TMI Tax Updates - e-Newsletter
February 1, 2017

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

TMI SMS

• Universal Basic Income (UBI) - UBI is a powerful idea whose time even if not ripe for implementation, is ripe for serious discussion

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• Distinction between detention & seizure of the goods, if any, was lost, as the Dept. didn't release goods in derogation of its own circular

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Articles

1. WHY THERE IS A HIGH DEMAND FROM THE MEJORITY PEOPLE OF INDIA TO INCREASE THE I.T. EXEMPTION LIMIT TO ₹ 5.00 LAKH?

   By: krishna murthy

2. FACTORY BUILDING – A PLANT?

   By: DR.MARIAPPAN GOVINDARAJAN

3. Union Budget 2017-18: Key expectations and highlights

   By: Bimal jain

News

1. Service Tax —Monitoring of Non-Filers/Stop-Filers & Widening of Taxpayer base- Reg

2. Finance Minister Shri Arun Jaitley Presented Economic Survey 2016-17 in the Parliament today

3. Economic Survey: The Constitutional Amendment on GST will create a common Indian market, improve tax compliance and governance and boost investment and growth

4. Economic Survey: Universal Basic Income (UBI) Scheme an alternative to plethora of State subsidies for poverty alleviation; JAM and Center State cost sharing prerequisite for a successful UBI

5. Economic Survey 2016-17 suggests setting up of a centralised Public Sector Asset Rehabilition Agency

6. GDP growth in 2017-18 is projected at 6 ¾ to 7 ½ percent Post-demonetisation

7. Good fiscal performance by States should be incentivized to keep the overall fiscal performance on track: Economic Survey 2016-17 Centre should take the lead in sound fiscal management suggests Economic Survey

8. Apparel and Leather industry key to generation of formal and productive jobs: Economic Survey 2016-17 Economic Survey recommends reforms in labour and tax policies to make the Apparel and Leather sector globally competitive

9. Redistributive Resource Transfers (RRT) should be significantly linked to fiscal and governance efforts on the part of the states: Economic Survey 2016-17

10. Property Tax can be tapped to generate Additional Revenue at City Level

11. In creating one Economic India, Technology, Economics and Politics are Surging Ahead Survey suggests that it is Time for the Laws to catch up and facilitate this Internal Integration

12. Real per capita GSDP between 1983 and 2014, shows across-the-board improvement: Economic Survey 2016-17 Improved health indicators in life expectancy Striking over performance of Indian States in fertility decline Shri Arun Jaitley presents the Economic Survey 2016-17

13. Economic Survey advocates reforms to unleash economic dynamism and social justice

14. Fiscal activism embraced by advanced economies not relevant for India: Economic Survey 2016-17

15. Income Tax Department (ITD) launches Operation Clean Money [स्वच्छ धन अभियान]

16. Economic Survey 2016-2017 - Finance Minister Shri Arun Jaitley Presented Economic Survey 2016-17 in the Parliament as on 31.1.2017

17. RBI Reference Rate for US $

18. Labour migration in India increasing at an accelerating rate, reveals new study: Economic Survey 2016-17

19. Text of PMs statement ahead of Budget Session of Parliament, 31.01.2017

20. Auction for Sale (Re-issue) of Government of India Floating Rate Bonds

Notifications

Service Tax

1. 6/2017 - dated 30-1-2017 - ST

Service Tax (Second Amendment) Rules, 2017

2. 5/2017 - dated 30-1-2017 - ST

Seeks to amend Notification No. 25/2012-Service Tax, dated the 20th June, 2012

Circulars / Instructions / Orders

Customs

1. STANDING ORDER NO. 76/2016 - dated 1-12-2016

Standard Operating Procedure consequent to commencement of “Document Processing Area” in the Parking Plaza and Gate Automation for Export & Import through NSICT / NSIGT, GTI & JNPCT;

Highlights / Catch Notes

Income Tax

• Supreme Court grants exemption u/s 10(37), quashes reassessment u/ss 147/148, overturning High Court decision.

  Case-Laws - SC : Claim for exemption u/s 10(37) denied - revenue contended that it was the voluntary sale and not the result of compulsory acquisition - SC overruled the judgement of HC - benefit of exemption allowed - reassessment u/s 147/148 quashed.
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• Satellite Income Accrual Misunderstood: Rule 9A Doesn't Apply to Accounting Methods or Section 145 of Income Tax Regulations.

  Case-Laws - AT : Addition about the satellite income - Accrual of income - The reliance placed by Ld. DR of Rule 9A appears to be misplaced as Rule 9A has no relation with the method of accounting as it nowhere deals with section 145 - AT
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• High Court Rules Against Net Profit Addition Based Solely on Provisional Account Without Supporting Evidence.

  Case-Laws - HC : Addition of undisclosed net profit - addition relying upon one piece of paper which was provisional P&L Account - here was no other material available with the AO - No Additin could be made - HC
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• Liaison Offices in India Not Considered Permanent Establishments for Tax Purposes Due to Auxiliary Functions.

  Case-Laws - HC : Taxability in India - whether the said offices (LOs) could be regarded as PE ? - Held No - the functions performed by the expatriates in the liaison office were of auxiliary character - an activity which aids and supports the Assessee in carrying on its main business, but not the business itself - HC
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Customs

• Authorities Overlook "Detention" vs "Seizure" in Failing to Release Goods, Ignoring January 4, 2011 Circular.

  Case-Laws - HC : The fine distinction between "detention" and "seizure" of the goods, if any, was lost, as the authorities chose not to release the goods in derogation of its own circular dated 04.01.2011 - HC
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• Revisional Authority's Order Overturned Due to Rank Parity with Appellate Authority in Gold Smuggling Case.

  Case-Laws - HC : Jurisdiction of revisional authority to take up the proceedings - smuggling of gold - since the rank of the Revisional Authority and that of the Appellate Authority was the same, the order passed by the Revisional Authority, could not be sustained. - HC
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• Importer Eligible for Concessional Customs Duty Despite Procedural Lapse; Substantive Conditions Met, Court Rules.

  Case-Laws - AT : Eligibility for Concessional rate of duty - BCD - denial on the ground that goods were cleared without examination under the 'Risk Management System' which was a consequence of the importer not having claimed the benefit of the said exemption - substantive benefit, if otherwise due, should not be denied merely because of minor procedural infractions. - AT
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Indian Laws

• Finance Minister unveils Economic Survey 2016-17, highlighting tax reforms, fiscal policy, investment growth, and economic challenges.

  News : Finance Minister Shri Arun Jaitley Presented Economic Survey 2016-17 in the Parliament as on 31.1.2017
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• Universal Basic Income: Exploring Its Potential to Transform Economic Reforms and Social Welfare Policies.

  News : Universal Basic Income (UBI) - UBI is a powerful idea whose time even if not ripe for implementation, is ripe for serious discussion
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Service Tax

• Reimbursable Expenses Excluded from Service Tax Valuation for Clearing and Forwarding Services per Statute.

  Case-Laws - AT : Valuation - Clearing and Forwarding services - since the service tax statute does not provide for inclusion of reimbursable exposes therein, the same should be outside the scope and purview of Levy of Service tax - AT
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• Taxable Services Confirmed for June 2007 to September 2008, Limited to Commercial or Industrial Construction Services Only.

