TMI Tax Updates - e-Newsletter
February 26, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Directions u/s 168 of the CGST Act regarding non-transition of CENVAT credit u/s 140 of CGST Act or non-utilization thereof in certain cases

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• Valuation - Oil companies selling petroleum products through dealers are required to include the commission retained by the dealers - Tri

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News

1. PNB fraud: ED attaches houses, land worth INR 523cr of Nirav Modi group

2. Arun Jaitley Jaitley slams regulators, auditors for PNB fraud

3. ​IBBI seeks public comments on contents of Request for Proposal (RFP)

Notifications

Central Excise

1. 18/2018 - dated 23-2-2018 - CE

Central Government considers the said notification shall not apply to the goods manufactured on or before the 1st February, 2018 and cleared on or after the 2nd February, 2018

2. 17/2018 - dated 23-2-2018 - CE

Central Government considers the said notification shall not apply to the goods manufactured on or before the 1st February, 2018 and cleared on or after the 2nd February, 2018.

Customs

3. 05/2018 - dated 23-2-2018 - ADD

Seeks to amend notification No.3/2018-Customs (ADD) dated the 23rd January, 2018

4. 27/2018 - dated 23-2-2018 - Cus

Seeks to further amend notification No. 50/2017-Customs so as to prescribe effective rate of BCD on various goods

5. 2/2018-Customs (N.T./CAA/DRI) - dated 23-2-2018 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI

6. 1/2018-Customs (N.T./CAA/DRI) - dated 23-2-2018 - Cus (NT)

Appointment of Common Adjudicating Authority by DGRI

GST - States

7. 11/2018-State Tax - dated 3-2-2018 - Himachal Pradesh SGST

Notification regarding e-way bill

8. EXN-F(10)-44/2017-74/2018-State Tax - dated 16-1-2018 - Himachal Pradesh SGST

1st day of February, 2018 as the date from which the provisions of serial number 2(i) and 2(ii) of Notification No. EXN-F(10)-31/2017 dated 26th September, 2017, shall come into force

9. G.O. Ms. No. 09/2018-Puducherry GST (Rate) - dated 25-1-2018 - Puducherry SGST

Amendment to notification No. G.O. Ms. No. 45/2017-Puducherry GST (Rate), dated the 14th November, 2017 on concessional SGST rates on certain goods supplies to specific public funded research institute.

10. G.O. Ms. No. 08/2018-Puducherry GST (Rate) - dated 25-1-2018 - Puducherry SGST

Reduction of State tax on intra-state supply of certain old and used motor vehicle.

11. G.O. Ms. No. 07/2018-Puducherry GST (Rate) - dated 25-1-2018 - Puducherry SGST

Seeks to amend Notification No.2/2017-Puducherry GST (Rate).

12. G.O. Ms. No. 06/2018-Puducherry GST (Rate) - dated 25-1-2018 - Puducherry SGST

Seeks to amend Notification No.1/2017-Puducherry GST (Rate).

13. G.O. Ms. No. 05/2018-Puducherry GST (Rate) - dated 25-1-2018 - Puducherry SGST

Exemption to intra-State supply of services by way of grant of license or lease to explore or mine petroleum crude or natural gas or both, consideration for which is paid to the Government in the form of Government's share of profit petroleum.

14. G.O. Ms. No. 04/2018-Puducherry GST (Rate) - dated 25-1-2018 - Puducherry SGST

Seeks to provide special procedure with respect to payment of tax by registered person supplying service by way of construction against transfer of development right and vice versa.

15. G.O. Ms. No. 03/2018-Puducherry GST (Rate) - dated 25-1-2018 - Puducherry SGST

Amendment to notification on services on which the State tax shall be paid on reverse charge basis.

16. G.O. Ms. No. 02/2018-Pudduchrry GST (Rate) - dated 25-1-2018 - Puducherry SGST

Seeks to amend notification No. 12/2017- Puducherry GST (Rate) so as to exempt certain services as recommended by Goods and Services Tax Council in its 25th meeting held on 18.01.2018.

17. G.O. Ms. No. 01/2018-Pudduchrry GST (Rate) - dated 25-1-2018 - Puducherry SGST

Seeks to amend notification No. 11/2017- Puducherry GST (Rate) so as to notify SGST rates of various services as recommended by Goods and Services Tax Council in its 25th meeting held on 18.01.2018.

18. G.O. Ms. No. 13 - dated 23-1-2018 - Puducherry SGST

Amendment of .notification issued vide G.O. Ms. No. 5/A1/CT/2017 dated 21st June, 2017 for notifying e-way bill portal.

19. G.O. Ms. No. 12 - dated 23-1-2018 - Puducherry SGST

Waiver of late fee payable by registered person for failure to furnish the return in FORM GSTR-6 by the due date

20. G.O. Ms. No. 11 - dated 23-1-2018 - Puducherry SGST

Waiver of late fee payable by registered person for failure to furnish the return in FORM GSTR-5A by the due date

21. G.O. Ms. No. 10 - dated 23-1-2018 - Puducherry SGST

Waiver of late fee payable by registered person for failure to furnish the return in FORM GSTR-5 by the due date

22. G.O. Ms. No. 09 - dated 23-1-2018 - Puducherry SGST

Waiver of late fee payable by registered person for failure to furnish the details of outward supplies for any month/quarter in FORM GSTR-1 by the due date

23. G.O. Ms. No. 08 - dated 23-1-2018 - Puducherry SGST

The Puducherry Goods and Services Tax (Amendment) Rules, 2018.

24. G.O. Ms. No. 05 - dated 3-1-2018 - Puducherry SGST

Seeks to amend Notifification G.O. Ms. No.9/A1/CT/2017 dt.29.06.2017 so as to prescribe effective rate of tax under composition scheme for manufacturers and other suppliers.

25. G.O. Ms. No. 04 - dated 3-1-2018 - Puducherry SGST

The Puducherry Goods and Services Tax (Fourteenth Amendment) Rules, 2017.

26. G.O. Ms. No. 03 - dated 3-1-2018 - Puducherry SGST

Notifies the date from which E-Way Bill Rules shall come into force.

27. G.O. Ms. No. 02 - dated 3-1-2018 - Puducherry SGST

Waives the late fee payable for failure to furnish the return in FORM GSTR-4.

28. G.O. Ms. No. 01 - dated 3-1-2018 - Puducherry SGST

Extends the due dates for quarterly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of upto ₹ 1.5 crore.

29. G.O. Ms. No. 59/CT/2017-18 - dated 21-12-2017 - Puducherry SGST

The Puducherry Goods and Services Tax (Thirteenth Amendment) Rules, 2017.

30. F. No. 3240/CTD/GST/2017/08 - dated 21-12-2017 - Puducherry SGST

Seeks to extend the time limit for filing FORM GST ITC-01.

31. 145/2018/18(120)/XXVII(8)/2017/CTR-9 - dated 6-2-2018 - Uttarakhand SGST

Amendment in Notification No. 973/2017/9(120)/XXVII(8)/2017 dated 23 November, 2017

32. 144/2018/18(120)/XXVII(8)/2017/CTR-8 - dated 6-2-2018 - Uttarakhand SGST

Exemption of State Tax on intra state supplies of certain motor vehicles driven by LPG or CNG

33. 143/2018/18(120)/XXVII(8)/2017/CTR-7 - dated 6-2-2018 - Uttarakhand SGST

Amendment in Notification No. 518/2017/9/(120)/XXVII(8)/2017 dated 29 June, 2017

34. 141/2018/18(120)/XXVII(8)/2017/CTR-5 - dated 6-2-2018 - Uttarakhand SGST

Regarding exemption to Intra State supply of services to explore or mine petroleum crude/natural gas

35. 139/2018/18(120)/XXVII(8)/2017/CTR-3 - dated 6-2-2018 - Uttarakhand SGST

Amendment in Notification No. 526/2017/9(120)/ XXVII(8)/2017 dated 29 June, 2017

36. 138/2018/18(120)/XXVII(8)/2017/CTR-2 - dated 6-2-2018 - Uttarakhand SGST

Amendments in Notification No. 530/2017/9(120)/XXVII(8)/2017 dated 29th June, 2017

37. 119/2018/5(120)/XXVII(8)/2017/CT-7 - dated 31-1-2018 - Uttarakhand SGST

Waiver of late fee for failure to furnish the returns in FORM GSTR 6 by due date

38. 118/2018/5(120)/XXVII(8)/2017/CT-6 - dated 31-1-2018 - Uttarakhand SGST

Waiver of late fee for failure to furnish the returns in FORM GSTR-5A by due date.

39. 117/2018/5(120)/XXVII(8)/2017/CT-5 - dated 31-1-2018 - Uttarakhand SGST

Waiver of late fee for failure to furnish the returns in FORM GSTR-5 by due date

40. 116/2018/5(120)/XXVII(8)/2017/CT-4 - dated 31-1-2018 - Uttarakhand SGST

Waiver of late fee for failure to furnish the details of outward supplies for any month/quarter in FORM GSTR-1 by due date

Circulars / Instructions / Orders

GST

1. 33/07/2018 - dated 23-2-2018

Directions under Section 168 of the CGST Act regarding non-transition of CENVAT credit under section 140 of CGST Act or non-utilization thereof in certain cases-reg.

Customs

2. 05/2018 - dated 23-2-2018

Refund of IGST on Export– Invoice mis-match Cases –Alternative Mechanism with Officer Interface - reg.

Highlights / Catch Notes

GST

• Guidelines for CENVAT Credit Transition and Utilization u/ss 168 and 140 of CGST Act to Ensure Compliance.

  Circulars : Directions u/s 168 of the CGST Act regarding non-transition of CENVAT credit u/s 140 of CGST Act or non-utilization thereof in certain cases.
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Income Tax

• Delay in Filing 2009-2010 Tax Return Condoned; Return Considered Filed as of Order Date, Subject to Scrutiny.

  Case-Laws - HC : Application u/s 119(2) - condoning the delay in filing the return for the assessment year 2009-2010 - claim of refund - delay condoned subject to rider that return would be treated as filed as on the date of order and subject for the purpose of scrutiny assessment - HC
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• Court Approves Lease Equalization Charges Deduction for MAT Computation; Aligns with Companies Act Section 211(2) Requirements.

  Case-Laws - HC : MAT computation - deduction of lease equalization charges while computing book profit - we cannot find fault with the assessee debiting lease equalization charges in the AYs in issue, in its profit and loss account. It represents a true and fair view of the accounts, which is a statutory requirement u/s 211(2) of the Companies Act. - HC
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• Court Upholds Reopening of Assessment u/s 68; AO's Independent Judgment Validates Investigation Report Findings.

  Case-Laws - HC : Reopening of assessment - Addition u/s 68 - independent application of mind - The contention that the AO had merely and mechanically acted on the report of the investigation wing also cannot be accepted. - HC
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• Court Rules Advance from Ginza is Deemed Dividend, Not Guarantee Fee, u/s 2(22)(e) of Income Tax Act.

  Case-Laws - HC : Deemed dividend u/s 2(22)(e) - assessee claimed the amount received as guarantee fee for advance received from Ginza - the real intent of Ginza in advancing the sums it did to the assessee was to share its profit by way of deemed dividend - Decided in favor of revenue - HC
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• High Court Rules Income from Penalties, Unclaimed Balances, and Rebates Eligible for Deductions u/s 80-IA(4)(iv)(c.

  Case-Laws - HC : Income derived from the items, viz., penalty recovered from suppliers/contracts, unclaimed balance outstanding pertaining to SD/EMD of contractor written back in the books of accounts, rebate from power generators, interest income (FD for opening of LC to Power Grid Corporation Ltd., PGCIL) are allowable deduction u/s 80-IA(4)(iv)(c) - HC
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• First Appellate Authority Cannot Invalidate Orders Transferring Jurisdiction u/s 127; Limited to Assessment Review Only.

