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TMI Tax Updates - e-Newsletter
February 3, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Wealth tax
TMI SMS
Articles
News
Notifications
Highlights / Catch Notes
GST
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In view of difficulties faced by the trade in generating e-way bill due to initial technological glitches, it has been decided to extend the trial phase for generation of e-way bill, both for inter and intra state movement of goods. It'll be applicable from a date to be notified - CBEC
Income Tax
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Withholding of tax at higher of the rates prescribed u/s 206AA - non-resident not having PAN - provision of section 206AA will not have an overriding effect over the provisions of the 1961 Act and if the provision of DTAA are beneficial to the assessee they will override provisions of Section 206AA by virtue of provisions of Section 90(2). - AT
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Exemption u/s 11 - whether Voluntary Contributions made to the corpus of the Trust constitutes “taxable income” of the Trust? - Corpus-specific-voluntary contributions are outside the taxations in case of an unregistered Trust u/s. 12/12A/12AAA of the Act too. - AT
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Penalty u/s 271B - not getting accounts audited u/s 44AB - No doubt, exemption claimed by the assessee society trust u/s 11A has not been granted by the AO and completed the assessment u/s 143(3) but it will not burden the assessee to get its account audited with retrospective effect so long as registration u/s 12A of the Act is in operation - AT
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Penalty u/s 271B - not getting accounts audited u/s 44AB - when there is no computation of profits and gains of the business or profession as part of the total income, the assessee society is not amenable to section 44AB of the Act. - AT
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Gift chargeable to tax in the hands of HUF - assessee could not show us any commentary on Hindu law or any other authoritative material, which says that mother of Karta of assessee HUF, is member of his HUF - gift of equity shares received by the assessee is taxable u/s 56(2)(vii) - AT
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Effect of section 14A amendment - Expenses related to exempted income - Whether sub-section (2) and sub-section (3) of Section 14A inserted with effect from 01.04.2007 will apply to all pending assessments? - Held no - SC
Customs
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Effective rates of customs duty and IGST for goods imported into India. - Notification as amended
Service Tax
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Classification of services - BAS or Air Travel Agent Service - Export of service - the commercial services provided by the appellant, inter alia, soliciting, promoting and selling passenger air transportation and cargo and mail transportation for Saudia is very much a Business Auxiliary Service - AT
Central Excise
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CENVAT Credit - Input services in relation to GTA - Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer’s premises was not admissible post 1.3.2008 - SC
Case Laws:
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Income Tax
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2018 (2) TMI 115
Effect of section 14A amendment - Whether sub-section (2) and sub-section (3) of Section 14A inserted with effect from 01.04.2007 will apply to all pending assessments? - Whether Rule 8D is retrospectively applicable? - Method for determining amount of expenditure in relation to income not includible in total income - Held that:- Applying the principles of statutory interpretation for interpreting retrospectivity of a fiscal statute and looking into the nature and purpose of sub-section (2) and sub-section (3) of Section 14A as well as purpose and intent of Rule 8D coupled with the explanatory notes in the Finance Bill, 2006 and the departmental understanding as reflected by Circular dated 28.12.2006, we are of the considered opinion that Rule 8D was intended to operate prospectively. Rule 8D is prospective in operation and could not have been applied to any assessment year prior to Assessment Year 2008-09. - Decided against revenue
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2018 (2) TMI 114
Non-compete fee - Amount per annum received by the assessee/respondent for two years - compensation received for not providing “the benefit of his knowledge of regulatory matters, negotiating skills and strategic planning expertise to any other person in India in the two wheeler segment for a period of two years from the date of the Agreeement” - whether was more of a revenue character and was therefore taxable by virtue of Section 17(3) or under Section 28(va) - ITAT held the amounts essentially received as non-compete fee, were capital and not income - Held that:- The assessee had a dual role – both as shareholder and as Managing Director. As Managing Director, he received only the non-compete amounts for two years. It is quite possible that he could have been given this amount as a capital receipt at one go for whatever reasons and that the amount be spread over two years. Undoubtedly, the Parliament has intervened and deemed that such amounts – so far as they relate to consideration for professionals should be treated as income by virtue of the amendment of 2017. However, with respect to the Revenue’s contention that regardless of that amendment even in the pre-existing law, this amount had to be treated as receipts and therefore taxable as income, cannot be accepted. It also noted Commissioner of Income Tax v. Sapthagiri Distilleries Ltd. (2014 (11) TMI 1078 - SUPREME COURT) where the Supreme Court had held that compensation received towards loss of source of income and noncompetition fee would be treated only as capital receipts and not liable to tax. Having regard to these decisions and the fact that the view of the ITAT is a plausible one - Decided against revenue
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2018 (2) TMI 113
Validity of assessment framed u/s 16 (1) of the Gift Tax Act - whether condition precedent for reassessment of the proceedings under the said provision was not satisfied? - Held that:- It is not disputed that in Abhinandan Investments [2015 (11) TMI 1219 - DELHI HIGH COURT] this Court reversed the ITAT’s findings and held that the consideration received and shown by the assessee to be a capital loss in income tax proceedings was a device. At the same time while holding that the characteristic of the sale proceeds as a capital loss, was sham, the Court did not ignore the underlying validity of the share transaction or transfer. It proceeded to bring the amounts into question to tax – either as business receipts or as business losses. Such being the case, this Court is of the opinion that alike treatment had to be given. Furthermore, at the stage, when the ITAT intervened in gift tax proceedings (which are the subject matter in these appeals), it considered only the validity of the proceedings, but, did not consider whether in fact the transaction under Section 4(1)(a) amounted to a deemed gift; no conclusive finding in that regard was rendered; nor any finding could have been rendered or was given. For the above reasons, the impugned orders are hereby set aside. The matters are remitted to the ITAT for fresh consideration.
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2018 (2) TMI 112
Deduction u/s 80IA(4) and 80IA(5) - whether deduction is with reference to the profits derived from eligible business of the assessee and not with reference to the profits derived from every unit engaged in the eligible business? - Held that:- As decided in Hercules Hoists Ltd. (2017 (6) TMI 1125 - BOMBAY HIGH COURT) no error committed by the Tribunal in allowing the deduction of the profit u/s 80IB(5) of the Act without deducting the losses of the earlier years. See Velayudhaswamy Spinning Mills P. Ltd. & Sudan Spinning Mills (P). Ltd. [2010 (3) TMI 860 - Madras High Court] wherein held that only losses of the years beginning from the initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of assessee, can be looked into. - Decided in favour of assessee Addition u/s 40(a)(ia) on account of non-deduction of TDS on the Wheeling Charges paid to MSEB - Held that:- It is an agreed position by the parties that this issue is concluded against the Revenue and in favour of the Assessee by the decision of this Court in Commissioner of Income Tax Vs. Maharashtra State Electricity Distribution Co.Ltd [2015 (5) TMI 396 - BOMBAY HIGH COURT] Appeal is admitted on the substantial questions of law as listed at Sr.No. 1 - Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that the interest income is not required to be excluded from the net profit declared by the Respondent for computing book profit for the purpose of determining the allowable deduction of remuneration payable to the partners under Section 40(b) of the Act?
