TMI Tax Updates - e-Newsletter
March 15, 2018

Case Laws in this Newsletter:

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

Articles

1. E-hearing must be in true sense and complete manner by tax authorities

   By: DEVKUMAR KOTHARI

News

1. Budget passed without discussion in LS as protests continue

2. Indian Tea Exports Touch Record High in 2017

3. First Interaction of 15th Finance Commission with the Members of Parliament held today

4. RBI Reference Rate for US $

5. Index Numbers of Wholesale Price in India (Base: 2011-12=100)

6. 9,073 cases are under consideration in NCLT, including 1,630 cases of Merger and Amalgamation; 2,511 cases of insolvency and 4,932 cases under other sections of Companies Act

7. Resolution professional doesn’t require nod of shareholders/members for insolvency resolution

8. No reduction in approval of resolution plans after enactment of IBC (Amendment) Ordinance 2017

9. “Vanishing companies” can only be listed companies; so far 161 “vanishing companies” have been traced

Notifications

Customs

1. 07/2018 - dated 13-3-2018 - ADD

Seeks to impose definitive anti-dumping duty on the imports of " Sulphonated Naphthalene Formaldehyde" originating in or exported from China PR.

GST - States

2. S.O. 138 - dated 25-1-2018 - Bihar SGST

Corrigendum - S.O. 123, dated 23rd January, 2018

3. S.O. 137-09/2018-State Tax (Rate) - dated 25-1-2018 - Bihar SGST

Amendments in the Commercial Taxes Department Notification No. 45/2017- State Tax (Rate), dated the 14th November, 2017.

4. S.O. 136-08/2018-State Tax (Rate) - dated 25-1-2018 - Bihar SGST

Exempts the state tax on intra-state supplies of goods Old and used, petrol Liquefied petroleum gases (LPG).

5. S.O. 135-07/2018-State Tax (Rate) - dated 25-1-2018 - Bihar SGST

Amendments in the Commercial Taxes Department Notification No. 2/2017-State Tax (Rate), dated the 29th June, 2017

6. S.O. 131-03/2018-State Tax (Rate) - dated 25-1-2018 - Bihar SGST

Amendments in the Commercial Taxes Department Notification No. 13/2017- State Tax (Rate), dated the 29th June, 2017

7. S.O. 130-02/2018-State Tax (Rate) - dated 25-1-2018 - Bihar SGST

Amendments in the Commercial Taxes Department Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017.

8. S.O. 129-01/2018-State Tax (Rate) - dated 25-1-2018 - Bihar SGST

Amendments in the Commercial Taxes Department Notification No. 11/2017- State Tax (Rate), dated the 29th June, 2017.

9. S.O. 128-07/2018-State Tax - dated 23-1-2018 - Bihar SGST

Notifies www.gst.gov.in and www.ewaybillgst.gov.in as the Common Goods and Services Tax Electronic Portal.

10. S.O. 127-06/2018-State Tax - dated 23-1-2018 - Bihar SGST

Waives the amount of late fee payable furnish the return in FORM GSTR-6 by the due date.

11. S.O. 126-05/2018-State Tax - dated 23-1-2018 - Bihar SGST

Waives the amount of late fee payable failure to furnish the return in FORM GSTR-5A by the due date.

12. S.O. 125-04/2018-State Tax - dated 23-1-2018 - Bihar SGST

Waives the amount of late fee payable furnish the return in FORM GSTR-5 by the due date.

13. S.O. 124-03/2018-State Tax - dated 23-1-2018 - Bihar SGST

Waives the amount of late fee payable failure to furnish the details of outward supplies for any month/quarter in FORM GSTR-1.

14. S.O. 123-02/2018-State Tax - dated 23-1-2018 - Bihar SGST

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

15. F-10-8/2018/CT/V (19) - dated 13-2-2018 - Chhattisgarh SGST

Corrigendum- Notification No. 6/2018-State Tax (Rate), No. F -10-4/2018/CT/V (13) dated the 25th January, 2018

16. KA. NI-2-155/XI-9(42)/17 - dated 31-1-2018 - Uttar Pradesh SGST

THE UTTAR PRADESH GOODS AND SERVICES TAX (THIRTEENTH AMENDMENT) RULES, 2018

Income Tax

17. 14/2018 - dated 13-3-2018 - IT

Seeks to amend Notification No. 41/2015 dated the 22nd June, 2015

Circulars / Instructions / Orders

DGFT

1. Trade Notice No. 25/2018 - dated 14-3-2018

Launch of e-MPS- facility to make online payment for miscellaneous applications

Highlights / Catch Notes

Income Tax

• Court Rules Section 56(2)(viia) Inapplicable for Assessment Year 2010-11, No Income Assumed from Share Transaction Shortfall.

  Case-Laws - HC : Addition u/s 56 - transaction in shares - adequate consideration - Section 56(2)(viia) was brought in the statute book only w.e.f. 1st June, 2010 i.e. for AY 2011-12 - there was no reason to believe that there was any income on account of short fall in consideration paid during the AY 2010-11. - HC
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• Court Rules Against Reopening Old Dues Recovery Case Due to Department's Decade-Long Delay and Inaction.

  Case-Laws - HC : Recovery of dues of the erstwhile owners of the property - attachment orders - The transfer took place in the year 2007. No action was taken by the department for nearly 10 years. It was only when the petitioner asked for benefit of amnesty scheme the said view was taken. Even on ground of delay, laches and inaction, the department cannot be allowed to open such old issues. - HC
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• Exemption Denied: Section 11 Claim Rejected for Medical Facility Not Meeting Poor Patient Treatment Criteria.

  Case-Laws - HC : Claim of exemption u/s 11 denied - medical facilities for poor patients - beds reserved for needy and poor persons kept - The test cannot be percentage of the poor patients actually treated, in the absence of any evidence to indicate that poor patients were denied in-house treatment in the hospital. - HC
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• Section 10(38) LTCG Exemption Applies to Non-Life Insurance Businesses Under Income Tax Act.

  Case-Laws - HC : Exemption to the assessee u/s. 10(38) - LTCG - exemption available to any other assessee u/s 10(38) relating to long term capital, would also be available to a person carrying on non-life Insurance business. - HC
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• Delay in Filing Income Tax Return Condoned u/s 119; Case Restored to CCIT After Six-Year Delay.

  Case-Laws - HC : Condonation of delay in filing the IT return - powers u/s 119 - when the explanation offered was acceptable and genuine hardship is established. It was with a fond hope of getting justice at the hands of the CCIT - no decision was taken for nearly 6 years - Finally the said petition has been dismissed which has to be viewed seriously while rendering substantial justice to the parties. - Matter restored before CCIT. - HC
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• High Court Overturns Lower Court Ruling: Misapplication of Section 271AAA on Unaccounted Income Penalty Exemption.

  Case-Laws - HC : Penalty u/s 271AAA - disclosure of unaccounted income during search - assessee did not specify how she derived that income and what head it fell in (rent, capital gain, professional or business income out of money lending, source of the money etc) - the lower appellate authorities misdirected themselves in holding that the conditions in Section 271AAA (2) were satisfied by the assessee. - HC
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Customs

• Imported EDTA FE Micronutrients Not Fertilizers: Classified Under CTH 31059090 Due to Lack of Key Elements.

  Case-Laws - AT : Classification of imported goods - EDTA FE - micronutrients also fertilizers which are not getting the status of a fertilizer by the presence of Nitrogen / Phosphorous / Potash - to be classified under CTH 31059090 - AT
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• Advance Ruling on Goods Movement in SEZ Binding Only on Applicant, Not Current Appellants, per Section 28-I.

  Case-Laws - AT : Applicability of Advance ruling - movement of goods through SEZ when it was not required - the advance ruling pronounced by the authority under Section 28-I shall be binding only on the applicant who had sought it. Therefore, the said advance ruling is not applicable to the present appellants - AT
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• Court Confirms Supplier's Documents as Valid; Appellant Found to Have Under-Valued Goods, Demand Upheld.

  Case-Laws - AT : Valuation - enhancement of value - All the documents submitted by the supplier are genuine and correct and considered as valid evidence. Therefore the same cannot be doubted - If it is so, it is established that the appellant had under-valued the goods - demand confirmed - AT
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DGFT

• DGFT Launches e-MPS for Online Payments to Simplify and Streamline Miscellaneous Application Processes for Users.