  Case-Laws - AT : Works contract service - even as the services rendered by assessee are taxable for the period from 1st June 2007 to 30th September 2008 the narrow confines of the SCN do not permit confirmation of demand of tax on any service other than commercial or industrial construction service' - there is no scope for vivisection to isolate the service component of the contract. - AT
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Central Excise

• Petroleum Products to COCO Outlets: Valuation Not Covered by Rule 8 of Central Excise Valuation Rules, 2000.

  Case-Laws - AT : Valuation - petroleum products cleared from terminal point to company owned and company operated (COCO) outlets - Rule 8 of Central Excise Valuation Rules, 2000 cannot be applied which is applicable only in a situation where entire production of a particular commodity is captively consumed - AT
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• CENVAT Credit Approved for Input Services: No Exclusions Found u/r 2(l) Clauses (A), (B), (BA), and (C).

  Case-Laws - AT : CENVAT credit - various input services - none of the services availed are barred by exclusions (A) (B) (BA) and (C) in Rule 2 (l) of the CCR, 2004 - credit allowed - AT
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Case Laws:

• Income Tax

• 2017 (1) TMI 1379
  Entitlement to benefit of section 44BB(1) on the income from contracts of non-PSC companies or such receipts would be taxable u/s. 115A/44DA as per normal provisions of the Act - Held that:- This issue is squarely covered by the order of ITAT, Delhi Bench in the case of SBS Marine Ltd. vs. ADIT (Intl. Taxation) [2015 (3) TMI 147 - ITAT DELHI ]in favour of the assessee wherein held that the revenue’s reliance on section 9(1)(vi) to categorize the assessee’s income for hire of vessels as ‘royalty’ is also not correct since clause (iva) of section 9(1)(vi) excludes amounts referred to in section 44BB. The other arguments, decisions relied on by the learned DR including the one on ‘Base erosion profit shifting’ are also not relevant in the factual matrix of the present case and considering what we have already held. In view of the above, we hold that the income of the assessee for the year under consideration is to be computed in accordance with section 44BB of the Act.- Decided in favour of assessee. Inclusion of Service Tax and Vat in gross amount for the purpose of deeming profit @ 10% u/s 44BB - Held that:- The service tax and VAT are statutory dues which are paid to the Government as liability of the assessee. A perusal of the record as well as the assessment order nowhere reveals that the Service Tax and VAT have been separately charged by the appellant company on the bills. The record further does not reveal whether the assessee has separately accounted for the amounts of Service Tax and VAT so charged, in the books of account. The assessment order also does not whisper anything as to whether the Service tax and VAT have been charged by the appellant company in terms and conditions of the agreements. These aspects, in our opinion, need proper examination and verification at the stage of Assessing Officer before deciding the question whether the Service Tax and VAT charged by the assessee would form part of the receipts or not. We, therefore, direct the AO to examine – (i) the procedure for collecting the Service Tax and VAT; (ii) whether the assessee has issued bills for charging Service Tax & VAT and if yes, whether the Service Tax and VAT have been separately charged in the bills or not and (iii) whether the Service Tax and VAT have been separately accounted for and have been accordingly paid to the Government. Accordingly, this issue is restored to the file of Assessing Officer for deciding the same afresh Interest received on Income-tax Refund - should be taxed @ 15% under Article 12 of DTAA, treaty with UK or should be taxed @ 40% as per normal provision of the Act - Held that:- This issue is covered against the assessee by the decision of Uttaranchal High Court in the case of assessee itself [2015 (5) TMI 1036 - UTTARAKHAND HIGH COURT ] wherein it has been held that interest on Income-tax Refund is taxable @ 40%. Taxability on reimbursement of expenses - Held that:- This issue is covered against the assessee and in favour of the Revenue by the decision of Hon’ble Uttarakhand High Court in the case of CIT vs. Halliburton Offshore Services Inc. [2007 (9) TMI 230 - UTTARAKHAND HIGH COURT] wherein held Sec. 4 is the charging section of the IT Act and definition as well as the incomes referred in ss. 5 and 9 are for the purpose of imposing the income-tax under s. 143 (3). Sec. 44BB is a complete code in itself. It provides by a legal fiction to be the profits and gains of the non-resident assessee engaged in the business of oil exploration @ 10 per cent of the aggregate amount specified in sub-s. (2). It is not in dispute that the amount has been received by the assessee company. Therefore, the AO added the said amount which was received by the non-resident company rendering services as per provisions of s. 44BB to the ONGC and imposed the income-tax thereon

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• 2017 (1) TMI 1378
  Validity of reopening of assessment - on money paid by assessee in respect of land - Held that:- From the reasons recorded, it appears that all the allegations are with respect to Shri Kamal M. Gohil and ISCON Group and in most of the transactions, which are referred in the reasons recorded, the petitioner – assessee is not at all connected. So far as the petitioner – assessee is concerned, the petitioner – assessee is connected with the transactions with respect to the lands situated at Sanathal, Taluka Sanand in which as observed hereinabove the petitioner – assessee is the purchaser, who has paid the entire sale consideration by cheques and as observed hereinabove, there is no allegation whatsoever that any on money is paid by the petitioner – assessee. Under the circumstances on the ground that there is no tangible material available with the Assessing Officer to form an opinion that the income chargeable to tax has escaped the assessment in the case of the petitioner – assessee, the Assessing Officer is not justified in reopening the assessment on such belief, which has no base. Under the circumstances, on the aforesaid ground alone, the impugned reassessment proceedings deserves to be quashed and set aside. - Decided in favour of assessee

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• 2017 (1) TMI 1377
  Wife of the assessee in default as proceeded against for the income-tax dues - recovery proceedings - Held that:- The petitioner has produced two documents to contend that the consideration paid, as seen from Exhibit P1, is in consonance with the consideration as seen from the documents produced, being Exhibits P3 and P4. The Revenue has refuted such contention and has also produced, along with its counter affidavit, two documents as Exhibits R1(b) and R1(d) to contend that the consideration was inadequate. These are factual issues, which are to be examined by the original authority, on the basis of the location of the properties and the then prevalent market value. The contention of the petitioner that the property did not have a proper access and, hence, was not of value but for the petitioner who has the adjoining land, cannot be countenanced for two reasons. The title deed produced at Exhibit P1 in its Schedule shows a pathway on one of the boundaries. Then there is nothing produced to show that the adjoining property belongs to the petitioner. The boundary shown in the Schedule also does not indicate a property belonging to the petitioner to be adjoining to the subject property. Be that as it may, the question of under-valuation having not been specifically considered in Exhibit P9, the same would have to be considered. The petitioner would appear before the Tax Recovery Officer within two weeks from the date of receipt of a certified copy of the judgment and file objections producing documents, if any, within that time. The Tax Recovery Officer would grant an opportunity for hearing within two weeks therefrom and pass orders within two weeks from the date of hearing. It is made clear that the directions are issued by this Court itself, since otherwise the time would run out on notice being issued and hearing being posted by a further notice.