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2018 (2) TMI 111
Validity of search and seizure operation u/s 132(1) - whether authorization, search and seizure and subsequent proceedings all relate to assessee or not? - assessment under Section 158BC - Held that:- Tribunal has not examined sufficiency of material on which authorization under Section 132(1) was issued by competent authority but has examined identity of person in respect of whom authorization was issued under Section 132 (1) and search and seizure operations were carried on. Had it been a different person, and there would have been another person in the same premises with the title mentioned in the authorization and also in panchnama and material seized also would not have been belonged to Assessee, in our view, difference of identity in that case would have been sufficient to vitiate entire proceedings. On the contrary factum that search and seizure was at the premises of Assessee and material also belonged to Assessee was not disputed. It is in these facts and circumstances, we find that proven facts and truth is that search was actually conducted at the premises belong to Assessee i.e. "M/s. Verma Roadways", documents etc. were seized from its premises and when Assessee was called upon to explain, he gave various reasons and explanations without raising any dispute that there was no warrant of search validly issued in its respect and therefore, it was not liable to respond to any notice issued under Section 158 BC. Thus we find it difficult to hold that in the present case mention of different title in authorization and panchnama would be sufficent to hold that proceedings under Section 132(1) were conducted against different person and not Assessee. That being so proceedings under Section 158BC against Assessee also cannot be held bad. Search and seizure operations must be held to have been conducted against Assessee and, therefore, on the basis of material collected in search and seizure operations, ACIT/AA was justified in proceeding to make assessment under Section 158BC. - Decided against assessee.
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2018 (2) TMI 110
Notice u/s 226(3)(iii) - attachment orders - Held that:- This Court would be fully justified in issuing appropriate direction to re-credit the amount to the petitioner's bank accounts. However, since it is represented that the petitioner is already in the process of filing Appeal to the ITAT, this Court is inclined to grant liberty to the petitioner to seek for such relief before the ITAT. It is further represented that, apart from the above two bank accounts, there is third account maintained by the petitioner, which is EEFC account, bearing No.50200025012377, at HDFC Bank, T.Nagar Branch, Chennai, which is yet to be attached by the respondent, and it is stated that the respondent is present in the petitioner's bank to attach the said account, while this Writ Petition is being argued before this Court. Respondent is restrained from attaching the petitioner's EEFC Account No.50200025012377, at HDFC Bank, T.Nagar Branch, Chennai, till the petitioner's approaches the ITAT, challenging the order passed by the Commissioner of Income Tax (Appeals)-3 Chennai, dated 27.10.2017, by way of Appeal. The learned Senior Standing Counsel for the Revenue expresses her apprehension that the petitioner/assessee may indefinetly delay in filing the Appeal, and therefore, states that, the Court should fix time limit for filing such Appeal before the ITAT, for, via. this order, the respondent is injuncted from attaching the petitioner's EEFC A/c No.50200025012377, and this benefit should not last too long. Revenue need not have any such apprehension since already steps have been taken by the assessee, in filing the Appeal. The petitioner/assessee shall file Appeal before the ITAT within a period of four weeks from the date of receipt of this order.
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2018 (2) TMI 109
TPA - Adjustment on shareholder corporate guarantee - Held that:- We find that the coordinate bench in assessee’s own cases and its group cases held that amendment to section 92B are applicable prospectively from AY 2013-14. Therefore, the amended provision is not applicable to the present AY under consideration. Therefore, the ground raised by the assessee is allowed. Disallowance u/s 14A - Held that:- With regard to investment in APGPCL, the coordinate bench has remitted this issue back to the file of the AO to verify the contention of the assessee and, if, found correct, the investment should be excluded from the calculation under rule 8D(2)(iii). Therefore, we are also inclined to remit this issue back to the file of the AO to verify the contention of the assessee. With regard to investment in Moonglow company, which is overseas investment, we direct the AO to include those investments which have generated exempt income and exclude those which have generated taxable income or not generated any income as per the provisions of section 14A, as per which, we have to exclude those expenses which are connected with the generation of exempt income. Therefore, ground raised by the assessee in this regard is allowed for statistical purposes. Set off of previous years losses and unabsorbed depreciation - Held that:- When the assessee raised objection before the DRP, the DRP remitted the matter to the file of the AO to verify the claim of the assessee with reference to records and take appropriate action as per law.
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2018 (2) TMI 108
Denying the exemption u/s 10(23C) - appellant was not existing only for education purpose - AO had come to conclusion that the appellant existed for only for profit motive as accorded to him, it derived profit of more than 26% - Held that:- Hon’ble Apex Court Visvesvaraya Technological University Vs. ACIT [2014 (2) TMI 658 - KARNATAKA HIGH COURT] so long as the surplus generated is not far in excess of what has been held to be reasonable i.e from 6 to 15%, the institution would not cease to be institution exists solely for education purpose and not for the purpose of profit. In the present case, after providing for the depreciation, the surplus would be around 18% of the gross receipts which is not far in excess of 15%. Therefore we hold that the appellant exist solely for the educational purpose and not for the purpose of profit, and therefore is entitled for exemption of its income under clause (vi) of section 10(23C). - Decided in favour of assessee Calculation of carry forward of income to subsequent years - Held that:- This issue is covered in favour of the assessee by the decision of the co-ordinate bench in the case of Jyothy Charitable Trust [2015 (11) TMI 1295 - ITAT BANGALORE]. Deduction of twenty-five per cent was held to be allowable not on total income as computed under the IT Act. Any amount or expenditure, which was application of income, is not to be considered for determining twenty five per cent to be accumulated.
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2018 (2) TMI 107
Unexplained under section 68 - addition on doubt of genuineness of the investor’s capacity - Held that:- Assessee has completely produced the evidences before the AO i.e. the identity of the shareholder by filing the registered address with ROC, PAN No. along with copy of returns of income furnished with particular Ward of the department of the investors. The assessee has also received money from shareholders through account payee cheque and issued documents such as share certificate, return of allotment filed with ROC forms which were filed before the AO. The assessee has also filed copies of bank statement of the subscribers showing that it had sufficient balance in its accounts to enabled the subscriber to subscribe the share capital. Once the AO has not rebutted the evidences, the AO cannot disbelieve the same. This issue is squarely covered by the decision in the case of CIT vs. Gagandeep Infrastructure Pvt. Ltd. (2017 (3) TMI 1263 - BOMBAY HIGH COURT) We delete the addition made by AO and confirmed by CIT(A) on account of share application money as unexplained - Decided in favour of assessee.