  Circulars : Launch of e-MPS- facility to make online payment for miscellaneous application.
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Corporate Law

• NCLT Exercises Section 424 Powers to Address Oppression and Mismanagement Under Companies Act 2013, Ensuring Justice and Public Interest.

  Case-Laws - AT : Oppression and mismanagement - The directions are in interest of justice and cannot be faulted with. Under Section 424 of Companies Act 2013 NCLT can regulate procedure before it and while dealing with the matter, it could exercise inherent powers to do justice between the parties, the Company and public interest linked with the Company to give the directions it has given. - AT
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• Court Examines Option Agreement as Contract of Guarantee u/s 126, Evaluates Winding Up Petition Validity.

  Case-Laws - HC : Winding up petition - difficulties of non payment of the amount due and payable - considering the provisions of Section 126 of the Contract Act, it is imperative to accept the 'option agreement' as a 'contract of guarantee'. - HC
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Indian Laws

• NCLT Reviews 9,073 Cases: 1,630 Mergers, 2,511 Insolvencies, 4,932 Under Other Companies Act Sections.

  News : 9,073 cases are under consideration in NCLT, including 1,630 cases of Merger and Amalgamation; 2,511 cases of insolvency and 4,932 cases under other sections of Companies Act
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• Resolution Professionals Can Proceed with Insolvency Without Shareholder Approval, Emphasizing Independence in Managing Cases.

  News : Resolution professional doesn’t require nod of shareholders/members for insolvency resolution
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• Insolvency and Bankruptcy Code Amendment 2017: No Drop in Resolution Plan Approvals; Process Remains Steady.

  News : No reduction in approval of resolution plans after enactment of IBC (Amendment) Ordinance 2017
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• 161 Listed Companies Disappear Without Fulfilling Regulatory Obligations, Known as "Vanishing Companies.

  News : “Vanishing companies” can only be listed companies; so far 161 “vanishing companies” have been traced
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• RBI's New Policy Targets Rising NPAs in Nationalized Banks; High Court Stresses Limited Judicial Review of Financial Policies.

  Case-Laws - HC : Change in policy by RBI -The new policy appears to have been declared by RBI for the reason that the NPA, in the Nationalized banks, have touched almost 8 lakhs crores. - the financial exposure of the Petitioner company is more than ₹ 4000 crores - the financial policies and the financial matters, falling within the exclusive jurisdiction of the RBI, need not be scrutinized by the Court - HC
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Service Tax

• Erection and Commissioning Services Classified as Composite Works Contracts, Not Simple Service Contracts, Affects Taxation Approach.

  Case-Laws - AT : Erection and commissioning services - these are composite works contract and cannot be taxed as simple service contracts under a particular heading like erection commissioning service - AT
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• India Fair Amusement Facilities Exempt from "Business Exhibition Service" Classification for Service Tax Purposes.

  Case-Laws - AT : Business Exhibition Service - conducting of “India Tourist and Industrial Fair” every year - certain amusement facilities provided inside the trade fair, though by private parties, cannot be brought under the category “Business Exhibition Service” - AT
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Central Excise

• EOUs Must Pay Interest on Unpaid Duties During De-bonding, Even with Voluntary Payment, Per Section 11A(2B).

  Case-Laws - AT : 100% EOU - Liability of interest - even though the duty is voluntarily paid being not paid at the time of de-bonding, voluntarily as per Sub-scion (2B) of Sec 11A, interest is required to paid for the period of default as mentioned in the said provision - AT
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Case Laws:

• Income Tax

• 2018 (3) TMI 594
  Assessment u/s 153C - Search and seizure operation u/s 132 - Held that:- CIT(A) and the Tribunal premised their findings upon the admitted documents in the form of a compromise settlement in the course of which the relevant share of the parties’ rights and liabilities have been settled. The business, which had yielded such interest, had to be inevitably apportioned between the two brothers who had parted ways later. Income generated was during the period when both of them were together. Essentially, being factual, the findings are based upon a rationale which is both convincing and reasonable. The Court is of the opinion that there is no error of law with respect to the additions made. As far as the addition with respect to the unaccounted sum of Rs. 92,16,098/- goes, the Court notices that besides contesting that the assessee’s son was nick named “Golu”, there cannot be any denial that the documents seized clearly revealed the total expenditure that the assessee incurred in respect of both his children. Those were not traceable to the books of account or the returns that he had disclosed earlier. In these circumstances, the addition made was justified. - Decided in favour of the Revenue

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• 2018 (3) TMI 593
  Penalty u/s 271AAA - disclosure of unaccounted income during search - source of income not discolsed - Held that:- In the present case, during the course of the statement made by the assessee, during the course of the search on 4 March, 2010, that she had lent Rs. 16 crores in aggregate to three individuals during financial year 2009-2010. This was in response to a query by the revenue officials during the course of search when the basis of Page 81 of Exhibit A-3 was sought to be questioned. - The requirement of the assessee having to “(ii) substantiates the manner in which the undisclosed income was derived” was satisfied. Although a general statement that the undisclosed income was the source income that was disclosed, no “substantiation” of the “manner” of deriving such undisclosed income was revealed. The income which was ultimately brought to tax pursuant to the disclosure made, which was voluntary on the part of the assessee is stating the obvious. The assessee merely stated that the sums advanced were undisclosed income. However, she did not specify how she derived that income and what head it fell in (rent, capital gain, professional or business income out of money lending, source of the money etc). Unless such facts are mentioned with some specificity, it cannot be said that the assessee has fulfilled the requirement that she, in her statement (u/s 132 (4)) “substantiates the manner in which the undisclosed income was derived”. Such being the case, this court is of opinion that the lower appellate authorities misdirected themselves in holding that the conditions in Section 271AAA (2) were satisfied by the assessee. - Decided in favour of revenue.

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• 2018 (3) TMI 592
  Condonation of delay in filing the IT return - powers u/s 119 - Held that:- It is the case of the petitioner that it is not avoiding any scrutiny; the Authorities can verify the genuineness of the petitioner by taking up the matter for scrutiny. It is also not in dispute that the petitioner was regularly filing the return of income and a genuine tax payee. It is primfacie apparent that only for the assessment year 2006- 07, owing to the alleged crashing of the system, no income of return was filed within the prescribed time, the petitioner is not avoiding any scrutiny. The circumstance that financial report and audit reports were signed by the Managing Director on 04.09.2006 would not be a ground to reject the condonation of delay in filing the report. It cannot be said that the petitioner has obtained any undue advantage of the delay in filing the income tax returns. Rendering substantial justice shall be paramount consideration of the Courts as well as the Authorities rather than deciding on hyper-technicalities. It is obvious that there is some lapse on the part of the petitioner, that itself would not be a factor to turn out the plea for filing of the return, when the explanation offered was acceptable and genuine hardship is established. It was with a fond hope of getting justice at the hands of the Chief Commissioner of Income Tax, petition was filed on 11.06.2010. However, no decision was taken for nearly 6 years. Finally on 11.03.2016, the said petition has been dismissed which has to be viewed seriously while rendering substantial justice to the parties. - Matter restored before CCIT.

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• 2018 (3) TMI 591
  Addition u/s 14A - ITAT deleted the dis-allowance holding that the assessee has own interest free funds available more than the investment made in tax free securities - Held that:- The issues raised herein stands concluded against the Revenue and in favour of the respondent, assessee by the decision of this Court in Commissioner of Income Tax V/s. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT]. Addition of dis-allowance u/s. 14A made to Book Profit - Held that:- Tribunal has held that for the purpose of computing book profits, AO would include the amount of dis-allowance. However, as the issue of amount of dis-allowance u/s 14A has been restored to the Assessing Officer, this issue is also consequential to the quantum determined by the AO while considering the dis-allowance.

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• 2018 (3) TMI 590
  Deduction u/s 80IB(10) denied for failure to obtain completion certificate on or before 31st March, 2005 - Gram Panchayat authorization to issue the completion certificate - Held that:- As decided in case of Sai Krupa Developers [2014 (10) TMI 868 - BOMBAY HIGH COURT] prior to 31st March, 2005, there was no requirement of obtaining any completion certificate. Thus deduction under Section 80IB(10) of the Act could not be denied for failure to obtain completion certificate on or before 31st March, 2005. - Decided in favour of assessee.