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• 2017 (1) TMI 1376
  Reopening of assessment - addition on LTCG - Held that:- Considering the material produced by the petitioner – assessee, the Assessing Officer framed the assessment under Section 143(1) read with Section 147 of the Act and it appears that addition of Rs. 1,66,997/- was made to the total income of the petitioner – assessee towards long term capital gain. Thereafter, again reassessment proceedings have been initiated on the very ground doubting the genuineness of the bills, vouchers etc. for cost of improvement and doubting the long term capital gain claimed by the petitioner – assessee. It does not appear that there is any further material collected by the Assessing Officer after the assessment under Section 143(3) read with Section 147 of the Act was framed, and therefore, the impugned reopening is nothing but change of opinion by the successor Assessing Officer - Decided in favour of assessee.

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• 2017 (1) TMI 1375
  Substantial question of law - Assessment done u/s 153A - addition made on account of 'unaccounted purchases - Held that:- The learned counsel for the appellants had re- worded the substantial questions of law as framed in the appeal memoranda and as framed by this court at the stage of final hearing as on June 14, 2016 as above. It is evident from a reading of section 260A of the Income-tax Act that the appeal would lie to this court from an order of the Income-tax Appellate Tribunal only if there is a substantial question of law that arises for consideration. In Vijay Kumar Talwar's case (2010 (12) TMI 2 - Supreme Court of India ), the Supreme Court has held that it is mandatory for the High Court to formulate the substantial question of law on which the appeal would be considered. But that the expression "a substantial question of law" is not defined in the Income-tax Act. However, it has acquired a definite connotation through various judicial pronouncements. The principle that if a finding of fact is not challenged as being perverse, the High Court is bound to accept such finding. Therefore, as no such substantial question of law has been framed and the questions pertain to findings of fact, which cannot be said to be perverse as it is evident that the books of account of the respondent had been rejected by the assessing authority, in which case the same books of account could not be relied upon in an addition on account of trade creditors and also for arriving at the closing stock. There is no substantial question of law that arises for consideration and the findings of the Tribunal cannot be said to be perverse, as the reasons assigned by the Tribunal are certainly acceptable and do not warrant interference.

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• 2017 (1) TMI 1374
  Validity of reopening of assessment - whether the reassessment proceedings u/s. 148 are illegal and without jurisdiction in the absence of any tangible evidence or material in respect of any undisclosed income and recording of requisite satisfaction in respect of any such undisclosed income or not? - Held that:- AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. In my view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Income Tax Department. Keeping in view of the facts the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. - Decided in favour of assessee

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• 2017 (1) TMI 1373
  Estimation suppressed professional receipts - Held that:- AO estimated suppression at Rs. 21,46,481/- to 13,06,481/- and even the CIT(A) confirmed the same without any basis. After going through the facts narrated by the AO, the same are only on the basis of conjunctures and surmises and not facts. The entire estimation is without any basis because the assessee on daily basis receives cash and deposits the same in the very same day in the bank account. This fact has been corroborated by the statement of Dr. Archana Sangeakar and the assessee himself, wherein, it is accepted by the Revenue that the receptionist collects consulting charges and the accumulated cash from the clinic is deposited in the bank account. Once this is the position that the estimation made by the AO and confirmed by the CIT(A) is without any basis. Thus a reasonable estimate offered by the learned Counsel for the assessee at Rs. 3,00,000/- is fair and reasonable. This estimation is for both the addition and AO is directed to add a sum of Rs. 3,00,000/- instead of Rs. 11,00,000/-. This two connected issues are allowed partly. Disallowance of foreign travel expenses of wife - Held that:- We find that Dr. Sheila Balsekhar, wife of the assessee is a gynecologist and she is assessed to tax independently. The assessee’s contention for claim of this expenditure was that he travelled to US along with wife on the call of children’s hospital Los Angles to study the process of setting up of the obesity clinic for children, but no such evidence was produced before the lower authorities or even now before us. In view of the above facts, we also confirmed the action of the lower authorities and dismiss this issue of assessee’s appeal.

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• 2017 (1) TMI 1372
  Penalty under section 271 (1) (c ) - Deduction u/s 80P (2)(a) (i) - Whether the assessee is eligible for deduction under section 80 P (2) (D) relating to income derived from investment in other cooperative societies? - Availability of deduction of expenses under section 57 regarding income from other sources - Held that:- It is a case where penalty has been levied by the assessing officer on a issue in respect of which Hon’ble Delhi High Court in assessee’s own case for the relevant assessment year under consideration had sent back the issue for re-adjudication before Ld. CIT (A), by framing specific question of law in respect of the deduction claimed by the assessee. When the Hon’ble High Court has framed substantial question of law, it becomes apparent that the addition is certainly debatable. The framing of a substantial question of law by Hon’ble High Court lends credence to the bona fides of the assessee in claiming deduction. Once it turns out that the claim of assessee could have been considered for deduction as per instructions, which is not completely debarred at all, the mere fact of confirmation of the disallowance of deduction would not per se lead to imposition of penalty. Since the addition in respect of which penalty has been levied by the authorities below has been held by the Hon’ble High Court to be involving a substantial question of law, in our considered opinion, penalty is not exigible under this section. We therefore are inclined to delete the penalty. - Decided in favour of assessee

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• 2017 (1) TMI 1371
  Penalty u/s. 271(1)(c) - Held that:- No satisfaction for concealment was recorded for penalty of in dispute. We further note the AO observed that assessee furnished inaccurate particulars of its income and is liable for penalty u/s 271(1)(c), which did not establish from the facts and circumstances of the case that how the assessee has furnished inaccurate particulars of its income. Section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. I Hon'ble Apex Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) wherein the Hon'ble Supreme Court has held that 'where there is no findings that any details supplied by the assessee in its return are found to be incorrect or erroneous or false, there is no question of inviting the penalty u/sec. 271(1)(c) of the Act. A mere making a claim, which is not sustainable in law, by itself, will not amount of furnishing inaccurate particulars regarding the income of the assessee - Decided in favour of assessee

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• 2017 (1) TMI 1370
  Addition of undisclosed net profit - addition relying upon one piece of paper which was provisional P&L Account subject to further verification of the accounts of entire unit - Held that:- It is required to be noted that as such the learned Assessing Officer did not dispute other expenses and/or the amount mentioned in the final P&L account and/or audited account. There was no other material available with the learned Assessing Officer while making addition of Rs. 2,72,78,269/-as undisclosed net profit. The provisional P&L Account was explained by the assessee in detail which has been accepted by the learned CIT(A) as well as the learned Tribunal. We are in complete agreement with the view taken by the learned CIT(A) and the learned Tribunal while deleting the addition of Rs. 2,72,78,269/-made by the learned Assessing Officer as undisclosed net profit. There was no other material available with the learned Assessing Officer while making the addition of Rs. 2,72,78,269/-as undisclosed net profit except one piece of paper / provisional P&L account which was explained by the assessee. Under the circumstances, present Tax Appeal deserves to be dismissed qua proposed question No.(1) Addition on account of difference in stock - Held that:- As rightly observed by the learned CIT(A) and the learned Tribunal, the learned Assessing Officer was justified in neglecting the transactions in between the period. The learned CIT(A) also placed much reliance on the audited accounts. On reconsideration of the stock statement the stock difference was arrived at at Rs. 63,597/-and therefore, the learned CIT(A) rightly restricted the addition made on account of difference in stock to Rs. 63,597/-. Considering the aforesaid it cannot be said that both the learned CIT(A) and the learned Tribunal have committed any error. The findings recorded by the learned CIT(A) and the learned Tribunal are on appreciation of evidence and the material on record. No substantial question of law arise. We are in complete agreement with the view taken by the learned CIT(A) and the learned Tribunal while restricting the addition to Rs. 63,597/-on account of difference in stock. Under the circumstances, question No.(2) also deserves to be dismissed.

