TMI Tax Updates - e-Newsletter
February 14, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Partnership firm - deduction u/s 40(b) - AO observation that partnership firms could not exist with artificial persons alone is not tenable

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• Failure to point out as duties of excise short paid u/s 11A or sums which were collected in excess of duties of excise u/s 11D - No demand

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• Classification - Merely because the NEBULA Watch carries the mechanism of watch it will not loose the characteristic of jewellery - HC

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Articles

1. DEMYSTIFYING SUPPLY AS PER REVISED MODEL GST LAW

   By: Chitresh Gupta

2. Glimpse of Invoices Revised Model GST Law

   By: Ashish Mittal

3. Mega Exemption for Construction of single residential unit and  its sub-contract

   By: Siva Rama

News

1. Expeditious issue of Refunds is a High Priority for the Central Board of Direct Taxes (CBDT); Over 4.19 crore Income Tax Returns (ITRs) processed and over 1.62 crore refunds issued during the Current Financial Year up to 10th February, 2017

2. RBI Reference Rate for US $

3. Periodical review under FR 56 (j) and Rule 48 of CCS (Pension) Rules, 1972

4. Over 8 lakh people win ₹ 133 cr under digital payment scheme

5. Chidambaram asks Jaitley to cut indirect taxes immediately

Notifications

Income Tax

1. 9/2017 - dated 9-2-2017 - IT

Income –tax (2nd Amendment) Rules, 2017

Circulars / Instructions / Orders

DGFT

1. 58 /2015-20 - dated 10-2-2017

Amendment in Paragraph 3.06 of Handbook of Procedures 2015-20

Highlights / Catch Notes

Income Tax

• Assessees can write off business advances without proving exhaustive recovery efforts or absolute irrecoverability of debts.

  Case-Laws - AT : Bad debits - if the assessee decided to write off the said advances/securities given in ordinary course of business, in its books of accounts, the claim of assessee cannot be discarded simply because substantial evidences were not placed to prove its efforts of their recovery or that the said debts became irrecoverable, by way of stepping into the shoes of business. - AT
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• Court Rules Section 41(1) Inapplicable for Long-Standing 'Advance Against Export' if Liability is Acknowledged.

  Case-Laws - HC : Addition u/s 41 - amount shown as 'advance against export' outstanding since 1997 - Liability for a period of more than 10 years - Section 41(1) cannot be applied so long as the liability is acknowledged - HC
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• Section 153C Proceedings Invalid: Seized Document Must Belong to Assessee; Section 69C Additions Also Void.

  Case-Laws - HC : Validity of proceedings u/s 153C - addition u/s 69C - non satisfaction of the condition precedent viz. the seized document must belong to the assessee is a jurisdictional issue and non satisfaction thereof would make the entire proceedings taken thereunder null and void - HC
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• Trading Liability Exists Without Written Off in Books; No Additions u/s 41(1) Despite Missing Notices.

  Case-Laws - AT : Additions u/s 41(1) - Authorities Below has presumed that the trading liability ceased to exist as the notice u/s 133(6) of the Act issued were not served - liability cannot cease to exist until and unless it is written off in the books of account of assessee - No additions - AT
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• TDS Liability: Combine Gross Receipts u/ss 44AB & 194J for Applicability; Non-Deduction Leads to Disallowance.

  Case-Laws - AT : TDS liability of individual - for the applicability of the provisions of section 44AB and 194J, the gross receipts from both the sources shall be clubbed - the assessee has defaulted in the TDS deduction on the professional payment to doctors, therefore the deduction for the same shall not be allowed - AT
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• Assessee with receipts under Rs. 1 crore can claim exemption u/s 10(23C)(iiiad) without income tax authority approval.

  Case-Laws - AT : As the gross receipts of the assessee are less than ₹ 1 crore, so it is not required to get the approval from the income tax authority for claiming the exemption u/s 10(23C)(iiiad) - there is no condition that a registration u/s 12AA - AT
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• Section 40(b) Clarified: Partnerships Can Include Karta of HUF or Individuals in Representative Roles.

  Case-Laws - AT : Partnership firm - deduction u/s 40(b) - AO observed that partnership firms could not exist with artificial persons alone - there is nothing in that section to conclude that a partnership could not be formed by a karta of an HUF in his individual capacity with other persons. The same, in our opinion, would also apply where an individual who joins partnership in a representative capacity - AT
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• Sales Tax Department's Info Sparks Investigation; Rebuttal of Assessee's Documents Needed for Logical Conclusion.

  Case-Laws - AT : Addition on the basis of statements recorded Sales Tax Department (STD) - The information received from the STD was a good starting point for making further investigation. But same had to be taken to the logical end the documents produced by the assessee had to be rebutted - AT
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Corporate Law

• Appellant accepts winding-up petition order; settles disputes with creditors, highlighting company's significant debt issues.

  Case-Laws - HC : Winding-up petition - appellant acquiescing in the order admitting the winding up petition and proceeding to settle the disputes with a number of creditors. This itself establishes that the appellant company is heavily in debt - HC
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Service Tax

• Refund Approved: Mistaken Service Tax Collection Adjusted, Unjust Enrichment Claim Validated.

  Case-Laws - AT : Refund claim - unjust enrichment - The amount was collected as service tax on the mistaken belief that the services were taxable. The amount however does not have the colour or character of tax for the purpose of levy by the department - appellant has adduced evidence to show that the amount collected is adjusted - refund allowed - AT
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• Appellant Not Liable for Interest and Penalty on Reversed Credit Before Use; Irregular Credit Issue Resolved.

  Case-Laws - AT : Interest - penalty - reversal of irregularly availed credit - whether the appellant is liable to pay the interest and penalty for the irregularly availed credit, which was reversed prior to utilisation according to the appellant? - Held No - AT
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• Cenvat Credit Allowed if Invoice Address Matches Company, Even if SIM Card is in Employee's Name.

  Case-Laws - AT : Cenvat Credit - Merely because the SIM card or invoice is in the name of the employee it cannot be concluded that the mobile phone is for personal use of the employee when the address shows that of the company - AT
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Central Excise

• Cenvat Credit for Pre-Mining Activities Approved Despite Department's Argument Against Relevance to Manufacturing Process.

  Case-Laws - AT : Cenvat credit - Input service - pre-mining activities - Department took a view that as these were not approved mines and the said activities availed by the appellants were not directly or indirectly related to the manufacturing activity of the appellant - Contention of the revenue rejected - AT
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• Demand for Rs. 74,20,714 and Rs. 3,43,26,040 u/s 11D dismissed due to unclear excise duty status.

  Case-Laws - AT : Demand of duty u/s 11D or recovery of amount u/s 11D - Revenue could not decide as to ₹ 74,20,714/- & ₹ 3,43,26,040/- were the duties of excise short paid or sums which were collected in excess of duties of excise - demand set aside - AT
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• No Time Limit on Availing Cenvat Credit for Inputs Received in Factory During Relevant Period.

