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Newsletter: Where Service Meets Reader Approval. TMI Tax Updates - e-Newsletter February 14, 2019 Case Laws in this Newsletter: Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws TMI SMS High Seas Sale - import of goods - sales / transfer of the documents of title while the goods in the custom's bonded warehouse is local sale Articles GST Input Tax Credit on construction services in case the expenditure is not capitalized AMENDMENT TO THE COMPANIES (SIGNIFICANT BENEFICIAL OWNERS) RULES, 2018 News FINANCE BILL, 2019 - AS PASSED BY LOK SABHA ON 12-2-2019 Valedictory remarks of the Vice President and the Chairman, Rajya Sabha, Shri M. Venkaiah Naidu on the conclusion of 248th session (Budget session) of the Upper House (Rajya Sabha) of Parliament Notifications Customs 11/2019 - dated 12-2-2019 - ADD Seeks to rescind notification No. 11/2013- Customs (ADD), dated the 16th May, 2013 10/2019 - dated 12-2-2019 - ADD Seeks to amend notification No. 35/2018-Customs(ADD) dated 9th July, 2018 to amend the name of exporters at S. Nos. 1 and 2 of the duty table 09/2018 - dated 12-2-2019 - ADD Seeks to amend notification No. 52/2017- Customs (ADD) dated 24.10.2017 08/2019 - dated 12-2-2019 - ADD Seeks to amend notification No. 61/2015-Customs (ADD) dated 11.12.2015 GST - States 49/2018 State Tax - dated 29-11-2018 - Arunachal Pradesh SGST Amendment in Notification No. 32/2018- State Tax, dated the 10th September, 2018 48/2018 State Tax - dated 29-11-2018 - Arunachal Pradesh SGST Amendment in Notification No. 28/2018 – State Tax, dated the 10th August, 2018 77/2018-State Tax - dated 31-12-2018 - Gujarat SGST Late fee waived for GSTR-4 for July 17 to September 2018 76/2018-State Tax - dated 31-12-2018 - Gujarat SGST Late fee waived for GSTR 3B for July 17 to September 2018 75/2018-State Tax - dated 31-12-2018 - Gujarat SGST Late fee waived for GSTR-1 for July 17 to September 2018 74/2018-State Tax - dated 31-12-2018 - Gujarat SGST Gujarat Goods and Services Tax (Fourteenth Amendment) Rules, 2018 73/2018-State Tax - dated 31-12-2018 - Gujarat SGST Amendment in Notification No. 50/2018-State Tax dated 14/09/2018 71/2018-State Tax - dated 31-12-2018 - Gujarat SGST Extension for GSTR-1 for July 17 to March 19 till 31-3-2019 67/2018-State Tax - dated 31-12-2018 - Gujarat SGST Amendment in Notification No. 31/2018-State Tax dated 6th August, 2018 30/2018-State Tax (Rate) - dated 31-12-2018 - Gujarat SGST Insert Explanation in Notification No. 11/2017- State Tax (Rate)dated 30th June, 2017 29/2018-State Tax (Rate) - dated 31-12-2018 - Gujarat SGST Amendment in Notification No. 13/2017- State Tax (Rate)dated 30 June 2017 28/2018-State Tax (Rate) - dated 31-12-2018 - Gujarat SGST Amendment in Notification No. 12/2017- State Tax (Rate) dated 30 June 2017 27/2018-State Tax (Rate) - dated 31-12-2018 - Gujarat SGST Seeks to Amend Notification No. 11/2017- State Tax (Rate) dated 30th June 2017 26/2018-State Tax (Rate) - dated 31-12-2018 - Gujarat SGST Exemption on supply of gold by nominated agency for export of jewellery 25/2018-State Tax (Rate) - dated 31-12-2018 - Gujarat SGST Amendment in Notification No. 2/2017-State Tax (Rate) dated 30 June 2017 24/2018-State Tax (Rate) - dated 31-12-2018 - Gujarat SGST Seeks to amend Notification No. 1/2017-State Tax (Rate) dated 30 June 2017 Circulars / Instructions / Orders SEBI SEBI/HO/CDMRD/DNPMP/CIR/P/2019/29 - dated 11-2-2019 Framework for utilization of Financial Security Deposit (FSD) available with Clearing Corporations and WDRA Highlights / Catch Notes Income Tax Penalty - excessive claim of wastage - The additions made, to the extent confirmed by this Court, definitely leads to a finding of inaccurate particulars having been furnished which would enable invocation of Section 271(1)(c). Visit to Get Source Loss occurred on the purchase and sale of the units - The loss claimed by the assessee on the sale of securities shall be allowed without any dis-allowance made under sub-section (4) of Section 94. Visit to Get Source Nature of land sold - Though the certificate may state that there is no cultivation carried on the lands as per the land records, there is nothing on record to show that the land in question was put to use for any non-agricultural purposes. Visit to Get Source Penalty u/s 271(1)(c) - disclosure of income during survey - had it been the intention of the appellant to disclose the income voluntarily then the assessee would have disclosed the same by filing the revised return before survey which proves inaccurate particulars were filed in order to conceal the income in the original return of income - levy of penalty confirmed. Visit to Get Source Charitable activity - The advance made to employees of the trust, in fact, enables the assessee-trust to carry on the charitable object effectively and efficiently - there is no violation of Section 13(1). Visit to Get Source Rate of tax - royalty income earned by the assessee from its Indian Associated Enterprises, pursuant to an agreement dated 01-04-2008, should be charged to tax at 10.5060%. Visit to Get Source Delay in remittance of TDS - method and manner of calculation of interest - the term ‘month’ must be given the ordinary sense of the term i.e. 30 days of period and not the British calendar month as defined u/s 3(35) of the General Clauses Act Visit to Get Source Grant of registration u/s 12AA - non-disposal of application within a period of six months amounts to deemed grant of registration on the expiry period of six months from the end of the month, in which, application for grant seeking registration was received by the Ld.CIT (Exemptions) Visit to Get Source Unexplained cash credit u/s 68 - share application money - amount was received during the earlier years - entries made during the current year for converting deposits into share application money - No additions. Visit to Get Source Gain earned as acquired from IPO (Public issue) - The intention of the assessee gets manifested from the fact that the scrips have been sold within a very short span of time so as to reap the benefits of listing gains only. - Taxable as business profit only. Visit to Get Source Customs Requirement with the pre-deposit - Appellate Tribunal was well within his jurisdiction in dismissing the appeal on the ground of noncompliance of stay order Visit to Get Source Indian Laws Dishonor of Cheque - It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted Visit to Get Source Dishonor of Cheque - cheques were presented twice - insufficient funds - the complaint filed based on the second statutory notice is not barred and the High Court ought not to have quashed the criminal complaint and the impugned judgment is liable to be set aside. Visit to Get Source Dishonor of Cheque - section 138 read with section 141 of the Act - vicarious liability on director/partner - The very sine qua non for issuance of process is that the complaint, holistically read and understood, must aver that the directors or partners who are arrayed as accused were responsible to the company or firm for the conduct of the business. Visit to Get Source SEBI Framework for utilization of Financial Security Deposit (FSD) available with Clearing Corporations and WDRA Visit to Get Source Service Tax SEZ Unit - refund of service tax paid - condition of approval from UAC is not a mandatory requirement as per SEZ Act vide Section 51 of the SEZ Act which has an overriding effect over the provisions of any other law. Visit to Get Source Penalty u/s 76 and 78 of FA - the act of appellant of concealing relevant documents despite being afforded with the opportunity is definitely a positive act on his part to prove the alleged suppression of facts. Admittedly, ST-3 returns were also silent about the receipt of impugned income - penalty confirmed. Visit to Get Source Refund of service tax - intermediary services or not - In the present case, the appellant has directly provided services to the foreign clients and not acted as an intermediate in the provision of development of software and maintenance service Visit to Get Source Central Excise CENVAT credit - common inputs - it cannot be said that the goods manufactured and cleared under exemption were manufactured from all the inputs which were used exclusively in such exempted goods - the option of payment of 8% / 10% held as correct. Visit to Get Source CENVAT Credit - removal of inputs as such - shale stone - when the coal is issued for washing and screening and further preparation, it can be safely concluded that the inputs stand issued for utilisation in the manufacture of the final product - no reversal is required. Visit to Get Source The duty which was not admittedly payable but paid by the appellant voluntarily, no interest or penalty can be demanded from the appellant. Visit to Get Source VAT Local sale or sale in the course of import - High Seas Sale - the CST Act touches the concept of crossing the customs frontiers of India, which is distinct from customs barriers of India. Visit to Get Source Local sale or sale in the course of import - High Seas Sale - sales of the goods while being in customs bonded warehouse - transfer of the documents of title to the goods while the goods in the bonded warehouse is local sale. Visit to Get Source Case Laws: Income Tax 2019 (2) TMI 659 Reopening of assessment - proceedings under section 154 were also initiated against the petitioner on the same set of facts - reason to believe - Held that:- The Hon'ble Supreme Court in the case of State of Uttar Pradesh and others vs. Aryaverth Chawal Udyog and others [2014 (11) TMI 1095 - SUPREME COURT] has held that mere change of opinion while perusing the same material cannot be a reason to believe that a case of escaped assessment exists requiring assessment proceedings to be reopened. Even if, at the time of passing of the original assessment order, there is a mistake or nonapplication of mind, it would not justify the respondent Department to re-initiate the proceedings of reassessment. In the case, in hand, the Assessing Authority had applied its mind and passed the original assessment order and there is no fresh material on record permitting the respondent Department to initiate re-assessment proceedings. The impugned notice dated 29.03.2014 amounts to change of opinion on the same set of facts, which were available at the time of passing the original assessment order. This Court is of the opinion that the initiation of the re-assessment proceedings is bad in law and is liable to be set aside. - Decided in favour of assessee 2019 (2) TMI 658 Penalty imposed under Section 271(1)(c) - excessive claim of wastage - block assessment u/s 153A - Held that:- We need only refer to Section 271(1)(c) which not only speaks of concealment of particulars of income but also furnishing inaccurate particulars of such income. The additions made, to the extent confirmed by this Court, definitely leads to a finding of inaccurate particulars having been furnished which would enable invocation of Section 271(1)(c). We hence answer the said questions of law against the assessee and in favour of the Revenue. The order of penalty was passed after the Tribunal's order in the assessment was received, within the limitation period, noticing that the Tribunal had upheld the block assessment made by the Assessing Officer. The penalty order passed also has now been upheld by us and the contention of limitation rejected. This Court, in the assessment, modified the additions in favour of the assessee. Hence, if the limitation under the proviso to sub-section (1A) is said to operate, there could be no modification made of the order passed under Section 271 based on the order of the High Court. This would only be detrimental to the assessee since otherwise the assessee would have to pay the penalty as imposed in the impugned orders without the benefit of the modification being made available to the assessee. We do not think that the intention of the legislature was to prohibit the assessee from getting the benefit of an order in appeal before the higher authorities for reason only of the Department having not acted with expediency. We, hence, reject the said contention also and answer the first question against the assessee and in favour of the Revenue, which in fact would enure to the benefit of the assessee by enabling revision of penalty, as per the judgment of the High Court. 2019 (2) TMI 657 Addition u/s 68 - unexplained cash credit - Whether the Tribunal was correct in having deleted the additions, since the creditworthiness of the donor, to the three partners, who are said to have given advances to the firm, had not been established? - Held that:- The assessee firm has been able to point out the persons, from whom the firm had received credits. With respect to M.A. Unneeri Kutty [1991 (9) TMI 31 - KERALA HIGH COURT], it has to be noticed that the decision is an authority for the proposition that the assessee has to prove the identity of the creditor as also his creditworthiness and the genuineness of the transactions. Here, the creditors, as pointed out by the assessee firm, were the three partners. The three partners had also produced credible material to show their source of income for the specific advances made to the firm. If at all the source of the donor/ creditor is doubted, then there could be an assessment made only on that donor or creditor and not on the firm, who has proved the identity and creditworthiness of their creditor. To that end is the various decisions placed on record by the learned Amicus Curiae. We agree with the learned Amicus Curiae that no question of law arises from the order of the Tribunal and hence we reject the above appeal.- Decided in favour of assessee 2019 (2) TMI 656 Unexplained credit - Presumption of document recovered on search to be true and correct u/s 292C - Presumption as to assets, books of account, etc - Held that:- Section 292C speaks of a presumption insofar as books of accounts, other documents, money, bullion, jewellery or other valuable article or thing recovered in the course of a search under Section 132 or survey under Section 133A; as belonging to such person whose premises were searched and the contents of such books of accounts and other documents as being true. The initial burden necessarily has to be discharged by the department especially when the additions are proposed on one, other than the person whose premises were searched from where the documents were recovered. As to the addition made the assessee had no satisfactory explanation was the finding of the A.O. The fact that the amounts were paid to Sri. T.S.Asok by way of cheque was admitted by the assessee firm. The explanation was that it was refund of excess amounts paid by the said Asok. The A.O found that if the transaction was a legitimate one the credit and the debit would both be disclosed in the accounts. Here the payment alone was reflected in the accounts of the assesssee. The explanation offered by the assesssee as to the credit was not credible and hence disbelieved by the A.O. The first appellate authority rightly found that the cheque payment was a debit as seen from the accounts of the assessee and there was no reason to assume an unexplained credit. We perfectly agree with that and find no question of law arising therefrom. The first two questions of law has to be answered against the Revenue and in favour of the assessee. Insofar as the first appellate authority having not remanded the matter, on facts it is seen that the first appellate authority specifically called for a remand report from the AO; along with the documents produced by the assessee-firms before the first appellate authority. The AO even then did not carry out a proper enquiry. We, hence, find that the third question of law does not arise at all from the order of the Tribunal. Undisclosed income - balance consideration received from five purchasers of apartments in the assessee firm's project 'Cordial Tower' - corroborative evidence to find any additional sum having been received by the assessee firm - Held that:- We find Section 292C of the Act to be squarely applicable, since the document relied on was with respect to the assessee firm itself. The statement made by one of the purchasers, we find, is a self serving statement, which would not dispel the fact of receipt, of excess amounts, evidenced by documents recovered from the assessee's premise itself. On the specific transactions for which addition was made of ₹ 64,22,800/- and the documents relied on by the Department, we answer the question framed in favour of the Revenue and against the assessee. The order of the Tribunal, deleting ₹ 64,22,800/-, is set aside and the order of the Assessing Officer, making such addition, is restored. 2019 (2) TMI 655 Bogus expenses - expenses on shell companies - Held that:- Whatever may be the argument of the assessee we cannot be oblivious of the fact that the Rule 9 report accused the appellant of showing the bogus expenses of ₹ 272 crores or thereabouts in their accounts. Four shell companies were identified to which these expenses were made for allegedly procuring material and services to the assessee. Thereafter, the persons were identified as sub-dealers or sub-agents to whom this money was diverted. So much so that the entire bank accounts of these so called shell companies and sub-dealers were drained out. Now, this is not a very simple or usual discovery of facts. The assessee had just shown ₹ 126 crore as expenses. It was its duty to give an account for the rest of the money. It was also the duty of the Settlement Commission to ensure that the assessee did furnish proper accounts. In default adverse inference was drawn against them. The Commission was entitled to pass a best judgment order but doing so on the basis of gross receipts and expenses ratio or profit is not at all the wholly acceptable procedure. Some further enquiry was required. Equally the arbitrary was the method of addition of ₹ 36 crore to the expenses of the assessee. On what basis the Settlement Commission got this figure? Most probably it was using the figure to bring the receipt expenses or profit/expenses ratio of the assessee within the acceptable range. In the case of Ajmera Housing Corporation & Anr. Vs. Commissioner of Income Tax [2010 (8) TMI 35 - SUPREME COURT OF INDIA] as clearly tells us that where the settlement commission passed a final order without considering unexplained expenses, loans and surplus etc., the Court of jurisdiction could interfere. Assessment of undisclosed income can only be made following the principle of Brij Lal & Ors. Vs. Commissioner of Income Tax [2010 (10) TMI 8 - SUPREME COURT] - decided against assessee. 2019 (2) TMI 654 Income from house property - dispute before the Rent Control Tribunal was in respect of one of the properties which had been trespassed by M/s. Bank of Punjab Ltd., and the compensation/ mesne profit/ damages granted in respect thereof (L40) could not be compared to the rent received in respect of all other shops/premises from protected tenants - Tribunal held that in view of the fact that all the other shops/ premises of which the rent was sought to be enhanced, were covered by the Rent Control Act and the rent could not be in excess of the standard rent determined under the Rent Control Act - Held that:- We find that the submission on behalf of the Revenue proceeds on an incorrect fundamental premise viz. that the Addl. Rent Control Tribunal had fixed a rent of ₹ 1.42 lakhs per month in respect of (L40) premises, occupied by M/s. Bank of Punjab. This is factually incorrect. The amount of ₹ 1.42 lakhs per month were directed to be paid by M/s. Bank of Punjab in eviction proceedings as mesne profits/ damages. All the other premises are let out to persons who are protected by the Rent Control Act. Moreover, no order has been passed by the Rent Control Tribunal, fixing higher rent in respect of the other premises nor has the Revenue brought on record any evidence of the other premises being let out by the Respondent at more than the declared rent. Thus, we see no reason to interfere with the impugned order of the Tribunal for the four Assessment Years 2003-04 to 2006-07. 2019 (2) TMI 653 Loss occurred on the purchase and sale of the units - Applicability of Section 94(4) - Avoidance of tax by certain transactions in securities - Held that:- No such deeming fiction applied on the interest income obtained by the assessee by reason only of which the interest receivable by him is exempted from taxation. The fact that Section 10(15) exempts such interest income is not relevant, insofar as sub-section (4) speaking only of the interest received by an assessee being deemed to be not his income by reason of the provisions under sub-section (1). In such circumstances, we answer the first question of law framed in favour of the assessee and against the Revenue. We notice that the Tribunal has also considered the second issue of the assessee's purchase of securities being capital investment made, with which we do not think we have to deal with as we have found on the other issue that the assessee cannot be mulcted with the liability by adding back the loss claimed. There is also an ancillary ground raised on the application of sub-section (7) of Section 94, which is held in favour of the assessee and against the Revenue holding it to be prospective in application from 01.04.2002. The Hon'ble Supreme Court in CIT v. Walfort Share and Stock Brokers Private Limited [2010 (7) TMI 15 - SUPREME COURT] has upheld the judgment relied on by the Tribunal. The loss claimed by the assessee on the sale of securities shall be allowed without any dis-allowance made under sub-section (4) of Section 94. 