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• 2018 (3) TMI 589
  Exemption to the assessee u/s. 10(38) - Whether profits on sale of investments are liable to be (included) taxed in the hands of the assessee i.e. profits on sale of investments being liable to be tax. It does not deal with the benefit of exemption under Section 10(38) - Held that:- The question as raised herein proceeds on the basis that even if sale of investments is liable to be taxed, yet to the extent it relates to long term capital gain falling under Section 10(38) of the Act, the exemption would be available. The question arising for our consideration in this appeal is different from the question on which the appeal of the GIC in ITX No. 201 of 2011 (2013 (2) TMI 852 - BOMBAY HIGH COURT) was admitted. We find that this Court in General Insurance Corporation (2011 (12) TMI 70 - BOMBAY HIGH COURT) had also relied upon the communication dated 21st February, 2006 of the CBDT to the Chairman of the Insurance Regulatory and Developing Authority. In the above communication, it has been clarified that exemption available to any other assessee under clause 10(38) relating to long term capital, would also be available to a person carrying on non-life Insurance business. Mr. Suresh Kumar very fairly states that the CBDT communication dated 21st February, 2006 addressed by the CBDT to the Chairman, IRTA, as well as the decision of this Court in GIC (supra) would be binding upon the Revenue. - Decided in favour of assessee.

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• 2018 (3) TMI 588
  Claim of exemption u/s 11 denied - medical facilities for poor patients - beds reserved for needy and poor persons kept - Held that:- CIT (Appeals) has independently come to the satisfaction that in the subject Assessment Year, the Assessee has kept necessary percentage of bed reserved for needy and poor people and necessary percentage of the gross revenue was transferred to Indigent Patients Fund. It is only after having reached an independent conclusion for the subject Assessment Year that the Respondent is entitled to Section 11 of the Act, does it further record that in the Appellant's own case for the Assessment Year 2008-09, exemption was allowed under Section 11 of the Act. As observed by the CIT (A) as well as the Tribunal in the impugned order that the requirement is to keep and which has been done in this case. The test cannot be percentage of the poor patients actually treated, in the absence of any evidence to indicate that poor patients were denied in-house treatment in the hospital. - Decided against revenue.

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• 2018 (3) TMI 587
  Additional depreciation on hospital equipments - disallowance of claim as Assessee has claimed written down value of assets as Additional depreciation after its useful life - assessee is a charitable trust, running a hospital - Held that:- Where a plant and machinery is discarded/ destroyed in the previous year, the amount of money received on sale as such or as scrap or any insurance amount received to the extent it falls short of the written down value is allowed as depreciation, provided the same is written off in the books of account. In this case, the Respondent-Assessee could not sell the hospital equipments as scrap nor the Assessee could use the hospital equipments. Therefore, the written down value of the hospital equipments, was to be allowed as depreciation. This is so, provided the hospital equipment (asset) is written off in its books of accounts. This has been admittedly done i.e. writing off from its books. Thus, the nomenclature, as additional depreciation rather then depreciation, is the only objection of the Revenue. Nomenclature, cannot decide a claim. In any case, this could also be allowed as an expenses under Section 37 of the Act as it is an expenditure incurred wholly and exclusively for carrying out its its activity as a hospital (on application of commercial principles). - Decided against revenue

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• 2018 (3) TMI 586
  Recovery of dues of the erstwhile owners of the property - attachment orders - Benefit of amnesty scheme framed by the Government rejected - Held that:- Firstly, when the petitioner purchased the properties, no charge of the department was reflected in the revenue records. There is nothing on record to suggest that to defeat the interest of the revenue, erstwhile owners had transferred the properties to the petitioner who happen to be close relatives or that the transfer was without full consideration. The element of transfer being fraudulent is therefore, not established. Secondly, even in terms of section 47, the case of the department is that such transfer was void. The transfer took place in the year 2007. No action was taken by the department for nearly 10 years. It was only when the petitioner asked for benefit of amnesty scheme the said view was taken. Even on ground of delay, laches and inaction, the department cannot be allowed to open such old issues. In the present case, the petitioner did apply before the last date, nevertheless, his offer was conditional. The petitioner did not make payment of tax dues. He only indicated that he has a buyer and who also would pay the tax dues on a condition that department will thereafter lift the attachment on the properties. This was not an unconditional application for benefit of amnesty scheme. The amnesty scheme would be in the nature of an invitation by the Government and applying dealer would be making an offer. Such offer had to be unconditional. The petitioner therefore, did not make the application in proper requirement of the scheme. He did not deposit the amount. In any case, his offer that is, buyer would pay the amount provided the Government would agree to lift the attachment was not a valid offer. Whether the attachment would be lifted or not depend on various circumstances and not mere offer to pay the principal tax. The petitioner's request for being granted belated benefit of the amnesty therefore, must fail, despite our conclusion to the first issue regarding the legality of the Government's stand of insisting that either the erstwhile owners or the petitioner must clear the dues of such owners from whom the petitioner had purchased the properties in question. - Decided against the revenue.

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• 2018 (3) TMI 585
  Reopening of assessment - addition u/s 56 - transaction in shares - adequate consideration - Held that:- Section 56(2)(viia) was brought in the statute book only w.e.f. 1st June, 2010 i.e. for AY 2011-12. In this case, we are concerned with shares purchased by the Petitioner in March, 2010 i.e. Assessment Year 2010-11. Section 56(2)(viia) not being retrospective, would have no application. Thus, it was submitted that there was no reason to believe that there was any income on account of short fall in consideration paid during the AY 2010-11. The order disposing of the objections, does not deal with any of the contentions raised by the Petitioner. The entire exercise of raising objections and the Assessing Officer taking second look at the impugned notice is turned into an empty formality, if the objections are not taken into consideration while disposing of the same. Assessing Officer could not have any reason to believe that income chargeable to tax has escaped Assessment, as prima facie, there was no income arising on account of short payment of consideration for the subject Assessment Year in case of a limited Company such as the Petitioner, prior to introduction of Section 56(2)(viia). Thus, the artificial meaning of income sought to be canvassed by the Revenue, came into the statute only w.e.f. 1st June, 2010 i.e. after the impugned transaction i.e. AY 2010-11.

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• 2018 (3) TMI 584
  Bogus long term capital gain - unexplained cash credit u/s. 68 - Held that:- In support of claim of LTCG, the assessee has provided all the documents relating to sale and purchase which have taken place only through banking channel and are supported by contract note from HDFC Securities and the shares of Unno Industries Ltd. being listed shares on stock-exchange were filed by the assessee before the AO. The shares of assessee were sold through HDFC Securities Ltd. at Bombay Stock Exchange and assessee received sale consideration from HDFC Securities Ltd. after payment of STT and brokerage. However, the AO has not brought on record any material to support its finding that there has been collusion/ connivance between the broker and the assessee for the introduction of assesses own unaccounted money. LTCG claimed by the assessee is resulting from purchases made directly from the seller through a/c payee cheque based on actual delivery of shares, the transaction for sale is through registered broker on the floor of the stock exchange. LTCG of Rs. 33,63,368/- is fully supported by evidence, which in my considered opinion needs to be allowed. The assessee has justified the LTCG as a genuine and bonafide transaction the cost of Rs. 1,14,686/- shall also be allowed as a deduction from the sale consideration. Hence, the enhanced addition is deleted.

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• 2018 (3) TMI 583
  Reopening of assessment u/s 147/148 - accommodation entries - non independent application of mind by AO - Held that:- AO while recording reasons has failed to apply his mind and has merely referred to the report of the Investigation Wing. The least that was required by the Assessing Officer was to establish a link between the information made available by the Investigation Wing and the formation of his belief on escapement of income, which is clearly absent in the present case In the reasons recorded there is no details of the transaction and a bald reference to “entries amounting to Rs. 46,12,826/-” has been made. Even when the assessee pointed out to AO in its reply dated 7/11/2012, about the incorrectness of the purchases stated at Rs. 46,12,826/- as against actual purchase of Rs. 1,44,405/-, no credible negation has been brought out by the Assessing Officer. At the time of recording of reasons even the minimum required application of mind was absent, which obligated the Assessing Officer to establish a crucial link between the information made available to him and his belief about escapement of income. Therefore, the initiation of reassessment proceedings u/s 147/148 of the Act in the present case is without application of appropriate mind and, thus, untenable in law. - Decided in favour of assessee.