  Case-Laws - AT : Cenvat Credit - there was no time limit during the relevant period for availment of Cenvat Credit after the receipt of inputs into the factory - AT
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• Cenvat Credit Allowed: Allegations of Premature Invoicing Deemed Baseless Against Recipient; Credit Upheld Despite Disputed Timing.

  Case-Laws - AT : Cenvat Credit - duty paying documents - The defect that invoices were issued prior to clearances of goods from port is too flimsy and baseless allegation particularly to be raised at the receivers end - credit allowed - AT
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• Appellant Wins Refund: Price Variation Clause & Excess Duty Payment Valid Despite Provisional Assessment Denial by Department.

  Case-Laws - AT : Refund claim - price variation clause - payment of excess duty - When the department has denied provisional assessment particularly, they cannot deny the refund saying that the appellant has not resorted to provisional assessment - appellant is eligible for refund - AT
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• Refunds Under Notification No.102/2007-Cus Valid for Goods Moved from SEZ, Not Considered Imports.

  Case-Laws - AT : Benefit of refund of the said SAD as per Notification No.102/2007-Cus cannot be denied to them only on the ground that movement of goods is from SEZ and it cannot be construed as import of goods - AT
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VAT

• NEBULA Jewellery Watch Classified as Jewellery for VAT and Sales Tax, Despite Watch Mechanism Inclusion.

  Case-Laws - HC : Classification of NEBULA Jewellery Watch - Even the dress having diamond on it predominantly can be in a given case said to be a jewellery. Mainly because the NEBULA Watch carries the mechanism of watch it will not loose the characteristic of jewellery. - HC
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Case Laws:

• Income Tax

• 2017 (2) TMI 560
  Additions u/s 41(1) on account of seizure of current liability - whether the liability of assessee has ceased to exist in the books of account - Held that:- The liability has been shown in the balance-sheet for 26,27,186/-. Merely the notices issued under section 133(6) of the Act to the parties returned as un-served cannot be ground for the addition under section 41(1) of the Act as the liability has not ceased to exist. Therefore, it cannot be concluded that the liability has ceased to exist. It has not actually been written off in the books of account of assessee and the ld. DR has not brought anything on record suggesting that the trading liability has actually been written off in the books of account. In the instant case, the Authorities Below has presumed that the trading liability ceased to exist as the notice u/s 133(6) of the Act issued were not served. As such on examination of orders of Authorities Below, we find that the liability has not been written off in the books of account of assessee. In our considered view, liability cannot cease to exist until and unless it is written off in the books of account of assessee. In this view of the matter, we hold that the liability which has actually been written off can only be treated as income of assessee u/s 41(1) of the Act

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• 2017 (2) TMI 559
  Rejection of books of accounts - G.P. determination - Held that:- Though the petitioner at the relevant time was in the first year of his business but his turn over was far more than the turnover of other players in the market, as is evident from the details mentioned in the order of the Assessing Officer. The turnover of the appellant was 1,16,38,55,100/-. The Assessing Officer has compared gross profit and net profit of other concerns in the same business and for that very financial year found that assessee had shown gross profit much lower in comparison to average gross profit of other six business concerns engaged in the business of trading in Mentha Oil. Accordingly, he arrived at the conclusion that profit returned by the appellant is on the lower side and after rejecting the books of accounts u/s 145(3) of the Act, 1961, he applied the gross profit rate of 0.65% on total turnover of 1,16,38,55,100/- based on the average gross profit rate arrived at on the profit return by other concerns, which comes to 75,65,058/-. Accordingly the difference in the profit return and the one assessed which comes to 66,54,087/- was added to the income of the appellant. It is this assessment which was not accepted by the Commissioner of Income-tax (Appeals) whereas the Tribunal has concurred with the arguments of Departmental Representative and the finding of the Assessing Officer and rejected the view of the Commissioner Income-tax (Appeals) on the ground that Menthol is not a restricted item which could be sold only to a particular buyer. It was an open commodity and the Assessing Officer has rightly assessed the income and profit of the appellant based on comparison of profit of other concerns from the same business and in the same financial year. Even though, the reasoning given by the Tribunal is not very detailed yet as it has concurred with the reasoning of the Assessing Officer, therefore, on a perusal of comparative chart disclosing the rates of profit of others engaged in the same business in the same financial year, we do not find any error having been committed by the Tribunal in passing the impugned judgment affirming the order of Assessing Officer which may be said to give rise to a substantial question of law in the matter requiring our interference

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• 2017 (2) TMI 558
  Disallowance u/s 36(1)(iii) on account of the loans and advances given to the relatives interest-free - Held that:- The facts could not be disputed by the authorities below as also by the learned Departmental representative that the appellant was having interest-free funds to the extent of 9,91,01,938 as against which the interest-free loans and advances given to the relatives and directors etc. were only of 2,07,64,779, which were far below the interest-free funds. The objection of the authorities below that the assessee could not prove a nexus between the availability of interest-free funds and giving of interest-free advances, does not appear to be a requirement of the law inasmuch as it is by now settled that when there are interest-free funds available to the assessee sufficient to meet its investments or loans, it can be presumed that such investments came out of the available interest-free funds and not out of the interest bearing funds/overdraft account. The co- ordinate Bench of the Jaipur Income-tax Appellate Tribunal in the case of Ram Kishan Verma (2012 (6) TMI 534 - ITAT JAIPUR ) held that the assessee was having sufficient capital and there were mixed funds then non-interest bearing funds are to be considered as utilised for non-interest bearing advances. It is the assessee who has to take a business decision. There is no onus on the assessee to establish a nexus. The disallowance under challenge made by the Assessing Officer under section 36(1)(iii) and confirmed by the Commissioner of Income-tax (Appeals) was not justified - Decided in favour of assessee

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• 2017 (2) TMI 557
  Disallowance u/s 14A - Held that:- AO has failed to find out as to how the balance expenditure of 60.77 lacs claimed by assessee was incorrect or had any nexus with earning of exempt income. The AO also did not examine the stand of the assessee that administrative expenses of 10,70,000/- were in respect of a thin strength of employees who were working for providing IT enabled BPO Services and were not involved in the activity of making investment in shares or mutual funds. We also find substance in the observation of the ld. CIT(A) that the AO has disregarded the fact that he had also disallowed individual expenses embedded in the claim of 60.77 lakhs separately, such as disallowance of depreciation of 56,86,641/-, disallowance of rental expenses 8,23,166, disallowance of bad debts 2,66,243 and disallowance of advances and security deposits written off 13,99,056/-. - Decided against revenue Disallowance of depreciation - Held that:- Expression “used for the purpose of business” would mean & imply that the use of asset would be relevant in previous financial years with respect to the discarded assets forming part of the block. Furthermore, the nature of assets in the present case comprises of general items such as furniture & fixtures & office equipments which were “ready for use”. Such passive user is also entitled for depreciation in view of various decisions of jurisdictional High Court relied by the ld. AR, noted supra. Following the above decisions, and having found no contrary material, we do not find any justification to interfere with the conclusion reached by the ld. CIT(A) on this issue. - Decided against revenue Advances and security deposits written off - Held that:- We find that it is not in dispute that substantial material was placed before the AO that the said advances/securities were outstanding for last 5-10 years. The nature of these payments, i.e., towards advances and securities for getting VPN and utility connections, as noted above, is also not doubted by the Assessing Officer. In such state of affairs, if the assessee decided to write off the said advances/securities given in ordinary course of business, in its books of accounts, the claim of assessee cannot be discarded simply because substantial evidences were not placed to prove its efforts of their recovery or that the said debts became irrecoverable, by way of stepping into the shoes of business. - Decided against revenue