2019 (2) TMI 652 Tonnage Tax Provisions to prior period income, reversal of prior period expenses, income from other sources, income from incidental activity and provisions to Sundry receipts of liquidate damages (Dry Dock) - profits on bar / shop sales and directors fees being eligible for benefit of tonnage tax provisions contending that the same do not arise out the assessee's core activity of operation of ships - Held that:- The disputed amount under the head "profits on bar / shop sales" is extremely small. We keep such question to be considered in the appropriate cases. With respect to the director's fees, the Tribunal by the impugned judgment has recorded that such fees would have been allowed as an expenditure and therefore, refund of the same should be treated as income directly relatable to the core activity. It would appear, therefore, that the refund of the director's fees would only give rise to the accounting adjustment against the expenditure for such fees that the assessee's would have claimed while computing its income eligible for tonnage tax provisions. No question of law in this context, therefore arises. The Registry is directed to communicate copy of this order to the Tribunal. This would enable the Tribunal to keep papers and the proceedings relating to the present appeal available, to be produced when sought for by the Court. 2019 (2) TMI 651 TDS u/s 194C OR 194J - placement fees/carriage fees paid to cable operators/MSO/DTH operators - Short deduction of tds - Held that:- The issues raised herein stand concluded in favour of the respondent and against the appellant-revenue by the decision of this Court in case of Commissioner of Income Tax, TDS-2, Mumbai Vs. UTV Entertainment Television Ltd. (2017 (11) TMI 915 - BOMBAY HIGH COURT). In view of the fact that the issues stand concluded by the decision of this Court, the questions as proposed do not give rise to any substantial question of law. Thus, not entertained. 2019 (2) TMI 650 TDS u/s 194H - payment of Guarantee Commission paid by the Assessee to the Banks - Held that:- The so called bank guarantee commission is not in the nature of commission paid to an agent but it is in the nature of bank charges for providing one of the banking service. The requirement of Section 194H of the Act, therefore, would not arise. No question of law arises. See Commissioner of Income Tax (TDS)-1 Vs. Larsen & Toubro Ltd. [2018 (12) TMI 991 - BOMBAY HIGH COURT]. 2019 (2) TMI 649 Lease equalization charges - Held that:- The said question has been decided against the Revenue by the Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Virtual Soft Systems Ltd., (2018 (4) TMI 1472 - SUPREME COURT). Accordingly, the said question is decided against the Revenue and the appeals are dismissed as against the said question of law, i.e., in respect of lease equalization charges. Deduction of 1/10th of the share issue expenses - the provisions of amortization under Section 35D applied only to the primary issue of shares and in respect of subsequent share issues, the expenditure had to be disallowed as capital expenditure - Held that:- Tribunal has allowed the same on the ground that such expenses were allowed in the assessment years 1990-91/1993-94 and 1/10th of the same was allowed 8/5 years out of 10 years till the assessment year 1996-97. In our considered view, the Tribunal should have remanded the matter to the Assessing Officer to cause verification and then decide the issue. Therefore, we are of the view that the first substantial question of law is to be remanded to the AO for fresh consideration. 2019 (2) TMI 648 Charitable activity - Entitlement to the benefits available under Section 12AA and Section 80G contrary to the proviso of Section 2(15) - reference to expression 'otherwise' - Held that:- Tribunal has set aside the order passed by the DIT (Exemptions) dated 30.09.2010 rejecting the claim made by the assessee for registration under Section 12AA on the ground that the activities of the assessee as contained in the Memorandum cannot be called as charitable in nature as defined under Section 2(15) of the Act. DIT in the order dated 30.09.2010 came to such a conclusion solely based on Clause xvi of the Rules and Regulations of the respondent and held that it speaks about conducting programmes for raising funds or otherwise. DIT observed that the term 'otherwise' is vague and cannot be called as charitable purpose. Tribunal while deciding the correctness of the said order, in our considered view, rightly held that the expression 'otherwise' has to be read along with the objects enumerated in the Rules and Regulations of the Assessee, which was found to be charitable in nature and of public cause. It would be well open to the AO to take note of the same while completing the assessment. Thus, in our considered view, the order passed by the Tribunal is perfectly legal and valid. - Decided against revenue. 2019 (2) TMI 647 Nature of land sold - whether the land which was sold by the assessee was an agricultural land or not? - Held that:- We need not labour much to answer the question since the first Appellate authority viz., the CIT (A) as well as the Tribunal have made a thorough factual exercise and found that the land sold by the assessee was sold as an agricultural land. More importantly, the CIT (A) called for a remand report from the AO as to the distance between the property in question and the outer limit of the notified municipality. AO conducted inspection of the property in the presence of revenue officials and submitted a remand report, in which, it has been categorically stated that the land is situated at a distance of more than 8 kms away from the outer limits of St.Thomas Mount Cantonment Board. The remand report was taken into consideration by the CIT (A) as one of the factors for allowing the appeal filed by the assessee. CIT (A) also referred to the certificate issued by the Tahsildar and one of the important entry in the said certificate is by stating that the lands are classified as agricultural lands. Though the certificate may state that there is no cultivation carried on the lands as per the land records, there is nothing on record to show that the land in question was put to use for any non-agricultural purposes. Apart from that the assessee has also paid taxes which has been recorded by the CIT(A). - Decided against revenue. 2019 (2) TMI 646 Lease rental income earned from commercial properties - Income From House Property OR business income - AR submitted that the issue contested by the assessee in the present appeal has been decided against the assessee by the Hon'ble Supreme Court in earlier Assessment Years in light of the decision of M/s Ansal Housing Finance & Lease Company Ltd in assessee’s own case [2012 (11) TMI 323 - DELHI HIGH COURT] - Held that:- We have heard both the parties and perused the material available on record. The assessee through its AR has rightly submitted that the issue contented in the present appeal is decided against the assessee by the Hon’ble Jurisdictional High Court. Therefore, this appeal is dismissed but in light of the SLP pending before the Hon'ble Supreme Court. The assessee is at liberty to take appropriate action if the Hon’ble Apex Court decided the issue in favour of the assessee. In result, the appeal of the assessee is dismissed. 2019 (2) TMI 645 Eligibility for claiming deduction u/s 80IA(4) denied - assessee has failed to furnish a certificate from the concerned port authorities certifying that the structure at the port for storage, loading and unloading etc. formed part of Port - Held that:- The issue raised in the present appeal is similar to the issue before the Tribunal in earlier years and following the same parity of reasoning, we hold that the assessee is entitled to claim the deduction under section 80IA(4) of the Act. Thus, the grounds of appeal raised by Revenue are dismissed. 2019 (2) TMI 644 Deduction u/s 80IB(10) denied - plea of assessee was that it had plot area of 4074 sq.mtrs., out of which road acquisition area was reserved of 513.80 sq.mtrs. and on the remaining area of 3560.20 sq.mtrs. the housing project was built - Held that:- Where the assessee had purchased land admeasuring 4074 sq.mtrs. vide registered Development Agreement dated 31.08.2004 and where also the sanctioned building plan mentioned the plot area of 4074 sq.mtrs., out of which deduction of road acquisition by PMC was 513.80 sq.mtrs., fulfills the basic condition of section 80IB(10) of developing the housing project on minimum area of one acre. It was held that road acquisition area which was left out was part of housing project. The said proposition has also been applied by the Tribunal in assessee’s own case in assessment year 2009-10 [2013 (10) TMI 1514 - ITAT PUNE]. The case of assessee is thus, squarely covered by earlier orders of Tribunal. Accordingly, we find no merit in the grounds of appeal raised by Revenue and the same are dismissed. - Decided against revenue. 2019 (2) TMI 643 Addition of labour expenses - Held that:- As perused the materials available on record and gone through the orders of the authorities below. We find that the A.O. has made addition by estimating the expenses. A.O. has not given any reason to disallow the claim of the assessee merely stating that these are excessive, in our view is not sufficient. There has to be some reason for treating the expenses as disproportionate or excessive as wages are never remained constant. Therefore, we direct the A.O. to delete this addition. Ground No.1 of the assessee is allowed. Addition made on account of low house withdrawal - Held that:- As perused the materials available on record and gone through the orders of the authorities below. We find that the revenue has not controverted the fact that the A.O. has not taken a lower withdrawal and has been made addition purely on estimation basis. No reasoning is given as to why this amount is excessive. We therefore, direct the A.O. to delete this addition. Addition of Shop expenses - Held that:- A.O. has made disallowance purely on the basis of estimation. No reason is given as to why the pre-survey and post-survey are excessive. Therefore, we cannot sustain these additions and the A.O. is directed to delete the same. Excess stock as found and declared during the course of survey without properly appreciating the facts of the case and submission made before him - Held that:- Undisputedly, the assessee has declared amount in his return of income. The assessee himself has declared its amount and has not even revised his return of income. The assessee has also not stated as to how he is aggrieved by the order of the A.O. as he has not made any addition in the assessment order. Therefore, we do not see any infirmity in the order of the CIT(A) and the same is hereby affirmed. Appeal of the assessee is dismissed. 2019 (2) TMI 642 Penalty u/s 271(1)(c) - non specification of charge - defective notice - penalty levied without giving a valid notice by specifying the fault for which the assessee was being proceeded with u/s 271(1)(c) - Held that:- As decided in PRINCIPAL COMMISSIONER OF INCOME TAX-19, KOLKATA VERSUS DR. MURARI MOHAN KOLEY [2018 (9) TMI 1 - CALCUTTA HIGH COURT] there was no specific charge against the assessee in the notice. Revenue has missed out their opportunity to subject the assessee to the penalty proceeding by not issuing a proper notice. No specific case has been made out by the Revenue as to why the matter should be remanded except that the assessee had not participated properly in the assessment proceedings but for that reason best judgment assessment has been made and the income, which had escaped assessment has been added to the income of the assessee. It was incumbent upon the Revenue to make out a specific case for imposition of penalty, on which count the Revenue has failed. Thus penalty imposed by the AO and confirmed by the Ld. CIT(A) u/s. 271(1)(c) of the Act in the present case is not sustainable and hence, we delete the same. - decided against revenue 2019 (2) TMI 641 Addition on account of commission income at the rate of 2% - accommodation entries given to the Mumbai based Companies in the form of commission income - addition made on protective basis - Held that:- CIT(Appeals) did not await the outcome of the proceedings arising from the substantive assessment and since the said information was not forthcoming even after a considerable period from the concerned assessing officer, he proceeded to dispose of the appeals arising from the protective assessments by his impugned orders and deleted the addition made on protective basis without awaiting the final outcome of the proceedings arising from the substantive assessment. Keeping in view the decision of CIT –vs. - Surendra Gulab Chand Modi [1981 (3) TMI 21 - GUJARAT HIGH COURT] we hold that the CIT(Appeals) was not justified in deleting the additions made by the Assessing Officer on protective basis in all the three years under consideration without awaiting for the final outcome of the proceedings arising from this substantive assessment. We, therefore, set aside the impugned orders of the CIT(Appeals) on this issue and remit the matter back to him for keeping it alive and pending till the outcome of the proceedings arising from the substantive assessment. Additions made on account of commission income allegedly received by the assessee for giving accommodation entries, we find that this issue is consequential to the issue relating to the addition made on protective basis on account of accommodation entries allegedly given by the assessee-company to the Mumbai based companies. Since the said issue is remitted back by us to the CIT(Appeals), we also remit the consequential issue relating to addition on account of commission income back to the CIT(Appeals) for deciding the same afresh. - Decided in favour of revenue for statistical purposes. 2019 (2) TMI 640 Penalty u/s 271(1)(c) - reason for depreciation being claimed at 120% on air pollution control of equipments on items over 120 days and 60% for items below 120 days - Held that:- Assessee was under bona fide belief that depreciation calculated by software was correct. Thus in our view assessee was in bonafide belief that it is eligible for depreciation at 120% and that foreign exchange fluctuation loss on account of purchase of sale was a revenue expenditure. It is observed that explanation offered by assessee has not been found to be false by AO. It is a case of wrong claim, which cannot be categorised within ambit of filing of inaccurate particulars. Genuineness of foreign exchange fluctuation loss on account of purchase of assets has not been disputed by the AO. During the course of assessment proceedings, only the claim of deduction on account of additional depreciation and foreign exchange fluctuation loss has been disallowed as the same was not found to be allowable as per the Income Tax Act. Thus, it is a case of mere disallowance of claim of deduction on account of additional depreciation and foreign exchange fluctuation loss. In the case of Reliance Petro Product Ltd. (2010 (3) TMI 80 - SUPREME COURT) mere disallowance of claim of expenditure does not attract penalty u/s 271(1)(c). Relying upon the decision of Reliance Petro Products Ltd., the Assessing Officer is hereby directed to delete the impugned penalty. - Decided in favour of assessee. 2019 (2) TMI 639 Assessment u/s 153A (1)(b) - whether papers were found from the residence of the Directors of the company? - Held that:- It has been recorded that certain papers were found and seized from the residence of the assessee (which is a company). No where it is stated that papers were found from the residence of the Directors of the company at Shalimar Bagh or during the search of the premises at B- 44 and that these papers belong to the assessee company justifying the initiation of proceedings under section 153C. It can safely be assumed that the reference to section 153C, is an afterthought in the event of the failure to explain the assessment under section 153A read with section 143(3) of the Act. Furthermore, it is clear that the prescribed procedure has not been followed for initiation of the proceedings under section 153C. Finally, it is seen that the assessee has raised the issue of validity of notice under section 153A(1)(a) the very first instance while filing the return . Hence, such defect cannot even be cured by the provisions of section 292B of the Act. In the circumstances, after considering the facts of the case and the relevant case laws on the subject, thus constrained to hold that the assessment under section 153A(1)(b) read with section 143(3) of the Act is void ah initio. Requirement of issuance of notice under section 143 (2) within period of limitation - Jurisdiction to pass the assessment order u/s 143(3) vide notice u/s 143(2) - the first notice u/s 143(2) was not issued within the time period as per section 143(2) - Held that:- Limitation for issuance of notice under section 143 (2) has to be reckoned from date of filing of original return of income, for year under consideration being 21/09/11 and notice under section 143 (2) has been issued on 06/03/13, which is beyond limitation period. There are plethora of decisions by Hon’ble Supreme Court in case of ACIT vs Hotel blue Moon [2010 (2) TMI 1 - SUPREME COURT OF INDIA] which opines settled legal position that, requirement of issuance of notice under section 143 (2) within period of limitation is mandatory for completing assessment under section 143(3) of the Act. - Decided in favour of assessee 2019 (2) TMI 638 Penalty u/s 271(1)(c) - disclosure of income being made as a result of survey proceeding and not voluntary - Held that:- The assessee’s plea that declaration was made by revised return or that the assessee asked for immunity from penalty for income declared in survey by and under letter dated 18.05.2010 or that disclosure was made to purchase peace and to avoid litigation or that the revised return was filed before the issuance of notice u/s 148 or that there is no addition on the income declared in revised return and therefore penalty under section 271(1)(c) cannot be levied is not tenable in law. Apart from that, voluntary disclosure does not release the assessee from the mischief of penalty proceeding. Statute does not recognize those type of defenses under the explanation of Section-1 to Section 271(1)(c) of the Act. All such issues have already been decided by the Hon’ble Apex Court in the judgment of MAK Data Pvt. Ltd.-vs-CIT [2013 (11) TMI 14 - SUPREME COURT] It appears from the records that the appellant failed to prove the genuineness and/or creditworthiness and identity of the persons who had given share capital and premium. Moreso, had it been the intention of the appellant to disclose the income voluntarily then the assessee would have disclosed the same by filing the revised return before survey which proves inaccurate particulars were filed in order to conceal the income in the original return of income. Explanation – 1A to Section 271(1)(c), therefore, is fully satisfied and thus ultimately penalty to the tune of ₹ 5,50,000/- has been levied upon the assessee for concealment of total income of ₹ 1,60,00,000/-. Taking into consideration the entire aspect of the matter specially the conduct of the assessee and the intention as evident from the series of events and in the light of the judgment passed by the Hon’ble Apex Court as cited above we find that the authorities below rightly applied the ratio of said judgment in the case in hand and levied penalty. We find no ambiguity in confirming the said penalty - decided in favour of revenue 2019 (2) TMI 637 Reopening of assessment - addition on account of disallowance of depreciation - Held that:- For AY 2002-03 the assessment is reopened by issue of notice u/s 148 of the Act beyond four years from the end of the assessment years in which the original assessment was completed. The reasons recorded clearly shows that the claim of the assessee of depreciation was the reason for reopening of the assessment. It is appreciation of the same evidences which were there along with the return of income. No new tangible material was stated to have come into the possession of AO. In absence of any tangible material for reopening of the assessment we do not find any reason to reverse the decision of the ld CIT(A) wherein, he has quashed the reopening of assessment proceedings. - Decided against revenue Disallowance of depreciation - ownership with other people - Held that:- it is apparent that out of the total cost of ₹ 940030383/-, 54.13% amounting to ₹ 508621383/- belongs to the assessee and 45.87% amounting to ₹ 431409000/- belong to Bharti Mobile Ltd. The assessee has claimed depreciation only on ₹ 508621383/- as held by the ld CIT(A) and not on the full amount of ₹ 940030383/-. The ld Departmental Representative also could not show that the assessee has claimed depreciation on the assets beyond his share of ownership. In view of this we do not find any infirmity in the order of the ld CIT(A) and dismiss - Decided against revenue 2019 (2) TMI 636 Maintainability of appeal - monetary limit - Addition u/s. 68 on account of share capital/premium received by the assessee - CIT-A deleted the addition admitting additional evidence - Held that:- The appeals of Revenue are not maintainable on account of low tax effect prescribed by CBDT Circular of 2018. Further, in the absence of any material placed on record by the Revenue to demonstrate that the issue in the present appeals are covered by exceptions provided in para 10 of the aforesaid CBDT Circular, we are of the view that the monetary limit prescribed by the instructions of the aforesaid CBDT Circular would be applicable to the present appeals of the Department. We accordingly dismiss all the appeals of Revenue without expressing any opinion on merits of the case. The grounds of the Revenue are dismissed. 