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2018 (2) TMI 106
Default u/s 201(1) and 201(1A) - Withholding of tax at higher of the rates prescribed under section 206AA - applicability of section 115A on the payments made by the assessee to non-resident payees who did not have PAN - DTAA benefits - deduct income-tax at source at the rate of 25.75% as provided u/s. 115A OR @ 20% as specified u/s 206AA - Held that:- The issue is no more res-integra and in the case of Nagarjuna Fertilizers and Chemicals Ltd. v. ACIT (2017 (3) TMI 81 - ITAT HYDERABAD) has taken a view that provision of section 206AA will not have an overriding effect over the provisions of the 1961 Act and if the provision of DTAA are beneficial to the assessee they will override provisions of Section 206AA by virtue of provisions of Section 90(2). No infirmity in the order of learned CIT(A) in directing AO to verify whether the payees are entitled for benefits of DTAA and also whether they hold the tax-residency certificate as is required by the provisions of the 1961 Act, which directions of learned CIT(A) we affirm/sustain . It is also on record that the assessee has in-fact deducted income-tax @22.66% on all these foreign remittances while rate prescribed under the provisions of DTAA with France is lower @10% than the rate prescribed under provisions of Section 115A for making payments in the nature of technical fee. Thus assessee cannot be held to be an assessee in default within meaning of Section 201(1) and 201(1A) - Decided against revenue
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2018 (2) TMI 105
Taxability of interest received by assessee on compulsory acquisition of land - assessee has been awarded interest under the provisions of section 23(1A) and 23(2) r.w.s. 28 of the L.A. Act - Held that:- A perusal of Form 35 shows that the assessee in grounds of appeal before the Commissioner of Income Tax (Appeals) has not specified that the interest received by assessee on compulsory acquisition of land is u/s. 23(1A) and 23(2) or u/s. 34 of the L.A. Act. It is for the first time before the Tribunal that assessee in grounds of appeal has clearly stated that assessee has received interest u/s. 23(1A) and 23(2) r.w.s. 28 of the L.A. Act. However, the assertions made by assessee in the grounds of appeal are not supported by any cogent evidence. In the absence of complete facts it would not be possible to adjudicate the issue in hand. Therefore, in our considered opinion this issue needs re-visit to the file of Assessing Officer. - Decided in favour of assessee for statistical purpose.
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2018 (2) TMI 104
Levy of penalty u/s. 271(1)(c) - documents seized and found in search - addition on account of unexplained investment in money lending business - Held that:- Tribunal has remitted the issue back to Assessing Officer to re-examine the seized material and to find if any cash transactions is recorded in the name of assessee i.e. Shri Nanchand B. Shah and Shri Nanchand Bhogilal Shah and to make addition of the same, in accordance with law. However, in principle the Tribunal has set aside the findings of Commissioner of Income Tax (Appeals). Once, the substratum for levying penalty has eroded, the penalty proceedings would not survive. Therefore, no useful purpose would be served by restoring penalty proceedings to the Assessing Officer. - Decided in favour of assessee
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2018 (2) TMI 103
Exemption u/s 11 - whether Voluntary Contributions made to the corpus of the Trust constitutes “taxable income” of the Trust? - taxations in case of an unregistered Trust - Held that:- Corpus donations received by the Trusts, which is not registered u/s.12A/12AA of the Act, are not taxable as they assume the nature of ‘Capital receipt’ the moment the donations are given to the “Corpus of the Trust”. We find the provisions of section (24)(iia)/12(1)/11(1)(d)/35/56(2) are relevant for deciding the current issue. It is a settled legal proposition, in case of a registered Trust under the Income-Tax Act, the corpus specific Voluntary Contributions are outside the scope of income as defined in section 2(24)(iia) of the Act due to their “Capital nature”. But it is a case of un-registered Trust. Despite the detailed deliberations made by the Ld. DR, we find the principles relating to judicial discipline assume significance and the priority. It is also decided issue that there is need for upholding the favourable view if there exists divergent views on the issue. As discussed in the preceding paragraphs above, there are multiple decisions in favour of the assessee. Corpus-specific-voluntary contributions are outside the taxations in case of an unregistered Trust u/s.12/12A/12AAA of the Act too. From this point of view, and for this reason, the decision of the CIT(A) in granting relief to assessee does not call for any interferences. Accordingly, grounds of appeal raised by the Revenue are dismissed.
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2018 (2) TMI 102
Penalty proceedings u/s 271B - assessee has failed to get its accounts audited under the provisions contained u/s 44AB - bonafide belief of assessee as claimed the exemption u/s 11 - Held that:- Bare perusal of the provisions contained u/s 44AB of the Act goes to prove that the same are applicable to the person carrying on business or profession and is required to get its account mandatorily audited by an accountant. But, in the instant case, when assessee is undisputedly a charitable society and is not carrying out any business and has been claiming exemption u/s 11A of the Act, the penalty u/s 271B of the Act cannot be levied. Furthermore, when there is no computation of profits and gains of the business or profession as part of the total income, the assessee society is not amenable to section 44AB of the Act. No doubt, exemption claimed by the assessee society trust u/s 11A has not been granted by the AO and completed the assessment u/s 143 (3) but it will not burden the assessee to get its account audited with retrospective effect so long as registration u/s 12A of the Act is in operation. - Decided in favour of the assessee.
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2018 (2) TMI 101
Addition on account of ornament, jewellery and silver found during the course of search - guidelines in the matter of seizure of jewellery - Held that:- CBDT instructions in our view provides a guideline to the search conducting team that no seizure should be made of the jewellery and ornaments found during the course of search proceedings u/s 132 of the Act, if the same have been duly declared in the wealth tax returns filed by the tax payer or where such ornaments are within the prescribed limits of 500, 250 or 100 grams as stated in the said instructions. Out of total seized jewellery of ₹ 22,65,625/- (being the value of seized jewellery as on the date of search), we find that the assessee has been successful enough to explain the jewellery worth ₹ 17,59,500/- on account of following; (i) Diamond jewellery belonging to assessee’s wife purchased in 1993 for ₹ 2,16,000/- (duly shown in the balance sheet) which values at ₹ 10,77,000/- as on date of search. (ii) secondly the Gold jewellery weighing around 350 grams which the assessee received as per will of her grand mother in 1993 which is also shown in the balance sheet at a cost of ₹ 1,60,930/-. We have already accepted that the jewellery worth ₹ 17,59,500/- was purchased in the earlier years as well as some part received by “WILL”. However, as regards the remaining gold jewellery, silver items and diamond jewellery valuing ₹ 5,06,000/- there is no specific reply given by the assessee. We therefore, looking to the fact that assessee was living with his mother and wife and also in view of CBDT Instruction No.1916 dated 11.5.94 discussed above sustain a total addition of ₹ 2,50,000/- for unexplained jewellery. Accordingly the appeal of the assessee is partly allowed.