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• 2017 (2) TMI 556
  Rental income - house property or business - Held that:- The main objective of the assessee firm as manifest from the partnership deed was to carry on business in construction of different types of buildings such as godowns, residential or commercial buildings, flats, shops etc., and lease them out as a part of its business activity but not as exploitation of the property as an owner. In simple, construction of different types of buildings and leasing them out was the main business activity of the firm and doing other activity was only an optional one. In that view, the assessee firm was right in showing its both incomes under the head income from business. Therefore, we find no merit in the argument of learned Standing Counsel that the rental income should be shown under a different head. We also do not find any merit in the other argument that since the Tribunal has held in the previous instances that the income received by the same assessee was the income from house property and not a business income, in the instant case also it should have held similarly for the reason that in the earlier instances, the Tribunal had no occasion to peruse the judgment in M/s.Chennai Properties & Investments Ltd., Chennais case (2015 (5) TMI 46 - SUPREME COURT).

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• 2017 (2) TMI 555
  Penalty under Section 271C - non deduction of tds - assessee in default - Held that:- It is not in dispute that Assessee did not deduct interest and the reason given by Assessee was that in respect to Sahara premises, there was a revenue sharing agreement for the premises and services. Therefore, Assessee believed that tax at source was not deductible in such case. Commissioner of Income Tax (Appeals) (hereinafter referred to as "CIT(A)') accepted aforesaid explanation given by Assessee holding it to be a bonafide belief, though erroneous, and held that in view of fact that default was for bonafide belief, penalty under Section 271C of Act 1961 was not justified. It is not disputed before us that under Section 201(1A) interest for delayed payment of tax deducted at source has already been paid by Assessee. Since concurrent findings in respect of bonafide belief by Assessee in committing default have been recorded by authorities below and nothing has been shown to us that said findings are perverse, incorrect or otherwise illegal, we therefore, find no reason to interfere. - Decided in favour of Assessee.

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• 2017 (2) TMI 554
  Addition u/s 41 - amount shown as 'advance against export' outstanding since 1997 - Held that:- As in Jayram Holidngs Pvt. Ltd. (2012 (7) TMI 1011 - ITAT MUMBAI) wherein in almost identical fact situation, advance received for exports was also shown in the accounts as a liability for a period of more than 10 years, the Tribunal took a view that there can be no addition of the amount shown as a liability either under Section 41(1) and/or under Section 28(iv) of the Act. This is so as long as the liability exists. Section 41(1) of the Act cannot be applied so long as the liability is acknowledged. - Decided against revenue.

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• 2017 (2) TMI 553
  Validity of proceedings under Section 153C - addition u/s 69C - Held that:- The Revenue has to strictly comply with Section 153C of the Act. We are of the view that non satisfaction of the condition precedent viz. the seized document must belong to the respondent – assessee is a jurisdictional issue and non satisfaction thereof would make the entire proceedings taken thereunder null and void. The issue of Section 69C of the Act can only arise for consideration if the proceedings under Section 153C of the Act are upheld. Therefore, in the present facts, the issue of Section 69C of the Act is academic. In view of the above reasons and particularly the finding of fact that seized document which forms the basis of the present proceedings, do not belong to the petitioner and the same not being shown to be perverse - Decided in favour of assessee

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• 2017 (2) TMI 552
  Additions on account of gifts - proceedings commenced under Section 153C - Held that:- Admittedly, the Revenue has not produced any evidence either before the Assessing Officer, or before this Court to show that any incriminating evidence was discovered against the assessee during the search on 25.03.2008. In the absence of any incriminating evidence, the Assessing Officer was not justified in invoking his power under Section 153C of the Act. The learned Tribunal has also noticed that this opinion has been expressed by other courts. Therefore, a mere passing observation made by the learned Tribunal that the said power could not be invoked, for regular assessment that had already been completed under Section 143(3) of the Act, would not give rise to a substantial question of law. The issue is not with regard to the scope and ambit of Section 143(3) of the Act; it is specifically with regard to the power

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• 2017 (2) TMI 551
  Availability of deduction of u/s 80 IA on the subsidy received - Held that:- The assessee’s claim of deduction u/s 80 IA (4) qua the amounts received towards Sales Tax incentive and subsidy has to be considered in the light of the ratio laid down by the honourable Supreme Court in case of CIT Vs. M/S Meghalaya Steels Ltd. (2016 (3) TMI 375 - SUPREME COURT) wherein held so long as profits and gains emanate directly from the business itself, the fact that the immediate source of the subsidies is the Government would make no difference, as it cannot be disputed that the subsidies are only in order to reimburse wholly or partially costs actually incurred by the assesse in the manufacturing and selling of its products. Since the aforesaid decision of the honourable Apex Court was not available before the AO and the CIT appeal, we deem it appropriate to set aside the impugned order of CIT (appeal) and restore the matter back to the file of the assessing officer to consider assessee’s claim of deduction u/s 80 IA (4) in the light of the ratio laid down in the decision of the honourable Supreme Court referred to above. We may further observe, the assessing officer must also consider assessee’s claim on the quantum of subsidy actually received from the MSED

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• 2017 (2) TMI 550
  Penalty u/s. 271(1)(c) - allowability of project development expenses - Held that:- Respectfully following the judgments of Nayan Builders and Developers and Liquid Investment and Trading Company (2014 (7) TMI 1150 - BOMBAY HIGH COURT ),we hold that after admission of substantial question of law by the Hon’ble Bombay High Court the issue has become debatable and that penalty u/s. 271(1)(c) cannot be imposed in such cases. Reversing the order of the FAA, we decide effective Ground of appeal in favour of the assessee.

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• 2017 (2) TMI 549
  Income arising from sale of shares /mutual funds - capital gain OR business income - Held that:- Considering the material on record, more particularly, number of transactions, holding period and the treatment given with respect to similar income in the earlier Assessment Years when the similar income is considered as capital gain and not treated as business income, it cannot be said that the learned CIT(A) as well as the learned tribunal have committed any error in holding the income of the assessee arising from sale of shares /mutual funds for which short term capital gain /long term capital gain was claimed, as capital gain instead of business income.