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• 2017 (1) TMI 1369
  Validity of reopening of assessment - exemption under Section 54B eligibility - reasons to believe - Held that:- The issue with respect to exemption under Section 54B of the Act was gone into by the Assessing Officer while framing assessment under Section 143(3) of the Act and same was not disturbed in reassessment proceedings. That thereafter, again Assessing Officer is issued the impugned notice on the very ground i.e. on the ground that the assessee was not entitled to exemption under Section 54B of the Act. Under the circumstances, on the ground that the subsequent reassessment proceedings have been initiated on change of opinion by the subsequent Assessing Officer and also on the ground that there was no failure on the part of the assessee in not disclosing true and correct facts and therefore, condition precedent to assume the jurisdiction under Section 147 of the Act are not satisfied, impugned reassessment cannot be sustained. - Decided in favour of assessee

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• 2017 (1) TMI 1368
  TDS u/s 194J OR 194C - whether incorrect deduction of tax has led to disallowance of expenditure under Section 40(a)(ia)? - Held that:- The grievance raised herein could be raised by the petitioner's before the Income Tax Appellate Tribunal and appropriate interim reliefs should be sought from the Tribunal, if so entitled. Mr. Suresh Kumar, on instructions, to allay the fears of the petitioner states that the respondent Revenue will not act upon the final assessment order passed by the Assessing Officer consequent to the direction of the DRP for a period of 4 weeks from the date of its communication to the petitioner on the above account. Mr. Suresh Kumar further states that there shall be no recovery and / or adjustment of the amounts refundable against the amounts payable by the petitioner on the disallowance of expenses under Section 40(a)(ia) of the Act on account of channel placement fees paid to the cable operators, for a period of 4 weeks from the date of communication of the final assessment order of the Assessing Officer to the petitioner. In view of the above statement made on behalf of the Revenue, Mr. Kaka, learned Senior Counsel appearing for the petitioner seeks to withdraw the present petition.The Petition is disposed of as withdrawn.

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• 2017 (1) TMI 1367
  Taxability in India - whether the said offices (LOs) could be regarded as PE ? - whether its income from imports in India were not taxable by reason of the Indo-Japan Double Taxation Avoidance Agreement (Indo-Japan DTAA)?- Held that:- In the present case, both the CIT(A) and ITAT have found that the four expatriate employees posted in India performed purely preparatory functions: identifying a JV partner, negotiating with parties, seeking regulatory approvals and clearances, consulting management experts, lawyers and accountants toward setting up of the JV, towards entering into agreements, etc. They did not even enter into agreements on behalf of the assessee; instead they merely signed them as witnesses. These could not per se or by themselves amount to a business connection as to create a PE in India. The DTAA clearly envisions that offices that perform auxiliary and preparatory services are not to be treated as business connection. In the present context, the expression means carrying on activities, other than the main business functions, that aid and support the assessee. In the context of the contracts in question, where the main business is insurance business - coverage of industries and others who are subject to general insurance policies by entering into contracts of insurance, collecting premia, setting up networks of distributors or offices for that purpose etc., the functions performed by the expatriates in the liaison office were of auxiliary character - an activity which aids and supports the Assessee in carrying on its main business, but not the business itself. The findings of the authorities below, therefore, were warranted and call for no interference. - Decided against the Revenue and in favour of the assessee.

