TMI Tax Updates - e-Newsletter
February 9, 2019

Case Laws in this Newsletter:

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

Articles

1. CHANGE IN PAYMET/ SET OFF RULES UNDER GST FROM 1ST FEBRUARY 2019: DOES IT RESULT IN BLOCKAGE OF WORKING CAPITAL?

   By: Vivek Jalan

News

1. New Return Filing System of GSTN

2. GST Revenue Collections

3. Benefits of Economic Growth

4. New Policy for Overseas Borrowings

5. Direct and Indirect Taxes

6. Banking Sector Reforms

7. GeM and CCI Sign MoU

Notifications

Customs

1. 04/2019 - dated 7-2-2019 - Cus

Seeks to further amend Notification No. 08/2016- customs dated the 5th February 2016 to allow temporary importation of aircrafts, for the purposes of participation in Aero Show organised by the Central Government, without furnishing a bank guarantee or cash deposit

GST - States

2. 30/2018-Sikkim Tax (Rate) - dated 31-12-2018 - Sikkim SGST

Inserts the Explanation in Notification No. 11/2017- State Tax (Rate), dated the 30th June, 2017

3. 29/2018- State Tax (Rate) - dated 31-12-2018 - Sikkim SGST

Amendment in Notification No. 13/2017- State Tax (Rate), dated the 30thJune, 2017

4. 28/2018- State Tax (Rate) - dated 31-12-2018 - Sikkim SGST

Amendment in Notification No. 12/2017- State Tax (Rate), dated the 30th June, 2017,

5. 27/2018-State Tax (Rate) - dated 31-12-2018 - Sikkim SGST

Amendment in Notification No. 11/2017- State Tax (Rate), dated the 30th June, 2017

6. 26/2018- State Tax (Rate) - dated 31-12-2018 - Sikkim SGST

Seeks to exempt State tax on supply of gold by nominated agencies to exporters of gold jewellery

7. 25 /2018-State Tax (Rate) - dated 31-12-2018 - Sikkim SGST

Amendment in Notification No. 2/2017-State Tax (Rate), dated the 30th June, 2017

SEZ

8. G.S.R. 95(E) - dated 31-1-2019 - SEZ

Special Economic Zones (Amendment) Rules, 2019

Circulars / Instructions / Orders

FEMA

1. 18 - dated 7-2-2019

External Commercial Borrowings (ECB) Policy – ECB facility for Resolution Applicants under Corporate Insolvency Resolution Process

Customs

2. PUBLIC NOTICE N0. 1/2019 - dated 31-1-2019

Union Budget 2019-20- Filing of Bills of Entry

3. PUBLIC NOTICE N0. 2/2019 - dated 30-1-2019

Budget 2019-20 - Filing of Bills of Entry and Shipping Bills in ICES

4. STANDING ORDER No.01/2019 - dated 16-1-2019

Non-compliance of CBEC Cricular w.r.t weightment of Exim containers at ICD, Amingaon

5. PUBLIC NOTICE NO. 01/2019 - dated 15-1-2019

CHAIRMAN'S WEEKLY LETTER

6. FACILITY No. 01/2019 - dated 7-1-2019

Car Pass System- inclusion of new Land Customs Stations (LCSs)

7. TRADE NOTICE: 01/2019/CCP/JMR - dated 2-1-2019

Option to apply for Goods Registration online on ICEGATE M/

8. TRADE NOTICE: 02/2019/CCP/JMR - dated 2-1-2019

IGST revised Refund processing : m/r

9. TRADE NOTICE: 03/2019/CCP/JMR - dated 2-1-2019

Extension of date for the alternate mechanism to handle certain errors through officer interface : m/r

10. PUBLIC NOTICE NO. 46/2018-Customs - dated 18-12-2018

Amendment of Vessel Name and Rotation Number in Shipping Bill

11. TRADE NOTICE: 05/2018 - dated 4-12-2018

GST - Shifting of location of Mettupalayam Range Office to Karamadai

Highlights / Catch Notes

GST

• Analysis of GST Revenue Collections for Fiscal Year 2018-2019 Reveals Significant Trends and Adjustments in Revenue Expectations.

  News : GST Revenue Collections and revised estimate for the Year 2018-2019
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• Court Dismisses Challenge to GST Act Entry 5(b) on Land Valuation for Construction as Premature.

  Case-Laws - HC : Levy of tax on construction activities - value of the land at one-third of the total amount charged - Constitutional validity of entry 5(b) of Schedule II to the GST Act, 2017 - Petition dismissed as premature.
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• Revenue Authorities Ordered to Unseal Business Premises Over Authorization Concerns; Access Was Not Denied by Petitioner.

  Case-Laws - HC : Jurisdiction - power of respondent to seal the business premises - proper authorization - access to the business premises was not denied by the petitioner - Revenue directed to unseal the premises in question
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Income Tax

• Taxpayer's Income Understated Due to Undisclosed Permanent Establishment in India, Notice u/s 148 Justified.

  Case-Laws - AT : Reopening of assessment - the fact that assessee had a PE in India and that there was an understatement of income to the extent of sale receipts received by assessee from Indian customers towards sale of spare parts/equipments, issuance of notice under section 148 brings case of assessee within fold of Explanation 2 (b) to Section 147
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• TP Adjustments Must Be Separate for Enhanced Deductions u/s 10A, Cannot Be Combined with Other Additions.

  Case-Laws - AT : TP adjustment - Enhanced deduction u/s.10A - as per Section 92C(4) of the Act, TP addition has to be separately done, whatever may be the addition in respect of other aspects but that cannot be brought together with TP adjustment or addition - it does not qualify for enhanced deduction u/s.10A.
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• Hindu Undivided Family not liable for capital gains tax on property registered under minor children of Karta.

  Case-Laws - AT : Assessment of capital gain for HUF - purchase of family property - whether the property belongs to Hindu Undivided Family even though the document was registered in the names of minor children of Karta - Property belongs to the HUF and the assessee cannot be liable to tax on LTCG
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• Court Overturns Disallowance of Directors' Salaries; Business Necessity Not Considered u/s 40A(2) for Financial Operations.

  Case-Laws - AT : Disallowance of salary paid to directors u/s 40A(2) - Neither of the lower authorities has taken into account assessee’s business requirement of availing its directors’ services for effective management of its business operations in non-banking financial activities - additions deleted.
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• Tax Authority Disallows Claim Due to Lack of Required Documentation; Ad-Hoc Basis Decision Explained.

  Case-Laws - AT : Disallowance on an ad-hoc basis - in the absence of necessary documentary evidence the AO had no alternative except to make the disallowance on an ad-hoc basis.
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• Penalty u/s 271(1)(c) Not Applicable for Stock Valuation Method Differences Alone.

  Case-Laws - AT : Penalty u/s 271(1)(c) - Discrepancy or deficiency in the closing stock of the assessee - the mere addition on account of valuation of closing stock by adopting a different method will not attract the penalty U/s 271(1)(c)
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• Rental Income from Family Entertainment Center Taxed as Business Profit, Not Passive Property Income, Under Tax Law.

  Case-Laws - AT : Correct Head of income - rental income from Operating Family Entertainment Center cum Mall and Maintenance Charges - Income from House Property or Profit and Gains from Business or Profession - taxable as PGBP
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• Penalty Confirmed for Violating Section 271D: Cash Loan Over Rs. 20,000 Accepted Without Justification Under Income Tax Act.

  Case-Laws - AT : Penalty levied u/s. 271D r.w.s. 273B - reasonable cause for the assessee to accept loan over ₹ 20,000/- in cash - levy of penalty confirmed.
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• Assessment Order Void Due to Invalid Special Audit u/s 142(2A) of Income Tax Act; Limitation Period Key Factor.

  Case-Laws - AT : Validity of assessment - Special audit u/s 142(2A) - period of limitation - Since the foundation is removed, the super structure i.e. the assessment order must fall.
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• Assessee Granted 25% Depreciation Benefit on Intangible Asset "Right to Collect Toll.

  Case-Laws - AT : Depreciation on the asset ‘Right to Collect Toll’ - he benefit of depreciation @25% on the intangible asset designated by the assessee as “Right to Collect Toll” allowed.
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Customs

• New Measures in Union Budget 2019-20 to Simplify Customs Process for Faster, Efficient Trade Operations

  Circulars : Union Budget 2019-20- Filing of Bills of Entry
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• Court Halts Recovery and Encashment of Bank Guarantee for Import of HDPE with Carbon Black Additive.