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• 2018 (3) TMI 582
  Disallowance of claim of deduction u/s.35(2AB) - articles manufactured by the assessee which are machines used in Railway Stations - eligibility only to electronic items - Held that:- Neither the A.0. nor the board was competent to take any decision of any such controversy relating to report and approval granted by the prescribed authority as it involved expert view or opinion. It was prescribed authority alone which would be competent to take decision with regard to the correctness or otherwise and its order of approval granted in form No. 3CL as prescribed u/s. 35('2AB) read with rule 7A of the Income Tax Rules, 1962. In the present case on hand, on perusal of the facts available on record, we find that the A.0. Without following the procedure laid down under rules, simply disallowed the expenditure claimed by the assessee by holding that the goods manufactured by the assessee are mere office machines and apparatus listed in Eleventh Schedule. A.0. is not correct in disallowing the claim made by the assessee u/s. 35(2AB) of the Act. - Decided in favour of assessee. Allowability of capital expenditure incurred as research development - Held that:- As per Form No.3CL, the expenditure was R&D only. The evidence brought on record shows that the expenditure was capital expenditure other than land and building. A.O. disallowed the same without examining the nature of expenditure. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and the same is upheld.

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• 2018 (3) TMI 581
  Benefits of exemptions u/s 54F and 54 EC - Held that:- On a perusal of the entries in Andhra Bank Accounts cited by the learned Authorised Representative of the assessee, Smt. Veena Nambyar in this regard, we observe that certain amounts have been transferred from her account to that of her husband Shri Raghuram P Nambyar and others; but that the said transfers were for the purpose of construction of the residence, is not supported or corroborated by any bills to prove the assessee's claim that they were utilized for construction. No documentary evidence in this regard has been placed either before the authorities below or before us. This being the factual position i.e. that Smt. Veena Nambyar is not the owner of the said property, the authorities below have (i) rightly rejected her claims for exemption under Section 54F and 54EC and (ii) correctly brought the entire LTCG arising on sale of the said property in the hands of the assessee Shri Raghuram P Nambyar. In this factual matrix of the case, as discussed above, we are of the view that there is no merit in the claims put forth by the assessee in this regard and dismiss the same. Reopening of assessment - Held that:- At the stage of initiation of proceedings it is not necessary that escapement of income need be established, but there should be formation of belief by a reasonable person based on relevant material. In our view, the Assessing Officer has succinctly set out the facts of the case and recorded the reasons leading to the formation of belief that income of the assessee liable to tax had escaped assessment for Assessment Year 2009-10, with due application of mind, following the prescribed procedure as contemplated by the Act and in consonance with the decisions of various Hon'ble Courts. In this factual and legal matrix of the case as discussed above, we do not find any infirmity with the procedure adopted by the Assessing Officer in initiating proceedings under Section 147 of the Act. Interest u/s 234B and 234C - Held that:- Charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum Ghaswala & Others (2001 (10) TMI 4 - SUPREME Court) and we, therefore, uphold the action of the AO in charging the assessee the said interest. AO is however directed to recompute the interest chargeable under Section 234B and 234C of the Act while giving effect to this order.

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• 2018 (3) TMI 580
  Liability to deduct TDS u/s 195 - whether TDS provisions as applicable not only to the expenses incurred by the PE in India but also by the Head Office or any other branch of the assessee in any country, if such expenses are debited to the P&L accounts of the PE in India - Held that:- The appellant was not liable to deduct tax at source out of the expenses incurred by the head office, as no payments were made by the P.E., nor was any liability incurred by it. The action of the assessing officer in holding the assessee to be an assessee in default u/s 201 is misplaced. - Decided against revenue.

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• 2018 (3) TMI 579
  Unexplained investment u/s 69 - Reopening of assessment u/s 147 - Held that:- The case of the AO in the remand report was that on redemption of the investments made in the earlier year during the previous year, the investments made during the previous year becomes fresh investment. This stand of the AO is contrary to the provisions of sec.69. There is no dispute about that fresh investments have been made during the year but all such investments have come out of the maturity of the investments made in earlier years. Therefore the source of investments made during the year have been explained. The addition of Rs. 3,29,00,000/- cannot be sustained as unexplained investment of the assessee during the assessment year in question and was rightly deleted by the CIT(A). Further the earlier year’s assessment have been reopened by the AO u/s 148. The source of funds for making investments of the units of Mutual funds which matured for payment can be examined only in the assessment year relevant to the previous year in which the investment was made. - Decided against revenue.

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• 2018 (3) TMI 578
  Reopening of assessment - validity of reasons to believe - Held that:- Recording reasons there must be tangible material/information in possession of assessing officer, and he has to record reasons, why this tangible material/information makes him believe that income has escaped assessment. In the case, a conscious decision not to effect the disallowance of Rs. 49,97,704/- was taken by AO at the stage of assessment u/s 143(3). CIT(A) further observed that the AO after 4 years from the end of assessment year has changed his opinion, and when the opinion was changed, there were no new material before him except an audit objection. Moreover, the material/subject matter available in the audit objection was already examined by AO during the regular assessment under section 143(3) of the Act, by taking an affidavit from the assessee to satisfy the requirement of obtaining Form No. 15-I. CIT(A) rightly held that since the AO has changed his opinion and there were no new material before him except an audit objection, therefore, reopening u/s 147/148 was erroneous. - Decided in favour of assessee

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• 2018 (3) TMI 577
  Assessee in default for not making timely TDS and on the rates prescribed - Demand u/s 201(1) and 201(1A) - Held that:- As per section 202 of the Act, deduction of tax at source is only one mode of recovery. In the present case, as observed by the ld. CIT(A) herself, due taxes, including interest, have been, in fact, recovered. The fault in deduction stands rectified and also accepted by the Department, in as much as the outstanding demand now amounts to a total of Rs. 2,460/-. The rest of the demand no longer survives. Recovery of taxes was made. As such, the Department has accepted the assessee’s stand that it was not a case of no PANs, but that of mismatch of PANs. That being so, the assessee cannot be treated as an assessee in default. It is basic and trite that during the progress of proceedings from the taxing Authority to the Appellate Authority, in order to make the right or remedy claimed by the assessee just and meaningful, the Appellate Authority itself, subject to all just exceptions, must examine and evaluate events and developments, if any occurring subsequent to the institution of the proceedings, and mould the relief accordingly. In the present case, clearly, this has not been done. Though the ld. CIT(A) has noted the assessee having, post the passing of the AO’s order, furnished the quarterly statements and paid requisite taxes, in spite thereof, the assessee has been held not absolved of being treated as an assessee in default. - Decided in favour of assessee.

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• 2018 (3) TMI 576
  Disallowance of 100% of bogus purchase - Held that:- In this case the sales have not been doubted it is settled law that when sales are not doubted, 100% disallowance for bogus purchase cannot be done. This proposition is supported from Hon’ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (2013 (1) TMI 88 - BOMBAY HIGH COURT). Facts of the present case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee saving on account of non-payment of tax and others at the expense of the exchequer. In such situation, in my considered opinion, on the facts and circumstances of the case the 12.5% disallowance out of the bogus purchases meets the ends of justice. This is following the decision of the Hon’ble Gujarat High Court in the case of Simit P. Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT)

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• 2018 (3) TMI 575
  Bogus purchases - estimation of 5% profit on the alleged unverifiable purchases - Held that:- AO & CIT(A) has accepted the corresponding sales and even purchases were accepted. AO only made the addition by estimating further profit of 5% on such purchases. However, with regard to the payment so made by the cheques no evidence has been brought on record proving that suppliers have withdrawn cash immediately after depositing the cheques of the assessee. Under these facts and circumstances, we do not find any merit in treating the purchases as bogus and estimating further profit of 5% on the alleged suspicion purchases. Accordingly, AO is directed to delete the same. - Decided in favour of assessee.