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• 2017 (1) TMI 1340
  Taxability of amount payable to Kaledoscope Entertainment (KE) - Held that:- Income had crystallized during the year and the assessee was supposed to pay taxes in that year only. We agree with the FAA that same income cannot be taxed twice. So, there should not be any addition of the impugned amount in any other year. - Decided against assessee. Disallowance under Rule 9A of the Income tax Rule 1962(Rules) - expenses incurred under the head ‘advertisement and publicity’ of the movies in respect of movies Fanna and Dhoom-2 - Held that:- As decided in assessee's own case in earlier years movies were released before 90 days from the end of the previous year. A perusal of the chart exhibited on page-542 of the paper book show that the assessee has shown aggregate income which is much higher than the cost of production of these movies. As the facts are in line with the provisions of Rule 9A(2), the entire cost of production deserve to be allowed. Accordingly, we direct the AO to delete the enhancement Enhancement has been made on the ground that such publicity expenses are not allowable as per Rule 9A and 9B of the Rules. It is the say of the Counsel that Rule 9A and 9B do not preclude the assessee to claim such genuine business expenses u/s. 37(1) of the Act. Since only ground for disallowing publicity expense is that such expenses are not allowable as per Rule 9A,9B, we find force in the submission of the Counsel that such expenses can be allowed u/s. 37(1) of the Act. However, since the AO has not considered this aspect as the additions have been made by the Ld. CIT(A) during the appellate proceedings, in the interest of justice and fair play, we restore this issue back to the files of the AO. The AO is directed to verify the claim of publicity expenses vis-avis business of the assessee for the year under consideration. The AO should also verify how much publicity expenses have been recovered by the assessee and credited to its Profit and loss account for the year under consideration. The assessee is directed to furnish necessary details to substantiate its claim of publicity expenses. - Decided in favour of assessee for statistical purposes. Disallowance made under Rule 9A/9B of the Rules - expenditure incurred by the assessee for getting the prints of old movies - Held that:- We find that the addition was made with regard to the expenditure incurred by the assessee for getting the prints of old movies. The objection of the departmental authorities is that the expenditure was not for the movies released during the year. The assessee has claimed that income arising from movies had already been disclosed in earlier years. We find merit in the alternate argument advanced by the assessee that matter should be restored back to the file of the AO for fresh adjudication. He is directed to verify as to whether the assessee had offered the income of the movies in the earlier years and had incurred expenses during the year for getting new prints. If it is found that the income has already been taxed, there is no justification for not allowing the expenditure. Third ground stands allowed in favour of the assessee, in part. Disallowance of publicity cost incurred on regional film - Held that:- We find that assessee had distributed a regional film, that after deducting publicity cost it paid the balance amount to the producer of the film, that it did not route the transaction through its books of accounts, that the payment was made through banking channel, that the recipient producer had admitted to have received the disputed amount and had shown in his return of income. Considering these facts, we are of the opinion that FAA was not justified in partly upholding the disallowance made by the AO. When the assessee had not claimed any deduction, there was no justification for making any disallowance. Addition of remuneration paid to the directors - Held that:- It is found that the AO or the FAA have not doubted the ability of PC in rendering services to the assessee, that an independent agency has also certified that she was capable of handling the work related with movies, that she had shown the money received from the assessee in her individual return of income, that she had paid taxes at maximum marginal rate for the remuneration received by her. Considering these facts and the above referred order of the Tribunal, we are of the opinion that the AO/FAA was not justified in disallowing remuneration paid to the directors. Addition about the satellite income - Held that:- While deciding the appeal for the AY.2006-07 Tribunal has dealt the identical issue held a careful perusal of the agreement show that the licencee i.e. SET Satellite Singapore Ltd. acquired rights to exhibit the movies 24 times during the licence period and since the licence period is for four years the SET Satellite could exhibit the movies not more than six times in each year which means that the transferee has 25% right of exhibiting the moves in each year which further means that the right only for 25% of the licence fee has accrued to the assessee in the first year. Therefore, the plea of the AO that the entire income has accrued to the assessee as soon as the agreements have been executed is not correct. The licence fee did not accrue to the assessee as per terms of the agreement. The taxability of the licence fee has to be decided on the provisions of the contract. As per the agreement the transferee has only the right to exhibit the films over a period of four years as the agreement is that of a lease the assessee has rightly and correctly spread the licence fee over a period of four years. The reliance placed by Ld. DR of Rule 9A appears to be misplaced as Rule 9A has no relation with the method of accounting as it nowhere deals with section 145 of the Act. Considering the entire facts in the light of the SET Satellite agreement, in our considerate view, the addition deserves to be deleted. Disallowance of 20% on junior artists/technicians/dress, costume, make-up, dubbing, sound recording, mixing, music recording, dance expenses etc. - Held that:- Respectfully, following the assessee's own case for earlier year we delete the addition made on account of payment made to junior artists and we restrict the disallowance to 5% for other expenses. Last Ground of appeal is decided in favour of the assessee, in part. Transfer of funds from one division to another as profit of the company - Held that:- We find that the assessee had filed details of the revenue arising out of distribution of the above-mentioned two films, that it was following a particular system of accounting, that consolidated revenue of both the films was offered for taxation, that the FAA had verified the Ledger accounts and the bank statements of the DD as well as the HO. We agree that the accounting system followed by the assessee is different from the regular system maintained by other assessees. The AO has nowhere proved that total revenue of these two films was Rs. 12.91 crores + Rs. 8.34 crores + Rs. 9.95 crores. No incriminating document was found or impounded during the survey operation that could lead to the conclusion that the total revenue of these films was more than the income shown by the assessee in its regular books of accounts. In our opinion, the FAA had rightly observed that the AO had wrongly interpreted the transfer of funds from one division to another as profit of the company. Therefore, we hold that the order of the FAA does not suffer from any legal or factual infirmity. - Decided against revenue Addition made on account of print cost - Held that:- We find that the assessee could not produce all the relevant documents at the time of assessment, that it had furnished details of Rs. 3.14 crores only, that later on, before the FAA, it filed the remaining evidences, that the FAA called for remand report, that in the remand report the AO did not adversely comment about the authenticity of the evidences. The expenditure incurred by the assessee is a legitimate business expenditure and is allowable as per the provisions of the Act. As the assessee had failed, at the time of assessment, to fully support the claim made by it, so, the AO had rightly restricted the expenditure to Rs. 3.14crores. But, there was no justification in not allowing the remaining amount of Rs. 1.10 crores once the assessee had produced the necessary evidences. We are of the opinion that there is no infirmity in the order of the FAA. So, upholding his order, we dismiss third ground. Additions made under the head unaccounted receipts - Held that:- We find that assessee had distributed a regional film, that after deducting publicity cost it paid the balance amount to the producer of the film, that it did not prove the transaction through its books of accounts, that the payment was made through banking channel, that the recipient producer had admitted to have received the disputed amount and had shown in his return of income. Considering these facts and discussion held in earlier paragraphs, we are of the opinion that the AO was not justified in treating the income as concealed income. Depreciation on bungalow - Held that:- The FAA after considering the old records and the order of the Tribunal had given a finding of fact that the premises was being used as office premises in the year. Nothing adverse to the said fact was brought on record by the department. Therefore, in our opinion, there is no need to interfere with the order of the FAA. Disallowance of expenses not incidental to the business of the assessee - Held that:- We find that in the remand report submitted to the FAA, the AO had not discussed the issue as to how the then AO had arrived at the figure of Rs. 70,104/-. He had also not explained as to whether the assessee had claimed the said expenditure in the month of June,2006. In absence of these two vital facts there was no justification for making the addition of filing an appeal before us. Holding that the order of the FAA does not suffer from any infirmity. Addition u/s 40(A)(3) - Held that:- We find that the AO had made the addition considering the consolidated figures appearing in the tally software with regard to expenses incurred by the assessee, that he did not verify the vouchers before invoking the provisions section 40A(3), that the assessee had claimed that no expenditure was more than the prescribed limit, that the FAA had verified the vouchers and books of accounts, that nothing was brought before us to negate the finding of fact given by him about non -contravention of the section 40A(3) of the Act. Addition made u/s.69C - Held that:- We find that the assessee was maintaining its books of accounts regularly and was following a peculiar system, that after completion of the movie the account of each movie was merged in the main account. The AO without understanding the system followed by the assessee had invoked the provisions of section 69C Fluctuation of foreign currency loss - Held that:- We find that the FAA has given a categorical finding of fact that the foreign exchange fluctuation loss related to expired contracts. Nothing was brought over notice to prove otherwise. Therefore, we see no need to interfere with the order of the FAA because he has followed the provisions of rule 115 of the rules and the mandate of AS-11. Confirming his order, we dismiss GOA 10. Disallowance u/s.40(a)(i) - Held that:- FAA had partly allowed the appeal of the assessee, that it had directed the AO to make verification about the rates of deducting tax at source and to allow the expenses only after verification. In our opinion, the order of the FAA does not suffer from any infirmity. Confirming the same, we dismiss the ground raised by the AO. Disallowance of expenses on credit cards - Held that:- We find that similar issue has been decided in favour of the assessee by the order of the Tribunal for the earlier year. We also agree with the argument raised by the assessee that in case of a private Ltd company, there cannot be any personal expenses. Considering the above, we uphold the orders of the FAA

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• Customs

• 2017 (1) TMI 1351
  Whether the detention of goods and seizure of goods are similar? - Classification of export goods - hand knotted woolen carpets or hand woven carpets? - CBEC circular dated 04.01.2011 - Held that: - Ordinarily, the word "detention" applies to person and not goods. However, in the context of the statute, with which, we are dealing with, detention is the terminology, which is also used in the context of goods. - Therefore, while seizure is an act of taking possession of a property, i.e., goods in pursuance of an legal authority or process, detention of goods is carried out by the respondents, as it were, by way of an administrative practice. Strangely, the authorities in derogation of its own circular dated 04.01.2011, rejected the request of the petitioner for a provisional release of the subject goods meant for export. The fine distinction between "detention" and "seizure" of the goods, if any, was lost, as the respondents chose not to release the goods on terms or otherwise, despite, the petitioner's letter dated 08.06.2016, 17.06.2016, 24.02.2016 and 29.03.2016; though, I must note that in the letter dated 24.02.2016, as per the assertions made in the counter-affidavit by the respondents, the terminology used by the petitioner was, he be given permission to re-export the goods, as against seeking permission to export the goods - the continued detention of the subject goods is illegal. Therefore, the petitioner, in my opinion, should be handed over the custody of the subject goods. What are the terms, on which, the petitioner be allowed release of goods? - Held that: - the goods can be released to the petitioner, upon a personal bond being furnished by him, whereby, he will undertake to pay fine and penalty, if found payable, upon adjudication by the appropriate forum. Petition allowed - decided in favor of petitioner.