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• 2017 (2) TMI 548
  Disallowance u/s 69A -Held that:- The assessee has withdrawn and introduced the capital in the earlier years. On verification of the drawing and capital introduction, we find that there was hardly any surplus fund available to the assessee for infusion of fresh capital. The assessee must also be spending money on actual personal expenses. In view of above we are of the view that the assessee failed to explain the sources of cash with supporting evidence. Therefore the ground of appeal of the assessee is dismissed. Non-deduction of TDS u/s. 194J - Addition u/s 40(a)(ia) - payments made to the doctors - Held that:- On perusal of the submission of the assessee we find that the assessee has shown income from two sources (1) medical professional receipts (2) Nursing home receipts. The receipts from both the sources are of 14,34,833/- only in the immediate preceding financial year 2006-07. In our view for the applicability of the provisions of section 44AB of the Act and 194J of the Act, the gross receipts from both the sources shall be clubbed. Accordingly we find that the gross receipts for the tax audit for the FY 2006-07 is of more than 10 lacs so it is clear that the assessee was liable for tax audit for the FY 2006-07, consequently the TDS provisions will be applied for the year under consideration. Hence the assessee has defaulted in the TDS deduction on the professional payment to doctors, therefore the deduction for the same shall not be allowed. Hence the ground of appeal of the assessee is hereby dismissed. Disallowance u/s 41(1) - Held that:- We find that the liability ceased to exist if it is written off by assessee in its books of account. In case on hand we find that the liability is very much reflecting in the balance-sheet of assessee. Therefore the same cannot be added under the provisions of section 41(1) of the Act. Hence this ground of appeal of the assessee is allowed. Addition u/s 23(4)(b) - Held that:- AR has not brought anything on record to demonstrate that the flat at high land park is used for the purpose of assessee residence. In the absence of any documentary evidence we find no infirmity in the order of ld. CIT(A). Hence this ground of appeal of the assessee is dismissed. Disallowance of expenditure claimed by assessee under the head “rates and taxes” on account of nonavailability of supporting evidence - Held that:- AR before us pleaded that supporting evidence was not available at the assessment proceedings as well as appellate stage. But the documents are now available. Accordingly, Ld. AR requested before the Bench to restore the same to the file of AO for fresh adjudication. However, AR did not produce any supporting evidence for our reference. As the Ld. AR failed to bring supporting evidence, we are not inclined to restore this issue to the file of AO. Had there been supporting evidence available with the assessee, in our view, it should have been submitted now before us. As no relevant document has been submitted before us, Therefore we uphold the order of Ld. CIT(A) and this ground of assessee is dismissed. Disallowance of expenditure claimed in the profit and loss account - Held that:- Admittedly the assessee failed to furnish the evidence in support of the expenditure claimed in the profit and loss account before the AO and the learned CIT(A). Indeed the onus lies on the assessee to justify the expenses claimed in the P&L account. However in the absence of any documentary evidence then the lower authorities can also refer such amount of expenditure claimed in the earlier years before making the disallowance for the purpose of comparison and to check the consistence. As such we find no reference was made to the earlier year expenditure claimed by the assessee. Therefore in the interest of Justice and fair play we’re inclined to limit the disallowance at the rate of 10% of such expenditure. Hence this ground of the assessee is partly allowed. Disallowance of accrued interest on taxable HFC Bond - Held that:- On perusal of records and after considering the submissions raised by both the parties, we find that assessee has already offered the interest income in the financial year 2009-10 and addition the same in the year under consideration would amount to double taxation of the same income earned by assessee. To put this ongoing dispute to rest and in the interest of justice and fair play, we remit back this issue to the file of AO for fresh adjudication as per law with a direction to AO to check whether the interest income has been offered to tax in the assessment year 2010-11 after providing reasonable opportunity of being heard to assessee. If so, then the addition needs to be deleted. Hence, in terms of above, assessee’s ground is allowed for statistical purpose Disallowance of foreign travel expenses - Held that:- Aforesaid foreign travelling expenses were incurred from the disclosed bank account. Therefore, in our considered view, the question of incurring expense from undisclosed income does not arise. It is also important to note that the drawing shown by the assessee is less than the amount of travelling expenses. Therefore we are of the view the issue requires to be considered by the ld. CIT(A). Hence, in terms of above, assessee’s ground is allowed for statistical purpose.

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• 2017 (2) TMI 547
  Eligibility for exemption under Section 10(23C)(iiiad) - Held that:- The assessee is running a college of pharmacy and as such engaged in the educational activities. The assessee has received fee of 74,24,840/- as mentioned in the income and expenditure account for the year ending 31st March, 2004. From the aforesaid facts, it is clear that the assessee is an educational institution which is duly recognized and registered, it has applied his income for the purposes of education and had not distributed any profit. Therefore, the assessee is eligible for exemption u/s 10(23C)(iiiad). And as the gross receipts of the assessee are less than 1 crore, so it is not required to get the approval from the income tax authority for claiming the exemption u/s 10(23C)(iiiad) of the Act. In our opinion, for getting the exemption under the said section, there is no condition that a registration u/s 12AA of the Act is required. Keeping in view the ratio laid down by the Hon’ble Apex Court in the aforesaid referred to case of Queens Educational Society Vs CIT (2015 (3) TMI 619 - SUPREME COURT ) are of the view that the ld. CIT was not justified in confirming the action of the AO for denying the exemption u/s 10(23C)(iiiad) of the Act to the assessee. Accordingly, the impugned order is set aside and the AO is directed to allow the claim of the assessee for exemption u/s 10(23C)(iiiad) of the Act.- Decided in favour of assessee

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• 2017 (2) TMI 546
  Addition of sale of undertaking as slump sale - Held that:- It is not disputed by the Revenue that M/s SKODA Auto India Pvt. Ltd. had not approved the transfer of dealership from the assessee to M/s Miracle Cars India Pvt. Ltd. It is also not disputed that there was a clause in the agreement which required approval of M/s SKODA Auto India Pvt. Ltd. for transfer of dealership from the assessee to M/s Miracle Cars India Pvt. Ltd. Even the part consideration received, was held by one Shri D. Sivakumar, a director of the assessee and was never given to the assessee-company. Thus the agreement dated 30.06.2010, on which reliance has been placed by the Assessing Officer for fastening a liability on the assessee, was a conditional one which would become legally enforceable only if M/s SKODA Auto India Pvt. Ltd. gave approval for transfer of the dealership. Further, in the subsequent assessment year, the Assessing Officer himself noted that the agreement did not go through. Thus, in our opinion, the CIT(Appeals) was justified in taking the view that there was no slump sale and there was no occasion for making an addition - Decided in favour of assessee.