  Case-Laws - AT : Since the first appellate authority has no jurisdiction to decide the validity or otherwise of an order passed u/s 127, transferring the jurisdiction from one Assessing Officer to another, it is, but, natural that he cannot declare any order passed u/s 127 as invalid and consequently set aside the assessment order. - AT
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• Assessee's Business Profits Exempt from Indian Tax Due to No Permanent Establishment Under DTAA Articles 7 and 5.

  Case-Laws - AT : Even if the assessee's case is not covered by Article 8, the business profits would not be chargeable to Indian tax as it does not carry on business in India through a permanent establishment (an agency PE) as per articles 7 and 5 of the DTAA - AT
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• Tax Obligations Depend on Effective Management Location; Article 8 Benefits Unavailable if Managed from a Third State.

  Case-Laws - AT : Income accrued in India or not - the effective management of the assessee is neither in Mauritius nor in India - if the effective management of an enterprise is not in one of the contracting state, but is situated in the third state, the benefit of article-8, cannot be extended. - AT
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• Notice u/s 143(2) Mandatory for Valid Order u/ss 143(3) and 147 of Income Tax Act.

  Case-Laws - AT : Non–issuance of notice under section 143(2) of the Act by the Assessing Officer invalidates the order passed under section 143(3) r/w 147 of the Act, even if the assessee did not raise the objection against non–issuance of notice under section 143(2) within a period of one month - AT
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• Taxpayer Entitled to Full 10-Year Benefit u/s 80IA Once Granted in Initial Assessment Years.

  Case-Laws - AT : Deduction u/s 80IA - where a benefit is allowed to the assessee for first two assessment years, the same cannot be denied in the subsequent block period as once the claim of the assessee was accepted and the clock had started running in favour of the assessee, it had to complete the entire period of ten years. - AT
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Customs

• New Officer Interface to Resolve IGST Refund Invoice Mismatches for Exporters, Streamlining Compliance and Reducing Delays.

  Circulars : Refund of IGST on Export– Invoice mis-match Cases – Alternative Mechanism with Officer Interface
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• No Anti-Dumping Duties on Toluene Di-Isocyanate Imports from China, Japan, Korea from Dec 5, 2017, to Jan 22, 2018.

  Notifications : Anti-dumping duty on imports of "Toluene Di-Isocyanate (TDI)" originating in or exported from China PR, Japan and Korea RP - not to be levied for the period 5.12.2017 to 22.1.2018
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• Customs Duty Concessions Withdrawn for Screws and SIM Sockets for Mobile Phones, Increasing Import Costs.

  Notifications : Benefit of concessional rate of customs duty withdrawn on import of screw (7318 15 00) and SIM socket / Other Mechanical items (Metal) (7326 90 99) for cellular mobile phone
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• Freezing Bank Accounts in Old Cases Requires Substantiation; Investigations Can Proceed Without Restrictions.

  Case-Laws - HC : Freezing of bank accounts - there is no prohibition against investigation of old cases and past transactions, but in the garb of such investigation and scrutiny, the need for freezing and attaching the bank accounts should be made out by referring to and production of necessary materials. - HC
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• Imported Paper with Uneven Coating Classified as Scrap, Eligible for Concessional Duty Rate.

  Case-Laws - AT : Prima facie uneven coating can be considered as one of the defects for which purpose the paper cannot be considered as prime paper - the paper imported is defective and scrap only - benefit of concessional rate of duty allowed - AT
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Indian Laws

• Supreme Court Orders Probe into Multi-National Accounting Firms' Alleged Illegal Operations in India, Calls for Expert Committee Review.

  Case-Laws - SC : Whether the Multi-National Accounting Firms (MAFs) are operating in India in violation of law in force in a clandestine manner, and no effective steps are being taken to enforce the said law. - SC directed the govt to constitute a three member Committee of experts to look into the matter.
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Central Excise

• Appellant Challenges Higher Excise Duty on Petroleum Products Sold via COCO Outlets Due to Dealer Commission Inclusion.

  Case-Laws - AT : Valuation - sale of petroleum products through dealers - the appellant had discharged more excise duty on the clearances to and from COCO outlet, wherein the assessable value is more than the assessable value of the petroleum products cleared to dealers, which implies that the commission which has been extended to dealers has been included in the value. - AT
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• Pulihora Paste Classified Under Chapter 9 for Taxation, Requires Cooking with Rice and Ingredients to Prepare Dish.

  Case-Laws - AT : Classification of goods - It is understood that "Pulihora Paste " is not a ready to eat product but it has to be added with cooked rice, fried in hot edible oil, ground/cashew nuts if desired. Such a functional use of the impugned product is exclusively for rendering "Pulihora" the food preparation with aromatic, flavouring or seasoning properties - to be classified under chapter 9. - AT
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• Biryani Masala Paste Tax Classification Shifts from Chapter 20 to Chapter 9, Affecting Tax Rate and Regulation.

  Case-Laws - AT : Classification of goods - 'Biryani Masala Paste' would not fall under Chapter 20 it will fall under Chapter 9 - AT
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• CENVAT Credit Denied for Outdoor Catering Services Used by Employees for Personal Consumption, Not Eligible Input Services.

  Case-Laws - AT : CENVAT credit - input services - the outdoor catering service used for personal consumption of the employee is clearly excluded therefore the appellant is not entitled for CENVAT credit in respect of outdoor catering services - AT
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Case Laws:

• GST

• 2018 (2) TMI 1540
  Claim of 12% GST over the value of works contract - scope of terms of the agreement - Court noted that the appropriate authority, who has to answer the claim of the petitioner/Association was the Commissioner of Commercial Taxes, but, he was not impleaded as a respondent - Held that: - the Court directed the Commissioner of Commercial Taxes to consider the representation given by the petitioner/Association and pass orders on merits and in accordance with law within a period of four weeks after affording an opportunity of personal hearing to the authorised representative of the petitioner/Association. Though the Court would be fully justified in initiating action for contempt, considering the sensitivity of the matter and the members of the petitioner/Association, who are contractors, are put to hardship on account of the nebulous state of affairs, this Court is inclined to give one more opportunity to the respondent to consider the representations given by the petitioner/Association and pass orders on merits and in accordance with law - petition disposed off.

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• 2018 (2) TMI 1539
  GST Council meetings - Postponement of meeting - It is the case of the petitioner that only as a political strategy, such meeting was conducted in violation of the Code of Conduct. It is alleged that the recommendations made in the 9th and 10th November, 2017 Council meeting are only to appease the voters in the ensuing elections. Held that: - By virtue of constitutional amendment, Article 279A is inserted, which empowers the Hon'ble President to constitute a Council to be called the Goods and Services Tax Council. Under Article 279A(4), Goods and Services Tax Council is empowered to make its recommendations to the Union and the States, on taxes, cesses and surcharges etc. As per Article 279A(9), every decision of the Council is to be taken in a meeting, where majority of not less than three fourths of the weighted votes of the members present and voted - The recommendations made by the Council are ultimately to be accepted by the government. Merely because the Council has met and made its recommendations, it cannot be said that such recommendations and steps taken by the Council are in violation of the model Code of Conduct, which is in operation in the State of Gujarat. Petition dismissed.

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• Income Tax

• 2018 (2) TMI 1538
  Reopening of assessment - deduction u/s 80IB(10) allowability - Held that:- There is no allegation by the department that during the year under consideration i.e. the assessment year 2010-2011, the petitioner made any allotment of residential units in breach of conditions. AO as per the reasons recorded wishes to reexamine the petitioner's claim of deduction of 1.10 crores u/s 80IB(10) for the said assessment year on the premise that that in the assessment year 2013-2014, such claim was rejected since the petitioner had breached condition of not allotting two residential units to husband and wife. In absence of allegation of any of the breaches in the year under consideration, AO wishes to reopen the assessment for the current assessment year. On the simple reason that there was no failure on part of the assessee to disclose truly and fully all material facts, a mandatory condition which must be satisfied before reassessment can be permitted, impugned notice must go. It is not necessary to examine the contention of Shri Varun Patel that for breaches committed in later years, deduction claimed and already granted even if after scrutiny, can be withdrawn. - Decided in favour of assessee.

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• 2018 (2) TMI 1537
  Application u/s 119(2) - condoning the delay in filing the return for the assessment year 2009-2010 - claim of refund - Held that:- In case of Karta of HUF in his individual capacity under identical circumstances, application for condonation of delay based on identical grounds came to be accepted by the Revenue. In same set of facts and same situation, there cannot be a differential treatment. Merely because one application was decided by the Commissioner and another by the Chief Commissioner cannot be a point of distinction. Only on this ground, we are inclined to allow the petition. This would however be with two riders. Firstly, in case of individual while condoning delay, the Commissioner has provided that he will not be entitled to interest to the extent of period of delay. Same direction will apply in the present case. It is clarified that the petitioner shall not be entitled to any interest on refund even if ultimately allowed by the department till 8.6.2011. Second is that if the delay is condoned and effect of condonation is that the return filed by the petitioner after delay is treated as valid return filed on the date of its submission to the department, the period envisaged in the proviso to subsection (2) of section 143 would have lapsed by now. This would mean that even if the department wanted to scrutinise the return, there would be no such facility. To obviate this difficulty, while condoning the delay, it is provided that the petitioner's return shall be treated to have been validly filed from the date of this order i.e. today for the purpose of scrutiny and completion of assessment, if taken in scrutiny. All consequential provisions for scrutiny, final assessment and limitation would consequentially apply.

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• 2018 (2) TMI 1536
  Reopening of assessment - cost of improvement not reflected in the accounts of the assessee - Held that:- As is apparent from the petitioner s response to the Assessing Officer dated 15.12.2014, pertained to the sale of the property in question. We may recall, the petitioner had sold agricultural land situated at village:Hathijan during the said year. In his written communication dated 15.12.2014, the petitioner pointed out to the Assessing Officer that he had purchased the said land for cost of 81,000/under a registered sale deed and sold the same for 2.15 crores during the current year. Since the purchaser is not an agriculturist, he had made an agreement and the sale deed would be executed after conversion of the land into non-agricultural use. It was only after such examination of the sale of the land and related issues, the Assessing Officer passed the order of assessment making no disallowance. Entire issue was thus minutely examined by him. On this count, Assessing Officer cannot be allowed to reopen the assessment - the reasons lack validity and there was a degree of lack of application of mind on the part of the Assessing Officer when he conveyed that the cost of improvement of 5.09 lakhs was not reflected in the assessee s books of accounts. - Decided in favour of assessee.

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• 2018 (2) TMI 1535
  MAT computation - whether lease equalization charges can be deducted while computing book profit - Held that:- Capital recovery can be known, as is evident, on deduction of financing charges from the lease rentals. In sum and substance, lease equalization charges “is a method of re-calibrating the depreciation claimed by the assessee in a given accounting period. The method employed by the assessee, therefore, over the full term of the lease period would result in the lease equalization amount being reduced to a naught, as the debit and credits in the profit and loss account would square off with each other.” Revenue’s contention that the amount is unknown to the Act - as held in the decision, is a misappreciation of what constitutes a lease equalization charge. Therefore, as long as the method of accounting follows some established principles, one of which, includes offering only Revenue income for tax, we cannot find fault with the assessee debiting lease equalization charges in the AYs in issue, in its profit and loss account. It represents a true and fair view of the accounts, which is a statutory requirement under Section 211(2) of the Companies Act. For these reasons, the first question is answered in favour of the assessee and against the Revenue. Whether the provisions for non-performing assets are liable to be adjusted while computing book profit under Section 115JA of the Act? - Held that:- The lease equalization charges are not to be treated as adjustments needing to be added back while computing book profits, under Section 115JA on account of Explanation 1. This Court is in agreement with that view. Accordingly the second question too is answered in favour of the assessee.