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• 2017 (1) TMI 1350
  Jurisdiction of revisional authority to take up the proceedings - smuggling of gold - one of the reasons that the Revisional Authority is not able to take up the proceedings for hearing, is that, as presently constituted, the said authority holds a rank, which is equivalent to the post of Commissioner of Customs (Appeals) - Held that: - the Punjab and Haryana High Court, in the case of NVR Forgings V.Union of India [2016 (5) TMI 7 - PUNJAB AND HARYANA HIGH COURT], has ruled that since the rank of the Revisional Authority and that of the Appellate Authority was the same, the order passed by the Revisional Authority, could not be sustained. The rank of the Revisional Authority would be upgraded to a level higher than that of the Commissioner of Customs (Appeals). The petitioner will deposit a sum of Rs. 1,90,000/- towards redemption fine and penalty, subject to which the goods will be released - petition disposed off - decided partly in favor of appellant.

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• 2017 (1) TMI 1349
  Import of prohibited goods - branded shoes and toys - eye liners/eye brow pencils - confiscation of goods with imposition of fine and penalty - Held that: - goods are alleged to have been imported in violation of section 111(d), (i) and (m) of Customs Act, 1962 and prohibited for import under section 11 of Customs Act, 1962. But the fact remains that the proceedings in this case was declared illegal, null and void by the first appellate authority finding that the adjudication proceedings have not fulfilled the requirements of Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. Confiscation and penalties were vacated by Commissioner (Appeals) and the goods were allowed to be released - no reason found to interfere to the impugned order passed by the Commissioner (Appeals) - appeal dismissed - decided against Revenue.

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• 2017 (1) TMI 1348
  Eligibility for Concessional rate of duty - BCD - import of lead calcium positive alloy - certificate of origin - denial on the ground that goods were cleared without examination under the 'Risk Management System' which was a consequence of the importer not having claimed the benefit of the said exemption - Held that: - the issue had been settled by the decision of the Tribunal in Zuani Agro Chemicals Ltd, [1995 (7) TMI 221 - CEGAT, NEW DELHI] which held that a substantive benefit, if otherwise due, should not be denied merely because of minor procedural infractions. Concessional rate of duty extended - The appellant is entitled to file a refund claim which may be processed and sanctioned subject to verification of documentary evidence to be submitted by the appellant that incidence of duty has not been passed on - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2017 (1) TMI 1344
  Winding-up petition - disputes about the complete execution and implementation of the contract - Held that:- Mere supply of the Code Keys with liberty to the respondent-Company to download the same, which fact itself is disputed by the respondent-Company, and in the absence of evidence being produced on record by the petitioner-Company of the said Software actually being downloaded by the respondent-Company in pursuance of the License Keys supplied to the respondent-Company, no clear finding can be arrived at this stage because the contract was required to be executed and implemented by the petitioner-Company or its parent Company-PTC to the satisfaction of the respondent-Company. In the view of the settled legal position, these kind of disputes about the complete execution and implementation of the contract, cannot be gone into in the winding-up jurisdiction of this Court and it cannot be said that the liability of the respondent-Company in the present case is admitted or undisputed and in such cases, the only appropriate civil remedy is by way of filing a civil suit for recovery of money or any other appropriate remedy like Arbitration etc., and the winding-up petition cannot be converted into a money recovery suit as is sought to be done in the present case. Thus, the winding-up petition against the respondent-Company is liable to be dismissed

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• 2017 (1) TMI 1343
  Oppression and mis-management - Whether giving a notice for holding EGM for removal of Sanjay is oppressive or not? - Whether a proposal for removal of P1 in a family Company in the given facts of the case be treated as an oppressive act or not? - Held that:- General fulfilment to meet u/s 397 accordingly, his cheque signing authority in both the accounts is hereby revoked. As to casting vote given to the mother in the order dated 22.4.2015 in the Board Meetings, it will continue and without her sign, no cheque shall be passed. The Company shall provide financial statements on fortnightly basis to P1 so as to keep him informed about the business happening in the Company. However, R1 Company shall give notice and allow P1 to attend Board Meetings as and when they are called. For the company already passed a resolution for appointment of R3’s wife Bavana as director, the same could be hereafter given effect to. The reason for considering Bavana’s appointment is, one - the company already approved the resolution making her as director; two - for P1 and his wife being directors, to balance the same, it is just and equitable to have two directors from R3 side as well. Since R2 is natural mother to P1 and R3 as well, her continuation in the Board as director cannot be looked as weighing to the side of one son or the other.

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• FEMA

• 2017 (1) TMI 1342
  Purchase of agricultural lands in India in violation of Foreign Exchange Management Act (FEMA) - Detention of passport - Look Out Circular issued - Whether the passport of the petitioner can be impounded and the impugned notices issued by the respondents are sustainable? - Held that:- As per the instructions issued by the respondents/ department, look out circular can be issued against (i) persons with terrorist or militant links (ii) beligerent foreigners (iii) foreigners previously noticed for violations of visa conditions (iv) persons required by court in criminal/civil cases who are absconding and (v) absconding offenders wanted by Police/CBI/Customs/Central Excise/Directorate of Revenue Intelligence and other competent investigation agencies. In the present cdase, no where it was mentioned in the impugned circular that the petitioner comes under any of the categories mentioned in the instructions given by the respondents themselves. In so far as impounding of passport is concerned, the Honourable Supreme Court in the case of Suresh Nanda vs. CBI mentioned [2008 (1) TMI 876 - SUPREME COURT], has held that the police may not have power under Section 102 (1) of Code of Civil Procedure to seize a passport or to impound the same. It was further held that impounding of a passport can only be done by the Passport Authority under Section 10 (3) of the Passports Act, 1967.as per Section 104 of Cr.P.C., a 'document' does not include a passport. In the present case, it is not the case of the respondents that they have taken necessary steps under Section 10 of the Passports Act to impound the passport Act and therefore, the mere detention of the passport of the petitioner at the airpott without following the provisions contained under Section 10 of the Passport Act and issuing the look out circular without issuing prior notice are not legally sustainable. It is brought to the notice of this Court that after dismissal of writ petitions filed by petitioner before the Kerala High Court, the respondents themselves wanted the petitioner to appear for inquiry only at Delhi on the ground that cumulatively, investigation can be done in Delhi. At any rate, it is contended that the petitioner is cooperating with the enquiry. It is to be noted that the petitioner's passport, which has been impugned by the second respondent, is in the custody of the authorities concerned for the past 30 days. In the meantime, the petitioner has appeared before the authorities for inquiry on 15.01.2017 and 23.01.2017 and extended his cooperation for conducting the enquiry. Therefore, impounding of the petitioner's passport is not warranted. In this case, in the impugned notices, there is no reason has been mentioned for calling the petitioner an absconder. It is also to be noted that the impugned look out circular has been issued without any prior notice to the petitioner and without giving him a reasonable opportunity. It is also not the case of the respondents that they have taken necessary action as contemplated under Section 10 of the Passport Act, without doing so, the impugned orders are legally not sustainable. This Court direct the respondents to return the passport to the petitioner forthwith after cancelling the Look Out Circular with stringent conditions: [i] the petitioner will appear before the authority concerned for the enquiry as and when he has been summoned when a notice is given to a reasonable time for his appearance; [ii] the petitioner will undertake before this Court that he will specifically cooperate with the inquiry and will not abscond from the proceedings; [iii] he will abide any other reasonable conditions which may be imposed by the authority concerned; and [iv] he may be entitled for the assistance of a lawyer but the lawyer will be only present in the office of the respondent at the time of enquiry.