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• 2017 (2) TMI 545
  Revision u/s 263 - valuation of unexplained sale of gold - Held that:- What is required to be proved by the assessee is that it has included 40950.66 grams of gold at NIL value in the manufactured items of jewellery also. If the assessee is able to show the same to the satisfaction of the AO, in our view, no addition is called for as presumed by the AO. Since this fact requires verification, we are of the view that the same needs to be set aside to the file of the AO. Accordingly we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for the purpose of verifying the contentions of the assessee that the 40950.656 grams of gold, which was shown at NIL value in Sales was included in the manufactured items also at NIL value. If the contentions of the assessee were found to be correct, we direct the AO not to make any addition on account of unaccounted sales. If it is found otherwise, the AO may make appropriate decision in accordance with the law. The assessee is also directed to furnish necessary details to the AO in this regard. Unaccounted purchase of finished goods - Held that:- We notice that the assessing officer has made his own computation on the basis of statement of stock given to the bank and accordingly came to the conclusion that there is unaccounted purchase of finished goods. We notice that the assessing officer did not examine the quantity details of raw materials and finished goods furnished by the assessee by referring the books of accounts. The question of making own estimate, in our view, would arise only if the AO finds faults and deficiencies in the books of account and consequently come to the conclusion that the quantity details furnished by the assessee is not reliable. Before the AO, the assessee has submitted that the stock statement furnished to the bank is a provisional one and the value shown therein was average value. We notice that the AO did not examine the said explanation at all. Thus CIT(A) was justified in coming to the conclusion that the AO has computed the value of undisclosed purchases on surmises and conjectures and justified in deleting the impugned addition relating to undisclosed purchases and accordingly we uphold the same.

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• 2017 (2) TMI 544
  Acquisition of second hand windmill and pricing of such windmill - assessee is aggrieved on adoption of value as actual cost, whereas, the Revenue is aggrieved on rejection of the value assigned by the Assessing Officer - Held that:- It is not disputed that depreciated value of the said windmill in the hands of M/s Soundararaja Mills Ltd. was negligible at the time of such sale. M/s Enercon (India) Ltd. who manufactured the windmill had certified that the model sold by M/s Soundararaja Mills Ltd. to the assessee was no more in market. They also declined to assign a value which, in other words, mean that the windmill which was more than 5-1/2 years old was of obsolete technology. These factors, in our opinion, clearly indicate that the transfer of windmill to the assessee from M/s Soundararaja Mills Ltd. at a price of 2.36 Crores itself was a questionable and doubtful one, with the only intention to reduce tax liability. It may be true that assessee had raised a loan of 144 lakhs from M/s Canara Bank, based on a valuation report requisitioned by the said bank and in the said valuation report, the value of the windmill was fixed as 2,19,00,000/-. It may also be true that Government approved valuer had fixed the value of windmill at 2,95,00,000/-. However, for invoking Explanation 3 to Section 43(1) what is required is the objective satisfaction reached by the Assessing Officer that the main purpose of transfer is reduction of tax liability. The valuations may be relevant in ordinary circumstances but when the cumulated depreciation claimed was far in excess of the cost, relevance of such valuations, in our opinion, is insignificant. Especially so since CIT(Appeals) had found glaring deficiencies in such valuation, where only depreciation for one year alone was considered. CIT(Appeals), in our opinion, was not justified in substituting the value adopted by the A.O. with one based on a method adopted by TIIC, a Government agency. A.O. had adopted a fair method of multiplying the average generation per year with per unit cost of electricity generated. This was the method adopted by the assessee itself for valuing four numbers of windmill offered by it as collateral for raising loan from M/s Canara Bank, except for the difference in unit rate. In our opinion, the conditions for invoking Explanation 3 to Section 43(1) of the Act were satisfied. We, therefore, have no hesitation to set aside the order of the CIT(Appeals) and reinstate the order of the A.O.

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• 2017 (2) TMI 543
  Disallowance on claim made under Section 40(b) - whether the partnership was one formed between the HUF and two trustees or between three individuals? - Whether a valid partnership could be formed between three persons in representative capacity? - Held that:- It is not in dispute that the assessees were granted the status of registered firm by virtue of provisions of Section 185(1) of the Act since assessment year 1991- 92. The position continued for a period of twenty years and it was after such twenty years, the Assessing Officer attempted to disturb this. When a set of facts which permeates from earlier years, is consistently the same, it would not be appropriate to disturb the conclusions reached based on such facts. No doubt, rule of res judicata may not be applicable to the income-tax proceedings, but the rule of consistency demands that a position consistently taken shall not be disturbed unless there were significant change in facts. Insofar as reliance placed on Section 40(b) of the Act by the A.O. is concerned, there is nothing in that section to conclude that a partnership could not be formed by a karta of an HUF in his individual capacity with other persons. The same, in our opinion, would also apply where an individual who joins partnership in a representative capacity. It can always be considered that he was doing so in his individual capacity. This position has been reiterated by Hon'ble Apex Court in the case of Bagyalakshmi & Co. (1964 (11) TMI 11 - SUPREME Court ), which has also been relied on by the Ld. CIT(Appeals). Considering the facts of the case, we are inclined to uphold the orders of the CIT(Appeals). - Decided against revenue

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• 2017 (2) TMI 542
  Addition u/s 14A - whether section 14A is applicable when the assessee has not actually received any exempt income during the year from assets capable of yielding exempt income? - Held that:- Rule 8D is only a machinery/mechanism to compute the disallowance. It is trite that the Rules are sub servient to the main enactment. Rules can never override the main provisions of the Act. If the facts of the case warrants no disallowance, the computational provision does not come into picture at all. Further, the Circulars of the CBDT prejudicial to Assessee do not exert binding force on the assessee. Accordingly, where no exempt income is received or receivable during the relevant financial year, provisions of section 14A would not operate. In this view of the matter, the disallowance made by the AO is not sustainable having regard to absence of any exempt income during the financial year relevant to the assessment year in question. Therefore, we concur with the action of the CIT(A) in deleting the disallowance made by the AO. - Decided in favour of assessee Disallowance u/s.36(1)(va) by way of employee’s contribution towards provident fund - Held that:- Assessee has allegedly made belated payments of employees’ contribution towards PF for the month of March-2012. It was observed by the CIT(A) that no explanation was submitted by the Assessee before the AO nor was any submission made before the him in this regard. The CIT(A) accordingly upheld the disallowance.In the absence of any particulars regarding delayed payment, if any, even before us we are not in a position to comprehend the case of the assessee. Hence, we decline to interfere with the order of CIT(A). - Decided against assessee

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• 2017 (2) TMI 541
  Addition on the basis of statements recorded by the Sales Tax Department (STD) from two of the suppliers of the assessee - Held that:- FAA called for a remand report, that in the report the AO did not comment upon the statements of the suppliers, that the assessee was not given any opportunity to cross examine the parties who had supplied the goods to it, that the AO had not rejected the books of accounts of the assessee, that he had accepted the sales made by it. The FAA has mentioned that the AO did not comment upon as to whether the suppliers had implicated the assessee specifically or the statements were general in nature. In case the statements were about providing accommodation entry in general, in our opinion, the issue should have been investigated further. The assessee had produced documentary evidences including the proof of payment through banking channel. We further find that the AO has not mentioned in his order as to what documents were produced before him-though he stated that same are being reject - ed. Without giving the details of the documents and reasons for rejecting the same is arbitrary use of the powers. The information received from the STD was a good starting point for making further investigation. But same had to be taken to the logical end the documents produced by the assessee had to be rebutted. - Decided against revenue