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• 2018 (2) TMI 1534
  Reopening of assessment - Addition u/s 68 - independent application of mind - Held that:- Proviso added by the Finance Act 2012 with effect from 1.4.2013 to Section 68 says where the assessee is a company and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, explanation offered by the assessee company shall be deemed to be not satisfactory, unless the person in whose name such credit is recorded in the books of the company also offers an explanation about the nature and source of sum so credited and such explanation in the opinion of the AO has been found to be satisfactory. Essentially, this proviso eases the burden of proof on the Revenue while making addition under section 68 with respect to non genuine share application money of the companies. Even in absence of such proviso as was the case governing the periods with which we are concerned in the present case, if facts noted by the Assessing Officer and recorded in reasons are ultimately established, invocation of section 68 of the Act would be called for. The contention that the Assessing Officer had merely and mechanically acted on the report of the investigation wing also cannot be accepted. We have reproduced the reasons recorded by the Assessing Officer and noted the gist of his reasons for resorting to reopening of the assessment. We have recorded that the Assessing Officer had perused the materials placed for his consideration and thereupon, upon examination of such materials formed a belief that income chargeable to tax had escaped assessment. - Decided against assessee.

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• 2018 (2) TMI 1533
  Penalty u/s 271(1)(c) - period of limitation - Held that:- The dependence of the period of the limitation upon whether an order becomes final at the instance of one party, i.e. that filing and prosecution or withdrawal of an appeal (by one party or the other) would be, in the opinion of the Court one such event which leaves the legal position inchoate and unsatisfactory. Instead, an interpretation that permits certainty should be adopted. CIT’s order provided a fixed date from which to reckon the end of the period of limitation–some time in early July 1994. The absence of an appeal by the assessee (against the CIT(A)’s appellate adjudicatory order) meant that at least with respect to the amount that it had accepted in the adjudicatory order as an addition, the penalty proceedings survived. As far as the other issue was concerned, perhaps there was no occasion for a further penalty proceeding given that the issue might have been rendered debatable, even in the eventuality of an order favouring the revenue. As far as deletion was concerned, the assessee definitely was not aggrieved. It was incumbent upon the revenue to complete the penalty proceedings and pass order within the six months period. It did not. Its reliance upon the crutches of a non-appeal, which is what its effort at appeal to the ITAT eventually became in the present case, could not have been legitimately upheld as was done by the impugned order. - Decided in favour of the assessee

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• 2018 (2) TMI 1532
  Deemed dividend u/s 2(22)(e) - assessee claimed the amount received as guarantee fee for advance received from Ginza - Held that:- All indications were that the assessee was sanguine and assured about the nature of the amount given by Ginza, i.e. that it could use it for its own purposes– as it did by advancing substantial amounts at commercial rates of interest which could not be conceivably attributable to short term deposits and also for the purpose of yielding income, i.e. by investing with the object of trading in shares. In these circumstances, both the lower authorities, in the opinion of the Court overlooked that the real intent of Ginza in advancing the sums it did to the assessee was to share its profit by way of deemed dividend. The sum of 6.16 crores clearly fell within the description of “deemed dividend” under Section 2(22)(e) of the Act like in the case of Sunil Chopra (2011 (5) TMI 218 - DELHI HIGH COURT). For these reasons, the first question is answered in favour of revenue and against the assessee Disallowance of commission - CIT (A) and the ITAT deleted the disallowance holding that the original transaction of advance was genuine and a trading one and furthermore that the commission was paid through payment channels in terms of the tripartite agreements - Held that:- AO’s findings are based upon facts. A significant detail that seems to have escaped the notice of lower appellate authorities, i.e. that after obtaining substantial sums, the assessee even made over a substantial part of it – 6.14 crores to Adani to whom it paid 43.5 lakhs as commission for the standing guarantor. The latter payment in the light of the transactions previously discussed strain ones’ credibility and does not accord with prudent commercial practice. For these reasons the Court is of the opinion that the findings of the lower authorities are based upon a mis-appreciation of circumstances and are, therefore, unreasonable, and are premised on an erroneous appreciation of the facts and the law. The disallowance of 43.5 lakhs was just and warranted. - Decided against assessee.

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• 2018 (2) TMI 1531
  Reopening of assessment - Claim of the deduction u/s 80IA [4] - eligibility of reasons to believe - doctrine of merger - Held that:- AO passed assessment order on 12th March 2015 and in such order, he disallowed the entire claim under Section 80IA [4] of the Act. That being the position, he had no occasion to separately comment on the assessee’s claim of expenditure. The assessee carried such matter in appeal and CIT [A], by an Order dated 26th July 2016, allowed the assessee’s claim of deduction under Section 80IA [4] of the Act. It was thereafter that AO issued the impugned notice of reopening of the assessment. By the time petition was filed and this Court passed its first order on 4th September 2017 issuing notice and preventing the Assessing Officer from passing final order of assessment, he had already framed the assessment on 31st August 2017. Such facts and order of assessment were brought on record through amendment in which the order of assessment is also challenged. Principally on the ground of merger, the notice must be quashed. Without recording separate reasons, therefore, this petition is also required to be allowed.

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• 2018 (2) TMI 1530
  Addition of receipts as share premium and call in arrears - CIT and the ITAT were of the opinion that though the features of the case were unusual and the call arrears were liquidated after 10 years, equally the assessee was a public limited company and could not be expected to keep track of its individual shareholders and their details - Held that:- While initially the addition based upon the Assessing Officer’s assessment of the facts were premised upon the unusual feature of liquidation of the arrears after a substantial period, the fact equally remains that the assessee was placed under certain difficulties and therefore, unable to explain these transactions. Moreover, the assessee is a company with large shareholding. In these circumstances, the findings of fact concurrently made by the Appellate Authorities therefore, do not call for interference. Appeal is therefore, dismissed. - Decided against revenue

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• 2018 (2) TMI 1529
  Revision u/s 263 - benefit of deduction u/s 80-IA(4)(iv)(c) allowability - Held that:- As regards the rental income, it is also required to be observed that it is an independent income having no direct nexus towards reimbursement of manufacturing or selling expenses, in the absence of the fact that the assessee was paying rent of staff quarters which was debited to profit and loss account. Thus it cannot be construed as income derived from the industrial undertaking. This view of the Tribunal does not call for any interference by this Court. We confirm the finding of the Tribunal on this aspect. Other items namely department exam fees, sale of service register/departmental books, sale of forms/booklet etc., sale of scrap/stock excess found, meter rating testing charges (part of business income), Back Billing Charges (BBC) theft cases collected are already held to be allowable deduction under Section 80-IA(4)(iv)(c) of the Act by the ITAT. We answer the substantial questions of law in favour of the revenue and against the assessee as far as certain items of income are concerned, i.e., miscellaneous recovery from employees, difference between WDV/book value of released assets, commission for collection of electricity duty, rental income. Income derived from the items, viz., penalty recovered from suppliers/contracts, unclaimed balance outstanding pertaining to SD/EMD of contractor written back in the books of accounts, rebate from power generators, interest income (FD for opening of LC to Power Grid Corporation Ltd., PGCIL) are allowable deduction under Section 80-IA(4)(iv)(c) of the Act, the substantial questions of law relating to these items are answered in favour of the assessee. The substantial questions of law relating to the revisional order under Section 263 is held in favour of the assessee and against the Revenue.

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• 2018 (2) TMI 1528
  Non acceptance of declaration filed by the Petitioner under Section 88 of the Samadhan Scheme - determination of amount of tax payable under Section 90(1) - Held that:- The Affidavit in Reply dated 9th April 1999 by the Respondent No.1 – the Designated Authority itself in terms states that it has worked out the amount payable for the purpose of certificate dated 3 February 1999 by first adjusting the part payment made towards interest and only thereafter is balance amount of 96,844/- out of advance tax was adjusted towards tax payable. This action of the Designated Authority in issuing the certificate dated 3 February 1999 is contrary to the binding instructions dated 3rd September 1998 of the Central Government under the Samadhan Scheme. The impugned certificate dated 3rd February 1999 issued under Section 91 of the Samadhan scheme is quashed and set aside. The Petitioner's declaration is restored to the designated authority – Respondent No.1 for issuing a fresh certificate and determining the amount payable in accord with the instructions dated 3rd September 1998 issued by the Central Government under Section 96 of the Finance Act i.e. to first adjust the amount paid towards the tax payable and only thereafter to adjust the balance towards interest paid on the date of filing of the declaration. The necessary certificate should be issued by the Respondent No.1 – Designated Authority as expeditiously as possible and preferably within 16 (Sixteen) weeks from today along with corrected relief, if any.

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• 2018 (2) TMI 1527
  Short term capital gains on sale of the impugned flat - Interest paid for the acquisition of the impugned property - Computation of cost of acquisition - Held that:- The applicable clause of section 55 (2) to the assessee’s case is clause (b) and the relevant sub clause is sub clause (i) , which provides that where the capital asset become the property of the assessee before first day of April 1981 means the cost of acquisition of the asset to the assessee or the fair market value of the asset on the first day of April 1981. The statutory charges such as registration and stamp duty are paid for getting the property registered in the name of the assessee, without such payment the assessee would not become the owner of the impugned flat. The cost of acquisition of property would definitely include statutory charges such as registration and stamp duty duly paid. Therefore, hold that the amount of 3,84,449/- should be included as cost of acquisition of the impugned flat. For Interest paid for the acquisition of the impugned property as held in Challapalli Sugars Ltd. vs. CIT [1974 (10) TMI 3 - SUPREME Court] that in case money is borrowed by a newly started company which is in the process of constructing and erecting the plant, the interest incurred before the commencement of production on such borrowed money can be capitalized and added to the cost of the fixed asset. In the instant case, it is not discernable whether the interest paid for the acquisition of the impugned property has been claimed by the assessee under Chapter IVC namely ‘income from house property’. If the assessee had already claimed interest under the head income from house property, the same interest cannot be capitalized and added to the cost of acquisition of the property. Since these facts are not available on record, as regards interest paid for the loan availed from ICICI Bank for the purpose of acquisition of the impugned property whether to be allowed as deduction in computing the STCG is to be considered afresh by the Assessing Officer. The Assessing Officer shall take decision in accordance with law after affording a reasonable opportunity of hearing to the assessee. It is ordered accordingly.

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• 2018 (2) TMI 1526
  Transfer of a case u/s 127 - Jurisdiction and powers of CIT(A) to decide the issue - Held that:- An order passed u/s 127 is not appealable before the Ld. CIT(A). Since the first appellate authority has no jurisdiction to decide the validity or otherwise of an order passed u/s 127, transferring the jurisdiction from one Assessing Officer to another, it is, but, natural that he cannot declare any order passed u/s 127 as invalid and consequently set aside the assessment order. CIT(A) crossed his jurisdiction in declaring the order u/s 127 of the Act as invalid and as a fortiori, quashing the assessment. The impugned order is, therefore, overturned and the matter is restored to the file of Ld. CIT(A) for deciding the appeal on merits, after allowing a reasonable opportunity of hearing to the assessee.