2019 (2) TMI 635 Revision u/s 263 - entitled to deduction @ 30% of the profits instead of 100% under the provisions of section 80IC - Held that:- It is an admitted fact that the business unit of assessee was setup in 2004-05 and business activity was commenced in April, 2006. It is also not in dispute that as per the year of commencement of business, the initial assessment year of the business was 2007-08 for claiming deduction u/s. 80IC. It is also not in dispute initially, the assessee claimed deduction @ 100% on the premise that new unit was set up in the State of Himanchal Pradesh and now the assessee wanted to continue this rate of 100% for next five years under the said provisions on the premise that they have made substantial expansion, which is not permissible as per scheme of the section 80IC regarding commencement of initial assessment year. The aforesaid issue has been finally decided in recent decision of CIT vs. Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT OF INDIA] as unequivocally supports the findings reached by the ld. Pr. CIT that the assessee was not entitled to get 100% deduction treating the year under considering as initial assessment year on the premise of substantial expansion of business. A perusal of the impugned assessment order nowhere reveals that the Assessing Officer, not to speak of reliance on any decision of jurisdictional High Court, has not even addressed or examined or verified the claim of the assessee in terms of provisions of section 80IC of the Act. The ld. Pr. CIT, on correct appreciation of section 80IC, which is supported by various decisions relied in the impugned order as well by the decision of Hon’ble Supreme Court in the case of CIT vs. Classic Binding Industries (supra), being the law of land, was therefore justified to in revising the assessment being erroneous in so far as prejudicial to the interest of Revenue. - Decided against assessee. 2019 (2) TMI 634 Addition u/s 43B - assessee failed to deposit service tax to the Central Govt. Account well before filing of return - Held that:- Assessee before us maintains its account on Mercantile basis and had shown a sum of ₹ 1,49,48,482/-, as service tax payable in its annual account for year under consideration. Finance Act,2011 provides that, from 01/04/11 service tax will have to be paid on accrual basis, meaning thereby, till 31/03/11 service tax was payable on collection or receipt basis, i.e. when dues are realised, service tax was payable. The case of assessee is that during relevant financial year, service tax was payable upon realisation of dues and assessee had made a provision in balance sheet for outstanding service tax payable, which was not claimed in profit and loss account as expenditure. As decided in COMMISSIONER OF INCOME TAX VERSUS NOBLE AND HEWITT (I) P. LTD. [2007 (9) TMI 238 - DELHI HIGH COURT] since the assessee did not debit the amount of profit and loss account as an expenditure nor did the assessee claim any deduction in respect of the amount and considering that the assessee is following the Mercantile system of accounting, the question of disallowing the deduction not claimed would not arise. - Decided against revenue 2019 (2) TMI 633 Charitable activity - violation of Section 13(1)(c) and 13(1)(d) - assessee advanced money for purchase and construction of school building at Perungudi - Held that:- The Memorandum of Understanding dated 06.04.2006 clearly indicates that the assessee advanced money for the purpose of acquiring land and construction of building for the school. Even though it was paid to M/s Futura Construction Pvt. Ltd., it reached M/s Nischa Deep Enterprises Pvt. Ltd., who is the owner of the land. Therefore, this Tribunal is of the considered opinion that there is no violation of either Section 13(1)(c) or 13(1)(d) of the Act. Hence, the CIT(Appeals) has rightly allowed the claim of the assessee. A similar view was expressed by this Tribunal in Dy.DIT(E) v. Vels Institute of Science, Technology & Advanced Studies [2015 (11) TMI 857 - ITAT CHENNAI]. Advance made to Shri C.M. Babu - Held that:- It is not dispute that the assessee advanced amount for purchase of land. Merely because there was delay in completion of sale deed, this Tribunal is of the considered opinion that it cannot be said that there was any violation of Section 13(1)(c) or 13(2)(b) of the Act. Therefore, when the assessee advanced money for acquisition of property in connection with charitable object carried on by the assessee, this Tribunal is of the considered opinion that it has to be construed as application of income. Therefore, there is no question of violation of any provisions of the Act. Advance paid to employees of charitable trust - Held that:- When the assessee advanced money to the employees of the trust, it cannot be construed as violation of any of the provisions of Section 13 of the Act. The advance made to employees of the trust, in fact, enables the assessee-trust to carry on the charitable object effectively and efficiently. Unless the employees of the trust were motivated by advancing interest-free-funds, this Tribunal is of the considered opinion that the assessee may not be able to carry out the charitable object as expected by the trustees. Therefore, there is no violation of Section 13(1) of the Act. Advance made to other societies, who are having similar object, it is not in dispute that the advance made from the surplus funds of the current financial year. What is prohibited under the Incometax Act is advancing of money from the accumulated funds of the earlier year. It is not the case of the Revenue that the assessee has transferred the accumulated funds contrary to the purpose for which it was accumulated. In those circumstances, this Tribunal is of the considered opinion that when the assessee advanced money to similar societies who are carrying on similar object of charitable institution like assessee, there is no violation of Section 13(1) of the Act. Investment in M/s VGP Golden Beach Resorts Pvt. Ltd., the CIT(Appeals) has restricted the disallowance to the extent of the investment made in VGP Golden Beach Resorts Pvt. Ltd. Of course, the investment in VGP Golden Beach Resorts Pvt. Ltd. is in violation of Section 11(5) of the Act. Therefore, as rightly found by the CIT(Appeals), the disallowance has to be restricted only to the extent of investment made. Claim of depreciation - Held that:- It is not in dispute that the assessee claimed the cost of the asset as application of income under Section 11 of the Act. The Apex Court in Rajasthan And Gujarati Charitable Foundation Poona [2017 (12) TMI 1067 - SUPREME COURT] found that the assessee is eligible for depreciation under Section 32 of the Act even though the cost of asset was allowed as application of income. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Revenue appeal dismissed. 2019 (2) TMI 632 Addition of unsecured loan - AO did not provide due opportunity to the assessee to submit relevant documentary evidence during assessment proceedings and made addition - Held that:- AO alleged that during the course of assessment proceedings, the assessee was asked to furnish the names and address of the person from whom the firm has received unsecured loan and also asked to furnish the date and mode of receipt of loan but there is no mention regarding issuance of any notice or notesheet entry requiring the assessee to furnish abovenoted documentary evidence or details. Therefore, clearly observe that the AO did not provide due opportunity to the assessee to submit relevant documentary evidence during assessment proceedings and made addition. CIT(A) simply reproduced the observations of the AO and confirmed the addition by observing that even during the course of appellate proceedings the assessee has not given address of loan creditors, date on which alleged loan was obtained and whether the same was received through cheque or cash. CIT(A) also observed that in absence of date of obtaining loan, it cannot be said that they are old loans. No mention regarding issuance of any notice to the assessee or any notesheet entry seeking the required details by the first appellate authority. If the AO or appellate authority is not specifically asking the assessee to submit specified documentary evidence or details and adjudicating the issue against the assessee in absence of such relevant documentary evidence and details, then can safely presume that the assessee was not allowed due opportunity of hearing by the authorities below to submit its case along with supporting documentary evidence and relevant details. Therefore, second limb of rule 29 of the ITAT Rules, 1963 is to be pressed in service for admission and consideration of additional evidence submitted by the assessee before the Tribunal. In view of foregoing discussions, the additional evidence filed by the assessee including other relevant details of the creditors are relevant and necessary evidence, which should be taken on record to meet the ends of justice and to sub-serve the purpose and cause of justice. Therefore, application of the assessee for taking additional evidence is allowed under rule 29 of the ITAT Rules, 1963 and additional evidence is taken on record for consideration. Since the AO was not allowed to verify and examine the documentary evidence, which has been admitted as additional evidence in earlier part of this order, therefore, the issue of unsecured loan/creditors is restored to the file of AO for fresh examination - Appeal of the assessee is allowed for statistical purposes. 2019 (2) TMI 631 Disallowance of Research & Development capital expenditure - no documentary evidence of any real R&D activity by the assessee, was furnished - Held that:- We find that the assessee claimed to have incurred capital expenditure of ₹ 1,26,100/-. Despite the AOs’ requirement, the assessee could not produce any evidence to show that it was really engaged in doing some research activity. Similar position prevailed before the CIT(A). As recorded that no documentary evidence on real Research & Development activities was furnished. The position is no better before us as well. On a specific requisition, the ld. AR could not draw our attention towards any cogent material or evidence to demonstrate that it was engaged in carrying out any real research activity. Under such circumstances, action of the authorities below in allowing depreciation @15%, as against 100% claimed by the assessee on the capital expenditure, is unimpeachable. This ground is not allowed. Disallowance of Warranty expenses - Held that:- For the year under consideration, when the amount of sales dipped to ₹ 3.78 crore, amount of provision increased multifold from ₹ 9 lakh to ₹ 22 lakh as against the actual expenditure incurred on repairs standing only at ₹ 11,39,474/-. This narration of facts amply proves that the creation of warranty provision was not based on any scientific calculation but was rather an ad hoc exercise. Under such circumstances, we cannot grant deduction in respect of warranty provision. Once it is held that the creation of provision cannot be allowed as deduction, it is further clarified that the reversal of provision should also not be brought to tax, if the creation of such provision was earlier not allowed as deduction. To put it simply, neither the creation of provision nor its reversal, if earlier not allowed as deduction at the time of making it, would lead to deduction or taxability of any sum but the actual expenditure incurred by the assessee on repairs on year to year basis would qualify for deduction. With these observations, we set aside the impugned order to this extent and remit the matter to the file of AO for deciding the issue in accordance with our above directions. Research & Development capital expenditure cannot be allowed as deduction @100% but depreciation should be allowed at the eligible rate. Similarly, in so far as warranty provision is concerned, it is held that provision for warranty should not be allowed as deduction; reversal of the provision in the year, if not allowed as deduction at the time of its creation, should not be charged to tax but the actual expenditure incurred should be allowed as deduction. 2019 (2) TMI 630 Assessment u/s 153C - assumption of jurisdiction by the A.O. under section 153C - proof of incriminating material as found during the course of search - Held that:- Considering the facts of the case in the light of satisfaction note dated 22nd January 2014 reproduced above, it is clear that the only incriminating documents relates to the assessee was balance sheet and profit and loss account as on 31st March 2010 which would not relate to assessment years under appeals i.e., A.Ys. 2006-2007 to 2008-2009. Thus, no incriminating material was found during the course of search so as to proceed against the assessee under section 153C of the Income Tax Act. It is a general satisfaction recorded, therefore, A.O. was not justified in proceeding against the assessee under section 153C of the I.T. Act, 1961. - Decided in favour of assessee 2019 (2) TMI 629 Penalty u/s 271C - failure to deduct TDS during the year under appeal - reasonable ground to hold that provisions of Sections 194J and 194C may not apply in the case of the assessee - Held that:- In the present case, the A.O. passed the Order on account of default on the part of the assessee for non-deduction of the TDS under section 201(1)/201(1A) of the Income Tax Act. Copies of the Orders are available on record. CIT(A) considered the issue of payment made to EMRI and held that assessee was required to deduct tax at source on payments made to a EMRI. Similar view have been taken by the Ld. CIT(A) with regard to the payments made to other NGOs/Charitable Institutions and business entities. The action of the A.O. was thus confirmed in principle. Alternative argument of the assessee that the payees concerned had duly accounted for the impugned receipts in their return of income and paid the taxes as per Law - alternative contention of assessee was accepted and assessee was directed to furnish documentary evidences in support of its contention before A.O. with a direction to A.O. to satisfy himself about the correctness of the claim of assessee and modify the tax demand accordingly. Interest was however chargeable for the default and it should be reviewed as per verification of the taxes paid by the recipients. The appeal of assessee was thus partly allowed. D.R, therefore, rightly contended that there were no justification for the Ld. CIT(A) in the penalty matter to hold that assessee is not in default of deduction of tax. Since the matter of quantum is restored to the A.O. for verifying the above claim of assessee, therefore, it would be reasonable and proper to restore the penalty matter also to the file of A.O. to pass the fresh Order in accordance with Law, after passing the Order under sections 201(1)/201(1A) of the Income Tax Act, 1961, as per the directions of the Ld. CIT(A). Whether assessee would have a reasonable cause shall be re-determined by the A.O, after giving reasonable, sufficient opportunity of being heard to the assessee. Appeal of the Department is allowed for statistical purposes. 2019 (2) TMI 628 TP adjustment on account of guarantee commission in respect of corporate guarantee provided by the assessee to its Associated Enterprises [AEs] - Held that:- Since this issue has already been decided by the various Co-ordinate Benches in favour of the assessee in the earlier years, we therefore ,respectfully following the same, direct the AO/TPO to apply the guarantee commission of 1%. TP adjustment in respect of subscription and redemption of preference share capital - Held that:- The subscription and redemption of shares cannot be re- characterized as loan and therefore no interest should be charged on the said re-characterized loan. AR also submitted that the Co-ordinate Benches have held that the commercial expediency of transactions entered into by the assessee with its AE, cannot be questioned by the TPO, unless there are evidences and circumstances to doubt and it cannot be given different colours so as to expand the scope of TP adjustment by re-characterizing it as interest free loan. The rival contentions and perused the decisions relied upon. Since this issue has already been decided by the various Co-ordinate Benches in favour of the assessee in the earlier years, we, therefore, respectfully following the same direct the AO/TPO to do it accordingly. Disallowance of interest expenses u/s. 36(1)(iii) - Held that:- Where the assessee has substantial own funds, then presumption is that assessee has given advances to its sister concerns from its own funds. Thus, following the ratio laid down in the cases of CIT Vs. Reliance Utilities Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT Vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT], the issue has been decided in favour of assessee. Disallowance u/s. 14A computed @ 0.5% of average value of investments on account of administrative expenses - Held that:- In this case, the assessee has not made any suo motu disallowance towards exempt income, which was to the tune of ₹ 16.01 Crores during the year so there is no reasons to go into the satisfaction by the AO before invoking provisions of 14A rule 8D. Undisputedly, no investment was made during the year in the subsidiary companies. DRP deleted the disallowance u/s. 14A r.w. rule 8D(2)(ii) by recording a finding on facts that assessee’s own funds were more than the investment in the subsidiary companies. No disallowance u/s. 14A r.w. Rule 8D(2)(ii) is required to be made by following the decision in the case of Godrej & Boyce Manufacturing Company Ltd., [2017 (5) TMI 403 - SUPREME COURT OF INDIA]. DRP sustained the addition under Rule 8D(2)(iii) towards administrative expenses. In our view, the ratio laid down in the decision of Hon'ble Supreme Court in the case of Maxopp Investment Limited [2017 (5) TMI 403 - SUPREME COURT OF INDIA] is that no satisfaction is required to be recorded, where no disallowance is made by assessee towards exempt income. We therefore of the view that the provisions of Section 14A r.w. Rule 8D(2)(iii) are applicable in this case and DRP was right in sustaining the disallowance. Non- grant of foreign tax credit - Held that:- After hearing both the parties and perusing the facts of the case, we observe that the assessee filed rectification application dt. 24-11-2017, this is pending for disposal. So we feel it fit and proper to direct the AO to dispose the same. Accordingly the AO is hereby directed to decide the rectification application filed by the assessee. 2019 (2) TMI 627 Charitable activity - exemption u/s 11 denied - Held that:- The assessee is not eligible for claim under section 11 of the Act for the activities carried by the assessee. We also find that the income received by the assessee is not inconsonance with the objects of the society and therefore, there is a clear violation of section 11 of the Act. Therefore, the assessee is not entitled for exemption under section 11 of the Act. - Decided against assessee. 2019 (2) TMI 626 Rate of tax at which the amount received as Royalty to be charged to tax - Held that:- As against the assessee’s claim of taxability of royalty income at the rate of 10.5060% u/s.115A(1)(b), the Revenue has charged such income at 20% under the DTAA. Both the sides are in agreement that the facts and circumstances of this appeal are mutatis mutandis similar to those of the preceding year. Following the view taken hereinabove, we hold that the royalty income earned by the assessee from its Indian Associated Enterprises, pursuant to an agreement dated 01-04-2008, should be charged to tax at 10.5060%. Determining the correct amount of income chargeable to tax - guarantee fee not approved by the Reserve Bank of India (RBI) not be charged to tax in the hands of the assessee - claim of the assessee is that the RBI accorded approval for a sum of ₹ 17.99 lakhs after the filing of return and conclusion of assessment and hence, necessary relief should be given - Held that:- It goes without saying that, if a particular sum is not and cannot be lawfully received by the assessee, the same cannot be charged to tax. However, before allowing any such reduction in income, it is essential to verify that the full amount of ₹ 25.39 lakh was offered for taxation at the first instance. Since the facts have not been examined by the authorities below, we are of the considered opinion that, it would be in the fitness of things if the AO is directed to verify the inclusion of ₹ 25.39 lakh in the income of the assessee as guarantee fee; granting of approval by the RBI in respect of this amount only for ₹ 17.99 lakh; and eventual receipt of lower sum of ₹ 17.99 lakh. In case, it is found that the assessee included guarantee fee of ₹ 25.39 lakhs in his total income and further the RBI did not accord approval for a sum of ₹ 7.40 lakh, which was not received also, then the said sum of ₹ 7.40 lakhs should be reduced from the total income of the assessee. Needless to say, the assessee will be accorded an opportunity of hearing in determining such issue. 2019 (2) TMI 625 Addition made on account of understatement of two receipts in respect of BHEL - Held that:- We are unable to endorse the finding of CIT(A) in the absence of any assistance from the assessee or its counsel. It is needless to mention it is the responsibility and onus is on the respondent assessee to file all the documents in support of its claim before this Tribunal. Since there is no documents evidencing support of assessee’s claim and view of CIT(A), we set aside the order of CIT(A) and restore the order of Assessing Officer. Thus grounds raised by the revenue are allowed. 