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• 2018 (3) TMI 540
  Adjustment made in the transfer pricing order u/s 92CA(3) - Adjustment made under the transfer pricing provision on account of interest on delayed recoveries of debtors’ balances from Associated Enterprises (AEs) - Held that:- Similar issue of charging of interest on delayed recoveries of debtors from AEs arose before the Tribunal in assessee’s own case for assessment years 2005-06 to 2009-10 [2016 (6) TMI 1286 - ITAT PUNE] as held that the transactions of interest due on amounts outstanding from its AEs is to be benchmarked at LIBOR plus 300 basis point. The AO/TPO was directed to determine the adjustment, if any, to be made in the hands of the assessee on account of interest chargeable on the amounts due from its AEs beyond the credit period of 25 days after allowing the benefit of interest recovered by the assessee form its AEs. The ground of appeal No.1 raised by the assessee is thus, allowed for statistical purpose. Denial of deduction u/s. 10A - Held that:- The only new undertaking which has been established in the current year is at Hyderabad. Following the parity of reasoning as in the earlier years, we direct the Assessing Officer to allow the deduction u/s. 10A of the Act in respect of various undertakings established by the assessee from year to year, except new undertaking at Hyderabad which we shall decide separately. As per the undertakings claimed as TTC (BPO) the same was established in assessment year 2009-10 and the Tribunal has in ITA No. 282/PN/2014 vide paras 90 and 91 held that since, the assessee satisfies the employee condition as per the CBDT Circular No. 14/2004 dated 08.10.2014 held that there was no justification in denial of deduction u/s. 10A of the Act. The assessee has raised the issue of denial of deduction u/s. 10A in respect of TTC (BPO) by way of ground of appeal No. 3 and hence, the same is allowed. Claim the deduction u/s. 10A - applicability of provisions of section 33B - Held that:- Section 10A(2)(ii) states that this section applies to any undertaking which fulfills the condition that it was not formed by the splitting up, or the reconstruction, of a business already in existence. The proviso laid down that this condition shall not apply in respect of any undertaking which is formed as a result of the reestablishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section. Section 33B of the Act talks of a business of any industrial undertaking carried on in India was discontinued in any previous year by reason of extensive damage to, or destruction of, any building, machinery, plant or furniture owned by the assessee because of natural calamities i.e. riot, civil disturbance, accidental fire, explosion; or action by an enemy or action taken in combating an enemy. The case of the assessee before us is that it had established the new undertaking in Hyderabad because of the fall out the concern Satyam Computers. It is not the case that the said concern Satyam Computers which had rehabilitated itself or revived itself. The assessee or its Director have no connection with Satyam Computers. The provisions of section 33B of the Act are not attracted. Thus, the claim of the assessee in this regard is rejected. Alternate plea raised by the assessee on without prejudice basis that the undertaking at Hyderabad may be treated as expansion of the existing unit at Pune, from where the employees were transferred. We find that the assessee had been held to be entitled to claim the deduction u/s. 10A of the Act in respect of Pune unit. Accordingly, we direct the Assessing Officer to allow the said deduction u/s. 10A of the Act to Hyderabad unit being expansion of Pune unit for the remaining period, as eligible to the Pune unit. Disallowance made u/s. 40(a)(ia) of the Act in respect of datalink charges - Held that:- The year under appeal before us is assessment year 2010-11 and the Tribunal in the appeal against the order passed u/s. 201(1)/201(1A) of the Act while deciding the stand of the Revenue that the assessee has defaulted in not deducting tax at source out of datalink charges paid, had held that the payments made for utilizing such services was not in the nature of technical services governed by section 194J of the Act. Once, the same have been held to be not in the nature of technical services, then there is no requirement for deduction of tax at source. Hence, the assessee is not liable for any disallowance u/s. 40(a)(ia) of the Act. Disallowance made u/s. 40(a)(i) in respect of overseas payment for purchase of software and related payments - Held that:- As decided in assessee's own case the assessee was not liable to deduct tax at source on such payments. Once, the assessee had been held not to deduct tax at source there is no merit in making any disallowance u/s. 40(a)(ia) of the Act. Disallowance u/s 10A(7) r.w.s 80IA(10) - the assessee has earned substantial excessive profits - Held that:- We find that the issue is squarely covered by the order of Tribunal in the case of M/s. Honeywell Automation India Ltd. Vs. DCIT (supra) and also in the case of assessee. The Assessing Officer has invoked the provisions of section 10A(7) of the Act while comparing margins shown by the assessee with mean margins of comparables. Admittedly, there is no arrangement of earning more than ordinary profits pointed out by the Assessing Officer and in the absence of such arrangement, the provisions of section 10A(7) of the Act, are not attracted. We find no merit in ground of appeal raised by the Revenue in this regard. We uphold the order of DRP in directing the Assessing Officer to delete the disallowance made under section 10A(7) r.w.s. 80IA(10) of the Act though on protective basis. The ground of appeal No.1 raised by the Revenue is thus, dismissed. Disallowance made on account of ESOP cost - Held that:- The said issue was also covered by earlier order of Tribunal for assessment years 2006-07 to 2009-10 [2016 (6) TMI 1286 - ITAT PUNE] as directed the Assessing Officer to verify the claim of assessee and in case ESOP cost has been allowed in succeeding year, then same may be allowed in the hands of assessee in assessment year 2009-10 also. The learned Authorized Representative for the assessee before us has pointed out that the issue is covered and following the same parity of reasoning, we remit this issue back to the file of Assessing Officer to follow the directions of Tribunal Additional disallowance under section 14A read with rule 8D - Held that:- The preliminary satisfaction to be recorded by Assessing Officer, before making disallowance u/s 14A read with Rule 8D of the Rules, is missing in the case; in the absence of the same, there is no merit in the disallowance made by the Assessing Officer. We find support from the ratio laid down by the Hon'ble Supreme Court in Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT & Anr. (2017 (5) TMI 403 - SUPREME COURT OF INDIA) Setting off of losses of 10A undertakings against other business income - Held that:- Tribunal in assessee’s own case and while deciding the appeal for assessment year 2006-07 [2013 (10) TMI 293 - BOMBAY HIGH COURT], the Tribunal held that the said issue stands covered by the decision of Hon’ble Bombay High Court in assessee’s own case, which had been followed by the Tribunal in assessment year 2005-06.

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• Customs

• 2018 (3) TMI 571
  Maintainability of appeal - section 35G of the Central Excise Act - Classification of imported goods - Held that: - The Division Bench in the case of Principal Commissioner of Central Excise And Service Tax Versus M/s Raja Dyeing, Ludhiana [2017 (3) TMI 1284 - PUNJAB & HARYANA HIGH COURT], held that so long as the question of valuation or classification arises the appeal would not be maintainable before the High Court even if other issues are raised in view of section 35G(1) of the Central Excise Act. The provisions of section 35G(1) of the Central Excise Act are in pari materia to section 130(1) of the Customs Act, 1962. The judgment, therefore, applies to the present case as well. Appeal is dismissed only on the ground that it is not maintainable.

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• 2018 (3) TMI 570
  Amendment in Import General Manifest (IGM) - Held that: - identical issue decided in the case of M/s. Agrocorp International Pte Ltd Versus The Union of India and Others [2016 (12) TMI 1312 - BOMBAY HIGH COURT], where it was held that it is entirely for the authorities to act in terms of the powers conferred by the Act of 1962. The authorities cannot refuse to act merely because there is an allegation of a wrongful act or there is a protest raised - petition disposed off.

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• 2018 (3) TMI 569
  Illegal export of goods - Agar Wood or its derivatives or extracts - restricted item - absolute confiscation - penalty - Held that: - The Agar Wood or its derivatives or extracts being an endangered species are listed in Appendix II of Conservation of International Trade in endangered species of Wild Fauna Flora (CITES) and a restricted item. The appellants could not produce any legal documents for export to Kuwait. The documents and Transit Pass produced by the appellants in support of the goods were fake. It is noticed that the purported seller of the goods was not in existence and there was no forest Beat Office at Kohra Range. Thus, it is apparent on the face of the record that the appellants attempted to export the goods without any valid documents. Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 568
  Valuation - enhancement of value - whether the documentary evidence produced by the High Commission of India, U.K. which was obtained from Italian Customs can be relied upon? - If it can be relied upon, whether the value should be enhanced or otherwise? - imposition of redemption fine. Held that: - As regard authenticity of these documents, there cannot be any doubt for the reason that Italian Customs authority has obtained these documents directly from the supplier M/s Delbi Fibres and the same was obtained by the High Commission of India, U.K. From perusal of these documents, it cannot be said that these documents are not authentic - it is further established that the actual value shown in the invoice and documents submitted by M/s Delbi Fibres to the Italian Customs authorities is authentic and valid documents which cannot be questioned. All the documents submitted by the supplier are genuine and correct and considered as valid evidence. Therefore the same cannot be doubted - If it is so, it is established that the appellant had under-valued the goods. Accordingly, enhancement of the value and confirmation of differential duty demand and penalty related to such demand are correct and legal. Redemption fine - Held that: - in the present case neither the goods were available nor the same were released on provisional basis therefore, redemption fine imposed by the adjudicating authority is not legal and proper - redemption fine set aside. Appeal allowed in part.