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• 2018 (2) TMI 1525
  Disallowing the claim of “advance written off as shown under head “sundry debts written off’ - Held that:- The assessee-company has initially stated that the amount in question represented debts have become bad during the year and were written off in the books of account. However, it was clarified before DRP that it was a wrong submission made by the assessee-company because the amount in fact a debit balance was appearing in the accounts of the Vendors which were written off as were not recoverable. The assessee-company claimed that it is a business loss. The assessee-company, however, has not provided any basic details as to when the amount in question was advanced and to whom and for what purpose and what steps have been taken by the assessee-company for recovery of these amounts. Since the assessee-company failed to substantiate the issue of incurring of losses in the ordinary course of business before the authorities below and no further evidence or details have been furnished before Tribunal as well, we are of the view that assessee-company has failed to prove if any actual business losses have been suffered by assessee-company. Stock written-off - Held that:- The assessee-company did not file any evidence in support of its claim except filing copy of the ledger account. Assessee-company did not submit any report of Engineer or Production Head to verify that actually the inventory has become obsolete. Mere filing of the ledger account is not sufficient to support the claim of the assessee-company that the stock has become obsolete. Merely referring to Accounting Standard would not support the claim of the assessee-company that in fact the stock of the assessee-company has become obsolete. In the absence of any evidence in support of the claim of the assessee-company, no interference is called for in the matter. The DRP has given one more chance to the assessee-company to get the claim verified before A.O. However, the assessee-company did not avail the opportunity and did not produce any relevant or cogent evidence before A.O. to substantiate the claim of obsolete stock. Excess depreciation claim on fixed assets acquired by the appellant from NCR Corporation India Private Limited - Held that:- Direct the A.O. to verify the claim of the assessee-company as per law and pass consequential order.

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• 2018 (2) TMI 1524
  Income accrued in India - shipping profits to be not taxable in India - PE in India - Held that:- Freight Connection is an independent agent who acts in its ordinary course of its business and whose activities are not devoted exclusively or almost exclusively on behalf of the assessee. Therefore, it is held that the assessee does not have an Agency PE in India and the CIT(A) was right in so holding for the AY 1998-99 and the successor CIT(A) was wrong in taking a contrary view for the subsequent assessment years. Thus hold that even if the assessee's case is not covered by Article 8, the business profits would not be chargeable to Indian tax as it does not carry on business in India through a permanent establishment (an agency PE) as per articles 7 and 5 of the DTAA. - Decided against revenue Effective management of the respondent is neither in Mauritius nor in India but in a third country - benefit of article-8 - Held that:- Effective management can be only in between two contracting state is not correct and as per the facts narrated above, we are of the considered view that the effective management of the assessee is neither in Mauritius nor in India and we are in agreement with the views of Mr. Klaus Vogel, who is an eminent authority of International Taxation, that if the effective management of an enterprise is not in one of the contracting state, but is situated in the third state, the benefit of article-8, cannot be extended. - Decided against assessee.

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• 2018 (2) TMI 1523
  Addition u/s 69 - deposits made by the assessee in an undisclosed bank account of the assessee - Held that:- Although, the assessee has disclosed interest income from savings bank account with the HDFC Bank Ltd., he has not disclosed the interest income from ICICI Bank Ltd. Therefore, from the conduct of the assessee, it is apparent that the assessee had no intention of disclosing the impugned bank account. Also when the assessee was required to explain before the Assessing Officer that if he had received cash amount of 20,45,400/- as gifts from the various friends and relatives and that cash was kept as cash in hand during the previous financial year, why the assessee did not file a wealth tax return in respect to this cash, no explanation was forthcoming from the assessee in this regard. Also, since the assessee had not been preparing and filing the statement of affairs on a regular basis, this claim cannot be substantiated by a statement of affairs which has been filed by the assessee post the inquiry by the Assessing Officer. Thus, it is seen that the assessee could not give details of marriage expenses incurred by him and has claimed the entire gifts received as cash lying with him. Thus, as far as the cash of 20,45,400/- is concerned, given the fact that the assessee was asked to substantiate his stand by the Ld. CIT (A) by providing numerous opportunities and many queries were raised by the Ld. CIT(A), which the assessee has failed to reply, we are of the considered opinion that the Ld. CIT(A) has recorded a proper finding of fact that this cash of 20,45,400/- was rightly added as unexplained amount u/s 69 of the Act. As far as the remaining cash balance of 10,38,000/- is concerned, it is seen that no explanation was given from the assessee in this regard. In this case also it is seen that the assessee has not responded to the queries raised by the Ld. CIT (A) and, therefore, this amount also deserves to be added back to the income of the assessee and we find the action of the Ld. CIT (A) in confirming the addition as correct. In so far as the contention of the assessee that the opening cash balance brought from the earlier years cannot be challenged in the year under consideration is concerned, it is our considered opinion that in view of the assessee’s failure to substantiate the existence of cash balance as on the close of the previous financial year, the statement of affairs as on 31.03.2008 loses its persuasive value - Decided against assessee.

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• 2018 (2) TMI 1522
  TDS u/s 194J OR 194C - short deduction in respect of payments made towards “Outsourcing expenses” - assessee in default - Held that:- A sum as been paid by the assessee to Renaissance Insurance Services for this purpose. As per schedule to the agreement dated 01.08.2007 entered into with the aforesaid vendor, digitization of records involved scanning and uploading of proposal forms, premium instruments, annexures, endorsement requests, policy receipts, policy copy as per the instructions given by the company, claim intimation, discharge vouchers, query letters, claim payment advice, claim closure letters, etc. In other words, these would be digitization of documents that are generated by an insurance company in the normal course of its functioning. The assessee stated that digitization facilitated for easy retrieval of records at the time of renewal and claim, besides helping in saving storage cost. CIT(A) while evaluating the nature of services stated in para 4.4 to 4.6 falls for deduction of tax u/s.194J. However, in respect of services mentioned in para 6.4.2, the same falls in the nature of work contract liable for deduction of tax u/s.194C. The detailed finding so recorded by CIT(A) has not been controverted by learned AR or by learned DR. Accordingly, we do not find any reason to interfere in the order of CIT(A).

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• 2018 (2) TMI 1521
  Addition on account of purchase of tyres as well as depreciation on fixed assets - Held that:- AO depends on the wrong assumption of facts it does not represent the correct amount in view of the fact as discussed above. The addition made by the AO is not sustainable. The ld. DR has also not brought anything on record contrary to the findings of ld. CIT-A. In the light of above reasoning, we hold that the order of the Ld. CIT(A) is correct and in accordance with law and no interference is called for. No infirmity in the order of the Ld. CIT(A) in allowing depreciation @ 30% on dumper and tipper. TDS u/s 194C - non deduction of tds - Held that:- The payment is not exceeding the limits as specified u/s. 194C of the Act. Therefore, in our considered view, assessee is not liable to deduct the TDS u/s. 194C of the Act.

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• 2018 (2) TMI 1520
  Bogus purchases - Held that:- Large number of opportunities were provided by the A.O. to the assessee. It is noted from the financial statements of the assessee that for the F.Y. 2012-13 and 2013-14, the assessee was having total turnover of 92,01,799/- and 57,26,420/- respectively. Various notices were issued by the Assessing Officer to file the details but no compliance was made by the assessee. In view of the above facts and circumstances, the Bench find that there are no any contrary material in the order of the ld. CIT(A), therefore, we uphold the order of the ld. CIT(A) on this issue. Accordingly, this ground of assessee’s appeal is dismissed. Trading addition disallowing 15% of the entire purchases - Held that:- The assessee has not produced its books of accounts, therefore, the purchases made by the assessee remained unverifiable. The Coordinate Bench of the ITAT, Jaipur Bench in the case of Anuj Kumar Varshney 73,714/-. In view of the above, the Bench find no any contrary material in the order of the ld. CIT(A), therefore, we uphold the same. Hence, this ground of appeal of assessee stands dismissed. Addition considering the peak of cash deposit and withdrawal from the bank account as unexplained - Held that:- Assessing Officer comes to a finding that withdrawn amount was used or spent by the assessee for any other investment or expenditure than the benefit of peak of such credit, in such circumstances, may not be available. No specific reason was recorded regarding the utilization of cash withdrawal by the assessee from its bank accounts in some investment or expenditure. In view of the above and considering the totality of the facts and circumstances of the case, the Bench find no any contrary material in the order of the ld. CIT(A), therefore, we uphold the same. Hence, this ground of appeal of assessee stands dismissed. Disallowance of deduction under Chapter VI of the Act - payment of amount as premium of LIC - Held that:- The assessee has claimed deduction under Chapter VI-A of the Act but no evidence was submitted by the assessee. During the appellate proceedings, the assessee has submitted that he has paid the amount as premium of LIC but he failed to submit necessary documents. Therefore, the ld. CIT(A) has rejected the claim of the assessee. Considering the totality of the facts and circumstances of the case, the Bench find no any contrary material in the order of the ld. CIT(A), therefore, we uphold the same. Hence, this ground of appeal of assessee stands dismissed.

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• 2018 (2) TMI 1519
  Claim of deduction u/s. 80IA - denial of claim as AO was of the view that assessee is only executing works contract as a contractor and not as a developer of infrastructural facilities - Held that:- At the out set, it is to be agreed that the issue is covered in favour of assessee by the orders of the ITAT in earlier years in assessee’s own case which the Ld.CIT(A) has followed. Consequently, we do not see any reason to interfere with the order of CIT(A), as there seems to be no change in facts and circumstances of the case in the years under appeal. However, AO has not distinguished on what percentage assessee has claimed u/s. 80IA and what are the contracts undertaken. In earlier years, as seen from the orders of AYs. 2010-11 and 2011-12, AO has issued an annexure, identifying various projects. The matter was sent back to AO for verification. In view of that, since assessee ascertains that it has claimed only the deduction on infrastructural projects undertaken by it, AO is directed to examine this aspect and allow the claim after verification as in earlier years. The ground is considered partly allowed for statistical purposes Disallowance u/s.40(a)(ia) - amounts on which TDS was not deducted or TDS deducted but not paid - CIT-A restricted the disallowance only to the amount of TDS deducted and not paid in AY. 2012-13 - Held that:- As the issue is now decided by the Hon'ble Supreme Court of India in the case of Palam Gas Service Vs. CIT [2017 (5) TMI 242 - SUPREME COURT] in which it was held that even the amounts paid during the year are also covered by the provisions of Section 40(a)(ia), the Special Bench decision of the ITAT in the case of Merilyn Shipping and Transport Ltd., Vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM) is no longer a valid one. Consequently, the order of CIT(A), relying on the above, for giving relief is to be set aside. Allowance of deduction u/s. 80IA on the amount disallowed u/s 43B - Held that:- The amount disallowed u/s. 43B will become profits of business in the computation of income under the head ‘business’ or ‘profession. Consequently, if the amounts disallowed are pertaining to the projects on which the claim u/s 80IA was made, the same has to be allowed as profits get increased to that extent. AO is directed to the examine working of profits and allow the claim. The grounds raised by revenue has no merit.

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• 2018 (2) TMI 1517
  Rectification of mistake - FTS has to be taxed at a concessional rate of 15% of the gross receipts as per the provision of Article 13(2) of the DTAA as against higher rate of tax provided at 20% of gross receipts u/s 115A of the Act - Held that:- In the present case there is an agreement between India and U.K. for avoidance of double taxation and therefore the assessee is entitled to plead that taxability has to be as per the provision of the Act or the DTAA whichever is beneficial is to the assessee. Since the taxability of FTS at 15% of the gross receipts as per Article 13(2)(bb)(ii) is more favourable than the provision of section 115A of the Act, the FTS in question has to be taxed at 15% on gross basis as per the DTAA. We are of the view that the mistake pointed out in the miscellaneous applications is apparent in the face of the record. Even assuming that the long drawn processing of reasoning is required to decide the miscellaneous application but if ultimately there can be only one possible view then it cannot be said that the power to rectify such mistake is outside the ambit of section 254(2) of the Act. The ld. DR’s arguments that the assessee is seeking review of the order of the tribunal is not correct.