  Case-Laws - AT : Stay on recovery - Encashment of Bank Guarantee - Import of High Density Polyethylene (HDPE) - addition of carbon black - stay granted.
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SEZ

• Amended SEZ Rules 2019 Simplify Setup, Boost Compliance, and Offer New Incentives to Attract Investment and Economic Growth

  Notifications : Special Economic Zones (Amendment) Rules, 2019
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FEMA

• Resolution Applicants Can Access External Commercial Borrowings Under ECB Policy for Corporate Insolvency Resolution Process.

  Circulars : External Commercial Borrowings (ECB) Policy – ECB facility for Resolution Applicants under Corporate Insolvency Resolution Process
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Indian Laws

• India Enhances Tax System to Boost Revenue Efficiency and Compliance for Direct and Indirect Taxes

  News : Collection of revenue from Direct and Indirect Taxes
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• Company Secretary role requires 5 years experience; Management Trainee position doesn't qualify.

  Case-Laws - SC : Appointment to the post of Company Secretary in Respondent company - requirement of requisite five years’ experience for the post of Company Secretary - Her appointment as Management Trainee cannot be equated and/or considered as appointment ‘as’ a Company Secretary.
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• Arbitrators Prohibited from Awarding Interest Under Clauses 50 and 51 of Contract's General Conditions.

  Case-Laws - SC : Whether the Arbitrators could award any interest in view of Clauses 50 and 51 of the General Conditions of Contract (GCC) which governed the terms between the parties? - Held NO
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Central Excise

• CENVAT Credit Rules: Education Cess Excluded Under Subsection (5); Secondary and Higher Education Cess Also Excluded.

  Case-Laws - AT : CENVAT Credit - only education cess paid under sub-section (5) is outside the purview of Cenvat Credit Rules and Secondary & Higher Education cess and are not attached to additional duty referred in sub-section (5) of Section 3 of the Customs Tariff Act.
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• ISD Can Only Allocate CENVAT Credit to Own Unit, Not to Job Worker; Job Workers Can't Claim Credit from ISD Invoices.

  Case-Laws - AT : CENVAT Credit - input service distributor (IDS) - an ISD is authorized to distribute the Cenvat credit of service tax only to its own unit and not to the job worker - a job worker is not entitled to avail the credit on the basis of input invoices issued by the principal manufacturer as ISD
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Case Laws:

• GST

• 2019 (2) TMI 391
  Constitutional vires of Section 174 of the Kerala State Goods and Services Tax Act - Held that:- Learned Government Pleader fairly submits that the authorities will defer all actions under the Ext.P5 until the petitioner receives a copy of the judgment in [ 2019 (2) TMI 300 - KERALA HIGH COURT] - Petition disposed off.

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• 2019 (2) TMI 390
  Jurisdiction - power of respondent to seal the business premises - access to the business premises was not denied by the petitioner - software stopped functioning all of a sudden along with internet connection abruptly - seeking co-operation from the assessee for inspection/search of the computer system and other records available in the premises - Held that:- Section 67[4] of the Act contemplates that the officer authorized under Sub-section [2] shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. This Court is of the considered view that the justice would be sub-served in directing the Revenue to unseal the premises in question on 05.02.2019 at 11.00 a.m., which is convenient to the petitioner and the petitioner shall co-operate for inspection/search of the premises in question, including the computer system - the date is fixed on 11.02.2019 at 11.00 a.m., to unseal the premises in question - petition allowed.

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• 2019 (2) TMI 389
  Jurisdiction - power of respondent to seal the business premises - access to the business premises was not denied by the petitioner - software stopped functioning all of a sudden along with internet connection abruptly - seeking co-operation from the assessee for inspection/search of the computer system and other records available in the premises - Held that:- Section 67[4] of the Act contemplates that the officer authorized under Sub-section [2] shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. This Court is of the considered view that the justice would be sub-served in directing the Revenue to unseal the premises in question on 04.02.2019 at 11.00 a.m., which is convenient to the petitioner and the petitioner shall co-operate for inspection/search of the premises in question, including the computer system - the date is fixed on 08.02.2019 at 11.00 a.m., to unseal the premises in question - petition allowed.

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• 2019 (2) TMI 388
  Levy of tax on construction activities - Value of the land at one-third of the total amount charged - Constitutional validity of entry 5(b) of Schedule II to the GST Act, 2017 - legislative competence - Article 246A and 265 of the Constitution - Held that:- passing of a legislation by itself does not confer any such right to file the writ petition unless a cause of action arises therefor Enacting a legislation or issuing Notification/Circular could not confer a right to challenge unless the litigant is affected by the action initiated by the executive in furtherance of such legislation/administrative Circular/Notification more particularly, in taxing statutes. Cause of action is sine qua non for challenging such legislation/ Notification/Circular. The writ Court cannot adjudicate upon such matters in vacuum - The petitioner involved in construction activity or works contract would not be suffice to examine the constitutional vires of the Act and the related Notification/Circular unless the cause of action emerges. This Court is of the considered view that the writ petitions at this stage are premature and deserve to be dismissed as not maintainable - petition dismissed.

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• Income Tax

• 2019 (2) TMI 374
  Unaccounted investment in property - addition for undervaluation of the property in the hands of the purchaser - assessment on the basis of market valuation by Registration Authority - Held that:- It is not a denying fact that Section 50C is applicable in the case of the seller of the property to take into consideration the valuation of the property as per the value adopted by the Registration Authority. However, there is no provision under the Income Tax Act to deal with such situation in respect of the purchase of the property. Section 56(2)(x) was inserted into the Act with effect from 1st April 2017 to deal with such situation. However, it is well settled Law that substantive provisions could not be applied retrospectively. There is no other material brought on record to justify the conclusion that assessee-company made unaccounted investment in purchase of the property. No evidence on record to justify unaccounted payment for purchase of the property, the CIT(A) was justified in deleting the additions. A.O. did not gather any evidence to establish that payments were made by the assessee-company outside the books of account. - Decided against revenue.

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• 2019 (2) TMI 373
  Eligible for deduction u/s 80IB (11A) - disallowance made u/s 40A(3), 43B of the Act relating to the business activity would be eligible for deduction under Chapter-VIA as per the CBDT Circular No. 37/2016 dated 02.11.2016 - Held that:- We hold that the assessee is eligible for deduction on the enhanced income on account of the addition of certain items as discussed above. Therefore we reverse the order of authorities below and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed.

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• 2019 (2) TMI 372
  Penalty u/s 271(1)(c) - addition on account of deemed dividend u/s 2(22)(e) - Held that:- DR justified the stand of Ld. AO in imposing the penalty, yet the fact that the quantum addition has been deleted by the Tribunal, remain un-controverted. Nothing has been brought on record to suggest that the aforesaid ruling has ever been over-ruled by any competent judicial authority. This being the case, no interference is called for in the impugned order. - Decided against revenue.

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• 2019 (2) TMI 371
  Penalty u/s 271(1)(C) - addition u/s 68 - high share premium - Held that:- When immediate source of the money was explained, the initial onus casted upon assessee got discharged and nothing more could be asked from him The details of the ongoing projects have been placed on record. Under these circumstances, the revenue, in our opinion, by questioning the wisdom / prudence of the investor could not proceed to make addition in the hands of the assessee by invoking the provisions of Section 68 without bringing on record credible contrary evidences. The additions could not be made merely on the basis of suspicion. Nothing on record indicate that any cash got exchanged between the assessee and the investor to suggest that the unaccounted money belonging to the assessee was routed in the accounts as Share Application Money. For the sake of completeness, we find that even the newly inserted provisions of Section 56(2)(viib) could not be applied to the facts of the case since these provisions have been inserted by Finance Act 2012 with effect from 01/04/2013 only and further the same has also not been invoked by the revenue - the impugned addition u/s 68 in the hands of the assessee was not justified and therefore, by deleting the same, we allow this ground of appeal. Since we have deleted quantum additions penalty against the same do not survive. - Decided in favour of assessee

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• 2019 (2) TMI 370
  Denial of deduction u/s 10AA - activities being carried out by the assessee, in the opinion of AO did not involve any export outside India - Held that:- The assessee undertook to provide services of varied nature as specified therein. Against the same, it was entitled to receive certain monthly management fees in US Dollars. The invoices raised by the assessee during impugned AY has been placed on record, upon perusal of which, it appears that the nature of services being rendered by the assessee were not warehousing services simpliciter rather the assessee was providing comprehensive services in the nature of repair/maintenance services and incurred cost under various heads. Both the lower authorities, in our opinion, have missed out this vital factual aspect and examined the assessee’s claim by treating these services as warehousing services. Therefore, after due consideration of facts and circumstances, the bench formed an opinion that, keeping all issues open, the matter was to be restored back to the file of AO to re-appreciate the factual matrix and re-adjudicate the issues after ascertaining the true nature of services being rendered by the assessee.