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• 2017 (2) TMI 540
  Reopening of assessment - Claim of assessee u/s 10(38) relating to long term capital gain - Held that:- Claim cannot be just denied on the basis of presumption that they are in respect of fictitious and not genuine without allowing the assessee to go through the statement of Mukesh M. Chokshi used against her and also not allowing to cross examine him. Therefore, respectfully following the judgment of Hon. Supreme Court, in the case of Andaman Timber Industries (2015 (10) TMI 442 - SUPREME COURT ), Chartered Motors Pvt. Ltd. (2014 (9) TMI 83 - ITAT AHMEDABAD) and Dhwani Mahendra Shah [2017 (2) TMI 463 - ITAT AHMEDABAD] we allow this ground of assessee and quash the re-assessment proceedings u/s 143(3) r.w.s. 147 of the Act dated 18.3.2014. - Decided in favour of assessee

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• Customs

• 2017 (2) TMI 526
  CVD exemption in terms of N/N. 30/2004-C.E., dated 9-7-2004 - import of 100% polyester blanket - non-fulfillment of condition of imported goods - Held that: - the decision of Hon’ble Madras High Court in the case of HLG Trading [2015 (11) TMI 313 - MADRAS HIGH COURT] was under the challenge of vires of N/N. 34/2015-C.E., dated 17-7-2015 and N/N. 37/2015-C.E., dated 21-7-2015 which substituted the proviso condition relating to eligibility of exemption for Central Excise duty. The proviso afer Para 1 of exemption N/N. 30/2004-C.E. was substituted on 17-7-2015 vide N/N. 34/2015. Such substitution changed the scope of the condition and is subsequent to the decisions of Hon’ble Supreme Court. The Hon’ble Madras High Court dismissed the challenge of the assessee against amendment which substituted the condition - in the present case unamended proviso of the notifications are applicable - appeal allowed - decided in favor of appellant.

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• 2017 (2) TMI 525
  Restoration of CHA licence - An appeal preferred against the order of suspension was allowed by an order dated August 8, 2016. Although an appeal has been filed before the Hon’ble Division Bench, the authorities have not applied for stay - Held that: - The petitioner was a Customs House Agent till such agency being suspended by an order passed by the respondents. Such order was reversed by the Appellate Authority by an order dated August 8, 2016. The Appellate Authority has held that the order of suspension is bad. Till now, the respondents have not obtained any order of stay of the order of restoration CHA licence passed by the Appellate Authority. Licence restored - petition allowed - decided in favor of petitioner.

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• 2017 (2) TMI 524
  Whether in the facts and circumstances of the case M/s. Khanbhai Esoofbhai in whose hands the vessel was actually broken up is liable to pay customs duty that became leviable in accordance with proviso to N/N. 163/65Cus dated 16.10.1965, or otherwise? Held that: - no question of law is framed with respect to levy of additional customs duty on ships and vessels and rightly not raised as no such question was raised before the learned CESTAT. Therefore, now it is not open for the assessee to raise the question with respect to levy of additional customs duty on ships and vessels which was never raised earlier. Earlier before the learned CESTAT the respondent assessee heavily relied upon the decision in the case of Shree Dev Krupa Ship Breaking [2013 (6) TMI 370 - GUJARAT HIGH COURT]. Even the Division Bench of this Court also earlier dismissed the present Tax Appeal considering the decision of this Court in the case of Shree Dev Krupa Ship Breaking. The Hon’ble Supreme Court reversed the decision of this Court in the case of Shree Dev Krupa Ship Breaking and also set aside the order passed by this Court in the present Tax Appeal. While remanding the matters / appeals to this Court, the Hon’ble Supreme Court also framed the aforesaid questions of law and remanded the matter to this Court to consider the aforesaid questions of law only - Now, by a detailed judgment and order dated 26.07.2012 in Tax Appeal No.537/2004, the Division Bench of this Court has answered all the questions of law raised in the present Tax Appeal in favour of the Revenue and against the assessee and has quashed and set aside the order passed by the learned CESTAT in the case of Shree Dev Krupa Ship Breaking. Appeal allowed - decided against assessee.

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• 2017 (2) TMI 523
  Interest on delayed refund - Revenue claim that the refund is being made within three months from the date receipt of Final Order of Honorable High Court and therefore, there is no delay on the part of Department to refund the amount - Held that: - the appellants are eligible for interest after three months from the date of filing the refund application 29.05.2001 - the appellant is eligible for interest on the refund amount from 29.08.2001 onwards till the payment of refund 20.10.2009 - appeal allowed - decided in favor of appellant.

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• 2017 (2) TMI 522
  Refund of SAD - procurement of goods from SEZ units - Notification No. 102/07-Cus dated 14-9-2007 - 100 % EOU - Held that: - In the case of Adinath Trade Link Vs. Commissioner of Customs, Kandla[2013 (8) TMI 430 - CESTAT AHMEDABAD] wherein it was held that The intention of the legislature by promulgating Notification No.102/2007-Cus. was to give refund of SAD paid by the importer on goods, on subsequent sale subject that conditions are fulfilled - the appellants had discharged the SAD leviable on the goods when procured from SEZ, and have subsequently sold the same, benefit of refund of the said SAD as per Notification No.102/2007-Cus cannot be denied to them only on the ground that movement of goods is from SEZ and it cannot be construed as import of goods - Appeal allowed - decided in favor of the assessee.

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• Corporate Laws

• 2017 (2) TMI 519
  Winding up petition - Held that:- The record of the instant appeal would show, and we highlight that it is the case of the appellant itself, that it had entered into settlement agreement with 14 other petitioners who had filed company petitions seeking winding up of the appellant. It is the case of the appellant that it is actively negotiating to settle the disputes with 8 other petitioners who have likewise filed the company petitions. We find that the appellant filed an affidavit on July 19, 2016 bringing to the notice of the learned Company Judge the endeavours made to settle the claims of the creditors. The conduct of the appellant before the learned Company Judge is clearly indicative of the appellant acquiescing in the order admitting the winding up petition and proceeding to settle the disputes with a number of creditors. This itself establishes that the appellant company is heavily in debt. Learned Senior Counsel for the appellant urge that merely because the appellant is in debt would be no ground to wind up the appellant if it otherwise is a viable company. We have serious doubts on that. From the statement of affairs filed, the manner of giving the information is primafacie suggestive of diversion of funds. Petition under Section 9 of the Arbitration and Conciliation Act, 1996 - Held that:- Surprisingly, in the appeal, the appellant itself has pleaded that the learned Company Judge had directed the appellant to formulate a scheme of compromise/arrangement with other creditors and if such a scheme was filed the learned Judge would consider removing the Provisional Liquidator. The appellant did not file any scheme but chose to selectively settle the disputes with a few creditors. During arguments in appeal Sh.Atul Nanda, learned Senior Counsel for the appellant, had requested us to defer hearing of the appeal to enable appellant to file a scheme of compromise/arrangement with the other creditors. The appellant is free to do so before the learned Single Judge. The facts which we have noted, which emanate from the statement of affairs filed by the directors of the appellant do not warrant any of the impugned order to be set aside in appeal. The debts owned by the appellant are much. The rosy picture painted in the balance sheet, is not so rosy. The situs of the assets of the appellant is not known. The persons who have to pay money to the appellant are unknown as of today. The persons with whom deposits have been made are unknown today. As regards the interim applications filed we decline relief for the reason any direction by way of an interim order to honour the settlement which the directors of the appellant have entered into after the Provisional Liquidator was appointed would require either payments to be made or flats to be handed over to the persons with whom the appellant through its directors has entered into a settlement and this would prima-facie amount to a preferential payment to an unsecured creditor. We dismiss the appeal and CM for the reason compromise orders obtained by the applicants would be in the nature of a decree and the applicants are free to file applications before the learned Company Judge seeking permission to institute execution proceedings. The appellant which is under provisional liquidation cannot be now represented by any of its ex-Directors and no settlement or undertaking by any ex-Director would bind the appellant company.