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• 2018 (3) TMI 567
  Applicability of Advance ruling - Exemption of Additional Duty of Customs - N/N. 45/2005-Cus dated 16/05/2005 - it was the modus-operandi to evade payment of SAD and as a result, the appellants had made arrangement that for some time the goods would be kept in a warehouse which was located in FTWZ Khurja and there was no need for such movement of goods into FTWZ Khurja. - Held that: - as provided for in Section 28J of Customs Act, 1962, the advance ruling pronounced by the authority under Section 28-I shall be binding only on the applicant who had sought it. Therefore, the said advance ruling is not applicable to the present appellants - appeal dismissed - decided against appellant.

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• 2018 (3) TMI 566
  Absolute confiscation - penalty - smuggling - Foreign Origin Gold Bar bearing Suisse mark with 999.9 purity - prohibited goods or not? - Held that: - it is an admitted case of Town Seizure of the Gold. In the circumstances although the case of smuggling is not made out, but the appellant Mohd Waseem have failed to discharge the onus under Section 123 of the Customs Act, as to the licit import of the gold originally seized by the Police Officers and subsequently seized by the Customs Authority - also, gold is otherwise importable on payment of appropriate duty and is not prohibited. Appeal allowed in part.

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• 2018 (3) TMI 565
  Classification of imported goods - EDTA FE - respondent considered the same as Micronutrient Fertilizer to be classified under CTH 31059090 whereas Revenue claimed that it should be more specifically brought under Chapter 29 as 'Organic Chemical' more specifically under Heading 292121 as "Ethylenediamine and its salts" - Held that: - In the present case, the fertilizing element is contested to be not nitrogen and hence the classification as micronutrient was contested by the Revenue - As clarified by RFCL, micronutrients also fertilizers which are not getting the status of a fertilizer by the presence of Nitrogen / Phosphorous / Potash - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 564
  Refund claim - wrong goods at project stores as per order specification - Section 26A (1)(a) of the Customs Act, 1962 - Held that: - the appellant returned the goods as defective and therefore, they are entitled to get Refund of import duty under Section 26A of the Act, 1962 - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 563
  Classification of imported goods - Aluminium lithographic sheets - whether classified under CTH 76061190 or under CTH 76020010? - Held that: - there is no intention of the appellant to mis-declare the goods for the reason that the appellant under-took to mutilate the goods which were objected to be of prime nature by Revenue - the description of the goods declared in the Bills of entry were as per the documents received from the foreign supplier and there is no mis-declaration in the present case - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 562
  Mis-declaration of imported goods - Heavy Melting Scrap - Held that: - The department after examination has concluded that these are reusable TMT rods and do not fall under the description of scraps - demand upheld. Taking into consideration the facts of the case and pleading of the appellant that they had entered into an agreement with the supplier for supply of scrap only, it is found that the redemption fine and penalty imposed is on the higher side and requires to be reduced. Appeal allowed in part.

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• Corporate Laws

• 2018 (3) TMI 561
  Winding up petition - difficulties of non payment of the amount due and payable - Held that:- It is well settled that a contract of guarantee involves principally three parties namely the creditor, the surety and the principal debtor, where liability may be actual or prospective. Thus necessarily the ingredients of a contract of guarantee are clearly present in the option agreement which are reflected from the unambiguous nature of Article II the “Put Option” whereby the appellant has irrevocably, absolutely and unconditionally without demur or protest agreed to make payment of the exercise price to the respondent. If this be the case, then considering the provisions of Section 126 of the Contract Act, it is imperative to accept the 'option agreement' as a 'contract of guarantee'. There can be no other interpretation. Single Judge is correct in observing that the 'option agreement' is required to be considered as a guarantee. By agreeing to Article IV (termination clause) and accepting that the agreement will be terminated only on the happening of said two events, it can certainly be said that the appellant had waived the right if any, to terminate the contract. The submission as urged on behalf of the appellant that by their letter dated 4 March 2015 the option agreement was terminated, if is accepted, then the consequence is that Article IV (Termination Clause) of the option agreement itself would be rendered nugatory and meaningless. Whole intention of the parties to incorporate the termination clause as contained in Article IV is to bind the parties only in the stipulated and agreed mode of termination and in no other form or method. In fact what is pertinent is that the parties had categorically avoided to enter any other form of termination when they agreed to incorporate Article IV. Thus, the appellant's contention that in view of termination letter dated 4 March 2015 the “Put Option” could not have been exercised by the respondent is wholly untenable. The appellant's contention of the validity of the option agreement being considered by the learned Single Judge in the summary proceedings of a winding up petition, hence is wholly unfounded.

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• 2018 (3) TMI 560
  Condonation of Delay Scheme -2018 - Removal of the Company from the Register u/s 248(1) - Held that:- The Registrar shall scrutinize the same, and if the same are found to be otherwise in accordance u/s 248(2), the petitioners would be granted the benefit of the CODS - 2018. Removal of the Company from the Register under Section 248(1) would be deemed as striking off the Company under Section 248(2), and the petitioner s application under CODS - 2018 would be sympathetically considered by the Registrar. Since an unequivocal statement is made by the petitioners that they would pay the necessary charges and make the necessary application under the CODS - 2018, the impugned list of the disqualified directors, in as much as it includes the names of the directors, is stayed till 31.03.2018 or up till such time as the respondents take a final decision in the matter. This order has been passed with due assistance of the learned ASG, in the peculiar facts and circumstances of these cases. It is clarified that if the petitioners do not avail of the CODS-2018 or file the necessary documents as required for dissolution for the Company under Section 248(2) as stated above; in addition to other consequences, the petitioners would also be liable to be prosecuted for contempt of Court. It is further clarified that the aforesaid order is made on the basis of the unequivocal statements made on behalf of the petitioners above and in the event the statements are found to be incorrect, the petitioners would be liable to be proceeded against contempt of court in addition to being subjected to other proceedings.

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• 2018 (3) TMI 559
  Oppression and mismanagement - settlement process - While some parties pressed for execution of the consent terms, other parties claimed breach and forfeiture, etc. The impugned order has disposed of those applications recording reasons. - Held that:- The learned counsel for both sides however, went on with their arguments relating to one party finding fault with the other and vice versa but did not satisfy us that Annexures ‘A’ and ‘B’ read together and defaults of parties, creates strange situations making execution of the terms unworkable and unpractical. Even if we accept that enforcing term 19 of Annexure ‘A’ would require certain compliances as is being argued, question is what is the way out? N.C.L.T. rightly appears to have searched way out in interest of Company and all stakeholders to have a fresh settlement or it would appoint Independent Committee of Management. The directions are in interest of justice and cannot be faulted with. Under Section 424 of Companies Act 2013 NCLT can regulate procedure before it and while dealing with the matter, it could exercise inherent powers to do justice between the parties, the Company and public interest linked with the Company to give the directions it has given. We do not find any substance in these appeals to interfere with the impugned Judgement and Order which needs to be maintained and implemented. Thus the appeals deserve to be dismissed.

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• Insolvency & Bankruptcy

• 2018 (3) TMI 574
  Corporate insolvency process - Registration as an Insolvency Profession (I.P.) has been rejected - Held that:- What is not disputed by the learned counsel for the petitioner is that an FIR bearing No.RC/219/2012, dated 3.7.2012, has been registered against the petitioner. As a matter of fact, the registration of the FIR has been followed by the prosecution filing a chargesheet in the matter, on 17.02.2014. Writ petition at this juncture is in a sense pre-mature. The petitioner, therefore, is given liberty to approach this Court, once the discharge application is disposed of by the concerned Trial Court. Given the fact that the discharge application was filed as far back as on 13.01.2016, the concerned Trial Court is requested to take up the application for adjudication and dispose of the same at the earliest.