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• 2019 (2) TMI 369
  Disallowance of Interest Expenses - Interest accrued but not due - Held that:- Contention of the Assessee that the aforesaid amount of interest was not claimed as expenditure, or deduction is borne out from records, which could not be contradicted by the Ld. DR. After perusal of the submissions made from the Assessee’s side during assessment proceedings and after perusal of the reconciliation of Interest Expenses and also reconciliation of disallowance made by AO we are of the view that the addition made by the AO on account of disallowance of Interest Expenses was unjustified, unwarranted and illegal. AO has failed to establish a legal basis, in the facts and circumstances of the case, for the addition on account of disallowance of Interest Expenses, when the Assessee has not even claimed this amount as expenditure or deduction. - Decided in favour of assessee

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• 2019 (2) TMI 368
  Depreciation on the asset ‘Right to Collect Toll’ - Held that:- CIT(A) allowed the benefit of depreciation @25% on the intangible asset designated by the assessee as “Right to Collect Toll” by relying on certain Tribunal orders passed in the case of assessee’s sister concern. It is further observed that similar view has been taken by the Special Bench of the Tribunal in ACIT Vs. Progressive Construction Limited [2017 (3) TMI 1167 - ITAT HYDERABAD]. DR, except for relying on the order of the AO, could not place any material on record to demonstrate that the order passed by the Tribunal in the case of the assessee’s sister concern has been reversed or modified by the Hon’ble Bombay High Court in any manner. Respectfully following the precedent, we uphold the impugned orders. In the result, both the appeals are dismissed.

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• 2019 (2) TMI 367
  Disallowance of bad debt claimed - Held that:- There is no dispute with regard to the fact that the assessee has written off the debt and it is also not in dispute that proceedings against the NSEL is pending before the courts. Therefore, following the ratio laid down by the Hon'ble Supreme Court in the case of M/s. TRF Limited Vs. CIT (2010 (2) TMI 211 - SUPREME COURT), we direct the A.O. to allow the claim of bad debt. - Decided in favour of assessee Disallowing the deduction u/s 80C in respect of PPF contribution - Held that:- No argument is made by the Ld. Counsel for the assessee and he has not pointed out as what was the claim before the authorities below, therefore, in the absence of the same, this ground of the assessee’s appeal is rejected.

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• 2019 (2) TMI 366
  Validity of assessment - Special audit u/s 142(2A) - period of limitation - whether the assessment order framed u/s 143(3) is passed within the period of limitation period prescribed under the Act or not? - Held that:- In our considered opinion, for coming to such a conclusion, we can examine whether the order passed u/s 142(2A) of the Act is in accordance with law or not. It is true that the order passed u/s 142(2A) of the Act is not appealable but when an assessment order is challenged, then the different aspects, which are integral to the process and ultimate completion of the amount can be challenged in appeal and since the ground before us is challenged for assessment being barred by limitation, we are well within our rights to consider all material aspects which were considered while framing the assessment order u/s 143(3) of the Act. No hesitation to hold that the assessment order dated 25.06.2012 for the year under consideration is barred by limitation. Since the foundation is removed, the super structure i.e. the assessment order must fall.

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• 2019 (2) TMI 365
  Penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- Notice issued by the AO under Section 274 read with Section 271(l)(c) to be bad in law as it did not specify which limb of Section 271(l)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON AND GINNING FACTORY (2013 (7) TMI 620 - KARNATAKA HIGH COURT) - Decided in favour of assessee.

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• 2019 (2) TMI 364
  Disallowing of claim u/s 11(1) and 11(1)(a) - charitable activity - Held that:- Considering the fact that the assessee was a statutory body, an Authority constituted under the provisions of the Act, to carry out the object and purpose of Town Planning Act and collected regulatory fees for the object of the Acts, no services were rendered to any particular trade, commerce or business; and whatever income was earned by the assessee even while selling the plots (to the extent of 15% of the total area covered under the Town Planning Scheme) was required to be used only for the purpose to carry out the object and purpose of the Town Planning Act and to meet the expenditure of providing general utility service to the public such as electricity, road, drainage, water etc. and the entire control was with the State government and accounts were also subjected to audit and there was no element of profiteering at all. The activities of the assessee could not be said to be in the nature of trade, commerce and business and therefore, the proviso to Section 2(15) of the Act was not applicable so far as the assessee was concerned. Therefore, the assessee was entitled to exemption under section 11 - decided in favour of assessee

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• 2019 (2) TMI 363
  Unexplained cash deposits as against Sale proceeds - income from undisclosed sources u/s.69 - Held that:- Only if the assessee was prevented by sufficient cause in making available necessary evidence to the Assessing Officer or the assessment was improperly framed by the Assessing Officer by either not allowing adequate opportunity to the assessee or by not considering the relevant material, then the matter can be restored for a fresh decision. Thus it has to be decided by the appellate authorities in each and every case distinctly as to whether the addition made for non-compliance on the part of the assessee at the assessment stage be sustained or the assessee be allowed a fresh opportunity to make up the deficiency in the second round. However in the interests of natural justice, the undersigned had provided a second opportunity to the appellant to lead evidence in the matter. However he has miserably failed to establish the genuineness of his claim that he had made cash sales in the year under reference - Decided against assessee. Disallowance of commodity loss as speculative loss - Held that:- As decided in M/S VARSHA CORPORATION LTD. VERSUS DCIT (OSD) -9 (1) , MUMBAI [2015 (6) TMI 124 - ITAT MUMBAI] for the assessment year 2009-10 wherein the Co-ordinate Bench of the Tribunal has held that the loss to be speculative in nature and not business loss. Purchases of scrap as bogus purchases - Held that:- If the purchases were bogus then how the assessee had made corresponding sales which have not been disturbed by the AO and therefore stood accepted. However the fact remains that the appellant has not furnished the copies of invoices and complete names/addresses of the suppliers and corroborative evidence for transportation of the material. Accordingly to plug possible leakage of revenue and meet ends of justice, a token disallowance of Rs. 2,50,000/- is sustained. Accordingly direct the AO to restrict the addition to Rs. 2,50,000/- on this account instead of Rs. 40,61,348/- made by him. This ground of appeal is partly allowed.

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• 2019 (2) TMI 362
  Denial of exemption u/s 54/54F - Held that:- CIT(A) erred in confirming the order of the A.O. in taxing long term capital gains. On this issue, we note that the A.O. while considering the alternate claim of the assessee u/s. 54F has quoted in the case of Goetze (India) Ltd. v. CIT [2006 (3) TMI 75 - SUPREME COURT] for the proposition that in absence of revised return, the assessee cannot make a fresh claim. This has been upheld by the CIT(A). Another reason given for the denial of exemption u/s. 54F is that the assessee owns more than one residential house other than the new asset as found in the balance sheet. Denial of exemption on the touch stone of the Hon’ble Apex Court decision in the case of Goetze (India) Ltd. (supra) is not sustainable, as the Hon’ble Apex Court in the said case has held that the said decision would not impinge upon the Income Tax Appellate Tribunal’s jurisdiction to admit additional/fresh claims/grounds. Accordingly, we direct that this claim of the assessee should be considered. We note that while canvassing this appeal, the assessee has filed the additional evidences to counter the A.O.’s finding that the assessee is owned more than one flat. These additional evidences were not submitted before the authorities below. As a matter of fact, it is the plea of the assessee that no opportunity in this regard was granted by the A.O. Upon careful consideration, in the interest of justice, we remit this ground as well as additional evidences to the file of the A.O. to consider the claim of the assessee u/s. 54F. Needless to add, the assessee should be granted adequate opportunity of being heard.