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2018 (2) TMI 100
Revision u/s 263 - gift chargeable to tax in the hands of HUF - scope of the term relative u/s 56(2)(vii) - Held that:- The above information was provided with respect to the computation of cost of acquisition to be determined in case of the assessee when it is sold, as the Act provides for cost acquisition of the previous owner substituted in case of certain types of acquisition, such as gift etc. The copy of the gift deed, which is submitted by the assessee before AO was with respect to the cost of acquisition to be determined at the time of sale of those shares for working capital gain in the hands of the assessee. AO has not at all looked at those documents from the perspective of section 56 (2) of the Act. No other evidence was adduced before us which even remotely suggest that the ld AO has enquired about the taxability of impugned gift and its taxability in the hands of assessee. From the above facts, it is apparent that the ld assessing officer did not enquire during the course of assessment proceedings about the taxability of the shares received as gift by the appellant. Further , it is apparent that assessment order was passed on 18/3/2016 and order under section 263 was passed on 1/5/2017, both after 1/6/2015, therefore explanation (2) introduced w.e.f. 1/6/2015 squarely applies. Therefore, it is apparent that AO has not made any enquiry with respect to the taxability of gift received by the assessee from the mother of the Karta of assessee. Furthermore, merely notice has been issued under section 154 on the same issue but later on, no rectification order has been passed by the Ld. assessing officer does not help the case of the assessee. The provisions of section 154 operate when there is an apparent mistake from the records. - Decided against assessee. Whether the gift of 75,000 equity shares of a private limited company received by assessee HUF from Mrs. Sneh Gupta is chargeable to tax under section 56 (2) (vii)? - Held that:- In the present case, the assessee is a HUF who received the gift from a non-relative. The ld-authorized representative also could not show us any commentary on Hindu law or any other authoritative material, which says that mother of Karta of assessee HUF, is member of his HUF. Therefore, we reject the arguments of the assessee that the gift of 75,000 equity shares received by the assessee is not chargeable to tax under section 56 (2) (vii) of the act. Hence, we do not find any infirmity in the order of the Ld. PCIT in holding that gift of 75,000 equity shares received by the assessee received from Mrs. Sneh Gupta is chargeable to tax under section 56 (2) (vii) of the act. Valuation of the equity shares received by the assessee as gift from Mrs. Sneh Gupta - Held that:- When the specific rule for determination of ‘fair market value’ for section 56 has been notified, same shall be applied and not as defined under section 2 (22B)of the act. Furthermore, the notification issued by the Central government also speaks that determination of fair market value under rule 11 UA shall be applied for the purposes of section 56 of the act. Therefore, we reject the valuation adopted by the Ld. PCIT applying provisions of section 2 (22B) of the act. According to the assessee such computation u/r 11UA of Income tax Rules, 1962 works out at ₹ 234.82 per share. However, neither the Ld. PCIT nor the assessing officer has verified this computation of the fair market value of the shares. Therefore, we set aside the issue t of computation of the fair market value of the shares back to the file of the Ld. assessing officer. We direct assessee to produce the valuation before the ld AO as per rule 11UA of IT Rules.
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2018 (2) TMI 99
Receipts from sale of software taxable as "Royalty" - application for constitution of Special Bench - Held that:- As per the list of 21 cases placed on record wherein in the hands of recipients / deductees, the High Courts / Tribunals have held that receipts from sale of software were not taxable as "Royalty‟. The issue was settled by the High Courts and various benches of the Tribunal and did not warrant constitution of Special Bench. If the application for constitution of Special Bench of the revenue be accepted by the Bench then all 21 cases where in hands of deductees the Hon'ble High Courts / Tribunal has already held that income from sale of software is not royalty will be affected. Thus if the application for constitution of Special Bench of the Revenue be accepted by the Bench then 44 Special Benches need to be constituted, as there are 44 separate agreements entered by the assessee for which payment was made for purchase of software. Since, some agreements contain purchase of independent software and some of the agreement contains purchase of software alongwith hardware, every agreement would have to be examined for which 44 Special Benches would have to be constituted. Application for constitution of Special Bench made by the Revenue ought to be rejected and the appeals be heard by the regular Bench of the Hon'ble Tribunal. We direct accordingly.
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2018 (2) TMI 98
Reopening of assessment - bogus purchases - Held that:- Tangible and cogent incriminating material were received by the AO which clearly showed that the assessee was beneficiary of bogus purchase entries from bogus entry providers which formed the reason to believe by the AO that income has escaped assessment. The information so received by the AO has live link with reason to believe that income has escaped assessment. On these incriminating tangible material information, assessment was reopened. At this stage there has to be prima facie belief based on some tangible and material information about escapement of income and the same is not required to be proved to the hilt. CIT(A) has carefully examined the issue and has properly appreciated the issue. Hence, we do not find any infirmity in the same. Accordingly, uphold the order of the Ld. CIT(A) on the issue of reopening. As regards merits of addition, stent and there is no cogent evidence of transportation of goods. The sales tax Department in its enquiry have found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. The assessing officer has noted that there is no cogent evidence of the provision of goods. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. Hence purchase bills from these non-existent the/bogus parties cannot be taken as cogent evidence of purchases, in light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine. - Decided against assessee.
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2018 (2) TMI 97
Recognition of revenue - revenues where the assessee has entered into registered sale deeds with the plot buyers and where certain advances have been received from the plot buyers, where the assessee is following percentage completion method of accounting - profits determined by applying “percentage completion method” as per Accounting Standards issued by ICAI - Held that:- In respect of revenues from executed sale deeds, the revenues have been recognized to the extent of work completed and the said principle will apply in respect of advances so received from the buyers. The assessee has therefore to maintain the consistency in its method of accounting where it is following percentage completion of method and within the said method, it cannot be allowed to make variation on the basis of plot buyers agreement and executed sale deeds so long as the basic parameters for recognition of revenues, as we have discussed above, have been fulfilled. In respect of total advances actually received from the customers as on 31.03.2012 amounting to ₹ 4,44,28,514 arising out and in respect of which plot buyers agreement has been executed, revenues to the extent of percentage of work completed (45.73%) which comes to ₹ 2,03,17,159, following the percentage completion method has been rightly brought to tax by the Assessing officer and the order of the ld CIT(A) is set aside to this extent. Thus following the percentage completion method, revenues, as per executed sale deeds amounting to ₹ 2,11,38,286 and in respect of advances received from the customers amounting to ₹ 2,03,17,159 arising out and in respect of which plot buyers agreement has been executed, shall be recognized for the year under consideration. There is no dispute regarding the cost incurred and expected to be incurred in future and which has been determined as a percentage of sale @ 44.27% at ₹ 1,83,52,325 and after setting off the said cost, the profit chargeable to tax shall be ₹ 2,31,03,120 as against ₹ 3,43,13,700 determined by the AO.
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2018 (2) TMI 96
Levy of late filing fee u/s 234E - scope of adjustment provided u/s 200A - Held that:- The amendment in section 200A (1) of the Act is procedural in nature and AO while processing the TDS statements, returns of the period prior to 01/06/2015 was not empowered to charge late fee under section 234E of the Act, as such the intimation issued by the assessing officer under section 200A of the Act does not stand and the demand raised by way of charging fee under section 234E of the Act is not valid and, accordingly, is liable to be deleted. See Gajanan Constructions vs DCIT [2016 (10) TMI 92 - ITAT PUNE]- Decided in favour of assessee.
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2018 (2) TMI 95
Penalty u/s 271(1)(c) - excess claim of set off of brought forward capital loss against the capital gain for the year under consideration - Held that:- Explanation of the assessee that the new Chartered Accountant who had filed her return of income for A.Y. 2011-12 had claimed the set off of the brought forward capital loss of A.Y. 2006-07 against the capital gain in the hands of the assessee for A.Y. 2011-12, merely going by the fact that there was unabsorbed capital loss in the hands of the assessee in A.Y. 2006-07, without realizing that the same to the extent of ₹ 16,80,280/- had been set off against the capital gain of the assessee in A.Y. 2008-09 carries substantial force. It is difficult for us to comprehend that the assessee had failed to come forth with a duly substantiated explanation which would go to irrefutably prove the bonafides of her aforesaid claim. We are unable to persuade ourselves to subscribe to the view of the lower authorities that the assessee had furnished a false explanation as regards raising of an excess claim of set off of brought forward losses for A.Y. 2006-07 against her income for the year under consideration, viz. A.Y. 2011- 12 - Decided against revenue
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2018 (2) TMI 94
Validity of penalty order passed u/s 158BFA(2) as barred by limitation - Held that:- The quantum of undisclosed income gets crystallized only when the Assessing Officer has carried out directions of the ITAT whereby the matters were restored to the file of the Assessing Officer. This means that all earlier assessment orders and subsequent appeals in pursuance to the original assessment order were no more relevant. The Assessing Officer recomputed the income pursuant to the order of the Tribunal dated 30/12/2008 which attained finality in appeal decided by the ld. CIT(A) on 29/11/2013. In this view of the matter, we are of the considered view that the material date, in reference to which limitation has to be considered, is 29/11/2013 and, therefore, the order passed by the Assessing Officer in levying the penalty is within the period of limitation prescribed under the law. Imposition of penalty u/s 158BFA(2) - Held that:- Assessing Officer has not brought out any appropriate reason for levy of penalty. There is a clinching evidence to demonstrate that source of KVPs is explained through Will executed by the grandfather. The assessee could not foresee that investment disclosed in the Will of his grandfather and investment made according to the wishes expressed by his grandfather under the Will could become a reason for imposition of penalty under section 158BFA(2) of the Act. The Will was also accepted by the Coordinate Bench of ITAT Lucknow and its genuineness was never challenged anywhere. There is no malafide element for imposition of penalty in this case of the assessee. We set aside the order of the ld. CIT(A) and delete the penalty levied under section 158BFA(2) of the Act. The assessee, therefore, succeeds in the grounds on merit.
