar view has been expressed by the ICAI in the Guidance Note explaining the provisions of Section 145A. Further, on the basis of sense of justice and equity also same inference can be drawn that if Trading and P & L Account is to be converted from ‘Exclusive’ method to ‘Inclusive’ method, then corresponding adjustment will be required to be made in all relevant heads of Income and Expenditure including the opening stock. The adjustment on account of Payment of Excise duty and VAT out of Cash/Bank but not debited in P & L Account would also be required to be given. It is noted that assessee has submitted detailed submissions and evidences to demonstrate the fact of payment of Excise duty as well as amount of Excise duty and VAT embedded in the value of opening stock. No dispute on facts has been raised by the Ld. DR before us. Further, assessee has also submitted before the lower authorities both sets of Trading and P & L Account prepared on both ‘inclusive’ and ‘exclusive’ method showing that amount of net loss in both the situation remains the same at Rs. 48,716,531/- . Thus, viewed from any angle no case is made out by the revenue before us for sustaining the addition. Under these circumstances, we find that the CIT (A) has rightly deleted the addition

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• 2017 (12) TMI 356
  Penalty u/s 271D as well as 271E - point of reckoning of limitation from the date of issuing the notice by the ITO or by the JCIT - bar of limitation - authority competent to impose penalty - Held that:- In the present case, the first show cause notice for initiation of proceedings was issued by the AO on 25.03.2003 and was served on the assessee on 27.03.2003. Obviously, the later period also expired on 30.09.2003 when six months expired from the end of the month in which the action for imposing the penalty was initiated. The order as passed by the Joint Commissioner of Income Tax for the penalty under Section 271D on 28.05.2004 was clearly hit by the bar of limitation and has rightly been set aside in the orders impugned. In view of the above, our answer to the formulated question of law is that even when the authority competent to impose penalty under Section 271D was the Joint Commissioner, the period of limitation for the purpose of such penalty proceedings was not to be reckoned form the issue of first show cause by the Joint Commissioner; but the period of limitation was to be reckoned from the date of issue of first show cause for initiation of such penalty proceedings. For the purpose of present case, as observed hereinabove, for the proceedings having been initiated on 25.03.2003, the order passed by the Joint Commissioner under Section 271D on 28.05.2004 was hit by the bar of limitation. The CIT(A) and the Tribunal have, thus, not committed any error in setting aside the order of penalty. See CIT Vs Jitendra Singh Rathore [2013 (3) TMI 222 - RAJASTHAN HIGH COURT ] - Decided in favour of assessee

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• 2017 (12) TMI 355
  Unaccounted investment u/s 69B - fair market price/value of the property for the purpose of section 69B - Held that:- Since it is an issue of determination of the fair market value of the plots of land in question and it is apparent from the facts and chain of events as discovered from the search and seizure action and emerged from the documents disclosing the earlier agreements to sell of these plots of land that difference between the sale consideration agreed upon between the parties in the agreement dated 28.03.2013 and the sale consider for which the assessee purchase the property vide sale deed dated 07.05.2014 is Rs. 4.66 crores which is more than the twice of the sale consideration paid by the assessee. The assessee has not brought on record any facts or circumstances to show that the value of the property has depreciated during the period from 28.03.2013 to 07.05.2014 and further the fair market price of this property is less than the prevailing price due to certain disadvantages attached to this property. Therefore so far as the action of the AO to invoke the provisions of section 69B is concerned, it is proper on the part of the AO to invoke these provisions if the AO is satisfied that the investment made by the assessee is much more than it has shown in the books of accounts. Thus this matter requires a proper verification and examination at the level of the AO for determining the fair market price/value of the plot of land in question. Since the valuation of the property is a subject matter of the experts in the field, therefore, Assessing Officer ought to have got the valuation from the expert/DVO.

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• 2017 (12) TMI 354
  Benefit u/s 11 - Exempted capital receipt u/s 12 - whether the receipt on account of development fund/development fee from the students of the assessee is in the category of capital receipts/ corpus fund to be used by the assessee for specific purpose or not? - Held that:- In the case of the assessee the development fee is part of the total fee charged by the assessee from the students and it is apparent that the quantum of amount and specific purpose on account of which this fee is received from the students is determined and decided by the assessee and not by the students or their parents. Therefore, the development fee is not optional for the students but it is compulsory for the students without any discretion or fee will to decide whether to pay or not to pay the development fund fees. Hence, it is a charge by the assessee on the students without having any element of any discretion on the part of the students or parents either to the quantum of fee or the specific purpose as well as the option of making payment or not. Thus in the facts and circumstances of the case when the development fee received by the assessee is not voluntary but it is a compulsory charge on the students then the same cannot be classified as capital in nature for specific purpose or part of the corpus fund of the assessee trust. The decision relied by the ld. AR are on the point that when a particular contribution or donation is given by the donor as per his free will and for specific purpose then the same cannot be treated as revenue receipt. Having regard to all the fee in the name of development charge received by the assessee from the students is part of the current receipt and will part take a character of the other fee charged by the assessee on account of tuition fee, term fee etc. Hence, we set aside the order of the ld. CIT(A) qua this issue. Depreciation on capital assets - Held that:- Depreciation claimed by the assessee on capital assets for which capital expenditure was already given in the year under consideration allowed. See CIT vs. Krishi Upaj Mandi Samiti, Jaisalmer [2015 (3) TMI 11 - RAJASTHAN HIGH COURT ]

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• 2017 (12) TMI 353
  Reopening of assessment - assessee taken entries of purchases from hawala dealers - Held that:- AO has reopened by issuing notice u/s 148 the earlier assessment made u/s 143(1). In ACIT vs. Rajesh Jhaveri Stock Brokers P. Ltd. (2007 (5) TMI 197 - SUPREME Court) the Hon’ble Supreme Court has held that intimation u/s 143(1)(a) in not an assessment. It held the notice issued u/s 148 as valid. In the instant case the AO had received specific information that the assessee had merely taken entries of purchases from hawala dealers reflected in the website of the Sales Tax Department, Government of Maharashtra. In view of the decision in Rajesh Jhaveri Stock Brokers P. Ltd. (supra), we hold that the AO has rightly issued notice u/s 148. The 1st ground of appeal of the assessee is thus dismissed. Determination of income from house property - estimation of rent - Held that:- We find that the AO has estimated the rent of the second flat at Rs. 25,000/- per month without any basis. He has not mentioned in the assessment order the sort of market enquiry conducted by him. As the rate arrived at by the AO is based on conjectures, we delete the addition made by the AO as income from house property.