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• 2019 (2) TMI 361
  Penalty levied u/s. 271D r.w.s. 273B - reasonable cause for the assessee to accept loan over Rs. 20,000/- in cash - Held that:- We agree with the finding of the ld. CIT(A) that there was no reasonable cause for the assessee to accept loan over Rs. 20,000/- in cash in clear contravention of section 269SS. Except for stating that there was business exigency and the loan taken was for business purpose, no cogent evidence has been produced. CIT(A) has given a finding that there was no business transaction between the lender and the assessee. Hence, receiving the cash advance purportedly for business purpose is not proved. Accordingly, we do not find any infirmity in the order of the ld. CIT(A), hence, we uphold the same. - Decided against assessee.

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• 2019 (2) TMI 360
  Correct Head of income - rental income from Operating Family Entertainment Center cum Mall and Maintenance Charges - Income from House Property or Profit and Gains from Business or Profession - Held that:- As decided in assessee's own case [2017 (7) TMI 779 - BOMBAY HIGH COURT] the intention of the Assessing Companies was to commercially exploit the property by way of complex commercial activities and it was not a case of letting out the property simplicitor. The rental income and the service charges thus were received by the Assessee Company as business income during the course of business carried out by them of operating and running a Mall as a commercial activity. - Decided against revenue

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• 2019 (2) TMI 359
  Penalty u/s 271(1)(c) - Discrepancy or deficiency in the closing stock of the assessee - benefit of the higher valuation of closing stock by revising its opening stock of the subsequent year - Held that:- We find that in Form No. 3CD the assessee in column No. 14(a) has specified the method of valuation of closing stock employed during the year “gem stones at cost and foodgrains at market price”. Since, closing stock of foodgrains were valued at market price, therefore, there was no question of adopting the FIFO method for the purpose of valuation. Further, the AO has not pointed out any inconsistency in the method adopted by the assessee in comparison to the earlier years and in the subsequent years. Thus, once the assessee has been consistently valuing its closing stock of foodgrains (Dal) at market price then, effect it will be Revenue neutral as the closing stock of preceding year is taken as opening stock of the subsequent year. Apart from applying a different method the AO did not find any other discrepancy or deficiency in the closing stock of the assessee. The assessee before us has also not taken the benefit of the higher valuation of closing stock by revising its opening stock of the subsequent year, therefore, the addition made by the AO in the year under consideration will not ipso facto amount to furnishing of inaccurate of income or concealment of particulars of income. Even otherwise when it is a regular and consistent method applied by the assessee and not a case of any change of method for valuation of closing stock during the year under consideration then, the mere addition on account of valuation of closing stock by adopting a different method will not attract the penalty U/s 271(1)(c) of the Act. - Decided in favour of assessee.

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• 2019 (2) TMI 358
  Reopening of assessment - bogus purchases - Held that:- It is the profit embedded in these purchases which is required to be brought to tax wherein the assessee had obtained bogus bills from these parties to avoid paying taxes and to inflate costs , while the material/goods were actually purchased from grey market at lower costs and also without paying taxes while the sales were made by the assessee which is recorded in books of accounts and reconciliation statement also reveals that purchases of these materials were supported by sales. The estimation of embedded profits in these purchases has to be an fair & honest estimation as stipulated by Hon’ble Supreme Court in the case of Kachwala Gems v. JCIT (2006 (12) TMI 83 - SUPREME COURT). We are of the considered view that if 12.5% of these alleged bogus purchases are brought to tax as an income embedded in these purchases in addition to and over & above income declared by the assessee will meet end of justice and will be an fair and honest estimation of income. Disallowance of 20% of the aggregate expenditure after adjusting for disallowance towards bogus purchases - Held that:- We have also considered the nature of these expenses and we are of the considered view that out of these expenses of Rs. 1,33,253/- disallowed by the authorities below , an amount of Rs. 4,001/- incurred towards Donations could not be allowed in the absence of supporting bills/details and its connection with business of the assessee or in the absence of requisite confirmatory details to be eligible for allowability as deduction u/s 80G or other relevant provisions of the 1961 Act. In the absence of supporting invoice/details , the disallowance of expense of donation of Rs. 4,001/- stood confirmed. Rent expenses allowability - Held that:- The assessee has only submitted self supporting vouchers with respect to payment of rent in cash without any details as to the premises on which rent its paid and its user for business purposes and under these circumstances, we disallow the claim of the assessee and confirm additions to the tune of Rs. 54,000/- claimed to be incurred by the assessee for alleged rent of which no details are filed even before us. This is the third stage of litigation before us after framing of assessment by the AO and first appeal adjudicated by learned CIT(A) wherein at both the stages claim of the assessee was rejected by authorities below. Before us also there is no evidence filed towards rent expenses paid by the assessee. Allowability of expenses on account of Printing and Stationary, Tea and Refreshment, Mobile charges, Labour charges, Travelling charges and Sundry Expenses - Held that:- Keeping in view nature of these expenses and also noting that these expenses represents miniscule amount vis-a-vis total expenses incurred by the assessee , we found no reason and justification for doubting the contentions of the assessee as the assessee in any case submitted supporting self made vouchers prepared by the assessee. Thus we accept contention of the assessee keeping in view factual matrix of the case and keeping in view smallness of the amount involved and our decision shall not have precedential value for adjudicating appeals in the case of other assessee’s. Thus , these expenses of Rs. 75,253/- stood allowed.

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• 2019 (2) TMI 357
  Disallowance on account of the gift given to the doctors and medical practitioners - Allowable business expenditure u/s 37 - Held that:- Assessee has not produced any evidence to prove that there was no benefit extended to the doctors/medical practitioners out of the purchases of laptops, wrist watches, mobile phones, cameras, etc. In the absence of any documentary evidence, we are not inclined to disturb the finding of the lower authorities. Also the assessee duly admitted the disallowance of Rs. 5 lacs made by the AO on an ad-hoc basis during the assessment proceedings. The AO made the addition by observing that the assessee failed to furnish the details of the actual recipient of these gift articles. The assessee has also incurred traveling expenses which were claimed by the assessee for the traveling of the medical representatives. But the assessee failed to file the requisite documents evidencing that there was no benefit extended to the doctors /medical practitioners out of such traveling expenses. Therefore the addition was made by the AO on an ad-hoc basis. In this regard, we also note that assessee has also not produced any evidence before us to prove that the doctors were not the actual recipient of these gift articles. Thus in the absence of necessary documentary evidence the AO had no alternative except to make the disallowance on an ad-hoc basis. - Decided against assessee.

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• 2019 (2) TMI 356
  Penalty levied u/s 271(1)(c) - addition to capital gain invoking section 50C - difference between market value of the property as per the valuation for stamp duty and the sale consideration - Held that:- The assessee had sold property and derived income from capital gain. As there was a difference between market value of the property as per the valuation for stamp duty and the sale consideration, section 50C was attracted and consequently there was additional capital gain tax of Rs. 1,01,191/- was levied. We find that the assessee has sold the property i.e. land situated in Village Gourangapur, P.S. Bhadreshwar on 06.04.2010 for Rs. 9,00,000/-. The market value as per ADSR for the above property was Rs. 17,81,815/-. AO records that the required report from the valuation cell is not received and that, as the assessment is getting barred by limitation, the assessment is completed. The valuation as per ADSR as obtained by the Valuation Authority, Chandannagar, Hooghly was not referred to the valuation cell. Under these circumstances, we are of the considered opinion that no penalty can be levied u/s 271(1)(c). The assessee has furnished a reasonable explanation. AO has not based the addition after obtaining valuation report from the valuation officer as required by law. In the result, the penalty levied u/s 271(1)(c) of the Act is cancelled. - Decided in favour of assessee.

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• 2019 (2) TMI 355
  Claim of exemption made u/s 10(38) - bogus Long Term Capital Gains on purchase and sale of the shares - Held that:- The assessee has filed all necessary evidences in support of the transactions. Some of these evidences are (a) evidence of purchase of shares, (b) evidence of payment for purchase of shares made by way of account payee cheque, copy of bank statements, (c) copy of balance sheet disclosing investments, (d) copy of demat statement reflecting purchase, (e) copy of broker ledger account, (f) evidence of sale of shares through the stock exchange, (g) copy of demat statement after the sale of shares, (h) copy of bank statement reflecting sale proceeds receipts, (i) copy of brokers ledger, (j) copy of Contract Notes etc. Addition u/s 68 of the Act, on account of Long Term Capital Gains - Decided in favour of assessee.