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2018 (2) TMI 93
Violation of provisions of section 206C - assessee did not collect any tax u/s. 206C(1) of the Act on sale of ‘Timber obtained by any other mode other than under a forest lease’ - Held that:- The issue is squarely covered in favour of the assessee by the coordinate bench decision in assessee’s own case [2016 (5) TMI 640 - ITAT KOLKATA] we set aside the order of the Ld. CIT(A) and are of the view that the “sawn timber” does not fall under the ambit of tax collection at source within the meaning of section 206C of the Act - Decided in favour of assessee
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2018 (2) TMI 92
Reopening of assessment - reasons to believe - Held that:- As in the present case, we find that the AO is unable to discern the link between the tangible material and the formation of the reasons to believe that income had escaped assessment. In the case on hand the information of bad debts/ advance written off is very much emanating from the audited financial statement available with the AO. Thus the reopening on the basis of financial statement per se does not refer to the tangible material gathered from independent sources. Thus we find that the manner of recording satisfaction remains the same even in the case where no scrutiny assessment was conducted. Therefore respectfully following the co-ordinate Bench order and other judgments as discussed above, we hold that the re-assessment was not valid and in view of above CO filed by assessee is allowed.
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2018 (2) TMI 91
Addition of subscription expenses - allowable busniss expenses - whether this expenditure was incurred wholly and exclusively for the purpose of business - Held that:- No infirmity in the order of the Ld. CIT(A) in allowing the expenses incurred for membership in club which has nexus to the business of the assessee, which is required to forge friendship and required to entertain clients inorder to make progress and benifits business in the long run. See Gujarat State Export Corporation Limited Versus CIT [1993 (9) TMI 52 - GUJARAT High Court] - Decided against revenue Addition on account of unsecured loans as cash credit u/s. 68 - CIT-A allowed the claim - Held that:- The borrowing in this year is only from five parties and that too from NBFC. The company from which the assessee has borrowed funds have enough assets and are income tax assessee. The assessee has discharged its burden of proof and thereafter, if the AO had to make any additions then he should have discredited the evidences adduced by the assessee. Without doing so, merely because notice of 3 creditors were returned back to him un-served, cannot be the sole basis for addition and therefore, the ld CIT(A) has rightly deleted the same. - Decided against revenue
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Customs
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2018 (2) TMI 90
Bail application - Offence punishable u/s 135 of the Customs Act, 1962 - in the instant case the muddamal allegedly belonging to the petitioner was seized on 01.08.2017 when the petitioner was already in custody in respect of other offence - Section 108 of the Customs Act - Held that: - True it is that, Sanjay has retracted the said statements; but at this stage of the proceedings, this Court would not discount the statements made by the said accused on the mere ground of retraction; inasmuch as, retraction of a statement can be no impediment for investigation of a case on such statement. It cannot be disputed that statements under Section 108 of the Customs Act are admissible in evidence and under what circumstances the said statements were made and retracted can only be appreciated during the trial, if at all, the case goes to trial. For the present, the revealations under Section 108 of the Customs Act are relevant for the respondent to carry on the investigation. It is within the domain of the investigator to seek remand of a person. The requirement of the remand would depend upon the facts and circumstances concerning the individual / accused. The investigator may decide not to obtain remand if he is satisfied with the information he required for prosecuting a person has formed the record. Therefore, petitioner has no right to contend that in absence of remand of co-accused, the respondent has no case to plead against the petitioner. Bail application fails.
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2018 (2) TMI 89
Education cess on Clean Energy Cess - imported steaming (non-coking) coal - Held that: - Education Cess and Secondary Education Cess as duty of Excise and duty of Customs are two different levies and as such Education Cess and Secondary Education Cess as duty of excise is exempted but not as duty as Customs - The legal provisions for calculation of aggregate duty of Customs and Education and Higher Education Cess leviable on such duty of customs are clear and there is no ambiguity in the same - appeal dismissed - decided against appellant.
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2018 (2) TMI 88
Valuation - related party transaction - identical/similar goods - Held that: - it emerges that the appellants are 100% fully owned subsidiary of M/s. Biesse SPA, Italy, who is the supplier and seller. There is no doubt that the buyer and seller are related in view of Rule 2(2) of the CVR, 1988, for the purpose of Customs Act, 1962. The foreign supplier has procured the goods from third party suppliers and sold the same to the appellants at more or less the same price and in addition to ocean freight - we are not able to fathom, how in an international trade transaction, the freight cost incurred by the foreign supplier in procuring the goods within country of origin, or, for that matter, the margin of profit will not be added to local purchase cost to arrive at selling cost to Indian buyer, the appellant. This would certainly be the case if M/s.Biesse SPA, Italy would have sold the goods to any non-related buyer in India or in any other part of the world. Appellants have also not been able to establish that M/s. Biesse SPA, Italy sold identical or similar goods to other importers in India at the same price. They have themselves not able to satisfy the requirements of Rule 43 A & B of the CVR, 1988. Appeal dismissed - decided against appellant.
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2018 (2) TMI 87
Refund claim - interpretation of statute - sub-section (2) of section 129D of the Custom Act, 1962 - case of Revenue is that review order was mechanically issued without application of mind; hence, the review order falls foul of the requirements of sub-section (2) of section 129D of the Customs Act, 1962 - Held that: - It is not the dispute of the respondent that the grounds of appeal were different from the points or reasoning given in the file note sheet - the drafting of the appeal papers in the form CA2 required is just a procedure to implement the directions given by the Commissioner for filing the appeal. The legal requirement embedded in sub-section (2) of section 129D ibid has very much been followed and complied with. The matter is remanded back to the lower appellate authority to consider the appeal filed by the department afresh on merits - appeal allowed by way of remand.
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Insolvency & Bankruptcy
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2018 (2) TMI 116
Corporate insolvency process - no enclousres of certificate from ‘financial institution’ - Held that:- Respondent, Macquarie Bank Ltd., has not enclosed any certificate from ‘financial institution’ as defined under sub-section (14) of Section 3 of the I&B Code and Lawyer’s notice as given has been deprecated by the ‘adjudicating authority’. In effect, order (s), if any, passed by Ld. Adjudicating Authority appointing any ‘Interim Resolution Professional’ or declaring moratorium, freezing of account and all other order (s) passed by Adjudicating Authority pursuant to impugned order and action, if any, taken by the ‘Interim Resolution Professional’, including the advertisement, if any, published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside.