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• FEMA

• 2017 (2) TMI 518
  Prosecution under FERA - Acquirng foreign exchange without previous general or special permission from RBI from persons not being authorised dealers in foreign exchange and deposited the amounts in a bank account outside India - Complaint under Sections 8(1), 9(1)(a) and 14 of the Foreign Exchange Regulation Act, 1973 - HELD THAT:- On perusal of the letter written by the respondent, the contention of the respondent that he is not the citizen of India and he will not come under the purview of FERA is not at all acceptable. In view of the above circumstances, this court is of the considered view that there are so many incriminating materials available to presume that the respondent would have committed the offences and he is liable to be charged under Sections 8(1) and 9(1)(a) of FERA, 1973. The trial court, in the considered view of this court, without considering the materials available on record, has come to the conclusion that there is no incriminating materials available in this case in prima facie for framing charges under Section 8(1) of FERA 9(1)(a) of FERA. Hence, the impugned order passed by the trial court is liable to set aside and accordingly, the same is set aside.

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• Service Tax

• 2017 (2) TMI 539
  Interest - penalty - reversal of irregularly availed credit - whether the appellant is liable to pay the interest and penalty for the irregularly availed credit, which was reversed prior to utilisation according to the appellant? Held that: - having sufficient balance in the CENVAT account in any of the category namely input, capital goods or input services would suffice for the purpose of considering whether the appellant had reversed the credit before utilisation - the levy of interest and penalty is unwarranted - appeal allowed - decided in favor of appellant.

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• 2017 (2) TMI 538
  Cenvat Credit - 100% EOU - Refund claim - rejection on the ground of nexus - telecommunication services - Insurance services - Held that: - Merely because the SIM card or invoice is in the name of the employee it cannot be concluded that the mobile phone is for personal use of the employee when the address shows that of the company - refund allowed. Insurance services - Held that: - Though in the definition of input services it is mentioned that life insurance, health insurance etc., are excluded it is subject to the condition that such services are primarily for personal use or consumption of employee - None of the above insurance services can be said to be used primarily for personal use or consumption of employee - refund to be allowed. The appellant is eligible for refund - appeal allowed - decided in favor of appellant.

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• 2017 (2) TMI 537
  Refund claim - unjust enrichment - appellant contended that the amount so collected does not have the color or character of service tax for the reason that w.e.f. 01.07.2012, the said service fall in the negative list and are not taxable. The appellant having collected the tax erroneously has deposited the same to the Central Government. Thereafter they have filed the refund claim stating that there was no liability to make the payments as the services are not taxable. Held that: - even if credit notes are issued, the assessee has to establish that duty burden has not been passed on - the appellant has furnished documents to show that the amount collected has been adjusted. The amount was collected as service tax on the mistaken belief that the services were taxable. The amount however does not have the colour or character of tax for the purpose of levy by the department. Further, appellant has adduced evidence to show that the amount collected is adjusted - the rejection of refund claim is unjustified - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (2) TMI 536
  Cenvat credit - Input service - pre-mining activities - Department took a view that as these were not approved mines and the said activities availed by the appellants were not directly or indirectly related to the manufacturing activity of the appellant. - Held that: - The services availed by the appellants are very much towards compliance of the conditionalities therein. The invoices do in fact mention under the particulars column preparation of mining plan and environmental clearances . ; for preparation of mining plan for hydro study, rain water harvesting plant etc. I find that these services are very much essential for the eventual manufacturing activities utilising limestone mined from the demarcated areas. Though the letters evidencing grant of mining lease to the appellant have not been filed, it is seen that the letters conveying environmental clearance do indicate the fact - Appeal allowed - decided in favor of the assessee.

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• 2017 (2) TMI 535
  Demand of duty u/s 11D or recovery of amount u/s 11D - Concessional rate of duty - Notification 62/2002- Central Excise dated 31/12/2002 - activity of manufacture took place in tank-trucks within appellants factory and resultantly Ethanol blended Motor Spirit was cleared outside the factory - Held that: - Revenue could not decide as to 74,20,714/- 3,43,26,040/- were the duties of excise short paid or sums which were collected in excess of duties of excise. Therefore, there is an error in the invocation of provisions of law in the said Show Cause Notice. Therefore both Show Cause Notices are not sustainable in law - Decided in favor of the assessee.

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• 2017 (2) TMI 534
  Cenvat Credit - Rule 6(2) of Cenvat Credit Rules, 2004 - Separate account for dutiable and exempted goods - Held that: - In the present appeal for the said inputs there was no need for maintenance of separate accounts and it is undisputed that the respondent has availed Cenvat Credit only on such quantity of inputs which were used for manufacture of dutiable final products - Further as held by Division Bench of this Tribunal in the case of Steel Authority India Ltd. [2013 (3) TMI 115 - CESTAT NEW DELHI], there was no time limit during the relevant period for availment of Cenvat Credit after the receipt of inputs into the factory - Decided in favor of the assessee.

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• 2017 (2) TMI 533
  Cenvat Credit - duty paying documents - invoices do not contain necessary particulars - Held that: - The defect that the credit was taken by invoice issued by Mumbai branch office when goods were imported by importer at Chennai is only a procedural lapse if at all, and can be condoned. The defect that invoices were issued prior to clearances of goods from port is too flimsy and baseless allegation particularly to be raised at the receivers end - Appeal allowed - decided in favor of the assessee.

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• 2017 (2) TMI 532
  Cenvat credit - M.S. Steel items used in the fabrication of structures, cable tray, angles, etc - Rule 2(a) of Cenvat Credit Rules, 2004 - Held that: - Mere assertion of legal definition without supporting fact cannot be sustained to deny the credit. The decided cases, as mentioned above, are in support of the appellant’s plea for credit. Further, as held by the Hon’ble Supreme Court in the case of Rajasthan Spg. & Wvg. Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] the nature of usage of items on which the credit has been availed has to be examined in the factual context to determine their eligibility or otherwise. Applying such “user test”, the appellant’s eligibility for credit cannot be denied in the facts as recorded by the Lower Authorities - Appeal allowed.