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• Service Tax

• 2017 (1) TMI 1365
  Valuation - Clearing and Forwarding services - reimbursement on account of actual expenses incurred on behalf of the principle, whether liable to tax or not? - Held that: - remuneration or commission received by the agent for providing C&F Service should alone be considered as gross amount for computation of the service tax liability and that since the service tax statute does not provide for inclusion of reimbursable exposes therein, the same should be outside the scope and purview of Levy of Service tax - demand set aside - appeal dismissed - decided against Revenue.

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• 2017 (1) TMI 1364
  CENVAT credit - GTA services - Packing of the paper products using LDPE shrink film - denial on account of lack of nexus between input service and output service - Held that: - The service so availed was to carry LDPE shrink films to the premises of the aforesaid clients. That being integrally connected with the output service provided, there is no question of denial of input credit of the services so availed - credit allowed. Appeal allowed - decided in favor of assessee.

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• 2017 (1) TMI 1363
  Works contract service - commercial or industrial construction service - construction executed is beyond the scope of taxation under FA, 1994 - Held that: - appellant are not providers of 'commercial or industrial construction service' but of ‘works contract service', no tax is liable on construction contracts executed prior to 1st June 2007. Insofar as demand for subsequent period till 30th September 2008 is concerned, even as the services rendered by assessee are taxable for the period from 1st June 2007 to 30th September 2008 the narrow confines of the SCN do not permit confirmation of demand of tax on any service other than commercial or industrial construction service' - there is no scope for vivisection to isolate the service component of the contract. Appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 1362
  Refund claim - Time limitation - For the period April 2011 to March 2014, the appellant availed CENVAT credit of service tax paid on input services used for providing output services exported outside India. Appellant filed refund application for the relevant period on 21.05.2014 - whether the provision of limitation mentioned in Section 11B of the Central Excise Act, 1944 is applicable for refund claims filed under Rule 5 of CCR, 2004? - Held that: - there was an export of service and in the case of export of service, as per settled law, the refund under Rule 5 has to be filed before the expiry of one year from the date of receipt of proceeds of export of service - Learned Commissioner (A) directed the appellant to furnish the documents as required under the statutory provisions, before the adjudicating authority, who shall process the claim and shall pass appropriate speaking order after following the principles of natural justice - I do not find any infirmity in the impugned order passed by the learned Commissioner (A) and therefore impugned order upheld - appeal dismissed - decided against appellant.

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• Central Excise

• 2017 (1) TMI 1361
  Determination of the assessable value - According to law as that was prevailing during material period, sale price charged in respect of a solitary transaction did not become basis for determination of assessable value of the goods cleared from any of the above said place of removal at the time of removal thereof - Appellant submitted that a combined reading of the provision of Section 4(1) and 4(4) of the Act leads to the conclusion that the normal sale price of the excisable goods prevailed at a place of removal at the time of removal thereof was recognised by law to be basis for determination of assessable value in respect of unrelated party transactions. Held that:- Representative sale price prevailed at the particular point of time at the place of removal to satisfy the condition of Section 4(1) (a) of the Central Excise Act, 1944 was not considered by that Authority. Such legal infirmities demonstrate improper application of law. Therefore, in the light of the above analysis of law, it would be proper for both sides to place their case before the appellate authority on the date that may be fixed by him, issuing notice to both sides within three months of receipt of this order. Appellant’s further submission is that the time-bar aspect may also to be looked into since there was no intention of the appellant to cause evasion and nothing in the show cause notice shows that elements of proviso to Section 11A were present to invoke extended period - The matter having been remitted as above, if any plea is made by appellant in respect of time bar, in the course of readjudication, such aspect is left open to the appellate authority to examine and outcome of his examination shall be recorded by the Authority and resolved - Appeal allowed by way of remand.

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• 2017 (1) TMI 1360
  Denial of Cenvat credit - Input services - Held that: - the learned Commissioner (A) in the appellant s own case has allowed the CENVAT credit on these disputed services, I allow both the appeals of the appellant and hold that the appellants are entitled to CENVAT credit of service tax paid on input services holding that all the input services fall in the definition of input service - Appeal allowed - decided in favor of the assessee.

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• 2017 (1) TMI 1359
  Rebate of Cenvat credit - Rule 5 of Export of Service, 2005 - Time limitation - Held that: - We notice that intimation of personal hearing dated 14th February 2012 upon receipt of reply to show cause notice has intimated three alternative dates in the said intimation and that appellant chose the last option but were not heard - It would appear that the original authority decided not only to adopt this restrictive provision in the proceedings before him but also, in a most ingenious manner, paid lip service to the intent of being given sufficient opportunity to be heard by fixing three alternative dates in the same intimation. It is clear that order-in-original was received by appellant only on 10th August 2013 and hence there was no delay in filing the appeal before the first appellate authority - No purpose will be served by remanding the matter back to the first appellate authority when the original authority had not afforded the appellant a proper opportunity to counter the grounds for the proposed rejection of the claim for rebate - Appeal allowed by way of remand.

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• 2017 (1) TMI 1358
  Denial of CENVAT credit - Rule 3 of the CCR, 2004 - Held that: - It is a fact that SCN does not cover the issue of ineligibility on account of non-registration of ISD but only for the reason that services are ineligible by virtue of Rule 2 (l) (ii) read with Rule 3 of the Rules. However, following the decision taken in the identical issue in the appellant’s own case, for an earlier period, these appeals are also being sent back to original authority with the same directions - Decided in favor of the assessee.

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• 2017 (1) TMI 1357
  CENVAT credit - various input services - period prior to as well as after the amendment to Rule 2 (l) ibid, w.e.f. 01.04.2011 - Held that: - the disputed services are either required as mandated or obligated by law e.g. Factories Act etc. or are otherwise very much required for smooth and ancillary running of the plant and for their business activity. There is no allegation that any of the services are availed or used primarily for personal use or for consumption of any employee of the appellant. Further, even for the period after 1.4.2011, none of the services availed are barred by exclusions (A) (B) (BA) and (C) in Rule 2 (l) of the CCR, 2004 - the impugned services availed by the appellant are very much in the nature of eligible “input service” for the purpose of rule 2(l) of CCR 2004 - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 1356
  Levy of penalty - exemption claimed on the ground that the goods were meant for use in the public interest-water treatment project - Held that: - the appellant believed on the public authority's certificate levy of penalty of Rs. 10,000/- under Rule 25 of Central Excise Rules, 2002 is unwarranted. Accordingly, confirming the duty element, penalty is waived - appeal partly allowed. SSI exemption - whether the goods are duty paid goods and is eligible for exemption? - Held that: - When appellant did not avail any exemption relating to the water project due to withdrawal of the certificate by the Collector, appellant’s case falls under Sl.No.1 of the Table appended to the Notification No.8/2003-CE dt. 1.3.2003 - appeal allowed.