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• 2017 (12) TMI 352
  Addition of agricultural income - ownership of the land - Held that:- We find merit in the argument advanced by the ld. counsel for the assessee that in the light of Rule of consistently alone the agricultural income declared by the assessee should be accepted. Although, the principle of res-judicata do not apply to the income-tax proceedings, however, since the agricultural income declared by the assessee in the preceding and succeeding year has been accepted by the Revenue, although under section 143(1) proceedings, and since none of the assessments have been reopened, therefore, following the Rule of consistency, it is of the considered opinion that the agricultural income declared by the assessee should not have been rejected. Therefore, set-aside the order of the CIT(A) and direct the Assessing Officer to accept the agricultural income. Addition u/s 68 as a Gift from husband as unexplained - Held that:- As per the assessee that the gift deed has been duly executed by the husband of the assessee on 08.07.2010. From the various details furnished by the assessee, I find the gift has been received by the assessee during the period from 01.04.2010 to 08.07.2010. I find the assessee before the Assessing Officer had given the PAN and confirmation of the donor and copy of the income-tax return during the assessment proceedings. It was given out of the cash balance with her husband. Since out of Rs. 4,25,000/- cash gift, the Assessing Officer has already accepted Rs. 2,75,000/- as explained therefore, find no reason to disbelieve the capacity of her husband to the balance amount of Rs. 1,50,000/- received as cash gift. The ground raised by the assessee is accordingly allowed. Addition of sale of future standing crops - Held that:- As the assessee could not file any evidence to prove the capacity of the person who advanced the huge amount. Considering the totality of the facts of the case and in the interest of justice, deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to substantiate with evidence to his satisfaction regarding the identity and capacity of the person to give such huge cash advance and genuineness of the transaction.

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• 2017 (12) TMI 351
  Additions u/s 69 - Unexplained investments - Undervaluation of property - addition based upon the DVO's report - absence of any corroborative evidence - Held that:- It is not disputed that a readymade building was purchased by the assessee; that no evidence was found during the course of search action conducted at the residential premises of the assessee and other family members warranting such assessment proceedings in the case of assessee; that the assessee had purchased a constructed residential house, as detailed in the purchase deed; that no construction was carried out after the purchase of the property on 16.09.2007; and that no evidence that after the purchase of the property on 16.09.2007 either any investment was made by the assessee or investment is found recorded in its books of accounts, either during the course of search of the assessee’s residence and business premises, or thereafter during the course of assessment proceedings or even in the DVO’s enquiry proceedings. Thus we hold that the AO could not tax the said amounts merely based upon the DVO's report in the absence of any corroborative material to point out under-valuation of the property in question. Therefore, we accept the grievance of the assessee as justified. Accordingly, the impugned orders of the ld CIT(A) are reversed and the additions are hereby deleted, for all the Assessment Years, i.e., from A.Y. 2007-08 to 2013-14. - Decided in favour of assessee.

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• 2017 (12) TMI 350
  Section 14A applicability on the investment made in the EOU covered by the provisions of section 10B - Held that:- Section 10A is a provision for deduction and not exemption. SEE CIT versus TEI Technologies Private Limited [2012 (9) TMI 47 - DELHI HIGH COURT] As the provisions of section 10B are pari materia with section 10A of the Act, respectfully following the above decisions of the Hon’ble Supreme Court, we hold that section 10B is a provision dealing with deduction and not exemption. Since section 14A of the Act deals with the exempted income, accordingly, the section 14A of the Act is not applicable on the investment made in the EOU covered by the provisions of section 10B of the Act. - Decided in favour of the assessee.

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• 2017 (12) TMI 349
  Penalty proceedings u/s 271(1)(b) - non-compliance of statutory notices - reasonable cause - Held that:- The main planks for reasonable cause pleaded by the assessee has been that, firstly, the key person/group head, Shri Gopal Kumar Goyal who was entrusted with income tax matters and was looking after the entire working of the group was in judicial custody in some criminal proceedings and the entire group and family members were engaged in ongoing court proceedings for his early release and various employees were leaving the group further accentuating the problems; secondly, more than 300 group assessments were initiated in the wake of search proceedings which were simultaneously going on, therefore, it was difficult to comply to the various notices on short dates; lastly, it has been strongly pleaded before us, that the compliances had been made through replies filed through dak or registered post though belatedly. These facts have not been controverted by the AO or CIT (Appeals). All these facts and circumstances under any prudence do constitute reasonable cause falling within the scope and ambit of section 273B and accordingly, we are of the considered opinion that failure to comply with certain notices on a particular date was due to reasonable cause as highlighted by the assessee not only during the course of the assessment proceedings but also before the Assessing Officer and Learned CIT(Appeals) in the impugned penalty proceedings and hence penalty cannot be levied in such circumstances. - Decided in favour of assessee

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• 2017 (12) TMI 348
  Transfer pricing adjustment in AMP expenses - Held that:- It is noticed that similar issue cropped up in the assessee’s appeals for preceding years. The Hon'ble jurisdictional High Court in the assessee’s own case for the assessment years 2006-07 to 2010-11 has held that there is no international transaction of AMP expenses and the resultant additions were deleted. DRP contention that the facts and circumstances of the instant year are different inasmuch as the assessee did only ‘distribution’ activity in the year under consideration as against the ‘manufacturing and distribution’ activities done for earlier years does not appear to be correct. It is apparent from the first page of the TPO’s order wherein he has recorded that: ‘the assessee is engaged in manufacturing and trading of soft contact lenses……….’. Similarly, the AO in the impugned order has also recorded in para 2 that the assessee is : ‘engaged in the business of manufacturing lense care solutions and trading of contact lenses and ophthalmic intra ocular lenses and surgical equipments.’ It is, therefore, palpable that the nature of activity carried out by the assessee during the instant year is similar to that done in the earlier years, being that of manufacturing and trading as well. In the absence of any difference in the factual position prevailing in the year under appeal vis-à-vis the earlier years and respectfully following the precedents, we order for the deletion of the addition. Addition on account of transfer pricing adjustment in intra group services - Held that:- Having heard both the sides and perused the relevant material on record, we find that similar issue was raised in the preceding years, albeit, the addition was made directly by the AO as a result of the order of the TPO and there was no enhancement. The assesee challenged it before the appellate authorities. The Hon'ble High court in the assessee’s own case for the preceding five years has decided such issue in favour of the assessee by deleting the additions. Following the view of the Hon'ble High Court, the Tribunal, for the assessment year 2011-12 has directed the deletion of similar addition. As the facts and circumstances of the issue for the year under consideration are mutatis mutandis similar to those of preceding years, respectfully following the precedents, we order for the deletion of addition.