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• 2018 (3) TMI 573
  Condonation of delay - Rejection of Financial Creditors claim by the Liquidator as per an order of rejection by way of an Electronic Mail - whether the adjudicating authority can condone the delay and direct the liquidator to reconsider the claim on its merits? - Held that:- On reading of Rules 177 and 178, of the Companies (Court) Rules, 1959 and reading section 40(1) of the Code, it appears that one more opportunity can be allowed to the claimant here in the instant case who failed in submission of its claim in time. But there is no undue delay though the reason for the delay in submission of the claim is found not at all satisfactory. Delay condoned.

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• 2018 (3) TMI 572
  Order of liquidation - period of 180 days for completion of the resolution process as provided under Section 12 (1) of IBC expired - Held that:- Admittedly the period of 180 days for completion of the resolution process as provided under Section 12 (1) of the Insolvency and Bankruptcy Code, 2016 expired on 08.01.2018. While monitoring the progress reports submitted by the Resolution Professional, Registrar of this Tribunal put up a note that the period of 180 days has expired and the Resolution Professional informed that the application for liquidation proceedings would be filed. The matter was directed to be listed on the judicial side with notice to the Resolution Professional. In view of the mandate of Section 33 (1) of I & B Code there is no other alternative except to pass an order of liquidation. It was found fit to appoint a Liquidator from the panel of Liquidators/Insolvency Resolution Professionals circulated by Insolvency and Bankruptcy Board of India vide letter dated 10.01.2018 instead of Mr. Nipan Bansal who was appointed as the Resolution Professional, for the reasons stated in the order dated 31.01.2018. Accordingly, an order is passed in accordance with Section 33 of the Code for liquidation of the Corporate Debtor appointing Mr. Dinesh Kumar Seth as the Liquidator. The Liquidator shall issue public announcement to the effect that the Corporate Debtor is in liquidation and to intimate the same to Registrar of Companies, Punjab about this order.

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• Service Tax

• 2018 (3) TMI 556
  Business Auxiliary Services - appellants are franchisee/distributors appointed by the BSNL for sale of SIM cards - Held that: - the law is settled by the Hon'ble Apex Court in the case of Martend Food & Dehydrates Pvt. Ltd. [2013 (6) TMI 339 - CESTAT NEW DELHI], where it has been held that the activities of purchase and sale of SIM cards belonging to BSNL where BSNL has discharged the service tax on the full value of the SIM cards does not amount to providing business auxiliary service - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 555
  Business Exhibition Service - conducting of “India Tourist and Industrial Fair” every year - Held that: - It is clear that large number of stalls / pavilions were put up by the Government departments like Ministry of Health, Family Welfare, Civil Supplies, Agriculture etc. As claimed by the appellant, these pavilions / stalls are not in furtherance in business or commerce of the Government. These are basically for propagation of public policy and also for increasing the awareness of the public in various vital areas like health, family welfare, civil supplies, agriculture etc. These are essentially sovereign governmental activities - the income attributable to such stalls and the pavilions accruing to the appellant cannot be covered by tax entry “Business Exhibition Service”. The appellant also claimed certain income as attributable to providing space for parking for visitors which is not covered by the said tax entry. Similarly, certain amusement facilities provided inside the trade fair, though by private parties, cannot be brought under the category “Business Exhibition Service” - these aspects have not been examined which required analysis by the lower authorities - matter on remand. Time limitation - Held that: - there is a case of bonafide belief on the part of the appellant who is Government of Tamilnadu undertaking regarding non-taxability of the activity - the original authority himself waived the penalty invoking the provisions of section 80 - extended period not invokable. Appeal allowed by way of remand.

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• 2018 (3) TMI 554
  Erection and commissioning services - Revenue entertained a view that erection commissioning of work undertaken by the respondent is liable to be taxed as a service contract and accordingly proceedings were initiated against the respondents - Held that: - What is important is to see whether the respondent is acting in the ambit of overall composite works contract. In the present case, we are in agreement with the findings of the impugned order that these are composite works contract and cannot be taxed as simple service contracts under a particular heading like erection commissioning service - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 553
  Valuation - includibility - reimbursable expenses - Held that: - the issue whether reimbursable expenses are includible in the taxable value of services stands settled by the decision of the Hon’ble High Court of Madras in the case of Commissioner of Service Tax, Chennai Vs. Sangamitra Services Agency [2013 (7) TMI 862 - MADRAS HIGH COURT], where it was held that if a receipt is for reimbursing the expenditure incurred for the purpose, the mere act of reimbursement, per se, would not justify the contention of the Revenue that the same, having the character of the remuneration or commission, deserves to be included in the sum amount of remuneration / Commission - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 552
  Non-payment of service tax - Clearing and Forwarding services - The department was of the view that the respondents are liable to pay service tax on the wheat handling charges under the category of clearing and forwarding agency services - Held that: - The sum total of the activities rendered by the respondents show that they are holders of Stevedoring licence and were engaged in transportation and custom house handling works. Thus, they have entered into a composite agreement for facilitating export of wheat by MMTC from the godowns of FCI. Their functions include identification of goods to be exported in co-ordination with the buyers, transportation of the goods and also to provide temporary storage of the goods. The very fact that the respondents are obliged not to provide temporary storage alone but rendering of custom house handling work etc., would show that their activities cannot be classified under clearing and forwarding service - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 551
  Renting of immovable property service - non-payment of service tax - Finance Bill, 2017 inserted a new Section 104 retrospectively exempting from service tax the services rendered by State Government Industrial Development Corporation - whether the said exemption would be eligible for appellant or not? - Held that: - the matter requires to be remanded to the adjudicating authority as to the application of section104, newly introduced by the Finance Bill 2017 - appeal allowed by wya of remand.

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• 2018 (3) TMI 550
  Commercial Training Coaching Services - coaching and training services to the students of Alagappa University, Karaikudi and Periyar University - Held that: - The fee is charged as per the directions of the university and the courses are also conducted as per the curriculum and guidelines provided by the university. The fees is paid directly to the university by the students in the form of demand drafts. The identical issue has been agitated before CESTAT Chennai in the appeal filed by JMC Educational Trust Vs CC Trichy [2010 (12) TMI 1150 - CESTAT CHENNAI], where it was held that training and coaching provided by the appellant therein is an essential part of a course or curriculum of a university. From the documents available in file, it is found that the appellant has been authorized as a Study Centre under a Memorandum of Understanding entered into with Alagappa University on the basis of Distance Education Council (DEC) guidelines issued under the IGNOU Act, 1985. This being so, appellant would be exempted from service tax levy during the period of dispute under Section 65 (27) of the Act even without benefit of N/N. 10/2003-ST. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (3) TMI 549
  Valuation - clearance of ‘polyester staple fibre’ to some customers who were in possession of import licences for inputs that had been invalidated as a condition for such procurement - the decision in the case of Commissioner of Central Excise, Nagpur Versus Indorama Textiles Ltd [2017 (8) TMI 1042 - CESTAT MUMBAI] contested - Held that: - Whether the facts set out in the said order to distinguish the case of respondent-assessee and the case of IFGL [2000 (7) TMI 175 - CEGAT, KOLKATA] was pointed out to the Bench hearing the case of Indorama Synthetics (India) Ltd. would require some consideration - matter on remand.

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• 2018 (3) TMI 548
  100% EOU - Liability of interest - Section 11AB of CEA, 1944 - Held that: - undisputedly, the appellant accepting the liability of Spl CVD of 4% not paid at time of de-bonding as on 07.10.2009 of their 100% EOU, discharged the same on 31.3.2011. They resisted discharging of interest on the short paid amount on the ground that no formal SCN was issued in confirming/recovery of the amount short paid - even though the duty is voluntarily paid being not paid at the time of de-bonding, voluntarily as per Sub-scion (2B) of Sec 11A, interest is required to paid for the period of default as mentioned in the said provision - appeal dismissed - decided against appellant.