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• 2017 (2) TMI 531
  Whether deemed credit is admissible on inputs 'Grey Fabrics' though Grey fabrics is not a declared input under N/N.6/2002-CE(NT) dated 01.03.2002? - Held that: - reliance placed in the case of C.C.E. vs. M.B. Dyers [2010 (2) TMI 361 - DELHI HIGH COURT], where it was held that the processed fabrics are the final products containing yarn/fabric and, therefore, it fulfils the requirements of Rule 11 of CCR, 2002 - the requirement of Rule 11 of the aforesaid rules being satisfied the authority has allowed the Cenvat credit - appeal allowed - decided in favor of assessee.

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• 2017 (2) TMI 530
  Refund claim - price variation clause - payment of excess duty - rejection on the ground that the appellants have not resorted to provisional assessment - Held that: - Vide letter dated 12.01.2011 the appellant has requested the Additional Commissioner, Kadapa division for provisional assessment stating the conditions in the purchase order - When the department has denied provisional assessment particularly, they cannot deny the refund saying that the appellant has not resorted to provisional assessment - appellant is eligible for refund - appeal allowed - decided in favor of appellant.

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• 2017 (2) TMI 529
  Gross negligence - Valuation - Classification - whether the department can be allowed to take different stands qua different charged officers when identical chargesheets have been issued against them - Held that: - the respondent had raised the objection of delay at the first opportunity available at the time of filing his statement of defence and stated that with the passage of time, his memory would fail in recollection of the relevant materials and lack of files and note-sheets of a period of about 15 years prior would create serious prejudice to his rights and the preparation of a statement of defence. Having regard to the facts of the case in hand and the settled position of law and also taking into consideration that the department agreed to accept the decision of the Tribunal in the case of Ms.Naini against whom an identical charge-sheet was issued, who had a greater role to play and also having regard to the fact that ultimately, the department was able to recover the entire amount, we find no grounds to interfere in the order passed by the Tribunal - Petition dismissed.

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• 2017 (2) TMI 528
  CENVAT credit - MS items - Held that: - the MS items were used for fabrication of capital goods such as Hopper equipments, Electro Static Precipitator, Belt Conveyor unit, Kiln Cooler Assembly etc. it is made out from the documents as well as photographs produced by the appellant, that the MS items have been used for fabrication of capital goods/parts/components - appellants are eligible for credit - appeal allowed - decided in favor of appellant.

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• 2017 (2) TMI 527
  Rebate claim - whether deemed credit can be recovered when the benefit of rebate was already recovered? - reliance was placed in the case of Pachmukhi Processors Pvt. Ltd Vs CCE Surat-I - 2010 (258) ELT 152 (Tri-Ahmd) where the appeal of M/s Pachmukhi Processors Pvt. Ltd was allowed observing that since the entire rebate claim has been recovered from the merchant exporter, again denying the deemed CENVAT Credit which was reversed while clearing the processed fabrics to the merchant exporter, would result in recovery of duty twice on the same goods. Held that: - The only difference in the present case is, besides export by M/s Aanchal Synthetics Ltd, the Department also proposed to recover deemed credit for clearance made to local buyers. The learned Advocate, considering the fact that the deemed credit of 4,871/-, being an insignificant amount, agreed to reverse the same to put an end to the litigation. Consequently, the Appellant is directed to reverse the deemed credit amounting to 4,871/- - In the result, the impugned order is modified to the above extent - appeal allowed in part.

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• CST, VAT & Sales Tax

• 2017 (2) TMI 521
  Classification of goods - NEBULA Jewellery Watch - whether fall under Entry 13(ii) of Schedule-II to the Value Added Tax Act or under Entry 87 of Second Schedule to the Act? - Held that: - As per meaning of Jewel /Jewellery in Law Lexicon Dictionary means Articles manufactured from those for the purpose of personal adornment are known as articles of jewellery. Even hair pin, hat pin, buckles and other similar ornaments adapted for personal use or otherwise, and composed of base metal or imitation of precious metals and otherwise, some being set with imitation precious stones, are dutiable as jewellery. Even the dress having diamond on it predominantly can be in a given case said to be a jewellery. Mainly because the NEBULA Watch carries the mechanism of watch it will not loose the characteristic of jewellery. No error has been committed by the learned tribunal in holding NEBULA Watch as NEBULA Jewellery Watch falling under Entry 13(ii) of Schedule II of the Act - appeal dismissed - decided against Revenue.

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• 2017 (2) TMI 520
  Re-assessment - matter was on remand - the first respondent, being the assessing authority, instead of undertaking the re-assessment, has simply proceed to pass the present impugned order. Whether the impugned order valid? - Held that: - re-assessment has not been done by the first respondent before passing the impugned orders in accordance with the directions issued by the appellate authority. This position cannot be controverted by the learned Additional Government Pleader appearing for the respondents also. Therefore, this Court is of the view that the impugned orders shall not stand in the legal scrutiny as if an authority is directed to do a particular thing in a particular manner, the same has to be done only in that manner not otherwise. Here, in the case in hand, though a categorical direction was given by the appellate authority, the same has not been followed by the Assessing Authority and, therefore, the impugned orders followed by the non- consideration on the part of the first respondent would not stand in the legal scrutiny and, therefore, this Court has no hesitation to quash the said impugned orders. The matter can be remanded back to the Assessing Authority to re-assess the entire issue strictly in accordance with the directions issued by the appellate authority - petition allowed in part by way of remand.

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• Indian Laws

• 2017 (2) TMI 517
  Bail application filed by the Appellant under Section 439 Cr.P.C. and Section 20 (8) of the Terrorist and Disruptive Activities (Prevention) Act, 1987 rejected - Held that:- Though the Appellant is involved in serious offences and has absconded for a period of 10 years before he was arrested in 2004, we see no reason to confine him to jail as he has already suffered more than 12 years in custody and the trial may not be completed in the near future. Taking note of the above, we grant relief of bail to the Appellant subject to the following conditions: a. The Appellant will furnish a bail bond in the sum of 1 lakh (One Lakh only) with one surety for a similar amount. b. The Appellant will reside at Porbandar and report daily to the City B Division Police Station, Porbandar at 6:00 PM. He shall not leave the territory of Porbandar. c. If the Appellant is required to attend any Court outside Porbandar the same may be done through video conferencing to be organized by the State. If video conferencing cannot be arranged the Appellant will be produced before any court, if necessary, through Escort by the Police. d.The Passport of the Appellant shall be surrendered before the Designated Court. e. The Appellant shall not indulge in tampering of evidence and influencing of witnesses. f. The State is at liberty to move for cancellation of bail, if the Appellant is found to be tampering with the evidence or causing hindrance to the progress of the trial.

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