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• 2017 (12) TMI 347
  Resident in India - Taxability in India - period of stay in India - requirement to file return on India - Held that:- The assessee’s presence in India was only for 31 days in the relevant previous year. When, the assessee who is an U.S.A. citizen since 14.9.1999; and is living in USA since 1974; and his presence in India during the relevant previous year is less than 182 days, then in terms of section 6, the assessee cannot be held to be resident in India. The findings of the Learned CIT(Appeals) as well as that of the Assessing Officer in the wake of remand report itself gets vitiated. Now it is a matter of fact that the assessee was not a resident in India in terms of section 6 and was therefore, neither required to file any return of income in India not any income can be brought to tax in India. Therefore, the deposits made in the foreign bank account cannot be held to be included as taxable income in India. Similarly, with regard to the addition which represented deposits of US $ 7,000/- in ICICI Bank, New Delhi, we find that the assessee being an NRI was entitled to bring US $ 10,000 without any declaration in terms of Baggage Rules as given under FEMA. Thus the assessee being an American citizen who is otherwise permitted to convey US $ 10,000 in India without any explanation then the same cannot be taxed in India. Otherwise also, to be taxable in India, assessee has to be resident of India within the scope and meaning of section 6. Thus, on the merits we hold that the addition made by the Assessing Officer and sustained by the Learned CIT(Appeals) cannot be upheld for the reason that the assessee was neither liable to file return of income in India nor any income can be held to be chargeable in the hands of the assessee as he was not resident of in India in terms of section 6. Accordingly, the additions sustained by the Learned CIT(Appeals) is deleted. - Decided in favour of assessee.

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• 2017 (12) TMI 346
  Addition u/s 153A - absence of incriminating material found during the course of search - unexplained share capital - Held that:- AO asked the assessee about the increase in the share capital and categorically stated that the assessee was asked to furnish the confirmation from all six persons but whom shares were allotted year by year alongwith the copies of their bank statement, audited account and ITRs for the year under consideration which were furnished by the assessee. The AO was satisfied with the details furnished by the assessee except for 1,00,000 shares of Rs. 10/- each allotted to M/s Jeevandhara Waters Pvt. Ltd. which were added to the income of the assessee and finally the assessment was framed at an income of Rs. 5,83,177/-. Thereafter, a search u/s 132 of the Act was again carried out on 19.01.2009 on the assessee company. However, the assessment was framed by making the addition of Rs. 1,05,00,000/- on account of share capital and another addition of Rs. 10,00,000/- which was included in the above said amount and already added on account of shares allotted to M/s Jeevandhara Waters Pvt. Ltd. It is, therefore, clear that no fresh incriminating material was found during the course of search which took place on 19.01.2009. Thus we delete the addition made by the AO in the absence of incriminating material found during the course of search held on 19.01.2009, by passing the assessment u/s 153A r.w.s. 143(3) of the Act on 29.12.2010, which was confirmed by the ld. CIT(A) vide impugned order. - Decided in favour of assessee.

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• 2017 (12) TMI 345
  TPA - selection of comparable - Held that:- Assessee provides engineering, design and related services for the offshore floaters/platform business of SHI Korea. The assessee has a pool of qualified manpower. It employs engineers having a background and experience in lay out design, electrical design, instrumentation design, piping design and mechanical design, etc., thus companies functionally dissimilar with that of assessee is to be excluded from final comparability list.

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• 2017 (12) TMI 344
  Charitable institution within the meaning of s.11(1) - whether the assessee was engaged in commercial activities and proviso to s.2(15) was clearly applicable in this case - appellant had receipts from services provided to both members and non-members. The Assessing Officer has held that the income/fee received from members and nonmembers are purely commercial - Held that:- It is an admitted fact that the assessee is registered under section 12A. The main objects of the assessee are to promote and protect trade, commerce and manufacture in Delhi and to watch over and protect the general commercial interest in Delhi and adjoining area and to protect the interest of persons engaged in trade, commerce and industry. The assessee charge nominal fee for admission fee, subscription fee and certificate of origin fee as per the guidelines of Ministry of Commerce, Government of India. The motive of the assessee is not to earn any profit since there are no profit that can be distributed. The surplus or the profits remain with the assessee chamber and is applied towards achieving the objects. So it cannot be said that the assessee is involved in any business activity. It is apparent that the assessee exists only for the Welfare of its members and there is nothing on record to prove that the assessee is involved in any business activities. In the assessment years 2009-10 to 2012-13, the AO similarly denied exemption under section 11 of the act. However the Ld.CIT(A) allowed the appeals of the assessee in all these years, copies of the orders are placed in the paper book. The assessee in all these years submitted before the Ld.CIT(A) that the issue is covered by the judgement of Delhi High Court in the case of PhD Chamber of Commerce and Industry vs. DIT(E) (2012 (11) TMI 429 - DELHI HIGH COURT) and the Ld.CIT(A) allowed the claim of the assessee. In the Assessment Year 2009-10 the department filed an appeal before the Tribunal which was dismissed vide order dated 30th December, 2015 finding the tax effect being below Rs. 10 lakhs. However, nothing is explained about the remaining years. It is well settled law that the rule of consistency do apply to the income tax proceedings It may also be noted here that the claim of the assessee has been denied under section 13(3) of the Act. However it was explained by the assessee all these items have been purchased and used for meetings with delegations and attending conferences. These items are necessities and could not be considered as luxury because of the development of day today technology. Therefore there is nothing wrong if the assessee purchased these items for achieving its objects. Admittedly the issue is covered in favour of the assessee by the judgement of Hon’ble Delhi High Court in the case of Phd Chamber of Commerce and Industry (2012 (11) TMI 429 - DELHI HIGH COURT) wherein on identical facts the claim of the assessee for exemption u/s 11 have been allowed. The AO has not brought any evidence on record as to what business activities are conducted by the assessee with a profit motive and whether the items purchased for achieving the objects are misused by any of the persons covered u/s 13(3) of the Act. Merely because SLP of the department is pending before the Hon’ble Supreme Court in the case of Phd Chamber of Commerce and Industry (supra) is no ground to take a different view against the assessee. Considering all find no merit in the departmental appeal and the same is dismissed.

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• 2017 (12) TMI 343
  Deduction u/s. 10A - export sales - non-receipt in convertible foreign exchange - Held that:- Provisions provided in the manual of Reserve Bank of India which clearly specify the manner of receipt in foreign exchange as well as the meaning of foreign exchange. Now on going through the provisions of section 10A(3) and Explanation thereto, Explanation-2 to section 10A and the information provided in the manual of Reserve Bank of India all together, we are of the opinion that the assessee in order to claim deduction u/s. 10A has necessarily to prove that export sale proceeds are recovered in convertible foreign exchange/currency in India or has kept the money outside India in another bank account with the approval of Reserve Bank of India. Certainly, the assessee has not fulfilled any of these conditions. Even for the sake of discussion, the plea of the assessee of converting the outstanding sale proceeds into overseas direct investment to be treated as compliance of provision of section 10A(3) then also it cannot be accepted as there is no proper approval of Reserve Bank of India for capitalization of outstanding export sale proceeds. In view of our detailed discussion above, are of the view that assessee is not eligible to claim deduction u/s. 10A on the export sales of Rs. 74,60,891/- as they have not been received in convertible foreign exchange as per the provisions of section 10A(3). Therefore, we set aside the order of CIT(A) and confirm the disallowance made by the Assessing Officer.