2019 (2) TMI 624 Entitlement to deduction u/s. 80P(2)(a)(i) denied - as per AO assessee was primarily engaged in the business of banking and therefore, in view of the provisions of section 80P(4) which was inserted with effect from 01.04.2007, the assessee was not entitled to deduction u/s. 80P - Held that:- Admittedly, the assessee is primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The Hon'ble High Court of Kerala in the case of Chirakkal Service Co-op Bank Ltd. [2016 (4) TMI 826 - KERALA HIGH COURT] had held that a primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 is entitled to the benefit of deduction u/s. 80P(2). Thus we hold that the assessee-society is entitled to the benefit of deduction u/s. 80P of the Act Validity of certificate issued under the Kerala Co-operative Societies Act, 1969, categorizing the assessee as a Primary Agricultural Credit Society (PACS) - Held that:- In the instant case the classification of assessee-society as PACS is admittedly done by the Joint Registrar of Co-operative Societies, who is a competent authority under the KCS Act. The certificate stating that the assessee is classified as a Primary Agricultural Credit Society was issued by the Assistant Registrar. Therefore, the classification was not done by the Assistant Registrar, hence the certificate issued is valid as per law. Hence, grounds raised by the Revenue are dismissed. 2019 (2) TMI 623 Delay in remittance of TDS - AO calculated the interest as per the British calendar month and calculated interest for three months - method and manner of calculation of interest - Held that:- AO had taken the month to be the British calendar month as defined in Section 3(35) of the General Clauses Act and it is only on that premise, he calculated one day in March and two days in May as two full months and calculated interest for three months including the month of April also. In CIT vs. Arvind Mills Ltd. [2011 (9) TMI 244 - GUJARAT HIGH COURT] in the context of interest on refunds u/s 244A as held that the term ‘month’ must be given the ordinary sense of the term i.e. 30 days of period and not the British calendar month as defined u/s 3(35) of the General Clauses Act and such a definition under the General Clauses Act cannot be adopted for the purposes of Section 244A of the Act inasmuch as such importation of definition would lead to anomalous situation. Section 244A(1) is analogous to provisions of Section 201(1A)(ii) read with Rule 119A of the Act and a month must be given ordinary meaning of the term by taking period of 30 days and not British calendar month as defined u/s 3(35) of the General Clauses Act. See M/S. NAVAYUGA QUAZIGUND EXPRESSWAY (P) LIMITED, VERSUS DY. COMMISSIONER OF INCOME-TAX CIRCLE 15 (1) HYDERABAD [2015 (3) TMI 1083 - ITAT HYDERABAD] We are unable to endorse the view of the AO and accept the calculation of month reckoned by him. However, in view of the fact that the assessee did not furnish the requisite information as observed by the learned CIT(A) in para 2.3 of his order, we deem it just and necessary, while setting aside the impugned order, to remand the matter to the file of the learned CIT(A) to enable the assessee to submit the actual calculation showing the discrepancies in the calculation of interest by the AO and the assessee respectively. - Decided in favour of assessee for statistical purposes. 2019 (2) TMI 622 Grant of registration u/s 12AA denied - non-disposal of the application for registration u/s.12AA within a period of six months from the end of month in which application should be considered - deemed grant of registration - Held that:- This issue had come up before the Hon’ble Supreme Court in the case of CIT Vs. Society for the Promotion of Education Adventure Sports & Conservation of Environment [2016 (2) TMI 672 - SUPREME COURT] wherein, the Hon’ble Supreme Court held that non-disposal of application for registration u/s.12AA amounts to be deemed grant of the registration. Also see SOCIETY FOR THE PROMOTION OF EDUCATION, ADVENTURE SPORT & CONSERVATION OF ENVIRONMENT VERSUS COMMISSIONER OF INCOME-TAX, CENTRAL, KANPUR [2008 (4) TMI 700 - ALLAHABAD HIGH COURT] non-disposal of application within a period of six months amounts to deemed grant of registration on the expiry period of six months from the end of the month, in which, application for grant seeking registration was received by the Ld.CIT (Exemptions), Chennai. Therefore, we direct the Ld.CIT(Exemptions) to grant the registration u/s.12AA from the date of expiry of period of said six months. - Decided in favour of assessee 2019 (2) TMI 621 Disallowance of expenditure in terms of Section 14A in relation to income which does not form part of the total income under the Income Tax Act - Held that:- No disallowance is warranted under s.14A of the Act towards proportionate disallowance in view of the long line of judicial precedents including Sintex Industries Ltd. (2017 (5) TMI 1160 - GUJARAT HIGH COURT). Adverting to the second limb of disallowance of administrative expenses, the learned AR initially submitted that in the absence of any specific ‘satisfaction’ recorded for application of Section 14A, no such disallowance is permissible. However, later in the course of hearing, the learned AR for the assessee did not press the aforesaid aspect for adjudication and consented for disallowance of administrative expenses subject to deduction of ₹ 25,000/- already disallowed suo moto by the assessee. Having regard to the concluded facts towards own capital in excess of corresponding investment, we are inclined to accept the plea of the assessee for deletion of proportionate disallowance of interest expenditure to the tune of ₹ 6,64,777/-. The assessee accordingly gets relief to this extent. As regards the disallowance under Section 8D(2)(iii) towards administrative expenditure, we find merit in the plea of the assessee for deduction of suo moto disallowance therefrom. Accordingly, disallowance of administrative expenditure under s.14A r.w.s. 8D(2)(iii) is sustained to the extent of ₹ 50,695/- - Decided partly in favour of assessee. MAT computation - book profit under s.115JB - whether for the purposes of the computation of ‘book profit’ u/s 115JB, the AO is entitled to increase ‘book profit’ by the equivalent amount of disallowances as found attributable to exempt income under normal provisions or not? - Held that:- With the assistance of the learned AR for the assessee, we find that the issue is squarely covered in favour of the assessee by the decision of Alembic Ltd. [2017 (1) TMI 513 - GUJARAT HIGH COURT] as well as the decision of the special Bench in Vireet Investments [2017 (6) TMI 1124 - ITAT DELHI]. AO is directed to delete the adjustments made on account of disallowance under s.14A of the Act for the purposes of computation of book profit under s.115JB of the Act. Consequently, Ground No.2 of the assessee’s appeal is allowed. 2019 (2) TMI 620 Addition on account of difference in gross receipts - assessee could not reconcile the difference as per Form No.26AS and the income shown in the P&L Account towards direct income - Held that:- AO made addition on the ground that the assessee could not reconcile the difference between ₹ 16,05,263 as per Form No.26AS and the income shown in the P&L Account towards direct income. As find from the various details furnished by the assessee in the paper book that the for the assessee has successfully reconciled the difference between the Form No.26AS and the income shown by the assessee. Although these details were furnished before the CIT(A), however, find the CIT(A) in a very cryptic order, rejected the voluminous details filed before him on the ground that the issue of difference between the two figures does not get resolved. This type of action on the part of the CIT(A) is not justified especially when the assessee has submitted the requisite details before him substantiating the difference and reconciliation thereof. Therefore, set aside the order of the CIT(A) and direct the AO to delete the addition. - Decided in favour of assessee. 2019 (2) TMI 619 TP adjustment in respect of the interest charged on the loans advanced by the assessee to its AEs - assessee had given loans in USD to its AEs - Held that:- ALP of the interest charged on the amounts advanced by the assessee to its AEs, viz. (i) ILFS Maritime Offshore PTE Limited; (ii) IL&FS International PTE Limited; and (iii) Elsamex had rightly been benchmarked by the assessee as per LIBOR and EURIBOR rates, and the same could not have been determined as per the Indian rate as had been so taken by the A.O/TPO. We thus direct the A.O/TPO to determine the ALP of the interest charged by the assessee on the amounts advanced to its AEs viz. (i) ILFS Maritime Offshore PTE Limited; and (ii) IL&FS International PTE Limited by taking the LIBOR rates as the basis. Insofar, the amount advanced by the assessee to its AE i.e. Elsamex, the A.O shall take the EURIBOR rates as the basis for benchmarking the interest charged by the assessee on the loan advanced to the said AE. Grounds of Appeal No. 5 to 11 raised by the assessee are allowed in terms of our aforesaid observations. Addition u/s 14A - revised claim of disallowance u/s 14A that was raised by the assessee on the basis of a revised computation of income - Held that:- We are in agreement with the view of the A.O that in terms of the ratio of the decision of the Hon’ble Supreme Court in the case of Goetz (India) Ltd.[2006 (3) TMI 75 - SUPREME COURT], the A.O was not vested with any jurisdiction to have allowed the revised claim of disallowance under Sec. 14A that was raised by the assessee on the basis of a revised computation of income in the course of the assessment proceedings. We thus are of the considered view that in the backdrop of the aforesaid settled position of law the assessee remained at a liberty to assail the disallowance made under Sec. 14A, as long as such claim was based on the facts available on record. No disallowance u/s 14A is liable to be made if no exempt income is received or receivable by the assessee during the relevant previous year. On the basis of our aforesaid observations we restore the issue to the file of the A.O for readjudicating the issue pertaining to disallowance under Sec. 14A in the hands of the assessee, in terms of our aforesaid observations. Needless to say, the A.O shall during the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee, who shall remain at a liberty to substantiate its claim that no disallowance under Sec. 14A was liable to be made in its hands. 2019 (2) TMI 618 Unexplained cash credit u/s 68 - share application money - amount was received during the earlier years - entries made during the current year for converting deposits into share application money - Held that:- The assessee has only passed a journal entry in respective parties accounts and treated the deposits as Share Application Money, which also is grouped under the head liabilities in its Balance sheet. In this connection, the assessee has placed on record the ledger account of the parties from the year in which deposits were received from them till the year under consideration when the sum was transferred to share application money. Under the circumstances, impugned sum was received by the assessee in earlier years and hence provisions of section 68 is not applicable in the case of the assessee, for the years under consideration. The assessee has filed various details viz Name and address of Parties, Confirmation and PAN No, Bank statement of Pooja Kandhari/Thakur Sen Kandhari reflecting payment made by them to assessee. Bank Statement of assessee reflecting payment received from Pooja Kandhari / Thakur Sen Kandhari and Sanjay Chhabria. Since assessee company could not allot shares to these parties it has refunded amount received from these parties in subsequent years. The assessee filed the copies of ledger A/c of subsequent years alongwith copy of bank statement reflecting payment made to these parties. No justification for the addition made by AO u/s.68. - Decided in favour of assessee. 2019 (2) TMI 617 Condonation of delay - delay of 107 days - eligible reasons for delay - Held that:- There is no thumb rule that the delay in all cases is to be condoned. However, “Acceptability of the explanation is the only criteria”. Sometimes the delay of the shortest range may be uncondonable due to want of acceptable explanation whereas in certain other cases, delay of a long range can be condoned as the explanation thereof is satisfactory. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the court should lean against acceptance of the explanation. In the facts of the present case, the assessee has woken up from his slumber after a huge delay of 107 days and it has not been shown that all possible steps to file the appeal before the Tribunal were taken and the delay in filing the appeal was not because of any factors which were “beyond the control of assessee”. Considering all, we are not at all convinced with the casual and cavalier approach of the assessee in pursuing the legal remedy of approaching the Appellate Tribunal by way of filing appeal. Appeal filed by the assessee stands dismissed. 2019 (2) TMI 616 Gain earned as acquired from IPO (Public issue) - Gains to be assessed as Capital Gains or as a Business Income - Held that:- The perusal of holding period chart extracted by Ld. AO clearly reveal that the assessee has dealt in 11 scrips / transactions during the year out of which the holding period of 10 scrips / transactions is five or less than five days which indicate that the investments were made by the assessee as a trader only and not as an investor and the primary objective of the investments was to earn the gains in a business-like manner rather than to earn accretion to the same by way of dividend. The intention of the assessee gets manifested from the fact that the scrips have been sold within a very short span of time so as to reap the benefits of listing gains only. This is further fortified by the fact that the assessee was engaged as share broker and as evident from memorandum of association as placed on record, dealing in shares was one of the main objectives of the assessee company. Hence, after due consideration, we find ourselves in agreement with the view taken by first appellate authority and we see no reason to interfere with the same. All the grounds as well as the appeal stand dismissed. Addition u/s 14A r.w.r 8D - Held that:- It is undisputed position that the Tribunal in assessee’s own case for AY 2009-10 as well as first appellate authority in AY 2011-12 has restricted the same to 5% of exempt income, which has been accepted by the assessee. Relying upon the same, first appellate authority has restricted the expense disallowance to 5% of exempt income, which is fair under the circumstances and no further relief could be granted to the assessee on this account. The same is in line with estimation made in earlier years and therefore, the grounds of appeal, to that extent, stands dismissed. So far as interest disallowance u/r 8D(2)(ii) is concerned, we find that the assessee has not offered any disallowance against the same and therefore, to contend that the Ld. AO failed to reject the workings made by assessee and record a proper satisfaction in that respect could not help the assessee in any manner. The same is devoid of any merits. We find substantial force in the argument of AR that the assessee had sufficient interest free funds in the shape of Share Capital & Free Reserves to make new investments including stock in trade. The perusal of financial statements as placed on record reveals that there is no change in non-current investments made by the assessee during impugned AY whereas current investments and inventories have been funded by way of reduction in overall current assets. Therefore, a presumption was to be drawn in assessee’s favor that own funds were used to make the investments. Therefore, upon due consideration, we are inclined to delete the impugned interest disallowance u/r 8D(2)(ii). - Decided in favour of assessee. 2019 (2) TMI 615 Addition u/s 68 - Unexplained Cash Credit u/s 68 (Unsecured Loan) - Held that:- Identity, creditworthiness and genuineness of the transactions have been proved. In the case of M/s Angad Chemicals Ltd., it has total assets of more than 10.17 Crores. Income earned during the year cannot be the only criteria to determine the creditworthiness. Hence, the addition made on the loan given by M/s Angad Chemical Pvt. Ltd., is hereby deleted. In the case of Contship Commodities (P) Ltd. – the total Net assets are worth of ₹ 22.46 Crores. This proves the genuineness of the transaction and both the identity and the creditworthiness of the creditors are proved. In the case of Mindtrack Ventures (P) Ltd the total Net assets are worth of ₹ 15.32 Crores. This proves the genuineness of the transaction and both the identity and the creditworthiness of the creditors are proved. In the case of Subhlabh Fiscal Services (P) Ltd. the total Net assets are worth of ₹ 88.81 Crores. This proves the genuineness of the transaction and both the identity and the creditworthiness of the creditors are proved. Thus, the additions made on loans borrowed from all the above entities, are hereby deleted. Loans borrowed from M/s. SNV Enterprises and M/s B R Trading Co. though, the assessee has furnished certain details in support of its claim as notices could not be served on these creditors by the Assessing Officer due to the reason that, he did not have the latest address, we deem it fit and proper to remand this issue to the file of the Assessing Officer for fresh adjudication, in accordance with law. - decided in favour of assessee partly. 2019 (2) TMI 543 Exemption u/s.11(1) - retrospectivity of Amended Sec.2(15) to the term "charitable purposes" inserted to the Act by Finance Act, 2012 - Held that:- We find that the object of the assessee is similar to that of the corporation before the Jurisdictional High Court in AHMEDABAD URBAN DEVELOPMENT AUTHORITY VERSUS ASSISTANT COMMISSIONER OF INCOME TAX (EXEMPTION) [2017 (5) TMI 1468 - GUJARAT HIGH COURT] and on the similar set of facts the appeal was allowed in favour of the assessee hence relying upon the same we allow the claim of the assessee and the disallowance of exemption as claimed by the assessee u/s 11 of the Act to the tune is hereby quashed and addition made thereon is thus deleted. - Decided in favour of assessee. Customs 2019 (2) TMI 614 Maintainability of Review application - violation of conditions of license in question - Section 16 of the Foreign Trade (Development & Regulation) Act, 1962 - Held that:- Section 16 of the Foreign Trade (Development & Regulation) Act, 1962 would show that the reason stated for not considering the review applications cannot be sustained. This Court is of the view that the review application filed by the petitioner has to be considered by the second respondent on merits and appropriate orders shall be passed accordingly - petition disposed off. 2019 (2) TMI 613 Requirement with the pre-deposit - Whether the appellate Tribunal committed error of law in dismissing the appeal on the ground of non compliance of stay order despite direction issued by this Court for reconsideration of the stay application in the light of section 129-E of Customs Act, 1952? - Whether the finding recorded by the appellate Tribunal that the appellant is not in a position to deposit the amount in question is perverse in the state of evidence on record especially in view of the fact that the company was declared sick by BIFR? Held that:- In the case at hand evidently the Tribunal after considering the entire facts on record, passed the order for directing to deposit ₹ 10 Lacs as a pre-deposit in an appeal against the levy of duty of ₹ 69,22,218/-. The said direction is after taking into consideration the entire facts situation including the hardship to the Appellant and the prejudice to the Revenue - the substantial question of law is answered against the appellant that the Appellate Tribunal was well within his jurisdiction in dismissing the appeal on the ground of noncompliance of stay order and the finding arrived by the Appellate Tribunal, as would warrant any interference. Appeal dismissed - decided against appellant. 2019 (2) TMI 612 Import of spares of medical equipments - benefit of N/N. 64/88-Cus dated 01.03.1988 - Customs Duty Exemption Certificate - Held that:- The issue is in relation to imports made through the port situated in the jurisdiction of Bombay High Court. Also the decision of Delhi High Court do not departs with the decision of Bombay High Court and hold that the conditions stipulated in the Notification No 64/88-Cus, cast a continuing post importation obligations on the importers. Only difference was on the issue as to the period for such continuing post import obligations. While Delhi High Court stated that it continued till the Notification was rescinded, Bombay High Court has held that it continued thereafter in view of Section 159A of the Customs Act, 1962. SCN has been issued to the respondent, demanding the duty in terms of Section 12/ Section 125 of the Customs Act, 1962. Commissioner has in his order not recorded any findings in respect of the demand made in terms of Section 12. The order of Commissioner not considering the demand under Section 12 cannot be sustained - the post import conditions stipulated in a exemption notification are not satisfied the duty becomes payable in terms of the Section 12 of the Customs Act, 1962 and it is for the respondents to come forward and pay the duty. The order of Commissioner not considering demand of the duty legitimately payable under Section 12 of Customs Act, 1962 cannot be sustained - the matter needs to be remitted back to the Commissioner for determination of the issue in respect of the various contraventions alleged in the show cause notice and for recording a specific finding in respect of the duty legitimately payable under Section 12 - appeal allowed by way of remand. 