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• 2018 (2) TMI 1516
  Reopening of assessment - Non–issuance of notice under section 143(2) - Held that:- Non–issuance of notice under section 143(2) of the Act by the Assessing Officer invalidates the order passed under section 143(3) r/w 147 of the Act. As far as the submissions of the learned Departmental Representative that assessee should have raised the objection against non–issuance of notice under section 143(2) within a period of one month as per section 124(3) of the Act, we do not find merit in such submissions of the learned Departmental Representative as the said provision basically deals territorial jurisdiction of the Assessing Officer. Non–disposal of objections raised by the assessee before completion of assessment - Held that:- Assessing Officer did not dispose off the objections of the assessee prior to completion of the assessment under section 143(3) r/w section 147 of the Act. On the contrary, while completing the impugned assessment, the Assessing Officer simultaneously disposed off the objection of the assessee. In our view, the non–disposal of assessee’s objections independently before completion of the assessment under section 143(3) r/w section 147 of the Act is against the ratio laid down by the Hon'ble Supreme Court in case of GKN Drive Shaft India Ltd. (2002 (11) TMI 7 - SUPREME Court). - Decided in favour of assessee Disallowance u/s 14A r/w rule 8D - Held that:- We direct the Assessing Officer to exclude from the average value of investment the investments which are not capable of yielding exempt income and the investments which have not yielded any exempt income in the impugned assessment year for computing disallowance under rule 8D(2). Needless to mention, the Assessing Officer must afford reasonable opportunity of being heard to the assessee before deciding the issue. Ground no.1 raised by the assessee is allowed for statistical purposes. Short credit of TDS - Held that:- Having heard the submissions of the parties, we direct the Assessing Officer to verify assessee’s claim with regard to TDS credit and decide the issue after providing due opportunity of being heard to the assessee.

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• 2018 (2) TMI 1515
  Revision u/s 263 - deduction u/s 80IA (4) (i) not allowable to the assessee as the assessee was only an operating company and not an enterprise engaged in the business of infrastructure development - Held that:- It is clear that an order cannot be termed as erroneous unless it is not in accordance with law - a certain assessment, the same cannot be branded as erroneous by the Ld. Principal Commissioner simply because, according to him, the order should have been written more elaborately. Section does not visualize a case of substitution of the judgment of the Commissioner for that of the AO - in the instant case the AO’s order was erroneous and prejudicial to the interest of the revenue within the terms of section 263. Once the said claim was considered and examined by the Assessing Officer, Commissioner cannot set aside the order without recording contrary finding. This will be contrary to Section 263 of the Act. The year under consideration in the fourth consecutive year in which the assessee had claimed deduction u/s 80IA. It is a matter of record that the assessee’s claim was accepted by the AO for Assessment Years 2008-09 and 2009-10 by orders passed u/s 143(3) of the Act. It is also a matter of record that there is no change in the facts this year as compared to the earlier assessment years. The Hon’ble Apex Court in the case of Shasun Chemicals and Drugs Ltd. vs. CIT (2016 (9) TMI 1199 - SUPREME COURT OF INDIA), while adjudicating an issue relating to section 35D, held that where a benefit is allowed to the assessee for first two assessment years, the same cannot be denied in the subsequent block period as once the claim of the assessee was accepted and the clock had started running in favour of the assessee, it had to complete the entire period of ten years. The same analogy can be applied to provisions of section 80IA also. CIT, on the facts of the case, at best can be termed as having a ‘different view’ from that of the AO. CIT has not brought on record any finding as to why the view of the AO was not legally sustainable. In our considered opinion, section 263 does not envisage the substitution of the view of the AO by the view of the Ld. Pr. CIT especially when there is no legal infirmity in the view taken by the AO. Impugned action of the Ld. CIT u/s 263 of the Act was patently illegal and liable to be quashed. The proceedings u/s 263 of the Act are accordingly quashed. - Decided in favour of assessee.

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• 2018 (2) TMI 1514
  Depreciation on expenditure incurred on construction of Mumbra bypass road on BOT basis - Held that:- The assessee is entitled to claim depreciation on the cost incurred on construction of the BOT facility, since, by incurring such investment the assessee has acquired a valuable commercial or business right in the nature described under section 32(1)(ii) r/w Explanation 32(1), Explanation–3(b) of the Act. Also in the preceding assessment years the Assessing Officer after examining assessee’s claim has not only accepted the expenditure incurred on BOT facility as capital in nature but has allowed depreciation by treating it as an intangible asset. In the impugned assessment year, the assessee has claimed depreciation on the opening WDV only. As far as the nature and character of the expenditure, whether capital or revenue, has attained finality in the preceding assessment years wherein, the Assessing Officer has allowed assessee’s claim of deprecation. Therefore, it is not open to the Department to re–examine the nature of expenditure again in the impugned assessment year. The Assessing Officer having allowed assessee’s claim of depreciation on the BOT facility by treating it as an intangible asset in the preceding assessment years, it cannot be denied in the impugned assessment year. Therefore, allowing assessee’s claim we direct the Assessing Officer to allow depreciation as claimed by the assessee. Allowing foreign exchange loss - Held that:- In order to hedge the financial exposure of high debt and high interest outcome the assessee entered into currency swap derivative option agreement with ICICI Bank on 11th April 2007 to hedge the high interest outcome relating to Mumbra project debt of 75 crore by swapping debt of 35 crore into Japanese Yen for a period of five years. As per the swap arrangement, the assessee receives 9.50% interest per annum and pays interest @ 7.50% per annum on the Yen amount. Thus, from the aforesaid facts, it is clear that the hedging transaction with ICICI Bank was for the purpose of reducing the high interest outcome on the debt incurred for the Mumbra project. The aforesaid facts indicate not only that the hedging transaction is for the business requirement of the assessee but it was in the regular course of business. Moreover, as brought to our notice by the learned Authorised Representative, the assessee consistently following this method of accounting has shown foreign exchange gain / loss in the preceding assessment years which have been accepted by the Department. Therefore, no reason to interfere with the finding of the learned Commissioner (Appeals) on this issue. These grounds are dismissed. Disallowance under section 14A - Held that:- No disallowance of interest expenditure under section 8D(2)(ii) can be made in view of the decision of the Hon'ble Bombay High Court in CIT v/s HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT). As far as disallowance of administrative expenditure under rule 8D(2)(iii) is concerned, we do not find any infirmity in the order of the learned Commissioner (Appeals) in directing the Assessing Officer to exclude the strategic investment and investment which have not resulted in any exempt income during the year for computing disallowance under the said provisions, as such the findings of the learned Commissioner (Appeals) are in conformity with well settled principles of law. Applicability of section 14A to the computation of book profit under section 115JB - Held that:- the applicability of section 14A for making adjustment to book profit under section 115JB of the Act also requires consideration in view of the Special Bench decision of the Tribunal, Delhi Bench, in ACIT v/s Vireet Investment [2017 (6) TMI 1124 - ITAT DELHI]. In view of the aforesaid, we restore these issues to the file of the Assessing Officer for fresh adjudication after due opportunity of being heard to the assessee

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• 2018 (2) TMI 1513
  Liability of deduction of tax at source U/s 194H - liability to pay tax as the assessee in default U/s 201(1) & 201(1A) in respect of discount extended to the distributors for pre-paid SIM cards and recharge coupons - Held that:- This issue of liability of the assessee to deduct tax at source in respect of discount allowed to the distributors on pre paid SIM cards and recharge vouchers has been considered by the Hon’ble Jurisdictional High Court in assessee’s own case for the A.Y. 2007-08 to 2009-10 we decide this issue in favour of the assessee and consequently set aside the orders of the authorities below qua this issue. Liability of the assessee to deduct TDS U/s 194J in respect of the roaming charges paid by the assessee - Held that:- Tribunal decided the issue in favour of the assessee by holding that the fee paid for roaming charges does not fall in the ambit of fee for technical services as no human intervention is required in providing the roaming services by the mobile service provider. The revenue challenged this order of the Tribunal before the Hon'ble High Court and the Hon'ble High Court vide decision [2017 (7) TMI 1076 - RAJASTHAN HIGH COURT] by following the decision of the Hon’ble Karnataka High Court in the case of CIT TDS, Bangalore Vs Vodafone South Ltd. (2016 (8) TMI 422 - KARNATAKA HIGH COURT) has decided this issue in favour of the assessee and against the revenue

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• 2018 (2) TMI 1512
  Penalty u/s 271(1)(c) - exemption u/s 54F as claimed in the return of income - defective notice - non-striking off of the irrelevant clause - Held that:- The notice talks about both the charges and it doesn’t convey to the assessee as to which charge he has to respond. The notice thus demonstrate non-application of mind on the part of the AO. Further, we refer to the assessment order where, after discussing the issue relating to computation of capital gains, the AO held that by showing less capital gains, the assessee has furnished inaccurate particulars of income and penalty proceedings are being initiated separately and thereafter, towards the end of the assessment order, the AO states that penalty proceedings u/s 271(1)(c) read with section 274 have been initiated separately for concealment of income/furnishing of inaccurate particulars of income. AO himself is unsure about the charge against the assessee during the course of assessment proceedings. Considering the observations of the AO in the assessment order alongside his action of non-striking off the irrelevant clause in the penalty notice shows that the charge being made against the assessee qua 271(1)(c) is not firm, shows non-application of mind on the part of the AO, and the vagueness and ambiguity in the notice has thus prejudiced the right of reasonable opportunity to the assessee in as much as the assessee is not made aware as to which of the two charges, he has to submit his defence. Where the factum of non-striking off of the irrelevant clause in the notice has been held as reflective of non-application of mind by the AO and in light of facts and circumstances of the present case and the above discussions, the penalty imposed under section 271(1)(c) is liable to be deleted. - Decided in favour of assessee.

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• 2018 (2) TMI 1511
  TDS u/s 194C - addition u/s 40(a)(ia) - payment of carriage inward charges and transport charges without deduction of tax at source - Held that:- A specific contention was raised on behalf of the assessee before the Assessing Officer during the course of assessment proceedings itself that the transport charges in question were paid by the suppliers and the same were subsequently reimbursed by the assessee. The stand that there being no contract between the assessee and the concerned transporters, the provisions of section 194C were not applicable, was taken by the assessee before the Assessing Officer and the onus to rebut the same was shifted to the AO. He, however, failed to discharge the said onus and proceeded to make a disallowance under section 40(a)(ia) on the ground that the relevant freight charges were finally debited in the assessee’s account. In these facts and circumstances, if the matter is restored to the file of the Assessing Officer for giving an opportunity to the Assessing Officer to rebut the stand of the assessee as sought by the ld. D.R., it will result in giving a second innings to the Assessing Officer, which is not permissible. The assessee that the transport charges were initially paid by the suppliers and the same were subsequently reimbursed by the assessee is duly supported by the relevant documentary evidence in the form of bills raised by the suppliers, wherein the transport charges are separately charged by the suppliers to the assessee. It is thus duly established by the assessee on evidence that there was no contract between him and the concerned transporters and there was no requirement of deduction of tax at source as per the provisions of section 194C. No infirmity in the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the AO u/s 40(a)(ia) on account of transport charges by holding that the provisions of section 194C are not applicable and upholding the same, we dismiss this appeal filed by the Revenue. - Decided against revenue.

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• Customs

• 2018 (2) TMI 1510
  Payment of interest alongwith interest - applicability of EXIM Policy 1992-97 - Held that: - we cannot direct consideration of this application made in the year 1993 by issuing a writ in the year 2018. An entirely new regime has come into force since the policy (EXIM Policy) and the circulars which are relied upon. Going by the affidavit of the respondents, it is evident that this was not a open ended scheme. It was in effect and force for a particular period. It cannot be directed to be extended unless it is so provided in the document itself. Meaning thereby, this court can neither direct continuation of a policy or a circular or framing of a new policy. Petition dismissed.