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• Customs

• 2017 (12) TMI 340
  Valuation - Mini Booster Pump 50GPD of Chinese origin - enhancement of value - Held that: - respondent has stated that this Tribunal has held in the above stated case of M/s Sanjivani Non Ferrous Trading Limited [2017 (3) TMI 359 - CESTAT ALLAHABAD] held that “as provided by Section 14 of Customs Act, 1962 the assessable value has to be arrived at on the basis of the price which is actually paid and in a case the price is not sole consideration or if the buyers and sellers are related persons then after establishing that the price is not sole consideration the transaction value can be rejected and taking the other evidences into consideration the assessable value can be arrived at” - such exercise has not been done in the present case by the Original Authority and, therefore, the impugned Order-in-Appeal is sustainable. Revenue’s contention that enhancement of assessable value by the Assessing Officer was correct has not been supported by any evidence by Revenue. Appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 339
  Classification of goods - Heavy Melting Steel Scrap - Steel Slabs (Stock Lot Non Alloys) - mis-declaration of goods - enhancement of value - Held that: - the original adjudicating authority held the goods to be re-rollable scrap based only on the opinion of custom authorities who examined the goods. No expert opinion was obtained - In a dispute involving Custom, the Revenue’s argument that examination report by Customs officers should be accepted without any other supporting evidence, defies even the most basic jurisprudential principles. It is also seen that in the discussion and finding portion of the primary order, there is not even a word about enhancing the value, leave alone basis for doing so. Thus enhancement of value is devoid of sustainability. Appeal dismissed - decided against Revenue.

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• Corporate Laws

• 2017 (12) TMI 338
  Compulsory amalgamation of allegedly loss making wholly owned subsidiary (NSEL) with its profit making holding company (FTIL) in public interest - Whether the impugned order was made in violation of the principles of natural justice and fair play? - Held that:- In this case, proceeding on the basis that the impugned order is an administrative or at the highest a quasi judicial order as urged by the petitioners, we find that there was no breach in compliance with the principles of natural justice and fair play. Therefore, we do not deem it necessary to address the issue as to whether the impugned order is in the nature of delegated or subordinate legislation. Even independent of any decision upon such issue, in the facts and circumstances of the present case, we are satisfied that no case has been made out to interfere with the impugned order on the ground of any failure in compliance with the principles of natural justice and fair play. Accordingly, for all the aforesaid reasons, we are unable to fault the impugned order on the ground of non compliance with the principles of natural justice and fair play or on the ground of any breach of our directions in order dated 4th February 2015. In this case, since FTIL, NSEL and in particular their shareholders have failed to demonstrate that they have been deprived of their property, there is no question of any infringement of Article 300A of the Constitution. The shareholders cannot confuse between the property of the companies and the interest which they hold by virtue of their shareholding. Further, none of the petitioners have demonstrated any infringement of their rights under Articles 14 and 19 of the Constitution. Accordingly, there is no necessity to go into the issue of any derivative immunity, which might or might not attach to the impugned order made under Section 396. Only if the petitioners had made out a case that the impugned order infringes the rights guaranteed to them under Articles 14, 19 or 300A of the Constitution, could the issue of derivative immunity have assumed importance. Since, this is not the case, we do not deem it necessary to go into the issue of derivative immunity. Therefore, upon cumulative consideration of the aforesaid, we are unable to accept the contention that the Central Government was dis-entitled in law or on facts to order the compulsory amalgamation of allegedly loss making wholly owned subsidiary (NSEL) with its profit making holding company (FTIL) in public interest by resort to Section 396 There is no infirmity in the assessment order dated 1st April 2015 to the extent, it denies compensation to the shareholders of FTIL. The same is the position of the creditors of FTIL. There is nothing in the provisions of Section 396(3) which suggest that prior hearing has to be afforded to members or creditors before assessment order is made. Nothing prevented the shareholders from raising their objections in response to the draft order. Several shareholders, including perhaps the petitioners, did in fact, raise objections. If the shareholders were aggrieved by the assessment order dated 1st April 2015 because it awarded them no compensation, nothing prevented them from instituting appeal under Section 396(3A) within period of 30 days from the date of publication of the assessment in the Official Gazette. At best, the contention now raised by the petitioners, which again, is not at all backed by any pleadings, is some hyper technical objection based upon the form of assessment order dated 1st April 2015. In the facts and circumstances of the present case, we are not inclined to exercise our extra-ordinary and equitable jurisdiction under Articles 226 and 227 of the Constitution and upset the impugned order on the ground urged. This is not a case where the Central Government or the prescribed authority has failed to make any order as contemplated by Section 396(3) or that the shareholders or creditors of FTIL were deprived of opportunity of appeal under Section 396(3A) and therefore there is any breach of the procedure prescribed in Section 396(4) in making the impugned order. Accordingly, we see no merit in the contention that the impugned order is ultra vires Section 396. If the provision in Section 396 is analyzed, it is apparent it represents a complete Code in so far as amalgamation of two or more companies by the Central Government in public interest, is concerned. Therefore, on the basis of circular dated 20th April 2011, it is not possible to read into Section 396 the provisions of Section 391. Since, the petitioners have failed to establish that the impugned order made by the Central Government is in violation of Article 14 of the Constitution, there is really no reason to go into the issue as to whether the impugned order enjoys any derivative immunity under Article 31A (1)(c) of the Constitution. The issue of immunity, whether derivative or otherwise would have arisen, had, the petitioners been able to establish that the impugned order was in violation of Articles 14 of 19 of the Constitution. Since, the petitioners have failed to establish any violation of Article 14 or 19 of the Constitution, there is no necessity to go into the issue of immunity, whether derivative or otherwise.Accordingly, we are unable to fault the impugned order on the ground of violation of Article 14 of the Constitution or on the basis of the petitioners' reading of the Central Government's circular dated 20th April 2011. Taking into consideration the importance of stock and commodity exchanges to the national economy and the unprecedented situation which the Central Government was required to deal with in the wake of collapse of the entire commodities exchange, we are unable to hold that the impugned order was not made in “national interest”. We are unable to fault the impugned order on the ground that it makes no specific reference to “national interest” but focuses merely on “public interest”. The Central Government, in making the impugned order has balanced the interests of the two companies, its shareholders, creditors and employees on one hand and the interests, not only of the investors who may have claims, but also, of the investing public, which is required to be given the confidence that the Central Government will act to see that a holding company does not take shelter behind its wholly owned subsidiary and thereby shirk responsibility in the wake of such an unprecedented payment crisis. The three grounds or reasons stated in the impugned order, in our opinion, were sufficient to arrive at the subjective satisfaction that it was essential in public interest to order the amalgamation of the two companies. This is not a case of exercise of powers for any extraneous considerations or alien purposes. At this stage, the commodities sellers defaulted on their outstanding payments obligations to the Trading Clients to the extent of almost Rs. 5600 crores. The NSEL also sought to wriggle itself out of its obligations by contending that the counter guarantee was to apply only in relation to specified commodities and since none had been specified, the counter guarantee was in effective. The settlement guarantee fund to be maintained by NSEL and which was stated to be Rs. 738.55 crores as on 1st August 2013, was, on 4th August 2013 found to be only Rs. 62 crores. Even though the transactions at the spot exchange were to be backed by commodities supposedly checked and stored in warehouses owned and controlled by NSEL, SGS India Limited, which was appointed to inspect and audit the position, reported that stock worth only Rs. 358 crores was available, even though, NSEL, had solemnly stated that it has stocked valued at Rs. 2389.36 crores. This means that there was hardly any stock in the warehouses with which deliveries could be effected. All this, left the Trading Clients in a lurch. The impugned order details the nexus between NSEL and FTIL, in the context of the crisis, which led to the collapse of the spot exchange. For all these reasons, we are unable to fault the impugned order applying the test of Wednesbury unreasonableness. The conduct of the affairs of stock and commodity exchanges is of vital importance to the national economy. Stock and commodity exchanges provide vital hubs for investors and traders to trade in share and commodities. Commerce in modern economy is inconceivable without them. The perception of Indian economy, both locally and abroad, depends to a large extent on the functioning and the health of its stock and commodity exchanges. The failure of a national level commodity exchange under circumstances as stated in the impugned order, is clearly, a matter of serious concern. It is reported that almost 99.99% of the ostensible spot trading in commodities in the entire country was taking place on the NSEL spot exchange. The paired contracts offered by NSEL, which were in breach of the conditions of exemption notification, alone accounted for a turn over of Rs. 1,34,000 crores between the years 2009 to 2013. If exchanges such as these are permitted to be subverted or fail without honouring their obligations and commitments, the confidence in national economic institutions is bound to suffer and the repercussion to the national economy will be severe. In such situations, a negative perception about the business environment of the country is created, which has grave repercussions on the national economy. The Central Government, quite conscious of all such factors, has taken a balanced decision in the facts and circumstances of the present case. Therefore, in the facts and circumstances of the present case, even upon exercise of intensive review and the application of the test of proportionality, we see no reason to interfere with the impugned order.