2019 (2) TMI 611 100% EOU - debonding of unit - N/N. 52/2003 and N/N. 22/2003 dt. 31/03/2003 - challenge to the assessment of ex-bond bill of entry before the Commissioner of Customs(Appeals) praying for 100% depreciation - Held that:- The capital goods were procured and installed in the EOU in 1986 and the order of de-bonding was passed by the Development Commissioner on 19/07/2002 - the appellants are entitled to depreciation from 1986 to 2002 which also works out to 156% as per the Notification No.52/2003 and Notification No.22/2003 dt. 31/03/2003 - Further, in fact the de-bonding of the capital goods were allowed on 14/03/2008by the Asst. Commissioner and thereafter the duties were paid. The circular No.14/2004-Cus dt. 13/02/2004 also prescribe that the depreciation is admissible till the date of payment of duty - appeal allowed - decided in favor of appellant. 2019 (2) TMI 610 Valuation of imported goods - identical goods - Circular No. 4/99-Cus dated 15-2-99 - Held that:- The Commissioner has observed that to make the test results applicable, all the parameters have to be similar, i.e. description of the goods, the supplier of goods, importer and the price of the goods should be the same. If any one of the parameters is changed, then the test results cannot be applied to those situations. Only when all the parameters are identical, it can be reasonably concluded that the goods were also identical. Since all the goods were not identical and therefore one test report cannot be applied for all the goods and the same has rightly been considered by the Commissioner - there is no infirmity in the impugned order - Appeal dismissed - decided against Revenue. 2019 (2) TMI 609 Valuation of imported goods - rejection of declared value - Rule 8 of Customs Valuation Rules, 1988 - Held that:- The Commissioner(Appeals) has taken note of all the facts and the evidences on record and has recorded reasoned finding wherein he has considered the report of Chartered Engineer and the Board s circular No.4/2008 dt. 02/12/2008 and has come to the conclusion that the value declared by the importer is the correct value - The Commissioner(Appeals) has also observed that the second hand machinery should also be assessed by the transaction value method and Rule 3 and other parameters of the Rule 14 of Customs Act are satisfied. In the review order passed by the Committee consisting of the Commissioners of Customs, Cochin and Commissioner of Central Excise, Cochin, the Committee has not observed that the impugned order is not legal and proper which is required for the purpose of filing appeal by the Department - appeal dismissed - decided against Revenue. 2019 (2) TMI 608 Penalty u/s 112(a) and 114AA of the Customs Act, 1962 - mis-declaration of imported goods - rejection of declared value - Held that:- There is no clear cut evidence of abetment or instigation on the part of the appellant to undervalue the goods declared by the importers. In fact the appellant has only acted as a Clearing and Forwarding Agent and there is no independent corroborative evidence to come to the conclusion that he has helped the importer in evading the payment of customs duty. In fact there is no legally sustainable evidence of connivance against the appellant. More over it has been accepted by the Revenue that the importer has paid the differential duty along with interest and penalty and the same has been appropriated in the Order-in-original. The case of the appellant is covered by Section 28(6) - the proceedings against him also stands concluded once the importer has accepted the undervaluation and paid the differential duty along with interest and penalty - appeal allowed - decided in favor of appellant. 2019 (2) TMI 607 Principles of natural justice - non-speaking order - non-application of mind - Held that:- The Commissioner(Appeals) has observed in his order that three opportunities of personal hearing were granted to the appellants but none of the appellants or their counsel appeared and one of the letter addressed to Sh. Samjad Konari was returned back by observing that they are not staying in the said address - further, the appellant was not served the notice of hearing by the Department and in reply to the RTI application, the Department has stated that personal hearing was fixed on 19/04/2018 or 20/04/2018 and the intimation was given on 11/04/2018 which was never received by the appellants. The entire impugned order has been passed in clear violation of the principles of natural justice and no hearing was given to the appellant or his counsel and the impugned order has been passed ex parte - this case needs to be remanded to the Commissioner(Appeals) with a direction to pass de novo order after complying with the principles of natural justice - appeal allowed by way of remand. 2019 (2) TMI 606 Maintainability of appeal - non-compliance with the provisions of Section 128 of the Customs Act, 1962 and Chapter II of Customs (Appeals) Rules, 1982 - time limitation - Held that:- Since it has been admitted by the Department that appeal was filed on 12/12/2013 and not on 31/05/2017, I hold that appeal was within time before the Commissioner(Appeals). The dismissal of appeal on time bar is not tenable in law - case remanded back to the Commissioner(Appeals) to decide the same on merits after complying with the principles of natural justice and after affording an opportunity of hearing to the appellants - appeal allowed by way of remand. 2019 (2) TMI 605 Absolute Confiscation - penalties - Smuggling of gold - assorted gold articles and jewelry - Baggage Rules - Held that:- This issue is squarely covered by the decision of the Kerala High Court in the case of Vigneswaran Sethuraman [2014 (12) TMI 268 - KERALA HIGH COURT] wherein the Hon’ble High Court has discussed in detail regarding the declaration to be made by foreign tourist entering into India and the various provisions of the Customs Act relating to seizure of such goods. In the impugned order, the Commissioner of Customs has wrongly observed that the gold ornaments were made of crude gold whereas in the seizure report, it has been observed that the purity is 22 crt. - the impugned orders are not sustainable in law in view of the judgment of Kerala High Court in the said case - the impugned order set aside - Appeal allowed - decided in favor of appellant. Insolvency & Bankruptcy 2019 (2) TMI 604 Stay of the Corporate Insolvency Resolution Process initiated against the petitioner - Held that:- Corporate Insolvency Resolution Process being processed against the petitioner, there is no reason to keep this Special Leave Petition pending. The proceedings before the National Company Law Appellant Tribunal (NCLT) cannot be interfered with in this Special Leave Petition - SLP Dismissed. 2019 (2) TMI 603 Applying ‘Moratorium’ in terms of Section 14(1)(d) of I&B Code on the land of ‘Maharashtra Housing and Area Development Authority’ - asset of the ‘Corporate Debtor’ for application of provisions of Section 14(1) (d) of the ‘I&B Code’ - land in question originally belonged to ‘Bombay Housing & Area Development Board’, which was vested in the ‘Maharashtra Housing and Area Development Authority’ in the year 1966 pursuant to ‘Maharashtra Housing and Area Development Authority Act, 1966’ with all rights, liabilities and obligations Held that:- On perusal of record, we find that pursuant to the ‘Joint Development Agreement’ the land of the ‘Maharashtra Housing and Area Development Authority’ was handed over to the ‘Corporate Debtor’ and ‘except for development work’ the ‘Corporate Debtor’ has not accrued any right over the land in question. The land belongs to the ‘Maharashtra Housing and Area Development Authority’ which has not formally transferred it in favour of the ‘Corporate Debtor’. Hence, it cannot be treated to be the asset of the ‘Corporate Debtor’ for application of provisions of Section 14(1) (d) of the ‘I&B Code’. This apart, as we find that 270 days’ period has already lapsed on 19th April, 2018 and the period of ‘Moratorium’ in any case come to an end, the question raised has become academic. We find no merit in this appeal. It is accordingly dismissed. 2019 (2) TMI 602 Seeking waiver of penal damages - Scheme approved by the BIFR - Held that:- When the matter is pending before this Tribunal it was brought to the notice of the Tribunal that request for waiver is pending for consideration. If it is pending, then the Central Provident Fund Commissioner cum Secretary to process it expeditiously and communicate the order if any passed thereon to the Petitioner since order of attachment over the immovable property is pending and also lien is pending in the account. The CPFC to consider the request of the Petitioner. In the light of the Scheme approved by the BIFR and pass suitable order. However, if no application is pending for waiver then intimation be given to the Petitioner to submit fresh application and the same may be considered as expeditiously as possible and communicate the order to be passed thereon. The Petitioner already paid PF dues and also interest thereon. The amount due is with reference to the penal damages as M/s POL, the original company became sick and MRS was approved by BIFR. The CPFC may take appropriate decision and communicate the same. So with these observations, the Petition can be disposed of:- (a)The CPFC i.e. Central Provident Fund Commissioner to consider if the Application filed by Petitioner seeking waiver of penal damages basing on the approved MRS which was sanctioned by BIFR, if pending and decide expeditiously. (b)If no Application is pending as contended in the counter, the CPFC is directed to inform the Petitioner of the same and further direct the Petitioner to file fresh Application for waiver for consideration so as to enable the Petitioner to take appropriate decision basing on the order to be passed by Central Provident Fund Commissioner on the Application filed for waiver. 2019 (2) TMI 601 Corporate Insolvency Resolution Process - Whether mining lease has been issued by the State Government(s) in terms of the provisions as mentioned in the ‘Coal Mines Development and Production Agreement’? - lease the mines are under occupation or in possession of the ‘Corporate Debtor’ - Held that:- In the present case, as we find that the vesting of the Coal Mines is not complete in absence of any agreement with the State Government in respect to the mines in question, we hold that the ‘Resolution Professional’ on behalf of the ‘Corporate Debtor’ cannot claim that pursuant to lease the mines are under occupation or in possession of the ‘Corporate Debtor’. The Government of India by its letter dated 13th April, 2017 issued show cause notice to the ‘Corporate Debtor’ before issuance of the termination letter dated 30th December, 2017 i.e. much prior to initiation of the ‘Corporate Insolvency Resolution Process’ (18th July, 2017). The ‘Corporate Debtor’ having failed to act in terms with the said show cause. If the order of cancellation have been passed by the Government of India on 30th December, 2017, it cannot be held to be in violation of Section 14(1)(d) of the ‘I&B Code’. In view of the aforesaid findings, no interference is called for against the impugned order dated 16th January, 2018. The appeal is dismissed. Interim order passed by this Appellate Tribunal on 8th February, 2018 is vacated. It will be open to the Respondent- ‘Government of India’ to accept any bid and to create third party interest with regard to mines in question which were earlier allotted vide ‘Coal Mines Development and Production Agreement’ dated 2nd March, 2015 to the ‘Corporate Debtor’. No costs. 2019 (2) TMI 600 Corporate insolvency process - unpaid operational debt - Held that:- The Petitioner has annexed the demand notice sent to Corporate Debtor as per section 8 of Insolvency and Bankruptcy Code, 2016 and the same was received by the Corporate Debtor, the invoices against which it claims the outstanding amount from the Corporate Debtor as well as the bank certificate and Bank Statements to show that no payment is received from the Corporate Debtor in its bank account. The Corporate Debtor has not raised any dispute regarding the unpaid operational debt which is stated by the Petitioner on Affidavit and is also admitted by the Corporate Debtor. The application made by the Petitioner is complete in all respects as required by law and it clearly shows that the operational debt has not been paid as also confirmed by the Corporate Debtor. It is worth to mention that the Corporate Debtor had never attended the hearing. In totality of the facts and circumstances mentioned supra, we are of the view that the impugned Petition requires ‘Admission’. The Corporate Debtor having named the Interim Resolution Professional with his consent, there being no disciplinary proceedings against, this Bench hereby admits this petition filed under Section 9 of IBC, 2016, declaring moratorium with consequential directions Service Tax 2019 (2) TMI 599 Waiver of penalty u/s 78 of the Finance Act, 1994 - default in payment of service tax and filing of ST-3 returns - extended period of limitation - Held that:- A perusal of the SCN reveals that the visit of revenue intelligence was in 14.08.2008 on which date even a statement of Sri.P.Balachander, one of the partners in the appellant firm, was recorded. It appears that his admissions in his statement are not retracted or even disputed, later on. Even otherwise, there is no dispute regarding the service rendered namely, the Event Management Services, nor is there any dispute that the appellant raised invoices including service tax and even collected the same - The service in question came into statute book effective from 16.08.2002 and the SCN reveals that the appellant failed to discharge tax liability from 01.04.2004 and not even filed its service tax (ST-3) returns from 01.04.2004 to 31.03.2009, the period covered under the SCN. Sufficient time was granted even after survey by the Revenue intelligence, even the ld. Commissioner in the impugned order-in-original has fairly tried getting clarifications from the appellant’s sundry debtors on account of the appellant’s failure to do so. Commissioner has also been fair in extending the cum-tax value benefit despite the above and only quantified the demand thereafter - In spite of all this, the appellant, as admitted even by the ld. Advocate, has not paid the differential duty of ₹ 38,88,360/- demanded, which doesn’t show their bonafides. Appeal dismissed - decided against appellant. 2019 (2) TMI 598 CENVAT Credit - common inputs/input services used for the trading activity - Rule 6(3)(ii) of CCR 2004 - the proportionate Credit in respect of the trading activity already made - Department took the view that the appellant has to pay 5%/6% respectively of the value of exempted services, as required under Rule 6(3)(i) of the CCR, 2004. Whether the appellant is liable to pay an amount equal to 6% of the value of exempted services or products when they have opted to reverse the proportionate Credit in respect of the trading activity (exempted service)? Held that:- Rule 6(3A) provides for intimating the Department by issuing a letter as to the exercise of option of reversal of proportionate Credit - Further, in this case, the appellants have in fact issued a letter dated 16.05.2013 to the jurisdictional Range Officer, explaining that they were availing only the proportionate Credit on the value of taxable services, which is also reflected in their balance sheet as well as their ST-3 returns. The Department ought to have taken note of the fact that the appellant has exercised the option. The Department cannot force the assessee to pay 5% or 6% of the value of exempted services when the assessee has exercised the option of reversing the proportionate Credit - demand set aside - appeal allowed - decided in favor of appellant. 2019 (2) TMI 597 Validity of SCN - Works contract service - the SCN had proposed to demand tax under the category of ‘Construction of Residential Complex Service - Held that:- The demand should have been made under Works Contract Service. The ratio laid down by the Tribunal in the case of M/s/ Real Value Promoters Pvt. Ltd. [2018 (9) TMI 1149 - CESTAT CHENNAI], would apply in full force where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service - For the period after 1.6.2007, service tax liability under category of ‘commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, ‘Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 596 Construction services - construction of a control room for Tamil Nadu Electricity Board (TNEB) - applicability of N/N. 45/2010-ST dt. 20.07.2010 - Held that:- The Ld. Advocate is correct in his contention that the activities of construction of control room for TNEB is fully covered by Notification No. 45/2010. The argument that construction activity for educational institutions exempt from service tax is also no longer res integra. The case law of SRM Engineering Construction [2018 (2) TMI 321 - CESTAT CHENNAI] will stand support their contention - Construction of buildings for Gandhigram Rural University would come within the fold of construction undertaken for educational activities and hence would be exempt from tax. The contracts undertaken by the appellant will not be exigible to service tax - appeal allowed - decided in favor of appellant. 2019 (2) TMI 595 Refund of service tax paid - accommodation services - air travel agency service - denial on the ground of nexus - Rule 5 of CENVAT Credit Rules, 2004 - Held that:- In fact, there has been no show cause notice issued by the department alleging that the appellants are not eligible for credit of these services. When the department has not raised any allegation by issuing show cause notice that the appellant is not eligible for credit, they cannot go into the admissibility of the credit during the process of refund claim - Further, as per amended provisions of Rule 5, it is not necessary to establish the nexus with the output service - The Board circular also clarifies the same. The rejection of refund claim is without any basis and unjustified - Appeal allowed - decided in favor of appellant. 2019 (2) TMI 594 Imposition of penalty - availment of entire CENVAT credit accumulated on nil duty payable products and exempted services rendered - non-maintenance of separate records - Rule 6(3) of the CENVAT Credit Rules, 2004 - extended period of limitation - Held that:- It cannot be said that appellant had improperly filled up ST-3 returns as ‘NO’ for availment of exempted services but by no stretch of imagination it would constitute deliberate suppression of material facts for which extended period can be invoked . Further such irregularity was pointed out in the audit report during the course of audit on the strength of documents produced by the appellant. It cannot be said that only because audit party had found some credit availed as inadmissible, suppression of fact is made out. It cannot also be established that appellant had any malafide intention to suppress its duty liability from the department - Appeal allowed - decided in favor of appellant. 2019 (2) TMI 593 Extended period of limitation - Business Auxiliary Service - claim of N/N. 14/2004-ST not raised - Held that:- There is no dispute that admittedly, the appellant started payment of Service Tax without pointing out by the department. Therefore, the appellant have rightly entertained the bonafide belief regarding the non taxability of their service till 31.03.2006. Though the appellant have obtained the registration on 19.09.2006, the department has initiated action and record statement on 30.05.2007. Though the lower authority have not considered the notification as the same was not argued before them - There is no suppression of fact or malafide intention on the part of the appellant - the demand raised invoking the extended period would not sustain. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 592 Works Contract Service - Execution of Clear Water Transmission Main from RICO Industrial Area to SEZ Boundary, Jaipur - execution of contract during the period December 2007 to July 2008 - benefit of N/N. 4/2004 ST, dt. 31.0-3.2004 - Held that:- The tender documents and work order specifically talks about the project for transmission of potable drinking water to be transferred upto the SEZ boundary. The said project specifically states that appellant has to comply with this work of transmission of clear transfer of water to the boundaries of SEZ. The issue seems to be clearly covered by the Larger Bench decision of the Tribunal in the case of Lanco Infratech Limited [2015 (5) TMI 37 - CESTAT BANGALORE (LB)], where it was held that Where under an agreement, whether termed as works contract, turnkey or EPC, the principal contractor, in terms of the agreement with the employer/ contractee, assigns the works to a sub-contractor and the transfer of property in goods involved in the execution of such works passes on accretion to or incorporation into the works on the property belonging to the employer/ contractee, the principal contractor cannot be considered to have provided the taxable (works contract) service enumerated and defined in Section 65(105)(zzzza) of the Act. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 591 CENVAT Credit - trading of goods which is an exempted activity from service tax as per the Negative List - Rule 6(3) of the CCR - Held that:- The appellant has categorically stated in the reply that they have not taken any CENVAT credit on any of the input services which is used by the show-room - Further even if Rule 6(3) is applicable, the appellant is required to reverse proportionate credit only which is relating to trading whereas in the impugned order, entire credit has been disallowed which is not permitted under law - Further the Commissioner has not given the personal hearing to the appellant and thereby violated the principles of natural justice. The case needs to be remanded back to the adjudicating authority who will pass a de novo order after considering the reply of the appellant - appeal allowed by way of remand. 