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• 2019 (2) TMI 354
  Levy of penalty u/s. 271(1)(c) - Held that:- As noted by CIT(A) that assessee has not filed any appeal against the addition made and accordingly accepted the quantum addition made by the AO. Ld. CIT(A) after referring to various judgments including the judgment of Hon'ble Apex Court rendered in the case of Mak Data Vs. CIT [2013 (11) TMI 14 - SUPREME COURT] , upheld the penalty order. He has given a categorical finding on page No. 13 of his order that assessee has failed to prove the genuineness and bonafides of the transactions in dispute. In the light of the facts of the present case, I find no reason to interfere with the order of CIT(A). - decided against assessee.

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• 2019 (2) TMI 353
  Disallowance of deduction u/s.54B - Admission of additional evidence - Held that:- Additional evidences have been placed which needs to be verified by the Revenue Authorities. Furthermore, in the totality of facts and circumstances, the matter demands detailed factual verification and enquiry regarding the nature of land and whether it was being used for agricultural purpose throughout, most particularly with regard to specified conditions laid down u/s.54B of the Act. The twin conditions of the Section 54B which requires to be examined are: i) That the land which was sold was used for agricultural purpose in the two years immediately preceding the date on which the sale took place. ii) That the assessee has, within a period of two years after that date i.e. when the sale was completed, purchased any other land for agricultural purpose. We set aside the order of the Ld. CIT(Appeals) and remand the matter back to the file of the Assessing Officer to comply with our directions as herein above stated and thereafter, shall adjudicate the matter after providing reasonable opportunity of hearing to the assessee - Appeal of the assessee is allowed for statistical purposes.

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• 2019 (2) TMI 352
  Penalty u/s.271(1)(c) - survey action u/s.133A - additional income offered during survey action was incorporated in the books of account and filed the return of income within the due date specified under the Act - Held that:- We find, the assessee in the present case, filed the return of income u/s.139(1) offering the additional income disclosed during the survey action u/s.133A of the Act and the AO accepted the same u/s.143(3). AO did not make any addition. Under such circumstances, it is amply clear that there is no concealment of furnishing of inaccurate particulars which warrants imposition of penalty. We, therefore, concur with the arguments of ld. AR on this very issue. Further, we perused the decisions relied on by the ld. AR. Case of CIT Vs. SAS Pharmaceuticals [2011 (4) TMI 888 - DELHI HIGH COURT] to be followed. - Decided in favour of assessee.

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• 2019 (2) TMI 351
  TP adjustment for payment of commission to Associate Enterprises (AEs) - TPO has not accepted the international transaction of the assessee to be at arm’s length - Held that:- The facts on record shows that there is a commission agreement dated 01.12.2007 between the assessee and TTPL. That on examining the clauses contained therein and after giving considerable thought on those clauses, it is crystal clear that TTPL was facilitating the purchases in respect of the assessee from Dassault UK. It was the responsibility of TTPL to undertake marketing efforts through telemarketing and inbound inquiries through its dedicated support. TTPL also worked towards maintenance of relationship with the key global customers of the assessee. The agreement also specifies that the said service through TTPL was at arm’s length commission @6%. Before us, it is demonstrated by the Ld. AR through a series of emails exchanges between the assessee, TTPL and Dassault UK. This evidence demonstrates that purchases of software licenses were done by the assessee from Dassault UK and TTPL was facilitating the entire process and ensuring the smooth selling of the transaction. These are sufficient evidence to demonstrate the services rendered by the TTPL for which commission payment was made to the AE. Taking the practicability of the business in to consideration, these are the tangible evidence that can be placed on record which the assessee has done in order to justify the commission payment. There is copy of commission agreement. There is also no objection letter and series of emails exchanged involving all the concerned parties. We are of considered view that arm’s length commission @6% to TTPL is justified and we direct the TPO to determine the arm’s length commission of the international transaction accordingly. Thus, grounds of appeal No. 1 to 5 and 8 raised by the assessee are allowed. Disallowance u/s.14A r.w. Rule 8D - Held that:- With regard to the interest income part as contemplated under Rule 8D(ii) and with regard to the investment which yielded exempt income which are to be considered while calculating disallowance under Rule 8D(2)(iii). These aspects have to be verified in detailed. Therefore, we are of considered view that this issue is restored back to the file of Assessing Officer for verification and re-adjudication of the same after providing reasonable opportunity of hearing to the assessee. Accordingly, ground No.11 raised in appeal by the assessee is allowed for statistical purposes. Provision for written back for Mediclaim Insurance Scheme (Medicare) for employees not to be considered as taxable income - Held that:- Assessing Officer has already disallowed such provision for those years, then in the present year when the assessee has specifically offered this to tax in return of income, the same should not be taxed again by the Assessing Officer. Therefore, this issue needs to be verified. Accordingly, this matter is restored back to the file of Assessing Officer for verification and re-adjudication after following the principles of natural justice. The Assessing Officer shall grant reasonable opportunity of hearing to the assessee. Enhanced deduction u/s.10A - Held that:- We are inclined to go with the view of the DRP on this issue. We observe that within the parameter of Income Tax Act, 1961, as per Section 92C(4) of the Act, TP addition has to be separately done, whatever may be the addition in respect of other aspects but that cannot be brought together with TP adjustment or addition. Therefore, it does not qualify for enhanced deduction u/s.10A of the Act - decided against assessee.

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• 2019 (2) TMI 350
  Reopening of assessment - applicability of provisions of sec.153C - Held that:- On the disputed issue of assessment u/s 143(3) r.w.s. 147, though the assessee’s premises was not searched u/s 132, the fact remains that the assessee is only a third party and the details which are unearthed in the case of a searched person or belonging to assessee are prima facie cannot be disbelieved. The assessee has filed revised grounds of cross objection challenging the validity of issue of notice u/s 143(2) of the Act. At the time of hearing, the learned AR submitted that for the assessment year 2011-12, the assessment was completed u/s 143(3) of the Act without issuing notice u/s 143(2). On perusal of the assessment order, we found that notice u/s 143(2) was issued on 20/01/2014. When we called for assessment records of the AO, the said information could not be explained and also there is no finding of the CIT(A) on this legal issue which was raised. Hence, we consider it appropriate to remit this disputed issue to the file of the CIT(A) for adjudication. Accordingly, the cross objection for the assessment year 2011-12 is partly allowed for statistical purposes. Calculation of peak credit between the transaction of the assessee, Shri Dayananda Pai and CHD on the basis of documents filed in the course of hearing - Held that:- We are unable to understand the methodology of consolidated peak credit considered and there is no reference to peak credit calculation in respect of this assessee. The details filed by the AR are for the first time before the Tribunal based on the statements recorded in Dummy Tally Account in the course of search operations of Shri Dayananda Pai and CHD. We considering the material filed on record and the Settlement Commission and CIT(A)’s observations, are of the substantive opinion that these facts are to be examined and verified and the matter needs to be reconsidered for limited purpose for calculation of peak credit between the transaction of the assessee, Shri Dayananda Pai and CHD on the basis of documents filed in the course of hearing and accordingly, we restore this disputed issue to the file of the CIT(A) who shall call for remand report from the AO on these issues and pass a speaking order on the peak credit calculation only. The assessee shall co-operate in submitting information at the earliest and we allow the grounds of appeal of Revenue for statistical purposes.

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• 2019 (2) TMI 349
  Disallowance of agricultural income - assessee could not produce any cogent evidence for the agricultural income claimed to have returned by the assessee - Held that:- As before the Tribunal, the assessee has not produce any evidence for the above claim of agricultural income. Accordingly, the ground raised by the assessee for the assessment year 2005-06 stands dismissed. Unexplained investment in purchase of agricultural land - Held that:- Since the assessee has not accounted for the above purchase of properties in the cash flow statement and could not explain the discrepancy, we find no reason to interfere with the orders of the authorities below and accordingly dismiss the ground raised by the assessee. Agreement entered for purchase of property - advances receipt - Held that:- During the course of recording statement from the assessee at Chennai, a fax copy of the document was obtained. The document sowed that the agreement was signed by both Shri Maya Venkatesan (assessee) and his brother Shri M. Kannan. When the document was shown to the assessee, again he reiterated that he did not enter into such an agreement along with his brother. An advance of Rs..40 lakhs had been paid by both and the payment stood unexplained, the assessee’s share of half of the advance payment of Rs..20 lakhs was treated as unaccounted income and added. Since the assessee has not rebutted the findings of the Assessing Officer during the course of appellate proceedings, the ld. CIT(A) confirmed the addition. Even before the Tribunal, the assessee has not filed any material rebutting the findings of the Assessing Officer. - decided against assessee.