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• Insolvency & Bankruptcy

• 2017 (12) TMI 337
  Corporate Insolvency Resolution Process - authority of advocate issuing notice - Held that:- In the present case as the demand notice has been given by an advocate and there is nothing on record to suggest that the advocate in question holds any position with or in relation to the respondent - Dolphin Offshore Enterprises (Mauritius) Pvt. Ltd. and the demand notice has not been issued in mandatory Form 3 or Form 4, as stipulated, under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the initiation of resolution process cannot be upheld. This no other option but to set aside the impugned order.

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• 2017 (12) TMI 336
  Corporate insolvency procedure - Held that:- The Operational Creditor who has initiated this Insolvency Proceeding has also sent mail to the Corporate Debtor for closing the Insolvency Proceeding. Other operational creditors whose claim was submitted to the resolution professional, i.e. Poonam Enterprises Pvt. Ltd. has also settled the matter with the corporate debtor and accepted the post-dated cheques on account of the settlement of dues to the corporate debtor. Therefore, it is clear that operational creditors’ claim has been settled with the corporate debtor and financial creditor Punjab National Bank itself has certified that accounts of the corporate debtor are classified in their books of accounts as a standard asset. So, in this condition it is clear that no debt is outstanding as on today on the corporate debtor and Committee of Creditors with 100% own shares has made a recommendation for closing the Insolvency Proceedings. Given the resolution passed by Committee of Creditors Resolution Plan submitted by the Resolution Professional deserves to be accepted. The Resolution Plan submitted by Shri Arun Kumar Gupta as approved by the Committee on Creditors is at this moment accepted, and insolvency proceeding is closed accordingly.

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• Service Tax

• 2017 (12) TMI 334
  Demand of tax - cum tax benefit - the value of service shown in their profit and loss account was different that declared in their ST-3 return - Held that: - the appellants have not paid service tax on the total taxable value declared by them in their ST-3 return and consequently a demand of Rs. 4,59,665/- has been confirmed. The appellant in their appeal memorandum have contended that they have already paid this amount vide TR 6 challan which they claimed to have attached to their ST 3 return. The appellant had claimed that they will produced the said evidence during the hearing before Tribunal however no such evidence have been produced. In these circumstances there is no option but to confirm the said demand. Extended period of limitation - Held that: - The appellants have not disputed that the figure show in their ST-3 Return did not match with the figures shown in their balance sheet. In these circumstances invocation of extended period of limitation is justified. Simultaneous penalty u/s 76 and 78 - It has been argued that after 10.5.2008, when the act was amended, penalties under both these Section cannot be imposed simultaneously - Held that: - The appellant in their grounds of appeal, have not given any reason why the same finding needs to be disturbed. Consequently imposition of penalty under Section 76 & 78 is upheld. Penalty u/s 77 - Held that: - The appellants have not filed the S.T.3 returns in proper time and therefore penalties under Section 77 have rightly been imposed. The matter is remanded to the original adjudicating authority for redetermination of duty after granting cum tax benefit on receipt basis - appeal allowed in part and part matter on remand.

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• Central Excise

• 2017 (12) TMI 333
  Maintainability of appeal - Section 35-G of the CEA, 1944 - It is contended that, this Court does not have jurisdiction to entertain these appeals, and notwithstanding the fact that the appeals have been admitted, jurisdiction cannot vest in this Court when such jurisdiction is not specifically prescribed by the Statute - Held that: - the issue which we are called upon to adjudicate, would lead to a decision (if the appellant succeeds) determining the question of the rate of duty of excise, on the goods, which the respondent sells to the consumers, and the assertion of the appellant that the exemption granted cannot be made applicable. This would lead to permitting the appellant to impose higher rate of duty of excise on the value of the goods, in relation to which the impugned order has been passed - as the subject matter of both these appeals are squarely covered by the prohibition flowing from Section 35-G. Both these appeals would not be maintainable before this Court. Appeal dismissed on the ground of maintainability.