2019 (2) TMI 590 SEZ - Refund of service tax - N/N. 12/2013-ST dated 01.07.2013 - rejection on the ground that was rejected only on the ground that the address of the service recipient is not mentioned in the invoice - Held that:- The appellant has produced before me invoices subsequently issued by the service provider wherein the address of the service recipient is mentioned. Moreover, as per the proviso to Rule 4A itself provides that in the case of ‘financial institutions’, the address of the service recipient is not required but this proviso was not considered by both the authorities. Therefore, in view of the specific provision in Rule 4A of STR, 1994, the rejection of refund on the ground of not mentioning the address of the service recipient is not sustainable in law. Rejection of refund claim on the ground of time bar - Held that:- No doubt, the Notification gives the discretionary power to the Original Authority to condone the delay provided there is justification for the delay. The Original Authority have considered the application filed by the appellant seeking condonation but declined to condone the delay on the ground that no sufficient reason was given in the application seeking condonation except saying that due to unavoidable reason, the delay occurred. Since, there was no proper justification for the delay, therefore rejection of the refund of ₹ 97,831/- is perfectly justified. Appeal allowed in part. 2019 (2) TMI 589 Penalty u/s 77 and 78 of FA - PSU - utilization of ineligible CENVAT credit - short payment of Service Tax on ‘Reverse Charge Mechanism’ on Works Contract Service - no intent to evade - Held that:- The ratio of the decision in the case of M/S. MODERN WOOLENS VERSUS COMMISSIONER OF CENTRAL EXCISE [2016 (11) TMI 1353 - CESTAT NEW DELHI] is squarely applicable in the present case wherein it has been consistently held that in the case of PSU, there cannot be any malafide intent to avail irregular and unavailable credit Penalty set aside - appeal allowed - decided in favor of appellant. 2019 (2) TMI 588 SEZ Unit - refund of service tax paid - renting of immovable property services - period from October 2008 to October 2011 - rejection on the ground of non-availability of approved list of services during the period of receiving the input services itself. Held that:- The appellant being SEZ is entitled to refund of Service Tax paid on input services used for authorized operations - Further, as per Notification No. 12/2013-ST dated 01.07.2013, the only requirement is that the appellant is required to file the list of approved services which have been used by them for authorized operations - Further, in this case, it is found that the appellant has subsequently obtained the approval from the Unit Approval Committee of the SEZ and the said certificate is placed on record but the Commissioner (A) has held that the said approval was obtained from the competent authority on 25.10.2011 and therefore, after the approval, he has allowed the refund and prior to that he has rejected the same. Further, in view of the settled legal position by various decisions relied upon by the appellant, condition of approval from UAC is not a mandatory requirement as per SEZ Act vide Section 51 of the SEZ Act which has an overriding effect over the provisions of any other law. Refund allowed - appeal allowed - decided in favor of appellant. 2019 (2) TMI 587 Penalty u/s 76 and 78 of FA - Non-payment of service tax - expenses incurred against outward transportation of cement dispatched - Held that:- The audit in this case was done in the year 2009 vide a letter dated 15.04.2009. The appellant himself had given an undertaking to produce all the relevant documents as far as the receipt of payments towards freight by the appellant is concerned but the appellant had miserably failed to stand upon the said undertaking. It is appellant’s own case that the tax proposed vide SCN dated 08.01.2010 was deposited by him in October 2010. There is no apparent document on record reflecting the said intimation to the Department. Since the audit till the date of said payment, there was more than one year of period available with the appellant to cooperate the Department and to submit the documents but there was no compliance/ intimation on part of appellant. The option of the appellant to remain silent, to my opinion, is sufficient to reflect that non payment of tax was not mere unawareness of the impugned liability on the part of the appellant but the appellant under the garb of said unawareness was not inclined to discharge his liability. No doubt mere non payment of tax liability cannot amount to suppression of fact but as discussed above the act of appellant of concealing relevant documents despite being afforded with the opportunity is definitely a positive act on his part to prove the alleged suppression of facts. Admittedly, ST-3 returns were also silent about the receipt of impugned income - penalty upheld - appeal dismissed - decided against appellant. 2019 (2) TMI 586 CENVAT Credit - input services - Business Support Service - principles of natural justice - Held that:- Both the authorities have not properly understood the entire transaction and treated the amount of cenvat credit availed as output tax of the appellant. Further, the appellant has availed the credit not on the basis of debit note issued to the sister concern but the same was availed on the basis of valid invoices issued by the respective service providers. The cenvat credit availed by the appellant have been understood as output tax of the appellant and consequently demanded the tax, interest along with imposition of penalty. Further, the appellant has availed the cenvat credit on the basis of invoices issued by the service providers which is a valid document in terms of Rule 9(1)(a) of the CENVAT Credit Rules - Further the appellant has submitted the detailed worksheets justifying the availment of cenvat credit from the sister concern on the basis of invoice issued by the service provider and the result of which clearly shows that the appellant has taken proportionate credit from the sister concerns, which is perfectly valid in accordance with rules. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 585 Imposition of penalties - invocation of section 80 of FA - cleaning services rendered by them to Indian School of Business - levy of service tax - issue in confusion - Held that:- The Finance Act, 2010, with retrospective effect from 01.07.2003 clarified that profit motive is not an essential ingredient for an Institute in the field of “Commercial Training or Coaching Centre Services” which would mean that if an Institute is even established as a non-profit company, the fact has to be verified as to whether the service rendered is to a non-commercial organisation - We find that subsequently in the case of Indian School of Business [2008 (12) TMI 666 - CESTAT BANGALORE], the Tribunal has held that Indian School of Business is imparting education and not a commercial concern, a view which of course is now covered by retrospective amendment. The sequences of events would indicate that appellant applicant could have entertained a bonafide belief as to non leviability of tax as the services to Indian School of Business is an acceptable view and hence they have justified reasons for not collecting and paying the service tax from December 2007. This is a fit case to invoke the provisions of Section 80 of the Finance Act, 1994 - penalty set aside - appeal allowed. 2019 (2) TMI 584 CENVAT Credit - various input services - denial on account of nexus - Held that:- In respect of these services, the appellant has placed reliance upon various decisions in which each service is squarely held as input service - More over the nature of service received and its use also show that the stand taken by the Revenue that there is no nexus between the input services and the output service is not correct. Credit cannot be denied - appeal allowed - decided in favor of appellant. 2019 (2) TMI 583 CENVAT Credit - input services - insurance deposits - case of Revenue is that insurance taken by the appellant is not input service as the same is not used in discharge of output service - Held that:- Revenue has no force in their argument since no banker will prefer to take risk against the financial services provided by not taking insurance. Moreover same is mandatory in terms of DICGE. And accordingly, they have taken the insurance cover which will definitely form the part of input service for the output service being rendered by them - credit allowed - appeal allowed - decided in favor of appellant. 2019 (2) TMI 582 Imposition of penalty - levy of service tax on agency Commission received by them from Reserve Bank of India for taking Government business on their behalf - non-payment of service tax for the period 12th November 2012 to March 2014 - no suppression of facts - extended period of limitation - Held that:- The issue has been clarified by insertion of illustration to Section 65(F) of the Finance Act, 2015, wherein such agency commission became taxable to service tax. The appellant has also paid the amount which is also not disputed by the Revenue. It is on record that during that period there was decision in case of State Bank of Patiala [2016 (10) TMI 800 - CESTAT NEW DELHI] wherein it was held that no service tax is payable on such commission received by the appellant. The appellant has accordingly followed the same and the Revenue was also fully aware of these judgments on the issue. Subsequently, when the issue was clarified by adding to Section 65(F) of the Finance Act. Being interpretational issue and there is no question of levy of penalty on the appellant as has been held in the impugned order - Penalty set aside - demand of service tax with interest upheld - appeal allowed in part. 2019 (2) TMI 581 Interest on delayed refund - relevant date for calculation of Interest - Section 11B of the Central Excise Act - Held that:- The Hon’ble Apex Court in the case of Ranbaxy Laboratories Ltd. Vs. UOI [2011 (10) TMI 16 - SUPREME COURT OF INDIA] has upheld grant of interest in case of late disbursal of refund from the expiry of three months of refund application till refund is granted and not from the date of order of refund. The original authority is directed to compute the interest as per the direction of the Hon’ble Apex Court in the case of Ranbaxy Laboratories Ltd. and grant the interest within a period of three months from the date of receipt of this order - appeal allowed - decided in favor of appellant. 2019 (2) TMI 580 Erection, Commissioning or Installation Services - appellant is engaged in providing services in relation to laying and conversion of power transmission lines and providing services to various DISCOMS under Transmission Corporation of Andhra Pradesh and A.P. Transco etc. - N/N/. 45/2010-ST, dated 20.07.2010 - period involved in this case is 10.09.2004 to 30.09.2008 - Held that:- On perusal of the notification No. 45/2010-ST, dated 20.07.2010, it is found that the said notification grants retrospective exemption to all the service providers for the taxable services relating to transmission and distribution of electricity till 21.6.2010. The said notification covers the period involved in the case in hand - the demand for the service tax liability, interest thereof and the penalties imposed on this account on Erection, Commissioning or Installation Services are unsustainable. GTA Services - transportation of goods by road - Held that:- The said services are received by the appellant and we also note that appellant had already discharged the tax liability along with interest - the tax liability and the interest thereof needs to be upheld. Penalty - Held that:- For the period in question, the entire taxability on Goods Transport Agency service is in the hands of the recipient of the services was in a fluid state and was being contested at different forums - appellant had made out a case under section 80 of the Finance Act, 1994 for setting aside the penalty imposed and has also made out a case under section 73 (3) of the Finance Act, 1994 - Penalty set aside. Appeal disposed off. 2019 (2) TMI 579 Refund of service tax - intermediary services or not - Service Tax paid on various input services used in providing taxable output service - Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 27/2012-CE(NT) dated 18.6.2012 - export of service or not within Rule 6A of the Service Tax Rules, 1994 - Held that:- As per the Internal Services Level Agreement between the appellant and their client, precisely, the service provider is required to render services, namely, development of various softwares and maintenance of such software supplied to the foreign client. There is no allegation of the Department that any data stored outside India have been retrieved or used by the appellant so as to qualify or fall under the category of Online Information and Database Access or Retrieval Service prescribed under Rule 9(b) of the Place of Provision of Service Rules, 2012. The intermediary is a broker or an agent who arranges or facilities the provision of service between two or more persons, but does not include the person who provides the main service on his account - In the present case, the appellant has directly provided services to the foreign clients and not acted as an intermediate in the provision of development of software and maintenance service - the findings and conclusion of the learned Commissioner (Appeals) that the appellant is an intermediary is without any basis and therefore, not sustainable in law. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 578 CENVAT Credit - duty paying documents - invalid documents - denial on the ground that invoices issued in the name of Head Office, which was not registered as an ISD; Service Tax registration number is not mentioned; and credit denied on the invoices of Kingfisher Airlines showing that Service Tax payment has not been reflected in the invoices. Denial on the ground that invoices issued in the name of Head Office, but received and used in the local office, when Head Office is not registered - Held that:- The issue is no more res integra and settled by various judgments of this Tribunal including M/s Biotor Industries Ltd. [2017 (2) TMI 1062 - CESTAT, AHMEDABAD], where it was held that when it was found that full records were maintained and the irregularity, if at all, was procedural and when it was further found that the records were available for the Revenue to verify the correctness, the Tribunal, rightly did not disentitle the assessee from the entire Cenvat credit availed for payment of duty - credit allowed. Credit denied on the ground that missing Service Tax registration number in the invoices of the input supplier - Held that:- The issue is covered by the judgment of this Tribunal in the case of M/s HCL Technologies Ltd. [2015 (9) TMI 1037 - CESTAT NEW DELHI], where it was held that non-mentioning of registration number of the service provider is only a procedural lapse and Credit cannot be denied on account of procedural lapse when substantive entitlement itself is not disputed - credit allowed. Credit denied on the invoices of Kingfisher Airlines showing that Service Tax payment has not been reflected in the invoices - Held that:- Even though against the column - 'Tax paid', it is mentioned as 'pre-paid tax but not as Service Tay paid'. However, on calculation of the amount of tax paid on the value of service mentioned, it is nothing but the rate of Service Tax paid as applicable on the gross taxable value mentioned in the respective invoice - all the pleas of the learned C.S. for the appellant needs to be scrutinized in the light of the C.A. certificate now produced claiming that the input services against respective invoices were received and used in providing the output services - matter placed on remand. Appeal allowed in part and part matter on remand. 2019 (2) TMI 577 Valuation - transport of passenger by air service - inclusion of passenger service fee and airport taxes in assessable value - Held that:- The matter is no longer res integra as the issue has already been decided by this Tribunal in the case of M/s. Royal Jordanian Airlines and others vs. CST, Delhi [2017 (11) TMI 1407 - CESTAT NEW DELHI], where it was held that non-inclusion of these charges in the taxable value for air travel service by the appellants - appeal allowed - decided in favor of appellant. 2019 (2) TMI 576 Imposition of penalty - Non-payment of service tax - non-filing of returns - Manpower Recruitment and Supply services - period January, 2009 to March, 2012 - tax with interest paid on being pointed out - Held that:- The plea of sickness of the proprietor of the appellant cannot be a ground for not discharging Service Tax though collected from the customers. It is not in dispute that they continued to run the business and received the amount during the said period including the Service Tax component - Also, the appellant had not intimated in any manner to the Department about collection of the Service Tax from the customers and not depositing with the Govt. by way of filing periodical returns. Since there is contravention of the provisions with intent to not discharge Service Tax, the provisions of Section 73(3) of the Finance Act, 1994 cannot be invoked - Penalty upheld - appeal dismissed - decided against appellant. 2019 (2) TMI 575 Refund of accumulated CENVAT Credit - rejection on the ground that the same has been filed beyond the period of one year from the end of the quarter - Rule 5 of the CENVAT Credit Rules, 2004 for the period October 2012 to December 2012 read with N/N. 27/2012-CE(NT) dt. 18/06/2012 - Held that:- As per the Larger Bench decision of the Tribunal in CCE & CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [2018 (2) TMI 946 - CESTAT BANGALORE], the period of one year should be counted from the last date of the quarter in which the FIRCs received and in the present case, the FIRCs received on 25/02/2013 and the last date to file the refund claim was up to 31/03/2014 and the refund claim was filed on 03/02/2014 which is very much within the period of one year as per the judgment of the Larger Bench. The refund claim is within the time and cannot be rejected - the case is remanded back to the original authority for the purpose of computation of the claim and sanctioning of the same which should be done within a period of two months from the date of receipt of this order - appeal allowed by way of remand. 2019 (2) TMI 574 Valuation - Cargo Handling Services - inclusion of additional amount which they have collected for loading urea rakes at Marripalem siding in assessable value - Held that:- Although the initial correspondence between the appellant and their client was only towards additional transportation costs but final agreement signed between the parties in the meeting as well as the subsequent invoices covered this amount towards transportation as well as other expenses incurred in loading of rakes at the new siding - it cannot be agreed by the appellant that the additional expenditure is only towards transportation and hence not liable to be charged to service tax. There are no force in their argument that they were under the bona fide belief that this amount was paid separately only towards transportation and hence not taxable because the agreement signed by the appellant and the invoices raised by them clearly indicate otherwise - the demand of service tax along with interest and penalties imposed in the impugned order are sustainable - appeal dismissed - decided against appellant. 2019 (2) TMI 573 CENVAT Credit - non-payment of service tax - Business auxiliary services - denial of credit on various services on the ground of nexus - Held that:- The credit cannot be denied to the appellant as all these services has been availed by the appellant in the course of their business of manufacturing in terms of the decision of Hon’ble Bombay High court in the case of Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] wherein it was held hat any service availed by the assessee during the course of their business of manufacturing, the assessee is entitled to avail credit - credit allowed. CENVAT credit - denial on various services on the ground that the said services have been availed by the appellant outside their unit - Held that:- There is no provision in the Cenvat Credit Rules to deny credit if any service is availed outside the business premises. In fact, the assessee can avail the service outside the factory premises during the course of their business of manufacturing. Admittedly, the said services have been received by the assessee during the course of their business of manufacturing, therefore, they are entitled to avail credit on these services - credit allowed. Business Auxiliary services - commission recovered from insurance companies and banks - period October, 2003 to March, 2008 - Held that:- Similar issue came up before this Tribunal in the case of Ashok Auto Sales Ltd. [2013 (7) TMI 965 - ITAT AGRA], wherein the assessee was engaged in the same activity of providing table space, carrying out minimal paper work etc. for the banks and for the same, consideration was received from the bank. In the said case, this Tribunal held that the assessee was not providing Business Auxiliary services to the bank and hence, no service tax is leviable. The service tax cannot be demanded from the appellant on the value of spare parts/consumables utilized during the course of provision of services in the capacity of Authorized Service Station. Business Auxiliary services - Held that:- In the present case, the appellant is acting on principal to principal basis and appellant buys vehicle from M/s.TKML subsequently sale them in the market, therefore, the appellant is getting incentive on account of discounts for excess sale effected by the appellant. Such amount of discount which cannot be held Business Auxiliary Service in terms of Section 65 (19) of the Finance Act, 1994 as the appellant is not promoting or marketing or selling the goods on behalf of their client. In fact, the appellant is marketing their own goods as the appellant is the owner of the goods in question - demand of service on this ground is not sustainable against the appellant. Penalty - Held that:- The credit cannot be denied to the appellant and no service tax can be demanded from the appellant, therefore, no penalty is imposable on the appellant. Appeal allowed - decided in favor of appellant. Central Excise 2019 (2) TMI 572 CENVAT credit - Extended period of Limitation - no suppression of facts - Held that:- The court is of the view that the appeal requires consideration - appeal is admitted on the substantial questions of law arising for consideration. 