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• 2019 (2) TMI 348
  Disallowance of salary paid to directors u/s 40A(2) - as per revenue assessee has failed to prove the concerned payees’ eligibility and qualification - Held that:- Both the lower authorities have simply brushed aside assessee’s payment claimed without even drawing a comparison of the market rate of the corresponding services vis-à-vis educational qualifications. Neither of the lower authorities has taken into account assessee’s business requirement of availing its directors’ services for effective management of its business operations in non-banking financial activities. Therefore hold that the impugned disallowance of Rs.5.50 lac to be deleted. - Decided in favour of assessee.

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• 2019 (2) TMI 347
  Assessment of capital gain - taxable in the hands of assessee or in the hands of HUF - purchase of family property - whether the property belongs to Hindu Undivided Family even though the document was registered in the names of minor children of Karta - Held that:- On the date of purchase, the assessee and his brother were admittedly minors and they had no independent source of income. The income generated out of family business was invested in the property in question. The assessee being one of the coparceners, the property was purchased by his father in the name of the assessee and his brother. It is also not in dispute that the property in question was mortgaged for borrowing loan for the family business. Therefore, this Tribunal is of the considered opinion that the property in question belongs to Hindu Undivided Family Under the Income-tax Act, Hindu Undivided Family is a separate and independent assessable unit. Since the property belongs to Hindu Undivided Family and the Hindu Undivided Family is an independent and separate assessable unit under the Incometax Act, this Tribunal is of the considered opinion that the gain arising out of sale of property has to be assessed only in the hands of Hindu Undivided Family and definitely not in the hands of individual coparcener. The assessee and his brother are individual coparceners. Therefore, there cannot be any capital gain assessment in respect of the property belonging to the Hindu Undivided Family in the hands of the assessee - Decided in favour of assessee.

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• 2019 (2) TMI 346
  Reopening of assessment - Attribution of income - existence of PE in India, through GEIIPL, has already been established in respect of all GE Group Overseas entities, and that assessee for the year under consideration made sales in India through a PE in India which has admittedly not been offered to taxation by assessee - Held that:- Assessee had failed to disclose revenue received from sales made to Indian customers through GEIIPL, on basis of materials gathered during survey for Ld.AO to form prima facie reason to believe by Ld.AO, of income having escaped assessment, for year under consideration, as per Explanation 2 (b) to Section 147 of the Act. From documents gathered during survey proceedings, which has been elaborately discussed in order passed by this Tribunal in case of GE Energy Parts Inc. (supra), are sufficient to compel a person, reasonably instructed in law, to form a view about existence of PE of assessee, along with employees of GEIIPL for all GE Overseas entities in India. We, thus are not inclined to accept contentions advanced by Ld.Counsel, that Ld.AO was not justified in initiating reassessment proceedings. Thus, fact that assessee had a PE in India and that there was an understatement of income to the extent of sale receipts received by assessee from Indian customers towards sale of spare parts/equipments, issuance of notice under section 148 brings case of assessee within fold of Explanation 2 (b) to Section 147 of the Act. We are fully satisfied that Ld.AO was justified in initiating reassessment proceedings. Existence of assessee’s business connection as well as permanent establishment in India - Held that:- Strategic decisions in terms of finalising of contract/MOU’S were also carried out by assessee with support of highly specialised employees of GEIIPL in field of marketing and sales. Ld.Counsel has not disputed before us that, assessee did not have a business connection in India, as per Section 9, Explanation 2 of the Act. Further in foregoing paragraphs, we have already discussed that, expatriates habitually exercised in India to conclude contracts, on behalf of assessee, and that activities were not limited to purchase of goods or merchandise for assessee. It has also been established that expatriates habitually secured orders in India, wholly for assessee, through GEIOC with continuous assistance of employees of GEIIPL in India. We, therefore do not agree with argument advanced by Ld. Counsel that, authorities below erred in mechanically placing reliance on earlier assessment year wherein, PE has been created with presence of GE International Inc., expatriates and/or employees of GE India Industrial Pvt. Ltd. By way of sufficient material, related to assessee gathered during survey, it is apparently clear that for sales to be effectuated in India during year under consideration, expats of GE International Inc., and employees of GE India Industrial Pvt. Ltd., jointly worked together and took strategic decisions for purposes of negotiation of agreements and sale prices of spare parts/machineries sold by assessee in India. Further, Ld.Counsel admitted that, no change has occurred after survey conducted in the year 2007. Thus in our considered opinion that assessee has a business connection in India and therefore the requirements under Clause 4 of Article 5 stands satisfied. We are therefore of the considered opinion that assessee has a dependent agent PE in India through GEIIPL. Attribution of estimated offshore supplies made by assessee to customers in India - Held that:- We hold that GE India conducted core activities and the extent of activities by assessee in making sales in India is roughly one fourth of total marketing effort. We, thus estimate 26% of total profit in India as attributable to operations carried out by PE in India. Therefore, as against Ld.AO applying 3.5% to sales made by assessee in India, we direct Ld.AO to apply 2.6% on total sales for working out profits attributable to PE in India. Interest levied u/s 234 B to be deleted

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• 2019 (2) TMI 345
  Addition u/s 40(b) - Addition being partner’s remuneration - Held that:- Reading of section 40(b)(v) clearly shows that amount of remuneration which does not exceed the amount specified in the Act is deductible. The Board has provided that either the amount of remuneration payable to each individual should be fixed in the agreement or the partnership agreement deed should lay down the manner of qualifying such remuneration. The circular has to be read along with section 40(b)(v) and has to be made subject to section 40(b)(v). This section does not lay down any condition of fixing the remuneration or the method of remuneration in the partnership deed. All that the section provides is that in case the payment of remuneration made to any working partner is in accordance with the terms of the partnership deed and does not exceed the aggregate amount as laid down in the subsequent portion of the section the deduction is permissible. The remuneration had to be worked out based on certain percentage of the book profit. We are of the considered that that the provisions of section 40(b)(v) as well as clause of the partnership deed are to be interpreted harmoniously. While relying upon the judgments cited above, we are of the view that Clause-6 of partnership deed of the assessee specifically contains that the salary /remuneration is to be computed as provided in section 40(b)(v) or any statutory enactment thereto. It has also been quantified that the profit and loss in the business of the firm shall be arrived at after accounting for the said remuneration and interest so double to the partners as the business expenditure of the firm. Allow the claim of remuneration paid to the partners. With these observations, we allow this ground of appeal raised by the assessee.

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• Customs

• 2019 (2) TMI 344
  Stay on recovery - Encashment of Bank Guarantee - Import of High Density Polyethylene (HDPE) - addition of carbon black - Benefit of exemption under N/N. 21/2002-Cus dated 01.03.2002 Serial No 477 and 559 and N/N. 12/2012-Cus dated 17.03.2012 serial No. 236 and 237 - Import of - eligibility of compounded HDPE - High Density Polyethylene or not? - Held that:- The issue is decided in the case of Ratnamani Metal & Tubes Limited vs. CC, Kandla [2013 (8) TMI 851 - CESTAT AHMEDABAD], where it was held that In the absence of any support for the conclusion that the product imported by the appellant has been chemically modified or it is not known as HDPE in the market, the benefit of exemption under Sr. No. 477 has to be extended to the appellant - the said case is squarely applicable to the facts of the present case. Thus, at this stage encashment of bank guarantee would not be justified - the encashment of bank guarantee is stayed till final disposal of the appeal filed by the applicant.

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• Service Tax

• 2019 (2) TMI 387
  Classification of services - whether site formation activity will have to be treated as mining activity? - Held that:- Issue notice on the appeal as also on the application for ex-parte ad-interim stay, returnable in three weeks.