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• 2017 (12) TMI 332
  Penalty - Section 11A of the CEA, 1944 - Held that: - when action of the assessee cannot be said to be mala fide or that there is no finding of fact of the assessee having perpetuated fraud, collusion or having made willful mis-statement or suppression of facts, the Assessing Officer could not have exercised his power u/s 11A within the extended period of limitation so provided in terms of the proviso contained therein - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 331
  SSI Exemption - dummy units - clubbing of clearances - N/N. 8/2001 - validity of SCN - Held that: - different SCN was issued to the units demanding separate duty from each of the Units. If the revenue is of the view that both the units are not independent and are same, in that case the SCN should have been issued only to the actual alleged manufacturer and the duty demand should have been made against it. The SCN and the impugned order proceeds to demand duty from both the units without alleging/ holding as to which of the unit is actual manufacturer and which is dummy manufacturer. Such issuance of separate SCN and separate demand from each of the units itself recognizes the separate and independent legal entity of each unit - the ratio of Hon’ble Supreme Court judgment in the case of Gajanan Fabrics Distributors [1997 (5) TMI 50 - SUPREME COURT OF INDIA] is squarely applicable, where it was held that By confirming the demand upon all the seven units the Collector appears, however, to have treated them all as assessees and, implicitly recognised their independent existence - no demand of duty can be made from the Appellants. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 330
  Clandestine manufacture and removal - records of wastages - non-recording of actual production figures - Held that: - Though it is indeed surprising why production reports of a kind not relevant for the end product were kept, if 25% wastages were to be generated subsequent to that stage of operation. No professionally managed Company will keep records where there is no wastage, especially of steel coil, and will definitely keep records of & at wastage points to collect the data and steady reason and reduce such wastage - The admission of the officers of the assessee that dispatch figures were recorded and not actual product figures in the RG 1, itself leads to the establishment of the charge that Actual production figures was not recorded and dispatch figures in this case are doubtful. Therefore, it can be established that actual production has not been recorded. Such actual production is not found in the factory, there is established charge of removal of set on invoices - charge of unaccounted production and its clandestine removal is thus established. The Tribunal had upheld the charges of removal of goods but remanded only on limited aspect of reworking of demand and the above findings of the Tribunal was not challenged before higher forum by the assessee - the re-quantification of demand cannot be undertaken at this stage since it involves the detail inspection of the records and documents. Further the modvat aspect for the purpose of quantification has also to be looked into. It is appropriate to remand the case back to the adjudication authority for limited purpose of quantification - appeal allowed by way of remand.

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• 2017 (12) TMI 329
  Refund of excess duty paid - unjust enrichment - Held that: - M/s Swan Mills had paid duty on Yarn used captively in manufacture of Fabrics which was otherwise not exempted - The Commissioner (Appeals) while remanding the case to the adjudicating authority had directed to take assistance of Assistant Director (Cost) to ascertain as to whether the incidence of duty was passed on or otherwise. The Deputy Commissioner got verified the books of accounts from the Assistant Director (Cost) and held that incidence of duty was not passed on and refund claim filed from the date of knowledge was within time - also, the Bar of unjust enrichment would not apply for refunds which has arisen out of deemed finalization of assessment i.e from the AD(cost) report/ certificate in which it was shown that the incidence of duty was not passed on. Time limitation - Held that: - the refunds cannot be rejected on the grounds of time bar - reliance placed in the case of Commissioner of Central Excise, Raipur Versus M/s. Simplex Engineering & Foundary Works P. Ltd [2015 (11) TMI 662 - CESTAT NEW DELHI]. In absence of anything contrary on record to such cost report the unjust enrichment and issue of time bar would not arise and the same cannot be grounds to reject the refunds - refund allowed - appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 328
  SSI Exemption - dummy units - clubbing of clearances - Test of legality and propriety - Held that: - it is seen that the entire case has been premised on the electricity consumption, or its lack thereof, in the two entities that were concerned in the alleged collaboration to evade duty. The peremptory disposal of the submission of the appellants on the justification for the electricity consumption and of the Chartered Engineer's certificate without having produced it before the adjudicating authority or during the investigation as inadmissible at the appellate stage is indicative of lack of application of mind. If the appellate authority was of the view that the defence of the appellant placed before him had not been made available to the lower authority, principles of natural justice requires that such evidence that are intended to counter the allegations leveled in the show cause notice should have been referred back to original authority or considered in detail. The impugned order fails the test of legality and propriety and is set aside to enable consideration of the material that is claimed by the Learned Consultant to be crucial - matter remanded back - appeal allowed by way of remand.

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• 2017 (12) TMI 327
  Refund claim - delay in filing refund claim - section 11B of Central Excise Act, 1944 - Held that: - The motor vehicle having been consumed for the purpose for which the exemption was intended and there being no reasonable cause to presume that legislature intended the withholding of the burden only for such consumption within a limited period, the failure to file the refund claim within the time frame prescribed in the impugned notification should not lead to denial of the claim if it did not exceed the limit prescribed in section 11B of CEA, 1944 - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 326
  Default in monthly payment of dues - rule 8(3A) of Central Excise Rules 2002 - contention of the appellant that the show cause notice was issued on 27th August 2008 when the restriction imposed in rule 8(3) of Central Excise Rules, 2002 was no longer application to them - scope and intent of rule 8 of the Central Excise Rules, 2002 - penalty u/r 15(2) of CCR - Held that: - It is clear from the records that appellant had defaulted in the payment of dues during the months of May, August and September, 2007 and that the privilege of consolidated monthly discharge of duty liability was no longer available to them till November 2007 when the outstanding were erased. These facts are not disputed by appellant. Cognizance was taken of those derelictions about nine months later when the show cause notice for recovery was issued. Though the appellant had debited CENVAT account for discharging a portion of the duty liability that transaction had been received subsequently. The proposal in the show cause notice show cause notice for recovery of the amount paid through debit in CENVAT credit has been rendered infructuous as also the appropriateness of the said amount in the order of the original authority. Therefore, all that remains insofar this appeal is concerned are the penalties imposed under rule 15(2) and rule 25 of the CENVAT Credit Rules, 2004 to which reference may be made here. In view of the fact payment had been made in full along with interest before the issue of show cause notice the penalties imposed by the original authority and affirmed in the impugned order are set aside Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 325
  Clandestine removal - classification of goods - Flock printing of fabric - case of appellant is that the fabric partly covered with flock for design purpose is clearly excluded from heading 5907 therefore demand raised considering classification under 5907 is not sustainable - Held that: - As per tariff entry though after the main heading with one dash description is given as fabric covered partly or fully with textile flock or with preparation contained textile flock, however as per chapter note 5(c) the fabric partly covered with flock and bears designs resulting from this treatment is excluded from heading 5907. From the combined reading of Tariff entry and chapter note 5(c)., it is found that flock print on the fabric which resulted into design, the said flock printed fabric is excluded from heading 5907 and if the fabric is though printed with flock but it does not result into design, the said fabric will be classifiable under 5907 - In this fact of the present case there is no dispute that flock printing was done for the purpose of design, therefore we are of the clear view that flock printed fabric with design is not classifiable under 5907. After rejection of the proposal of the department regarding classification of subject goods under 5907, correct classification under 52,54,55 must be arrived at. This aspect has not been considered by the adjudicating authority - There is also a dispute that if the flock printing is done without aid power then product may not be dutiable, however this also the matter of facts which require a relook - issue of limitation is also kept open - appeal allowed by way of remand.