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• 2018 (3) TMI 547
  CENVAT credit - inputs such as, iron and steel, waste & scrap, sponge iron, pig iron etc. are used by the appellant during the manufacturing activity - According to the Department, such availment of credit is in contravention to Rule 15 (2) of the CCR 2004 read with Section 11AC of the CEA 1994 - Held that: - it is seen that the employees of the said input manufacturer have stated before the investigating authority that they were engaged into cutting of TMT rods into pieces in their factory of M/s. Industrial Associates during the period in question. Such cutting of TMT rods constitutes of iron and steel, which is the inputs required by the appellants. This fact has not been disputed by the Revenue and reliance is placed only on the statement of the Director and employees laying down that cenvatable inputs were not transported by them. The bank statement stands produced showing the payment of invoices to M/s. Industrial Associates by Account Payee Cheques. There is no allegation for such cheques which were encashed and there is no allegation that such cheques were encashed and subsequently refunded to the respondent. Reliance is placed on the decision of the Hon’ble Jharkhand High Court in the case of Commr. Of C.Ex., East Singhbhum vs. Tata Motors Ltd. [2010 (9) TMI 949 - JHARKHAND HIGH COURT] has held that it is presumed that when payments were made on the inputs, buyer is entitled to claim cenvat credit on such inputs. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 546
  CENVAT credit - demand on the ground that respondent have not received the material and they have only received the invoices and availed fraudulent credit - entire case of the department was made out against the respondent is only on the basis of RTO report, according to which in some of the vehicles it was found that the said vehicles are not capable of transporting the goods - Held that: - there is no concrete evidence by which it can be established that the goods were not received by the respondent - supplies made by M/s. Ravi Steel to the Respondent is undisputed and respondent has received the scrap from M/s. Ravi Steel Industries and payments towards said supplies was made through cheques/RTGS and same has been recorded in the ledger account of M/s. Ravi Steel Industries, Nagpur. It is established that respondent company has received the M.S. scrap, hence credit cannot be denied - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2018 (3) TMI 545
  Discontinuance of benefit of exemption under CST - Sick Industrial Companies (Special Provisions) Act - the case of the petitioner–M/s. Rajshree Plastiwood Private Limited did not fall under the Policy of the State Government, and therefore, notification dated 21.04.2003 issued pursuant to the directions of the Board has not been continued - Held that: - After coming into force of SICA Repeal Act, 2003, as per notification dated 25.11.2016 (Annexure R/1), the proceedings pending before BIFR stands abated and interim order passed in favour of the petitioner stands automatically vacated by operation of law - The order dated 05.11.2007 passed by the BIFR was set aside by the AAIFR on 16.08.2010. The petitioner is not entitled to get any relief as well as interim relief - petition dismissed.

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• 2018 (3) TMI 544
  Liability of purchase tax - cocoon - Whether the Tribunal has erred in holding the revisionist liable to tax under Section 3-AAAA on the purchase of cocoon from Resham Directorate of the Government of U.P. in view of notification dated 14.11.1995 by which silk-yarn has been exempted from tax u/s 4 of the Trade-tax Act, 1948? Held that: - It is an admitted factual position that the revisionist is not a producer of cocoon, therefore, not covered by the proviso to Section 2(c) of the Act, 1948. In exercise of the powers under clause (a) of Section 4 of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No.15 of 1948), the Governor is pleased to direct that with effect from February 26, 2000 no tax under the said Act shall be payable on the sale of pure silk, silk fabric, silk mixed cloth and silk yarn. The words used in clause (iii) of the proviso to Section 3-AAAA are ''in the same form and condition in which he had purchased them' thus only in such an eventuality, that is, if the Revisionist sold the cocoon purchased by it, as cocoon, it would escape the rigour of the charging provision, but this is not the case here. The memo of Second Appeal filed by the revisionist before the Tribunal is not on record so as to enable the Court to ascertain as to whether this plea was raised before it or not. Nevertheless, it being an important aspect which is required to be considered, therefore, it needs to be considered by the Tribunal. The Tribunal shall proceed to decide the Appeals, which stand restored - the impugned order is set aside.

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• 2018 (3) TMI 543
  Rejection of books of accounts - rejection on the ground that the assessee had filed to maintain stock books in respect of the raw material as well as products obtained at every stock of production - liability to tax - Held that: - The manufacturer liable to pay tax under the act is required to maintain stock books in respect of raw materials, as well as products obtained at every stage of production, unless exempted under the proviso. The maintenance of stock books would have a direct co-relation with the manufacturing process, as to maintain records of movement of raw material as well as finished products. The Tribunal has not specifically reversed the finding of first appellate authority in that regard. Though the Tribunal has come to the conclusion that proper movement of stock is not maintained, but there is no discussion in the order of tribunal specifying the process, as also the stages of production to record movement of stocks. Decided in favor of assessee.

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• 2018 (3) TMI 542
  Principle of mutuality - activities undertaken by the Association amounting to works contract - penalty - Held that: - The Association is an entity registered under the Societies Registration Act, 1860 - No proceedings, whatsoever, is pending against the petitioner, who is a member of the Association. In the absence of any proceedings against the petitioner, it was unnecessary for the petitioner to file an affidavit in the nature of Ext.P1 before the first respondent and it was unnecessary for the first respondent to issue a notice in the nature of Ext.P2 to the petitioner - petition dismissed - decided against petitioner.

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• 2018 (3) TMI 541
  Condonation of delay of 1530 days in filing the revision - Held that: - the revisionist has not given sufficient reasons to condone the delay of 1530 days in filing the revision - application for COD dismissed.

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• Indian Laws

• 2018 (3) TMI 558
  Whether the suit is not maintainable under Order XXXVII CPC because in the agreement dated 6.5.2013 there is no amount which is stated of the sum of Rs. 38,45,961/- and which amount the plaintiff claims to have paid as the sales tax dues to the appropriate authority on account of failure of the defendant to supply the C-Forms? - Held that: - it is an undisputed position that in terms of Clause 8 of the agreement dated 6.5.2013 the defendant undertook to supply the necessary C-Forms to the plaintiff - on the one hand the agreement dated 6.5.2013 requires the defendant to submit the C-Forms and which C-Forms were not supplied, on the other hand the monetary value of the C-Forms though not specifically stated in the agreement dated 6.5.2013, however the crystallized amount of Rs. 38,45,961/- being the amount paid by the plaintiff to the sales tax department is not disputed by the defendant in the present leave to defend application - as per Clause 8 of the agreement dated 6.5.2013 the liability of differential tax will be borne by the defendant and this is in so many clear words provided in this Clause 8 - the contention of the defendant is rejected that plaintiff is not entitled to the amount of Rs. 38,45,961/- as claimed in the present suit. The subject suit is a commercial suit under the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. Section 35 CPC has been amended by the legislature with respect to commercial cases filed under this Act. Courts are mandated to impose actual costs as also costs under different headings including for the defendant frivolously defending the suit. Accordingly while dismissing the leave to defend application, and in view of the fact that plaintiff has been harassed by the frivolous defences of the defendant who in spite of his liability is failing to pay the requisite amount to the plaintiff, the leave to defend application is dismissed with actual costs. The leave to defend application is dismissed.

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• 2018 (3) TMI 557
  Change in policy by RBI - Formation of Joint Lenders Forum (JLF) and adoption of Corrective Action Plan (CAP) - Resolution and restructuring of the corporate debt - Held that:- For operationalizing the framework Petitioner in the instant Petition, is virtually seeking a direction against the JLF not to proceed with the matter before the adjudicating authority under the IBC and to virtually disregard the directives. In fact, those directives issued to the JLF and initiation of proceedings under IBC before the adjudicating authority is a subject matter of grievance by the Petitioner company. It is the Petitioner company, as recorded above, which has not brought in the upfront contribution, mandated under the directives of the RBI and as instructed by JLF. One of the CRAs appointed by the RBI does not find the residual debt of the Petitioner to be investment grade and thirdly, all the lenders have not signed the MRA. Considering these factors, it is difficult to accept the contention of the Petitioner that the MRA has been operationalized. In view of the policy declared by the RBI on 12 February 2018, since the scheme itself has been withdrawn, any direction for implementation and enforcement of the said scheme, cannot be issued. This court cannot be unmindful of the fact that the RBI has withdrawn all the schemes relating to the financial restructuring, by declaring new financial policy on 12 February 2018. The new policy appears to have been declared by RBI for the reason that the NPA, in the Nationalized banks, have touched almost 8 lakhs crores. In the instant matter also, the financial exposure of the Petitioner company is more than Rs. 4000 crores, as has been recorded above, the financial policies and the financial matters, falling within the exclusive jurisdiction of the RBI, need not be scrutinized by the Court, since the Court do not possess required expertize in the financial and economic field.

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