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• 2019 (2) TMI 386
  Recovery of the service tax with interest and penalty - Notification Nos.45/2010-ST dated 20.7.2010 and 11/2010-ST dated 27.2.2010 - Held that: - the services rendered to other parties, the learned Advocate for the appellant-assessee disputes the same. In these circumstances, we are of the view that it is prudent and appropriate to remand the matter to the adjudicating authority to re-examine the issues afresh taking into consideration the admissibility of Notification No.45/2010-ST dated 20.7.2010 issued under Section 11C of the Central Excise Act, 1944 and Notification No.11/2010-ST dated 27.2.2010 to the appellant In these circumstances, we are of the view that it is prudent and appropriate to remand the matter to the adjudicating authority to re-examine the issues afresh taking into consideration the admissibility of Notification No.45/2010-ST dated 20.7.2010 issued under Section 11C of the Central Excise Act, 1944 and Notification No.11/2010-ST dated 27.2.2010 to the appellant - Appeal allowed by way of remand.

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• 2019 (2) TMI 385
  Levy of service tax - appellant had received commissions from one M/s KBC Multi Trade Pvt. Ltd., Nasik for selling the various products like, Magnetic Pendant, Magnetic Bracelet, Holiday Packages etc. - whether the appellants are liable to discharge Service Tax for receiving the commission during the period 2012-13 and 2013-14 from M/s KBC Multi Trades Pvt. Ltd.? Held that:- Before this forum, the appellant, though claimed that they have received lesser amount, no evidence has been placed to substantiate the said claim except bank statement of some account - there is no merit in the appeal - appeal dismissed - decided against appellant.

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• 2019 (2) TMI 384
  Refund claim - export of services - services rendered to M/s SurePrep LLC, USA for preparation of Income Tax Returns of the USA clients - Place of Provision of Service Rules, 2012 - Held that:- the services provided by the appellant fall under Rule 3 of the Place of Provision of Service Rules, 2012 and not under Rule 4 of the Place of Provision of Service Rules, 2012. Besides, I also find that the Department has allowed refund claims for the earlier and subsequent period, hence denying the claim for the impugned period without change in circumstances, in my opinion, is devoid of merit and accordingly, the impugned order deserves to be set aside - Appeal allowed - decided in the favor of the assessee.

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• 2019 (2) TMI 383
  Non-payment of Service Tax - Erection and Commissioning or Installation Services - installation of street light, traffic lights, flood lights and other electrical and electronic main appliances/devices to various authorities - period April 2011 to March 2012 - Held that:- In their own case, for Nanded Waghala City Municipal Corporation, this Tribunal has decided the issue against them reported as Royal Electricals Vs. Commissioner of Central Excise, Pune-I [2017 (11) TMI 298 - CESTAT MUMBAI], where it was held that The service of installation of street lights being an independent service clearly falls under works contract service and during the relevant period it was taxable - demand upheld - appeal dismissed - decided against appellant.

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• 2019 (2) TMI 382
  Non-payment of service tax - expenditure in foreign currency, relating to Commission, Interest, Bank Charges and Other Misc. cheque - Reply to SCN not made - lock out in the factory - Held that:- In response to the SCN dt. 22.10.2012, the appellant could not file a proper reply narrating their defense to the allegation leveled in the show cause notice. The reason for non-filing of reply as submitted by the appellant was due to lock out of their factory. Now the appellant filed a Chartered Accountant Certificate making out a prima facie case that the amount alleged in the show cause notice is not correct. The appellant must be provided an opportunity to submit their reply to the show cause notice - the appeal is allowed by way of remand to the adjudicating authority.

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• 2019 (2) TMI 381
  Non-payment of service tax - security services - computation of demand by extending cum-tax benefit - Held that:- In the present case disputed, the computation of demand stating that the cum-tax benefit though requested by them before the authorities below, the same was not extended - From the impugned order, it is found that since the appellant could not place necessary agreement/evidence whereunder, service has been provided to Nagpur Municipal Corporation, the authorities below could not examine the claim of the appellant relating to cum-tax benefit and consequently rejected the same. In the interest of justice, the matter is remanded to the adjudicating authority to compute the demand afresh taking into consideration the documents/evidence that would be produced by the appellant in support of their claim of cum-tax benefit - appeal allowed by way of remand.

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• 2019 (2) TMI 343
  Extended period of limitation - Valuation - GTA Services - inclusion of expenses incurred by the assessee on loading, unloading, margin money etc. in assessable value - Held that:- The period involved is 2007-08 to 2011-12 and the show cause notice stands issued in July 2013 i.e. by invoking longer period. Further all the relevant figures were duly reflected by the appellant in the balance sheet. Balance sheet have to be considered as public document and by various decisions of the Tribunal, it stand observed that once the figures are reflected in the balance sheet, there cannot be held any mala fide on the part of the assessee with an intent to suppress anything - in the absence of any mala fide, longer period is not available to the Revenue - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 342
  Nature of activity - sale or service? - proceeds received on sale of Export License of Sugar - Business Auxiliary Service or not? - Held that:- The issue is no more res-integra in view of the decision of this Tribunal in the case of Commissioner of Central Excise & Service Tax, Meerut-I vs. Bajaj Hindusthan Sugar Ltd. [2017 (10) TMI 1055 - CESTAT ALLAHABAD] where it was held that sale of right and privileges of Export of Sugar Quota amounts to sale of goods and there is no service involved in the transaction - demand set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (2) TMI 380
  CENVAT Credit - Education Cess & Secondary and Higher Secondary Education Cess - purchase of inputs for manufacture from 100% EOU for manufacturing - Extended period of limitation - Held that:- There is no doubt that Education Cess & Secondary and Higher Secondary Education Cess paid against additional duty leviable under section 3 of Customs Tariff Act are covered under cenvat credit permitted to be taken under Rule 3(1) of Cenvat Credit Rules 2004. Further, in respect of additional duty leviable under sub-section (5) of Section 3 of the Customs Tariff Act, nothing has been mentioned in Rule 3(1) of Cenvat Credit Rules 2004 that Education Cess & Secondary and Higher Secondary Education Cess paid on those duty is also included for availment of credits by the manufacturer. Thus, only education cess paid under sub-section (5) is outside the purview of Cenvat Credit Rules and Secondary & Higher Education cess and are not attached to additional duty referred in sub-section (5) of Section 3 of the Customs Tariff Act. Extended period of limitation - Held that:- The case of the appellant can be considered as a bonafide dispute of legal interpretation of the provision inasmuch as it has reflected the credit in its cenvat credit account without utilisation that would never justify invocation of extended period. Appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 379
  Clearance of by-product Bagasse - exempt goods - credit not reversed - Rule 6(3)(i) of the CENVAT Credit Rules, 2004 - Held that:- The issue of applicability of Rule 6(1) of CENVAT Credit Rules, 2004 to bagasse which emerges during the course of manufacture of sugar and molasses, has been settled taking note of the judgment of Hon'ble Supreme Court in the case of Union of India Vs. DSCL Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT], where it was held that Since it is not a manufacture, obviously Rule 6 of the Cenvat Rules, 2004, shall have no application - demand set aside - appeal allowed - decided in favor of appellant.

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• 2019 (2) TMI 341
  CENVAT Credit - inputs used in manufacturing both dutiable and as also exempted final product - non-maintenance of separate records or not - case of appellant is that two separate records were being maintained by them in terms of Rule 6 of Cenvat Credit Rules - Rule 6 of Cenvat credit Rules - Held that:- If an assessee is availing the credit only in respect of the raw materials used for manufacture of dutiable products and no credit is being taken on the inputs used for exempted final product, such legislative intent gets satisfied and the provisions of Rule 6 which disallow taking of such credit gets fully complied with - As such, simple non-maintenance of accounts in respect of both the types of final products and the use of the raw materials in the manufacture of the same, cannot be adopted as a ground or a reason for denial of the benefit which is otherwise available and which an assessee has satisfied. However, the fact is that the inputs were common for both the types of products and the appellant was adjusting the credit on fortnight basis depending upon percentage of the production of dutiable as well as exempted products - Admittedly, the adjudicating authority has not verified such maintaining of records, inasmuch as, he has denied the benefit in principle itself. As such, the matter needs to go back for verification of the appellants claim of availment of credit only in respect of inputs used for manufacture of dutiable products - matter on remand. CENVAT Credit - invoices issued by M/s Parle Biscuits Ltd. as ISD - Held that:- By merely doing the job work for M/s Parle, the appellant has not become a unit of M/s Parle Biscuits Ltd. In terms of Rule 7, an ISD is authorized to distribute the Cenvat credit of service tax only to its own unit and not to the job worker - a job worker is not entitled to avail the credit on the basis of input invoices issued by the principal manufacturer as ISD - the entire demand is within limitation and the same is upheld. Appeal allowed in part and part matter on remand.