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• 2017 (12) TMI 324
  CENVAT credit - plates, shape and section, M.S. Angles, G.P. Coil/Sheet, H.R. Coil, C.R. Strip, M.S. Channels, etc - denial on the ground that these items had been used either for repair and maintenance of plant and machinery or modification of their existing plant and machinery - movability/marketibility - Held that: - the issue of Cenvat credit on the items in question has been decided in favor of appellant-assessee, in the case of India Cement Ltd. Vs CESTAT, Chennai [2015 (3) TMI 661 - MADRAS HIGH COURT] wherein the goods had been used as support structural of capital goods or for modification of plant and machinery - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 323
  Interest on refund - Relevant period - Submission of appellant is that anti-dumping duty cannot be levied during intervening period i.e. between the period of expiry of provisional notification and issuance of definitive levy notification - Held that: - harmonious reading of the provisions contained in Section 11B and Section 11BB demonstrates that an order of refund under Section 11B(2) is pre-requisite and default in carrying out the provision of Section 11B gives rise to interest - it is difficult to entertain the prayer of the appellant for grant of interest from the date of deposit of the amount made - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 322
  Refund/re-credit of amount debited by appellant - amount debited for pre-deposit of penalty, which does not sustain - Held that: - there is no dispute that Rs. 4,40,000/- were debited on 31.01.2003 through Entry No. 1921 by the appellant. Said debit was not for payment of any duty of Excise or Service Tax. Further, the said debit was not for reversal of credit for removal of any inputs or capital goods - the appellant is entitled for re-credit of the said debit - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 321
  Scope of SCN - it was submitted before the Original Authority that the goods covered by the invoices stated in the show cause notice were purchased from outside and exported as such and therefore, such goods did not require following any procedure of Central Excise - Held that: - the said SCN did not establish that the goods covered by the invoice numbers stated therein were manufactured by the appellant - Also, Revenue did not discharge its burden to prove that the goods exported through the invoices stated in the said show cause notice were manufactured by the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 320
  CENVAT credit - input service - repair, renovation and modernization of machinery - repair and renovation of factory building and repairing of outside godown - carry bags which were used for export of Cigarettes - also some invoices could not be located - Held that: - Cenvat credit of Service Tax Rs. 2,27,102/- paid on input service utilized for repair, renovation and modernization of machinery is allowed - Cenvat credit of Central Excise duty paid on carry bags which were used for export of Cigarettes is also allowed. I also accept the grounds related to Cenvat credit of Rs. 1,30,595/- which was related to the invoices which could not be located since the same was debited along with interest before issue of the said Show Cause Notice dated 07/05/2014. Therefore, there was no legal requirement to show cause and adjudicated the same. CENVAT credit in respect of Rs. 53,234/- on works contract service is not allowed. Appeal allowed in part.

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• 2017 (12) TMI 319
  Penalty u/r 173Q of CER, 1944 - scope of SCN - case of appellant is that in the present SCN there was no allegation related to either collusion or suppression or willful statement, etc. and therefore, penalty imposed is not in accordance with provisions of Rule 173Q of CER, 1944 - Held that: - there are no ingredients in the said SCN, which indicated that the matter was related to either collusion or suppression or willful statement, etc. and therefore, Section 11AC of the CEA, 1944 was not invocable and therefore, the penalty u/r 173Q of CER, 1944 of said rules was not imposable in the present case - appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 318
  Whether the Commissioner (Appeals) have rightly dropped the demand raised u/r 8(3A) of CER, 2002? Held that: - on the date SCN was issued there was no default on the part of the appellant - further, SCN is issued invoking the extended limitation without there being any ground for invocation of extended period, as is evident from the show cause notice - SCN not maintainable - appeal dismissed - decided against Revenue-appellant.

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• 2017 (12) TMI 317
  Demand on interest - whether the ld. Commissioner (Appeals) have rightly directed payment of interest on the amount deposited during investigation, which was lying with the Department and thereafter no SCN was issued? - Held that: - the issue is squarely covered by the ruling of this Tribunal in the case of Toyoto Kirloskar Auto Parts Pvt. Ltd. [2008 (9) TMI 345 - CESTAT, Bangalore], where it was held that the appellant is entitled for interest on the amount, which has been withheld by the Department unlawfully from the date of deposit. The Adjudicating Authority is directed to grant interest from the date of deposit till the date of refund of the principal amount as per the rates in force at the relevant time - appeal dismissed - decided against Revenue.

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• 2017 (12) TMI 316
  CENVAT credit - capital goods installed in the factory - formation of joint venture by the appellant with 51% share - case of the department is that new joint venture was created and foam division was transferred to such joint venture, it is removal of capital goods from the appellant to joint venture. Therefore such capital goods and input lying in the joint venture premises is liable for payment of duty in accordance with Rule 3(5) CCR, 2004 - Held that: - there is no dispute that the capital goods and input on which credit was availed by the appellant and subsequently the creation of joint venture it was used by the joint venture but such goods were not removed from existing premises. The payment of duty is required to be made under Rule 3(5) only in such case whether the goods are removed from the factory. In the present case admittedly the goods were lying in the same premises and was not removed, provision of Rule 3(5) shall not apply. Identical issue decided in the case of M/s. L.G. BALAKRISHNAN AND BROS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, TRICHY [2016 (6) TMI 829 - CESTAT CHENNAI], where it was held that when there is no removal of goods under cover of invoice, as provided under rule 9, there is nothing in Rule 3 (5) to invoke the deeming fiction as insisted by the department. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 315
  Refund claim - unjust enrichement - applicability of Section 11B and Section 12B of CEA, 1944 - Held that: - there was no order on record establishing provisional assessment of the goods and order finalizing the provisional assessments - the contention of the appellant that since the duty was paid under protest and Rule 233B of the said Rules, 1944 were followed and, therefore, the provisions related to unjust enrichment are not applicable in the present case is not tenable in law for the reason that Rule 233B of said Rules has no bearing on limitation for calculation of period for eligibility of limitation for refund u/s 11B of CEA, 1944 - appeal dismissed - decided against appellant.