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• 2018 (2) TMI 1509
  Restoration of Registration of Courier License - All that the Revenue would argue is that the Tribunal should not have interfered with the concurrent orders for they are passed on the materials produced on record - Jurisdiction of CESTAT - Regulation 14 of the said Regulations - Held that: - There are compliances to be made and particularly of execution of bond and furnishing of security. By Regulation 12, it is stated that a courier, who is registered under Regulation 10 or had intimated in form 'A' to the Commissioner of Customs having jurisdiction over the Customs Station from where he has to transact the business, shall furnish a bond and security as specified in Regulation 11 for each Customs Station. The obligation of authorised courier is set out in Regulation 13 and then, there is a power of de-registration. That power is conferred in the Commissioner of Customs. By sub-regulation (2) of Regulation 14, the aggrieved authorised courier and whose authorisation is revoked or he is de-registered, may, if aggrieved by the order of the Commissioner, represent to the Chief Commissioner of Customs in writing against such order of the competent authority and thereafter it is permissible for the Chief Commissioner to dispose of the representation. We do not think that the tribunal, in the facts and circumstances of the case, has acted perversely in entertaining the appeal. More so, when the attempt of the Revenue was to question its jurisdiction on more than one occasion. The case of the Revenue is not that the courier agent sub-contracted to sublet/outsource any of the activity/function for the purpose of assessment and clearance of courier parcels. On further scrutiny, it was found that the charge of violation of Regulation 13(j) is not substantiated - also, the tribunal found that no infringement of KYC verification leading to any significant revenue loss was pointed out even in the SCN. Appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 1508
  Freezing of bank accounts - Communications addressed by the Directorate of Revenue Intelligence to the Bankers, namely Kotak Mahindra Bank and Bank of Baroda - Held that: - In this case, when the petitioners state that to the knowledge of the DRI and the Customs Department, they have been importing consignments, having them cleared by payment of duty or otherwise exporting the goods with compliance of the Customs Act, 1962, suddenly there was no need to investigate their cases - there is no prohibition against investigation of old cases and past transactions, but in the garb of such investigation and scrutiny, the need for freezing and attaching the bank accounts should be made out by referring to and production of necessary materials. Merely because the investigations are pending, we are not inclined to accede to the request of Mr. Jetly to continue the freezing order till all investigations are concluded and show cause notices are issued. We are not inclined to presume merely on the basis of the affidavit in reply filed by the Revenue that the adjudication process will necessarily result in a demand for payment of duty, interest and penalty. Petition disposed off.

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• 2018 (2) TMI 1506
  Import of restricted item - two consignments of 3-½ OD Tubing (seamless pipes) classifiable under CTH 7304 - confiscation - redemption fine - penalty - As per Foreign Trade Policy 2004-2009, import of such goods was allowed ‘free’. However, DGFT vide Notification No.64/2008 dated 24.11.2008 amended the policy which reads as ‘Import Policy for the item ‘Seamless Tubes/Pipes’ under 4 digit Exim Code ‘7403’ will be amended to read as ‘Restricted’ (instead of ‘free’). However, this restriction imposed on import was lifted subsequently by DGFT vide Notification No.81/2008 dated 16.1.2009. Held that: - the appellant-importer has bonafidely imported the said goods and has undertaken effective steps for importing the same when that was freely importable prior to 24.11.2008 and further the restriction imposed under Notification No.64/2008 stood withdrawn vide subsequent Notification No.81/2008 dated 16.1.2009 - There was no restriction both at the time of placing the orders and also when the Bill of Entry was filed subsequently on 16.1.2009. The appellant has also taken effective steps for obtaining licence from the DGFT - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1505
  Benefit of N/N. 7-21/2002-Cus dated 1.3.2002 as per Serial I52A - import of consignment of paper which was claimed by them as waste paper classifiable under Chapter Heading 47.07 - the applicant represented before the Commissioner that the goods were having inherent defects because of uneven coating and damaged sheets and therefore could not be used as such and were accordingly cleared by the supplier as a waste paper not capable of being put to prime use. Held that: - the waste paper as defined even in the HSN Explanatory Notes include printers rejects and similar material. It therefore implies that the goods need not necessarily be in the shape of clippings, shavings, cuttings etc. but defects in the roll as a whole. Prima facie uneven coating can be considered as one of the defects for which purpose the paper cannot be considered as prime paper. As per report dated 04.06.2008 along with photographs (certified by the team) were furnished to this Tribunal, the paper imported is defective and scrap only. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1504
  Import of restricted item - old and used ballast wagon for demag - It appeared to Revenue that the same is not capital goods but only accessory and as such, being a second hand used part, was not importable without specific licence as per para 2.17 of the Foreign Trade Policy for the period 2004-09. Held that: - the appellant have imported a second hand spare parts for equipment which enhanced capacity of the existing crane and the same has resulted in modernization or technological upgradation of the existing crane - the same was appropriately imported under the provisions of Foreign Trade Policy 2004-09, as is evident from para 9.2 read with para 9.12 of the Policy. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1499
  Release of imported seized goods - Desiccated coconut fine grade - goods have been expired long back - imported products were expired, and unfit for human consumption - refusal to draw samples on the ground that the consignment does not satisfy the labelling requirement Held that: - the labels contained the details of the supplier, receiver, product, batch number, weight, date of production and expiry date. The main aspect to be noted herein is that the goods imported from Malaysia got expired long back in the year May 2015 itself, the same cannot be used for human consumption. The raw materials imported is used for manufacturing chocolates which is consumed mostly by children. At this time, even if the goods are handed over to the appellant, the same cannot be used for manufacturing purposes, as the shell life of the raw materials is already expired. From the available records, it is seen that the appellant in their representation dated 23.07.2014 addressed to the fourth respondent have admitted that they would require 3 to 6 months to exhaust the total quantity of goods imported. - there is violation in the import process and the learned single judge has rightly taken note of the regulations and the import process while passing the order. If at all any request is made by the appellant for waiver of demurrage charges, the same may be considered by the respondents in accordance with law. Appeal dismissed.

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• Corporate Laws

• 2018 (2) TMI 1503
  Insolvency process - delay in getting back the money - sale of the machinery attached by the order of this Court - Held that:- As learned Senior Counsel appearing for the respondent/defendant in the suit that the respondent/defendant has obeyed all the orders of this Court and therefore he cannot be penalized for obeying the orders of this Court. The sum and substance of the contentions of Mr.APS.Ahluwalia, learned Senior Counsel is that having obeyed the orders under the firm belief that it would get back the money spent by it, the respondent cannot be made to wait till the conclusion of the Insolvency Resolution process. All that this Court can do in the present situation is only to sympathize with the 1st respondent/defendant. A bare perusal of the earlier orders passed by this Court would show that the plaintiff in the suit M/s.Falcon Tyres Ltd., is a consistent and willful defaulter. But, in view of Section 14 of the Code, this Court is denuded of the power to proceed against the properties of a consistent defaulter also. Even proceedings initiated by a secured creditor under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, Act 2002, have been included under Sub Cause (c) of Sub Section (1) of Section 14. Therefore, unable to accept the submission of the learned Senior Counsel Mr.APS.Ahluwalia, that the present proceedings cannot be termed as proceedings within the meaning of Sub Clauses a, b, c and d of Sub Section (1) of Section 14. Mr.APS.Ahluwalia, learned Senior Counsel would also contend that by virtue of the lien created under the Order dated 21.04.2011, the property becomes answerable to the claims of the 1st respondent. Therefore the 1st respondent would be in the position of the secured creditor and hence these proceedings cannot be prohibited by the order of NCLT. A lien created over the property would not divest the ownership of the corporate debtor over the said property. Even claims of secured creditors are barred under Sub Clause (c) of Sub Section (1) of Section 14. Clause (d) of Sub Section (1) of Section 14 includes even proceedings of recovery of any property in possession of a corporate debtor by its owner or lessor. Apart from the wide language of Section 14, Section 238 of the Code gives an overriding effect to the provisions of the Act for any statute or any instrument having the force of the statute. Stay all further proceedings pursuant to the earlier orders in the suit and adjourn the suit till 16th April 2018. Also all further proceedings for sale of the machinery attached by the order of this Court dated 13.08.2012 will stand stayed, till the expiry of 180 days from 30.08.2017, or till such extended period as may be granted by the Adjudicating Authority, viz. The National Company Law Tribunal, Bengaluru.

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• 2018 (2) TMI 1502
  Winding up petition - whether any bona fide dispute or debate was raised by the appellant - Held that:- We believe that the appellant has been marking time and delaying payment. As per acknowledgment in the statement of accounts dated 8th January, 2014, 12,00,155/- was due and payable. No payment has been made since then. Interest on the said amount would be due and payable. The reply to the company petition was filed belatedly after 222 days. Costs imposed vide order dated 22nd July, 2016 was not paid for nearly a year, when the impugned order dated 24th May, 2017 was passed. There was also non-compliance of the order dated 22nd July, 2016, as affidavits enclosing therewith relevant information and documents were not filed. Order dated 19th January, 2017 had directed the Managing Director to be present, failing which, the Court would be constrained to take coercive steps. This was also noticed in the impugned order. Admittedly, the Managing Director of the appellant company was not present. It is stated that Jatinder Singh Bagga and his son Shiv Karan Bagga are Directors of the appellant company and Shiv Karan Bagga has suffered kidney failure. We can understand the difficult and hard times being faced, but we cannot accept repeated and prolonged failure on the part of the appellant company and its Directors to file reply, and then comply with the orders. Court proceedings are not to be taken lightly. In these circumstances, we are not inclined to issue notice in the present appeal and the same is dismissed. However, the dismissal would not mean that the appellant cannot approach the Company Judge with payment towards principal amount, interest and cost. Of course, compliance by filing affidavit etc. should be also made.

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• Service Tax

• 2018 (2) TMI 1498
  Non-payment of service tax - Renting of immovable property service - allegation under the SCN is that MIDC has not paid service tax on services charges collected from the holders of the plots situated at various Industrial areas/estates of the MIDC - circular dated 18th December, 2006 bearing No.89/7/2006. Held that: - the activities performed by sovereign or public authorities under the provisions of law which are in the nature of statutory obligations are covered by clause 2 which provides that the fee collected by such sovereign or public authorities for performing such activities is in the nature of compulsory levy. Only if such authority performs service which is not in the nature of statutory activity and the same is undertaken for a consideration which is not in the nature of statutory fee, service tax would be leviable if the activity undertaken otherwise falls within the ambit of taxable service. Section 14 of the MID Act provides that the function of the MIDC is not only to develop industrial areas but to establish and manage industrial estates. The role of MIDC is not limited only to establishing industrial estates and allotting the plots or buildings or factory sheds to industrial undertakings. The function and obligation of the MIDC is also to manage and maintain the said industrial estates as provided in Section 14. Therefore, it is the statutory obligation of the MIDC to provide amenities as defined in clause (a) of Section 2 of the MID Act to the industrial estates established by it. Thus, it is the statutory obligation of MIDC to provide and maintain amenities in its Industrial estates such as roads, water supply, street lighting, drainage, etc. As provided in the circular dated 18th December, 2006, for providing amenities to the plot holders, the service fees or service charges collected by MIDC are obviously in the nature of compulsory levy which is used by MIDC in discharging statutory obligations under Section 14 - even in the OrderinOriginal, there is no finding of fact recorded that the service rendered for which service tax was sought to be levied was not in the nature of statutory obligation. MIDC is a statutory Corporation which is virtually a wing of the State Government. It discharges several sovereign functions - the Revenue ought not to have compelled MIDC to prefer Appeals before Appellate Tribunal. Appeal dismissed - decided against appellant.