2019 (2) TMI 571 CENVAT credit - duty paying documents - rule 9(1)(bb) of the Cenvat Credit Rules, 2004 - It was submitted that, sub-rule (bb) of sub-rule (1) of rule 9 of the rules is ultra vires section 37 of the Central Excise Act, 1944 and section 94 of the Finance Act, 1994 to the extent the same provides for disqualification for availing cenvat credit - Held that:- The court is of the view that the matter requires consideration. Issue Rule. Issue Notice as to Interim relief returnable on 13th March, 2019. 2019 (2) TMI 570 CENVAT credit - inputs used exclusively in the manufacture of exempted goods manufactured on job work basis - demand of 6% / 8% amount under Rule 6(3) of Cenvat Credit Rules, 2004 - Held that:- In the present case, the fact is also not under dispute that the appellant are using certain other inputs such as Zinc, Furnace Oils, Consumables, certain grades of angles/ channels etc. which are commonly used in the manufacture of exempted goods as well as on their own goods cleared on payment of duty, therefore, it cannot be said that the goods manufactured and cleared under exemption were manufactured from all the inputs which were used exclusively in such exempted goods. In the present case the appellant have opted for rule 6(3)(i) according to which they have paid 6%/ 8% of the value of the exempted goods, thereafter no further demand can be made as there is no provision that once a payment is made under Rule 6(3) (i) then further cenvat credit is required to be reversed - As regard the explanation (ii) given in sub Rule (3) of Rule 6, this explanation applies only in such cases where the exempted goods is manufactured wholly from the inputs which are exclusively used in the manufacture of such exempted goods. However, in the present case some of the inputs are common which were used in the manufacture of dutiable final product as well as exempted goods, therefore, the explanation II is not applicable in the present case. Moreover, the explanation II is applicable only with reference to Rule 6(2), however the appellant have not opted for said Rule and they have opted for sub Rule (3) of Rule 6 wherein unambiguous provision for payment of 6% / 8% of the value of exempted goods is provided. It is apparent that there is no exclusive input which were used in only exempted goods, for this reason also the demand applying Rule 6 (1) and (2) will not sustain - Since various consumables inputs were used in the manufacture of exempted goods well as dutiable goods, the option of payment of 8% / 10% was held correct. Time limitation - Held that:- The department was well aware about the entire working of the appellant as with reference to payment of 6% / 8% the appellants were issued SCN disputing the valuation, therefore, there is no suppression of fact on the part of the appellant - demand for the extended period beyond normal period is also not sustainable. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 569 CENVAT credit - input services - site supervision in connection with setting up of 33 KV line services - deletion of the word ‘setting up’ from the inclusive part of input service definition w.e.f. 01/04/2011 - Held that:- The substantial portion of the input service credit amounting to ₹ 3,17,246/- relates to the Terminal Bay for ensuring continuous power supply to the manufacturing unit from the State Electricity Board which is directly used for the manufacturing of the final product and therefore even after the amendment, these services fall in the definition of input service. It is now settle law that cenvat credit is available if the input services are used “in or in relation to the manufacturing of final product” and if the nexus of such services with manufacture is established. Credit allowed - appeal allowed - decided in favor of appellant. 2019 (2) TMI 568 CENVAT Credit - clearance of by-product/waste - bagasse - common input, input services used in manufacture of dutiable goods as well as exempted goods - non-maintenance of separate records - Rule 6 of CCR, 2004 - Held that:- The issue is no more res integra and has been settled by the decision in the case of INDRESHWAR SUGAR MILS LTD. AND ORS. VERSUS CCE, PUNE III [2017 (11) TMI 1766 - CESTAT MUMBAI], where it was held that in case of removal of waste or by-product Rule 6(3) has no application - demand set aside - appeal dismissed - decided against Revenue. 2019 (2) TMI 567 Clandestine removal - MS Bars - demand based upon the recovery of kutcha slips, private ledger and the data available in the computer CPU and pen drive - Held that:- The entire case of the Revenue is based upon recovery of the so called incriminating evidence from the residential premises of one of the Directors. They have not adduced any evidence to connect these documents with the activities of the manufacturing unit. No further investigations stand made by them from the persons concerned with the production of the goods in the assessee’s factory and their clearances. Further, there is no identification of the transporters or the recipient of the goods, thus establishing that the appellant had actually cleared the goods in a clandestine manner. Though, Revenue is not expected to prove its case of clandestine activities to the hilt but the evidences produced by the Revenue should be, at least, to an extent so as to inspire confidence in the prosecution’s case - In the present case, no further investigations except the recovery of certain incriminating documents from the residential premises of the assessee’s director read with his retracted statement, stand made. The findings of the clandestine activities cannot be upheld on the said documents, which were not even recovered from the premises of the manufacturing unit and as such has to be treated in the nature of third party documents. The same required corroboration, which the Revenue has failed to. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 566 CENVAT Credit - removal of inputs as such - shale stone - Revenue was of the view that the shale stone which are not actually used by the appellant, are required to be considered as clearance of the inputs and are required to reverse Cenvat credit - Rule 3(5) of Cenvat Credit Rules - Held that:- Admittedly, Rule 3(5) of Cenvat Credit Rules requires reversal of credit when inputs in respect of which Cenvat credit has been taken, are removed “as such” from the factory. Admittedly, the Cenvat credit was availed on the coal and the coal was never removed from the factory. In such a scenario, the provisions of Rule 3(5) would not get attracted. Otherwise, also when the coal is issued for washing and screening and further preparation, it can be safely concluded that the inputs stand issued for utilisation in the manufacture of the final product. After the issuance of the inputs, if waste is generated during further processes, no reversal is required to be done in terms of Rule 3(5). The shale stones have emerged during the course of manufacture of the appellant’s final product which stands initiated with the issuance of the coal. The issue also stands decided by the Tribunal in the case of Indo Rama Synthetics (I) Ltd. Vs. CCE, Nagpur [2016 (4) TMI 624 - CESTAT MUMBAI], wherein it was held that removal of the sludge settled at bottom of the tank during storage of oil cannot be held to be removal of the inputs as such so as to attract the provisions of Rule 3 of Cenvat Credit Rules, which require reversal only in case of removal of inputs “as such”. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 565 SSI Exemption - dummy unit - It was contended by the department that the appellants were removing the goods in the guise of removal for job work; during the investigation both Shri Charles D’Silva and Smt. Helen Charles D’Silva Proprietors of M/s. Aurrick Tools and M/s. Austin have accepted that M/s. Austin had no machinery and where with all to undertake job work like cutting/punching of aluminum sheets - Held that:- The Commissioner (Appeals) has correctly held that duty at the normal rate for the period 01/03/2005 to 2006-2007 was payable as the appellants have failed to follow the procedures prescribed under Notification No.08/2003-CE dated 01/03/2003 - the duty liability of the appellants should be restricted to 01/04/2003 onwards only. Penalty - Held that:- Equal penalty was imposed on Smt. Helen Charles D’Silva while holding that Shri Charles D’Silva was the person, who has established a dummy unit by using the name of Smt. Helan Charles D’Silva of proprietor of M/s. Austin except the fact that her name has been used, no other positive and pro-active roles alleged on her part in the evasion of duty by the appellants. Therefore, we find that the penalty imposed on her needs to be commensurate with here offence and thus, requires to be reduced. Appeal allowed in part. 2019 (2) TMI 564 SSI exemption - use of brand name of others - the goods manufactured by the appellant is bearing the brand name “SNT” which as per the claim of department is owned by another person i.e. Shri. Dilipbhai J Rathod of M/s. Vidyut Motors Pvt. Ltd., Mumbai - appellant claims that the said brand name was assigned to them by assignment deed - N/N. 08/2003-CE dated 01.03.2003. Held that:- The assignment deed was neither signed by the assignee nor by any witness in the assignment deed. The date of assignment was not mentioned, therefore, the assignment deed is not free from serious doubt. Even if for sake of argument if the assignment deed is accepted but the most important point is that if the brand name is assigned to the appellant, thereafter, the assignor has no locus standing, as regard the said brand name “SNT”, however, despite the assignment deed written the assignor M/s. Vidyut Motors PVT. Ltd applied for renewal of the trade mark “SNT” and the same was granted by the trade Mark registry. This makes it clear that the brand name “SNT” even after the period of assignment deed the trade mark “SNT” was owned by M/s. Vidyut Motors PVT. Ltd. It is only by an application made by the appellant to the trade mark registry on 06.12.2006, the appellant can be treated as owner of the brand name only w.e.f .06.12.2006. In this fact, the appellant is entitled for the SSI Exemption only for the period from 06.12.2006 onward. Time limitation - Held that:- Though the appellant have declared the brand name “SNT” but the fact of ownership of brand name “SNT” was not disclosed , therefore, there is a clear mis-declaration and suppression of fact on the part of the appellant - demand cannot be held as time bar. Since the appellant is entitled for SSI Exemption from 06.12.2006 onward, the adjudicating authority shall make a re-quantification of demand and pass a fresh order - appeal allowed by way of remand. 2019 (2) TMI 563 Demand of interest u/s 11AB of CEA and penalty u/r 25 of the Central Excise Rules, 2002 - delayed payment of duty - the duty was not payable at all - Held that:- The duty so paid by the appellant was not lawfully payable on the ground that the appellant had admittedly cleared un-branded Petrol and Diesel which attracts lower rate of duty in terms of Notification No. 4/06-CE. On this issue, the department has also not raised any SCN, therefore, the department itself has admitted that the appellant was eligible for lower rate of duty in terms of aforesaid Notification. Therefore, differential duty was not payable at all by the appellant. In this case, the duty which was paid by the appellant for which they were not liable to pay, the duty was paid voluntarily by the appellant. Therefore, the duty which was not lawfully required to be paid even though the appellant pay on their own, the department has no authority to recover interest or impose penalty with respect to such payment of duty even though belatedly - the provision of Section 11AB of Central Excise Act shall be applicable only in case where the duty which is lawfully required to be paid by an assessee and the same is not paid. Section 11A (2B) of CEA - Held that:- The sub section (2B) is also applicable only in case where duty is payable with authority of law. Moreover, the appellant have not opted for sub section (2B) explicitly for the reason that, firstly, they have only paid the duty but did not pay the interest. Secondly, after payment of duty and interest, the appellant has to opt this provision in written by informing to the department which is not the case here, therefore, sub section (2B) is also not applicable. The duty which was not admittedly payable but paid by the appellant voluntarily, no interest or penalty can be demanded from the appellant - appeal allowed - decided in favor of appellant. 2019 (2) TMI 562 CENVAT credit - CENVAT credit involved input and input services related to that quantity of electricity sold to outside agencies - common inputs to the manufacture of dutiable goods as well as exempted goods - non-maintenance of separate records - Sub Rule 3(1) of Rule 6 of CENVAT Credit Rules - Held that:- Allahabad High Court in the case of Gularia Chini Mills [2013 (7) TMI 159 - ALLAHABAD HIGH COURT] has held that in the generation of electricity from bagasse, no other input or input service is used and therefore, the electrical energy is neither excisable under Section 2(d) of Central Excise Act, 1944 nor exempted goods and hence, Rule 6 is not applicable. The demand of 6% of the value of electricity sold to various companies is not sustainable in law - appeal allowed - decided in favor of appellant. 2019 (2) TMI 561 Maintainability of appeal - Refund claim - time barred - Whether without filing the appeal against the orders of sanctioning the refund claim into Cenvat credit account, the appeal is maintainable before this Tribunal or not? - Held that:- In this case due to introduction of Central Goods Service Tax Act, 2017, the appellant is entitled to claim the refund in cash and the appellant after giving refund claim into Cenvat credit account, approached to the adjudicating authority for modification of the order. When the appellant has approached the adjudicating authority for modification, it means that the appellant has not agreed with the adjudication order and when request for modification in adjudication order has been entertained and rejected and the same has been appealed against, in that circumstance, it is concluded that the appellant has challenged the adjudication order of refund claim - the appeal filed before the Ld. Commissioner (Appeals) is maintainable. Whether the appeal filed by the appellant before the Ld. Commissioner (Appeals) against the order of rejection of their request dt. 28.03.2018 is barred by limitation or not? - Held that:- Against the adjudication order, the appellant approached to the adjudicating authority for the modification of the same. Therefore, the time consumed by the adjudicating authority is required to be deducted from the time of filing the appeal before the Commissioner (Appeals). If same is deducted, then the appeal filed before the Commissioner (Appeals) is within time - the appeal filed by the appellant before Ld. Commissioner (Appeals) is within time. Refund allowed - appeal allowed - decided in favor of appellant. 2019 (2) TMI 560 Condonation of delay in filing appeal - appeal filed beyond the period of limitation prescribed under section 85 of the Finance Act, 1994 - Held that:- As the appeal was preferred before the Commissioner (Appeals) even beyond the extended period of one month after the expiry of the statutory period of two months, it was liable to be dismissed and was rightly dismissed by the Commissioner (Appeals). There is, therefore, no error in the order passed by Commissioner (Appeals) - The appeal is dismissed. 2019 (2) TMI 559 CENVAT Credit - invoices which were beyond six months of the date thereof - common inputs services used by the appellant in manufacture as well as the trading activities. Denial on the ground that the credit has been taken on the invoice which were beyond six months - Held that:- It is observed that limitation of six months was introduced only in the year 2014 as is apparent from the Notification No. 21 dated 11.07.2014. It is also apparent that there was several confusion prevailing due to the said introduction in the statute and there was a clarification in this regard as is apparent from Circular No. 990 of 19.11.2014 not only this the period of six months got enhanced to one year vide a subsequent Notification No. 6/2015 dated 01.03.2015. The appellant no doubt has taken the cenvat credit beyond six months but within the one year of the requisite invoices - The benefit of the above discussed confusion has to be extended in favour of the assessee. Denial that the appellant was involved in manufacturing as well as trading activities, as such, was not entitled to take entire credit on the common input/ input services - extended period of limitation - no suppression of facts - Held that:- While issuing the impugned SCN the factum of availing the cenvat credit by the appellant on the common input/ input services was very much in the notice of the Department. It was also in their notice that while taking the said credit invoice of the period prior six months was used by the appellant. In such circumstances, the allegation of suppression of facts on part of the appellant is not at all sustainable, based whereupon, the extended period of limitation has been invoked vide this SCN - SCN is abrred by time. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 558 EOU - Refund of accumulated credit - Rule 5 of the Cenvat Credit Rules, 2004 - wrong availment of CENVAT credit or not - Held that:- The issue decided in the case of M/S NAVIN FLUORINE INTERNATIONAL LTD. VERSUS CCE, INDORE [2018 (11) TMI 346 - CESTAT NEW DELHI], where it was held that tax was not being paid during the relevant period and as such it can be concluded that there was suppression or mis-statement on the part of the assessee, thus leading to non-availability of credit to them - appeal allowed - decided in favor of appellant. 2019 (2) TMI 557 CENVAT Credit - inputs - steel plates, TMT bars, angles, beams etc. which were used for fabrication of various equipments, components, accessories, parts to the kiln, conveyor system, storage tanks/bunkers, in their unit - scope of SCN - Held that:- The impugned order has travelled beyond the show-cause notice because in the show-cause notice, the only allegation is that the MS Angles, MS Bars, Channels which have been used in the fabrication of various equipments are embedded to earth so as to form immovable property and hence cannot be considered as ‘capital goods’ as per the definition of ‘capital goods’ under Rule 2(a) of the Cenvat Credit Rules, 2004. In the impugned order, the Commissioner has accepted that credit cannot be denied on the ground of immovability but still he has denied the credit by invoking the user test which was not an allegation in the show-cause notice - Appeal allowed - decided in favor of appellant. 2019 (2) TMI 556 CENVAT Credit - capital goods - various iron and steel items used in the fabrication of parts of capital goods and structural support for capital goods - Held that:- Both the authorities have relied upon the verification report dated 25.08.2008 prepared by the Asst. Commissioner, Dharwad which is one sided and copy of the same has not been given to the appellant. Therefore, the same cannot be relied upon for denying the CENVAT credit. The impugned items have been used in fabrication of capital goods such as cane unloader, bagasse carrier, crystallizer, hot & cold water tank, molasses tanks on which credit has been allowed - credit allowed - appeal allowed - decided in favor of appellant. 