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• 2017 (12) TMI 314
  CENVAT credit - manufacture of dutiable as well as exempt goods - Un-Denatured Ethyl Alcohol/ Rectified Spirit - Whether Un-Denatured Ethyl Alcohol/ Rectified Spirit manufactured by the assessee are "exempted goods" in terms of Rule 2(d) of the CCR, 2004 and consequently, whether the provisions of Rule 6(3) of the CCR, 2004, apply to the present case? - Whether the assessee is liable to pay 10% of the value of Un-Denatured Ethyl Alcohol/Rectified Spirit at all in terms of Rule 6(3)(b) of the Cenvat Credit Rules, 2004?? - Held that: - Under CCR, 2004, where an assessee manufacturer dutiable and non-dutiable product from the same input, Rule 6(2) provides that the manufacturer has to maintain separate accounts and inventory of the inputs used in dutiable and non-dutiable products. If it is not possible to maintain such separate accounts, Rule 6(3) demands payment of an amount as calculated under Rule 6 (3)(a) or 6(3) (b) - Admittedly, the appellants have not maintained separate accounts. However, after January, 2006, the appellants reversed 10% of the price of Un-Denatured Ethyl Alcohol in terms of Rule 6(3)(b). Whether with effect from 01.03.2005 Un-Denatures Ethyl Alcohol is an exempted product-as alleged by department or non-excisable product as contended by appellant? - Held that: - The erstwhile Tariff Heading 22.04 covered by both Denatured and Un-Denatured Ethyl Alcohol. The Denatured Ethyl Alcohol was subject to 16% duty. Alcohol other than Denatured Ethyl Alcohol (Un-Denatured Ethyl Alcohol) carried "NIL" rate of duty. In the revised Tariff Schedule (w.e.f. 01.03.2005), there is no corresponding Heading/sub-heading for Undenatured Ethyl Alcohol. The Central Excise as well as Customs Tariff was aligned and in the Customs Tariff Schedule 'Un-Denatured Ethyl Alcohol' falls under Tariff heading 22.08. is left blank without mentioning any goods. From the above, it can be seen that the arguments of the learned counsel for appellant that w.e.f. 01.03.2005, Un-Denatured Ethyl Alcohol is non- excisable is not without force. Un-Denatured Alcohol are not specified goods under Rule 6(3)(a) and the demand is unjustified - appellant is not liable to pay 10% of the price in terms of Rule 6(3)(b) of CCR, 2004. Appeal allowed - decided in favor of appellant.

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• 2017 (12) TMI 313
  CENVAT credit - welding electrodes - SS Coil - MS Angles - MS Channels - Joists - Held that: - reliance placed in the case of Singhal Enterprises Private Ltd. v/s Commissioner Customs & Central Excise [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 - credit allowed on welding electrodes. CENVAT credit - SS coil - Held that: - this has been used in Juice Sulphiter and raw juice through lining, in the factory of production. As they do not qualify under definition of capital goods, the same are covered under the definition of input and credit taken accordingly - there is no dispute that these items have been used in the factory of production for manufacture of taxable/dutiable goods - credit allowed. CENVAT credit - MS Angles - MS Channels - Held that: - MS Angles are used in enhancing the capacity and modification of dryer house equipment, namely sugar beater, hopper, etc. These angles have also been used for staging and supporting structures of equipments, but not used as civil work. Accordingly, these angles, etc., qualify as capital goods for Cenvat Credit - Further MS channel have been used in expansion and modification of dryer house equipments, namely sugar beater and hopper etc. to give support and strengthening the same. Admittedly, these goods have not been used as civil construction item. Thus, these angles and channels quality as for Cenvat Credit as inputs - credit on both items allowed. CENVAT credit - Joist - Held that: - Joist have been used in staging of Juice Sulphiter, Juice weighing scale and sugar beater. Joist have been used as supporting structure of equipment in the factory of production but, not used in civil work, admittedly - joist also qualifies for Cenvat Credit. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (12) TMI 312
  Validity of reassessment proceeding - Section 29 of the U.P. VAT Act, 2007 - interpretation of statute 'reason to believe' - escapement from tax - deemed sale of construction material - Held that: - the jurisdiction to reassess the petitioner could arise under Section 29 only if after the petitioner's assessing authority records a valid 'reason to believe' as is the requirement of the Act itself - it cannot be gain said that at present merely a show cause notice has been issued to the petitioner and that it would be open to the petitioner to establish that no taxable event had occurred during the assessment year 2008-09 (U.P.). That plea may be permitted to be raised and may be sustained if the proceedings in which or with reference to which such plea is raised are those of regular assessment and not of reassessment. In the course of regular assessment proceedings it is open to assessing authority to raise all his doubts, suspicion and seek clarification on the same from the assessee. There is not even any information with the assessing authority of the petitioner as to any turnover having escaped assessment. The petitioner's assessing authority in fact desires to conduct a fishing and roving inquiry to explore the possibility of escapement of turnover, though at present he does not appear to have with him any material that may lead to formation of a 'reason to believe' as to escapement of any part of the petitioner's turnover - It being a jurisdictional issue that goes to the very root of the matter, the revenue cannot plead that the assessee may be first required to show cause without the revenue first satisfying this Court that it had jurisdiction to reassess the petitioner. Then, the jurisdiction to reassess the petitioner cannot be claimed merely because in subsequent assessment years the petitioner has been subjected to tax and the assessing officer wants to explore a possibility if similar liability may arise in the present year as well. There must exist relevant material with the assessing authority to claim occurrence of the taxable event and further that such event occurred during the Assessment Year in question and that it escaped assessment. The fact situation of the present case admits of no doubt that the taxable event of deemed transfer of construction material never occurred during the A.Y. 2008-09. Though the petitioner admitted to have started making the constructions in that assessment year but the petitioner denied existence of any contract to either book or sell any flat/apartment or unit etc. during the assessment year in question. Being a negative fact, the petitioner could not have lead any evidence in support thereof. In any case being reassessment proceedings, the burden was on the revenue to disclose material to establish otherwise. The assessing authority does not have any material to prove or allege otherwise. Therefore, the revenue cannot assert that any taxable event occurred. Consequently, in absence of taxable event having occurred, the revenue could not have also alleged that any turnover ever escaped assessment at the hands of the petitioner in that year. The reassessment issue notice in the present case dated 2.3.2017 and the sanction order dated 25.2.2017 are wholly without jurisdiction and consequently deserve to be quashed - petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2017 (12) TMI 335
  Renewal of license denied - application received, after the expiry of the licence period - Held that:- Having regard to the orders made in W.P. filed by Harshini Recreation Club, represented by its Secretary against the Commissioner of Prohibition and Excise, Chennai and another, and after, obtaining opinion from the learned Advocate General, the Commissioner of Prohibition and Excise (i/c), Chennai has sought for necessary amendment, to Rule 21 of the Tamilnadu Liquor (Licence & Permit) Rules, 1981. The proposed amendment intended to be made in Rule 21 is that, an application for renewal of licence, received, after the expiry of the licence period i.e. 31st March of the concerned year, will not be considered and that the licence, already granted will be deemed to be cancelled. In the light of the decisions, the amendment proposed, fortifies our view that, as per the existing rule, belated applications for renewal of licences, can be entertained, subject to the applicant, offering good and sufficient reasons for the delay and on payment of additional fee of 25% of the prescribed licence fee, ie., an application filed even after 31st March , can be considered. Amendment is yet to be made. Existing rule position, as on today, in Tamilnadu Liquor (Licence & Permit) Rules, 1981, has been understood by the department and therefore, amendment has been sought for. Going through the reasons, assigned by the writ Court, we do not find any merit in the instant writ appeals.Hence, the writ appeals are dismissed.

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