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Service Tax
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2018 (2) TMI 86
Validity of show cause notice - Liability of service tax - activity of generating electricity - negative list - opportunity of being heard - principles of natural justice - Held that: - The petitioner conceded to the request made by the respondent for furnishing copies of invoices which were furnished on 22.09.2015 and 23.09.2015. Immediately thereafter, the Miscellaneous Petition has been filed on 09.10.2015 for modification. One more reason which will work against the writ petitioner is that though the Court stipulated a time frame for the second respondent to pass orders, the petitioner did not approach the Court complaining of any violation of the time frame fixed - petitioner was not prejudiced in any manner on account of no action being taken by the Revenue between 16.09.2014 and 02.09.2015. Whether the petition for modification is maintainable? - Held that: - There can be no dispute to the legal position that a review petition is not an appeal in disguise. The grounds of review are clearly circumscribed under Order 47 Rule 1 CPC. However, it has to be borne in mind that the present proceedings is a writ proceedings arising under a taxation statute. The prayer sought for in M.P.No.1 of 2015, in my considered opinion, cannot be construed as a prayer to review the order passed in the writ petition. On a reading of the proceedings dated 28.03.2014, it is clear that it is only an intimation. This is on account of the fact that the petitioner stopped paying service tax from 01.01.2014. Therefore, the second respondent requested the petitioner to pay service tax, failing which stated that action for recovery will be initiated. Thus, the communication/intimation dated 28.03.2014 cannot be treated as a show cause notice nor can be treated as a demand but only as an intimation - the petition for modification cannot be construed as a review petition but only to modify the earlier order by permitting issuance of a show cause notice instead of treating the communication dated 28.03.2014 as a show cause notice, which is not feasible as it is not in accordance with Section 73(1) of the Act. The petitioner had pressed for hearing of the modification petition. However, on 04.02.2016, the writ petition in W.P.No.36494 of 2015 alone was listed and M.P.No.1 of 2015 in W.P.No.9496 of 2014 was not listed, and the writ petition was disposed of. The revenue cannot be prejudiced on account of non-listing of M.P.No.1 of 2015. In the factual background could the respondent Department be faulted for issuing the impugned show cause notice, is the conduct of the Department in violation of the order in W.P.No.9496 of 2014 or contumacious. The answers to all the above queries should lean and be answered in favour of the Revenue - there is no violation of the order in W.P.No.9496 of 2014 much less willful violation in issuing the impugned show cause notice. Thus the impugned show cause notice can be adjudicated as according to law, giving liberty to the petitioner to canvass all points. The petitioners are granted thirty days time from the date of receipt of a copy of this order to submit their reply to the show cause notice which shall be adjudicated in accordance with law after affording an opportunity of personal hearing to the authorized representative of the petitioner.
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2018 (2) TMI 85
Whether dismissal of appeal by rejecting the application seeking condonation of delay in filing of appeal in the facts and circumstances of the case and in law could not be countenanced and appeal needs to be restored to the file of the CESTAT for decision afresh affording opportunity of hearing to the appellant to secure the ends of justice? Held that: - Taking into account that the appellant is a local authority and the liability which is fastened on the local authority is required to be considered on merits, without entering into merits of the case, remit back in the Tribunal to proceed in the matter on merit after condoning delay in view of the fact that appellant is local authority and face a hazardous procedure and being a service tax at the relevant time was a new subject and every officer was not acquainted with the law in view of special case, we condone the delay on application before Tribunal - appeal disposed off.
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2018 (2) TMI 84
Cargo Handling Services - sub-contract - the appellant did not discharge the Service Tax on the consideration received by them on the ground that the entire value is already included by the main contractor, M/s DARCL, for payment of service tax by them - Held that: - once the main contractor is paying service tax, the sub-contractor, whose entire value of service is sub-sumed in the value on which the Service Tax is paid by the main contractor, is not required to pay service tax separately - the service rendered is covered by the definition of ‘Cargo Handling Services’ and consequently, the liability for payment of Service Tax has arisen on the part of the appellant - The services provided by the sub-contract and used by the main service provider is liable for payment of Service Tax in the hands of sub-contractor. Extended period of limitation - Held that: - the department is not justified in invoking the extended time limit to demand service tax from the appellant. Moreover, the entire details of amount has already been recorded in the books of account of the appellant and the same has been noticed only during the period of audit by the department - extended period not invocable. For quantifying the demand, as above, the matter is remanded to the adjudicating authority - issue of penalty also to be redetermined - appeal allowed in part by way of remand.
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2018 (2) TMI 83
Liability of service tax - amounts recovered by book adjustments from the subsidiary prior to the amendment - the department was of the view that the appellant was liable to pay Service Tax on the amount which was outstanding from the subsidiary company as on 16.05.2008 - Held that: - the explanation inserted in the statute through which the taxing net has been widened, cannot be held to be retrospective in operation. Through the amendments carried out in Section 67 of the Act as well as Rule 6(1) of the Service Tax Rules, effectively the liability to pay Service Tax has been imposed in respect of transactions with the subsidiary or associate enterprises. Such an amendment is definitely having the effect of widening the tax net. In the light of the Apex Court’s decision, we are of the view that the demand raised cannot be sustained, except for the adjustments made on or after 10.05.2008. The Service Tax liable for the period on or after 10.05.2008 has been paid by the appellant along with the interest and is not being challenged - demand with penalty set aside. Liability of service tax - certain services received from foreign service providers - appellant discharged service tax by utilising CENVAT credit - Held that: - Once such Service Tax is paid in cash, the appellant will be entitled to take Cenvat credit of the same. In the present case, instead of making the payment in cash, the liability was discharged by making use of the Cenvat credit - The statute specifically provides that Service Tax payable on reverse charge basis in terms of Section 66(A) of the Act is required to be discharged by making payments in cash. Once such Service Tax is paid in cash, Cenvat Credit Rules allow credit of the same. This cannot be interpreted to mean that it is a revenue neutral situation. Extended period of limitation - Held that: - the Revenue is justified in invoking the extended period of limitation in the present case to raise the demand of ₹ 1,93,74,146/-. However, the appellant will have the option to avail the Cenvat credit of this amount after payment of the same in cash. Penalty u/s 78 - Held that: - the demand for the period prior to 10.05.2008 has been set aside by us as above. The balance amount of ₹ 12,66,876/- already stands paid by the appellant. Consequently, we find that the appeal filed by the Revenue is without merit and is dismissed. Appeal allowed in part.