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• 2019 (2) TMI 340
  Valuation - manufacture of various machines - inclusion of value of installation services provided, in the assessable value of the machines - Held that:- The earlier order of the Tribunal directed the Revenue to re-decide the issue, after appreciating the fact that the Managing Director of the company, in his statement, has only pointed out to three such orders with their customers where the bifurcation has taken place. In respect of the balance transactions, Tribunal has remanded the matter for verification of the documentary evidences in respect of the remaining transactions, entered vide their purchase orders, by which the contracts were entered into between the appellant and their customers. The impugned order is required to be set aside and the matter is once again required to be remanded to the original adjudicating authority to give a detailed finding after verifying each and every contract entered between the appellant and their customers - appeal allowed by way of remand.

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• 2019 (2) TMI 339
  Rectification of Mistake - it is alleged that plea of limitation is not considered - issue pertained to wrong availment of CENVAT credit - Held that:- Any submission made to the effect that all the details had been placed on record before the central excise/ service tax authorities would not come to their assistance in support of their plea against recovery owing to limitation of time prescribed in section 11A of Central Excise Act, 1944. With the finding that the applicants were ineligible for the CENVAT credit, it would be improper to permit utilization of the CENVAT credit. Hence the aspect of limitation was rightly not required to be considered - application dismissed.

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• CST, VAT & Sales Tax

• 2019 (2) TMI 378
  Extension of time granted for deposit of Bank Guarantee - extension sought on the ground that the applicant has suffered a loss in the financial year 2017-18 - Held that:- This court had directed the petitioner to deposit a sum of Rs. 20 lakhs with the respondent authorities latest by 30.11.2018 and to further furnish a bank guarantee of a similar amount which should be kept alive till the first appeal is disposed of. However, for the reasons set out in the memorandum of application and as submitted before the court, the applicant is not in a position to deposit the same within the aforesaid time limit. The court is of the view that the interest of justice would best be served if suitable time is granted to the applicant for depositing the sum of Rs. 20,00,000/- and furnishing the bank guarantee in compliance of the order dated 24.10.2018 passed by this court - application allowed in part.

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• 2019 (2) TMI 377
  Validity of Suo-moto revisional proceedings - Section 22-A(1) of the Karnataka Sales Tax Act, 1957 - Form-C - impugned assessment order is an ex-parte order - principles of natural justice - Held that:- It would suffice to note that revisional authority had disposed of the proceedings exparte and as such, an opportunity requires to be granted to petitioner and accordingly, matter requires to be re-adjudicated by the revisional authority, particularly in the background of disputed question of facts having been raised by the appellant before this Court with regard to ‘C’ form, which in fact had been accepted by the first appellate authority also, though not by revisional authority. The matter deserves to be remitted back to the revisional authority namely, respondent herein - appeal allowed by way of remand.

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• 2019 (2) TMI 338
  Maintainability of application under Section 84 of the TNVAT Act - application before wrong forum - only grievance of the petitioner before this Court is that even though the petitioner has filed appeal before the wrong officer, the same should have been forwarded to the Appellate Authority for deciding the same on merits - Validity of assessment order - Held that:- It is seen that the petitioner has wrongly chosen to file an appeal as against the order passed by the third respondent already under Section 84 of TNVAT Act, 2006 dated 02.07.2018 instead of filing revision before the concerned Revisional Authority - this writ petition is disposed of, by granting liberty to the petitioner to file a revision against the order dated 02.07.2018 as well as the present order dated 15.10.2018 before the concerned Revisional Authority within a period of two weeks from the date of receipt of a copy of this order.

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• Indian Laws

• 2019 (2) TMI 376
  Appointment to the post of Company Secretary in Respondent company - requirement of requisite five years’ experience for the post of Company Secretary - whether in the facts and circumstances of the case can it be said that the appellant fulfilled the eligibility criteria mentioned in the advertisement of having experience of five years ‘as’ a Company Secretary and/or, can it be said that the period during which the appellant worked as ‘Management Trainee’ and/or ‘Assistant Company Secretary’ be considered for treating the appellant having been appointed ‘as’ a Company Secretary so as to become eligible for the post of Company Secretary which was advertised? - Held that:- It can be seen from the relevant appointment orders, and even as per the case of the appellant that she was working as Assistant Company Secretary for the period between June 2008 to May 2010 in Utkal Investments Limited and that she was working as Management Trainee in the Delhi Stock Exchange Association Limited for the period between April 2005 to June 2006, and as the Management Trainee in ONGC for the period between May 2003 to June 2004 - Her appointment as Management Trainee cannot be equated and/or considered as appointment ‘as’ a Company Secretary. In the case of Dr. Asim Kumar Bose, [1982 (12) TMI 224 - SUPREME COURT OF INDIA], this Court observed and held that the provisions contained in Rule 8(2A) and paragraph 3 of Annexure I to the Second Schedule of the Central Health Service Rules must be interpreted in a broad and liberal sense so as to avoid any injustice to person in specialists’ Grade like the appellant. This Court observed that the Rules nowhere provide that the teaching experience gained by a Specialist in a teaching hospital as an Associate Professor (ex officio) shall not be counted towards the requisite teaching experience. In the present case, the word ‘as’ and the words ‘experience as Company Secretary’ used in the advertisement are very clear and as observed hereinabove it means the candidate ought to be appointed and worked as such ‘as’ a Company Secretary - appellant did not fulfil the eligibility criteria of having five years post qualification experience ‘as’ Company Secretary as on 30.11.2013, the services of the appellant have rightly been terminated. Appeal dismissed.

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• 2019 (2) TMI 375
  Interest payable to the contractor on the money due to him - power of the arbitral tribunal in granting pre-reference and/or pendente lite interest - Whether the Arbitrators could award any interest in view of Clauses 50 and 51 of the General Conditions of Contract (GCC) which governed the terms between the parties? - Clauses 50 and 51 of the General Conditions of Contract - Principles of Ejusdem Generis - HC uphold the order declining interest - Held that:- As a sequitur, the arbitrator would be within his jurisdiction to award pre-reference or pendente lite interest even if agreement between the parties was silent as to whether interest is to be awarded or not - Conversely, if the agreement between the parties specifically prohibits grant of interest, the arbitrator cannot award pendente lite interest in such cases. This proposition is predicated on the principle that an arbitrator is the creature of an agreement and he is supposed to act and make his award in accordance with the general law of the land and the agreement. 1940 Act was silent about the jurisdiction of the arbitrator in awarding pendente lite interest. However, there is a significant departure on this aspect insofar as 1996 Act is concerned. In the 1940 Act, there was no provision which prohibited the arbitrator from awarding interest for the pre-reference, pendente lite or post-award period, whereas the 1996 Act contains a specific provision which says that if the agreement prohibits award of interest for the pre-award period, the arbitrator cannot award interest for the said period. The grant of pendente lite interest depends upon the phraseology used in the agreement, clauses conferring power relating to arbitration, the nature of claim and dispute referred to the arbitrator, and on what items the power to award interest has been taken away and for which period. Also, the position under Section 31(7) of the 1996 Act, is wholly different, inasmuch as Section 31(7) of the 1996 Act sanctifies agreements between the parties and states that the moment the agreement says otherwise, no interest becomes payable right from the date of the cause of action until the award is delivered. The rule of ejusdem generis would be applied only if there is distinct genus or a category, which is lacking in the instant case. This rule is applicable when particular words pertaining to a clause, category or genus are followed by general words. In such a situation, the general words are construed as limited to things of same kind as those specified. In that sense, this rule reflects an attempt ‘to reconcile incompatibility between the specific and general words in view of the other rules of interpretation that all words in a statute are given effect if possible, that a statute is to be construed as a whole and that no words in a statute were presumed to be superfluous’. The conclusions of the High Court in the impugned judgment are correct and need no interference - appeal dismissed.

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