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• 2017 (1) TMI 1355
  Levy of duty - clearance of capital goods as waste prior to 16.5.2005 - N/N. 27/2005-CE dt. 16.5.2005 - Held that: - When repeated SCN were issued and as many as seven numbers, beginning from the period July 1998 to May 2005, Revenue was aware what was the clearances. There is nothing to demonstrate that excisable goods were cleared other than scrap and waste - bringing the capital goods cleared as 'waste' prior to 16.5.2005, no allegation shall sustain. Similarly scrap not being manufactured, appellant shall not liable to duty - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 1354
  CENVAT credit - Business Auxiliary Service - input service - Held that: - the inclusive part of the definition of Rule 2 (l) ibid should only be considered as examples of the genre of input service that would be permissible. Thus, if sales promotion has been mentioned in inclusive part of the definition, so also it would include the services attendant to such sales promotion, for example, renting of regional sales office, procuring orders and so on. When the services disputed in this case viz. Business Auxiliary Service relating to sales commission are not specifically excluded by the exclusion portion of the definition and in any case they are services essential directly or in relation to manufacture or business activities, the same would definitely fall within the ambit of Rule 2 (l) ibid - eligible input services - credit allowed - appeal allowed - decided in favor of assessee.

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• 2017 (1) TMI 1353
  Valuation - petroleum products cleared from terminal point to company owned and company operated (COCO) outlets - Rule 7 - Held that: - provisions of Rule 7 are not attracted, in the light of the Larger Bench decision of the Tribunal in Ispat Industries Ltd. vs. CCE, Raigad [2007 (209) ELT 185], wherein it has been held that transfer of part of production to another plant of the same assessee and balance production sold to independent buyers would not attract Rule 8 of Central Excise Valuation Rules, 2000 which is applicable only in a situation where entire production of a particular commodity is captively consumed - appeal allowed - decided in favor of appellant.

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• 2017 (1) TMI 1352
  Benefit of Exemption N/N. 108/95-CE dated 28/08/1995 - denial on the ground that the goods were not supplied to the project or Project Implementing Authority but to the contractors who continued to be the owner of the said goods even after the completion of the project - Held that: - ultimately, as the machineries had been put in use by the sub contractors, who were given the job of execution the claim for exemption cannot be denied - the appellant is entitled for benefit of exemption N/N. 108/95 ibid - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (1) TMI 1347
  Eligibility to receive interest u/s 14-C on refund - whether during the pendency of the reassessment order in exercise of the powers conferred under Section 12(8) of the Act, the assessee is entitled to get interest from the date of first assessment order under Section 12(1) of the Act? - Held that: - the assessee was conscious about the tax liability and intentionally he has not furnished proper return before the Assessing Officer and subsequently, it was found that the assessee has suppressed the material facts from the Assessing Officer in submission of return and accordingly, the amount of return has been reassessed and the refund amount has been reduced, which has never been disputed by the assessee, rather it has been accepted, which goes to suggest that there is suppression and misrepresentation by the assessee in submitting the return. The assessee would be entitled to get interest only when the assessment for the particular year would be concluded finally. Hence, the contention of the petitioner that it is entitled to get interest from the date of first application, which has been filed by it after the first order of refund of amount has been passed, is not acceptable to this Court - application dismissed - decided against applicant.

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• 2017 (1) TMI 1345
  Violation of principles of natural justice - Two notices were issued with the proposal to assess six machines, two of which were primary crushers, two secondary crushers of size (iii), one secondary crusher of size (ii) and a cone crusher - Held that: - The petitioner admits in the reply dated 24.10.2016, as extracted in the order, that the petitioner initially installed one primary crusher and two secondary ones and later installed a cone crusher without enhancing the production capacity. The compounding as permitted is not based on the production and is for the machines installed and the petitioner's contentions works against himself. When, for all practical purposes, it is admitted that deviation is existing in so far as the machinery installed and operating, from that originally declared for the purposes of compounding; there is no explanation offered as to why, on fresh installation, the same was not brought to the notice of the Assessing Officer - Petition dismissed.

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• Wealth tax

• 2017 (1) TMI 1366
  Addition in respect of the Wealth of Two Trusts - Held that:- Similar question relating to same Assessee has already been answered by this Court in Commissioner of Income Tax Vs. Comilla Mohan [2007 (1) TMI 111 - ALLAHABAD High Court ]

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• Indian Laws

• 2017 (1) TMI 1341
  Complaints pending when the amendment to the Act was carried out - Complaint under Section 138 of the Negotiable Instruments Act - non-suit the appellant/ complainant from maintaining its complaint before the learned Judicial Magistrate First Class - Held that:- In the present cases, the 30 complaints had not been returned to the complainant in compliance of the order dated 30.08.2014. That order was stayed before the complaints were returned. Even if they had been returned, the same would have made no difference, since the operation of the initial order dated 30.08.2014 directing return of the complaints for their being filed before the competent Court at Raigarh, Chhattisgarh had been stayed, firstly, by the High Court and thereafter, that stay was continued by the Supreme Court till the promulgation of the Ordinance on 15.06.2015, and thereafter the amendment to the Act was made. Thus, the complaints continued to lie before, and were pending before the learned MM which passed the order dated 30.08.2014. The learned Magistrate failed to appreciate that there was no question of re-filing the 30 cases with which we are concerned, since the complaints had not been returned to the petitioner and taken by the petitioner in view of the intervening stay of the order dated 30.08.2014 by this Court, which stay continued to operate thereon till the disposal of the SLPs as infructuous vide order dated 11.03.2016. Cannot appreciate the observation made by the learned Magistrate in the impugned order accusing the petitioner of resorting to “forum shopping”. In the face of the retrospective amendment carried out to the Negotiable Instruments Act, the complaints were correctly instituted at Delhi and the petitioner had sought transfer of the complaints to the Court of the learned MM, New Delhi District at Patiala House Courts, where the complaints could be properly maintained. There was no occasion for the learned Magistrate to make any such observation, since the petitioner has diligently pursued its remedies, firstly, by approaching this Court to assail order dated 30.08.2014, and thereafter, the Supreme Court. No merit in the submission of learned counsel for the respondents that the complaints were not “pending” on account of the passing of the order dated 30.08.2014. As noticed above, the said order had been stayed, firstly, by this Court, and thereafter, by the Supreme Court. Consequently, the complaints remained in the same position in which they were, prior to the passing of the order dated 30.08.2014 at the time when the Negotiable Instruments Ordinance was issued, which was then replaced by the Amendment Act. Thus there is absolutely no merit in the submissions of learned counsel for the respondents that the complaints were not pending when the amendment to the Act was carried out retrospectively. There is also no merit in the submission of learned counsel for the respondents that the petitioner was obliged to “re-file” the 30 complaints. Since the said 30 complaints had not been collected or taken back by the complainant and they continued to remain pending on the file of the learned MM, Saket Courts, New Delhi, there was no question of the same being “refiled” at any stage. For the aforesaid reasons, no issue of limitation can possibly arise in these cases in relation to the so-called “re-filing” of the complaints. For all the aforesaid reasons, the impugned common order dated 02.06.2016 is set aside. In exercise of jurisdiction under Section 407 Cr.P.C., the complaints in question filed by the petitioner stand transferred to the Court of the learned CMM for being assigned to the Court of the competent MM having jurisdiction over PS – New Delhi District situated at Patiala House Courts, New Delhi.

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