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• 2018 (2) TMI 1497
  Liability of interest and penalty - payment of tax prior to issuance of SCN - respondent had not reflected the correct value of the services rendered according to the exchange rate prescribed by RBI reference rate - Held that: - the Adjudicating Authority has erred in not demanding the interest on the amount of service tax liability confirmed of 12,53,138/- - the interest liability arises even if the service tax liability is discharged by the respondent prior to issuance of SCN - the respondent is liable to pay interest on this amount as provided in that Section. Penalty - Held that: - Adjudicating Authority, though specifically not mentioned in the order, has it seems invoked the provisions of Section 80 to drop penal proceedings. In my view, this is a fit case wherein provisions of Section 80 needs to invoked - penalty set aside. Appeal allowed in part.

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• Central Excise

• 2018 (2) TMI 1507
  CENVAT credit - place of removal of the goods - Job work - whether the principal and job worker are independent legal entities - the Revenue appears to have been insisting that the contract documents as between M/s Parle Biscuits Private Limited and the respondent were not made available for adjudication before the departmental authorities or the Tribunal. Held that:- the fact of the matter remains that levy and sufferance of duty, taxes etc. are fiscal liabilities that add on, on the basis of the different transactions. Therefore, even if M/s Parle Biscuits Private Limited had a standard form contract, the decision rendered by the Tribunal in relation to a party who had or has transactions with that establishment could not have been applied without affirmatively holding that the particular transaction which forms the foundation and the substratum of a subsequent case is selfsame. The ends of justice require the Tribunal to reconsider the appeal filed before it by the respondent and which has given rise to the order dated 25.08.2015 which is challenged by the Revenue in this appeal - appeal disposed off.

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• 2018 (2) TMI 1496
  Validity of Remand order - issue pending before Larger Bench - taxability service under the taxing entry “Cargo Handling Services“. Held that: - the issue pending for decision of the Larger Bench is involved in all these appeals and the Tribunal, therefore, could not have remanded the matter back to the Adjudicating Authority, but should have waited for decision of the Larger Bench. The order impugned cannot, therefore, be sustained and it will have to be quashed. The common order dt.7.4.2017 which is impugned in all these appeals remanding the matter to the Adjucating Authority, passed by the Tribunal is hereby quashed and set aside. The matter is remitted back to the Custom, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai to wait for the decision of the Larger Bench on the issue involved.

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• 2018 (2) TMI 1495
  Valuation - sale of petroleum products through dealers - appellant retains the benefit of discount/commission offered to the dealers - whether the appellant needs to be saddled with the additional duty liability in resection of the in petroleum products cleared to company owned and company operated (COCO) outlets during the period April 2002 to September 2004? Held that: - It is undisputed that when the goods are cleared to outlets operated by the dealers, the assessable value is worked out by deducting the discounts/commission offered to the dealers - the appellant had discharged more excise duty on the clearances to and from COCO outlet, wherein the assessable value is more than the assessable value of the petroleum products cleared to dealers (certified by Chartered Accountants), which implies that the commission which has been extended to dealers has been included in the value. It can be assumed that the retention of dealers commission as challenged by the Revenue is already taken care of while discharging the duty liability on the higher assessable value on petroleum goods cleared to and from COCO outlets and cannot have effect of the exchequer, it can be seen that net excise duty paid on the net petroleum products cleared to COCO outlets is more than the duty paid on tine clearances to dealers outlets. Demand upheld - penalty not warranted - appeal allowed in part.

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• 2018 (2) TMI 1494
  Classification of goods - Pulihora Paste - Biryani Masala Paste - respondent have classified the said products under Chapters 9 and Chapter 20 respectively of the Central Excise Act, 1985 claiming benefit of "nil" rate of duty - Revenue sought to classify the said products under chapter 21 as mixed condiments and seasoning liable to Central Excise Duty at the applicable rate - Held that: - as regards 'Pulihora Paste', the First Appellate Authority has recorded that The essential character of these "Spices" viz., aromatic, flavouring and seasoning etc., would definitely form part of the resultant product "Pulihora Paste”. It is understood that "Pulihora Paste " is not a ready to eat product but it has to be added with cooked rice, fried in hot edible oil, ground/cashew nuts if desired. Such a functional use of the impugned product is exclusively for rendering "Pulihora" the food preparation with aromatic, flavouring or seasoning properties - classified under chapter 9. Biryani Masala Paste - Held that: - the judgment of the Tribunal in the case of Narendrakumar & Co., [2008 (6) TMI 621 - CESTAT MUMBAI], squarely covers the issue in favor, where it was held that 'Biryani Masala Paste' would not fall under Chapter 20 it will fall under Chapter 9 and the respondents have claimed same under Chapter 20 the effect being that product 'Biryani Masala Paste' is attracting "nil" rate of duty in both Chapters - decided in favor of assessee. Appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 1493
  CENVAT credit - credit availed without receipt of material - appellant claims that the entire case is based on third party documents - Held that: - the case is booked on the basis of statements of the transporter, first stage dealer and auction bidder. None of these statements have been retracted. All these statements contain admission that the transactions between the appellant and GAA were fictitious and paper transactions and no goods were indeed received under these transactions. In any case the data suggests in these the goods were sold by GAA to the appellant at much below the purchase price. No dealer can do the same on a regular basis i.e. to buy goods at a higher price and sell it cheaper. The appellant has claimed that in respect of goods directly purchased from IIL and UGSL, there is no evidence. It is apparent that the goods directly purchased by the appellant from IIL and UGSL also moved to Gujarat instead of the appellant’s premises. In these circumstances, there is a clear evidence that the goods shown to be purchased by the appellant have indeed not reached the appellant’s premises and the appellant was a part of the conspiracy to buy invoices in order to avail illegal cenvat credit. Confiscation - Redemption Fine - Held that: - it is clear that no goods were seized and thus the question of confiscation does not arise - redemption fine also not justified. Appeal allowed in part.

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• 2018 (2) TMI 1492
  Refund of unutilized CENVAT credit - Rule 5 of the CCR 2004 - It is the case of the Revenue that when the CENVAT credit itself is not available, the question of availing the same and claiming refund under Rule 5 does not arise - Held that: - the concurrent findings as recorded by both the lower authorities seems to be in consonance with the law as it is the avowed policy of Govt of India that the exports should not be burdened with taxes, specifically when there is no dispute as to the services rendered and utilized for the exported consignments, non-sanctioning of the refund claims of the service tax paid would add to the value of export consignments. The sanction of the refund claim by the adjudicating authority in this case, is itself an acceptance of the fact that these documents are eligible for availment of CENVAT credit. Appeal dismissed - decided against Revenue.

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• 2018 (2) TMI 1491
  Refund claim - benefit of N/N. 64/95-CE dated 06/03/95 - unjust enrichment - Held that: - the appellants have relied on the letter of the BPCL by the Assistant Commissioner of Central Excise, Chembur, where he has stated that the appellant should have claimed the refund as the goods were supplied from the IOCL installation. They have also relied on the certificate issued by the BPCL where it has been stated that the transaction payment between BPCL and IOC in respect of said disputed refund have been settled in fully and final - They have also referred on the letter addressed to Assistant Commissioner, Chembur, wherein they have informed that duty amount between the IOC and BPCL in respect of said amount has been settled. It cannot be said that burden of duty was not passed on to IOCL - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1490
  Valuation - includibility - quantity discount at various rates - It was alleged that appellant has not passed the quantity discount claimed by them completely to the buyers - Held that: - ample opportunities were given and the appellant failed to substantiate their claim - It is seen that in the earlier proceedings before the Tribunal they had not raised this issue and they have admitted their liability and therefore, it is not open to them to raise this issue in this proceeding. Appeal dismissed - decided against appellant.

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• 2018 (2) TMI 1489
  Valuation - deduction of freight and insurance on average basis - place of removal - Held that: - at the material time depot was not included in the definition of place of removal, consequently, duty was required to be paid on the value at the factory gate. In these circumstances, cost of transportation and transit insurance cannot be included in the assessable value as a matter of principle - reliance placed in the case of UNION OF INDIA & ORS. ETC., ETC. Versus BOMBAY TYRE INTERNATIONAL LTD. ETC., ETC. [1983 (10) TMI 51 - SUPREME COURT OF INDIA] - decided in favor of appellant. Demand on the ground of change in rate of duty - Held that: - on this issue, the impugned order does not give any findings - impugned order is set aside in respect of second issue and the matter is remanded to the Commissioner (Appeals) to give findings - matter on remand. Appeal allowed in part and part matter on remand.

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• 2018 (2) TMI 1488
  Refund claim - excise duty paid in excess - price variation clause - case of appellant is that their claim was not examined properly - Held that: - There is no doubt that the appellant was to receive, as consideration, a lesser amount than that on which the duties were initially computed and paid and the contract price had not been registered with the jurisdictional authorities to acquire sanctity from which no deviations could be permitted; that was but a provision in the commercial agreement which is not germane to the general provisions of valuation, viz., the transaction value - On a perusal of the orders of the lower authorities, it is seen that no attempt has been made to ascertain the veracity of the claim of the appellant that a duty higher than that mandated by law had been paid. Such an ascertainment would require an exercise akin to assessment. The records do not bespeak of such. An application for refund is not to be discarded by reference to any one infirmity but is required to be examined in its entirety for determination if the duties not sanctioned by law has been collected and to remedy any breach thereof - the refund claim restored to the original authority to examine all aspects after giving an opportunity to the appellant - appeal restored.

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• 2018 (2) TMI 1487
  CENVAT credit - common input services for all divisions - whether the appellant are entitled for the CENVAT credit on common input services namely gardening, canteen, premises maintenance, housekeeping, fire protection etc. for all divisions situated in the premises at Kanjur Marg? - Held that: - except outdoor catering services, all other services are used in or in relation to the running of the factory which is engaged for production of final product, therefore services received are admissible for inputs credit - there is no dispute, it is common amenities such as gardening, canteen, premises maintenance, housekeeping, fire protection etc. which are commonly used for all the divisions located in the premises of the appellant’s factory. Therefore it is evident that the entire service was not used by the appellant themselves but part of the services was attributed to other divisions. Even as per Rule 7 of CENVAT Credit Rule, if the common services are related to various units of one company the same should be distributed as per turnover of individual unit. On this analogy also though the appellant are entitled for the CENVAT credit but not for the whole of the credit but only to the extent it is attributed to the turnover of the appellant’s unit - it needs to be re-quantified in accordance with the turnover of the appellant’s unit vis-a-vis total turnover of all the units - matter on remand. Outdoor catering services - Held that: - the outdoor catering service is provided for the personal consumption of the employees. As per the exclusion clause in the definition of ‘input service’ the outdoor catering service used for personal consumption of the employee is clearly excluded therefore the appellant is not entitled for CENVAT credit in respect of outdoor catering services - credit not allowed. Partly decided against appellant and part matter on remand.