2019 (2) TMI 555 Maintainability of appeal - Rebate claim - Rule 18 of Central Excise Rules, 2002 - Held that:- The issue whether the appeal against the rebate claim came before this Tribunal in the case Venus International Vs. CCE [2013 (8) TMI 900 - CESTAT MUMBAI], where it was held that the appeal relates to rebate of excise duty and the order has been passed by the Commissioner of Central Excise (Appeals) and, therefore, such appeal is not maintainable before this Tribunal - the appeal is maintainable before this Tribunal as in this case the core issue for denial of rebate claim is that whether the appellant is entitled to claim Cenvat credit on the invoices issued by M/s SS Exports (one of the supplier of the goods). The case of the Revenue is that M/s SS Exports had no facility to manufacturer the goods in question, therefore, the invoices issued by M/s SS Exports are fake, consequently, on the said invoices, the appellant is not entitled to avail cenvat credit, consequently, rebate claim cannot be sanctioned to the appellant - Held that:- It is a fact on record that on the strength of ARE-I, the appellant has received the goods on the strength of the invoices issued by the M/s SS Exports, therefore, the burden lies on the Revenue to establish the fact that from where the appellant procured the goods in question, if they are not procured by M/s SS Exports, in these circumstances, when the export of the said goods has not been disputed by the Revenue. Therefore, as revenue has failed to establish the fact that from where the goods in question has been procured by the appellant, if not procured by M/s SS Exports, the benefit of doubt goes in favour of the appellant, therefore, the appellant is entitled to take Cenvat credit on the strength of the invoices issued by M/s SS Exports of the goods in question, as appellant is entitled to Cenvat credit, therefore, the question of denial for rebate claim does not arise. Appeal allowed - decided in favor of appellant. 2019 (2) TMI 554 Levy of duty - residual waste namely, ‘fly ash’ - process of manufacture not taking place - benefit of N/N. 89/95-CE dated 18.5.95 denied - Held that:- The matter is no longer res integra as it has already been decided by Hon’ble High Court of Madras in the case of Mettur Thermal Power Station vs. CBE & C New Delhi [2015 (9) TMI 152 - MADRAS HIGH COURT], where it was held that the commodity ‘fly ash’ cannot be subjected to levy of excise duty because it is not an item of goods which has been subjected to process of manufacture, it may not be necessary for this Court to delve upon any other related issues - demand set aside - appeal dismissed - decided against Revenue. 2019 (2) TMI 553 Refund of duty paid - period of limitation - payment of duty through PLA which was otherwise exempted - area based exemption - benefit of N/N. 56/2002 dated 14/11/2002 availed - extension of benefit of Notification pertaining to the expansion - rejection of refund on the ground of time limitation - Held that:- In respect of the issue regarding the application of conditionality of expansion prior to date of filing is concerned, the same is covered by the decision of this very Tribunal in their own case COMMISSIONER OF CENTRAL EXCISE, JAMMU VERSUS SHANKAR TIMBER PRODUCTS [2011 (8) TMI 930 - CESTAT, NEW DELHI], where it was held that When the duty in respect of clearances made during whole of December 2006 was payable only in the next month and during December 2006, the respondent was eligible for benefit of Notification No. 56/2002-C.E. - thus, the filing of the statements is procedural nature and does not come in way of granting of the refund to the appellant. The contention of the Department with exemption Notification cannot be granted to the respondent assessee for the period prior to 11/12/2006, has no basis on the law. It is seen from para 2(a) and 2(A)(d) of the Notification. Under the Notification it is not seen that it provides that in order to avail the Notification benefit the appellant will be disentitled to avail the benefit for the period prior to filing of the appeal. Appeal dismissed - decided against Revenue. 2019 (2) TMI 552 CENVAT Credit - input and input services related to that quantity of electricity sold to outside agencies - Rule 6 of the CENVAT Credit Rules, 2004 - Held that:- Allahabad High Court in the case of Gularia Chini Mills [2013 (7) TMI 159 - ALLAHABAD HIGH COURT] has held that in the generation of electricity from bagasse, no other input or input service is used and therefore, the electrical energy is neither excisable under Section 2(d) of Central Excise Act, 1944 nor exempted goods and hence, Rule 6 is not applicable. The demand of 6% of the value of electricity sold to various companies is not sustainable in law - appeal allowed - decided in favor of appellant. CST, VAT & Sales Tax 2019 (2) TMI 551 Local sale or sale in the course of import - High Seas Sale - sales of the goods while being in customs bonded warehouse - interpretation of the definition of the term 'crossing of customs frontiers of India' - sales in the course of import or not - transfer of the documents of title to the goods before crossing the customs frontiers of India - import under the second limb of section 5(2) of the Central Sales Tax Act, 1956. - Exemption from sales tax / VAT Held that:- a combined reading of the definitions of the terms customs airport , customs area , customs port and customs station would indicate that these are the notified places where the goods on import, until they are cleared, have to be placed. Their custody is with the person referred by us in the aforereferred provisions. Thus, once the imported goods are unloaded in the customs area, then, there has to be entry made, save and except such goods which are intended for transit or transhipment and there is a provision for clearance of goods for home consumption. When we see this scheme in the light of the provisions contained in Chapter VI and particularly section 46 falling therein, it is evident that the filing of bill of entry means the importer of any goods, on importation, presenting this bill to the proper officer for home consumption or warehousing. If they have to be cleared for home consumption, then, the procedure under section 47 of the Customs Act, 1962 has to be followed and when they have to be warehoused after unloading, then, section 48 is the provision which has to be abided by the concerned persons. In case of warehoused goods, by section 71, it is categorically stated that goods not to be taken out of warehouse except as provided by this Act. - Thus, the import is complete on compliance of the above noted provisions of the Customs Act, 1962 and therefore, that expression for the purposes of the BST and the CST Act has to be understood accordingly. The clearance of goods for home consumption is dealt with by section 47 of the Customs Act, 1962, but storage of imported goods in warehouse only because they are not cleared after unloading having been dealt with by the Customs Act, 1962 and particularly section 48 thereof, does not mean that for the purposes of the CST Act the goods have not crossed the customs frontiers of India. This is not a case where the deeming fiction in sub-section (2) of section 5 of the CST Act operates. Admittedly, this is not a case of a sale of goods occasioning the import, but what is claimed is that the sale is effected by transfer of documents of title to the goods before the goods have crossed the customs frontiers of India. This later part is also belied by the fact and as claimed by Mr.Sonpal that in this case, the bill of lading was issued on 15th September, 1995 and the bill of entry for the period 1995-96 for warehousing was filed on 13th November, 1995 and the agreement for sale has been executed thereafter. Once these are the admitted dates and events, then, this is not a case where the documents of title to the goods have been transferred before the goods have crossed the customs frontiers of India. This is, therefore, a local sale. Once on the factual position, the dealer claims the transaction to be effected by transfer of document of title to the goods before clearance from customs authorities, then, it is evident that in the light of the discussion in the forgoing paragraphs about the legal provisions, particularly of the Customs Act, 1962 and the BST Act, the second limb of sub-section (2) of section 5 of the CST Act is not attracted. This argument is not acceptable, that the customs frontiers of India are not crossed until the goods find their free access into the country by crossing the outer limits of the area of customs station and it is possible only at the time of clearance by the customs authorities by making the payment of customs duty. This argument is not sound on facts and in law. Once we are of the firm opinion that the CST Act touches the concept of crossing the customs frontiers of India, which is distinct from customs barriers of India, then all the more we cannot agree with the counsel of the assessee. The question forwarded for our opinion is answered in favour of the applicant/Department and against the respondent/dealer - reference disposed off. 2019 (2) TMI 550 Validity of Recovery proceedings - constitutional validity of Section 26C of the Kerala General Sales Tax Act, 1963 - proceedings taken against the Director of a private limited company. Constitutional validity of Section 26C of the Kerala General Sales Tax Act, 1963 - Held that:- The issue is decided against the assessee - Section 26C specifically speaks of joint and several liability of every person who was a Director of a private limited company only if the tax or other amounts recoverable under the Act cannot be recovered for any reason from the private company. Hence the proceedings has to be taken first against the company and there should also be sufficient material to show that the recovering authorities were not able to recover the amounts from the assessee company. Proceedings taken against the Director of a private limited company - Held that:- This issue is decided against Revenue - In the decision of another Division Bench in Mohammed Harid, v. District Collector [2014 (3) TMI 1137 - KERALA HIGH COURT], this Court had declared that since Section 26C contains a specific clause that it would be subject to the Companies Act, if any statutory right or protection is available to the Director under the Companies Act contravention of the same could be taken as a defense against the recovery. Petition disposed off. 2019 (2) TMI 549 Non-speaking order - application of the annual ratio of total production/stock transfer value to determine reverse tax - goods are purchased and input claimed/stock transfer effected on a monthly basis - reversal of input tax credit on monthly basis - sub-clause (iv) of rule 39(5) of the Kerala Value Added tax Rules, 2005 - Held that:- We do not think that the aforesaid provision would apply especially since it is on audit assessment. However, the general scheme of best judgment assessment, which is indicated from the above provision would be applicable even if it is not an audit assessment - We are of the opinion that the matter has to be re-done by the Assessing Officer (AO) computing the input-tax credit on a monthly basis with reference to the reversal made by the assessee itself on the next month. The Tribunal has not considered the issue at all and there is total lack of application of mind - the matter should be considered by the AO itself - decided against Revenue and in favor of assessee. Indian Laws 2019 (2) TMI 548 Smuggling of contraband item - Charas - Section 20(ii)(c) of NDPS Act - seizure of the contraband from gunny bags - applicability of Section 50 of NDPS Ac - reliability on a recent decision of this Court in Mohan Lal vs. State of Punjab [2018 (8) TMI 963 - SUPREME COURT OF INDIA]. Held that:- Section 50 of NDPS Act patently has no application since the recovery was not from the person of the appellant but the gunny bags carried on the scooter. PW5 the independent witness who had signed the search and seizure documents but turned hostile, was duly confronted under Section 145 of the Evidence Act, 1872 with his earlier statements to the contrary under Section 161 Cr.P.C. and did not deny his signatures. The order sheet dated 08.11.1995 of the Trial Court reveals that independent witness Jeevan Kumar was present on that date to depose, but was bound down on objection from the defence side that he be examined on another date along with other witnesses. It is therefore very reasonable to conclude that the witness did not appear subsequently because he may have been won over by the appellant. There is no material to conclude that the witness was withheld or suppressed by the prosecution with any ulterior motive. The only issue surviving for consideration is with regard to the prosecution being vitiated because PW10 was the informant as also the Investigating Officer, in view of Mohan Lal - In Mohan Lal our attention had been invited to the divergent views being taken on the issue with regard to the informant and the investigating officer being the same person in criminal prosecutions, and the varying conclusions arrived at in respect of the same. The facts in Mohan Lal, were indeed extremely telling in so far as the defaults on part of the prosecution was concerned. In that back ground it was held that the issue could not be left to be decided on the facts of a case, impinging on the right of a fair trial to an accused under Article 21 of the Constitution of India. Societal interest therefore mandates that the law laid down in Mohan Lal cannot be allowed to become a spring board by an accused for being catapulted to acquittal, irrespective of all other considerations pursuant to an investigation and prosecution when the law in that regard was nebulous. Criminal jurisprudence mandates balancing the rights of the accused and the prosecution. If the facts in Mohan Lal were telling with regard to the prosecution, the facts in the present case are equally telling with regard to the accused. There is a history of previous convictions of the appellant also. We cannot be oblivious of the fact that while the law stood nebulous, charge sheets have been submitted, trials in progress or concluded, and appeals pending all of which will necessarily be impacted. The criminal justice delivery system, cannot be allowed to veer exclusively to the benefit of the offender making it unidirectional exercise. A proper administration of the criminal justice delivery system, therefore requires balancing the rights of the accused and the prosecution, so that the law laid down in Mohan Lal is not allowed to become a spring board for acquittal in prosecutions prior to the same, irrespective of all other considerations. All pending criminal prosecutions, trials and appeals prior to the law laid down in Mohan Lal shall continue to be governed by the individual facts of the case - appeal dismissed. 2019 (2) TMI 547 Dishonor of Cheque - insufficiency of funds - repayment of friendly loan - Sections 138 of the Negotiable Instruments Act. Whether a revisional Court can, in exercise of its discretionary jurisdiction, interfere with an order of conviction in the absence of any jurisdictional error or error of law? - Held that:- It is well settled that in exercise of revisional jurisdiction under Section 482 of the Criminal Procedure Code, the High Court does not, in the absence of perversity, upset concurrent factual findings. It is not for the Revisional Court to re-analyse and re-interpret the evidence on record - As held by this Court in Southern Sales and Services and Others vs. Sauermilch Design and Handels GMBH [2008 (10) TMI 696 - SUPREME COURT OF INDIA], it is a well established principle of law that the Revisional Court will not interfere even if a wrong order is passed by a court having jurisdiction, in the absence of a jurisdictional error - The answer to the first question is therefore, in the negative. Whether the payee of a cheque is disentitled to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, of a cheque duly drawn, having been issued in discharge of a debt or other liability, only because he is in a fiduciary relationship with the person who has drawn the cheque? - Held that:- A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted - It is not the case of the respondent-accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion - The second question is also answered in the negative. The High Court patently erred in holding that the burden was on the appellant-complainant to prove that he had advanced the loan and the blank signed cheque was given to him in repayment of the same. The finding of the High Court that the case of the appellant-complainant became highly doubtful or not beyond reasonable doubt is patently erroneous - appeals are allowed. 2019 (2) TMI 546 Gas Distribution Network (GDN) - Projects under implementation - deemed authorisation under the new provision - Vires of the Regulation 18 of the Petroleum and Natural Gas Regulatory Board (Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution Networks) Regulations, 2008 - grant of authorisation of projects in Udaipur and Jaipur - laying down of Gas Network pipelines. Whether the Board was justified in rejecting the application filed by the appellant under Section 17 of the Act of 2006 read with Regulation 18 of the Regulations of 2008, after the provisions contained in Section 16 of the Act of 2006 came into force on 12.07.2010 granting deemed authorisation to those entities which had inter alia started laying and building local Natural Gas Distribution Network prior to the appointed date, i.e. 01.10.2007? Held that:- The application of the appellant has been rejected primarily on the ground of noncompliance of clause (d) of Regulation 18(2) of the Regulations of 2008. It was incumbent on the Board to take into consideration various factors as specified in clauses (a) to (j) of Regulation 18(2) of the Regulations of 2008, and the same has to be considered in the back drop of the fact that the press note was issued on 30.10.2007 to stop all incremental activities and as such it was necessary to consider whether the appellant could have been faulted for noncompliance of clause (d) of Regulation 18(2), and whether it was a mandatory requirement or merely one of the factors to be considered along with all the other factors. Other relevant aspects as contained in the other clauses have not been adverted to by the Board while deciding the application of the appellant, which were also equally significant. It was necessary to consider whether the appellant is compliant of various other factors as provided in clauses (a) to (j) of Regulation 18(2) of the Regulations of 2008. The noncompliance, if any, of clause (d) ought to have been considered in the light of the press note dated 30.10.2007 which required stopping of all incremental activities. Besides depositing the sum of ₹ 2 Crores immediately towards commitment fee, the appellant had thereafter incurred mammoth expenditure after it was successful in the bids, which aspect has not been considered by the Board while deciding the application of the appellant. In our considered view, the same should not have normally been over looked. Besides the same, in the factual circumstances of the present case, the provision of ‘deemed authorisation’ contained in Proviso (ii) to Section 16 had also been enforced on 12.07.2010 and it was necessary for the Board to have considered whether it was a case where only certain safeguards were required to be observed in view of the ‘deemed authorisation’. It was also necessary for the Board to have considered all these aspects and thereafter to have decided the application relating to authorisation/conditions to be imposed under the Act, if any, required. There was illegality committed by the Board in deciding the application of the appellant while passing the order dated 19.05.2011, and as such the same deserves to be quashed - Appeal allowed. 2019 (2) TMI 545 Second Dishonor of Cheque - insufficient funds - Section 138 of the Negotiable Instruments Act - whether the prosecution based upon second or successive dishonour of the cheque is permissible or not? Held that:- The cheques were presented twice and notices were issued on 31.08.2009 and 25.01.2010 - Applying the ratio of MSR Leathers [2012 (10) TMI 232 - SUPREME COURT] the complaint filed based on the second statutory notice is not barred and the High Court, in our view, ought not to have quashed the criminal complaint and the impugned judgment is liable to be set aside. The Complaint CC No. 4029 of 2010 before the Court of XVIII, Metropolitan Magistrate at Saidapet, Chennai is restored to the file of the Trial Court and the Trial Court shall proceed with the matter in accordance with law after affording sufficient opportunity to both the parties. 2019 (2) TMI 544 Dishonor of Cheque - section 138 read with section 141 of the Act - vicarious liability on director/partner - Held that:- It is well settled, and reference to the catena of decisions enunciating the position of law is not really necessary, that a director or a partner can not be fastened with vicarious liability unless he was in charge of, and was responsible to the firm for the conduct of the business of the firm. A director or a partner can not be deemed to be liable, and that the director and partners is vicariously liable for the offence committed by the company or firm must be pleaded and proved like any other fact. In the absence of the necessary averment in the complaint, which averments may not necessarily confirm to or mechanically reproduce the language of section 141 of the Act, it would impermissible for the Court to take cognizance of the complaint. The very sine qua non for issuance of process is that the complaint, holistically read and understood, must aver that the directors or partners who are arrayed as accused were responsible to the company or firm for the conduct of the business. It is obvious that the purchase orders would be placed by either the company or firm or on its behalf by a director or officer or other employee. The fact that the invoices placed on record do not refer to the applicantsaccused does not take the case of the applicantsaccused any further. The challenge to the order of issuance of process must fail - the personal presence of the applicants – accused is exempted unless the trial Court, for reasons to be recorded, finds that the personal presence of the applicants – accused is absolutely necessary - Application rejected.
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