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2018 (2) TMI 82
Classification of services - Business Auxiliary Services or air travel agent service?- appellant is engaged in rendering of services as air travel agent and registered under the category of air travel agent services - Held that: - the services rendered by the appellant it booking of passes for travel by air which is squarely covered by the definition of air travel agency service as defined under Section 65(105) - In view of the statutory definition, any activity in relation to booking of passes by air travel agent would be covered under air travel agency services . Whether the ticket is bought directly from the airline or through the GSA the same would not make any difference. Also, the issue squarely covered by the decision in the case of Commissioner of Central Excise, Goa v. Zuari Travel Corporation [2013 (7) TMI 911 - CESTAT MUMBAI], where it was held that The activity undertaken by respondent herein, who is a sub-agent of the IATA agent comes under Air Travel Agents Services or Business Auxiliary Services. The impugned order classifying the service under business auxiliary service is not sustainable in law - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 81
Penalty u/s 78 - renting of immovable property service - conflicting decisions on the issue - Held that: - the appellant had not paid the amount of ₹ 71,207/- only because they believed that since the building was used by educational institution, they need not discharge the service tax liability with regard to the rent received from such building - there were much confusion whether the services were subject to levy of service tax since there were conflicting decisions on the said issue - penalty set aside - appeal allowed.
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2018 (2) TMI 80
Commercial or Industrial Construction Service - completion and finishing services - period June 2005 to March 2008 - Held that: - Hon'ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] held that the appellants will not be liable to pay service tax prior to 1.6.2007 - For the period from 31.6.2007 to 31.3.2008, considering the services as works contract service, they would be eligible for composition scheme. The tax liability, after application of composition scheme, has already been discharged by the appellant. Hence there is no further liability that is required to be paid by the appellant. For this reason, there shall be no further tax liability beyond the amount already paid by the appellant - there is no cause for imposition for penalty for which reason the penalty imposed under section 78 is set aside. Appeal allowed in part.
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2018 (2) TMI 79
Liability of service tax - commission/amounts paid to foreign agent - reverse charge mechanism - Held that: - the period involved is prior to 18.4.2006 on which date Section 66A came to be introduced in the Finance Act, 1994 - The issue whether the assesse is liable to pay service tax under reverse charge mechanism on commission/amounts paid to foreign agent stands settled in favour of the assessees in the judgment of Indian National Shipowners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT], where it was held that Before insertion of section 66A with effect from 18-4-2006, there was no authority to levy service tax on Import of service. Appeal dismissed - decided against Revenue.
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2018 (2) TMI 78
Penalty - GTA services availed by the appellant for transportation of mined iron ores within and outside the mining area - Held that: - in the present case, the adverse factors like suppression of facts, mis-statement or fraud or collusion are not present. Therefore, even though the extended period has been invoked in the proceedings, absence of these factors would mean that the appellant should not be penalised with an amount equal to the duty determined as envisaged under Section 78 of the Finance Act, 1994 - there does exist reasonable and justifiable cause in the failure of the appellants to have discharged tax liability when they should have. However, on being pointed out by the Department, they have paid up the differential tax liability along with interest thereon - penalty u/s 78 do not sustain - appeal allowed in part.
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2018 (2) TMI 77
Penalties - Business Auxiliary Services - services as a Commission Agent - department was of view that the commission paid to foreign agent is liable to levy of service tax under reverse charge mechanism - Held that: - issue whether assesse is liable to pay service tax under reverse charge mechanism on the commission paid to foreign agents was under much dispute during the relevant period. Section 66A was introduced with effect from 18.04.2006 and the Hon'ble Bombay High Court in the case of Union of India Vs. Indian National Ship Owners Association [2010 (12) TMI 12 - Supreme Court of India] observed that assesse is not liable to pay service tax prior to introduction of Section 66A. During the relevant period there was much confusion as to the levy of service tax on commission paid to foreign agent. Being an interpretational issue, the penalties imposed, except that of Section 77 are unwarranted, and requires to be set aside - appeal allowed in part.
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2018 (2) TMI 76
Classification of services - Export of service or not - The commercial services to be rendered by the GSA are specified in the agreement. The agreement portion under the caption 'Commission to GSA' contains various commissions applicable to GSA. The Ethiopian Airlines shall pay GSA normal and Overriding Commission for Air transportation over the service of Ethiopian Airlines sold only in the allowed territory by the GSA or sub-agents on Ethiopian Airlines traffic documents/ticket stock - whether the service would be classified under Business Auxiliary service or Air Travel Agent Service? - Held that: - the matter has already been analysed, considered and decided by this very Bench in the case of M/s. Arafaath Travels Pvt Ltd. [2017 (8) TMI 554 - CESTAT CHENNAI], where it was held that Evidently, the commercial services provided by the appellant, inter alia, soliciting, promoting and selling passenger air transportation and cargo and mail transportation for Saudia is very much a Business Auxiliary Service, ordered by Saudi Arabian Airlines, Jeddah, to benefit all such service flowing to Saudias business - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (2) TMI 117
CENVAT Credit - Input services in relation to GTA - transportation of their final product from their premises to customers premises - scope of the restriction "upto to place of removal" - Rule 2(l)(ii) of the CC Rules, 2004 - validity of CBEC vide its Circular No. 97/8/2007-ST dated August 23, 2007 issued before the amendment for the issues post amendment - Held that:- In the first instance, it needs to be kept in mind that Board’s Circular dated August 23, 2007 was issued in clarification of the definition of ‘input service’ as existed on that date i.e. it related to unamended definition. - However, the important aspect of the matter is that Cenvat Credit is permissible in respect of ‘input service’ and the Circular relates to the unamended regime. Therefore, it cannot be applied after amendment in the definition of ‘input service’ which brought about a total change. Now, the definition of ‘place of removal’ and the conditions which are to be satisfied have to be in the context of ‘upto’ the place of removal. It is this amendment which has made the entire difference. That aspect is not dealt with in the said Board’s circular, nor it could be. Secondly, if such a circular is made applicable even in respect of post amendment cases, it would be violative of Rule 2(l) of Rules, 2004 and such a situation cannot be countenanced. The upshot of the aforesaid discussion would be to hold that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer’s premises was not admissible to the respondent. - Decided in favor of Revenue.
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2018 (2) TMI 75
Area Based Exemption - N/N. 15/2003-CE dated 10.06.2003 - appellant has filed declaration and claimed the benefits of the Notification on 29.03.2010, and claimed immediately thereafter, i.e., on 30.03.2010 that the commercial production has been started - Held that: - the evidences produced by the department do not establish the allegation that the appellant has failed to commence commercial production before 31.03.2010. The genuineness of the first consignment of 10 Multimedia Speakers manufactured prior to 31.03.2010 is established - appellant is entitled to the benefit of notification - appeal allowed.