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• 2018 (2) TMI 1486
  CENVAT credit - premium paid on insurance policies - Held that: - The decision of the Hon’ble High Court in Commissioner of Central Excise & Service Tax, LTU, Bangalore v. Micro Labs Ltd 2011 (6) TMI 115 - KARNATAKA HIGH COURTdid examine the eligibility of tax paid the premium for availment of credit and held that merely because these services are not expressly mentioned in the definition of input service it cannot be said that they do not constitute input service and the assessees are not entitled to the benefit of CENVAT credit - appellant is entitled to credit of tax paid on insurance services to the extent that it pertains to its employees - appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1485
  CENVAT credit - input services - catering service - quality audit - garden maintenance - testing of samples - Held that: - The credit in dispute on testing services is a mere 143 and that on catering services is a meagre 384. Quality audit - Held that: - Quality audit is not intended to protect the intellectual property of the concentrate used in manufacture of beverages but has a direct bearing on the product served to the customer; it is, therefore, an inextricable part of the manufacturing process - credit allowed. Garden maintenance - Held that: - The decision of the Hon’ble High Court of Karnataka in Commissioner of Central Excise, Bangalore - II v. Millipore India Pvt Ltd [2011 (4) TMI 1122 - KARNATAKA HIGH COURT] would sustain that claim to credit of tax paid on use of garden maintenance service - credit allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (2) TMI 1484
  SEZ unit - Refund of service tax paid - denial on the ground that the amount claimed had been availed as CENVAT credit by the appellant and that this availment had been suppressed in the documents accompanying the claim - Held that: - It is seen from the records that appellant had filed the claims between May 2014 and November 2014. The appellant had reversed the CENVAT credit so claimed only October 2014 - the decision of the Hon’ble Supreme Court in Comnr. of Central Excise & Customs Versus M/s. Precot Meridian Ltd. [2015 (11) TMI 323 - SUPREME COURT], where it was held that even if the MODVAT credit was utilised but, thereafter, refunded, it would amount to not utilising the said MODVAT credit. Appellant entitled to the refund subject to verification of reversal - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2018 (2) TMI 1483
  Reopening of assessment - Section 24 of the Delhi Sales Tax Act, 1975 - Held that: - the original records relating to the present case have been misplaced or weeded out and hence it is not possible to establish and show that the assessing authority had recorded ‘reasons to believe’ in writing before issuing notice dated 9th November, 1999 under Section 24 of the Act. As the respondents are unable to show and establish that ‘reasons to believe’ were recorded in writing, we have to allow the present writ petition and quash the impugned notice dated 9th November, 1999 initiating proceedings under Section 24 of the Act. Petition allowed - decided in favor of petitioner.

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• 2018 (2) TMI 1482
  Set off of purchase tax - Whether the applicant is entitled to set off under Rule 41A of the Bombay Sales Tax Rules, 1959 in respect of the purchase tax paid under Section 13 of the Bombay Sales Tax Act while purchasing unginned cotton from the unregistered dealer? - Held that: - It is not in dispute that unginned cotton was purchased by the applicant from unregistered dealers by paying purchase tax under Section 13 of the Bombay Sales Tax Act. The cotton so purchased was processed to take out ginned cotton, yarn and ultimate product of cloth, which is a taxfree product. In the process, two products came out namely, (1) cotton waste and (2) cotton yarn waste, which are the commodities at serial no. 22 in Schedule C and made taxable. The applicant was entitled to claim set off under Rule 41A in respect of the tax paid by the applicant under Section 13 while purchasing unginned cotton from the unregistered dealer - application allowed.

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• 2018 (2) TMI 1481
  Validity of assessment order - Section 27 of the TNVAT Act 2006 - Held that: - It is not in serious dispute that the turn over was exceeded Rupees Fifty Lakhs even during the year 2007 and the petitioner has submitted a letter along with Form – I on 22.04.2008, which is prior to the substitution of Section 34 of TNVAT Act under Tamil Nadu Act 49 of 2008 with effect from 18.06.2008. Admittedly and no doubt, after the said substitution, the petitioner did not inform the said fact within 7 days as contemplated under Section 3(4) of the TNVAT Act. In a case of similar in nature, a clarification in VAT Cell/41922/2007 (VCC No.1161), dated 29.08.2007 has been issued with regard to the compounding scheme in respect of one Mr.Nanjundamoorthy, Sundaram Complex, 19-F, Co-op. Colony, Mettupalayam, Coimbatore District and as per the said clarification, the said assessee is eligible for input tax credit for his purchases made from the beginning of the year, but the time barred sales tax credit to stock held as on 31.12.2006 cannot be claimed. Appeal allowed in part.

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• 2018 (2) TMI 1480
  Principles of Natural Justice - TNVAT Act - fulcrum of the argument of the learned counsel for the petitioner is that the revision of assessment was based on the details culled out from the Departmental website and that in spite of the petitioner's request to furnish the details namely mismatch details and check post details, the same were not furnished - Held that: - the respondent understood the scope of the direction and called for information with regard to the stage of adjudication of the case by the Directorate of Revenue Intelligence. However, with regard to the direction contained in paragraph 12(i) of the order dated 08.8.2017, the respondent totally misunderstood the earlier directions issued in the said writ petitions and stated that the details have already been furnished even in the earlier notices dated 15.9.2014. On a comparison of the notices dated 15.9.2014 with the impugned notices, it is seen that it is a verbatim reproduction of the first notice. This Court did not expect the respondent to proceed in such a manner. The matters are remitted back to the respondent to scrupulously follow the directions contained in the earlier order dated 08.8.2017 - petition allowed by way of remand.

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• 2018 (2) TMI 1479
  Maintainability of petition - Issuance of Statutory C Forms - CST Act, 1956 - interstate purchases and transit sales under Section 6(2) - denial of exemption granted for transit sales under Section 6(2) on the ground that the petitioner has not filed the Statutory Forms C/E1 in support of such exemption claimed - Held that: - It may not be necessary for this Court to delve on this issue any further on account of the factual turn of events which have taken place during the pendency of the writ petition. Assuming if the amendment to the prayer as sought for by the petitioner is to be considered and granted, then it would be in direct conflict to order passed by the respondent rejecting the representation made by the second respondent to issue Form C declaration as such request made by the second respondent has been rejected by the first respondent vide order dated 29.11.2017 and communicated to the second respondent. As long as the order remains in tact, the question of considering the prayer for an amended relief does not arise, that too, at the instance of the writ petitioner. Neither the prayer as sought for by the petitioner can be granted nor the amendment sought for can be permitted - petition dismissed.

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• 2018 (2) TMI 1478
  Finalization of assessment - authority of Assessing Officer to finalize assessment - Held that: - after reply is given by the dealer, the Assessing Officer is bound to consider the reply and finalize the assessment based upon the facts and materials placed before him and he cannot close his eyes and state that the officials of the Enforcement Wing have given an adverse report against the petitioner and that therefore, he will blindly follow the report. If the Assessing Officer does so, he will be abdicating his statutory duty. A useful reference can be made to the decision in the case of Madras Granites Pvt. Ltd. Vs. CTO, Arisipalayam Circle, Salem [2002 (10) TMI 767 - MADRAS HIGH COURT], in which, the Hon'ble Division Bench of this Court considered as to how the Assessing Officer should conduct himself and complete an assessment when there is a D3 proposal forwarded by the Assistant Commissioner (CT). The respondent are directed to finalize the assessments by considering the objections dated 30.6.2017 filed by the petitioner - petition allowed - decided in favor of petitioner.

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• 2018 (2) TMI 1477
  Principles of Natural Justice - Alternative remedy of filing a revision - Section 54 of TNVAT Act - only grievance of the petitioner is that the objection made by the petitioner by way of reply dated 14.12.2010 had not been considered by the second respondent before passing the impugned order - Held that: - it cannot be said that the second respondent had not considered the objections of the petitioner, amounting to violation of natural justice requiring interference of this Court in exercise of the discretionary powers under Article 226 of the Constitution of India. Further, when the statutory remedy available stands barred by limitation even at the time of filing of the writ petition, it would be without any justification to entertain a Writ Petition against such order. Petition dismissed.

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• 2018 (2) TMI 1476
  Validity of assessment order - challenge to order on the ground that the respondent has not strictly adhered to the directions issued by this Court in the earlier writ petition being W.P.No.20189 of 2003 - principles of natural justice - Held that: - the 1st respondent was required to call for the necessary records and details from the 2nd respondent and then conduct an enquiry and pass fresh orders on merits. However, the 1st respondent has partially complied with the directions and appears to have secured some information from the 2nd respondent, the Assessing Officer of the 3rd respondent. However, without providing further opportunity to the petitioner held that the materials collected by him are sufficient to conclude the case against the petitioner. This procedure adopted by the 1st respondent is in violation of the principles of natural justice as the petitioner had no opportunity to rebut the materials which were collected by the 1st respondent from the 2nd respondent and relied upon to nonsuit the petitioner. The 1st respondent is directed to afford an opportunity of personal hearing to the petitioner - Petition allowed by way of remand.

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• Indian Laws

• 2018 (2) TMI 1501
  Whether the Multi-National Accounting Firms (MAFs) are operating in India in violation of law in force in a clandestine manner, and no effective steps are being taken to enforce the said law. If so, what orders are required to be passed to enforce the said law? Held that: - While we appreciate that it is for the policy makers to take a call on the issue of extent to which globalization could be allowed in a particular field and conditions subject to which the same can be allowed. Safeguards in the society and economy of the country in the process are of paramount importance. This Court may not involve itself with the policy making but the policy framework can certainly be looked at to find out whether safeguards for enforcement of fundamental rights have been duly maintained. In the present context, having regard to the statutory framework under the CA Act, current FDI Policy and the RBI Circulars, it may prima facie appear that there is violation of statutory provisions and policy framework effective enforcement of which has to be ensured. Statutory regulatory provisions intended to advance the object of law have to be enforced meaningfully. No vested interest can flout the same by manifesting compliance only in form. Compliance has to be in substance. The law enforcing agencies are expected to see the real situation. As found by the Expert Committee in its report, there is a compliance by MAFs only in form and not in substance, by having got registered partnership firms with the Indian partners, the real beneficiaries of transacting the business of chartered accountancy remain the companies of the foreign entities. The partnership firms are merely a face to defy the law. The principle of lifting the corporate veil has to apply when the law is sought to be circumvented. Absence of revisiting and restructuring oversight mechanism as discussed above may have adverse effect on the existing chartered accountancy profession as a whole on the one hand and unchecked auditing bodies can adversely affect the economy of the country on the other. Moreover, companies doing chartered accountancy business will not have personal or individual accountability which is required. Persons who are the face may be insignificant and real owners or beneficiary of prohibited activity may go scot free. The Union of India may constitute a three member Committee of experts to look into the question whether and to what extent the statutory framework to enforce the letter and spirit of Sections 25 and 29 of the CA Act and the statutory Code of Conduct for the CAs requires revisit so as to appropriately discipline and regulate MAFs - matter referred to three member Committee of experts.

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• 2018 (2) TMI 1500
  Maintainability of petition - Arbitration agreement - This petition was contested by the respondent who in its reply denied all the allegations raised by the appellant and also submitted that since there was no arbitration agreement between the parties, the petition under Section 9 of the Act was not maintainable - Held that: - As per sub-section (5), an arbitration clause contained in an independent document can also be imported and engrafted in the contract between the parties, by reference to such independent document in the contract, even if there is no specific provision for arbitration. However, the Court noted that such a recourse can be adopted only ‘if the reference is such as to make the arbitration clause in such document, a part of the contract.’ Clause 2 and clause 9.10 are given correct interpretation. By these clauses, only those conditions and sub-conditions of the contract, specification etc. which relate to the works and quality are incorporated. Clause 9.10 only talks of ‘items’ which are not mentioned in the contract and terms and conditions relating to the execution of those items are to be taken from the main contracts. In Alimenta S.A. v. National Agricultural Coop. Mktg. Federation of India Ltd. [1987 (1) TMI 482 - SUPREME COURT OF INDIA], the question was as to whether the arbitration clause in Fosfa-20 was incorporated in the first contract by way of clause 11 and in the second contract by virtue of clause 9. The Court held that while the arbitration clause was incorporated in the first contract, the same was not incorporated in the second contract. Appeal dismissed - decided against appellant.

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