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2018 (2) TMI 74
CENVAT credit - inputs/input services used in the manufacture of Silver - silver which is recovered during the course of the Pyro-metallurgical process by the appellant in which zinc concentrate, lead concentrate as well as bulk concentrate are charged - Department entertained a view that Silver is an exempted product, hence the Cenvat credit liable to be reversed - Rule 6 of the Credit Rules - Held that: - From the Imperial Smelting Furnace, Zinc bullion which floats at the top and the lead along with impurities such as copper/silver is removed from the bottom and taken to lead refinery, to obtain lead ingots. Silver emerges in the process of refining - the input to the Pyro-metallurgical process is zinc and lead concentrate. In the first part of the process, Zinc is recovered and in the second part, lead is recovered along with the by-product silver - the silver in the present case has indeed emerged in the process of manufacture of zinc by smelting. Accordingly, the appellant will be entitled to the benefit granted by Rule 6(6) (vi) of the CCR, 2004 - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 73
Additional Excise Duty (AED) - bleached cotton fabrics - appellant engaged in the manufacture of plastic coated fabrics - Held that: - on the same set of facts for a different period, identical issue was before the Tribunal in assessee s own case, Siddeshwar Textile Mills Pvt. Ltd. v. Commissioner of Central Excise, Pune III [2009 (4) TMI 752 - CESTAT, MUMBAI], where it was held that As the additional duty of excise leviable under Additional Duties of Excise (Goods of Special Importance) Act, 1957 was not covered under the said Notification, non payment of additional excise duty by the appellants is incorrect - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 72
Liability of duty - freight element incurred on inter-depot transfer of petroleum products for payment of duty - Rule 7 of Valuation Rules - Held that: - withdrawal of warehousing facility has brought new responsibility to the appellants as the place of removal for the excisable goods are to be determined at the time of clearance of goods from the factory. When the goods were not sold from the depot to which they were cleared by the appellants, it would necessarily follow that till the actual place of clearance, the element freight has to be added. Penalty - case of appellant is that the tax is paid immediately on intimation from Revenue - Held that: - even in such a situation it is open for the Revenue to examine the existence or otherwise of the elements for imposition of penalty. In the present case, the same has been done. Since the criteria for both, extended period of demand as well as imposition of penalty are one and the same and same demand has been confirmed for extended period, we find a different interpretation cannot be invoked for waiver of penalty. Appeal dismissed - decided against appellant.
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2018 (2) TMI 71
Benefit of N/N. 67/95-CE, dated 16.03.1995 - the appellant started using the molasses captively for further conversion into spirit under the claim of captive consumption - Held that: - the N/N. 67/95-CE nowhere lays down the condition of ownership for the goods used captively - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 70
Interest on irregularly availed CENVAT credit - irregular credit was reversed before utilization - whether appellant is liable to pay interest on the irregularly availed credit, which was reversed before utilization? - Held that: - pursuant to the amendment brought forth with effect from 1.4.2012, the credit availed and utilized was substituted with the words “credit availed or utilized” - the issue has been settled in the case of Commissioner of Central Excise, Madurai Vs. Strategic Engineering (P) Ltd. [2014 (11) TMI 89 - MADRAS HIGH COURT], where it was held that even prior to the amendment, the assessee cannot be liable to pay interest or penalties. The demand of interest and penalties imposed is unjustified - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 69
CENVAT credit - input services - house-keeping / cleaning services - Held that: - In the appellant’s own case M/s. Samsung India Electronics Pvt. Ltd. Versus Commissioner of Central Excise, Chennai-IV [2016 (11) TMI 1514 - CESTAT CHENNAI], the Tribunal had analysed the very same and had remanded the matter to consider the issue whether the appellant would fall within the purview of Shops and Establishments Act as contended by them - the matter requires to be remanded to the original authority who shall verify whether the appellants are within the purview of the said Act and dispose the issue - appeal allowed by way of remand.
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2018 (2) TMI 68
Refund claim - Classification of goods - Sodium Alginate - whether classified under Chapter 13 or Chapter 39? -The technical objection is that instead of filing protest the appellants should have filed an appeal against the upholding of classification under Chapter 39 and the letter should have been addressed to the Asst. Commissioner instead of Superintendent - Held that: - The said grounds are only hyper technical pleas which cannot be appreciated and adopted for grant of legitimate benefit of success of the classification dispute by the higher appellate forum. Admittedly, during the period, duty was being discharged by the assessees under Chapter 39 which has been held to be a wrong classification, subsequently on the litigation success between the assessee and the revenue and admittedly such payment of duties were under protest - denial of refund claims would be neither justified nor fair - appeal dismissed - decided against Revenue.
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2018 (2) TMI 67
Manufacture - fixing images in the Pre Sensitized Aluminum Litho Plates using CTP technique by adopting various processes - whether the process amounts to manufacture - time limitation - Held that: - the appeal of the Revenue can be disposed of on limitation aspect - Though the Revenue has contended in the memorandum of appeal that the Commissioner (Appeals) should not be considered the limitation aspect as the time bar plea raised for the first time before him. However, we find the above contention of the Revenue is factually incorrect in as much as the limitation plea was raised by the respondent before the original adjudicating authority. On merits also, there is no evidence raised by the Revenue as regards any suppression or mis-statement by the respondents, with an intention to evade payment of duty. If the department’s own senior officer of the level of Commissioner (Appeals) has held in favour of the assessee on the issue of manufacture, we cannot find any fault with the assessee for entertaining the same belief - In the absence of any evidence to the contrary that such duty has not been paid by them with malafide intention, we are of the view that the extended period of limitation cannot be invoked by the Revenue and the appellate authority has rightly extended the benefit to the assessee. Appeal dismissed - decided against Revenue.
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2018 (2) TMI 66
Extended period of limitation - Additional Duty of Excise (Surcharge) - manufacture of Black Tea and Tea Waste, which has been cleared by them to 100% EOU - Held that: - Admittedly, the issue involved is a complex nature of interpretation of law and the notification in question exempting the Basic Excise Duty as also the other two types of Additional Duties of Excise, the appellants could have inferred that all the types of Additional Duties of Excise are exempted in respect of the tea waste cleared by them. In absence of any evidence to reflect upon the appellant's malafide and appreciating the fact that the issue involved is purely a legal issue requiring interpretation of law, we accept the assessee's stand of bonafide - the demand raised beyond the limitation period is required to be set aside - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 65
Scope of SCN - Classification of goods - the very basis of the SCN that the finished products manufactured by the respondents are classifiable under Chapter 48 no longer exists - Held that: - the very basis of the SCN that the finished products manufactured by the respondents are classifiable under Chapter 48 no longer exists - appeal dismissed - decided against Revenue.
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2018 (2) TMI 64
Valuation - inclusion of amount shown in certain debit notes raised by the respondent after the supply of excisable goods - Held that: - there is no evidence of realization of amount towards debit notes. We find that the said reason cannot be validly held against levy of excise duty. Excise duty is on goods manufactured and cleared and is not upon realization of sale proceeds - Commissioner records that these debit notes were in fact fictitious in nature and were issued only to show higher turnover, for some other purposes. When the debit notes themselves were held to be fictitious, we find no valid excise duty can be charged on such documents. Appeal dismissed - decided against Revenue.
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Wealth tax
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2018 (2) TMI 63
Determination of net wealth - correctness of valuation adopted by the AO - Scope of remand by the ITAT to the WTO - Held that:- Remand by the ITAT to the WTO in this case was with respect to the question of valuation. At the stage when the WTO decided on the valuation, the final report of the DVO was not available. In the circumstances, the ITAT remanded the matter only on that aspect. In the circumstances, the findings rendered by the WTO could not have been interfered with by the CWT who entertained the issue of taxability which had been earlier given-up. Para 28 of the ITAT’s order clearly shows that the scope of remand was clearly in respect of valuation. In these given facts, the circumstance that for later years, the Revenue accepted the ITAT’s contentions regarding non-taxability of assets, per se cannot afford a ground for it to insist that the remand made by the ITAT ought to and was enlarged so as to include that ground in the previous order when as a matter of fact they did not agitate it. ITAT’s impugned order on the first question did not call for interference. The Court further notices that both the ITAT and the lower appellate authority, i.e. CWT did not address themselves to the issue of valuation which primarily was the subject matter of remand in the first instance. In the circumstances, the matter is remitted for fresh consideration
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